-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QHObaurjN0TQgO0I5qvnHidLQmmQ1JWj84ezcoEHGP+9KoqzPKT316vyA2Q/B9Sy vIZ6kF4qRPZBOdOPJAVQlg== /in/edgar/work/20000707/0000719271-00-000010/0000719271-00-000010.txt : 20000920 0000719271-00-000010.hdr.sgml : 20000920 ACCESSION NUMBER: 0000719271-00-000010 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000725 FILED AS OF DATE: 20000707 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSFINANCIAL HOLDINGS INC CENTRAL INDEX KEY: 0000719271 STANDARD INDUSTRIAL CLASSIFICATION: [4213 ] IRS NUMBER: 460278762 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-12070 FILM NUMBER: 668582 BUSINESS ADDRESS: STREET 1: 8245 NIEMAN ROAD, STE 100 STREET 2: SUITE 100 CITY: LENEXA STATE: KS ZIP: 66214 BUSINESS PHONE: 9138590055 MAIL ADDRESS: STREET 1: 8245 NIEMAN ROAD STREET 2: SUITE 100 CITY: LENEXA STATE: KS ZIP: 66214 FORMER COMPANY: FORMER CONFORMED NAME: ANUHCO INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CARRIERS INC DATE OF NAME CHANGE: 19910812 DEF 14A 1 0001.txt SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1943 (AMENDMENT NO. ) Filed by 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 Proxy Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 TransFinancial Holdings, Inc. - ------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - ------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [ ] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 9Set 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: - ------------------------------------------------------------------------------- TRANSFINANCIAL [COMPANY LOGO - GRAY/BLACK] NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 25, 2000 The Annual Meeting of Shareholders of TransFinancial Holdings, Inc. ("TransFinancial" or "the Company"), a Delaware corporation, will be held at the Holiday Inn, 12601 West 95th Street, Lenexa, Kansas, on Tuesday, July 25, 2000, at 9:00 a.m., Central Time, for the following purposes: 1. To consider and act upon a proposal to elect five (5) directors of TransFinancial; 2. To consider and act upon such other matters as may properly come before the meeting and any adjournment thereof. The foregoing matters are more fully described in the accompanying Proxy Statement. Shareholders of record on the books of TransFinancial at the close of business on June 16, 2000 will be entitled to receive notice of and to vote at the meeting. A complete list of such Shareholders will be available for examination at the principal executive offices of TransFinancial Holdings, Inc. at 8245 Nieman Road, Suite 100, Lenexa, Kansas, by any Shareholder, for any purpose germane to the Annual Meeting, for the 10 days immediately preceding the Annual Meeting. YOUR VOTE IS IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO PROMPTLY DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. Returning your proxy now will not interfere with your right to attend the meeting or to vote your shares personally at the meeting, if you wish to do so. The prompt return of your proxy may save TransFinancial additional expenses of solicitation. All Shareholders are cordially invited to attend the meeting. By Order of the Board of Directors Timothy P. O'Neil, President, Chief Executive Officer and Corporate Secretary Lenexa, Kansas June 16, 2000 TRANSFINANCIAL HOLDINGS, INC. June 16, 2000 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS To Be Held July 25, 2000 This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of TransFinancial Holdings, Inc. ("TransFinancial" or "the Company") to be used at the 2000 Annual Meeting of Shareholders of the Company ("Annual Meeting") which will be held at the Holiday Inn, 12601 West 95th Street, Lenexa, Kansas, on Tuesday, July 25, 2000, at 9:00 a.m. Central Time, and any adjournment thereof. All costs of the solicitation will be borne by the Company. A copy of the Company's annual report for the fiscal year ended December 31, 1999, is enclosed herewith. Such report is not incorporated in this Proxy Statement and is not to be deemed a part of the proxy solicitation material. PROXIES AND VOTING Shareholders of record at the close of business on June 16, 2000 are entitled to one vote at the meeting for each share held. There were outstanding on June 16, 2000, 3,278,291 shares of common stock, par value $.01 per share, of the Company ("Common Stock"). Such shares have no cumulative voting rights. The Company has no other class of stock outstanding. Shareholders who execute proxies retain the right to revoke them at any time before they are voted by giving to the Corporate Secretary of the Company written notice of revocation bearing a date later than the proxy date, by submission of a later-dated proxy or by revoking the proxy and voting in person at the Annual Meeting. Attendance at the Annual Meeting will not in and of itself constitute revocation of a proxy. Unless so revoked, proxies properly executed and returned will be voted in accordance with the instructions given therein or, if properly executed but no instructions are given, will be voted for the nominees for director named herein. Proxies submitted by Shareholders prior to the Annual Meeting will be tabulated by the Company's transfer agent, UMB Bank, N.A. Votes cast and proxies received at the Annual Meeting will be manually tabulated by an inspector of election and the proxy count certified by the Company's transfer agent will be adjusted accordingly. Abstentions and broker non-votes are each counted for purposes of determining whether there is a quorum at the Annual Meeting. Abstentions are counted in the tabulations of votes cast on proposals presented to shareholders, whereas broker non-votes are not counted for purposes of determining whether a proposal presented to the Shareholders has been approved. The five individuals receiving the greatest number of votes cast at the meeting will be elected as directors of the Company. PROPOSAL 1 ELECTION OF DIRECTORS Five directors are to be elected at the Annual Meeting to serve until the 2001 Annual Meeting of the Shareholders of the Company or until their successors are elected and qualified. J. Richard Devlin and David D. Taggart are not standing for re-election. In the absence of contrary instructions, each proxy will be voted for the election of the persons listed below. Each of the nominees has advised the Company that he can and will serve as a director of the Company if elected. If for any reason any of the nominees shall become unavailable for election, the persons named in the accompanying proxy will vote for the other nominees and for a substitute nominee or nominees if so designated by the Board of Directors. The following information is given with respect to each nominee as of June 16, 2000. Director of the Name, Principal Occupation and Company other Directorships Age Since William D. Cox 57 1991 Chairman of the Board of Directors since June 1997. Mr. Cox has served as President of various family-owned, commercial and residential construction and land development companies in Wichita, Kansas, currently Applewood Homes, Inc., from 1967 to the present. Harold C. Hill, Jr. 64 1995 Retired as a partner of Arthur Andersen LLP in 1993. Mr. Hill's 35 years of service with that firm included responsibility as partner in charge of the transportation, financial services and government practices in Kansas City, and National Technical Coordinator of that firm's trucking industry practice group. Roy R. Laborde 61 1991 Vice Chairman of the Board of Directors since June 1997. Chairman of the Board of Directors from May 1992 to June 1997. President of Amboy Grain, Inc., Amboy, Minnesota, since 1985; President and Chief Operating Officer for Rapidan Grain & Feed, Rapidan, Minnesota, from 1968 through 1988 and has continued to merchandise grain for that company. Timothy P. O'Neil 43 1995 President and Chief Executive Officer of the Company since May 1995. From October 1989, through May, 1995, Mr. O'Neil served in various positions with the Company, including, Senior Vice President, Vice President, Treasurer and Director of Finance. From March 1997 to October 1998, he has also served as President and Chief Executive Officer of Universal Premium Acceptance Corporation ("UPAC"), a wholly-owned subsidiary of the Company. Mr. O'Neil has also served as President, Chief Executive Officer, and Chief Financial Officer and Treasurer of American Freight System, Inc. ("AFS"), a wholly-owned subsidiary of the Company, since July, 1991. Clark D. Stewart 60 1997 President and Chief Executive Officer of Butler National Corporation, a publicly-held company headquartered in Olathe, Kansas, with operations primarily in the manufacture and modification of aerospace switching equipment and management services for Indian gaming enterprises, since September 1989. During the fiscal year ended December 31, 1999, the Board of Directors held five (5) regular meetings and one (1) special meeting. Each director attended 75 percent or more of the total number of all meetings of the Board and of committees of which he or she was a member during 1999. COMPENSATION OF DIRECTORS Directors who are not employees of the Company or its Subsidiaries received compensation of $8,000 per annum, plus $750 for each board meeting attended and $750 for each committee meeting attended when held on a day on which they were not compensated for attending another meeting, except the Chairman of the Board who received $1,500 for each board meeting and committee meeting attended and chairmen of Committees who received $1,000 for each committee meeting chaired. Directors received $200 for telephonic meetings of either the board or its committees. Directors were also reimbursed for reasonable travel and other expenses incurred by them in performance of their duties as directors of the Company. Directors who are not employees receive options to purchase 2,000 shares of Common Stock on the first stock trading day immediately following each Annual Meeting of the Shareholders of the Company at which they are elected to the Board of Directors, at market value on such date. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires directors, executive officers and beneficial owners of more than ten percent of the Common Stock to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission (the "SEC") and the American Stock Exchange, and to provide copies to the Company. Based solely on a review of the copies of such reports provided to the Company and written representations from the directors and executive officers, the Company believes that all applicable Section 16(a) filing requirements have been met. COMMITTEES OF THE BOARD OF DIRECTORS The Company's Board of Directors has standing Audit, Compensation and Corporate Governance Committees. Members of the Audit Committee are Harold C. Hill, Jr. (Chairman), J. Richard Devlin and William D. Cox. The Audit Committee met two times during the fiscal year ended December 31, 1999. The Audit Committee advises, reports to and makes recommendations to the Board of Directors on (i) audit procedures of the Company and its subsidiaries, (ii) general policy with regard to audit matters, (iii) the financial and accounting controls of the Company and its subsidiaries, (iv) nominating independent accountants to conduct the annual examination of the Company's financial statements, and (v) the results of the examination performed by the independent accountants. Members of the Compensation Committee are William D. Cox (Chairman), J. Richard Devlin and Clark D. Stewart. The Compensation Committee met one time during the fiscal year ended December 31, 1999. The Compensation Committee (i) approves salaries and other compensation to be paid to the officers of the Company, (ii) administers the 1992 Incentive Stock Plan and the 1998 Long-Term Incentive Plan and makes recommendations for option grants under these plans, and (iii) reviews and makes recommendations to the Board of Directors on any proposed employee benefit plans and any proposed material changes to existing employee benefit plans for the Company and its subsidiaries. Members of the Corporate Governance Committee are Harold C. Hill, Jr. (Chairman), William D. Cox and Roy R. Laborde. The Corporate Governance Committee met one time during the fiscal year ended December 31, 1999. The Corporate Governance Committee advises, reports to and makes recommendations to the Board of Directors on corporate governance issues, including nominations for the Board of Directors of the Company. The Corporate Governance Committee will consider candidates for the Board of Directors suggested by shareholders. Shareholders desiring to suggest candidates for nomination at the 2001 Annual Meeting should advise the Secretary of the Company in writing by December 31, 2000 and include sufficient biographical material to permit an appropriate evaluation. The Corporate Governance Committee and the Board of Directors continue to consider qualified candidates for the Board of Directors and may add new members to the Board of the Directors before the 2001 Annual Meeting. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1. RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP has served as independent accountants for the Company since November 1995. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting with an opportunity to make a statement, if they desire to do so, and to respond to appropriate questions. The Audit Committee of the Board of Directors has not met to determine its recommendation of an independent accounting firm for the 2000 fiscal year. The Audit Committee intends to make such determination and submit such recommendation to the Board of Directors prior to the end of the third quarter of the current fiscal year. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as of June 16, 2000, unless otherwise indicated, with respect to the beneficial ownership of the Company's Common Stock by (a) persons known to the Company to be beneficial owners of 5% or more of the outstanding Common Stock, (b) executive officers listed in the Summary Compensation Table, (c) directors and nominees for director and (d) all directors and executive officers of the Company as a group. Name of Beneficial Owners Amount and (and address of beneficial owners Nature of of five percent or more of the Beneficial Percent outstanding common stock) Ownership(1) of Class Franklin Advisory Services Charles B. Johnson Rupert H. Johnson, Jr. Franklin Resources, Inc. 777 Mariners Island Boulevard San Mateo, CA 94404................................. 265,000 (2) 8.08% Dimensional Fund Advisors, Inc. 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401.............................. 296,800 (3) 9.05% Roy R. Laborde....................................... 172,365 (7) 5.24% Care of TransFinancial Holdings, Inc. 8245 Nieman Road, Suite 100 Lenexa, KS 66214 Timothy P. O'Neil.................................... 205,360 (8) 6.17% 8245 Nieman Road, Suite 100 Lenexa, KS 66214 William D. Cox....................................... 84,000 (4) 2.55% J. Richard Devlin.................................... 6,000 (5) .18% Harold C. Hill, Jr................................... 11,500 (6) .35% Clark D. Stewart..................................... 4,000 (9) .12% David D. Taggart..................................... 20,000 (10) .61% Kurt W. Huffman...................................... 23,000 (11) .70% Directors and executive officers as a group (8 persons, including the above)............ 526,225 (12) 15.46% (1) Unless otherwise indicated, each person has sole voting and investment power with respect to the shares listed. (2) The shares shown in the table are beneficially owned by one or more open or closed-end investment companies or other managed accounts which are advised by Franklin Advisory Services, Inc. ("Franklin"), a subsidiary of Franklin Resources, Inc. ("FRI"). Franklin has all investment and/or voting power over the shares owned by such advisory clients and may be deemed the beneficial owner of the shares shown in the table. Charles B. Johnson and Rupert H. Johnson, Jr. (the "Principal Shareholders") each own in excess of 10% of the outstanding common stock of FRI and are the principal shareholders of FRI. FRI, the Principal Shareholders and Franklin disclaim any economic interest or beneficial ownership in any of the shares. The information contained in this footnote was obtained from the Amendment No. 3 to Schedule 13G filed by these persons on February 2, 2000. (3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment advisor, is deemed to have beneficial ownership of 296,800 shares, all of which shares are held in portfolios of four registered open-end investment companies, or in series of investment vehicles, all of which Dimensional serves as investment manager. Dimensional disclaims beneficial ownership of all such shares. The information as to the beneficial ownership of Dimensional was obtained from the Schedule 13G filed by that company on February 11, 2000. (4) Includes 15,000 shares subject to exercisable outstanding stock options. (5) Includes 5,000 shares subject to exercisable outstanding stock options. (6) Includes 4,500 shares in the Francile Hill Revocable Trust. Both Mr. Hill and Francile Hill are trustees and each has shared voting and investment power. Also includes 7,000 shares subject to exercisable outstanding stock options. (7) Includes 13,150 shares subject to exercisable outstanding stock options and 1,415 shares owned by and registered in the name of his wife, over which they share voting power but Mrs. Laborde retains sole investment power. (8) Includes 52,000 shares subject to exercisable outstanding stock options. Does not include 9,000 shares held in various irrevocable trusts for the benefit of Mr. O'Neil's children and over which he has no voting or investment power. (9) Includes 3,000 shares subject to exercisable outstanding stock options. (10)Represents 20,000 shares subject to exercisable outstanding stock options. (11)Includes 10,000 shares subject to exercisable outstanding stock options. (12)Includes a total of 125,150 shares subject to exercisable outstanding stock options. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company did not engage in any individual transactions or series of transactions with members of management or nominees for director during 1999 in which the amount involved exceeded $60,000. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee consists exclusively of non-employee directors appointed by resolution of the entire Board of Directors. William D. Cox has been a non-employee Chairman of the Board of Directors since the 1997 Organization Meeting of the Board of Directors. EXECUTIVE OFFICER COMPENSATION BOARD COMPENSATION COMMITTEE REPORT The responsibilities of the Compensation Committee ("Committee") include approval of the salaries and other compensation paid to executive officers of the Company. The Committee attempts to set executive officers' compensation at levels which are fair and reasonable to the shareholders of the Company and which will attract, motivate, retain and appropriately reward experienced executive officers who contribute to the success of the Company and the returns to its shareholders. In 1998, the Committee engaged a compensation consulting company to perform a review of the Company's executive compensation program. The current compensation levels were compared to geographical and industry averages and found to be substantially less than average for all executive positions. The compensation consulting company reviewed various compensation surveys and prepared for the Committee a summary of average salary, average incentive compensation and average total compensation for different executive positions, summarized according to geographical area (generally the Kansas City and Des Moines metropolitan areas), by industry (motor carrier trucking and financial services) and by size of company (amount of revenues). The Committee does not know whether the companies included in the compensation surveys reviewed by the consultant include any companies used by the Company in its peer group index in the performance graph. In order to bring the Company's current executive management team closer to average market total compensation levels, and to tie each executive's performance to the strategic plan of the Company, the Committee adopted a new executive compensation program. The new program divides the elements of compensation into two categories: performance and opportunity. Performance compensation is comprised of base salary paid to each executive to accomplish their standard job duties, functions and responsibilities. Opportunity compensation is comprised of "at risk" short-term and long-term incentives which reward the management team members for achieving or exceeding measurable goals. The short-term incentive compensation program permits executives the opportunity to earn an additional 43% of their base compensation by achieving budgeted net income levels in each operating segment or the Company as a whole, and meeting certain other subjective criteria. Executives also have the opportunity to earn additional short-term incentive compensation ratably if the operating segments or the Company as a whole exceed budgeted net income levels. The Committee selected the various amounts which may be earned by an executive under the short-term incentive compensation program in order to cause the executive's total compensation package to meet the Company's target for the executive's total compensation if, and only if, the Company meets budgeted net income levels. To ensure internal equity each executive's total compensation was benchmarked at 40% to 75% of the CEO's total compensation as recommended by the compensation consulting company based upon each executive's position and responsibilities. To provide a long-term incentive and link a portion of each executive's compensation with the interests of shareholders, the Company generally includes stock options in each executive's compensation package. In 1999, the Committee continued this compensation program without substantial modification. COMPENSATION OF CHIEF EXECUTIVE OFFICER Timothy P. O'Neil is President and Chief Executive Officer of the Company, and also served as President and Chief Executive Officer of UPAC, a subsidiary of the Company, through October 1998. The Committee made no change in Mr. O'Neil's base salary in 1999. The Committee decided not to change Mr. O'Neil's base salary because of the institution of the short-term incentive program and the opportunities it provides for Mr. O'Neil to earn additional compensation if certain objectives are met. In order to bring Mr. O'Neil's total compensation package within total market compensation levels, a short-term incentive program was provided to Mr. O'Neil which gives him the opportunity to earn additional cash compensation of 43% of his base compensation, or $69,000, for achieving budgeted net income levels for UPAC and the Company as a whole. No short-term incentive was earned in 1999 as the Company did not achieve budgeted net income levels. The Committee's determination to recommend an option grant in 1999 to Mr. O'Neil was based upon its subjective and informal review of a number of factors, including the number of options held by Mr. O'Neil, the exercise prices of such options, the amount of Mr. O'Neil's total compensation package, the amounts which Mr. O'Neil is eligible to earn under the short-term incentive program, the past performance of Mr. O'Neil and the Committee's desire to provide a long-term incentive component to Mr. O'Neil's compensation. The decision to grant the option was not based upon any specific criteria or financial performance measure. As described under "Employment Agreements," the Company entered into employment agreements with Mr. O'Neil and several other executive officers in 1998. The Committee determined that it was in the best interests of the Company and its stockholders to enter into the agreements in light of the competitive market for qualified and experienced executives and with respect to the agreement with Mr. O'Neil, in light of the then ongoing hostile takeover attempt of the Company. The Committee believes that the employment agreements will help to ensure the retention of valued executives. The Committee also believes that it is very important to maintain the management team intact in the event of any future pending or threatened change of control. In determining the amount of severance compensation payable to Mr. O'Neil and the triggering events for the payment of such compensation, the Committee approved provisions which it considered reasonable to the Company and which would satisfy the goals described above. COMPENSATION OF OTHER EXECUTIVE OFFICERS The Company has two executive officers in addition to Mr. O'Neil. The Committee approved no increases in base salary for the two executive officers for 1999 because of the institution of the short-term incentive program and the opportunities it provides for each executive officer to earn additional compensation if certain objectives are met. Each of the executive officers has the opportunity to earn 43% of their base compensation as cash incentive compensation based on the achievement of budgeted net income levels for each operating segment or the Company as a whole, and meeting certain other subjective criteria. Neither of these executive officers earned additional cash compensation under the short-term incentive program. However, both executive officers were awarded cash incentive compensation of 7% on a discretionary basis by the Compensation Committee. The decision to award these bonuses was not based on any specific financial performance measures. Both executive officers received stock option grants in 1999. All of the options were Incentive Stock Options. Each option provides for a term of ten years, subject to earlier termination upon certain events, and an exercise price equal to the fair market value of the common stock on the date of grant. The Committee's determination to recommend the grant of options to each of the executive officers was based upon its subjective and informal review of a number of factors including the number of options held by the executive, the exercise prices of such options, the amount of the executive's total compensation package, the amounts which the executive is eligible to earn under the short- term incentive program, the position held by the executive, the duties and responsibilities of the executive, the past performance of the executive and the Committee's desire to provide a long-term incentive component to the executive's compensation. The decision to grant the options was not based upon any specific criteria or financial performance measure. As described under "Employment Agreements," the Company entered into employment agreements with Mr. O'Neil and several other executive officers in 1998. The Committee's determinations with respect to the employment agreements are described above in the discussion of the compensation of the Chief Executive Officer. SECTION 162(M) The Committee has considered the potential impact of Section 162(m) of the Internal Revenue Code of 1986, as amended, regarding nondeductibility of annual compensation in excess of $1,000,000. The Committee does not believe that Section 162(m) will have any material impact upon the Company, given the current cash compensation levels of executive officers of the Company, the number of options granted to such officers and the treatment of such options under Section 162(m). The Committee believes that many of the options currently outstanding are exempt from the deductibility limit under the transition provisions set forth in the regulations under Section 162(m). It is the Committee's intention that options granted under the 1998 Long-Term Incentive Plan will qualify as performance-based compensation and be exempt from the deductibility limits of Section 162(m). The Committee will continue to evaluate the advisability of qualifying executive compensation for deductibility under Section 162(m). COMPENSATION COMMITTEE William D. Cox, Chairman J. Richard Devlin Clark D. Stewart COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG TRANSFINANCIAL HOLDINGS, INC. COMMON STOCK, AMEX MARKET AND PEER GROUP [Line Graph representing data points in table below] Based on data furnished by Media General Financial Services, Richmond, Virginia. Assumes $100 invested at the close of business at December 31, 1994 in Company Common Stock, the Amex Market Index and the selected peer group. The total return calculated assumes the reinvestment of any dividends. Numbers used to prepare the above graph were:
Year Ending December 31 1994 1995 1996 1997 1998 1999 TransFinancial 100.00 84.34 75.90 86.14 43.37 50.60 Peer Group 100.00 83.38 83.57 126.51 113.04 123.72 Amex Market Index 100.00 128.90 136.01 163.66 161.44 201.27
The industry peer group ("Peer Group") consists of all predominantly less- than-truckload motor carriers (or parent companies) publicly traded on any stock exchange for the last five years (6 companies: Arkansas Best Corporation, Arnold Industries, Inc., CNF Transportation, Inc., Old Dominion Freight Line, Inc., USFreightways, Inc., and Yellow Corporation). Each member of the peer group had a much larger market capitalization than TransFinancial. SUMMARY COMPENSATION TABLE
Long Term Compensation Annual Compensation Awards Payouts Other Securities All Annual Restricted Underlying Other Name and Compen- Stock Options/ LTIP Compen- Principal sation Award(s) SARs Payouts sation Position Year Salary Bonus ($)(3) ($) ($) (#) ($) ($) Timothy P. O'Neil, 1999 $ 160,680 $ -0- -0- -0- 20,000 -0- $ 25,000 (2) President and Chief 1998 160,680 11,500 -0- -0- 20,000 -0- 25,000 (2) Executive Officer 1997 160,680 -0- -0- -0- 20,000 -0- 25,000 (2) David D. Taggart, 1999 $ 143,000 $ 10,333 -0- -0- 10,000 -0- $ 10,000 (1) Executive Vice President 1998 140,000 10,333 -0- -0- 10,000 -0- 10,000 (1) of the Company and Chief 1997 123,278 23,266 -0- -0- 10,000 -0- 10,000 (1) Executive Officer of Crouse Kurt W. Huffman, 1999 $ 125,000 $ 9,000 $7,200 -0- 10,000 -0- $ -0- Executive Vice President 1998 110,908 9,000 -0- -0- 10,000 -0- -0- of the Company and President and Chief Executive Officer of UPAC and Presis (1) Pursuant to Mr. Taggart's employment agreement an interest free loan secured by his personal residence is being forgiven ratably over eight years. (2) Represents the annual insurance premiums paid by the Company with respect to a split-dollar life insurance policy for the benefit of Timothy P. O'Neil. For a description of such arrangement see Employment Agreements. (3) 1999 and 1998 bonuses represent incentive compensation awarded on a discretionary basis based on subjective criteria.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable Number of % of Total Value at Assumed Annual Securities Options Exer- Rates of Stock Price Underlying Granted to cise Expir- Appreciation for Options Employees in Price ation Option Term Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($) Timothy P. O'Neil(1) 20,000 22% $4.25 2/23/2009 $ 53,456 $ 135,468 David D. Taggart(1) 10,000 11% 4.25 2/23/2009 26,728 67,734 Kurt W. Huffman(1) 10,000 11% 4.25 2/23/2009 26,728 67,734 (1) Grants are "Incentive Stock Options" under the Internal Revenue Code. The exercise prices equal the market value on the date of grant. The options become exercisable ratably on February 23 of the years 2000 through 2004 and remain exercisable through 2009.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options at Options at Shares Value FY-End (#) FY-End ($) Acquired on Realized Exercisable/ Exercisable/ Name Exercise (#) ($) Unexercisable Unexercisable (1) Timothy P. O'Neil -- $ -- 32,820/59,180 $-0-/$20,000 David D. Taggart -- -- 13,000/27,000 -0-/10,000 Kurt W. Huffman -- -- 6,000/24,000 -0-/10,000 (1) With the exception of the 1999 option grants at an exercise price of $4.25 per share, all of the exercisable and unexercisable options held as of the fiscal yearend were exercisable at prices above the closing market price of $5.25 per share as of December 31, 1999.
EMPLOYMENT AGREEMENTS The Company is a party to a Supplemental Benefit and Collateral Assignment Split-Dollar Agreement with Timothy P. O'Neil, President and Chief Executive Officer of the Company. Under the agreement, the Company has agreed to pay the premiums on a life insurance policy insuring the life of Mr. O'Neil with an initial death benefit of $532,968. Mr. O'Neil has the right under the agreement to designate the beneficiaries to whom the death benefits under the policy shall be payable. If Mr. O'Neil's employment is terminated by the Company with cause, Mr. O'Neil's rights under the policy shall terminate. If Mr. O'Neil terminates his employment, Mr. O'Neil will have no further rights under the policy except that Mr. O'Neil will receive, for each period of twelve months from the date of hire, an amount equal to 10% of the excess, if any, of the cash surrender value of the policy over the aggregate cost of the policy incurred by the Company in the payment of premiums. Upon the death of Mr. O'Neil, or the earlier surrender or cancellation of the policy by him subsequent to his retirement, disability or termination without cause, the Company is entitled to the lesser of the cash surrender value of the policy and the amount of premiums paid by it, and Mr. O'Neil is entitled to the remaining amounts payable upon such event under the policy. Mr. O'Neil has the right to retire under the agreement upon completing ten years of employment and reaching age 50. The Company is party to an Employment Agreement with Timothy P. O'Neil, President and Chief Executive Officer of the Company. The Employment agreement provides for the employment at will of Mr. O'Neil by the Company. Under the Employment Agreement, Mr. O'Neil is entitled to (a) salary of $160,680 per year, subject to increase by the Company from time to time, (b) annual incentive compensation of 36% of base salary, or $57,500, based on achieving budgeted net income levels for the Company and an additional 7% of base salary, or $11,500, based on subjective criteria, (c) such stock options as the Company shall from time to time grant pursuant to stock option plans, (d) certain additional fringe and other benefits, including a Supplemental Benefit and Collateral Assignment Split-Dollar Agreement as described above. The Employment Agreement provides that if Mr. O'Neil's employment is terminated by the Company without good cause (as defined in the agreement), he will be entitled to his then existing base compensation and all related benefits for two years. The Employment Agreement also includes a non-competition provision for two years after termination. Under the Employment Agreement, Mr. O'Neil is entitled to certain payments upon termination of Mr. O'Neil's employment after a change of control of the Company. Mr. O'Neil is entitled to such payments if, within two years after such a change of control, Mr. O'Neil's employment is terminated other than by Mr. O'Neil for any reason other than death, permanent disability, retirement or Good Cause (as defined in the agreement), or is terminated by Mr. O'Neil for Stated Cause (as defined in the agreement). In such event, Mr. O'Neil is entitled to the following: (i) 2.99 times Mr. O'Neil's average annual compensation over the three most recent years prior to the change of control, or such lesser period as Mr. O'Neil shall have been employed by the Company, excluding any amount which would constitute an "excess parachute payment" under Section 280G of the Code, (ii) immediate 100% vesting of all incentive compensation provided or to be provided under the Employment Agreement, (iii) all benefits to which he would have been entitled upon normal retirement under the Supplemental Benefit and Collateral Assignment Split-Dollar Agreement described above and (iv) three years participation in certain medical and life insurance plans of the Company. The Company is a party to a Supplemental Benefit Agreement with David D. Taggart, an Executive Vice President of the Company and Chairman and Chief Executive Officer of Crouse Cartage Company ("Crouse"). The agreement provides salary continuation benefits in the event of death before age 65, supplemental retirement benefits and pre-retirement death benefits. Under the agreement, if Mr. Taggart remains a full-time officer of Crouse until age 65, the Company is required to pay him (or his beneficiary in the event of death) $21,000 per year for 15 years after his retirement. Mr. Taggart's entitlement to such supplemental retirement benefit vests 10% per year of service and immediately upon disability or a change of control of the Company or Crouse. The agreement provides for partial payments of supplemental retirement benefits upon early retirement or retirement at age 65 prior to full vesting of the retirement benefits. The agreement provides that if Mr. Taggart's employment with Crouse is terminated before his 65th birthday due to death, Mr. Taggart's beneficiary shall receive $35,000 per year for 20 years. If Mr. Taggart dies before retirement, the Company is also required to pay to his beneficiaries the sum of $175,000 under the agreement. The Company and Crouse Cartage Company are parties to an Employment Agreement with David D. Taggart, an Executive Vice President of the Company and Chairman and Chief Executive Officer of Crouse. The Employment Agreement provides for the employment at will of Mr. Taggart by TransFinancial. Under the Employment Agreement, Mr. Taggart is entitled to (a) salary of $143,000 per year, subject to increase by Crouse from time to time, (b) annual incentive compensation of 36% of base salary, or $51,667, based on achieving budgeted net income levels for Crouse or the Company, and an additional 7% of base salary, or $10,333, based on subjective criteria, (c) an interest free home loan from the Company to be forgiven in equal annual installments, (d) such stock options as the Company shall from time to time grant pursuant to stock option plans, and (e) certain additional fringe and other benefits, including supplemental retirement benefits as described above. The Employment Agreement provides that if Mr. Taggart's employment is terminated by the Company without cause (as defined in the agreement) he will be entitled to an amount equal to his then existing base compensation and all related benefits for two years. The Employment Agreement also includes a non-competition provision for two years after termination. Under a separate agreement between the parties, Mr. Taggart is entitled to certain payments upon termination of Mr. Taggart's employment after a change of control of the Company or Crouse. Mr. Taggart is entitled to such payments if, within two years after such a change of control, Mr. Taggart's employment is terminated other than by Mr. Taggart for any reason other than death, permanent disability, retirement or Good Cause (as defined in the agreement), or is terminated by Mr. Taggart for Stated Cause (as defined in the agreement). In such event, Mr. Taggart is entitled to the following: (i) 2.99 times Mr. Taggart's average annual compensation over the three most recent years prior to the change of control, or such lesser period as Mr. Taggart shall have been employed, excluding any amount which would constitute an "excess parachute payment" under Section 280G of the Code, (ii) immediate 100% vesting of all incentive compensation provided or to be provided under the Employment Agreement, (iii) all benefits to which he would have been entitled upon normal retirement under the Supplemental Benefit Agreement described above and (iv) three years participation in certain medical and life insurance plans of the Company and Crouse. The Company and Presis are parties to an Employment Agreement with Kurt W. Huffman, Executive Vice President of the Company, President and Chief Executive Officer of Presis and President and Chief Executive Officer of UPAC. The Employment agreement provides for the employment at will of Mr. Huffman by the Company. Under the Employment Agreement, Mr. Huffman is entitled to (a) salary of $125,000 per year, subject to increase by the Company from time to time, (b) annual incentive compensation of 36% of base salary, or $45,000, based on achieving budgeted net income levels for the Company and an additional 7% of base salary, or $9,000, based on subjective criteria, (c) such stock options as the Company shall from time to time grant pursuant to stock option plans, (d) certain additional fringe and other benefits. The Employment Agreement provides that if Mr. Huffman's employment is terminated by the Company without good cause (as defined in the agreement), he will be entitled to his then existing base compensation and all related benefits for one year. The Employment Agreement also includes a non-compensation provision for one year after termination. Under the Employment Agreement, Mr. Huffman is entitled to certain payments upon termination of Mr. Huffman's employment after a change of control of the Company. Mr. Huffman is entitled to such payments if, within one year after such a change of control, Mr. Huffman's employment is terminated other than by Mr. Huffman for any reason other than death, permanent disability, retirement or Good Cause (as defined in the agreement), or is terminated by Mr. Huffman for Stated Cause (as defined in the agreement). In such event, Mr. Huffman is entitled to the following: (i) 2.99 times Mr. Huffman's average annual compensation over the three most recent years prior to the change of control, or such lesser period as Mr. Huffman shall have been employed by the Company, excluding any amount which would constitute an "excess parachute payment" under Section 280G of the Code, (ii) immediate 100% vesting of all incentive compensation provided or to be provided under the Employment Agreement, and (iii) three years participation in certain medical and life insurance plans of the Company. SHAREHOLDER PROPOSALS Any proposal that a Shareholder desires to have included in the Company's proxy materials for the 2001 Annual Meeting of Shareholders of the Company must be received by the Corporate Secretary of the Company at the Company's principal executive offices no later than March 2, 2001, in order to be considered for possible inclusion in the proxy materials. Any such proposal must comply with the applicable rules of the Securities and Exchange Commission. In addition to the requirements set forth above, the Company's By-laws contain advance notice provisions governing certain matters, including shareholder proposals and shareholder nominations of candidates for election to the Board of Directors of the Company. Under the Company's By-laws, notice of any such proposal or nomination must be in writing and must be delivered to the Corporate Secretary at the Company's principal executive offices by the later of: (a) sixty (60) days prior to the scheduled date of the shareholders' meeting, or (b) ten (10) days following the day on which the Company mails notice or makes a public announcement of the scheduled date of the meeting. Any such shareholder proposal or nomination for election to the Board of Directors must also comply with the other applicable provisions of the advance notice provisions in the Company's By-laws. The Company currently anticipates that the 2001 Annual Meeting of Shareholders will be held on May 24, 2001. Assuming that the date of the meeting is not changed, notice of any shareholder proposal or nomination to be considered at the 2001 Annual Meeting of Shareholders must be received by the Corporate Secretary no later than March 26, 2001 in order to be timely under the advance notice provisions of the Company's By-laws. No shareholder proposal or nomination will be considered at the 2001 Annual Meeting of Shareholders unless it is presented in accordance with the foregoing requirements. A copy of the Company's By-laws containing the advance notice provisions can be obtained by any Shareholder by written request to the Corporate Secretary of the Company at the Company's principal executive offices. MISCELLANEOUS As of the date of this Proxy Statement, the Board of Directors knows of no other matter to be presented for consideration at the Annual Meeting. Although the Company knows of no items of business which will be presented at the Annual Meeting other than those described herein, proxies in the accompanying form confer upon the persons named in such proxies discretionary authority to vote upon any other matters that may properly come before the meeting, to the extent permitted under the applicable rules of the Securities and Exchange Commission. All expenses incurred in connection with this proxy solicitation will be borne by the Company. In addition to solicitation of proxies by mail, proxies may be solicited by the Company's directors, officers and other employees, by personal interview, telephone and telegram. The Company will also request brokers and other fiduciaries to forward solicitation materials to the beneficial owners of shares held of record by them, and will pay all expenses in connection therewith. DATE: June 16, 2000 Timothy P. O'Neil President, Chief Executive Officer and Corporate Secretary TRANSFINANCIAL HOLDINGS, INC. PROXY FOR ANNUAL MEETING OF SHAREHOLDERS July 25, 2000 The undersigned hereby appoints Timothy P. O'Neil and Kurt W. Huffman, and each of them, as proxies for the undersigned at the Annual Meeting of Shareholders of TransFinancial Holdings, Inc. at the Holiday Inn, 12601 West 95th Street, Lenexa, Kansas, on Tuesday, July 25, 2000, at 9:00 A.M., and at any adjournment, to vote the shares of stock the undersigned would be entitled to vote, if personally present, upon the proposals, and any other matter brought before the meeting, all as set forth in the June 16, 2000, Proxy Statement. The Board of Directors recommends voting for Proposal 1. 1.Authority granted to or withheld from proxies to vote for William D. Cox, Harold C. Hill, Jr., Roy R. Laborde, Timothy P. O'Neil, and Clark D. Stewart as directors of TransFinancial (or a substitute nominee or nominees designated by the Board of Directors if any of them become unavailable). [ ] FOR all nominees (unless exceptions are marked). [ ] WITHHOLD AUTHORITY (for all nominees). (To withhold authority to vote for individual nominees write such nominees names in the space provided below). 2.THIS PROXY CONFERS DISCRETIONARY AUTHORITY TO VOTE UPON CERTAIN MATTERS, AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. (continued and to be signed and dated on the reverse side) THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR PROPOSAL 1. Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, 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 AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. - ------------------------------------------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----