-----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, B2Hck1ceKoj7Q1Eo23TvrSkNkpEB5XzDzn3mrvIUkNH7acaSkduFGbJMcDVHjrDT 1gm/DsbJp5ZHlOp0+fyrxw== 0000793765-98-000001.txt : 19980323 0000793765-98-000001.hdr.sgml : 19980323 ACCESSION NUMBER: 0000793765-98-000001 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980421 FILED AS OF DATE: 19980320 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KLLM TRANSPORT SERVICES INC CENTRAL INDEX KEY: 0000793765 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 640412551 STATE OF INCORPORATION: DE FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-14759 FILM NUMBER: 98569466 BUSINESS ADDRESS: STREET 1: 3475 LAKELAND DR CITY: JACKSON STATE: MS ZIP: 39288 BUSINESS PHONE: 6019392545 MAIL ADDRESS: STREET 1: P.O.BOX 6098 CITY: JACKSON STATE: MS ZIP: 39288 DEF 14A 1 NOTICE & PROXY STATEMENT KLLM TRANSPORT SERVICES, INC. 135 Riverview Drive Richland, Mississippi 39218 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 21, 1998 TO THE SHAREHOLDERS: Notice is hereby given that the Annual Meeting of Shareholders of KLLM Transport Services, Inc., will be held at the Company's headquarters, 135 Riverview Drive, Richland, Mississippi, on Tuesday, April 21, 1998, at 10:00 a.m., Richland time, for the purpose of considering and acting upon the following matters: 1. Election of seven directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified. 2. Ratification of the appointment of Ernst & Young LLP as independent auditors for the fiscal year ending January 1, 1999. 3. Transaction of such other business as may properly come before the meeting or any adjournments thereof. The directors have fixed the close of business on March 10, 1998, as the record date for the determination of shareholders entitled to receive notice of and vote at the Annual Meeting. The directors sincerely desire your presence at the meeting. However, so that we may be sure your vote will be included, please sign and return the enclosed proxy promptly. A self-addressed, postage-paid return envelope is enclosed for your convenience. By order of the Board of Directors. s/James Leon Young JAMES LEON YOUNG, Secretary Date: March 20, 1998 SHAREHOLDERS ARE URGED TO VOTE BY DATING, SIGNING AND RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. SCHEDULE 14A INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 KLLM TRANSPORT SERVICES, 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): /X/ 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 (Set forth the amount on which the filing fee is calculated and state how it was determined): - ------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: - ------------------------------------------------------------ (5) Total fee paid: - ------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: - ------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: - ------------------------------------------------------------ (3) Filing Party: - ------------------------------------------------------------ (4) Date Filed: - ------------------------------------------------------------ KLLM TRANSPORT SERVICES, INC. 135 Riverview Drive Richland, Mississippi 39218 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 21, 1998 The following information is furnished in connection with the Annual Meeting of Shareholders of KLLM Transport Services, Inc. (the "Company") to be held on Tuesday, April 21, 1998, at 10:00 a.m., Richland time, at the Company's headquarters, 135 Riverview Drive, Richland, Mississippi. A copy of the Company's annual report to shareholders for the fiscal year ended January 2, 1998, accompanies this proxy statement. The annual report is not to be considered part of the proxy solicitation materials. Additional copies of the annual report, notice, proxy statement, and form of proxy may be obtained from the Company's Secretary, P. O. Box 6098, Jackson, Mississippi 39288. The enclosed proxy is solicited by the Board of Directors of the Company. The proxy may be revoked by a shareholder at any time before it is voted by filing with the Company's Secretary a written revocation or a duly executed proxy bearing a later date. The proxy may also be revoked by a shareholder attending the meeting, withdrawing the proxy, and voting in person. All expenses incurred in connection with the solicitation of proxies will be paid by the Company. In addition to the solicitation of proxies by mail, directors, officers, and regular employees of the Company may solicit proxies in person or by telephone. The Company will, upon request, reimburse banks, brokerage houses and other institutions, nominees, and fiduciaries for their expenses in forwarding proxy material to their principals. The approximate date of mailing this proxy statement and the enclosed form of proxy is March 20, 1998. Shareholders of record at the close of business on March 10, 1998, are eligible to vote at the Annual Meeting. As of the record date, 4,373,115 shares of the Company's common stock were outstanding. Each is entitled to one vote on each issue to be considered at the Annual Meeting. Other than the election of directors, which requires a plurality of the votes cast, each matter to be submitted to the shareholders requires the affirmative vote of a majority of the votes cast at the meeting. For purposes of determining the number of votes cast with respect to a particular matter, only those cast "For" or "Against" are included. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the meeting. ELECTION OF DIRECTORS The Company's bylaws provide that the number of directors shall be fixed by resolution of the Board of Directors and that the number may not be less than three nor more than twelve. Pursuant to the bylaws, the Board of Directors has fixed the number of directors at seven. Unless otherwise specified, proxies will be voted FOR the election of the seven nominees named below to serve until the next annual meeting of shareholders and until their successors are elected and qualified. If, at the time of the meeting, any of the nominees named below is not available to serve as director (which is not anticipated), the proxies will be voted for the election of such other person or persons as the Board of Directors may designate. The directors recommend a vote FOR the seven nominees listed below. Nominees Benjamin C. Lee, Jr., James Leon Young, Walter P. Neely, Steven K. Bevilaqua, C. Tom Clowe, Jr., and Leland R. Speed are now directors of the Company. Nominees for Director - --------------------- The table below sets forth certain information regarding the nominees for election to the Board of Directors: Name and Position Age Principal Occupation, Business Experience for the Past Five Years and Tenure with the Company Benjamin C. Lee, Jr. 70 Chairman of the Board of Directors Director and Chairman since February 14, 1996; Acting Board of Directors Chief Executive Officer from November, 1994 to April, 1995; Vice Chairman of the Board of Directors from 1986 to February 14, 1996; Executive Vice President from 1982 to 1986; Secretary from January, 1964 to May, 1968 and from July, 1969 to January, 1982; Treasurer from July, 1969 to January, 1982. James Leon Young 67 Attorney, Young, Williams, Henderson Secretary & Director & Fuselier, P.A., Jackson, Mississippi; Director since 1965; Secretary since 1982. Walter P. Neely 52 Professor, Else School of Management, Director Millsaps College, Jackson, Mississippi; Private consultant; Trustee, Performance Funds Trust, New York, New York, since June, 1992; Director since 1986. Steven K. Bevilaqua 46 President, Chief Executive Officer and President, Chief Director since April, 1995; President - Executive Officer Eastern Region of J. B. Hunt Co. from and Director November, 1994 to March, 1995; Executive Vice President of Operations of J. B. Hunt Co. from February, 1992, to November, 1994; Senior Vice President of Sales and Marketing of J. B. Hunt Co. from September, 1990 to February, 1992. C. Tom Clowe, Jr. 64 President and Chief Operating Officer, Director Missouri Gas Energy, Division of Southern Union Corporation, from September, 1995 to present; Chairman, President and Chief Executive Officer of Central Freight Lines, Inc., Waco, Texas, from June, 1993 to April, 1995; Director since June, 1995. Leland R. Speed 65 President and Director of Congress Street Director Properties from February, 1984 to November, 1994; Chairman and Director of Delta Industries, Inc. from April, 1979 to present; Trustee of EastGroup Properties, Inc. from 1978 to present; Chairman of EastGroup Properties, Inc. from April, 1993 to present; Chief Executive Officer of EastGroup Properties, Inc. from April, 1993 to September, 1997; Trustee of Eastover Corporation from 1975 to December, 1994; President of Eastover Corporation from 1978 to December, 1994; Chairman and Director of Eastover Realty Corp. from 1987 to December, 1994; President and Director of EB, Inc. from March, 1993 to April, 1996; Director of Farm Fish, Inc. from October, 1982 to present; Director of ChemFirst, Inc. from May, 1968 to present; President and Director of LNH REIT, Inc. from November, 1991 to May, 1996; Trustee of First Continental Investors REIT from June, 1987, to May, 1994; Director of Mississippi Valley Gas Co. from December, 1984 to present; President, Chief Executive Officer and Director of Rockwood National Corp. from April, 1983 to June, 1994; Chairman of Parkway Properties, Inc. from April, 1993 to present; Chief Executive Officer of Parkway Properties, Inc. from April, 1993 to September, 1997; Director since May, 1995. W. J. Liles, III 47 Employee of the Company since 1974; Vice President Vice President-Sales and Marketing since Sales and Marketing April, 1996; President-Rail Services from February, 1994 to April, 1996; Vice President-Sales and Marketing-West from 1990 to 1994; Vice President-Marketing from October, 1986 to 1990; Marketing Director from 1983 to October, 1986.
Stock Ownership - ---------------- The following table indicates the beneficial ownership as of March 10, 1998, unless otherwise indicated below, of the Company's common stock by each nominee and director, the CEO and the four most highly compensated executive officers other than the CEO, by each person known by the Company to be the beneficial owner of more than 5% of the Company's outstanding shares, and by all directors and executive officers of the Company as a group. Name of Beneficial Amount and Nature of Beneficial Percent of Class Owner Ownership William J. Liles, Jr. 626,163 (1)(2) 14.3% Marital Trust Benjamin C. Lee, Jr. 603,000 (2)(3) 13.8% James Leon Young 11,667 (4) Less than 1% Walter P. Neely 4,499 (5) Less than 1% Steven K. Bevilaqua 170,000 (6) 3.7% C. Tom Clowe, Jr. 2,000 Less than 1% Leland R. Speed 1,000 Less than 1% John J. Ritchie 21,250 (7) Less than 1% William J. Liles, III 713,123 (8) 16.2% Wynne Liles Appleton 689,504 (9) 15.8% Nancy M. Sawyer 70,600 (10) 1.6% Steven L. Dutro 26,987 (11) Less than 1% Brinson Partners, Inc. 430,697 (12) 9.9% Brinson Holdings, Inc. 430,697 (12) 9.9% SBC Holding (USA), Inc. 430,697 (12) 9.9% Swiss Bank Corporation 430,697 (12) 9.9% Dimensional Fund Advisors, Inc. 304,198 (13) 6.9% Franklin Resources, Inc. 241,000 (14) 5.5% Charles B. Johnson 241,000 (14) 5.5% Rupert H. Johnson, Jr. 241,000 (14) 5.5% Franklin Advisory Services, Inc. 241,000 (14) 5.5% Officers & Directors, as a Group (10 persons) 1,624,126 (15) 34.8%
(1) Mr. William J. Liles, Jr. passed away on February 11, 1996. The current address for the Trust is 112 Meadowbrook North, Jackson, Mississippi 39211. William J. Liles, III and Wynne Liles Appleton are Co-Trustees of the Trust. (2) The Trust and Mr. Lee may be deemed to control the Company because of stock ownership and Mr. Lee's position with the Company. (3) The address of Mr. Lee is P. O. Box 6098, Jackson, Mississippi 39288. (4) 5,000 shares are jointly owned with Mr. Young's wife. (5) 2,499 shares are jointly owned with Dr. Neely's wife. (6) 120,000 shares are unissued but are subject to an option that is exercisable at any time prior to May 31, 2005. 50,000 shares are unissued but are subject to an obligation to purchase under the Amended and Restated 1996 Stock Purchase Plan on or before August 7, 2001. (7) 1,250 shares are unissued but are subject to an option that is exercisable at any time prior to March 31, 2006. 20,000 shares are unissued but are subject to an obligation to purchase under the Amended and Restated 1996 Stock Purchase Plan on or before August 7, 2001. (8) 626,163 shares are owned by the William J. Liles, Jr. Marital Trust of which Mr. Liles is Co-Trustee. 54,237 shares are owned by the William J. Liles, Jr. Family Trust in which Mr. Liles has an indirect pecuniary interest. 824 shares are owned by Mr. Liles' wife. 3,590 shares are owned by trusts set up for the benefit of Mr. Liles' two sons of which Mr. Liles is the Trustee. 20,000 shares are unissued but are subject to an obligation to purchase under the Amended and Restated 1996 Stock Purchase Plan on or before August 7, 2001. 4,000 shares are unissued but are subject to an option that is exercisable at any time prior to February 9, 1999. (9) 54,237 shares are owned by the William J. Liles, Jr. Family Trust in which Ms. Appleton has an indirect pecuniary interest. 626,163 shares are owned by the William J. Liles, Jr. Marital Trust of which Ms. Appleton is Co-Trustee. 3,590 shares are owned by trusts set up for the benefit of Ms. Appleton's two daughters of which Ms. Appleton is the Trustee. 1,290 shares are owned by Ms. Appleton's husband. (10) 50,000 shares are unissued but are subject to an obligation to purchase under the Amended and Restated 1996 Stock Purchase Plan on or before August 7, 2001. 20,000 shares are owned jointly with her husband. (11) 3,820 shares are jointly owned with Mr. Dutro's wife. 3,167 shares are unissued but are subject to options that are exercisable at any time prior to March 19, 2002. 20,000 shares are unissued but are subject to an obligation to purchase under the Amended and Restated 1996 Stock Purchase Plan on or before August 7, 2001. (12) Ownership is as of December 31, 1997. Shared voting and shared dispositive power are claimed as to all shares. The address of Brinson Partners, Inc. is 209 South LaSalle, Chicago, Illinois 60604-1295. The address of Brinson Holdings, Inc. is 209 South LaSalle, Chicago, Illinois 60604-1295. The address of SBC Holding (USA), Inc. is 222 Broadway, New York, New York 10038. The address of Swiss Bank Corporation is Aeschenplatz, 6 CH-4002, Basel, Switzerland. (13) 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401. Ownership is as of December 31, 1997. Beneficial ownership of all shares is disclaimed. Sole voting power is claimed as to 212,599 shares and sole dispositive power is claimed as to all shares. (14) The address of Franklin Resources, Inc., Charles B. Johnson, and Rupert H. Johnson, Jr. is 777 Mariners Island Boulevard, San Mateo, California 94404. The address of Franklin Advisory Services, Inc. is One Parker Plaza, Sixteenth Floor, Ft. Lee, New Jersey 07024. Sole voting power and sole dispositive power are claimed by Franklin Advisory Services, Inc. as to all shares. Franklin Resources, Inc. is the parent holding company, Charles B. Johnson and Rupert H. Johnson, Jr. are principal shareholders of the parent holding company, and Franklin Advisory Services, Inc. is the investment advisor. Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin Advisory Services, Inc. disclaim any economic interest or beneficial ownership in any of the shares. Ownership is as of December 31, 1997. (15) 128,417 shares are unissued but are subject to options exercisable at various times. 160,000 shares are unissued but are subject to obligations to purchase under the Amended and Restated 1996 Stock Purchase Plan on or before August 7, 2001. Management - ---------- The executive officers of the Company are as follows: Principal Occupation and Name, Position and Tenure Business Experience with the Company Age For the Past Five Years __________________________ ___ _____________________________- Benjamin C. Lee, Jr. 70 See table under Election of Chairman of the Board of Directors. Directors Steven K. Bevilaqua See table under Election of President and Chief 46 Directors. Executive Officer James Leon Young 67 See table under Election of Secretary and Director Directors. Steven L. Dutro 42 Employee of the Company since Chief Financial Officer 1986; Chief Financial Officer since March, 1998; Acting Chief Financial Officer from February, 1997 to February, 1998; Vice-President of Finance, Profitability and Planning from December, 1995 to February, 1997; Vice-President of Finance from 1994 to 1995; Director of Finance from 1993 to 1994; Controller from 1986 to 1992. Nancy M. Sawyer 53 Employee of the Company and President Vernon President of Vernon Sawyer Sawyer Division operations since May, 1995; Vice President of Operations of Vernon Sawyer, Inc. from 1964 to April, 1995; Secretary-Treasurer of Vernon Sawyer, Inc. from 1986 to April, 1995. John J. Ritchie 48 Employee of the Company and Senior Vice President Senior Vice President-Sales and Sales and Marketing Marketing since April, 1996; Vice President of Marketing of Central Transport from July, 1995, to April, 1996; Vice President of Marketing of Dawes Transport from May, 1995 to July, 1995; Vice President of Marketing of Overnite Transportation from January, 1989, to May, 1995.
The executive officers have no particular terms of office. They each serve at the discretion of the Board of Directors. Certain Transactions - --------------------- In the following three paragraphs, the "Company" includes the Company's subsidiaries. On January 1, 1978, the Company entered into a ground lease with Mr. Lee (principal shareholder and current Chairman of the Board of Directors) and Mr. Liles (now deceased), for part of the real property on which the Company's Richland, Mississippi, terminal and corporate headquarters are located. In 1986, this lease was renegotiated to include contiguous property acquired by Mr. Lee and Mr. Liles, with the lease term commencing January 31, 1986, and expiring January 31, 2006 ("the 1986 Lease"). The monthly rental payments for the term of the 1986 Lease are $3,000. In the opinion of the disinterested members of the Board of Directors, the rental payments under the lease were on terms no less favorable to the Company than those available from unrelated third parties. During the year ended January 2, 1998, total lease payments were $36,000. On December 31, 1991, Messrs. Liles and Lee granted the Company an option to purchase the land covered by the 1986 Lease for $390,257 when that lease expires in 2006. In the opinion of the disinterested members of the Board of Directors, the option to purchase the land covered by the 1986 Lease was on terms no less favorable to the Company that those available from unrelated third parties. James Leon Young, who is a director of the Company, is a shareholder and officer in the Jackson, Mississippi, law firm of Young, Williams, Henderson & Fuselier, P.A., general counsel to the Company. During the year ended January 2, 1998, the Company paid Young, Williams, Henderson & Fuselier, P.A., fees in payment of services rendered in connection with litigation, corporate and other matters. No retainer fees were paid. The total of all such fees did not exceed five percent of that firm's gross revenues for its last full fiscal year. Committees and Meeting Data - --------------------------- The standing Audit Committee of the Board of Directors consists of Dr. Neely (Chairman), Mr. Young and Mr. Speed. The Audit Committee recommends auditors for the Company, oversees the Company's accounting functions and is the Board's liaison with the Company's independent auditors. The Audit Committee met 3 times in the year ended January 2, 1998, and meets at least once annually to review the reports of the Company's independent auditors and to review the Company's internal accounting procedures. The Compensation Committee of the Board of Directors consists of Mr. Young, Mr. Speed and Mr. Clowe (Chairman). The Compensation Committee reviews the compensation for the officers of the Company. The Compensation Committee met 2 times in the year ended January 2, 1998. The Company does not have a nominating committee. During the year ended January 2, 1998, the Board of Directors met on 7 occasions. Each director attended 100% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board on which he served, except that Mr. Lee missed 1 Board of Directors meeting and Mr. Speed missed 1 Board of Directors meeting. Executive Compensation - ---------------------- The following table summarizes the compensation paid by the Company and its subsidiaries to the Company's Chief Executive Officer and to the Company's four most highly compensated executive officers other than the Chief Executive Officer who were serving as executive officers at the end of the year ended January 2, 1998, for services rendered in all capacities to the Company and its subsidiaries during the fiscal years ended January 2, 1998, January 3, 1997, and December 29, 1995. SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER RES- OPTIONS LTIP ALL ($) ($) ANNUAL TRICTED (#) PAY- OTHER COMPEN STOCK OUTS COMPEN SATION AWARDS ($) ($) ($) ($) Steven K. Bevilaqua President and CEO 1997 $225,000 $124,325 --- 5,757 $9,348(2) 1996 225,000 33,817 $18,192 (1) --- 6,348 1995 168,750 50,000 117,188 (1) 150,000 --- Benjamin C. Lee, Jr. Chairman of the Board 1997 $139,000 $110,424 $8,080(3) 1996 117,000 --- 7,200 1995 117,000 --- 5,160 John J. Ritchie Senior Vice President Sales and Marketing 1997 $150,000 $59,417 308 --- 1996 112,500 3,769 5,000 --- 1995 --- --- --- --- Nancy M. Sawyer President Vernon 1997 $110,000 $79,518 5,875 $4,400 (4) Sawyer 1996 106,667 71,890 --- 4,267 Division 1995 66,667 --- --- --- Steven L. Dutro Chief Financial Officer 1997 $95,153 $54,362 345 $3,806(4) 1996 88,965 7,753 --- 3,559 1995 82,850 --- --- 3,314 (1) Effective April, 1995, Mr. Bevilaqua assumed the position of President and CEO. As an inducement to accept the position, in 1995, Mr. Bevilaqua was paid $75,000 relative to his relocation, plus reimbursement for projected income taxes associated therewith in the amount of $42,188 plus an additional $18,192 in 1996. (2) Comprised of $9,000 of matching contributions by the Company to Mr. Bevilaqua's 401(K) Retirement Plan Account and $348 in insurance premiums paid by the Company with respect to term life insurance for Mr. Bevilaqua's benefit. (3) Comprised of $5,560 of matching contributions by the Company to Mr. Lee's 401(K) Retirement Plan Account and $2,520 in insurance premiums paid by the Company with respect to term life insurance for Mr. Lee's benefit. (4) Comprised of matching contributions by the Company to the officer's 401(K) Retirement Plan Account. The Company has no employment agreements with its executive officers, except for Mr. Bevilaqua, whose base salary is $225,000.00 annually. Further, Mr. Bevilaqua has stock options as set forth in the tables below and receives the perquisites provided to all Company executives. Director Compensation - --------------------- Directors who are also full-time employees of the Company receive no additional compensation for their services as directors. In 1997, Dr. Neely, Mr. Young, Mr. Clowe and Mr. Speed received $12,500.00 for their services as directors, which included their services at all quarterly and special Board meetings. The Company's standard arrangement is to pay directors who are not also full-time employees of the Company $750.00 for each committee meeting attended as members and $1,000.00 for each committee meeting attended as chairmen. In 1997, Dr. Neely, Mr. Young, Mr. Speed and Mr. Clowe received $3,000, $3,750, $3,750, and $2,000, respectively, for their services at committee meetings attended. Compensation Committee Report on Executive Compensation - ------------------------------------------------------- The Compensation Committee recommended increases in the salaries of some of the officers based on length of service, level of responsibility, and the particular performance of the officers in question. The Committee determined that the salary of the President and Chief Executive Officer would remain the same. The Compensation Committee provides incentives to executive officers through a bonus program which is linked to profit performance. Salaries are based on: (a) comparable salaries for similar positions in the industry; and (b) a bi-annual survey of similarly sized companies with sources such as the National Association of Finance Council, the Geographic Reference Report, and reports from the American Trucking Association. The Compensation Committee targets executive compensation at the middle point of compensation paid by comparable companies. There was no objection nor modification by the Board of Directors of the Committee's recommendations. James Leon Young, Leland R. Speed C. Tom Clowe, Jr., Chairman Compensation Committee Interlocks and Insider Participation - ----------------------------------------------------------- During the fiscal year ended January 2, 1998, the Compensation Committee of the Board of Directors consisted of Mr. Clowe (Chairman), Mr. Speed and Mr. Young. Mr. Young is currently serving as Secretary and has served in such capacity since 1982. Additionally, Mr. Young is a shareholder and officer in the law firm of Young, Williams, Henderson & Fuselier, P.A., which acts as general counsel to the Company. During the year ended January 2, 1998, the Company paid Young, Williams, Henderson & Fuselier, P.A. fees in payment of services rendered in connection with litigation, corporate and other matters. No retainer fees were paid. The total of all such fees did not exceed five percent of that firm's gross revenues for its last full fiscal year. Stock Option Plan - ----------------- The following table sets forth (a) all individual grants of Stock Options made by the Company and its subsidiaries during the year ended January 2, 1998, to each of the executive officers named in the Summary Compensation Table above, (b) the ratio that the number of options granted to each individual bears to the total number of options granted to all employees of the Company and its subsidiaries, (c) the exercise price and expiration date of such options, and (d) estimated potential realizable values with respect to each grant of options based on assumed appreciation rates of 5% (compounded annually) and 10% (compounded annually): OPTIONS/SAR GRANTS IN FISCAL YEAR ENDED JANUARY 2, 1998
Individual Potential Realizable Value Grants at Assumed Annual Rates of Stock Price Appreciation for Option Terms Name Options/SARs % of Total Exercise Expiration 5% ($)10% ($) Granted (#) Options/SARs or Base Date Granted to Price Employees ($/Share) in Fiscal Year Steven K. Bevilaqua President and CEO 5,757 27.9% $11.75 6/30/2007 $37,294 $91,858 Benjamin C. Lee, Jr. Chairman of the Board John J. Ritchie Senior Vice President Sales and Marketing 308 1.5% $11.75 6/30/2007 $1,995 $4,914 Nancy M. Sawyer President Vernon Sawyer Division 5,875 28.5% $11.75 6/30/2007 $38,059 $93,741 Steven L. Dutro Chief Financial Officer 345 1.7% $11.75 6/30/2007 $2,235 $5,505
The following table sets forth (a) the number of shares received and the aggregate dollar value realized in connection with each exercise of outstanding stock options during the year ended January 2, 1998, by each of the executive officers named in the Summary Compensation Table above; (b) the total number and value of all outstanding unexercised options (separately identifying exercisable and unexercisable options) held by such executive officers as of January 2, 1998; and (c) the aggregate dollar value of all such unexercised options that are in-the-money (i.e., when the fair market value of the common stock that is subject to the option exceeds the exercise price of the option): AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED JANUARY 2, 1998 AND FISCAL YEAR-ENDED OPTION/SAR VALUES (1) Name Shares Acquired Value Number of Value of on Exercise Realized Unexercised Unexercised (#) ($) Options/SARs In-the-Money at FY-End (#) Options/SARs Exercisable/ at FY-End ($) Unexercisable(2) Exercisable/ Unexercisable Steven K. Bevilaqua President and CEO 90,000 $0 65,757 $0 Benjamin C. Lee, Jr. Chairman of the Board 0 $0 0 $0 John J. Ritchie 1,250 $2,813 0 $0 Senior Vice President 4,058 $7,808 Sales and Marketing Nancy M. Sawyer President Vernon Sawyer 0 $0 Division 5,875 $5,875 Steven L. Dutro Chief Financial Officer 3,167 $0 345 $345
(1) Not included in this table are options granted pursuant to the Company's Employee Stock Purchase Plan which are made available to all employees on an equal basis. For a detailed discussion of the extent of the executive officers' participation in the plan, see the discussion under the heading "Employee Stock Purchase Plan". (2) The number listed represents the number of shares of the Company's common stock subject to all of the options held by the named officer. Employee Stock Purchase Plan ("ESPP") - ------------------------------------- The Company has in place its Employee Stock Purchase Plan ("ESPP") pursuant to Section 423 of the Internal Revenue Code. The ESPP covers an aggregate of 133,333 shares of the Company's common stock. 70,288 shares are currently available for purchase under the ESPP. The purpose of the ESPP is to promote employee ownership in the Company. The Company believes that employees who participate in the ESPP will have a closer identification with the Company by virtue of their ability as stockholders to participate in the Company's growth and earnings. The ESPP is also designed to provide motivation for participating employees to remain in the employ of the Company and to give a greater effort on behalf of it. The Company's Board of Directors acts as Administrator of the ESPP. The Board does not receive any compensation from the ESPP. The Board of Directors may, in its sole discretion, amend or terminate the ESPP, except that a termination shall not affect any option granted under the ESPP and no amendment may be made to the ESPP without approval of the stockholders if the amendment would require the sale of more than 133,333 shares under the ESPP. Unless earlier terminated, the ESPP will terminate when all 133,333 shares reserved for the ESPP are sold. The ESPP permits eligible employees to purchase common stock in cash or through payroll deductions that cannot exceed 20% of the employee's regular base salary. Participants may purchase between 10 and 300 shares each year pursuant to the ESPP, and if the number of shares subscribed for exceeds the number of shares available in the ESPP, the purchase will be made pro rata. There are restrictions on purchase of shares by owners of five percent of the voting stock of the Company and holders of options to purchase stock of the Company outside the ESPP. The purchase price for the stock is not less than 85% of its fair market value at the beginning of the offering period and is set by the Board of Directors or a committee thereof. Employees of the Company on October 1 of the year in which an offering is made who are customarily employed by the Company for at least 20 hours per week on a regular basis are eligible to participate in the ESPP. During 1997, the following executive officers listed in the Summary Compensation Table participated in the ESPP and purchased shares in the following amounts: Ms. Sawyer - 300. During 1997, 26 employees purchased 3,276 shares at $11.50 per share. 55 employees currently have outstanding subscriptions to purchase 5,227 shares at $12.375 per share. Performance Graph - ----------------- The following line graph compares cumulative five-year shareholder returns (1) among the Company's Common Stock, the University of Chicago's Center for Research in Securities Prices ("CRSP") Total Return Index for The NASDAQ Stock Market, and the CRSP NASDAQ Trucking & Transportation Stocks Index: Total Return For The Year Index 1992 1993 1994 1995 1996 1997 NASDAQ COMPOSITE (US ONLY) 100.0 114.8 112.2 158.7 195.2 239.5 NASDAQ TRUCKING & TRANSPORTATION 100.0 121.5 110.2 128.5 141.8 181.7 KLLM TRANSPORT SERVICES, INC. 100.0 70.4 72.5 51.9 46.3 63.0 (1) Assumes $100 invested on December 31, 1992, and reinvestment of all dividends. Section 16(a) Beneficial Ownership Reporting Compliance - ------------------------------------------------------- Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent (10%) of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Such persons are also required to furnish the Company with copies of all forms they file under this regulation. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required, for the fiscal year ended January 2, 1998, all Section 16(a) filing requirements applicable to its directors and executive officers were complied with, except that Form 3s for the Estate of William J. Liles, Jr. and Mrs. William J. Liles, Jr. were filed late, the Form 3 holdings for Ms. Irene C. Howard, Mr. Larry C. Simpson, Mr. Vincent A. Schott, Mr. James M. Richards, Jr. and Mr. Daniel M. Thomas, Jr. were reported on Form 5, and a Form 4 transaction for Mr. John J. Ritchie was reported on Form 5. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board of Directors, upon recommendation of the Audit Committee, has appointed Ernst & Young LLP independent public accountants, to act as auditors for the fiscal year ending January 1, 1999. Ernst & Young LLP have audited the accounts of the Company since 1986. Representatives of Ernst & Young LLP are expected to be present at the annual meeting and will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. Neither Ernst & Young LLP nor any of its partners has any direct or indirect financial interest in the Company. SHAREHOLDER PROPOSALS Shareholder proposals must be received by the Company no later than November 1, 1998, to be included in the Company's proxy materials for the 1999 Annual Meeting. Shareholder proposals should be addressed to: KLLM Transport Services, Inc., Post Office Box 6098, Jackson, Mississippi 39288, Attention Secretary. No shareholder proposals were received for inclusion in the proxy materials for the 1998 meeting. OTHER MATTERS The Board of Directors is not aware of any other matters which may come before the meeting. However, if any other matters are properly brought before the meeting, the proxies named in the enclosed proxy will vote in accordance with their best judgment on such matters. KLLM TRANSPORT SERVICES, INC. THIS PROXY IS BEING SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS. The undersigned hereby appoints Benjamin C. Lee, Jr., and Steven K. Bevilaqua, or either of them, as proxies with the power to appoint their substitutes and hereby authorizes them to represent and vote, as designated below, all the shares of Common Stock of KLLM Transport Services, Inc. (the "Company"), held of record by the undersigned on March 10, 1998, at the Annual Meeting of Stockholders of KLLM Transport Services, Inc., to be held on Tuesday, April 21, 1998, and at any adjournments thereof, with all powers the undersigned would possess if personally present. 1. Election of Directors. (Check only one box below. TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE THROUGH THE NAME OF THE NOMINEE.) -- To vote for all the nominees listed below: Steven K. Bevilaqua; C. Tom Clowe, Jr.; Benjamin C. Lee, Jr.; William J. Liles, III; Walter P. Neely; Leland R. Speed; James Leon Young or -- To withhold authority to vote for all nominees listed above. 2. Ratification of the selection of Ernst & Young LLP as the Company's independent auditors (check only one box below). -- FOR -- AGAINST -- ABSTAIN 3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting and any adjournments thereof. If a nominee for director is unable to serve or, for good cause, will not serve as director, the proxies may vote for any person for director in their discretion. When properly executed, this proxy will be voted in the manner directed. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED AND FOR THE PROPOSALS SOLICITED. The undersigned hereby revokes any proxy heretofore given by the undersigned to vote at the Annual Meeting. This proxy may be revoked prior to its exercise, either in person or in writing. _________________________________________ Signature (Seal) _________________________________________ Signature if held jointly (Seal) ____________________________________, 1998 (Date) 1. Sign your name exactly as it appears on the label. 2. When signing as attorney, executor, administrator, trustee, or guardian, please state full title as such. 3. If a corporation, please sign in full corporate name by president or other authorized officer. 4. If a partnership, please sign in partnership name by authorized person. 5. When shares are held jointly, both stockholders must sign this proxy. PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
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