SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HUB GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HUB GROUP, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
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 is
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:
April 12, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Hub Group, Inc. This meeting will be held in Prairie Room A and
B at the Lodge on the McDonald's Office Campus at 2815 Jorie Boulevard, Oak
Brook, Illinois at 10:00 a.m. Chicago time on Wednesday, May 17, 2000.
The attached Notice of 2000 Annual Meeting of Stockholders and Proxy
Statement describe the matters to be acted upon. The Annual Report to
Stockholders is also enclosed.
We hope you will be able to attend the meeting. However, even if you
anticipate attending in person, we urge you to mark, sign, date, and return the
enclosed proxy card to ensure that your shares will be represented. If you
attend, you will, of course, be entitled to vote in person.
Sincerely,
PHILLIP C. YEAGER
Chairman
HUB GROUP, INC.
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Hub Group, Inc.:
The Annual Meeting of Stockholders of Hub Group, Inc., a Delaware
corporation (the "Company"), will be held in Prairie Room A and B at the Lodge
on the McDonald's Office Campus at 2815 Jorie Boulevard, Oak Brook, Illinois on
Wednesday, May 17, 2000, at 10:00 a.m., Chicago time, for the following
purposes:
(1) To elect six directors of the Company to hold office until the
next annual meeting of stockholders; and
(2) To transact such other business as may properly be presented
at the Annual Meeting or any adjournment thereof.
A proxy statement with respect to the Annual Meeting accompanies and
forms a part of this Notice. The Company's Annual Report to Stockholders also
accompanies this Notice.
The Board of Directors has fixed the close of business on March 31,
2000, as the record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting.
By order of the Board of Directors,
DAVID C. ZEILSTRA
Vice President, Secretary and General Counsel
Lombard, Illinois
April 12, 2000
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING.
HUB GROUP, INC.
377 E. BUTTERFIELD ROAD, SUITE 700
LOMBARD, ILLINOIS 60148
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Hub Group, Inc., a Delaware corporation ("Hub
Group" or the "Company"), of proxies for use at the 2000 Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 17, 2000, and any
adjournment thereof (the "Annual Meeting"). This Proxy Statement and
accompanying form of proxy are first being sent to stockholders on or about
April 12, 2000.
The Company's Class A common stock, $.01 par value (the "Class A Common
Stock"), and the Class B common stock, $.01 par value (the "Class B Common
Stock," together with the Class A Common Stock, the "Common Stock"), are the
only issued and outstanding classes of stock. Only stockholders of record at the
close of business on March 31, 2000 (the "Record Date"), are entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, the Company had
7,046,050 shares of Class A Common Stock (each a "Class A Share") and 662,296
shares of Class B Common Stock (each a "Class B Share," and collectively with
the Class A Shares, the "Shares") outstanding and entitled to vote.
VOTING RIGHTS AND PROCEDURES
Shares represented by an effective proxy given by a stockholder will be
voted as directed by the stockholder. If a properly signed proxy form is
returned to the Company and one or more proposals are not marked, it will be
voted in accordance with the recommendation of the Board of Directors on all
such proposals. A stockholder giving a proxy may revoke it at any time prior to
the voting of the proxy by giving written notice to the Secretary of the
Company, by executing a later dated proxy or by attending the Annual Meeting and
voting in person.
Each Class A Share is entitled to one (1) vote and each Class B Share
is entitled to twenty (20) votes. The holders of Shares having a majority of the
votes which could be cast by the holders of all Shares, present in person or
represented by proxy, will constitute a quorum at the Annual Meeting.
Abstentions will be treated as Shares that are present and entitled to vote for
purposes of determining the presence of a quorum. If a broker indicates on the
proxy that it does not have discretionary authority as to certain Shares to vote
on a particular matter, those Shares will be considered as present and entitled
to vote for purposes of determining the presence of a quorum. The Yeager family
members own all 662,296 shares of Class B Common Stock. Consequently, the Yeager
family controls approximately 65% of the voting power of the Company on all
matters presented for stockholder action. The Yeager family members are parties
to a stockholders' agreement, pursuant to which they have agreed to vote all of
their shares of Class B Common Stock in accordance with the vote of the holders
of a majority of such shares.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and such election
inspectors will determine whether or not a quorum is present.
The Board of Directors knows of no matters to be presented at the
Annual Meeting other than those set forth in the Notice of 2000 Annual Meeting
of Stockholders enclosed herewith. However, if any other matters do come before
the meeting, it is intended that the holders of the proxies will vote thereon in
their discretion. Any such other matter will require for its approval the
affirmative vote of the holders of Shares having a majority of the votes present
in person or represented by proxy at the Annual Meeting, provided a quorum is
present, or such greater vote as may be required under the Company's Certificate
of Incorporation, the Company's By-laws or applicable law. A list of
stockholders as of the record date will be available for inspection at the
Annual Meeting and for a period of ten days prior to the Annual Meeting at the
Company's offices in Lombard.
ELECTION OF DIRECTORS
The number of directors of the Company, as determined by the Board of
Directors under Article III of the Company's By-laws, is currently six. Each
director holds office until his or her successor is elected and qualified or
until his or her earlier death, resignation, retirement, disqualification or
removal.
The nominees for whom the enclosed proxy is intended to be voted are
set forth below. Each nominee for election as director currently serves as a
director of the Company. It is not contemplated that any of these nominees will
be unavailable for election, but if such a situation should arise, the proxy
will be voted in accordance with the best judgment of the proxyholder for such
person or persons as may be designated by the Board of Directors unless the
stockholder has directed otherwise.
Directors are elected by a plurality of the votes cast at the Annual
Meeting, provided a quorum is present. The outcome of the election is not
affected by abstentions or the withholding of authority to vote in the election,
or by broker non-votes. Stockholders are not allowed to cumulate their votes in
the election of directors.
If a stockholder desires to nominate persons for election as directors
at the next Annual Meeting of Stockholders written notice of such stockholder's
intent to make such a nomination must be given and received by the Secretary of
the Company at the principal executive offices of the Company either by personal
delivery or by United States mail no earlier than February 16, 2001 nor later
than March 19, 2001. Each notice must describe the nomination in sufficient
detail for the nomination to be summarized on the agenda for the meeting and
must set forth: (i) the name and address, as it appears on the books of the
Company, of the stockholder making the nomination, (ii) a representation that
the stockholder is a holder of record of stock in the Company entitled to vote
at the annual meeting of stockholders and intends to appear in person or by
proxy at the meeting to present the nomination, (iii) a statement of the class
and number of shares beneficially owned by the stockholder, (iv) the name and
address of any person to be nominated, (v) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, (vi) such other information
regarding such nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission (the "Commission"), and (vii) the consent of
such nominee to serve as a director of the Company if elected. The presiding
officer of the annual meeting of stockholders will, if the facts warrant, refuse
to acknowledge a nomination not made in compliance with the foregoing procedure,
and any such nomination not properly brought before the meeting will not be
considered.
2
NOMINEES FOR ELECTION AS DIRECTORS
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ---- --- ---------------------
Phillip C. Yeager 72 Phillip C. Yeager has been Chairman of the
Board since October 1985. From April 1971 to
October 1985, Mr. Yeager served as President of
Hub City Terminals, Inc. ("Hub Chicago").
Mr. Yeager became involved in intermodal
transportation in 1959, five years after the
introduction of intermodal transportation in
the United States, as an employee of the
Pennsylvania and Pennsylvania Central
Railroads. He spent 19 years with the
Pennsylvania and Pennsylvania Central
Railroads, 12 of which involved intermodal
transportation. In 1991, Mr. Yeager was named
the Man of the Year by the Intermodal
Transportation Association. In 1995, he
received the Salzburg Practitioners Award from
Syracuse University in recognition of his
lifetime achievements in the transportation
industry. In October 1996, Mr. Yeager was
inducted into the Chicago Area Entrepreneurship
Hall of Fame sponsored by the University of
Illinois at Chicago. In March 1997, he
received the Presidential Medal from Dowling
College for his achievements in transportation
services. In September 1998 he received the
Silver Kingpin award from the Intermodal
Association of North America and in February
1999 he was named Transportation Person of the
Year by the New York Traffic Club. Mr. Yeager
graduated from the University of Cincinnati in
1951 with a Bachelor of Arts degree in
Economics. Mr. Yeager is the father of
David P. Yeager, Vice Chairman and Chief
Executive Officer and Mark A. Yeager,
President - Field Operations.
David P. Yeager 47 David P. Yeager has served as the Company's
Vice Chairman of the Board since January 1992
and as Chief Executive Officer of the Company
since March 1995. From October 1985 through
December 1991, Mr. Yeager was President of Hub
Chicago. From 1983 to October 1985, he served
as Vice President, Marketing of Hub Chicago.
Mr. Yeager founded the St. Louis Hub in 1980
and served as its President from 1980 to 1983.
Mr. Yeager founded the Pittsburgh Hub in 1975
and served as its President from 1975 to 1977.
Mr. Yeager received a Masters in Business
Administration degree from the University of
Chicago in 1987 and a Bachelor of Arts degree
from the University of Dayton in 1975.
Mr. Yeager is the son of Phillip C. Yeager and
the brother of Mark A. Yeager. Mr. Yeager also
serves as a director of SPR Inc.
Thomas L. Hardin 54 Thomas L. Hardin has served as the Company's
President since October 1985 and has served as
Chief Operating Officer and a director of the
Company since March 1995. From January 1980 to
September 1985, Mr. Hardin was Vice
President-Operations and from June 1972 to
December 1979, he was General Manager of the
Company. Prior to joining the Company,
Mr. Hardin worked for the Missouri Pacific
Railroad where he held various marketing and
pricing positions. Mr. Hardin is presently
Chairman of the Intermodal Association of
North America.
3
Gary D. Eppen 63 Gary D. Eppen has served as a director of the
Company since February 1996. Having served as
a Professor of Industrial Administration in
the Graduate School of Business at The
University of Chicago since 1964, Mr. Eppen is
currently the Ralph and Dorothy Keller
Distinguished Service Professor of Operations
Management and Deputy Dean for part-time
programs. He received a Ph.D. in Operations
Research from Cornell University in 1964, a
Master of Science in Industrial Engineering
from the University of Minnesota in 1960, a
Bachelor of Science from the University of
Minnesota in 1959 and an Associate in Arts
degree in Pre-Engineering from Austin Junior
College in 1956. Mr. Eppen also serves as a
director of Landauer, Inc.
Charles R. Reaves 61 Charles R. Reaves has served as a director of
the Company since February 1996. Since 1994,
Mr. Reaves has been President and Chief
Executive Officer of Reaves Enterprises, Inc.,
a real estate development company. From April
1962 until November 1994, Mr. Reaves worked
for Sears Roebuck & Company in various
positions, most recently as President and
Chief Executive Officer of Sears Logistics
Services, Inc., a transportation, distribution
and home delivery subsidiary of Sears
Roebuck & Company. Mr. Reaves received a
Bachelor of Science degree in Business
Administration from Arkansas State University
in 1961.
Martin P. Slark 45 Martin P. Slark has served as a director of
the Company since February 1996. Since 1976,
Mr. Slark has been employed by Molex
Incorporated ("Molex"), a manufacturer of
electronic, electrical and fiber optic
interconnection products and systems. Having
worked for Molex in Europe, the United
States and Asia, Mr. Slark is presently a
Director and an Executive Vice President of
Molex. Mr. Slark received a Masters in
Business Administration degree from the
London Business School in 1993, a
Post-Graduate Diploma in Management Studies
from the London School of Economics in 1981
and a Bachelors of Science degree in
Engineering from Reading University in 1977.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has both an Audit Committee and a Compensation
Committee. The Board of Directors does not have a Nominating Committee. During
the fiscal year ended December 31, 1999, the full Board of Directors met six
times, the Audit Committee met twice and the Compensation Committee met twice.
During 1999, all directors attended at least 75% of the meetings of the Board of
Directors and the committees thereof on which they served.
The duties of the Audit Committee are to oversee the Company's internal
control structure; review the Company's financial statements and other financial
information to be included in the Company's 10-K and annual report to
stockholders; select the independent auditors for the Company and its
subsidiaries; and review the Company's annual audit plan. The members of the
Audit Committee are Messrs. Eppen, Reaves and Slark.
The duties of the Compensation Committee are to determine the
compensation of the Company's Chief Executive Officer and to make
recommendations to the Board of Directors concerning the salaries of the
Company's other officers; to exercise the authority of the Board of Directors
concerning the Company's 1996 Long-Term Incentive Plan, 1997 Long-Term Incentive
Plan and 1999 Long-Term Incentive Plan; and to advise the Board of Directors on
other compensation and benefit matters. The members of the Compensation
Committee are Messrs. Eppen, Reaves and Slark.
4
OWNERSHIP OF THE CAPITAL STOCK OF THE COMPANY
The following table sets forth information with respect to the number
of shares of Class A Common Stock and Class B Common Stock beneficially owned by
(i) each director of the Company, (ii) the executive officers of the Company
named in the table under "Compensation of Directors and Executive
Officers--Summary Compensation Table," (iii) all directors and executive
officers of the Company as a group, and (iv) based on information available to
the Company and a review of statements filed with the Commission pursuant to
Section 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), each person that owns beneficially (directly or together with
affiliates) more than 5% of the Class A Common Stock or Class B Common Stock, in
each case as of March 31, 2000, except as otherwise noted. The Company believes
that each individual or entity named has sole investment and voting power with
respect to shares of the Class A Common Stock or Class B Common Stock indicated
as beneficially owned by them, except as otherwise noted.
NUMBER (1)
--------------------------
NAME CLASS A CLASS B PERCENTAGE(2)
- ------------------------------------------------------------------ ---------- --------- -------------
Phillip C. Yeager(3)(4)........................................... 47,000 662,296 9.2%
David P. Yeager(3)(5)............................................. 50,300 662,296 9.2%
Thomas L. Hardin(6)............................................... 50,000 -- *
Richard M. Rogan(7)............................................... 14,400 -- *
John T. Donnell(8)................................................ 26,200 -- *
Mark A. Yeager(3)(9).............................................. 30,000 662,296 9.0%
Gary D. Eppen(10)................................................. 13,000 -- *
Charles R. Reaves(10)............................................. 12,000 -- *
Martin P. Slark(11)............................................... 12,000 -- *
All directors and executive officers as a group (13 persons)(12) . 290,900 662,296 12.0%
Debra A. Jensen(3)(13)............................................ -- 662,296 8.6%
T. Rowe Price Associates, Inc.(14)................................ 417,900 -- 5.4%
Tweedy, Browne Company LLC/ TBK Partners L.P.(15)................. 419,710 -- 5.4%
Dimensional Fund Advisors, Inc.(16)............................... 486,100 -- 6.3%
Capital Group International, Inc./ Capital Guardian Trust
Company (17).................................................... 914,000 -- 11.9%
Wanger Asset Management, L.P./ Wanger Asset Management,
Ltd./Acorn Investment Trust (18)................................ 1,416,300 -- 18.4%
- ---------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options,
warrants, rights, or conversion privileges exercisable within 60 days
are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but not deemed outstanding for the
purpose of calculating the percentage owned by each other person
listed.
(2) Represents percentage of total number of outstanding shares of Class A
Common Stock and Class B Common Stock.
5
(3) The Yeager family members are parties to a stockholders' agreement (the
"Yeager Family Stockholder Agreement"), pursuant to which they have
agreed to vote all of their shares of Class B Common Stock in
accordance with the vote of the holders of a majority of such shares.
Except as provided in footnotes 5 and 9, each of the Yeager family
members disclaims beneficial ownership of the shares of Class B Common
Stock held by the other Yeager family members. The Class B Common Stock
represents approximately 65% of the total votes allocable to the Common
Stock. Members of the Yeager family own all of the Class B Common
Stock.
(4) Includes 413,934 shares of Class B Common Stock as to which Phillip C.
Yeager may be deemed to have shared voting discretion pursuant to the
Yeager Family Stockholder Agreement. See Note 3. Also includes 42,000
shares of Class A Common Stock issuable upon exercise of options.
(5) Includes 36,794 shares of Class B Common Stock owned by the Laura C.
Yeager 1994 GST Trust, 36,794 shares of Class B Common Stock owned by
the Matthew D. Yeager 1994 GST Trust and 36,794 shares of Class B
Common Stock owned by the Phillip D. Yeager 1994 GST Trust, for which
David P. Yeager serves as sole trustee and has sole investment and
voting discretion and 469,127 shares of Class B Common Stock as to
which David P. Yeager may be deemed to have shared voting discretion
pursuant to the Yeager Family Stockholder Agreement. See Note 3. Also
includes 30,000 shares of Class A Common Stock issuable upon exercise
of options.
(6) Includes 30,000 shares of Class A Common Stock issuable upon exercise
of options.
(7) Includes 14,000 shares of Class A Common Stock issuable upon exercise
of options.
(8) Includes 21,200 shares of Class A Common Stock issuable upon exercise
of options.
(9) Includes 36,794 shares of Class B Common Stock owned by the Alexander
B. Yeager 1994 GST Trust and 36,794 shares of Class B Common Stock
owned by the Samantha N. Yeager 1994 GST Trust, for which Mark A.
Yeager serves as sole trustee and has sole investment and voting
discretion and 551,914 shares of Class B Common Stock as to which Mark
A. Yeager may be deemed to have shared voting discretion pursuant to
the Yeager Family Stockholder Agreement. See Note 3. Also includes
20,000 shares of Class A Common Stock issuable upon exercise of
options.
(10) Includes 12,000 shares of Class A Common Stock issuable upon exercise
of options.
(11) Includes 8,000 shares of Class A Common Stock issuable upon exercise
of options.
(12) Includes 224,200 shares of Class A Common Stock issuable upon exercise
of options.
(13) Debra A. Jensen is the daughter of Phillip C. Yeager.
(14) T. Rowe Price Associates, Inc. ("Price") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, Price has sole dispositive power
with respect to all 417,900 shares of Class A Common Stock beneficially
owned and sole voting power with respect to 141,600 shares of Class A
Common Stock beneficially owned. These securities are owned by various
individual and institutional investors which Price serves as investment
advisor with power to direct investments and/or sole power to vote the
securities. For purposes of the Exchange Act, Price is deemed the
beneficial owner of such securities; however, Price expressly disclaims
that it is, in fact, the beneficial owner of such securities. The
number of shares beneficially owned by Price is indicated as of
February 14, 2000. The address of Price is 100 E. Pratt Street,
Baltimore, MD 21202.
(15) Tweedy, Browne Company LLC ("TBC") and TBK Partners L.P. ("TBK") filed
a Schedule 13D with the Commission indicating beneficial ownership of
shares of Class A Common Stock. According to the Schedule 13D, (i) TBC
has shared dispositive power with respect to all 403,170 shares of
Class A Common Stock beneficially owned and sole voting power with
respect to 391,085 shares of Class A Common Stock beneficially owned
and (ii) TBK has sole dispositive power with respect to 16,540 shares
of Class A Common Stock beneficially owned and sole voting power with
respect to 16,540 shares of Class A Common Stock beneficially owned.
The number of shares beneficially owned by TBC and TBK is indicated as
of June 30, 1999. The address of TBC and TBK is 52 Vanderbilt Avenue,
New York, NY 10017.
6
(16) Dimensional Fund Advisors, Inc. ("Dimensional") filed a Schedule 13G
with the Commission indicating beneficial ownership of shares of Class
A Common Stock. The number of shares beneficially owned by Dimensional
is indicated as of February 4, 2000. The address of Dimensional is 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
(17) Capital Group International, Inc. and Capital Guardian Trust Company
(collectively, "Capital") filed a Schedule 13G with the Commission
indicating beneficial ownership of shares of Class A Common Stock.
Capital has sole dispositive power with respect to all 914,000 shares
of Class A Common Stock beneficially owned and sole voting power with
respect to 839,000 shares of Class A Common Stock beneficially owned.
The number of shares beneficially owned by Capital is indicated as of
February 10, 2000. The address of Capital is 11100 Santa Monica
Boulevard, Los Angeles, CA 90025.
(18) Wanger Asset Management, L.P., Wanger Asset Management, Ltd.
(collectively "Wanger") and Acorn Investment Trust ("Acorn") filed a
Schedule 13G with the Commission indicating beneficial ownership of
shares of Class A Common Stock. According to the Schedule 13G, Wanger
has shared dispositive power and shared voting power with respect to
all 1,416,300 shares of Class A Common Stock beneficially owned. Acorn
has shared dispositive power with respect to 1,105,000 shares of Class
A Common Stock beneficially owned and has shared voting power with
respect to 1,105,000 shares of Class A Common Stock beneficially owned.
The number of shares beneficially owned by Wanger and Acorn are
indicated as of February 11, 2000. The address of Wanger and Acorn is
227 West Monroe Street, Suite 3000, Chicago, IL 60606.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors, and greater than
ten-percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the Company's 1999 fiscal year all applicable
Section 16(a) filing requirements were complied with by the officers, directors,
and greater than ten-percent beneficial owners.
7
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term and
other compensation for services rendered to the Company for the fiscal years
ended December 31, 1997, December 31, 1998 and December 31, 1999 paid or awarded
to those persons who were, at December 31, 1999: (i) the Company's chief
executive officer, and (ii) the Company's four most highly compensated executive
officers other than the chief executive officer (collectively, together with the
Company's chief executive officer, the "Named Executive Officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- ------------
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND SALARY BONUS COMPENSATION SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- ------------------------- ---- ------- ------- ------------ ----------- ------------
David P. Yeager 1999 364,000 500,000 3,438(1) -- 5,035(2)
Vice Chairman and 1998 346,500 225,250 1,113(1) 5,000 5,062(2)
Chief Executive Officer 1997 330,000 411,840 -- -- 5,062(2)
Thomas L. Hardin 1999 287,000 325,000 6,982(1) -- 5,035(2)
President and 1998 273,000 225,250 1,500(1) 5,000 5,062(2)
Chief Operating Officer 1997 260,000 274,560 -- -- 5,062(2)
Mark A. Yeager 1999 208,500 210,000 2,805(1) 7,500 5,035(2)
President-Field Operations 1998 168,000 127,500 421(1) -- 5,062(2)
1997 160,000 101,760 -- -- 5,062(2)
John T. Donnell 1999 210,000 238,350 -- 5,000 5,035(2)
E.V.P.- National Accounts 1998 210,000 144,481 -- 3,000 5,062(2)
1997 200,000 235,000 -- -- 5,062(2)
Richard M. Rogan 1999 215,500 200,000 -- 5,000 5,035(2)
E.V.P.- Marketing and 1998 200,000 112,500 -- -- 5,062(2)
President Hub Highway 1997 181,500 120,000 -- -- 5,062(2)
- ------------------
(1) Represents above market earnings on deferred compensation.
(2) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,900 in 1999, 1998 and 1997,
respectively, and represents the value of insurance premiums paid by
the Company with respect to term life insurance for the benefit of each
Named Executive Officer equal to $135 during 1999 and $162 during each
of 1998 and 1997.
8
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table summarizes the grants of stock options awarded to
the Named Executive Officers during the fiscal year ended December 31, 1999,
under the Company's 1999 Long-Term Incentive Plan.
INDIVIDUAL GRANTS
---------------------
POTENTIAL REALIZABLE VALUE
% OF AT ASSUMED ANNUAL RATES
OPTIONS/ TOTAL OF STOCK PRICE APPRECIATION
SARs OPTIONS/ FOR OPTION TERM (3)
GRANTED SARs EXERCISE EXPIRATION ---------------------------
NAME (#) GRANTED PRICE ($/SH)(1) DATE (2) 5%($) 10%($)
- ------------------------ -------- -------- --------------- ---------- --------- -------
Mark A. Yeager.......... 7,500 2.1% 18.75 12/10/09 88,438 224,120
John T. Donnell......... 5,000 1.4% 18.75 12/10/09 58,959 149,413
Richard M. Rogan........ 5,000 1.4% 18.75 12/10/09 58.959 149,413
- ------------------
(1) The exercise price equals the closing stock price on December 10, 1999.
(2) The options were granted on December 10, 1999 and vest ratably over a
five-year period, expiring ten years after their grant date.
(3) The potential realizable dollar value of a grant is the product of: (a) the
difference between (i) the product of the per-share market price at the
time of the grant and the sum of 1 plus the stock appreciation rate
compounded annually over the term of the option (here, 5% and 10%), and
(ii) the per-share exercise price of the option, and (b) the number of
securities underlying the grant at fiscal year-end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information concerning options exercised by
the Named Executive Officers during the fiscal year ended December 31, 1999, and
the value at December 31, 1999, of unexercised options.
NUMBER OF SHARES OF
CLASS A COMMON STOCK VALUE ($) OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-
SHARES OPTIONS AT MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1999 DECEMBER 31, 1999
ON ---------------------- -------------------
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------- ---------- ------------ ---------------------- -------------------
David P. Yeager.................. 0 0 22,000/18,000 126,000/84,000
Thomas L. Hardin................. 0 0 22,000/18,000 126,000/84,000
Mark A. Yeager................... 0 0 15,000/17,500 90,000/69,375
John T. Donnell.................. 0 0 15,600/17,400 90,000/66,250
Richard M. Rogan................. 0 0 10,000/15,000 54,000/42,250
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COMPENSATION OF DIRECTORS
Directors who are not employees of the Company received $20,000 for
serving as a director during 1999. Directors who are employees of the Company do
not receive additional compensation for such services. Both employee and
non-employee directors are reimbursed for their travel and other expenses
incurred in connection with attending meetings of the Board of Directors or
committees thereof. In addition, simultaneously with the closing of the initial
public offering (the "Offering") of the Company, Messrs. Eppen, Reaves and Slark
each received options to purchase 12,000 shares of Class A Common Stock
exercisable at $14.00 per share. All of these options have now vested for each
director. On December 10, 1999, Messrs. Eppen, Reaves and Slark each received
additional options to purchase 12,000 shares of Class A Common Stock exercisable
at $18.75 per share. These options vest ratably over a three-year period.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee approves the policies under which
compensation is paid or awarded to the Company's executive officers. The
Compensation Committee consists of the three independent members of the Board.
In October 1998, the Board of Directors commissioned a third party to
conduct a study of the Company's compensation program. This study included a
survey of compensation practices in the transportation industry using a broad
sample of companies within the industry. This independent study was used as the
benchmark to determine competitive compensation ranges for senior executives.
The Compensation Committee implemented certain recommendations from the
independent study and, using this study, determined the compensation structure
for 1999. An independent study of compensation practices in the transportation
industry will be conducted periodically by a third party to update the Company's
benchmark of competitive compensation ranges for senior executives.
The 1999 Compensation structure approved by the Compensation Committee
was based on the following philosophy:
COMPENSATION PHILOSOPHY
The Company's compensation philosophy is designed to link executive
performance to long-term stockholder value, connect pay with individual
performance, maintain a compensation system that is competitive with the
industry standards and attract and retain outstanding executives.
DESCRIPTION OF COMPENSATION PROGRAMS
The Company's executive compensation program has three components--base
salary, annual incentives, and long-term incentives. Base salary and annual
incentives are primarily designed to reward current and past performance.
Long-term incentives are primarily designed to provide strong incentives for
long-term future Company growth.
BASE SALARY To attract and retain qualified executives, base salary is
determined using competitive criteria within the transportation industry. Salary
increases are based on individual performance and, to a lesser extent, trends
within the industry.
ANNUAL INCENTIVE The Company's bonus plan recognizes and rewards
executives for taking actions that build the value of the Company, generate
competitive total returns for stockholders, and provide value-added solutions
for the Company's customers. For most executive officers, bonus compensation is
based on individual performance and Company performance. The component of the
bonus based on individual performance is conditioned on the individual meeting
certain pre-determined objectives and the component of the bonus based on
Company performance is based on the Company meeting certain performance goals.
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LONG-TERM INCENTIVES The Company's Long-Term Incentive Program serves to
reward executive performance that successfully executes the Company's long-term
business strategy and builds stockholder value. The program allows for the
awarding of options and stock appreciation rights, restricted stock and
performance units. During fiscal year 1999, non-qualified stock options were
granted to certain of the Company's executive officers. The grants were designed
to motivate each executive officer to continue the Company's growth.
SECTION 162(M) COMPENSATION COMMITTEE REPORT DISCLOSURE
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the Company's deduction for compensation paid to the executive
officers named in the Summary Compensation Table to $1 million unless certain
requirements are met. The policy of the Committee with respect to section 162(m)
is to establish and maintain a compensation program which will optimize the
deductibility of compensation. In that regard, no executive officer received
compensation in excess of $1 million during fiscal year 1999. The Committee,
however, reserves the right to use its judgment, where merited by the
Committee's need to respond to changing business conditions or by an executive
officer's individual performance, to authorize compensation which may not, in a
specific case, be fully deductible to the Company.
COMPENSATION ADMINISTRATION
The Compensation Committee will follow an annual cycle to administer
each of the three components of executive compensation. The independent study of
competitive compensation practices within the transportation industry will
continue to be used as the benchmark to determine competitive compensation
ranges for senior executives. Individual performance and contribution to the
achievement of strategic objectives will be considered in the determination of
annual compensation for each executive. The integrity of the Company's
compensation program relies on an annual performance evaluation process.
DISCUSSION OF CEO COMPENSATION
Consistent with the Company's compensation philosophy, the Compensation
Committee approved Mr. David P. Yeager's total compensation during fiscal year
1999. Mr. Yeager's base salary was based on overall performance of the Company,
on relative levels of compensation for CEOs within the benchmark companies in
the transportation industry and on individual performance related to strategic
objectives. Mr. Yeager's incentive compensation was based on achievement of
goals relating to the Company's earnings per share target.
The Compensation Committee approved the following compensation for
Mr. Yeager during 1999: (i) a base salary of $364,000 per year and (ii) a bonus
of $500,000.
COMPENSATION COMMITTEE,
Gary D. Eppen
Charles R. Reaves
Martin P. Slark
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PERFORMANCE GRAPH
The following line graph compares the Company's cumulative total
stockholder return on its Class A Common Stock since March 13, 1996, the date
that the Class A Common Stock began trading, with the cumulative total return of
the Nasdaq Stock Market Index and the Nasdaq Trucking and Transportation Index.
These comparisons assume the investment of $100 on March 13,1996 in each index
and in the Company's Class A Common Stock and the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
3/13/96 12/31/96 12/31/97 12/31/98 12/31/99
------- -------- -------- -------- --------
Hub Group, Inc. 100 191 212 138 142
Nasdaq Stock Market 100 119 146 205 370
Nasdaq Trucking & Transp. 100 103 132 117 125
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CERTAIN TRANSACTIONS
On April 1, 1999 the Company purchased the remaining 70% minority
interest in Hub City Alabama, L.P., Hub City Atlanta, L.P., Hub City Boston,
L.P., Hub City Canada, L.P., Hub City Cleveland, L.P., Hub City Detroit, L.P.,
Hub City Florida, L.P., Hub City Indianapolis, L.P., Hub City Kansas City, L.P.,
Hub City Mid-Atlantic, L.P., Hub City New York-New Jersey, L.P., Hub City New
York State, L.P., Hub City Ohio, L.P., Hub City Philadelphia, L.P., Hub City
Pittsburgh, L.P., Hub City Portland, L.P. and Hub City St. Louis, L.P. (each a
"Purchased Hub" and, collectively, the "Purchased Hubs") for approximately
$108.7 million in cash. Phillip C. Yeager received approximately $8,745,000,
David P. Yeager (including members of his immediate family) received
approximately $11,437,000, Thomas L. Hardin received approximately $4,822,000,
Mark A. Yeager (including members of his immediate family) received
approximately $8,751,000, Debra A. Jensen (including members of her immediate
family) received approximately $9,856,000, John T. Donnell received
approximately $2,410,000 and Daniel F. Hardman received approximately $110,000.
The purchase price paid by the Company was based upon the option formula
contained in the respective Amended and Restated Limited Partnership Agreements
of each Purchased Hub. The decision to exercise the options to acquire the
minority interests in the Purchased Hubs was made by the independent members of
the Company's Board of Directors.
AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the
independent accountant of the Company. Representatives of Arthur Andersen LLP
will be present at the Annual Meeting and will be given the opportunity to make
a statement if they desire to do so. They will also be available to respond to
appropriate questions.
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PROXY SOLICITATION EXPENSE
The expense of any proxy solicitation will be paid by the Company. In
addition to the solicitation of proxies by use of the mails, solicitation also
may be made by telephone, telegraph or personal interview by directors,
officers, and regular employees of the Company, none of whom will receive
additional compensation for any such solicitation. The Company will, upon
request, reimburse brokers, banks, and similar organizations for out-of-pocket
and reasonable clerical expenses incurred in forwarding proxy material to their
principals.
STOCKHOLDER PROPOSALS
Proposals of stockholders must be received in writing by the Secretary
of the Company at the principal executive offices of the Company no later than
December 13, 2000, in order to be considered for inclusion in the Company's
proxy statement and form of proxy relating to the next annual meeting of
stockholders.
The Company anticipates that its next annual meeting of stockholders
will be held in May 2001. If a stockholder desires to submit a proposal for
consideration at the next annual meeting of stockholders, written notice of such
stockholder's intent to make such a proposal must be given and received by the
Secretary of the Company at the principal executive offices of the Company
either by personal delivery or by United States mail no earlier than February
16, 2001 nor later than March 19, 2001. Each notice must describe the proposal
in sufficient detail for the proposal to be summarized on the agenda for the
annual meeting of stockholders and must set forth: (i) the name and address, as
it appears on the books of the Company, of the stockholder who intends to make
the proposal; (ii) a representation that the stockholder is a holder of record
of stock of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at such meeting to present such proposal; and (iii) the
class and number of shares of the Company which are beneficially owned by the
stockholder. In addition, the notice must set forth the reasons for conducting
such proposed business at the annual meeting of stockholders and any material
interest of the stockholder in such business. The presiding officer of the
annual meeting of stockholders will, if the facts warrant, refuse to acknowledge
a proposal not made in compliance with the foregoing procedure, and any such
proposal not properly brought before the annual meeting of stockholders will not
be considered.
By order of the Board of Directors,
DAVID C. ZEILSTRA
Vice President, Secretary and General Counsel
Lombard, Illinois
April 12, 2000
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO BE PRESENT IN PERSON AT
THE ANNUAL MEETING, IS REQUESTED TO MARK, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. A STOCKHOLDER MAY
REVOKE HIS OR HER PROXY AT ANY TIME PRIOR TO VOTING.
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