PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.)
Filed by the Registrant /x/
Filed by the 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 Rule 14a-11(c) Rule 14-a12
CONSOLIDATED-TOMOKA LAND CO.
(Name of Registrant as specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
/ / 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 transactions 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:
1
CONSOLIDATED-TOMOKA LAND CO.
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING
OF SHAREHOLDERS
APRIL 25, 2001
The undersigned hereby appoints William H. McMunn and Patricia
Lagoni, each or either of them, as Proxies, each with the power to
appoint his or her substitute, and hereby authorizes them to
represent, and to vote, as designated below, all the shares of common
stock of Consolidated-Tomoka Land Co. held of record by the
undersigned on March 1, 2001, at the annual meeting of shareholders to
be held April 25, 2001, or any adjournment or postponement thereof.
PROPOSAL NO. 1: Election of three Class I Directors
for three-year terms ending 2004.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed below
To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.
Class I. John C. Adams, Jr., Bob D. Allen, and David D. Peterson
PROPOSAL NO. 2: Approval of proposed Consolidated-Tomoka Land Co.
2001 Stock Option Plan for employees.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
CONSOLIDATED-TOMOKA LAND CO.
PROXY
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this
proxy will be voted for each proposal.
Please sign exactly as name appears below. 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 signing for a corporation, or partnership, authorized person should
sign full corporation or partnership name and indicate capacity in
which they sign.
Dated____________________________________________
Signature________________________________________
Signature________________________________________
(if held jointly)
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
2
CONSOLIDATED-TOMOKA LAND CO.
Post Office Box 10809
Daytona Beach, Florida 32120-0809
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 25, 2001
To the Shareholders:
The annual meeting of shareholders of Consolidated-Tomoka Land Co., a Florida
corporation (the "Company"), will be held at the LPGA International
Clubhouse, 1000 Champions Drive, Daytona Beach, Florida, on Wednesday,
April 25, 2001, at ten o'clock in the morning for the following purposes:
1. To elect three directors to serve for a three-year term expiring at
the annual meeting of shareholders to be held in 2004, or until their
successors are elected and qualified.
2. To consider and act upon a proposal to adopt the Consolidated-Tomoka
Land Co. 2001 Stock Option Plan for employees.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 1, 2001, are
entitled to notice of, and to participate in and vote at the meeting.
A complete list of shareholders as of the record date will be available for
shareholders' inspection at the Corporate Offices at 149 South Ridgewood
Avenue, Daytona Beach, Florida, for at least ten days prior to the meeting.
By Order of the Board of Directors
Patricia Lagoni
Secretary
Daytona Beach, Florida
March 15, 2001
All shareholders are requested to date and sign the enclosed proxy and return
it promptly in the accompanying envelope. This proxy is revocable by you
at any time before it is exercised by notifying the corporate secretary of
the Company in writing or by submitting a properly executed, later-dated
proxy. Signing a proxy will not affect your right either to attend the
meeting and vote your shares in person or to give a later proxy.
A COPY OF THE COMPANY'S MOST RECENT FORM 10-K ANNUAL REPORT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED, WITHOUT CHARGE, TO ANY
SHAREHOLDER UPON WRITTEN REQUEST DIRECTED TO THE COMPANY'S SECRETARY, P. O.
BOX 10809, DAYTONA BEACH, FLORIDA 32120-0809.
3
CONSOLIDATED-TOMOKA LAND CO.
PROXY STATEMENT
INTRODUCTION
This proxy statement and the enclosed form of proxy are being sent to
the shareholders of Consolidated-Tomoka Land Co., a Florida corporation (the
"Company"), on or about March 15, 2001, in connection with the solicitation
by the Board of Directors of the Company of proxies to be used at the annual
meeting of shareholders to be held on Wednesday, April 25, 2001 (and at any
adjournment or adjournments thereof), for the purposes set forth in the
accompanying notice of annual meeting. Shareholders who execute proxies
retain the right to revoke them at any time before they are exercised by
sending written notice to the secretary of the Company, by submitting a
properly executed, later-dated proxy, or by attending the annual meeting
and electing to vote in person.
The cost of preparing, assembling, and mailing material in connection
with this solicitation will be borne by the Company.
At the close of business on March 1, 2001, there were 5,565,784
shares of common stock, $1 par value, of the Company outstanding.
Each holder of common stock of record on that date is entitled
to one vote for each share held by such shareholder on
every matter submitted to the meeting. The Company's Articles
of Incorporation and Bylaws do not provide for cumulative voting
for the election of directors, which is permitted but not required
by Florida law.
See "Interests in Stock" below for information as to the beneficial
ownership of common stock of the Company as of December 31, 2000 by each
director of the Company and by all directors and executive officers as a
group.
Proposal 1: ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the
Board of Directors into three classes, as nearly equal as possible.
At the 2001 annual meeting of shareholders, three Class I directors
are to be elected, each to hold office until the annual meeting
of shareholders to be held in 2004, or until their successors are
elected and qualified.
The Company has no nominating committee other than the Board of
Directors for the selection of candidates to serve as directors.
It is the intention of the persons named in the accompanying
form of proxy to vote such proxy for the election as
directors, of the persons named below who have been designated by
the Board of Directors as nominees for Class I unless authority
to do so is withheld.
All nominees for election as directors are now directors,
each having been elected by the shareholders at the April 1998
annual meeting. Each nominee has indicated his willingness to serve
if elected. If any nominee should be unable to serve, which is not
now anticipated, the proxy will be voted for such other persons as
shall be determined by the persons named in the proxy in accordance
with their judgment.
4
Jack H. Chambers retired from the Board of Directors on January
24, 2001. William J. Voges was appointed by the Board of Directors
to fill this unexpired term in Class III.
The election of Messrs. Adams, Allen and Peterson will require
the affirmative vote of the holders of a plurality of the shares
present or represented at the meeting. The Board of Directors of the
Company recommends a vote "for" the election of Messrs. Adams, Allen
and Peterson as directors in Class I. Proxies solicited by the
Board will be so voted unless shareholders specify in their proxies
a contrary choice. Abstentions will be treated as shares represented
at the meeting and therefore will be the equivalent of a negative
vote, and broker non-votes will not be considered as shares represented
at the meeting.
Additional information concerning the nominees and the directors
appears below.
Name,
Age at January 31, 2001, Class and Other
and Principal Occupation Director Expiration Business
January 1, 1996 Since Of Term Affiliations
John C. Adams, Jr.-age 64(1)(2) 1977 I None
Executive vice president of 2001
Brown and Brown, Inc. (an
insurance agency) since January
1999; Chairman of the board of
Hilb, Rogal and Hamilton
Company of Daytona Beach, Inc.
(an insurance agency) to
December 1998; and executive vice
president operations from
January 1994 to December 1998.
Executive vice president of
Hilb, Rogal and Hamilton
Company, Richmond, Virginia,
from 1993 to December 1998
Bob D. Allen-age 66(1) 1990 I Director,
Chairman of the board since April 1998 2001 First Union-
and chief executive officer of the Florida
Company since March 1990; president
from March 1990 to January 2000
William O. E. Henry-age 73(3) 1977 III None
Practicing attorney and 2003
partner in law firm of
Holland & Knight LLP
Robert F. Lloyd-age 65(2) 1991 II None
Chairman of the board and 2002
chief executive officer of
Lloyd Buick-Cadillac Inc.
5
Name,
Age at January 31, 2001, Class and Other
and Principal Occupation Director Expiration Business
since January 1, 1996 Since Of Term Affiliations
William H. McMunn-age 54 1999 II None
President and chief operating 2002
officer of the Company since
January 2000; president, Indigo
Development Inc., a subsidiary of
the Company, since December 1990
David D. Peterson-age 69(1)(2) 1984 I None
Chairman of the executive 2001
committee of the Company;
retired president and chief
executive officer of Baker,
Fentress & Company (a publicly
owned, closed-end investment
company) since June 1996
H. Jay Skelton-age 63(3) 2000 III None
President and chief executive 2003
officer of DDI, Inc. (a diversified
family holding company)
Bruce W. Teeters-age 55 1990 II None
Senior vice president- 2002
finance and treasurer
of the Company
William J. Voges-age 46(3) 2001 III None
President, chief executive officer 2003
since 1997, and general counsel;
executive vice president from 1990
to 1997 of the Root Organization (a
private investment company with
diversified holdings)
(1) Member of the Executive Committee of the Company, which had no meetings
in 2000. The Executive Committee has the authority during intervals
between meetings of the Board of Directors to exercise power on matters
designated by the Board.
(2) Member of the Compensation and Stock Option Committee, which had one
meeting in 2000.
(3) Member of the Audit Committee, which had one meeting in 2000. The
Committee meets with representatives of the Company's independent
public accountants to determine the scope of each audit and review the
results. The Audit Committee acts under a written charter adopted by
the Board of Directors, a copy of which is attached to this Proxy
Statement as Appendix A. All members of the Audit Committee are
"independent" (as defined in Section 121(A) of the American Stock
Exchange Listing Standards).
6
During 2000, the Board of Directors held one regular and three special
meetings. Each outside director received a fee of $1,000 for each board
meeting he attended in 2000. Each outside director received, in addition to
meeting fees, an annual retainer of $15,000, payable quarterly. Mr. Peterson
received, as Chairman of the Executive Committee, an additional annual fee of
$9,000, payable quarterly. Members of the Executive, Audit, and Compensation
and Stock Option Committees also received $1,000 for each meeting of those
Committees attended in 2000.
Effective January 1, 2001, meeting fees for all outside directors were
increased to $1,500 per meeting, fees for the Chairman of the Compensation
and Stock Option Committee and Audit Committee were increased to $2,000 per
meeting and an Audit Committee fee of $500 was established for each quarterly
review of the Company's audited financial statements by a member of the Audit
Committee.
All members of the Board attended at least 75% of the meetings of the
and all committees on which they served.
INTERESTS IN STOCK
The following table contains information at December 31, 2000 on the
number of shares of common stock of the Company of which each director and
each officer named in the Summary Compensation Table set forth elsewhere in
this Proxy Statement had outright ownership, or, alone or with others, any
power to vote or dispose of the shares, or to direct the voting or
disposition of the shares by others, and the percentage of the aggregate of
such shares to all of the outstanding shares of the Company. The table also
sets forth information with respect to all persons known by the Company to
own beneficially more than 5% of the
Company's common stock as of December 31, 2000:
Power Over Voting
and Disposition Aggregate
Name Sole Shared Shares Percent
-------------------------- ------- ------ ------- -------
Shufro, Rose & Co., LLC(1) 448,180 -- 448,180 8.0%
745 Fifth Avenue
New York, NY 10151-2600
Henri L. Wedell, et al (2) 316,100 39,100 355,200 6.3%
125 Norwal
Memphis, TN 38117
John C. Adams, Jr. 11,600 (3) 800 12,400 (3) 0.2%
Bob D. Allen 154,181 (4) -- 154,181 (4) 2.7%
William O. E. Henry 500 -- 500 --
Robert F. Lloyd 500 -- 500 --
William H. McMunn 57,231 (4) -- 57,231 (4) 1.0%
David D. Peterson 4,887 -- 4,887 --
H. Jay Skelton -- 1,000 1,000 --
Bruce W. Teeters 48,059 (4) 57 48,116 (4) 0.9%
William J. Voges 219 -- 219 --
Directors and Executive Officers
as a group (9 persons) 277,177 (4) 1,857 279,034 (4) 5.0%
7
(1) Registered Broker/Dealer and Investment Advisors with offices at
the above address. Information derived from Schedule 13G, dated
February 15, 2000, filed with the Securities and Exchange
Commission.
(2) Private investor. Information derived from Schedule 13D, dated
September 5, 2000, filed with the Securities and Exchange
Commission.
(3) Does not include 4,400 shares held in trust for his wife who has
sole voting and disposition power over these shares.
(4) Includes the following shares subject to options that are
currently exercisable or exercisable within 60 days of March 1,
2001: Bob D. Allen, 80,000 shares; William H. McMunn, 40,000;
Bruce W. Teeters, 40,000 shares; and executive officers as a
group, 160,000 shares.
CERTAIN TRANSACTIONS
Mr. William J. Voges, a Director of the Company, is an officer
and director of Root Real Estate Corp., the managing general partner
of Root Riverfront Partners, LP, Ltd. ("Root Riverfront Partners"),
as well as a trustee of the limited partners holding a majority
interest in Root Riverfront Partners. Root Riverfront Partners is
the mortgagor of a mortgage held by Indigo Development Inc., a
subsidiary of the Company, relating to the Indigo Professional
Centre located in Daytona Beach, Florida. The underlying note
was originated on December 31, 1996, in the principal amount
of $1,220,000 and bearing interest at 8.5% per annum. As of
December 2000, the note was current and the remaining principal
balance was $1,055,719. The maturity date is December 31, 2001.
William O. E. Henry, a Director of the Company, is a partner in
the law firm of Holland & Knight LLP, which served as counsel to
the Company during the fiscal year ended December 31, 2000.
EXECUTIVE COMPENSATION
The sections which follow provide extensive information
pertaining to the compensation of the executive officers of the
Company. This information is introduced in the Compensation
Committee Report on Executive Compensation set forth below
which describes the policies and components of the Company's
Compensation Program.
To provide a context for considering the detailed compensation
data, as well as the policies of the Compensation Committee, there
is set forth immediately below information as to the
cumulative shareholder return on the Company's Common Stock.
The graph compares the yearly percentage change in this return
with that of the American Stock Exchange Composite Index and
the Real Estate Industry Index.
8
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG
CONSOLIDATED-TOMOKA LAND CO., AMERICAN STOCK EXCHANGE INDEX, AND REAL
ESTATE INDUSTRY INDEX
At December 31,
---------------------------------------------------
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
AMEX $100.00 $105.52 $126.97 $125.25 $156.15 $154.23
CTO $100.00 $101.66 $114.20 $ 92.65 $ 85.61 $ 81.06
INDUSTRY $100.00 $116.28 $160.23 $117.93 $115.35 $ 90.74
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of
Directors consists solely of independent, outside directors and met
once during 2000. The Committee reviews and approves salary
adjustments for officers and key personnel with salaries in excess of
$50,000, administers the Company's Stock Option Plan, and makes
recommendations to the Board with respect to the Company's
Compensation Program for the executive officers named in the following
Summary Compensation Table. The three individuals named in the
Summary Compensation Table are the only persons earning more than
$100,000 in annual compensation who fall within the Securities and
Exchange Commission definition of executive officers.
The annual compensation program includes base pay plus an
incentive program to reward key management employees who are in a
position to make substantial contributions to the success or the
growth of the Company and its subsidiaries. The Company seeks to
provide through this program compensation opportunities that are
competitive and directly related to Company performance. All
participants in the incentive plan were approved by the Compensation
Committee. There were ten participants in the plan during 2000.
The executive officers are evaluated on performance, corporate
and individual, based on a management-by-objectives system.
Corporate performance is based on the Company's growth in earnings
per share and progress on projects and activities which
will have a major effect on future earnings. Individual
performance includes implementation of goals and objectives,
strategic planning, civic involvement, and public affairs.
Base pay is designed to provide competitive rewards for the
normal duties associated with the individual's job description.
The incentive pay component is designed to stimulate actions
that contribute to improved operating and financial results.
The incentive awards are based on the achievement of
predetermined corporate and individual performance goals.
9
The Summary Compensation Table shows the incentive awards
(Bonus in the Table) to the named executive officers for the past
three years. For 2000, the goals for all executive officers
included an overall operating and financial performance
target measured by net income plus additional quantitative
indicators. In addition to the 2000 quantified objectives, the
Committee evaluated performance against predetermined
qualitative objectives in determining the amount of incentive
awards.
The Summary Compensation Table shows the Options/SAR
(Stock Appreciation Right) Grants to the named executive officers
for the past three years. The exercise price of the options granted
was equal to the market value of the underlying common stock on
the date of the grant. Therefore, the value of these grants
to the officers is dependent solely upon the future growth in
share value of the Company's Common Stock. The stock appreciation
right entitles the optionee to receive a supplemental
payment which at the election of the Committee may be paid in
whole or in part in cash or in shares of common stock equal to
all or a portion of the spread between the exercise price and
the fair market value of the underlying shares at the time of
exercise.
The Company's CEO, Mr. Allen, received a 4% increase in base
pay determined by salary surveys which indicated such an increase
was appropriate to maintain a competitive salary structure.
Mr. Allen received a bonus of $118,000 for 2000, based upon the
favorable operating results of the Company.
The Committee believes that the components of salary,
Stock Options/SARs,and incentive awards are fair, competitive, and
in the best interest of the Company. Specific salary and incentives
are disclosed in the Summary Compensation Table and the
Options/SAR Grants in Last Fiscal Year Table.
By the Compensation Committee: John C. Adams, Jr., Chairman and
Robert F. Lloyd
10
SUMMARY COMPENSATION TABLE(a)
LONG TERM
COMPENSATION
AWARDS SECURITIES
Name and Principal FISCAL OTHER ANNUAL UNDERLYING
Position(b) YEAR(a) SALARY BONUS COMPENSATION(B) OPTIONS/SARS
Bob D. Allen 2000 $299,904 $118,000 $ 6,301 -0-
Chairman of the Board and 1999 288,372 90,000 134,609 -0-
Chief Executive Officer 1998 277,280 -0- 5,254 20,000
William H. McMunn 2000 $200,004 $ 70,000 $ 5,110 -0-
President and 1999 160,248 50,000 5,199 -0-
Chief Operating Officer 1998 154,092 -0- 4,955 8,000
Bruce W. Teeters 2000 $187,872 $40,000 $ 3,371 -0-
Senior Vice President- 1999 180,648 25,000 3,244 -0- Finance
& Treasurer 1998 173,700 -0- 3,269 8,000
(a) 12/31 Fiscal Year
(b) Other compensation includes personal use of company
automobile, premium for term life insurance exceeding $50,000,
and 1999 exercises of Stock Options and Stock Appreciation
Rights.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options or SARs to any of the
named executive officers during the year ended December 31, 2000.
AGGREGATED OPTION EXERCISES DURING FISCAL YEAR 2000
AND FISCAL YEAR END OPTION VALUES
The following table provides information related to
options exercised by the named executive officers during the fiscal year
ended December 31, 2000 and the number of options at fiscal year end which
are currently exercisable.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FY-END AT FY-END($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Bob D. Allen,
Chairman of the Board
and Chief Executive
Officer -- -- 80,000 -- $0 $0
William H. McMunn,
President and Chief
Operating Officer -- -- 40,000 -- 0 0
Bruce W. Teeters,
Sr. Vice President -
Finance and Treasurer -- -- 40,000 -- 0 0
11
(1) The values of unexercised in-the-Money Options represents the
aggregate amount of the excess of $11.875, the closing sales price
for a share of common stock on December 29, 2000, over the
relevant exercise prices of all "in-the-money" options held on
such date. No participant in the plan holds any stock options at
a price less than the closing sales price.
DEFERRED COMPENSATION PLANS
Under the Company's Unfunded Deferred Compensation Plan,
effective July 1,1981, fees earned by directors for service on the
Board and its committees may be deferred until the director attains
seventy years of age or ceases to be a member of the Board, whichever
occurs first. Under a similar plan effective October 25,1982,
officers and key employees of the Company may elect to defer all or a
portion of their earnings until such time
as the participant ceases to be an officer or key employee. All sums
credited to a participating director, officer, or employee under
either of these plans may be distributed in a lump sum or in
installments over not more than ten calendar years following the end
of the deferral period. The participant will be entitled to elect the
size of the installments and the period over which they will be
distributed. The deferred compensation accrues interest annually at
the average rate of return earned by the Company on its short-term
investments. Compensation deferred pursuant to these plans during
2000 by officers named in the compensation table above is included in
the table.
PENSION PLAN
The amount of the Company's contributions or accrual on behalf of
any particular participant in the pension plan cannot readily be
determined. The following table shows the estimated annual benefit
payable under the pension plan (utilizing present levels of Social
Security benefits) upon retirement to persons in a range-of-salary and
years-of-service classification:
PENSION PLAN TABLE
Final
Average Years of Service
Earnings as 10 20 30 35
of 1/1/00 NRA 65 NRA 65 NRA 65 NRA 65
$ $ $ $ $
50,000 6,894 13,788 20,682 24,129
75,000 11,394 22,788 34,182 39,879
100,000 15,894 31,788 47,682 55,629
125,000 20,394 40,788 61,182 71,379
150,000 24,894 49,788 74,682 87,129
160,000 26,694 53,388 80,082 93,429
170,000 & Greater 28,494 56,988 85,482 99,729
NRA = normal retirement age
Calendar year of 65th birthday = 2000
2000 Social Security covered compensation level is $35,100
Pension Benefit is Subject to IRC Section 415 Benefit Limitation of
$135,000.
12
Pensionable Earnings are Subject to IRC Section 401(a)17 Salary
Limitation of $170,000.
As of December 31, 2000, the executive officers named in the
compensation able are expected to be credited with years of service
under the amended plan as follows: Mr. Allen, 10 years, Mr. McMunn,
10 years, and Teeters, 21 years.
PROPOSAL 2: APPROVAL OF THE CONSOLIDATED-TOMOKA LAND CO.
2001 STOCK OPTION PLAN
In January 2001, the Company's Board of Directors adopted the
Consolidated-Tomoka Land Co. 2001 Stock Option Plan (the "Plan"),
subject to shareholder approval, pursuant to which 500,000 shares of
the Company's common stock may be issued. At the annual meeting of
shareholders, a proposal to approve the Plan will be submitted for
shareholder approval. The affirmative vote of the holders of a
majority of the outstanding shares of the Company's common stock is
required for approval of the Plan. The Board of Directors recommends
a vote in favor of the Plan. Unless a contrary specification is
indicated, the enclosed proxy will be voted in favor of such approval.
Purpose of the Plan
The purpose of the Plan is to further the interests of the
Company, its subsidiaries and its shareholders by providing incentives
to key employees who contribute materially to the success and
profitability of the Company. The Plan will assist the Company and
its subsidiaries in attracting and retaining key persons and enhancing
their personal interests in the Company's continued success and
progress by enabling them to acquire a proprietary interest in the
Company.
The following is a general summary of the principal provisions of
the Plan. Any shareholder who wishes to review the full text of the
Plan may obtain a copy by writing to the Secretary of the Company,
P.O. Box 10809, Daytona Beach, Florida 32120-0809.
Description of the Plan
The Plan provides for administration by a committee of three
or more directors chosen by the Board of Directors (the "Committee"),
who are (i) not employees of the Company, (ii) non-employee directors
as defined in Rule 16b-3(d) of the Securities Exchange Act of 1934,
and (iii) "outside directors" as defined in Treasury Regulations,
S1.162-27. Subject to the provisions of the Plan, the Committee has
exclusive power to select participants, to establish the terms of the
options granted, to interpret the Plan and to prescribe rules,
regulations, and forms relating to the Plan's administration. The
Board of Directors has full authority to amend or terminate the Plan
at any time without shareholder approval (except in the case of
amendments for which shareholder approval is required as a condition
13
for certain favorable treatment under federal income tax or securities
laws), provided that no amendment may alter the terms or provisions of
an option or stock appreciation right ("SAR") issued prior to such
amendment, without the optionee's or holder's consent.
All hourly and salaried employees of the Company or subsidiaries,
as designated by the Committee in its sole discretion, are eligible to
participate in the Plan. As of January 31, 2001, approximately
seventeen employees are eligible to participate in the Plan.
The Plan provides for the grant of (a) incentive stock options
which satisfy the requirements of Code S422 of the Internal Revenue
Code of 1986, as amended (the "Code") and (b) nonqualified stock
options which are not entitled to favorable tax treatment under Code
S422. No optionee may receive incentive stock options which vest for
the first time in any one calendar year for shares of common stock
having a total market value of more than $100,000 on the date of grant
(subject to certain carry-over provisions). In connection with the
grant of nonqualified options, the Committee also may provide for the
grant of a SAR for each share covered by the option. The SAR will
entitle the optionee to receive a supplemental payment which at the
election of the Committee may be paid in whole or in part in cash or
in shares of common stock equal to a portion of the spread between the
exercise price and fair market value of the underlying share at the
time of exercise.
The exercise price of shares subject to incentive stock options
must at least be equal to the fair market value of such shares on the
date the option is granted, except that incentive stock options
granted to an individual owning more than 10% of the combined voting
power of all classes of stock of either the Company or any parent or
subsidiary must have an exercise price equal to at least 110% of fair
market value. The exercise price of shares subject to nonqualified
stock options will be at the discretion of the Committee, provided
that it will be at least 50% of the fair market value of the shares on
the date the option is granted.
Options will expire on the day prior to the tenth anniversary of
the date of the grant or such earlier time as the Committee may
establish and set forth in the stock option agreement between the
Company and the optionee. Unless otherwise provided by the Committee,
options will be exercisable, subject to compliance with securities
laws, as to no more than one-fifth of the total number of shares
covered by the option during each twelve-month period commencing
twelve months from the date of grant. Incentive stock options granted
to any individuals owning more than 10% of the combined voting power
of all classes of stock of either the Company or any parent or
subsidiary will be exercisable only during the five-year period
immediately following the date of grant.
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The Plan requires that incentive stock options be exercised in
full or expire due to the lapse of time before any portion of a later-
granted incentive stock option may be exercised. Incentive stock
options will be exercisable only by the optionee during the optionee's
lifetime, but if an optionee becomes incompetent, his incentive stock
options may be exercised on his behalf by his legal guardian or the
holder of a durable family power of attorney executed by the optionee.
Neither incentive stock options nor nonqualified options may be
transferred except by will or the laws of descent and distribution.
Options will expire immediately upon termination of employment for
reasons other than death, disability, or retirement, unless on the
date of grant the Committee extends the exercisability period to no
more than ninety days after the date of termination. Options will be
exercisable for a period of one year from the date of the
participant's death or total and permanent disability, and for a
period of ninety days after retirement to the extent that the
options could have been exercised but for such death, disability, or
retirement.
Payment for shares upon exercise of an option may be in cash,
check, or, with the consent of the Committee, in the form of common
stock of the Company having a fair market value equal to the exercise
price.
If options expire or lapse without having been exercised in full,
the underlying shares will be available for the grant of additional
options unless the Plan has been terminated. The Plan provides for
equitable adjustment of shares authorized under the Plan in the event
of a reorganization, merger, consolidation, reclassification,
recapitalization, combination, or exchange of shares, stock split,
stock dividend or rights offering.
Federal Income Tax Consequences
An optionee generally will recognize no income for federal income
tax purposes at the time of the grant or exercise of an incentive
stock option. However, the "Spread" between the option exercise price
and the fair market value of the underlying shares on the date the
option is exercised (the "Spread") generally will constitute a tax
preference item for purposes of the alternative minimum tax.
An optionee generally will be entitled to long-term capital gain
treatment upon the sale of shares acquired pursuant to the exercise of
an incentive stock option if the shares have been held for more than
two years from the date of grant of the option and for more than one
year after the exercise of the option. If a disposition of the
incentive stock option shares is made prior to the end of those time
periods, the Spread (or amount of the realized gain, if less) will be
taxable as ordinary income. The Company will not be entitled to an
income tax deduction in connection with the grant or exercise of an
incentive stock option but will be entitled to a deduction equal to
the amount of any ordinary income recognized by an optionee upon a
disqualifying disposition.
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An optionee will not recognize income for federal income tax
purposes upon the grant of a nonqualified stock option but will
recognize ordinary income upon exercise, to the extent of the Spread.
The Company will be entitled to a deduction equal to the amount of
ordinary income recognized by the optionee, and such ordinary income
will be subject to withholding of federal income and payroll taxes by
the Company. Upon the sale of shares acquired pursuant to the
exercise of a nonqualified stock option, the optionee will recognize
capital gain or loss to the extent of any difference between the
amount realized and the fair market value of the shares on the date of
exercise of the option. The capital gain or loss will be long-term if
the shares are held for more than one year after the exercise of the
option.
Use of previously acquired shares to pay the exercise price of
options will not cause any appreciation in the shares to be taxable
except in the case of shares acquired upon exercise of incentive stock
options that have not been held for the requisite holding periods
discussed above.
New Plan Benefits
Because no grants have been made under the Plan and future grants
are not currently known, the future benefits to be distributed are not
determinable at this time.
Potential Limitation on Company Deductions
Internal Revenue Code Section 162(m) denies a deduction to any
publicly held corporation for compensation paid to certain employees
in a taxable year to the extent that compensation exceeds $1,000,000
for a covered employee. It is possible that compensation attributable
to stock options, when combined with all other types of compensation
received by a covered employee from the Company, may cause this
limitation to be exceeded in a particular year.
There are a number of exceptions to this rule, such as
compensation paid under a shareholder approved "performance-based
compensation" plan or option grants under a shareholder approved
option plan.
The Board of Directors believes that, at the present time, it is
unlikely that eligible compensation under Code S162(m) paid to any
executive officer in a taxable year will exceed $1,000,000. However,
the Plan is structured to comply with Code S162(m). In addition, the
Board of Directors has established a policy for determining which
forms of incentive compensation awarded to executive officers shall be
designed to qualify as "performance-based compensation."
AUDIT COMMITTEE REPORT
In connection with the preparation and filing of the Company's
Annual Report on Form 10-K for the year ended December 31, 2000:
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The Audit Committee reviewed and discussed the audited financial
statements with management;
The Audit Committee discussed with the independent auditors the
material required to be discussed by SAS 61; and
The Audit Committee reviewed the written disclosures and the
letter from the independent auditors required by the Independence
Standards Board Standard No. 1 and discussed with the auditors any
relationships that may impact their objectivity and independence and
satisfied itself as to the auditors' independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors of the Company that
the audited financial statements be included in the Annual Report on
Form 10-K for the year ended December 31, 2000.
By the Audit Committee: William O. E. Henry, Chairman
H. Jay Skelton
William J. Voges
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Company has selected the firm of Arthur Andersen LLP to serve
as the independent auditors for the Company for the current fiscal
year ending December 31, 2001. That firm served as the Company's
independent auditors for its fiscal year ended December 31, 2000. It
is expected that representatives of Arthur Andersen LLP will be
present at the Shareholders' meeting and will be given an opportunity
to make a statement and to respond to appropriate questions.
Audit Fees. Arthur Andersen LLP billed the Company $51,000, in
the aggregate, for professional services rendered by them for the
audit of the Company's annual financial statements for the fiscal year
ended December 31, 2000, and the reviews of the interim financial
statements included in the Company's Form 10-Q's filed during the
fiscal year ended December 31, 2000.
Financial Information Systems Design and Implementation Fees.
Arthur Andersen LLP provided no professional services to the Company
of the nature described in Paragraph (c)(4)(ii) of Rule 2-01 of
Regulation S-X during the fiscal year ended December 31, 2000.
All Other Fees. Arthur Andersen LLP billed the Company $127,350,
in the aggregate, for all other services rendered by them (other than
those covered above under "Audit Fees" and "Financial Information
Systems Design and Implementation Fees") during the fiscal year ended
December 31, 2000. This amount generally included fees for tax-
related services and other professional services.
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SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING
During 2000, there was no director or officer subject to Section
16 of the Securities Exchange Act of 1934 (the "Exchange Act") i.e.,
with respect to filing reports of ownership and change in ownership
concerning a registered class of equity securities of the Company who
did not file timely reports required by Section 16(a) of the Exchange
Act.
SHAREHOLDER PROPOSALS
Regulations of the Securities and Exchange Commission require
that proxy statements disclose the date by which shareholder proposals
must be received by the corporate secretary of the Company in order to
be included in the Company's proxy materials for the next annual
meeting. In accordance with these regulations, shareholders are hereby
notified that if they wish a proposal to be included in the Company's
proxy statement and form of proxy relating to the 2002 annual meeting,
a written copy of their proposal must be received at the principal
executive offices of the Company no later than November 15, 2001.
Proposals submitted outside the provisions of Rule 14a-8 will be
considered untimely if submitted after January 29, 2002. To ensure
prompt receipt by the Company, proposals should be sent certified
mail, return receipt requested. Proposals must comply with the proxy
rules relating to shareholder proposals in order to be included in the
Company's proxy materials.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2000, accompanies this proxy statement. Additional
copies may be obtained by writing to the Company at Post Office Box
10809, Daytona Beach, Florida 32120-0809.
OTHER MATTERS
The Board of Directors of the Company does not intend to bring
any other matters before the meeting, and it does not know of any
proposals to be presented to the meeting by others. If any other
matters properly come before the meeting, however, the persons named
in the accompanying proxy will vote thereon in accordance with their
best judgment.
Dated: March 15, 2001
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