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 15, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of Hub Group, Inc. This meeting will be held in Room 226 in the
Hamburger University building on the McDonald's Office Campus at Ronald Lane,
Oak Brook, Illinois at 10:00 a.m. Chicago time on Tuesday, May 19, 1998.
The attached Notice of 1998 Annual Meeting of Stockholders and Proxy
Statement describe the matters to be acted upon. The Annual Report to
Stockholders and Form 10-K for the 1997 fiscal year are 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 1998 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 Room 226 in the Hamburger
University building on the McDonald's Office Campus at Ronald Lane, Oak Brook,
Illinois on Tuesday, May 19, 1998, 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;
(2) To approve the Hub Group, Inc. 1997 Long-Term Incentive Plan; and
(3) 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 and Form 10-K
for the fiscal year ended December 31, 1997, also accompany this Notice.
The Board of Directors has fixed the close of business on March 31, 1998,
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,
MARK A. YEAGER
Division President, Secretary and General
Counsel
Lombard, Illinois
April 15, 1998
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 1998 Annual Meeting of Stockholders
of the Company to be held on Tuesday, May 19, 1998, 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 15, 1998.
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, 1998 (the "Record Date"), are entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, the Company had
6,990,950 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 is not marked, it will be voted in accordance with
the recommendation of the Board of Directors on all 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, but as not present or
represented at the Annual Meeting for purposes of determining the approval of
any matter submitted to the stockholders for a vote. 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 not be considered as present and
entitled to vote with respect to that matter. 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.
Directors are elected by a plurality of the votes present in person or
represented by proxy at the Annual Meeting and entitled to vote for the election
of directors, provided a quorum is present. Stockholders are not allowed to
cumulate their votes in the election of directors. Shares represented at the
Annual Meeting in person or by proxy but withheld or otherwise not cast for the
election of directors will have no effect on the outcome of the election.
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 1998 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.
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 not later than March 20, 1999. 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 70 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. 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, Division President, Secretary and
General Counsel, and the father-in-law of Robert J.
Jensen, President-Hub Group Operations Management.
David P. Yeager 45 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, the
brother of Mark A. Yeager and the brother-in-law of
Robert J. Jensen. Mr. Yeager also serves as a
director of SPR Inc.
Thomas L. Hardin 52 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. During
1996, Mr. Hardin was Chairman of the Intermodal
Association of North America.
3
Gary D. Eppen 61 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
Masters in Business Administration 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 59 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 43 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 Corporate Vice
President and President of the Americas region. 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, 1997, the full Board of Directors met four
times, the Audit Committee met twice and the Compensation Committee met twice.
During 1997, 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 make recommendations to
the Board of Directors concerning the salaries of the Company's officers; to
4
exercise the authority of the Board of Directors concerning the Company's 1996
Long-Term Incentive Plan and 1997 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.
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, 1998, 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) ........................................................ 20,000 662,296 8.9%
David P. Yeager(3)(5) .......................................................... 14,000 662,296 8.8%
Thomas L. Hardin(6) ............................................................ 26,500 -- *
Robert J. Jensen(3)(7) ......................................................... 10,000 662,296 11.3%
Daniel F. Hardman(8) ........................................................... 7,000 -- *
John T. Donnell(9) ............................................................. 15,000 -- *
Mark A. Yeager(3)(10) .......................................................... 10,000 662,296 8.8%
Gary D. Eppen(11) .............................................................. 9,000 -- *
Charles R. Reaves(11) .......................................................... 8,000 -- *
Martin P. Slark(11) ............................................................ 8,000 -- *
All directors and executive officers as a group (13 persons)(12) ............... 152,600 662,296 10.5%
Debra A. Jensen(3)(13) ......................................................... 10,000 662,296 8.8%
Thomson Horstmann & Bryant, Inc.(14) ........................................... 369,800 -- 4.8%
Strong Capital Management, Inc./Richard S. Strong (15).......................... 734,475 -- 9.6%
Dresdner RCM Global Investors L.L.C./RCM Limited L.P./RCM General
Corporation(16)............................................................... 674,600 -- 8.8%
Dresdner Bank AG(17) ........................................................... 674,600 -- 8.8%
William Blair & Company, L.L.C.(18) ............................................ 1,029,525 -- 13.5%
- ---------------------------
* 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 10, 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 20,000
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 14,000 shares of Class A
Common Stock issuable upon exercise of options.
(6) Includes 14,000 shares of Class A Common Stock issuable upon exercise of
options.
(7) Consists of the shares of Class B Common Stock owned by Debra A. Jensen,
Robert J. Jensen's wife, and of which he may be deemed to be the
beneficial owner and 551,913 shares of Class B Common Stock as to which
Robert J. Jensen may be deemed to have shared voting discretion pursuant
to the Yeager Family Stockholder Agreement. See Note 3. Also includes
10,000 shares of Class A Common Stock issuable upon exercise of options.
(8) Includes 6,000 shares of Class A Common Stock issuable upon exercise of
options.
(9) Includes 10,000 shares of Class A Common Stock issuable upon exercise of
options.
(10) 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 10,000 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 130,000 shares of Class A Common Stock issuable upon exercise of
options.
(13) Debra A. Jensen is the wife of Robert J. Jensen and the daughter of
Phillip C. Yeager. Includes 10,000 shares of Class A Common Stock
issuable upon exercise of options held by Robert J. Jensen.
(14) Thomson Horstmann & Bryant, Inc. ("THB") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, (i) THB has sole dispositive power
with respect to all 369,800 shares of Class A Common Stock beneficially
owned and (ii) THB has sole voting power with respect to 218,400 shares of
Class A Common Stock beneficially owned and shared voting power with
respect to 3,700 shares of Class A Common Stock beneficially owned. The
number of shares beneficially owned by THB is indicated as of January 27,
1998. The address of THB is Park 80 West, Plaza Two, Saddle Brook, NJ
07663.
(15) Strong Capital Management, Inc. and Richard S. Strong (collectively,
"Strong") filed a Schedule 13G with the Commission indicating beneficial
ownership of shares of Class A Common Stock. According to the Schedule
13G, (i) Strong has sole dispositive power with respect to all 734,475
shares of Class A Common Stock beneficially owned and (ii) Strong has sole
voting power with respect to 439,325 shares of Class A Common Stock
beneficially owned and shared voting power with respect to zero shares of
Class A Common Stock beneficially owned. The number of shares beneficially
owned by Strong is indicated as of February 16, 1998. The address of
Strong is 100 Heritage Reserve, Menomonee Falls, WI 53051.
6
(16) Dresdner RCM Global Investors, L.L.C., RCM Limited L.P. and RCM General
Corporation (collectively, "RCM") filed a Schedule 13G with the Commission
indicating beneficial ownership of shares of Class A Common Stock.
According to the Schedule 13G, (i) RCM has sole dispositive power with
respect to 632,600 shares of Class A Common Stock beneficially owned and
shared dispositive power with respect to 42,000 shares of Class A Common
Stock beneficially owned and (ii) RCM has sole voting power with respect
to 543,600 shares of Class A Common Stock beneficially owned and shared
voting power with respect to zero shares of Class A Common Stock
beneficially owned. The number of shares beneficially owned by RCM is
indicated as of January 30, 1998. The address of RCM is Four Embarcadero
Center, Suite 2900, San Francisco, CA 94111.
(17) Dresdner Bank AG ("Dresdner") filed a Schedule 13G with the Commission
indicating beneficial ownership of shares of Class A Common Stock.
Dresdner has beneficial ownership of the securities reported on its
Schedule 13G only to the extent that Dresdner may be deemed to have
beneficial ownership of securities deemed to be beneficially owned by
Dresdner RCM (See Note 16). According to the Schedule 13G, (i) Dresdner
does not have either sole or shared dispositive power with respect to any
shares of Class A Common Stock beneficially owned and (ii) Dresdner does
not have either sole or shared voting power with respect to any shares of
Class A Common Stock beneficially owned. The number of shares beneficially
owned by Dresdner is indicated as of January 30, 1998. The address of
Dresdner is Jurgen-Ponto-Platz 1, 60301 Frankfurt, Germany.
(18) William Blair & Company, L.L.C. ("WB&C") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, (i) WB&C has sole dispositive power
with respect to all 1,059,525 shares of Class A Common Stock beneficially
owned and (ii) WB&C has sole voting power with respect to 278,900 shares
of Class A Common Stock beneficially owned and shared voting power with
respect to zero shares of Class A Common Stock beneficially owned. The
number of shares beneficially owned by WB&C is indicated as of February
14, 1998. The address of WB&C is 222 West Adams Street, 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 1997 fiscal year all applicable
Section 16(a) filing requirements were complied with by the officers, directors,
and greater than ten-percent beneficial owners except that Mr. Rogan was late in
filing a Form 3.
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, 1995, December 31, 1996 and December 31, 1997 paid or awarded
to those persons who were, at December 31, 1997: (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 ($) ($) ($)(1) (#) ($)
- -------------------------- ---- ------- ------- ------------ ------------ ------------
David P. Yeager 1997 330,000 411,840 -- -- 5,062(2)
Vice Chairman and 1996 199,650 522,082 -- 35,000 4,762(2)
Chief Executive Officer 1995 181,500 450,314 -- -- 4,762(2)
Thomas L. Hardin 1997 260,000 274,560 -- -- 5,062(2)
President and 1996 199,650 374,711 -- 35,000 4,762(2)
Chief Operating Officer 1995 181,500 310,636 -- -- 4,762(2)
Daniel F. Hardman 1997 125,000 258,210 -- -- 5,062(2)
President-Chicago Region 1996 108,900 252,569 -- 15,000 4,762(2)
1995 111,578 189,122 -- -- 4,762(2)
John T. Donnell 1997 200,000 235,000 -- -- 5,062(2)
Executive Vice President-- 1996 163,600 251,047 -- 25,000 4,762(2)
National Accounts 1995 148,700 227,428 -- -- 4,762(2)
Robert J. Jensen 1997 170,000 242,000 -- -- 5,062(2)
President-Hub Group 1996 155,500 225,500 -- 25,000 4,762(2)
Operations Management 1995 139,755 205,000 -- -- 4,762(2)
(1) During the fiscal years covered, no Named Executive Officer received any
other annual compensation in an aggregate amount exceeding the lesser of
either $50,000 or 10% of his total annual salary and bonus reported in the
preceding two columns.
(2) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,900, $4,600 and $4,600 in 1997,
1996 and 1995, 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 $162 during each of 1997,
1996 and 1995.
8
Aggregated Option/SAR Exercises In Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table provides information concerning options exercised by
the Named Executive Officers during the fiscal year ended December 31, 1997, and
the value at December 31, 1997, of unexercised options.
Number of Shares of
Class A Common Stock Value ($) of
Underlying Unexercised Unexercised In-the-
Shares Options at Money Options at
Acquired December 31, 1997 December 31, 1997
on Value ---------------------- -------------------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ----------------------- -------- -------- ---------------------- -------------------
David P. Yeager........ 0 0 7,000/28,000 110,250/441,000
Thomas L. Hardin....... 0 0 7,000/28,000 110,250/441,000
Daniel F. Hardman...... 0 0 3,000/12,000 47,250/189,000
John T. Donnell........ 0 0 5,000/20,000 78,750/315,000
Robert J. Jensen....... 0 0 5,000/20,000 78,750/315,000
Compensation of Directors
Directors who are not employees of the Company received $12,000 for
serving as a director during 1997. 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 of which 4,000 shares have vested for each
director. These options vest ratably on the date of each of the three annual
meetings of stockholders occurring after the grant date.
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 May 1996, 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 1997.
The 1997 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.
9
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.
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 1997, there were no long-term incentive
awards to the Company's executive officers.
Compensation Administration
The Compensation Committee will follow an annual cycle to administer each
of the three components of executive compensation. 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
1997. Mr. Yeager's compensation was based on overall performance of the Company
and on relative levels of compensation for CEOs within the benchmark companies
in the transportation industry. In particular, Mr. Yeager's compensation is
based on achievement of goals relating to the Company's earnings per share
target and individual performance related to strategic objectives.
The Compensation Committee approved the following compensation for Mr.
Yeager during 1997: (i) a base salary of $330,000 per year and (ii) a bonus
of $411,840.
COMPENSATION COMMITTEE,
Gary D. Eppen
Charles R. Reaves
Martin P. Slark
10
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
------- -------- --------
Hub Group, Inc. 100 191 212
Nasdaq Stock Market 100 119 146
Nasdaq Trucking & Transp. 100 103 132
11
APPROVAL OF 1997 LONG-TERM INCENTIVE PLAN
A proposal will be presented at the Annual Meeting to approve the Hub
Group, Inc. 1997 Long-Term Incentive Plan (the "Plan"), as amended and restated
effective as of October 28, 1997. The Plan was adopted by the Board of Directors
of the Company effective as of October 28, 1997. The Board of Directors of the
Company adopted the amendment and restatement of the Plan on April 10, 1998,
effective as of October 28, 1997, subject to shareholder approval.
General Description
The purpose of the Plan is to (a) attract and retain key executive and
managerial employees; (b) attract and retain the services of experienced and
knowledgeable directors; (c) motivate participating employees by means of
appropriate incentives to achieve long-range goals; (d) provide incentive
compensation opportunities that are competitive with those of other
corporations; and (e) further identify participants' interests with those of the
Company's other shareholders through compensation that is based on the price
appreciation of common stock of the Company, and thereby promote the long-term
financial interest of the Company, including the growth in value of the
Company's equity and enhancement of long-term shareholder return. The purpose of
the amendment and restatement of the Plan is to permit the grant of incentive
stock options (within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code")) and to provide for awards to employees subject to
Section 162(m) of the Code and in compliance with the requirements thereunder.
A committee (the "Committee") comprised of members of the Board of
Directors, and selected by the Board, administers the Plan. Currently, the
Compensation Committee of the Board serves as the "Committee". Participants in
the Plan are selected by the Committee from time to time from among the
employees who are key executives or managerial employees of Hub Group and its
related companies (as defined in the Plan) which have adopted the Plan. The
Committee may grant non-qualified stock and incentive stock options, stock
appreciation rights ("SARs"), restricted stock and performance units, subject to
the terms and conditions established by the Committee. In addition, except as
provided below with respect to Directors who have already received an award,
each Director who is not an employee of the Company or a related company (an
"Eligible Director") shall receive an award of non-qualified stock options under
the Plan and thereby become a participant in the Plan, but shall not be eligible
to receive any other award under the Plan while he is an Eligible Director.
The number of shares of Hub Group common stock which may be issued or
granted under the Plan with respect to all participants shall not exceed 150,000
shares in the aggregate. The number of shares of Hub Group common stock which
may be issued under the Plan with respect to options and stock appreciation
rights awarded to a participant during any one fiscal year of the Company may
not exceed 50,000. All awards granted on or after April 10, 1998 are contingent
on approval of the Plan, as amended and restated, by the shareholders. In
addition, the number of shares of Hub Group common stock that may be issued or
granted under the Plan is subject to equitable adjustment in the event of a
reorganization, recapitalization, stock dividend, stock split, or other capital
readjustment of Hub Group common stock, and is subject to the ability to award
again shares that were subject to an award but were not delivered. The Hub Group
common stock with respect to which awards may be made under the Plan shall be
shares currently authorized but unissued or currently held or subsequently
acquired by the Company as treasury shares, including shares purchased in the
open market or in private transactions.
The Plan is unlimited in duration, and in the event of Plan termination,
will remain in effect as long as any awards under it are outstanding; provided,
however, that no new award shall be made under the Plan on a date that is more
than ten years from the date that the Plan is adopted. The Plan may be amended
or terminated at any time by the Board of Directors, without the consent of
shareholders; provided, however, that no such amendment or termination may
adversely affect the rights of any participant or beneficiary under any award
12
made under the Plan prior to the date such amendment is adopted by the Board.
The Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974, as amended.
Awards under the Plan are not transferable except as designated by the
participant by will or by the laws of descent and distribution; provided that
once the participant is in receipt of the common stock under an award and all
restrictions on the award have lapsed, then the common stock awarded is
transferable. Notwithstanding the foregoing, the Committee may permit awards to
be transferred to or for the benefit of the participant's family, subject to
such limits as the Committee may establish.
Termination provisions in the event of death or termination of employment
shall be in accordance with the restrictions and conditions contained in the
individual awards; provided that, with respect to options awarded to Eligible
Directors, a participant who ceases to be a Director (and does not become an
employee of the Company or a related company) will have 3 months from the date
he ceases to be a Director to exercise any vested options, unless he ceases to
be a Director by reason of his death, disability or retirement, in which case he
(or his estate) will have twelve months to exercise any options.
The employees of the Company and related companies which have adopted the
Plan are eligible to become participants in the Plan. As of March 31, 1998,
there were approximately 1235 employees of the Company and related companies
which have adopted the Plan. The Company has granted options to purchase an
aggregate of 49,000 shares of Class A Common Stock to certain of its employees
under the Plan. None of Messrs. Yeager, Hardin, Hardman, Donnell, Jensen, the
Company's executive officers as a group, the Company's Directors, or any
associates of the foregoing have been granted options under the Plan.
Stock Options Awarded to Participants Who Are Employees
The Committee may determine the type and terms of stock options granted to
participants pursuant to the Plan, provided that such options are either
non-qualified stock options or incentive stock options (within the meaning of
Section 422 of the Code); and provided that (1) the option price per share shall
not be less than the greater of (a) the fair market value of a share of Hub
Group common stock on the date the option is granted or (b) the par value of a
share of Hub Group common stock on such date, and (2) each option must expire
not later than 10 years after the date of grant. Generally, no option may be
exercised by a participant prior to the date the participant completes one
continuous year of employment with the Company or a related Company after the
date as of which the option is granted (provided that the Committee may permit
earlier exercise following the participant's termination of employment by reason
of death or disability). The exercise of any option will result in the surrender
of any SARs granted in tandem therewith.
If a participant elects to exercise an option by paying all or a portion
of the purchase price in common stock, as permitted and in accordance with the
terms of the Plan, then such participant may, in the Committee's discretion, be
issued a new option to purchase additional shares of common stock equal to the
number of shares of common stock surrendered to the Company in such payment.
Such new option shall have an exercise price equal to the fair market value per
share on the date such new option is granted, shall first be exercisable six
months from the date of grant of the new option and shall have an expiration
date on the same date as the expiration date of the original option so exercised
by payment of the purchase price in shares of common stock.
The Committee may award dividend equivalents with respect to non-qualified
stock options and, subject to the limitations of the Code, with respect to
incentive stock options. The award of dividend equivalents shall permit the
participant to earn an amount equal to the dividends payable with respect to the
number of shares of common stock subject to the option for the period the option
is outstanding and unexercised. The right to payment of such earned dividends
shall be subject to such restrictions and limitations as may be imposed by the
Committee.
13
Stock Options Awarded to Participants Who Are Eligible Directors
Each Director who is an Eligible Director shall be granted an option to
purchase 12,000 shares of Hub Group common stock (the "Eligible Director Award")
as of the first business day immediately following the date he becomes an
Eligible Director, provided that he has not previously received an Eligible
Director Award below under this Plan or the comparable award under the Hub
Group, Inc. 1996 Long-Term Incentive Plan. A Director may not receive more than
one Eligible Director Award, and an individual may not receive any award under
the Plan other than the Eligible Director Award during the period that he is an
Eligible Director.
An option awarded as an Eligible Director Award is not intended to satisfy
the requirements applicable to an "incentive stock option" as described in
section 422(b) of the Code. The option price per share of an option granted as
an Eligible Director Award shall not be less than the greater of (a) the fair
market value of a share of Hub Group common stock on the date the option is
granted or (b) the par value of a share of Hub Group common stock on such date.
Generally, the option shall be first exercisable with respect to each 1/3 of the
number of shares of common stock subject to the option on the date of each of
the first, second and third annual anniversaries of the date as of which the
option is granted, respectively, but only if the participant continues to serve
as a Director until such annual anniversary (or is employed by the Company or
any related company until such anniversary). Notwithstanding the foregoing, 100%
of the option will become fully exercisable on the date the participant ceases
to be a Director if such cessation occurs by reason of the participant's death
or disability. The option will not be exercisable after the earliest to occur of
(a) the ten-year anniversary of the date on which the option was granted; (b)
the one-year anniversary of the date an Eligible Director ceases to be a
Director after attaining age 65 or as a result of death or disability; and (c)
the three-month anniversary of the date an Eligible Director ceases to be a
Director prior to age 65 for a reason other than death or disability (the
"Expiration Date"). The option will not be exercisable after the Expiration Date
applicable to that option, and all rights to purchase shares of common stock
pursuant to the option shall cease as of the option's Expiration Date. A
participant shall not be permitted to exercise the option after the participant
ceases to be a Director except to the extent that the option is exercisable
immediately prior to such cessation; provided that, if, at the time a
participant ceases to be a Director, he is employed by the Company or a related
company, then the date of his subsequent termination of employment with the
Company or a related company, rather than the date he ceases to serve as a
Director, will be used to determine whether the Expiration Date occurs prior to
the tenth anniversary of the date the option was granted.
Stock Appreciation Rights
The Committee may award SARs in connection with all or any portion of a
previously or contemporaneously granted option or not in connection with an
option, in such number and on such terms as the Committee may decide. If an SAR
is granted in connection with an option, then in the discretion of the
Committee, the SAR may, but need not, be granted in tandem with the option. The
SAR must expire no later than 10 years after the date of grant, or if granted in
tandem with an option, the expiration date of the related option. Generally, no
SAR may be exercised by a participant prior to the date the participant has
completed one continuous year of employment with the Company after the date as
of which the SAR is granted (provided that the Committee may permit earlier
exercise following the participant's termination of employment by death or
disability). An SAR entitles the participant to receive the amount by which the
fair market value of a specified number of shares on the exercise date exceeds a
specified price, which price shall not be less than 100% of the fair market
value of a share of Hub Group common stock at the time the SAR is granted, or if
granted in tandem with an option, the exercise price with respect to shares
under the tandem option. Such amount shall be payable in Hub Group common stock,
in cash, or in a combination thereof, as determined by the Committee. The
exercise of an SAR will result in the surrender of corresponding rights under
the tandem option.
14
The Committee may award dividend equivalents with respect to SARs. The
award of dividend equivalents shall permit the participant to earn an amount
equal to the dividends payable with respect to the number of shares of Stock
that are subject to the SARs for the period the SARs are outstanding and
unexercised. The right to payment of such earned dividends shall be subject to
such restrictions and limitations as may be imposed by the Committee.
Restricted Stock
The Committee may award to participants shares of Hub Group common stock
which are subject to certain restrictions as may be determined by the Committee
("Restricted Stock"); provided that Restricted Stock awarded under the Plan may
not be sold, assigned, transferred, pledged or otherwise encumbered for a period
of not less than one year after the time of the grant of such shares (the
"Restricted Period"); and provided further that a participant who terminates
employment prior to the end of the Restricted Period will forfeit all shares of
Restricted Stock that remain subject to restrictions. The Committee may, in its
discretion, at any time after the date of the award of Restricted Stock, adjust
the length of the Restricted Period to account for individual circumstances of a
participant or group of participants, but in no case shall the length of the
Restricted Period be less than one year.
Performance Units
The Committee may award performance units to participants under the Plan,
subject to such conditions and restrictions as may be determined by the
Committee. The award of performance units entitles the participant to receive
value for the units at the end of a performance period to the extent provided
under the award. The number of units earned, and value received for them, will
be contingent on the degree to which the performance measures established at the
time of the initial award are met.
The Committee shall designate the participants to whom performance units
are to be granted, the term of the performance period, and other terms and
conditions of the award. The Committee will compare the actual performance to
the performance measures established for the performance period and determine
the number of units to be paid and their value. Payment for units earned shall
be wholly in cash, wholly in common stock or in a combination of the two, in a
lump sum or installments, and subject to vesting requirements and such other
conditions as the Committee shall determine. The Committee will determine the
number of earned units to be paid in cash and the number to be paid in common
stock. For performance units valued when granted in shares of common stock, one
share of common stock will be paid for each unit earned, or cash will be paid
for each unit earned equal to either (a) the fair market value of a share of
common stock at the end of the performance period or (b) the value of the common
stock determined based on the average fair market value for a number of days
determined by the Committee. For performance units valued when granted in cash,
the value of each unit earned will be paid in its initial cash value, or shares
of common stock will be distributed based on the cash value of the units earned
divided by (a) the fair market value of a share of common stock at the end of
the performance period or (b) the value of a share of common stock determined
based on the average fair market value for a number of days determined by the
Committee.
If a participant's termination of employment occurs during a performance
period with respect to any performance shares granted to him, the Committee may
determine that the participant will be entitled to receive all or any portion of
the performance shares that he would otherwise receive, and may accelerate the
determination and payment of the value of such performance shares or make such
other adjustments as the Committee, in its sole discretion, deems desirable.
15
U.S. Federal Income Tax Consequences
A participant who has been granted an incentive stock option will not
realize taxable income and the Company will not be entitled to a deduction at
the time of the grant or exercise of such option. If the participant makes no
disposition of shares acquired pursuant to an incentive stock option within two
years from the date of grant of such option, or within one year of the transfer
of the shares to the participant, any gain or loss realized on a subsequent
disposition of such shares will be treated as a capital gain or loss. Under such
circumstances, the Company will not be entitled to any deduction for Federal
income tax purposes. If the holding period requirements are not satisfied, the
participant will generally realize ordinary income at the time of disposition in
an amount equal to the lesser of (i) the excess of the fair market value of the
shares on the date of exercise over the option price or (ii) the excess of the
amount realized upon disposition of the shares, if any, over the option price,
and the Company will be entitled to a corresponding deduction. In addition, the
participant may be required to pay an alternative minimum tax on the amount of
his tax preference items, if such tax exceeds the tax otherwise due, which
amount of minimum tax paid may be available as a credit in future years to
reduce subsequent tax liability. The exercise of an incentive stock option will
generally result in an increase to alternative minimum taxable income, the basis
on which the alternative minimum tax is computed, by the amount by which the
fair market value of the shares at the time of exercise exceeds the exercise
price.
A participant will not realize taxable income at the time of the grant of
a non-qualified option. Upon exercise, however, of such non-qualified stock
option, the participant will realize ordinary income in an amount measured by
the excess, if any, of the fair market value of the shares on the date of
exercise over the option price, and the Company will be entitled to a
corresponding deduction. Upon a subsequent disposition of such shares, the
participant will realize short-term or long-term capital gain or loss, with the
basis for computing such gain or loss equal to the option price plus the amount
of ordinary income realized upon exercise.
A participant will not realize taxable income at the time of the grant of
a stock appreciation right. Upon exercise, however, the participant will realize
ordinary income measured by the difference between the fair market value of the
common stock of the Company on the applicable date of grant and the fair market
value of such stock on the date of exercise. The Company will be entitled to a
corresponding deduction in the year of exercise.
A participant who has been granted a restricted stock award will not
realize taxable income at the time of grant, and the Company will not be
entitled to a deduction at that time, assuming that the restrictions constitute
a substantial risk of forfeiture for Federal income tax purposes. Upon the
vesting of shares subject to an award, the participant will realize ordinary
income in an amount equal to the fair market value of the shares at such time,
and the Company will be entitled to a corresponding deduction. Dividends paid to
the participant during the restriction period will also be compensation income
to the participant and deductible as such by the Company. The participant may
elect to be taxed at the time of grant of a restricted stock award on the then
fair market value of the shares, in which case (i) the Company will be entitled
to a deduction at the same time and in the same amount, (ii) dividends paid to
such holder during the restriction period will be taxable as dividends to such
holder and not deductible by the Company, and (iii) there will be no further tax
consequences when the restrictions lapse. If a participant who has made such an
election subsequently forfeits the shares, he will not be entitled to any
deduction or loss. The Company, however, will be required to include as ordinary
income the lesser of the fair market value of the forfeited shares or the amount
of the deduction originally claimed with respect to the shares.
A participant who has been granted performance units will not realize
taxable income at the time of grant, and the Company will not be entitled to a
deduction at that time. The participant will have compensation income at the
time of payment, and the Company will have a corresponding deduction.
16
Payment of Option Price with Shares of Company Common Stock
Under proposed regulations, the exercise of an incentive stock option
through the exchange of previously acquired stock will generally be treated as a
non-taxable, like-kind exchange as to the number of shares given up and the
identical number of shares received under the option. That number of shares will
take the same basis and, for capital gains purposes, the same holding period as
the shares which are given up. However, such holding period will not be credited
for purposes of the one-year holding period required for the new shares to
receive incentive stock option treatment. Shares received upon such an exchange
which are in excess of the number of shares given up will have a new holding
period and, if cash was paid in addition to the shares exchanged, a basis equal
to the amount of such cash. If a disqualifying disposition (a disposition before
the end of the applicable holding period) occurs with respect to any of the
shares received from the exchange, it will be treated as a disqualifying
disposition of the shares with the lowest basis.
If the exercise price of an incentive stock option is paid with shares of
stock of the Company acquired through a prior exercise of an incentive stock
option, gain will be realized on the shares given up (and will be taxed as
ordinary income) if those shares have not been held for the minimum holding
period (two years from the date of grant and one year from the date of
transfer), but the exchange will not affect the tax treatment, as described in
the immediately preceding paragraph, of the shares received.
The exercise of a non-qualified stock option through the delivery of
previously acquired stock will generally be treated as a non-taxable, like-kind
exchange as to the number of shares surrendered and the identical number of
shares received under the option. That number of shares will take the same basis
and, for capital gains purposes, the same holding period as the shares which are
given up. The value of the shares received upon such an exchange which are in
excess of the number given up will be taxed to the participant at the time of
the exercise as ordinary income. The excess shares will have a new holding
period for capital gains purposes and a basis equal to the value of such shares
determined at the time of exercise.
Withholding of Taxes
The Company may deduct, from any payment under the Plan, the amount of any
tax required by law to be withheld with respect to such payment, or may require
the participant to pay such amount to the Company prior to, and as a condition
of, making such payment. The use of shares of Company common stock to satisfy
any withholding requirement will be treated, for federal income tax purposes, as
a sale of such shares for an amount equal to the fair market value of the stock
on the date when the amount of taxes to be withheld is determined. If previously
owned shares of Company common stock are delivered by a participant to satisfy a
withholding requirement, the disposition of such shares may result in the
recognition of gain or loss by the participant for tax purposes.
Limitations on Deductions
The Company income tax deduction for awards under the Plan may be
unavailable if (i) the award is in excess of reasonable compensation, (ii) the
award fails to satisfy the requirements of section 162(m) of the Code that
compensation in excess of $1 million be performance-based, and (iii) the award
constitutes an excess parachute payment under section 280G of the Code.
The Board of Directors recommends that shareholders vote FOR this
proposal.
17
CERTAIN TRANSACTIONS
On March 1, 1997, the Company exercised its option to acquire an
additional approximately 44% ownership interest in Hub Group Distribution
Services ("Hub Distribution") for an aggregate price of approximately
$1,500,000, raising the Company's general partnership interest in Hub
Distribution to 65%. In connection with this acquisition, Phillip C. Yeager
received approximately $97,000, David P. Yeager (including members of his
immediate family) received approximately $151,000, Thomas L. Hardin received
approximately $98,000, Mark A. Yeager (including members of his immediate
family) received approximately $90,000, John T. Donnell received approximately
$65,000 and Robert J. Jensen (including members of his immediate family)
received approximately $103,000. The purchase price paid by the Company for this
approximate 44% interest was determined based upon a fixed option price
determined at the closing of the Offering.
On September 17, 1997 the Company purchased the remaining 70% minority
interest in Hub City Los Angeles, L.P. and Hub City Golden Gate, L.P. for
approximately $59,379,000 in cash. Phillip C. Yeager received approximately
$5,051,000, David P. Yeager (including members of his immediate family) received
approximately $3,707,000, Thomas L. Hardin received approximately $1,475,000,
Mark A. Yeager (including members of his immediate family) received
approximately $3,707,000 and Robert J. Jensen (including members of his
immediate family) received approximately $3,707,000. The purchase price paid by
the Company was based upon the option formula contained in the Amended and
Restated Limited Partnership Agreements of Hub City Los Angeles, L.P. and Hub
City Golden Gate, L.P. The decision to exercise the options to acquire the
minority interests in Hub City Los Angeles, L.P. and Hub City Golden Gate, L.P.
was made by the independent members of the Company's Board of Directors.
On April 1, 1998 the Company purchased the remaining 70% minority interest
in Hub City Houston, L.P., Hub City Dallas, L.P. and Hub City Rio Grande, L.P.
for approximately $6,152,000 in cash. Phillip C. Yeager received approximately
$426,000, David P. Yeager (including members of his immediate family) received
approximately $547,000, Thomas L. Hardin received approximately $419,000, Mark
A. Yeager (including members of his immediate family) received approximately
$515,000 and Robert J. Jensen (including members of his immediate family)
received approximately $515,000. The purchase price paid by the Company was
based upon the option formula contained in the Amended and Restated Limited
Partnership Agreements of Hub City Houston, L.P., Hub City Dallas, L.P and Hub
City Rio Grande, L.P. The decision to exercise the options to acquire the
minority interests in Hub City Houston, L.P., Hub City Dallas, L.P. and Hub City
Rio Grande, L.P. 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.
18
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 16, 1998, 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 1999. 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 not later than December 16,
1998. 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,
MARK A. YEAGER
Division President, Secretary and General
Counsel
Lombard, Illinois
April 15, 1998
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.
19
HUB GROUP, INC.
1997 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective as of October 28, 1997)
HUB GROUP, INC.
Certificate
I, ______________, _____________ of Hub Group, Inc., having in my custody
and possession the corporate records of said corporation, do hereby certify that
attached hereto is a true and correct copy of the Hub Group, Inc. 1997 Long-Term
Incentive Plan as in effect October 28, 1997.
WITNESS my hand this __ day of ________, 1998.
________________
As Aforesaid
TABLE OF CONTENTS
SECTION 1....................................................................1
GENERAL...................................................................1
1.1 Purpose........................................................1
1.2 Participation..................................................1
1.3 Operation and Administration...................................2
SECTION 2....................................................................2
OPTIONS...................................................................2
2.1 Definition.....................................................2
2.2 Eligibility....................................................2
2.3 Price..........................................................2
2.4 Exercise.......................................................3
2.5 Post-Exercise Limitations......................................4
2.6 Expiration Date................................................4
2.7 Reload of Option. .............................................4
2.8 Dividend Equivalents...........................................4
SECTION 3....................................................................5
STOCK APPRECIATION RIGHTS.................................................5
3.1 Definition.....................................................5
3.2 Eligibility....................................................5
3.3 Exercise.......................................................5
3.4 Settlement of Award............................................6
3.5 Post-Exercise Limitations......................................6
3.6 Expiration Date................................................6
3.7 Dividend Equivalents...........................................6
SECTION 4....................................................................7
RESTRICTED STOCK..........................................................7
4.1 Definition.....................................................7
4.2 Eligibility....................................................7
4.3 Terms and Conditions of Awards.................................7
SECTION 5....................................................................8
PERFORMANCE UNITS.........................................................8
5.1 Definition.....................................................8
5.2 Eligibility....................................................8
5.3 Terms and Conditions of Awards.................................8
5.4 Payment........................................................9
5.5 Termination during Performance Period..........................9
i
SECTION 6....................................................................9
DIRECTORS AUTOMATIC OPTION GRANT..........................................9
6.1 Definition.....................................................9
6.2 Participation..................................................9
6.3 Price.........................................................10
6.4 Exercise......................................................10
6.5 Expiration Date...............................................11
6.6 Agreement With Company........................................11
SECTION 7...................................................................12
OPERATION AND ADMINISTRATION.............................................12
7.1 Effective Date...............................................12
7.2 Shares Subject to Plan.......................................12
7.3 Individual Limits on Awards..................................12
7.4 Adjustments to Shares........................................13
7.5 Limit on Distribution........................................15
7.6 Liability for Cash Payments..................................16
7.7 Performance-Based Compensation...............................16
7.8 Withholding..................................................16
7.9 Transferability..............................................17
7.10 Administration...............................................17
7.11 Notices......................................................17
7.12 Form and Time of Elections...................................17
7.13 Agreement With Company.......................................17
7.14 Limitation of Implied Rights.................................17
7.15 Benefits Under Qualified Retirement Plans....................18
7.16 Evidence.....................................................18
7.17 Action by Employers..........................................18
7.18 Gender and Number............................................18
7.19 Defined Terms................................................18
SECTION 8...................................................................20
COMMITTEE................................................................20
8.1 Selection of Committee........................................20
8.2 Powers of Committee...........................................20
8.3 Delegation by Committee.......................................21
8.4 Information to be Furnished to Committee......................22
8.5 Liability and Indemnification of Committee....................22
SECTION 9...................................................................22
AMENDMENT AND TERMINATION................................................22
ii
HUB GROUP, INC.
1997 LONG-TERM INCENTIVE PLAN
SECTION 1
GENERAL
1.1 Purpose. The Hub Group, Inc. 1997 Long-Term Incentive Plan (the
"Plan") has been established by Hub Group, Inc. (the "Company") to:
(a) attract and retain key executive and managerial employees;
(b) attract and retain the services of experienced and knowledgeable
directors;
(c) motivate participating employees, by means of appropriate incentives,
to achieve long-range goals;
(d) provide incentive compensation opportunities that are competitive with
those of other corporations; and
(e) further identify Participants' interests with those of the Company's other
shareholders through compensation that is based on the Company's common
stock;
and thereby promote the long-term financial interest of the Company and the
Related Companies, including the growth in value of the Company's equity and
enhancement of long-term shareholder return.
1.2 Participation. Participation in the Plan shall be subject to the
following:
(a) Subject to the terms and conditions of the Plan, the Committee shall
determine and designate, from time to time, from among the employees of
the Employers who are key executives or managerial employees, those
persons who will be granted one or more Awards under the Plan, and
thereby become "Participants" in the Plan. In the discretion of the
Committee, and subject to the terms of the Plan, a Participant may be
granted any Award permitted under the provisions of the Plan, and more
than one Award may be granted to a Participant. However, the right to
receive an Option under Section 6 shall be subject to the limitations
of that section.
(b) Subject to the terms and conditions of the Plan, Eligible Directors shall
receive Option Awards in accordance with the provisions of Section 6, and
thereby become "Participants" in the Plan. Individuals shall not be
eligible for Awards under Sections 2, 3, 4 and 5 during the period in
which they are Eligible Directors.
Except as otherwise provided by the Committee and consented to by the
Participant, or except as otherwise provided in the Plan, an Award under the
Plan shall not affect any previous Award under the Plan or an award under any
other plan maintained by the Company or the Related Companies.
1.3 Operation and Administration. The operation and administration of
the Plan, including the Awards made under the Plan, shall be subject to the
provisions of Section 7. Capitalized terms in the Plan shall be defined as set
forth in the Plan (including subsection 7.18 of the Plan).
SECTION 2
OPTIONS
2.1 Definitions. The grant of an Option under this Section 2 entitles
the Participant to purchase shares of Stock at a price fixed at the time the
Option is granted, or at a price determined under a method established at the
time the Option is granted, subject to the terms of this Section 2. Options
granted under this Section 2 may be either Incentive Stock Options or
Non-Qualified Stock Options, as determined in the discretion of the Committee.
A "Non-QualifiedOption" is an Option that is not intended to be an "incentive
stock option" as that term is described in section 422(b) of the Code. An
"Incentive Stock Option" is an Option that is intended to satisfy the
requirements applicable to an "incentive stock option" described in section
422(b) of the Code.
2.2 Eligibility. The Committee shall designate the Participants to whom
Options are to be granted under this Section 2 and shall determine the number of
shares of Stock to be subject to each such Option. Consistent with the
requirements of section 422 of the Code, to the extent that the aggregate fair
market value of Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year (under
all plans of the Company and all Related Companies) exceeds $100,000, such
options shall be treated as Non-Qualified Stock Options.
2.3 Price. The determination and payment of the purchase price of a
share of Stock under each Option granted under this Section 2 shall be subject
to the following:
(a) The purchase price shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option
is granted; provided, however, that in no event shall such price be less
than the greater of (i) 100% of the Fair Market Value of a share of Stock
as of the date on which the Option is granted; or (ii) the par value of a
share of Stock on such date.
(b) Subject to the following provisions of this subsection 2.3, the full
purchase price of each share of Stock purchased upon the exercise of any
Option shall be paid at the time of such exercise and, as soon as
practicable thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto.
(c) The purchase price shall be payable in cash or in shares of Stock (valued
at Fair Market Value as of the day of exercise), or in any combination
thereof, as determined by the Committee.
(d) A Participant may elect to pay the purchase price upon the exercise of
an Option through the following cashless exercise procedures: The
Participant shall notify the Corporate Secretary of the intent to
exercise. Written instructions will then be prepared and delivered to
the Company and the broker indicating the Participant's cashless
election and instructing the Company to deliver to the broker the
Common Stock issuable upon exercise. The exercise of the Option will
be executed on the same day that the broker is able to sell the stock.
The broker will then withhold from the proceeds of the sale and deliver
to the Company an amount, in cash, equal to the Option exercise price.
An additional amount for federal and state tax withholdings may also be
withheld and delivered to the Company at the Participant's election.
2.4 Exercise. Except as otherwise expressly provided in the Plan, an
Option granted under this Section 2 shall be exercisable in accordance with the
following terms of this subsection 2.4:
(a) The terms and conditions relating to exercise of an Option shall be
established by the Committee, and may include, without limitation,
conditions relating to completion of a specified period of service or
achievement of performance standards prior to exercise of the Option.
2
(b) No Option may be exercised by a Participant: (i) prior to the date on
which the Participant completes one continuous year of employment with the
Company or any Related Company after the date as of which the Option is
granted (provided, however, that the Committee may permit earlier exercise
following the Participant's Date of Termination by reason of death or
Disability); or (ii) after the Expiration Date applicable to that Option.
(c) The exercise of an Option will result in the surrender of the
corresponding rights under a tandem Stock Appreciation Right, if any.
2.5 Post-Exercise Limitations. The Committee, in its discretion, may
impose such restrictions on shares of Stock acquired pursuant to the exercise of
an Option (including stock acquired pursuant to the exercise of a tandem Stock
Appreciation Right) as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance and such other factors as the
Committee determines to be appropriate.
2.6 Expiration Date. The "Expiration Date" with respect to an Option
means the date established as the Expiration Date by the Committee at the time
of the grant; provided, however, that the Expiration Date with respect to any
Option shall not be later than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Option is granted;
(b) if the Participant's Date of Termination occurs by reason of
Retirement, death or Disability, the one-year anniversary of such Date
of Termination; or
(c) if the Participant's Date of Termination occurs for reasons other than
Retirement, death or Disability, the 60-day period following such Date of
Termination.
2.7 Reload of Option. In the event the Participant exercises an Option
and pays all or a portion of the purchase price in Common Stock, in the manner
permitted by subsection 2.3, such Participant may, in the Committee's
discretion, be issued a new Option to purchase additional shares of Stock equal
to the number of shares of Stock surrendered to the Company in such payment.
Such new Option shall have an exercise price equal to the Fair Market Value per
share on the date such new Option is granted, shall first be exercisable six
months from the date of grant of the new Option and shall have an Expiration
Date on the same date as the Expiration Date of the original Option so exercised
by payment of the purchase price in shares of Stock.
2.8 Dividend Equivalents. The Committee may award Dividend Equivalents
with respect to Options. The award of Dividend Equivalents shall permit the
Participant to earn an amount equal to the dividends payable with respect to the
number of shares of Stock subject to the Option for the period the Option is
outstanding and unexercised. The right to payment of such earned dividends
shall be subject to such restrictions and limitations as may be imposed by the
Committee.
SECTION 3
STOCK APPRECIATION RIGHTS
3.1 Definition. Subject to the terms of this Section 3, a Stock
Appreciation Right granted under the Plan entitles the Participant to receive,
in cash or Stock (as determined in accordance with subsection 3.4), value equal
to all or a portion of the excess of: (a) the Fair Market Value of a specified
number of shares of Stock at the time of exercise; over (b) a specified price
which shall not be less than 100% of the Fair Market Value of the Stock at the
time the Stock Appreciation Right is granted, or, if granted in tandem with an
Option, the exercise price with respect to shares under the tandem Option.
3.2 Eligibility. Subject to the provisions of the Plan, the Committee
shall designate the Participants to whom Stock Appreciation Rights are to be
3
granted under the Plan, shall determine the exercise price or a method by which
the price shall be established with respect to each such Stock Appreciation
Right, and shall determine the number of shares of Stock on which each Stock
Appreciation Right is based. A Stock Appreciation Right may be granted in
connection with all or any portion of a previously or contemporaneously granted
Option or not in connection with an Option. If a Stock Appreciation Right is
granted in connection with an Option, then, in the discretion of the Committee,
the Stock Appreciation Right may, but need not be granted in tandem with the
Option.
3.3 Exercise. The exercise of Stock Appreciation Rights shall be
subject to the following:
(a) If a Stock Appreciation Right is not in tandem with an Option, then the
Stock Appreciation Right shall be exercisable in accordance with the
terms established by the Committee in connection with such rights;
provided, however, that except as otherwise expressly provided in the
Plan, no Stock Appreciation Right may be exercised by a Participant (i)
prior to the date on which he completes one continuous year of
employment with the Company or any Related Company after the date as of
which the Stock Appreciation Right is granted (provided, however, that
the Committee may permit earlier exercise following the Participant's
Date of Termination by reason of death or Disability); or (ii) after
the Expiration Date applicable to that Stock Appreciation Right.
(b) If a Stock Appreciation Right is in tandem with an Option, then the Stock
Appreciation Right shall be exercisable at the time the tandem Option is
exercisable. The exercise of a Stock Appreciation Right will result in
the surrender of the corresponding rights under the tandem Option.
3.4 Settlement of Award. Upon the exercise of a Stock Appreciation
Right, the value to be distributed to the Participant, in accordance with
subsection 3.1, shall be distributed in shares of Stock (valued at their Fair
Market Value at the time of exercise), in cash, or in a combination thereof, in
the discretion of the Committee.
3.5 Post-Exercise Limitations. The Committee, in its discretion, may
impose such restrictions on shares of Stock acquired pursuant to the exercise of
a Stock Appreciation Right as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance and such other factors as the
Committee determines to be appropriate.
3.6 Expiration Date. If a Stock Appreciation Right is in tandem with an
Option, then the "Expiration Date" for the Stock Appreciation Right shall be the
Expiration Date for the related Option. If a Stock Appreciation Right is not in
tandem with an Option, then the "Expiration Date" for the Stock Appreciation
Right shall be the date established as the Expiration Date by the Committee;
provided, however, that subject to the following provisions of this subsection
3.6, the Expiration Date with respect to any Stock Appreciation Right shall not
be later than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Stock Appreciation
Right is granted;
(b) if the Participant's Date of Termination occurs by reason of
Retirement, death or Disability, the one-year anniversary of such Date
of Termination;
(c) if the Participant's Date of Termination occurs by reason other than
Retirement, death, or Disability, 60 days after such Date of Termination.
3.7 Dividend Equivalents. The Committee may award Dividend Equivalents
with respect to Stock Appreciation Rights. The award of Dividend Equivalents
shall permit the Participant to earn an amount equal to the dividends payable
with respect to the number of shares of Stock that are subject to the Stock
Appreciation Rights for the period the Stock Appreciation Rights are outstanding
and unexercised. The right to payment of such earned dividends shall be subject
to such restrictions and limitations as may be imposed by the Committee.
4
SECTION 4
RESTRICTED STOCK
4.1 Definition. Subject to the terms of this Section 4, Restricted Stock
Awards under the Plan are grants of Stock to Participants, the vesting of which
is subject to such conditions as may be established by the Committee.
4.2 Eligibility. The Committee shall designate the Participants to whom
Restricted Stock is to be granted, and the number of shares of Stock that are
subject to each such Award.
4.3 Terms and Conditions of Awards. Shares of Restricted Stock granted
to Participants under the Plan shall be subject to the following terms and
conditions:
(a) Restricted Stock granted to Participants may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter
provided, for a period of not less than one year after the time of the
grant of such Stock (the "Restricted Period"). Except for such
restrictions, the Participant as owner of such shares shall have all
the rights of a shareholder, including but not limited to the right to
vote such shares and, except as otherwise provided by the Committee,
the right to receive all dividends paid on such shares. The Committee
may, in its discretion, at any time after the date of the award of
Restricted Stock, adjust the length of the Restricted Period to account
for individual circumstances of a Participant or group of Participants,
but in no case shall the length of the Restricted Period be less than
one year.
(b) Except as otherwise determined by the Committee, a Participant whose Date
of Termination occurs prior to the end of the Restricted Period for any
reason shall forfeit all shares of Restricted Stock remaining subject to
any outstanding Restricted Stock Award.
(c) The Committee may, in its discretion, condition the vesting of shares of
Restricted Stock on the achievement of performance goals.
(d) Each certificate issued in respect of shares of Restricted Stock granted
under the Plan shall be registered in the name of the Participant and, at
the discretion of the Committee, each such certificate may be deposited in
a bank designated by the Committee. Each such certificate shall bear the
following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) contained in the Hub Group, Inc. 1997
Long-Term Incentive Plan and an agreement entered into between the
registered owner and Hub Group, Inc. A copy of such plan and
agreement is on file in the office of the Secretary of Hub Group,
Inc., 377 East Butterfield Road, Suite 700, Lombard, Illinois
60148."
(e) Subject to the limitations of the Plan and the Award of Restricted Stock,
at the end of the Restricted Period for Restricted Stock, such Restricted
Stock will be transferred free of all restrictions to a Participant (or
his or her legal representative, beneficiary or heir).
SECTION 5
PERFORMANCE UNITS
5.1 Definition. Subject to the terms of this Section 5, the Award of
Performance Units under the Plan entitles the Participant to receive value for
the units at the end of a Performance Period to the extent provided under the
Award. The number of units earned, and value received for them, will be
contingent on the degree to which the performance measures established at the
time of the initial Award are met.
5
5.2 Eligibility. The Committee shall designate the Participants to whom
Performance Units are to be granted, and the number of units to be the subject
to each such Award.
5.3 Terms and Conditions of Awards. For each Participant, the Committee
will determine the number of units granted; the value of units, which may be
stated either in cash or in shares of Stock; the performance measures used for
determining whether the Performance Units are earned; the Performance Period
during which the performance measures will apply; the relationship between the
level of achievement of the performance measures and the degree to which
Performance Units are earned; whether, during or after the Performance Period,
any revision to the performance measures or Performance Period should be made to
reflect significant events or changes that occur during the Performance Period;
and the number of earned Performance Units that will be paid in cash and/or
shares of Stock.
5.4 Payment. The Committee will compare the actual performance to the
performance measures established for the Performance Period and determine the
number of units to be paid and their value. Payment for units earned shall be
wholly in cash, wholly in Stock or in a combination of the two, in a lump sum or
installments, and subject to vesting requirements and such other conditions as
the Committee shall determine. The Committee will determine the number of
earned units to be paid in cash and the number to be paid in Stock. For
Performance Units valued when granted in shares of Stock, one share of Stock
will be paid for each unit earned, or cash will be paid for each unit earned
equal to either (a) the Fair Market Value of a share of Stock at the end of the
Performance Period or (b) the value of the Stock determined based on the average
Fair Market Value for a number of days determined by the Committee. For
Performance Units valued when granted in cash, the value of each unit earned
will be paid in its initial cash value, or shares of Stock will be distributed
based on the cash value of the units earned divided by (a) the Fair Market Value
of a share of Stock at the end of the Performance Period or (b) the value of a
determined based on the average Fair Market Value for a number of days
share of Stock determined by the Committee.
5.5 Termination during Performance Period. If a Participant's Date of
Termination occurs during a Performance Period with respect to any Performance
Shares granted to him, the Committee may determine that the Participant will be
entitled to receive all or any portion of the Performance Shares that he would
otherwise receive, and may accelerate the determination and payment of the value
of such Performance Shares or make such other adjustments as the Committee, in
its sole discretion, deems desirable.
SECTION 6
DIRECTORS AUTOMATIC OPTION GRANT
6.1 Definition. The grant of an Option under this Section 6 entitles the
Participant to purchase shares of Stock at a price fixed at the time the Option
is granted. An Option granted under this Section 6 shall not affect any Award
previously granted under the Plan or an award under any other plan maintained by
the Company or the Related Companies. An Option granted under this Section 6 is
not intended to satisfy the requirements applicable to an "incentive stock
option" as described in section 422(b) of the Code.
6.2 Participation. Subject to the following provisions of this subsection
6.2, each Director who is an Eligible Director shall be granted an "Option",
which shall be an option to purchase 12,000 shares of Stock (as adjusted
pursuant to subsection 7.4). Each Director who becomes an Eligible Director on
or after the Effective Date (as defined in subsection 7.1) and who has not
previously received an Option award under this Section 6 or under Section 6 of
the Hub Group, Inc. 1996 Long-Term Incentive Plan shall receive the Option Award
described in this subsection 6.2 as of the first business day immediately
following the date he becomes an Eligible Director. A Director may not receive
more than one Option Award under this Section 6 or under Section 6 of the Hub
Group, Inc. 1996 Long-Term Incentive Plan. For purposes of the Plan, each
Director who is not an employee of the Company or any Related Company shall be
an "Eligible Director".
6
6.3 Price. The determination and payment of the purchase price of a
share of Stock under each Option granted pursuant to this Section 6 shall be
subject to the following:
(a) The purchase price shall be the greater of (a) 100% of the Fair Market
Value of a share of Stock as of the date on which such Option is granted;
or (b) the par value of a share of such Stock on such date.
(b) The full purchase price of each share of Stock purchased upon the exercise
of any Option shall be paid at the time of such exercise and, as soon as
practicable thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto.
(c) The purchase price shall be payable in cash or in shares of Stock (valued
at Fair Market Value as of the day of exercise), or in any combination
thereof.
(d) A Participant may elect to pay the purchase price upon the exercise of
an Option granted pursuant to this Section 6 through the following
cashless exercise procedures: The Participant shall notify the
Corporate Secretary of the intent to exercise. Written instructions
will then be prepared and delivered to the Company and the broker
indicating the Participant's cashless election and instructing the
Company to deliver to the broker the Common Stock issuable upon
exercise. The exercise of the Option will be executed on the same day
that the broker is able to sell the stock. The broker will then
withhold from the proceeds of the sale and deliver to the Company an
amount, in cash, equal to the Option exercise price. An additional
amount for federal and state tax withholdings may also be withheld and
delivered to the Company at the Participant's election.
6.4 Exercise. An Option granted under this Section 6 shall be first
exercisable with respect to each 1/3 of the number of shares of Stock subject to
the Option on the date of each of the first, second and third annual
anniversaries of the date as of which the Option is granted, respectively, but
only if the Participant continues to serve as a Director until such annual
anniversary (or is employed by the Company or any Related Company until such
anniversary). Notwithstanding the foregoing, 100% of an Option granted to a
Participant under this Section 6 will become fully exercisable on the date the
Participant ceases to be a Director if such cessation occurs by reason of the
Participant's death or Disability. An Option granted under this Section 6 will
not be exercisable after the Expiration Date applicable to that Option, and all
rights to purchase shares of Stock pursuant to the Option shall cease as of the
Option's Expiration Date.
6.5 Expiration Date. The "Expiration Date" with respect to an Option
granted under this Section 6 means the earliest to occur of:
(a) the ten-year anniversary of the date on which the Option is granted;
(b) if the Participant ceases to be a Director by reason of death or
Disability, or ceases to be a Director after attainment of age 65, the
one-year anniversary of the date he ceases to be a Director; and
(c) if the Participant ceases to be a Director prior to age 65 for reasons
other than death or Disability, the three-month anniversary of the date he
ceases to be a Director.
A Participant shall not be permitted to exercise an Option granted under this
Section 6 after the Participant ceases to be a Director except to the extent
that the Option is exercisable immediately prior to such cessation. For purposes
of this subsection 6.5, if, at the time a Participant ceases to be a Director,
he is employed by the Company or a Related Company, then the Expiration Date of
the Participant's Option under this subsection 6.5 shall be determined by
substituting, in paragraphs 6.5(b) and (c), the Participant's Date of
Termination for the date he ceases to serve as a Director.
6.6 Agreement With Company. Each Option granted under this Section 6
shall be evidenced by an Agreement (an "Agreement") duly executed on behalf of
the Company and by the Participant to whom such option is granted and dated as
of the applicable date of grant. Each Agreement shall comply with and be subject
to the terms of the Plan.
7
SECTION 7
OPERATION AND ADMINISTRATION
7.1 Effective Date. The Plan was adopted by the Board effective October
28, 1997, and was further amended and restated in the form herein effective as
of October 28, 1997 (the "Effective Date"); provided however, that to the extent
Awards are made under the Plan on or after April 10, 1998, they shall be
contingent upon shareholder approval of the Plan by the shareholders of the
Company. The Plan shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that no Awards may be granted under the Plan on
a date that is more than ten years from the date the Plan is adopted.
7.2 Shares Subject to Plan. The shares of Stock with respect to which
Awards may be made under the Plan shall be shares currently authorized but
unissued or currently held or subsequently acquired by the Company as treasury
shares, including shares purchased in the open market or in private
transactions. Subject to the provisions of subsection 7.4, the number of shares
of Stock which may be issued with respect to Awards under the Plan shall not
exceed 150,000 shares in the aggregate. Except as otherwise provided herein, any
shares subject to an Award which for any reason expires or is terminated without
issuance of shares (whether or not cash or other consideration is paid to a
Participant in respect of such shares) shall again be available under the Plan.
7.3 Individual Limits on Awards. Notwithstanding any other provision of
the Plan to the contrary, no Participant shall receive any Award of an Option or
a Stock Appreciation Right under the Plan to the extent that the sum of:
(a) the number of shares of Stock subject to such Award;
(b) the number of shares of Stock subject to all other prior Awards
of Options and Stock Appreciation Rights under the Plan within
the one-year Company fiscal year period that includes the date
of the Award; and
(c) the number of shares of Stock subject to all other prior stock
options and stock appreciation rights granted to the Participant
under other plans or arrangements of the Company and Related
Companies within the one-year Company fiscal year period that
includes the date of the Award;
would exceed the Participant's Individual Limit under the Plan. Subject to the
provisions of paragraph 7.4, the determination made under the foregoing
provisions of this subsection 7.3 shall be based on the shares subject to the
awards at the time of grant, regardless of when the awards become exercisable.
Subject to the provisions of paragraph 7.4, a Participant's "Individual Limit"
shall be 50,000 shares of Stock.
7.4 Adjustments to Shares.
(a) If the Company shall effect any subdivision or consolidation of shares
of Stock or other capital readjustment, payment of stock dividend,
8
stock split, combination of shares or recapitalization or other
increase or reduction of the number of shares of Stock outstanding
without receiving compensation therefor in money, services or property,
then the Committee shall adjust (i) the number of shares of Stock
available under the Plan; (ii) the number of shares available under any
individual or other limits; (iii) the number of shares of Stock subject
to outstanding Awards and the number of shares of Stock subject to
future automatic grant as provided in Section 6; and (iv) the per-share
price under any outstanding Award and the per-share purchase price
under any future automatic grant as provided in Section 6 to the extent
that the Participant is required to pay a purchase price per share with
respect to the Award.
(b) If the Company is reorganized, merged or consolidated or is party to a
plan of exchange with another corporation, pursuant to which
reorganization, merger, consolidation or plan of exchange the
shareholders of the Company receive any shares of stock or other
securities or property, or the Company shall distribute securities of
another corporation to its shareholders, there shall be substituted for
the shares subject to outstanding Awards an appropriate number of
shares of each class of stock or amount of other securities or property
which were distributed to the shareholders of the Company in respect of
such shares, subject to the following:
(1) If the Committee determines that the substitution described in
accordance with the foregoing provisions of this paragraph (b)
would not be fully consistent with the purposes of the Plan or
the purposes of the outstanding Awards under the Plan, the
Committee may make such other adjustments to the Awards to the
extent that the Committee determines such adjustments are
consistent with the purposes of the Plan and of the affected
Awards.
(2) All or any of the Awards may be canceled by the Committee on or
immediately prior to the effective date of the applicable
transaction, but only if the Committee gives reasonable advance
notice of the cancellation to each affected Participant, and
only if either: (A) the Participant is permitted to exercise the
Award for a reasonable period prior to the effective date of the
cancellation; or (B) the Participant receives payment or other
benefits that the Committee determines to be reasonable
compensation for the value of the canceled Awards.
(3) Upon the occurrence of a reorganization of the Company or any
other event described in this paragraph (b), any successor to
the Company shall be substituted for the Company to the extent
that the Company and the successor agree to such substitution.
(c) Upon (or, in the discretion of the Committee, immediately prior to) the
sale to (or exchange with) a third party unrelated to the Company of all
or substantially all of the assets of the Company, all Awards shall be
canceled. If Awards are canceled under this paragraph (c) then, with
respect to any affected Participant, either:
(1) the Participant shall be provided with reasonable advance notice
of the cancellation, and the Participant shall be permitted to
exercise the Award for a reasonable period prior to the
effective date of the cancellation; or
(2) the Participant shall receive payment or other benefits that the
Committee determines to be reasonable compensation for the value
of the canceled Awards.
The foregoing provisions of this paragraph (c) shall also apply to the
sale of all or substantially all of the assets of the Company to a related
party, if the Committee determines such application is appropriate.
(d) In determining what action, if any, is necessary or appropriate under the
foregoing provisions of this subsection 7.4, the Committee shall act in a
manner that it determines to be consistent with the purposes of the Plan
and of the affected Awards and, where applicable or otherwise appropriate,
in a manner that it determines to be necessary to preserve the benefits
and potential benefits of the affected Awards for the Participants and the
Employers.
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(e) The existence of this Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Company or its shareholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business, any merger or consolidation of the Company, any issue of
bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Company's Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(f) Except as expressly provided by the terms of this Plan, the issue by
the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, for cash or property or for labor or
services, either upon direct sale, upon the exercise of rights or
warrants to subscribe therefor or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to Awards then outstanding hereunder.
(g) Awards under the Plan are subject to adjustment under this subsection 7.4
only during the period in which they are considered to be outstanding
under the Plan, with the determination of whether an Award is outstanding
to be made by the Committee.
7.5 Limit on Distribution. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall have no
liability to deliver any shares of Stock under the Plan or make any other
distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws and the applicable
requirements of any securities exchange or similar entity.
(b) In the case of a Participant who is subject to Section 16(a) and 16(b) of
the Securities Exchange Act of 1934, the Committee may, at any time, add
such conditions and limitations to any Award to such Participant, or any
feature of any such Award, as the Committee, in its sole discretion, deems
necessary or desirable to comply with Section 16(a) or 16(b) and the rules
and regulations thereunder or to obtain any exemption therefrom.
7.6 Liability for Cash Payments. Subject to the provisions of this
Section 7, an Employer shall be liable for payment of cash due under the Plan
with respect to any Participant to the extent that such benefits are
attributable to the services rendered for that Employer by the Participant. Any
disputes relating to liability of Employers for cash payments shall be resolved
by the Committee.
7.7 Performance-Based Compensation. To the extent that the Committee
determines that it is necessary or desirable to conform any Awards under the
Plan with the requirements applicable to "Performance-Based Compensation", as
that term is used in Code section 162(m)(4)(C), it may, at or prior to the time
an Award is granted, take such steps and impose such restrictions with respect
to such Award as it determines to be necessary to satisfy such requirements,
including without limitation:
(a) The establishment of performance goals that must be satisfied prior to the
payment or distribution of benefits under such Awards.
(b) The submission of such Awards and performance goals to the Company's
shareholders for approval and making the receipt of benefits under such
Awards contingent on receipt of such approval.
(c) Providing that no payment or distribution be made under such Awards unless
the Committee certifies that the goals and the applicable terms of the
Plan and Agreement reflecting the Awards have been satisfied.
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To the extent that the Committee determines that the foregoing requirements
relating to Performance-Based Compensation do not apply to Awards under the Plan
because the Awards constitute Options or Stock Appreciation Rights, the
Committee may, at the time the Award is granted, conform the Awards to
alternative methods of satisfying the requirements applicable to
Performance-Based Compensation.
7.8 Withholding. All Awards and other payments under the Plan are
subject to withholding of all applicable taxes, which withholding obligations
may be satisfied, with the consent of the Committee, through the surrender of
shares of Stock which the Participant already owns, or to which a Participant is
otherwise entitled under the Plan.
7.9 Transferability. Awards under the Plan are not transferable except
as designated by the Participant by will or by the laws of descent and
distribution. To the extent that the Participant who receives an Award under
the Plan has the right to exercise such Award, the Award may be exercised during
the lifetime of the Participant only by the Participant. Notwithstanding the
foregoing provisions of this subsection 7.9, the Committee may permit awards
under the Plan to be transferred to or for the benefit of the Participant's
family, subject to such limits as the Committee may establish.
7.10 Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in a committee (the "Committee")
in accordance with Section 8.
7.11 Notices. Any notice or document required to be filed with the
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company, at
its principal executive offices. The Committee may, by advance written notice
to affected persons, revise such notice procedure from time to time. Any notice
required under the Plan (other than a notice of election) may be waived by the
person entitled to notice.
7.12 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
7.13 Agreement With Company. At the time of an Award to a Participant
under the Plan, the Committee will require a Participant to enter into an
agreement with the Company in a form specified by the Committee, agreeing to the
terms and conditions of the Plan and to such additional terms and conditions,
not inconsistent with the Plan, as the Committee may, in its sole discretion,
prescribe.
7.14 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of
the Employers whatsoever, including, without limitation, any specific
funds, assets, or other property which the Employers, in their sole
discretion, may set aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual right to the
amounts, if any, payable under the Plan, unsecured by any assets of the
Employers. Nothing contained in the Plan shall constitute a guarantee
by any of the Employers that the assets of the Employers shall be
sufficient to pay any benefits to any person.
(b) Neither the Plan nor Awards granted under the Plan shall confer any
right upon a Participant to continue as an employee or Director for any
period of time or give any Participant any right or claim to any
benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan. Subject to the provisions of
Section 4 (relating to Restricted Stock Awards), no Award under the
Plan shall confer upon the holder thereof any right as a shareholder of
the Company prior to the date on which he fulfills all service
requirements and other conditions for receipt of shares of Stock under
the Plan.
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7.15 Benefits Under Qualified Retirement Plans. Awards to a Participant
(including the grant and the receipt of benefits) under the Plan shall be
disregarded for purposes of determining the Participant's benefits under any
Qualified Retirement Plan.
7.16 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
7.17 Action by Employers. Any action required or permitted to be taken
by any Employer shall be by resolution of its board of directors, or by action
of one or more members of the board (including a committee of the board) who are
duly authorized to act for the board, or by a duly authorized officer of the
Employer.
7.18 Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
7.19 Defined Terms. For purposes of the Plan, the terms listed below
shall be defined as follows:
(a) Award. The term "Award" shall mean any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of
Options, Stock Appreciation Rights, Restricted Stock, Performance
Units, and Dividend Equivalents.
(b) Board. The term "Board" shall mean the Board of Directors of the
Company.
(c) Code. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference
to any successor provision of the Code.
(d) Date of Termination. A Participant's "Date of Termination" shall be
the date that his employment with all Employers and Related Companies
terminates for any reason; provided that a Date of Termination shall
not be deemed to occur by reason of a transfer of the Participant
between the Company and a Related Company (including an Employer) or
between two Related Companies (including Employers); and further
provided that a Participant's employment shall not be considered
terminated while the Participant is on a leave of absence from an
Employer or a Related Company approved by the Participant's employer.
(e) Director. The term "Director" means a member of the Board of Directors
of the Company.
(f) Disability. A Participant shall be considered to have a "Disability"
during the period in which he is unable, by reason of a medically
determinable physical or mental impairment, to engage in any substantial
gainful activity, which condition, in the opinion of a physician selected
by the Committee, is expected to have a duration of not less than 120
days.
(g) Employer. The Company and each Related Company which, with the consent of
the Company, adopts the Plan for the benefit of its eligible employees are
referred to collectively as the "Employers" and individually as an
"Employer".
(h) Fair Market Value. The "Fair Market Value" of a share of Stock of the
Company as of any date shall be the closing market composite price for
such Stock as reported for the NASDAQ Stock Exchange on that date or, if
Stock is not traded on that date, on the next preceding date on which
Stock was traded.
(i) Option. The term "Option" shall mean any Incentive Stock Option or
Non-Qualified Stock Option granted under the Plan.
(j) Performance-Based Compensation. The term "Performance-Based
Compensation" shall have the meaning ascribed to it in section
162(m)(4)(C) of the Code.
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(k) Qualified Retirement Plan. The term "Qualified Retirement Plan" means any
plan of the Company or a Related Company that is intended to be qualified
under section 401(a) of the Internal Revenue Code of 1986, as amended.
(l) Related Companies. The term "Related Company" means (i) any corporation,
partnership, joint venture or other entity during any period in which it
owns, directly or indirectly, at least thirty percent of the voting power
of all classes of stock of the Company (or successor to the Company)
entitled to vote; and (ii) any corporation, partnership, joint venture or
other entity during any period in which either:
(A) it is effectively controlled by; or
(B) at least a thirty percent of its voting or profits interest
is owned, directly or indirectly, by;
the Company, any entity that is a successor to the Company or any entity
that is a Related Company by reason of clause (i) next above.
(m) Retirement. "Retirement" of a Participant shall mean the occurrence of
a Participant's Date of Termination under circumstances that
constitutes a retirement under the terms of the Qualified Retirement
Plan of an Employer or Related Company that is extended to the
Participant immediately prior to the Participant's Date of Termination
or, if no such plan is extended to the Participant on his Date of
Termination, under the terms of any applicable retirement policy of the
Participant's employer.
(n) SEC. "SEC" shall mean the Securities and Exchange Commission.
(o) Stock. The term "Stock" shall mean shares of common stock of the
Company.
SECTION 8
COMMITTEE
8.1 Selection of Committee. The Committee shall be selected by the
Board, and shall consist of not less than two members of the Board, or such
greater number as may be required for compliance with SEC Rule 16b-3.
8.2 Powers of Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the Committee,
subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have
authority and discretion to select employees to receive Awards, to
determine the time or times of receipt, to determine the types of
Awards and the number of shares covered by the Awards, to establish the
terms, conditions, performance criteria, restrictions, and other
provisions of such Awards, and to cancel or suspend Awards. In making
such Award determinations, the Committee may take into account the
nature of services rendered by the respective employee, his present and
potential contribution to the Company's success and such other factors
as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have
authority and discretion to determine the extent to which Awards under
the Plan will be structured to conform to the requirements applicable
to Performance-Based Compensation as described in Code section 162(m),
and to take such action, establish such procedures, and impose such
restrictions at the time such Awards are granted as the Committee
determines to be necessary or appropriate to conform to such
requirements.
(c) The Committee will have the authority and discretion to interpret the
Plan, to establish, amend, and rescind any rules and regulations relating
13
to the Plan, to determine the terms and provisions of any agreements made
pursuant to the Plan, and to make all other determinations that may be
necessary or advisable for the administration of the Plan.
(d) Any interpretation of the Plan by the Committee and any decision made by
it under the Plan is final and binding on all persons.
(e) Except as otherwise expressly provided in the Plan, where the Committee is
authorized to make a determination with respect to any Award, such
determination shall be made at the time the Award is made, except that the
Committee may reserve the authority to have such determination made by the
Committee in the future (but only if such reservation is made at the time
the Award is granted and is expressly stated in the Agreement reflecting
the Award).
8.3 Delegation by Committee. Except to the extent prohibited by the
provisions of Rule 16b-3, the rules relating to Performance-Based Compensation,
applicable state law, the applicable rules of any stock exchange, or any other
applicable rules, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.
8.4 Information to be Furnished to Committee. The Employers and Related
Companies shall furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the Employers and
Related Companies as to an employee's or Participant's employment, termination
of employment, leave of absence, reemployment and compensation shall be
conclusive on all persons unless determined to be incorrect. Participants and
other persons entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers desirable to carry
out the terms of the Plan.
8.5 Liability and Indemnification of Committee. No member or authorized
delegate of the Committee shall be liable to any person for any action taken or
omitted in connection with the administration of the Plan unless attributable to
his own fraud or willful misconduct; nor shall the Employers be liable to any
person for any such action unless attributable to fraud or willful misconduct on
the part of a director or employee of the Employers. The Committee, the
individual members thereof, and persons acting as the authorized delegates of
the Committee under the Plan, shall be indemnified by the Employers against any
and all liabilities, losses, costs and expenses (including legal fees and
expenses) of whatsoever kind and nature which may be imposed on, incurred by or
asserted against the Committee or its members or authorized delegates by reason
of the performance of a Committee function if the Committee or its members or
authorized delegates did not act dishonestly or in willful violation of the law
or regulation under which such liability, loss, cost or expense arises. This
indemnification shall not duplicate but may supplement any coverage available
under any applicable insurance.
SECTION 9
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that,
subject to subsection 7.4 (relating to certain adjustments to shares), no
amendment or termination may materially adversely affect the rights of any
Participant or beneficiary under any Award made under the Plan prior to the date
such amendment is adopted by the Board.
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