def14a
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Under
Rule 14a-12
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LANDSTAR SYSTEM, INC.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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(1) |
Title of each class of securities to which transaction applies:
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(2) |
Aggregate number of securities to which transaction applies:
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(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) |
Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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(1) |
Amount Previously Paid:
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(2) |
Form, Schedule or Registration Statement No.:
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LANDSTAR SYSTEM, INC.
13410 Sutton Park Drive South
Jacksonville, Florida 32224
April 14,
2011
To the Stockholders of Landstar System, Inc.:
You are cordially invited to attend the Annual Meeting of
Stockholders of Landstar System, Inc., on Thursday, May 26,
2011, at 9:00 a.m., local time, to be held in the first
floor conference room of the principal offices of Landstar
System, Inc., at the address above. A notice of meeting, a proxy
card, the 2010 Annual Report on
Form 10-K
and a Proxy Statement containing information about the matters
to be acted upon are enclosed. It is important that your shares
be represented at the meeting. Accordingly, I urge you to sign
and date the enclosed proxy card and promptly return it in the
enclosed pre-addressed, postage-paid envelope even if you are
planning to attend the meeting.
I look forward to the Annual Meeting of Stockholders, and I hope
you will attend the meeting or be represented by proxy.
HENRY H. GERKENS
Chairman, President and Chief Executive Officer
LANDSTAR SYSTEM, INC.
13410 Sutton Park Drive South
Jacksonville, Florida 32224
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held May 26,
2011
Notice is hereby given that the 2011 Annual Meeting of
Stockholders of Landstar System, Inc., a Delaware corporation
(the Company), will be held in the first floor
conference room of the principal offices of Landstar System,
Inc., at the address above, on Thursday, May 26, 2011, at
9:00 a.m., local time, for the following purposes:
(1) To elect one Class I Director whose term will
expire at the 2012 Annual Meeting of Stockholders and two
Class III Directors whose terms will expire at the 2014
Annual Meeting of Stockholders;
(2) To ratify the appointment of KPMG LLP as the
Companys independent registered public accounting firm for
fiscal year 2011;
(3) To hold an advisory vote on executive compensation;
(4) To hold an advisory vote on the frequency of the
advisory vote on executive compensation;
(5) To approve the 2011 Landstar System, Inc. Equity
Incentive Plan; and
(6) To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on
March 31, 2011 will be entitled to notice of and to vote at
the meeting. A list of stockholders eligible to vote at the
meeting will be available for inspection at the meeting at the
address set forth above and during business hours from
May 12, 2011 to the date of the meeting at 13410 Sutton
Park Drive South, Jacksonville, Florida 32224, the
Companys corporate headquarters.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to be held on May 26,
2011:
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The proxy statement and annual report to security holders are
available at www.landstar.com.
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All stockholders are cordially invited to attend the meeting in
person. Whether you expect to attend the Annual Meeting or not,
your proxy vote is very important. To assure your
representation at the meeting, please sign and date the enclosed
proxy card and return it promptly in the enclosed envelope,
which requires no additional postage if mailed in the United
States or Canada.
By Order of the Board of Directors
MICHAEL K. KNELLER
Vice President, General Counsel and Secretary
Jacksonville, Florida
April 14, 2011
IT IS
IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED
AND RETURNED PROMPTLY
LANDSTAR
SYSTEM, INC.
PROXY
STATEMENT
April 14, 2011
INTRODUCTION
This Proxy Statement is furnished to the stockholders of
Landstar System, Inc. (the Company) in connection
with the solicitation of proxies on behalf of the Board of
Directors of the Company (the Board) to be voted at
the Annual Meeting of Stockholders to be held on Thursday,
May 26, 2011 at 9:00 a.m., local time (the 2011
Annual Meeting). The 2010 Annual Report to Stockholders
(which does not form a part of the proxy solicitation material
relating to this Proxy Statement), including the financial
statements of the Company for fiscal year 2010, is enclosed
herewith (the 2010 Annual Report). The mailing
address of the principal executive offices of the Company is
13410 Sutton Park Drive South, Jacksonville, Florida 32224. This
Proxy Statement, accompanying form of proxy, Notice of 2011
Annual Meeting and 2010 Annual Report are being mailed to the
stockholders of the Company on or about April 14, 2011.
RECORD
DATE
The Board has fixed the close of business on March 31, 2011
as the record date for the 2011 Annual Meeting. Only
stockholders of record on that date will be entitled to vote at
the 2011 Annual Meeting in person or by proxy.
PROXIES
Shares cannot be voted at the 2011 Annual Meeting unless the
owner thereof is present in person or by proxy. The proxies
named on the enclosed proxy card were appointed by the Board to
vote the shares of Common Stock of the Company, par value $0.01
per share (Common Stock), represented by the proxy
card. If a stockholder does not return a signed proxy card, his
or her shares cannot be voted by proxy. Stockholders are urged
to mark the boxes on the proxy card to show how their shares are
to be voted. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will
be voted at the meeting or any adjournment thereof in accordance
with any specification thereon, or if no specification is made,
will be voted as follows: (i) FOR the election
of the three directors nominated by our Board of Directors and
named in this proxy statement for the Classes for which they are
nominated; (ii) FOR the ratification of KPMG
LLP as the independent registered public accounting firm for the
Company; (iii) FOR the proposal regarding an
advisory vote on executive compensation; (iv) ABSTAIN
regarding the proposal regarding an advisory vote on the
frequency of the advisory vote on executive compensation; and
(v) FOR the proposal to approve the 2011
Landstar System, Inc. Equity Incentive Plan. Each of these
proposals is more fully described in this Notice of 2011 Annual
Meeting. The proxy card also confers discretionary authority on
the proxies to vote on any other matter not presently known to
management that may properly come before the 2011 Annual Meeting.
Any proxy delivered pursuant to this solicitation is revocable
at the option of the person(s) executing the same (i) upon
receipt by the Company before the proxy is voted of a duly
executed proxy bearing a later date, (ii) by written notice
of revocation to the Secretary of the Company received before
the proxy is voted or (iii) by such person(s) voting in
person at the 2011 Annual Meeting.
The Board has selected BNY Mellon Shareowner Services as
Inspectors of Election (the Inspectors) pursuant to
Article I of the Companys Bylaws, as amended and
restated (the Bylaws). The Inspectors shall
ascertain the number of shares of Common Stock outstanding,
determine the number of shares represented at the 2011 Annual
Meeting by proxy or in person and count all votes and ballots.
Each stockholder shall be entitled to one vote for each share of
Common Stock and such votes may be cast either in person or by
written proxy.
PROXY
SOLICITATION
The cost of the preparation of proxy materials and the
solicitation of proxies will be paid by the Company. The Company
has engaged Georgeson Shareholder Communications, Inc. as the
proxy solicitor for the meeting for a fee of approximately
$7,500 plus reasonable expenses. In addition to the use of the
mails, certain directors, officers or employees of the Company
may solicit proxies by telephone or personal contact. Upon
request, the Company will reimburse brokers, dealers, banks and
trustees, or their nominees, for reasonable expenses incurred by
them in forwarding proxy materials to beneficial owners of
shares.
STOCKHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
A description of the procedures as to how stockholders may send
communications to the Board or individual Board members is
included on the Companys website at
www.landstar.com under Investor Relations/Corporate
Governance.
VOTING
SECURITIES
Shares of the Companys Common Stock are the only class of
voting securities of the Company which are outstanding. On
March 31, 2011, 47,878,197 shares of Common Stock were
outstanding. At the 2011 Annual Meeting, each stockholder of
record at the close of business on March 31, 2011 will be
entitled to one vote for each share of Common Stock owned on
that date as to each matter properly presented to the 2011
Annual Meeting. The holders of a majority of the total number of
the issued and outstanding shares of Common Stock shall
constitute a quorum for purposes of the 2011 Annual Meeting.
PROPOSAL NUMBER
ONE ELECTION OF DIRECTORS
The Board is divided into three classes (Class I,
Class II and Class III), with directors of the Board
(collectively, Directors) in each class serving
staggered three-year terms. At each annual meeting of
stockholders, the terms of Directors in one of these three
classes expire. At that annual meeting of stockholders,
Directors are elected to a Class to succeed the Directors whose
terms are then expiring, with the terms of that Class of
Directors so elected to expire at the third annual meeting of
stockholders thereafter. Pursuant to the Bylaws, new Directors
elected by the remaining Board members to fill a vacancy on the
Board shall hold office for a term expiring at the annual
meeting of stockholders at which the term of office of the Class
of which they have been elected expires and until such
Directors successors shall have been duly elected and
qualified. There are currently six members of the Board: three
Class III Directors whose terms will expire at the 2011
Annual Meeting, one Class I Director whose term will expire
at the 2012 Annual Meeting of Stockholders and two Class II
Directors whose terms will expire at the 2013 Annual Meeting of
Stockholders. As of immediately following the 2011 Annual
Meeting, the Board, pursuant to the Bylaws, will have rebalanced
the number of directors in each of the three classes such that
the Board will be comprised of two Class I Directors, two
Class II Directors and two Class III Directors. The
Board may decide to expand the size of the Board and appoint a
new director or directors in the future in accordance with the
Bylaws.
In connection with its efforts to rebalance the number of
directors in each of the three classes as described above, the
Board has nominated one of the Directors whose term expires at
the 2011 Annual Meeting, Jeffrey C. Crowe, for election as a
Class I Director, and the other two such Directors, David
G. Bannister and Michael A. Henning, for election as
Class III Directors. It is intended that the shares
represented by the accompanying form of proxy will be voted at
the 2011 Annual Meeting for the election of nominee Jeffrey C.
Crowe as a Class I Director and for the election of
nominees David G. Bannister and Michael A. Henning as
Class III Directors, unless the proxy specifies otherwise.
Each Class I Directors term will expire at the 2012
Annual Meeting of Stockholders and each Class III
Directors term will expire at the 2014 Annual Meeting of
Stockholders. Each nominee has indicated his willingness to
serve as a member of the Board, if elected.
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If, for any reason not presently known, any of David G.
Bannister, Jeffrey C. Crowe or Michael A. Henning is not
available for election at the time of the 2011 Annual Meeting,
the shares represented by the accompanying form of proxy may be
voted for the election of one or more substitute nominee(s)
designated by the Board or a committee thereof, unless the proxy
withholds authority to vote for such substitute nominee(s).
Assuming the presence of a quorum, to be elected, a nominee must
receive the affirmative vote of a majority of the votes cast by
the holders of the Common Stock with respect to that
directors election at the 2011 Annual Meeting. Abstentions
from voting and broker non-votes will have no effect on the
outcome of this proposal.
THE BOARD
RECOMMENDS A VOTE FOR THIS PROPOSAL
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DIRECTORS
OF THE COMPANY
The following information describes the principal occupation or
employment, other affiliations and business experience of each
nominee named above and the other persons whose terms as
Directors will continue after the 2011 Annual Meeting.
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Name
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Business Experience
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CLASS I Nominee to serve as Director until
the 2012 Annual Meeting
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Jeffrey C. Crowe
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Mr. Crowe served as Chairman of the Board of the Company from
April 1991 to January 4, 2010. Mr. Crowe was Chief
Executive Officer of the Company from December 2001 to June 30,
2004 and President and Chief Executive Officer of the Company
from April 1991 to December 2001. He was a member of the Board
of Directors of each wholly-owned direct or indirect subsidiary
of the Company, other than Signature Insurance Company, until
June 30, 2004. Mr. Crowe has served as a Director of the U.S.
Chamber of Commerce since February 1998, serving as Vice
Chairman from June 2002 until May 2003 and as Chairman from June
2003 to June 2004. Mr. Crowe has also served as a Director of
the National Chamber Foundation since 1997. He served as
Chairman of the National Defense Transportation Association (the
NDTA) from October 1993 to July 2003 and has served
on the National Surface Transportation Infrastructure Financing
Commission since March 2007. He has served as a Director of
Silgan Holdings, Inc. since May 1997, as a Director of
SunTrust Banks, Inc. since April 2004 and as a Director of PSS
World Medical, Inc. since March 2007.
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Mr. Crowe has extensive experience in the transportation and
logistics industry having worked in this industry over the
course of his entire life, including his service as Chairman and
Chief Executive Officer of the Company. Mr. Crowe remains
involved in the issues that affect industry and commerce in the
United States through his long service and commitment to the
U.S. Chamber of Commerce and affiliated organizations. Mr.
Crowe also has a long history of involvement with the U.S. armed
forces, through his work, among other organizations, with the
NDTA.
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CLASS III Nominees to serve as Directors
until the 2014 Annual Meeting
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David G. Bannister
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Mr. Bannister has been a Director of the Company since April
1991 and was a Director of Landstar System Holdings, Inc.
(LSHI) from October 1988 to July 2004. Effective
April 1, 2011, Mr. Bannister has been elected to the new
position of Chairman of the North American Region of FTI
Consulting Inc. (FTI), a global consulting firm. In
this capacity, Mr. Bannister will have operating and
profitability responsibility for FTIs United States and
Canadian client-service operations. Mr. Bannister served as
Executive Vice President, Chief Development Officer and Chief
Financial Officer of FTI from June 2005 to April 2011. From 1998
to 2003, Mr. Bannister was a General Partner of Grotech Capital
Group, a private equity and venture capital firm. Prior to
joining Grotech Capital Group in May 1998, Mr. Bannister was a
Managing Director at Deutsche Bank Alex Brown Incorporated.
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Mr. Bannister has broad financial and strategic experience
through a long career that has involved work as an investment
banker focused on the transportation sector, a private equity
and venture capital investor and, today, as an executive with
FTI Consulting, Inc., a global business consulting firm listed
on the New York Stock Exchange. In his current capacity as a
senior executive with FTI Consulting, Mr. Bannister is involved
extensively with that firms operational strategy and
international expansion, with responsibility for all
administrative, budgeting and strategic growth initiatives.
Earlier in his career, Mr. Bannister was a certified public
accountant with Deloitte, Haskins and Sells and has extensive
experience with financial reporting and auditing matters. The
Board believes Mr. Bannisters experience allows him to
bring a sophisticated, diverse and seasoned business perspective
to the Board.
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Michael A. Henning
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Mr. Henning has been a Director of the Company since July 2007.
Mr. Henning served in various capacities with Ernst & Young
from 1961 to 2000, including Deputy Chairman of Ernst &
Young from December 1999 to October 2000 and Chief Executive
Officer of Ernst & Young International from September 1993
to December 1999. Mr. Henning also serves on the Board of
Directors of Omnicom Group, Inc., CTS Corporation and Black
Diamond, Inc.
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Mr. Henning has extensive financial and audit experience, having
served in various capacities with Ernst & Young from 1961
to 2000. In particular, in addition to serving in executive
leadership roles with that firm, the Board believes Mr.
Hennings decades of experience as a partner with Ernst
& Young specializing in tax matters contributes to the
Boards overall strength in financial matters. Over the
course of his career, Mr. Henning also had management
responsibility for the New York City office of Ernst &
Young from 1985 to 1991 and the worldwide tax practice of Ernst
& Young from 1991 to 1993. The Board believes Mr.
Hennings experience, particularly his service as Chief
Executive Officer of Ernst & Young International, adds
valuable expertise to the Board in matters involving
international operations.
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Class I Director whose term expires at the
2012 Annual Meeting
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Henry H. Gerkens
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Mr. Gerkens was appointed Chairman of the Board effective
January 4, 2010. Mr. Gerkens has been a Director of the Company
since May 2000. Mr. Gerkens has been President and Chief
Executive Officer of the Company since July 1, 2004. He was
President and Chief Operating Officer of the Company from
December 2001 to June 30, 2004. Mr. Gerkens held various other
positions at the Company and its subsidiaries since 1988,
including Chief Financial Officer. Mr. Gerkens is a member of
the Board of Directors of each current wholly-owned direct or
indirect subsidiary of the Company (collectively the
Subsidiaries).
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Mr. Gerkens has extensive financial and operational experience,
having served in a number of executive capacities with the
Company over the course of his career, including Chief Financial
Officer, Chief Operating Officer and President and Chief
Executive Officer. Mr. Gerkens began his career as an auditor
with a predecessor firm to PricewaterhouseCoopers LLP, and prior
to joining Landstar, served in various financial roles with a
variety of other companies. Since joining Landstar in 1988, Mr.
Gerkens has been instrumental in strategically leading the
growth of Landstar.
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Class II Directors whose terms expire at the
2013 Annual Meeting
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William S. Elston
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Mr. Elston has been a Director of the Company since February
1998. Mr. Elston was an Executive Recruiting Consultant from
December 1999 until December 2003. He was President and Chief
Executive Officer of Clean Shower, L.P. from November 1998 to
December 1999. He served as Managing Director/Executive Vice
President of DHR, International, an executive recruiting firm,
from February 1995 to November 1998. He was Executive Vice
President of Operations of Steelcase, Inc. from April 1994 to
January 1995. Mr. Elston was President and Chief Executive
Officer of GATX Logistics, Inc. from 1990 through March 1994.
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Mr. Elston has extensive operational and logistics experience as
an executive with several firms including Steelcase, Inc., where
he served as Executive Vice President of Operations, and GATX
Logistics, Inc., where he served as President and Chief
Executive Officer. During Mr. Elstons service with GATX
Logistics, Inc., that company, a subsidiary of GATX Corp., was
the largest third-party provider in the United States of
distribution and logistics support services, warehousing
facilities, and related real estate services. Prior to his
service with GATX Logistics, Inc., Mr. Elston served as a Senior
Vice President at
Frito-Lay,
Inc., where his areas of responsibility included domestic
manufacturing, transportation, warehousing and quality control.
The Board believes Mr. Elston also complements it with his
extensive experience in the field of executive recruiting,
having worked in that field for several years.
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Diana Murphy
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Ms. Murphy has been a Director of the Company since February
1998 and was a Director of LSHI from February 1998 to July 2004.
Ms. Murphy is a Managing Director of Rocksolid Holdings, LLC, a
private equity firm. From 1997 to 2007, she was a Managing
Director at Chartwell Capital Management Company, a private
equity firm. She was Senior Vice President for The
Baltimore Sun, a newspaper company, from 1992 to 1995. Ms.
Murphy also serves on the Board of Directors of CTS Corporation.
Ms. Murphy serves on the Board of Directors of several private
companies and non-profit organizations, including The Coastal
Bank of Georgia, Abeome Corporation, the Georgia Research
Alliance Venture Fund, College of Coastal Georgia Foundation,
the Southeast Georgia Boys and Girls Club, the Georgia
Humanities Foundation and the United States Golf Association
Executive Committee.
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Business Experience
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Ms. Murphy has extensive experience in business management
having served as a Managing Director of several private equity
firms, as a board member of numerous privately held portfolio
companies and as an executive in the media and communications
industry. The Board believes Ms. Murphys work across a
range of private equity portfolio companies operating in
different industry sectors, together with her strong background
in marketing, advertising and public relations, allows her to
add important perspective and experience to the Board.
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INFORMATION
REGARDING BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of
the Board. The Board meets on a regularly scheduled basis four
times a year to review significant developments affecting the
Company and to act on matters requiring Board approval. It also
holds special meetings and acts by written consent when
important matters require Board action between scheduled
meetings.
Attendance
at Annual Meetings
Each member of the Board is required to attend all meetings
(whether special or annual) of the stockholders of the Company.
In the case where a Director is unable to attend a special or
annual stockholders meeting, such absence shall be publicly
disclosed in the subsequent Proxy Statement on Schedule 14A
filed by the Company with the Securities and Exchange Commission
and an explanation for such absence shall be provided to the
Companys Nominating and Corporate Governance Committee.
Any consideration of additional Company action, as appropriate,
with respect to such absence shall be solely within the
discretion of the Nominating and Corporate Governance Committee.
All Board members attended the Annual Meeting of Stockholders
held on April 29, 2010.
Attendance
at Board Meetings
During the 2010 fiscal year, the Board held four regularly
scheduled meetings, six telephonic meetings and did not act by
unanimous written consent. During the 2010 fiscal year, each
Director attended 75% or more of the total number of meetings of
the Board and each committee of the Board on which such Director
serves.
Independent
Directors
Each of David G. Bannister, William S. Elston, Michael A.
Henning and Diana M. Murphy is an independent
director, as defined in Rule 4200(a) (15) of the
Marketplace Rules of the NASDAQ Stock Market (such Directors
are, collectively, the Independent Directors). The
Independent Directors of the Board held five meetings during
fiscal year 2010 without the presence of management or any
non-Independent Directors.
Structure
and Committees of the Board
The Board has established an Audit Committee, a Compensation
Committee, a Nominating and Corporate Governance Committee, a
Safety and Risk Committee and a Strategic Planning Committee to
devote attention to specific subjects. The functions of these
committees and the number of meetings held during 2010 are
described below. The Board does not have an Executive Committee.
In addition, the Board has established a Disclosure Committee
comprised of members of management, including one employee
member of the Board, to establish and maintain certain
disclosure controls and procedures to ensure accurate and timely
disclosure in the Companys periodic reports filed with the
Securities and Exchange Commission.
Each of the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee consist of the
four Independent Directors, with a different Independent
Director serving as the Chair
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for each such committee. In addition, Mr. Henning, also an
Independent Director, serves as the Chair of the two other
committees of the Board, the Strategic Planning Committee and
the Safety and Risk Committee, each of which is comprised of all
six members of the Board. Moreover, the typical practice for
each of the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee is to invite
Messrs. Crowe and Gerkens, the two directors who do not
serve on those committees, to attend all regular meetings of
these three committees, excluding, in the case of
Mr. Gerkens, any meetings of the Compensation Committee
concerning his executive compensation arrangements.
The Independent Directors previously elected William S. Elston
to serve as Lead Independent Director of the Board (the
Lead Independent Director) for such term as the
Independent Directors may determine. The duties and
responsibilities of the Lead Independent Director include:
(i) to serve as a liaison between the Independent Directors
and the other members of the Board; (ii) to preside as the
chairperson at all meetings of the Independent Directors;
(iii) to coordinate with the other Independent Directors of
the Board to develop the agenda with respect to all meetings of
the Independent Directors; (iv) to have the authority to
call meetings of the Independent Directors; (v) to provide
input to the Chairman of the Board on the preparation of meeting
agendas and related materials for meetings of the Board;
(vi) to approve the annual schedule of meetings of the
Board; (vii) to ensure that the Independent Directors have
adequate resources, including full, timely information necessary
to enable them to perform their duties; and (viii) to
communicate to management, as appropriate, the results of
private discussions among Independent Directors.
On January 4, 2010, the Board elected Henry H. Gerkens as
Chairman of the Board in addition to his continuing service as
President and Chief Executive Officer of the Company.
Mr. Gerkens succeeded the Companys prior Chairman of
the Board, Jeffrey C. Crowe, who resigned his position as
Chairman of the Board on January 4, 2010 but remains a
Director.
The leadership structure of the Board consists
of: (i) a Chairman of the Board, who is also the
Companys President and Chief Executive Officer;
(ii) a Lead Independent Director; (iii) an Independent
Director serving as chair of the Audit Committee; (iv) an
Independent Director serving as chair of the Compensation
Committee; (v) an Independent Director serving as chair of
the Nominating and Corporate Governance Committee;
(vi) each of the Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee
consist solely of Independent Directors; and (vii) an
Independent Director serving as chair of each of the other two
committees of the Board, the Strategic Planning Committee and
the Safety and Risk Committee.
The Board believes this leadership structure is appropriate for
the Company as Mr. Gerkens is responsible for leading the
overall strategic direction of the enterprise; however, the
Independent Directors retain the decision making authority of
the Board. In particular, the Independent Directors consist of
(i) a majority of the members of the Board, (ii) the
sole members of the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee and (iii) a
majority of members of the Strategic Planning Committee and the
Safety and Risk Committee. The Board also believes that its
leadership structure is supported by each of the Independent
Directors serving as the chair of at least one committee of the
Board, as the chair of each committee of the Board has
responsibility for setting the agenda for each meeting of that
committee. Mr. Elston, as Lead Independent Director, sets
the agenda for the meetings of the Independent Directors.
Further, the Companys internal audit function reports
directly to the Audit Committee. Finally, there are no meetings
of the Board or any committee of the Board at which each
Independent Director is not an invited member, the Independent
Directors meet regularly in executive session without
Messrs. Crowe or Gerkens present, and the Independent
Directors have significant input regarding the Boards
agenda and information flow.
Audit
Committee
The members of the Audit Committee are David G. Bannister,
William S. Elston, Michael A. Henning and Diana M. Murphy, each
an Independent Director.
The charter of the Audit Committee was amended and restated by
the Board at the January 28, 2009 board meeting. The
Charter of the Audit Committee more fully describes the
purposes, membership, duties and responsibilities of the Audit
Committee described herein. A copy of the Charter of the Audit
Committee is available on the Companys website at
www.landstar.com under Investor Relations/Corporate
Governance.
9
The Audit Committee (i) appoints the independent registered
public accounting firm for the Company and monitors the
performance of such firm, (ii) reviews and approves the
scope and results of the annual audits, (iii) evaluates
with the independent registered public accounting firm the
Companys annual audit of the consolidated financial
statements and audit of internal control over financial
reporting, (iv) monitors the performance of the
Companys internal audit function, (v) reviews with
management the annual and quarterly financial statements,
(vi) reviews with management and the internal auditors the
status of internal control over financial reporting,
(vii) reviews and maintains procedures for the anonymous
submission of complaints concerning accounting and auditing
irregularities and (viii) reviews problem areas having a
potential financial impact on the Company which may be brought
to its attention by management, the internal auditors, the
independent registered public accounting firm or the Board. In
addition, the Audit Committee preapproves all non-audit related
services provided by the independent registered public
accounting firm and approves the independent registered public
accounting firms fees for services rendered to the
Company. During the 2010 fiscal year, the Audit Committee held
four meetings and six telephonic meetings.
Compensation
Committee
The members of the Compensation Committee are David G.
Bannister, William S. Elston, Michael A. Henning and Diana M.
Murphy, each an Independent Director.
The Compensation Committee functions include (i) reviewing
and making determinations with respect to matters having to do
with the compensation of executive officers and Directors of the
Company and (ii) administering certain plans relating to
the compensation of officers and Directors. During the 2010
fiscal year, the Compensation Committee held four meetings and
one telephonic meeting.
The charter of the Compensation Committee was approved and
adopted by the Board at the August 1, 2007 board meeting.
The Charter of the Compensation Committee more fully describes
the purposes, membership, duties and responsibilities of the
Compensation Committee described herein. A copy of the Charter
of the Compensation Committee is available on the Companys
website at www.landstar.com under Investor
Relations/Corporate Governance.
The Compensation Committee has full and complete discretion to
establish the compensation payable to the Companys Chief
Executive Officer and the other executive officers and oversees
the compensation payable to other employees of the Company. With
regard to the executive officers other than the Chief Executive
Officer, the Compensation Committee considers the
recommendations of the Chief Executive Officer. The Compensation
Committee following authorization by the Board has delegated to
the Companys Chief Executive Officer authority with
respect to (i) management annual salary decisions up to
$150,000 per employee, (ii) the grant of up to
1,000 stock options per employee (other than Executive
Officers) and (iii) the grant of up to 5,000 stock options
per employee (other than Executive Officers) following
consultation with the Chair of the Compensation Committee. The
Compensation Committee has otherwise not delegated to management
any of its responsibilities with respect to the compensation of
the executive officers of the Company, except in respect to the
day to day operations of the Companys compensation plans.
The Compensation Committee has the authority to hire and
negotiate the terms of compensation for its advisers, including
compensation consultants. The Compensation Committee
periodically reviews the Companys compensation programs.
Compensation
Committee Interlocks and Insider Participation
As noted above, the members of the Compensation Committee are
David G. Bannister, William S. Elston, Michael A. Henning and
Diana M. Murphy. All members of the Compensation Committee are
Independent Directors, and no member is or has been an employee
of the Company. During fiscal year 2010, no executive officer of
the Company served as a member of the compensation committee (or
its equivalent) or board of directors of another entity whose
executive officer served on the Board or Compensation Committee.
10
Nominating
and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee
are David G. Bannister, William S. Elston, Michael A. Henning
and Diana M. Murphy, each an Independent Director.
The Nominating and Corporate Governance Committee functions
include identifying persons for future nomination for election
to the Board. During the 2010 fiscal year, the Nominating and
Corporate Governance Committee held two meetings. Stockholders
who wish to submit names to the Nominating and Corporate
Governance Committee for consideration should do so in writing
addressed to the Nominating and Corporate Governance Committee,
c/o Corporate
Secretary, Landstar System, Inc., 13410 Sutton Park Drive South,
Jacksonville, Florida 32224.
The Charter of the Nominating and Corporate Governance Committee
was approved and adopted by the Board at the February 27,
2004 Board meeting. The Charter more fully describes the
purposes, membership, duties and responsibilities of the
Nominating and Corporate Governance Committee described herein.
A copy of the Charter of the Nominating and Corporate Governance
Committee is available on the Companys website at
www.landstar.com under Investor Relations/Corporate
Governance. Following the recommendation of the Nominating and
Corporate Governance Committee, the Board approved revised
Corporate Governance Guidelines at its December 2, 2009
meeting. The Corporate Governance Guidelines set forth, among
other things, guidelines with respect to Director qualification
standards and Board membership criteria, limitations on the
number of public company boards on which a Director may serve,
attendance of Directors at Board meetings, Director
compensation, Director education, evaluation of the
Companys Chief Executive Officer and Board
self-assessment. A copy of the Corporate Governance Guidelines
is available on the Companys website at
www.landstar.com under Investor Relations/Corporate
Governance.
The Nominating and Corporate Governance Committee oversees an
annual self-evaluation conducted by the Board in order to
determine whether the Board and its committees are functioning
effectively. The Nominating and Corporate Governance Committee
also oversees individual Director self-assessments in connection
with the evaluation of such Director for purposes of making a
recommendation to the Board as to the persons who should be
nominated for election or re-election, as the case may be, at
the upcoming annual meeting of stockholders.
The Nominating and Corporate Governance Committee considers
candidates for the Board suggested by its members and other
Board members, as well as management and stockholders. There are
no differences in the manner in which the Nominating and
Corporate Governance Committee evaluates nominees for the Board
based on whether or not the nominee is recommended by a
stockholder. The Nominating and Corporate Governance Committee
evaluates prospective nominees against a number of minimum
standards and qualifications, including business experience and
financial literacy. The Nominating and Corporate Governance
Committee also considers such other factors as it deems
appropriate, including the current composition of the Board, the
balance of management and Independent Directors, the need for
Audit Committee or other relevant expertise, the evaluations of
other prospective nominees and other individual qualities and
attributes that contribute to a broad spectrum of experience
among members of the Board. The committee then determines
whether to interview the prospective nominees, and, if
warranted, one or more of the members of the Nominating and
Corporate Governance Committee, and others as appropriate,
interview such prospective nominees whether in person or by
telephone. After completing this evaluation and, if warranted,
interview, the Nominating and Corporate Governance Committee
makes a recommendation to the Board as to the persons who should
be nominated by the Board. The Board then determines the
nominees after considering the recommendation and report of the
Nominating and Corporate Governance Committee.
Safety
and Risk Committee
The members of the Safety and Risk Committee are Jeffrey C.
Crowe, David G. Bannister, William S. Elston, Henry H. Gerkens,
Michael A. Henning and Diana M. Murphy.
The Safety and Risk Committee functions include the review and
oversight of the Companys safety performance, goals and
strategies and the Companys enterprise-wide risk
identification, policies and procedures. During the 2010 fiscal
year, the Safety and Risk Committee held two meetings. The
Company has also established a
11
management risk committee, consisting of those members of
executive management of the Company with ultimate responsibility
for the Companys enterprise risk management practices. The
members of this committee include the President and Chief
Executive Officer, the Vice President and Chief Financial
Officer, the Vice President and Chief Operating Officer, the
Vice President and Chief Compliance, Security and Safety
Officer, the Vice President and Chief Information Officer, the
director of internal audit, the Vice President, General Counsel
and Secretary and the Vice President, Corporate Controller. The
management risk committee meets on a quarterly basis to review
the Companys enterprise-wide risk identification and
monitoring practices, policies and procedures. The chair of the
management risk committee meets with the Safety and Risk
Committee at least twice annually to review and discuss
enterprise risk management within the Company.
Strategic
Planning Committee
The members of the Strategic Planning Committee are Jeffrey C.
Crowe, David G. Bannister, William S. Elston, Henry H. Gerkens,
Michael A. Henning and Diana M. Murphy.
The Strategic Planning Committee functions include the
development of strategic objectives and policies and procedures
to achieve the strategic objectives of the Company. The
Strategic Planning Committee solicits the views of the
Companys senior management and determines strategic
directions for implementation. During the 2010 fiscal year, the
Strategic Planning Committee held one meeting and did not act by
written consent.
COMPENSATION
OF DIRECTORS
Each of the Independent Directors is paid an annual fee of
$75,000 with no additional fees payable for attendance at or
participation in Board or committee meetings or service as a
chair of a committee of the Board. Independent Directors are not
paid a retainer fee upon election or re-election to the Board.
Directors are reimbursed for expenses incurred in connection
with attending Board meetings.
In addition, upon election or re-election to the Board for a
three year term, an Independent Director receives a grant of
such number of restricted shares of Common Stock equal to the
quotient of $225,000 divided by the fair market value of a share
of the Common Stock on the date immediately following the date
of such Directors election or re-election to the Board.
Each such grant of restricted stock vests in three equal annual
installments on the first three anniversary dates of the
Directors election or re-election to the Board. The
unvested shares of restricted stock are subject to forfeiture
for the portion of the award that has not yet vested upon early
departure of a Director from the Board for any reason prior to
the expiration of his or her three year term.
Messrs. Crowe and Gerkens, the two Directors who are not
Independent Directors, did not receive any compensation for
services as a Director, for services on committees of the Board
or for attendance at meetings, but both were eligible for
reimbursement of expenses incurred in their capacities as
Directors.
With respect to Mr. Crowe, the Companys former
non-executive Chairman of the Board, during the period from
June 30, 2004 to January 4, 2010, Mr. Crowe was
an employee of the Company, received an annual base salary of
$250,000 and was entitled to participate in all of the
Companys employee benefit plans, programs and
arrangements. Effective January 4, 2010, Mr. Crowe
retired from his employment with the Company and entered into a
consulting agreement with the Company, dated as of
December 18, 2009, a copy of which was attached as
Exhibit 10.13 to the Companys Annual Report on
Form 10-K
for the fiscal year ending December 26, 2009. The
consulting agreement provides, among other things, that
Mr. Crowe shall provide consulting services to the Company
for two years from the date of his retirement as an employee of
the Company for fees of $250,000 per year. The Company has the
right to terminate the consulting agreement in the event
Mr. Crowe performs services for a competitor of the
Company. Mr. Crowe is no longer entitled to participate in
any of the Companys employee benefit plans, programs and
arrangements available to employees of the Company.
In the event Mr. Crowe is elected to serve as a
Class I Director at the 2011 Annual Meeting, Mr. Crowe
will continue to receive no compensation for services as a
Director, for services on committees of the Board or for
attendance at meetings of the Board through January 4,
2012, other than the compensation he receives under the terms of
his consulting agreement with the Company. Following the end of
the term of Mr. Crowes consulting services agreement
with the Company on January 4, 2012, the Company will
compensate Mr. Crowe for his services
12
as a Director in an amount equal to the pro rata share of the
annual $75,000 fee paid to the other outside directors based on
the number of days of service beginning as of January 5,
2012, the day after the end of Mr. Crowes consulting
services agreement with the Company, and ending on the date of
the 2012 Annual Meeting of Stockholders. Mr. Crowe will not
receive a grant of restricted stock should he be re-elected to
the Board at the 2011 Annual Meeting.
The following table summarizes the compensation paid to
Mr. Crowe and the Independent Directors during 2010.
Director
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Stock awards
|
|
Total
|
Name
|
|
Paid in Cash ($)
|
|
($)(1)
|
|
($)
|
|
David G. Bannister
|
|
|
65,876
|
|
|
|
|
|
|
|
65,876
|
|
Jeffrey C. Crowe
|
|
|
250,000
|
|
|
|
|
|
|
|
250,000
|
|
William S. Elston
|
|
|
65,876
|
|
|
|
225,000
|
|
|
|
290,876
|
|
Michael A. Henning
|
|
|
65,876
|
|
|
|
|
|
|
|
65,876
|
|
Diana M. Murphy
|
|
|
65,876
|
|
|
|
225,000
|
|
|
|
290,876
|
|
|
|
|
(1) |
|
Mr. Elston and Ms. Murphy each were granted 4,977 (the
quotient of $225,000 divided by the fair market value of a share
of Common Stock of $45.21 on April 30,
2010) restricted shares of the Companys Common Stock
on April 30, 2010, the date immediately following the date
of re-election to the Board. These share amounts represent the
aggregate grant date fair value of the restricted shares
computed in accordance with generally accepted accounting
principles. As of the end of the fiscal year ended
December 25, 2010, Mr. Elston and Ms. Murphy each
had 4,977 restricted shares outstanding. |
The Compensation Committee of the Board has established stock
ownership guidelines for Directors that recommend that each
Director hold a minimum of 15,000 shares of the
Companys Common Stock within five years of such
Directors initial election to the Board. At April 8,
2011, each current Director who has served five years on the
Board was in compliance with the stock ownership guidelines.
13
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for providing
independent, objective oversight of the Companys
accounting functions and internal controls. The Audit Committee
has the sole authority and responsibility to select, evaluate
and, when appropriate, replace the Companys independent
registered public accounting firm. The Audit Committee is
comprised of all of the Independent Directors. The Audit
Committee operates under a written charter approved by the Board.
Management is responsible for the Companys internal
control over financial reporting. The independent registered
public accounting firm is responsible for performing an
independent audit of the Companys consolidated financial
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States) and to
issue a report thereon. The independent registered public
accounting firm is also responsible for auditing the
Companys internal control over financial reporting. The
Audit Committee is responsible for monitoring these processes.
The Audit Committee is not, however, professionally engaged in
the practice of accounting or auditing and does not provide any
expert or other special assurance as to such financial
statements concerning compliance with laws, regulations or
generally accepted accounting principles or as to the
independent registered public accounting firms
independence. The Audit Committee relies, without independent
verification, on the information provided to it and on
presentations and statements of fact made by management, the
internal auditors and the independent registered public
accounting firm.
In connection with these responsibilities, as discussed
elsewhere in this Proxy Statement, the Audit Committee held four
meetings and six telephonic meetings during 2010. These meetings
were designed, among other things, to facilitate and encourage
communication among the Audit Committee, management, the
internal auditors and the independent registered public
accounting firm. The Audit Committee discussed with
representatives of the independent registered public accounting
firm the overall scope and plans for their audits. The Audit
Committee also met with representatives of the independent
registered public accounting firm, with and without management
and the internal auditors present, to discuss the Companys
fiscal 2010 financial statements and the Companys internal
control over financial reporting. The Audit Committee also
reviewed and discussed the December 25, 2010 financial
statements with management and reviewed and discussed the status
of the Companys internal control over financial reporting
with management and the internal auditors. The Audit Committee
also discussed with representatives of the independent
registered public accounting firm the matters required by
Statement on Auditing Standards No. 114 (The Auditors
Communication With Those Charged With Governance) and also
received written disclosures from the independent registered
public accounting firm required by the Public Company Accounting
Oversight Board regarding KPMG LLPs independence from the
Company. The Audit Committee had discussions with
representatives of the independent registered public accounting
firm concerning the independence of the independent registered
public accounting firm under the rules and regulations governing
auditor independence promulgated under the Sarbanes-Oxley Act.
The Audit Committee had discussions with management and the
internal auditors concerning the process used to support
certifications by the Companys Chief Executive Officer and
Chief Financial Officer that are required by the Securities and
Exchange Commission (SEC) and the Sarbanes-Oxley Act
to accompany the Companys periodic filings with the
Securities and Exchange Commission.
The Board has determined that Mr. Bannister and
Mr. Henning, each an independent director as that term is
used in Item 7(d)(3)(iv) of Schedule 14A under the
Securities and Exchange Act of 1934 (the 34 Act),
meet the SEC criteria of an audit committee financial
expert under the standards established by
Item 401(h)(2) of Regulations S-K under the Securities Act.
Mr. Bannisters background and experience includes
serving as a Managing Director of Deutsche Bank Alex Brown
Incorporated, a General Partner of Grotech Capital Group, and
currently as Chairman of the North American Region of
FTI Consulting, Inc., a global business consulting firm
listed on the New York Stock Exchange. In addition,
Mr. Bannister was a certified public accountant employed as
an audit manager at the firm of Deloitte, Haskins and Sells.
Mr. Hennings background and experience includes
serving in various capacities with Ernst & Young from
1961 to 2000, including Deputy Chairman of Ernst &
Young from December 1999 to October 2000 and Chief Executive
Officer of Ernst & Young International from September
1993 to December 1999.
During 2010, the Audit Committee preapproved the continuation of
all non-audit services to be rendered to the Company by the
independent registered public accounting firm in 2010 (which
services are disclosed elsewhere in
14
this Proxy Statement) and concluded that these services were
compatible with maintaining the independence of the registered
public accounting firm.
Based upon the Audit Committees discussions with
management and the independent registered public accounting
firm, and the Audit Committees review of the
representations of management and the independent registered
public accounting firm, the Audit Committee recommended that the
Board include the audited consolidated financial statements in
the Companys Annual Report on
Form 10-K
for the year ended December 25, 2010, filed with the
Securities and Exchange Commission on February 23, 2011.
The Audit Committee has also selected KPMG LLP as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2011 and has
recommended to the Board that this selection be presented to the
stockholders for ratification.
THE AUDIT COMMITTEE
David G. Bannister, Chairman
William S. Elston
Michael A. Henning
Diana M. Murphy
15
EXECUTIVE
OFFICERS OF THE COMPANY
The following table sets forth the name, age, principal
occupation and business experience during the last five years of
each of the current executive officers (the Executive
Officers) of the Company. The Executive Officers of the
Company serve at the discretion of the Board and until their
successors are duly elected and qualified. For information
regarding ownership of Common Stock by the Executive Officers of
the Company, see Security Ownership by Management and
Others. There are no family relationships among any of the
Directors and Executive Officers of the Company or any of its
Subsidiaries. In a
Form 8-K
filed on January 26, 2011, the Company announced that
Mr. Jim M. Handoush would step down as Co-Chief Operating
Officer of the Company, effective February 1, 2011.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
|
Business Experience
|
|
Henry H. Gerkens
|
|
|
60
|
|
|
See previous description under Directors of the
Company.
|
James B. Gattoni
|
|
|
49
|
|
|
Mr. Gattoni has been an Executive Officer of the Company since
January 2005. Mr. Gattoni has been Vice President and Chief
Financial Officer of the Company since April 2007. Mr. Gattoni
was Vice President and Co-Chief Financial Officer of the Company
from January 2, 2007 to April 20, 2007. He was Vice President
and Corporate Controller of Landstar System Holdings, Inc.
(LSHI) from July 2000 to January 1, 2007. He was
Corporate Controller from November 1995 until July 2000. He is
also an officer of each of the Subsidiaries.
|
Michael K. Kneller
|
|
|
36
|
|
|
Mr. Kneller has been an Executive Officer of the Company since
June 2005. He has been Vice President, General Counsel and
Secretary of the Company since June 2005. Prior to joining the
Company in 2005, Mr. Kneller was a corporate attorney at the law
firm of Debevoise and Plimpton LLP. He is also an officer of
each of the Subsidiaries, other than Signature.
|
Larry S. Thomas
|
|
|
50
|
|
|
Mr. Thomas has been an Executive Officer of the Company since
January 2005. He has been Vice President and Chief Information
Officer of the Company since January 2005. Mr. Thomas has been
Vice President and Chief Information Officer of LSHI since May
2001. He was Vice President of Research and Development of LSHI
from July 2000 until May 2001. From April 1994 until July 2000,
he was Director of Management Information Systems of Landstar
Ligon, Inc. (Landstar Ligon).
|
16
|
|
|
|
|
|
|
Name
|
|
Age
|
|
|
Business Experience
|
|
Patrick J. OMalley
|
|
|
52
|
|
|
Mr. OMalley has been an Executive Officer of the Company
since January 2008. Mr. OMalley has been Vice President
and Chief Operating Officer of the Company since January 2011.
Mr. OMalley served as Vice President and Co-Chief
Operating Officer of the Company from August 2009 until January
2011. Mr. OMalley has served as President of Landstar
Global Logistics, Inc. and Landstar Transportation Logistics,
Inc. since February 2011. Mr. OMalley has served as
President of Landstar Express America, Landstar Gemini, Inc.
(Landstar Gemini), Landstar Inway, Inc.
(Landstar Inway), Landstar Ligon and Landstar
Ranger, Inc. (Landstar Ranger) since January 2008.
Mr. OMalley was Executive Vice President of Operations for
Landstar Gemini, Landstar Inway, Landstar Ligon and Landstar
Ranger from January 2005 to December 2007.
Mr. OMalley was Vice President and Chief Safety
Officer of LSHI from January 2003 to January 2005. Prior to
2003, Mr. OMalley held various other positions within
subsidiaries of the Company since 1985.
|
Joseph J. Beacom
|
|
|
46
|
|
|
Mr. Beacom has been an Executive Officer of the Company since
January 2006. He has been Vice President and Chief Safety,
Security and Compliance Officer of the Company since January
2006. Mr. Beacom has been Vice President and Chief Safety,
Security and Compliance Officer of LSHI since May 2005. From
March 2000 to April 2005, he was Chief Compliance Officer of
LSHI. Prior to March 2000, Mr. Beacom held various positions at
Landstar Inway since 1995.
|
Compensation
Discussion and Analysis
Overall
Policy
The Companys executive compensation philosophy is designed
to attract and motivate executive talent best suited to develop
and implement the Companys business strategy. These
objectives are attained by tying a significant portion of each
executives compensation to the Companys success in
meeting specified annual corporate financial performance goals
and, through the grant of stock-based awards, to appreciation in
the Companys stock price. The Companys philosophy is
to recognize individual contributions while supporting a team
approach in achieving overall business objectives and increasing
shareholder value.
The key elements of the Companys executive compensation
consist of base salary, annual incentive payments and
stock-based awards. The Companys policies with respect to
each of these elements, including the basis for the compensation
awarded, are discussed below.
The Companys philosophy is to pay annual compensation
generally in cash, with long-term incentive compensation paid in
the form of stock-based awards. Base salary is intended to
constitute a modest percentage of total compensation. The annual
incentive compensation plan is designed to pay substantial
compensation for superior performance. Stock options have
historically accounted for a significant portion of each
Executive Officers total compensation. The Company awards
stock options and restricted stock to its Executive Officers as
a reward for the achievement of overall business objectives and
to help align managements future interests with that
17
of the Companys stockholders. The Company believes this
approach both rewards for performance and is generally aligned
with the Companys variable cost business model.
The Compensation Committee of the Companys Board is solely
responsible for decisions with respect to the compensation of
the Companys President and Chief Executive Officer, Henry
H. Gerkens. The Compensation Committee is also responsible,
taking into consideration recommendations of the President and
Chief Executive Officer, for decisions with respect to the
compensation awarded to the other individuals whose compensation
is detailed below (such other officers, together with
Mr. Gerkens, collectively herein referred to as the
Named Executives), subject to review by the entire
Board.
The executive compensation program is reviewed annually by the
Compensation Committee. Periodically, at the Compensation
Committees sole discretion, an independent review of the
executive compensation program may be performed by outside
consultants.
Base
Salaries
Base salaries for Executive Officers are initially determined by
evaluating the responsibilities of the position held and the
experience of the individual. Salary adjustments are determined
by evaluating the performance of the Company and of each
Executive Officer, and also take into account the assumption of
new responsibilities. The financial results of the operating
functions which report into an Executive Officer or for which an
Executive Officer otherwise has responsibility are also
considered. The base salaries of the five Named Executives are
detailed in the Summary Compensation Table that follows.
Annual
Incentive Compensation
The Companys objective with respect to its Incentive
Compensation Plan (the ICP) is to encourage the
Companys Executive Officers to achieve various financial
goals linked to operating objectives for the Companys
upcoming fiscal year. These annual goals are developed as part
of the Companys budgeting process and in general are
aligned with the Companys long-term objectives with
respect to earnings growth. Prior to the beginning of each
annual fiscal period, the Compensation Committee reviews and
approves budgeted amounts for consolidated revenue, operating
income and diluted earnings per share. In establishing the 2010
budgeted amounts for revenue, operating income, and diluted
earnings per share, management considered a growth factor over
2009 operating results and forecasted 2010 U.S. economic
factors such as industrial production, estimated freight demand,
and capacity availability. Once the annual budgeted goals are
approved, the ICP is designed to incent management to meet and
when possible to exceed their goals. An executives
incentive compensation payment continues to increase as actual
results for the fiscal year exceed budgeted amounts. As further
described below, actual payments under the ICP are calculated
based upon how much actual results exceed budgeted amounts,
using a predetermined formula, up to the maximum annual payment
per eligible participant as per the Companys executive
incentive compensation plan as approved by the Companys
stockholders, all subject to the discretion of the Compensation
Committee. For the 2010 fiscal year, the maximum annual payment
per eligible participant was $3 million.
The ICP targets for the 2010 fiscal year for
Messrs. Gerkens, Gattoni and Kneller were set to a specific
diluted earnings per share amount related to the Companys
annual operating budget. With respect to Patrick J.
OMalley, Vice President and Chief Operating Officer and
Larry S. Thomas, Vice President and Chief Information Officer,
one-half of their ICP payment was based upon the Companys
achievement of budgeted diluted earnings per share. The other
half of their ICP payment was based upon the achievement of
budgeted consolidated operating income. The Company has met or
exceeded the budgeted amount for diluted earnings per share in
three of the preceding five fiscal years. The Company has met or
exceeded the budgeted amount for consolidated operating income
in three of the preceding five fiscal years.
The ICP targets for Messrs. Gerkens, Gattoni and Kneller
for 2010 solely related to budgeted diluted earnings per share
whereas the ICP targets for Messrs. OMalley and
Thomas for 2010 related in part to budgeted consolidated
operating income. This is because (1) Messrs. Gerkens,
Gattoni and Kneller were in positions of responsibility with
respect to all of the components that affect the Companys
diluted earnings per share amounts, (2) the Compensation
Committee believes that diluted earnings per share is the
primary financial measure reflecting the performance of the
Companys overall strategic direction and on that basis
evaluates the performance of the Companys Chief Executive
Officer, Chief Financial Officer and General Counsel,
(3) consolidated operating income reflects the performance
of
18
the functions over which each of Messrs. OMalley and
Thomas had responsibility and, as a result, achievement of
budgeted consolidated operating income is considered an
important component in the performance evaluation of each such
Named Executive and (4) the Compensation Committee believes
it is appropriate to compensate Named Executives upon
achievement of Company-wide, rather than division or function
specific, budgeted targets in order to focus executive
management on Company-wide strategic and financial performance
goals.
The ICP for the 2010 fiscal year was designed such that in the
event the Company exceeded budgeted amounts of diluted earnings
per share and operating income, the amount of compensation
potentially payable for exceeding budgeted diluted earnings per
share amounts would be greater as compared to the amount of
compensation potentially payable for exceeding budgeted
operating income, as further discussed herein. With respect to
the portion of the ICP tied to diluted earnings per share, if
the Companys actual diluted earnings per share amount for
the fiscal year had equaled budgeted diluted earnings per share
after giving effect to a one-time incentive payment (the
target), the incentive payment would have equaled
100% of the executives ICP percentage multiplied by such
executives base salary. If the Companys actual
diluted earnings per share amount for the fiscal year would have
been less than the target amount of diluted earnings
per share, no incentive payment would have been made to the
Named Executives under this portion of the ICP. As actual
results exceeded the target, the ICP payment was calculated by
multiplying each executives base salary by such
executives ICP percentage multiplied by one plus a
predetermined factor. This factor equaled
331/3 percent
for each one percent actual diluted earnings per share (after
giving effect to a one-time payout) exceeded target diluted
earnings per share. For Named Executives whose ICP payment was
only partially based on diluted earnings per share
(Messrs. OMalley and Thomas), the amount determined
as described above was multiplied by 50% to reflect the
weighting of that objective. Under the operating income portion
of the ICP, eligible employees are paid quarterly if certain
operating income amounts are achieved. With respect to the
portion of the ICP for the 2010 fiscal year tied to consolidated
operating income, if actual consolidated operating income for a
specific fiscal quarter was equal to or greater than budgeted
consolidated operating income for that quarter, the
executives ICP payment would be calculated pursuant to a
three-step formula: (1) the executives base salary is
multiplied by such executives ICP percentage, (2) the
resulting product is multiplied by the current quarters
budgeted operating income divided by total budgeted fiscal year
operating income and (3) the resulting product is
multiplied by 50% to reflect the weighting of that objective.
The portion of the ICP for the 2010 fiscal year tied to
consolidated operating income also includes a component tied to
budgeted consolidated operating income for the fiscal year. If
actual consolidated operating income for the fiscal year was
equal to or greater than 90% of budgeted consolidated operating
income for the fiscal year and greater than the actual
consolidated operating income from the prior year, the
executives ICP payment would be calculated pursuant to a
four-step formula: (1) actual consolidated operating income
is divided by budgeted consolidated income, (2) this
quotient is multiplied by the product of the executives
base salary multiplied by such executives ICP percentage,
(3) the resulting product is multiplied by 50% to reflect
the weighting of that objective and (4) amounts previously
paid to the executive under the ICP with respect to the results
of a specific fiscal quarter are deducted. Individual amounts
calculated under the ICP may be adjusted at the discretion of
the Compensation Committee in accordance with the Companys
162(m) shareholder-approved ICP.
The ICP percentages for the Named Executives in 2010 were as
follows: Mr. Gerkens, 100%, Mr. Gattoni, 65%,
Mr. Kneller, 40%, Mr. Thomas, 60% and
Mr. OMalley, 60%. The target amount of diluted
earnings per share under the ICP with respect to the 2010 fiscal
year was $1.50, which represented a 9% increase from the actual
diluted earnings per share for the 2009 fiscal year. The target
amount of consolidated operating income under the ICP
(i) with respect to each quarter of the 2010 fiscal year
were, respectively, $23,914,000, $33,793,000, $33,823,000 and
$34,840,000 and (ii) with respect to the full 2010 fiscal
year was $126,370,000, which represented an 11% increase from
the actual consolidated operating income for the 2009 fiscal
year. Diluted earnings per share for the 2010 fiscal year
exceeded target diluted earnings per share by 18%, or $0.27 per
share, and exceeded fiscal year 2009 diluted earnings per share
by 29%, or $0.40 per share. Operating income for the 2010 fiscal
year exceeded targeted operating income by 11%, or $13,601,000,
and exceeded fiscal year 2009 operating income by 23%, or
$26,229,000. Therefore, bonus payments were made under the ICP
for the 2010 fiscal year with respect to both the portion of the
plan tied to diluted earnings per share and the portion of the
plan tied to operating income. Neither the diluted earnings per
share target nor the operating income target were achieved in
fiscal year 2009 and, therefore, no bonus payments were made for
fiscal year 2009.
19
Under the Companys sales incentive plan,
Mr. OMalley, as Chief Operating Officer with
responsibility for the Companys field operations in
support of its independent sales agents, was eligible for an
additional incentive compensation payment based upon achievement
of budgeted revenue goals. The budgeted revenue goal with
respect to the 2010 fiscal year was $2,010,112,000. Revenue in
fiscal year 2010 exceeded the budgeted revenue goal and,
therefore, Mr. OMalley received a bonus payment under
the Companys sales incentive plan for the 2010 fiscal year.
Stock-based
Awards
Under the Companys Amended and Restated 2002 Employee
Stock Option and Stock Incentive Plan (the 2002
ESOSIP), equity awards may be granted to the
Companys Executive Officers and certain other key
employees. The Compensation Committee determines the type and
number of equity awards to be granted to a Named Executive based
on such Named Executives job responsibilities, the
individual performance evaluation of such Named Executive,
including the achievement of certain specified performance
related goals, and overall Company performance. Stock options
are granted with an exercise price equal to the fair market
value of the Common Stock on the date of grant. Stock options
are typically granted to Named Executives once a year. In 2010,
awards to Named Executives were made on January 29, 2010.
Stock option grants to Named Executives made in 2010 vest in
five equal annual installments commencing on the first
anniversary of the date of grant. Executive Officers have been
granted stock options that vest 100% after a period that may
range from three to five years from the date of grant or in
three or five pro rata installments commencing on the first
anniversary of the date of grant. Shares of restricted stock
have also been granted to Named Executives under the 2002
ESOSIP. Restricted stock has been granted that vests in three or
five pro rata installments commencing on the first anniversary
of the date of grant or 100% after a period that may range from
three to five years from the date of grant. In 2010,
5,800 shares of restricted stock were issued in the
aggregate to Named Executives that vest in three equal annual
installments commencing on the first anniversary of the date of
grant. The Company believes this approach to the granting of
stock awards is designed to encourage the creation of long-term
stockholder value as no benefit can be realized from stock
options unless the stock price exceeds the exercise price over
the vesting period and the benefit realized from restricted
stock varies directly with the Companys stock price.
Stock
Ownership Guidelines
The Company believes that equity interests held by management
help to align the interests of stockholders and management and
maximizes stockholder returns over the long term. To that end,
the Compensation Committee of the Board has established stock
ownership guidelines applicable to the Executive Officers of the
Company. These guidelines recommend that the Chief Executive
Officer of the Company hold a minimum of 50,000 shares of
the Companys Common Stock and each of the other Executive
Officers of the Company hold a minimum of 15,000 shares of
the Companys Common Stock, in each case to be achieved
within specified time periods.
Deferred
Compensation
The Company maintains an Internal Revenue Service Code
Section 401(k) Savings Plan (the 401(k) Plan)
for all eligible employees. The Company maintains a Supplemental
Executive Retirement Plan (the SERP) for all
officers, including the Named Executives, of the Company and its
subsidiaries. The SERP is designed to provide officers with the
option to receive the benefits - tax deferred investment of a
certain percentage of the executives salary and a Company
matching contribution on a certain portion of the
executives contribution that are offered under
the Companys 401(k) Plan on the portion of the
executives salary that is not eligible to be included
under the Companys 401(k) Plan, because it is above the
various limitations established in the Internal Revenue Code.
Except for the elimination of the maximum salary limitations,
the benefits and the investment options of the SERP are the same
as the 401(k) Plan. Messrs. Gerkens, Kneller, OMalley
and Thomas have elected to participate in the SERP.
Key
Executive Employment Protection Agreements and Other Severance
Arrangements
The Board has approved the execution of Key Executive Employment
Protection Agreements for each of the Executive Officers, to
assure that each of these officers will have a minimum level of
personal financial security in the context of a change in
control transaction to avoid undue distraction due to the risks
of job security, and to enable such officer to act in the best
interests of stockholders without being influenced by such
officers economic interests. Each
20
agreement provides certain severance benefits in the event of a
change in control of the Company. Generally, i) if on or
before the second anniversary of a change in control
(x) the Company terminates the covered executives
employment for any reason other than for cause or
disability or (y) the covered executive
voluntarily terminates his employment for good
reason, (ii) if the covered executive voluntarily
terminates his employment for any reason at any time within the
60-day
period beginning on the 181st day following the
change in control or (iii) if the covered
executives employment is terminated by the Company for any
reason other than death, disability or
cause or by the covered executive for good
reason, after the execution of a definitive agreement with
respect to a change in control transaction but prior to the
consummation thereof and the transaction contemplated by such
definitive agreement is subsequently consummated, such executive
will be entitled to severance benefits consisting of a lump sum
cash amount equal to a multiple of the sum of (A) the
executives annual base salary and (B) the amount that
would have been payable to the executive as an annual incentive
compensation bonus for the year in which the change in control
occurs, determined by multiplying his annual base salary by his
total participants percentage participation
established for such year under the ICP (or any successor plan
thereto). The applicable multiples are: three times for
Mr. Gerkens, two times for Messrs. Gattoni and
Kneller, and one time for Messrs. OMalley and Thomas.
We believe that the terms of our Key Executive Employment
Protection Agreements are consistent with market practice and
assist us in retaining the services of our Executive Officers.
We set the severance multiples for our Executive Officers based
on their position and the potential impact to their continued
employment in the event of a change in control and to remain
competitive within our industry. Each agreement also provides
for continuation of medical benefits and for certain tax
gross-ups to
be made to a covered executive in the event payments to the
executive are subject to the excise tax on parachute
payments imposed under Section 4999 of the Internal
Revenue Code of 1986.
The Company agreed, in a letter dated July 2, 2002, to
provide Mr. Gerkens with the right to receive a cash
payment in settlement of his outstanding stock options in the
event his employment is involuntarily or constructively
terminated by the Company in connection with a change in
control. The Company entered into this agreement with
Mr. Gerkens to provide Mr. Gerkens with additional
personal financial security in the event of a change in control
of the Company which results in or is likely to result in a
termination of his employment and his ability to influence the
strategic direction of the Company. A copy of this letter was
attached as Exhibit 10.17 to the Annual Report on
Form 10-K
for the fiscal year ended December 28, 2002 and is
incorporated by reference to the Companys Annual Report on
Form 10-K
for the year ending December 25, 2010 as Exhibit 10.11.
The Company has also entered into an agreement with
Mr. Gerkens, in various letters dated April 27, 2004,
June 8, 2007, and January 2, 2008, to provide
Mr. Gerkens with certain compensation and benefits in the
event of his termination of employment under certain specified
circumstances. The Company and Mr. Gerkens determined to
amend the letter agreement on January 2, 2008 because the
Company wanted to ensure that Mr. Gerkens would continue to
serve as the Companys Chief Executive Officer for five
years. Under the revised agreement, Mr. Gerkens was granted
400,000 stock options on January 2, 2008 with an additional
100,000 granted on January 2, 2009. These stock options are
intended to reward Mr. Gerkens for his significant
contributions to the Company and to provide an incentive to
Mr. Gerkens for his continued services to the Company.
These 500,000 stock options will vest, subject to
Mr. Gerkens continued employment with the Company, in
three equal annual installments, on January 2, 2011,
January 2, 2012 and January 2, 2013. Notwithstanding
the foregoing, the unvested portion of the options shall become
immediately vested and exercisable in the event that the Company
appoints someone other than Mr. Gerkens as its Chief
Executive Officer at a time when Mr. Gerkens is employed by
the Company, Mr. Gerkens resigns his employment for
good reason (as defined in the letter agreement), or
Mr. Gerkens employment is terminated by the Company
for any reason other than for cause.
The agreement provides that in the event the Company terminates
Mr. Gerkens employment other than for cause or
disability or Mr. Gerkens terminates his employment for
good reason prior to January 2, 2013, in each case at any
time that Mr. Gerkens right to receive severance is
not governed by his Key Executive Employment Protection
Agreement, the Company would pay Mr. Gerkens a lump sum
severance benefit equal to two times the sum of his annual base
salary and the annual bonus that would have been payable to him
for the relevant period under the Companys Executive
Incentive Compensation Plan. In addition, Mr. Gerkens would
be entitled to continue to receive health and welfare benefits.
The agreement also provides that if Mr. Gerkens
employment with the Company ends due to his disability or death,
he, or his beneficiary, would be entitled to receive a pro rata
portion of the annual bonus that would have been payable to him
for the relevant period under the Companys Executive
Incentive Compensation
21
Plan. Further, the agreement provides that in the event the
Company appoints someone other than Mr. Gerkens as Chief
Executive Officer prior to January 2, 2013 at a time when
Mr. Gerkens is employed by the Company or in the event
Mr. Gerkens service to the Company as Chief Executive
Officer ends on or after January 2, 2013 for any reason
other than a termination as a result of which he is entitled to
receive severance benefits under either his Key Executive
Employment Protection Agreement or the letter agreement, a
termination for cause or his death, he would provide the Company
with certain consulting and advisory services during the
two-year period following the end of his employment, for which
he would be paid $300,000 and would be entitled to continue to
receive health and welfare benefits. The agreement further
provides that Mr. Gerkens would work exclusively for the
Company while in its employ and not compete with the Company or
solicit or hire any of its employees for a two-year period
following the end of his employment as Chief Executive Officer
for any reason. A copy of the letter agreement between the
Company and Mr. Gerkens as in effect on December 27,
2008, dated January 2, 2008, was attached as
Exhibit 99.1 to a Current Report on
Form 8-K,
filed by the Company on January 4, 2008.
The Company and Mr. Gerkens determined to amend this letter
agreement on December 31, 2008 to comply with
Section 409A of the Internal Revenue Code and to clarify
and fulfill the intent of certain compensation arrangements in
light of such Section 409A changes. Specifically, to effect
the original intent of the letter agreement, the Company
modified the terms of the 400,000 stock options granted to
Mr. Gerkens on January 2, 2008, to provide that they
may be exercised, in all events other than a cause termination,
for two years following termination of Mr. Gerkens
employment. The 100,000 stock options granted to
Mr. Gerkens on January 2, 2009 were granted inclusive
of the two year exercise provision. A copy of the letter
agreement between the Company and Mr. Gerkens, dated
December 31, 2008, was attached as Exhibit 99.1 to a
Current Report on
Form 8-K,
filed by the Company on January 7, 2009, and is
incorporated by reference to the Companys Annual Report on
Form 10-K
for the year ending December 25, 2010 as Exhibit 10.12.
Other
Benefits and Arrangements
The Company provides the Named Executives with certain other
benefits and arrangements that the Company believes are
reasonable and consistent with its overall compensation program
to enable the Company to continue to attract and maintain highly
qualified individuals in key positions. The Company pays the
premium associated with term life insurance policies covering
each of the Named Executives. The dollar value paid by the
Company on behalf of each of the Named Executives with respect
to these policies is included in the Summary Compensation Table
below. The Board has approved and the Company has entered into
indemnification agreements with each of the Named Executives
providing each such Named Executive with a contractual
obligation from the Company to indemnify such individual in
connection with such individuals service as an employee of
the Company (and in the case of Mr. Gerkens, his service as
a member of the Board) to the fullest extent permitted by
applicable law. The Company retains discretion to provide Named
Executives with the use of certain equipment in connection with
their job responsibilities, including, cell phone, blackberry
and other computer and communications equipment and maintenance
of connectivity for such equipment in the Named Executives
home.
Tax
Considerations
Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally denies a publicly traded company a federal
income tax deduction for compensation in excess of
$1 million paid to certain of its Executive Officers unless
the amount of such excess is payable based solely upon the
attainment of objective performance criteria. The Company has
undertaken to qualify substantial components of the incentive
compensation it makes available to its Executive Officers for
the performance exception to non-deductibility. Equity awards
under the Companys 2002 ESOSIP currently meet these
requirements. At the 2007 Annual Meeting, the Company received
stockholder approval for the executive incentive compensation
plan so that any annual awards payable thereunder (subject to
certain limits) would qualify for the performance exception
under Section 162(m). Under the plan as approved, the
maximum annual bonus payment per participant that could be
awarded is $3 million. The Company believes that tax
deductibility of compensation is an important factor, but not
the sole factor, to be considered in setting executive
compensation policy. Accordingly, the Company generally intends
to take such reasonable steps as are required to avoid the loss
of a tax deduction due to Section 162(m), but the
Compensation Committee reserves the right to pay amounts which
are not deductible in appropriate circumstances.
22
REPORT OF
THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
this Proxy Statement.
THE COMPENSATION COMMITTEE
Diana M. Murphy, Chair
David G. Bannister
William S. Elston
Michael A. Henning
Compensation of Named Executives. The
following table summarizes the compensation paid to (i) the
Chairman of the Board, President and Chief Executive Officer,
(ii) the Principal Financial Officer and (iii) the
Companys three most highly compensated Executive Officers
other than the Chairman of the Board, President and Chief
Executive Officer and the Principal Financial Officer (such five
individuals, collectively, the Named
Executives).
Summary
Compensation Table
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Change in
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Pension Value
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and Nonqualified
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Non-Equity
|
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Deferred
|
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|
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Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
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All Other
|
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|
|
|
|
|
Salary
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name and Principal Occupation
|
|
Year
|
|
(1)($)
|
|
(2)($)
|
|
(3)($)
|
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($)
|
|
(4)($)
|
|
(5)($)
|
|
($)
|
|
Henry H. Gerkens
|
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2010
|
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|
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500,000
|
|
|
|
|
|
|
|
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3,000,000
|
|
|
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44,253
|
|
|
|
29,604
|
|
|
|
3,573,857
|
|
Chairman of the Board,
|
|
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2009
|
|
|
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500,000
|
|
|
|
|
|
|
|
1,205,970
|
|
|
|
|
|
|
|
43,256
|
|
|
|
29,050
|
|
|
|
1,778,276
|
|
President and CEO
|
|
|
2008
|
|
|
|
500,000
|
|
|
|
|
|
|
|
4,890,120
|
|
|
|
1,051,000
|
|
|
|
|
|
|
|
24,039
|
|
|
|
6,465,159
|
|
James B. Gattoni
|
|
|
2010
|
|
|
|
245,000
|
|
|
|
62,560
|
|
|
|
139,637
|
|
|
|
1,125,000
|
|
|
|
|
|
|
|
10,583
|
|
|
|
1,582,780
|
|
Vice President and Chief
|
|
|
2009
|
|
|
|
235,000
|
|
|
|
102,270
|
|
|
|
401,937
|
|
|
|
|
|
|
|
|
|
|
|
10,156
|
|
|
|
749,363
|
|
Financial Officer
|
|
|
2008
|
|
|
|
225,000
|
|
|
|
|
|
|
|
489,012
|
|
|
|
308,000
|
|
|
|
|
|
|
|
9,720
|
|
|
|
1,031,732
|
|
Patrick J. OMalley
|
|
|
2010
|
|
|
|
215,000
|
|
|
|
54,740
|
|
|
|
139,637
|
|
|
|
610,000
|
|
|
|
5,408
|
|
|
|
9,649
|
|
|
|
1,034,434
|
|
Vice President,
|
|
|
2009
|
|
|
|
204,167
|
|
|
|
72,400
|
|
|
|
334,948
|
|
|
|
|
|
|
|
2,936
|
|
|
|
9,156
|
|
|
|
623,607
|
|
Chief Operating Officer
|
|
|
2008
|
|
|
|
200,000
|
|
|
|
|
|
|
|
547,824
|
|
|
|
187,000
|
|
|
|
|
|
|
|
8,966
|
|
|
|
943,790
|
|
Larry S. Thomas
|
|
|
2010
|
|
|
|
210,500
|
|
|
|
54,740
|
|
|
|
218,183
|
|
|
|
530,000
|
|
|
|
1,747
|
|
|
|
9,444
|
|
|
|
1,024,614
|
|
Vice President and
|
|
|
2009
|
|
|
|
206,000
|
|
|
|
|
|
|
|
200,969
|
|
|
|
|
|
|
|
2,743
|
|
|
|
8,892
|
|
|
|
418,604
|
|
Chief Information Officer
|
|
|
2008
|
|
|
|
206,000
|
|
|
|
|
|
|
|
305,633
|
|
|
|
193,000
|
|
|
|
|
|
|
|
8,892
|
|
|
|
713,525
|
|
Michael K. Kneller
|
|
|
2010
|
|
|
|
211,000
|
|
|
|
54,740
|
|
|
|
81,455
|
|
|
|
610,000
|
|
|
|
2,726
|
|
|
|
8,842
|
|
|
|
968,763
|
|
Vice President, General
|
|
|
2009
|
|
|
|
206,000
|
|
|
|
102,270
|
|
|
|
334,948
|
|
|
|
|
|
|
|
5,952
|
|
|
|
8,631
|
|
|
|
657,801
|
|
Counsel and Secretary
|
|
|
2008
|
|
|
|
206,000
|
|
|
|
|
|
|
|
305,633
|
|
|
|
173,000
|
|
|
|
|
|
|
|
8,588
|
|
|
|
693,221
|
|
|
|
|
(1) |
|
Amounts shown include any salary deferred at the election of the
Named Executive under the Landstar 401(k) Savings Plan and/or
the SERP. |
|
(2) |
|
Stock award amounts reflect the aggregate grant date fair value
of shares of restricted Common Stock granted during each fiscal
year computed in accordance with generally accepted accounting
principles. Assumptions used in calculating the fair market
value of stock awards granted are included in the footnotes to
the Companys audited consolidated financial statements
included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 25, 2010 filed with the
Securities and Exchange Commission. |
|
(3) |
|
Option award amounts reflect the aggregate grant date fair value
of stock option grants during each fiscal year computed in
accordance with generally accepted accounting principles.
Assumptions used in calculating the fair market value of stock
options granted are included in the footnotes to the
Companys audited consolidated financial statements
included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 25, 2010 filed with the
Securities and Exchange Commission. |
23
|
|
|
(4) |
|
Represents aggregate earnings during each fiscal year on
investments held on behalf of the Named Executives under the
SERP. Amounts for 2008 exclude losses of $50,440 for
Mr. Gerkens, $818 for Mr. OMalley and $4,079 for
Mr. Kneller. |
|
(5) |
|
Amounts include contributions made by the Company under the
Landstar 401(k) Savings Plan on behalf of the Named Executives,
contributions made by the Company under the SERP on behalf of
the Named Executives and the dollar value of term life insurance
premiums paid by the Company on behalf of the Named Executives
in the following amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
|
|
|
|
|
|
|
401(k)
|
|
|
SERP
|
|
|
Premiums
|
|
|
Total
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry H. Gerkens
|
|
$
|
9,800
|
|
|
$
|
10,200
|
|
|
$
|
9,604
|
|
|
$
|
29,604
|
|
James B. Gattoni
|
|
|
9,800
|
|
|
|
|
|
|
|
783
|
|
|
|
10,583
|
|
Patrick J. OMalley
|
|
|
8,600
|
|
|
|
|
|
|
|
1,049
|
|
|
|
9,649
|
|
Larry S. Thomas
|
|
|
8,420
|
|
|
|
|
|
|
|
1,024
|
|
|
|
9,444
|
|
Michael K. Kneller
|
|
|
8,440
|
|
|
|
|
|
|
|
402
|
|
|
|
8,842
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry H. Gerkens
|
|
$
|
9,800
|
|
|
$
|
10,200
|
|
|
$
|
9,050
|
|
|
$
|
29,050
|
|
James B. Gattoni
|
|
|
9,400
|
|
|
|
|
|
|
|
756
|
|
|
|
10,156
|
|
Patrick J. OMalley
|
|
|
8,167
|
|
|
|
|
|
|
|
989
|
|
|
|
9,156
|
|
Larry S. Thomas
|
|
|
8,240
|
|
|
|
|
|
|
|
652
|
|
|
|
8,892
|
|
Michael K. Kneller
|
|
|
8,240
|
|
|
|
|
|
|
|
391
|
|
|
|
8,631
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry H. Gerkens
|
|
$
|
9,200
|
|
|
$
|
10,800
|
|
|
$
|
4,039
|
|
|
$
|
24,039
|
|
James B. Gattoni
|
|
|
9,000
|
|
|
|
|
|
|
|
720
|
|
|
|
9,720
|
|
Patrick J. OMalley
|
|
|
8,000
|
|
|
|
|
|
|
|
966
|
|
|
|
8,966
|
|
Larry S. Thomas
|
|
|
8,240
|
|
|
|
|
|
|
|
652
|
|
|
|
8,892
|
|
Michael K. Kneller
|
|
|
8,240
|
|
|
|
|
|
|
|
348
|
|
|
|
8,588
|
|
Grants of Plan-Based Awards. The following
table illustrates the threshold, target and maximum amounts that
could have been payable in respect of 2010 services under the
ICP. The following table also sets forth the number of and
information about stock-based awards granted in fiscal 2010 to
each of the Named Executives of the Company.
Grants of
Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Fair
|
|
Closing
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
or Base
|
|
Value of
|
|
Market
|
|
|
|
|
Date of
|
|
Under Non-Equity Incentive
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
Price on
|
|
|
|
|
Compensation
|
|
Plan Awards
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Option
|
|
Date of
|
|
|
Grant
|
|
Committee
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Awards
|
|
Grant
|
Name
|
|
Date
|
|
Action
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($/Sh)
|
|
($/Sh)
|
|
Henry H. Gerkens
|
|
December 1, 2009
|
|
December 1, 2009
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James B. Gattoni
|
|
January 4, 2010(1)
|
|
December 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,600
|
|
|
|
|
|
|
|
|
|
|
|
39.10
|
|
|
|
39.24
|
|
|
|
January 29, 2010(2)
|
|
January 26, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
37.07
|
|
|
|
11.64
|
|
|
|
36.29
|
|
|
|
December 1, 2009
|
|
December 1, 2009
|
|
|
152,750
|
|
|
|
152,750
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick J. OMalley
|
|
January 4, 2010(1)
|
|
December 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
39.10
|
|
|
|
39.24
|
|
|
|
January 29, 2010(2)
|
|
January 26, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
37.07
|
|
|
|
11.64
|
|
|
|
36.29
|
|
|
|
December 1, 2009
|
|
December 1, 2009
|
|
|
119,700
|
|
|
|
126,000
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry S. Thomas
|
|
January 4, 2010(1)
|
|
December 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
39.10
|
|
|
|
39.24
|
|
|
|
January 29, 2010(2)
|
|
January 26, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
37.07
|
|
|
|
11.64
|
|
|
|
36.29
|
|
|
|
December 1, 2009
|
|
December 1, 2009
|
|
|
117,420
|
|
|
|
123,600
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael K. Kneller
|
|
January 4, 2010(1)
|
|
December 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
39.10
|
|
|
|
39.24
|
|
|
|
January 29, 2010(2)
|
|
January 26, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
37.07
|
|
|
|
11.64
|
|
|
|
36.29
|
|
|
|
December 1, 2009
|
|
December 1, 2009
|
|
|
82,400
|
|
|
|
82,400
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Restricted stock granted shall vest in three equal installments
on each of the first three anniversaries of the date of grant,
provided the employee is employed by the Company on such
anniversary date. |
24
|
|
|
(2) |
|
Stock options granted shall become exercisable in five equal
installments on each of the first five anniversaries of the date
of grant, provided the employee is employed by the Company on
such anniversary date. |
Option Exercises. The following table sets
forth the number and value of all stock options exercised during
the 2010 fiscal year by each of the Named Executives. No stock
awards vested during fiscal year 2010.
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
Name
|
|
(#)
|
|
|
(1)($)
|
|
|
Henry H. Gerkens
|
|
|
55,445
|
|
|
|
451,931
|
|
James B. Gattoni
|
|
|
44,240
|
|
|
|
1,183,223
|
|
Patrick J. OMalley
|
|
|
48,584
|
|
|
|
1,315,144
|
|
Larry S. Thomas
|
|
|
5,112
|
|
|
|
163,597
|
|
|
|
|
(1) |
|
The value realized represents the difference between the fair
market value of the shares of Common Stock acquired on the date
of exercise and the exercise price of the stock option. The fair
market value was calculated based upon the average of the high
and low bid and ask prices per share of Common Stock as reported
on NASDAQ on the respective stock option exercise dates. |
25
Outstanding Equity Awards at Fiscal Year
End. The following table sets forth the
outstanding equity awards held by the Named Executives at
December 25, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Value of
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Shares or Units
|
|
Units of
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
of Stock That
|
|
Stock That
|
|
|
Options
|
|
Options
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
Name
|
|
Exercisable (#)
|
|
Unexercisable (#)
|
|
($/Sh)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Henry H. Gerkens
|
|
|
100,000
|
|
|
|
|
|
|
|
43.6600
|
|
|
|
2/2/2016(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
|
|
|
|
|
|
44.3200
|
|
|
|
2/1/2017(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
41.5700
|
|
|
|
1/2/2018(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
39.3200
|
|
|
|
1/2/2019(3
|
)
|
|
|
|
|
|
|
|
|
James B. Gattoni
|
|
|
20,000
|
|
|
|
|
|
|
|
37.3088
|
|
|
|
1/3/2015(1
|
)
|
|
|
4,600(9
|
)
|
|
|
187,450
|
|
|
|
|
8,000
|
|
|
|
|
|
|
|
32.1300
|
|
|
|
1/27/2015(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
43.6600
|
|
|
|
2/2/2016(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
38.1800
|
|
|
|
1/2/2017(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
24,000
|
|
|
|
41.5700
|
|
|
|
1/2/2018(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
39.3200
|
|
|
|
1/2/2019(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
37.0700
|
|
|
|
1/29/2020(4
|
)
|
|
|
|
|
|
|
|
|
Patrick J. OMalley
|
|
|
3,201
|
|
|
|
|
|
|
|
32.1300
|
|
|
|
1/27/2015(4
|
)
|
|
|
3,400(10
|
)
|
|
|
138,550
|
|
|
|
|
3,200
|
|
|
|
800
|
|
|
|
43.6600
|
|
|
|
2/2/2016(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
1,600
|
|
|
|
44.3200
|
|
|
|
2/1/2017(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
41.5700
|
|
|
|
1/2/2018(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
39.3200
|
|
|
|
1/2/2019(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
37.0700
|
|
|
|
1/29/2020(4
|
)
|
|
|
|
|
|
|
|
|
Larry S. Thomas
|
|
|
45,000
|
|
|
|
|
|
|
|
19.0250
|
|
|
|
1/2/2014(8
|
)
|
|
|
1,400(11
|
)
|
|
|
57,050
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
37.3088
|
|
|
|
1/3/2015(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
32.1300
|
|
|
|
1/27/2015(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
43.6600
|
|
|
|
2/2/2016(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
44.3200
|
|
|
|
2/1/2017(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
15,000
|
|
|
|
41.5700
|
|
|
|
1/2/2018(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
39.3200
|
|
|
|
1/2/2019(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
37.0700
|
|
|
|
1/29/2020(4
|
)
|
|
|
|
|
|
|
|
|
Michael K. Kneller
|
|
|
25,000
|
|
|
|
|
|
|
|
34.1350
|
|
|
|
6/1/2015(1
|
)
|
|
|
4,400(12
|
)
|
|
|
179,300
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
43.6600
|
|
|
|
2/2/2016(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
44.3200
|
|
|
|
2/1/2017(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
15,000
|
|
|
|
41.5700
|
|
|
|
1/2/2018(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
39.3200
|
|
|
|
1/2/2019(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
37.0700
|
|
|
|
1/29/2020(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All stock options, which may represent the remaining outstanding
portion of a stock option award where stock options have
previously been exercised, vest at a rate of
331/3%
per year over the first three years of the stock option term,
which began ten years prior to the expiration date shown. |
|
(2) |
|
Stock options vest as to 133,333 shares each on
January 2, 2011 and on January 2, 2012 and
133,334 shares on January 2, 2013. |
|
(3) |
|
Stock options vest as to 33,333 shares each on
January 2, 2011 and on January 2, 2012 and
33,334 shares on January 2, 2013. |
|
(4) |
|
All stock options, which may represent the remaining outstanding
portion of a stock option award where stock options have
previously been exercised, vest at a rate of 20% per year over
the first five years of the stock option term, which began ten
years prior to the expiration date shown. |
|
(5) |
|
All stock options vest on January 2, 2012. |
|
(6) |
|
All stock options vest on January 2, 2014. |
|
(7) |
|
All stock options vest on January 2, 2013. |
26
|
|
|
(8) |
|
All stock options vested on January 2, 2009. |
|
(9) |
|
Restricted stock vests as to 3,000 shares on July 16,
2014 and 1,600 shares in three equal annual installments on
each of the first three anniversaries of January 4, 2010,
the date of grant. |
|
(10) |
|
Restricted stock vests as to 2,000 shares on July 29,
2014 and 1,400 shares in three equal annual installments on
each of the first three anniversaries of January 4, 2010,
the date of grant. |
|
(11) |
|
Restricted stock vests in three equal annual installments on
each of the first three anniversaries of January 4, 2010,
the date of grant. |
|
(12) |
|
Restricted stock vests as to 3,000 shares on July 16,
2014 and 1,400 shares in three equal annual installments on
each of the first three anniversaries of January 4, 2010,
the date of grant. |
Nonqualified Deferred Compensation. The
following table provides the contributions, earnings and
balances under the SERP as of and for the fiscal year ended
December 25, 2010 for the Named Executives:
Nonqualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
|
|
Balance
|
|
|
Contributions
|
|
Contributions
|
|
Earnings
|
|
Aggregate
|
|
at Last
|
|
|
in Last
|
|
in Last
|
|
in Last
|
|
Withdrawals/
|
|
Fiscal
|
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Fiscal Year
|
|
Distributions
|
|
Year End
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Henry H. Gerkens
|
|
|
25,000
|
|
|
|
10,200
|
|
|
|
44,253
|
|
|
|
|
|
|
|
451,450
|
|
Patrick J. OMalley
|
|
|
15,750
|
|
|
|
|
|
|
|
5,408
|
|
|
|
|
|
|
|
47,419
|
|
Larry S. Thomas
|
|
|
|
|
|
|
|
|
|
|
1,747
|
|
|
|
|
|
|
|
20,842
|
|
Michael K. Kneller
|
|
|
|
|
|
|
|
|
|
|
2,726
|
|
|
|
|
|
|
|
19,288
|
|
Eligible employees can elect to make deferred contributions to
the SERP, based on a percentage of their base salary, subject to
certain limitations. To the extent the employee has achieved the
maximum allowable matching contribution under the Landstar
System, Inc. 401(k) Savings Plan, the Company will contribute an
amount equal to 100% of the first 3% and 50% of the next 2% of
such contributions subject to certain limitations. Interest,
earnings or appreciation (less losses and depreciation) with
respect to investment balances included in the employees
SERP account balance are credited to the employees
investment balance. As of December 25, 2010, distributions
under the SERP were payable in the same form and at the same
time as distributions under the 401(k) Plan, or upon request by
the employee, shortly after termination from employment.
Investments in the SERP include primarily mutual
27
funds and are valued using quoted market prices. The table below
shows the investment options available to an employee under the
SERP and their annual rate of return for 2010 as reported by the
administrator of the SERP.
|
|
|
|
|
Name of Fund
|
|
Rate of Return
|
|
T. Rowe Price Mid Cap Growth Fund
|
|
|
28.06
|
%
|
INVESCO Small Cap Growth Fund
|
|
|
26.28
|
%
|
Dreyfus Small Cap Stock Index Fund
|
|
|
26.05
|
%
|
Janus Overseas Fund S
|
|
|
18.97
|
%
|
Perkins Small Cap Value S
|
|
|
17.64
|
%
|
T. Rowe Price Retirement 2040 Fund
|
|
|
16.51
|
%
|
T. Rowe Price Mid Cap Value Fund
|
|
|
16.45
|
%
|
T. Rowe Price Retirement 2045 Fund
|
|
|
16.44
|
%
|
T. Rowe Price Retirement 2050 Fund
|
|
|
16.41
|
%
|
T. Rowe Price Retirement 2035 Fund
|
|
|
16.34
|
%
|
T. Rowe Price Retirement 2030 Fund
|
|
|
16.01
|
%
|
T. Rowe Price Retirement 2025 Fund
|
|
|
15.37
|
%
|
Vanguard 500 Index Fund
|
|
|
14.91
|
%
|
T. Rowe Price Retirement 2020 Fund
|
|
|
14.74
|
%
|
MFS Massachusetts Investors Growth Stock R3
|
|
|
14.30
|
%
|
T. Rowe Price Retirement 2015 Fund
|
|
|
13.79
|
%
|
T. Rowe Price Retirement 2010 Fund
|
|
|
12.70
|
%
|
Goldman Sachs Large Cap Value A
|
|
|
12.13
|
%
|
MFS Massachusetts Investors Tr R3
|
|
|
11.51
|
%
|
MFS Value R3
|
|
|
11.40
|
%
|
Allianz NFJ International Value A
|
|
|
10.62
|
%
|
BlackRock Inflation Protected Bond A
|
|
|
5.82
|
%
|
RidgeWorth Investment Grade Bond I
|
|
|
5.42
|
%
|
Federated Prime Obligations Fund SS
|
|
|
0.01
|
%
|
Potential
Payment Upon Termination or Change in Control
The table below reflects the amount of compensation payable to
each of the Named Executives in the event of a qualifying
termination of employment in connection with a change in control
or possible change in control under the Key Executive Employment
Protection Agreements, as further described in the Compensation
Discussion and Analysis section of this Proxy Statement as of
the end of the Companys 2010 fiscal year. The table below
also reflects letter agreements between the Company and
Mr. Gerkens, dated July 2, 2002 and December 31,
2008, that provide for certain severance benefits for
Mr. Gerkens. Each of these letter agreements is further
described in the Compensation Discussion and Analysis section of
this Proxy Statement. In addition, in accordance with the
provisions of the Companys stock-based award plans, all
outstanding, non-vested stock options and restricted stock are
subject to accelerated vesting upon a change in control of the
Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance Upon
|
|
|
|
|
|
|
Termination without
|
|
|
|
|
|
|
Cause or for Good
|
|
|
|
Change in Control (1)
|
|
|
Reason (2)
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Henry H. Gerkens
|
|
|
3,160,256
|
|
|
|
2,017,256
|
|
James B. Gattoni
|
|
|
1,348,150
|
|
|
|
|
|
Patrick J. OMalley
|
|
|
615,138
|
|
|
|
|
|
Larry S. Thomas
|
|
|
1,727,469
|
|
|
|
|
|
Michael K. Kneller
|
|
|
1,028,241
|
|
|
|
|
|
28
|
|
|
(1) |
|
Change in Control amounts include severance benefits, target
bonus and medical benefits under the Key Executive Employment
Protection Agreements, as described further in the Compensation
Discussion and Analysis, plus the intrinsic value of stock
options outstanding based on the closing price of $40.75 on
December 25, 2010 and assuming accelerated vesting upon a
change in control of the Company, effective as of that date. The
value of medical benefits for each Named Executive equals the
payments that may be waived by the Company on behalf of such
Named Executive for the continuation of existing coverage for up
to one year under the Companys medical benefit plans
pursuant to such Named Executives Key Executive Employment
Protection Agreement. |
|
(2) |
|
Severance amount includes $2,000,000 of severance and $17,256 of
medical benefits. |
SECURITY
OWNERSHIP BY MANAGEMENT AND OTHERS
The following table sets forth certain information concerning
the beneficial ownership of the Companys Common Stock as
of March 28, 2011 by (i) each person who is known by
the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each Director, nominee for
election as a Director and Executive Officers of the Company,
and (iii) all Directors and Executive Officers as a group.
Except as otherwise indicated, the business address of each
stockholder listed on the table below is
c/o Landstar
System, Inc., 13410 Sutton Park Drive South, Jacksonville,
Florida 32224.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
Ownership
|
|
|
|
|
Beneficial
|
|
Percent of
|
Name of Beneficial Owner
|
|
Position(s)
|
|
Ownership
|
|
Class(1)
|
|
(i)
|
|
|
|
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc.(2)(3)
|
|
|
|
|
4,873,330
|
|
|
|
10.2
|
%
|
BlackRock, Inc.(2)(4)
|
|
|
|
|
3,484,260
|
|
|
|
7.3
|
%
|
(ii)
|
|
|
|
|
|
|
|
|
|
|
David G. Bannister
|
|
Director and Nominee for Director
|
|
|
18,680
|
|
|
|
|
*
|
Jeffrey C. Crowe
|
|
Director and Nominee for Director
|
|
|
33,572
|
|
|
|
|
*
|
William S. Elston(5)
|
|
Director
|
|
|
30,556
|
|
|
|
|
*
|
Michael A. Henning
|
|
Director and Nominee for Director
|
|
|
10,577
|
|
|
|
|
*
|
Diana M. Murphy(6)
|
|
Director
|
|
|
70,726
|
|
|
|
|
*
|
Henry H. Gerkens(7)
|
|
Chairman of the Board, President
and Chief Executive Officer
|
|
|
352,822
|
|
|
|
|
*
|
James B. Gattoni(8)
|
|
Vice President and Chief
Financial Officer
|
|
|
146,000
|
|
|
|
|
*
|
Larry S. Thomas(9)
|
|
Vice President and Chief
Information Officer
|
|
|
182,195
|
|
|
|
|
*
|
Michael K. Kneller(10)
|
|
Vice President, General Counsel
and Secretary
|
|
|
96,458
|
|
|
|
|
*
|
Patrick J. OMalley(11)
|
|
Vice President and Chief
Operating Officer
|
|
|
37,113
|
|
|
|
|
*
|
Joseph J. Beacom(12)
|
|
Vice President and Chief
Compliance, Security and Safety Officer
|
|
|
69,122
|
|
|
|
|
*
|
(iii)
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a group
(11 persons)(13)(14)
|
|
|
|
|
1,047,821
|
|
|
|
2.2
|
%
|
|
|
|
* |
|
Less than 1% |
|
(1) |
|
The percentages are based upon 47,878,197 shares, which
equals the number of outstanding shares of the Company as of
March 28, 2011. With respect to the calculation of the
percentages for beneficial owners who hold stock options
exercisable within 60 days of March 28, 2011, the
number of shares of Common Stock on which such percentage is
based also includes the number of shares underlying such stock
options. |
29
|
|
|
(2) |
|
In accordance with the rules of the Securities and Exchange
Commission, the information set forth above is based on the most
recent Schedule 13G (and amendments thereto) filed by this
entity. |
|
(3) |
|
According to an amendment to its Schedule 13G/A filed on
February 10, 2011, (i) T. Rowe Price Associates, Inc.
(Price Associates) is an investment adviser
registered under Section 203 of the Investment Advisers Act
of 1940 and is deemed to be the beneficial owner of
4,873,330 shares of Common Stock and (ii) T. Rowe
Price Small-Cap Value Fund, Inc. (T. Rowe Small-Cap)
is an investment company registered under Section 8 of the
Investment Company Act of 1940 and is deemed to be the
beneficial owner of 2,610,000 shares of Common Stock. Price
Associates has sole voting power with respect to 1,110,630 of
such shares, no shared voting or dispositive power with respect
to such shares, and sole dispositive power with respect to all
4,873,330 shares. Price Associates, however, expressly
disclaims that it is, in fact, the beneficial owner of such
shares. T. Rowe Small-Cap has sole voting power with respect to
2,610,000 of such shares and no shared voting or sole or shared
dispositive power with respect to such shares. The business
address of each of Price Associates and T. Rowe Small-Cap is
100 E. Pratt Street, Baltimore, Maryland 21202. |
|
(4) |
|
According to its Schedule 13G/A filed on February 7,
2011, BlackRock, Inc. (BlackRock) is a parent
holding company or control person and is deemed to be the
beneficial owner of 3,484,260 shares of Common Stock.
BlackRock has sole voting and dispositive power with respect to
all 3,484,260 of such shares. The business address of BlackRock
is 40 East 52nd Street, New York, NY 10022. |
|
(5) |
|
Includes 4,977 shares of restricted stock subject to
vesting. |
|
(6) |
|
Includes 4,977 shares of restricted stock subject to
vesting. |
|
(7) |
|
Includes 293,667 shares that may be acquired upon the
exercise of stock options. |
|
(8) |
|
Includes 94,400 shares that may be acquired upon the
exercise of stock options and 5,672 shares of restricted
stock subject to vesting. |
|
(9) |
|
Includes 163,250 shares that may be acquired upon the
exercise of stock options and 2,238 shares of restricted
stock subject to vesting. |
|
(10) |
|
Includes 88,900 shares that may be acquired upon the
exercise of stock options and 5,338 shares of restricted
stock subject to vesting. |
|
(11) |
|
Includes 12,801 shares that may be acquired upon the
exercise of stock options and 4,338 shares of restricted
stock subject to vesting. |
|
(12) |
|
Includes 46,900 shares that may be acquired upon the
exercise of stock options and 2,004 shares of restricted
stock subject to vesting. |
|
(13) |
|
Represents amount of shares that may be deemed to be
beneficially owned either directly or indirectly by all
Directors and Executive Officers as a group. |
|
(14) |
|
Includes 699,918 shares that may be acquired upon the
exercise of stock options and 29,544 shares of restricted
stock subject to vesting. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys Executive Officers and
Directors, and persons who own more than ten percent of a
registered class of the Companys equity securities, to
file reports of ownership and changes in ownership with the
Securities and Exchange Commission (SEC). Executive
Officers, Directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to
the Company, or written representations that no Form 5 was
required, the Company believes that during the fiscal year ended
December 25, 2010, all reports required by
Section 16(a) which are applicable to its Executive
Officers, Directors and greater than ten percent beneficial
owners were filed on a timely basis, except with respect to the
following: on March 11, 2010, Mr. Beacom
30
exercised options on 2,920 shares and sold
2,900 shares of the Companys common stock. The
Form 4 reporting these transactions was filed on
March 17, 2010.
PROPOSAL NUMBER
TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The firm of KPMG LLP served as the independent registered public
accounting firm for the Company for the fiscal year ended
December 25, 2010. In addition to retaining KPMG LLP to
audit the consolidated financial statements and the internal
controls over financial reporting of the Company and its
subsidiary, the Company engaged KPMG LLP to render certain
employee benefit audit services to the Company in fiscal year
2010 and expects to continue to do so in fiscal 2011. The
aggregate fees billed for professional services by KPMG LLP in
fiscal years 2010 and 2009 for services consisted of the
following:
AUDIT FEES: Fees for the audits of the
financial statements and internal control over financial
reporting and quarterly reviews were $830,000 for fiscal 2010
and $917,500 for fiscal 2009.
AUDIT RELATED FEES: Fees for audits of the
Companys 401(k) plan and subsidiary audit were $42,000 and
$63,328 for fiscal 2010 and 2009, respectively.
TAX FEES: Fees for assistance with tax
compliance and tax audits were $24,364 for fiscal 2009.
The Audit Committee has approved all of the fees above.
The Audit Committee has appointed KPMG LLP to continue in that
capacity for fiscal year 2011, and has recommended to the Board
that a resolution be presented to stockholders at the 2011
Annual Meeting to ratify that appointment. The Board has adopted
such resolutions and hereby presents it to the Companys
stockholders. A representative of KPMG LLP will be present at
the 2011 Annual Meeting and will have an opportunity to make a
statement and respond to questions from stockholders as
appropriate.
Assuming the presence of a quorum, to be approved, this proposal
must receive the affirmative vote of the holders of a majority
of the Common Stock, present, in person or by proxy, at the 2011
Annual Meeting. Abstentions from voting and broker non-votes
will have no effect on the outcome of this proposal.
THE BOARD
RECOMMENDS A VOTE FOR THIS PROPOSAL
PROPOSAL NUMBER
THREE
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The recently enacted Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, or the
Dodd-Frank
Act, enables the Companys stockholders to vote to approve,
on an advisory (nonbinding) basis, the compensation of the Named
Executives as disclosed in this proxy statement.
As described in detail under the heading Executive
Compensation Compensation Discussion and
Analysis, the executive compensation programs are
designed to attract, motivate, and retain the Named Executives,
who are critical to the Companys success. Under these
programs, the Named Executives are rewarded for the achievement
of specific annual, long-term and strategic goals, corporate
goals, and the realization of increased stockholder value.
Please read the Compensation Discussion and
Analysis included in this proxy statement for
additional details about the executive compensation programs,
including information about the fiscal year 2010 compensation of
the Named Executives.
The Compensation Committee continually reviews the compensation
programs for the Named Executives to ensure they achieve the
desired goals of aligning the Companys executive
compensation structure with current market practices and the
stockholders interests. While the Compensation Committee
determines the compensation of the Named Executives in the
manner described in the Compensation Discussion and
Analysis, the Company understands that the
stockholders may be particularly interested in the connection
between our Chief Executive Officers compensation and the
Companys performance, as well as the long-term trend of
the Chief Executive Officers total compensation relative
to the stockholders return. For 2010, 85% of the Chief
Executive Officers
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total direct compensation was performance-based (as
discussed in Compensation Discussion and
Analysis) and determined based on the Companys
actual diluted earnings per share as compared to the budgeted
amount for this metric.
We are asking the stockholders to indicate their support for the
Named Executive compensation as described in this proxy
statement. This proposal, commonly known as a
say-on-pay
proposal, gives the stockholders the opportunity to express
their views on the Named Executives compensation. This
vote is not intended to address any specific item of
compensation, but rather the overall compensation of the Named
Executives and the philosophy, policies and practices described
in this proxy statement. Accordingly, we will ask the
stockholders to vote FOR the following resolution at
the Companys 2011 Annual Meeting:
RESOLVED, that the Companys stockholders approve, on
an advisory basis, the compensation of the Named Executives, as
disclosed in the Companys Proxy Statement for the 2011
Annual Meeting pursuant to the compensation disclosure rules of
the Securities and Exchange Commission, including the
Compensation Discussion and Analysis, the 2010 Summary
Compensation Table and the other related tables and
disclosure.
The
say-on-pay
vote is advisory, and therefore not binding on the Company, the
Compensation Committee or the Board of Directors. The Board of
Directors and the Compensation Committee value the opinions of
the Companys stockholders and to the extent there is any
significant vote against the Named Executive compensation as
disclosed in this proxy statement, we will consider the
stockholders concerns and the Compensation Committee will
evaluate whether any actions are necessary to address those
concerns.
Approval of Proposal No. 3 requires the affirmative
vote of a majority of the votes cast at the 2011 Annual Meeting,
provided a quorum is present. Unless you instruct us to vote
differently, we will vote valid proxies FOR the approval of the
compensation paid by the Company to its Named Executives as
discussed in this proxy statement.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THIS
PROPOSAL.
PROPOSAL NUMBER
FOUR
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE
COMPENSATION
The Dodd-Frank Act also enables the Companys stockholders
to indicate how frequently we should seek an advisory vote on
the compensation of the Named Executives, as disclosed pursuant
to the SECs compensation disclosure rules. By voting on
this proposal, stockholders may indicate whether they would
prefer an advisory vote on Named Executive compensation once
every one, two, or three years or may abstain.
The Board of Directors believes that a triennial vote on
executive compensation is appropriate for a number of reasons.
The Company believes that a triennial advisory vote would better
enable stockholders to see and evaluate the Compensation
Committees actions in context over time. In this regard,
as noted above under the heading Executive
Compensation- Compensation Discussion and
Analysis, long-term incentive compensation paid in the
form of stock-based awards has historically accounted for a
significant portion of each Named Executives total
compensation and has been designed to reward long-term
performance, with such awards typically subject to vesting
periods of no less than three years. The Board believes that
long-term incentive compensation paid in the form of stock-based
awards helps to align managements future interests with
that of the Companys stockholders, rewards for sustained
performance over a period of time longer than one or two years
and is generally aligned with the Companys variable cost
business model.
Moreover, the Board of Directors believes that an advisory vote
on executive compensation that occurs every three years reflects
the appropriate time frame for the Compensation Committee and
the Board of Directors to evaluate the results of the most
recent advisory vote on executive compensation, to discuss the
implications of that vote with stockholders to the extent needed
and to develop and implement any adjustments to our executive
compensation programs that may be appropriate in light of a past
advisory vote on executive compensation. In this regard, because
the advisory vote on executive compensation occurs after we have
already implemented our executive compensation programs for the
current year, and because the different elements of compensation
are designed to operate in an integrated manner and to
complement one another, we expect that in many cases it may not
32
be appropriate or feasible to fully address and respond to any
one years advisory vote on executive compensation by the
time of the following years annual meeting of stockholders.
The Board of Directors is also aware of views that some have
expressed in support of conducting an annual advisory vote on
executive compensation. We are aware that some stockholders
believe that annual advisory votes will enhance or reinforce
accountability. However, we have in the past and will in the
future continue to be engaged with our stockholders on a number
of topics and in a number of forums. Thus, we view the advisory
vote on executive compensation as an additional, but not
exclusive, means for our stockholders to communicate with us
regarding their views on the Companys executive
compensation programs. Also, because our executive compensation
programs are designed to operate over the long-term and to
enhance long-term performances, we are concerned that an annual
advisory vote on executive compensation could lead to our
executive compensation programs placing an undue emphasis on
near term performance.
We understand that the stockholders may have different views as
to what is the best approach for the Company and we will
carefully review the voting results. As the Board of Directors
acknowledges that there are a number of points of view regarding
the relative benefits of triennial and more frequent
say-on-pay
votes, the Board of Directors is not making a recommendation
with the respect to this proposal.
You may cast your vote on your preferred voting frequency by
choosing the option of one year, two years, three years or
abstain from voting when you vote in response to the resolution
set forth below.
RESOLVED, that the option of once every one year, two
years, or three years that receives the highest number of votes
cast for this resolution will be determined to be the preferred
frequency with which the Company is to hold a stockholder vote
to approve the compensation of its Named Executives, as
disclosed pursuant to the Securities and Exchange
Commissions compensation disclosure rules (which
disclosure shall include the Compensation Discussion and
Analysis, the Summary Compensation Table, and the other related
tables and disclosure).
The option of one year, two years or three years that receives
the highest number of votes cast by stockholders will be the
frequency for the advisory vote on executive compensation that
has been selected by stockholders. However, because this vote is
advisory and not binding on the Board of Directors or the
Company in any way, the Board of Directors may decide that it is
in the best interests of the stockholders and the Company to
hold an advisory vote on executive compensation more or less
frequently than the option approved by the stockholders.
Unless you instruct us to vote differently, we will vote
valid proxies to ABSTAIN on the vote on the frequency of a
stockholders vote on the compensation paid by the Company to its
Named Executives.
THE BOARD
OF DIRECTORS IS NOT MAKING A RECOMMENDATION REGARDING THE VOTE
ON THE FREQUENCY WITH WHICH STOCKHOLDERS ARE PROVIDED AN
ADVISORY VOTE ON EXECUTIVE COMPENSATION, AS DISCLOSED PURSUANT
TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND
EXCHANGE COMMISSION.
PROPOSAL NUMBER
FIVE
PROPOSAL TO ADOPT THE 2011 EQUITY INCENTIVE PLAN
To further its policy of encouraging the creation of long-term
stockholder value, the Board has adopted the Landstar System,
Inc. 2011 Equity Incentive Plan (the 2011 EIP),
subject to stockholder approval. The 2011 EIP is substantially
similar to and will replace the Companys Amended and
Restated 2002 Employee Stock Option and Stock Incentive Plan
(the 2002 ESOSIP). The 2011 EIP is set forth in
Exhibit A to this proxy statement.
The Company is seeking to replace the 2002 ESOSIP with the 2011
EIP primarily because under applicable provisions of the
Internal Revenue Code, as amended, incentive stock options may
not be granted after the tenth anniversary of the date the 2002
ESOSIP was originally adopted by the Board and the Company
wishes to have the flexibility to continue to grant incentive
stock options. The 2011 EIP, like the 2002 ESOSIP, will, among
other things, provide the Compensation Committee the power to
grant equity and equity-based awards including stock options,
restricted stock, stock appreciation rights, performance shares
and other stock based awards. As of March 31, 2011, there
are 2,232,917 awards available for grant under the 2002 ESOSIP.
Should the stockholders approve the 2011 EIP, no further grants
will be made under the 2002 ESOSIP.
33
In seeking to replace the 2002 ESOSIP with the 2011 EIP, the
Company also seeks to increase the number of shares available
for grant. As originally adopted under the 2002 ESOSIP,
800,000 shares were authorized for issuance. Through the
adjustment provisions of the 2002 ESOSIP, to reflect stock
splits with respect to the Companys common stock, the
number of shares authorized for issuance has been adjusted to be
6,400,000 shares. As of March 31, 2011, there were
options outstanding with respect to 2,384,983 shares held
by participants and 26,800 shares of restricted stock that
have been awarded to participants. Each share of restricted
stock, performance shares or other stock-based awards granted
counts as two shares against the share limit in the 2002 ESOSIP.
This double counting with regard to awards of restricted stock,
performance shares or other stock-based awards is intended to
reflect that these types of awards are more valuable to the
recipients, and more dilutive than stock options or stock
appreciation rights.
The Company has drafted the 2011 EIP to comply with the
requirements of Section 162(m) of the Internal Revenue
Code. This means that, if stockholders approve the 2011 EIP and
the performance objectives specified therein, awards such as
performance shares, or cash based awards based on appropriate
performance objectives extending for periods of more than one
year, can be granted without the loss of a Federal income tax
deduction for the Company. For information on the deductibility
of compensation related to awards granted under the 2011 EIP,
see Certain Tax Code Limitations on
Deductibility below.
Summary
of the 2011 Equity Incentive Plan
The following summary of the 2011 EIP is qualified by reference
to the full text thereof, which is attached as Exhibit A to
this proxy statement.
General
The 2011 EIPs purposes remain unchanged from those of the
2002 ESOSIP and are to:
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attract and retain the best available personnel;
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provide additional incentives to employees;
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encourage an ownership interest in the Company; and
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promote the success of the Company.
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The Compensation Committee of the Companys Board of
Directors administers the 2011 EIP. The Compensation Committee
consists solely of two or more directors who are independent in
accordance with the Internal Revenue Code and the National
Association of Securities Dealers Automated Quotation/National
Market System (NASDAQ) requirements. The
Compensation Committee is authorized to:
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interpret the 2011 EIP and all awards;
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establish and amend rules and regulations for the 2011
EIPs operation;
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select recipients of awards;
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determine the form, amount and other terms and conditions of
awards; and
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amend awards.
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The Companys officers and key executive and management
employees, in addition to those of its subsidiaries, are
eligible to be selected to participate in the 2011 EIP. The
Compensation Committee has the sole discretion to select
participants from among the eligible persons. It is estimated
that the total number of persons who are eligible to receive
awards under the 2011 EIP at present would not exceed 1,500.
The aggregate number of shares of common stock that may be
issued under the 2011 EIP with respect to awards may not exceed
6,000,000. This limit is subject to adjustment for certain
transactions affecting the common stock. Each share issued
pursuant to awards of stock options or stock appreciation rights
under the 2011 EIP, or with respect to awards issued in
settlement of existing obligations of the Company to pay cash,
will reduce the share limit by one full share. Each share issued
pursuant to an award of restricted stock, performance shares or
other stock
34
based award will reduce the share limit by two shares. If an
award is cancelled, forfeited or expires unexercised, the number
of shares of common stock under such award will be added back to
the shares available for grant under the 2011 EIP. If an award
granted under the 2002 ESOSIP is cancelled, forfeited or expires
unexercised, the number of shares of common stock under such
award shall be added to the shares available for grant under the
2011 EIP. The number of shares available for grant under the
2011 EIP shall not be increased by any shares not issued or
delivered as a result of a net settlement of an option or a
stock appreciation right. The shares issued under the 2011 EIP
may be issued from shares held in treasury or from authorized
but unissued shares.
The 2011 EIP provides for the grant of:
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stock options, including incentive stock options and
nonqualified stock options;
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stock appreciation rights, in tandem with stock options or
freestanding;
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restricted stock awards;
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performance share and cash awards;
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cash awards; and
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other stock based awards.
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The Compensation Committee may grant awards individually, in
combination, or in tandem.
The exercise or measurement price for any stock option or stock
appreciation right will be at least equal to the fair market
value of the Companys common stock at the date of grant.
The fair market value generally is determined to be the average
of the high and low bid and ask prices of a share of the
Companys common stock as reported on the NASDAQ on the day
of grant of the award. Stock options and stock appreciation
rights will normally terminate on the earlier of
(i) 10 years from the date of grant,
(ii) 30 days after termination of employment or
service for a reason other than cause, death, disability or
retirement, or (iii) one year after death, disability or
retirement.
Awards may be paid in cash, shares of the Companys common
stock or a combination, as determined by the Compensation
Committee. Awards are non-transferable except by disposition on
death.
Options
Stock options granted under the 2011 EIP may be:
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incentive stock options, as defined in the Internal Revenue
Code, as amended, or
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nonstatutory stock options, which do not qualify for treatment
as incentive stock options under the Internal Revenue Code, as
amended.
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The Compensation Committee selects the recipients of stock
options and sets the terms of the stock options, including:
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the number of shares for which a stock option is granted;
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the term of the stock option; and
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the date(s) when the stock option can be exercised.
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The Compensation Committee determines how a stock option may be
exercised, whether for cash or securities. The exercise price of
a stock option may not be less than the fair market value of a
share of the Companys common stock on the date of grant,
and the stock option term may be no longer than ten years.
A stock option agreement or the Compensation Committees
procedures may set forth conditions respecting the exercise of a
stock option. The Compensation Committee may in its discretion
waive any condition respecting the exercise of any stock option
and may accelerate the time at which any stock option is
exercisable.
No incentive stock option may be granted after the tenth
anniversary of the date the 2011 EIP was originally adopted by
the Board.
35
No participant can receive more than 400,000 shares of
stock subject to stock options (including incentive stock
options)
and/or stock
appreciation rights in any year.
Stock
Appreciation Rights
A stock appreciation right is a grant entitling the participant
to receive an amount in cash or shares of common stock or a
combination thereof, as the Compensation Committee may
determine, in an amount equal to the increase in the fair market
value between the grant and exercise dates of the shares of the
Companys common stock with respect to which the stock
appreciation right is exercised. The measurement price of a
stock appreciation right may not be less than the fair market
value of a share of the Companys common stock on the grant
date, and the term of a stock appreciation right may be no
longer than ten years. Stock appreciation rights may be granted
separately or in tandem with the grant of a stock option.
A stock appreciation right granted in tandem with a nonstatutory
stock option may be granted either at or after the time of the
grant of the nonstatutory stock option. A stock appreciation
right granted in tandem with an incentive stock option may be
granted only at the time of the grant of the incentive stock
option. A stock appreciation right granted in tandem with a
stock option terminates and is no longer exercisable upon the
termination or exercise of the related stock option. The
Compensation Committee may set the terms and conditions of stock
appreciation rights, subject to the limitations set forth in the
2011 EIP. At any time, the Compensation Committee may accelerate
the exercisability of any stock appreciation right and otherwise
waive or amend any condition(s) to the grant of a stock
appreciation right.
Restricted
Stock
A restricted stock grant entitles the recipient to acquire, at
no cost or for a purchase price determined by the Compensation
Committee on the date of grant, shares of the Companys
common stock subject to such restrictions and conditions as the
Compensation Committee may determine at or after the time of
grant, including years of service or the attainment of specified
performance goals. The recipient may have all the rights of a
shareholder with respect to the restricted stock. These rights
include voting and dividend rights and they are effective as
soon as:
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restricted stock is granted (or upon payment of the purchase
price for restricted stock); and
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issuance of the restricted stock is recorded by the
Companys transfer agent.
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A grant of restricted stock will be subject to
non-transferability restrictions, repurchase and forfeiture
provisions and such other conditions (including conditions on
voting and dividends) as the Compensation Committee may impose
at the time of grant.
Any restricted shares cease to be restricted stock and will be
deemed vested after the lapse of all restrictions.
Restrictions lapse, and restricted stock based on service
becomes vested either ratably or in a lump-sum over a minimum
period of three years and, over a minimum period of one year if
the restricted period is based on performance goals. If
determined by the Compensation Committee at or after the time of
grant, the restrictions will lapse earlier upon the
participants death, disability or retirement or upon a
change in control.
Performance
Related Awards
The Compensation Committee may grant performance share and
performance cash awards, which are rights to receive shares of
the Companys common stock or the cash equivalent of the
performance share award based on the attainment of
pre-established performance goals and such other conditions,
restrictions and contingencies as the Compensation Committee may
determine. Performance awards will be contingent upon
performance measures applicable to a particular period (not less
than one year), as established by the Compensation Committee,
and may be determined by reference to the performance of the
Company, a subsidiary or a division or unit relative to past
performance or to other companies based upon any one or more of
the following (and the satisfaction of any additional
performance goals as the Compensation Committee determines):
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earnings per share
and/or
diluted earnings per share
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budgeted earnings per share
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return on equity;
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total shareholder return;
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revenue;
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cash flows, revenue
and/or
earnings relative to other parameters (e.g., net or gross
assets);
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operating income;
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return on investment;
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changes in the value of the Companys common stock;
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return on assets;
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return on invested capital;
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net revenue (defined as revenue less purchased transportation);
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net revenue percentage (defined as net revenue divided by
revenue);
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gross profit (defined as revenue less purchased transportation
and agent commissions);
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gross profit margin (defined as gross profit divided by revenue);
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operating margin (defined as operating income divided by gross
profit);
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certain costs (which may include other operating costs,
insurance and claims costs, selling general and administrative
costs and/or
depreciation and amortization costs) in gross dollars
and/or as a
percentage of revenue, net revenue, gross profit or operating
income.
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The Compensation Committee may modify or waive the performance
goals or conditions to the granting or vesting of a performance
award unless the performance award is intended to qualify as
performance-based compensation under Section 162(m) of the
Code. Section 162(m) of the Code generally disallows
deductions for compensation in excess of $1 million for
some executive officers unless the awards meet the requirements
for being performance-based. Please see Compensation
Discussion and Analysis-Deductibility of Compensation
for more information regarding Section 162(m) of the Code.
The maximum number of shares that may be subject to a
performance share award to any one participant in any year
cannot exceed 750,000 shares and the maximum dollar value
of any performance related cash award in any year cannot exceed
$3,000,000.
Other
Stock Based Awards
The Compensation Committee may grant other types of stock based
awards, as it determines in its discretion. These stock based
awards cannot exceed five percent of the shares available under
the 2011 EIP.
Provisions
Relating to a Change In Control
The 2011 EIP provides certain benefits in the event of a change
in control. A change in control is deemed to have occurred if:
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any person acquires beneficial ownership of 35% or more of the
Companys voting securities;
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as a result of, or in connection with, a tender or exchange
offer, merger or other business combination, there is a change
in the majority of the Companys Board of Directors and
after which less than 50% of the voting securities of the
Company or the surviving entity outstanding immediately
thereafter is owned by the Companys former shareholders;
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a sale of substantially all of the Companys assets; or
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a tender or exchange offer results in the acquisition of 35% or
more of the Companys outstanding voting securities.
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Upon a change in control, (i) each stock option and stock
appreciation right will, at the discretion of the Compensation
Committee, either be cancelled in exchange for a cash payment
equal to the excess of the change in control price (as defined
in the 2011 EIP) over the exercise price of the stock option or
the base price of the stock appreciation right, or in the case
of stock options, be fully exercisable and (ii) all
forfeiture restrictions applicable to the award will lapse.
However, no cancellation, acceleration of exercisability or
vesting or cash settlement will occur if the Compensation
Committee reasonably determines before the change in control
that the award will be honored or assumed or a new award will be
made with substantially equivalent rights and economic value and
which provides that if the participant is terminated, all
restrictions lapse and the award will otherwise vest.
Upon a change in control, participants will earn that number of
performance shares that would have been paid if the applicable
measurement period had ended on the Companys fiscal year
ended immediately preceding the change in control (based on the
performance conditions set for that period) and such performance
award will either be paid in shares or cancelled in exchange for
a cash payment, as determined by the Compensation Committee, in
its discretion.
Other
Modifications
In the event of specified changes in the Companys capital
structure, the Compensation Committee will have the power to
adjust the number and type of shares authorized by the 2011 EIP
(including on individual awards) and the number, stock option
price or types of shares covered by outstanding awards. The
Compensation Committee will also have the power to make other
appropriate adjustments in awards under the 2011 EIP.
Clawback
Any payment or award made to a participant is subject to
recovery or clawback by the Company if the payment
or award is based on materially inaccurate financial statements
or any other materially inaccurate performance metric criteria,
or as otherwise required by applicable law.
Amendment
The Board may at any time terminate or suspend the 2011 EIP, and
from time to time may amend or modify the 2011 EIP, provided
that without the approval by a majority of the votes cast at a
meeting of stockholders at which a quorum representing a
majority of the shares of common stock is present in person or
by proxy, no amendment or modification to the 2011 EIP may
(i) materially increase the benefits accruing to
participants under the 2011 EIP, (ii) except in connection
with an adjustment to the Companys capitalization,
materially increase the number of shares of common stock subject
to awards under the 2011 EIP or the number of awards that may be
granted to a participant in a single calendar year under the
2011 EIP, (iii) materially modify the requirements for
participation in the 2011 EIP or (iv) permit the repricing
of any option or stock appreciation right. No amendment,
modification, or termination of the 2011 EIP shall in any manner
adversely affect any award theretofore granted under the 2011
EIP, without the consent of the participant.
Federal
Income Tax Consequences
The Internal Revenue Code provides that a participant receiving
a nonqualified stock option ordinarily does not realize taxable
income upon the grant of the stock option. A participant does,
however, realize compensation income taxed at ordinary income
tax rates upon the exercise of a nonqualified stock option to
the extent that the fair market value of the common stock on the
date of exercise exceeds the stock option price. Subject to the
discussion under Certain Tax Code Limitations on
Deductibility below, the Company is entitled to a federal
income tax deduction for compensation in an amount equal to the
ordinary income so realized by the participant. When the
participant sells the shares acquired pursuant to a nonqualified
stock option, any gain or loss will be capital gain or loss.
This assumes that the shares represent a capital asset in the
participants hands, although there will be no tax
consequences for the Company.
The grant of an incentive stock option does not result in
taxable income to a participant. The exercise of an incentive
stock option also does not result in taxable income, provided
that the circumstances satisfy the employment requirements in
the Internal Revenue Code. However, the exercise of an incentive
stock option may give rise to alternative minimum tax liability
for the participant. In addition, if the participant does not
dispose of the common stock acquired upon exercise of an
incentive stock option during the statutory holding period, then
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any gain or loss upon subsequent sale of the common stock will
be a long-term capital gain or loss. This assumes that the
shares represent a capital asset in the participants hands.
The statutory holding period lasts until the later of:
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two years from the date the stock option is granted; and
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one year from the date the common stock is transferred to the
participant pursuant to the exercise of the stock option.
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If the employment and statutory holding period requirements are
satisfied, the Company may not claim any federal income tax
deduction upon either the exercise of the incentive stock option
or the subsequent sale of the common stock received upon
exercise. If these requirements are not satisfied (a
disqualifying disposition), the amount of ordinary
income taxable to the participant is the lesser of:
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the fair market value of the common stock on the date of
exercise minus the stock option price; and
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the amount realized on disposition minus the stock option price.
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Any excess is long-term or short-term capital gain or loss,
assuming the shares represent a capital asset in the
participants hands. Subject to the discussion under
Certain Tax Code Limitations on Deductibility below,
in the case of a disqualifying disposition, the Company is
entitled to a federal income tax deduction in an amount equal to
the ordinary income realized by the participant.
The exercise of a 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 stock
option. That number of shares will take the same tax basis and,
for capital gain purposes, the same holding period as the shares
that 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, taxed as compensation. The excess shares will have a new
holding period for capital gains purposes and a tax basis equal
to the value of such shares determined at the time of exercise.
If the tendered shares were acquired through the prior exercise
of an incentive stock option and do not satisfy the statutory
two-year and one-year holding periods (disqualified
shares), then the tender will result in compensation
income to the optionee taxed as ordinary income equal to the
excess of the fair market value of the disqualified shares,
determined when the prior incentive stock option was exercised,
over the exercise price of the disqualified shares. The optionee
will increase his tax basis in the number of shares received on
exercise equal to the number of shares of disqualified shares
tendered by the amount of compensation income recognized by the
optionee with respect to the disqualified shares. Generally, the
federal income tax consequences to the optionee are similar to
those described above relating to the exercise of a stock option
through the exchange of non-disqualified shares.
If an optionee exercises a stock option through the cashless
exercise method by authorizing a broker to sell a specified
number of the shares to be acquired through the stock option
exercise having a market value equal to the sum of the stock
option exercise plus any transaction costs (the cashless
shares), the optionee should be treated as constructively
receiving the full amount of stock option shares, followed
immediately by a sale of the cashless shares by the optionee. In
the case of an incentive stock option, the cashless exercise
method would result in the cashless shares becoming disqualified
shares and taxed in a manner described above for disqualified
shares.
In the case of a nonqualified stock option, the cashless
exercise method would result in compensation income to the
optionee with respect to both the cashless shares and remaining
stock option shares as discussed above relating to nonqualified
stock options. Since the optionees tax basis in the
cashless shares that are deemed received and simultaneously sold
on exercise of the stock option is equal to the sum of the
exercise price and the compensation to the optionee, no
additional gain should be recognized by the optionee upon the
deemed sale of the cashless shares.
Under Section 83(b) of the Internal Revenue Code, an
employee may elect to include in ordinary income, as
compensation at the time restricted stock is first issued, the
excess of the fair market value of the stock at the time of
issuance over the amount paid, if any, by the employee. In this
event, any subsequent change in the value of the shares will be
recognized for tax purposes as capital gain or loss upon
disposition of the shares, assuming that the shares represent a
capital asset in the hands of the employee. An employee makes a
Section 83(b) election by filing the election with the IRS
no later than 30 days after the restricted stock is
transferred to the employee. If a Section 83(b) election is
properly made, the employee will not be entitled to any loss
deduction if the shares with
39
respect to which a Section 83(b) election was made are
later forfeited. Unless a Section 83(b) election is made,
no taxable income will generally be recognized by the recipient
of a restricted stock award until the shares are no longer
subject to the restrictions or the risk of forfeiture. When
either the restrictions or the risk of forfeiture lapses, the
employee will recognize ordinary income, taxable as
compensation, in an amount equal to the excess of the fair
market value of the common stock on the date of lapse over the
amount paid, if any, by the employee for the stock. Absent a
Section 83(b) election, any cash dividends or other
distributions paid with respect to the restricted stock prior to
the lapse of the restrictions or risk of forfeiture will be
included in the employees ordinary income as compensation
at the time of receipt and subsequent appreciation or
depreciation will be recognized as capital gain or loss,
assuming that the shares represent a capital asset in the hands
of the employee.
Generally, an employee will not recognize any taxable income
upon the grant of stock appreciation rights, performance shares,
or other stock or cash based award. At the time the employee
receives the payment for the stock appreciation right,
performance shares, or other stock or cash based award, the fair
market value of shares of common stock or the amount of any cash
received in payment for such awards generally is taxable to the
employee as ordinary income, taxable as compensation.
Subject to the discussion under Certain Tax Code
Limitations on Deductibility below, the Company or one of
its subsidiaries will be entitled to a deduction for federal
income tax purposes at the same time and in the same amount that
an employee recognizes ordinary income from awards under the
2011 EIP.
The exercisability of a stock option or a stock appreciation
right, the payment of a performance share or the elimination of
restrictions on restricted stock, may be accelerated, and
special cash settlement rights may be triggered and exercised,
as a result of a change in control. If any of the foregoing
occurs, all or a portion of the value of the relevant award at
that time may be considered a parachute payment under the
Internal Revenue Code. This is relevant for determining whether
a 20% excise tax (in addition to income tax otherwise owed) is
payable by the participant as a result of the receipt of an
excess parachute payment pursuant to the Internal Revenue Code.
The Company will not be entitled to a deduction for that portion
of any parachute payment which is subject to the excise tax.
Certain
Tax Code Limitations on Deductibility
Section 162(m) of the Internal Revenue Code generally
disallows a federal income tax deduction to any publicly held
corporation for compensation paid in excess of $1.0 million
in any taxable year to the chief executive officer or any of the
four other most highly compensated executive officers who are
employed by the corporation on the last day of the taxable year,
but does not disallow a deduction for performance-based
compensation the material terms of which are disclosed to and
approved by the Companys stockholders. The Company has
structured and intends to implement the 2011 EIP so that
resulting compensation would be performance-based compensation.
To allow the Company to qualify the compensation, the Company is
seeking stockholder approval of the 2011 EIP and the material
terms of the related performance goals. However, the Company
may, in its sole discretion, determine that in one or more cases
it is in its best interests not to satisfy the requirements for
the performance-based exception. Please see Compensation
Discussion and Analysis Tax Considerations for
more information regarding Section 162(m) of the Internal
Revenue Code.
In addition to the 2002 ESOSIP, the Company maintains one stock
option plan and one stock compensation plan (the
2003 Directors Stock Compensation Plan).
The following table presents information related to securities
authorized for issuance under these plans at December 25,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
|
|
Number of Securities
|
|
|
Number of Securities
|
|
Weighted-average
|
|
Remaining Term of
|
|
Remaining Available for
|
|
|
to be Issued Upon Exercise of
|
|
Exercise Price of
|
|
Outstanding
|
|
Future Issuance Under
|
Plan Category
|
|
Outstanding Options
|
|
Outstanding Options
|
|
Options (Years)
|
|
Equity Compensation Plans(1)
|
|
Equity Compensation Plans Approved by Security Holders
|
|
|
2,295,831
|
|
|
$
|
39.73
|
|
|
|
6.5
|
|
|
|
2,533,686
|
|
Equity Compensation Plans Not Approved by Security Holders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(1) |
|
Should the stockholders approve the 2011 EIP, no further grants
will be made under the 2002 ESOSIP. |
Included in the number of securities remaining available for
future issuance under equity compensation plans were
128,469 shares of Common Stock reserved for issuance under
the 2003 Directors Stock Compensation Plan.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THIS
PROPOSAL.
40
STOCKHOLDER
PROPOSALS
In accordance with regulations issued by the SEC, stockholder
proposals intended for presentation at the 2012 Annual Meeting
of Stockholders must be received by the Secretary of the Company
no later than December 9, 2011, if such proposals are to be
considered for inclusion in the Companys Proxy Statement.
In accordance with the Bylaws of the Company, stockholder
proposals intended for presentation at the 2012 Annual Meeting
of Stockholders that are not intended to be considered for
inclusion in the Companys Proxy Statement must be received
by the Secretary of the Company not earlier than
December 9, 2011 and not later than January 8, 2012.
For any proposal that is not submitted for inclusion in next
years Proxy Statement, but is instead sought to be
presented directly at the 2012 Annual Meeting, SEC rules permit
management to vote proxies in its discretion if the Company:
(1) receives notice of the proposal before the close of
business on February 29, 2012 and advises stockholders in
the 2012 Proxy Statement about the nature of the matter and how
management intends to vote on such matter; or (2) does not
receive notice of the proposal prior to the close of business on
February 29, 2012.
In addition, in accordance with the Bylaws, stockholder
proposals intended for presentation at the 2011 Annual Meeting
of Stockholders that are not intended for inclusion in this
Proxy Statement must be received by the Company not earlier than
November 23, 2010 and not later than December 23,
2010. For any proposal that is not submitted for inclusion in
this Proxy Statement, but is instead sought to be presented
directly at the 2011 Annual Meeting, SEC rules permit management
to vote proxies in its discretion if the Company:
(1) received notice of the proposal before the close of
business on February 6, 2011, and advises stockholders in
this years Proxy Statement about the nature of the matter
and how management intends to vote on such matter; or
(2) did not receive notice of the proposal prior to the
close of business on February 6, 2011.
All proposals should be mailed via certified mail and addressed
to Michael K. Kneller, Secretary, Landstar System, Inc., 13410
Sutton Park Drive South, Jacksonville, Florida 32224.
DELIVERY
OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
The Company and its intermediaries shall provide one copy of a
proxy statement or annual report to two or more security holders
who share an address in accordance with
Rule 14a-3(e)(1)
of the 34 Act, as amended, where consent of such security
holders has been properly obtained and where neither the Company
nor the intermediary has received contrary instructions from one
or more of such security holders. The Company undertakes to
deliver promptly upon written or oral request a separate copy of
a proxy statement or annual report, as applicable, to any
security holder at a shared address to which a single copy of
the documents was delivered. A security holder can notify the
Company that the security holder wishes to receive a separate
copy of a proxy statement or annual report by contacting the
Company at the following phone number
and/or
mailing address:
Landstar System, Inc.
Investor Relations
13410 Sutton Park Drive South
Jacksonville, FL 32224
Phone:
904-398-9400
Security holders sharing an address can also request delivery of
a single copy of a proxy statement or an annual report if they
are receiving multiple copies of proxy statements or annual
reports by contacting the Company at the preceding phone number
and/or
mailing address.
41
OTHER
MATTERS
Management knows of no matters that are to be presented for
action at the meeting other than those set forth above. If any
other matters properly come before the 2011 Annual Meeting, the
persons named in the enclosed form of proxy will vote the shares
of Common Stock represented by proxies in accordance with their
best judgment on such matters.
PLEASE
COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD PROMPTLY
By Order of the Board of Directors
MICHAEL K. KNELLER
Vice President, General Counsel & Secretary
13410 Sutton Park Drive South
Jacksonville, FL 32224
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER
OF THE COMPANY WHO SO REQUESTS, A COPY OF THE COMPANYS
ANNUAL REPORT ON
FORM 10-K
FOR THE YEAR ENDED DECEMBER 25, 2010, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE
DIRECTED TO LANDSTAR SYSTEM, INC., ATTENTION: MICHAEL K.
KNELLER, SECRETARY, 13410 SUTTON PARK DRIVE SOUTH, JACKSONVILLE,
FLORIDA 32224.
42
Exhibit
A
LANDSTAR
SYSTEM, INC.
2011
EQUITY INCENTIVE PLAN
SECTION 1.
PURPOSE
The purpose of the Plan is to foster and promote the long-term
financial success of the Company and materially increase
shareholder value by (a) motivating superior performance
by means of performance-related incentives,
(b) encouraging and providing for the acquisition of
an ownership interest in the Company by Employees, and
(c) enabling the Company to attract and retain the
services of an outstanding management team upon whose judgment,
interest, and special effort the successful conduct of its
operations is largely dependent.
SECTION 2.
DEFINITIONS
2.1 Definitions. Whenever
used herein, the following terms shall have the respective
meanings set forth below:
(a) Act means the Securities
Exchange Act of 1934, as amended.
(b) Award means any grant or
award pursuant to Sections 6 through 10 of the Plan.
(c) Award Agreement means an
agreement between the Company and a Participant, setting forth
the terms and conditions relating to an Award granted under the
Plan.
(d) Board means the Board of
Directors of the Company.
(e) Cause means (i) the
willful failure by the Participant to perform substantially his
duties as an Employee of the Company (other than due to physical
or mental illness) after reasonable notice to the Participant of
such failure, (ii) the Participants engaging in
serious misconduct that is injurious to the Company or any
Subsidiary, (iii) the Participants having been
convicted of, or entered a plea of nolo contendere to, a crime
that constitutes a felony or (iv) the breach by the
Participant of any material written policy of the Company or any
Subsidiary, or any written covenant or agreement with the
Company or any Subsidiary not to disclose any information
pertaining to the Company or any Subsidiary or not to compete or
interfere with the Company or any Subsidiary.
(f) Change in Control means the
occurrence of any of the following events:
(i) any person including a group
(as such terms are used in Sections 13(d) and 14(d)(2) of
the Act, but excluding the Company, any of its Subsidiaries, any
employee benefit plan of the Company or any of its Subsidiaries)
is or becomes the beneficial owner (as defined in
Rule 13(d)(3) under the Act), directly or indirectly, of
securities of the Company representing 35% or more of the
combined voting power of the Companys then outstanding
securities; or
(ii) the consummation of a (a) merger or other
business combination of the Company with or into another
corporation, a majority of the directors of which were not
directors of the Company immediately prior to the merger and in
which the stockholders of the Company immediately prior to the
effective date of such merger directly or indirectly own less
than 50% of the voting power in such corporation or (b)
sale or other disposition in a transaction or a series of
related transactions of all or substantially all of the assets
of the Company; provided that if a Participants employment
with the Company is terminated between the date the stockholders
of the Company approve a transaction described in the preceding
clauses (a) or (b) and the date of the consummation of
such transaction, such Participant shall be entitled to the
provisions of Section 11 as if such Participant had
remained continuously employed through the date of such
consummation; or
A-1
(iii) the purchase of Stock pursuant to any tender or
exchange offer made by any person, including a
group (as such terms are used in Sections 13(d)
and 14(d)(2) of the Act), other than the Company, any of its
Subsidiaries, an employee benefit plan of the Company or any of
its Subsidiaries, for 35% or more of the Stock of the Company.
(g) Change in Control Price means
the price per share of Stock paid in conjunction with any
transaction resulting in a Change in Control (as determined in
good faith by the Committee if any part of the offered price is
payable other than in cash) provided, however that to the extent
necessary to comply with Section 409A of the Code, the
Change in Control Price should not exceed the fair market value
of the Stock.
(h) Code means the Internal
Revenue Code of 1986, as amended.
(i) Committee means the
Compensation Committee of the Board, which is expected to
consist of two or more outside directors within the
meaning of Section 1-162-27(e) of the Treasury Regulations
issued pursuant to Section 162(m) of the Code, each of whom
is independent under the NASDAQ/NMS requirements.
(j) Company means Landstar
System, Inc., a Delaware corporation, and any successor thereto.
(k) Disability means total
disability as determined in accordance with the terms of the
long-term disability plan of the Company or any of its
Subsidiaries in which the Participant is eligible to
participate, provided, that in the case of any Award subject to
Section 409A of the Code, Disability shall have the meaning
set forth in Section 409A of the Code.
(l) Effective Date means the
date, following adoption of this Plan by the Board, on which
this Plan is approved by a majority of the votes cast at a duly
constituted meeting of the shareholders of the Company.
(m) Employee means any officer or
other key executive and management employee of the Company or
any of its Subsidiaries.
(n) Fair Market Value means, on
any date, the average of the bid and asked for price of a share
of Stock as reported on the National Association of Securities
Dealers Automated Quotation/National Market System (or on such
other recognized market or quotation system on which the trading
prices of the Stock are traded or quoted at the relevant time)
on such date. In the event that there are no Stock transactions
reported on NASDAQ/NMS (or such other system) on such date, Fair
Market Value shall mean the closing price on the immediately
preceding date on which Stock transactions were so reported.
(o) Net Exercise means the
exercise of an Option or any portion thereof by the delivery of
the greatest number of whole shares of Stock having a Fair
Market Value on the date of exercise not in excess of the
difference between the aggregate Fair Market Value of the shares
of Stock subject to the Option (or the portion of such Option
then being exercised) and the aggregate exercise price for all
such shares of Stock under the Option (or the portion thereof
then being exercised), with any fractional share that would
result from such equation to be payable in cash.
(p) Option means the right to
purchase Stock at a stated price for a specified period of time.
For purposes of the Plan, an Option may be either (i) an
Incentive Stock Option within the
meaning of Section 422 of the Code or (ii) a
Nonstatutory Stock Option.
(q) Participant means any
Employee designated by the Committee to receive an Award under
the Plan.
(r) Performance Criteria means
the objectives established by the Committee pursuant to
Section 9 of the Plan for the purpose of determining the
extent to which a Performance Related Award has been earned or
vested.
(s) Performance Related Award
means Performance Related Cash Awards or Performance Related
Stock Awards that vest (in whole or in part) upon the
achievement of specified Performance Criteria.
(t) Plan means the Landstar
System, Inc. 2011 Equity Incentive Plan, as in effect from time
to time.
A-2
(u) Restricted Stock means shares
of Stock contingently granted to a Participant under
Section 8 of the Plan.
(v) Restriction Period means the
period of time selected by the Committee during which a grant of
Restricted Stock is subject to forfeiture
and/or
restrictions on transfer pursuant to the terms of the Plan.
(w) Retirement means termination
of a Participants employment on or after the date the
Participant attains age 62.
(x) Stock means the common stock
of the Company, par value $0.01 per share.
(y) Stock Appreciation Right or
SAR means the right to receive a
payment from the Company in cash
and/or
shares of Stock equal to the product of (i) the excess, if
any, of the Fair Market Value of one share of Stock on the
exercise date over a specified price fixed by the Committee on
the grant date, multiplied by (ii) a stated number of
shares of Stock. The number of shares to be issued shall be
calculated on the basis of the Fair Market Value of the shares
at the time of exercise. Notwithstanding the foregoing, the
Committee may elect, at any time and from time to time, in lieu
of issuing all or any portion of the shares of Stock otherwise
issuable upon any exercise of any such SAR, to pay the grantee
an amount in cash or other marketable property of a value
equivalent to the aggregate Fair Market Value at the time of
exercise to the number of shares of Stock that the Committee is
electing to settle in cash or other marketable property.
(z) Stock Based Award means an
Award described in Section 10 of the Plan.
(aa) Subsidiary means any
corporation or partnership in which the Company owns, directly
or indirectly, 50% or more of the total combined voting power of
all classes of stock of such corporation or of the capital
interest or profits interest of such partnership.
2.2 Gender and
Number. Except when otherwise indicated by
the context, words in the masculine gender used in the Plan
shall include the feminine gender, the singular shall include
the plural, and the plural shall include the singular.
SECTION 3.
ELIGIBILITY
AND PARTICIPATION
Participants in the Plan shall be those Employees selected by
the Committee to participate in the Plan. The selection of an
Employee as a Participant shall neither entitle such Employee
to, nor disqualify such Employee from, participation in any
other award or incentive plan.
SECTION 4.
POWERS OF
THE COMMITTEE
4.1 Power to Grant. The
Committee shall determine the Participants to whom Awards shall
be granted and the terms and conditions of any and all such
Awards. The Chairman of the Board may suggest to the Committee
the Participants who should receive Awards under the Plan. The
terms and conditions of each Award shall be determined by the
Committee at the time of grant, and such terms and conditions
shall not be subsequently changed in a manner which would be
adverse to participants without the consent of the Participant
to whom such Award has been granted. The Committee may establish
different terms and conditions for different Participants
receiving Awards and for the same Participant for each Award
such Participant may receive, whether or not granted at
different times.
4.2 Administration. The
Committee shall be responsible for the administration of the
Plan. The Committee, by majority action thereof, is authorized
to prescribe, amend and rescind rules and regulations relating
to the Plan and any Award thereunder, to establish the person(s)
to whom Awards shall be payable or exercisable upon the death of
a Participant, to provide for conditions deemed necessary or
advisable to protect the interests of the Company, and to make
all other determinations necessary or advisable for the
administration and interpretation of the Plan in order to carry
out its provisions and purposes. Determinations,
interpretations, or other actions made or
A-3
taken by the Committee pursuant to the provisions of the Plan
shall be final, binding, and conclusive for all purposes and
upon all persons.
SECTION 5.
STOCK
SUBJECT TO PLAN
5.1 Number. Subject to the
provisions of Section 5.3, the number of shares of Stock
subject to Awards under the Plan may not exceed
6,000,000 shares of Stock. The shares to be delivered under
the Plan may consist, in whole or in part, of treasury Stock or
authorized but unissued Stock, not reserved for any other
purpose. Any shares of Stock issued in connection with an Option
or SAR shall be counted against the limit as one (1) share
of Stock issued; for Awards other than Options and SARs, any
shares of Stock issued shall be counted against this limit as
two shares of Stock for every one (1) share issued. The
maximum number of shares of Stock that may be granted in the
form of Incentive Stock Options shall be 6,000,000. The maximum
number of shares of Stock available for issuance under the Plan
shall not be reduced to reflect any dividends or dividend
equivalents that are reinvested into additional shares of Stock
or credited as additional Restricted Stock or Stock Based Awards.
5.2 Cancelled, Terminated, Settled or Forfeited
Awards. Any shares of Stock subject to any
portion of any Award granted under the Plan or any Award granted
under the Landstar System, Inc. 2002 Amended and Restated Stock
Option and Stock Incentive Plan (the Prior
Plan) which is cancelled, forfeited or otherwise
expires without having been exercised, in the case of an Option
or SAR, or having become vested, in the case of any other Award
shall again be available for grant under the Plan. For purposes
of applying the share limit set forth in Section 5.1, upon
the Net Exercise of any Options or the exercise of any SAR
(whether granted under the Plan or granted under the Prior
Plan), the gross number of shares of Stock as to which such
Option or SAR is being exercised, and not just the net number of
shares of Stock delivered upon such exercise, shall be treated
as having been issued pursuant to the Plan or the Prior Plan, as
applicable.
5.3 Adjustment in
Capitalization. In the event of any Stock
dividend or Stock split, recapitalization (including, without
limitation, the payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to
stockholders, exchange of shares, or other similar corporate
change, the aggregate number of shares of Stock reserved for
issuance under the Plan, the number and Option price of shares
subject to outstanding Options or SARs granted under the Plan,
and the number of shares subject to other outstanding Awards
granted under the Plans may be appropriately adjusted by the
Committee, in its sole discretion, and whose determination shall
be conclusive.
SECTION 6.
STOCK OPTIONS
6.1 Grant of
Options. Options may be granted to
Participants alone, in addition to, or in tandem with other
Awards granted under the Plan, at such time or times as shall be
determined by the Committee. Options granted under the Plan may
be of two types: (i) Incentive Stock Options and
(ii) Nonstatutory Stock Options. The Committee shall have
complete discretion in determining the number of Options, if
any, to be granted to a Participant, provided that no
Participant shall receive more than 400,000 shares of Stock
subject to Options
and/or SARs
during any fiscal year of the Company. Each Option shall be
evidenced by an Award Agreement that shall specify the type of
Option granted, the exercise price, the duration of the Option,
the number of shares of Stock to which the Option pertains, and
such other terms and conditions not inconsistent with the Plan
as the Committee shall determine. Notwithstanding any other Plan
provision, no Incentive Stock Option may be granted on or after
the tenth anniversary of the date the Plan was first adopted by
the Board.
6.2 Option
Price. Nonstatutory Stock Options and
Incentive Stock Options granted pursuant to the Plan shall have
an exercise price which is not less than the Fair Market Value
on the date the Option is granted. Without the express approval
of the Companys stockholders, except as otherwise provided
in Section 5.3, the Committee shall not be entitled to
amend or otherwise modify any Option to lower the option price
per share below the Fair
A-4
Market Value on the date of grant, or to issue any replacement
Option or similar Award in exchange for an Option with a higher
exercise price.
6.3 Exercise of
Options. Options awarded to a Participant
under the Plan shall be exercisable at such times and shall be
subject to such restrictions and conditions including the
performance of a minimum period of service or the satisfaction
of performance goals, as the Committee may impose either at or
after the time of grant of such Options, subject to the
Committees right to accelerate the exercisability of such
Option in its discretion. Notwithstanding the foregoing, no
Option shall be exercisable more than 10 years after the
date on which it is granted.
6.4 Payment. The Committee
shall establish procedures governing the exercise of Options,
which shall require that written notice of exercise be given and
that the Option price be paid in full in cash or cash
equivalents, including by personal check, at the time of
exercise. The Committee may, in its discretion, permit a
Participant to make payment in Stock already owned by him or
her, valued at its Fair Market Value on the date of exercise, as
partial or full payment of the exercise price. Alternatively,
the Committee may permit a Participant to Net Exercise any
Nonstatutory Stock Option. As soon as practicable after receipt
of a written exercise notice and full payment of the exercise
price (if applicable), the Company shall deliver to the
Participant a certificate or certificates representing the
acquired shares of Stock.
6.5 Incentive Stock
Options. Notwithstanding anything in the Plan
to the contrary, no term of the Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised,
so as to disqualify the Plan under Section 422 of the Code,
or, without the consent of any Participant affected thereby, to
cause any Incentive Stock Option previously granted to fail to
qualify for the Federal income tax treatment afforded under
Section 421 of the Code.
6.6 Termination of Employment Due to
Retirement. Unless otherwise determined by
the Committee at or after the time of grant, in the event a
Participants employment terminates by reason of
Retirement, any Options granted to such Participant which are
then outstanding (whether or not exercisable prior to the date
of such termination) may be exercised at any time prior to the
expiration of the term of the Options or within one
(1) year (or such other period as the Committee shall
determine at or after the time of grant) following the
Participants termination of employment, whichever period
is shorter.
6.7 Termination of Employment Due to Death or
Disability. Unless otherwise determined by
the Committee at or after the time of grant, in the event a
Participants employment terminates by reason of death or
Disability, any Options granted to such Participant which are
then outstanding (whether or not exercisable prior to the date
of such termination) may be exercised by the Participant or the
Participants designated beneficiary (in accordance with
procedures as may be determined by the Committee at or after the
time of grant) and if none is named, at any time prior to the
expiration date of the term of the options or within one
(1) year (or such other period as the Committee shall
determine at or after the time of grant) following the
Participants termination of employment, whichever period
is shorter.
6.8 Termination of Employment for
Cause. Unless otherwise determined by the
Committee at or after the time of grant, in the event a
Participants employment is terminated for Cause, any
Options granted to such Participant which are then outstanding
(whether or not exercisable prior to the date of such
termination) shall be forfeited.
6.9 Termination of Employment for Any Other
Reason. Unless otherwise determined by the
Committee at or after the time of grant, in the event the
employment of the Participant shall terminate for any reason
other than one described in Section 6.6, 6.7, or 6.8, any
Options granted to such Participant which are exercisable at the
date of the Participants termination of employment shall
be exercisable at any time prior to the expiration of the term
of such Options or the thirtieth day following the
Participants termination of employment, whichever period
is shorter.
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SECTION 7.
STOCK
APPRECIATION RIGHTS
7.1 Grant. Stock
Appreciation Rights may be granted alone, in addition to, or in
tandem with, other Awards granted under the Plan. Any Stock
Appreciation Right granted under the Plan shall be in such form
as the Committee may from time to time approve. Stock
Appreciation Rights may be granted in conjunction with all or
part of any Option granted under the Plan. In the case of a
Nonstatutory Stock Option, such rights may be granted either at
or after the time of the grant of such Option. In the case of an
Incentive Stock Option, unless the Participant otherwise
consents, such rights may be granted only at the time of grant
of such Option. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions
of the Plan, as shall be determined from time to time by the
Committee.
7.2 Exercisability. Stock
Appreciation Rights shall be exercisable at such time and
subject to such conditions as the Committee shall specify,
except that any Stock Appreciation Right granted in tandem with
an Option (or portion thereof) shall be exercisable only at such
time or times and to the extent that the Options to which they
relate shall be exercisable, including in the event of the
termination of the Participants employment, in accordance
with the provisions of Section 6 of the Plan. Any Stock
Appreciation Right granted on a stand-alone basis shall be
subject to the same rules regarding exercisability (including
those pertaining to periods following termination of employment)
that apply to Options under Section 6.
7.3 Shares Delivered on
Exercise. Upon the exercise of a Stock
Appreciation Right, a grantee shall be entitled to receive an
amount in shares of Stock (or, solely to the extent determined
by the Committee, cash) equal in value to the excess of the Fair
Market Value (at the time of exercise) of one share of Stock
over the base price per share specified with respect to the
Stock Appreciation Right, multiplied by the number of shares in
respect of which the Stock Appreciation Right shall have been
exercised. When payment is to be made in shares, the number of
shares to be paid shall be calculated on the basis of the Fair
Market Value of the shares at the time of exercise.
Notwithstanding anything in this Section 7.3 to the
contrary, the base price in respect of any Stock Appreciation
Right shall not be less than the Fair Market Value of the Stock
at the time the Stock Appreciation Right is granted, or in the
case of a Stock Appreciation Right granted in tandem with an
Option, the Fair Market Value of the Stock at the time the
related Option was granted. Without the express approval of the
Companys stockholders, except as otherwise provided in
Section 5.3, the Committee shall not be entitled to amend
or otherwise modify any Stock Appreciation Right to lower the
exercise price below the applicable Fair Market Value
established under the preceding sentence, or to issue any
replacement Stock Appreciation Right or similar Award in
exchange for a Stock Appreciation Right with a higher base price.
7.4 Exercise of SARs. A
Stock Appreciation Right may be exercised by a grantee, subject
to Section 7.3, in accordance with the procedures
established by the Committee from time to time for such
purposes. Upon such exercise, the grantee shall be entitled to
receive an amount determined in the manner prescribed in
Section 7.3.
7.5 Exercise of Tandem
Option. A Stock Appreciation Right or
applicable portion thereof granted with respect to a given
Option shall terminate and no longer be exercisable upon the
termination or upon the exercise of the related Option (and
similarly the related Option shall no longer be exercisable upon
the exercise or termination of the related Stock Appreciation
Right), subject to such provisions as the Committee may specify
at grant where a Stock Appreciation Right is granted with
respect to less than the full number of shares covered by a
related Option.
SECTION 8.
RESTRICTED
STOCK
8.1 Administration. Restricted
Stock may be issued either alone, in addition to, or in tandem
with, other Awards granted under the Plan
and/or
awards made outside of the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which,
grants of Restricted Stock will be made, the number of shares to
be awarded, the price (if any) to be paid by the recipient of
Restricted Stock, the time or times within which such Awards may
be subject to forfeiture, and all other terms and conditions of
the Awards. The Committee may condition the grant of Restricted
Stock upon the attainment of specified Performance Criteria or
such other factors
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as the Committee may determine, in its sole discretion. The
provisions of Restricted Stock Awards need not be the same with
respect to each recipient. The shares of Restricted Stock
awarded pursuant to this Section 8 shall be subject to the
terms and conditions set forth herein.
8.2 Restriction
Period. Subject to the provisions of this
Plan and the Award agreement, during the Restriction Period, the
Participant shall not be permitted to sell, transfer, pledge or
assign shares of Restricted Stock awarded under the Plan. Where
the Restriction Period will lapse or expire based on service,
the Restriction Period shall be at least three (3) years,
provided that such Restriction Period may lapse ratably over
such minimum three-year period and may be waived in the event of
death, Disability, Retirement or a Change in Control. Where the
Restriction Period will lapse or expire based on performance
objectives, the Restriction Period shall be at least one
(1) year, but may be waived in the event of death,
Disability, Retirement or a Change of Control. Subject to the
two immediately preceding sentences, the Committee, in its sole
discretion, may provide for the lapse of any restrictions
imposed on any Restricted Stock Award in installments and may
accelerate or waive such restrictions in whole or in part, based
on service, Performance Criteria
and/or such
other factors as the Committee may determine, in its sole
discretion.
8.3 Stock Certificates and
Delivery. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock
subject to such Restriction Period, (except to the extent the
Committee decides to settle the Award in cash), the Committee
may (i) cause the Company to record on its books and
records, in a manner generally consistent with its then current
procedures for recording stock ownership, the Participants
ownership of an appropriate number of unrestricted shares of
Stock, or (ii) deliver certificates for an appropriate
number of unrestricted shares of Stock to the Participant
promptly after the lapse of the Restriction Period.
SECTION 9.
PERFORMANCE
RELATED AWARDS
9.1 Performance
Objectives. Notwithstanding anything else
contained in the Plan to the contrary, unless the Committee
otherwise determines at the time of grant, any Award of
Restricted Stock to an officer who is subject to the reporting
requirements of Section 16(a) of the Act, other than an
Award which will vest solely on the basis of the passage of
time, shall become vested, if at all, upon the determination by
the Committee that performance objectives established by the
Committee have been attained, in whole or in part (a
Performance Related Stock Award). In
addition, the Committee may grant dollar denominated awards to
any Participant the vesting of which shall be subject to the
determination by the Committee that performance objectives
established by the Committee shall have been satisfied, in whole
or in part (a Performance Related Cash
Award). The performance objectives upon which any
Performance Related Award shall be based shall be determined
over a measurement period or periods established by the
Committee (which period or periods shall not be less than one
(1) year) and related to at least one of the following
criteria, which may be determined solely by reference to the
performance of: (i) the Company; (ii) a Subsidiary
or (iii) a division or unit of any of the foregoing or
based on comparative performance of any of the foregoing
relative to past performance or to other companies: (A)
actual
and/or
diluted earnings per share; (B) budgeted earnings per
share; (C) return on equity; (D) total shareholder
return; (E) revenues; (F) cash flows, revenues
and/or
earnings relative to other parameters (e.g., net or gross
assets); (G) operating income; (H) return on
investment; (I) changes in the value of the Stock;
(J) return on assets; (K) return on invested
capital; (L) net revenue (defined as revenue less
purchased transportation); (M) net revenue percentage
(defined as net revenue divided by revenue); (N) gross
profit (defined as revenue less purchased transportation and
agent commissions); (O) gross profit margin (defined as
gross profit divided by revenue); (P) operating margin
(defined as operating income divided by gross profit); and
(Q) certain costs (which may include other operating
costs, insurance and claim costs, selling, general and
administrative costs
and/or
depreciation and amortization costs) in gross dollars,
and/or as a
percentage of revenue, net revenue, gross profit, or operating
income (the Performance Criteria). In
addition to the performance conditions established pursuant to
the immediately preceding sentence, the Committee may further
condition the vesting of any Performance Related Award on
achieving such additional performance conditions of whatever
nature that the Committee deems appropriate. Excluding Options
and/or Stock
Appreciation Rights granted hereunder, the maximum number of
shares of Stock that may be subject to any such Performance
Related Stock Award granted to any key employee in any calendar
year shall not exceed 750,000 shares, as such number
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may be adjusted pursuant to Section 5; provided that, based
on the level of achievement of the performance objectives, the
number of shares of Stock issuable in respect of any Performance
Related Stock Award upon achievement of the applicable
performance conditions may be up to twice the number of shares
initially granted. The maximum initial dollar value of any
Performance Related Cash Award granted may not exceed
$3,000,000; provided that, based on the level of achievement of
the performance objectives, the actual amount payable in respect
of such Performance Related Stock Award upon achievement of the
applicable performance conditions may be twice the initial
dollar value.
9.2 Interpretation. Notwithstanding
anything else contained in the Plan to the contrary, to the
extent required to so qualify any Performance Related Award as
other performance based compensation within the meaning of
Section 162(m)(4)(C) of the Code, the Committee shall not
be entitled to exercise any discretion otherwise authorized
under the Plan (such as the right to accelerate vesting without
regard to the achievement of the relevant performance
objectives) with respect to such Performance Related Award if
the ability to exercise such discretion (as opposed to the
exercise of such discretion) would cause such Award to fail to
qualify as other performance based compensation.
SECTION 10.
STOCK BASED
AWARDS
10.1 Stock Based Awards. The
Committee may grant other types of equity-based or
equity-related awards (Stock Based
Awards) not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted
shares of Stock) in such amounts and subject to such terms and
conditions as the Committee shall determine. Such Stock Based
Awards may be granted as an inducement to enter the employ of
the Company or any Subsidiary or in satisfaction of any
obligation of the Company or any Subsidiary to an officer or
other key employee, whether pursuant to this Plan or otherwise,
that would otherwise have been payable in cash. Additionally,
Stock Based Awards in respect of not more than five percent of
the shares of Stock available for issuance under
Section 5.1 may be granted for such other purposes as the
Committee shall determine. Such Stock Based Awards may entail
the transfer of actual shares of Stock, or payment in cash or
otherwise of amounts based on the value of shares of Stock and
may include, without limitation, Awards designed to comply with
or take advantage of the applicable local laws of jurisdictions
other than the United States.
10.2 Termination of
Service. The Committee shall specify the
extent to which the Participant shall have the right to receive
Stock Based Awards following termination of the
Participants employment with the Company and its
Subsidiaries. Such provisions need not be uniform among all
Stock Based Awards, and may reflect distinctions based on the
reasons for such termination.
10.3 Transferability. Except
as the Committee shall otherwise specify at or after grant,
Stock Based Awards may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution, and during the
Participants lifetime only by the Participant.
SECTION 11.
CHANGE IN
CONTROL
11.1 Accelerated Vesting and
Payment. Subject to the provisions of
Section 11.2 below, in the event of a Change in Control,
(a) each Option and SAR shall, at the discretion of the
Committee, either be cancelled in exchange for a payment in cash
of an amount equal to the excess of the Change in Control Price
over the exercise price for such Option or the base price for
such SAR, whichever is applicable, or, in the case of Options,
be fully exercisable regardless of the exercise schedule
otherwise applicable to such Option and (b) the
Restriction Period applicable to all shares of Restricted Stock
shall expire and all such shares shall become nonforfeitable and
immediately exercisable.
11.2 Alternative
Awards. Notwithstanding Section 11.1, no
cancellation, acceleration of exercisability or vesting or cash
settlement or other payment shall occur with respect to any
Award if the Committee reasonably determines in good faith prior
to the occurrence of a Change in Control that such Award shall
be honored or
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assumed, or new rights substituted therefore (such honored,
assumed or substituted award hereinafter called an
Alternative Award), by a
Participants employer (or the parent or a subsidiary of
such employer) immediately following the Change in Control,
provided that any such Alternative Award must:
(i) be based on stock which is traded on an established
securities market, or which will be so traded within
60 days of the Change in Control;
(ii) provide such Participant (or each Participant in a
class of Participants) with rights and entitlements
substantially equivalent to or better than the rights, terms and
conditions applicable under such Award, including, but not
limited to, an identical or better exercise or vesting schedule
and identical or better timing and methods of payment;
(iii) have substantially equivalent economic value to such
Award (determined at the time of the Change in Control);
(iv) have terms and conditions which provide that in the
event that the Participants employment is involuntarily
terminated or constructively terminated, any conditions on a
Participants rights under, or any restrictions on transfer
or exercisability applicable to, each such Alternative Award
shall be waived or shall lapse, as the case may be.
For this purpose, a constructive termination shall mean a
termination by a Participant following a material reduction in
the Participants compensation or a material reduction in
the Participants responsibilities, in each case without
the Participants written consent.
11.3 Performance Related
Awards. In the event of a Change in Control,
each Participant shall be deemed to have earned Performance
Related Stock Awards with respect to each of his Performance
Related Stock Awards outstanding at the date of such Change in
Control. The number of shares so earned for each Award shall be
computed by determining the number of Performance Related Stock
Awards that would have been paid if the subject measurement
period had ended on the Companys fiscal year ended
immediately preceding the Change in Control (based on the
conditions set by the Committee for payment of Performance
Related Awards for the subject measurement period), provided
that in no event shall the number of shares earned be less than
the aggregate number of Performance Related Stock Awards at the
target level (as identified in the applicable Award Agreement)
with respect to such Award. Performance Related Stock Awards
granted in the year of the Change in Control shall be earned at
the same percentage as Awards granted in the year preceding the
year of the Change in Control. Each Performance Related Stock
Award so earned shall either (a) be paid in shares of Stock
or (b) be cancelled in exchange for an immediate payment in
cash of an amount based upon the Change in Control Price, in the
discretion of the Committee.
11.4 Compliance with
Section 409A. Notwithstanding the
foregoing, to the extent that the provisions of this
Section 11 would result in a distribution of any amount
that would be treated as deferred compensation under
Section 409A of the Code (after taking into account any and
all applicable exemptions from such status), no such
distribution shall be made upon the occurrence of the event
constituting the Change in Control unless it also constitutes a
change in control within the meaning of such Section 409A.
The immediately preceding sentence shall not be construed to
deny any Participant the right to vest in any such Award on
account of a Change in Control. If any amount is not payable at
the time of a change in control by reason of this
Section 11.4, such amount shall be paid at the time it
would otherwise be payable in accordance with its terms.
SECTION 12.
AMENDMENT,
MODIFICATION AND TERMINATION OF PLAN
The Board may at any time terminate or suspend the Plan, and
from time to time may amend or modify the Plan, provided that
without the approval by a majority of the votes cast at a
meeting of shareholders at which a quorum representing a
majority of the shares of Stock is present in person or by
proxy, no amendment or modification to the Plan may (i)
materially increase the benefits accruing to participants under
the Plan, (ii) except as otherwise expressly provided in
Section 5.3, materially increase the number of shares of
Stock subject to Awards under the Plan or the number of Awards
that may be granted to a participant in a single calendar year
under the Plan,
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(iii) materially modify the requirements for
participation in the Plan or (iv) permit the repricing of
any Option or Stock Appreciation Right. No amendment,
modification, or termination of the Plan shall in any manner
adversely affect any Award theretofore granted under the Plan,
without the consent of the Participant.
SECTION 13.
MISCELLANEOUS
PROVISIONS
13.1 Nontransferability of
Awards. No Awards granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent
and distribution. All rights with respect to Awards granted to a
Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
13.2 No Guarantee of Employment or
Participation. Nothing in the Plan shall
interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participants employment at
any time, nor confer upon any Participant any right to continue
in the employ of the Company or any Subsidiary or affiliate. No
Employee shall have a right to be selected as a Participant, or,
having been so selected, to receive any future Awards.
13.3 Tax Withholding. The
Company shall have the power to withhold, or require a
Participant to remit to the Company, an amount sufficient to
satisfy federal, state and local withholding tax requirements on
any Award under the Plan, and the Company may defer payment of
cash or issuance of Stock until such requirements are satisfied.
13.4 Clawback. Any payment
paid or Award made to a Participant is subject to recovery or
clawback by the Company if the payment or Award is
based on materially inaccurate financial statements or any other
materially inaccurate performance metric criteria, or as
otherwise required by applicable law.
13.5 Indemnification. Each
person who is or shall have been a member of the Committee or of
the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him in connection with
or resulting from any claim, action, suit, or proceeding to
which he may be made a party or in which he may be involved by
reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him in settlement
thereof, with the Companys approval, or paid by him in
satisfaction of any judgment in any such action, suit, or
proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive
and shall be independent of any other rights of indemnification
to which such persons may be entitled under the Companys
Articles of Incorporation or Bylaws, by contract, as a matter of
law, or otherwise.
13.6 No Limitation on
Compensation. Nothing in the Plan shall be
construed to limit the right of the Company to establish other
plans or to pay compensation to its employees in cash or
property, in a manner which is not expressly authorized under
the Plan.
13.7 Requirements of
Law. The granting of Awards and the issuance
of shares of Stock shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
13.8 Term of Plan. The Plan
shall be effective upon its adoption by the Board and approval
by a majority of the shareholders of the Company. The Plan shall
continue in effect, unless sooner terminated pursuant to
Section 12, until the tenth anniversary of the date on
which it is adopted by the Board.
13.9 Governing Law. The
Plan, and all Awards hereunder, shall be construed in accordance
with and governed by the laws of the State of Delaware.
13.10 No Impact on
Benefits. Awards granted under the Plan are
not compensation for purposes of calculating an Employees
rights under any employee benefit plan.
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13.11 Freedom of
Action. Subject to Section 12, nothing
in the Plan or any Award Agreement shall be construed as
limiting or preventing the Company or any subsidiary thereof
from taking any action with respect to the operation or conduct
of its business that it deems appropriate or in its best
interest.
13.12 Headings and
Captions. The headings and captions herein
are provided for reference and convenience only, shall not be
considered part of the Plan and shall not be employed in the
construction of the Plan.
13.13 No Rights as
Stockholder. No Participant shall have any
voting or other rights as a stockholder of the Company with
respect to any Stock covered by any Option until the Participant
becomes the holder or record owner of such Stock. No adjustment
shall be made for dividends or other rights for which the record
date is prior to the date the Participant becomes the holder or
record owner of such Stock.
13.14 Delay of
Distributions. Any Plan provision to the
contrary notwithstanding and subject to Section 409A of the
Code, to the extent required by Section 409A of the Code,
payment made to a Specified Employee upon a separation
from service as defined in Section 409A of the Code
may not be made before the date that is six months after the
date of such separation from service (or, if earlier, the date
of death of the Specified Employee). A Specified Employee is any
Employee with respect to April 1 of each calendar year, who
meets the definition of key employee of an Employer
under Code Section 416(i) (without regard to Code
Section 416(i)(5)) at any time during the preceding
calendar year, all as provided in Code Section 409A.
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LANDSTAR
SYSTEM, INC.
13410
SUTTON PARK DRIVE SOUTH
JACKSONVILLE, FL 32224
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James B. Gattoni and Michael K.
Kneller, jointly and severally, as Proxies, each with the power
to appoint his substitute, and hereby authorizes each or both of
them to represent and to vote, as designated on the reverse
side, all of the shares of Common Stock of Landstar System,
Inc., held of record by the undersigned on March 31, 2011,
at the Annual Meeting of Stockholders to be held in the offices
of Landstar System, Inc., at 13410 Sutton Park Drive South,
Jacksonville, Florida 32224 on Thursday, May 26, 2011, at
9:00 a.m., local time, or any adjournment or postponement
thereof. None of the matters to be acted upon, each of which has
been proposed by Landstar System, Inc. (the
Company), is related to or conditioned on the
approval of other matters.
Important
Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to be held on May 26, 2011:
The proxy
statement and annual report to security holders are available at
www.landstar.com.
**CONTINUED
AND TO BE SIGNED ON REVERSE SIDE**
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Address Change/ Comments (Mark the
corresponding box on the reverse side)
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FOLD
AND DETACH HERE
Please Mark Here for Address Change or Comments SEE REVERSE
SIDE o
**PLEASE
MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING
THE
ENCLOSED ENVELOPE**
VOTES MUST
BE INDICATED (X) IN BLACK OR BLUE INK.
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1. |
ELECTION OF DIRECTORS.
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FOR all nominees listed
(except as marked to the contrary)
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01 JEFFREY C. CROWE
02 DAVID G. BANNISTER
03 MICHAEL A. HENNING
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WITHHOLD AUTHORITY to vote for all nominees listed
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INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write the number(s) of the nominee(s) on the line below.
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2. |
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
FISCAL YEAR 2011.
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FOR o AGAINST o ABSTAIN
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3. |
ADVISORY VOTE ON EXECUTIVE COMPENSATION.
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FOR o AGAINST o ABSTAIN
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4. |
ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE
COMPENSATION.
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ONE YEAR
o TWO
YEARS
o THREE
YEARS
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ABSTAIN
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5. |
APPROVAL OF THE 2011 LANDSTAR SYSTEM, INC. EQUITY INCENTIVE PLAN.
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FOR o AGAINST o ABSTAIN
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6. |
IN THEIR DISCRETION, EACH OF THE PROXIES IS AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
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This proxy when properly executed will be voted in accordance
with the specifications made herein by the undersigned
stockholder. If no direction is made, this proxy will be voted
FOR proposals 1, 2, 3, 5 and 6 and ABSTAIN from vote under
proposal 4.
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Signature |
Signature
Date
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NOTE: |
Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
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