UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No.)
Filed
by
the Registrant x
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by
a Party other than the Registrant o
Check
the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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Celadon
Group, Inc.
(Name
of
Registrant as Specified In Its Charter)
N/A
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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fee required.
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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respond unless the form displays a currently valid
OMB control
number.
Celadon
Group, Inc.
9503
East
33rd Street
One
Celadon Drive
Indianapolis,
Indiana 46235
NOTICE
AND PROXY STATEMENT FOR
ANNUAL
MEETING OF STOCKHOLDERS
TO
BE
HELD NOVEMBER 3, 2006
To
Our
Stockholders:
The
Annual Meeting of Stockholders following the 2006 fiscal year (the "Annual
Meeting") of Celadon Group, Inc., a Delaware corporation (the "Company"), will
be held at the Company, 9503 East 33rd Street, One Celadon Drive, Indianapolis,
Indiana, 46235 at 9:00 a.m. (local time), on Friday, November 3, 2006, for
the following purposes:
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1.
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To
consider and act upon a proposal to elect four directors of the Company;
and
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2.
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To
consider and act upon such other matters as may properly come before
the
meeting and any adjournment
thereof.
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The
foregoing matters are more fully described in the accompanying proxy
statement.
The
Board
of Directors has fixed the close of business on September 22, 2006, as the
record date for the determination of stockholders entitled to receive notice
of
and to vote at the Annual Meeting or any adjournment thereof. Shares of common
stock may be voted at the Annual Meeting only if the holder is present at the
Annual Meeting in person or by valid proxy.
YOUR VOTE IS IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
YOU
ARE REQUESTED TO PROMPTLY DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY IN
THE
ENCLOSED ENVELOPE.
Returning your proxy now will not interfere with your right to attend the Annual
Meeting or to vote your shares personally at the Annual Meeting, if you wish
to
do so. The prompt return of your proxy may save the Company additional expenses
of solicitation.
All
Stockholders are cordially invited to attend the Annual Meeting.
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By
order of the Board of Directors
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Kenneth Core
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Secretary
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October
6, 2006
CELADON
GROUP, INC.
9503
East
33rd
Street
One
Celadon Drive
Indianapolis,
Indiana 46235
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD NOVEMBER 3, 2006
This
proxy statement ("Proxy Statement") is furnished in connection with the
solicitation of proxies by the Board of Directors of Celadon Group, Inc. (the
"Company") to be voted at the Annual Meeting of Stockholders of the Company
(the
"Annual Meeting"), which will be held on Friday, November 3, 2006, beginning
at
9:00 a.m. (local time) at our corporate headquarters and principal executive
offices located at 9503 East 33rd Street, One Celadon Drive, Indianapolis,
Indiana, 46235, and any adjournment thereof.
THE ENCLOSED PROXY IS SOLICITED BY OUR BOARD OF DIRECTORS.
Where
specific choices are not indicated, all proxies received pursuant to this
solicitation will be voted (i) FOR the election of the director nominees named
below and (ii) with respect to any other matters properly brought before the
Annual Meeting, in accordance with the judgment of the proxy holders. We have
not received notice of other matters that properly may be presented for voting
at the Annual Meeting.
The
approximate date on which this Proxy Statement, the enclosed form of proxy,
and
the accompanying Annual Report are first being mailed to stockholders is October
6, 2006.
Unless
the context indicates otherwise, the terms "Company," "we," "us," and "our"
refer to Celadon Group, Inc. and its subsidiaries.
GENERAL
INFORMATION
Voting
Rights
Only
stockholders of record at the close of business on September 22, 2006
("Stockholders"), are entitled to vote, either in person or by valid proxy,
at
the Annual Meeting. On September 1, 2006, there were issued and outstanding
23,418,648 shares of common stock, par value $.033. The number of issued and
outstanding shares excludes approximately 889,031 shares of common stock
reserved for issuance under our incentive stock plans and other arrangements.
We
have no other class of stock outstanding. Stockholders are entitled to one
vote
for each share of common stock held of record. Holders of unexercised options
or
other rights to acquire common stock are not entitled to vote the underlying
shares at the Annual Meeting, but holders of restricted stock are entitled
to
vote. Stockholders are not entitled to cumulative voting in the election of
directors.
Quorum
Requirement
In
order
to transact business at the Annual Meeting, a quorum must be present. A quorum
is present if a majority of the issued and outstanding shares of common stock
as
of the record date is represented at the Annual Meeting in person or by proxy.
Shares that are entitled to vote but that are not voted at the direction of
the
holder (called "abstentions") and shares that are not voted by a broker or
other
record holder due to the absence of instructions from the beneficial owner
(called "broker non-votes") will be counted for the purpose of determining
whether a quorum is present.
Directors
are elected by a plurality of the votes cast, which means that the director
nominees receiving the highest number of votes for their election will be
elected as directors. Approval of any other matter that may be properly
submitted to Stockholders for action at the Annual Meeting will require the
affirmative vote of a majority of the shares of common stock represented in
person or by proxy, unless a different vote is required by law or our
certificate of incorporation or bylaws. Abstentions and broker non-votes will
be
disregarded in determining whether a particular matter has been
approved.
Right
to Attend the Meeting; Revocation of Proxy
Returning
a proxy now will not interfere with a Stockholder's right to attend the Annual
Meeting or vote his or her shares personally at the Annual Meeting, if he or
she
desires to do so. Stockholders who execute and return proxies may revoke them
at
any time prior to their use at the Annual Meeting by delivering a written notice
of revocation to our Secretary at the address of our principal executive
offices, by executing a subsequent proxy and delivering it to our Secretary
at
such address, or by attending the Annual Meeting and voting in
person.
Costs
of Solicitation
We
will
bear all costs of solicitation, which we expect to include reimbursements for
the charges and expenses of brokerage firms and others for forwarding
solicitation materials to beneficial owners of our common stock. Proxies will
be
solicited by mail and may be solicited personally by directors, officers, or
other employees, who will not receive any additional compensation for such
services.
Electronic
Access to Proxy Statement and Annual Report
This
Proxy Statement and our 2006 Annual Report on Form 10-K may be viewed online
at
www.celadontrucking.com. If you are a Stockholder, you can elect to receive
future annual reports and proxy statements electronically by marking the
appropriate box on your proxy form. If you choose this option and remain a
stockholder at such time, you will receive a proxy form prior to the next Annual
Meeting of Stockholders listing the website locations and your choice will
remain in effect until you notify us by mail that you wish to resume mail
delivery of these documents. If you hold our stock through a bank, broker,
or
another holder of record, refer to the information provided by that entity
for
instructions on how to elect this option. Opting for this option will save
us
the time and expense of printing and mailing these materials to
you.
PROPOSAL
1
ELECTION
OF DIRECTORS
At
the
Annual Meeting, the Stockholders will elect four directors to serve as the
Board
of Directors until our Annual Meeting of Stockholders following our 2007 fiscal
year or until their successors are duly elected and qualified. Our Board of
Directors has nominated Stephen Russell, Michael Miller, Anthony Heyworth,
and
Chris Hines for election as directors. Each of the nominees is presently serving
as a director. In the absence of contrary instructions, each proxy will be
voted
for the election of all of the proposed directors.
We
have
no reason to believe that any of the nominees will be unable or unwilling for
good cause to serve if elected. However, if any nominee should become unable
for
any reason or unwilling for good cause to serve, proxies may be voted for
another person nominated as a substitute by the Board of Directors, or the
Board
of Directors may reduce the number of directors.
Our
Board
of Directors was comprised of four members throughout the fiscal year ended
June
30, 2006. Paul Biddelman resigned from the Board of Directors for personal
reasons effective June 30, 2006. Chris Hines has been named as a replacement
director.
2
Information
Concerning Directors and Executive Officers
Information
concerning the names, ages, positions with the Company, tenure as a director,
and business experience of current directors and other executive officers is
set
forth below. All references to experience with the Company include positions
with our operating subsidiary, Celadon Trucking Services, Inc., a New Jersey
corporation. All executive officers are elected annually by the Board of
Directors.
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Name
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Age
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Position
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Director
Since
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Stephen
Russell
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66
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Chairman
of the Board and Chief Executive Officer
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1986
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Thomas
Glaser
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56
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President
and Chief Operating Officer
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N/A
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Paul
Will
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40
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Executive
Vice President, Chief Financial Officer, Treasurer, and Assistant
Secretary
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N/A
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Kenneth
Core
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56
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Vice
President and Secretary
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N/A
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Sergio
Hernandez
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48
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Vice
President - Mexico
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N/A
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Michael
Miller(1)(2)(3)
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61
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Director
of the Company
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1992
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Anthony
Heyworth(2)(3)
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62
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Director
of the Company
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1999
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Chris
Hines(2)(3)
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46
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Director
of the Company
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2006
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_____________________
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(1)
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Lead
Outside Director
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(2)
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Member
of the Audit Committee
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(3)
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Member
of the Compensation Committee
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Thomas
Glaser has been our President and Chief Operating Officer since October 2004.
He
served as Executive Vice President and Chief Operating Officer from November
2003 to October 2004. He served as Executive Vice President-Truckload
Operations/Sales from April 2003 to November 2003, Executive Vice
President-Operations from September 2001 to April 2003, and Vice
President-Transportation Services from May 2001 to September 2001. He served
in
various management capacities at Contract Freighters, Inc. for over 13 years,
most recently as Vice President-Operations, prior to joining the Company. Mr.
Glaser serves as a director of the Truckload Carriers Association, Executive
Director of the Indiana Motor Transportation Association, and as a director
of
the American Heart Association.
Paul
Will
has been our Executive Vice President, Chief Financial Officer, Assistant
Secretary, and Treasurer since April 2004. He was Executive Vice President,
Chief Financial Officer, Assistant Secretary, and Treasurer from February 2004
to April 2004; Executive Vice President, Chief Financial Officer, Secretary,
and
Assistant Treasurer from May 2002 to January 2004; Executive Vice President,
Chief Financial Officer, Assistant Secretary, and Assistant Treasurer from
September 2001 to May 2002; Vice President, Chief Financial Officer, Assistant
Secretary, and Assistant Treasurer from December 2000 to September 2001; Vice
President, Chief Financial Officer, and Secretary from December 1998 to December
2000; Vice President, Secretary, and Controller from September 1996 to December
1998; Vice President and Controller for Celadon Trucking Services, Inc. from
January 1996 to September 1996; and Controller from September 1993 to January
1996. Mr. Will is a certified public accountant.
Kenneth
Core has been our Vice President and Secretary since August 2003. He was Vice
President of Risk Management from July 2000 to July 2003. He served in various
capacities at Builders Transport, Inc. and CRST, Inc. for over 28 years, most
recently as Vice President of Risk Management, prior to joining the
Company.
3
Sergio
Hernandez has been our Vice President-Mexico since December 2001. He was the
Director of Mexico Sales from October 1996 to December 2001. He has over 20
years of responsibilities in marketing and transportation throughout
Mexico.
Michael
Miller has been one of our directors since February 1992. Mr. Miller has been
Chairman of the Board and Chief Executive Officer of Aarnel Funding Corporation,
a venture capital/real estate company, since 1974, a partner of Independence
Realty, an owner and manager of real estate properties, since 1989, and
President and Chief Executive Officer of Miller Investment Company, Inc., a
private investment company, since 1990.
Anthony
Heyworth has been one of our directors since 1999. He retired from KeyCorp
in
February 2001 as Vice Chairman, Commercial Banking, KeyBank N.A. after a 36-year
career with this $85 billion financial services company. He continues as
Chairman of KeyBank Central Indiana, having served as President and Chief
Executive since 1991. He joined the former Central National Bank in 1965 and
was
Executive Vice President when the bank merged with Society National Bank of
Cleveland in 1986 and KeyBank in 1994.
Chris
Hines has served as a director since July 1, 2006. Mr. Hines currently serves
as
the President and COO of Tripmaster Corp., an onboard computer and asset
management company primarily serving the trucking industry, and has served
in
that capacity since June 2006. From 2004 to 2006, Mr. Hines was the President
and CEO of Atipical Holdings, Inc., a business focused on asset management,
equipment finance, and backroom productivity solutions. From 2003 to 2004,
Mr.
Hines served as President of Pegasus Transtech, a provider of imaging-based
business process and workflow solutions. In 2003, Mr. Hines served as Executive
Vice President of Terion, Inc., a provider of satellite equipment tracking
hardware and software. From 2000 to 2002, Mr. Hines served as President of
TIP
North American, a G.E. Capital subsidiary offering trailer financing services,
and prior to that time he also served in various other capacities with TIP
North
American from 1986 to 2000. Mr. Hines has served on the Truckload Carriers
of
America Board of Directors since 2001.
Pursuant
to Section 145 of the Delaware General Corporation Law, our certificate of
incorporation provides that we shall, to the full extent permitted by law,
indemnify all of our directors, officers, incorporators, employees, and agents
against liability for certain of their acts. Our certificate of incorporation
also provides that, with a number of exceptions, none of our directors shall
be
liable to us for damages for breach of a fiduciary duty as a
director.
CORPORATE
GOVERNANCE
The
Board of Directors
Meetings.
Our
Board of Directors held six meetings during the fiscal year ended June 30,
2006.
No director attended less than 75% of the meetings of the Board of Directors
or
any committee on which he served. In addition, all directors attend the Annual
Meeting. All of our then-current directors attended the Annual Meeting held
January 12, 2006.
In
fiscal
2006, our Board of Directors approved an increase in the annual retainer
provided to directors who are not our employees to $30,000, from $27,500. In
addition, non-employee directors receive an annual retainer of $2,500 for each
Board committee on which they serve, and our Lead Director and Committee
Chairmen receive additional annual retainers of $5,000 and $2,500, respectively.
Our non-employee directors also are reimbursed for their expenses incurred
in
attending Board and committee meetings. There are no fees based upon number
of
meetings attended.
Typically,
non-employee directors also receive equity compensation as part of their
compensation package. The April 2005 grant to the Company's non-employee
directors of an option to purchase 4,000 shares at $18.30 per share was
defective since the underlying plan had expired. In recognition of that fact,
on
January 12, 2006, the Compensation and Nominating Committee of the Board of
Directors (the "Compensation Committee") approved the one time cash payment
of
$42,080 to each non-employee director. Such payment represents the in-the-money
value of the option based upon the January 12, 2006, closing price of our common
stock.
4
Director
Independence.
Our
common stock is listed on the Nasdaq National Market, and therefore it is
subject to the listing standards, including standards relating to corporate
governance, embodied in applicable rules promulgated by the National Association
of Securities Dealers, Inc. (the "NASD"). Pursuant to NASD Rule 4350(c)(1),
the
Board of Directors has determined that the following directors and nominees
are
"independent" under NASD Rule 4200(a)(15): Michael Miller, Anthony Heyworth,
and
Chris Hines. In accordance with NASD Rule 4350(c)(2), in fiscal 2006, our
independent directors held four regularly scheduled meetings, referred to as
"executive sessions," at which only the independent directors were present.
Our
independent directors will continue to meet in executive session at least twice
each fiscal year.
Stockholder
Communications.
Our
Board of Directors provides a process for stockholders to send written
communications to the entire Board or individual directors. If you wish to
send
a communication to the entire Board of Directors, your communication should
be
addressed as follows: The Board of Directors, Celadon Group, Inc., c/o Paul
Will
- Executive Vice President, 9503 East 33rd Street, One Celadon Drive,
Indianapolis, Indiana, 46235. Written communications addressed in this manner
will be copied and distributed to each director at or prior to the next Board
meeting. If you wish to communicate with an individual director, your
communication should be addressed as follows: Name - Director, Celadon Group,
Inc., c/o Paul Will - Executive Vice President, 9503 East 33rd Street, One
Celadon Drive, Indianapolis, Indiana 46235. Written communications received
in
this manner will not be opened, but rather delivered unopened to the director
to
whom they are addressed at or prior to the next Board meeting, following
clearance through normal security procedures.
Committees
of the Board and Director Nominations
Audit
and Corporate Governance Committee.
The
Audit and Corporate Governance Committee ("Audit Committee") met six times
during fiscal 2006. Messrs. Heyworth, Miller, and Biddelman served as the Audit
Committee. The responsibilities of the Audit Committee are set forth in the
Audit Committee Report, which appears below. Each member of the Audit Committee
satisfies the independence and audit committee membership criteria set forth
in
NASD Rule 4350(d)(2). Specifically, each member of the Audit
Committee:
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is
independent under NASD Rule 4200(a)(15);
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·
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meets
the criteria for independence set forth in Rule 10A-3(b)(1) under
the
Securities Exchange Act of 1934, as amended (the "Exchange
Act");
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·
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has
not participated in the preparation of our financial statements or
any
current subsidiary at any time during the past three years;
and
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·
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is
able to read and understand fundamental financial statements, including
our balance sheet, statement of operations, and statement of cash
flows.
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The
Board
of Directors has determined that at least one "audit committee financial
expert," as defined under Item 401(h) of Regulation S-K, currently serves on
the
Audit Committee. The Board of Directors has identified Mr. Heyworth as an audit
committee financial expert. Mr. Heyworth is independent, as independence for
audit committee members is defined under applicable NASD rules.
The
Audit
Committee has operated pursuant to a written charter detailing its duties since
June 12, 2000. In fiscal 2005, the Audit Committee amended and restated its
charter to comply with certain requirements of the NASD rules relating to
qualitative listing requirements for Nasdaq National Market issuers. The charter
is available on the Company's website.
In
performing its duties, the Audit Committee, as required by applicable SEC rules,
issues a report recommending to the Board of Directors that our audited
financial statements be included in the Annual Report on Form 10-K, and relating
to certain other matters, including the independence of our public accounting
firm.
The
fiscal 2006 Report of the Audit Committee is set forth below. The Audit
Committee Report shall not be deemed to be incorporated by reference into any
filing made by us under the Securities Act of 1933 ("Securities Act") or the
Exchange Act, notwithstanding any general statement contained in any such
filings incorporating this Proxy Statement by reference, except to the extent
we
incorporate such report by specific reference.
5
Audit
Committee Report for Fiscal 2006
The
primary purpose of the Audit Committee is to assist the Board of Directors
in
fulfilling its oversight responsibilities relating to the quality and integrity
of our financial reports and financial reporting processes and systems of
internal control. Management has primary responsibility for our financial
statements and the overall reporting process, including maintenance of our
system of internal control. We retain an independent registered public
accounting firm that is responsible for conducting an independent audit of
our
financial statements, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), and issuing a report
thereon.
In
performing its duties, the Audit Committee has discussed our financial
statements, management's assessment of internal control over financial reporting
and the effectiveness of internal control over financial reporting with
management and our independent registered public accounting firm and, in issuing
this report, has relied upon the responses and information provided to the
Audit
Committee by management and the independent registered public accounting firm.
For the fiscal year ended June 30, 2006, the Audit Committee (1)
reviewed and discussed the audited financial statements, management's assessment
of internal control over financial reporting, and the effectiveness of internal
control over financial reporting with management and KPMG LLP ("KPMG"), our
independent registered public accounting firm for such fiscal year; (2)
discussed with the independent registered public accounting firm the matters
required to be disclosed by Statement on Auditing Standards No. 61; (3) received
and discussed with the independent registered public accounting firm the written
disclosures and the letter from such firm required by Independence Standards
Board Statement No. 1; and (4) discussed with the independent registered public
accounting firm its independence. The Audit Committee met with representatives
of KPMG without management or other persons present on one occasion during
fiscal 2006. Based on the foregoing reviews and meetings, the Audit Committee
recommended to the Board of Directors that the audited financial statements
be
included in the Annual Report on Form 10-K for the year ended June 30, 2006,
for
filing with the SEC.
Audit
Committee
Anthony
Heyworth (Chairman)
Michael
Miller
Chris
Hines
Compensation
and Nominating Committee.
The
Compensation Committee met four times during fiscal 2006. The Compensation
Committee reviews all aspects of compensation of our executive officers,
recommends for the selection of the Board of Directors director nominees, and
makes recommendations on such matters to the full Board of Directors. The
charter for the Compensation Committee was adopted in fiscal 2005 and is
available on our website. The Compensation Committee Report on executive
compensation for fiscal 2006 is set forth below.
Director
Nomination Process.
Director
nominees are selected by the independent members of our Board of Directors.
Our
Board has adopted a policy of re-nominating incumbent directors who continue
to
satisfy the criteria for Board membership and whom the independent directors
believe continue to make important contributions to the Board and who consent
to
continue to serve on the Board.
Our
independent directors will also consider proposed director nominees recommended
by stockholders, provided that the following procedural requirements are
satisfied. Director nominee recommendations should be mailed via certified
mail,
return receipt requested, and addressed to Director Nomination, Celadon Group,
Inc., c/o Paul Will - Executive Vice President, 9503 East 33rd Street, One
Celadon Drive, Indianapolis, Indiana, 46235. In order to be considered, a
stockholder recommendation must: (i) be received at least 120 days prior to
the
first anniversary of the date of the proxy statement for the prior year's annual
meeting (by June 8, 2007, for director candidates to be considered for
nomination for election at the Annual Meeting of Stockholders following the
end
of fiscal year 2007), however, if the date of such Annual Meeting is more than
thirty days before or after November 3, 2007, then the deadline for submitting
any director candidates for nomination for election at such annual meeting
6
will
be a
reasonable time before we begin to print or mail such proxy materials;
(ii) contain sufficient background information, such as a resume and
references, to enable our independent directors to make a proper judgment
regarding the proposed nominee's qualifications; (iii) be accompanied by a
signed consent of the proposed nominee to serve as a director, if elected,
and a
representation that such proposed nominee qualifies as independent under NASD
Rule 4200(a)(15) or, if the proposed nominee does not qualify, a description
of
the reasons he or she is not independent; (iv) state the name and address of
the
stockholder submitting the recommendation and the number of shares of our common
stock owned of record or beneficially by such stockholder; and (v) if submitted
by a beneficial stockholder, be accompanied by evidence (such as a recent
brokerage statement) that the person making the recommendation beneficially
owns
shares of our common stock.
In
evaluating potential nominees, including potential nominees properly submitted
by stockholders, our independent directors will review the person's judgment,
integrity, independence, experience, and knowledge of the industry in which
we
operate or related industries, as well as such other factors the independent
directors determine are relevant in light of our needs and the needs of our
Board. With regard to specific qualities and skills, our Board of Directors
believes it necessary that: (i) at least a majority of the members of the Board
qualify as independent under NASD Rule 4200(a)(15); (ii) at least three
members of the Board of Directors satisfy the audit committee membership
criteria specified in NASD Rule 4350(d)(2); and (iii) at least one member of
the
Board of Directors eligible to serve on the Audit Committee have sufficient
knowledge, experience, and training concerning accounting and financial matters
so as to qualify as an "audit committee financial expert" within the meaning
of
Item 401(h) of Regulation S-K.
Code
of Conduct and Ethics
Our
Board
of Directors has adopted a Code of Business Conduct and Ethics that applies
to
all our directors, officers, and employees. The Code of Business Conduct and
Ethics includes provisions applicable to our principal executive officer,
principal financial officer, and principal accounting officer or controller
or
persons performing similar functions, that constitute a "code of ethics" within
the meaning of Item 406 (b) of Regulation S-K. A copy of the Code of Business
Conduct and Ethics is available on our Company's website.
Section
16(a) Beneficial Ownership Reporting Compliance
Under
the
securities laws of the United States, our directors and executive officers
and
any persons owning more than 10 percent of our common stock are required to
report their ownership of common stock and any changes in that ownership, on
a
timely basis, to the SEC. To our knowledge, based solely on a review of
materials provided to us, all such required reports were filed on a timely
basis
in fiscal 2006, except that (i) Stephen Russell inadvertently failed to timely
report on Form 4 the exercise of an outstanding option to purchase 12,500 shares
in May 2005 and the exercise of an outstanding option to purchase 10,000 shares
held for the benefit of his ex-spouse in February 2006; and (ii) Michael Miller,
Anthony Heyworth, and Paul Biddelman each inadvertently failed to timely report
on Form 4 the April 2005 grant of an option to purchase 4,000 shares. All such
transactions have been reported in subsequent filings. Copies of Section 16(a)
forms that our directors and officers file with the SEC are accessible through
our website at www.celadontrucking.com.
7
EXECUTIVE
COMPENSATION
The
following table sets forth the aggregate compensation paid or accrued by us
for
services rendered during fiscal 2006, 2005, and 2004, to our Chief Executive
Officer, and each of the four next most highly compensated executive officers
(collectively, the "Named Executive Officers") during fiscal 2006. Columns
are
omitted where no information is required to be reported.
Summary
Compensation Table
|
Long
Term Compensation
Awards
|
|||||||||||||||||||||||||
|
Annual
Compensation
|
Securities
|
||||||||||||||||||||||||
|
Name
|
Year
|
Salary
|
Bonus
|
Other
Annual
Compensation
|
Restricted
Stock
Awards(1)
|
Underlying
Options
/
SARs(2)
|
All
Other
Compensation
|
||||||||||||||||||
|
Stephen
Russell
Chairman
and
Chief
Executive Officer
|
2006
2005
2004
|
$
$
$
|
633,063
597,770
568,264
|
$
$
$
|
1,289,806
613,371
270,000
|
$
$
|
691,740
—
304,875
|
283,500
78,750
—
|
$
$
$
|
27,989
27,063
23,972
|
(3
(3
(3
|
)
)
)
|
|||||||||||||
|
|
|||||||||||||||||||||||||
|
Thomas
Glaser
President
and
Chief
Operating Officer
|
2006
2005
2004
|
$
$
$
|
216,153
195,726
185,000
|
$
$
$
|
531,532
259,872
97,500
|
$
$
|
253,638
—
217,071
|
103,950
67,500
—
|
$
$
$
|
5,229
4,786
4,472
|
(4
(4
(4
|
)
)
)
|
|||||||||||||
|
|
|||||||||||||||||||||||||
|
Paul
Will
Executive
Vice President,
Chief
Financial Officer,
Assistant
Secretary, and
Treasurer
|
2006
2005
2004
|
$
$
$
|
216,153
195,070
185,000
|
$
$
$
|
531,532
259,872
97,500
|
$
$
|
207,522
—
182,925
|
85,050
56,250
—
|
$
$
$
|
7,013
9,055
8,312
|
(5
(5
(5
|
)
)
)
|
|||||||||||||
|
|
|||||||||||||||||||||||||
|
Kenneth
Core
Vice
President and Secretary
|
2006
2005
2004
|
$
$
$
|
120,835
129,934
120,196
|
$
$
$
|
50,000
86,760
20,000
|
$
|
176,505
|
(6
|
)
|
$
|
23,058
—
—
|
9,450
13,500
22,500
|
$
$
$
|
2,743
2,518
2,783
|
(7
(7
(7
|
)
)
)
|
|||||||||
|
|
|||||||||||||||||||||||||
|
Sergio
Hernandez
Vice
President - Mexico
|
2006
2005
2004
|
$
$
$
|
140,229
140,514
132,300
|
$
$
$
|
30,932
93,403
23,446
|
(8
|
)
|
$
|
106,688
|
(6
|
)
|
$
|
23,058
—
—
|
9,450
11,250
22,500
|
$
$
$
|
2,098
1,943
2,549
|
(9
(9
(9
|
)
)
)
|
|||||||
_______________________
|
(1)
|
On
January 12, 2006 and October 30, 2003, the Board of Directors approved
and
issued Restricted Stock Grants ("RSGs") to the following Named Executive
Officers in the following amounts (adjusted to reflect the February
1,
2006 and June 1, 2006 3-for-2 stock splits): Stephen Russell - 54,000
and
56,250 shares respectively; Thomas Glaser - 19,800
and 40,050
shares respectively; Paul Will - 16,200 and 33,750 shares respectively;
Kenneth Core - 1,800 shares in 2006; and Sergio Hernandez - 1,800
shares
in 2006. The RSGs vest over four years, 25% per year, and are contingent
upon our meeting certain financial targets annually. The dollar values
of
the RSGs set forth in the table above are calculated based upon the
closing price of $12.81 and $5.42 reported on the Nasdaq National
Market
on January 12, 2006 and October 30, 2003. The RSGs reflected in the
table
above represent the only restricted stock holdings of our Named Executive
Officers. At June 30, 2006, the dollar values of the RSGs held by
our
Named Executive Officers, based upon the closing price of $22.04
on the
Nasdaq National Market on that date, were as follows: Mr. Russell
-
$2,429,910; Mr. Glaser - $1,319,094; Mr. Will - $1,100,898; Mr. Core
-
$39,672; and Mr. Hernandez - $39,672.
|
|
(2)
|
2006
represents stock options and 2005 and 2004 represent SARs, which
are
payable in cash only.
|
|
(3)
|
Represents
the premiums paid by us for term insurance as follows: $19,420 in
fiscal
2006, 2005, and 2004. Also includes: (i) our contributions under
our
401(k) Profit Sharing Plan of $3,828 in fiscal 2006, $4,522 in fiscal
2005, and $1,462 in fiscal 2004; (ii) our contributions under our
Excess
Benefit Plan of $231 in fiscal 2006, $752 in fiscal 2005, and $1,500
in
fiscal 2004; and (iii) premiums and reimbursements under an executive
health and disability benefit program (including split dollar life
insurance premiums) of $4,510 in fiscal 2006, $2,369 in fiscal 2005,
and
$1,590 in fiscal 2004.
|
|
(4)
|
Represents:
(i) our contributions under our 401(k) Profit Sharing Plan of $2,209
in
fiscal 2006, $1,500 in fiscal 2005, and $926 in fiscal 2004; (ii)
our
contributions under our Excess Benefit Plan of $192 in fiscal 2006,
$1,062
in fiscal 2005, and $1,389 in fiscal 2004; and (iii) premiums and
reimbursements under an executive health and disability benefit program
(including split dollar life insurance premiums) of $2,828 in fiscal
2006,
$2,224 in fiscal 2005, and $2,157 in fiscal
2004.
|
8
|
(5)
|
Represents:
(i) our contributions under our 401(k) Profit Sharing Plan of $2,363
in
fiscal 2006, $1,533 in fiscal 2005, and $938 in fiscal 2004; (ii)
our
contributions under our Excess Benefit Plan of $200 in fiscal 2006,
$1,043
in fiscal 2005, and $1,407 in fiscal 2004; and (iii) premiums and
reimbursements under an executive health and disability benefit program
(including split dollar life insurance premiums) of $4,450 in fiscal
2006,
$6,479 in fiscal 2005, and $5,967 in fiscal 2004.
|
|
(6)
|
Under
the terms of their original SARs agreements, Messrs. Core and Hernandez
would not have been eligible for a payout of vested SARs until the
earlier
of the third or fourth anniversary of the SARs grant date, depending
on
the grant, or the termination of their respective employment with
the
Company. In consideration of the early payout election by employees,
the
Compensation Committee reviewed the average SARs price of eligible
grants,
the possible impact on the Company's financial statements, and the
possible market price fluctuation of the Company's common stock between
the payout election and the February 10, 2006, distribution. Accordingly,
the Compensation Committee determined a payout price of $30 per share.
The
one-time cash payment of Messrs. Core and Hernandez reflects the
differences between the exercise prices of the underlying SARs and
such
payout price of $30 per share.
|
|
(7)
|
Represents:
(i) our contributions under our 401(k) Profit Sharing Plan of $1,283
in
fiscal 2006, $900 in fiscal 2005, and $464 in fiscal 2004; (ii) our
contributions under our Excess Benefit Plan of $291 in fiscal 2006,
$798
in fiscal 2005, and $909 in fiscal 2004; and (iii) premiums and
reimbursements under an executive health and disability benefit program
(including split dollar life insurance premiums) of $1,169 in fiscal
2006,
$820 in fiscal 2005, and $410 in fiscal 2004.
|
|
(8)
|
Represents:
(i) a $20,000 bonus as disclosed in the 8-K we filed with the SEC
on
August 23, 2006 and (ii) a $10,932 customary holiday bonus for Mexico
employees.
|
|
(9)
|
Represents
our contributions under Mexico savings
plan.
|
Option
Grants in Last Fiscal Year
The
following table lists stock options granted to the Named Executive Officers
during the fiscal year ended June 30, 2006.
|
Individual
Grants
|
|||||||||||||||||||
|
Number
of
securities
underlying
options/SARs
|
Percent
of
total
options/SARs
granted
to
employees
in
|
Exercise
or
base
price
|
Expiration
|
Potential
realizable value
at
assumed annual rates
of
stock price
appreciation
for option term
|
|||||||||||||||
|
Name
|
granted(#)(1)
(2)
|
fiscal
year
|
($/Sh)(3)
|
Date
|
5%
($)
|
10%
($)
|
|||||||||||||
|
Stephen
Russell
|
283,500
|
44.4%
|
|
|
$12.81
|
1/12/16
|
2,285,010
|
5,789,070
|
|||||||||||
|
Thomas
Glaser
|
103,950
|
16.3%
|
|
|
$12.81
|
1/12/16
|
837,837
|
2,122,659
|
|||||||||||
|
Paul
Will
|
85,050
|
13.3%
|
|
|
$12.81
|
1/12/16
|
685,503
|
1,736,721
|
|||||||||||
|
Kenneth
Core
|
9,450
|
1.5%
|
|
|
$12.81
|
1/12/16
|
76,167
|
192,969
|
|||||||||||
|
Sergio
Hernandez
|
9,450
|
1.5%
|
|
|
$12.81
|
1/12/16
|
76,167
|
192,969
|
|||||||||||
____________________
|
(1)
|
Amounts
have been adjusted to reflect the February 1, 2006 and June 1, 2006,
3-for-2 stock splits.
|
|
(2)
|
The
stock options will become vested with respect to one-fourth thereby
on
each of January 18, 2007, 2008, 2009, and 2010, subject to meeting
certain
annual financial targets, and will become immediately exercisable
in the
event of a change of control involving us.
|
|
(3)
|
The
distribution date shall be the earlier of the fourth anniversary
of the
grant date or the date the holder's employment is terminated; provided,
upon compliance with certain notice or election provision, the holder
can
extend the distribution date, thereby extending the expiration date,
up to
the tenth anniversary of the grant
date.
|
9
Aggregated
Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
The
following table demonstrates the options that were exercised during the fiscal
year ended June 30, 2006, by the Named Executive Officers and the number and
value of unexercised stock options and SARs held by such individuals at
year-end.
|
Shares
acquired
on
|
Value
|
Number
of securities
underlying
unexercised
options/SARs
at fiscal
year-end
(#)(1)
(2)
|
Value
of unexercised
in-the-
money
options/SARs
at fiscal
year-end
($)(3)
|
|||||||||||||||
|
Name
|
exercise
(#)(1)
|
Realized
($)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
||||||||||||
|
Stephen
Russell
|
73,125
|
657,168
|
374,063
|
342,562
|
7,242,200
|
3,408,195
|
||||||||||||
|
Thomas
Glaser
|
33,750
|
444,713
|
84,375
|
154,575
|
1,521,450
|
1,637,724
|
||||||||||||
|
Paul
Will
|
87,188
|
1,166,147
|
104,063
|
127,237
|
1,877,175
|
1,350,231
|
||||||||||||
|
Kenneth
Core
|
0
|
(4)
|
|
176,505
|
(4)
|
|
13,500
|
34,574
|
254,350
|
480,521
|
||||||||
|
Sergio
Hernandez
|
5,625
|
(4)
|
|
171,701
|
(4)
|
|
14,625
|
29,137
|
297,325
|
391,709
|
||||||||
____________________
|
(1)
|
Amounts
have been adjusted to reflect the February 1, 2006 and June 1, 2006,
3-for-2 stock splits.
|
|
(2)
|
All
SARs are payable in cash only.
|
|
(3)
|
Based
on the $22.04 closing price of our common stock on June 30,
2006.
|
|
(4)
|
Under
the terms of their original SARs agreements, Messrs. Core and Hernandez
would not have been eligible for a payout of vested SARs until the
earlier
of the third or fourth anniversary of the SARs grant date, depending
on
the grant, or the termination of their respective employment with
the
Company. In consideration of the early payout election by employees,
the
Compensation Committee reviewed the average SARs price of eligible
grants,
the possible impact on the Company's financial statements, and the
possible market price fluctuation of the Company's common stock between
the payout election and the February 10, 2006, distribution. Accordingly,
the Compensation Committee determined a payout price of $30 per share.
The
one-time cash payment of Messrs. Core and Hernandez reflects the
differences between the exercise prices of the underlying SARs and
such
payout price of $30 per share. Mr. Core realized a value of $176,505
from
such cash payout. Mr. Hernandez realized a value of $106,688 from
such
cash payout. The value of these payouts to Messrs. Core and Hernandez
are
also reflected in the Summary Compensation Table as Other Annual
Compensation. The additional value realized by Mr. Hernandez of $65,013
is
from the exercise of an outstanding option to purchase 5,625
shares.
|
Compensation
Committee Interlocks and Insider Participation
Messrs.
Miller, Heyworth, and Biddelman served as the Compensation Committee in fiscal
2006. No Committee member has been an officer or employee for the Company.
There
are no interlocking relationships between our directors and executive officers
and the executive officers and directors of any other entity that might affect
the compensation of our executive officers. For a description of other
transactions between us and other directors and executive officers, see "Certain
Relationships and Related Transactions" below.
Compensation
Committee Report on Executive Compensation for Fiscal 2006
The
Compensation Committee Report on Executive Compensation that follows shall
not
be deemed to be incorporated by reference into any filing made under the
Securities Act or the Exchange Act, notwithstanding any general statement
contained in any such filings incorporating this Proxy Statement by reference,
except to the extent that we incorporate such report by specific
reference.
Role
of the Compensation Committee
The
Compensation Committee was formed in September 1993. The Compensation Committee
is responsible for determining the compensation program for our executive
officers, including the Named Executive Officers. The Compensation Committee
administers the Celadon Group, Inc. 2006 Omnibus Incentive Plan ("Omnibus
Incentive Plan") and, subject to the provisions of the plan, determines grants
under the plan for all employees, including the Named Executive Officers. The
Compensation Committee establishes and administers our bonus program, which
is
re-evaluated each fiscal year, pursuant to which certain of our employees and
executive officers may be eligible to receive bonuses. The Compensation
Committee also considers and, if appropriate, recommends for selection, nominees
for the Board of Directors.
10
Principles
of Executive Compensation and Program Components
Our
executive compensation philosophy is designed to attract and retain outstanding
executives, to foster employee commitment, and to align employee and stockholder
interests. To this end, we have sought to provide competitive levels of
compensation that integrate pay with our annual and long-term performance goals
and reward above-average corporate performance.
Salary
Determinations.
With the
exception of the Chief Executive Officer, whose salary is fixed under an
employment agreement described below, the Compensation Committee generally
reviews and sets the base salary of each of the executive officers on an annual
basis. In reviewing and making decisions with respect to the base salaries
of
executive officers (other than the Chief Executive Officer) for fiscal 2006,
the
Compensation Committee reviewed and considered: (i) compensation information
disclosed by similarly-sized publicly held truckload carriers; (ii) our
financial and operating performance, as well as the role of and contribution
of
the particular executive with respect to such performance; and (iii) the
particular executive's contributions to us unrelated to our financial
performance. The Compensation Committee believes that the annual salaries of
the
Chief Executive Officer and other executive officers are reasonable compared
to
similarly situated executives of other comparable companies, including trucking
and transportation companies and other comparable companies from a variety
of
industries.
Bonus
Program.
The
Compensation Committee annually determines bonuses for executive officers
following the finalization of the financial statements. The Compensation
Committee may consider Company and individual performance components when making
bonus determinations. For fiscal 2006, the Compensation Committee based bonus
amounts for the Chief Executive Officer and each other Named Executive Officer
on the Company's relative performance compared with earnings targets that had
been established during the first fiscal quarter of fiscal 2006. The bonus
amounts are adjusted up or down based on a range of Company performance between
85% and 140% of the earnings target. For fiscal 2006, the Company exceeded
the
top of the range, at over 150% of the target. In addition to the formula bonus,
the Company granted a discretionary bonus to Messrs. Russell, Glaser, and Will.
The discretionary bonus was based, among other things, on the Company's safety,
driver development, and profitability above the targeted range. Furthermore,
Mr.
Hernandez received an additional bonus based in part on an earnings goal for
our
Mexican subsidiary, which he manages.
Stock-Based
Compensation.
Our
Omnibus Incentive Plan is intended to enhance profitability and value for the
benefit of stockholders by enabling us to offer stock-based incentives to
employees, including executive officers, thereby creating a means to attract,
retain, and reward such individuals and to strengthen the mutuality of interests
between such individuals and stockholders.
We
historically have sought to align the long-term interests of executive officers
and stockholders through the use of stock-based compensation, including stock
options, stock appreciation rights, and restricted stock grants. The
Compensation Committee awarded restricted stock accompanied by stock options
in
fiscal 2006. The options will vest 25% on the first through fourth anniversaries
of the date of grant, terminate after ten years, and have an exercise price
of
$12.81, the closing price of the Company's common stock as reported on the
Nasdaq National Market on the grant date. The restricted stock awards are
subject to certain performance vesting targets tied to an adjusted earnings
per
share calculation, which consists of diluted earnings per share as reported
in
the audited financial statements for the applicable fiscal year adjusted for
changes in compensation expense caused by the stock market price change during
the applicable fiscal year. The grants are intended to be "performance-based"
compensation for purposes of Section 162(m) of the Internal Revenue Code;
however the amounts eligible to vest for achievement of the fiscal 2006 goal
may
not so qualify because the Omnibus Plan was adopted in the second half of the
year. The restricted stock awards generally vest upon the achievement of the
performance target, with the possibility of accelerated vesting upon the
achievement of a performance target for a future year. For performance targets
relating to fiscal 2006, there is also a time-vesting requirement such that
the
vesting does not occur until January 12, 2007. The restricted stock awards
contain forfeiture provisions as determined by the Committee at the date of
grant.
The
Compensation Committee views stock options and restricted stock as an important
part of overall executive compensation because of the emphasis on increasing
stockholder value and promoting a long-term financial interest in the
Company.
11
Chief
Executive Officer's Compensation
Mr.
Russell is employed pursuant to an employment agreement dated January 21, 1994,
as amended and extended by its terms thereafter, providing for his continued
employment until January 21, 2008. The employment period is automatically
renewed for successive two-year terms unless the Company or Mr. Russell gives
written notice to the other at least 90 days prior to the expiration of the
then
current employment period of their intention to terminate. The employment
agreement provides Mr. Russell with a base salary equal to $521,000 (as adjusted
annually for increases in the Consumer Price Index). In addition, Mr. Russell
is
eligible to participate in an incentive bonus program designed for all members
of senior management pursuant to which he may receive a bonus in an amount
equal
to between 0% and 105% of his base salary in the discretion of the Compensation
Committee. The employment agreement also provides that Mr. Russell is entitled
to participate in all the Company's employee benefit plans and all other fringe
benefit plans generally available to our employees.
The
employment agreement for Mr. Russell also provides that in the event of
termination: (i) by us without cause (including the non-renewal of the
employment period by us) or by Mr. Russell for cause, Mr. Russell will be
entitled to receive his salary for the remainder of the then current employment
period or one year, whichever is greater; (ii) by reason of his disability,
Mr.
Russell will be entitled to receive 50% of his salary during the two-year period
commencing on the date of his termination; and (iii) by reason of his death,
Mr.
Russell's estate will be entitled to receive a pro-rata portion of the bonus
for
the fiscal year in which his death occurs and to receive 50% of his salary
until
the earlier of the end of the then current employment period or one year after
the date of death. The employment agreement includes a two-year non-compete
covenant commencing on termination of employment.
Upon
the
occurrence of a change in control (as defined in the employment agreement),
the
amended agreement provides that if (i) at any time within two years of a change
in control or within 180 days prior to a change in control, Mr. Russell's
employment is terminated by us without cause or by Mr. Russell for cause or
(ii) at any time during the 90-day period immediately following the date which
is six months after the change in control Mr. Russell terminates his employment
for any reason, Mr. Russell shall be entitled to receive (1) a lump sum payment
in an amount equal to three times his base salary and three times the highest
annual bonus paid to him within three years prior to the change in control;
(2)
any accrued benefits; (3) a pro-rata portion of the bonus for the fiscal year
in
which the change in control occurs; (4) continued medical and dental benefits
for Mr. Russell (and eligible dependents) for 36 months; (5) outplacement
services for one year; and (6) upon the occurrence of the change in control,
full and immediate vesting of all stock options and equity awards. The agreement
also provides that Mr. Russell is entitled to receive a gross-up payment on
any payments made to Mr. Russell that are subject to the excise tax imposed
by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code");
provided, however, that if the total payments made to Mr. Russell do not exceed
110% of the greatest amount that could be paid to Mr. Russell such that the
receipt of payments would not give rise to any excise tax, then no gross-up
payment will be made and the payments made to Mr. Russell, in the aggregate,
will be reduced to an amount that would result in no excise tax being
triggered.
For
fiscal 2006, Mr. Russell's salary was $633,063, representing the contractual
amount. The Compensation Committee awarded Mr. Russell a bonus of $1,289,806
for
fiscal 2006. Approximately 80% of Mr. Russell's bonus was determined based
on
pre-established earnings targets and the balance was discretionary. In fiscal
2006, the Compensation Committee awarded Mr. Russell 283,500 stock options
and a
54,000 restricted stock grant. The prior discussion included under "Principles
of Executive Compensation and Program Components-Bonus Program and Stock-Based
Compensation" applies to the compensation of Mr. Russell.
12
Separation
Agreements
Mr.
Paul
Will is party to a separation agreement with us whereby we have the right at
any
time with or without prior written notice to terminate his employment or obtain
his resignation. The agreement provides that in the event of termination of
employment, Mr. Will will be entitled to receive: (i) one year's salary less
normal withholding; (ii) a pro-rata bonus payment equal to the then current
bonus formula for the time employed in the then current fiscal year up to the
date of termination in that fiscal year less normal withholdings; (iii) a lump
sum payment equal to twelve months of COBRA premiums for the group medical
and
dental plans; and (iv) a lump sum payment equal to twelve months car allowance.
In addition, in such event, Mr. Will will be entitled to exercise any vested
or
unvested stock options he then has in accordance with the terms of the Stock
Option Plan for a period of one year from the termination of his
employment.
Compensation
Committee
Michael
Miller
Anthony
Heyworth
Chris
Hines
13
The
Stock
Price Performance Graph that follows shall not be deemed to be incorporated
by
reference into any filing made under the Securities Act or the Exchange Act,
notwithstanding any general statement contained in any such filings
incorporating this Proxy Statement by reference, except to the extent that
we
incorporate such report by specific reference.
The
following graph compares the cumulative total return to our stockholders to
the
cumulative total returns of the Nasdaq Stock Market - U.S. and the Nasdaq Truck
and Transportation Index for the period June 2001 through June 2006. The graph
assumes that $100 was invested on June 30, 2001.
|
Company/Index/Peer
Group
|
6/30/01
|
6/30/02
|
6/30/03
|
6/30/04
|
6/30/05
|
6/30/06
|
|||||||||||||
|
Celadon
Group, Inc.
|
$
|
100.00
|
$
|
296.74
|
$
|
210.67
|
$
|
409.30
|
$
|
393.02
|
$
|
1,153.26
|
|||||||
|
NASDAQ
Stock Market (U.S.)
|
$
|
100.00
|
$
|
70.34
|
$
|
78.10
|
$
|
98.58
|
$
|
99.24
|
$
|
105.85
|
|||||||
|
NASDAQ
Trucking & Transportation
|
$
|
100.00
|
$
|
113.19
|
$
|
121.82
|
$
|
154.61
|
$
|
178.24
|
$
|
239.73
|
|||||||
14
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
following table sets forth, as of September 1, 2006, certain information
furnished to us regarding the beneficial ownership of common stock (i) by each
person known by us, based upon filings with the SEC, to beneficially own more
than five percent (5%) of the outstanding shares of the common stock, (ii)
by
each of our directors, (iii) by each of the Named Executive Officers, and (iv)
by all of our directors and executive officers as a group. Share numbers and
other information for Dawson Herman Capital Management Inc. ("Dawson"), and
Thompson, Siegel & Walmsely, Inc. ("Thompson"), included in the following
table and notes are as of December 31, 2005, and solely based upon Schedules
13/G filed with the SEC on February 14, 2006 and February 13, 2006,
respectively.
The
beneficial ownership percentages are based upon 23,418,648 shares of common
stock outstanding at September 1, 2006. Beneficial ownership is calculated
in
accordance with the rules of the Securities and Exchange Commission. A person
is
deemed to have "beneficial ownership" of any security that he or she has a
right
to acquire within sixty days after September 1, 2006. Shares that a person
has
the right to acquire under stock options are deemed outstanding for the purpose
of computing the percentage ownership of that person and all executive officers
and directors as a group, but not for the percentage ownership of any other
person. As a result, the denominator used in calculating beneficial ownership
percentages among our stockholders and management may differ.
|
Name
and address of beneficial owner
(1)
|
Amount
and nature of beneficial
ownership
of common stock(2)
|
Percent
of
Class (%)
|
|||||
|
Stephen
Russell (3)
|
1,495,407
|
6.29
|
|||||
|
Thomas
Glaser (4)
|
276,125
|
1.17
|
|||||
|
Paul
Will (5)
|
308,700
|
1.31
|
|||||
|
Kenneth
Core (6)
|
22,500
|
*
|
|||||
|
Sergio
Hernandez (7)
|
29,925
|
*
|
|||||
|
Michael
Miller (8)
|
72,844
|
*
|
|||||
|
Anthony
Heyworth (9)
|
51,469
|
*
|
|||||
|
Chris
Hines
|
—
|
*
|
|||||
|
Dawson
Herman Capital Management Inc. (10)
|
1,883,184
|
8.04
|
|||||
|
Thompson,
Siegel & Walmsley, Inc. (11)
|
1,316,252
|
5.62
|
|||||
|
All
executive officers and directors as a group (eight
persons)
|
2,256,970
|
9.36
|
|||||
_____________________
|
*
|
Represents
beneficial ownership of not more than one percent of the outstanding
common stock.
|
|
(1)
|
The
address of each Named Executive Officer and other directors is 9503
East
33
rd
Street, One Celadon Drive, Indianapolis, Indiana, 46235. The address
of
Dawson Herman Capital Management Inc. is 354 Pequot Avenue, Southport,
Connecticut 06890. The address of Thompson, Siegel & Walmsley, Inc. is
5000 Monument Avenue, Richmond, Virginia 23230.
|
|
(2)
|
Amounts
have been adjusted to reflect the February 1, 2006, and June 1, 2006,
3-for-2 stock splits.
|
|
(3)
|
Includes
(a) 969,094 shares held directly by Stephen Russell; (b) 374,063
shares
covered by stock options granted to Mr. Russell that are currently
exercisable or that will become exercisable within 60 days of September
1,
2006; (c) 110,250 shares covered by restricted stock grants to Mr.
Russell; and (d) 42,000 shares held by Mr. Russell's spouse and beneficial
ownership of such shares is disclaimed.
|
|
(4)
|
Includes:
(a) 131,625 shares held directly by Thomas Glaser; (b) 84,375 shares
covered by stock options granted to Mr. Glaser that are currently
exercisable or that will become exercisable within 60 days of September
1,
2006; (c) 59,850 shares covered by restricted stock grants to Mr.
Glaser;
and (d) 275 shares held by Mr. Glaser's spouse and beneficial ownership
of
such shares is disclaimed.
|
|
(5)
|
Includes:
(a) 154,687 shares held directly by Paul Will; (b) 104,063 shares
covered
by stock options granted to Mr. Will that are currently exercisable
or
that will become exercisable within 60 days of September 1, 2006;
and (c)
49,950 shares covered by restricted stock grants to Mr.
Will.
|
|
(6)
|
Includes:
(a) 7,200 shares held directly by Kenneth Core; (b) 13,500 shares
covered
by stock options granted to Mr. Core that are currently exercisable
or
that will become exercisable within 60 days of September 1, 2006;
and (c)
1,800 shares covered by a restricted stock grant to Mr.
Core.
|
|
(7)
|
Includes:
(a) 13,500 shares held directly by Sergio Hernandez; (b) 14,625 shares
covered by stock options granted to Mr. Hernandez that are currently
exercisable or that will become exercisable within 60 days of September
1,
2006; and (c) 1,800 shares covered by a restricted stock grant to
Mr.
Hernandez.
|
|
(8)
|
Includes:
(a) 25,875 shares held directly by Michael Miller; and (b) 46,969
shares
covered by stock options granted to Mr. Miller that are currently
exercisable or that will become exercisable within 60 days of September
1,
2006.
|
|
(9)
|
Includes:
(a) 4,500 shares held directly by Anthony Heyworth; and (b) 46,969
shares
covered by stock options granted to Mr. Heyworth that are currently
exercisable or that will become exercisable within 60 days of September
1,
2006.
|
|
(10)
|
Dawson
Herman Capital Management Inc. has sole voting power and sole dispositive
power over 1,883,184 shares. It has shared voting power and shared
dispositive power over no shares.
|
|
(11)
|
Thompson,
Siegel & Walmsley, Inc. has (a) sole voting power over 862,470 shares;
(b) shared voting power over 453,782 shares; (c) sole dispositive
power
over 1,316,252 shares; and (d) shared dispositive power over no
shares.
|
15
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Jon
Russell, President of our TruckersB2B subsidiary and son of Stephen Russell,
our
Chairman of the Board and Chief Executive Officer, received aggregate
compensation of $250,934 and $203,888 in fiscal 2006 and 2005,
respectively.
RELATIONSHIP
WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
engaged KPMG as our independent registered public accounting firm during fiscal
2006 and will continue to engage KPMG for fiscal 2007. A representative of
KPMG
is expected to be present at the Annual Meeting and to be available to respond
to appropriate questions, and such representative will have an opportunity
to
make a statement at the Annual Meeting if he or she desires to do
so.
Change
in Independent Registered Public Accounting Firm
As
previously reported in our Current Report on Form 8-K filed with the SEC on
September 21, 2004, our Audit Committee dismissed Ernst & Young ("E&Y")
as our independent registered public accounting firm, effective September 15,
2004.
The
report issued by E&Y in connection with our financial statements for each of
the fiscal years ended June 30, 2004, and June 30, 2003, did not contain an
adverse opinion or a disclaimer of opinion, nor was either such report qualified
or modified as to uncertainty, audit scope, or accounting principles.
During
the fiscal years ended June 30, 2004, and June 30, 2003, and the subsequent
interim period preceding the dismissal of E&Y on September 15, 2004, there
were no disagreements with E&Y on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which
disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K), if not
resolved to the satisfaction of E&Y, would have caused E&Y to make a
reference to the subject matter of such disagreement in connection with its
reports, and there occurred no "reportable events" within the meaning of Item
304(a)(1)(v) of Regulation S-K.
We
have
provided E&Y with a copy of the foregoing statements. A copy of E&Y's
letter to the SEC, dated September 21, 2004, regarding its agreement with the
foregoing statements was filed as Exhibit 16.1 to our Current Report on Form
8-K
filed with the SEC on September 21, 2004.
As
previously reported in our Current Report on Form 8-K filed with the SEC on
September 27, 2004, our Audit Committee engaged KPMG as our independent
registered public accounting firm for fiscal 2005 effective September 24,
2004. Among other reasons, the Audit Committee selected KPMG because of their
expertise and knowledge serving public truckload companies. During the fiscal
years ended June 30, 2004, and June 30, 2003, and the subsequent
interim period through the date of our engagement of KPMG on September 24,
2004, neither we nor anyone on our behalf consulted with KPMG regarding any
of
the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation
S-K.
16
Principal
Accounting Fees and Services
KPMG
billed us the following amounts for services provided in the following
categories during the fiscal year ended June 30, 2006 and 2005.
|
|
Fiscal
2006
|
Fiscal
2005
|
||||||
|
Audit
fees
|
$
|
303,000
|
(1) |
|
$
|
345,992
|
(2) | |
|
Audit-related
fees
|
0
|
0
|
||||||
|
Tax
fees
|
0
|
0
|
||||||
|
All
other fees
|
0
|
0
|
||||||
|
Total
|
$
|
303,000
|
$
|
345,992
|
||||
|
(1)
|
Represents
the aggregate fees billed for professional services rendered by KPMG
for
the audit of our annual financial statements and audit of internal
controls and review of financial statements included in our quarterly
reports on Form 10-Q, and services that are normally provided by
an
independent registered public accounting firm in connection with
statutory
or regulatory filings or engagements for that fiscal
year.
|
|
(2)
|
For
fiscal 2005, audit fees were comprised of $135,000 in fees for the
audit
of our annual financial statements and review of financial statements
included in our quarterly reports on Form 10-Q and $210,992 in fees
for
the audit of our assessment of internal control over financial
reporting.
|
The
Audit
Committee maintains a policy pursuant to which it pre-approves all audit
services and permitted non-audit services to be performed by the independent
registered public accounting firm in order to assure that the provision of
such
services is compatible with maintaining the firm's independence. Under this
policy, the Audit Committee pre-approves, on an annual basis, specific types
of
categories of engagements constituting audit, audit-related, tax, or other
permissible non-audit services to be provided by the independent registered
public accounting firm. Pre-approval of an engagement for a specific type or
category of services generally is provided for up to one year and typically
is
subject to a budget comprised of a range of anticipated fee amounts for the
engagement. Management and the independent registered public accounting firm
are
required to periodically report to the Audit Committee regarding the extent
of
services provided by the firm in accordance with the annual pre-approval, and
the fees for the services performed to date. To the extent that management
believes that a new service or the expansion of a current service provided
by
the independent registered public accounting firm is necessary or desirable,
such new or expanded services are presented to the Audit Committee for its
review and approval prior to the engagement of the independent registered public
accounting firm to render such services. No audit-related, tax, or other
non-audit services were approved by our Audit Committee pursuant to the de
minimus exception to the pre-approval requirement under Rule 2-01, paragraph
(c)(7)(i)(C), of Regulation S-X.
17
STOCKHOLDER
PROPOSALS
To
be
eligible for inclusion in our proxy materials relating to the Annual Meeting
of
Stockholders following our 2007 fiscal year, stockholder proposals intended
to
be presented at that meeting must be received by us in writing on or before
June
8, 2007. However, if the date such Annual Meeting of Stockholders is more than
thirty days before or after November 3, 2007, then the deadline for submitting
any stockholder proposal for inclusion in the proxy materials relating to such
Annual Meeting of Stockholders will be a reasonable time before we begin to
print or mail such proxy materials. The inclusion of any such stockholder
proposals in such proxy materials will be subject to the requirements of the
proxy rules adopted under the Exchange Act, including Rule 14a-8.
We
must
receive in writing any stockholder proposals to be considered at the Annual
Meeting of Stockholders following our fiscal year 2007, but not included in
our
proxy materials relating to that meeting, by August 21, 2007. However, if the
date of such Annual Meeting of Stockholders is more than thirty days before
or
after November 3, 2007, then the deadline for submitting any such Stockholder
proposal will be a reasonable time before we mail the proxy materials relating
to such meeting.
Under
Exchange Act Rule 14(a)-4(c)(1), the proxy holders designated by an executed
proxy in the form accompanying this Proxy Statement will have discretionary
authority to vote on any Stockholder proposal that is not received on or prior
to the deadline described above.
Written
copies of all stockholder proposals should be sent to our principal executive
offices at 9503 East 33rd
Street,
One Celadon Drive, Indianapolis, Indiana, 46235 to the attention of Paul Will,
our Executive Vice President, Chief Financial Officer, Treasurer, and Assistant
Secretary.
For
information regarding how stockholders can recommend candidates for
consideration as director nominees, see "Corporate Governance - Committees
of
the Board and Director Nominations - Director Nomination Process."
ANNUAL
REPORT ON 10-K
The
Annual Report on Form 10-K is included with the mailing of this Proxy Statement
for the Annual Meeting of Stockholders.
OTHER
MATTERS
The
Board
of Directors does not intend to present at the Annual Meeting any matters other
than those described herein and does not presently know of any matters that
will
be presented by other parties. If any other matters are properly brought before
the Annual Meeting or any adjournment thereof, the proxy holders named in the
accompanying form of proxy will have discretionary authority to vote proxies
on
such matters in accordance with their judgment, unless the person executing
any
such proxy indicates that such authority is withheld.
|
Celadon Group, Inc.
|
|
|
|
|
|
Kenneth Core
|
|
Secretary
|
October
6, 2006
18
PROXY
CELADON
GROUP, INC.
9503
East 33rd
Street
One
Celadon Drive
Indianapolis,
Indiana 46235-4207
ANNUAL
MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The
undersigned hereby appoints Stephen Russell, Michael Miller, and Paul A. Will
and each of them with full power of substitution, proxies of the undersigned,
to
vote all shares of common stock of Celadon Group, Inc. (the "Company") that
the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held on Friday, November 3, 2006
at
9:00 a.m. (local time) at the Company's corporate headquarters located at One
Celadon Drive, Indianapolis, Indiana, 46235, and at any adjournment or
postponement thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL 1.
|
Address
Changes:
|
|
|
|
|
|
|
|
|
|
|
(If
you
noted any Address Changes above, please mark corresponding box on the reverse
side.)
|
SEE
REVERSE
SIDE
|
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
|
SEE
REVERSE
SIDE
|
|
C/O
AMERICAN STOCK TRANSFER
59
MAIDEN LAND
NEW
YORK, NY 10038
|
VOTE
BY MAIL
Mark,
sign, and date your proxy card and return it in the postage paid
envelope
we have provided or return it to Celadon Group, Inc., c/o ADP,
51 Mercedes Way, Edgewood, NY
11717
|
TO
VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
CELDG1
KEEP
THIS PORTION FOR YOUR RECORDS
--
-- --
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
-- --
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
-- --
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ---- -- -- ----
-- -- -- --
DETACH
AND RETURN THIS PORTION ONLY
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
CELADON
GROUP, INC.
This
Proxy, when properly executed and returned,
will
be voted in the manner directed below. If no
direction
is made, this Proxy will be voted FOR
all
nominees.
|
1.
|
Election
of Directors.
|
|||||
|
|
|
|
|
|
|
|
|
|
Nominees:
|
(01)
Stephen Russell
(02)
Michael Miller
|
For
All
|
Withhold
All
|
For
All
Except
|
To
withhold authority to vote, mark "For All Except"
and
write the nominee's number on the line below.
|
|
|
|
(03)
Anthony Heyworth
|
¡
|
¡
|
¡
|
|
|
|
|
(04)
Chris Hines
|
|
|
|
|
|
|
|
|||||
|
2.
|
In
their discretion, the proxies are authorized to vote upon each other
matter that may properly come before the meeting or any adjournments
thereof.
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
For
|
Withhold
|
Against
|
|
|
|
|
|
¡
|
¡
|
¡
|
|
PLEASE
MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
IN THE USA.
Please
sign below exactly as your name appears. When shares are held by joint tenants,
both shall sign. When signing as attorney, executor, administrator, trustee,
or
guardian, please give full title as such. If a corporation, please sign in
full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
|
For
Address Changes, please check this box and write them on the back
where
indicated. o
|
|
|
|
Please
indicate if you wish to view meeting materials electronically via
the
Internet rather than receiving a hard copy, please note that you
will
continue to receive a proxy card for voting purposes
only. Yes o
No o
|
|
|
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|
Signature
[PLEASE SIGN WITHIN BOX.] Date
|
|
Signature
(Joint Owners)
Date
|