CONSOLIDATED-TOMOKA LAND CO.
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 2003
The undersigned hereby appoints William H. McMunn and Bruce W.
Teeters, each or either of them, as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent, and
to vote, as designated below, all the shares of common stock of
Consolidated-Tomoka Land Co. held of record by the undersigned on
February 27, 2003, at the annual meeting of shareholders to be held
April 23, 2003, or any adjournment or postponement thereof.
Election of three Class III Directors for three-year terms ending
2006.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed
contrary below) below
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Class III. William O. E. Henry, H. Jay Skelton, and William J. Voges
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
CONSOLIDATED-TOMOKA LAND CO.
PROXY
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE PROPOSAL.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If signing for a corporation, or partnership, authorized person should
sign full corporation or partnership name and indicate capacity in
which they sign.
Dated
-----------------------------
Signature
-------------------------
Signature
-------------------------
(if held jointly)
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
CONSOLIDATED-TOMOKA LAND CO.
Post Office Box 10809
Daytona Beach, Florida 32120-0809
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 23, 2003
To the Shareholders:
The annual meeting of shareholders of Consolidated-Tomoka Land Co., a
Florida corporation (the "Company"), will be held at the LPGA
International Clubhouse, 1000 Champions Drive, Daytona Beach, Florida,
on Wednesday, April 23, 2003, at ten o'clock in the morning for the
following purposes:
1. To elect three directors to serve for a three-year term
expiring at the annual meeting of shareholders to be held in
2006, or until their successors are elected and qualified.
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on February 27, 2003,
are entitled to notice of, and to participate in and vote at the
meeting.
A complete list of shareholders as of the record date will be
available for shareholders' inspection at the Corporate Offices at 149
South Ridgewood Avenue, Daytona Beach, Florida, for at least ten days
prior to the meeting.
By Order of the Board of Directors
/S/ Linda Crisp
----------------------------------
Linda Crisp
Corporate Secretary
Daytona Beach, Florida
March 14, 2003
ALL SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. This proxy is
revocable by you at any time before it is exercised by notifying the
corporate secretary of the Company in writing or by submitting a
properly executed, later-dated proxy. Signing a proxy will not affect
your right either to attend the meeting and vote your shares in person
or to give a later proxy.
A COPY OF THE COMPANY'S MOST RECENT FORM 10-K ANNUAL REPORT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED, WITHOUT
CHARGE, TO ANY SHAREHOLDER UPON WRITTEN REQUEST DIRECTED TO THE
COMPANY'S SECRETARY, P. O. BOX 10809, DAYTONA BEACH, FLORIDA 32120-
0809.
1
CONSOLIDATED-TOMOKA LAND CO.
PROXY STATEMENT
INTRODUCTION
This proxy statement and the enclosed form of proxy are being sent to
the shareholders of Consolidated-Tomoka Land Co., a Florida
corporation (the "Company"), on or about March 14, 2003, in connection
with the solicitation by the Board of Directors of the Company of
proxies to be used at the annual meeting of shareholders to be held on
Wednesday, April 23, 2003 (and at any adjournment or adjournments
thereof), for the purposes set forth in the accompanying notice of
annual meeting. Shareholders who execute proxies retain the right to
revoke them at any time before they are exercised by sending written
notice to the secretary of the Company, by submitting a properly
executed, later-dated proxy, or by attending the annual meeting and
electing to vote in person.
The cost of preparing, assembling, and mailing material in connection
with this solicitation will be borne by the Company.
At the close of business on February 27, 2003, there were 5,615,579
shares of common stock, $1 par value, of the Company outstanding.
Each holder of common stock of record on that date is entitled to one
vote for each share held by such shareholder on every matter submitted
to the meeting. The Company's Articles of Incorporation and Bylaws do
not provide for cumulative voting for the election of directors, which
is permitted but not required by Florida law.
See "Interests in Stock" below for information as to the beneficial
ownership of common stock of the Company as of February 27, 2003 by
each director of the Company and by all directors and executive
officers as a group.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the Board of Directors
into three classes, as nearly equal as possible. At the 2003 annual
meeting of shareholders, three Class III directors are to be elected,
each to hold office until the annual meeting of shareholders to be
held in 2006, or until their successors are elected and qualified.
The Company has no nominating committee other than the Board of
Directors for the selection of candidates to serve as directors. It
is the intention of the persons named in the accompanying form of
proxy to vote such proxy for the election as directors, of the persons
named below who have been designated by the Board of Directors as
nominees for Class III unless authority to do so is withheld.
All nominees for election as directors are now directors, each having
been elected by the shareholders at the April 2000 annual meeting.
Each nominee has indicated his willingness to serve if elected. If
any nominee should be unable to serve, which is not now anticipated,
the proxy will be voted for such other persons as shall be determined
by the persons named in the proxy in accordance with their judgment.
The election of Messrs. Henry, Skelton, and Voges will require the
affirmative vote of the holders of a plurality of the shares present
or represented at the meeting. The Board of Directors of the Company
2
recommends a vote "for" the election of Messrs. Henry, Skelton, and
Voges as directors in Class III. Proxies solicited by the Board will
be so voted unless shareholders specify in their proxies a contrary
choice. Abstentions will be treated as shares represented at the
meeting, but not voting, so they will have no effect on the outcome of
the voting to elect directors. Broker non-votes will not be
considered as shares represented at the meeting.
Additional information concerning the nominees and the directors
appears below.
NAME,
AGE AT JANUARY 31, 2003, CLASS AND OTHER
AND PRINCIPAL OCCUPATION DIRECTOR EXPIRATION BUSINESS
SINCE JANUARY 1, 1998 SINCE OF TERM AFFILIATIONS
- ------------------------ --------- ---------- ------------
JOHN C. ADAMS, JR.-AGE 66(1)(2) 1977 I None
Executive vice president of Brown and Brown, 2004
Inc. (an insurance agency) since January 1999.
Chairman of the board of Hilb, Rogal and
Hamilton Company of Daytona Beach, Inc.
(an insurance agency) from January 1994 to
December 1998 and executive vice president
operations from January 1994 to December 1998.
Executive vice president of Hilb, Rogal and
Hamilton Company, Richmond, Virginia,
from 1993 to December 1998
BOB D. ALLEN-AGE 68(1) 1990 I None
Chairman of the board since April 1998; 2004
chief executive officer of the Company
from March 1990 to April 2001; and president
of the Company from March 1990 to January 2000
WILLIAM O. E. HENRY-AGE 75(3) 1977 III None
Practicing attorney and partner 2003
in law firm of Holland & Knight LLP
ROBERT F. LLOYD-AGE 67(2) 1991 II None
Chairman of the board and chief executive 2005
officer of Lloyd Buick-Cadillac Inc.
WILLIAM H. McMUNN-AGE 56(1) 1999 II None
President of the Company since January 2000
and chief executive officer since April 2001;
chief operating officer of the Company from
January 2000 to April 2001; president,
Indigo Development Inc., a subsidiary of
the Company, since December 1990
DAVID D. PETERSON-AGE 71(1)(2) 1984 I None
Chairman of the executive committee of the
Company; retired president and chief executive
officer of Baker, Fentress & Company
(a publicly owned, closed-end investment company)
since June 1996.
3
NAME,
AGE AT JANUARY 31, 2003, CLASS AND OTHER
AND PRINCIPAL OCCUPATION DIRECTOR EXPIRATION BUSINESS
SINCE JANUARY 1, 1998 SINCE OF TERM AFFILIATIONS
- ------------------------ --------- ---------- ------------
H. JAY SKELTON-AGE 65(3) 2000 III None
President and chief executive officer of DDI, 2003
Inc. (a diversified family holding company)
since July 1989
BRUCE W. TEETERS-AGE 57 1990 II None
Senior vice president-finance and treasurer 2005
of the Company since January 1988
WILLIAM J. VOGES-AGE 48(3) 2001 III None
President, chief executive officer since 1997,
and general counsel from 1990 of The Root
Organization (a private investment company with
diversified holdings)
(1) Member of the Executive Committee of the Company, which had no
meetings in 2002. The Executive Committee has the authority during
intervals between meetings of the Board of Directors to exercise power
on matters designated by the Board.
(2) Member of the Compensation and Stock Option Committee, which had
two meetings in 2002. The committee annually reviews existing
compensation levels for the executive officers, makes compensation
recommendations to management and the Board of Directors, and
administers the 2001 Stock Option Plan.
(3) Member of the Audit Committee, which had four meetings in 2002.
The committee meets with representatives of the Company's independent
auditors to (a) discuss the scope, fees, timing and results of the
annual audit; (b) review the consolidated financial statements on a
quarterly basis, and (c) perform other duties as directed by the Board
of Directors. The Audit Committee acts under a written charter
adopted by the Board of Directors. All members of the Audit Committee
are "independent" (as defined in Section 121(A) of the American Stock
Exchange Listing Standards).
During 2002, the Board of Directors held one regular and three special
meetings. Each non-employee director received a fee of $1,500 for
each board meeting he attended in 2002. Each non-employee director
received, in addition to meeting fees, an annual retainer of $15,000,
payable quarterly. Beginning May 1, 2002, Mr. Allen received, as
Chairman of the Board, an annual fee of $50,000, payable quarterly,
in addition to receiving regular directors' fees. Mr. Peterson
received, as Chairman of the Executive Committee, an additional annual
fee of $9,000, payable quarterly. Members of the Executive, Audit,
and Compensation and Stock Option Committees also received $1,500 for
each meeting of those committees attended in 2002, and Chairmen of
those committees received $2,000 per meeting attended. Audit
Committee members received an Audit Committee fee of $500 for each
quarterly review of the Company's audited financial statements.
4
Because of increased responsibilities, effective January 22, 2003,
fees for members of the Audit Committee were increased to $2,500 for
the Chairman and $1,500 for members for each meeting they attend.
Effective March 31, 2003, the annual fee payable to the Chairman of
the Executive Committee will be eliminated. The Chairman will then
receive the same fee as the Chairman of the other committees, except
the Audit Committee Chairman.
All members of the Board attended 100% of the meetings of the Board
and all committees on which they served during 2002.
INTERESTS IN STOCK
The following table contains information at February 27, 2003 on the
number of shares of common stock of the Company, of which each
director and each officer named in the Summary Compensation Table set
forth elsewhere in this Proxy Statement had outright ownership, or,
alone or with others, any power to vote or dispose of the shares, or
to direct the voting or disposition of the shares by others, and the
percentage of the aggregate of such shares to all of the outstanding
shares of the Company. The table also sets forth information with
respect to all persons known by the Company to own beneficially more
than 5% of the Company's common stock as of February 27, 2003:
Power over Voting
and Disposition Aggregate
Name Sole Shared Shares Percent
- ------------------------------------------- ----------------- -----------------
Third Avenue Management LLC (1) 612,313 -- 612,313 10.9%
622 Third Avenue, 32nd Floor
New York, NY 10017
John C. Adams, Jr. 11,600 (2) -- 11,600 (2) 0.2%
Bob D. Allen 88,634 -- 88,634 1.6%
Robert F. Apgar 10,400 (3) -- 10,400 0.2%
William O. E. Henry 500 -- 500 --
Robert F. Lloyd 500 -- 500 --
William H. McMunn 35,007 (3) -- 35,007 (3) 0.6%
David D. Peterson 4,887 -- 4,887 --
H. Jay Skelton -- 1,000 1,000 --
Bruce W. Teeters 21,415 (3) 57 21,472 (3) 0.4%
William J. Voges 430 289(4) 719 --
Directors and Executive Officers
as a group (10 persons) 173,373 (3) 1,346 174,719 (3) 3.1%
(1) Registered investment adviser with offices at the above address.
Information derived from Schedule 13G, dated January 30, 2003, filed
with the Securities and Exchange Commission.
(2) Does not include 4,400 shares held in trust for his wife who has
sole voting and disposition power over these shares.
(3) Includes shares subject to options that are currently exercisable
within 60 days of March 1, 2003: Robert F. Apgar, 2,400 shares;
William H. McMunn, 8,000 shares; Bruce W. Teeters, 3,200 shares; and
executive officers as a group, 13,600 shares.
(4) Shares held jointly with his wife.
5
CERTAIN TRANSACTIONS
William O. E. Henry, a Director of the Company, is a partner in the
law firm of Holland & Knight LLP, which served as counsel to the
Company during the fiscal year ended December 31, 2002.
EXECUTIVE COMPENSATION
The sections which follow provide extensive information pertaining to
the compensation of the executive officers of the Company. This
information is introduced in the Compensation Committee Report on
Executive Compensation set forth below which describes the policies
and components of the Company's Compensation Program.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG
CONSOLIDATED-TOMOKA LAND CO., AMERICAN STOCK EXCHANGE INDEX,
AND REAL ESTATE INDUSTRY INDEX
The following performance graph shows a comparison of cumulative total
shareholder return from a $100 investment in the stock of the Company
over the five-year period ending December 31, 2002, with the
cumulative shareholder return of the American Stock Exchange Composite
Index and the Real Estate Industry Index (MG industry Group). Note
that historic stock price performance is not necessarily indicative of
future price performance.
FISCAL YEAR ENDING
------------------
COMPANY/INDEX/MARKET 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002
- -------------------- ---------- ---------- ---------- ---------- ---------- ----------
CONSOLIDATED-TOMOKA LAND CO. $100.00 $98.64 $122.98 $121.47 $115.87 $111.25
REAL ESTATE DEVELOPMENT $100.00 $81.12 $ 74.96 $ 70.98 $120.25 $117.68
AMEX MARKET INDEX $100.00 $73.60 $ 71.99 $ 56.63 $ 65.17 $ 45.29
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors
consists solely of independent, outside directors, and they met twice
during 2002. The Committee reviews and recommends salary adjustments
for officers and key personnel with salaries in excess of $75,000,
administers the Company's 2001 Stock Option Plan, and makes
recommendations to the Board with respect to the Company's
Compensation Program for the executive officers named in the following
Summary Compensation Table. The three individuals named in the
Summary Compensation Table are the only persons earning more than
$100,000 in annual compensation who fall within the Securities and
Exchange Commission definition of executive officers.
The annual compensation program includes base pay plus an incentive
program to reward key management employees who are in a position to
make substantial contributions to the success or the growth of the
Company and its subsidiaries. The Company seeks to provide through
this program compensation opportunities that are competitive and
directly related to Company performance. All participants in the
6
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE ON EXECUTIVE
COMPENSATION (CONTINUED)
incentive plan were approved by the Compensation Committee. There
were eight participants in the plan during 2002.
The executive officers are evaluated on performance, corporate and
individual, based on a pay-for-performance system. Corporate
performance is based on the Company's growth in earnings per share and
progress on projects and activities which will have a major effect on
future earnings. Individual performance includes implementation of
goals and objectives, strategic planning, civic involvement, and
public affairs. Base pay is designed to provide competitive rewards
for the normal duties associated with the individual's job
description. The incentive pay component is designed to stimulate
actions that contribute to improved operating and financial results.
The incentive awards are based on the achievement of predetermined
corporate and individual performance goals.
The Summary Compensation Table shows the incentive awards (Bonus in
the Table) to the named executive officers for the past three years.
For 2002, the goals for all executive officers included an overall
operating and financial performance target measured by net income plus
additional quantitative indicators. In addition to the 2002
quantified objectives, the Committee evaluated performance against
predetermined qualitative objectives in determining the amount of
incentive awards.
The Summary Compensation Table shows the Options/SAR (Stock
Appreciation Right) Grants to the named executive officers for the
past three years. The exercise price of the options granted was equal
to the market value of the underlying common stock on the date of the
grant. Therefore, the value of these grants to the officers is
dependent solely upon the future growth in share value of the
Company's common stock. The stock appreciation right entitles the
optionee to receive a supplemental payment, which at the election of
the Committee may be paid in whole or in part in cash or in shares of
common stock equal to a portion of the spread between the exercise
price and the fair market value of the underlying shares at the time
of exercise.
The Company's CEO, Mr. McMunn, received a 3-1/2% increase in base pay
determined by salary surveys, which indicated such an increase was
appropriate to maintain a competitive salary structure. Mr. McMunn
also received a bonus of $120,000 for 2002 based on his performance as
it relates to improvements in the Company's earnings per share and net
income, as well as the continuing growth of the Company's business.
Earnings per share increased substantially over the 2001 results. Mr.
McMunn did not receive a bonus in 2001. The Committee believes that
the components of salary, Stock Options/SARs, and incentive awards are
fair, competitive, and in the best interest of the Company. Specific
salary and incentives are disclosed in the Summary Compensation Table
and the Options/SAR Grants in Last Fiscal Year Table.
By the Compensation Committee: John C. Adams, Jr., Chairman; Robert
F. Lloyd and David D. Peterson.
7
SUMMARY COMPENSATION TABLE
The following table sets forth the annual, long-term and other
compensation for our Chief Executive Officer and each of the other
executive officers during the last fiscal year, as well as the total
annual compensation for each such individual for the two previous
fiscal years.
AWARDS LONG-TERM COMP. AWARDS
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SECURITIES UNDERLYING
POSITION YEAR(a) SALARY BONUS COMPENSATION(b) OPTIONS/SARS
- ------------------ ------ ------- ------- -------------- ----------------------
William H. McMunn 2002 $234,000 $120,000 $7,173 20,000
President and 2001 $219,336 $ -0- $8,396 20,000
Chief Executive Officer 2000 $200,004 $ 70,000 $8,710 -0-
Bruce W. Teeters 2002 $203,202 $ 60,000 $5,935 8,000
Senior Vice President - 2001 $195,387 $ -0- $5,827 8,000
Finance and Treasurer 2000 $187,872 $ 40,000 $6,971 -0-
Robert F. Apgar 2002 $132,504 $ 60,000 $9,224 8,000
Senior Vice President - 2001 $125,000 $ -0- $9,013 6,000
General Counsel 2000 $117,408 $ 40,000 $8,952 -0-
(a) 12/31 Fiscal Year
(b) Other compensation includes personal use of company automobile,
premium for term life insurance exceeding $50,000, and LPGA Club
membership fees.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning options granted
to executive officers named in the Summary Compensation Table during
the fiscal year ended December 31, 2002:
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS/SARS VALUE AT ASSUMED
UNDERLYING GRANTED TO PER SHARE ANNUAL RATES OF STOCK
OPTIONS/SARS EMPLOYEES IN DATE OF EXERCISE EXPIRATION PRICE APPRECIATION
NAME GRANTED (1) FISCAL YEAR GRANT PRICE DATE FOR OPTION TERM (2)
- ------------------ ------------ ------------ ------- --------- ---------- ---------------------
5% 10%
--------- --------
William H. McMunn 20,000 41.7% 01/23/02 $20.05 01/23/12 $252,187 $639,091
Bruce W. Teeters 8,000 16.7% 01/23/02 $20.05 01/23/12 $100,875 $255,636
Robert F. Apgar 6,000 12.5% 01/23/02 $20.05 01/23/12 $75,656 $191,727
(1) Each of these options was granted pursuant to the 2001 Stock
Option Plan and is subject to the terms of such plan. These options
are exercisable to no more than one-fifth (1/5) of the total number of
shares covered by the option during each twelve (12) month period
commencing twelve (12) months after the date of grant on January 23,
2002. In addition, each of these option grants included a tandem SAR,
exercisable only to the extent that the related option is exercisable.
Upon the exercise of a tandem SAR, the holder is entitled to receive
the value of the SAR, calculated by subtracting the excess of the fair
8
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR (CONTINUED)
market value of the common stock over the exercise price of the
related option from the quotient obtained by dividing such amount by
one minus the holders' personal income tax rate. The tandem SAR is
payable upon exercise in cash or common stock, at the discretion of
the stock option committee. The tandem SAR can be exercised only
until the later of the end of (i) the 90-day period following the
exercise of the related option or (ii) the 10-day period beginning on
the 3rd business day after the date on which the Company releases its
official financial data for the quarter in which the related option
was exercised.
(2) Potential gains are calculated net of the exercise price but
before taxes associated with the exercise. These amounts represent
hypothetical gains that could be achieved for the options if they were
exercised at the end of the option term. The assumed 5% and 10% rates
of stock appreciation are based on appreciation from the exercise
price per share. These rates are provided in accordance with the
rules of the SEC and do not represent our estimate or projection of
our future common stock price. Actual gains, if any, on stock option
exercises are dependent on our future financial performance, overall
stock market conditions and the option holders' continued employment
through the vesting period. These amounts do not include the value of
the options' tandem SARs because the value of such SARs will not be
determinable until the time of exercise.
AGGREGATE OPTION/SAR EXERCISES DURING FISCAL YEAR 2002
AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information related to options exercised
by the named executive officers during the fiscal year ended December
31, 2002 and the number of options at fiscal year end which are
currently exercisable.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON REALIZED OPTIONS AT FY-END (1) AT FY-END($) (2)(3)
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- ----------- -------- ----------- ------------- ----------- -------------
William H. McMunn -0- $0 4,000 36,000 $19,200 $76,800
Bruce W. Teeters -0- $0 1,600 14,400 $ 7,680 $30,720
Robert F. Apgar -0- $0 1,200 10,800 $ 5,760 $23,040
(1) These amounts do not include tandem SARs.
(2) These amounts do not include the value of the options' tandem SARs
because the value of such SARs will not be determinable until the time
of exercise.
(3) The value of unexercised in-the-money options represents the
aggregate amount of the excess of $19.25, the closing price of the
Company's Common Stock on December 31, 2002, over the exercise price
of all options held on such a date.
9
EQUITY COMPENSATION PLANS
The following table summarizes share and exercise price information
about the Company's equity compensation plans as of December 31, 2002:
Number of securities
remaining available for
future issuance under
Number of securities to Weighted-average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected
Plan Category warrants and rights warrants and rights in the first column)
- ------------- ----------------------- ------------------- -----------------------
Equity compensation
plans approved by
security holders 94,000 $17.31 454,000
Equity compensation
plans not approved
by security holders 0 n/a 0
Total 94,000 $17.31 454,000
====== ====== =======
DEFERRED COMPENSATION PLANS
Under the Company's Unfunded Deferred Compensation Plan, effective
July 1, 1981, fees earned by directors for service on the Board and
its committees may be deferred until the director attains seventy
years of age or ceases to be a member of the Board, whichever occurs
first. Under a similar plan effective October 25, 1982, officers and
key employees of the Company may elect to defer all or a portion of
their earnings until such time as the participant ceases to be an
officer or key employee. All sums credited to a participating
director, officer, or employee under either of these plans may be
distributed in a lump sum or in installments over not more than ten
calendar years following the end of the deferral period. The
participant will be entitled to elect the size of the installments and
the period over which they will be distributed. The deferred
compensation accrues interest annually at the average rate of return
earned by the Company on its short-term investments. Compensation
deferred pursuant to these plans during 2002 by officers named in the
compensation table above is included in the table.
PENSION PLAN
The Company maintains a defined benefit plan for all employees who
have attained the age of 21 and completed one year of service.
Pension benefits are based primarily on years of service and the
average compensation for the five highest years during the final ten
years of employment. The benefit formula generally provides for a
life annuity benefit. The amount of the Company's contributions or
accrual on behalf of any particular participant in the pension plan
cannot readily be determined. The following table shows the estimated
annual benefit payable under the pension plan (utilizing present
levels of Social Security benefits) upon retirement to persons in a
range-of-salary and years-of-service classification:
10
PENSION PLAN TABLE
YEARS OF SERVICE
FINAL AVERAGE ----------------
EARNINGS AS OF 15 20 25 30 35
1/1/02 NRA=65 NRA=65 NRA=65 NRA=65 NRA=65
----------------- ------ ------ ------ ------- --------
$125,000 $30,200 $40,267 $50,333 $ 60,400 $ 70,467
$150,000 $36,950 $49,267 $61,583 $ 73,900 $ 86,217
$175,000 $43,700 $58,257 $72,822 $ 87,400 $101,967
$200,000 & Greater $50,450 $67,267 $84,083 $100,900 $117,717
NRA = normal retirement age
Calendar year of 65th birthday = 2002
2002 Social Security covered compensation level is $39,444.
Pension Benefit is Subject to IRC Section 415 Benefit Limitation of
$160,000.
Pensionable Earnings are Subject to IRC Section 401(a)17 Salary
Limitation of $200,000.
The above benefits are not subject to Social Security or other offset
amounts.
As of December 31, 2002, the executive officers named in the
compensation table above are expected to be credited with years of
service under the amended plan as follows: Mr. Apgar, 12 years; Mr.
McMunn, 12 years; and Mr. Teeters, 23 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee, except David D.
Peterson, has ever served as an officer or employee of the Company or
any of its subsidiaries or had any relationship with the Company
requiring disclosure under applicable SEC regulations. Mr. Peterson
served as Chairman of the Board from 1987 to 1998, and was Acting
President and Chief Executive Officer from 1989 to 1990.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in fulfilling the
Board's oversight responsibilities relating to (1) the financial
reports and other financial information provided by the Company to the
public, (2) the Company's systems of internal controls regarding
finance and accounting established by management, and (3) the
Company's auditing, accounting and financial reporting processes
generally.
The Audit Committee contracts with the independent auditors to audit
the financial statements of the Company, and presents its selection
with respect to such contract to the Company's Board of Directors;
inquires as to the independence of the auditors, and obtains at least
annually the auditors written statement describing their independent
status; meets with the independent auditors, with and without
management present, to discuss their examination, their evaluation of
the Company's internal controls, and the overall quality of the
Company's financial reporting; investigates any matter brought to its
attention within the scope of its duties, with the power to retain
outside counsel for this purpose, as deemed necessary by the Audit
Committee.
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REPORT OF THE AUDIT COMMITTEE (CONTINUED)
In connection with the preparation and filing of the Company's Annual
Report on Form 10-K for the year ended December 31, 2002:
The Audit Committee reviewed and discussed the audited financial
statements with management;
The Audit Committee discussed with the independent auditors the
material required to be discussed by Statement of Auditing
Standards 61; and
The Audit Committee reviewed the written disclosures and the letter
from the independent auditors required by the Independence
Standards Board Standard No. 1 and discussed with the auditors any
relationships that may impact their objectivity and independence
and satisfied itself as to the auditors' independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors of the Company that
the audited financial statements be included in the Annual Report on
Form 10-K for the year ended December 31, 2002.
By the Audit Committee: H. Jay Skelton, Chairman; William O. E. Henry;
and William J. Voges
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Company has selected the firm of KPMG LLP to serve as the
independent auditors for the Company for the current fiscal year
ending December 31, 2003. That firm served as the Company's
independent auditors beginning July 24, 2002, for its fiscal year
ended December 31, 2002. On July 24, 2002, the Company dismissed
Arthur Andersen LLP as the Company's independent auditors. This
decision was approved by the Company's Board of Directors upon the
recommendation of the Audit Committee.
The reports of Arthur Andersen LLP for the fiscal years ended December
31, 2000 and December 31, 2001 did not contain an adverse opinion,
disclaimer of opinion, qualifications, or modification as to
uncertainty, audit scope or accounting principles. There were no
disagreements with Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure for the fiscal years ended December 31, 2000 and
December 31, 2001 or in the interim periods subsequent to December 31,
2001 that, if not resolved to Arthur Andersen LLP's satisfaction,
would have caused Arthur Andersen LLP to make reference to the subject
matter of the disagreement in their report on the financial
statements; and, during such periods, there were no "reportable
events," as that term is defined in Item 304 of Regulation S-K and the
related instructions to Item 304 of Regulation S-K.
For the fiscal years ended December 31, 2000 and December 31, 2001 and
the interim period subsequent to December 31, 2001, the Company did
not consult with KPMG regarding (i) either the application of
accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the
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INFORMATION CONCERNING INDEPENDENT AUDITORS (CONTINUED)
registrant's financial statements, where either a written report or
oral advice was provided to the Company by KPMG that KPMG concluded
was an important factor considered by the registrant in reaching a
decision as to the accounting, auditing, or financial reporting issue;
or (ii) any matter that was either the subject of a "disagreement" or
"reportable event," as those terms are used in Item 304 or Regulation
S-K and the related instructions to Item 304 of Regulation S-K. It is
expected that representatives of KPMG LLP will be present at the
Shareholders' meeting, will have an opportunity to make a statement if
they desire to do so, and will respond to appropriate questions.
AUDIT FEES. KPMG LLP billed the Company $36,300, in the aggregate,
for professional services rendered by them for the audit of the
Company's annual financial statements for the fiscal year ended
December 31, 2002, and the reviews of the interim financial statements
included in the Company's Form 10-Q's filed during the fiscal year
ended December 31, 2002. In 2002, Arthur Andersen LLP billed the
Company $25,500 for the 2001 audit.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. Neither
Arthur Andersen LLP nor KPMG LLP provided professional services to the
Company of the nature described in Paragraph (c)(4)(ii) of Rule 2-01
of Regulation S-X during the fiscal year ended December 31, 2002.
ALL OTHER FEES. Arthur Andersen LLP billed the Company $11,250, in
the aggregate, for all other services rendered by them (other than
those covered above under "Audit Fees" and "Financial Information
Systems Design and Implementation Fees") for the period of January 1
through July 24, 2002 during the fiscal year ended December 31, 2002.
KPMG LLP billed the Company $33,000, in the aggregate, for all other
services rendered by them (other than those covered above under "Audit
Fees" and "Financial Information Systems Design and Implementation
Fees") during the fiscal year ended December 31, 2002. The amounts
for all other services generally included fees for preparation of
Federal and State income tax returns and income tax consulting
services.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
directors and executive officers and persons who beneficially own more
than 10% of our common stock to file with the SEC and American Stock
Exchange initial reports of beneficial ownership and reports of
changes in beneficial ownership of the Company's common stock.
Directors, executive officers and beneficial owners of more than 10%
of our common stock are required by SEC rules to furnish the Company
with copies of all such reports. To the Company's knowledge, based
solely upon a review of the copies of such reports furnished to the
Company and written representations from directors and executive
officers that no other reports were required, the Company believes
that Section 16(a) filing requirements applicable to all directors and
executive officers were reported timely during the fiscal year ended
December 31, 2002.
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SHAREHOLDER PROPOSALS
Regulations of the Securities and Exchange Commission require that
proxy statements disclose the date by which shareholder proposals must
be received by the corporate secretary of the Company in order to be
included in the Company's proxy materials for the next annual meeting.
In accordance with these regulations, shareholders are hereby notified
that if they wish a proposal to be included in the Company's proxy
statement and form of proxy relating to the 2004 annual meeting, a
written copy of their proposal must be received at the principal
executive offices of the Company no later than November 14, 2003.
Proposals submitted outside the provisions of Rule 14a-8 will be
considered untimely if submitted after January 29, 2004. To ensure
prompt receipt by the Company, proposals should be sent certified
mail, return receipt requested. Proposals must comply with the proxy
rules relating to shareholder proposals in order to be included in the
Company's proxy materials.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 2002, accompanies this proxy statement. Additional
copies may be obtained by writing to the Company at Post Office Box
10809, Daytona Beach, Florida 32120-0809.
OTHER MATTERS
The Board of Directors of the Company does not intend to bring any
other matters before the meeting, and it does not know of any
proposals to be presented to the meeting by others. If any other
matters properly come before the meeting, however, the persons named
in the accompanying proxy will vote thereon in accordance with their
best judgment.
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