SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HUB GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it is
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
April 11, 2003
Dear Stockholder:
You are cordially invited to attend the 2003 Annual Meeting of
Stockholders of Hub Group, Inc. This meeting will be held in the Maple Room at
the DoubleTree Guest Suites, 2111 Butterfield Road, Downers Grove, Illinois at
10:00 a.m. Chicago time on Tuesday, May 13, 2003.
The attached Notice of 2003 Annual Meeting of Stockholders and Proxy
Statement describe the matters to be acted upon. The Annual Report to
Stockholders on Form 10-K is also enclosed.
We hope you will be able to attend the meeting. However, even if you
anticipate attending in person, we urge you to mark, sign, date, and return the
enclosed proxy card to ensure that your shares will be represented. If you
attend, you will, of course, be entitled to vote in person.
Sincerely,
PHILLIP C. YEAGER
Chairman
HUB GROUP, INC.
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Hub Group, Inc.:
The Annual Meeting of Stockholders of Hub Group, Inc., a Delaware
corporation (the "Company"), will be held in the Maple Room at the DoubleTree
Guest Suites, 2111 Butterfield Road, Downers Grove, Illinois on Tuesday, May 13,
2003, at 10:00 a.m., Chicago time, for the following purposes:
(1) To elect six directors of the Company to hold office until the next
annual meeting of stockholders; and
(2) To transact such other business as may properly be presented at the
Annual Meeting or any adjournment thereof.
A proxy statement with respect to the Annual Meeting accompanies and
forms a part of this Notice. The Company's Annual Report to Stockholders on Form
10-K also accompanies this Notice.
The Board of Directors has fixed the close of business on March 31,
2003, as the record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting.
By order of the Board of Directors,
DAVID C. ZEILSTRA
Vice President, Secretary and General Counsel
Downers Grove, Illinois
April 11, 2003
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING.
HUB GROUP, INC.
3050 HIGHLAND PARKWAY, SUITE 100
DOWNERS GROVE, ILLINOIS 60515
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Hub Group, Inc., a Delaware corporation ("Hub
Group" or the "Company"), of proxies for use at the 2003 Annual Meeting of
Stockholders of the Company to be held on Tuesday, May 13, 2003, and any
adjournment thereof (the "Annual Meeting"). This Proxy Statement and
accompanying form of proxy are first being sent to stockholders on or about
April 11, 2003.
The Company's Class A common stock, $.01 par value (the "Class A Common
Stock"), and the Class B common stock, $.01 par value (the "Class B Common
Stock," together with the Class A Common Stock, the "Common Stock"), are the
only issued and outstanding classes of stock. Only stockholders of record at the
close of business on March 31, 2003 (the "Record Date"), are entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, the Company had
7,046,250 shares of Class A Common Stock (each a "Class A Share") and 662,296
shares of Class B Common Stock (each a "Class B Share," and collectively with
the Class A Shares, the "Shares") outstanding and entitled to vote.
VOTING RIGHTS AND PROCEDURES
Shares represented by an effective proxy given by a stockholder will be
voted as directed by the stockholder. If a properly signed proxy form is
returned to the Company and one or more proposals are not marked, it will be
voted in accordance with the recommendation of the Board of Directors on all
such proposals. A stockholder giving a proxy may revoke it at any time prior to
the voting of the proxy by giving written notice to the Secretary of the
Company, by executing a later dated proxy or by attending the Annual Meeting and
voting in person.
Each Class A Share is entitled to one (1) vote and each Class B Share
is entitled to twenty (20) votes. The holders of Shares having a majority of the
votes which could be cast by the holders of all Shares, present in person or
represented by proxy, will constitute a quorum at the Annual Meeting.
Abstentions will be treated as Shares that are present and entitled to vote for
purposes of determining the presence of a quorum. If a broker indicates on the
proxy that it does not have discretionary authority as to certain Shares to vote
on a particular matter, those Shares will be considered as present and entitled
to vote for purposes of determining the presence of a quorum. As of March 28,
2003, the Yeager family members own all 662,296 shares of Class B Common Stock
and 789,400 shares of Class A Common Stock. Consequently, the Yeager family
controls approximately 69% of the voting power of the Company on all matters
presented for stockholder action. The Yeager family members are parties to a
stockholders' agreement, pursuant to which they have agreed to vote all of their
shares of Class B Common Stock in accordance with the vote of the holders of a
majority of such shares.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and such election
inspectors will determine whether or not a quorum is present.
The Board of Directors knows of no matters to be presented at the
Annual Meeting other than those set forth in the Notice of 2003 Annual Meeting
of Stockholders enclosed herewith. However, if any other matters do come before
the meeting, it is intended that the holders of the proxies will vote thereon in
their discretion. Any such other matter will require for its approval the
affirmative vote of the holders of Shares having a majority of the votes present
in person or represented by proxy at the Annual Meeting, provided a quorum is
present, or such greater vote as may be required under the Company's Certificate
of Incorporation, the Company's By-laws or applicable law. A list of
stockholders as of the record date will be available for inspection at the
Annual Meeting and for a period of ten days prior to the Annual Meeting at the
Company's offices in Downers Grove.
ELECTION OF DIRECTORS
The number of directors of the Company, as determined by the Board of
Directors under Article III of the Company's By-laws, is currently six. Each
director holds office until his or her successor is elected and qualified or
until his or her earlier death, resignation, retirement, disqualification or
removal.
The nominees for whom the enclosed proxy is intended to be voted are
set forth below. Each nominee for election as director currently serves as a
director of the Company. It is not contemplated that any of these nominees will
be unavailable for election, but if such a situation should arise, the proxy
will be voted in accordance with the best judgment of the proxyholder for such
person or persons as may be designated by the Board of Directors unless the
stockholder has directed otherwise.
Directors are elected by a plurality of the votes cast at the Annual
Meeting, provided a quorum is present. The outcome of the election is not
affected by abstentions or the withholding of authority to vote in the election,
or by broker non-votes. Stockholders are not allowed to cumulate their votes in
the election of directors.
If a stockholder desires to nominate persons for election as directors
at the next Annual Meeting of Stockholders written notice of such stockholder's
intent to make such a nomination must be given and received by the Secretary of
the Company at the principal executive offices of the Company either by personal
delivery or by United States mail no earlier than February 13, 2004 nor later
than March 14, 2004. Each notice must describe the nomination in sufficient
detail for the nomination to be summarized on the agenda for the meeting and
must set forth: (i) the name and address, as it appears on the books of the
Company, of the stockholder making the nomination, (ii) a representation that
the stockholder is a holder of record of stock in the Company entitled to vote
at the annual meeting of stockholders and intends to appear in person or by
proxy at the meeting to present the nomination, (iii) a statement of the class
and number of shares beneficially owned by the stockholder, (iv) the name and
address of any person to be nominated, (v) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, (vi) such other information
regarding such nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission (the "Commission"), and (vii) the consent of
such nominee to serve as a director of the Company if elected. The presiding
officer of the annual meeting of stockholders will, if the facts warrant, refuse
to acknowledge a nomination not made in compliance with the foregoing procedure,
and any such nomination not properly brought before the meeting will not be
considered.
-2-
NOMINEES FOR ELECTION AS DIRECTORS
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
Phillip C. Yeager 75 Phillip C. Yeager has been Chairman of the Board
since October 1985. From April 1971 to October
1985, Mr. Yeager served as President of Hub City
Terminals, Inc. ("Hub Chicago"). Mr. Yeager
became involved in intermodal transportation in 1959,
five years after the introduction of intermodal
transportation in the United States, as an employee
of the Pennsylvania and Pennsylvania Central
Railroads. He spent 19 years with the Pennsylvania
and Pennsylvania Central Railroads, 12 of which
involved intermodal transportation. In 1991,
Mr. Yeager was named the Man of the Year by the
Intermodal Transportation Association. In 1995, he
received the Salzburg Practitioners Award from
Syracuse University in recognition of his lifetime
achievements in the transportation industry. In
October 1996, Mr. Yeager was inducted into the
Chicago Area Entrepreneurship Hall of Fame sponsored
by the University of Illinois at Chicago. In March
1997, he received the Presidential Medal from Dowling
College for his achievements in transportation
services. In September 1998 he received the Silver
Kingpin award from the Intermodal Association
of North America and in February 1999 he was named
Transportation Person of the Year by the New York
Traffic Club. Mr. Yeager graduated from the
University of Cincinnati in 1951 with a Bachelor of
Arts degree in Economics. Mr. Yeager is the father
of David P. Yeager, Vice Chairman and Chief Executive
Officer and Mark A. Yeager, President - Field
Operations.
David P. Yeager 50 David P. Yeager has served as the Company's Vice
Chairman of the Board since January 1992 and as Chief
Executive Officer of the Company since March 1995.
From October 1985 through December 1991, Mr. Yeager
was President of Hub Chicago. From 1983 to October
1985, he served as Vice President, Marketing of Hub
Chicago. Mr. Yeager founded the St. Louis Hub in 1980
and served as its President from 1980 to 1983.
Mr. Yeager founded the Pittsburgh Hub in 1975 and
served as its President from 1975 to 1977. Mr. Yeager
received a Masters in Business Administration degree
from the University of Chicago in 1987 and a Bachelor
of Arts degree from the University of Dayton in 1975.
Mr. Yeager is the son of Phillip C. Yeager and the
brother of Mark A. Yeager.
Thomas L. Hardin 57 Thomas L. Hardin has served as the Company's
President since October 1985 and has served as Chief
Operating Officer and a director of the Company since
March 1995. From January 1980 to September 1985,
Mr. Hardin was Vice President-Operations and from
June 1972 to December 1979, he was General Manager of
the Company. Prior to joining the Company, Mr. Hardin
worked for the Missouri Pacific Railroad where he
held various marketing and pricing positions.
Mr. Hardin is the former Chairman of the Intermodal
Association of North America.
-3-
Gary D. Eppen 66 Gary D. Eppen has served as a director of the Company
since February 1996. Currently retired, Mr. Eppen is
formerly the Ralph and Dorothy Keller Distinguished
Service Professor of Operations Management and Deputy
Dean for part-time programs in the Graduate School of
Business at The University of Chicago. He received
a Ph.D. in Operations Research from Cornell
University in 1964, a Master of Science in Industrial
Engineering from the University of Minnesota in 1960,
a Bachelor of Science from the University of
Minnesota in 1959 and an Associate in Arts degree in
Pre-Engineering from Austin Junior College in 1956.
Mr. Eppen also serves as a director of Landauer, Inc.
Charles R. Reaves 64 Charles R. Reaves has served as a director of the
Company since February 1996. Since 1994, Mr. Reaves
has been President and Chief Executive Officer of
Reaves Enterprises, Inc., a real estate development
company. From April 1962 until November 1994,
Mr. Reaves worked for Sears Roebuck & Company in
various positions, most recently as President and
Chief Executive Officer of Sears Logistics Services,
Inc., a transportation, distribution and home
delivery subsidiary of Sears Roebuck & Company.
Mr. Reaves received a Bachelor of Science degree in
Business Administration from Arkansas State
University in 1961.
Martin P. Slark 48 Martin P. Slark has served as a director of the
Company since February 1996. Since 1976, Mr. Slark
has been employed by Molex Incorporated ("Molex"), a
manufacturer of electronic, electrical and fiber
optic interconnection products and systems. Having
worked for Molex in Europe, the United States and
Asia, Mr. Slark is presently a Director and President
and Chief Operating Officer of Molex. Mr. Slark is a
fellow of the British Institute of Management and
received a Masters in Business Administration degree
from the London Business School in 1993, a
Post-Graduate Diploma in Management Studies from
Portmouth University and a Bachelors of Science
degree in Engineering from Reading University
in 1977.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has both an Audit Committee and a Compensation
Committee. The Board of Directors does not have a Nominating Committee. During
the fiscal year ended December 31, 2002, the full Board of Directors met 15
times, the Audit Committee met six times and the Compensation Committee met
three times. During 2002, all directors except Mr. Hardin attended at least 75%
of the meetings of the Board of Directors and the committees thereof on which
they served. Mr. Hardin attended 11 of the 15, or 73%, of the full Board of
Director meetings.
The duties of the Audit Committee are to oversee the Company's internal
control structure; review the Company's financial statements and other financial
information to be included in the Company's 10-K and annual report to
stockholders; select the independent auditors for the Company and its
subsidiaries; and review the Company's annual audit plan. The members of the
Audit Committee are Messrs. Eppen, Reaves and Slark.
The duties of the Compensation Committee are to determine the
compensation of the Company's Chief Executive Officer and to make
recommendations to the Board of Directors concerning the salaries of the
Company's other officers; to exercise the authority of the Board of Directors
concerning the Company's 1996 Long-Term Incentive Plan, 1997 Long-Term Incentive
Plan, 1999 Long-Term Incentive Plan and 2002 Long-Term Incentive Plan; and to
advise the Board of Directors on other compensation and benefit matters. The
members of the Compensation Committee are Messrs. Eppen, Reaves and Slark.
-4-
OWNERSHIP OF THE CAPITAL STOCK OF THE COMPANY
The following table sets forth information with respect to the number
of shares of Class A Common Stock and Class B Common Stock beneficially owned by
(i) each director of the Company, (ii) the executive officers of the Company
named in the table under "Compensation of Directors and Executive
Officers--Summary Compensation Table," (iii) all directors and executive
officers of the Company as a group, and (iv) based on information available to
the Company and a review of statements filed with the Commission pursuant to
Section 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), each person that owns beneficially (directly or together with
affiliates) more than 5% of the Class A Common Stock or Class B Common Stock, in
each case as of March 28, 2003, except as otherwise noted. The Company believes
that each individual or entity named has sole investment and voting power with
respect to shares of the Class A Common Stock or Class B Common Stock indicated
as beneficially owned by them, except as otherwise noted.
NUMBER (1)
----------------------------
NAME CLASS A CLASS B PERCENTAGE(2)
---------------------------------------------------------------------- ------------ --------------- ---------------
Phillip C. Yeager(3)(4)(5)........................................ 136,825 662,296 10.3%
David P. Yeager(3)(6)............................................. 318,975 662,296 12.7%
Thomas L. Hardin(7)............................................... 60,000 -- *
Dennis R. Polsen(8)............................................... 9,053 -- *
Richard M. Rogan(9)............................................... 23,000 -- *
Mark A. Yeager(3)(10)(11)......................................... 386,275 662,296 13.6%
Gary D. Eppen(12)................................................. 25,000 -- *
Charles R. Reaves(12)............................................. 24,000 -- *
Martin P. Slark(13)............................................... 24,000 -- *
All directors and executive officers as a group (11 persons)(14) . 1,015,719 662,296 21.0%
Debra A. Jensen(3)(15)............................................ 119,425 662,296 10.1%
T. Rowe Price Associates, Inc. (16)............................... 655,945 -- 8.5%
Tweedy, Browne Company LLC (17)................................... 667,533 -- 8.7%
Dimensional Fund Advisors, Inc.(18).......... ..................... 463,100 -- 6.0%
Wellington Management Company, LLP (19)........................... 546,600 -- 7.1%
Liberty Wanger Asset Management, L.P./ WAM Acquisition
GP, Inc./ Liberty Acorn Trust (20).............................. 1,503,300 -- 19.5%
--------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options,
warrants, rights, or conversion privileges exercisable within 60 days
are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but not deemed outstanding for the
purpose of calculating the percentage owned by each other person
listed.
(2) Represents percentage of total number of outstanding shares of Class A
Common Stock and Class B Common Stock.
(3) The Yeager family members are parties to a stockholders' agreement (the
"Yeager Family Stockholder Agreement"), pursuant to which they have
agreed to vote all of their shares of Class B Common Stock in
accordance with the vote of the holders of a majority of such shares.
Except as provided in footnotes 5 and 9, each of the Yeager family
members disclaims beneficial ownership of the shares of Class B Common
Stock held by the other Yeager family members. The Class B Common Stock
represents approximately 65% of the total votes allocable to the Common
Stock. Members of the Yeager family own all of the Class B Common
Stock.
-5-
(4) Includes 563,934 shares of Class B Common Stock as to which Phillip C.
Yeager may be deemed to have shared voting discretion pursuant to the
Yeager Family Stockholder Agreement. See Note 3. Also includes 55,000
shares of Class A Common Stock issuable upon exercise of options.
(5) Does not include 47,600 shares of Class A Common Stock owned by DDM LP,
in which Phillip C. Yeager has a limited partnership interest. Mr.
Yeager disclaims beneficial ownership of the shares of Class A Common
Stock held by this partnership.
(6) Includes 46,794 shares of Class B Common Stock owned by the Laura C.
Yeager 1994 GST Trust, 46,794 shares of Class B Common Stock owned by
the Matthew D. Yeager 1994 GST Trust and 46,794 shares of Class B
Common Stock owned by the Phillip D. Yeager 1994 GST Trust, for which
David P. Yeager serves as sole trustee and has sole investment and
voting discretion and 419,127 shares of Class B Common Stock as to
which David P. Yeager may be deemed to have shared voting discretion
pursuant to the Yeager Family Stockholder Agreement. See Note 3. Also
includes 40,000 shares of Class A Common Stock issuable upon exercise
of options.
(7) Includes 40,000 shares of Class A Common Stock issuable upon exercise
of options.
(8) Includes 6,000 shares of Class A Common Stock issuable upon exercise
of options.
(9) Includes 23,000 shares of Class A Common Stock issuable upon exercise
of options.
(10) Includes 43,758 shares of Class A Common Stock and 36,794 shares of
Class B Common Stock owned by the Alexander B. Yeager 1994 GST Trust
and 43,758 shares of Class A Common Stock and 36,794 shares of Class B
Common Stock owned by the Samantha N. Yeager 1994 GST Trust, for which
Mark A. Yeager serves as sole trustee and has sole investment and
voting discretion and 501,914 shares of Class B Common Stock as to
which Mark A. Yeager may be deemed to have shared voting discretion
pursuant to the Yeager Family Stockholder Agreement. See Note 3. Also
includes 29,500 shares of Class A Common Stock issuable upon exercise
of options.
(11) Includes 47,600 shares of Class A Common Stock owned by DDM LP, as to
which Mark A. Yeager and Debra Jensen may be deemed to share investment
and voting discretion. Mr. Yeager and Ms. Jensen each disclaim
beneficial ownership of 47,552 shares of the Class A Common Stock held
by this partnership.
(12) Includes 24,000 shares of Class A Common Stock issuable upon exercise
of options.
(13) Includes 20,000 shares of Class A Common Stock issuable upon exercise
of options.
(14) Includes 276,000 shares of Class A Common Stock issuable upon exercise
of options.
(15) Includes 25,000 shares of Class B Common Stock owned by the Elizabeth
A. Jensen 1994 GST Trust and 25,000 shares of Class B Common Stock
owned by the Patrick R. Jensen 1994 GST Trust and 501,913 shares of
Class B Common Stock as to which Debra Jensen may be deemed to have
shared voting discretion pursuant to the Yeager Family Stockholder
Agreement. See Note 3. Includes 47,600 shares of Class A Common Stock
owned by DDM LP, as to which Mark A. Yeager and Debra Jensen may be
deemed to share investment and voting discretion. Mr. Yeager and Ms.
Jensen each disclaim beneficial ownership of 47,552 shares of the Class
A Common Stock held by this partnership. Debra Jensen is the daughter
of Phillip C. Yeager.
(16) T. Rowe Price Associates, Inc. ("Price") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, Price has sole dispositive power
with respect to all 655,945 shares of Class A Common Stock beneficially
owned and sole voting power with respect to 249,845 shares of Class A
Common Stock beneficially owned. These securities are owned by various
individual and institutional investors which Price serves as investment
advisor with power to direct investments and/or sole power to vote the
securities. For purposes of the Exchange Act, Price is deemed the
beneficial owner of such securities; however, Price expressly disclaims
that it is, in fact, the beneficial owner of such securities. The
number of shares beneficially owned by Price is indicated as of
February 14, 2003. The address of Price is 100 E. Pratt Street,
Baltimore, MD 21202.
(17) Tweedy, Browne Company LLC ("TBC") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, TBC has sole dispositive power
with respect to all 667,533 shares of Class A Common Stock beneficially
owned and sole voting power with respect to 656,088 shares of Class A
Common Stock beneficially owned. The number of shares beneficially
owned by TBC is indicated as of January 23, 2003. The address of TBC is
350 Park Avenue, New York, NY 10022.
-6-
(18) Dimensional Fund Advisors, Inc. ("Dimensional") filed a Schedule 13G
with the Commission indicating beneficial ownership of shares of Class
A Common Stock. According to the Schedule 13G, Dimensional has sole
dispositive power and sole voting power with respect to all 463,100
shares of Class A Common Stock beneficially owned. The number of shares
beneficially owned by Dimensional is indicated as of February 3, 2003.
The address of Dimensional is 1299 Ocean Avenue, 11th Floor, Santa
Monica, CA 90401.
(19) Wellington Management Company, LLP ("Wellington") filed a Schedule 13G
with the Commission indicating beneficial ownership of shares of Class
A Common Stock. Wellington has shared voting power with respect to
476,600 shares of Class A Common Stock beneficially owned and shared
dispositive power with respect to 546,600 shares of Class A Common
Stock beneficially owned. The number of shares beneficially owned by
Wellington is indicated as of February 14, 2003. The address of
Wellington is 75 State Street, Boston, MA 02109.
(20) Liberty Wanger Asset Management, L.P., WAM Acquisition GP, Inc.
(collectively "Wanger") and Liberty Acorn Trust ("Acorn") filed a
Schedule 13G with the Commission indicating beneficial ownership of
shares of Class A Common Stock. According to the Schedule 13G, Wanger
has shared dispositive power and shared voting power with respect to
all 1,503,300 shares of Class A Common Stock beneficially owned. Acorn
has shared voting and dispositive power with respect to 1,105,000
shares of Class A Common Stock beneficially owned. The number of shares
beneficially owned by Wanger and Acorn are indicated as of February 12,
2003. The address of Wanger and Acorn is 227 West Monroe Street, Suite
3000, Chicago, IL 60606.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors, and greater than
ten-percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the Company's 2002 fiscal year all applicable
Section 16(a) filing requirements were complied with by the officers, directors,
and greater than ten-percent beneficial owners.
-7-
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term and
other compensation for services rendered to the Company for the fiscal years
ended December 31, 2000, December 31, 2001 and December 31, 2002 paid or awarded
to those persons who were, at December 31, 2002: (i) the Company's chief
executive officer, and (ii) the Company's four most highly compensated executive
officers other than the chief executive officer (collectively, together with the
Company's chief executive officer, the "Named Executive Officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------- ------------
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND SALARY BONUS COMPENSATION SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------------- ---- ---------- ------- ------------ ----------- ------------
David P. Yeager 2002 485,000(1) -- 20,122(4) 50,000 5,090(5)
Vice Chairman and 2001 539,123 -- 13,726(4) -- 5,184(5)
Chief Executive Officer 2000 463,068 -- 9,266(4) -- 5,322(5)
Thomas L. Hardin 2002 296,000(2) -- 30,799(4) 46,000 5,090(5)
President and 2001 316,418 100,000 22,939(4) -- 5,184(5)
Chief Operating Officer 2000 301,350 170,625 17,747(4) -- 5,322(5)
Mark A. Yeager 2002 253,418(3) -- 16,337(4) 46,000 5,090(5)
President-Field Operations 2001 242,550 100,000 11,355(4) -- 5,184(5)
2000 231,000 126,000 8,428(4) -- 5,322(5)
Dennis R. Polsen 2002 200,000 50,000 1,759(4) 29,000 5,090(5)
Vice President and 2001 183,588 70,000 569(4) -- 84(6)
Chief Information Officer 2000 125,654 59,650 -- 15,000 47,977(7)
Richard M. Rogan 2002 252,200 -- 3,607(4) 37,000 5,090(5)
Executive Vice President 2001 242,500 60,000 2,044(4) -- 5,184(5)
Marketing 2000 231,000 85,200 989(4) -- 5,322(5)
(1) Represents a decrease of $54,123 from the amount that Mr. Yeager would
have otherwise received in order to enable the Company to lease certain
assets, which Mr. Yeager used for personal purposes from time to time
in 2002.
(2) Represents a decrease of $33,074 from the amount that Mr. Hardin would
have otherwise received in order to enable the Company to lease certain
assets, which Mr. Hardin used for personal purposes from time to time
in 2002.
(3) Represents a decrease of $42,000 from the amount that Mr. Yeager would
have otherwise received in order to enable the Company to lease certain
assets, which Mr. Yeager used for personal purposes from time to time
in 2002.
(4) Represents above market earnings on deferred compensation.
(5) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $5,010 in 2002, $5,100 in 2001 and
$5,200 in 2000, and represents the value of insurance premiums paid by
the Company with respect to term life insurance for the benefit of each
Named Executive Officer equal to $80 during 2002, $84 during 2001 and
$122 during 2000.
(6) Represents the value of insurance premiums paid by the Company with
respect to term life insurance for the benefit of Mr. Polsen equal to
$84 during 2001
(7) Represents $47,921 paid by the Company on behalf of Mr. Polsen for
expenses incurred in connection with relocating Mr. Polsen to Chicago,
including moving expenses and closing costs on the sale of his primary
residence and $56 worth of insurance premiums paid by the Company with
respect to term life insurance for the benefit of Mr. Polsen during
2000.
-8-
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table summarizes the grants of stock options awarded to
the Named Executive Officers during the fiscal year ended December 31, 2002,
under the Company's 2002 Long-Term Incentive Plan.
INDIVIDUAL GRANTS
-------------------------
# OF SECURITIES POTENTIAL REALIZABLE VALUE
UNDERLYING %OF AT ASSUMED ANNUAL RATES
OPTIONS/ TOTAL OF STOCK PRICE APPRECIATION
SARS OPTIONS/ FOR OPTION TERM (3)
GRANTED SARS EXERCISE EXPIRATION ---------------------------
NAME (#) GRANTED PRICE ($/SH)(1) DATE (2) 5%($) 10%($)
------------------------ -------------- --------- ---------------- ------------ ---------- ----------
David P. Yeager......... 50,000 9.3% 5.20 12/16/12 163,513 414,373
Thomas L. Hardin........ 46,000 8.6% 5.20 12/16/12 150,432 381,223
Mark A. Yeager.......... 46,000 8.6% 5.20 12/16/12 150,432 381,223
Dennis R. Polsen........ 29,000 5.4% 5.20 12/16/12 94,837 240,336
Richard M. Rogan........ 37,000 6.9% 5.20 12/16/12 120,999 306,636
-------------------------
(1) The exercise price equals the closing stock price on December 16, 2002.
(2) The options were granted on December 16, 2002 and vest ratably over a
three-year period, expiring ten years after their grant date.
(3) The potential realizable dollar value of a grant is the product of: (a) the
difference between (i) the product of the per-share market price at the
time of the grant and the sum of 1 plus the stock appreciation rate
compounded annually over the term of the option (here, 5% and 10%), and
(ii) the per-share exercise price of the option, and (b) the number of
securities underlying the grant at fiscal year-end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information concerning options exercised by
the Named Executive Officers during the fiscal year ended December 31, 2002, and
the value at December 31, 2002, of unexercised options.
NUMBER OF SHARES OF
CLASS A COMMON STOCK VALUE ($) OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-
SHARES OPTIONS AT MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 2002 DECEMBER 31, 2002
ON ----------------------- ---------------------
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
--------------------------------- ---------- ------------ ----------------------- -------------------
David P. Yeager.................. 0 0 39,000/51,000 0/0
Thomas L. Hardin................. 0 0 39,000/47,000 0/0
Mark A. Yeager................... 0 0 29,500/49,000 0/0
Dennis R. Polsen ................ 0 0 6,000/38,000 0/0
Richard M. Rogan................. 0 0 22,000/40,000 0/0
-9-
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company received $24,000 for
serving as a director during 2002 and will receive $35,000 for serving as a
director during 2003. Directors who are employees of the Company do not receive
additional compensation for such services. Both employee and non-employee
directors are reimbursed for their travel and other expenses incurred in
connection with attending meetings of the Board of Directors or committees
thereof. In addition, simultaneously with the closing of the initial public
offering (the "Offering") of the Company, Messrs. Eppen, Reaves and Slark each
received options to purchase 12,000 shares of Class A Common Stock exercisable
at $14.00 per share. All of these options have now vested for each director. On
December 10, 1999, Messrs. Eppen, Reaves and Slark each received additional
options to purchase 12,000 shares of Class A Common Stock exercisable at $18.75
per share. All of these options have now vested for each director. On December
10, 2002, Messrs. Eppen, Reaves and Slark each received additional options to
purchase 12,000 shares of Class A Common Stock exercisable at $5.66 per share.
These options vest ratably over a three-year period.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee approves the policies under which
compensation is paid or awarded to the Company's executive officers. The
Compensation Committee consists of the three independent members of the Board.
In September 2001, the Board of Directors commissioned a third party to
conduct a study of the Company's compensation program. This study included a
survey of compensation practices in the transportation industry using a broad
sample of companies within the industry. This independent study was used as the
benchmark to determine competitive compensation ranges for senior executives.
The Compensation Committee implemented certain recommendations from the
independent study and, using this study, determined the compensation structure
for 2002. The Compensation Committee intends to have a third party periodically
conduct an independent study of compensation practices in the transportation
industry to update the Company's benchmark of competitive compensation ranges
for senior executives.
The 2002 Compensation structure approved by the Compensation Committee
was based on the following philosophy:
COMPENSATION PHILOSOPHY
The Company's compensation philosophy is designed to link executive
performance to long-term stockholder value, connect pay with individual
performance, maintain a compensation system that is competitive with the
industry standards and attract and retain outstanding executives.
DESCRIPTION OF COMPENSATION PROGRAMS
The Company's executive compensation program has three components--base
salary, annual incentives, and long-term incentives. Base salary and annual
incentives are primarily designed to reward current and past performance.
Long-term incentives are primarily designed to provide strong incentives for
long-term future Company growth.
BASE SALARY To attract and retain qualified executives, base salary is
determined using competitive criteria within the transportation industry. Salary
increases are based on individual performance and, to a lesser extent, trends
within the industry.
ANNUAL INCENTIVE The Company's bonus plan recognizes and rewards
executives for taking actions that build the value of the Company, generate
competitive total returns for stockholders, and provide value-added solutions
for the Company's customers. For most executive officers, bonus compensation is
based on individual performance and Company performance. The component of the
bonus based on individual performance is conditioned on the individual meeting
certain pre-determined objectives and the component of the bonus based on
Company performance is based on the Company meeting certain performance goals.
-10-
LONG-TERM INCENTIVES The Company's Long-Term Incentive Program serves to
reward executive performance that successfully executes the Company's long-term
business strategy and builds stockholder value. The program allows for the
awarding of options and stock appreciation rights, restricted stock and
performance units.
SECTION 162(M) COMPENSATION COMMITTEE REPORT DISCLOSURE
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the Company's deduction for compensation paid to the executive
officers named in the Summary Compensation Table to $1 million unless certain
requirements are met. The policy of the Committee with respect to section 162(m)
is to establish and maintain a compensation program which will optimize the
deductibility of compensation. In that regard, no executive officer received
compensation in excess of $1 million during fiscal year 2002. The Committee,
however, reserves the right to use its judgment, where merited by the
Committee's need to respond to changing business conditions or by an executive
officer's individual performance, to authorize compensation which may not, in a
specific case, be fully deductible to the Company.
COMPENSATION ADMINISTRATION
The Compensation Committee will follow an annual cycle to administer
each of the three components of executive compensation. The independent study of
competitive compensation practices within the transportation industry will
continue to be used as the benchmark to determine competitive compensation
ranges for senior executives. Individual performance and contribution to the
achievement of strategic objectives will be considered in the determination of
annual compensation for each executive. The integrity of the Company's
compensation program relies on an annual performance evaluation process.
DISCUSSION OF CEO COMPENSATION
Consistent with the Company's compensation philosophy, the Compensation
Committee approved Mr. David P. Yeager's total compensation during fiscal year
2002. Mr. Yeager's base salary was based on overall performance of the Company,
on relative levels of compensation for CEOs within the benchmark companies in
the transportation industry and on individual performance related to strategic
objectives. Mr. Yeager's incentive compensation was based on achievement of
goals relating to the Company's earnings per share target.
For 2001, the Compensation Committee approved a package allowing Mr.
Yeager to potentially earn $952,561, or five percent more than 2000, with
$539,123 in the form of salary and $413,438 in the form of bonus if the Company
met its goals for the year. For 2002, the Compensation Committee approved a
package allowing Mr. Yeager to potentially earn $970,000, with $485,000 in the
form of salary and $485,000 in the form of bonus if the Company met its goals
for the year. Mr. Yeager's 2002 salary represents a decrease of $54,123 from the
amount that he would have otherwise received in order to enable the Company to
lease certain assets, which Mr. Yeager used for personal purposes from time to
time in 2002.
Mr. Yeager was paid his salary of $485,000 during 2002 but received no
bonus because the Company did not meet its earnings per share goal.
COMPENSATION COMMITTEE,
Gary D. Eppen
Charles R. Reaves
Martin P. Slark
-11-
AUDIT COMMITTEE REPORT
Each member of the Audit Committee is independent of the Company and its
management, as required of audit committee members by the National Association
of Securities Dealers listing standards. In June 2000, the Audit Committee
adopted and the Board approved a written charter. The charter specifies the
scope of the Audit Committee's responsibilities and how it carriers out those
responsibilities.
The Audit Committee has reviewed and discussed the Company's quarterly
and annual audited financial statements with management and with Ernst & Young,
LLP, the Company's independent public accountants. The Company has also
discussed with Ernst & Young LLP the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as
amended, by the Auditing Standards Board of the American Institute of Certified
Public Accountants. The Audit Committee has also received from Ernst & Young LLP
the written disclosures required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, by the Independence Standards
Board, regarding their independence. The Audit Committee has discussed with
Ernst & Young LLP their independence and considered whether the provision of
non-audit services referred to under "Independent Public Accountants" on page 14
is compatible with maintaining their independence. Based on the review and
discussions referred to above, the Audit Committee recommended to the Board of
Directors that the December 31, 2002 audited financial statements be included in
the Company's Annual Report on Form 10-K for 2002.
AUDIT COMMITTEE
Gary D. Eppen
Charles R. Reaves
Martin P. Slark
-12-
PERFORMANCE GRAPH
The following line graph compares the Company's cumulative total
stockholder return on its Class A Common Stock since March 13, 1996, the date
that the Class A Common Stock began trading, with the cumulative total return of
the Nasdaq Stock Market Index and the Nasdaq Trucking and Transportation Index.
These comparisons assume the investment of $100 on March 13,1996 in each index
and in the Company's Class A Common Stock and the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
3/13/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
------- -------- -------- -------- -------- -------- -------- --------
Hub Group, Inc. 100 191 212 138 142 64 75 34
Nasdaq Stock Market 100 119 146 206 382 230 182 126
Nasdaq Trucking & Transp. 100 103 132 119 114 103 122 125
-13-
CERTAIN TRANSACTIONS
Mr. David P. Yeager was the owner of 20% of the Class A membership
interest of SmartOffices Services, LLC ("SmartOffices") until March 2003.
SmartOffices is in the business of selling office supplies to various companies.
The Company spent $290,400 buying various office supplies from SmartOffices in
2002.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP as the
independent accountant of the Company. Representatives of Ernst & Young LLP will
be present at the Annual Meeting and will be given the opportunity to make a
statement if they desire to do so. They will also be available to respond to
appropriate questions.
AUDIT FEES
Fees billed to the Company by Ernst & Young LLP for the most recent
fiscal year for professional services rendered for the audit of the Company's
annual financial statements and the review of the financial statements including
in its quarterly reports were $395,600.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed to the Company by Ernst & Young LLP for the
most recent fiscal year for professional services rendered for financial
information systems design and implementation.
ALL OTHER FEES
All other fees billed to the Company by Ernst & Young LLP for the most
recent fiscal year for professional services rendered were $80,750, including
audit related services of $73,250. Audit related services include consultations
for accounting and financial reporting matters. Non-audit service fees of $7,500
relate to tax consultation for the Company. See "Audit Committee Report" for a
discussion of consideration of these fees by the Audit Committee.
CHANGE OF INDEPENDENT ACCOUNTANTS IN 2002
As previously reported, on May 6, 2002, the Company decided to dismiss
its independent auditors, Arthur Andersen LLP ("Arthur Andersen"), and to engage
Ernst & Young LLP to serve as its new independent auditors for 2002. The change
in auditors became effective May 13, 2002. This determination was made by the
Company's Audit Committee upon the recommendation of the Company's management.
Arthur Andersen's reports on the Company's consolidated financial
statements for each of the years ended December 31, 2001 and December 31, 2000
did not contain an adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During the years ended December 31, 2001 and 2000 and the interim
period between December 31, 2001 and May 13, 2002, there were no disagreements
between the Company and Arthur Andersen on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure
which, if not resolved to Arthur Andersen's satisfaction, would have caused them
to make reference to the subject matter of the disagreement in connection with
their report on such years.
In January 2002, the Company learned that its 65% owned subsidiary, Hub
Group Distribution Services ("HGDS"), was having difficulties reconciling its
general ledger balances for several accounts, including cash, accounts payable
and accounts receivable. HGDS is now a wholly owned subsidiary of the Company.
-14-
Following an investigation into these problems, the Company determined
that HGDS' balance sheets were incorrect in each of 1999, 2000 and 2001. Because
HGDS' results were incorporated into the Company's consolidated financial
statements, these inaccuracies resulted in the Company's net income being
overstated. After completely recreating the financial statements for HGDS for
1999, 2000 and 2001, the Company determined that the Company's 1999 financial
results were overstated by $1.4 million and its 2000 financial results were
overstated by $1.9 million on an after-tax, post-minority interest basis, which
the Company reflected by restating the financial results for those years.
Additional adjustments were necessary to properly reflect the results of 2001,
but since the Company had not yet finalized its results for 2001, the Company
did not need to restate its 2001 results. Due to time constraints and cost, the
Company did not restate its results on a quarterly basis, therefore the
adjustments to properly reflect the Company's results were made in the fourth
quarter of each of 1999, 2000 and 2001.
In the early stages of the investigation, Arthur Andersen notified the
Company's Audit Committee that there was a material weakness with the internal
controls at HGDS. Arthur Andersen also advised the Company that previously
issued financial results for the years 1999, 2000 and 2001 and previously issued
audit reports for 1999 and 2000 should not be relied upon. Following the
Company's restatement of its financial statements for those years, the financial
statements were audited by Arthur Andersen. At the conclusion of its audit,
Arthur Andersen issued unqualified opinions on the Company's restated financial
results for the years 1999, 2000, and 2001. Arthur Andersen was unable to review
the quarterly financial data from 2001 and 2000 in accordance with standards
established by the American Institute of Certified Public Accountants because
the Company did not restate its results on a quarterly basis. The Company
announced the restated results for 1999 and 2000 and its results for 2001 in a
press release on March 19, 2002.
In addition to the work resulting in the restatement of its 1999 and
2000 financial statements, the Company, with the assistance of outside counsel,
conducted an investigation into the cause of the accounting problems at HGDS.
The Company has concluded that the accounting problems at HGDS resulted from
several factors, including (1) systems problems associated with HGDS'
implementation of multiple financial accounting and operating systems; (2) the
rapid growth of HGDS' business beginning in late 1998; (3) weaknesses in
internal controls at HGDS; and (4) inadequate oversight by the HGDS management.
The Company has taken numerous steps to address these problems to ensure that
similar accounting problems will not arise in the future.
During the years ended December 31, 2001 and 2000 and through May 13,
2002, neither the Company nor anyone acting on its behalf consulted Ernst and
Young LLP with respect to 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 Company's consolidated financials
statements, or any other matters or reportable events listed in Items
304(a)(2)(i) and (ii) of Regulation S-K.
PROXY SOLICITATION EXPENSE
The expense of any proxy solicitation will be paid by the Company. In
addition to the solicitation of proxies by use of the mails, solicitation also
may be made by telephone, telegraph or personal interview by directors,
officers, and regular employees of the Company, none of whom will receive
additional compensation for any such solicitation. The Company will, upon
request, reimburse brokers, banks, and similar organizations for out-of-pocket
and reasonable clerical expenses incurred in forwarding proxy material to their
principals.
-15-
STOCKHOLDER PROPOSALS
Proposals of stockholders must be received in writing by the Secretary
of the Company at the principal executive offices of the Company no later than
December 12, 2003, in order to be considered for inclusion in the Company's
proxy statement and form of proxy relating to the next annual meeting of
stockholders.
The Company anticipates that its next annual meeting of stockholders
will be held in May 2004. If a stockholder desires to submit a proposal for
consideration at the next annual meeting of stockholders, written notice of such
stockholder's intent to make such a proposal must be given and received by the
Secretary of the Company at the principal executive offices of the Company
either by personal delivery or by United States mail no earlier than February
13, 2004 nor later than March 14, 2004. Each notice must describe the proposal
in sufficient detail for the proposal to be summarized on the agenda for the
annual meeting of stockholders and must set forth: (i) the name and address, as
it appears on the books of the Company, of the stockholder who intends to make
the proposal; (ii) a representation that the stockholder is a holder of record
of stock of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at such meeting to present such proposal; and (iii) the
class and number of shares of the Company which are beneficially owned by the
stockholder. In addition, the notice must set forth the reasons for conducting
such proposed business at the annual meeting of stockholders and any material
interest of the stockholder in such business. The presiding officer of the
annual meeting of stockholders will, if the facts warrant, refuse to acknowledge
a proposal not made in compliance with the foregoing procedure, and any such
proposal not properly brought before the annual meeting of stockholders will not
be considered.
By order of the Board of Directors,
DAVID C. ZEILSTRA
Vice President, Secretary and General Counsel
Downers Grove, Illinois
April 11, 2003
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO BE PRESENT IN PERSON AT
THE ANNUAL MEETING, IS REQUESTED TO MARK, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. A STOCKHOLDER MAY
REVOKE HIS OR HER PROXY AT ANY TIME PRIOR TO VOTING.
-16-