The Adams Express Company
Seven St. Paul Street
Baltimore, Maryland 21202
----------------
NOTICE OF ANNUAL MEETING
February 16, 2001
To the Stockholders of
THE ADAMS EXPRESS COMPANY:
Notice is hereby given that the Annual Meeting of Stockholders of THE
ADAMS EXPRESS COMPANY, a Maryland corporation (the "Company"), will be held at
the Radisson Hotel at Cross Keys, 5100 Falls Road, Baltimore, Maryland, on
Tuesday, March 27, 2001, at 11:00 a.m., for the following purposes:
(a) to elect directors as identified in the Proxy Statement for the
ensuing year;
(b) to consider and vote upon the ratification of the selection of
PricewaterhouseCoopers LLP as the firm of independent accountants to audit
the books and accounts of the Company for or during the year ending
December 31, 2001; and
(c) to transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record, as shown by the transfer books of the Company, at
the close of business on February 16, 2001, are entitled to notice of and to
vote at this meeting.
By order of the Board of Directors,
LAWRENCE L. HOOPER, JR.
Vice President, Secretary and General Counsel
Baltimore, MD
Note: Stockholders who do not expect to attend the meeting are requested
to fill in, sign, date and return the accompanying proxy in the enclosed
envelope without delay.
The Adams Express Company
Seven St. Paul Street
Baltimore, Maryland 21202
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Proxy Statement
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The Annual Meeting of Stockholders of The Adams Express Company, a
Maryland corporation (the "Company"), will be held Tuesday, March 27, 2001, for
the purposes set forth in the accompanying Notice of Annual Meeting. This
statement is furnished in connection with the solicitation by the Board of
Directors of proxies to be used at such meeting and at any and all adjournments
thereof and is first being sent to stockholders on or about February 23, 2001.
At the Annual Meeting, action is to be taken on (a) the election of a
Board of Directors; (b) the ratification of the selection of independent
accountants; and (c) the transaction of such other business as may properly
come before the meeting.
Except for Proposals (a) and (b) referred to above, the proxies confer
discretionary authority on the persons named therein or their substitutes with
respect to any business that may properly come before the meeting. Stockholders
retain the right to revoke executed proxies at any time before they are voted
by written notice to the Company, by executing a later dated proxy, or by
appearing and voting at the meeting. All shares represented at the meeting by
proxies in the accompanying form will be voted, provided that such proxies are
properly signed. In cases where a choice is indicated, the shares represented
will be voted in accordance with the specifications so made. In cases where no
specifications are made, the shares represented will be voted for the election
of directors and for Proposal (b) referred to above. Under Maryland law, there
are no appraisal or other dissenter rights with respect to any matter to be
voted on at the Annual Meeting that is described herein.
The Company will pay all costs of soliciting proxies in the accompanying
form. See "Other Matters" below. Solicitation will be made by mail, and
officers, regular employees, and agents of the Company may also solicit proxies
by telephone or personal interview. The Company expects to request brokers and
nominees who hold stock in their names to furnish this proxy material to their
customers and to solicit proxies from them, and will reimburse such brokers and
nominees for their out-of-pocket and reasonable clerical expenses in connection
therewith.
Shares Outstanding and Entitled to be Voted at Meeting
Only stockholders of record at the close of business February 16, 2001,
may vote at the Annual Meeting. The total number of shares of Common Stock of
the Company outstanding and entitled to be voted on the record date was
81,958,362. Each share is entitled to one vote. The Company has no other class
of security outstanding. For Proposal (a), referred to above, directors shall
be elected by a plurality of the votes cast at the meeting. Proposal (b)
referred to above requires the affirmative vote of a majority of the votes cast
at the meeting. Unless otherwise required by the Company's Articles of
Incorporation or By-laws, or by applicable Maryland law, any other matter
properly presented for a vote at the meeting will require the affirmative vote
of a majority of the votes cast at this meeting. Proxies received by the
Company that are marked "withhold authority" or abstain, or that constitute a
broker non-vote, are counted as present for purposes of determining a quorum at
the meeting. Broker non-votes are shares held in the name of a broker or
nominee for which the broker or nominee indicates that instructions have not
been received from the beneficial owner or person entitled to vote and the
broker or nominee does
1
not have discretionary voting power. Proxies marked "withhold authority",
abstentions and broker non-votes do not count as votes cast with respect to any
proposal, and therefore, such proxies would have no effect on the outcome of
Proposals (a) and (b), above.
As of December 31, 2000, the Company knows of no person or group of
persons that owns beneficially more than 5 percent of the outstanding Common
Stock of the Company, except as set forth immediately below. According to a
Schedule 13G filed with the Securities and Exchange Commission on January 30,
2001, Erik E. Bergstrom and related persons, directly and indirectly, own
5,292,950 shares of Common Stock of the Company, which represents 6.45% of the
Company's outstanding Common Stock. Mr. Bergstrom disclaimed beneficial
ownership of certain of these shares. Mr. Bergstrom's address is P.O. Box 126,
Palo Alto, CA 94302.
(a) NOMINEES FOR ELECTION AS DIRECTORS
Unless contrary instructions are given by the stockholder signing a proxy,
it is intended that each proxy in the accompanying form will be voted at the
Annual Meeting for the election of the following nominees to the Board of
Directors for the ensuing year, all of whom have consented to serve if elected:
Enrique R. Arzac W. D. MacCallan John J. Roberts
Daniel E. Emerson W. Perry Neff Susan C. Schwab
Thomas H. Lenagh Douglas G. Ober+ Robert J. M. Wilson
Landon Peters
If for any reason one or more of the nominees above named shall become
unable or unwilling to serve (which is not now expected) when the election
occurs, proxies in the accompanying form will, in the absence of contrary
instructions, be voted for the election of the other nominees above named and
may be voted for substitute nominees in the discretion of the persons named as
proxies in the accompanying form. The directors elected will serve until the
next annual meeting or until their successors are elected, except as otherwise
provided in the By-laws of the Company.
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+ Mr. Ober is an "interested person," as defined by the Investment Company Act
of 1940, because he is an officer of the Company.
2
Information as to Nominees for Election as Directors (as of December 31, 2000)
Set forth below with respect to each nominee for director are his or her
name and age, any positions held with the Company, other principal occupations
during the past five years, other directorships and business affiliations, the
year in which he or she first became a director and the number of shares of
Common Stock of the Company beneficially owned by him or her. Also set forth
below is the number of shares of Common Stock beneficially owned by all the
directors and officers of the Company as a group.
Shares of
Common
Has Stock
been a Beneficially
Name, Age, Positions with the Company, Other Director Owned
Principal Occupations and Other Affiliations since (a)(b)(c)(d)
----------------------------------------------------------------------------------------- ---------- ---------------
Enrique R. Arzac, 59, Professor of Finance and Economics, formerly Vice Dean of 1983 8,392
Academic Affairs of the Graduate School of Business, Columbia University. Director
of Petroleum & Resources Corporation* and Credit Suisse Asset Management
Funds (investment companies).
Daniel E. Emerson, 76, Retired Executive Vice President of NYNEX Corporation, retired 1982 17,962
Chairman of the Board of both NYNEX Information Resources Co. and NYNEX
Mobile Communications Co. Previously, Executive Vice President and Director of
New York Telephone Company. Presently, Chairman, The National YMCA Fund,
Inc., Director of Petroleum & Resources Corporation.
Thomas H. Lenagh, 82, Financial Advisor, Chairman of the Board, Inrad Corp. (crystals), 1968 2,493
formerly Chairman of the Board and Chief Executive Officer of Greiner Engineering
Inc. (formerly Systems Planning Corp.) (consultants), formerly financial vice
president, Aspen Institute (research), and financial advisor and prior thereto
Treasurer of the Ford Foundation (charitable foundation). Director of Gintel Fund,
Clemente Strategic Fund, and Petroleum & Resources Corporation (investment
companies). Director of ICN Pharmaceuticals, Inc., ASD Group (electronic contract
manufacturing), and China Light Industry Fund.
W. D. MacCallan, 73, Retired Chairman of the Board and Chief Executive Officer of the 1971 147,420
Company. Director, former Chairman of the Board and Chief Executive Officer of
Petroleum & Resources Corporation. Formerly, consultant to the Company and
Petroleum & Resources Corporation. Previously, Director of the Hanover Funds, Inc.
and the Hanover Investment Funds, Inc. (investment companies). Presently,
Trustee, Chase Vista and Chase funds (68 funds).
W. Perry Neff, 73, Private Financial Consultant, Retired Executive Vice President of 1987 4,861
Chemical Bank. Director of Petroleum & Resources Corporation. Previously,
Chairman of the Board and Director of the Hanover Funds, Inc. and the Hanover
Investment Funds, Inc. (investment companies) and a Director of Van Deventer &
Hoch (investment company). Presently, Trustee, Chase Vista and Chase funds (68
funds).
**Douglas G. Ober, 54, Chairman of the Board and Chief Executive Officer of the 1989 99,559(e)
Company since April 1, 1991. Chairman of the Board, Chief Executive Officer and
Director of Petroleum & Resources Corporation.
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* Non-controlled affiliate of the Company.
** Mr. Ober is an "interested person," as defined by the Investment Company Act
of 1940, because he is an officer of the Company.
3
Shares of
Common
Has Stock
been a Beneficially
Name, Age, Positions with the Company, Other Director Owned
Principal Occupations and Other Affiliations since (a)(b)(c)(d)
------------------------------------------------------------------------------------------ ---------- -------------
Landon Peters, 70, Private Investor, previously Investment Manager, Y.M.C.A. 1974 5,811
Retirement Fund. Formerly Executive Vice President and Treasurer and prior thereto
Senior Vice President and Treasurer of The Bank of New York. Director of Petroleum &
Resources Corporation.
John J. Roberts, 78, Senior Advisor, formerly Vice-Chairman, External Affairs, American 1976 7,843
International Group, Inc. (insurance). Formerly Chairman and Chief Executive Officer
of American International Underwriters Corporation (insurance). Previously President
of American International Underwriters Corporation-U.S./Overseas Operations.
Honorary Director of American International Group, Inc. and Director of Petroleum &
Resources Corporation.
Susan C. Schwab, 45, Dean of the School of Public Affairs at the University of Maryland, 2000 581
College Park. Formerly, Director of Corporate Business Development at Motorola, Inc.
Also served as an Assistant Secretary of Commerce for the U.S. and Foreign
Commercial Service of the U.S. Department of Commerce. Director of Calpine Corp.
(energy) and Petroleum & Resources Corporation.
Robert J. M. Wilson, 80, Retired President of the Company. Director and retired 1975 45,814
President of Petroleum & Resources Corporation.
Directors and Executive Officers as a group. 731,919
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(a) To the Company's knowledge, other than shares referred to in footnote (c)
below, each director and officer had sole investment and sole voting power
with respect to the shares shown opposite his or her name, except Mr.
Lenagh, who has only investment power.
(b) Of the amount shown as beneficially owned by the directors and executive
officers as a group, 221,514 shares were held by the Trustee under the
Employee Thrift Plan of the Company.
(c) The amounts shown include shares subject to option under the Company's
Stock Option Plan (see "Stock Option Plan" below) held by Mr. Ober (64,581
shares) and directors and executive officers as a group (267,122 shares).
Mr. Ober and the other officers with shares subject to option all disclaim
beneficial ownership of those shares.
(d) Calculated on the basis of 82,292,262 shares outstanding on December 31,
2000, each director owned less than 1.0% of the Common Stock outstanding.
The directors and executive officers as a group owned 0.9% of the Common
Stock outstanding.
(e) Of the amount shown, 34,892 shares beneficially owned by Mr. Ober were held
by the Trustee under the Employee Thrift Plan of the Company.
4
The nominees for election as directors of the Company identified above are
also the nominees for election to the Board of Directors of Petroleum &
Resources Corporation ("Petroleum"), the Company's non-controlled affiliate, of
which the Company owned 1,913,761 shares or approximately 9.1% of the
outstanding Common Stock on December 31, 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
Each director and officer of the Company who is subject to Section 16 of
the Securities Exchange Act of 1934 is required to report to the Securities and
Exchange Commission by a specified date his or her beneficial ownership of or
transactions in the Company's securities. Based upon a review of filings with
the Securities and Exchange Commission and written representation that no other
reports are required, the Company has no reason to believe that any such
directors and officers have not filed all requisite reports with the Securities
and Exchange Commission on a timely basis during 2000, with the exception that,
a) following her election as a director of the Company, Ms. Schwab's Form 3 was
filed after the 10 day filing period, b) Mr. Neff failed to file a Form 4 for
two transactions in which he sold shares of the Company, and c) Mr. Peters
failed to file a Form 4 for one transaction in which his wife sold shares she
owned of the Company.
Information as to Other Executive Officers
Set forth below are the names, ages and positions with the Company of all
executive officers of the Company other than those who also serve as directors.
Executive officers serve as such until the election of their successors.
Ms. Maureen A. Jones, 53, has served as Vice President since January 1,
1998, and as Treasurer since January 1, 1993.
Mr. Richard F. Koloski, 56, has served as Executive Vice President since
January 1, 1986.
Mr. Joseph M. Truta, 56, has served as President since April 1, 1986.
Mr. Lawrence L. Hooper, Jr., 48, has served as Vice President since March
30, 1999, and as Secretary and General Counsel since April 1, 1997. Prior
thereto, he was a partner in Tydings & Rosenberg L.L.P., a Baltimore, Maryland
law firm.
5
Shares of
Common
Stock
Beneficially
Security Ownership of Management of the Company (a) Owned
Name (b) (c) (d) (e)
---- ----------------
Maureen A. Jones .......................... 21,288
Richard F. Koloski ........................ 124,530
Joseph M. Truta ........................... 231,410
Lawrence L. Hooper, Jr. ................... 13,955
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(a) As of December 31, 2000. Share ownership of directors and executive
officers as a group is shown in the table beginning on page 3 and
footnotes thereto.
(b) To the Company's knowledge, each officer had sole investment and voting
power with respect to the shares shown opposite his or her name above
other than shares referred to in footnote (d) below.
(c) Of the amounts shown, the following shares beneficially owned by the
respective officer were held by the Trustee under the Employee Thrift Plan
of the Company: Ms. Jones (9,136 shares), Mr. Koloski (42,142 shares), Mr.
Truta (127,993 shares), and Mr. Hooper (7,351 shares).
(d) The amounts shown include shares subject to option under the Company's
Stock Option Plan (see "Stock Option Plan" below), held by Ms. Jones
(12,152 shares), Mr. Koloski (82,388 shares), Mr. Truta (101,430 shares),
and Mr. Hooper (6,571 shares). These officers disclaim beneficial
ownership of those shares.
(e) Calculated on the basis of 82,292,262 shares of Common Stock outstanding on
December 31, 2000, each of the officers listed above owned less than 1.0%
of the Common Stock outstanding.
Board Meetings and Committees of the Board
Overall attendance at the thirteen meetings of the Board held in 2000 was
approximately 94%. Each Director attended at least 75% of the total of all (i)
meetings of the Board and (ii) meetings of Committees of the Board on which he
or she served in 2000.
Audit Committee
Messrs. Emerson, Lenagh, Neff and Peters, each of whom is an independent
director, as such is defined by the Rules of the New York Stock Exchange,
constitute the membership of the Board's standing Audit Committee, which met
twice in 2000. The Board has adopted a written charter under which the Audit
Committee operates, which was most recently amended in January 2001. A copy of
the written charter is attached as an appendix hereto. Set forth below is the
report of the Audit Committee:
Audit Committee Report
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management is responsible for the financial
statements and the reporting process, including the system of internal
controls. The independent auditors are responsible for expressing an opinion on
the conformity of those audited financial statements with accounting principles
generally accepted in the United States. In fulfilling its responsibilities,
the Committee has reviewed and discussed the audited financial statements
contained in the 2000 Annual Report of the Company with the Company's
management and the independent auditors.
6
The Committee discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended. In addition, the Committee has discussed with the
independent auditors the auditors' independence from the Company and its
management, including the written disclosures submitted to the Committee by the
independent auditors as required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report for the year ended
December 31, 2000, for filing with the Securities and Exchange Commission.
Respectfully submitted on February 16, 2001 by the members of the Audit
Committee of the Board of Directors:
Landon Peters, Chairman
Daniel E. Emerson
Thomas H. Lenagh
W. Perry Neff
Compensation Committee
Messrs. Lenagh, MacCallan, and Wilson, and Ms. Schwab, constitute the
membership of the Board's standing Compensation Committee, which met three
times during 2000. The Compensation Committee reviews and recommends changes in
the salaries of directors, executive officers, officers, and employees, and
advises upon the compensation and stock option plans in which the executive
officers, officers, and employees of the Company are eligible to participate.
Executive Committee
Messrs. Arzac, MacCallan, Neff, Ober*, and Roberts, and Ms. Schwab,
constitute the membership of the Board's standing Executive Committee, which
met twice during 2000. The Committee has the authority of the Board of
Directors between meetings of the Board except as limited by law, the Company's
By-laws, or Board resolution. The Executive Committee also performs the duties
of a nominating committee. It recommends to the full Board candidates for
directorship. It is the policy of the Executive Committee not to consider
unsolicited nominations for director.
Retirement Benefits Committee
Messrs. Arzac, Emerson, Peters, Roberts, and Wilson are the director
members of the standing Retirement Benefits Committee of the Company, which
administers the Employees' Retirement Plan, Supplemental Retirement Plan and
the Employee Thrift Plan of the Company. This Committee met once during 2000.
Board of Directors Compensation
During 2000, each director who is not an interested person received an
annual retainer fee of $10,000 and a fee of $500 for each Board meeting
attended. All members of each Committee, except executive officers and/or
interested persons, receive an additional annual retainer fee of $1,500 for
each committee membership and a fee of $500 for each meeting attended; the
Chairman of each committee, except for the Executive Committee, receives an
additional fee of $500 for each committee meeting attended. The total amount of
fees paid to "disinterested person" directors in 2000 was $188,750.
----------
* Mr. Ober is an "interested person."
7
Transactions with Petroleum & Resources Corporation
The Company shares certain expenses with Petroleum, of which all of the
above-named nominees are also directors. Prior to April 1, 2000, these expenses
were initially paid by the Company, which was reimbursed by Petroleum either in
proportion to the size of the respective investment portfolios of the two
companies or, where possible, on an actual usage basis. In 2000, Petroleum's
share of such expenses that were handled in this fashion was $125,083 for
research, accounting services and other office services (including
proportionate salaries and other employee benefits), rent and related expenses,
and miscellaneous expenses such as office supplies, postage, subscriptions and
travel. Beginning on April 1, 2000, such expenses were paid by the Company and,
on the date the payment was made, Petroleum simultaneously paid to the Company
its allocated share of such expenses.
Audit Fees
The aggregate fees billed by the Company's independent auditors,
PricewaterhouseCoopers LLP, for professional services rendered for the audits
of the Company's annual and semi-annual financial statements for 2000 and the
reviews of the financial statements contained in the First and Third Quarter
reports in 2000 was $47,293.
Financial Information Systems Design and Implementation Fees
No such fees were billed to the Company by its auditors during 2000.
All Other Fees
The aggregate fees billed for services to the Company by
PricewaterhouseCoopers LLP, other than the services referenced above, for 2000
was $8,839.
The Board's Audit Committee has considered the provision by
PricewaterhouseCoopers LLP of the services covered in this All Other Fees
section and found that they are compatible with maintaining
PricewaterhouseCoopers LLP's independence.
8
Remuneration of Directors and Others
The following table sets forth for each of the persons named below the
aggregate current remuneration received from the Company during the fiscal year
ended December 31, 2000, for services in all capacities:
Pension or
Retirement Estimated
Benefits Accrued Annual
Aggregate During the Last Benefits upon
Name of Person Position Remuneration (1) (2) (3) (4) Fiscal Year (5) Retirement
------------------- ----------------- ------------------------------ ------------------ --------------
Douglas G. Ober Chairman of the
Board and Chief
Executive
Officer (A) $486,644 -- $342,524
Joseph M. Truta President 312,840 -- 172,865
Richard F. Koloski Executive Vice
President 138,300 -- 62,700
Enrique R. Arzac Director (A)(D) 22,000 N/A N/A
Daniel E. Emerson Director (B)(D) 21,000 N/A N/A
Thomas H. Lenagh Director (B)(C) 22,000 N/A N/A
W. D. MacCallan Director (A)(C) 21,000 N/A N/A
W. Perry Neff Director (A)(B) 19,500 N/A N/A
Landon Peters Director (B)(D) 21,500 N/A N/A
John J. Roberts Director (A)(D) 19,500 N/A N/A
Susan C. Schwab Director (A)(C) 20,250 N/A N/A
Robert J. M. Wilson Director (C)(D) 22,000 N/A N/A
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(A) Member of Executive Committee
(B) Member of Audit Committee
(C) Member of Compensation Committee
(D) Member of Retirement Benefits Committee
(1) Of the amounts shown, direct salaries paid by the Company to Messrs.
Ober, Truta and Koloski were $272,550, $181,700, and $69,000, respectively.
(2) Of the Company's direct salaries, $8,297 for Mr. Ober, $8,295 for Mr.
Truta, and $3,150 for Mr. Koloski, was deferred compensation under the
Company's Employee Thrift Plan. Under the Employee Thrift Plan, the Company
also makes contributions to match the contributions made by eligible employees
(see "Employee Thrift Plan" below). Of the amounts shown, $16,594, $16,590, and
$6,300 were plan contributions for Messrs. Ober, Truta, and Koloski,
respectively. The non-employee Directors do not participate in the Employee
Thrift Plan.
(3) Of the amounts shown, $197,500, $114,550, and $63,000 were incentive
compensation accrued for Messrs. Ober, Truta, and Koloski, respectively, in
2000 and deferred until January 2001.
(4) In addition, $177,855 for Mr. Ober, $400,464 for Mr. Truta, and
$238,923 for Mr. Koloski was the net gain realized by them upon the exercise of
stock appreciation rights during 2000 granted under the Company's Stock Option
Plan (see "Stock Option Plan" below). These sums are in addition to the
aggregate remuneration amounts shown in this summary table.
(5) The Company has a noncontributory Employees' Retirement Plan. No
contributions were made by the Company to this plan in 2000.
Messrs. Ober, Truta, and Koloski also received direct salaries, deferred
compensation, thrift plan contributions, and incentive compensation from
Petroleum, which amounts were included in this summary table in years prior to
1999.
9
Stock Option Plan
On December 12, 1985, the Company's Board of Directors adopted a Stock
Option Plan (the "Plan"), which was approved by the stockholders at the March
26, 1986 Annual Meeting of Stockholders and amended at the March 29, 1994
Annual Meeting of Stockholders. The Plan provides for the grant to "key
employees" (as defined in the Plan) of options to purchase shares of Common
Stock of the Company, together with related stock appreciation rights. As of
December 31, 2000, (i) the number of shares subject to outstanding options
under the Plan was 339,403 and (ii) the number of shares available for future
grants under the Plan was 1,310,585, in each case as adjusted to reflect the
3-for-2 stock split effected by the Company on October 19, 2000. All options
granted or to be granted under the Plan currently will be treated as
non-qualified stock options under the Internal Revenue Code. The Plan is
administered by the Compensation Committee of the Board of Directors, which
consists of four members of the Board, none of whom is eligible to receive
grants under the Plan. The grant of options is at the discretion of the
Compensation Committee.
The Plan provides that, among other things, (a) the option price per share
shall not be less than the fair market value of the Common Stock at the date of
grant, except that the option price per share will be reduced after grant of
the option to reflect capital gains distributions to the Company's
stockholders, provided that no such reduction shall be made which will reduce
the option price below 25% of the original option price; (b) an option will not
become exercisable until the optionee shall have remained in the employ of the
Company for at least one year after the date of grant and may be exercised for
10 years unless an earlier expiration date is stated in the option; and (c) no
option or stock appreciation right shall be granted after December 8, 2003.
The Plan permits the grant of stock appreciation rights in conjunction
with the grant of an option, either at the time of the option grant or
thereafter during its term and in respect of all or part of such option. Stock
appreciation rights permit an optionee to request to receive (a) shares of
Common Stock of the Company with a fair market value, at the time of exercise,
equal to the amount by which the fair market value of all shares subject to the
option in respect of which such stock appreciation right was granted exceeds
the exercise price of such option, (b) in lieu of such shares, the fair market
value thereof in cash, or (c) a combination of shares and cash. Stock
appreciation rights are exercisable beginning no earlier than two years after
the date of grant and extend over the period during which the related option is
exercisable. To the extent a stock appreciation right is exercised in whole or
in part, the option in respect of which such stock appreciation right was
granted shall terminate and cease to be exercisable.
No disposition of shares of Common Stock acquired as the result of the
exercise of an option or stock appreciation right may be made within the later
of two years of the date of grant of the option and one year of the acquisition
of such shares.
Employee Thrift Plan
Employees of the Company who have completed six months of service may
elect to have 2% to 6% of their base salary deferred as a contribution to a
thrift plan instead of being paid to them currently (see table set forth on
page 9 regarding 2000 contributions for the officers and directors identified
therein). The Company (subject to certain limitations) contributes for each
employee out of net investment income an amount equal to 200% of each
employee's contribution or to the maximum permitted by law. Employees may also
contribute an additional 10% of base salary to the thrift plan, but these
post-tax contributions are not matched by the Company. All employee
contributions are credited to the employee's individual account. Employees may
elect that their salary deferral and other contributions be invested in a money
market fund, an intermediate bond fund, Common Stock of the Company or of
Petroleum, or a
10
combination thereof. The Company's contributions are invested entirely in its
Common Stock. An employee's interest in amounts derived from the Company's
contributions becomes non-forfeitable upon completion of 36 months of service
or upon death or retirement. Payments of amounts not withdrawn or forfeited
under the thrift plan may be made upon retirement or other termination of
employment in a single distribution, in ten equal installments, or in an
annuity.
Employees' Retirement Plan
The employees of the Company with one or more years of service participate
in a retirement plan pursuant to which contributions are made solely by the
Company on behalf of, and benefits are provided for, employees meeting certain
age and service requirements. The plan provides for the payment of benefits in
the event of an employee's retirement at age 62 or older. Upon such retirement,
the amount of the retirement benefit is 2% of an employee's final thirty-six
months average annual salary, including incentive compensation, multiplied by
years of service. Retirement benefits cannot exceed 55% of the final thirty-six
months' average annual salary including incentive compensation. Benefits are
payable in several alternative methods, each of which must be the actuarial
equivalent of a pension payable for the life of the employee only. Retirement
benefits (subject to any applicable reduction) are also payable in the event of
an employee's early or deferred retirement, disability or death. Contributions
are made to a trust to fund these benefits.
On March 10, 1988, the Board of Directors of the Company unanimously
approved a supplemental retirement benefits plan (the "Supplemental Plan") for
employees of the Company. On June 11, 1998, the Supplemental Plan was amended
and restated as of January 1, 1998. The purpose of the Supplemental Plan is to
provide deferred compensation in excess of benefit limitations imposed by the
Internal Revenue Code on tax-qualified defined benefit plans, including the
retirement plan of the Company described above. In accordance with such
limitations, the annual benefit payable under the Company's retirement plan may
not exceed the lesser of $140,000 for 2001 and the employee's average total
compensation paid during the three highest-paid consecutive calendar years of
employment. The $140,000 limit will be adjusted by the Secretary of the
Treasury to reflect cost-of-living increases.
The Supplemental Plan authorizes the Company to pay annual retirement
benefits in an amount equal to the difference between the maximum benefits
payable under such retirement plan and the benefits that would otherwise be
payable but for the Internal Revenue Code's limitations on annual retirement
benefits. All amounts payable under the Supplemental Plan will be paid from the
general funds of the Company as benefits become due. The Company has
established a funding vehicle using life insurance policies owned by the
Company for the Supplemental Plan. Payment of benefits under the Supplemental
Plan will be made concurrently with and in the same form as payment of benefits
under the Company's retirement plan. During 2000, the Company made payments of
$18,844 under the Supplemental Plan.
Brokerage Commissions
During the past fiscal year, the Company paid brokerage commissions in the
amount of $581,811 on the purchase and sale of portfolio securities traded on
the New York Stock Exchange and the American Stock Exchange, substantially all
of which were paid to brokers providing research and other investment services
to the Company. The average per share commission rate paid by the Company was
$0.0606. No commissions were paid to an affiliated broker.
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Portfolio Turnover
The portfolio turnover rate (purchases or sales, whichever is lower, as a
percentage of weighted average portfolio value) for the past three years has
been as follows:
2000 1999 1998
----------------- ---------------- --------------------
12.74% 15.94 % 22.65%
Expense Ratio
The ratio of expenses to the average net assets of the Company for the
past three years has been as follows:
2000 1999 1998
---------------- ---------- -------------------
0.24% 0.32% 0.22%
(b) RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Investment Company Act of 1940 (the "Act") requires, in effect, that
the Company's independent accountants be selected by a majority of the members
of the Board of Directors who are not "interested persons" (as defined by the
Act) of the Company; that such selection be submitted for ratification or
rejection at the annual meeting of stockholders; and that the employment of
such independent accountants be conditioned on the right of the Company, by
vote of the holders of a majority of its outstanding voting securities, to
terminate such employment at any time without penalty. In accordance with such
provisions, PricewaterhouseCoopers LLP, 250 W. Pratt Street, Baltimore,
Maryland, independent accountants, which firm was the Company's principal
auditor during the year 2000, has been selected as independent accountants of
the Company to audit the books and accounts of the Company for or during the
year ending December 31, 2001, by a majority of those members of the Board of
Directors who were not "interested persons" of the Company, voting in person,
and their selection is submitted to the stockholders for ratification by the
affirmative vote of a majority of all the votes cast at the meeting.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
meeting to make a statement if they so desire and to respond to appropriate
questions. The Company has been informed that PricewaterhouseCoopers LLP does
not have any direct financial or any material indirect financial interest in
the Company.
The Board of Directors unanimously recommends ratification of the
selection of PricewaterhouseCoopers LLP.
- - - - - - - - - - - - - - -
(c) OTHER MATTERS AND ANNUAL REPORT
As of the date of this proxy statement, management knows of no other
business that will come before the meeting. Should other business be properly
brought up, it is intended that proxies in the accompanying form will be voted
thereon in accordance with the judgment of the person or persons voting such
proxies.
The Annual Report of the Company for the year ended December 31, 2000,
including financial statements, has been mailed to all stockholders entitled to
notice of and to vote at the annual meeting to be held on March 27, 2001. A
copy of the Company's Annual Report will be furnished to stockholders, without
charge, upon request. You may request a copy by telephoning Lawrence L. Hooper,
Jr., Vice President, Secretary and General Counsel, at (800) 638-2479 or by
sending Mr. Hooper an e-mail message at contact@adamsexpress.com.
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The Company has retained Corporate Investor Communications, Inc. ("CIC")
to assist in the solicitation of proxies. The Company will pay CIC a fee for
its services not to exceed $5,500 and will reimburse CIC for its expenses,
which the Company estimates will not exceed $2,500.
(d) STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Stockholder proposals for inclusion in the proxy statement and form of
proxy relating to the 2002 Annual Meeting must be received at the office of the
Company, Seven St. Paul Street, Baltimore, MD 21202, no later than October 26,
2001.
In addition, pursuant to the Company's By-laws, stockholder proposals for
consideration at the 2002 Annual Meeting which are not to be included in the
Company's proxy statement and form of proxy must be received at the office of
the Company at the address listed in the preceding paragraph no later than
January 25, 2002, in order to be eligible for presentation at the 2002 Annual
Meeting. Should the Company determine to allow a stockholder proposal that is
received by the Company after January 25, 2002 to be presented at the 2002
Annual Meeting nevertheless, the persons named as proxies in the accompanying
form will have discretionary voting authority with respect to such stockholder
proposal.
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APPENDIX
THE ADAMS EXPRESS COMPANY
AUDIT COMMITTEE CHARTER
I. Composition of the Audit Committee: The Audit Committee shall be comprised
of at least three directors, each of whom shall have no relationship to the
Company that may interfere with the exercise of their independence from
management and the Company and shall otherwise satisfy the applicable
membership requirements under the rules of the New York Stock Exchange,
Inc., as such requirements are interpreted by the Board of Directors in its
business judgment.
II. Purposes of the Audit Committee: The purposes of the Audit Committee are to
assist the Board of Directors:
1. in its oversight of the Company's accounting and financial
reporting principles and policies and internal audit controls and
procedures;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in nominating the outside auditors to be proposed for shareholder
approval in any proxy statement, evaluating and, where deemed appropriate,
replacing the outside auditors; and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. The management of the
Company is responsible for the preparation, presentation and integrity of
the Company's financial statements. Management is responsible for
maintaining appropriate accounting and financial reporting principles and
policies and internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. The outside
auditors are responsible for planning and carrying out a proper audit and
reviews, including reviews of the Company's quarterly financial statements
prior to the filing of each quarterly report, and other procedures. In
fulfilling their responsibilities hereunder, it is recognized that members
of the Audit Committee are not full-time employees of the Company and are
not, and do not represent themselves to be, accountants or auditors by
profession or experts in the fields of accounting or auditing. As such, it
is not the duty or responsibility of the Audit Committee or its members to
conduct "field work" or other types of auditing or accounting reviews or
procedures, and each member of the Audit Committee shall be entitled to
rely on (i) the integrity of those persons and organizations within and
outside the Company from which it receives information and (ii) the
accuracy of the financial and other information provided to the Audit
Committee by such persons or organizations absent actual knowledge to the
contrary.
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). The Board of
Directors, with the assistance of the Audit Committee, has the ultimate
authority and responsibility to select, evaluate and, where appropriate,
replace the outside auditors (or to nominate the outside auditors to be
proposed for shareholder approval in the proxy statement.)
The outside auditors shall submit to the Company annually a formal written
statement delineating all relationships between the outside auditors and
the Company ("Statement as to Independence"), addressing at least the
matters set forth in Independence Standards Board Standard No. 1.
III. Meetings of the Audit Committee: The Audit Committee shall meet at least
two times annually, or more frequently if circumstances dictate, to discuss
with management the annual audited financial statements and quarterly
financial statements and quarterly financial results. The Audit Committee
should meet separately at least annually with management and with the
outside auditors to discuss
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any matters that the Audit Committee or any of these persons or firms
believe should be discussed privately. The Audit Committee may request any
officer or employee of the Company or the Company's outside counsel or
outside auditors to attend a meeting of the Audit Committee or to meet with
any members of, or consultants to, the Audit Committee. Members of the
Audit Committee may participate in a meeting of the Audit Committee by
means of conference call or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
IV. Duties and Powers of the Audit Committee: To carry out its purposes, the
Audit Committee shall have the following duties and powers:
1. with respect to the outside auditor,
(i) to provide advice to the Board of Directors in selecting,
evaluating or replacing outside auditors;
(ii) to review the fees charged by the outside auditors for audit
and nonaudit services;
(iii) to ensure that the outside auditors prepare and deliver
annually a Statement as to Independence (it being understood
that the outside auditors are responsible for the accuracy
and completeness of this Statement), to discuss with the
outside auditors any relationships or services disclosed in
this Statement that may impact the objectivity and
independence of the Company's outside auditors and to
recommend that the Board of Directors take appropriate
action in response to this Statement to satisfy itself of
the outside auditors' independence; and
(iv) to instruct the outside auditors that the outside auditors
are ultimately accountable to the Board of Directors and the
Audit Committee;
2. with respect to financial reporting principles and policies and
internal audit controls and procedures:
(i) to advise management and the outside auditors that they are
expected to provide to the Audit Committee a timely analysis
of significant financial reporting issues and practices;
(ii) to consider any reports or communications (and management's
responses thereto) submitted to the Audit Committee by the
outside auditors required by or referred to in Statement on
Auditing Standards No. 61 (as codified by AU Section 380),
as may be modified or supplemented, including reports and
communications related to:
o deficiencies noted in the audit in the design or
operation of internal controls;
o consideration of fraud in a financial statement audit;
o detection of illegal acts;
o the outside auditor's responsibility under generally
accepted auditing standards;
o significant accounting policies;
o management judgments and accounting estimates;
o adjustments arising from the audit;
o the responsibility of the outside auditor for other
information in documents containing audited financial
statements;
o disagreements with management;
o consultation by management with other accountants;
o major issues discussed with management in performing
the audit;
o difficulties encountered with management in performing
the audit;
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o the outside auditor's judgments about the quality of
the entity's accounting principles; and
o reviews of interim financial information conducted by
the outside auditor;
(iii) to meet with management and/or the outside auditors:
o to discuss the scope of the annual audit;
o to discuss the audited financial statements;
o to discuss any significant matters arising from any
audit or report or communication referred to in item
2(ii) above, whether raised by management or the
outside auditors, relating to the Company's financial
statements;
o to review the form of opinion the outside auditors
propose to render to the Board of Directors and
shareholders in the annual report to shareholders;
o to review annually management's program to monitor
compliance with the Company's code of ethics and policy
on insider trading;
o to discuss significant changes to the Company's
auditing and accounting principles, policies, controls,
procedures and practices proposed or contemplated by
the outside auditors or management; and
o to inquire about significant risks and exposures, if
any, and the steps taken to monitor and minimize such
risks;
(iv) to obtain from the outside auditors assurance that the audit
was conducted in a manner consistent with Section 10A of the
Securities Exchange Act of 1934, as amended, which sets
forth certain procedures to be followed in any audit of
financial statements required under the Securities Exchange
Act of 1934; and
(v) to discuss with the Company's General Counsel any
significant legal matters that may have a material effect on
the financial statements, the Company's compliance policies,
including material notices to or inquiries received from
governmental agencies; and
3. with respect to reporting and recommendations,
(i) to prepare any report, including any recommendation of the
Audit Committee, required by the rules of the Securities and
Exchange Commission to be included in the Company's annual
proxy statement;
(ii) to review this Charter at least annually and recommend any
changes to the full Board of Directors; and
(iii) to report its activities to the full Board of Directors on
a regular basis and to make such recommendations with
respect to the above and other matters as the Audit
Committee may deem necessary or appropriate.
V. Resources and Authority of the Audit Committee: The Audit Committee shall
have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage outside auditors for
special audits, reviews and other procedures and to retain special counsel
and other experts or consultants.
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