The Adams Express Company
Seven St. Paul Street
Baltimore, Maryland 21202
--------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------------------------------
February 15, 2002
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
Royal Palms Hotel, 5200 East Camelback Road, Phoenix, Arizona, on Tuesday,
March 26, 2002, at 11:00 a.m., for the following purposes:
(1) to elect directors as identified in the Proxy Statement for the ensuing
year;
(2) 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,
2002; and
(3) 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 15, 2002, 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. Telephone and Internet voting are also offered.
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 26, 2002, 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 the meeting and at any and all adjournments thereof and
is first being sent to stockholders on or about February 22, 2002.
At the Annual Meeting, action is to be taken on (1) the election of a Board
of Directors; (2) the ratification of the selection of independent accountants;
and (3) the transaction of such other business as may properly come before the
meeting.
Except for Proposals (1) and (2) 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 (2) 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 15, 2002, 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 85,171,062.
Each share is entitled to one vote. The Company has no other class of security
outstanding. For Proposal (1), referred to above, directors shall be elected by
a plurality of the votes cast at the meeting. Proposal (2), 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
1
and the broker or nominee does 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 (1) and (2), above.
As of December 31, 2001, 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 31, 2002, Erik E.
Bergstrom and related persons, directly and indirectly, own 5,908,800 shares of
Common Stock of the Company, which represents 6.9% 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.
(1) 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
Edward J. Kelly, III Douglas G. Ober+ Robert J. M. Wilson
Thomas H. Lenagh 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,
2001)/1/
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. A separate table is provided
showing the dollar value range of the shares beneficially owned by each
director.
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)
-------------------------------------------- -------- ------------
Independent Directors
---------------------
Enrique R. Arzac, 60, Professor of Finance and Economics, formerly Vice Dean of Academic Affairs 1983 9,214
of the Graduate School of Business, Columbia University. Director of Petroleum & Resources
Corporation* and Credit Suisse Asset Management Funds (8 funds) (investment companies).
Daniel E. Emerson, 77, Retired Executive Vice President of NYNEX Corporation, retired Chairman of 1982 19,759
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., and Director of Petroleum & Resources Corporation.
Edward J. Kelly, III, 48, President and Chief Executive Officer of Mercantile Bankshares Corporation 2001 1,000
since March 2001. Formerly Managing Director with J.P. Morgan Chase (investment bank and
global financial institution) from February 1996 to January 2001 and a partner with the New York
City law firm of Davis Polk & Wardwell prior thereto. Director of Petroleum & Resources
Corporation, Hartford Financial Services Group, and Constellation Energy Group; and member of
Board of Trustees of Johns Hopkins University.
Thomas H. Lenagh, 83, Financial Advisor, Chairman of the Board, Inrad Corp. (crystals) since 1968 2,726
August 1999. Formerly Chairman of the Board and Chief Executive Officer of Greiner Engineering
Inc. (formerly Systems Planning Corp.) (consultants). Formerly Treasurer and Chief Investment
Officer of the Ford Foundation (charitable foundation). Director of Gintel Fund, Cornerstone
Funds, Inc. (3 funds), China Light Industry Fund, and Petroleum & Resources Corporation
(investment companies). Director of ICN Pharmaceuticals International, Inc.
W. D. MacCallan, 74, Retired Chairman of the Board and Chief Executive Officer of the Company. 1971 147,420
Director, former Chairman of the Board and Chief Executive Officer of Petroleum & Resources
Corporation. Formerly, consultant to the Company and Petroleum & Resources Corporation.
W. Perry Neff, 74, Private Financial Consultant. Retired Executive Vice President of Chemical Bank. 1987 5,409
Director of Petroleum & Resources Corporation.
----------
/1/ The information for Mr. Kelly is as of January 15, 2002.
* Non-controlled affiliate 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, 71, Private Investor. Formerly Investment Manager, Y.M.C.A. Retirement Fund, 1974 4,375
and 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, 79, Senior Advisor to American International Group, Inc. (insurance) since 1976 8,580
September 1997, and formerly Vice-Chairman, External Affairs, American International Group,
Inc. from May 1989 to September 1997. 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, 46, Dean of the School of Public Affairs at the University of Maryland, College 2000 1,324
Park, since 1995. Formerly, Director of Corporate Business Development at Motorola, Inc.
Director of Calpine Corp. (energy) and Petroleum & Resources Corporation.
Robert J. M. Wilson, 81, Retired President of the Company. Director and retired President of 1975 45,814
Petroleum & Resources Corporation.
Interested Director
-------------------
Douglas G. Ober, 55, Chairman of the Board and Chief Executive Officer of the Company since 1989 102,134(e)
April 1, 1991. Chairman of the Board, Chief Executive Officer and Director of Petroleum &
Resources Corporation.
Directors and executive officers of the Company as a group. 764,820
The address for each director is the Company's office.
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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, 262,312 shares were held by the Trustee under the
Employee Thrift Plan of the Company and the Employee Thrift Plan of
Petroleum & Resources Corporation.
(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 (61,220
shares) and directors and executive officers as a group (254,519 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 85,233,262 shares outstanding on December 31,
2001, 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, 40,819 shares beneficially owned by Mr. Ober were held
by the Trustee under the Employee Thrift Plan of the Company.
Independent Directors Dollar Value of Shares Owned
--------------------- ----------------------------
Enrique R. Arzac greater than $100,000
Daniel E. Emerson greater than $100,000
Edward J. Kelly, III $10,001-$50,000
Thomas H. Lenagh $10,001-$50,000
W. D. MacCallan greater than $100,000
W. Perry Neff $50,001-$100,000
Landon Peters $50,001-$100,000
John J. Roberts greater than $100,000
Susan C. Schwab $10,001-$50,000
Robert J. M. Wilson greater than $100,000
Interested Director
-------------------
Douglas G. Ober greater than $100,000
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 9.0% of the
outstanding Common Stock on December 31, 2001.
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 2001, with the exception that
Mr. Peters filed late a Form 4 for one transaction reporting the sale of shares
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.
Mr. Lawrence L. Hooper, Jr., 49, 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.
Ms. Maureen A. Jones, 54, has served as Vice President since January 1,
1998, and as Treasurer since January 1, 1993.
Mr. Richard F. Koloski, 57, has served as Executive Vice President since
January 1, 1986.
Mr. Joseph M. Truta, 57, has served as President since April 1, 1986.
Shares of
Common
Security Ownership of Management of the Company (a) Stock
Beneficially
Owned
Name (b)(c)(d)(e)
---- ------------
Lawrence L. Hooper, Jr.................................. 14,106
Maureen A. Jones........................................ 25,829
Richard F. Koloski...................................... 109,761
Joseph M. Truta......................................... 267,369
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(a) As of December 31, 2001. 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 and the Employee Thrift Plan of Petroleum: Mr. Hooper (3,680
shares), Ms. Jones (11,453 shares), Mr. Koloski (47,409 shares), and Mr.
Truta (158,951 shares).
5
(d) The amounts shown include shares subject to option under the Company's
Stock Option Plan (see "Stock Option Plan" below), held by Mr. Hooper
(10,380 shares), Ms. Jones (14,376 shares), Mr. Koloski (62,352 shares),
and Mr. Truta (106,191 shares). These officers disclaim beneficial
ownership of those shares.
(e) Calculated on the basis of 85,233,262 shares of Common Stock outstanding on
December 31, 2001, 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 2001 was
approximately 97%. Each Director attended at least 83% 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 2001.
Audit Committee
Messrs. Arzac, Lenagh, Neff and Roberts, 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 2001. The Board has adopted a written charter under which the Audit
Committee operates, which was most recently amended in January 2001. Set forth
below is the report of the Audit Committee:
Audit Committee Report
The purposes of the Committee are set forth in the Committee's written
charter. As provided in the charter, the role of the Committee is to assist the
Board of Directors in its oversight on matters relating to accounting,
financial reporting, internal control, auditing, and regulatory compliance
activities, and other matters the Board deems appropriate. The Committee also
recommends to the Board the selection of the Company's independent accountants.
Management, however, is responsible for the preparation, presentation and
integrity of the Company's financial statements, and for the procedures
designed to assure compliance with accounting standards and applicable laws and
regulations. The independent accountants are responsible for planning and
carrying out proper audits and reviews.
In fulfilling its responsibilities, the Committee has reviewed and discussed
the audited financial statements contained in the 2001 Annual Report of the
Company with the Company's management and the independent accountants. In
addition, the Committee has discussed with the independent accountants the
matters required to be discussed pursuant to Statement of Auditing Standards
No. 61, as modified or supplemented. The Committee has also received from the
independent accountants the written statement regarding independence as
required by Independence Standards Board Standard No. 1, considered whether the
provision of nonaudit services by the independent accountants is compatible
with maintaining the accountants' independence, and discussed with the
accountants the accountants' independence.
The members of the Committee are not professionally engaged in the practice
of auditing or accounting nor are they experts in the fields of auditing or
accounting, including the issue of auditor independence. Moreover, the
Committee relies on and makes no independent verification of the facts
presented to it or representations made by management or the independent
accountants. Accordingly, the Committee's oversight does not provide an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal controls
and procedures designed to assure compliance with accounting standards and
applicable
6
laws and regulations. Furthermore, the Committee's considerations and
discussions referenced above do not assure that the audit of the Company's
financial statements has been carried out in accordance with generally accepted
accounting standards, that the financial statements are presented in accordance
with generally accepted accounting principles, or that the Company's
accountants are in fact "independent."
In reliance on the reviews and discussions with management and the
independent accountants referred to above, and subject to the limitations on
the responsibilities and role of the Committee set forth in the charter and
discussed above, the Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's 2001 Annual Report,
for filing with the Securities and Exchange Commission.
Respectfully submitted on February 15, 2002 by the members of the Audit
Committee of the Board of Directors:
Enrique R. Arzac
Thomas H. Lenagh
W. Perry Neff, Chairman
John J. Roberts
Compensation Committee
Messrs. Lenagh, Peters, Wilson, and Ms. Schwab constitute the membership of
the Board's standing Compensation Committee, which met three times during 2001.
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. Emerson, MacCallan, Neff, Ober*, Wilson, and Ms. Schwab constitute
the membership of the Board's standing Executive Committee, which met three
times during 2001. 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, minus Mr. Ober, 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, MacCallan, Peters, and Roberts 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 twice during 2001.
Board of Directors Compensation
During 2001, 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 the
independent directors in 2001 was $203,500.
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* Mr. Ober is an "interested person."
7
Transactions with Petroleum & Resources Corporation
The Company shares certain expenses 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, with Petroleum, of which all of
the above-named nominees are also directors. These 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, based on either the
proportion of the size of the investment portfolio of the two companies, or,
where possible, on an actual usage basis. In 2001, Petroleum's share of such
expenses was $403,312.
Audit Fees
The aggregate fees paid and accrued by the Company for professional services
rendered by its independent accountants, PricewaterhouseCoopers LLP, for the
audits of the Company's annual and semi-annual financial statements for 2001
and the reviews of the financial statements contained in the First and Third
Quarter reports in 2001 was $57,970.
Financial Information Systems Design and Implementation Fees
No such fees were billed to the Company by its accountants during 2001.
All Other Fees
The aggregate fees billed for services to the Company by
PricewaterhouseCoopers LLP, other than the services referenced above, for 2001
was $2,950.
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, 2001, 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) $373,648 -- $255,168
Joseph M. Truta President 242,780 -- 160,560
Richard F. Koloski Executive Vice
President 108,600 -- 74,748
Enrique R. Arzac Director (B)(D) 22,000 N/A N/A
Daniel E. Emerson Director (A)(D) 23,000 N/A N/A
Edward J. Kelly, III Director 4,000 N/A N/A
Thomas H. Lenagh Director (B)(C) 23,000 N/A N/A
W. D. MacCallan Director (A)(D) 23,000 N/A N/A
W. Perry Neff Director (A)(B) 21,000 N/A N/A
Landon Peters Director (C)(D) 22,000 N/A N/A
John J. Roberts Director (B)(D) 21,000 N/A N/A
Susan C. Schwab Director (A)(C) 22,500 N/A N/A
Robert J. M. Wilson Director (A)(C) 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 $270,720, $180,000, and $75,000, respectively.
(2) Of the Company's direct salaries, $7,664 for Mr. Ober, $7,665 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,
$15,328, $15,330, 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, $87,600, $47,450, and $27,300 were incentive
compensation accrued for Messrs. Ober, Truta, and Koloski, respectively, in
2001 and deferred until January 2002.
(4) In addition, $93,336 for Mr. Ober, and $319,445 for Mr. Koloski was the net
gain realized by them upon the exercise of stock appreciation rights during
2001 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 2001.
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
2000.
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, 2001, (i) the number of shares subject to outstanding options
under the Plan was 345,567 and (ii) the number of shares available for future
grants under the Plan was 1,266,371. 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.
Shares of Common Stock acquired as the result of the exercise of an option
or stock appreciation right may not be sold until the later of two years after
the date of grant of the option or one year after 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 2001 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 Common
Stock of the Company, or of Petroleum, or several mutual funds, or a
combination thereof. Fifty percent of the Company's matching contributions is
invested in
10
the Company's Common Stock, and the remaining fifty percent is invested in the
same manner that the employee has elected for his or her contributions. 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 highest thirty-six
months average out of the employee's final sixty months annual salary,
including incentive compensation, multiplied by years of service. Retirement
benefits cannot exceed 60% of the highest thirty-six months' average out of the
employee's final sixty months 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 $160,000 for 2002 and the employee's average total
compensation paid during the three highest-paid consecutive calendar years of
employment. The $160,000 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 2001, 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 $1,039,816 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
$0.06. 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:
2001 2000 1999
---- ---- ----
19.15% 12.74% 15.94%
Expense Ratio
The ratio of expenses to the average net assets of the Company for the past
three years has been as follows:
2001 2000 1999
---- ---- ----
0.19% 0.24% 0.32%
(2) 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 may 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 2001, 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, 2002, 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.
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(3) 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, 2001,
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 26, 2002. 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 Georgeson Shareholder Communications Inc. ("GS") to
assist in the solicitation of proxies. The Company will pay GS a fee for its
services not to exceed $5,000 and will reimburse GS for its expenses, which the
Company estimates will not exceed $2,500.
Stockholder Proposals for 2003 Annual Meeting
Stockholder proposals for inclusion in the proxy statement and form of proxy
relating to the 2003 Annual Meeting must be received at the office of the
Company, Seven St. Paul Street, Baltimore, MD 21202, no later than October 25,
2002.
In addition, pursuant to the Company's By-laws, stockholder proposals for
consideration at the 2003 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 24, 2003, in order to be eligible for presentation at the 2003 Annual
Meeting. Should the Company determine to allow a stockholder proposal that is
received by the Company after January 24, 2003 to be presented at the 2003
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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