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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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 sec.240.14a-11(c) or sec.240.14a-12
CHAMPIONSHIP AUTO RACING TEAMS, 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.
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(1) Title of each class of securities to which transaction applies:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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[LOGO]
CHAMPIONSHIP AUTO RACING TEAMS, INC.
5350 LAKEVIEW PARKWAY DRIVE SOUTH
INDIANAPOLIS, INDIANA 46268
To Our Stockholders:
I am pleased to invite you to attend the annual meeting of stockholders of
Championship Auto Racing Teams, Inc. to be held on Thursday, July 17, 2003 at
10:00 a.m. Indianapolis time at the corporate offices of Championship Auto
Racing Teams, Inc., 5350 Lakeview Parkway Drive South, Indianapolis, Indiana
46268.
Details regarding the business to be conducted at the meeting are more fully
described in the accompanying Notice of Annual Meeting and Proxy Statement.
Your vote is important. Whether or not you plan to attend the annual meeting, I
hope that you will vote as soon as possible. You may vote over the Internet, as
well as by telephone or by mailing a traditional proxy card. Voting over the
Internet, by phone or by written proxy will ensure your representation at the
annual meeting if you do not attend in person. Please review the instructions on
the proxy card regarding each of these voting options.
Thank you for your ongoing support of and continued interest in Championship
Auto Racing Teams, Inc.
Sincerely,
/s/ Christopher R. Pook
-------------------------
Christopher R. Pook
President/CEO
Championship Auto Racing Teams, Inc.
May 27, 2003
2003 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
Notice of Annual Meeting of Stockholders............................................................................. 1
Q: Why am I receiving these materials?............................................................. 2
Q: What information is contained in these materials?............................................... 2
Q: What is a proxy?................................................................................ 2
Q: What proposals will be voted on at the meeting?................................................. 2
Q. What shares owned by me can be voted?........................................................... 2
Q. What is the difference between holding shares as a stockholder of record and
as a beneficial owner?.......................................................................... 2
Stockholder of Record........................................................................ 2
Beneficial Owner............................................................................. 2
Q: How can I vote my shares in person at the meeting?.............................................. 3
Q: How can I vote my shares without attending the meeting?......................................... 3
Q: Can I vote by telephone or on the Internet if I am not a registered stockholder?................ 3
Q: Can I change my vote?........................................................................... 3
Q: How are votes counted?.......................................................................... 3
Q: What is the voting requirement to approve each of the proposals?................................ 3
Q: How will abstentions be treated?................................................................ 4
Q: How will broker non-votes be treated?........................................................... 4
Q: What does it mean if I receive more than one proxy or voting instruction card?.................. 4
Q: Where can I find the voting results of the meeting?............................................. 4
STOCK OWNERSHIP...................................................................................................... 5
Who are the largest owners of CART's stock?.............................................................. 5
How much stock do CART's directors and executive officers own?........................................... 5
Section 16(a) Beneficial Ownership Reporting Compliance.................................................. 7
BOARD STRUCTURE AND COMPENSATION..................................................................................... 7
DIRECTOR COMPENSATION ARRANGEMENTS................................................................................... 8
PROPOSAL NO. 1- ELECTION OF DIRECTORS................................................................................ 9
PROPOSAL NO. 2 - RATIFICATION OF INDEPENDENT ACCOUNTANTS............................................................. 12
EXECUTIVE OFFICERS AND KEY EMPLOYEES................................................................................. 13
EXECUTIVE COMPENSATION............................................................................................... 15
Summary Compensation Table................................................................... 15
Option Grants In Last Fiscal Year............................................................ 16
Aggregate Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values............. 16
REPORT OF THE COMPENSATION COMMITTEE................................................................................. 17
REPORT OF THE AUDIT COMMITTEE........................................................................................ 18
STOCK PERFORMANCE GRAPH.............................................................................................. 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................................................................... 21
ADDITIONAL QUESTIONS AND INFORMATION REGARDING THE ANNUAL MEETING AND STOCKHOLDER PROPOSALS.......................... 24
Q: What happens if additional proposals are presented at the meeting?.............................. 24
Q: Which shares are entitled to be voted?.......................................................... 24
Q: What is the quorum requirement for the meeting?................................................. 24
Q: Who will count the vote?........................................................................ 24
Q: Is my vote confidential?........................................................................ 24
Q: Who will bear the cost of soliciting votes for the meeting?..................................... 24
Q: May I propose actions for consideration at next year's annual meeting of stockholders or
nominate individuals to serve as directors?..................................................... 25
APPENDIX A - AUDIT COMMITTEE CHARTER
CHAMPIONSHIP AUTO RACING TEAMS, INC.
5350 LAKEVIEW PARKWAY DRIVE SOUTH
INDIANAPOLIS, INDIANA 46268
(317) 715-4100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME 10:00 a.m. Indianapolis time on Thursday,
July 17, 2003
PLACE Championship Auto Racing Teams, Inc. 5350
Lakeview Parkway Drive South Indianapolis,
Indiana 46268
ITEMS OF BUSINESS (1) To elect directors
(2) To ratify the appointment of
independent accountants
(3) To consider such other business as
may properly come before the
meeting
RECORD DATE You are entitled to vote if you were a
stockholder at the close of business on
Friday, May 23, 2003.
VOTING BY PROXY Please submit the proxy as soon as possible
so that your shares can be voted at the
meeting in accordance with your
instructions. You may submit your proxy (1)
over the Internet, (2) by telephone, or (3)
by mail. For specific instructions, please
refer to the Questions and Answers beginning
on page 2 of this proxy statement and the
instructions on the proxy card.
By Order of the Board of Directors
/s/ Christopher R. Pook
-------------------------
Christopher R. Pook
President/CEO
This proxy statement and accompanying proxy card are being distributed on or
about June 3, 2003.
Q: WHY AM I RECEIVING THESE MATERIALS?
A: The Board of Directors of Championship Auto Racing Teams, Inc. ("CART") is
providing these proxy materials for you in connection with CART's annual
meeting of stockholders which will take place on July 17, 2003. You are
invited to attend the meeting and are requested to vote on the proposals
described in this proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to the proposals
to be voted on at the meeting, the voting process, the compensation of
directors and our most highly paid officers and certain other required
information. Our 2002 Annual Report to Stockholders was previously
delivered to stockholders, under separate cover, and additional copies are
available upon written request to the Company.
Q: WHAT IS A PROXY?
A: It is your legal designation of another person to vote the stock you own.
That other person is called a proxy. If you designate someone as your
proxy in a written document, that document also is called a proxy or proxy
card. We have designated Christopher R. Pook and Thomas L. Carter as
proxies for the 2003 Annual Meeting of Stockholders.
Q: WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?
A: There are two proposals scheduled to be voted on at the meeting:
- The election of directors
- The ratification of independent accountants
Q. WHAT SHARES OWNED BY ME CAN BE VOTED?
A: All shares owned by you as of May 23, 2003, the record date, may be voted
by you. These shares include those: (1) held directly in your name as a
stockholder of record and (2) held for you as the beneficial owner through
a stockbroker, bank or other nominee.
Q. WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD
AND AS A BENEFICIAL OWNER?
A: Many CART stockholders hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
STOCKHOLDER OF RECORD
If your shares are registered directly in your name with CART's Transfer
Agent, Wells Fargo Minnesota N.A., you are considered, with respect to
those shares, the stockholder of record and these proxy materials are
being sent directly to you by CART. As a stockholder of record, you have
the right to grant your voting proxy directly to CART or to vote in person
at the meeting. CART has enclosed a proxy card for your use.
BENEFICIAL OWNER
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of the shares held in
street name and these proxy materials are being forwarded to you by your
broker or nominee who is considered, with respect to those shares, the
stockholder of record. As the beneficial owner, you have the right to
direct your broker on how to vote and are also invited to attend the
meeting. However, since you are not the stockholder of record, you may not
vote these shares in person at the meeting. Your broker or nominee has
enclosed a voting instruction card for your use.
2
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE MEETING?
A: Shares held directly in your name as the stockholder of record may be
voted in person at the annual meeting. If you choose to do so, please
bring the enclosed proxy card or proof of identification.
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE RECOMMEND THAT YOU ALSO
SUBMIT YOUR PROXY AS DESCRIBED BELOW SO THAT YOUR VOTE WILL BE COUNTED IF
YOU LATER DECIDE NOT TO ATTEND THE MEETING.
Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE MEETING?
A: Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct your vote without attending
the meeting. You may vote by granting a proxy or, for shares held in
street name, by submitting voting instructions to your broker or nominee.
In most instances, you will be able to do this over the Internet, by
telephone or mail. Please refer to the summary instructions below and
those included on your proxy card or, for shares held in street name, the
voting instruction card included by your broker or nominee.
BY INTERNET - If you have Internet access, you may submit your proxy from
any location in the world by following the "Vote by Internet" instructions
on the proxy card.
BY TELEPHONE - If you live in the United States or Canada, you may submit
your proxy by following the "Vote by Telephone" instructions on the proxy
card.
BY MAIL - You may vote by mail by signing your proxy card or, for shares
held in street name, the voting instruction card included by your broker
or nominee and mailing it in the enclosed, postage prepaid and addressed
envelope. If you provide specific voting instructions, your shares will be
voted as you instruct. If you sign but do not provide instructions, your
shares will be voted as described below in "HOW ARE VOTES COUNTED?".
Q: CAN I VOTE BY TELEPHONE OR ON THE INTERNET IF I AM NOT A REGISTERED
STOCKHOLDER?
A: If your shares are held in "street name" by a broker or other nominee, you
should check the voting form used by that firm to determine whether you
will be able to vote by telephone or on the Internet.
Q: CAN I CHANGE MY VOTE?
A: You may change your proxy instructions at any time prior to the vote at
the annual meeting. For shares held directly in your name, you may
accomplish this by granting a new proxy or by attending the annual meeting
and voting in person. Attendance at the meeting will not cause your
previously granted proxy to be revoked unless you specifically so request.
For shares held beneficially by you, you may accomplish this by submitting
new voting instructions to your broker or nominee.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote "FOR" all of the nominees or
your vote may be "WITHHELD" with respect to one or more of the nominees.
For the other proposal, you may vote "FOR," "AGAINST" or "ABSTAIN." If you
"ABSTAIN," it has the same effect as a vote "AGAINST." If you sign your
proxy card or broker instruction card with no further instructions, your
shares will be voted in accordance with the recommendations of the Board.
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: In the election of directors, the eight persons receiving the highest
number of "FOR" votes will be elected. The other proposal requires the
affirmative "FOR" vote of a majority of those shares present, in person or
by proxy, and entitled to vote. If you are the beneficial owner and do not
provide the stockholder of record with voting instructions, your shares
may constitute broker non-votes, as described in "HOW WILL BROKER
NON-VOTES BE
3
TREATED?". In tabulating the voting results for any particular proposal,
shares which constitute broker non-votes are not considered entitled to
vote.
Q: HOW WILL ABSTENTIONS BE TREATED?
A: If you abstain from voting on one or more proposals, your shares will
still be included for purposes of determining whether a quorum is present.
Because directors are elected by a plurality of the votes, an abstention
will have no effect on the outcome of the vote and, therefore, is not
offered as a voting option for Proposal 1. If you abstain from voting on
the remaining proposal, your shares will be included in the number of
shares voting on the proposal and, consequently, your abstention will have
the same practical effect as a vote against the proposal.
Q: HOW WILL BROKER NON-VOTES BE TREATED?
A: Shares treated as broker non-votes on one or more proposals will be
included for purposes of calculating the presence of a quorum. Otherwise,
shares represented by broker non-votes will be treated as shares not
entitled to vote on a proposal. Consequently, broker non-votes will have
the following effects:
Proposal 1: Broker non-votes will have no effect on the election of
directors.
Proposal 2: Broker non-votes will not be counted in determining the number
of shares necessary for ratification of the appointment of the Company's
independent auditors and will, therefore, reduce the absolute number (but
not the percentage) of the affirmative votes required for approval of the
proposal.
Generally, broker non-votes occur when shares held by a broker for a
beneficial owner are not voted with respect to a particular proposal
because (1) the broker has not received voting instructions from the
beneficial owner and (2) the broker lacks discretionary voting power to
vote such shares.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION
CARD?
A: It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting
instruction cards you receive.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
A: We will announce preliminary voting results at the meeting and publish
final results in our quarterly report on Form 10-Q for the third quarter
of 2003.
Additional Q&A information regarding the annual meeting and stockholder
proposals may be found on pages 24 and 25.
4
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF CART'S STOCK?
The following table shows the amount of CART common stock beneficially
owned by any person or group known to us that is the beneficial owner of more
than 5% of CART's common stock as of May 23, 2003.
AGGREGATE NUMBER PERCENT OF
OF SHARES SHARES
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING
---------------- ------------------ -----------
Gerald R. Forsythe (1) 3,377,400 22.95%
Forsythe Racing, Inc.
Indeck Energy Services, Inc.
1111 South Willis Avenue
Wheeling, IL 60090
FMR Corp. (2) 1,471,600 9.99%
Edward C. Johnson, III
Abigail P. Johnson
82 Devonshire Street
Boston, MA 02109
Jonathan P. Vannini (3) 1,255,000 8.53%
828 Irwin Drive
Hillsborough, CA 94010
Fuller & Thaler Asset Management, Inc. (4) 1,145,500 7.78%
Russell J. Fuller
411 Borel Avenue, Suite 402
San Mateo, CA 94402
(1) We have received this information regarding share ownership from the
Schedule 13D/A that was filed with the SEC on September 12, 2002, and the
Form 4 filed with the SEC in February 2003. Mr. Forsythe has agreed to vote
and exchange all shares he or his affiliated entities has acquired in excess
of 15% of the outstanding stock consistent with the recommendations of the
Board of Directors of CART on all strategic matters for a period of three
years.
(2) We have received this information regarding share ownership from the
Schedule 13G that was filed with the SEC on February 13, 2003.
(3) We have received this information regarding share ownership from the
Schedule 13D/A that was filed with the SEC on November 29, 2001.
(4) We have received this information regarding share ownership from the
Schedule 13G that was filed with the SEC on February 13, 2003.
HOW MUCH STOCK DO CART'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table shows the amount of common stock of CART beneficially
owned (unless otherwise indicated) by CART's directors, the executive officers
of CART named in the Summary Compensation Table below, nominees, and the
directors and executive officers of CART as a group. Except as otherwise
indicated, all information is as of May 23, 2003.
The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as to
which the individual has the sole or shared voting power or investment power and
also any shares which the individual has the right to acquire as of July 22,
2003 (60 days after the record date of May 23, 2003) through the exercise of
stock options or other rights. Unless
5
otherwise indicated, each person has sole investment and voting power (or shares
such powers with his/her spouse) with respect to the shares set forth in the
following table.
AMOUNT AND PERCENT OF
NATURE OF SHARES
NAME BENEFICIAL OWNERSHIP(1) OUTSTANDING(2)
---- ------------------------ --------------
Christopher R. Pook............................................... 90,000 Vested Options *
Mario Andretti.................................................... 10,000 Vested Options *
Robert D. Biggs................................................... 0 -- 0
Carl A. Haas...................................................... 300,500 Indirect (3) 2.04%
James F. Hardymon................................................. 80,000 Vested Options *
James A. Henderson................................................ 1,000 Direct
20,000 Vested Options *
U.E. Patrick...................................................... 100 Direct 1.01%
141,300 Indirect (4)
7,585 Vested Options
Rafael A. Sanchez................................................. 10,000 Vested Options *
Frederick T. Tucker............................................... 20,000 Vested Options *
Derrick Walker.................................................... 7,500 Indirect (5) *
Thomas L. Carter.................................................. 3,000 Direct *
33,334 Vested Options
Vicki O'Connor.................................................... 20,834 Vested Options *
All current directors and executive officers as a
group (12) persons............................................. 4,100 Direct 4.96%
449,300 Indirect
291,753 Vested Options
* Represents less than 1% of the Company's outstanding common stock.
(1) "Vested Options" are stock options which may be exercised as of July 22,
2003.
(2) Percentages are based upon 14,718,134 shares of common stock outstanding
on May 23, 2003.
(3) The shares are held of record by Newman/Haas Racing, Carl Haas
Enterprises, Inc. and Mr. Haas' spouse.
(4) The shares are held of record by Patrick Racing, Inc.
(5) The shares are held of record by Derrick Walker Racing, Inc.
6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and holders of more than 10% of our common stock
to file with the Securities and Exchange Commission reports regarding their
ownership and changes in ownership of our stock. CART believes that during
fiscal 2002, its officers and directors complied with all Section 16(a) filing
requirements. In making this statement, CART has relied upon the written
representations of its directors and officers. CART believes that Gerald R.
Forsythe, a holder of more than 10% of our common stock, filed a Form 4 late,
reporting the sale of 135,000 shares of common stock in December 2002.
BOARD STRUCTURE AND COMPENSATION
During 2002, our Board had the following three committees: (1) Executive,
(2) Audit and (3) Compensation. Immediately following the 2002 Annual Meeting of
Stockholders, our Board had nine directors. Messrs. Andretti and Patrick will
not stand for re-election at this meeting. The Board has amended our bylaws to
provide for a board composed of eight directors.
The Board and Committee membership during fiscal 2002 and the function of
each committee are described below. During 2002, the Board held seven meetings
and nine telephonic meetings. Except for Mr. Sanchez, each nominee for Director
attended at least 75% of all Board and applicable Committee meetings for the
period of time he served as a member of the Board. Mr. Sanchez attended fewer
than 75% of all Board and applicable Committee meetings during 2002 due to
health issues, but has attended 100% of all Board and applicable Committee
meetings since January 1, 2003.
NAME OF DIRECTOR EXECUTIVE AUDIT COMPENSATION
---------------- --------- ----- ------------
Non-Employee Directors:
Mario Andretti (1)..................
Carl A. Haas .......................
James F. Hardymon .................. X* X*
James A. Henderson ................. X X
U.E. Patrick (1) ................... X
Rafael A. Sanchez................... X
Frederick T. Tucker ................ X(3) X*
Derrick Walker ..................... X X
Employee Directors:
Christopher R. Pook................. X
Number of Meetings in Fiscal 2002... 5 5 6(2)
X = Committee member; * = Chair
(1) Will not stand for re-election.
(2) The Committee also took one action in writing.
(3) Mr. Tucker served as a member of the Committee until Mr. Sanchez was
elected.
THE EXECUTIVE COMMITTEE
The Executive Committee meets or takes written action when the Board is
not otherwise meeting. The Executive Committee has full authority to act on
behalf of the Board, except that it cannot amend CART's by-laws, recommend any
action that requires the approval of the stockholders or take any other action
not permitted under Delaware law to be delegated to a committee. The members of
the Executive Committee are currently Messrs. Pook, Hardymon, Henderson and
Patrick.
7
THE AUDIT COMMITTEE
The Audit Committee reviews our auditing, accounting, financial reporting
and internal control functions and makes recommendations to the Board for the
selection of independent accountants. In discharging its duties, the committee:
- reviews and approves the scope of the annual audit and the
independent accountants' fees;
- meets independently with our internal accounting staff, our
independent accountants and our senior management; and
- reviews the general scope of our accounting, financial reporting,
annual audit and internal audit program, and matters relating to
internal control systems as well as the results of the annual audit.
The members of the Audit Committee are currently Messrs. Hardymon,
Henderson and Sanchez. Each member of the Audit Committee is an "independent
director," as defined in the rules of The New York Stock Exchange. The Audit
Committee operates pursuant to a written charter, a copy of which is attached as
Appendix A to this proxy statement.
THE COMPENSATION COMMITTEE
The Compensation Committee determines, approves and reports to the Board
on all elements of compensation for our elected executive officers and all new
employees whose annual salary exceeds $150,000. The members of the Compensation
Committee are currently Messrs. Tucker and Walker.
DIRECTOR COMPENSATION ARRANGEMENTS
The following information relates to CART's compensation and reimbursement
practices during 2002 for directors who are not CART officers and who are not
affiliated with teams participating in CART events (Messrs. Andretti, Hardymon,
Henderson, Sanchez and Tucker). CART employees and those directors who are
affiliated with teams participating in CART events do not receive any
compensation for their Board activities.
In addition to the cash compensation discussed below, members of the Board
of Directors who are not CART officers and who are not affiliated with teams
participating in CART events (Messrs. Andretti, Hardymon, Henderson, Sanchez and
Tucker) received options to purchase 10,000 shares of common stock when first
elected and options to purchase 5,000 shares upon each re-election.
During 2002, members of the Board of Directors who were not CART officers
and who were not affiliated with teams participating in CART events, were paid
an annual retainer of $25,000. All Board members were reimbursed for expenses
attendant to Board membership.
8
PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are eight nominees for election to our Board this year. All of
the nominees have served as directors since the last annual meeting, except for
Mr. Biggs, who is a nominee, but does not currently serve as a director.
Information regarding the business experience of each nominee is provided below.
Messrs. Andretti and Patrick will not stand for re-election at this Meeting. All
directors are elected annually to serve until the next annual meeting and until
their respective successor is elected.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION TO THE BOARD
OF EACH OF THE FOLLOWING NOMINEES.
ROBERT D. BIGGS Mr. Biggs retired from the accounting firm of
Nominee for Director Pricewaterhouse-Coopers in October 1999. Mr. Biggs was
Age 60 the managing partner of the PricewaterhouseCoopers
office in Peoria, Illinois from 1984 through 1990 and
was the managing partner of the Indianapolis office
from 1992 to 1999. Mr. Biggs has been the responsible
partner for accounting services for a variety of New
York Stock Exchange listed companies throughout his
career. Mr. Biggs graduated from Manchester College in
1967 with a Bachelor of Science degree.
CARL A. HAAS Since 1960, Mr. Haas has served as Chief Executive
Director since December 1997 Officer of Carl A. Haas Auto Imports, a company
Age 73 specializing in the distribution of race cars and
parts. Since 1982, Mr. Haas has also served as the
Managing Partner of Newman Haas Racing. Since 1992, he
has served as President of Carl A. Haas Racing Teams,
Ltd. and, since 1996, as the Managing Member of Texaco
Grand Prix of Houston, LLC. Both Carl A. Haas Racing
Teams, Ltd. and Texaco Grand Prix of Houston, LLC are
race promotion organizations. In addition, Mr. Haas
also holds positions with various companies, including,
but not limited to, Carl A. Haas Enterprises, Inc.,
Team Haas USA Ltd., Road America, SCCA Pro Racing, Inc.
and Milwaukee Mile, Inc., all of which are racing
related businesses.
JAMES F. HARDYMON Mr. Hardymon retired as Chairman and Chief Executive
Director since April 1998 Officer of Textron, Inc. in January 1999. Textron, Inc.
Age 68 is a public company, supplying aerospace, automotive
and industrial components. He joined Textron in 1989 as
President and Chief Operating Officer, became Chief
Executive Officer in 1992, assumed the additional title
of Chairman in 1993. Prior to joining Textron, Mr.
Hardymon was President, Chief Operating Officer and a
director of Emerson Electric Co., a global manufacturer
of electrical and electronic products and systems. Mr.
Hardymon is a director of Air Products and Chemicals,
Inc., Schneider Electric SA, Lexmark International,
Inc., Circuit City Stores, Inc. and American Standard
Companies, Inc. Mr. Hardymon is also a member of the
Advisory Boards of Investcorp International, Inc. and
Proudfoot Consulting Company.
9
JAMES A. HENDERSON Mr. Henderson retired as Chairman of the Board and
Director since July 2000 Chief Executive Officer of Cummins, Inc. in 1995 after
Age 68 serving as Chief Executive Officer since 1994 and its
President since 1977. He received a Bachelor of Arts
degree from Princeton University in 1956, served in the
U.S. Navy and received an M.B.A. from Harvard in 1963.
He joined Cummins, Inc. in 1964. Mr. Henderson serves
as a director of SBC Communications, Inc.,
International Paper Company, Ryerson Tull, Inc., Rohm
and Haas Company, and Nanophase Technologies
Corporation.
CHRISTOPHER R. POOK Mr. Pook has served as President and CEO of the Company
Director since January 2002 since December 2001. Prior to joining the Company, Mr.
Age 62 Pook served as President of the Grand Prix Association
of Long Beach, Inc., a subsidiary of Dover Downs,
Entertainment, Inc. In 1973, Mr. Pook conceived the
idea of running a world-class automobile race through
the city streets of Long Beach, and his dream became a
reality when the initial event, a Formula 5000 event,
was staged in September 1975. Thereafter, the Long
Beach Grand Prix became a Formula One race and "The
Toyota Grand Prix of Long Beach" evolved into an annual
event on the World Championship Grand Prix circuit.
Following the 1983 event, Mr. Pook made a decision to
change the format of the Long Beach Grand Prix from
Formula One to CART Champ Cars. In 1996, the Grand Prix
Association of Long Beach, Inc., with Mr. Pook as
President and Chief Executive Officer, completed an
initial public offering of stock, and also acquired
tracks in St. Louis and Memphis. In 1998, this company
was purchased by Dover Downs Entertainment, Inc. (NYSE:
DVD). Mr. Pook has served as a member of the Board of
Directors of Dover Downs Entertainment, Inc. since
1998. Mr. Pook is a Member of the Board of Directors of
the Los Angeles Organizing Committee for the 2012
Olympic Games; he is Co-Chair of the Local Organizing
Committee for the 2005 FINA World Swimming
Championships and is Chairman of the Board of the Long
Beach Area Convention & Visitors Bureau.
RAFAEL A. SANCHEZ Mr. Sanchez has served as President and CEO of various
Director since June 2002 ventures since 1998, including Sanchez Motorsports
Age 54 Group, Inc., Motorsports Americas, Inc., Douglas Road
Partners, and RAS Development, Inc. From 1995 to 1998,
Mr. Sanchez served as the President and CEO of
Homestead-Miami Speedway. Mr. Sanchez was the founder
of the Miami Grand Prix, the street race that ran
through downtown Miami from 1983 through 1995. Mr.
Sanchez developed the Homestead-Miami Speedway.
10
FREDERICK T. TUCKER Mr. Tucker served as Deputy to the Chief Executive
Director since May 2000 Office of Motorola, Inc. from October 2000 until his
Age 62 retirement in February 2001. From January 2000 to
October 2000, Mr. Tucker was President, Semiconductor
Products Sector, and Deputy to the Chief Executive
Officer of Motorola, Inc. After joining Motorola in
1965, Mr. Tucker served in a number of senior
management positions, including President and General
Manager of the Automotive, Component, Computer and
Energy Sector. Prior to that, Mr. Tucker served as
Executive Vice President and General Manager of the
Automotive and Industrial Electronics Group and
Corporate Vice President and General manager of
Motorola's Bipolar Analog IC Division in Arizona, a
manufacturer of semiconductor products. Mr. Tucker has
served as a trustee of Rochester Institute of
Technology since 1986.
DERRICK WALKER Mr. Walker is currently the President and owner of
Director since December 1997 Walker Racing, LLC, which was formed in 1990. In 1988,
Age 56 he joined Al Holbert's Porsche Indy car project and
assumed control of the program upon the death of Al
Holbert. From 1980 to 1988, he was responsible for
Penske Racing, Inc.'s Indy car program.
11
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed Deloitte &
Touche LLP as CART's independent accountants to audit CART's consolidated
financial statements for the year ended December 31, 2003. During 2002, Deloitte
& Touche LLP, served as CART's independent accountants and provided certain tax
and consulting services. Representatives of Deloitte & Touche LLP are expected
to attend the meeting where they will be available to respond to questions and,
if they desire, to make a statement.
Audit Fees. The aggregate fees billed by Deloitte & Touche LLP for
professional services rendered for the audit of our annual financial statements
for 2002 and the review of the financial statements in our Forms 10-Q was
$121,519.
Tax Fees. The aggregate fees billed by Deloitte & Touche LLP for tax
compliance, tax advice and tax planning services was $23,153.
All Other Fees. The aggregate fees billed by Deloitte & Touche LLP for
other non-audit services rendered to us for the year ended December 31, 2002 was
$14,828.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS CART'S INDEPENDENT ACCOUNTANTS FOR 2003.
If the appointment is not ratified, our Board will select other independent
accountants.
12
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table provides information regarding each of CART's
executive officers and certain key employees. Messrs. Pook and Lopes have
entered into employment agreements pursuant to which they hold their current
positions. All other officers are elected to serve one year terms.
NAME AGE POSITION
---- --- --------
Christopher R. Pook(1) 62 President and Chief Executive Officer
David Clare 48 Chief Operating Officer
Thomas L. Carter 47 Chief Financial Officer/Vice President
of Administration of CART, Inc.
Steve Fusek 40 Vice President of Marketing of CART,
Inc.
John Lopes 41 Vice President of Racing Operations of
CART, Inc.
Adam Saal 39 Vice President of Communications of
CART, Inc.
J. Carlisle Peet 50 Vice President and Chief Legal Officer
of CART, Inc.
Rena Shanaman 51 Vice President of Joint Venture
Promoter Relations of CART, Inc.
Vicki O'Connor 57 President of Pro-Motion Agency, Ltd.
(Toyota Atlantic Series)
-----------------------
(1) See Mr. Pook's biography on page 10.
David Clare was elected Chief Operating Officer of the Company in
January 2003. From April 2000 through December 2002, Mr. Clare was a director of
Merit/Burson-Marsteller, a leading communications company. From April 1996 to
March 2000, Mr. Clare was managing director of Event Promotion International
Limited, an event and sports marketing company. Prior to assuming the position
with Event Promotion International Limited, Mr. Clare served as financial
controller and various other positions in Formula 1 Constructors Association for
a period of approximately ten years.
Thomas L. Carter was elected Chief Financial Officer in October 2000
and was first named Vice President of Finance and Administration of CART, Inc.
in March 1998 after serving as Director of Finance since February 1997. From
1995 to 1996, Mr. Carter was employed by Rehman Robinson as a senior tax
manager. From 1990 to 1995, Mr. Carter was employed by Deloitte & Touche as a
senior tax consultant. From 1973 to 1989, Mr. Carter worked in various positions
with the Michigan Department of Treasury. Mr. Carter is a certified public
accountant.
13
Steve Fusek was named Vice President of Marketing of CART, Inc. in
December 2001. From May 1996 through September 2001, Mr. Fusek served as Vice
President of Business Operations for PacWest Racing Group, responsible for
accounting, marketing, contracts, hospitality and graphics. Prior to assuming
that position, Mr. Fusek served in various capacities with PacWest Racing Group
from 1994, including Team Coordinator and Business Manager. During 1992 and
1993, Mr. Fusek was team coordinator and had team operations responsibilities
with Walker Racing.
John Lopes was elected Vice President of Racing Operations in September
2001. Mr. Lopes graduated in 1985 from the U.S. Military Academy at WestPoint,
New York with concentrations in both engineering and international security. He
served over five years as an air/cavalry aviation officer and served as an
aviation headquarters commander in the seventh infantry division and during
Operation Just Cause in the Republic of Panama. Mr. Lopes began his career in
motor sports in 1990 while attending Duke University School of law where he
graduated with a juris-doctorate in 1993. While in law school, Mr. Lopes also
worked full-time on public relations and marketing projects in NASCAR with all
levels including Winston Cup. From 1993 to 1998, Mr. Lopes practiced law in
Dallas, Texas with the law firm of Gardere and Wynne, extending his motor sports
participation by representing drivers, teams and sponsors in the stockcar
industry. He worked with large privately held businesses as well as professional
athletes and the NBA's Dallas Mavericks. From 1998 to September 2001, Mr. Lopes
served as General Manager of TeamXtreme Racing in the Indy Racing League.
Adam Saal joined CART as the Vice President of Communications in
January 2002, as part of the management restructuring initiated by President and
CEO Christopher R. Pook. The appointment marks the second time Mr. Saal has held
the top communications and public relations position at CART, previously heading
the department in 1995 through 1996. A career motorsports professional, Mr. Saal
began with the Barber Saab Pro Series (now Barber Dodge Pro Series) in 1988 as a
public relations account executive. Later that year, Mr. Saal joined the
International Motor Sports Association (IMSA) as director of communications, his
first management position. In 1991, Mr. Saal joined Mr. Pook at the Grand Prix
Association of Long Beach as that company's vice president of communications. In
that capacity, Saal ran all of the media, public relations and communications
projects related to the annual Toyota Grand Prix of Long Beach and other company
projects. In December 1994, Saal joined CART for the first time as Director of
Public Relations and stayed with the organization through December 1996 before
leaving to start his own communications and public relations company, Saal
L.L.C., which served as the primary and exclusive public relations and
communications agency for the former CART series, the Dayton Indy Lights
Championship from January 1997 through November 2001.
J. Carlisle Peet became Vice President/Chief Legal Officer of CART,
Inc. in June 2002. Mr. Peet graduated from Syracuse University School of Law in
1978. From 1981 through 2001, he served as Assistant General Counsel for three
publicly traded companies, Rollins Truck Leasing Corp., Matlack Inc., and
Rollins Environmental Services, Inc. Concurrently, from 1988 through 2001, Mr.
Peet served as Vice President and General Counsel for Rollins Leasing Corp., the
operating subsidiary of Rollins Truck Leasing Corp.
Rena Shanaman is serving in a new role beginning in January 2002, as
Vice President of Joint Venture Promoter Relations, She was first named Vice
President of Client Relations for CART, Inc. in July 1996 after serving as the
General Manager of CART's inaugural U.S. 500 on a contractual basis. Ms.
Shanaman has been involved in motorsports for more than 16 years, including the
Detroit Grand Prix, Molson Indy Vancouver and the Arrivederci, Mario tour for
racing legend Mario Andretti.
Vicki O'Connor is the founder, and has served as President, of
Pro-Motion Agency, Ltd., which has administered the Atlantic Championship Series
since 1985. From 1983 through 1984, Pro-Motion also organized the Pro Sports
2000 Series.
14
EXECUTIVE COMPENSATION
The following table discloses compensation received by each person who
served as CART's Chief Executive Officer during 2002 and its four other most
highly paid executive officers for the fiscal year ending December 31, 2002, as
well as their compensation for the fiscal years ending December 31, 2001 and
2000.
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM COMPENSATION
COMPENSATION AWARDS
----------------------- ----------------------
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) SARS (#) COMPENSATION ($)
--------------------------- ---- ---------- --------- ---------------- -------- ----------------
Christopher R. Pook(1) 2002 $375,000 $169,000 (2) 250,000 $20,000(3)
President and CEO 2001 14,423 120,000 450,000 0
Thomas L. Carter 2002 $210,000 $ 0 (2) 40,000 $ 5,330(3)
Chief Financial Officer 2001 200,000 20,000 50,000 3,435
Vicki O'Connor 2002 $195,700 $ 0 (2) 0 $ 5,285(3)
President of Pro-Motion 2001 190,000 0 5,000 6,153
Agency, Ltd. 2000 185,000 0 5,000 10,051
(1) Mr. Pook was elected as President and CEO in December 2001. He was not
employed by CART prior to that time. He has entered into an employment
agreement whereby he will be paid a base salary of $375,000 per year.
(2) The aggregate amount of perquisite compensation to be reported herein
is less than the lesser of $50,000 or 10% of the total annual salary
and bonus reported for the named executive officer. No other annual
compensation was paid or payable to the named executive officers in the
years indicated.
(3) Includes the payment of term life insurance premiums on behalf of the
named executive officer, as follows: Mr. Pook ($2,580); Mr. Carter
($2,580); Ms. O'Connor ($2,535). Includes the contributions to defined
benefit plans on behalf of the named executive officer, as follows: Mr.
Pook ($2,750); Mr. Carter ($2,750); Ms. O'Connor ($2,750). Also
includes the payment of premiums for life and disability insurance on
behalf of Mr. Pook in the amount of $14,670.
15
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in 2002 to
each of the named executive officers.
INDIVIDUAL GRANTS
-----------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR(2) ($/SHARE) DATE(3) VALUE ($)(4)
---- ---------- -------------- --------- ------- ------------
Christopher R. Pook 250,000 49% $4.90 8/27/2012 $599,889
Thomas L. Carter 40,000 10% 4.90 8/27/2012 95,982
Vicki O'Connor 0 0 -- -- --
-----------------------------
(1) The options granted in 2002 are exercisable 33% after the first year,
66% after the second year and 100% after the third year.
(2) CART granted options representing 513,250 shares to employees in 2002.
(3) The options expire the earlier of the date set forth herein or within a
period specified in the option agreement following termination of
employment with CART.
(4) CART used a Black-Scholes model of option valuation to determine grant
date present value. CART does not advocate or necessarily agree that
the Black-Scholes model can properly determine the value of an option.
Calculations for the named officers are based on a ten-year option
term. Other assumptions used for the valuations are: interest rate of
3%; annual dividend yield of 0%; and volatility of 32%.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in 2002 by
each of the named executive officers and the values of each of such officer's
unexercised options at December 31, 2002.
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-THE-
NUMBER OF UNEXERCISED OPTIONS AT MONEY OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Christopher R. Pook 0 0 90,000 610,000 0 0
Thomas L. Carter 0 0 33,334 81,666 0 0
Vicki O'Connor 0 0 20,834 11,666 0 0
--------------------------
(1) The value of unexercised options is based upon the difference between
the exercise price and the average of the high and low market prices on
December 31, 2002 of 3.70.
16
EQUITY PLAN COMPENSATION INFORMATION
The following table sets forth information regarding outstanding
options, warrants and rights and shares reserved for future issuance under our
existing equity compensation plans as of December 31, 2002. Descriptions of the
plans are included in footnote 13 of our audited financial statements. Each of
these plans have been previously approved by the Company's stockholders.
NUMBER OF SECURITIES
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE REMAINING AVAILABLE FOR
BE ISSUED UPON EXERCISE EXERCISE PRICE OF FUTURE ISSUANCE (EXCLUDING
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS, RIGHTS (a) WARRANTS, RIGHTS (b) COLUMN (a)) (c)
------------- -------------------- -------------------- ---------------
Equity compensation plans
approved by security holders:
(1) 1997 Employee and
Director Stock Option Plans 175,270 $18.88 none*
(2) 1997 Director Stock
Option Plan 90,000 $21.20 none*
(3) 2001 Long-Term Stock
Incentive Plan 1,136,050 $11.49 363,950
Equity compensation plans
not approved by security
holders none not applicable not applicable
---- -------------- --------------
Total 1,401,320 $13.04 363,950
========= ====== =======
----------------
* No further options will be granted under either the 1997 Stock Option Plan or
the 1997 Director Stock Option Plan.
REPORT OF THE COMPENSATION COMMITTEE
CART's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Compensation Committee").
The Compensation Committee, which is comprised of non-employee directors, is
responsible for approving and reporting to the Board on all elements of
compensation for elected corporate officers. The Compensation Committee of the
Board of Directors has furnished the following report on Executive Compensation
for the year ended December 31, 2002
COMPENSATION PROGRAM. The compensation program for the executive
officers of the Company consist of three (3) key elements: (i) base salary; (ii)
performance based annual bonus; and (iii) periodic grants of stock options.
Compensation Committee believes that this three part approach best serves the
interests of CART and its stockholders. It enables CART to meet the requirements
of the highly competitive environment in which CART operates, while insuring
that executive officers are compensated in a way that advances both the short
and long-term interests of the stockholders. The variable annual bonus and stock
options relate to an evaluation of the contribution made by the officers of CART
to its performance and to his or her goals, and with respect to the stock
options, is long-term remuneration related directly to the stock appreciation
realized by all CART stockholders.
BASE SALARY. Base salaries of CART's executive officers, as well as
changes in such salaries, take into account such factors as competitive industry
salaries; a subjective assessment of the nature of the position; the
contribution and experience of the officer; negotiated terms of any applicable
employment contracts; and the length of the officer's service. Salaries of all
new employees earning in excess of $150,000 per annum are reviewed and approved
by the Compensation Committee.
17
ANNUAL BONUS. Annual bonuses for officers are based upon the
recommendation of the Chief Executive Officer and are reviewed and approved by
the Compensation Committee. Bonuses are based on a number of factors, including
achieving CART's financial and operational goals and overall performance by the
individual, including meeting certain specific goals and objectives.
STOCK OPTIONS. The Compensation Committee's policy with respect to
Stock Options is to grant options reflecting the participant's position and
ability to influence CART's overall performance. The Stock Option Plan is
intended to provide participants with an increased incentive to make
contributions to the long-term performance and growth of CART and to attract and
retain qualified employees. CART's approach has been to grant options to a
significant number of employees at all levels in order to align all employees
with the stockholders in seeking stockholder value.
CHIEF EXECUTIVE OFFICER COMPENSATION. Christopher R. Pook was elected
President and CEO of CART in December 2001. Under the terms of Mr. Pook's
employment agreement, he received a salary of $375,000 for his services in 2002
and received a bonus of $169,000. During 2002, we granted Mr. Pook options to
purchase 250,000 shares of the Company's common stock, vesting over a three (3)
year period. Effective January 1, 2003, we increased Mr. Pook's salary to
$450,000 for his services in 2003. We believe that the increase in Mr. Pook's
base salary was warranted based on our assessment of the performance of Mr. Pook
in a very difficult environment. In addition to Mr. Pook's salary, he will be
entitled to a bonus for services provided during 2003 based upon specific
written criteria. The Compensation Committee spent a considerable amount of time
analyzing various performance criteria, which are important to the Company and
its stockholders and, which will be used as a measurement of Mr. Pook's
performance and determine any bonus for 2003
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. The Committee intends to
comply with the requirements of Section 162(m) of the Internal Revenue Code of
1986, as amended, which imposes a limitation on the deductibility of
nonperformance-based compensation in excess of $1 million paid to a named
executive officer. The Compensation Committee believes the Company should be
able to continue to manage its executive compensation program to preserve
federal income tax deductions.
Compensation Committee:
Frederick T. Tucker, Chairman
Derrick Walker
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Board's Compensation Committee is or has
been an officer or employee of CART or any of its subsidiaries during the last
10 years.
REPORT OF THE AUDIT COMMITTEE
The Securities and Exchange Commission rules require the company to
include in its proxy statement a report from the Audit Committee of the Board.
The following report concerns the Committee's activities regarding oversight of
the company's financial reporting and auditing process.
The Audit Committee is comprised solely of independent directors, as
defined by the New York Stock Exchange, and it operates under a written charter
adopted by the Board of Directors, a copy of which is attached to this proxy
statement as Exhibit A. The composition of the Audit Committee, the attributes
of its members and the responsibilities of the Committee, as reflected in its
charter, are intended to be in accordance with applicable requirements for
corporate audit committees. The Committee reviews and assesses the adequacy of
its charter on an annual basis.
18
As described more fully in its charter, the purpose of the Audit
Committee is to assist the Board of Directors in its general oversight of the
company's financial reporting, internal control and audit functions. Management
is responsible for the preparation, presentation and integrity of the company's
financial statements, accounting and financial reporting principles, internal
controls and procedures designed to ensure compliance with accounting standards,
applicable laws and regulations. Deloitte & Touche LLP, the company's
independent auditing firm, is responsible for performing an independent audit of
the consolidated financial statements in accordance with generally accepted
auditing standards.
The Audit Committee members are not professional accountants or
auditors, and their functions are not intended to duplicate or to certify the
activities of management and the independent auditor. The Audit Committee acts
only in a board-level oversight capacity. In its oversight role, the Committee
relies on the work and assurances of the Company's management, which has the
primary responsibility for financial statements and reports, and of the
independent auditors, who, in their report, express an opinion on the conformity
of the Company's annual financial statements to generally accepted accounting
principles.
In connection with the preparation and filing of our Annual Report on
Form 10-K for the year ended December 31, 2002 the Audit Committee:
- reviewed and discussed the audited financial statements with
CART's management,
- discussed with Deloitte & Touche LLP, our independent
auditors, the matters required to be discussed by Statement of
Auditing Standards No. 61 (as modified or supplemented), and
- received the written disclosures and the letter from Deloitte
& Touche LLP required by Independence Standards Board Standard
No. 1 (as modified or supplemented) and discussed the
independence of Deloitte & Touche LLP.
- had private sessions, at each of its meetings, with the
Company's independent auditors and, separately, with the
Company's financial management team, at which candid
discussions of financial management, accounting and internal
control issues took place.
Management has reviewed the audited financial statements in the Annual
Report with the Audit Committee including a discussion of the quality, not just
the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial
statements. In addressing the quality for management's accounting judgments,
members of the Audit Committee asked for management's representations that the
audited consolidated financial statements of the Company have been prepared in
conformity with generally accepted accounting principles.
Based on the review and discussions referred to above, among other
things, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Championship Auto Racing Teams,
Inc. Annual Report on Form 10-K for the year ended December 31, 2002.
AUDIT COMMITTEE
James F. Hardymon, Chairman
James A. Henderson
Rafael A. Sanchez
19
STOCK PERFORMANCE GRAPH
The graph below shows the cumulative total shareholder return from the
date of CART's initial public offering assuming the investment of $100 on March
10, 1998 in each of CART's common stock, the S&P 500 Index and the Company's
peer group. For purposes of this stock performance graph, CART has selected all
of the auto racing industry public companies as its peer group. The peer group
is comprised of Dover Downs Entertainment, Inc., International Speedway
Corporation, and Speedway Motorsports, Inc.
[PERFORMANCE GRAPH]
Assumes that the value of the investment in CART stock and each index
was $100 at March 10, 1998 and that all dividends were reinvested.
PLOT POINTS
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
CART 100.00 155.92 121.05 110.52 84.68 19.47
S&P 500 100.00 118.62 143.58 130.51 115.00 89.59
Peer Group 100.00 120.17 143.26 108.98 117.68 103.07
Russell 2000 100.00 92.35 111.98 108.72 111.58 88.72
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have historically entered into transactions with related parties,
because several of our directors and one of our significant shareholders are
team owners. We believe that it is necessary and appropriate to have team owners
involved as directors or significant shareholders of the Company because of
their unique knowledge of our business. We believe that all the transactions
which we have entered into with our directors or significant shareholders, are
comparable to the terms that we have in the past or could in the future enter
into with third parties with respect to each of these transactions. In order to
avoid conflicts of interest, any of our directors who are affiliated with an
entity that is entering into a transaction with us have not and will not vote on
any matters related to such transactions and may, in certain circumstances,
refrain from participating in any discussions related to such transactions.
The related party transactions under "Purse Distributions, Entry
Support Program and Lease Arrangements" are all payments or transactions that
are made on the identical basis to all race teams, whether they are affiliated
with directors or significant shareholders or not affiliated. The payments
payable to related parties under the caption "Team Assistance Program" relate to
further assistance that the Company is providing to race teams to assure their
participation in the 2003 race season. The amounts payable to each race team
vary, depending upon the team's ability to raise third party sponsorship, the
number of cars that the team will race in 2003, their budget and other factors.
The Company has determined that these payments are necessary in order to assure
a proper field for 2003 and believes that the amounts payable to each of the
race teams affiliated with a director is consistent with arrangements that the
Company could enter into with third parties. Both of these programs were
developed to insure the necessary participation in the series. Without this
additional funding, it is unlikely that there would have been 18 teams, which
would result in defaults under certain of the Company's agreements with
promoters and television and could have resulted in severe financial
consequences to the Company.
PURSE DISTRIBUTIONS, ENTRY SUPPORT PROGRAM AND TEAM ASSISTANCE
We have entered into, and we will continue to enter into, transactions
with entities that are affiliated with our directors and/or 5% stockholders who
are owners of our race teams. Race teams that participate in the Champ Car World
Series receive purse distributions on a per race basis and from the year end
point fund, which amounts have been paid based solely upon their performance in
specific races. All of these payments are made to our race teams regardless of
the affiliation with our directors or significant stockholders. During 2002, we
also paid a participation payment to our race teams, including those affiliated
with directors (or directors who have resigned during the year) and/or 5%
stockholders. The following table provides information with respect to payments
made during 2002 by us to race teams that are or were affiliated with directors
and/or significant stockholders of CART:
RACE TEAM/AFFILIATED PERSON PURSE DISTRIBUTIONS PARTICIPATION PAYMENTS
--------------------------- ------------------- ----------------------
Newman/Haas Racing/Carl A. Haas $ 2,677,500 $ 380,000
Team Green/Barry E. Green 2,013,500 570,000
Chip Ganassi Racing Teams, Inc./Chip Ganassi 2,185,000 540,000
Forsythe Racing, Inc./Gerald R. Forsythe 1,532,250 380,000
Patrick Racing, Inc./U.E. Patrick 317,250 190,000
Derrick Walker Racing, Inc./Derrick Walker 317,750 190,000
In 2003, we will lease engines and provide financial assistance to
every team that participates in the Champ Car World Series, including teams
affiliated with our directors and/or 5% stockholders. The financial assistance
payments relate to two programs instituted for the 2003 season, the Entry
Support Program (ESP) and the Team Assistance Program. ESP will provide up to
$42,500 in cash payments to teams, per race, for each car entered into the
series.
The Company has entered into a sponsorship agreement with Ford Motor
Company, which provides in part, that Ford will lease to each of the teams Ford
vehicles for their use in 2003. For ease of administration, Ford has leased
these vehicles to the Company and the Company has subleased the vehicles to each
team on a net net basis. There is no net cost or benefit to the Company related
to this arrangement.
21
The Company purchased one hundred (100) race engines from Cosworth
Racing, Inc. for a total purchase price of $4.0 million and agreed to pay for
track support in the amount of $1.5 million. The Company in turn has leased
these engines to each team on the basis of $100,000 per entrant per year.
The following table lists the estimated amount of engine lease income
we will receive and Entry Support Payments we will make to related parties for
the 2003 race season.
-----------------------------------------------------------------------------------
ENGINE LEASE INCOME ESP PAYMENTS
RACE TEAM/AFFILIATED PERSON FROM TEAMS TO TEAMS
--------------------------- ---------- --------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Newman/Haas Racing/Carl A. Haas $200,000 $1,530,000
-----------------------------------------------------------------------------------
Forsythe Racing, Inc./Gerald R. Forsythe 200,000 1,530,000
-----------------------------------------------------------------------------------
Patrick Racing, Inc./U.E. Patrick 100,000 765,000
-----------------------------------------------------------------------------------
Derrick Walker Racing, Inc./Derrick Walker 200,000 1,530,000
-----------------------------------------------------------------------------------
TEAM ASSISTANCE PROGRAM. The Team Assistance Program will supply an
additional $30.0 million in team assistance spread over the 2003 race season as
described above. The following table sets forth the Team Assistance Program
payments to teams affiliated with directors and/or 5% stockholders.
-----------------------------------------------------------------------
RACE TEAM/AFFILIATED PERSON TEAM ASSISTANCE PAYMENTS
--------------------------- ------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Newman/Haas Racing/Carl A. Haas* $ 2,000,000
-----------------------------------------------------------------------
Patrick Racing, Inc./U.E. Patrick* 1,400,000
-----------------------------------------------------------------------
Derrick Walker Racing, Inc./Derrick Walker 5,925,000
-----------------------------------------------------------------------
* These agreements would put the Company over the $30.0 million in total team
assistance the board of directors approved. The board has approved these
contracts contingent on reducing the overall team assistance so as not to exceed
$30.0 million.
PROMOTER AGREEMENTS
Some of our directors or stockholders either control or are affiliated
with others who control racing venues which stage CART and other racing events.
We have entered into the following agreements with entities associated with
directors or 5% stockholders:
Carl A. Haas, a director of the Company and a race team owner, is a
principal owner of Carl Haas Racing Teams, Ltd. and Texaco Houston Grand Prix
L.L.C. ("HGP"), each of which have entered into Promoter Agreements with respect
to Champ Car World Series races at the Wisconsin State Park Speedway in
Milwaukee, Wisconsin and at a temporary road course in Houston, Texas. In the
second quarter of 2002 the Promoter Agreement for the Milwaukee race was renewed
for the 2002 event with the promoter having the option to extend for the 2003
and 2004 years. The sanction fees payable to CART under this agreement is
similar to those paid by independent race promoters. Pursuant to the Promoter
Agreement, entities affiliated with Mr. Haas have paid sanction fees to CART of
$1.7 million. We are currently in negotiations regarding the option for the 2003
and 2004 events. In addition, we have incurred a total of $100,000 in sales
costs and $100,000 in marketing expenses in relation to our race at Wisconsin
State Park Speedway during 2002. The promoter agreement in regards to the
Houston, Texas event provided for races to be held starting in 1998 through
2003. The Houston, Texas race was not held in 2002 and will not be held in 2003
due to construction on the temporary circuit in downtown Houston. Therefore, the
promoter agreement has been terminated by mutual agreement. Carl Haas Racing
Teams, Ltd. paid a $500,000 termination fee to CART and CART has received an
option to acquire certain assets of HGP, used in operating the Houston event,
for $750,000. This option was exercised and payment was made in January 2003.
22
Gerald R. Forsythe, a race team owner and 24.9% stockholder, is a
principal owner of the entities which entered into Promoter Agreements with
respect to Champ Car World Series races in Monterrey, Mexico and Mexico City,
Mexico. These entities affiliated with Mr. Forsythe have paid sanction fees to
CART in the aggregate amount of $6.1 million for 2002. We are currently
renegotiating the remaining years of the agreements.
In addition, we have paid a total of $200,000 in sales costs and
$200,000 in marketing expenses to these entities during 2002.
In order to change the date of the Mexico City race as requested by Mr.
Forsythe's affiliated entity, we have paid another promoter $250,000. Mr.
Forsythe's affiliated entity reimbursed us for $125,000 of that expense.
Gerald R. Forsythe is also a principal owner of an entity which entered
into a Promoter Agreement with respect to Champ Car World Series races in
Rockingham, England. The agreement provided for a race to be held beginning in
2001 through 2006. Following the cancellation of the race scheduled to be run in
Germany, officials at Rockingham expressed concern regarding the viability of
running a single event in Europe. In order to assure that the Rockingham event
could move forward in 2002, we negotiated an amendment to the Promoter Agreement
which reduced the sanction fee to $2.8 million and we assumed certain costs,
including freight and transportation, in the amount of $900,000. In addition,
the terms of the future years of the agreement, 2003-2006, were subject to
renegotiation. This renegotiation has subsequently resulted in the cancellation
of the remaining years of the agreement. In addition, we have paid a total of
$100,000 in sales costs and $400,000 in marketing expenses to this entity during
2002.
Floyd R. Ganassi Jr., a former director of the Company and a race team
owner, is a principal owner of Chicago Motor Speedway, LLC and has entered into
a Promoter Agreement with respect to a Champ Car World Series race at Chicago
Motor Speedway in Cicero (Chicago), Illinois. Pursuant to the terms thereof, a
Championship race was to be held through 2003. The Chicago Motor Speedway, LLC
was to pay sanction fees to CART of $2.0 million for 2002 and $2.1 million for
2003. In 2002, the Chicago Motor Speedway, LLC announced the suspension of all
race events at Chicago Motor Speedway. We then entered into an agreement with
the Chicago Motor Speedway, LLC where we rented the track for $850,000 in 2002
and promoted the race ourselves.
OTHER TRANSACTIONS
In addition to the above, we have entered into the following
transactions with related parties:
Mr. Forsythe is also a principal owner of the entity that holds our
Mexican television rights through 2004. In return for these rights, we received
a minimum guarantee of $300,000 in 2002 and will receive a minimum guarantee of
$325,000 and $350,000 for each of the two years ending 2003 and 2004,
respectively. In addition, we will receive 70% of the net profits, if any, until
we reach $500,000, $550,000 and $600,000 for each of the three years ending
2002, 2003 and 2004, respectively.
Mr. Ganassi is also principal owner of Target Chip Ganassi Racing,
Inc., which entered into an agreement by which Target Chip Ganassi Racing Inc.
ran a third car for a portion of the 2002 season. Pursuant to the terms thereof,
we paid Target Chip Ganassi Racing, Inc. $1.7 million for running the third car,
and we received the right to sell certain sponsorship space on that car.
Ralph Sanchez, a director of the Company, is a principal owner of RAS
Development, Inc. which has entered into a five year lease agreement with the
Company for office space in Miami, Florida. Payments for this lease total
$80,292, $97,957, $99,081, $100,045, $101,008 and $16,861 for 2003, 2004, 2005,
2006, 2007 and 2008, respectively.
PAYMENTS TO CART
In addition to the payments described above, CART receives revenues
from its race teams, including those affiliated with CART directors and/or 5%
stockholders, for entry fees, equipment leases and other payments based
23
solely on participation in CART events and CART's self-promoted event. During
2002, race teams affiliated with CART directors and/or 5% stockholders made such
payments to CART as follows:
Team Green/Barry E. Green $187,360
Forsythe Racing, Inc./Gerald R. Forsythe 106,636
Chip Ganassi Racing Teams, Inc./Chip Ganassi 94,805
Newman/Haas Racing/Carl A. Haas 142,368
Patrick Racing, Inc./U.E. Patrick 71,500
Derrick Walker Racing, Inc./Derrick Walker 50,050
ADDITIONAL QUESTIONS AND INFORMATION REGARDING THE
ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Q: WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE MEETING?
A: Other than the two proposals described in this proxy statement, we do not
expect any matters to be presented for a vote at the annual meeting. If you
grant a proxy, the persons named as proxy holders, Christopher R. Pook and
Thomas L. Carter, will have the discretion to vote your shares on any
additional matters properly presented for a vote at the meeting. If for any
unforeseen reason any of our nominees is not available as a candidate for
director, the persons named as proxy holders will vote your proxy for such
other candidate or candidates as may be nominated by the Board of Directors.
Q: WHICH SHARES ARE ENTITLED TO BE VOTED?
A: Each share of our common stock outstanding as of the close of business on May
23, 2003, the record date, is entitled to one vote at the annual meeting. On
the record date, we had 14,718,134 shares of common stock issued and
outstanding, held of record by 437 holders.
Q: WHAT IS THE QUORUM REQUIREMENT FOR THE MEETING?
A: The quorum requirement for holding the meeting and transacting business is a
majority of the outstanding shares entitled to be voted. The shares may be
present in person or represented by proxy at the meeting. Both abstentions
and broker non-votes are counted as present for the purpose of determining
the presence of a quorum.
Q: WHO WILL COUNT THE VOTE?
A: A representative of Wells Fargo Minnesota, N.A., CART's transfer agent, will
tabulate the votes and act as the inspector of election.
Q: IS MY VOTE CONFIDENTIAL?
A: Proxy instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting privacy. Your
vote will not be disclosed either within CART or to third parties except (1)
as necessary to meet applicable legal requirements, (2) to allow for the
tabulation of votes and certification of the vote, or (3) to facilitate a
successful proxy solicitation by our Board. Occasionally, stockholders
provide written comments on their proxy card which are then forwarded to CART
management.
Q: WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?
A: CART will pay the entire cost of preparing, assembling, printing, mailing and
distributing these proxy materials, except that certain expenses for Internet
access will be incurred by you if you choose to access the proxy materials
and/or vote over the Internet. In addition to the mailing of these proxy
materials, the solicitation of proxies or votes
24
may be made in person, by telephone or by electronic communication by our
directors, officers and employees, who will not receive any additional
compensation for such solicitation activities. We will reimburse brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for forwarding proxy and solicitation materials to
stockholders.
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING OF
STOCKHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?
A: You may submit proposals for consideration at future stockholder meetings,
including director nominations.
STOCKHOLDER PROPOSALS: In order for a stockholder proposal to be considered
for inclusion in CART's proxy statement for next year's annual meeting, the
written proposal must be received by CART no later than February 4, 2004.
Such proposals also will need to comply with Securities and Exchange
Commission regulations regarding the inclusion of stockholder proposals in
company sponsored proxy materials. Similarly, in order for a stockholder
proposal to be raised from the floor during next year's annual meeting,
written notice must be received by CART no later than April 18, 2004 and
shall contain such information as required under our Bylaws.
NOMINATION OF DIRECTORS: Any stockholder of record may nominate persons for
election to the Board of Directors by providing written notification to
CART's secretary, in accordance with the Bylaws. Nominations for persons to
be elected at the meeting of stockholders in 2004 must be received by April
18, 2004, and must include information concerning the proposed nominee as
required by the Bylaws, and such person's written consent.
COPY OF BYLAW PROVISIONS: You may contact the CART Corporate Secretary at our
Company headquarters for a copy of the relevant Bylaw provisions regarding
the requirements for making stockholder proposals and nominating director
candidates.
By Order of the Board of Directors
/s/ Christopher R. Pook
--------------------------
Christopher R. Pook
President/CEO
May 27, 2003
25
APPENDIX A
AUDIT COMMITTEE CHARTER
OF
CHAMPIONSHIP AUTO RACING TEAMS, INC.
ORGANIZATION
1. The Audit Committee is a committee of the Board of Directors of
Championship Auto Racing Teams, Inc. The members and chair of the
committee will be elected by the full Board on the recommendation of
the Nominating and Corporate Governance Committee and will serve at the
pleasure of the Board.
2. All members of the committee must meet the independence and experience
requirements for audit committee members under the listing standards of
the New York Stock Exchange and applicable law. Unless determined
otherwise by the Board (in which case disclosure of such determination
shall be made as required by applicable rules of the Securities and
Exchange Commission ("SEC)), at least one member of the Audit Committee
shall be an "audit committee financial expert" as defined by the SEC.
If an audit committee member simultaneously serves on the audit
committee of more than three public companies, the Board must determine
that such simultaneous service would not impair his or her ability to
serve on the audit committee and must disclose this determination in
the annual proxy statement.
3. The committee will regularly report on actions taken by it to the full
Board.
4. The committee is authorized to obtain advice and assistance as it
believes necessary from corporate personnel and from external legal,
accounting and other advisors.
5. The committee will establish, with the assistance of management and the
internal audit manager, a calendar incorporating regular reporting
items it requires from independent auditors, the internal audit
function and management during the year.
PURPOSE
The purpose of the committee will be to:
- Assist Board oversight of (i) the integrity of the corporation's
financial statements, (ii) the corporation's compliance with legal and
regulatory requirements, (iii) the independent auditor's qualifications
and independence and (iv) the performance of the corporation's internal
audit function and independent auditor; and
- Prepare the committee report to be included in the corporation's proxy
statement in accordance with applicable rules and regulations.
DUTIES AND RESPONSIBILITIES
The committee's duties and responsibilities will be to:
1. Retain and terminate, and be responsible for the compensation and
oversight of, the corporation's independent auditor.
2. Approve all audit engagement fees and terms and all non-audit
engagements with the independent auditor.
3. On an annual basis, obtain and review a report by the independent
auditor describing (i) all relationships the independent auditor has
with the corporation, including any management consulting services and
related fees provided to the auditor (so that the committee may assess
the auditor's independence); (ii) the firm's internal quality-control
procedures; and (iii) any material issues raised by the most recent
internal quality-control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or
26
professional authorities within the preceding five years respecting one
or more independent audits carried out by the firm, and any steps taken
to deal with any such issues. In connection with its evaluation of the
independent auditor, the committee should, in addition to assuring the
regular rotation of the audit partners as required by law, consider
whether, in order to assure continuing auditor independence, there
should be regular rotation of the audit firm itself.
4. Review and approve the committee's report to be included in the proxy
statement and the corporation's response to any comments of the
Securities and Exchange Commission on the report.
5. Review and discuss with management and the independent auditor the
corporation's annual and quarterly financial statements, including the
corporation's critical accounting estimates underlying the financial
statements and other disclosures discussed in "Management's Discussion
and Analysis of Financial Condition and Results of Operation"; the
effect of regulatory and accounting initiatives and any off-balance
sheet structures on the corporation's financial statements; and any
certification, report, opinion or review rendered by the independent
auditor.
6. Resolve any disagreements between management and the independent
auditors regarding financial reporting.
7. Discuss with management the corporation's earnings press releases
before their release. In addition, discuss the types of financial
information and earnings guidance provided to analysts and rating
agencies.
8. Periodically consult with the independent auditor, outside the presence
of management, about internal controls and the quality of the
corporation's financial statements. As part of this review, the
committee will receive regular reports from the corporation's counsel
on significant litigation in which the corporation is involved and the
anticipated impact of such litigation.
9. Meet separately, at least quarterly, with management, the internal
audit manager and the independent auditor to review the integrity of
the corporation's financial reporting processes, both internal and
external.
10. Discuss with management significant risks or exposures that the
corporation may have and the steps management has taken to monitor and
control such risks or exposures.
11. Review and discuss with management and the independent auditor (i)
major issues regarding accounting principles and financial statement
presentation, including any significant changes in the corporation's
selection or application of accounting principles or adoption of new
accounting principles; (ii) major issues as to the adequacy of the
corporation's internal controls and any special audit steps adopted in
light of material control deficiencies; and (iii) analyses prepared by
management and/or the independent auditor setting forth significant
financial reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses prepared by
management and the independent auditor of the effects of applying
alternative accounting principles on the financial statements.
12. Consider, in consultation with the independent auditor, the internal
audit manager and the chief financial officer, the audit scope and plan
of the independent auditor and the internal auditors. Review with the
independent auditor, the internal audit manager and the chief financial
officer the coordination of the audit effort with respect to
completeness of coverage, reduction of redundant efforts, and the
effective use of audit resources.
13. Review with the independent auditor any audit problems or difficulties
and management's response. This review must include any restrictions on
the scope of the independent auditor's activities or on access to
requested information and discussion of any disagreements with
management. It should also include accounting adjustments proposed by
the independent auditor but not adopted; communications between the
audit team and the audit firm's national office with regard to auditing
to accounting issues presented by the engagement; and any management or
internal control letter issued or proposed to be issued by the
independent auditor.
27
14. Receive any reports from the independent auditor under the provisions
of Section 10A of the Securities Exchange Act of 1934 and review with
management and recommend to the Board appropriate remedial action to be
taken by the corporation.
15. Establish hiring policies with respect to employees or former employees
of the independent auditor.
16. Discuss with the independent auditor the responsibilities, budget and
staffing of the internal audit function.
17. Review the appointment and replacement of the internal audit manager.
18. Review significant reports to management prepared by the internal
auditing department and management's responses.
19. Review legal and regulatory matters that may have a material impact on
the corporation's financial statements.
20. Perform such other functions as may be assigned by the Board of
Directors or as specified in policies adopted or approved by the Board
of Directors.
21. Establish procedures for (i) the receipt, retention and treatment of
complaints received by the corporation regarding accounting, internal
accounting controls or auditing matters, and (ii) the confidential,
anonymous submission by employees of the corporation of concerns
regarding questionable accounting or auditing matters. Receive reports
regarding any violations of the corporation's code of business conduct
and ethics relating to accounting, financial reporting or internal
controls.
22. Review and approve all related party transactions.
23. Evaluate the committee's own performance annually and report the
results of the evaluation to the Board.
24. Review this charter at least annually and update as necessary (with any
amendments subject to approval by the Board.)
ROLE OF THE AUDIT COMMITTEE
This charter assigns oversight responsibilities to the audit committee.
Management is responsible for the preparation, presentation and integrity of the
corporation's financial statements; accounting and financial reporting
principles; internal controls; and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. The independent
auditor is responsible for performing an independent audit of the consolidated
financial statements in accordance with generally accepted auditing standards.
The members of the audit committee are not acting as experts in accounting or
auditing and rely without independent verification on the information provided
to them and on the representations made by management and the independent
auditor. Accordingly, the audit committee's oversight does not provide an
independent basis to determine that the corporation's financial statements have
been prepared in accordance with generally accepted accounting principles or
that the audit of the corporation's financial statements by the independent
auditor has been carried out in accordance with generally accepted auditing
standards.
28
CHAMPIONSHIP AUTO RACING TEAMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JULY 17, 2003 10:00 A.M.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
CORPORATE HEADQUARTERS
5350 LAKEVIEW PARKWAY DRIVE
SOUTH INDIANAPOLIS, INDIANA 46268
CHAMPIONSHIP AUTO RACING TEAMS, INC.
5350 LAKEVIEW PARKWAY DRIVE SOUTH
INDIANAPOLIS, INDIANA 46268 PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON JULY 17, 2003.
The shares of stock you hold in your account will be voted as you specify on the
reverse side.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy, you revoke all prior proxies and appoint Christopher R.
Pook and Thomas L. Carter, and each of them, with full power of substitution, to
vote your shares on the matters shown on the reverse side and any other matters
which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
--------------------------
COMPANY #
CONTROL #
--------------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
- Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 11:00 a.m. (CT) on July 16, 2003.
- You will be prompted to enter your 3-digit Company Number, your 7-digit
Control Number (these numbers are located on the proxy card) and the last 4
digits of the U.S. Social Security Number or Tax Identification Number for
this account. If you do not have a U.S. SSN or TIN please enter 4 zeros.
- Follow the simple instructions the voice provides you.
VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/MPH/ -- QUICK *** EASY *** IMMEDIATE
- Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on July 16, 2003.
- You will be prompted to enter your 3-digit Company Number, your 7-digit
Control Number (these numbers are located on the proxy card) and the last 4
digits of the U.S. Social Security Number or Tax Identification Number for
this account to obtain your records and create an electronic ballot. If you
do not have a U.S. SSN or TIN please leave blank.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Championship Auto Racing Teams, Inc., c/o
Shareowner Services(SM), P.O. Box 64873, St. Paul, MN 55164-0837.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
\/ Please detach here \/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of directors: 01 Robert D. Biggs 05 Christopher R. Pook [ ] Vote FOR [ ] Vote WITHHELD
02 Carl A. Haas 06 Rafael A. Sanchez all nominees from all nominees
03 James F. Hardymon 07 Frederick T. Tucker (except as marked)
04 James A. Henderson 08 Derrick Walker
--------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED
NOMINEE, WRITE THE NUMBER(s) OF THE NOMINEE(s) IN THE BOX PROVIDED TO THE RIGHT.)
--------------------------------
2. To ratify the appointment of Deloitte & Touche LLP as the
independent accountants for the year ended December 31, 2003. [ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes below: Date _________________
----------------------------------------------------
----------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appears on
Proxy. If held in joint tenancy, all persons must
sign. Trustees, administrators, etc., should
include title and authority. Corporations should
provide full name of corporation and title of
authorized officer signing the proxy.