UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
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1934
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Definitive
Proxy Statement
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Definitive
Additional Materials
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[ ]
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Soliciting
Material Pursuant to
§ 240.14a-12
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Covenant
Transportation Group, Inc.
(Name of
Registrant as Specified in its Charter)
N/A
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Person(s) Filing Proxy Statement if other than the Registrant)
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COVENANT
TRANSPORTATION GROUP, INC.
400
Birmingham Highway
Chattanooga,
Tennessee 37419
___________________________________________
NOTICE
AND PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON TUESDAY, MAY 5, 2009
___________________________________________
To Our
Stockholders:
You are cordially invited to attend the
2009 Annual Meeting of Stockholders of Covenant Transportation Group, Inc.,
a Nevada corporation, to be held at our principal executive offices,
400 Birmingham Highway, Chattanooga, Tennessee 37419, at 10:00 a.m.
local time, on Tuesday, May 5, 2009, for the following purposes:
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1.
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To
consider and act upon a proposal to elect five (5)
directors;
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2.
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To
consider and act upon a proposal to approve the Amendment to the Covenant
Transportation Group, Inc. 2006 Omnibus Incentive Plan (the "Incentive
Plan"), which, among other things, (i) provides that the maximum aggregate
number of shares of Class A common stock available for the grant of awards
under the Incentive Plan from and after the effective date of the
Amendment shall not exceed 700,000, and (ii) limits the shares of Class A
common stock that shall be available for issuance or reissuance under the
Incentive Plan from and after the effective date of the Amendment to the
additional 700,000 shares reserved, plus any expirations, forfeitures,
cancellations, or certain other terminations of such shares;
and
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3.
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To
consider and act upon such other matters as may properly come before the
meeting and any adjournment
thereof.
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The foregoing matters are more fully
described in the accompanying Proxy Statement.
The Board of Directors has fixed the
close of business on Monday, March 23, 2009, as the record date for the
determination of stockholders entitled to receive notice of and to vote at the
Annual Meeting or any adjournment thereof. Shares of Class A and
Class B common stock may be voted at the Annual Meeting only if the holder
is present at the Annual Meeting in person or by valid proxy. YOUR VOTE IS IMPORTANT. To ensure
your representation at the Annual Meeting, you are requested to promptly date,
sign, and return the accompanying proxy in the enclosed envelope. You
may also vote on the Internet by completing the electronic voting instruction
form found at www.investorvote.com/CVTI or by telephone using a touch-tone
telephone and calling 1-800-652-8683. Returning your proxy now
will not interfere with your right to attend the Annual Meeting or to vote your
shares personally at the Annual Meeting, if you wish to do so. The prompt return
of your proxy may save us additional expenses of solicitation.
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Important
Notice Regarding the Availability of Proxy Materials for the
Meeting
of Stockholders to Be Held on May 5,
2009
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Pursuant to new rules promulgated by
the Securities and Exchange Commission, we have elected to provide access to our
proxy materials both by: (i) sending you this full set of proxy materials,
including a proxy card; and (ii) notifying you of the availability of our proxy
materials on the Internet. This
Notice of Meeting and Proxy Statement, and our Annual Report to Stockholders for
the fiscal year ended December 31, 2008, are available online and may be
accessed at www.eproxyaccess.com/CVTI. In accordance
with such new rules, we do not use "cookies" or other software that identifies
visitors accessing these materials on this website. We encourage you
to access and review all of the important information contained in the proxy
materials before voting.
To obtain directions to the Annual
Meeting, please call Kimberly Perry at (423) 825-3357.
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By
Order of the Board of Directors,
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/s/
David R. Parker
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David
R. Parker
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Chairman
of the Board of
Directors
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Chattanooga,
Tennessee
April 10,
2009
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GENERAL
INFORMATION
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Voting
Rights
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Quorum
Requirement
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Required
Vote
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Right to Attend Annual Meeting;
Revocation of
Proxy
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Costs of
Solicitation
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Annual
Report
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How to Read this Proxy
Statement
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How to Vote – Proxy
Instructions
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PROPOSAL
1 - ELECTION OF
DIRECTORS
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Nominees for
Directorships
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CORPORATE
GOVERNANCE
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The Board of Directors and Its
Committees
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Board of
Directors
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Committees of the Board of
Directors
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The Audit
Committee
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Report of the Audit
Committee
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The Compensation
Committee
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Compensation Committee
Report
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Compensation Committee Interlocks
and Insider
Participation
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The Nominating and Corporate
Governance
Committee
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Our Executive
Officers
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Section 16(a) Beneficial
Ownership Reporting
Compliance
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Code of Conduct and
Ethics
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EXECUTIVE
COMPENSATION
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Compensation Discussion and
Analysis
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Overview and Philosophy of
Compensation
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Elements of
Compensation
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Base
Salary
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Incentive
Compensation
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Long-Term
Incentives
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Performance-Based Annual
Bonuses
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Other
Compensation
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Employee
Benefits
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Compensation Paid to Our Named
Executive
Officers
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Compensation Paid to Our Chief
Executive
Officer
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Compensation Paid to Our Other
Named Executive
Officers
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Compensation Decisions with
Respect to
2009
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Separation and Severance
Agreements
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Summary Compensation
Table
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All Other Compensation
Table
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Narrative to the Summary
Compensation
Table
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Grants of Plan-Based
Awards
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Narrative to Grants of Plan-Based
Awards
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Outstanding Equity Awards at
Fiscal
Year-End
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Director
Compensation
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Narrative to Director
Compensation
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS
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RELATIONSHIPS
WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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Principal Accountant Fees and
Services
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PROPOSAL
2 – APPROVAL OF THE AMENDMENT TO THE INCENTIVE PLAN, WHICH, AMONG OTHER
THINGS, (I) PROVIDES THAT THE MAXIMUM AGGREGATE NUMBER OF SHARES OF CLASS
A COMMON STOCK AVAILABLE FOR THE GRANT OF AWARDS UNDER THE INCENTIVE PLAN
FROM AND AFTER THE EFFECTIVE DATE OF THE AMENDMENT SHALL NOT EXCEED
700,000, AND (II) LIMITS THE SHARES OF CLASS A COMMON STOCK THAT SHALL BE
AVAILABLE FOR ISSUANCE OR REISSUANCE UNDER THE INCENTIVE PLAN FROM AND
AFTER THE EFFECTIVE DATE OF THE AMENDMENT TO THE ADDITIONAL 700,000 SHARES
RESERVED, PLUS ANY EXPIRATIONS, FORFEITURES, CANCELLATIONS, OR CERTAIN
OTHER TERMINATIONS OF SUCH SHARES
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Introduction
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Background
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Reasons for Seeking Stockholder
Approval of the
Amendment
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Description of the Incentive Plan
and the
Amendment
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Administration
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Shares Available and Maximum
Awards
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Payment
Terms
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Adjustments Upon Certain
Events
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Termination and Amendment of
Incentive
Plan
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Tax Status of Incentive Plan
Awards
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Securities Act
Registration
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Eligible
Participants
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Plan
Benefits
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Additional Information Regarding
Stock Options, Warrants, and
Rights
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Federal Income Tax Consequences
of the Issuance and Exercise of Stock Options
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Equity Compensation Plan
Information
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STOCKHOLDER
PROPOSALS
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OTHER
MATTERS
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APPENDIX
A- COVENANT
TRANSPORTATION GROUP, INC. AMENDED
AND RESTATED 2006 OMNIBUS INCENTIVE PLAN
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COVENANT
TRANSPORTATION GROUP, INC.
400
Birmingham Highway
Chattanooga,
Tennessee 37419
__________________________________________
NOTICE
AND PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON TUESDAY, MAY 5, 2009
__________________________________________
This
Proxy Statement is furnished in connection with the solicitation of proxies from
the stockholders of Covenant Transportation Group, Inc., a Nevada
corporation, to be voted at the Annual Meeting of Stockholders, which will be
held at our principal executive offices, 400 Birmingham Highway,
Chattanooga, Tennessee 37419, at 10:00 a.m. local time, on Tuesday, May 5,
2009, and any adjournment thereof. THE ENCLOSED PROXY IS SOLICITED BY
OUR BOARD OF DIRECTORS. If not otherwise specified, all
proxies received pursuant to this solicitation will be voted (i) FOR the
director nominees named below; (ii) FOR the approval of the Amendment to the
Covenant Transportation Group, Inc. 2006 Omnibus Incentive Plan (the "Incentive
Plan"), which, among other things, (i) provides that the maximum aggregate
number of shares of Class A common stock available for the grant of awards under
the Incentive Plan from and after the effective date of the Amendment shall not
exceed 700,000, and (ii) limits the shares of Class A common stock that shall be
available for issuance or reissuance under the Incentive Plan from and after the
effective date of the Amendment to the additional 700,000 shares reserved, plus
any expirations, forfeitures, cancellations, or certain other terminations of
such shares; and (iii) in accordance with the judgment of the proxy holders,
with respect to any other matters properly brought before the Annual
Meeting.
The Proxy
Statement, proxy card, and our Annual Report on Form 10-K for the fiscal
year ended December 31, 2008, was first mailed on or about April 10,
2009, to stockholders of record at the close of business on our record date of
March 23, 2009.
Except to the extent it is
incorporated by specific reference, the enclosed copy of our 2008 Annual Report
on Form 10-K is not incorporated into this Proxy Statement and is not to be
deemed a part of the proxy solicitation material.
The terms "Company," "we," "us," and
"our" refer to Covenant Transportation Group, Inc. and its consolidated
subsidiaries.
Only
stockholders of record at the close of business on the record date are entitled
to vote at the Annual Meeting, either in person or by valid proxy. Holders of
Class A common stock are entitled to one vote for each share held. Holders
of Class B common stock are entitled to two votes for each share held so
long as such shares are owned by David R. Parker or certain members of
his immediate family. In the event that any shares of our Class B common stock
cease to be owned by Mr. Parker or certain of his immediate family members,
such shares will be automatically converted into shares of our Class A common
stock. Unless otherwise required by Nevada law, the Class A common stock and
Class B common stock vote together as a single class. On March 23, 2009, the record date,
there were issued and outstanding 12,463,381 shares of Class A common
stock, par value one cent ($0.01) per share (including 764,199 shares of
restricted Class A common stock subject to certain performance vesting and
holding provisions), entitled to cast an aggregate 12,463,381 votes on all matters
subject to a vote at the Annual Meeting, and 2,350,000 shares of Class B
common stock, par value one cent ($0.01) per share, entitled to cast an
aggregate 4,700,000 votes on all matters subject to a vote at the Annual
Meeting. The total number of shares of our common stock issued and outstanding
on the record date was approximately 14,813,381, which is entitled to cast an
aggregate of 17,163,381 votes on all matters subject to a vote at the Annual
Meeting. The total number of issued and outstanding shares excludes
approximately 1,045,831 shares of Class A common stock reserved for
issuance upon the exercise of outstanding stock options granted under our
incentive stock plans and other arrangements. Holders of unexercised options are
not entitled to vote at the Annual Meeting. We have no other class of stock
outstanding. Stockholders are not entitled to cumulative voting in the election
of directors. Votes cast at the Annual Meeting will be tabulated by the
Inspector of Elections, and the results of all items voted upon will be
announced at the Annual Meeting.
In order
to transact business at the Annual Meeting, a quorum must be present. A quorum
is present if the holders of a majority of the total number of shares of
Class A and Class B common stock issued and outstanding as of the
record date are represented at the Annual Meeting in person or by proxy. Shares
that are entitled to vote but that are not voted at the direction of the holder
(called "abstentions") and shares that are not voted by a broker or other record
holder due to the absence of instructions from the beneficial owner (called
"broker non-votes") will be counted for the purpose of determining whether a
quorum is present.
Directors
are elected by an affirmative vote of a plurality of the total votes cast by
stockholders entitled to vote and represented in person or by proxy at the
Annual Meeting, which means that the five director nominees receiving the
highest number of votes for their election will be elected. Approval of any
other matter submitted to stockholders requires the affirmative vote of a
majority of the votes cast by stockholders entitled to vote and represented in
person or by proxy at the Annual Meeting. Abstentions and broker non-votes are
not considered affirmative votes and thus will have no effect on the election of
directors by a plurality vote, but will have the same effect as negative votes
with respect to the approval of any other matter submitted to
stockholders.
Returning
a proxy card now will not interfere with your right to attend the Annual Meeting
or to vote your shares personally at the Annual Meeting, if you wish to do so.
Stockholders who execute and return proxies may revoke them at any time before
they are exercised by giving written notice to our Secretary at our address, by
executing a subsequent proxy and delivering it to our Secretary, or by attending
the Annual Meeting and voting in person.
We will
bear the cost of solicitation of proxies, which we expect to be nominal, and we
will include reimbursements for the charges and expenses of brokerage firms and
others for forwarding solicitation materials to beneficial owners of our
outstanding Class A common stock. Proxies will be solicited by mail, and may be
solicited personally by directors, officers, or our regular employees, who will
not receive any additional compensation for any such services.
The
information included in this Proxy Statement should be reviewed in conjunction
with the Consolidated Financial Statements, Notes to Consolidated Financial
Statements, Reports of Independent Registered Public Accounting Firm, and other
information included in our 2008 Annual Report that was mailed on or about
April 10, 2009, together with this Notice and Proxy Statement, to all
stockholders of record as of the record date.
Set forth
below are the proposals to be considered by stockholders at the Annual Meeting,
as well as important information concerning, among other things, our management
and our Board of Directors; executive compensation; transactions between us and
our officers, directors, and affiliates; the stock ownership of certain
beneficial owners and management; the services provided to us by and fees of
KPMG, LLP, our independent registered public accounting firm; the proposal
to approve the Amendment to the Incentive Plan; and how stockholders may make
proposals at our next annual meeting. EACH STOCKHOLDER SHOULD READ THIS
INFORMATION BEFORE VOTING.
If you
are a holder of record of our Class A or Class B common stock, you may vote your
shares either (i) over the telephone by calling a toll-free number,
(ii) by using the Internet, or (iii) by mailing in your proxy
card. Owners who hold their shares in street name will need to obtain
a voting instruction form from the institution that holds their stock and must
follow the voting instructions given by that institution.
For 2009,
we have arranged for telephone and Internet-voting procedures to be
used. These procedures have been designed to authenticate your
identity, to allow you to give instructions, and to confirm that those
instructions have been recorded properly. If you choose to vote by
telephone or by using the Internet, please refer to the specific instructions on
the proxy card. The deadline for voting by telephone or the Internet
is 11:59 p.m. Eastern Standard Time on Monday, May 4, 2009. If you
wish to vote using the proxy card, complete, sign, and date your proxy card and
return it to us before the meeting.
At the
Annual Meeting, the stockholders will elect five directors to serve as the Board
of Directors until our next annual meeting or until their successors are duly
elected and qualified. Upon the recommendation of the Nominating and Corporate
Governance Committee, our Board of Directors has nominated for election as
directors David R. Parker, William T. Alt, Robert E. Bosworth,
Bradley A. Moline, and Dr. Niel B. Nielson, each of whom is presently
serving as a director. In the absence of contrary instructions, each
proxy will be voted for the election of all the proposed directors.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" EACH OF THE DIRECTOR NOMINEES.
Information
concerning the names, ages, positions with us, tenure as a director, and
business experience of the nominees standing for election as directors at the
Annual Meeting is set forth below. All references to experience with us include
positions with our operating subsidiary, Covenant Transport, Inc., a Tennessee
corporation.
David R. Parker, 51,
has served as President since our founding in 1985 and as Chairman of the Board
and Chief Executive Officer ("CEO") since 1994. Mr. Parker was elected to
the Board of Directors of the Truckload Carriers Association in 1994 and also
serves on the Board of Directors of the American Trucking
Associations.
William T. Alt, 72,
has served as a director since 1994. Mr. Alt has engaged in the private
practice of law since 1962 and served as outside counsel to the Company from
1986 to 2003.
Robert E. Bosworth,
61, has served as a director since 1998. Since September 19, 2005, Mr. Bosworth
has served as the President and Chief Operating Officer of Chattem, Inc., a
publicly traded consumer products company. Prior to such position,
Mr. Bosworth served as Chief Financial Officer for the Livingston Company,
a merchant bank located in Chattanooga, Tennessee, since 2004, and as
Livingston's Vice President of Corporate Finance since 2001. From 1998 until
2001, Mr. Bosworth was a business and management consultant to various
corporations in the Chattanooga area. Prior to 1998, Mr. Bosworth served
for more than five years as Executive Vice President and Chief Financial Officer
of Chattem, Inc. Mr. Bosworth is currently a director of Chattem,
Inc.
Bradley A. Moline,
42, has served as a
director since 2003. Mr. Moline has been President and Chief
Executive Officer of Allo Communications, LLC, a competitive local telephone
company, since October 2002. Mr. Moline also has been the owner and
President of Imperial Super Foods, a grocery store in Imperial, Nebraska, since
February 2002 and NECO Grocery, a grocery store in Holyoke, Colorado, since
March 2006. From 1994 to 1997, Mr. Moline was our Treasurer and Chief
Financial Officer.
Dr. Niel B. Nielson,
55, has served as a director since 2003. Dr. Nielson has been President of
Covenant College since 2002. From 1997 until 2002, Dr. Nielson was the
Associate Pastor of Outreach for College Church in Wheaton, Illinois.
Dr. Nielson was a partner and trader for Ritchie Capital Markets
Group, LLC from 1996 to 1997. Prior to 1996, Dr. Nielson served as an
executive officer in various companies, including serving for two years as
Senior Vice President of Chicago Research and Trading Group, Ltd., a company at
which he was employed for nine years. Dr. Nielson holds several
investment company directorships, including 14 directorships of closed-end funds
associated with the First Trust group of funds, 38 directorships of
exchange-traded funds associated with the First Trust group of funds, and one
directorship of the First Defined Portfolio Fund LLC.
Meetings. Our Board of
Directors held four regularly scheduled meetings and seven special meetings
during the fiscal year ended December 31, 2008. All of our
directors attended at least 75% of the regularly scheduled board meetings of the
Board of Directors and each committee on which he served. We
encourage the members of our Board of Directors to attend our Annual Meeting of
Stockholders. All five of our then-current directors attended the
2008 Annual Meeting of Stockholders.
Director Independence. Our
Class A common stock is listed on the Nasdaq Global Select Market. Therefore, it
is subject to the listing standards, including standards relating to corporate
governance, embodied in applicable NASDAQ Stock Market ("NASDAQ") listing
standards. Pursuant to NASDAQ Rule 4350(c)(1), the Board of Directors
has determined that the following directors and nominees are "independent" under
NASDAQ Rule 4200(a)(15): Robert E. Bosworth, William T. Alt,
Bradley A. Moline, and Dr. Niel B. Nielson. Hugh O.
Maclellan served as a director through May 2008 as he decided not to stand for
reelection. However, as Mr. Maclellan served as a director for a
portion of 2008, the Board of Directors has determined that Mr. Maclellan was
"independent" under NASDAQ Rule 4200(a)(15) in accordance with NASDAQ Rule
4350(c)(1) for the portion of 2008 that he served as a director. In
accordance with NASDAQ Rule 4350(c)(2), in fiscal 2008, our independent
directors held five meetings or "executive sessions," at which only the
independent directors were present, either before or following each regularly
scheduled meeting of the full Board of Directors.
Communications with the Board of
Directors. Our Board of Directors has adopted procedures by which our
stockholders may communicate with our Board regarding matters of substantial
importance to us. Information concerning the manner in which
stockholders can communicate with the Board is available on our website at http://www.covenanttransport.com.
Functions, Composition, and Meetings
of the Audit Committee. The primary responsibilities of the Audit
Committee are set forth in the Audit Committee Report, which appears
below. The Audit Committee met seven times during 2008. Messrs.
Bosworth and Moline have served on the Audit Committee since 2003, while Dr.
Nielson has served on the Audit Committee since 2004. Mr. Bosworth serves
as Chairman of the Audit Committee.
Each member of the Audit Committee
satisfies the independence and audit committee membership criteria set forth in
NASDAQ Rule 4350(d)(2). Specifically, each member of the Audit
Committee:
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is
independent under NASDAQ Rule 4200(a)(15);
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meets
the criteria for independence set forth in Rule 10A-3(b)(1) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
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did
not participate in the preparation of our financial statements or the
financial statement of any of our current subsidiaries at any time during
the past three years; and
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is
able to read and understand fundamental financial statements, including
our balance sheet, statement of operations, and cash flows
statement.
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Audit Committee
Charter. Our Audit Committee operates pursuant to a written
charter detailing its purpose, powers, and duties. The charter is
available free of charge on our website at http://www.covenanttransport.com.
Audit Committee Financial Expert.
The Board of Directors has determined that at least one "audit committee
financial expert," as defined under Item 407(d)(5) of Regulation S-K
and NASDAQ Rule 4350(d)(2)(A), currently serves on the Audit Committee. The
Board of Directors has identified Mr. Bosworth as an audit committee
financial expert. Mr. Bosworth is independent, as independence for audit
committee members is defined under applicable NASDAQ rules.
Audit Committee Report. In
performing its duties, the Audit Committee, as required by applicable rules of
the SEC, issues a report recommending to the Board of Directors that our audited
financial statements be included in our Annual Report on Form 10-K, and
determines certain other matters, including the independence of our independent
registered public accounting firm. The Audit Committee Report for 2008 is set
forth below.
The
Audit Committee Report shall not be deemed to be incorporated by reference into
any filing made by us under the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, notwithstanding any general statement
contained in any such filings incorporating this Proxy Statement by reference,
except to the extent we incorporate such report by specific
reference.
The
primary purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities relating to the quality and integrity
of the Company's financial reports and financial reporting processes and systems
of internal controls over financial reporting. The Company's management has
primary responsibility for the Company's financial statements and the overall
reporting process, including maintenance of the Company's system of internal
controls. The Company retains an independent registered public accounting firm,
which is responsible for conducting an independent audit of the Company's
financial statements, the effectiveness of management's assessment of internal
controls over financial reporting, and the effectiveness of internal controls
over financial reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and issuing reports
thereon.
In
performing its duties, the Audit Committee has discussed the Company's financial
statements, management's assessment of internal controls over financial
reporting, and the effectiveness of internal controls over financial reporting
with management and the Company's independent registered public accounting firm
and, in issuing this report, has relied upon the responses and information
provided to the Audit Committee by management and such accounting firm. For the
fiscal year ended December 31, 2008, the Audit Committee (i) reviewed and
discussed the audited financial statements, management's assessment of internal
controls over financial reporting, and the effectiveness of internal controls
over financial reporting with management and KPMG LLP, the Company's independent
registered public accounting firm; (ii) discussed with the independent
registered public accounting firm the matters required to be disclosed by
Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended; (iii) received and discussed with the independent
registered public accounting firm the written disclosures and the letter from
such accounting firm required by Independence Standards Board Statement No. 1,
Independence Discussions with
Audit Committees, as amended; and (iv) has discussed with the
independent registered public accounting firm its independence. The Audit
Committee met with representatives of the independent registered public
accounting firm without management or other persons present five times during
2008.
Based on
the foregoing reviews and meetings, the Audit Committee recommended to the Board
of Directors that the audited financial statements be included in the Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, for filing with
the SEC.
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Audit
Committee:
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Robert E. Bosworth,
Chairman
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Bradley A.
Moline
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Dr. Niel B.
Nielson
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Functions, Composition, and Meetings
of the Compensation Committee. As more fully outlined in the Compensation
Committee Charter, the primary functions of the Compensation Committee are to
aid our Board in discharging its responsibilities relating to the compensation
of our executive officers, including the chief executive officer; to evaluate
and approve our compensation plans, policies, and programs; to produce an annual
report on executive compensation; and to perform such other duties as may be
assigned to it by our Board or imposed by applicable laws or regulations. In
furtherance of its duties, the Compensation Committee reviews and approves
certain aspects of compensation of our executive officers and makes
recommendations on other compensation matters to the full Board of Directors.
During part of 2008, Dr. Nielson and Mr. Maclellan served as the members of the
Compensation Committee, with Dr. Nielson serving as
Chairman. The Board of Directors appointed Mr. Alt to the
Compensation Committee in May 2008 following Mr. Maclellan's decision not to
stand for reelection. The Compensation Committee held a total of four
meetings in 2008.
Compensation Committee
Charter. Our Compensation Committee operates pursuant to a
written charter detailing its purpose, powers, and duties. The
charter is available free of charge on our website at http://www.covenanttransport.com.
Compensation Committee
Report. In performing its duties, the Compensation Committee,
as required by applicable rules and regulations promulgated by the SEC, issues a
report recommending to the Board of Directors that our Compensation Discussion
and Analysis be included in this Proxy Statement. The Compensation Committee Report follows.
The Compensation Committee Report
shall not be deemed to be incorporated by reference into any filing made by us
under the Securities Act or the Exchange Act, notwithstanding any general
statement contained in any such filings incorporating this Proxy Statement by
reference, except to the extent we incorporate such report by specific
reference.
We have
reviewed and discussed the Compensation Discussion and Analysis contained in
this Proxy Statement with management. Based on that review and
discussion, we have recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
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Compensation
Committee:
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Dr. Niel B. Nielson,
Chairman
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William T.
Alt
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Dr.
Nielson served on the Compensation Committee and was Chairman for all of
2008. Mr. Maclellan, a former director, served on the Compensation
Committee through May 2008, when he was replaced by Mr. Alt.
During
2008, none of our executive officers served as a member of the board of
directors or compensation committee (or other committee performing equivalent
functions) of any entity that had one or more executive officers serving as a
member of our Board of Directors, our executive officers, and their
affiliates.
See "Certain Relationships
and Related Transactions" for a description of certain transactions between us
and our other directors, executive officers, or their affiliates, and "Executive
Compensation – Director Compensation" for a description of compensation of the
members of the Compensation Committee.
Functions, Composition, and Meetings
of the Nominating and Corporate Governance Committee. In April 2004, the
Board of Directors established a Nominating and Corporate Governance Committee
to recommend to the Board of Directors potential candidates for election to the
Board of Directors and to make recommendations to the Board concerning issues
related to corporate governance, as more specifically detailed in the written
charter discussed below. During part of 2008, Mr. Maclellan and Mr. Moline
served as the Nominating and Corporate Governance Committee, with
Mr. Maclellan serving as Chairman. The Board of Directors
appointed Mr. Alt to the Committee in May 2008 to replace former director Mr.
Maclellan. Mr. Alt has served since such time as Chairman of such
Committee. All current members of the Nominating and Corporate
Governance Committee are independent, as independence for nominating committee
members is defined under applicable NASDAQ rules. The Committee met two times in
2008. The Nominating and Corporate Governance Committee has recommended that the
Board of Directors nominate David R. Parker, William T. Alt,
Robert E. Bosworth, Bradley A. Moline, and Dr. Niel B. Nielson
for election at the Annual Meeting, each of whom is currently serving as a
director.
Nominating and Corporate Governance
Committee Charter. Our Nominating and Corporate Governance Committee
operates pursuant to a written charter detailing its purpose, powers, and
duties. A copy of
the charter is available on our website at http://www.covenanttransport.com.
Process for Identifying and
Evaluating Director Nominees. Director nominees are chosen by the entire
Board of Directors, after considering the recommendations of the Nominating and
Corporate Governance Committee. The members of the Nominating and Corporate
Governance Committee review the qualifications of various persons to determine
whether they are qualified candidates for membership on the Board of Directors.
The Nominating and Corporate Governance Committee will review all candidate
recommendations, including those properly submitted by stockholders, in
accordance with the requirements of its charter. With regard to specific
qualities and skills, the Nominating and Corporate Governance Committee believes
it necessary that: (i) at least a majority of the members of the Board of
Directors qualify as "independent" under NASDAQ Rule 4200(a)(15);
(ii) at least three members of the Board of Directors satisfy the audit
committee membership criteria specified in NASDAQ Rule 4350(d)(2); and
(iii) at least one member of the Board of Directors eligible to serve on
the Audit Committee has sufficient knowledge, experience, and training
concerning accounting and financial matters so as to qualify as an "audit
committee financial expert" within the meaning of Item 407(d)(5) of
Regulation S-K. In addition to these specific requirements, the Nominating
and Corporate Governance Committee takes into account all factors it considers
appropriate, which may include experience, accomplishments, education,
understanding of our business and the industry in which we operate, specific
skills, general business acumen, and personal and professional integrity.
Generally, the Nominating and Corporate Governance Committee will first consider
current Board members because they meet the criteria listed above and possess
knowledge of our history, strengths, weaknesses, goals, and objectives. We do
not pay a fee to any third party to identify or evaluate or assist in
identifying or evaluating potential nominees.
Stockholder Director Nominee
Recommendations. It is generally the policy of the Nominating and
Corporate Governance Committee to consider stockholder recommendations of
proposed director nominees if such recommendations are serious and timely
received. To be timely, recommendations must be received in writing at our
principal executive offices, 400 Birmingham Highway, Chattanooga, Tennessee
37419, at least 120 days prior to the anniversary date of mailing of our
Proxy Statement for the prior year's Annual Meeting. For the next
annual meeting, the deadline for receiving stockholder recommendations of
proposed director nominees will be December 11, 2009. In
addition, any stockholder director nominee recommendation must include the
following information:
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the
proposed nominee's name and qualifications and the reason for such
recommendation;
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the
name and record address of the stockholder(s) proposing such
nominee;
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the
number of shares of our Class A and/or Class B common stock that are
beneficially owned by such stockholder(s); and
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a
description of any financial or other relationship between the
stockholder(s) and such nominee or between the nominee and us or any of
our subsidiaries.
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In order
to be considered by the Board, any candidate proposed by one or more
stockholders will be required to submit appropriate biographical and other
information equivalent to that required of all other director
candidates.
Set forth
below is certain information regarding our current executive officers (other
than our CEO, David R. Parker, for whom information is set forth above
under "Proposal 1 – Election of Directors – Nominees for Directorships"). All
executive officers are elected annually by the Board of Directors. All
references to experience with us include positions with our operating
subsidiary, Covenant Transport, Inc., a Tennessee corporation.
Joey B. Hogan, 47, has served
as our Senior Executive Vice President and Chief Operating Officer since
May 2007, and has also served as President of Covenant Transport, Inc., a
Tennessee corporation, since such time. Mr. Hogan was our Chief Financial
Officer from 1997 to May 2007, and our Executive Vice President from
May 2003 to May 2007, and was a Senior Vice President from December 2001 to
May 2003. From joining us in August 1997 through December 2001, Mr. Hogan
served as our Treasurer. Mr. Hogan is a director nominee of Chattem,
Inc., a publicly traded consumer products company. Chattem's annual
meeting of stockholders is scheduled to be held April 8, 2009.
Tony Smith, 61, founded
Southern Refrigerated Transport, Inc. in 1986 and has served as President of
Southern Refrigerated Transport, Inc. since its inception. Southern
Refrigerated Transport, Inc. joined Covenant Transportation Group, Inc. as one
of our subsidiaries in 1998. Mr. Smith also served as President of
Tony Smith Trucking, Inc., a former subsidiary, from October 1998 to December
2004.
James "Jim" Brower, 52, has
served as President of Star Transportation, Inc., one of our subsidiaries, since
1983.
Charles "Jerry" Eddy, 55, has
served as our Senior Vice President - Operations since September 2007 and as
Vice President and General Manager of our Dedicated service offering from July
2006 to September 2007. Mr. Eddy served as Vice President of Sales
and Customer Service with Coastal Transport from 2005 to July 2006, served as
President of Paper Transport from 2002 to 2005, and served in various capacities with
Schneider National from 1991 to 2002, including Vice President and General
Manager of Dedicated and Expedited Services.
Richard B. Cribbs, 37, has
served as our Senior Vice President and Chief Financial Officer since May
2008. Previously, Mr. Cribbs served as our Vice President and Chief
Accounting Officer from May 2007 to May 2008 and was our Corporate Controller
from May 2006 to May 2007. Prior to joining the Company, Mr. Cribbs was
the Corporate Controller, Assistant Secretary, and Assistant Treasurer for
Tandus, Inc., a commercial flooring company, from May 2005 to May 2006, and
served as Chief Financial Officer of Modern Industries, Inc., a Tier-2
automotive supply company from December 1999 to May 2005.
M. David Hughes, 39, has
served as our Senior Vice President - Fleet Management and Procurement and
Corporate Treasurer since May 2007. Prior to that, Mr. Hughes served
as Vice President and Chief Financial Officer of Star Transportation, Inc., a
subsidiary of the Company, from September 2006 to May 2007. Prior to
joining Star Transportation, Inc., Mr. Hughes served as our Treasurer and
Director of Business Development from May 2002 to July 2006 and served as Chief
Financial Officer at Star Transportation, Inc. from July 2006 through the
Company's acquisition of Star Transportation, Inc. in September of
2006.
R.H. Lovin, Jr., 57, has
served in several senior management positions since joining us in 1986.
Mr. Lovin has been our Executive Vice President - Administration since
February 2003 and Corporate Secretary since August 1995. Mr. Lovin
previously served as our Chief Financial Officer from 1986 to 1994, as Vice
President of Administration from May 1994 to May 2003, and as one of our
directors from May 1994 to May 2003.
Section 16(a)
of the Exchange Act requires our officers and directors, and persons who own
more than 10% of a registered class of our equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, directors, and
greater than 10% stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. Based solely upon a
review of the copies of such forms furnished to us, we believe that, with the
exception of one filing, none of our officers, directors, and greater than 10%
beneficial owners failed to file on a timely basis the reports required by
Section 16(a). The exception was that R.H. Lovin, Jr.
inadvertently failed to timely report one transaction. We make
available copies of Section 16(a) forms that our directors and executive
officers file with the SEC through our website at http://www.covenanttransport.com.
Our Board
of Directors has adopted a Code of Conduct and Ethics that applies to all
directors, officers, and employees, whether with us or one of our subsidiaries.
The Code of Conduct and Ethics includes provisions applicable to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions that constitute a "code of
ethics" within the meaning of Item 406(b) of Regulation S-K. A copy of
the Code of Conduct and Ethics is available to stockholders on our website at
http://www.covenanttransport.com.
The
Compensation Committee of our Board of Directors ("Compensation Committee")
oversees all of our executive officer compensation arrangements. The
Compensation Committee has the specific responsibility to (i) review and
approve corporate goals and objectives relevant to the compensation of our CEO,
(ii) evaluate the performance of our CEO in light of those goals and
objectives, and (iii) determine and approve the compensation level of our
CEO based upon that evaluation. The Compensation Committee also has
the responsibility to review annually the compensation of our other executive
officers and to determine whether such compensation is reasonable under existing
facts and circumstances. In making such determinations, the
Compensation Committee seeks to ensure that the compensation of our executive
officers aligns the executives' interests with the interests of our
stockholders. The Compensation Committee also reviews and approves
all forms of deferred compensation and incentive compensation, including stock
option grants, stock grants, and other forms of incentive compensation granted
to our executive officers. The Compensation Committee takes into
account the recommendations of our CEO in reviewing and approving the overall
compensation of the other executive officers.
One of
our primary business strategies has been to divide our businesses into defined
service offerings, each of which operates as a semi-autonomous business
unit. Accordingly, at the most senior level, including our Named
Executive Officers (as defined below), we seek to attract, motivate, and retain
executives who are capable of evaluating, building, and managing multiple
businesses. Our primary executive compensation goals include
attracting, motivating, and retaining qualified executive officers who possess
the requisite abilities to serve in these roles and who we believe will create
long-term value for our stockholders. In this regard, we use a mix of
compensation designed to provide overall compensation levels that (i) are
sufficient to attract and retain talented executives and to motivate those
executives to achieve superior results, (ii) align executives' interests with
our corporate strategies, our business objectives, and the performance of
specific business units to the extent applicable, (iii) enhance executives'
incentives to increase our stock price and focus on the long-term interests of
our stockholders, and (iv) are consistent with our goal of controlling
costs. In many instances we build our compensation elements around
long-term retention and development together with annual rewards based on
financial performance.
Our
compensation program for senior executive officers has two major elements, fixed
and incentive compensation. The total compensation for senior
executive officers, including the Named Executive Officers, consists of one or
more of the following components: (i) base salary, (ii) incentive compensation,
which may include a performance-based annual bonus and long-term equity
incentive awards, which in recent years have been in the form of restricted
stock grants that have been both performance-based and time-based as to vesting,
(iii) other compensation, including specified perquisites, and (iv)
employee benefits, which are generally available to all of our
employees.
The
Compensation Committee has the responsibility to make and approve changes in the
total compensation of our executive officers, including the mix of compensation
elements. In making decisions regarding an executive's total
compensation, the Compensation Committee considers whether the total
compensation is fair and reasonable to us, is internally appropriate based upon
our culture, goals, initiatives, and the compensation of our other employees,
and is within a reasonable range of the compensation afforded by other
opportunities, overall economic conditions, and our recent historical
performance. The Compensation Committee also bases its decisions
regarding compensation upon its assessment of the executive's leadership,
integrity, individual performance, prospect for future performance, years of
experience, skill set, level of commitment and responsibility required in the
position, contributions to our financial results, the creation of stockholder
value, and current and past compensation. In determining the mix of
compensation elements, the Compensation Committee considers the effect of each
element in relation to total compensation. Consistent with our need
to control costs and our desire to recognize our executives' performance where
such recognition is warranted, the Compensation Committee has attempted to keep
base salaries relatively low and weight overall compensation toward incentive
and equity based compensation. Accordingly, a substantial part of the
compensation package for each Named Executive Officer is at risk and is only
earned if our performance and the performance of the Named Executive Officer so
warrants. The Compensation Committee specifically considers whether
each particular element provides an appropriate incentive and reward for
performance that sustains and enhances long-term stockholder
value. The Compensation Committee also takes into account the tax and
accounting consequences associated with each element of
compensation. In determining whether to increase or decrease an
element of compensation, we rely upon the business experience of the members of
the Compensation Committee, the Compensation Committee's general understanding
of compensation levels of public companies, and the historical compensation
levels of the executive officers. We generally do not rely on rigid
formulas, other than performance measures under our annual bonus program, or
short-term changes in business performance when setting
compensation.
The following summarizes the
compensation elements we used to attract, motivate, and retain our CEO, our
Chief Financial Officer, and our three other most highly compensated executive
officers for the year ended December 31, 2008 (collectively, the "Named
Executive Officers").
We pay
base salaries at levels that reward executive officers for ongoing performance
and that enable us to attract, motivate, and retain highly qualified
executives. Base pay is a critical element of our compensation
program because it provides our executive officers with
stability. Compensation stability allows our executives to focus
their attention and efforts on creating stockholder value and on our other
business objectives. In determining base salaries, we consider the
executive's current base salary, recent economic conditions and our financial
results, and the executive's qualifications and experience, including, but not
limited to, the executive's length of service with us, the executive's industry
knowledge, and the quality and effectiveness of the executive's leadership,
integrity, scope of responsibilities, dedication to us and our stockholders,
past performance, and current and future potential for providing value to our
stockholders. We do not formally benchmark base salary or total
executive compensation against the executive compensation of any other company
or group of companies. From time to time, the Compensation Committee
has considered the form and level of compensation disclosed by other publicly
traded truckload carriers, certain other transportation companies, and companies
of similar size and market capitalization in general. However, we do
not have a peer group for compensation purposes. We set our base
salaries at a level that allows us to pay a portion of an executive officer's
total compensation in the form of incentive compensation, including annual
bonuses, long-term incentives, and perquisites. We believe this mix
of compensation helps us incentivize our executives to maximize stockholder
value in the long run. We adjust base salaries annually to reflect
the foregoing factors but do not apply a specific weighting to such
factors.
On May
23, 2006, our stockholders approved our 2006 Omnibus Incentive Plan ("Incentive
Plan"). Our Incentive Plan is a broad-based equity plan that we use
to, among other things, (i) provide annual incentives to executive officers in a
manner designed to reinforce our performance goals, (ii) attract, motivate, and
retain qualified executive officers by providing them with long-term incentives,
and (iii) align our executives' and stockholders' long-term interests by
creating a strong, direct link between executive pay and stockholder
return. The Incentive Plan allows the Compensation Committee to link
compensation to performance over a period of time by using equity-based awards
(which often value a company's long-term prospects), requiring holding periods
for equity grants, and granting awards that have multiple-year vesting
schedules. Awards with multiple-year vesting schedules, such as
restricted stock grants, provide balance to the other elements of our
compensation program that otherwise link compensation to annual
performance. Awards with multiple-year vesting schedules create
incentive for executive officers to increase stockholder value over an extended
period of time because the value received from such awards is based on the
growth of the stock price. Such awards also incentivize executives to
remain with us over an extended period of time. Thus, we believe our
Incentive Plan is an effective way of aligning the interests of our executive
officers with those of our stockholders.
Awards
under our Incentive Plan may be paid in cash, shares of Class A common stock, a
combination of cash and shares of Class A common stock, or in any other
permissible form, as the Compensation Committee determines. All
awards granted under the Incentive Plan are evidenced by an award notice that
specifies the type of award granted, the number of shares of Class A common
stock underlying the award, if applicable, and all terms governing the
award. Payment of awards may include such terms, conditions,
restrictions, and/or limitations, if any, as the Compensation Committee deems
appropriate, including, in the case of awards paid in shares of Class A common
stock, restrictions on transfer of such shares and provisions regarding the
forfeiture of such shares under certain circumstances. The Incentive
Plan authorizes the grant of stock options, stock appreciation rights, stock
awards, restricted stock unit awards, performance units, performance awards, and
any other form of award established by the Compensation Committee that is
consistent with the Incentive Plan's purpose, or any combination of the
foregoing.
The Compensation Committee considers
several factors when determining awards to be granted to our executive officers,
including (i) the recommendations of our CEO, (ii) how the achievement
of certain performance goals will help us improve our financial and operating
performance and add long-term value to our stockholders, (iii) the value of
the award in relation to other elements of total compensation, including the
number of options or restricted stock currently held by the executive and the
number of options or restricted stock granted to the executive in prior years,
(iv) the executive's position, scope of responsibility, ability to affect
our financial and operating performance, ability to create stockholder value,
and historic and recent performance, and (v) the impact of awards on
retention.
Consistent
with our goal to improve our consolidated operating ratio, the Compensation
Committee has over the past few years approved operating income and operating
ratio targets as the basis for performance-based bonuses. The key
terms of our performance-based bonuses for 2008 and 2009 are described in
additional detail below.
We
provide our Named Executive Officers with certain other benefits that we believe
are reasonable, competitive, and consistent with our overall executive
compensation program. We believe that these benefits generally allow
our executives to work more efficiently. The costs of these benefits
constitute only a small percentage of each executive's total
compensation. In setting the amount of these benefits, the
Compensation Committee considers each executive's position and scope of
responsibilities and all other elements comprising the executive's
compensation.
Our
executive officers are eligible to participate in all of our employee benefit
plans, such as our 401(k) Plan and medical, dental, and group life insurance
plans, in each case on the same basis as our other employees.
Mr. David
Parker founded Covenant Transport, Inc. in 1985 with just 25 tractors and 50
trailers and has been our chief executive since our inception. We
have achieved considerable growth in revenue since our inception and now serve
as the holding company for several transportation providers that in the
aggregate operate more than 3,500 tractors and 8,600 trailers and offer premium
transportation services for customers throughout the United
States. Mr. Parker, along with one other executive officer, is
responsible for managing the performance of our service offerings.
At the
request and recommendation of Mr. Parker, the Compensation Committee did not
consider an increase to Mr. Parker's base salary during 2008. Mr.
Parker's base salary has not increased since 2003. Please see
"Executive Compensation – Compensation Discussion and Analysis – Compensation
Decisions with Respect to 2009" for a description of Mr. Parker's voluntary
salary reduction at the beginning of 2009, and subsequent grant of restricted
stock by the Compensation Committee. With respect to the other
aspects of Mr. Parker's compensation, the Compensation Committee determined that
a significant amount of equity compensation to align Mr. Parker's compensation
with increasing stockholder value and certain perquisites, as included in the
"All Other Compensation" column of the Summary Compensation table, were
important to motivate continued performance from Mr. Parker. Mr.
Parker does not participate in the determination of his own
compensation.
In June
2008, after considering that Mr. Parker's base salary has remained constant
since 2003 and considering his position, scope of responsibility, ability to
affect our results, ability to create stockholder value, and historic and recent
performance, as partially described above, the Compensation Committee granted
Mr. Parker 18,750 restricted shares of our Class A common stock, with such grant
becoming effective on July 1, 2008. Such amount was an increase over
the 4,000 restricted shares of our Class A common stock granted in 2007 as the
Compensation Committee determined that all of Mr. Parker's options to purchase
were substantially underwater and all prior restricted stock grants were subject
to performance-based vesting criteria that were not likely to be attained in the
foreseeable future. In addition, the Compensation Committee wished to
recognize Mr. Parker’s leadership responsibilities. Accordingly, the
Compensation Committee granted the additional restricted shares and provided
that the restricted shares awarded to Mr. Parker in June 2008 will vest 50% on
each of June 30, 2009 and June 30, 2010, subject to Mr. Parker's continued
employment with us. The restricted shares are subject to additional
holding requirements and terms set forth in the Incentive Plan and the
Restricted Stock Award Notice substantially in the form filed as Exhibit 10.22
to the our Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2006.
For 2008,
the Compensation Committee also approved a performance-based bonus opportunity
under which Mr. Parker was eligible to receive a bonus of up to 75% of his
base salary for 2008. The percentage of salary assigned to Mr.
Parker's potential bonus was based on the Compensation Committee's evaluation of
(i) the magnitude of Mr. Parker's ability to impact corporate performance based
on his responsibilities, (ii) the composition of Mr. Parker's total compensation
package, and (iii) our long-term financial goals. The Compensation
Committee set performance targets for Mr. Parker that were tied to us achieving
certain consolidated financial and operating benchmarks. The
performance targets for Mr. Parker were the same performance targets for our
other Named Executive Officers, except for Messrs. Smith and Brower, and are
discussed below. Because we failed to achieve any of the performance
targets for 2008, the Compensation Committee did not award a performance bonus
to Mr. Parker for 2008 under the 2008 Bonus Plan (as defined below).
During
2008, we also provided Mr. Parker with a cash vehicle allowance, use of our
corporate travel agency to arrange personal travel, and use of our
administrative personnel for personal services. We also paid Mr.
Parker the value of certain of his life insurance premiums and certain of his
club fees and dues. With the exception of payment for the life
insurance premiums, each perquisite is designed to help Mr. Parker more
effectively carry out his responsibilities as CEO. In addition to
providing the foregoing benefits and providing medical, dental, and group life
insurance to Mr. Parker, we also contributed to his 401(k) Plan account in
2008.
For all
Named Executive Officers, other than our CEO, the form and amount of
compensation was recommended by the CEO. As discussed above, the
Compensation Committee relied on the business experience of its members, the
historical compensation levels of the Named Executive Officers, and its general
understanding of compensation levels at public companies to determine that the
CEO's recommendations with respect to the compensation levels and forms were
appropriate for 2008. For 2008, the form of compensation paid to our
Named Executive Officers was generally consistent with past years, with
compensation consisting primarily of base salary, bonus based on the achievement
of certain financial and operating goals, and equity compensation in the form of
restricted stock grants. For each of the Named Executive Officers,
the Compensation Committee considered, among other things, our financial and
operating results for the periods ended December 31, 2007 and 2008, the duties
and responsibilities of each Named Executive Officer, and the length of time
each Named Executive Officer has been with us, as further described in each
executive's biographical information found herein.
On May
14, 2008, after reviewing our financial performance and the financial
performance of two of our subsidiaries, Southern Refrigerated Transport, Inc.
("SRT"), and Star Transportation, Inc. ("Star"), for the fiscal year ended
December 31, 2007, considering our compensation philosophy and the guidelines
described above, acknowledging our recent financial performance, and considering
the recommendations of the CEO, the Compensation Committee approved a $25,000
increase in the base salary of only one of our Named Executive Officers, Mr.
Cribbs, our Senior Vice President and Chief Financial Officer. This
salary increase was in recognition of Mr. Cribbs' promotion to the role of
Senior Vice President and Chief Financial Officer and the additional
responsibilities associated therewith. The Compensation Committee did
not increase the annual base salaries of our other Named Executive Officers. The
Compensation Committee believed their base salaries were consistent with their
responsibilities and, based on our cost-cutting efforts and recent financial
performance, the Compensation Committee did not believe salary increases for
such Named Executive Officers were appropriate. Along with
Mr. Parker, Mr. Hogan also voluntarily reduced his salary at the
beginning of 2009, and our other Named Executive Officers did the same effective
April 1, 2009. Please see "Executive Compensation – Compensation
Discussion and Analysis – Compensation Decisions with Respect to 2009" for a
description of the voluntary salary reductions in 2009 by our Named Executive
Officers, and grant of restricted stock by the Compensation Committee in
connection therewith.
After
considering the number of restricted shares of our Class A common stock granted
to each Named Executive Officer, other than the CEO, in prior years and each
Named Executive Officer's base salary, position, scope of responsibility,
ability to affect our results, ability to create stockholder value, and historic
and recent performance, as described above, the Compensation
Committee granted (i) Mr. Hogan 15,000 restricted shares of our Class A common
stock and (ii) each of Messrs. Cribbs, Smith, and Brower 12,500 restricted
shares of our Class A common stock, all of which were approved in June 2008, and
became effective on July 1, 2008. In addition, the Compensation
Committee determined that all such Named Executive Officers' options to purchase
were substantially underwater and all prior restricted stock grants were subject
to performance-based vesting criteria that were not likely to be attained in the
foreseeable future. Accordingly, the
Compensation Committee provided that the restricted shares awarded to each of
Messrs. Hogan, Cribbs, Smith, and Brower in June 2008 will vest 50% on each of
June 30, 2009 and June 30, 2010, subject to such Named Executive Officers'
continued employment with us. The restricted shares are subject to
additional holding requirements and terms set forth in the Incentive Plan and
the Restricted Stock Award Notice substantially in the form filed as Exhibit
10.22 to the our Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2006.
The
Compensation Committee granted restricted shares to create an incentive for the
executives to maximize stockholder value. The Compensation Committee
determined that, in addition to the underwater options and unlikelihood of
vesting of restricted shares as described above, the increase from 2007 to 2008
in the number of shares granted to (i) Mr. Hogan from 4,000 to 15,000 was
appropriate given Mr. Hogan's additional responsibilities associated with
general oversight of our service offerings and our restructuring initiative, as
well as his leadership responsibilities, (ii) Mr. Cribbs from 12,000 to 12,500
was appropriate given the increased responsibilities associated with his new
role as our Senior Vice President and Chief Financial Officer, (iii) Mr. Smith
from 4,000 to 12,500 was appropriate given the additional responsibilities in
managing tractors repositioned to SRT as part of our restructuring and
delivering better financial results at SRT when compared to our other service
offerings, and (iv) Mr. Brower from 4,000 to 12,500 was appropriate in
recognition of his responsibilities at Star. We believe the awards to
each of the Named Executive Officers will help build long-term value for our
stockholders, particularly because these equity awards are designed to raise
the
current
share price for our Class A common stock by providing incentives to the Named
Executive Officers in a manner designed to retain key employees and foster stock
price performance.
On April
9, 2008, after a meeting of, and deliberations by, the Compensation Committee,
and after considering recommendations of the CEO, the Compensation Committee
approved a special bonus to Tony Smith, President of SRT, in the amount of
$12,500, in order to reward Mr. Smith for his efforts in managing additional
trucks that SRT was asked to manage in 2007 as part of our
restructuring.
On
October 2, 2008, in recognition of his role in the September 2008 refinancing of
our credit facility, the Compensation Committee granted Richard Cribbs a dollar
value award of $3,000, with such award to be converted to restricted shares of
our Class A common stock based upon the closing price of our Class A common
stock two full trading days following the public release of our third quarter
2008 earnings, which converted to 1,744 shares. Such shares will vest
100% on October 2, 2009, subject to Mr. Cribbs' continued employment with
us.
For 2008,
the Compensation Committee also approved a performance-based bonus opportunity
under which each Named Executive Officer was eligible to receive a bonus of up
to 75% of his base salary for 2008 based upon our achievement of certain
performance targets (the "2008 Bonus Plan"). Each Named Executive
Officer must accept at least 25% of his bonus for 2008, if any, in the form of
Class A common stock under the Incentive Plan and may choose to receive up to
100% of the bonus in Class A common stock under the Incentive
Plan. As in 2007, the percentage of salary assigned to each Named
Executive Officer was based on the CEO's recommendation and the Compensation
Committee's evaluation of (i) the magnitude of each Named Executive
Officer's ability to impact corporate performance based on the executive's
responsibilities at the time the targets were set, (ii) the composition of each
Named Executive Officer's total compensation package, and (iii) our long-term
financial goals.
In
connection with the 2008 performance-based bonus opportunities described above,
the Compensation Committee set performance targets for each Named Executive
Officer (other than Messrs. Smith and Brower, whose performance targets are
provided below) related to us having consolidated operating income of
$16,187,000 and a consolidated operating ratio of 97.5% for 2008. As with the
performance targets for 2007, the Compensation Committee also created specific
parameters for awarding bonuses within certain incremental ranges of achievement
of the performance targets, subject to upward or downward adjustment in defined
circumstances. The applicable percentage of the achieved performance target is
then multiplied by the Named Executive Officer's target bonus (50% of the Named
Executive Officer's base salary for 2008) to determine the Named Executive
Officer's bonus. The following table sets forth a summary of the incremental
levels of achievement of the performance targets and the related percentage of
the potential bonus associated with such achievement.
|
2008
Incremental Ranges of Performance Targets
(Consolidated)
|
||
|
Consolidated
Operating
Income
($)
(000s)
|
Consolidated
Operating
Ratio
(%)
|
%
of Bonus
Opportunity
Paid as
Bonus
(%)
|
|
7,515
|
98.8
|
25.0
|
|
10,168
|
98.4
|
50.0
|
|
12,951
|
98.0
|
75.0
|
|
16,187
|
97.5
|
100.0
|
|
19,422
|
97.5
|
125.0
|
|
22,658
|
97.5
|
150.0
|
For Mr.
Smith, the Compensation Committee set performance targets, of which 10% were
related to the consolidated performance targets set forth above and 90% were
related to SRT having operating income of $8,492,000 and an operating ratio of
93.0% for 2008. As with the performance targets for the other Named
Executive Officers, the Compensation Committee also created specific parameters
for awarding a bonus to Mr. Smith within certain incremental
ranges of
achievement of the performance targets, subject to upward or downward adjustment
in defined circumstances. The following table sets forth, with
respect to Mr. Smith, a summary of the incremental levels of achievement of the
performance targets and the related percentage of the potential bonus associated
with such achievement.
|
2008
Incremental Ranges of Performance Targets (SRT)
|
||
|
SRT
Operating
Income
($)
(000s)
|
SRT
Operating
Ratio
(%)
|
%
of Bonus
Opportunity
Paid as
Bonus
(%)
|
|
6,879
|
94.3
|
25.0
|
|
7,364
|
93.9
|
50.0
|
|
7,886
|
93.5
|
75.0
|
|
8,492
|
93.0
|
100.0
|
|
9,099
|
93.0
|
125.0
|
|
9,706
|
93.0
|
150.0
|
For Mr.
Brower, the Compensation Committee set performance targets, of which 10% were
related to the consolidated performance targets set forth above and 90% were
related to Star having operating income of $2,527,000 and an operating ratio of
97.0% for 2008. As with the performance targets for the other Named
Executive Officers, the Compensation Committee also created specific parameters
for awarding a bonus to Mr. Brower within certain incremental ranges of
achievement of the performance targets, subject to upward or downward adjustment
in defined circumstances. The following table sets forth, with
respect to Mr. Brower, a summary of the incremental levels of achievement of the
performance targets and the related percentage of the potential bonus associated
with such achievement.
|
2008
Incremental Ranges of Performance Targets (Star)
|
||
|
Star
Operating
Income
($)
(000s)
|
Star
Operating
Ratio
(%)
|
%
of Bonus
Opportunity
Paid as
Bonus
(%)
|
|
1,399
|
98.3
|
25.0
|
|
1,744
|
97.9
|
50.0
|
|
2,106
|
97.5
|
75.0
|
|
2,527
|
97.0
|
100.0
|
|
2,949
|
97.0
|
125.0
|
|
3,370
|
97.0
|
150.0
|
The
Compensation Committee believes that the performance targets represent
aggressive, yet achievable goals for the Named Executive Officers to earn 100%
of the eligible bonus amount.
The Compensation Committee met in February 2009 to discuss and review the 2008 bonus awards for the Named Executive Officers. The Compensation Committee reviewed the foregoing policies, our consolidated financial and operating performance, and SRT's and Star's financial and operating performance. After determining that we failed to achieve the performance targets, or any incremental ranges of the performance targets, the Compensation Committee did not award performance bonuses to the Named Executive Officers for 2008 under the 2008 Bonus Plan.
During
2008, we also provided each Named Executive Officer, other than Mr. Parker, with
a cash vehicle allowance and use of our corporate travel agency to arrange
personal travel. We also paid certain club fees and dues on behalf of
Mr. Brower. Each perquisite is designed to help the Named Executive
Officers more effectively carry out their responsibilities for us. In
addition to providing the foregoing benefits and providing medical, dental, and
group life insurance to the Named Executive Officers, we also contributed to
each of their 401(k) Plan accounts for 2008.
The
Compensation Committee annually reviews and considers increases in the base
salaries of our Named Executive Officers. Messrs. Parker and Hogan
voluntarily elected to reduce their 2009 base salaries from $535,500 to $492,660
and from $275,000 to $253,000, respectively, with such salary reductions
becoming effective as of the first pay period in January 2009. In
March of 2009, in conjunction with the 2009 Voluntary Incentive Opportunity (as
defined below), Messrs. Cribbs, Smith, and Brower voluntarily elected to reduce
their 2009 base salaries from $175,000 to $168,437; from $250,000 to $231,250;
and from $200,000 to $192,500, respectively. Additionally, Messrs.
Parker and Hogan elected to further reduce their 2009 base salaries, from
$492,660 to $484,627 and from $253,000 to $248,875, respectively. The
March 2009 voluntary salary reductions became effective as of the first pay
period in April of 2009. As set forth below, the stockholders of the
Company are being asked to approve the Amendment to the Incentive Plan at the
2009 Annual Meeting, which shall have the effect of making additional shares
available for the grant of awards under the Incentive Plan from and after the
effective date of the Amendment. Such approval of the Amendment is
necessary to effectuate the grant of shares of restricted Class A common stock
to Messrs. Cribbs, Smith, and Brower under the 2009 Voluntary Incentive
Opportunity, and accordingly, maintain the reduced 2009 cash base salaries for
such Named Executive Officers discussed herein. Based on the Named
Executive Officers' voluntary election to reduce their 2009 base salaries, the
Compensation Committee did not consider any increases in the base salaries of
our Named Executive Officers for 2009.
In March
2009, after considering (i) certain of our goals, including our desire to
control costs and conserve cash, (ii) discussions with and the recommendations
of Messrs. Parker and Hogan, and (iii) our compensation philosophy and the
guidelines described above, the Compensation Committee approved a plan under
which individuals that voluntarily forfeited a portion of their 2009 base salary
(up to ten percent (10%)) would receive, in exchange for such forfeiture, a
special grant of restricted shares of our Class A common stock equal to (y) the
amount of 2009 base salary voluntarily forfeited by such individuals divided by
(z) the closing price of our Class A common stock two full trading days
following release of our first quarter 2009 earnings (the "2009 Voluntary
Incentive Opportunity"). Pursuant to the 2009 Voluntary Incentive
Opportunity, each individual electing to participate was required to make such
election by March 31, 2009. As of March 31, 2009, all of the Named
Executive Officers had elected to
participate in the 2009 Voluntary Incentive Opportunity for a period of one year
(the "Incentive Period") from April 1, 2009, through March 31, 2010; provided,
that the Incentive Period is January 1, 2009, through December 31, 2009, for
Messrs. Parker and Hogan, who each, as discussed above, voluntarily reduced
their 2009 base salaries effective as of the first pay period in January 2009.
At the expiration of the applicable Incentive Period, each Named Executive
Officer's salary will revert back to his original 2009 base salary.
Except as explained herein with respect
to Messrs. Parker and Hogan, the awards granted to the Named Executive Officers
under the 2009 Voluntary Incentive Opportunity shall be void if our stockholders
do not approve the Amendment to the Incentive Plan. In the event the
Amendment to the Incentive Plan is not approved by the stockholders at the 2009
Annual Meeting, each Named Executive Officer's salary, with the exception of
Messrs. Parker's and Hogan's, will automatically revert back to his original
2009 base salary and we will make an immediate lump sum cash payment to each
such Named Executive Officer equal to the amount of his 2009 base salary forgone
up to such date, without interest. As Messrs. Parker and Hogan
voluntarily elected to reduce their 2009 base salaries in January 2009, and the
grants to Messrs. Parker and Hogan under the 2009 Voluntary Incentive
Opportunity could be made within the existing shares available under the
Incentive Plan, the grants of such shares to Messrs. Parker and Hogan will not
be void regardless of whether the Amendment to the Incentive Plan is approved at
the 2009 Annual Meeting.
Subject
to the foregoing, the restricted shares granted to each Named Executive Officer
as part of the 2009 Voluntarily Incentive Opportunity will vest in one-third
increments when and to the extent our Class A common stock trades at or above
$4.00, $6.00, and $8.00 for thirty consecutive
trading days during the period beginning January 1, 2010, and ending on
December 31, 2011. Any restricted shares granted as part of an
award under the 2009 Voluntary Incentive Opportunity that have not vested as of
December 31, 2011, will automatically be forfeited without any obligation
of ours to pay any amount to the Named Executive Officers for such unvested
shares, to return any forfeited 2009 base salary of the Named Executive
Officers, or to make any other payment or award whatsoever. The
Compensation Committee believes that the 2009 Voluntary Incentive Opportunity
will assist us in reducing costs and conserving cash, while at the same time
creating an incentive for the Named Executive Officers to maximize stockholder
value.
The Compensation Committee annually
reviews and considers proposals to grant equity awards to each Named Executive
Officer based on the number of restricted shares of our Class A common stock
granted to each Named Executive Officer in prior years and each Named Executive
Officer's base salary, position, scope of responsibility, ability to affect our
results, ability to create stockholder value, and historic and recent
performance, as described above. As of March 31, 2009, the
Compensation Committee had not considered any annual grants of equity awards to
the Named Executive Officers for 2009 based primarily on the lack of sufficient
shares currently available for grant under the Incentive Plan. The
Compensation Committee may revisit the issue of annual grants of equity awards
to the Named Executive Officers and may review and consider proposals to grant
annual equity awards to the Named Executive Officers later in 2009, subject to
the stockholders' approval of the Amendment to the Incentive Plan.
In March 2009, the Compensation
Committee approved performance-based bonus opportunities under which each Named
Executive Officer is eligible to receive a bonus of up to 75% of his 2009 base
salary (prior to any forfeiture under the 2009 Voluntary Incentive Opportunity)
based upon our achievement of certain performance targets (the "2009 Bonus
Plan"). Each Named Executive Officer may choose to receive up to 100%
of the bonus in Class A common stock under the Incentive Plan. While under the 2008
Bonus Plan each Named Executive Officer was required to accept at least 25% of
his bonus for 2008, if any, in the form of Class A common stock under the
Incentive Plan, under the 2009 Bonus Plan there is no such requirement based on
the adoption of the 2009 Voluntary Incentive Opportunity and related salary
reductions. As in 2008, the percentage of salary assigned to each
Named Executive Officer is based on the Compensation Committee's evaluation of
(i) the magnitude of each Named Executive Officer's ability to impact
corporate performance based on the executive's responsibilities at the time the
targets were set, (ii) the composition of each Named Executive Officer's
total compensation package, and (iii) our long-term financial
goals.
In
connection with the 2009 performance-based bonus opportunities described above,
the Compensation Committee set performance targets for each Named Executive
Officer (other than Messrs. Smith and Brower, whose performance targets are
provided below) related to us having consolidated operating income of
$26,515,000 and a consolidated operating ratio of 95.3% for 2009. As
with the performance targets for 2008, the Compensation Committee also created
specific parameters for awarding bonuses within certain incremental ranges of
achievement of the performance targets, subject to upward or downward adjustment
in defined circumstances. The applicable percentage of the achieved
performance target is then multiplied by the Named Executive Officer's target
bonus (50% of the Named Executive Officer's 2009 base salary prior to any
forfeiture under the 2009 Voluntary Incentive Opportunity) to determine the
Named Executive Officer's bonus. The following table sets forth a
summary of the incremental levels of achievement of the performance targets and
the related percentage of the potential bonus associated with such
achievement.
|
2009
Incremental Ranges of Performance Targets
(Consolidated)
|
||
|
Consolidated
Operating
Income
($)
(000s)
|
Consolidated
Operating
Ratio
(%)
|
%
of Bonus
Opportunity
Paid as
Bonus
(%)
|
|
17,951
|
96.8
|
50.0
|
|
22,289
|
96.0
|
75.0
|
|
26,515
|
95.3
|
100.0
|
|
29,333
|
95.3
|
125.0
|
|
32,150
|
95.3
|
150.0
|
For Mr.
Smith, the Compensation Committee set performance targets, of which 20% (versus
10% in 2008) were related to the consolidated performance targets set
forth above and 80% (versus 90% in 2008) were related to SRT having operating
income of $9,398,000 and an operating ratio of 92% for 2009. The
portion of the pay-out performance based on consolidated performance was
increased over 2008 to incentivize Mr. Smith to maximize results for the
consolidated group, while still rewarding Mr. Smith for the individual results
of SRT. As with the performance targets
for the
other Named Executive Officers, the Compensation Committee also created specific
parameters for awarding a bonus to Mr. Smith within certain incremental ranges
of achievement of the performance targets, subject to upward or downward
adjustment in defined circumstances. The following table sets forth,
with respect to Mr. Smith, a summary of the incremental levels of achievement of
the performance targets and the related percentage of the potential bonus
associated with such achievement.
|
2009
Incremental Ranges of Performance Targets (SRT)
|
||
|
SRT
Operating
Income
($)
(000s)
|
SRT
Operating
Ratio
(%)
|
%
of Bonus Opportunity Paid as Bonus
(%)
|
|
7,613
|
93.5
|
50.0
|
|
8,517
|
92.8
|
75.0
|
|
9,398
|
92.0
|
100.0
|
|
9,986
|
92.0
|
125.0
|
|
10,573
|
92.0
|
150.0
|
For Mr.
Brower, the Compensation Committee set performance targets, of which 20% (versus
10% in 2008) were related to the consolidated performance targets set forth
above and 80% (versus 90% in 2008) were related to Star having operating income
of $3,407,000 and an operating ratio of 94% for 2009. The portion of
the pay-out performance based on consolidated performance was increased over
2008 to incentivize Mr. Brower to maximize results for the consolidated group,
while still rewarding Mr. Brower for the individual results of
Star. As with the performance targets for the other Named Executive
Officers, the Compensation Committee also created specific parameters for
awarding a bonus to Mr. Brower within certain incremental ranges of achievement
of the performance targets, subject to upward or downward adjustment in defined
circumstances. The following table sets forth, with respect to Mr.
Brower, a summary of the incremental levels of achievement of the performance
targets and the related percentage of the potential bonus associated with such
achievement.
|
2009
Incremental Ranges of Performance Targets (Star)
|
||
|
Star
Operating
Income
($)
(000s)
|
Star
Operating
Ratio
(%)
|
%
of Bonus
Opportunity
Paid as
Bonus
(%)
|
|
2,544
|
95.5
|
50.0
|
|
2,981
|
94.8
|
75.0
|
|
3,407
|
94.0
|
100.0
|
|
3,691
|
94.0
|
125.0
|
|
3,974
|
94.0
|
150.0
|
The
Compensation Committee believes that the performance targets represent
aggressive, yet achievable goals for the Named Executive Officers to earn 100%
of the eligible bonus amount.
We
currently do not have any employment contracts, severance agreements,
change-of-control agreements, or other arrangements with our Named Executive
Officers that provide for payment or benefits to an executive officer at,
following, or in connection with a change in control, a change in an executive
officer's responsibilities, or an executive officers' termination of employment,
including resignation, severance, retirement, or constructive termination.
However, under certain circumstances in which there is a change of control,
certain outstanding unexercisable stock options and unvested restricted stock
granted to recipients, including Named Executive Officers, under the Incentive
Plan and our Predecessor Plans (as defined below) may become immediately
exercisable or subject to immediate vesting, respectively, upon the occurrence
of such event, notwithstanding that such stock options or restricted shares may
not have otherwise been fully exercisable or fully vested.
Generally
speaking, and as qualified by the terms of the relevant plans and award notices,
a change in control occurs if: (i) someone acquires 50% or more of the combined
voting power of our stock, unless after the transaction more than 75% of the
acquiring company is owned by all or substantially all of those persons who were
beneficial owners of our stock prior to such acquisition; (ii) a majority of our
directors is replaced, other than by new directors approved by existing
directors; (iii) we consummate a reorganization, merger, or consolidation where,
following such transaction, all or substantially all of those persons who were
beneficial owners of our stock immediately prior to the transaction do not own,
immediately after the transaction, more than 75% of the outstanding securities
of the resulting corporation; or (iv) we sell or liquidate all or
substantially all of our assets. The estimated value of stock options and
restricted stock that would have vested for our Named Executive Officers as of
December 31, 2008 (the last day of fiscal 2008) under the acceleration scenarios
described above is set forth in the table below. As the exercise price for
all outstanding stock options is above the aggregate market value of the
underlying shares as of December 31, 2008, or $2.00 per share at the closing
price, there is no value in the accelerated options. The value for the
accelerated restricted stock was calculated by multiplying the closing market
price of our stock on December 31, 2008 ($2.00) by the number of shares of
accelerated restricted stock. For additional information on the number of
currently unexercisable stock options and unvested restricted stock that may
become fully exercisable or immediately vest in the event of a change in
control, please refer to the table of Outstanding Equity Awards at Fiscal
Year-End.
|
Name
|
Value
of Accelerated Stock
Options
($)
|
Value
of Accelerated
Restricted
Stock ($)
|
|
David
R. Parker
|
-
|
153,500
|
|
Richard
B. Cribbs
|
-
|
55,488
|
|
Joey
B. Hogan
|
-
|
112,666
|
|
Tony
Smith
|
-
|
91,000
|
|
James
"Jim" Brower
|
-
|
91,000
|
The
following table sets forth information concerning the total compensation for the
fiscal year 2008 awarded to, earned by, or paid to those persons who were, at
December 31, 2008, (i) our CEO, (ii) our Chief Financial Officer, and
(iii) our three other most highly compensated executive officers with total
compensation exceeding $100,000 for the fiscal year ended December 31,
2008.
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards(1)
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
All
Other Compensation(2)
($)
|
Total
($)
|
|
David
R. Parker, Chief
Executive Officer, Chairman, and President
|
2008
2007
2006
|
535,500
535,500
535,500
|
-
-
-
|
(1,248)
8,108
9,593
|
-
-
-
|
156,153
158,368
135,232
|
690,405
701,976
680,325
|
|
Richard
B. Cribbs,(3)
Senior
Vice President and Chief Financial Officer
|
2008
|
164,904
|
-
|
4,068
|
-
|
5,228
|
174,200
|
|
Joey
B. Hogan, Senior
Executive Vice President and Chief Operating Officer
|
2008
2007
2006
|
275,000
252,273
219,815
|
-
-
-
|
(4,538)
8,108
9,593
|
-
-
-
|
21,010
21,017
20,191
|
291,472
281,398
249,599
|
|
Tony
Smith, President
of Southern Refrigerated Transport, Inc.
|
2008
2007
2006
|
250,000
248,581
208,793
|
-
12,500
-
|
(6,793)
8,108
9,654
|
-
-
90,561
|
16,736
17,478
17,631
|
259,943
286,667
326,639
|
|
James
"Jim" Brower,(4)
President
of Star Transportation, Inc.
|
2008
2007
|
200,000
200,000
|
-
-
|
2,861
8,108
|
-
-
|
184
7,888
|
203,045
215,996
|
|
(1)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2008, 2007, and 2006 fiscal years
for the fair value of stock awards granted to each Named Executive Officer
in accordance with SFAS 123R. Pursuant to SEC rules, the
amounts shown exclude the impact of estimated forfeitures related to
service-based vesting conditions. For additional information on
the valuation assumptions with respect to the 2008 grants, refer to note 3, Share-Based
Compensation, of our consolidated financial statements as provided
in the Form 10-K for the year-ended December 31, 2008, as filed with the
SEC. See the Grants of
Plan-Based Awards Table for information on awards made in
2008. In accordance with SFAS 123R, the amounts shown for 2008
represent the total stock award expense recognized in 2008 and include the
reversal of previously reported expensed portions of restricted stock for
each Named Executive Officer, where applicable, because achievement of the
performance-based vesting criteria associated with such restricted stock
awards is now considered improbable. These amounts reflect our
accounting expense for these awards, and do not correspond to the actual
value that will be recognized by the Named Executive
Officers.
|
|
(2)
|
See the All Other
Compensation Table for additional information.
|
|
(3)
|
Mr.
Cribbs was not a Named Executive Officer for 2006 or
2007.
|
|
(4)
|
Mr.
Brower was not a Named Executive Officer for
2006.
|
The following table describes each
component of the "All Other Compensation" column in the Summary Compensation
Table.
|
Name
|
Year
|
Perquisites
and
Other
Personal
Benefits
($)
|
Insurance
Premiums
($)
|
Contributions
to Retirement and 401(k) Plans(4)
($)
|
Total
($)
|
|
David
R. Parker
|
2008
|
42,774(1)
|
100,000(3)
|
13,380
|
156,153(5)
|
|
Richard
B. Cribbs
|
2008
|
-
|
-
|
5,228
|
5,228
|
|
Joey
B. Hogan
|
2008
|
13,200(2)
|
-
|
7,810
|
21,010
|
|
Tony
Smith
|
2008
|
12,000(2)
|
-
|
4,736
|
16,736
|
|
James
"Jim" Brower
|
2008
|
-
|
-
|
184
|
184
|
|
(1)
|
During
2008, we provided Mr. Parker with certain other benefits in addition to
his salary, including, a $33,600 cash vehicle allowance, use of our
corporate travel agency to arrange personal travel, and use of our
administrative personnel for personal services. During 2008, we
also paid for certain of Mr. Parker's club fees and
dues.
|
|
(2)
|
During
2008, we provided the Named Executive Officer with certain other benefits
in addition to his base salary, including, a cash vehicle allowance and
use of our corporate travel agency to arrange personal
travel. None of the personal benefits provided to the Named
Executive Officer exceeded the greater of $25,000 or 10% of the total
amount of the personal benefits he received during
2008.
|
|
(3)
|
During
2008, we paid Mr. Parker the value of certain life insurance premiums, as
a result of arrangements entered into during a time when split-dollar
insurance policies were common. Subsequent to adoption of the
Sarbanes-Oxley Act of 2002, we converted the policy to a company-paid
policy to honor the pre-existing obligation to
Mr. Parker.
|
|
(4)
|
The
differences in contribution amounts among the Named Executive Officers is
based upon a combination of the differences among the officers' salary and
the extent to which each officer chooses to make personal contributions to
his 401(k) account.
|
|
(5)
|
Due
to rounding, the amounts in this row do not
foot.
|
See "Executive Compensation –
Compensation Discussion and Analysis" for a complete description of our
compensation plans pursuant to which the amounts listed under the Summary
Compensation Table were paid or awarded and the criteria for such award or
payment.
The following table sets forth
information concerning each grant of an award made to our Named Executive
Officers during fiscal 2008.
|
Name
|
Grant
Date
|
Approval
Date(1)
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards(2)
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards(3)
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards(4)
($)
|
||||
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
||||
|
David
R. Parker
|
7/1/08
|
6/23/08
|
-
66,938
|
-
267,750
|
-
401,625
|
-
-
|
18,750
-
|
-
-
|
65,813
-
|
|
Richard
B. Cribbs
|
7/1/08
10/2/08
|
6/23/08
-
|
-
-
20,613
|
-
-
82,452
|
-
-
123,678
|
-
-
-
|
12,500
1,744
-
|
-
-
-
|
43,875
3,000
|
|
Joey
B. Hogan
|
7/1/08
|
6/23/08
|
-
34,375
|
-
137,500
|
-
206,250
|
-
-
|
15,000
-
|
-
-
|
52,650
-
|
|
Tony
Smith
|
7/1/08
|
6/23/08
|
-
31,250
|
-
125,000
|
-
187,500
|
-
-
|
12,500
-
|
-
-
|
43,875
-
|
|
James
"Jim" Brower
|
7/1/08
|
6/23/08
|
-
25,000
|
-
100,000
|
-
150,000
|
-
-
|
12,500
-
|
-
-
|
43,875
-
|
|
(1)
|
This
column represents the date on which the Compensation Committee approved
the grant of such awards.
|
|
(2)
|
These
columns represent the approximate value of the payout to the Named
Executive Officer based upon the attainment of specified performance
targets that were established by the Compensation Committee in April
2008. The performance targets are related to our consolidated
performance, except with respect to Messrs. Smith's and Brower's bonuses
where the targets are weighted 90% to the performance of SRT and Star,
respectively, and 10% on our consolidated performance. The
bonus threshold, target, and maximum set forth above are based upon the
Named Executive Officer's 2008 base salary. The Compensation
Committee also created specific parameters for awarding bonuses to the
Named Executive Officer within certain incremental ranges of achievement
of the performance targets, subject to upward and downward
adjustments. See the Compensation
Discussion and Analysis for additional detail with respect to the
performance targets. As we failed to achieve the performance
targets, or any incremental ranges of the performance targets, no
performance bonuses were awarded to the Named Executive Officers for
fiscal 2008 under the 2008 Bonus Plan, no amount is shown in the
"Non-Equity Incentive Plan Compensation" column of the Summary
Compensation Table for fiscal 2008, and no amount related to the 2008
Bonus Plan is potentially owing any Named Executive
Officer.
|
|
(3)
|
This
column represents the potential number of shares to be awarded to the
Named Executive Officer based upon the time-vesting requirements that were
established by the Compensation Committee and as discussed in more detail
in the Compensation Discussion and Analysis.
|
|
(4)
|
This
column represents the full grant date fair value of the stock awards under
SFAS 123R granted to the Named Executive Officers in 2008. The
fair value was calculated using the closing price of our Class A common
stock on the grant date, which was $3.51 for July 1, 2008, and $1.72
for October 2, 2008. The fair value of the stock awards are
accounted for in accordance with SFAS 123R. For additional
information on the valuation assumptions, refer to note 3, Share-Based
Compensation, of our consolidated financial statements in the Form
10-K for the year-ended December 31, 2008, as filed with the
SEC. These amounts reflect our accounting expense, and do not
correspond to the actual value that will be recognized by the Named
Executive Officers.
|
See "Executive Compensation –
Compensation Discussion and Analysis" for a complete description of the
performance targets for payment of incentive awards.
The
following table sets forth information concerning all stock option grants and
stock awards held by our Named Executive Officers as of December 31,
2008. All outstanding equity awards are in shares of our Class A
common stock.
|
Option
Awards
|
Stock
Awards
|
||||||
|
Name
|
Grant Date
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested
(#)
|
Equity
Incentive Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or Other Rights
That
Have Not
Vested(7)
($)
|
|
David
R. Parker
|
05/20/99
|
3,333
|
-
|
13.00
|
05/20/09
|
-
|
-
|
|
05/20/99
|
6,667
|
-
|
13.00
|
05/20/09
|
-
|
-
|
|
|
02/29/00
|
7,206
|
-
|
13.13
|
03/31/10
|
-
|
-
|
|
|
05/18/00
|
6,666
|
-
|
12.19
|
05/18/10
|
-
|
-
|
|
|
05/18/00
|
3,334
|
-
|
12.19
|
05/18/10
|
-
|
-
|
|
|
07/27/00
|
9,429
|
-
|
8.00
|
07/27/10
|
-
|
-
|
|
|
07/27/00
|
100,571
|
-
|
8.00
|
07/27/10
|
-
|
-
|
|
|
05/17/01
|
3,333
|
-
|
16.79
|
05/17/11
|
-
|
-
|
|
|
05/17/01
|
6,667
|
-
|
16.79
|
05/17/11
|
-
|
-
|
|
|
05/16/02
|
6,194
|
-
|
15.39
|
05/16/12
|
-
|
-
|
|
|
05/16/02
|
3,806
|
-
|
15.39
|
05/16/12
|
-
|
-
|
|
|
02/20/03
|
5,780
|
-
|
17.30
|
02/20/13
|
-
|
-
|
|
|
02/20/03
|
1,111
|
-
|
17.30
|
02/20/13
|
-
|
-
|
|
|
05/22/03
|
6,095
|
-
|
17.63
|
05/22/13
|
-
|
-
|
|
|
05/22/03
|
3,905
|
-
|
17.63
|
05/22/13
|
-
|
-
|
|
|
05/27/04
|
10,000
|
-
|
15.71
|
05/27/14
|
-
|
-
|
|
|
02/16/05
|
5,690
|
-
|
21.43
|
02/16/15
|
-
|
-
|
|
|
05/10/05
|
10,000
|
-
|
13.64
|
05/10/15
|
-
|
-
|
|
|
05/23/06
|
-
|
-
|
-
|
-
|
50,000(1)
|
100,000
|
|
|
05/23/06
|
-
|
-
|
-
|
-
|
4,000(2)
|
8,000
|
|
|
05/22/07
|
-
|
-
|
-
|
-
|
4,000(3)
|
8,000
|
|
|
07/01/08
|
-
|
-
|
-
|
-
|
18,750(4)
|
37,500
|
|
|
Richard
B. Cribbs
|
05/23/06
|
1,667
|
833(5)
|
12.79
|
05/23/2016
|
-
|
-
|
|
05/23/06
|
-
|
-
|
-
|
-
|
1,500(2)
|
3,000
|
|
|
05/22/07
|
-
|
-
|
-
|
-
|
2,000(3)
|
4,000
|
|
|
05/22/07
|
-
|
-
|
-
|
-
|
10,000(1)
|
20,000
|
|
|
07/01/08
|
-
|
-
|
-
|
-
|
12,500(4)
|
25,000
|
|
|
10/02/08
|
-
|
-
|
-
|
-
|
1,744(6)
|
3,488
|
|
|
Joey
B. Hogan
|
05/20/99
|
480
|
-
|
13.00
|
05/20/09
|
-
|
-
|
|
05/20/99
|
9,520
|
-
|
13.00
|
05/20/09
|
-
|
-
|
|
|
02/29/00
|
2,272
|
-
|
13.13
|
03/01/10
|
-
|
-
|
|
|
05/18/00
|
3,333
|
-
|
12.19
|
05/18/10
|
-
|
-
|
|
|
05/18/00
|
6,667
|
-
|
12.19
|
05/18/10
|
-
|
-
|
|
|
07/27/00
|
2,423
|
-
|
8.00
|
07/27/10
|
-
|
-
|
|
|
07/27/00
|
27,577
|
-
|
8.00
|
07/27/10
|
-
|
-
|
|
|
05/17/01
|
3,333
|
-
|
16.79
|
05/17/11
|
-
|
-
|
|
|
05/17/01
|
6,667
|
-
|
16.79
|
05/17/11
|
-
|
-
|
|
|
05/16/02
|
6,194
|
-
|
15.39
|
05/16/12
|
-
|
-
|
|
|
05/16/02
|
3,806
|
-
|
15.39
|
05/16/12
|
-
|
-
|
|
|
02/20/03
|
2,612
|
-
|
17.30
|
02/20/13
|
-
|
-
|
|
|
05/22/03
|
2,762
|
-
|
17.63
|
05/22/13
|
-
|
-
|
|
|
05/22/03
|
7,238
|
-
|
17.63
|
05/22/13
|
-
|
-
|
|
|
05/27/04
|
10,000
|
-
|
15.71
|
05/27/14
|
-
|
-
|
|
|
02/16/05
|
2,285
|
-
|
21.43
|
02/16/15
|
-
|
-
|
|
|
05/10/05
|
10,000
|
-
|
13.64
|
05/10/15
|
-
|
-
|
|
|
05/23/06
|
-
|
-
|
-
|
-
|
33,333(1)
|
66,666
|
|
|
05/23/06
|
-
|
-
|
-
|
-
|
4,000(2)
|
8,000
|
|
|
05/22/07
|
-
|
-
|
-
|
-
|
4,000(3)
|
8,000
|
|
|
07/01/08
|
-
|
-
|
-
|
-
|
15,000(4)
|
30,000
|
|
|
Option
Awards
|
Stock
Awards
|
||||||
|
Name
|
Grant Date
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested
(#)
|
Equity
Incentive Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or Other Rights
That
Have Not
Vested(8)
($)
|
|
Tony
Smith
|
05/20/99
|
5,000
|
-
|
13.00
|
05/20/09
|
-
|
-
|
|
07/27/00
|
4,062
|
-
|
8.00
|
07/27/10
|
-
|
-
|
|
|
07/27/00
|
938
|
-
|
8.00
|
07/27/10
|
-
|
-
|
|
|
05/17/01
|
4,613
|
-
|
16.79
|
05/17/11
|
-
|
-
|
|
|
05/17/01
|
387
|
-
|
16.79
|
05/17/11
|
-
|
-
|
|
|
05/16/02
|
3,652
|
-
|
15.39
|
05/16/12
|
-
|
-
|
|
|
05/16/02
|
348
|
-
|
15.39
|
05/16/12
|
-
|
-
|
|
|
08/28/03
|
5,000
|
-
|
17.00
|
08/28/13
|
-
|
-
|
|
|
08/28/03
|
2,500
|
-
|
17.00
|
08/28/13
|
-
|
-
|
|
|
05/27/04
|
2,354
|
-
|
15.71
|
05/27/14
|
-
|
-
|
|
|
05/27/04
|
5,146
|
-
|
15.71
|
05/27/14
|
-
|
-
|
|
|
02/16/05
|
2,076
|
-
|
21.43
|
02/16/15
|
-
|
-
|
|
|
05/10/05
|
10,000
|
-
|
13.64
|
05/10/15
|
-
|
-
|
|
|
05/23/06
|
-
|
-
|
-
|
-
|
25,000(1)
|
50,000
|
|
|
05/23/06
|
-
|
-
|
-
|
-
|
3,000(2)
|
6,000
|
|
|
07/31/06
|
-
|
-
|
-
|
-
|
1,000(2)
|
2,000
|
|
|
05/22/07
|
-
|
-
|
-
|
-
|
4,000(3)
|
8,000
|
|
|
07/01/08
|
-
|
-
|
-
|
-
|
12,500(4)
|
25,000
|
|
|
James
"Jim" Brower
|
09/21/06
|
-
|
-
|
-
|
-
|
25,000(1)
|
50,000
|
|
09/21/06
|
-
|
-
|
-
|
-
|
4,000(2)
|
8,000
|
|
|
05/22/07
|
-
|
-
|
-
|
-
|
4,000(3)
|
8,000
|
|
|
07/01/08
|
-
|
-
|
-
|
-
|
12,500(4)
|
25,000
|
|
|
(1)
|
Subject
to the terms of the award notice, the restricted shares will vest
completely in any year between 2007 and 2010 in which we reach an adjusted
earnings per share target of $2.00, though no 2007 vesting target was
provided for the grant of the 10,000 restricted shares to Mr. Cribbs, as
such award was granted after 2006. The adjusted
earnings-per-share target excludes the effect of the vesting of the awards
on earnings per share as well as extraordinary gains. The
executive must hold the shares for one year after vesting; provided that
the executive may sell such portion of the restricted shares that is
necessary to cover the federal and state taxes he incurs upon vesting of
the shares.
|
|
|
(2)
|
Subject
to the terms of the award notice, the restricted shares will vest in equal
increments over the four-year period beginning on the first anniversary of
the award date, subject to us reaching earnings-per-share targets of $0.75
in 2006, $1.05 in 2007, $1.35 in 2008, and $1.55 in 2009. Any
percentage that fails to vest as of a particular vesting date as a result
of failure to reach a particular target will automatically be forfeited;
provided, that such shares that do not vest as of a particular vesting
date will be eligible for vesting and will vest if we meet a subsequent
target, subject to continued employment. As a condition to
selling any vested shares of restricted Class A common stock, the
executive is required to maintain an equivalent of 200% of his annual
salary on the date of the proposed sale in the combination of (i) Class A
common stock and (ii) 50% of the value of (a) unexercised options to
purchase Class A common stock, and (b) restricted Class A common stock;
provided that the executive may sell such portion of the restricted shares
that is necessary to cover the federal and state taxes he incurs upon
vesting of the shares.
|
|
|
(3)
|
Subject
to the terms of the award notice, the restricted shares will vest in equal
increments over the four-year period beginning on the first anniversary of
the award date, subject to us reaching earnings-per-share targets of $0.25
in 2007, $.50 in 2008, $1.00 in 2009, and $1.50 in 2010. Any
percentage that fails to vest as of a particular vesting date as a result
of failure to reach a particular target will automatically be forfeited;
provided, that such shares that do not vest as of a particular vesting
date will be eligible for vesting and will vest if we meet a subsequent
target, subject to continued employment. As a condition to
selling any vested shares of restricted Class A common stock, the
executive is required to maintain an equivalent of 200% of his annual
salary on the date of the proposed sale
in
|
|
|
the
combination of (i) Class A common stock and (ii) 50% of the value of (a)
unexercised options to purchase Class A common stock, and (b)
restricted Class A common stock; provided that the executive may sell such
portion of the restricted shares that is necessary to cover the federal
and state taxes he incurs upon vesting of the shares.
|
|
|
(4)
|
Subject
to the terms of the award notice, the restricted shares will vest 50% on
each of June 30, 2009 and June 30, 2010, subject to continued
employment. Such restricted shares have also been disclosed in
the Summary Compensation Table (based on grant date fair value) and the
Grants of Plan-Based Awards Table and do not constitute additional
compensation by virtue of their disclosure in this
table.
|
|
(5)
|
Such
shares of Class A common stock are part of an option award to purchase
2,500 shares, with such option vesting and becoming exercisable in
accordance with the following schedule: 34% on May 23, 2007,
67% on May 23, 2008, and 100% on May 23, 2009, subject to continued
employment and the terms of the award notice.
|
|
(6)
|
Subject
to the terms of the award notice, the restricted shares will vest 100% on
October 2, 2009, subject to continued employment. Such
restricted shares have also been disclosed in the Summary Compensation
Table (based on grant date fair value) and the Grants of Plan-Based Awards
Table and do not constitute additional compensation by virtue of their
disclosure in this table.
|
|
(7)
|
The
market value was calculated by multiplying the closing market price of our
stock on December 31, 2008, which was $2.00, by the number of restricted
shares that have not vested.
|
The following table sets forth
information concerning the compensation of our non-employee directors for the
fiscal year 2008.
|
Name
|
Fees
Earned or Paid
in
Cash(1)
($)
|
Stock
Awards(2)
($)
|
Total
($)
|
|
William
T. Alt
|
$29,875
|
25,001
|
$54,876
|
|
Robert
E. Bosworth
|
$32,500
|
25,001
|
$57,501
|
|
Bradley
A. Moline
|
$32,875
|
25,001
|
$57,876
|
|
Dr.
Niel B. Nielson
|
$35,000
|
25,001
|
$60,001
|
|
Hugh
O. Maclellan, Jr.
(3)
|
$8,000
|
-
|
$8,000
|
|
(1)
|
This
column represents the amount of cash compensation earned in 2008 for Board
and committee service.
|
|
(2)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2008 fiscal year for the fair value
of stock awards granted to each director in 2008, in accordance with SFAS
123R. Directors who are not our employees received shares of our Class A
common stock with a market value on the grant date equivalent to
approximately $25,000. The directors can only sell these shares
if, after the sale, they maintain a minimum of $100,000 in value of our
Class A common stock.
|
|
(3)
|
Mr.
Maclellan's term ended in May 2008, as he decided not to stand for
re-election.
|
For 2008,
the compensation package for our non-employee Directors remained unchanged from
2007. Accordingly, Directors who are not our employees or employees
of one of our subsidiaries currently receive a $25,000 annual retainer and no
meeting attendance fees. An additional annual retainer of $7,500 is
paid to the Audit Committee Chairman; $5,000 to the Compensation Committee
Chairman; and $3,000 to the Nominating and Corporate Governance Committee
Chairman. For the additional time related to attending committee
meetings, Audit Committee members also receive an annual fee of $5,000;
Compensation Committee members also receive an annual fee of $4,000; and
Nominating and Corporate Governance Committee members also receive an annual fee
of $2,500. In lieu of stock options that had previously been a part
of outside director compensation, Directors who are not our employees or
employees of one of our subsidiaries received a grant of Class A common stock
equivalent to $25,000 at the time of our annual meeting. The directors can only
sell these shares if, after the sale, they maintain a minimum of $100,000 in
value of Class A common stock.
Directors who are our employees or
employees of one of our subsidiaries do not receive compensation for board or
committee service.
BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows, as of March
31, 2009, the
number of shares and percentage of outstanding shares of our Class A and
Class B common stock beneficially owned by:
|
•
|
Each
of our directors, director nominees, and Named Executive
Officers;
|
|
•
|
All
of our executive officers and directors as a group; and
|
|
•
|
Each
person known to us to beneficially own 5% or more of any class of our
common stock.
|
The
percentages shown are based on 12,463,381 shares of Class A common stock
(including 764,199 shares of restricted Class A common stock
subject to certain performance vesting and holding provisions) and 2,350,000
shares of Class B common stock outstanding at March 23,
2009. The shares of Class B common stock owned by Mr. and
Mrs. Parker are convertible into the same number of shares of Class A
common stock at any time and convert automatically if beneficially owned by
anyone other than Mr. or Mrs. Parker or certain members of their family. The
Class B common stock has two votes per share but otherwise is substantially
identical to the Class A common stock, which has one vote per
share.
|
Title
of Class
|
Name
and Address of Beneficial Owner(1)
|
Amount
and Nature
of
Beneficial
Ownership(2)
|
Percent
of Class(3)
|
|
Class
A & Class B
common
|
David
R. Parker & Jacqueline F. Parker
|
5,989,865(4)
|
28.7%
of Class A
100%
of Class B
39.9%
of Total(5)
|
|
Class
A common
|
Joey
B. Hogan
|
204,555(6)
|
1.6%
of Class A
1.4%
of Total
|
|
Class
A common
|
Richard
B. Cribbs
|
36,657(7)
|
*
|
|
Class
A common
|
Tony
Smith
|
101,576(8)
|
*
|
|
Class
A common
|
James
"Jim" Brower
|
45,500(9)
|
*
|
|
Class
A common
|
William
T. Alt
|
24,989
|
*
|
|
Class
A common
|
Robert
E. Bosworth
|
48,657(10)
|
*
|
|
Class
A common
|
Hugh
O. Maclellan, Jr.
|
29,268
|
*
|
|
Class
A common
|
Bradley
A. Moline
|
18,489
|
*
|
|
Class
A common
|
Dr.
Niel B. Nielson
|
18,489
|
*
|
|
Class
A common
|
Wells
Fargo & Company
|
1,148,718(11)
|
9.2%
of Class A
7.8%
of Total
|
|
Class
A common
|
Donald
Smith & Co., Inc.
|
1,087,321(12)
|
8.7%
of Class A
7.3%
of Total
|
|
Class
A common
|
Dimensional
Fund Advisors LP
|
1,012,426(13)
|
8.1%
of Class A
6.8%
of Total
|
|
Class
A & Class B
common
|
All
directors and executive officers as a group
(13
persons)
|
6,737,748(14)
|
44.1%
of Total
|
|
*
|
Less
than one percent (1%).
|
|
|
(1)
|
The
business address of Mr. and Mrs. Parker and the other directors,
director nominees, Named Executive Officers and the other executive
officers is 400 Birmingham Highway, Chattanooga, TN 37419. The
business addresses of the remaining entities listed in the table above
are: Wells Fargo & Company, 420 Montgomery Street,
San Francisco, CA 94104; Dimensional Fund Advisors LP,
Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746;
Donald Smith & Co., Inc., 152 West 57th
Street, New York, NY 10019; and Barrow, Hanley,
Mewhinney & Strauss, Inc., 2200 Ross Avenue, 31st
Floor, Dallas, TX 75201-2761.
|
|
|
(2)
|
Beneficial
ownership includes sole voting power and sole investment power with
respect to such shares unless otherwise noted and subject to community
property laws where applicable. In accordance with Rule 13d-3(d)(1)
under the Exchange Act, the number of shares indicated as beneficially
owned by a person includes shares of Class A common stock underlying
options that are currently exercisable or will become exercisable within
60 days from March 23, 2009 held by the following
individuals: Mr. Parker–199,787; Mr. Joey Hogan–107,169;
Mr. Cribbs–1,667; Mr. Smith–46,076; Mr. Brower–0;
Mr. Alt–15,000; Mr. Bosworth–17,500; Mr. Maclellan–17,500;
Mr. Moline–7,500; and Dr. Nielson-7,500. In addition, beneficial
ownership includes shares of restricted Class A common stock subject to
certain vesting and holding provisions held by the following
individuals: Mr. Parker–76,750; Mr. Joey Hogan–56,333; Mr.
Cribbs–27,744; Mr. Smith–45,500; and
Mr. Brower–45,500. The beneficial ownership also includes
the following shares of Class A common stock allocated to the
accounts of the following individuals under our 401(k) plan (the number of
shares reported as beneficially owned is equal to the following
individuals' February 11, 2009 account balance in the employer stock fund
under the Company's 401(k) plan divided by the closing price on such
date): Mr. Parker–24,851; Mr. Hogan–37,653; Mr. Cribbs–6,496;
Mr. Smith–0; and Mr. Brower–0.
|
|
|
(3)
|
Shares
of Class A common stock underlying stock options that are currently
exercisable or will be exercisable within 60 days following March 23, 2009
are deemed to be outstanding for purposes of computing the percentage
ownership of the person holding such options and the percentage ownership
of all directors and executive officers as a group, but are not deemed
outstanding for purposes of computing the percentage ownership of any
other person or entity. There are no stock options that will
become exercisable within 60 days following March 23, 2009, for any
executive officer, director, or director nominee of the
Company.
|
|
|
(4)
|
Comprised
of 3,160,662 shares of Class A common stock and 2,350,000 shares of
Class B common stock owned by Mr. and Mrs. Parker as joint
tenants with rights of survivorship; 100,000 shares of Class A common
stock owned by the Parker Family Limited Partnership, of which
Mr. and Mrs. Parker are the two general partners and
possess sole voting and investment control; 199,787 shares of Class A
common stock underlying Mr. Parker's stock options that are currently
exercisable; 76,750 shares of restricted Class A common stock; 24,851
shares allocated to the account of Mr. Parker under our 401(k) plan
(the number of shares reported as beneficially owned is equal to Mr.
Parker's February 11, 2009 account balance in the employer stock fund
under the Company's 401(k) plan divided by the closing price on such
date); and 77,815 shares of Class A common stock owned by the
David R. Parker 2008 Trust (of which Mr. Parker is the sole
lifetime beneficiary and Mrs. Parker is the trustee). The restricted
Class A common stock is subject to certain vesting and holding
provisions.
|
|
|
(5)
|
Based
on the aggregate number of shares of Class A and Class B common
stock held by Mr. and Mrs. Parker.
Mr. and Mrs. Parker hold 28.7% of shares of Class A
and 100% of shares of Class B common stock. The Class A common
stock is entitled to one vote per share, and the Class B common stock
is entitled to two votes per share. Mr. and Mrs. Parker
beneficially own shares of Class A and Class B common stock with
48.0% of the voting power of all outstanding voting
shares.
|
|
|
(6)
|
Comprised
of 3,400 shares of Class A common stock owned by Mr. Hogan and
Melinda J. Hogan as joint tenants, 107,169 shares of Class A common
stock underlying stock options, 56,333 shares of restricted Class A common
stock, and 37,653 shares held by Mr. Hogan in our 401(k) plan (the number
of shares reported as beneficially owned is equal to Mr. Hogan's February
11, 2009 account balance in the employer stock fund under the Company's
401(k) plan divided by the closing price on such date). The
restricted Class A common stock is subject to certain vesting and holding
provisions.
|
|
|
(7)
|
Comprised
of 750 shares of Class A common stock owned directly, 1,667 shares of
Class A common stock underlying stock options that are currently
exercisable, 27,744 shares of restricted Class A common stock, and 6,496
shares held by Mr. Cribbs in our 401(k) plan (the number of shares
reported as beneficially owned is equal to Mr. Cribb's February 11, 2009
account balance in the employer stock fund under the Company's 401(k) plan
divided by the closing price on such date). The restricted
Class A common stock is subject to certain vesting and holding
provisions.
|
|
|
(8)
|
Comprised
of 10,000 shares of Class A common stock owned by Mr. Smith and Kathy
Smith as joint tenants with rights of survivorship, 46,076 shares of Class
A common stock underlying stock options, and 45,500 shares of restricted
Class A common stock.
|
|
(9)
|
Comprised
of 45,500 shares of restricted Class A common stock.
|
|
(10)
|
Comprised
of 10,989 shares of Class A common stock owned directly, 20,168 shares of
Class A common stock held in an individual retirement account, and
17,500 shares of Class A common stock underlying stock
options.
|
|
(11)
|
As
reported on Schedule 13G/A filed with the SEC on January 22, 2009.
Represents aggregate beneficial ownership on a consolidated basis reported
by Wells Fargo & Company and includes shares of Class A
common stock beneficially owned by subsidiaries. Information is as of
December 31, 2008.
|
|
(12)
|
As
reported on Schedule 13G filed with the SEC on February 11, 2009.
Represents aggregate beneficial ownership on a consolidated basis
reported by Donald Smith & Co., Inc. and includes shares of Class A
common stock beneficially owned by advisory clients of Donald Smith &
Co., Inc. Information is as of December 31, 2008.
|
|
(13)
|
As
reported on Schedule 13G/A filed with the SEC on February 9, 2009.
Represents aggregate beneficial ownership on a consolidated basis reported
by Dimensional Fund Advisors LP and includes shares of Class A common
stock beneficially owned by advisory clients of Dimensional Fund Advisors
LP. Information is as of December 31, 2008.
|
|
(14)
|
The
other executive officers are Charles "Jerry" Eddy, R.H. Lovin, Jr., and M.
David Hughes. Mr. Eddy beneficially owns 52,071 shares of
Class A common stock, which are comprised of 44,500 shares of restricted
Class A common stock and 7,571 shares held by Mr. Eddy in our 401(k) plan
(the number of shares reported as beneficially owned is equal to Mr.
Eddy's February 11, 2009 account balance in the employer stock fund under
the Company's 401(k) plan divided by the closing price on such
date). Mr. Lovin beneficially owns 116,092 shares of Class
A common stock, which are comprised of 2,650 shares of Class A common
stock owned directly, 57,932 shares of Class A common stock underlying Mr.
Lovin's stock options that are currently exercisable, 43,500 shares of
restricted Class A common stock, and 12,010 shares allocated
to the account of Mr. Lovin under our 401(k) plan (the number of
shares reported as beneficially owned is equal to Mr. Lovin's February 11,
2009 account balance in the employer stock fund under the Company's 401(k)
plan divided by the closing price on such date). Mr. Hughes
beneficially owns 51,540 shares of Class A
common stock, which are comprised of 42,888 shares of restricted Class A
common stock and 8,652 shares allocated
to the account of Mr. Hughes under our 401(k) plan (the number of
shares reported as beneficially owned is equal to Mr. Hughes' February 11,
2009 account balance in the employer stock fund under the Company's 401(k)
plan divided by the closing price on such date). The restricted
Class A common stock is subject to certain vesting and holding
provisions. The shares detailed in this footnote are included
in the calculation of all directors and executive officers as a
group.
|
Pursuant to our Audit Committee
Charter, all transactions with affiliated persons or entities must be reviewed
and pre-approved by our Audit Committee.
The information set forth herein
briefly describes certain transactions between us and certain affiliated
parties. We believe that the terms of these transactions are comparable to the
terms that could be obtained from unaffiliated parties.
Company Store. A company
wholly owned by Nancy Landreth operates a store that sells branded apparel and
personal items on a rent-free basis in our headquarters building, and uses our
service marks on its products at no cost. We made purchases from this
store totaling approximately $45,000 in 2008. Ms. Landreth is
Mr. Parker's step-sister. The Audit Committee has approved a continuation
of this relationship and annually pre-approves purchase limits. The
store was shut down in 2008. Accordingly, we do not expect any future
similar transactions.
The
principal independent registered public accounting firm utilized by us during
fiscal 2008 was KPMG LLP. KPMG has served as our independent registered public
accounting firm since September 2001. A representative of KPMG
is expected to be present at the Annual Meeting and to be available to respond
to appropriate questions. KPMG’s representative will have an
opportunity to make a statement at the Annual Meeting should he or she desire to
do so.
KPMG billed us the following amounts
for services provided in the following categories during the fiscal years ended
December 31, 2008 and 2007:
|
Fiscal
2008
|
Fiscal
2007
|
||
|
Audit
Fees(1)
|
$603,500
|
$710,000
|
|
|
Audit-Related
Fees(2)
|
0
|
0
|
|
|
Tax
Fees(3)
|
68,427
|
122,497
|
|
|
All
Other Fees(4)
|
0
|
0
|
|
|
Total
|
$671,927
|
$832,497
|
|
(1)
|
Represents
the aggregate fees billed for professional services rendered by KPMG for
the audit of our annual financial statements and review of financial
statements included in our quarterly reports on Form 10-Q, and
services that are normally provided by an independent registered public
accounting firm in connection with statutory or regulatory filings or
engagements for those fiscal years. For fiscal 2008, audit fees
were comprised of $373,000 in fees for the audit of our annual
consolidated financial statements and review of our consolidated financial
statements included in our quarterly reports on Form 10-Q, $205,500
in fees for the audit of our assessment of internal controls over
financial reporting, $25,000 for the statutory audit of our Volunteer
Insurance Limited subsidiary’s annual financial statements, and $0 in fees
for agreed upon procedures related to our securitization
facility. For fiscal 2007, audit fees were comprised of
$350,000 in fees for the audit of our annual financial statements and
review of financial statements included in our quarterly reports on
Form 10-Q, $315,000 in fees for the audit of our assessment of
internal controls over financial reporting, $25,000 for the statutory
audit of our Volunteer Insurance Limited subsidiary’s annual financial
statements, and $20,000 in fees for agreed upon procedures related to our
securitization facility.
|
|
(2)
|
Represents
the aggregate fees billed for assurance and related services by KPMG that
are reasonably related to the performance of the audit or review of our
financial statements and are not reported under "audit
fees." There were no such fees for fiscal 2008 or fiscal
2007.
|
|
(3)
|
Represents
the aggregate fees billed for professional services rendered by KPMG for
tax compliance, tax advice, and tax planning. For fiscal 2008,
tax fees were comprised of $45,480 in fees for tax compliance and $22,947
in fees for tax planning and advice. For fiscal 2007, tax fees
were comprised of $122,497 in fees for tax compliance and $0 in fees for
tax planning and advice.
|
|
(4)
|
Represents
the aggregate fees billed for products and services provided by KPMG,
other than audit fees, audit-related fees, and tax fees. There were no
such fees for fiscal 2008 or fiscal
2007.
|
Our Audit
Committee maintains a policy pursuant to which it pre-approves all audit
services and permitted non-audit services to be performed by our independent
registered public accounting firm in order to assure that the provision of such
services is compatible with maintaining the firm's
independence. Under this policy, the Audit Committee pre-approves
specific types or categories of engagements constituting audit, audit-related,
tax, or other permissible non-audit services to be provided by our principal
independent registered public accounting firm. Pre-approval of an
engagement for a specific type or category of services generally is provided for
up to one year and typically is subject to a budget comprised of a range of
anticipated fee amounts for the engagement. Management and the
principal independent registered public accounting firm are required to
periodically report to the Audit Committee regarding the extent of services
provided by the principal independent registered public accounting firm in
accordance with the annual pre-approval, and the fees for the services performed
to date. To the extent that management believes that a new
service or the expansion of a current service provided by the principal
independent registered public accounting firm is necessary or desirable, such
new or expanded services are presented to the Audit Committee for its review and
approval prior to the engagement of the principal independent registered public
accounting firm to render such services. No audit-related, tax, or
other non-audit services were approved by the Audit Committee pursuant to the
de minimis exception to
the pre-approval requirement under Rule 2-01(c)(7)(i)(C), of
Regulation S-X during the fiscal year ended December 31,
2008.
PROPOSAL 2 – APPROVAL OF THE AMENDMENT TO THE INCENTIVE PLAN,
WHICH, AMONG OTHER THINGS, (I) PROVIDES THAT THE MAXIMUM AGGREGATE NUMBER OF
SHARES OF CLASS A COMMON STOCK AVAILABLE FOR THE GRANT OF AWARDS UNDER THE
INCENTIVE PLAN FROM AND AFTER THE EFFECTIVE DATE OF THE AMENDMENT SHALL NOT
EXCEED 700,000, AND (II) LIMITS THE SHARES OF CLASS A COMMON STOCK THAT SHALL BE
AVAILABLE FOR ISSUANCE OR REISSUANCE UNDER THE INCENTIVE PLAN FROM AND AFTER THE
EFFECTIVE DATE OF THE AMENDMENT TO THE ADDITIONAL 700,000 SHARES RESERVED, PLUS
ANY EXPIRATIONS, FORFEITURES, CANCELLATIONS, OR CERTAIN OTHER TERMINATIONS OF
SUCH SHARES
At the
2009 Annual Meeting, our stockholders are being asked to approve an amendment to
the Incentive Plan to (i) provide that the maximum aggregate number of shares of
Class A common stock available for the grant of Awards (as defined in the
Amended and Restated Plan) under the Incentive Plan from and after the Effective
Date (as defined below) shall not exceed 700,000, plus any of such shares that
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of shares, are settled in cash in lieu of Class A common stock, or are
exchanged with the Compensation Committee’s permission for awards not involving
Class A common stock, (ii) provide that any shares of Class A common stock
reserved for issuance under the Predecessor Plans in excess of the number of
shares of Class A common stock as to which awards have been awarded thereunder,
shall not be available for issuance under the Incentive Plan, (iii) provide that
any shares of Class A common stock related to awards granted under the
Predecessor Plan or the Incentive Plan prior to the Effective Date that
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of such shares, are settled in cash in lieu of Class A common stock, or
are exchanged with the Compensation Committee’s permission for awards not
involving Class A common stock, shall not be available for issuance or
reissuance under the Incentive Plan, and (iv) make such other miscellaneous
administrative and conforming changes as necessary (collectively, the
"Amendment"). The Amendment was approved by the Compensation
Committee, pursuant to its charter, subject to stockholder approval at the 2009
Annual Meeting, and is being recommended to the stockholders for approval by our
Board of Directors. If stockholder approval of the Amendment is
received at the 2009 Annual Meeting, the Incentive Plan will be amended and
restated to incorporate the Amendment (the "Amended and Restated Plan"), and
will become effective upon such date (the "Effective Date"). If
stockholder approval of the Amendment is not obtained at the 2009 Annual Meeting
of the stockholders, the Incentive Plan as initially approved in May 2006 will
remain in full force and effect and we will not have sufficient ability to grant
equity awards to retain, motivate, and attract new and existing key employees,
directors, officers, and eligible participants.
The
summary is qualified in its entirety by reference to the text of the Amended and
Restated Plan, a copy of which is included as Appendix A to this Proxy
Statement. You are urged to read the actual text of the Amended and
Restated Plan, in its entirety. Unless otherwise defined in this
summary, capitalized terms used in this summary have the meanings given such
terms in the Amended and Restated Plan.
Background
On April
12, 2006, our Board of Directors approved the Incentive Plan to serve as the
successor to the Covenant Transport, Inc. 2003 Incentive Stock Plan; the
Incentive Stock Plan, Amended and Restated as of May 17, 2001; the Outside
Director Stock Option Plan; and Amendment No. 1 to the Outside Director Stock
Option Plan (collectively, the "Predecessor Plans"), subject to the approval of
our stockholders, which approval was granted on May 23, 2006. All
outstanding awards under the Predecessor Plans from and after May 23, 2006 were
incorporated into the Incentive Plan; provided, however, each such award
continues to be governed solely by the terms and conditions of the instrument
evidencing such award and interpreted under the terms of the respective
Predecessor Plan, and, except as otherwise expressly provided in the Incentive
Plan, no provision of the Incentive Plan affects or otherwise modifies the
rights or obligations of holders of such incorporated awards with respect to
their acquisition of shares of Class A common stock,
or
otherwise modify the rights or the obligations of the holders of such
awards. No additional awards may be made under the Predecessor
Plans.
The
purposes of the Incentive Plan are to: (i) provide our employees with an
opportunity to purchase Class A common stock in a manner that reinforces our
performance goals and provides an incentive to continue employment with us and
work toward our long-term growth, development, and financial success; (ii)
attract, motivate, and retain qualified executive officers by providing them
with long-term incentives and reward such employees by the issuance of equity
grants so that these directors and employees will contribute to and participate
in our long-term performance; and (iii) align our executives' and
stockholders' short- and long-term interests by creating a strong and direct
link between executive pay and stockholder return. In furtherance of
these purposes, the Incentive Plan authorizes the grant of stock options and
restricted stock, subject to applicable law, to the Company's employees,
directors, and consultants.
When
adopted, there were 1,000,000 shares of Class A common stock available under the
Incentive Plan for grants on or after May 23, 2006. Of such amount
available, we had outstanding awards covering 897,394 shares of Class A common
stock net of all shares that have been cancelled or forfeited as of March 31,
2009. This left only 102,606 remaining for future Awards as of March
31, 2009. A substantial portion of the shares of Class A common stock
related to outstanding Awards granted under the Incentive Plan are expected to
be forfeited based on the perceived difficulty of achieving the performance
vesting targets associated with the grants of such shares. These
shares, however, would not become available for reissuance under the Incentive
Plan until 2010 and 2011. As a result, the Incentive Plan currently
lacks sufficient shares to continue our current equity incentive
program. In order to increase the number of shares available for the
grant of future Awards under the Incentive Plan, while at the same time
providing a definitive maximum number of shares available for such grants, on
March 31, 2009, the Compensation Committee approved the Amendment, subject to
stockholder approval at the 2009 Annual Meeting. If the Amendment is
approved by the stockholders, a maximum aggregate number of 700,000 shares of
Class A common stock would be available for the grant of Awards under the
Incentive Plan from and after the Effective Date, and any shares of Class A
common stock that (i) were reserved for issuance under the Predecessor Plans in
excess of the number of shares of Class A common stock as to which awards have
been awarded thereunder or (ii) related to awards granted under the Predecessor
Plan or the Incentive Plan prior to the Effective Date that terminate by
expiration, forfeiture, cancellation, or otherwise without the issuance of such
shares, are settled in cash in lieu of Class A common stock, or are exchanged
with the Compensation Committee’s permission for Awards not involving Class A
common stock, shall not be available for issuance or reissuance under the
Incentive Plan.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE INCENTIVE
PLAN, WHICH, AMONG OTHER THINGS, (I)
PROVIDES THAT THE MAXIMUM AGGREGATE NUMBER OF SHARES OF CLASS A COMMON STOCK
AVAILABLE FOR THE GRANT OF AWARDS UNDER THE INCENTIVE PLAN FROM AND AFTER THE
EFFECTIVE DATE OF THE AMENDMENT SHALL NOT EXCEED 700,000, AND (II) LIMITS THE SHARES OF
CLASS A COMMON STOCK THAT SHALL BE AVAILABLE FOR ISSUANCE OR REISSUANCE UNDER
THE INCENTIVE PLAN FROM AND AFTER THE EFFECTIVE DATE OF THE AMENDMENT TO THE
ADDITIONAL 700,000 SHARES RESERVED, PLUS ANY EXPIRATIONS, FORFEITURES,
CANCELLATIONS, OR CERTAIN OTHER TERMINATIONS OF SUCH SHARES.
The Board
of Directors believes that our success in executing our strategy is largely due
to the efforts of our hard-working employees and that our future success will
depend on our ability to continue to attract and retain high caliber
employees. The Board of Directors believes that equity-based grants
to employees are a highly effective recruiting and retention tool that allows
our employees to share in the ownership of our Company and contribute to our
revenue and earnings growth by aligning the long-term interests of our
management and employees with those of our stockholders.
The
Compensation Committee, which administers the Incentive Plan, recognizes its
responsibility to strike a balance between our ability to attract, retain, and
reward officers and employees whose contributions are critical to our long-term
success and our stockholder concerns as to the potential dilutive impact of
additional shares made available for
the
issuance to such individuals. The Compensation Committee believes
that making additional shares of Class A common stock available for the grant of
Awards under the Incentive Plan from and after the Effective Date is necessary
for us to continue to offer our key employees, directors, officers, and eligible
participants an effective and competitive equity incentive
program. The Compensation Committee believes that an appropriate
amount of shares will be available by (a) limiting the number of available
shares for future grants to 700,000 shares, plus any of such shares that
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of shares, are settled in cash in lieu of Class A common stock, or are
exchanged with the Compensation Committee’s permission for awards not involving
Class A common stock and (b) prohibiting the future use of (i) any shares
of Class A common stock that were reserved for issuance under the Predecessor
Plans in excess of the number of shares of Class A common stock as to which
awards have been awarded thereunder and (ii) any shares of Class A common stock
related to awards granted under the Predecessor Plan or the Incentive Plan prior
to the Effective Date that terminate by expiration, forfeiture, cancellation, or
otherwise without the issuance of such shares, are settled in cash in lieu of
Class A common stock, or are exchanged with the Compensation Committee’s
permission for Awards not involving Class A common stock. The
Compensation Committee believes that if additional shares are not made available
for the grant of future Awards under the Incentive Plan, we would be required to
discontinue or significantly curtail our current equity incentive program, which
could have an adverse impact on our ability to attract and retain key employees,
directors, officers, and eligible participants.
The
principal provisions of the Incentive Plan and the Amendment are summarized
below. This summary is not a complete description and is qualified in
its entirety by reference to the text of the Amended and Restated Plan, attached
as Appendix A to this Proxy Statement.
The Incentive Plan authorizes the grant
of stock options, stock appreciation rights, Stock Awards, Restricted Stock Unit
Awards, performance units, Performance Awards, and any other form of award
established by the Compensation Committee that is consistent with the Incentive
Plan’s purpose pursuant to Section 4.2(j) of the Incentive Plan, or any
combination of the foregoing. Each Award is subject to the terms,
conditions, restrictions, and limitations of the Incentive Plan and the Award
Notice for such Award. Under the Incentive Plan, Awards made under a
particular Article of the Incentive Plan need not be uniform and Awards under
two or more Articles of the Incentive Plan may be combined into a single Award
Notice. Any combination of Awards may be granted at one time and on
more than one occasion to the same Participant.
Each of
our Named Executive Officers is eligible to participate in our Incentive
Plan. We use our
Incentive Plan to, among other things, (a) provide annual incentives to selected
key employees, directors, officers, and eligible participants in a manner
designed to reinforce our performance goals, (b) link a significant portion of
participants' compensation to the achievement of those goals, and (c) continue
to attract, motivate, and retain key personnel on a competitive basis, in each
case by enabling us to offer such persons a variety of incentive awards, and (d)
ensure, to the extent possible, that incentive compensation paid by us is
deductible for tax purposes.
The
Incentive Plan allows the Compensation Committee to link compensation to
performance over a period of time by granting awards that have multiple-year
vesting schedules. Awards with multiple-year vesting schedules, such
as restricted stock grants, provide balance to the other elements of our
compensation program that otherwise link compensation to the Company's
short-term performance. Awards with multiple-year vesting schedules
create incentive for executive officers to increase stockholder value over an
extended period of time because the value received from such awards is based
upon the growth of the stock price. Such awards also incentivize
executives to remain with us over an extended period of time. Thus,
we believe our Incentive Plan is an effective way of aligning the interests of
our executive officers with those of our stockholders. A description
of the Awards that may be made pursuant to our Incentive Plan
follows. Such descriptions are qualified in their entirety by
reference to the text of the Amended and Restated Plan.
Stock Options. Pursuant to
the Incentive Plan, the Compensation Committee may grant awards in the form of
stock options to purchase shares of Class A common stock, which stock options
may be non-qualified or incentive stock options for federal income tax
purposes. Stock options granted under the Incentive Plan vest and
become exercisable at such times and upon such terms and conditions as may be
determined by the Compensation Committee. Any stock option granted in
the form of an incentive stock option must satisfy the requirements of
Section 422 of the Code. The
exercise
price per share of Class A common stock for any stock option cannot be less than
100% of the fair market value of a share of Class A common stock on the day that
the stock option is granted. In addition, the term of the stock
option may not exceed ten years. In the case of an incentive stock
option granted to an employee Participant who owns, directly or indirectly (as
determined by reference to Section 424(d) of the Code), at the time the option
is granted, stock possessing more than 10 percent of the total combined voting
power of all classes of our stock, the exercise price per share of Class A
common stock for any stock option will not be less than 110% of the fair market
value of a share of Class A common stock on the day that the stock option is
granted, and the term of the stock option may not exceed five (5) years. The exercise price of
any stock option granted pursuant to the Incentive Plan may not be subsequently
reduced by amendment or cancellation and substitution of such stock option or
any other action of the Compensation Committee without stockholder approval,
subject to the Compensation Committee’s authority to adjust awards upon certain
events as set forth in the Incentive Plan. The type (incentive or
non-qualified), vesting, exercise price, and other terms of each stock option
are set forth in the award notice for such stock option.
A stock
option may be exercised by paying the exercise price in cash or its equivalent
and/or, to the extent permitted by the Compensation Committee and applicable
law, shares of Class A common stock, a combination of cash and shares of Class A
common stock, or through the delivery of irrevocable instruments to a broker to
sell the shares obtained upon the exercise of the stock option and to deliver to
us an amount equal to the exercise price.
Stock Appreciation Rights.
The Compensation Committee may grant awards in the form of stock
appreciation rights, either in tandem with a stock option ("Tandem SARs") or
independent of a stock option ("Freestanding SARs"). The exercise price of a
stock appreciation right is an amount determined by the Compensation Committee,
but in no event is such amount less than 100% of the fair market value of a
share of Class A common stock on the date that the stock appreciation right is
granted or, in the case of a Tandem SAR, the exercise price of the related stock
option.
A Tandem
SAR may be granted either at the time of grant of the related stock option or at
any time thereafter during the term of the related stock option. A Tandem SAR is
exercisable to the extent its related stock option is exercisable. Each Tandem
SAR entitles the holder of such stock appreciation right to surrender the
related stock option and to receive an amount equal to (i) the excess of
(A) the fair market value on the exercise date of one share of Class A
common stock over (B) the stock option price per share of Class A common
stock, times (ii) the number of shares of Class A common stock covered by
the stock option which is surrendered. Upon the exercise of a stock option as to
some or all of the shares of Class A common stock covered by such stock option,
the related Tandem SAR is automatically canceled to the extent of the number of
shares of Class A common stock covered by the exercise of the stock
option.
Each
Freestanding SAR will entitle the holder of such stock appreciation right upon
exercise to an amount equal to (i) the excess of (A) the fair market
value on the exercise date of one share of Class A common stock over
(B) the exercise price, times (ii) the number of shares of Class A
common stock covered by the Freestanding SAR and as to which the stock
appreciation right is exercised.
The type
(Tandem SAR or Freestanding SAR), exercise price, vesting, and other terms of
each stock appreciation right is set forth in the award notice for such stock
appreciation rights. Payment of stock appreciation rights may be made
in shares of Class A common stock or in cash, or partly in shares of Class A
common stock and partly in cash, as determined by the Compensation
Committee.
Other Stock-Based Awards. The
Compensation Committee may grant awards in the form of stock awards (for either
unrestricted or restricted shares of Class A common stock), restricted stock
unit awards and other awards that are valued in whole or in part by reference
to, or are otherwise based on the fair market value of, Class A common stock.
Such other stock-based awards are in such form, and dependent on such
conditions, as the Compensation Committee determines, including, without
limitation, the right to receive, or vest with respect to, one or more shares of
Class A common stock (or the equivalent cash value of such shares of Class A
common stock) upon the completion of a specified period of service, the
occurrence of an event, and/or the attainment of performance objectives. In
addition, the Compensation Committee may choose, at the time of grant of a
stock-based award, or any time thereafter up to the time of the payment of such
award, to include as part of such award an entitlement to receive dividends or
dividend equivalents on the shares of Class A common stock underlying such
award, subject to such terms, conditions, restrictions, and/or limitations, if
any, as the Compensation Committee may establish. The restrictions, conditions,
and other terms of each stock-based award are set forth in the award notice for
such award.
Performance Units. The
Compensation Committee may grant awards in the form of performance units, which
are units valued by reference to designated criteria established by the
Compensation Committee other than Class A common stock. Performance units are in
such form, and dependent on such conditions, as the Compensation Committee
determines, including, without limitation, the right to receive a designated
payment upon the completion of a specified period of service, the occurrence of
an event, and/or the attainment of performance objectives. The form, applicable
conditions, and other terms of each performance unit are set forth in the award
notice for such performance unit.
Performance Awards. Performance
awards are designed to reward executive officers for their contributions to our
financial and operating performance and are based primarily upon our financial
results and certain operating statistics that the Compensation Committee
identifies each year as being important to our success. Performance
awards are awards structured to qualify as deductible "performance-based"
compensation for purposes of Section 162(m) of the
Code. Performance awards may take the form of cash, stock awards,
restricted stock unit awards, or performance units that are conditioned upon the
satisfaction of enumerated performance criteria during a stated performance
period, which awards, in addition to satisfying the requirements otherwise
applicable to that type of award generally, also satisfy the requirements of
performance awards under the Incentive Plan.
Performance
awards must be based upon one or more of the following performance criteria:
(a) revenues (including without limitation, measures such as revenue per
mile (loaded or total) or revenue per tractor), (b) net revenues, (c) fuel
surcharges, (d) accounts receivable collection or days sales outstanding,
(e) cost reductions and savings (or limits on cost increases), (f) safety and
claims (including, without limitation, measures such as accidents per million
miles and number of significant accidents), (g) operating income, (h)
operating ratio, (i) income before taxes, (j) net income, (k) earnings
before interest and taxes (EBIT), (l) earnings before interest, taxes,
depreciation, and amortization (EBITDA), (m) adjusted net income,
(n) earnings per share, (o) adjusted earnings per share,
(p) stock price, (q) working capital measures, (r) return on
assets, (s) return on revenues, (t) debt-to-equity or
debt-to-capitalization (in each case with or without lease adjustment), (u)
productivity and efficiency measures (including, without limitation measures
such as driver turnover, trailer to tractor ratio, and tractor to non-driver
ratio), (v) cash position, (w) return on stockholders’ equity,
(x) return on invested capital, (y) cash flow measures (including,
without limitation, free cash flow), (z) market share,
(aa) stockholder return, (bb) economic value added, or
(cc) completion of acquisitions (either with or without specified size). In
addition, the Compensation Committee may establish, as an additional performance
measure, the attainment by a participant of one or more personal objectives
and/or goals that the Compensation Committee deems appropriate, including but
not limited to implementation of Company policies, negotiation of significant
corporate transactions, development of long-term business goals or strategic
plans, or the exercise of specific areas of managerial responsibility. The
performance goals set by the Compensation Committee may be expressed on an
absolute and/or relative basis, and may include comparisons with our past
performance (including the performance of one or more of our divisions) and/or
the current or past performance of other peer group companies or
indices.
For each
performance period, the Compensation Committee designates, in its sole
discretion, within the initial period allowed under Section 162(m) of the
Code, which persons are eligible for performance awards for such period, the
length of the performance period, the types of performance awards to be issued,
the performance criteria that are to be used to establish performance goals, the
kind or level of performance goals, and other relevant matters.
After the
close of each performance period, the Compensation Committee determines whether
the performance goals for the cycle have been achieved. In determining the
actual award to be paid to a participant, the Compensation Committee has the
authority to reduce or eliminate any performance award earned by the
participant, based upon any objective or subjective criteria it deems
appropriate. The award notice for each performance award sets forth
or makes reference to the performance period, performance criteria, performance
goals, performance formula, performance pool, and other terms applicable to such
performance award.
The
Incentive Plan is administered by the Compensation Committee, or such other
committee as may be designated by the Board of Directors, which consists of at
least two individuals who are intended to qualify both as "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act, and as
"outside directors" within the
meaning
of the definition of such term as contained in Section 1.162-27(e)(3) of
the Treasury Regulations, or any successor definition adopted under Section
162(m) of the Code.
The
Compensation Committee may allocate all or any portion of its responsibilities
and powers under the Incentive Plan to any one or more of its members, our CEO,
or other senior members of management as the Compensation Committee deems
appropriate; however, only the Compensation Committee (or another committee
consisting of two or more individuals who qualify both as "non-employee
directors" and as "outside directors") may select and grant Awards to
Participants who are subject to Section 16 of the Exchange Act or are
Covered Employees. The Compensation Committee may revoke any
such allocation or delegation at any time for any reason with or without prior
notice.
The
Compensation Committee has broad authority in its administration of the
Incentive Plan, including, but not limited to, the authority to interpret the
Incentive Plan; to establish rules and regulations for the operation and
administration of the Incentive Plan; to select the persons to receive Awards;
to determine the form, size, terms, conditions, limitations, and restrictions of
Awards, including, without limitation, terms regarding vesting, exercisability,
assignability, expiration, and the effect of certain events, such as a change of
control of the Company or the Participant’s death, disability, retirement, or
termination as a result of breach of agreement; to create additional forms of
Awards consistent with the terms of the Incentive Plan; to allow for the
deferral of Awards; and to take all other action it deems necessary or advisable
to administer the Incentive Plan.
To
facilitate the granting of Awards to Participants who are employed or retained
outside of the United States, the Compensation Committee is authorized to modify
and amend the terms and conditions of an Award to accommodate differences in
local law, policy, or custom.
If the
Amendment is approved, a maximum of 700,000 shares of Class A common stock will
be available for the grant of Awards under the Incentive Plan from and after the
Effective Date, plus any of such shares that terminate by expiration,
forfeiture, cancellation, or otherwise without the issuance of shares, are
settled in cash in lieu of Class A common stock, or are exchanged with the
Compensation Committee’s permission for awards not involving Class A common
stock. Any shares of Class A common stock remaining available under the
Predecessor Plans, shall not be available for issuance under the Incentive Plan
(see "Proposal 2 – Approval of the Amendment to the Covenant Transportation
Group, Inc. 2006 Omnibus Incentive Plan – Description of the Incentive Plan —
Introduction"). Further, shares of Class A common stock shall not be
available related to awards granted under the Predecessor Plan or the Incentive
Plan prior to the Effective Date that terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such shares, are settled in
cash in lieu of Class A common stock, or are exchanged with the Compensation
Committee’s permission for Awards not involving Class A common stock (see
"Proposal 2 – Approval of the Amendment to the Covenant Transportation Group,
Inc. 2006 Omnibus Incentive Plan – Description of the Incentive Plan —
Introduction"). The shares of Class A common stock available for
issuance under the Incentive Plan may be authorized and unissued shares or
treasury shares, including shares purchased in open market or private
transactions.
The
number of shares of Class A common stock available under the Incentive Plan
shall be adjusted to reflect the occurrence of certain events described under
"Proposal 2 – Approval of the Amendment to the Covenant Transportation Group,
Inc. 2006 Omnibus Incentive Plan – Description of the Incentive Plan —
Adjustments Upon Certain Events" below. The total number of shares
reserved and available for issuance under the Incentive Plan is automatically
adjusted, without further action by the Board or stockholders, to reflect stock
dividends, stock splits, reverse stock splits, subdivisions, reorganizations,
reclassifications, or any similar recapitalizations that affect or modify the
number of shares of outstanding Class A common stock.
The
maximum Award granted or payable to any one Participant under the Incentive Plan
for a calendar year is 250,000 shares of Class A common stock, subject to the
Compensation Committee’s authority to adjust Awards upon certain events
described under "Proposal 2 – Amendment to the Covenant Transportation Group,
Inc. 2006 Omnibus Incentive Plan – Description of the Plan – Adjustments Upon
Certain Events" below, or in the event the Award is paid in cash,
$2,000,000.
Awards
may be paid in cash, shares of Class A common stock, a combination of cash and
shares of Class A common stock, or in any other permissible form, as the
Compensation Committee determines. Payment of Awards may include such terms,
conditions, restrictions, and/or limitations, if any, as the Compensation
Committee deems appropriate, including, in the case of Awards paid in shares of
Class A common stock, restrictions on transfer of such shares and provisions
regarding the forfeiture of such shares under certain
circumstances.
At the
discretion of the Compensation Committee, a Participant may defer payment of any
Award; salary or bonus compensation; Board compensation; dividend or dividend
equivalent, or any portion thereof. If permitted by the Compensation Committee,
any such deferral shall be accomplished by the delivery of a written,
irrevocable election by the Participant prior to the time established by the
Compensation Committee for such purpose, on a form provided by the
Company. Further, all deferrals must be made in accordance with the
administrative guidelines established by the Compensation Committee to ensure
that such deferrals comply with all applicable requirements of the Code for such purpose. Such
deferred items may be paid in a lump sum or
installments, or credited with interest
(at a rate determined by the Compensation Committee) or deemed invested by us,
as determined by the Compensation Committee, and, with respect to those deferred
Awards denominated in the form of Class A common stock, credited with dividends
or dividend equivalents.
The
Company is entitled to deduct from any payment to a Participant under the
Incentive Plan the amount of all applicable income and employment taxes required
by law to be withheld with respect to such payment or may require the
Participant to pay us such tax prior to and as a condition of the making of such
payment. Subject to certain limitations, the Compensation Committee may allow a
Participant to pay the amount of taxes required by law to be withheld from an
Award by withholding any shares of Class A common stock to be paid under such
Award or by permitting the Participant to deliver to us shares of Class A common
stock having a Fair Market Value equal to the amount of such taxes.
In the
event that there is a stock dividend or split, reorganization, recapitalization,
merger, consolidation, spin-off, combination, or transaction or exchange of
Class A common stock or other corporate exchange, or any distribution to
stockholders of Class A common stock or other property or securities (other than
regular cash dividends) or any transaction similar to the foregoing or other
transaction that results in a change to our capital structure, the Compensation
Committee shall make substitutions and/or adjustments to the maximum number of
shares available for issuance under the Incentive Plan, the maximum Award
payable, the number of shares to be issued pursuant to outstanding Awards, the
option prices, exercise prices, or purchase prices of outstanding Awards, and/or
any other affected terms of an Award or the Incentive Plan as the Compensation
Committee, in its sole discretion, deems equitable or appropriate. Unless the
Compensation Committee determines otherwise, in no event shall an Award that is
intended to qualify as "performance-based compensation" for purposes of Section
162(m) of the Code be adjusted to the extent such adjustment would cause such
Award to fail to qualify as "performance-based compensation" under Section
162(m) of the Code. With the exception of the foregoing, the
Compensation Committee shall not reprice any stock options and/or stock
appreciation rights unless such action is approved by the Company's
stockholders.
The
Compensation Committee may suspend or terminate the Incentive Plan at any time
for any reason with or without prior notice. In addition, the Compensation
Committee may amend the Incentive Plan, provided that it may not, without
stockholder approval, adopt any amendment if stockholder approval is required,
necessary, or deemed advisable with respect to tax, securities, or other
applicable laws or regulations, including, but not limited to, the listing
requirements of the stock exchanges or quotation systems on which the securities
of the Company are listed. No amendment of the Incentive Plan may materially and
adversely affect the rights of a Participant under any outstanding Award without
the consent of that Participant. No awards may be made under the Incentive Plan
after the tenth anniversary of the effective date of the Incentive
Plan. No amendment may materially and adversely affect any of the
rights of such Participant under any Award theretofore granted to such
Participant under the Plan.
No person
connected with the Incentive Plan in any capacity, including, but not limited
to, the Company and its directors, officers, agents, and employees, makes any
representation, commitment, or guaranty that any tax treatment, including, but
not limited to, federal, state, and local income, estate, and gift tax
treatment, will be applicable with respect to the tax treatment of any Award,
any amounts deferred under the Incentive Plan, or paid to or for the benefit of
a Participant under the Incentive Plan, or that such tax treatment will apply to
or be available to a Participant on account of participation in the Incentive
Plan.
The
registration with the SEC on Form S-8 of the shares of Class A common stock
issuable under the Incentive Plan will be post-effectively amended on Form S-8
as soon as practicable, subject to the stockholders' approval of the
Amendment.
Participants
in the Incentive Plan will be selected by the Compensation Committee from our
executive officers, directors, employees, and consultants. Participants may be
selected and awards may be made at any time during the ten-year period following
May 23, 2006, the effective date of the Incentive Plan. As of March
31, 2009, approximately 5,712 employees (consisting of eight (8) executive
officers and 5,704 other officers and other employees), four (4) non-employee
directors, and one (1) independent contractor were eligible to participate in
our current equity compensation plans. The Incentive Plan also
permits the granting of our current equity awards to eligible
consultants. The number of active engagements with consultants varies
from time to time and the Compensation Committee has not historically made
grants to these individuals under the Incentive Plan. As of March 31,
2009, there were no eligible consultants the Compensation Committee would likely
consider for the grant of awards.
The
selection of those persons within a particular class who will receive Awards is
entirely within the discretion of the Compensation Committee only employees,
however, are eligible to receive "incentive stock options" within the meaning of
§422 of the Code. The Compensation Committee has not determined how many people
are likely to participate in the Incentive Plan over time. The
Compensation Committee intends, however, to grant most of the Awards to those
persons who are in a position to have a significant direct impact on our growth,
profitability, and success, which would include a portion of the Participants in
our current equity compensation plans.
The
following table sets forth certain information regarding grants of equity awards
made under the Incentive Plan during the year ended December 31, 2008, and as of
March 31, 2009, to (i) each of the Named Executive Officers; (ii) all
current executive officers of the Company as a group; (iii) all current
directors who are not executive officers as a group; and (iv) all
employees, including all current officers who are not executive officers, as a
group. Future Awards, if any, that will be made to eligible
Participants under the Incentive Plan are subject to the discretion of the
Compensation Committee. Accordingly, future grants of Awards under
the Incentive Plan are not determinable.
|
Plan
Benefits
Covenant Transportation Group, Inc. 2006 Omnibus
Incentive Plan
|
||||
|
Fiscal Year 2008
(2)
|
Fiscal Year 2009(4)
|
|||
|
Name
and Principal Position
|
Dollar Value(1)
|
Number
of
Equity
Awards
|
Dollar
Value
|
Number
of
Equity Awards(3)
|
|
David
R. Parker,
Chief
Executive Officer,
Chairman,
and President
|
$65,813
|
18,750
|
$50,873
|
25,955
|
|
Richard
B. Cribbs,
Senior
Vice President and
Chief
Financial Officer
|
$46,875(5)
|
14,244(5)
|
$8,750
|
4,464
|
|
Joey
B. Hogan,
Senior
Executive Vice
President
and Chief
Operating
Officer
|
$52,650
|
15,000
|
$26,125
|
13,329
|
|
Tony
Smith,
President
of Southern
Refrigerated
Transport, Inc.
|
$43,875
|
12,500
|
$25,000
|
12,755
|
|
James
"Jim" Brower,
President
of Star
Transportation,
Inc.
|
$43,875
|
12,500
|
$10,000
|
5,102
|
|
Executive
Group
|
$399,712
|
119,215
|
$159,009
|
81,127
|
|
Non-Executive
Director Group
|
$100,003
|
22,884
|
-
|
-
|
|
Employee
Group
|
$524,991
|
149,570
|
$131,815
|
67,252
|
|
(1)
|
Represents
the grant date fair value of the stock awards under SFAS 123R granted to
the Named Executive Officers during fiscal 2008. The fair value
was calculated using the closing price of our common stock on the grant
date. The fair value of the stock awards are accounted for in
accordance with SFAS 123R. Due to rounding, the total amount
set forth for the Non-Executive Director Group does not foot with the
total of the amounts set forth in the Director Compensation
table. For additional information on the valuation assumptions,
refer to note 3, Share-Based
Compensation, of our consolidated financial statements in the Form
10-K for the year ended December 31, 2008, as filed with the SEC on March
31, 2009. These amounts reflect our accounting expense and do
not correspond to the actual value that will be recognized by the
recipients.
|
|
(2)
|
Represents
the fiscal year 2008 grants that were granted as of December 31, 2008, all
of which were shares of restricted Class A common stock, with the
exception of the grants of unrestricted shares to the Non-Executive
Director Group. The Non-Executive Director Group received
shares of our Class A common stock with a market value on the grant date
equivalent to approximately $25,000.
|
|
(3)
|
Represents
the number of equity awards assuming a dollar value at the March 31, 2009
closing price of $1.96.
|
|
(4)
|
Represents
the fiscal year 2009 grants that were granted as of March 31, 2009, all of which were
restricted stock. With the exception of Messrs. Parker's and
Hogan's, these grants shall be void if the stockholders of the Company do
not approve the Amendment to the Incentive Plan at the 2009 Annual
Meeting.
|
|
(5)
|
Represents
12,500 shares of restricted Class A common stock with a grant date value
of $3.51, and 1,744 shares of restricted Class A common stock with a grant
date value of $1.72.
|
Class A
common stock underlies any grant made by the Compensation Committee of awards in
the form of stock options, warrants, or rights. The last reported
sale price of our Class A common stock as reported by NASDAQ on March 31, 2009
was $1.96. The Compensation Committee, in its discretion, selects the
persons to whom options or restricted stock will be granted, the time or times
at which such options or restricted stock will be granted, and the number of
shares subject to each such grant. For this reason, it is not
possible to determine the benefits or amounts that
will be
received by any particular officer or employee, or group of officers or
employees, in the future. The Incentive Plan provides, however, that
the aggregate Fair Market Value (determined at the time the option was granted)
of the Class A common stock with respect to which incentive stock options are
exercisable for the first time by a Participant during any calendar year shall
not exceed $100,000 (or such other limit as may be required by Section 422 of
the Code).
The
following is only a summary of the effect of federal income taxation upon us and
the participants under the Incentive Plan. It does not purport to be complete
and does not discuss all of the tax consequences of a participant's death or the
provisions of the income tax laws of any state, municipality, or foreign country
in which the participants may reside.
Incentive Stock
Options. A Participant is not treated as receiving taxable
income upon either the grant of an Incentive Stock Option (an "ISO") or upon the
exercise of an ISO. However, the difference between the exercise
price and the fair market value on the date of exercise is an item of tax
preference at the time of exercise in determining liability for the alternative
minimum tax, assuming that the Class A common stock is either transferable or is
not subject to a substantial risk of forfeiture under section 83 of the
Code. If at the time of exercise, the Class A common stock is both
nontransferable and is subject to a substantial risk of forfeiture, the
difference between the exercise price and the fair market value of the Class A
common stock (determined at the time the Class A common stock becomes either
transferable or not subject to a substantial risk of forfeiture) will be a tax
preference item in the year in which the Class A common stock becomes either
transferable or not subject to a substantial risk of forfeiture.
If Class
A common stock acquired by the exercise of an ISO is not sold or otherwise
disposed of within two years from the date of its grant and is held for at least
one year after the date such Class A common stock is transferred to the
Participant upon exercise, any gain or loss resulting from its disposition is
treated as long-term capital gain or loss. If such Class A common
stock is disposed of before the expiration of the above-mentioned holding
periods, a "disqualifying disposition" occurs. If a disqualifying
disposition occurs, the Participant realizes ordinary income in the year of the
disposition in an amount equal to the difference between the fair market value
of the Class A common stock on the date of exercise and the exercise price, or
the selling price of the Class A common stock and the exercise price, whichever
is less. The balance of the Participant's gain on a disqualifying
disposition, if any, is taxed as capital gain.
We are not entitled to any tax
deduction as a result of the grant or exercise of an ISO, or on a later
disposition of the Class A common stock received, except that in the event of a
disqualifying disposition, we are entitled to a deduction equal to the amount of
ordinary income realized by the Participant.
Non-Qualified Stock
Options. A Participant does not recognize any taxable income
upon the grant of a Non-Qualified Stock Option (a "NSO"), and we are not
entitled to a tax deduction by reason of such grant. Upon exercise of
a NSO, the Participant recognizes ordinary income generally measured by the
excess of the then fair market value of the shares over the exercise price, and
we are entitled to a corresponding tax deduction. Upon a disposition
of shares acquired upon exercise of a NSO by the Participant, any difference
between the sale price and the exercise price, to the extent not recognized as
ordinary income as provided above, is treated as long-term or short-term capital
gain or loss, depending on the holding period. Such subsequent
disposition by the Participant has no tax consequence to us.
The
following table provides certain information, as of December 31, 2008, with
respect to our compensation plans and other arrangements under which shares of
our Class A common stock are authorized for issuance. The number of
shares of Class A common stock reflected in column (a) of the following table is
comprised of 1,195,190 shares of Class A common stock subject to
outstanding options, warrants, and rights granted under the Incentive Plan and
the Predecessor Plans. The number of shares of Class A common stock
reflected in column (c) of the following table is comprised entirely of shares
available for future grant under the Incentive Plan as of December 31, 2008, and
neither takes into account the restricted stock grants that were granted on
March 31, 2009 (as such grants were not made as of the most recently completed
fiscal year), as described below, nor includes (i) forfeitures, expirations,
cancellations, or
certain
other terminations after that date or (ii) the additional shares reserved for
issuance thereunder as contemplated by the Amendment. Pursuant to the
terms of the Amendment, shares of Class A common stock underlying outstanding
awards granted under the Predecessor Plans or the Incentive Plan prior to the
Effective Date that are forfeited, expire, are cancelled, or otherwise terminate
unexercised after the Effective Date will not be available for future
grant.
Equity
Compensation Plan Information
|
Plan
category
|
Number
of
securities
to
be
issued
upon
exercise
of
outstanding
options,
warrants
and
rights
|
Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
|
(a)
|
(b)
|
(c)
|
|
|
Equity
compensation plans approved by security holders (1)
|
1,095,190
|
$13.43
|
30,118
|
|
Equity
compensation plans not approved by security holders (2)
|
100,000
|
$14.49
|
-
|
|
Total
|
1,195,190
|
$13.52
|
30,118
|
|
(1)
|
Includes
Incentive Stock Plan, Outside Director Stock Option Plan, 2003 Incentive
Stock Plan, and the 2006 Omnibus Incentive Plan.
|
|
(2)
|
Includes
1998 Non-Officer Incentive Stock Plan, and shares issued pursuant to
grants outside any plan.
|
Immediately
prior to March 31, 2009, we had 102,606 shares available for future grant under
the Incentive Plan, due to forfeitures since December 31, 2008. On
March 31, 2009, the Compensation Committee made restricted stock grants under
the Incentive Plan covering an estimated 148,379 shares of Class A common
stock, with an estimated 109,095 of those restricted
shares being subject to stockholder approval of the Amendment at the 2009 Annual
Meeting. Since the number will be determined two full trading days
following release of the Company's first quarter 2009 earnings, such amount is
estimated based upon the March 31, 2009, closing price of $1.96.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE INCENTIVE PLAN, WHICH, AMONG OTHER THINGS, (I)
PROVIDES THAT THE MAXIMUM AGGREGATE NUMBER OF SHARES OF CLASS A COMMON STOCK
AVAILABLE FOR THE GRANT OF AWARDS UNDER THE INCENTIVE PLAN FROM AND AFTER THE
EFFECTIVE DATE OF THE AMENDMENT SHALL NOT EXCEED 700,000, AND (II) LIMITS THE
SHARES OF CLASS A COMMON STOCK THAT SHALL BE AVAILABLE FOR ISSUANCE OR
REISSUANCE UNDER THE INCENTIVE PLAN FROM AND AFTER THE EFFECTIVE DATE OF THE
AMENDMENT TO THE ADDITIONAL 700,000 SHARES RESERVED, PLUS ANY EXPIRATIONS,
FORFEITURES, CANCELLATIONS, OR CERTAIN OTHER TERMINATIONS OF SUCH
SHARES.
To be eligible for inclusion in our
proxy materials relating to our next annual meeting of stockholders, stockholder
proposals intended to be presented at that meeting must be in writing and
received by us at our principal executive office on or before December 11,
2009. However, if the date of the next annual meeting of stockholders
is more than thirty days before or after May 5, 2010, then the deadline for
submitting any such stockholder proposal for inclusion in the proxy materials
relating to the next annual meeting of stockholders will be a reasonable time
before we begin to print or mail such proxy materials. The inclusion
of any such stockholder proposals in such proxy materials will be subject to the
requirements of the proxy rules adopted under the Exchange Act, including
Rule 14a-8.
We must
receive in writing any stockholder proposals to be considered at our next annual
meeting, but not included in our proxy materials relating to that meeting
pursuant to Rule 14a-8 under the Exchange Act, by February 24,
2010. However, if the date of the next annual meeting of stockholders
is more than thirty days before or after May 5, 2010, then the
deadline for submitting any such stockholder proposal will be a reasonable time
before we mail the proxy materials relating to such meeting. Under
Rule 14(a)-4(c)(1) of the Exchange Act, the proxy holders designated by an
executed proxy in the form accompanying our Proxy Statement for our next annual
meeting will have discretionary authority to vote on any stockholder proposal
that is not received on or prior to the deadline described above.
Written
copies of all stockholder proposals should be sent to our principal executive
offices at 400 Birmingham Highway, Chattanooga, Tennessee 37419, to the
attention of Joey B. Hogan, our Senior Executive Vice President and Chief
Operating Officer. Stockholder proposals must comply with the rules
and regulations of the SEC.
The Board
of Directors does not intend to present at the Annual Meeting any matters other
than those described herein and does not presently know of any matters that will
be presented by other parties.
|
Covenant
Transportation Group, Inc.
|
|
|
/s/ David R.
Parker
|
|
|
David
R. Parker
|
|
|
Chairman
of the Board of Directors
|
|
|
April
10, 2009
|
COVENANT
TRANSPORTATION GROUP, INC.
AMENDED
AND RESTATED
2006
OMNIBUS INCENTIVE PLAN
Original
Plan Effective May 23, 2006
Amended
and Restated Plan Effective May [___], 2009
ARTICLE
I
PURPOSE
AND EFFECTIVE DATE
Section 1.1. Purpose. The
purpose of the Plan is to provide annual incentives to certain Employees,
Directors, and Consultants of the Company in a manner designed to reinforce the
Company’s performance goals; to link a significant portion of Participants’
compensation to the achievement of such goals; and to continue to attract,
motivate, and retain key personnel on a competitive basis.
Section 1.2. Background and Effective
Date. The Plan was initially adopted by the Board of Directors
on April 12, 2006, and became effective on May 23, 2006, the date of the
approval by the Company's stockholders at the 2006 Annual Meeting of
Stockholders. When adopted, there were 1,000,000 shares of Common
Stock available under the Plan. Awards covering substantially all of
these 1,000,000 shares of Common Stock (including shares available based on
adjustments made for forfeitures under the Plan) had been granted as of March
31, 2009. A substantial portion of the shares subject to Awards is
expected to be forfeited based on the perceived difficulty of achieving the
performance vesting targets associated with the grants of such
shares These shares, however, would not become available for
reissuance under the Plan until 2010 and 2011. As a result, the Plan
currently lacks sufficient shares to continue our current equity incentive
program. In order to increase the number of shares available for the
grant of future Awards under the Plan, while at the same time providing a
definitive maximum number of shares available for such grants, on March 31,
2009, the Committee, pursuant to its Amended and Restated Charter, amended the
Plan to: (i) provide that the maximum aggregate number of shares of
Common Stock available for the grant of Awards under the Plan from and after the
Amended and Restated Plan Effective Date (as defined below) shall not exceed
700,000, (ii) provide that any shares of Common Stock reserved for issuance
under the Predecessor Plans in excess of the number of shares of Common Stock as
to which awards have been awarded thereunder, shall not be available for
issuance under the Plan, (iii) provide that any shares of Common Stock related
to awards granted under the Predecessor Plan or the Plan prior to the Amended
and Restated Plan Effective Date that terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such shares, are settled in
cash in lieu of Common Stock, or are exchanged with the Committee’s permission
for Awards not involving Common Stock, shall not be available for issuance or
reissuance under the Plan, and (iv) make such other miscellaneous administrative
and conforming changes as necessary. This amendment will become
effective upon the date of the approval by the Company's stockholders at the
2009 Annual Meeting of the Stockholders (the "Amended and Restated Plan
Effective Date"). If stockholder approval of the amendment is
not obtained at the 2009 Annual Meeting of the Stockholders, the Plan as
initially approved in May 2006 will remain in full force and
effect.
Section
1.3 Successor
Plan. This Plan shall serve as the successor to the Covenant
Transport, Inc. 2003 Incentive Stock Plan; the Incentive Stock Plan, Amended and
Restated as of May 17, 2001; the Outside Director Stock Option Plan; and
Amendment No. 1 to the Outside Director Stock Option Plan (collectively, the
"Predecessor
Plans"), and no further awards shall be made under the Predecessor Plans
from and after the effective date of this Plan. All outstanding
awards under the Predecessor Plans immediately prior to the effective date of
this Plan are hereby incorporated into this Plan and shall accordingly be
treated as outstanding awards under this Plan; provided, however, each such
award shall continue to be governed solely by the terms and conditions of the
instrument evidencing such award and interpreted under the terms of the
respective Predecessor Plan, and, except as otherwise expressly provided herein,
no provision of this Plan shall affect or otherwise modify the rights or
obligations of holders of such incorporated awards with respect to their
acquisition of shares of Common Stock, or otherwise modify the rights or the
obligations of the holders of such awards. Any shares of Common Stock
reserved for issuance under the Predecessor Plans in excess of the number of
shares as to which awards have been awarded thereunder, plus any shares of
Common Stock related to
awards
granted under the Predecessor Plans that terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such shares, are settled in
cash in lieu of Common Stock, or are exchanged with the Committee’s permission
for Awards not involving Common Stock, shall not be available for issuance or
reissuance under Section 6.1 of the Plan.
ARTICLE
II
DEFINITIONS
AND CONSTRUCTION
Section
2.1. Certain Defined
Terms. As used in this Plan, unless the context otherwise
requires, the following terms shall have the following meanings:
(a) "Award" means any form
of stock option, stock appreciation right, Stock Award, Restricted Stock Unit
Award, performance unit, Performance Award, or other incentive award granted
under the Plan, whether singly, in combination, or in tandem, to a Participant
by the Committee pursuant to such terms, conditions, restrictions, and/or
limitations, if any, as the Committee may establish by the Award Notice or
otherwise.
(b) "Award Notice" means
the document establishing the terms, conditions, restrictions, and/or
limitations of an Award in addition to those established by this Plan and by the
Committee’s exercise of its administrative powers. The Committee will establish
the form of the document in the exercise of its sole and absolute
discretion.
(c) "Board" means the
Board of Directors of the Company.
(d) "CEO" means the Chief
Executive Officer of the Company.
(e) "Code" means the
Internal Revenue Code of 1986, as amended from time to time, including the
regulations thereunder and any successor provisions and the regulations
thereto.
(f) "Committee" means the
Compensation Committee of the Board, or such other Board committee as may be
designated by the Board to administer the Plan; provided, that the Committee
shall consist of two or more Directors, all of whom are both a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act and an
"outside director" within the meaning of the definition of such term as
contained in Treasury Regulation Section 1.162-27(e)(3), or any successor
definition adopted under Section 162(m) of the Code.
(g) "Common Stock" means
the Class A Common Stock, par value $0.01 per share, of the
Company.
(h) "Company" means
Covenant Transportation Group, Inc., a Nevada corporation, and its
Subsidiaries.
(i) "Consultants" means
the consultants, advisors, and independent contractors retained by the
Company.
(j) "Covered Employee"
means an Employee who is a "covered employee" within the meaning of
Section 162(m) of the Code.
(k) "Director" means a
Non-Employee member of the Board.
(l) "Effective Date" means
the date an Award is determined to be effective by the Committee upon its grant
of such Award, which date shall be set forth in the applicable Award
Notice.
(m) "Employee" means any
person employed by the Company on a full or part-time basis.
(n) "Exchange Act" means
the Securities Exchange Act of 1934, as amended from time to time, including the
rules thereunder and any successor provisions and the rules
thereto.
(o) "Fair Market Value"
means the closing price of the Common Stock on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading, and
the closing price shall be the last reported sale price, regular way, on such
date (or, if no sale takes place on such date, the last reported sale price,
regular way, on the next preceding date on which such sale took place), as
reported by such exchange. If the Common Stock is not then so listed or admitted
to trading on a national securities exchange, then Fair Market Value shall be
the closing price (the last reported sale price regular way) of the Common Stock
in the over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), if the
closing price of the Common Stock is then reported by NASDAQ. If the Common
Stock closing price is not then reported by NASDAQ, then Fair Market Value shall
be the mean between the representative closing bid and closing asked prices of
the Common Stock in the over-the-counter market as reported by NASDAQ. If the
Common Stock bid and asked prices are not then reported by NASDAQ, then Fair
Market Value shall be the quote furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by the
Company for that purpose. If no member of the National Association of Securities
Dealers, Inc. then furnishes quotes with respect to the Common Stock, then Fair
Market Value shall be the value determined by the Committee in good
faith.
(p) "Negative Discretion"
means the discretion authorized by the Plan to be applied by the Committee in
determining the size of a Performance Award for a Performance Period if, in the
Committee’s sole judgment, such application is appropriate. Negative Discretion
may only be used by the Committee to eliminate or reduce the size of a
Performance Award. In no event shall any discretionary authority granted to the
Committee by the Plan, including, but not limited to Negative Discretion, be
used to: (a) grant Performance Awards for a Performance Period if the
Performance Goals for such Performance Period have not been attained under the
applicable Performance Formula; or (b) increase a Performance Award above
the maximum amount payable under Section 6.3 of the Plan.
(q) "Participant" means
either an Employee, Director, or Consultant to whom an Award has been granted
under the Plan.
(r) "Performance Awards"
means the Stock Awards and performance units granted pursuant to
Article VII. Performance Awards are intended to qualify as
"performance-based compensation" under Section 162(m) of the
Code.
(s) "Performance Criteria"
means the one or more criteria that the Committee shall select for purposes of
establishing the Performance Goal(s) for a Performance Period. The Performance
Criteria that will be used to establish such Performance Goal(s) shall be
expressed in terms of the attainment of specified levels of one or any variation
or combination of the following: revenues (including, without
limitation, measures such as revenue per mile (loaded or total) or revenue per
tractor), net revenues, fuel surcharges, accounts receivable collection or days
sales outstanding, cost reductions and savings (or limits on cost increases),
safety and claims (including, without limitation, measures such as accidents per
million miles and number of significant accidents), operating income, operating
ratio, income before taxes, net income, earnings before interest and taxes
(EBIT), earnings before interest, taxes, depreciation, and amortization
(EBITDA), adjusted net income, earnings per share, adjusted earnings per share,
stock price, working capital measures, return on assets, return on revenues,
debt-to-equity or debt-to-capitalization (in each case with or without lease
adjustment), productivity and efficiency measures (including, without
limitation, measures such as driver turnover, trailer to tractor ratio, and
tractor to non-driver ratio), cash position, return on stockholders’ equity,
return on invested capital, cash flow measures (including, without limitation,
free cash flow), market share, stockholder return, economic value added, or
completion of acquisitions (either with or without specified size). In addition,
the Committee may establish, as additional Performance Criteria, the attainment
by a Participant of one or more personal objectives and/or goals that the
Committee deems appropriate, including but not limited to implementation of
Company policies, negotiation of significant corporate transactions, development
of long-term business goals or strategic plans for the Company, or the exercise
of specific areas of managerial responsibility. Each of the Performance Criteria
may be expressed on an absolute and/or relative basis with respect to one or
more peer group companies or indices, and may include comparisons with past
performance of the Company (including one or more divisions thereof, if any)
and/or the current or past performance of other companies.
(t) "Performance Formula"
means, for a Performance Period, the one or more objective formulas (expressed
as a percentage or otherwise) applied against the relevant Performance Goal(s)
to determine, with regard to the Award of a particular Participant, whether all,
some portion but less than all, or none of the Award has been earned for the
Performance Period.
(u) "Performance Goals"
means, for a Performance Period, the one or more goals established by the
Committee for the Performance Period based upon the Performance Criteria. Any
Performance Goal shall be established in a manner such that a third party having
knowledge of the relevant performance results could calculate the amount to be
paid to the Participant. For any Performance Period, the Committee is authorized
at any time during the initial time period permitted by Section 162(m) of
the Code, or at any time thereafter, in its sole and absolute discretion, to
adjust or modify the calculation of a Performance Goal for such Performance
Period in order to prevent the dilution or enlargement of the rights of
Participants (i) in the event of, or in anticipation of, any unusual or
extraordinary corporate item, transaction, event, or development; (ii) in
recognition of, or in anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions; and (iii) in view of the
Committee’s assessment of the business strategy of the Company, performance of
comparable organizations, economic and business conditions, and any other
circumstances deemed relevant.
(v) "Performance Period"
means the one or more periods of time, which may be of varying and overlapping
durations, as the Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a
Participant’s right to and the payment of a Performance Award.
(w) "Plan" means this 2006
Omnibus Incentive Plan, as amended from time to time.
(x) "Restricted Stock Unit
Award" means an Award granted pursuant to Article XI in the form of
a right to receive shares of Common Stock on a future date.
(y) "Securities Act" means
the Securities Act of 1933, as amended from time to time, including the rules
thereunder and any successor provisions and the rules thereto.
(z) "Stock Award" means an
award granted pursuant to Article X in the form of shares of Common Stock,
restricted shares of Common Stock, and/or units of Common Stock.
(aa) "Subsidiary" means a
corporation or other business entity in which the Company directly or indirectly
has an ownership interest of twenty percent (20%) or more, except that with
respect to incentive stock options, "Subsidiary" shall mean "subsidiary
corporation" as defined in Section 424(f) of the Code.
Section
2.2. Other Defined
Terms. Unless the context otherwise requires, all other
capitalized terms shall have the meanings set forth in the other Articles and
Sections of this Plan.
Section
2.3. Construction. In
any necessary construction of a provision of this Plan, the masculine gender may
include the feminine, and the singular may include the plural, and vice
versa.
ARTICLE
III
ELIGIBILITY
Section 3.1. In
General. Subject to Section 3.2 and Article IV, all
Employees, Directors, and Consultants are eligible to participate in the Plan.
The Committee may select, from time to time, Participants from those Employees,
Directors, and Consultants.
Section 3.2. Incentive Stock
Options. Only Employees shall be eligible to receive
"incentive stock options" (within the meaning of Section 422 of the
Code).
ARTICLE
IV
PLAN
ADMINISTRATION
Section 4.1. Responsibility. The
Committee shall have total and exclusive responsibility to control, operate,
manage, and administer the Plan in accordance with its terms.
Section 4.2. Authority of the
Committee. The Committee shall have all the authority that may
be necessary or helpful to enable it to discharge its responsibilities with
respect to the Plan. Without limiting the generality of the preceding
sentence, the Committee shall have the exclusive right to:
(a) determine
eligibility for participation in the Plan;
(b) select
the Participants and determine the type of Awards to be made to Participants,
the number of shares subject to Awards and the terms, conditions, restrictions,
and limitations of the Awards, including, but not by way of limitation,
restrictions on the transferability of Awards and conditions with respect to
continued employment, Performance Criteria, confidentiality, and
non-competition;
(c) interpret
the Plan;
(d) construe
any ambiguous provision, correct any default, supply any omission, and reconcile
any inconsistency of the Plan;
(e) issue
administrative guidelines as an aid to administer the Plan and make changes in
such guidelines as it from time to time deems proper;
(f) make
regulations for carrying out the Plan and make changes in such regulations as it
from time to time deems proper;
(g) to
the extent permitted under the Plan, grant waivers of Plan terms, conditions,
restrictions, and limitations;
(h) promulgate
rules and regulations regarding treatment of Awards of a Participant under the
Plan in the event of such Participant’s death, disability, retirement,
termination from the Company, or breach of agreement by the Participant, or in
the event of a change of control of the Company;
(i) accelerate
the vesting, exercise, or payment of an Award or the Performance Period of an
Award when such action or actions would be in the best interest of the
Company;
(j) establish
such other types of Awards, besides those specifically enumerated in Article V
hereof, which the Committee determines are consistent with the Plan’s
purpose;
(k) subject
to Section 4.3, grant Awards in replacement of Awards previously granted under
this Plan or any other executive compensation plan of the Company;
(l) establish
and administer the Performance Goals and certify whether, and to what extent,
they have been attained;
(m) determine
the terms and provisions of any agreements entered into hereunder;
(n) take
any and all other action it deems necessary or advisable for the proper
operation or administration of the Plan; and
(o) make
all other determinations it deems necessary or advisable for the administration
of the Plan, including factual determinations.
The
decisions of the Committee and its actions with respect to the Plan shall be
final, binding, and conclusive upon all persons having or claiming to have any
right or interest in or under the Plan.
Section 4.3. Option
Repricing. Except for adjustments pursuant to Section 6.2, the
Committee shall not reprice any stock options and/or stock appreciation rights
unless such action is approved by the Company’s stockholders. For
purposes of the Plan, the term "reprice" shall mean the reduction, directly or
indirectly, in the per-share exercise price of an outstanding stock option(s)
and/or stock appreciation right(s) issued under the Plan by amendment,
cancellation, or substitution, or any other action that would be treated as a
"repricing" under the NASDAQ Stock Market Rules and interpretations
thereunder.
Section 4.4. Section 162(m) of the
Code. With regard to Awards issued to Covered Employees that
are intended to qualify as "performance-based compensation" for purposes of
Section 162(m) of the Code, the Plan shall, for all purposes, be
interpreted and construed with respect to such Awards in the manner that would
result in such interpretation or construction satisfying the exemptions
available under Section 162(m) of the Code.
Section 4.5. Action by the
Committee. Except as otherwise provided by Section 4.6,
the Committee may act only by a majority of its members. Any determination of
the Committee may be made, without a meeting, by a writing or writings signed by
all of the members of the Committee.
Section 4.6. Allocation and Delegation of
Authority. The Committee may allocate all or any portion of
its responsibilities and powers under the Plan to any one or more of its
members, the CEO, or other senior members of management as the Committee deems
appropriate, and may delegate all or any part of its responsibilities and powers
to any such person or persons; provided, that any such allocation or delegation
be in writing; provided, further, that only the Committee, or other committee
consisting of two or more Directors, all of whom are both "Non-Employee
Directors" within the meaning of Rule 16b-3 under the Exchange Act and
"outside directors" within the meaning of the definition of such term as
contained in Treasury Regulation Section 1.162-27(e)(3), or any successor
definition adopted under Section 162(m) of the Code, may select and grant
Awards to Participants who are subject to Section 16 of the Exchange Act or
are Covered Employees. The Committee may revoke any such allocation or
delegation at any time for any reason with or without prior notice.
ARTICLE
V
FORM
OF AWARDS
Section 5.1. In
General. Awards may, at the Committee’s sole discretion, be
paid in the form of Performance Awards pursuant to Article VII, stock
options pursuant to Article VIII, stock appreciation rights pursuant to
Article IX, Stock Awards pursuant to Article X, Restricted Stock Unit
Awards pursuant to Article XI, performance units pursuant to
Article XII, any form established by the Committee pursuant to
Section 4.2(j), or a combination thereof. Each Award shall be
subject to the terms, conditions, restrictions, and limitations of the Plan and
the Award Notice for such Award. Awards under a particular Article of the Plan
need not be uniform and Awards under two or more Articles may be combined into a
single Award Notice. Any combination of Awards may be granted at one time and on
more than one occasion to the same Participant.
Section 5.2. Foreign
Jurisdictions.
(a) Special
Terms. In order to facilitate the making of any Award to
Participants who are employed or retained by the Company outside the United
States as Employees, Directors, or Consultants (or who are foreign nationals
temporarily within the United States), the Committee may provide for such
modifications and additional terms and conditions ("Special Terms") in
Awards as the Committee may consider necessary or appropriate to accommodate
differences in local law, policy, or custom or to facilitate administration of
the Plan. The Special Terms may provide that the grant of an Award is subject to
(i) applicable governmental or regulatory approval or other compliance with
local legal requirements and/or (ii) the execution by the Participant of a
written instrument in the form specified by the Committee, and that in the event
such conditions are not satisfied, the grant shall be void. The Special Terms
may also provide that an Award shall become exercisable or redeemable, as the
case may be, if an Employee’s employment or Director or Consultant’s
relationship with the Company ends as a result of workforce reduction,
realignment, or similar measure and the Committee may designate a person or
persons to make such determination for a
location.
The Committee may adopt or approve sub-plans, appendices or supplements to, or
amendments, restatements, or alternative versions of, the Plan as it may
consider necessary or appropriate for purposes of implementing any Special
Terms, without thereby affecting the terms of the Plan as in effect for any
other purpose; provided, however, no such sub-plans, appendices or supplements
to, or amendments, restatements, or alternative versions of, the Plan shall:
(x) increase the limitations contained in Section 6.3;
(y) increase the number of available shares under Section 6.1; or
(z) cause the Plan to cease to satisfy any conditions of Rule 16b-3
under the Exchange Act.
(b) Currency
Effects. Unless otherwise specifically determined by the
Committee, all Awards and payments pursuant to such Awards shall be determined
in United States currency. The Committee shall determine, in its discretion,
whether and to the extent any payments made pursuant to an Award shall be made
in local currency, as opposed to United States dollars. In the event payments
are made in local currency, the Committee may determine, in its discretion and
without liability to any Participant, the method and rate of converting the
payment into local currency.
ARTICLE
VI
SHARES
SUBJECT TO PLAN
Section 6.1. Available Shares. The
maximum aggregate number of shares of Common Stock which shall be available for
the grant of Awards under the Plan from and after the Amended and Restated Plan
Effective Date (including incentive stock options) until the end of the Plan's
term shall not exceed 700,000 (the "Share
Reserve"). The Share Reserve shall be subject to adjustment as
provided in Section 6.2. Any shares of Common Stock related to
Awards that terminate by expiration, forfeiture, cancellation, or otherwise
without the issuance of such shares, are settled in cash in lieu of Common
Stock, or are exchanged with the Committee’s permission for Awards not involving
Common Stock (collectively, "Terminated Shares")
shall be available again for grant under the Plan to the extent such Terminated
Shares relate to Awards granted on or after the Amended and Restated Plan
Effective Date; provided, that Terminated Shares shall not be available again
for grant under the Plan to the extent such Terminated Shares relate to awards
granted under the Plan or the Predecessor Plans prior to the Amended and
Restated Plan Effective Date. Moreover, if the exercise price of any
Award granted under the Plan or the tax withholding requirements with respect to
any Award granted under the Plan are satisfied by tendering shares of Common
Stock to the Company (by either actual delivery or by attestation), only the
number of shares of Common Stock issued net of the shares of Common Stock
tendered will be deemed delivered for purposes of determining the Share Reserve
available for delivery under the Plan. The shares of Common Stock available for
issuance under the Plan may be authorized and unissued shares or treasury
shares, including shares purchased in open market or private
transactions. For the purpose of computing the total number of shares
of Common Stock granted under the Plan, where one or more types of Awards, both
of which are payable in shares of Common Stock, are granted in tandem with each
other such that the exercise of one type of Award with respect to a number of
shares cancels an equal number of shares of the other, the number of shares
granted under both Awards shall be deemed to be equivalent to the number of
shares under one of the Awards.
Section 6.2. Adjustment Upon Certain
Events. In the event that there is, with respect to the
Company, a stock dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination, or transaction or exchange of Common Stock
or other corporate exchange, or any distribution to stockholders of Common Stock
or other property or securities (other than regular cash dividends), or any
transaction similar to the foregoing or other transaction that results in a
change to the Company’s capital structure, then the Committee shall make
substitutions and/or adjustments to the maximum number of shares available for
issuance under the Plan, the maximum Award payable under Section 6.3, the
number of shares to be issued pursuant outstanding Awards, the option prices,
exercise prices or purchase prices of outstanding Awards and/or any other
affected terms of an Award or the Plan as the Committee, in its sole discretion
and without liability to any person, deems equitable or appropriate. Unless the
Committee determines otherwise, in no event shall an Award to any Participant
that is intended to qualify as "performance-based compensation" for purposes of
Section 162(m) of the Code be adjusted pursuant to this Section 6.2 to
the extent such adjustment would cause such Award to fail to qualify as
"performance-based compensation" under Section 162(m) of the Code.
Section 6.3. Maximum Award
Payable. Subject to Section 6.2, and notwithstanding any
provision contained in the Plan to the contrary, the maximum Award payable (or
granted, if applicable) to any one Participant under the Plan for a calendar
year is 250,000 shares of Common Stock or, in the event the Award is paid in
cash, $2,000,000.
ARTICLE
VII
PERFORMANCE
AWARDS
Section 7.1. Purpose. For purposes
of Performance Awards issued to Employees, Directors, and Consultants that are
intended to qualify as "performance-based compensation" for purposes of
Section 162(m) of the Code, the provisions of this Article VII shall
apply in addition to and, where necessary, in lieu of the provisions of
Article X, Article XI, and Article XII. The purpose of this
Article is to provide the Committee the ability to qualify the Stock Awards
authorized under Article X, the Restricted Stock Unit Awards authorized
under Article XI, and the performance units under Article XII as
"performance-based compensation" under Section 162(m) of the Code. The
provisions of this Article VII shall control over any contrary provision
contained in Article X, Article XI, or Article XII.
Section 7.2. Eligibility. For
each Performance Period, the Committee will, in its sole discretion, designate
within the initial period allowed under Section 162(m) of the Code which
Employees, Directors, and Consultants will be Participants for such
period. However, designation of an Employee, Director, or Consultant
as a Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the period. The determination as to whether
or not such Participant becomes entitled to an Award for such Performance Period
shall be decided solely in accordance with the provisions of this
Article VII. Moreover, designation of an Employee, Director, or Consultant
as a Participant for a particular Performance Period shall not require
designation of such Employee, Director, or Consultant as a Participant in any
subsequent Performance Period, and designation of one Employee, Director, or
Consultant as a Participant shall not require designation of any other Employee,
Director, or Consultant as a Participant in such period or in any other
period.
Section 7.3. Discretion of Committee with
Respect to Performance Awards. The Committee shall have the
authority to determine which Covered Employees or other Employees, Directors, or
Consultants shall be Participants of a Performance Award. With regard to a
particular Performance Period, the Committee shall have full discretion to
select the length of such Performance Period, the type(s) of Performance Awards
to be issued, the Performance Criteria that will be used to establish the
Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s),
whether the Performance Goal(s) is (are) to apply to the Company or any one or
more subunits thereof and the Performance Formula. For each Performance Period,
with regard to the Performance Awards to be issued for such period, the
Committee will, within the initial period allowed under Section 162(m) of
the Code, exercise its discretion with respect to each of the matters enumerated
in the immediately preceding sentence of this Section 7.3 and record the
same in writing.
Section 7.4. Payment of Performance
Awards.
(a) Condition to Receipt of
Performance Award. Unless otherwise provided in the relevant
Award Notice, a Participant must be employed by the Company on the last day of a
Performance Period to be eligible for a Performance Award for such Performance
Period.
(b) Limitation. A
Participant shall be eligible to receive a Performance Award for a Performance
Period only to the extent that: (1) the Performance Goals for such period
are achieved; and (2) and the Performance Formula as applied against such
Performance Goals determines that all or some portion of such Participant’s
Performance Award has been earned for the Performance Period.
(c) Certification. Following
the completion of a Performance Period, the Committee shall meet to review and
certify in writing whether, and to what extent, the Performance Goals for the
Performance Period have been achieved and, if so, to also calculate and certify
in writing the amount of the Performance Awards earned for the period based upon
the Performance Formula. The Committee shall then determine the actual size of
each Participant’s Performance Award for the Performance Period and, in so
doing, shall apply Negative Discretion, if and when it deems
appropriate.
(d) Negative
Discretion. In determining the actual size of an individual
Performance Award for a Performance Period, the Committee may reduce or
eliminate the amount of the Performance Award earned under the Performance
Formula for the Performance Period through the use of Negative Discretion, if in
its sole judgment, such reduction or elimination is
appropriate.
(e) Timing of Award
Payments. The Awards granted for a Performance Period shall be
paid to Participants as soon as administratively practicable following
completion of the certifications required by Section 7.4(c).
ARTICLE
VIII
STOCK
OPTIONS
Section 8.1. In
General. Awards may be granted in the form of stock options.
These stock options may be incentive stock options within the meaning of
Section 422 of the Code or non-qualified stock options (i.e., stock options
which are not incentive stock options), or a combination of both. All
Awards under the Plan issued to Covered Employees in the form of non-qualified
stock options shall qualify as "performance-based compensation" under
Section 162(m) of the Code.
Section 8.2. Terms and Conditions of
Stock Options. An option shall be exercisable in accordance
with such terms and conditions and at such times and during such periods as may
be determined by the Committee. The price at which Common Stock may be purchased
upon exercise of a stock option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock, as determined by the
Committee, on the Effective Date of the option’s grant. In addition, the term of
a stock option may not exceed ten (10) years.
Section 8.3. Restrictions Relating to
Incentive Stock Options. Stock options issued
in the form of incentive stock options shall, in addition to being subject to
the terms and conditions of Section 8.2, comply with Section 422 of the
Code. Accordingly, the aggregate Fair Market Value (determined at the time the
option was granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by a Participant during any calendar
year (under this Plan or any other plan of the Company) shall not exceed
$100,000 (or such other limit as may be required by Section 422 of the
Code).
Section 8.4. Exercise. Upon
exercise, the option price of a stock option may be paid in cash, or, to the
extent permitted by the Committee, by tendering, by either actual delivery of
shares or by attestation, shares of Common Stock, a combination of the
foregoing, or such other consideration as the Committee may deem appropriate.
The Committee shall establish appropriate methods for accepting Common Stock,
whether restricted or unrestricted, and may impose such conditions as it deems
appropriate on the use of such Common Stock to exercise a stock option. Stock
options awarded under the Plan may also be exercised by way of a broker-assisted
stock option exercise program, if any, provided such program is available at the
time of the option’s exercise. Notwithstanding the foregoing or the provision of
any Award Notice, a Participant may not pay the exercise price of a stock option
using shares of Common Stock if, in the opinion of counsel to the Company,
(i) the Participant is, or within the six months preceding such exercise
was, subject to reporting under Section 16(a) of the Exchange Act,
(ii) there is a substantial likelihood that the use of such form of payment
or the timing of such form of payment would subject the Participant to a
substantial risk of liability under Section 16 of the Exchange Act, or
(iii) there is a substantial likelihood that the use of such form of
payment would result in accounting treatment to the Company under generally
accepted accounting principles that the Committee reasonably determines is
adverse to the Company.
ARTICLE
IX
STOCK
APPRECIATION RIGHTS
Section 9.1. In
General. Awards may be granted in the form of stock
appreciation rights ("SARs"). SARs entitle
the Participant to receive a payment equal to the appreciation in a stated
number of shares of Common Stock from the exercise price to the Fair Market
Value of the Common Stock on the date of exercise. The "exercise price" for a
particular SAR shall be defined in the Award Notice for that SAR. A SAR may be
granted in tandem with all or a portion of a related stock option under the Plan
("Tandem
SARs"), or may be granted separately ("Freestanding SARs").
A Tandem SAR may be granted either at the time of the grant of the related stock
option or at any time thereafter during the term of the stock option. All Awards
under the Plan issued to Covered Employees in the form of a SAR shall qualify as
"performance-based compensation" under Section 162(m) of the
Code.
Section 9.2. Terms and Conditions of
Tandem SARs. A Tandem SAR shall be exercisable to the extent,
and only to the extent, that the related stock option is exercisable, and the
"exercise price" of such a SAR (the base from which the value of the SAR is
measured at its exercise) shall be the option price under the related stock
option. However,
at no
time shall a Tandem SAR be issued if the option price of its related stock
option is less than the Fair Market Value of the Common Stock, as determined by
the Committee, on the Effective Date of the Tandem SAR’s grant. If a related
stock option is exercised as to some or all of the shares covered by the Award,
the related Tandem SAR, if any, shall be canceled automatically to the extent of
the number of shares covered by the stock option exercise. Upon exercise of a
Tandem SAR as to some or all of the shares covered by the Award, the related
stock option shall be canceled automatically to the extent of the number of
shares covered by such exercise. Moreover, all Tandem SARs shall expire not
later than ten (10) years from the Effective Date of the SAR’s
grant.
Section 9.3. Terms and Conditions of
Freestanding SARs. Freestanding SARs shall be exercisable or
automatically mature in accordance with such terms and conditions and at such
times and during such periods as may be determined by the Committee. The
exercise price of a Freestanding SAR shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock on the
Effective Date of the Freestanding SAR’s grant. Moreover, all Freestanding SARs
shall expire not later than ten (10) years from the Effective Date of the
Freestanding SAR’s grant.
Section 9.4. Deemed Exercise. The Committee may
provide that a SAR shall be deemed to be exercised at the close of business on
the scheduled expiration date of such SAR if at such time the SAR by its terms
remains exercisable and, if so exercised, would result in a payment to the
holder of such SAR.
Section 9.5. Payment. Unless
otherwise provided in an Award Notice, an SAR may be paid in cash, Common Stock
or any combination thereof, as determined by the Committee, in its sole and
absolute discretion, at the time that the SAR is exercised.
ARTICLE
X
STOCK
AWARDS
Section 10.1. Grants. Awards may be
granted in the form of Stock Awards. Stock Awards shall be awarded in such
numbers and at such times during the term of the Plan as the Committee shall
determine.
Section 10.2. Performance Criteria.
For Stock Awards conditioned, restricted, and/or limited based on Performance
Goals, the length of the Performance Period, the Performance Goals to be
achieved during the Performance Period, and the measure of whether and to what
degree such Performance Goals have been attained shall be conclusively
determined by the Committee in the exercise of its absolute discretion.
Performance Goals may be revised by the Committee, at such times as it deems
appropriate during the Performance Period, in order to take into consideration
any unforeseen events or changes in circumstances.
Section 10.3. Rights as
Stockholders. During the period in which any restricted shares
of Common Stock are subject to any restrictions, the Committee may, in its sole
discretion, deny a Participant to whom such restricted shares have been awarded
all or any of the rights of a stockholder with respect to such shares,
including, but not by way of limitation, limiting the right to vote such shares
or the right to receive dividends on such shares.
Section 10.4. Evidence of
Award. Any Stock Award granted under the Plan may be evidenced
in such manner as the Committee deems appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate or
certificates, with such restrictive legends and/or stop transfer instructions as
the Committee deems appropriate.
ARTICLE
XI
RESTRICTED
STOCK UNIT AWARDS
Section 11.1. Grants. Awards
may be granted in the form of Restricted Stock Unit Awards. Restricted Stock
Unit Awards shall be awarded in such numbers and at such times during the term
of the Plan as the Committee shall determine.
Section 11.2. Rights as
Stockholders. Until the shares of
Common Stock to be received upon the vesting of such Restricted Stock Unit Award
are actually received by a Participant, the Participant shall have no rights as
a stockholder with respect to such shares.
Section 11.3. Evidence of
Award. A Restricted Stock Unit Award granted under the Plan
may be recorded on the books and records of the Company in such manner as the
Committee deems appropriate.
ARTICLE
XII
PERFORMANCE
UNITS
Section 12.1. Grants. Awards
may be granted in the form of performance units. Performance units, as that term
is used in this Plan, shall refer to units valued by reference to designated
criteria established by the Committee, other than Common Stock.
Section 12.2. Performance
Criteria. Performance units shall be contingent on the
attainment during a Performance Period of certain Performance Goals. The length
of the Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such
Performance Goals have been attained shall be conclusively determined by the
Committee in the exercise of its absolute discretion. Performance Goals may be
revised by the Committee, at such times as it deems appropriate during the
Performance Period, in order to take into consideration any unforeseen events or
changes in circumstances.
ARTICLE
XIII
PAYMENT
OF AWARDS
Section 13.1. Payment. Absent
a Plan or Award Notice provision to the contrary, payment of Awards may, at the
discretion of the Committee, be made in cash, Common Stock, a combination of
cash and Common Stock, or any other form of property as the Committee shall
determine. In addition, payment of Awards may include such terms, conditions,
restrictions, and/or limitations, if any, as the Committee deems appropriate,
including, in the case of Awards paid in the form of Common Stock, restrictions
on transfer and forfeiture provisions; provided, however, such terms,
conditions, restrictions, and/or limitations are not inconsistent with the
Plan.
Section 13.2. Withholding
Taxes. The Company shall be entitled to deduct from any
payment under the Plan, regardless of the form of such payment, the amount of
all applicable income and employment taxes required by law to be withheld with
respect to such payment or may require the Participant to pay to it such tax
prior to and as a condition of the making of such payment. In accordance with
any applicable administrative guidelines it establishes, the Committee may allow
a Participant to pay the amount of taxes required by law to be withheld from an
Award by withholding from any payment of Common Stock due as a result of such
Award, or by permitting the Participant to deliver to the Company, shares of
Common Stock having a Fair Market Value equal to the minimum amount of such
required withholding taxes. Notwithstanding the foregoing or the provision of
any Award Notice, a Participant may not pay the amount of taxes required by law
to be withheld using shares of Common Stock if, in the opinion of counsel to the
Company, (i) there is a substantial likelihood that the use of such form of
payment or the timing of such form of payment would subject the Participant to a
substantial risk of liability under Section 16 of the Exchange Act, or
(ii) there is a substantial likelihood that the use of such form of payment
would result in adverse accounting treatment to the Company under generally
accepted accounting principles.
ARTICLE
XIV
DIVIDEND
AND DIVIDEND EQUIVALENTS
If an
Award is granted in the form of a Stock Award or stock option, or in the form of
any other stock-based grant, the Committee may choose, at the time of the grant
of the Award or any time thereafter up to the time of the Award’s payment, to
include as part of such Award an entitlement to receive dividends or dividend
equivalents, subject to such terms, conditions, restrictions, and/or
limitations, if any, as the Committee may establish. Dividends and dividend
equivalents shall be paid in such form and manner (i.e., lump sum or
installments), and at such time(s) as the Committee shall determine. All
dividends or dividend equivalents which are not paid currently may, at the
Committee’s discretion,
accrue
interest, be reinvested into additional shares of Common Stock or, in the case
of dividends or dividend equivalents credited in connection with Stock Awards,
be credited as additional Stock Awards and paid to the Participant if and when,
and to the extent that, payment is made pursuant to such Award.
ARTICLE
XV
DEFERRAL
OF AWARDS
At the
discretion of the Committee, payment of any Award, salary, bonus compensation,
Company Board compensation, dividend or dividend equivalent, or any portion
thereof, may be deferred by a Participant until such time as the Committee may
establish. All such deferrals shall be accomplished by the delivery
of a written, irrevocable election by the Participant prior to the time
established by the Committee for such purpose, on a form provided by the
Company. Further, all deferrals shall be made in accordance with
administrative guidelines established by the Committee to ensure that such
deferrals comply with all applicable requirements of the Code. Deferred payments
shall be paid in a lump sum or installments, as determined by the Committee.
Deferred Awards may also be credited with interest, at such rates to be
determined by the Committee, or invested by the Company, and, with respect to
those deferred Awards denominated in the form of Common Stock, credited with
dividends or dividend equivalents.
ARTICLE
XVI
MISCELLANEOUS
Section 16.1. Nonassignability. Except
as otherwise provided in an Award Notice, no Awards or any other payment under
the Plan shall be subject in any manner to alienation, anticipation, sale,
transfer (except by will or the laws of descent and distribution), assignment,
or pledge, nor shall any Award be payable to or exercisable by anyone other than
the Participant to whom it was granted.
Section 16.2. Regulatory Approvals and
Listings. Notwithstanding anything contained in this Plan to
the contrary, the Company shall have no obligation to issue or deliver
certificates of Common Stock evidencing Stock Awards or any other Award
resulting in the payment of Common Stock prior to (a) the obtaining of any
approval from any governmental agency which the Company shall, in its sole
discretion, determine to be necessary or advisable, (b) the admission of
such shares to listing on the stock exchange or quotation system on which the
Common Stock may be listed, and (c) the completion of any registration or
other qualification of said shares under any state or federal law or ruling of
any governmental body which the Company shall, in its sole discretion, determine
to be necessary or advisable.
Section 16.3. No Right to Continued
Employment or Grants. Participation in the Plan shall not give
any Participant the right to remain in the employ or other service of the
Company. The Company reserves the right to terminate the employment or other
service of a Participant at any time. Further, the adoption of this Plan shall
not be deemed to give any Employee, Director, or any other individual any right
to be selected as a Participant or to be granted an Award. In addition, no
Employee, Director, or any other individual having been selected for an Award,
shall have at any time the right to receive any additional Awards.
Section 16.4. Amendment/
Termination. The Committee may suspend or terminate the Plan
at any time for any reason with or without prior notice. In addition, the
Committee may, from time to time for any reason and with or without prior
notice, amend the Plan in any manner, but may not without stockholder approval
adopt any amendment which would require the vote of the stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities, or other applicable laws or regulations, including, but not limited
to, the listing requirements of the stock exchanges or quotation systems on
which the securities of the Company are listed. Notwithstanding the foregoing,
without the consent of a Participant (except as otherwise provided in
Section 6.2), no amendment may materially and adversely affect any of the
rights of such Participant under any Award theretofore granted to such
Participant under the Plan.
Section 16.5. Governing
Law. The Plan shall be governed by and construed in accordance
with the laws of the State of Nevada, except as superseded by applicable federal
law, without giving effect to its conflicts of law provisions.
Section 16.6. No Right, Title, or Interest
in Company Assets. No Participant shall have any rights as a
stockholder as a result of participation in the Plan until the date of issuance
of a stock certificate in his or her name, and, in the case of restricted shares
of Common Stock, such rights are granted to the Participant under the Plan. To
the extent any person acquires a right to receive payments from the Company
under the Plan, such rights shall be no greater than the rights of an unsecured
creditor of the Company and the Participant shall not have any rights in or
against any specific assets of the Company. All of the Awards granted under the
Plan shall be unfunded.
Section 16.7. No Guarantee of Tax
Consequences. No person connected with the Plan in any
capacity, including, but not limited to, the Company and its directors,
officers, agents, and employees, makes any representation, commitment, or
guaranty that any tax treatment, including, but not limited to, federal, state,
and local income, estate, and gift tax treatment, will be applicable with
respect to the tax treatment of any Award, any amounts deferred under the Plan,
or paid to or for the benefit of a Participant under the Plan, or that such tax
treatment will apply to or be available to a Participant on account of
participation in the Plan.
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Using
a black
ink pen, mark your
votes with an X as
shown in this example. Please do not write outside the designated
areas.
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[X]
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PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE.
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A Proposals — The Board of
Directors recommends a vote FOR all the nominees listed,
FOR Proposal 2, and FOR granting
the proxies discretionary
authority.
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1.
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Election
of Directors:
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01
– William T. Alt
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02
– Robert E. Bosworth
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03
– Bradley A. Moline
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04
– Niel B. Nielson
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05
– David R. Parker
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[ ]
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Mark
here to vote FOR all
nominees
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[ ]
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Mark
here to vote WITHHOLD vote
from all nominees
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01
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02
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03
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04
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05
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[ ]
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For All EXCEPT
– To withhold a vote for one or more nominees, mark the box to the left
and the corresponding numbered box(es) to the right.
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[ ]
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[ ]
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[ ]
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[ ]
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[ ]
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2.
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Approval
of the Amendment to the Covenant Transportation Group, Inc. 2006 Omnibus
Incentive Plan (the “Incentive Plan”), which, among other things, (i)
provides that the maximum aggregate number of shares of Class A common
stock available for the grant of awards under the Incentive Plan from and
after the effective date of the Amendment shall not exceed 700,000, and
(ii) limits the shares of Class A common stock that shall be available for
issuance or reissuance under the Incentive Plan from and after the
effective date of the Amendment to the additional 700,000 shares reserved,
plus any expirations, forfeitures, cancellations, or certain other
terminations of such shares.
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For
[ ]
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Against
[ ]
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Abstain
[ ]
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GRANT
AUTHORITY
to
vote
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WITHHOLD
AUTHORITY
to
vote
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Abstain
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3.
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In
their discretion, the attorneys and proxies are authorized to vote upon
such other matters as may properly come before the meeting or any
adjournment thereof.
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[ ]
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[ ]
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[ ]
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B Authorized Signatures —
This section must be completed for your vote to be counted. — Date and
Sign Below
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Please
sign above exactly as your name appears at the upper left. When
shares are held by joint tenants, both shall sign. When signing
as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.
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Signature
1 — Please keep signature within the box.
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Signature
2 — Please keep signature within the box.
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/ /
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IF
VOTING BY MAIL, YOU MUST COMPLETE
SECTIONS A AND
B.
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PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE.
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Proxy
- COVENANT
TRANSPORTATION GROUP,
INC.
|
PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 5, 2009
Solicited
on Behalf of the Board of Directors of the Company
The
undersigned holder(s) of Class A and/or Class B common stock (individually or
together referred to as "Common Stock") of Covenant Transportation Group,
Inc., a Nevada corporation (the "Company"), hereby appoint(s) David R. Parker
and Joey B. Hogan, and each or any of them, attorneys and proxies of the
undersigned, with full power of substitution, to vote all of the Common Stock
that the undersigned is (are) entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Company’s Corporate Headquarters
at 400 Birmingham Highway, Chattanooga, Tennessee, on Tuesday, May 5, 2009,
at 10:00 A.M. Eastern Time, and at any adjournment thereof. The
undersigned acknowledges receipt of the Notice and Proxy Statement for the 2009
Annual Meeting of Stockholders of the Company and the Annual Report to
Stockholders for the year ended December 31, 2008.
A
vote FOR Proposal 1, Proposal 2, and granting the proxies discretionary
authority is recommended by the Board of Directors of the Company. When properly
executed, this proxy will be voted in the manner directed by the undersigned
stockholder(s). If no direction is given, this proxy will be voted FOR Proposal
1, FOR Proposal 2, and, at the discretion of the proxy holder, upon such other
matters as may properly come before the meeting or any adjournment thereof.
Proxies marked "Abstain" and broker non-votes are counted only for purposes of
determining whether a quorum is presented at the meeting.
PLEASE
SIGN, DATE AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE.
(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE)
IF
VOTING BY MAIL, YOU MUST COMPLETE
SECTIONS A AND B.