UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material under §240.14a-12
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KNIGHT TRANSPORTATION,
INC.
(Name of
Registrant as Specified In Its Charter)
N/A
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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of Filing Fee (Check the appropriate box):
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computed on table below per Exchange Act Rules 14a-6(i)(4) and
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number of securities to which transaction applies:
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Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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maximum aggregate value of transaction:
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statement number, or the Form or Schedule and the date of its
filing.
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KNIGHT
TRANSPORTATION, INC.
5601 West
Buckeye Road
Phoenix,
Arizona 85043
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON MAY 22, 2008
To our
Shareholders:
You are
cordially invited to attend the 2008 Annual Meeting of Shareholders (the "Annual
Meeting") of KNIGHT TRANSPORTATION, INC. to be held at 8:30 A.M., Phoenix time,
on May 22, 2008, at the Wigwam Golf Resort & Spa, 300 East Wigwam Boulevard,
Litchfield Park, Arizona 85340. The purposes of the Annual Meeting
are to:
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1.
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Elect
two Class I Directors, each director to serve a term of three
years;
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2.
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Approve
the Second Amendment to the Company's Amended and Restated 2003 Stock
Option Plan to increase the number of shares of Common Stock reserved for
the issuance of stock grants, including stock options, to employees and
directors;
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3.
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Ratify
the appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for fiscal year 2008;
and
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4.
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Transact
such other business as may properly come before the Annual
Meeting.
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The Board
of Directors has fixed the close of business on March 31, 2008, as the record
date for determining those shareholders who are entitled to receive notice of
and vote at the Annual Meeting or any adjournment(s) thereof. Shares
of Knight Common Stock can be voted at the Annual Meeting only if the holder is
present at the Annual Meeting in person or by valid proxy. A copy of
our 2007 Annual Report to Shareholders, which includes audited consolidated
financial statements, is enclosed. 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.proxyvote.com or by
telephone using a touch-tone telephone and calling
1-800-690-6903. The prompt return of your proxy may save us
additional expenses of solicitation.
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By
Order of the Board of Directors,
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/s/
David A. Jackson
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David
A. Jackson
Secretary
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Phoenix,
Arizona
April 11,
2008
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Page
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GENERAL
INFORMATION
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Voting
Rights
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Quorum
Requirement
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Required
Vote; Cumulative Voting
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Right
To Attend the 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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PROPOSAL
NO. 1 – ELECTION OF DIRECTORS
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Class
I Director Nominees
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CONTINUING
DIRECTORS
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Class
II Directors
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Class
III Directors
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CORPORATE
GOVERNANCE
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Applicable
Corporate Governance Requirements
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Corporate
Governance Guidelines
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Code
of Ethics
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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
Nominating and Corporate Governance 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
Executive Committee
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Other
Board and Corporate Governance Matters
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Our
Executive Officers and Certain Significant Employees
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Compliance
with Section 16(a) of the Exchange Act
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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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Performance-Based
Annual Cash Bonuses
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Long-Term
Incentives
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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 2008
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Employment
Agreements
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Summary
Compensation Table
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Grants
of Plan-Based Awards
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Outstanding
Equity Awards at Fiscal Year-End
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Option
Exercises and Stock Vested
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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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PROPOSAL
NO. 2 – APPROVAL OF THE SECOND AMENDMENT TO THE AMENDED AND RESTATED 2003
STOCK OPTION PLAN
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Background
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Reasons
for Seeking Shareholder Approval of the Amendment
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Description
of the Amended and Restated 2003 Plan
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Federal
Income Tax Consequences
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Accounting
Treatment
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Plan
Benefits under the Amended and Restated 2003 Plan
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Equity
Compensation Plan Information
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PROPOSAL
NO. 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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PRINCIPAL
ACCOUNTING FEES AND SERVICES
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SHAREHOLDER
PROPOSALS
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OTHER
MATTERS
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5601 West
Buckeye Road
Phoenix,
Arizona 85043
PROXY
STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON MAY 22, 2008
GENERAL
INFORMATION
This
Proxy Statement is furnished in connection with the solicitation of proxies from
the shareholders of Knight Transportation, Inc. to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at 8:30 A.M., Phoenix
time, on May 22, 2008, at the Wigwam Golf Resort & Spa, 300 East Wigwam
Boulevard, Litchfield Park, Arizona 85340. 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 herein; (ii) FOR approval of the amendment to our
Amended and Restated 2003 Stock Option Plan to increase the number of shares
reserved for issuance thereunder; (iii) FOR ratification of the appointment of
Deloitte & Touche LLP as our independent registered public accounting firm
for fiscal year 2008; and (iv) with respect to any other matters properly
brought before the Annual Meeting, in accordance with the recommendations of the
Board of Directors, or, if no recommendations are given, in accordance with the
judgment of the proxy holders.
This
Proxy Statement, the proxy card, and our Annual Report were first mailed on or
about April 11, 2008, to shareholders of record at the close of business on
March 31, 2008 (the "Record Date").
The
terms "we," "our," "us," or the "Company" refer to Knight Transportation, Inc.
and its subsidiaries.
Only
holders of record of our Common Stock, par value $0.01 per share ("Common
Stock"), at the close of business on the Record Date are entitled to vote at the
Annual Meeting, either in person or by valid proxy. Except in the
election of directors, shareholders are entitled to one vote for each share held
of record on each matter of business to be considered at the Annual
Meeting. In the election of directors, Arizona law requires
cumulative voting. See "Required Vote;
Cumulative Voting." As of the Record Date, there were issued and
outstanding approximately 85,519,943 shares
of our Common Stock, entitled to cast an aggregate 85,519,943 votes
on all matters subject to a vote at the Annual Meeting, other than in the
election of the Class I directors, where the shares are entitled to an aggregate
171,039,886 votes. 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.
Quorum Requirement
In order
to transact business at the Annual Meeting, a quorum must be
present. A quorum is present if a majority of the issued and
outstanding shares of Common Stock 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.
Required Vote; Cumulative Voting
Election of
Directors. Directors are elected by plurality of the votes
cast, which means that the director nominees receiving the highest number of
votes for their election will be elected as directors. Abstentions
and broker non-votes are not counted as votes for the election of any director
nominee. Under the Constitution of the State of Arizona, as well as
Section 10-728 of the Arizona Revised Statutes, shareholders have cumulative
voting rights in electing directors of an Arizona
corporation. Cumulative voting means that each shareholder, when
electing directors, has the right to cast as many votes in the aggregate as he,
she, or it has voting shares multiplied by the number of directors to be
elected. For example, this year two Class I directors will be
elected. If a shareholder has 100 shares of Common Stock, the
shareholder is entitled to cast a total of 200 votes in the election of the
Class I directors and may cast 200 votes for a
single director nominee or distribute those votes between the two Class I
director nominees.
Other
Matters. Approval of the other matters submitted to
shareholders for consideration and action at the Annual Meeting requires that
the number of votes cast for the matter exceeds the number of votes cast against
the matter. Abstentions and broker non-votes will be disregarded in
determining whether a matter has been approved. In other words,
abstentions and broker non-votes will be counted neither as votes for, nor as
votes against, a matter.
Right to Attend the Annual Meeting; Revocation of
Proxy
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. Shareholders 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 will
include reimbursements for the charges and expenses of brokerage firms and
others for forwarding solicitation material to beneficial owners of our
outstanding Common Stock. Proxies will be solicited by mail and may
be solicited personally by our directors, officers, or 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 our Independent Registered Public Accounting Firm, and
other information included in our 2007 Annual Report to Shareholders that was
mailed on or about April 11, 2008, together with this Notice of Annual Meeting
and Proxy Statement, to all shareholders of record as of the Record
Date. A copy of our Annual Report is available free of charge on the
Shareholder Relations section of our corporate website at http://www.knighttrans.com. The Annual Report is not
incorporated into this Proxy Statement, and is not considered proxy-soliciting
material.
How to Read this Proxy Statement
This
Proxy Statement contains the proposals to be considered by shareholders 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
management and other large shareholders; the services provided to us by and fees
of Deloitte & Touche LLP, our independent registered public accounting firm;
and instructions for shareholders who want to make proposals at the 2009 Annual
Meeting of Shareholders. Each shareholder should read this
information before completing and returning the enclosed proxy
card.
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
Our Board of Directors
presently consists of eight members. The directors are divided into
three classes, with each class serving a three-year term. The
shareholders elect approximately one-third of the Board of Directors each
year. Two Class I directors will be elected at the Annual
Meeting.
Upon the
recommendation of the Nominating and Corporate Governance Committee, the Board
of Directors has nominated Donald A. Bliss and Richard J. Lehmann for election
as Class I directors at the Annual Meeting. During 2007, Mr. Mark
Scudder, a Class I Director, resigned from the Board. The Nominating
and Corporate Governance Committee is searching for, but has not yet selected, a
third Class I Director to stand for election to the Board.
Each
Class I director nominee will be elected to serve until the 2011 Annual Meeting
of Shareholders or until his successor shall have been duly elected and
qualified or his resignation or removal, whichever occurs first. Each
of the Class I director nominees has consented to serve a three-year
term.
If any of
the nominees named above should become unavailable to serve as a director, the
Board of Directors may designate a substitute nominee. In that case,
the proxy holders will vote for the substitute nominee designated by the
Board.
Class I Director Nominees
Information
concerning the nominees standing for election as Class I directors
follows:
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Donald
A. Bliss, 75
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Director
Since 1995
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Donald A. Bliss has served as a member
of our Board of Directors since February 1995. Until his retirement
in December 1994, Mr. Bliss was the Chief Executive Officer and Vice President
of U.S. West Communications, a U.S. West company. Mr. Bliss also is a
director of the Western and Southern Life Insurance Company and the Biltmore
Bank of Arizona. Mr. Bliss served as Chairman of the Western Region
Advisory Board of AON Risk Services of Arizona, Inc. from October 2001 to
February 2005.
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Richard
J. Lehmann, 64
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Director
Since 2006
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Richard J. Lehmann has served
as a member of our Board of Directors since February 2006. Mr.
Lehmann serves as the founding principal of the Biltmore Bank of Arizona and is
the Chairman of Bank Capital Corporation, the holding company for the Biltmore
Bank of Arizona. Until December 31, 1999, Mr. Lehmann served as Vice
Chairman of Bank One, when it acquired FCNBC, creating the fifth largest bank in
the United States, with responsibility for all consumer banking and credit card
operations. Mr. Lehmann's previous positions include Chairman and
Chief Executive Officer of Valley National Bank. Prior to that, Mr.
Lehmann spent 20 years with Citigroup in various positions, including 10 years
in the International Division, with more than three years as a Senior Corporate
Officer in Europe, the Middle East, and Africa. Mr. Lehmann is a
member of the board of directors of the Arizona Board of Nature Conservancy and
the TGen Foundation. He also serves on the Mayo Advisory Board
and serves on the Board of Trustees at Thunderbird, The Garvin School of
International Management.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE DIRECTOR
NOMINEES.
Class II Directors
Certain
information regarding our current Class II directors who were elected in 2006
for terms expiring at our 2009 Annual Meeting of Shareholders
follows:
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Gary
J. Knight, 56
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Director
Since 1990
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Gary J. Knight has served as the Vice
Chairman of our Board of Directors since January
2004. Mr. Knight served as our President from 1993 to January
2004, and has been one of our officers and a member of our Board of Directors
since 1990. From 1975 until 1990, Mr. Knight was employed by Swift
Transportation Co., Inc. ("Swift"), a long-haul truckload carrier, where he was
an Executive Vice President.
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G.D.
Madden, 68
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Director
Since 1997
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G.D. Madden has served as a member
of our Board of Directors since January 1997. Since 1996,
Mr. Madden has been President of Madden Partners, a consulting firm he
founded, which specializes in transportation technology and strategic
issues. Prior to founding Madden Partners, he was President and Chief
Executive Officer of Innovative Computing Corporation, a subsidiary of
Westinghouse Electric Corporation. Mr. Madden founded Innovative
Computing Corporation ("ICC"), a privately held company, which grew to be the
largest supplier of fully integrated management information systems to the
trucking industry. Mr. Madden sold ICC to Westinghouse in 1990
and continued to serve as its President and Chief Executive Officer until
1996.
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Kathryn
L. Munro, 59
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Director
Since 2005
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Kathryn L. Munro has served
as a member of our Board of Directors since April 2005. She is a
principal of BridgeWest, LLC, a private equity investment company specializing
in wireless technology companies. Ms. Munro was the Chairperson
of BridgeWest from February 1999 until July 2003. From 1996 to 1998,
Ms. Munro served as Chief Executive Officer of Bank of America's Southwest
Banking Group and was President of Bank of America Arizona from 1994 to
1996. Ms. Munro has served on the boards of directors of Flow
International Corporation, a Seattle-based manufacturer of industrial tools,
since 1996; and Pinnacle West Capital Corporation, the holding company of
Arizona Public Service and Pinnacle West Energy, since 2000. Ms. Munro served on
the board of Capitol Bancorp Limited, a Michigan-based multi-bank holding
company, from 2002 to 2006.
Class III Directors
Certain
information regarding our current Class III directors who were elected in 2007
for terms expiring at our 2010 Annual Meeting of Shareholders
follows:
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Kevin
P. Knight, 51
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Director
Since 1990
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Kevin P. Knight has served as
the Chairman of our Board of Directors since May 1999 and has served as our
Chief Executive Officer since 1993. He has been one of our officers
and directors since 1990. From 1975 to 1984 and again from 1986 to
1990, Mr. Knight was employed by Swift, where he served as Executive Vice
President and President of Cooper Motor Lines, Inc., a Swift
subsidiary. From February 2004 through February 2008, Mr. Knight
served on the Board of Directors of Universal Technical Institute, Inc., a
provider of post-secondary education. Mr. Knight currently serves on the Board
of Directors and Executive Committee of the American Trucking
Associations.
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Randy
Knight, 59
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Director
Since 1989
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Randy Knight has served as a member
of our Board of Directors since our inception in 1989. Mr. Knight
served as one of our officers from 1989 until July 1999, when he resigned from
being an officer. Mr. Knight served as the Chairman of the Board
from 1993 to 1999. From 1985 to June 2004, Mr. Knight held a
significant ownership interest in and served as the Chairman of Total
Warehousing, Inc., a commercial warehousing and local transportation business
located in Phoenix, Arizona. Mr. Knight sold his interest in Total
Warehousing to a third party in June 2004. Mr. Knight was employed by
Swift or related companies from 1969 to 1985, where he was a Vice
President. Mr. Knight is a director of the Biltmore Bank of
Arizona.
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Michael
Garnreiter, 56
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Director
Since 2003
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Michael Garnreiter has served
as a member of our Board of Directors since September 2003. Mr.
Garnreiter currently is the managing member of Rising Sun Restaurant Group, LLC,
an eight-restaurant chain of casual dining locations. Mr. Garnreiter also is a
director and member of the audit committees of Taser International, Inc., a manufacturer of
non-lethal protection devices, Amtech Systems, Inc., a supplier of horizontal
diffusion furnace systems, and, effective February 2008, Syntax-Brillian
Corporation, a designer, developer, and
distributor of high-definition televisions. From 2002 through
2006, Mr. Garnreiter served as the Executive Vice President, Treasurer, and
Chief Financial Officer of Main Street Restaurant Group, Inc., a publicly held
restaurant operating company. Prior to joining Main Street, Mr.
Garnreiter served as a general partner of Arthur Andersen
LLP. Mr. Garnreiter began his career with Arthur Andersen in
1974 after graduating with a Bachelor of Science degree in accounting from
California State University at Long Beach. In 1986, he became the
managing partner of Arthur Andersen's Tucson, Arizona office. Mr.
Garnreiter is a Certified Public Accountant in California and
Arizona.
Kevin
Knight, our Chairman and Chief Executive Officer, and Keith Knight, one of our
executive officers, are brothers and are cousins of Randy Knight and Gary
Knight, who also are brothers.
Applicable Corporate Governance
Requirements
Our
Common Stock has been listed on the New York Stock Exchange (the "NYSE") since
December 30, 2004, and we are subject to the listing standards, including
those relating to corporate governance. Prior to listing on the NYSE,
our Common Stock was listed on the Nasdaq National Market ("NASDAQ"), and we
were subject to the NASDAQ listing standards, including those related to
corporate governance.
Corporate Governance Guidelines
Our Board
of Directors has adopted corporate governance guidelines to further its goal of
providing effective governance of our business and affairs for the long-term
benefit of our shareholders. A copy of the corporate governance
guidelines is available free of charge on the Shareholder Relations section of
our corporate website at http://www.knighttrans.com and is available in print to
any shareholder who requests it. The Nominating and Corporate Governance
Committee is responsible for periodically reviewing the corporate governance
guidelines and recommending changes as appropriate to ensure the effective
functioning of our Board of Directors and high quality corporate
governance.
The Board
of Directors has adopted a Code of Ethical Conduct that applies to all of our
directors, officers, and employees. In addition, we maintain a Policy
Governing Responsibilities of Financial Managers and Senior Officers (the
"Financial Responsibilities Policy") that applies to our senior executive
officers (Executive Vice President or above), Chief Financial Officer, Chief
Accounting Officer, Controller, and any other employees who are responsible for
the management of our funds or for the operation and maintenance of our
financial accounting and reporting system. The Code of Ethical
Conduct and Financial Responsibilities Policy includes provisions applicable to
our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions, which
constitute a "code of ethics" within the meaning of Item 406(b) of
Regulation S-K. Copies of the Code of Ethical Conduct and Financial
Responsibilities Policy are available free of charge on the Shareholder
Relations section of our website at http://www.knighttrans.com
and are available in print to any shareholder who requests them.
The Board of Directors and Its Committees
Meetings of the Board of
Directors. During the year ended December 31, 2007,
our Board of Directors met on four regularly scheduled occasions and did not
hold any special meetings. Each of the directors, other than Randy
Knight, attended 75% or more of the meetings of the Board of Directors and the
meetings held by all of the committees of the Board on which he or she
served. Mr. Randy Knight's absence from Board meetings during 2007
was due to a medical condition. We encourage our directors to attend
our Annual Meetings of Shareholders. Eight of our then-current
directors attended the 2007 Annual Meeting of Shareholders.
Independent
Directors. In accordance with NYSE Rule 303A.02(a), the Board
of Directors affirmatively determines the independence of each director after
reviewing the findings and recommendations of the Nominating and Corporate
Governance Committee. Upon the recommendation of the Nominating and
Corporate Governance Committee, the Board has determined that Donald A. Bliss,
G.D. Madden, Michael Garnreiter, Mark Scudder (who resigned as a member of
the Board of Directors effective November 9, 2007), Kathryn L. Munro, and
Richard J. Lehmann are independent (collectively, the "Independent
Directors"). Except in their capacities as directors or as holders of
an immaterial amount of securities of other entities, neither Mr. Bliss, Mr.
Madden, Mr. Garnreiter, nor Ms. Munro either directly or in his or her
capacity as a partner, shareholder, officer, or similar position of another
organization, has or in the past three years had any business or financial
relationship with us or any of our subsidiaries. Mr. Scudder is
president of a law firm to which we paid approximately $207,000 for legal
services in 2007 and which currently provides legal services to
us. Based upon information regarding the law firm's total revenues
for each of the past three years supplied by Mr. Scudder, the Board of Directors
has determined that the relationship between us and Mr. Scudder is not
material. See "Certain Relationships
and Related Transactions" for additional information concerning our financial
relationships with Mr. Scudder. None of the Independent Directors or any of
their immediate family members has or had any of the disqualifying relationships
with us or our subsidiaries specified in NYSE Rule 303A.02(b).
Executive
Sessions. In 2007, pursuant to NYSE Rule 303A.03, our
Independent Directors held two meetings, referred to as "executive sessions," at
which only the Independent Directors were present. The Chairman of the
Nominating and Corporate Governance Committee acts as the presiding director for
all executive sessions. Mr. Bliss currently serves as the Chairman of
the Nominating and Corporate Governance Committee and will continue in that
capacity following the Annual Meeting. Our non-management directors, who are
comprised of the Independent Directors and Mr. Randy Knight, met once in
2007. Our non-management directors and independent directors will
each continue to hold at least one meeting annually at which only independent
and non-management directors are present, respectively.
Communication with
Directors. Our Board of Directors provides a process for
shareholders to send written communications to the entire Board or to individual
directors. To send a communication to the entire Board of Directors,
your communication should be addressed as follows: The Board of Directors,
Knight Transportation, Inc., c/o David A. Jackson – Secretary, 5601 West Buckeye
Road, Phoenix, Arizona 85043. Written communications addressed in
this manner will be copied and distributed to each director at or prior to the
next Board meeting. If you wish to communicate with an individual
director, your communication should be addressed as follows: Name – Director,
Knight Transportation, Inc., c/o David A. Jackson – Secretary, 5601 West Buckeye
Road, Phoenix, Arizona 85043. Written communications received in this
manner will not be opened, but rather delivered unopened to the director to whom
they are addressed at or prior to the next Board meeting, following clearance
through normal security procedures.
In
addition, we provide a method for concerned parties to communicate directly with
our non-management directors. Any person wishing to contact our
non-management directors may contact these directors through our presiding
non-management director, the Chairman of the Nominating and Corporate Governance
Committee, whose contact information may be obtained by writing our Secretary,
David A. Jackson, at the address set forth above or by calling our Investor
Relations Department at telephone number (602) 606-6224.
The Board
of Directors has standing Audit, Nominating and Corporate Governance,
Compensation, and Executive Committees. The Board does not maintain
any other standing committees. The following table sets forth the
membership of each of the standing committees of the Board of Directors as of
February 29, 2008.
|
Name
|
Audit
Committee
|
Nominating
and
Corporate
Governance
Committee
|
Compensation
Committee
|
Executive
Committee
|
|
Donald
A. Bliss
|
X
|
X
|
X
|
|
|
G.D.
Madden
|
X
|
X
|
||
|
Michael
Garnreiter
|
X
|
|||
|
Kevin
P. Knight
|
X
|
|||
|
Gary
J. Knight
|
X
|
|||
|
Kathryn
L. Munro
|
X
|
X
|
X
|
|
|
Richard
J. Lehmann
|
X
|
X
|
Purpose, Functions, Composition, and
Meetings. The primary purpose of the Audit Committee is to
assist the Board of Directors in its oversight of:
|
•
|
the
integrity of our financial statements;
|
|
•
|
the
qualifications, independence, and performance of our independent
registered public accounting firm; and
|
|
•
|
our
compliance with legal and regulatory requirements related to financial
reporting.
|
As more
fully outlined in the Audit Committee's charter, the primary functions of the
Audit Committee include:
|
•
|
making
determinations regarding the selection and retention of our independent
registered public accounting firm and reviewing and pre-approving such
firm's fees and the proposed scope of its services; and
|
|
•
|
reviewing,
and meeting with our management, internal auditors, and independent
registered public accounting firm, as applicable, to discuss, our
financial statements and financial and related disclosures, accounting
policies and principles, systems of internal control, and financial
reporting processes.
|
Messrs.
Bliss, Madden, and Garnreiter currently serve on the Audit Committee, and Mr.
Garnreiter serves as the Chairman. Each member of the Audit Committee
satisfies the independence and other audit committee membership criteria set
forth in NYSE Rule 303A.07. Specifically, each member of the Audit
Committee:
|
•
|
is
independent under NYSE Rule 303A.02;
|
|
•
|
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");
and
|
|
•
|
is
financially literate, as our Board of Directors has interpreted such
qualification in its business
judgment.
|
The Audit
Committee met five times during 2007. Each member of the Audit
Committee attended all of the Audit Committee meetings during 2007.
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, currently serves on the Audit Committee. The Board of
Directors has identified Mr. Garnreiter as an audit committee financial expert.
Mr. Garnreiter is independent, as independence for audit committee members is
defined under applicable NYSE rules.
Audit Committee
Charter. A copy of the Audit Committee's current charter is
available free of charge on the Shareholder Relations section of our website at
http://www.knighttrans.com and is available in print to any shareholder who
requests it.
Report of the Audit
Committee. In performing its duties, the Audit Committee, as
required by applicable rules and regulations promulgated by 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 relating to
certain other matters, including the independence of our independent registered
public accounting firm. The Report of the Audit Committee
follows.
The Report of the Audit Committee
shall not be deemed to be incorporated by reference into any filing made by us
under the Securities Act of 1933 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 Audit
Committee oversees the accounting and financial reporting processes of the
Company and the audit of the financial statements of the Company. Management of
the Company has primary responsibility for the Company's financial statements
and the overall reporting process, including maintenance of the Company's
systems of internal control. The Company retains an independent registered
public accounting firm that is responsible for conducting an independent audit
of the Company's financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States), and issuing a report
thereon.
In
undertaking its responsibilities, the Audit Committee has discussed the
Company's financial statements 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
the independent registered public accounting firm.
For the
fiscal year ended December 31, 2007, the Audit Committee has reviewed and
discussed the audited financial statements with management and Deloitte &
Touche LLP, the Company's independent registered public accounting
firm. Specifically, the Audit Committee has discussed with the
independent registered public accounting firm the matters required to be
discussed by Statement on Auditing Standards No. 114, as amended, "The Auditor's Communication with
those Charged with Governance" and Rule 2-07 of Regulation S-X "Communication With Audit
Committees,"
which include, among other things:
|
•
|
methods
used to account for significant unusual transactions;
|
|
•
|
the
effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or
consensus;
|
|
•
|
the
process used by management in formulating particularly sensitive
accounting estimates and the basis for the accounting firm's conclusions
regarding the reasonableness of those estimates; and
|
|
•
|
disagreements
with management over the application of accounting principles, the basis
for management's accounting estimates, and the disclosures in the
financial statements.
|
The Audit
Committee has received the written disclosures from the independent registered
public accounting firm required by Independence Standards Board Standard No. 1
"Independence Discussions with
Audit Committees" and discussed with the independent registered public
accounting firm its independence.
Based on
the foregoing reviews and discussions, 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 year ended December 31, 2007, for
filing with the Securities and Exchange Commission.
Michael Garnreiter,
Chairman
G.D. Madden,
Member
Donald A. Bliss,
Member
Purpose, Functions, Composition, and
Meetings. In February 2003, the Board of Directors established
a nominating committee to recommend to the Board potential candidates for
election as directors. In November 2004, the nominating committee was
reconstituted as the Nominating and Corporate Governance
Committee. Mr. Lehmann, Ms. Munro, and Mr. Bliss currently serve on
the Nominating and Corporate Governance Committee, and Mr. Bliss serves as
Chairman.
The
purposes of the Nominating and Corporate Governance Committee are to assist the
Board of Directors in improving our corporate governance, to train members of
the Board, to improve the Board's governance functions, and to assist us in
obtaining the highest quality independent directors. As more fully
detailed in the Nominating and Governance Committee's charter, the primary
functions of the committee include:
|
•
|
evaluating
the composition of the Board and selecting and recommending nominees for
election or reelection to the Board or for appointment to fill Board
vacancies;
|
|
•
|
developing
and implementing regular and emergency succession plans for our senior
management positions; and
|
|
•
|
reviewing
and developing policies or making recommendations concerning other aspects
of our corporate governance, such as the Board's committee structure, our
corporate governance guidelines, director training and evaluation
programs, and potential conflicts of
interest.
|
All
current members of the Nominating and Corporate Governance Committee are
independent, as independence for nominating committee members is defined under
applicable NYSE rules. In 2007, the Nominating and Corporate Governance
Committee held one meeting.
The
Nominating and Corporate Governance Committee met in March 2008 and approved the
nomination of Donald
A. Bliss and Richard J. Lehmann as Class I directors and recommended
their election. Both nominees are presently directors and have
consented to stand for re-election.
Nominating and Corporate Governance
Committee Charter. A copy of the Nominating and Corporate
Governance Committee's current charter is available free of charge on the
Shareholder Relations section of our website at http://www.knighttrans.com and
is available in print to any shareholder who requests it.
Process for Identifying and
Evaluating Director Nominees. Director nominees are chosen by
the Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee reviews the qualifications of various persons to
determine whether they should be considered as candidates for membership on the
Board of Directors. The Nominating and Corporate Governance Committee also
accepts recommendations of director candidates from our other outside directors
and our executive officers, advisors, and shareholders. We do not pay
a fee to any third party to identify or evaluate or assist in identifying or
evaluating potential nominees.
The
Nominating and Corporate Governance Committee reviews all candidate
recommendations, including those properly submitted by shareholders, in
accordance with the mandate contained in its charter. The Nominating
and Corporate Governance Committee assesses a candidate's judgment, integrity,
independence, management or business skills and experience (particularly with
public companies and companies in our industry or other industries related to
our business), prominence and reputation in their profession, knowledge of
corporate governance issues and Board functions, commitment to attend and
actively participate in meetings and related Board activities, other commitments
and responsibilities, and such other factors as the Nominating and Corporate
Governance Committee determines are appropriate in light of our needs and the
needs of the Board. With regard to specific qualities and skills, the
Nominating and Corporate Governance Committee believes it is necessary that:
(i) at least a majority of the members of the Board of Directors qualify as
"independent" under NYSE Rule 303A.02; (ii) at least three members of the
Board of Directors satisfy the audit committee membership criteria specified in
NYSE Rule 303A.07; 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 the qualifications and considerations described above, our corporate
governance guidelines contain the following director eligibility criteria that
impact the director nomination process:
|
•
|
a
mandatory retirement age of 82 for all directors, subject to waiver by a
majority of the Board;
|
|
•
|
director
term limits of 20 years, following March 2, 2005, for all directors,
subject to waiver by a majority of the Board;
|
|
•
|
no
director may serve on more than five public company boards of directors,
including our Board; and
|
|
•
|
our
Chief Executive Officer may not serve on more than two other public
company boards of directors in addition to our
Board.
|
Consideration of Director Candidates
Recommended by Shareholders. The Nominating and Corporate
Governance Committee will consider director candidates recommended by
shareholders, provided that the following procedural requirements are
satisfied. Candidate recommendations should be mailed via certified
mail, return receipt requested, and addressed to the Nominating and Corporate
Governance Committee, Knight Transportation, Inc., c/o David A. Jackson –
Secretary, 5601 West Buckeye Road, Phoenix, Arizona 85043. To be
considered, a shareholder recommendation must: (i) be received at least 120 days
prior to the first anniversary of the date of the proxy statement for the prior
year's Annual Meeting (by December 12, 2008 for director candidates to
be considered for nomination for election at the 2009 Annual Meeting of
Shareholders); (ii) contain sufficient background information, such as a resumé
and references, to enable the Committee to make a proper judgment regarding the
qualifications of the proposed nominee; (iii) be accompanied by a signed consent
of the proposed nominee to serve as a director if elected and a
representation that such proposed nominee qualifies as "independent" under NYSE
Rule 303A.02 or, if the proposed nominee does not qualify, a description of the
reason(s) he or she is not "independent"; (iv) state the name and address of the
person submitting the recommendation and the number of shares of our Common
Stock owned of record or beneficially by such person; and (v) if submitted by a
beneficial shareholder, be accompanied by evidence that the person making the
recommendation beneficially owns shares of our Common Stock.
Purpose, Functions, Composition, and
Meetings. The Compensation Committee reviews, analyzes,
recommends, and approves all aspects of executive compensation. As
more fully outlined in the Compensation Committee's charter, the primary
responsibilities of the Compensation Committee include:
|
•
|
reviewing
and approving corporate goals and objectives relating to the compensation
of the Chief Executive Officer, evaluating the Chief Executive Officer's
performance in light of those objectives, and determining and approving
the Chief Executive Officer's compensation based upon this
evaluation;
|
|
•
|
reviewing
and making recommendations to the Board regarding the compensation of our
other executive officers;
|
|
•
|
reviewing
and approving all forms of incentive compensation, including stock options
and other stock-based awards to our executive officers;
and
|
|
•
|
administering
our stock option plan, as in effect from
time-to-time.
|
During
2007, Mr. Madden, Mr. Lehmann, and Ms. Munro, served on the Compensation
Committee, and Ms. Munro served as Chairperson. Each of these
individuals are currently members of the Compensation Committee. The
Compensation Committee met twice in 2007. See "Executive
Compensation –
Compensation Discussion and Analysis" for a discussion of, including the role
the Compensation Committee and our executive officers have in implementing, our
processes and procedures for recommending and setting executive and director
compensation.
Compensation Committee
Charter. A copy of the Compensation Committee's current
charter is available free of charge on the Shareholder Relations section of our
website at http://www.knighttrans.com and is available in print to any
shareholder who requests it.
Report of the Compensation
Committee. 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
Report of the Compensation
Committee follows.
The Report of the Compensation
Committee shall not be deemed to be incorporated by reference into any filing
made by us under the Securities Act of 1933 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 for the year ended
December 31, 2007.
Kathryn Munro,
Chairperson
G.D. Madden,
Member
Richard J. Lehmann,
Member
None of
the current members of the Compensation Committee have been, or are, one of our
officers or employees. During 2007, 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. See "Certain Relationships
and Related Transactions" for a description of certain transactions between us
and our directors and executive officers, or their affiliates, and "Executive
Compensation – Director Compensation" for a description of the compensation of
the members of the Compensation Committee.
The
Executive Committee is authorized to act on behalf of the Board of Directors
when the Board of Directors is not in session. Prior to Mr. Scudder
resigning from the Board in November 2007, the Executive Committee was comprised
of Messrs. Scudder, Kevin Knight, Gary Knight, and Bliss. The
Executive Committee did not meet during 2007. The current members of
the Executive Committee include Messrs. Kevin Knight, Gary Knight, and
Bliss and Ms. Munro. Ms. Munro became a member of the Executive
Committee in February 2008.
Director Evaluation
Program. The Nominating and Corporate Governance Committee is
responsible for developing and implementing a director evaluation program to
measure the individual and collective performance of directors and the
fulfillment of their responsibilities to our shareholders, including an
assessment of the Board's compliance with applicable corporate governance
requirements and identification of areas in which the Board might improve its
performance. The Nominating and Corporate Governance Committee also
is responsible for developing and recommending to the Board of Directors for
approval an annual self-evaluation process for the Board designed to assure that
directors contribute to our corporate governance and to our
performance.
Director Orientation and
Training. The Nominating and Corporate Governance Committee is
responsible for developing and implementing an orientation program for new
directors. Under this program, we provide new, non-management
directors a variety of materials to assist them in familiarizing themselves with
our business, management structure, and operations and key legal, financial,
risk management, and operational issues, as well as the policies, procedures,
and responsibilities of the Board and its committees. New,
non-management directors also meet with members of our senior management and
other non-management directors as part of their orientation. We
periodically provide materials to directors on various subjects to assist them
in understanding our business and operations and in effectively discharging
their duties.
Authority to Engage
Advisors. Each of the Audit Committee, the Nominating and
Corporate Governance Committee, and the Compensation Committee is conferred by
its charter with explicit authority to engage its own independent advisors,
including legal counsel.
Management Succession
Planning. The Board of Directors has adopted a management
succession plan that identifies emergency and potential long-term successors to
our Chief Executive Officer, President, Chief Financial Officer, and certain
other key members of senior management. The Nominating and Corporate Governance
Committee, following consultation with our Chief Executive Officer, is
responsible for giving an annual report to the Board of Directors with regard to
management succession planning. After reviewing this report and
consulting with the members of the Nominating and Corporate Governance Committee
and the Chief Executive Officer, the Board of Directors makes any changes or
updates to the management succession plan that it determines are
appropriate.
The
following table sets forth, as of March 31, 2008, certain information regarding
our executive officers and Michael K. Liu, Erick Kutter, Greg Ritter, and Bill
Ramsey, four significant employees.
|
Name
|
Age
|
Position
|
||
|
Kevin
P. Knight
|
51
|
Chairman
of the Board and Chief Executive Officer
|
||
|
Gary
J. Knight
|
56
|
Vice
Chairman of the Board
|
||
|
Keith
T. Knight
|
53
|
Chief
Operating Officer
|
||
|
David
A. Jackson
|
32
|
Chief
Financial Officer, Secretary, and Treasurer
|
||
|
Casey
Comen
|
54
|
Executive
Vice President of Sales
|
||
|
Michael
K. Liu
|
35
|
President
of Knight Transportation – Dry Van
|
||
|
Erick
Kutter
|
40
|
President
of Knight Refrigerated, LLC
|
||
|
Greg
Ritter
|
49
|
President
of Knight Brokerage, LLC
|
||
|
Bill
Ramsey
|
48
|
Senior
Vice President of Business
Development
|
Keith T. Knight has served as our Chief
Operating Officer since May 2006. Prior to his appointment as Chief
Operating Officer, Mr. Knight served as our Executive Vice President from 1993
until May 2006, and has been one of our officers since 1990. He
served as a director of our Board of Directors from 1990 to
2004. From 1977 until 1990, Mr. Knight was employed by Swift,
where he was a Vice President and Manager of Swift's Los Angeles
terminal.
David A. Jackson joined us in
April 2000. He has served as our Chief Financial Officer since
January 2004, as our Treasurer since May 2006, and our Secretary since
November 2007. Mr. Jackson served as our Corporate Purchasing Manager
from April 2000 until July 2002, and as the Owner Operator Program Director from
July 2002 until January 2004.
Casey Comen has served as our
Executive Vice President of Sales since March 2004. Prior to joining
us, Mr. Comen was employed by Swift, where he most recently served as the Vice
President of Sales and Marketing from 1997 through January 2004.
Michael K. Liu was appointed
President of the Knight Transportation – Dry Van in April 2007. Prior
to his appointment as President of Knight Transportation – Dry Van, Mr. Liu
served as a division manager for our Southern California Division since December
2003. Mr. Liu also served as a training manager for our driver
development department from January 2000 to December 2003.
Erick Kutter joined us in
February 1993. He has served as the President of Knight Refrigerated,
LLC, our asset-based refrigerated business, since July 2004. Prior to
his appointment as President of Knight Refrigerated, Mr. Kutter was responsible
for opening our service centers in Katy, Texas, Kansas City, Kansas, and
Atlanta, Georgia. Mr. Kutter also served as the division manager of
our service center in Indianapolis, Indiana from July 1998 to April
2001.
Greg Ritter joined us in
2005. He has served as the President of Knight Brokerage, LLC, our
non-asset based brokerage business, since the opening of our brokerage business
in 2005. He began his career in 1979 with C.H.Robinson Worldwide, where he was
the branch manager for the Phoenix office for 18 years.
William "Bill" Ramsey joined
us in April 2000 as part of the acquisition of Fastway Systems. He has served as
Senior Vice President of Business Development, since October 2007. Prior to this
assignment he served as Divisional Sales Manger and Division Manger in our
Gulfport Division from April 2000 thru November 2006. Mr. Ramsey also served as
our South West Regional Vice President from November 2006 to April 2007 where he
served as General Manger of the South East from April 2007 thru October 2007.
See "Continuing Directors"
for information concerning the business experience of Kevin P. Knight and Gary
J. Knight.
Compliance with Section 16(a) of the Exchange
Act
Section
16(a) of the Exchange Act requires our directors and executive officers, and
persons who own more than 10% of a registered class of our equity securities, to
file with the SEC reports of ownership and changes in ownership of our Common
Stock and other equity securities. Our officers, directors, and
greater than 10% beneficial owners 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 reports furnished to us, or written representations
that no other reports were required, we believe that during the 2007 fiscal
year, all Section 16(a) filing requirements applicable to our directors,
executive officers, and greater than 10% beneficial owners were complied with,
except that (i) Donald A. Bliss inadvertently failed to timely report on Form 4
the sale of shares, which occurred in June 2007, and (ii) Erick Kutter
inadvertently failed to timely report on Form 4 the exercise of six different
option grants on December 11, 2007, and the associated acquisition and sale of
all shares received upon exercise. All such transactions have been
reported in subsequent filings. Copies of Section 16(a) forms that
our directors and executive officers file with the SEC are accessible through
the Shareholder Relations section of our website at
http://www.knighttrans.com.
The
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 Chief Executive Officer, (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
shareholders. The Compensation Committee also reviews and approves
all forms of 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.
We
believe that the quality, skills, and dedication of our executive officers are
critical factors affecting our long-term value and success. Our
primary executive compensation goals include attracting, motivating, and
retaining qualified executive officers who create long-term value for our
shareholders. We seek to accomplish this goal by rewarding past
performance, incentivizing future performance, and aligning our executive
officers' long-term interests with those of our shareholders. Our
compensation program is specifically designed to reward our executive officers
for individual performance, years of experience, contributions to our financial
success, and creation of shareholder value. Our compensation
philosophy is to provide overall compensation levels that (i) attract and retain
talented executives and motivate those executives to achieve superior results,
(ii) align executives' interests with our corporate strategies, our business
objectives, and the long-term interests of our shareholders, and (iii) enhance
executives' incentives to increase our stock price and maximize shareholder
value. In addition, we strive to ensure that our compensation,
particularly salary compensation, is consistent with our constant focus on
controlling costs. Our primary strategy for building senior
management depth has been to develop personnel from within our Company to ensure
that our executive team as a whole remains dedicated to our customs, practices,
and culture, recognizing, however, that we may gain talent and new perspectives
from external sources. Accordingly, in many instances we build our
compensation elements around long-term retention and development together with
annual rewards based on specific focus areas.
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 (as defined below), consists of one or
more of the following components: (i) base salary, (ii) incentive compensation,
which may include a performance-based annual cash bonus and long-term equity
incentives in the form of stock options and other stock-based awards or grants,
(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 (i) fair and reasonable to us, (ii) internally appropriate
based upon our culture and the compensation of our other employees, and (iii)
within a reasonable range of the compensation afforded by other
opportunities. The Compensation Committee also bases its decisions
regarding compensation upon its assessment of the executive's leadership,
integrity, individual performance, years of experience, skill set, level of
commitment and responsibility required in the position, contributions to our
financial success, the creation of shareholder 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 culture of cost control and high
level of performance, the Compensation Committee historically has attempted to
keep base salaries relatively low and weight overall compensation toward
incentive cash and equity-based compensation. The Compensation
Committee specifically considers whether each particular element provides an
appropriate incentive and reward for performance that sustains and enhances
long-term shareholder value. The Compensation Committee also
considers the tax consequences associated with each element of compensation,
including whether the deductibility of compensation is expected to be limited
under Section 162(m) of the Internal Revenue Code. 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 at public
companies, and the historical compensation levels of the executive officers,
and, with respect to executives other than the CEO, we consider the
recommendations of the CEO. We generally do not rely on rigid
formulas (other than performance measures under our annual cash 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 Chief Executive Officer, Chief Financial Officer, and our four other
most highly compensated executive officers, for the fiscal year ended December
31, 2007 (collectively, the "Named Executive Officers").
We pay
base salaries at levels that reward executive officers for ongoing performance
and that enable us to attract and retain highly qualified executives, but not at
a level that allows them to achieve the overall compensation they
desire. 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 shareholder value and on our other
business objectives. In determining base salaries, we consider the
executive's current salary and the executive's qualifications and experience,
including, but not limited to, the executive's length of service with our
Company, the executive's industry knowledge, and the quality and effectiveness
of the executive's leadership, integrity, scope of responsibilities, dedication
to our shareholders and Company, past performance, and future potential of
providing value to our shareholders. We do not formally benchmark
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. 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 cash bonuses and long-term
incentives, and perquisites. We believe this mix of compensation
helps us incentivize our executives to maximize shareholder value in the long
run. We consider adjustments to base salaries annually to reflect the
foregoing factors but do not apply a specific weighting to such
factors.
On
December 21, 2005, our shareholders approved and ratified our 2005 Executive
Cash Bonus Plan ("Cash Bonus Plan"). We use our Cash Bonus Plan to provide
annual incentives to executive officers in a manner
designed
to (i) link increases in compensation to increases in our income in order
to reinforce cost controls, (ii) reinforce our performance goals, and
(iii) link a significant portion of our executives' compensation to the
achievement of such goals. We also use the Cash Bonus Plan to
preserve for our benefit a federal tax deduction for payments of incentive
compensation to our executive officers. Cash bonuses 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.
Under the
Cash Bonus Plan, the Compensation Committee is required to set, for each
executive officer, one or more objective performance targets. The
annual cash bonus amount awarded to each executive officer is primarily
dependent upon us reaching or exceeding specified, objective performance
targets. Performance targets may be based on the attainment of
specified levels of one or any variation or combination of the factors listed in
the Cash Bonus Plan. Corporate performance targets are typically
established on a combined basis of sales and earnings growth targets in order to
align cash compensation payments with our performance and the creation of
shareholder value. Additionally, individual performance targets may
be based on the successful implementation of corporate 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 Compensation Committee also reserves the right to
award cash bonuses for achievements in leadership, innovation, initiative, and
other non-objective performance indicia outside the Cash Bonus
Plan. These awards are made on a discretionary basis and are
unrelated to the attainment of the Cash Bonus Plan's objective, performance
criteria. The Compensation Committee sets the specific performance
targets for each executive officer after (i) engaging in active dialog with
our CEO concerning our strategic objectives and performance, and
(ii) reviewing the appropriateness of the financial measures used in the
Cash Bonus Plan.
Concurrently
with establishing the performance targets, the Compensation Committee also
establishes a maximum cash bonus award opportunity for each executive
officer. An executive's maximum cash bonus award opportunity may not
exceed the plan maximum of $2 million annually (however, the maximum award
approved for any executive has never exceeded $354,000). In
determining an executive officer's maximum cash bonus opportunity, the
Compensation Committee considers (i) the value that achieving specific
performance targets will add to our shareholders, (ii) the degree of difficulty
in achieving specific performance targets, and (iii) each of the other elements
comprising the executive's total compensation. When calculating the
cash bonus earned by an executive officer, the Compensation Committee may, in
its sole discretion, eliminate or reduce the size of a bonus if it deems such
action is appropriate but may not increase a bonus above the executive's maximum
cash bonus opportunity. Further, the Compensation Committee is
required to certify, prior to payment, that the executive officer achieved the
respective performance targets underlying the cash bonus. Under a
policy adopted by the Compensation Committee in 2008, two-thirds of a Named
Executive Officer's total cash bonus opportunity will be determined under the
Cash Bonus Plan and one-third is subject to discretionary awards made by the
Compensation Committee, after taking into account the recommendations of the CEO
and such non-objective criteria as leadership, innovation, initiative, and other
non-objective performance indicia that are of value to us and our
shareholders.
On
December 21, 2005, our shareholders approved and ratified our Amended and
Restated 2003 Stock Option Plan (the "Amended and Restated 2003
Plan"). The Amended and Restated 2003 Plan is a broad-based equity
compensation plan that we use to attract, motivate, and retain qualified
executive officers by providing them with long-term incentives. We
also use the Amended and Restated 2003 Plan to align our executives' and
shareholders' long-term interests by creating a strong, direct link between
executive compensation and shareholder return.
The
Amended and Restated 2003 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 stock
options, 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 shareholder value over an extended period of time because the value
received from such awards is based on the growth of the stock price above the
grant price. Such awards also incentivize executives to remain with
us over an extended period of time. Thus, we believe the Amended and
Restated 2003 Plan is an effective way of aligning the interests of our
executive officers with those of our shareholders.
Under the
Amended and Restated 2003 Plan, the Compensation Committee may grant stock
options or award restricted stock as forms of executive officer
compensation. To date, the Compensation Committee has only awarded
stock options to our Named Executive Officers under the Amended and Restated
2003 Plan because the Committee believes that stock options have historically
been an effective means of incentivizing executive officers to work toward, and
rewarding them for, increasing shareholder value. Further, the
Compensation Committee prefers stock options as a method of equity compensation,
rather than restricted stock, because we have over 1,000 participants in our
stock option program and the Compensation Committee believes there is value in
maintaining a consistent incentive throughout the organization. The
Compensation Committee recognizes a broad trend toward some level of restricted
stock grants and may, in its discretion, award restricted stock in the
future.
The
Compensation Committee considers several factors when determining the number of
options to award to our executive officers, including (i) the
recommendations of our CEO; (ii) the value of the option in relation to
other elements of total compensation; (iii) the number of options currently held
by the executive; (iv) the number of options granted to the executive in
prior years; and (v) the executive's position, scope of responsibility,
ability to affect our profits, ability to create shareholder value, and historic
and recent performance. The Compensation Committee also has approved
a policy whereby the primary grant of options or restricted stock to our Named
Executive Officers will be made on the date of the Annual Meeting of
Shareholders. Options granted under the Amended and Restated 2003
Plan (i) have a grant date that is established when the Compensation
Committee approves the grant and all key terms have been determined, (ii) have
an exercise price equal to the fair market value of the underlying Common Stock
on the date of the grant, (iii) are subject to a vesting schedule,
(iv) are exercisable for a maximum term of 10 years, and (v) once
made, may not be repriced. Additional information concerning the
Amended and Restated 2003 Plan is set forth under "Proposal No. 2 – Approval of
the Second Amendment to the Amended and Restated 2003 Stock Option
Plan."
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
generally constitute only a small percentage of each executive's total
compensation, with the exception being the air travel allowance for our CEO as
described below. 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 Named
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.
Compensation Paid to Our Named Executive
Officers
Mr. Kevin
Knight has been our CEO since 1993 and has served as Chairman of the Board since
1999. Since Mr. Knight became our CEO, we have achieved considerable
growth in revenue, earnings, and market value. We have been named to Forbes Magazine's list of the
"200 Best Small Companies in America" for thirteen consecutive years and Mr.
Knight has managed our growth and development during that time. In
discussions with the CEO, the Compensation Committee determined that the
following items were most important to motivating continued performance from the
CEO: (i) a base salary that is commensurate with his level of
responsibility and commitment to our Company, but not so high that it would
undermine the cost-control culture of our Company, (ii) a significant
amount of equity compensation to align the CEO's compensation with increasing
shareholder value, and (iii) a travel allowance that would
permit use of private aircraft at the CEO's discretion to manage far-flung
operations without unduly affecting his availability for business or damaging
his lifestyle. Mr. Knight does not participate in the determination
of his own compensation.
Based on
the Compensation Committee's consideration of the foregoing factors and at the
request of the CEO, the Compensation Committee determined not to increase Mr.
Knight's salary for 2007. Thus, Mr. Knight's salary for 2007 remained
constant at $590,000.
For 2007,
the Compensation Committee also approved a maximum performance-based cash bonus
opportunity under which Mr. Knight was eligible to receive a cash bonus of up to
60% of his base salary for 2007. The percentage of salary assigned to
Mr. Knight's potential bonus was based on the Compensation
Committee's
evaluation
of (i) the magnitude of Mr. Knight's ability to impact corporate performance
based on his responsibilities, (ii) the composition of Mr. Knight's total
compensation package, including the fact that his salary remained constant for
2007, and (iii) our long-term profitability and earnings goals. Mr.
Knight's potential bonus as a percentage of his salary was greater than the
other Named Executive Officer's because the Compensation Committee believed
that, based upon his responsibilities, Mr. Knight had a greater ability to
impact corporate performance than the other Named Executive
Officers.
The
Compensation Committee set performance targets ("CEO Performance Targets") for
Mr. Knight that were tied to us achieving certain financial and operating
benchmarks (20% of his maximum bonus as a percentage of his salary was tied to
achieving revenue growth of 12.5%; 20% of his maximum bonus as a percentage of
his salary was tied to achieving earnings growth of 12.5%; 6.7% of his maximum
bonus as a percentage of his salary was tied to having a dry van operating ratio
of 80.0%; 6.7% of his maximum bonus as a percentage of his salary was tied to
having a refrigerated operating ratio of 85.0%; and 6.7% of his maximum bonus as
a percentage of his salary was tied to having a brokerage operating ratio of
90.0%). The Compensation Committee also set intermediate benchmarks
relative to each CEO Performance Target to help the Compensation Committee
determine the appropriate cash bonus to the extent the full CEO Performance
Target was not achieved. The Compensation Committee also determined
that in the event earnings per diluted share ("EPS") growth of 12.5% was
achieved, all CEO Performance Targets would be deemed satisfied and the maximum
cash bonus would be awarded to Mr. Knight. The Compensation Committee
believed that the CEO Performance Targets, specifically the growth in EPS,
represented aggressive, yet achievable goals for Mr. Knight to earn 100% of the
maximum cash bonus award. In addition to the maximum bonus
opportunity, as described above, the Compensation Committee created specific
parameters for awarding cash bonus compensation within certain incremental
ranges of achievement of the CEO Performance Targets. See "Compensation Paid to Our
Other Named Executive Officers" for a description of these incremental
ranges.
The
Compensation Committee met in March 2008 to discuss, review, and approve the
2007 cash bonus awards for the Named Executive Officers, including Mr. Kevin
Knight. The Committee reviewed the foregoing policies, our financial
and operating performance, and the CEO Performance Targets with the CEO and the
Chief Financial Officer. After determining that due to the difficult
economic environment we had only partially achieved a number of the objective
goals, and at the suggestion of the CEO, the Compensation Committee exercised
negative discretion, as permitted by the Cash Bonus Plan, and reduced the cash
bonus compensation that would have been payable to Mr. Kevin Knight to $45,000
from $78,682. The CEO and the Compensation Committee recognized that,
while our Company's earnings and certain other goals had not been achieved, the
management team had worked extraordinarily hard, despite the fact that 2007
represented a continuation of one of the most difficult operating environments
in several years (including continued weakness in the truckload market due to
excess capacity and the lack of a strong "peak" shipping season) for the
execution of our business model, and had still achieved much better margins than
most other trucking companies. The negative discretion exercised with
regard to the CEO's cash bonus did not reflect any negative determination
concerning the CEO's performance by the Compensation Committee.
On May
24, 2007, after considering the number of options granted to Mr. Knight in prior
years and Mr. Knight's position, scope of responsibility, ability to affect our
profits, ability to create shareholder value, and historic and recent
performance, as described above, the Compensation Committee granted Mr. Knight
an option to purchase 45,000 shares our Common Stock, with an exercise price
equal to the fair market value of the underlying Common Stock on the date of the
grant.
During
2007, we also paid a pre-determined amount of $200,000 for the business-related
air travel of Mr. Knight, in his role as our CEO. Mr. Knight used the
allowance for all of his business-related air travel, whether commercial or
charter. With over 30 locations across the United States and numerous
acquisitions, investor, supplier, industry, and other destinations, Mr. Knight
was, and continues to be, required to travel by air frequently to carry out his
responsibilities. Some of this travel involved a personal component, although we
believe the personal component is immaterial compared to the business-related
travel. The Compensation Committee believes that the air-travel
allowance was reasonable because it enhances Mr. Knight's ability to carry out
his responsibilities as CEO. The Compensation Committee also
desired to avoid the complications of allocating business versus personal travel
expenses on trips with more than one function. Thus, the CEO's entire
air-travel allowance was included as compensation, with any excess being payable
personally by him. During 2007, Mr. Knight also received a vehicle
allowance of approximately $18,000. Both the air-travel allowance and
the vehicle allowance are included in the "All Other Compensation" column of the
Summary Compensation Table.
In 2007,
in addition to providing medical, dental, and group life insurance to Mr.
Knight, we also contributed $850, which represents our maximum matching
discretionary contribution per participant, to the 401(k) Plan of Mr.
Knight. We report the 401(k) contribution in the "All Other
Compensation" column in the Summary Compensation Table.
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 relies 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 2007. The form of compensation was consistent with
past years, with compensation consisting primarily of salary, cash bonus based
on the achievement of certain financial and operating goals established through
consultation with the Compensation Committee during the first quarter of the
year, and equity compensation in the form of stock options. For each of
the Named Executive Officers, the Compensation Committee considered, among other
things, our financial and operating results during 2006 and 2007, the duties and
responsibilities of each executive, and the length of time each executive has
been with us as further described in each executive's biography found
herein.
In May
2007, after reviewing our financial performance for the fiscal year ended
December 31, 2006, considering our compensation philosophy and the guidelines
described above, recognizing the difficult economic environment that the
Compensation Committee believed we would be operating in throughout 2007, and
receiving the recommendation of the CEO, the Compensation Committee determined
not to increase the base salaries of our Named Executive Officers, other than
approving a $22,500 and a $5,000 increase to Messrs. Jackson's and Keith
Knight's salaries, respectively.
The
Compensation Committee approved the salary increase for Messrs. Jackson and
Keith Knight based on the Compensation Committee's determination that in both
instances, the prior salaries were inconsistent with the time commitment and
responsibilities attendant to the position of Chief Financial Officer and Chief
Operating Officer, respectively, and the Compensation Committee believed that
the increases were merited based on standard market adjustments. The
Compensation Committee believed that the relatively large percentage increase to
the CFO's salary was justified by a low salary in prior years and also
recognized that the CFO's salary, after adjustment, remains relatively low for a
chief financial officer. In setting the CFO's salary, the
Compensation Committee specifically considered the fact that the CFO has
relatively less experience in his position, and in senior management in general,
than the other Named Executive Officers. In approving a relatively
low salary for Mr. Gary Knight, our Vice Chairman, the Compensation Committee
considered the fact that the Vice Chairman has reduced the number of hours
worked on average each week but has focused his time on matters such as
acquisitions, investments, strategic growth opportunities, and board of director
planning and functions, all of which we believe can have a significant influence
on value creation for shareholders. Accordingly, the Compensation
Committee, with the concurrence of the CEO, established a relatively lower cash
compensation level for the Vice Chairman in view of his reduced daily time
commitment.
For 2007,
the Compensation Committee also approved a maximum performance-based cash bonus
opportunity under which each of Messrs. Jackson, Keith Knight, Gary Knight, and
Comen was eligible to receive a cash bonus of up to 30% of his base salary and
Mr. Kohl was eligible to receive a cash bonus of up to 40% of his base
salary. 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 Named Executive Officer's
responsibilities at the time, (ii) the composition of the respective Named
Executive Officer's total compensation package, and (iii) our long-term
profitability and earnings goals. Mr. Kohl's potential bonus
opportunity was greater than the other Named Executive Officers because the
Compensation Committee believed that, based upon his responsibilities at the
time, Mr. Kohl had a greater ability to affect corporate performance than the
other Named Executive Officers.
Similar
to establishing the CEO Performance Targets, the Compensation Committee set
performance targets ("Performance Targets") for the Named Executive Officers,
other than the CEO, that were related to revenue growth, earnings growth, and
the operating ratio of each of our dry van, refrigerated, and brokerage
operating units. The Performance Targets assigned to each Named Executive
Officer were based upon the Compensation Committee's evaluation of each Named
Executive Officer's responsibility at the time and how the achievement of
certain goals would help us achieve leading growth and
profitability. Other than the CEO and Mr. Kohl, Each Named Executive
Officer's maximum bonus as a percentage of salary was as follows: 10% was tied
to achieving revenue growth of 12.5%; 10% was tied to achieving earnings growth
of 12.5%; 3.3% was tied to having a dry van operating ratio of 80.0%; 3.3% was
tied to having a refrigerated operating ratio of 85.0%; and 3.3% was tied to
having a brokerage operating ratio of 90.0%. Mr. Kohl's maximum bonus as a
percentage of salary was as follows: 13.3% was tied to achieving revenue growth
of 12.5%; 13.3% was tied to achieving earnings growth of 12.5%; and 13.3% was
tied to having a dry van operating ratio of 80.0%. The Compensation
Committee also set intermediate benchmarks relative to each Performance Target
to help the Compensation Committee determine the appropriate
cash
bonus to the extent the full Performance Target was not achieved. The
Compensation Committee also determined that in the event EPS growth of 12.5% was
achieved, all Performance Targets would be deemed satisfied and the maximum cash
bonus would be awarded to each Named Executive Officer. The
Compensation Committee believed that the Performance Targets, specifically the
growth in EPS, represented aggressive, yet achievable goals for the Named
Executive Officers to earn 100% of the maximum cash bonus award.
In
addition to the maximum bonus opportunity, as described above, for each Named
Executive Officer, the Compensation Committee created specific parameters for
awarding cash bonus compensation within certain incremental ranges of
achievement of the Performance Targets. The Compensation Committee
adopted the supplemental bonus criteria shown below after considering (i) our
historic cash bonus structure and (ii) the need for a more transparent,
objective method for awarding cash bonus compensation to the Named Executive
Officers.
|
2007 Named Executive Officer
Incremental Ranges of Performance Targets
(1)
|
|||||
|
Revenue
Growth Incremental Target Thresholds
|
2.5%
|
5.0%
|
7.5%
|
10.0%
|
12.5%
|
|
Bonus
Earned as a Percentage of the Maximum Bonus
|
20.0%
|
40.0%
|
60.0%
|
80.0%
|
100%
|
|
Earnings
Growth Incremental Target Thresholds
|
2.5%
|
5.0%
|
7.5%
|
10.0%
|
12.5%
|
|
Bonus
Earned as a Percentage of the Maximum Bonus
|
20.0%
|
40.0%
|
60.0%
|
80.0%
|
100%
|
|
Dry
Van Operating Ratio Incremental Target Thresholds
|
84.0%
|
83.0%
|
82.0%
|
81.0%
|
80.0%
|
|
Bonus
Earned as a Percentage of the Maximum Bonus
|
20.0%
|
40.0%
|
60.0%
|
80.0%
|
100%
|
|
Refrigerated
Operating Ratio Incremental Target Thresholds
|
89.0%
|
88.0%
|
87.0%
|
86.0%
|
85.0%
|
|
Bonus
Earned as a Percentage of the Maximum Bonus
|
20.0%
|
40.0%
|
60.0%
|
80.0%
|
100%
|
|
Brokerage
Operating Ratio Incremental Target Thresholds
|
94.0%
|
93.0%
|
92.0%
|
91.0%
|
90.0%
|
|
Bonus
Earned as a Percentage of the Maximum Bonus
|
20.0%
|
40.0%
|
60.0%
|
80.0%
|
100%
|
|
(1)
|
The
Compensation Committee did not have discretion to award cash bonuses for
partial achievement of a Performance Target, other than as set forth in
this table (i.e. if revenue growth would have been 4.8%, the bonus earned
as a percentage of the maximum bonus would have been
20.0%).
|
The
Compensation Committee met in March 2008 to discuss, review, and approve the
2007 cash bonus awards for the Named Executive Officers. The
Committee reviewed the foregoing policies, our financial and operating
performance, and the Performance Targets with the CEO and the Chief Financial
Officer. After determining that due to the difficult economic
environment we had only partially achieved a number of the objective goals and
pursuant to the established Performance Targets, the Compensation Committee
awarded the following annual cash bonuses to the Named Executive Officers:
$10,292 to Mr. Jackson, $21,912 to Mr. Keith Knight, $15,106 to Mr. Gary Knight,
and $17,264 to Mr. Comen. In connection with our movement toward more
formal operating units, the responsibilities formerly associated with Mr. Kohl's
position as President were eliminated and Mr. Kohl left our Company at the end
of October 2007. Accordingly, Mr. Kohl did not receive an annual cash
bonus for 2007.
On May
24, 2007, after considering the number of options granted to each of the Named
Executive Officers, other than the CEO, in prior years and each executive's
position, scope of responsibility, ability to affect our profits, ability to
create shareholder value, and historic and recent performance, the Compensation
Committee granted (i) Mr. Jackson an option to purchase 12,500 shares our
Common Stock, (ii) Mr. Keith Knight an option to purchase 20,000 shares our
Common Stock, (iii) Mr. Gary Knight an option to purchase 12,500 shares our
Common Stock, (iv) Mr. Comen an option to purchase 12,500 shares our Common
Stock, and (v) Mr. Kohl an option to purchase 20,000 shares of our Common
Stock. Each of the foregoing option grants has an exercise price
equal to the fair market value of the underlying Common Stock on the date of the
grant. Mr. Keith Knight's relatively higher stock option grant was in
recognition of his appointment as our Chief Operating Officer during 2006 and
the responsibilities attendant with that position and as an additional incentive
for him to use his new position to seek opportunities to create shareholder
value. Mr. Kohl forfeited his options when he left our Company.
Except
for as described above with respect to the CEO, we did not pay for the personal
air travel of any of our other executive officers, including our other Named
Executive Officers. However, similar to our CEO, our other Named Executive
Officers receive a vehicle allowance. In 2007, in addition to
providing medical, dental, and group life insurance to our Named Executive
Officers, we also contributed $850, which represents our maximum matching
discretionary contribution per participant, to the 401(k) Plan of each Named
Executive Officer. We report the vehicle allowance and the 401(k)
contribution in the "All Other Compensation" column in the Summary Compensation
Table.
In March
2008, the Compensation Committee met and approved, at the recommendation of the
CEO, a special discretionary cash bonus of $9,700 and $2,750 and a special
option grant of 9,304 shares and 10,000 shares for Messrs. Jackson and Comen,
respectively. The bonuses and options were given in recognition of
the services Messrs. Jackson and Comen provided during the first quarter of 2008
and were paid outside of our Cash Bonus Plan. Particularly, the
bonuses and options were meant to recognize Messrs. Jackson and Comen for the
contributions each of them made during the first quarter of 2008 in helping us
respond to the recession in the freight market.
For 2008,
the Compensation Committee also approved maximum performance-based cash bonus
opportunities under which (i) Mr. Kevin Knight is eligible to receive a cash
bonus of up to 60% of his base salary; (ii) Mr. Keith Knight is eligible to
receive a cash bonus of up to 40% of his base salary; and (iii) each of
Messrs. Gary Knight, Jackson, and Comen is eligible to receive a cash bonus of
up to 30% of his base salary. As in 2007, 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 Named Executive Officer's
responsibilities at the time, (ii) the composition of the respective Named
Executive Officer's total compensation package, and (iii) our long term
profitability and earnings goals. The Compensation Committee
increased Mr. Keith Knight's cash bonus opportunity from 30% to 40% of his base
salary for 2008 compared to 2007 in light of Mr. Keith Knight's expanding
responsibilities as our Chief Operating Officer and his increasing ability to
affect our performance. Two-thirds of each Named Executive Officer's
cash bonus will be paid under the Cash Bonus Plan (the "Bonus Plan
Compensation") and one-third will be discretionary, based upon the CEO's
recommendations and the Compensation Committee's evaluation of each Named
Executive Officer's performance.
In
connection with the maximum performance-based cash bonus opportunities described
above, the Compensation Committee set performance targets related to earnings
growth compared with earnings in 2007 and having an annual consolidated
operating ratio of 86.5% (the "2008 Performance Targets"). One-third
of the maximum bonus opportunity is tied to earnings growth and one-third is
tied to achieving the target operating ratio. The 2008 Performance
Target range for earnings growth is from 20% target bonus achievement at zero
earnings growth to 100% bonus target achievement at 10% earnings
growth. There is no 2008 Performance Target range for the
consolidated operating ratio. However, there is an override feature
such that 7.5% earnings per share growth (as opposed to earnings growth) will
result in 100% achievement of the 2008 Performance Targets. Given the
economic and fuel cost environment at the date the targets were adopted, the
Compensation Committee viewed the 2008 Performance Targets as reflecting a range
of performance that is achievable but uncertain, with the upper end of the range
reflecting a significant accomplishment. The 2008 Performance
Targets do not reflect any view of ours concerning earnings expectations for the
year. The 2008 Performance Targets were recommended by the CEO and
approved by the Compensation Committee.
In
addition to the 2008 Performance Targets, the Compensation Committee also has
the discretion to evaluate and award each Named Executive Officer, after taking
into account the CEO's recommendations, up to one-third of the cash bonus
opportunity based upon the executive's leadership, ability to influence others,
dedication, integrity, creativity, and the promotion of our
business.
We currently do not have any employment
contracts, severance agreements, change-of-control agreements, or other
arrangements with our executive officers, including our Named Executive
Officers, that provide for payment or benefits to any executive officer at,
following, or in connection with a change in control, a change in an executive
officer's responsibilities, or an executive officer's termination of employment,
including resignation, severance, retirement, or constructive
termination.
The
following table sets forth information concerning the total compensation for
fiscal year 2007 awarded to, earned by, or paid to those persons who were, at
December 31, 2007, (i) our Chief Executive Officer, (ii) our Chief
Financial Officer, (iii) our four other most highly compensated executive
officers with total compensation exceeding $100,000 for the fiscal year ended
December 31, 2007 (collectively, the "Named Executive Officers").
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Options
Awards(1)
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
All
Other
Compensation(2)
($)
|
Total
($)
|
|
Kevin
P. Knight,
Chairman
and Chief Executive Officer
|
2007
2006
|
590,000
568,462
|
286,247
210,482
|
45,000
354,000
|
218,840
196,833
|
1,140,087
1,329,777
|
|
David
A. Jackson,
Chief
Financial Officer
|
2007
2006
|
145,221
118,500
|
90,006
68,393
|
10,292
39,750
|
850
850
|
246,369
227,493
|
|
Keith
T. Knight,
Chief
Operating Officer
|
2007
2006
|
327,827
328,961
|
160,421
124,690
|
21,912
97,500
|
16,450
850
|
526,610
552,001
|
|
Gary
Knight,
Vice
Chairman(3)
|
2007
2006
|
227,500
-
|
112,961
-
|
15,106
-
|
13,210
-
|
368,777
-
|
|
Casey
Comen,
Vice
President of Sales
|
2007
2006
|
260,000
255,692
|
201,212
94,341
|
17,264
78,000
|
12,934
12,934
|
491,410
440,967
|
|
Timothy
M. Kohl(4)
|
2007
2006
|
304,615
312,769
|
163,406
247,754
|
-
132,000
|
14,142
21,990
|
482,163
714,513
|
|
(1)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2007 and 2006 fiscal years for the
fair value of stock options granted in those years, as well as prior
fiscal years, 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 2007 grants,
refer to note 8 of our financial statements as provided in the Form 10-K
for the year-ended December 31, 2007, as filed with the
SEC. For information on the valuation assumptions with respect
to grants made prior to 2007, refer to the notes of our financial
statements as provided in the Form 10-K for the respective
year-end. See the Grants of Plan-Based Awards Table for
information on options granted in 2007. 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.
Gary Knight was not a Named Executive Officer during
2006.
|
|
(4)
|
In
connection with our movement toward more formal operating units, the
responsibilities formerly associated Mr. Kohl's position as President were
eliminated and Mr. Kohl left our Company at the end of October 2007.
Pursuant to Item 402(a)(3)(iv), Mr. Kohl's compensation for 2007 is
included.
|
All
Other Compensation Table
The
following table describes, for 2007, each component of the "All Other
Compensation" column in the Summary Compensation Table.
|
Name
|
Year
|
Perquisites
and
Other
Personal
Benefits(1)
($)
|
Insurance
Premiums
($)
|
Contributions
to
Retirement
and
401(k)
Plans
($)
|
Total
($)
|
|
Kevin
P. Knight
|
2007
|
217,990
|
-
|
850
|
218,840
|
|
David
A. Jackson
|
2007
|
-
|
-
|
850
|
850
|
|
Keith
T. Knight
|
2007
|
15,600
|
-
|
850
|
16,450
|
|
Gary
Knight
|
2007
|
12,360
|
-
|
850
|
13,210
|
|
Casey
Comen
|
2007
|
12,084
|
-
|
850
|
12,934
|
|
Timothy
M. Kohl(2)
|
2007
|
13,292
|
-
|
850
|
14,142
|
|
(1)
|
This
column represents the total amount of perquisites and other personal
benefits provided to the Named Executive Officer, if the aggregate of such
benefits were equal to or exceeded $10,000. For Mr. Kevin
Knight, $200,000 of this amount represents a cash air-travel allowance and
the remainder represents a cash vehicle allowance. For each of
the other Named Executive Officers, this amount includes compensation for
a cash vehicle allowance.
|
|
(2)
|
In
connection with our movement toward more formal operating units, the
responsibilities formerly associated Mr. Kohl's position as President were
eliminated and Mr. Kohl left our Company at the end of October
2007. Pursuant to Item 402(a)(3)(iv), Mr. Kohl's compensation
for 2007 is included.
|
Narrative
to Summary Compensation Table
See "Executive Compensation –
Compensation Discussion and Analysis" for a complete description of our
compensation plans pursuant to which the amounts listed under the Summary
Compensation Table were paid or awarded and the criteria for such award or
payment.
The
following table sets forth information concerning each grant of an award made to
our Named Executive Officers during 2007.
|
Name
|
Grant
Date
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price of
Option
Awards(5)
($/Sh)
|
Grant
Date Fair
Value
of Stock
and
Option
Awards(6)
($)
|
||
|
Threshold
($)
|
Target(1)
($)
|
Maximum
($)
|
|||||
|
Kevin
P. Knight
|
05/24/2007
|
-
-
|
236,000
-
|
-
-
|
-
45,000(2)
|
-
18.23
|
-
378,900
|
|
David
A. Jackson
|
05/24/2007
|
-
-
|
31,000
-
|
-
-
|
-
12,500(2)
|
-
18.23
|
-
105,250
|
|
Keith
T. Knight
|
05/24/2007
|
-
-
|
88,000
-
|
-
-
|
-
20,000(2)
|
-
18.23
|
-
168,400
|
|
Gary
Knight
|
05/24/2007
|
-
-
|
45,500
-
|
-
-
|
-
12,500(2)
|
-
18.23
|
105,250
|
|
Casey
Comen
|
05/24/2007
|
-
-
|
52,000
-
|
-
-
|
-
12,500(3)
|
-
18.23
|
-
105,250
|
|
Timothy
M. Kohl(4)
|
05/24/2007
|
-
-
|
-
-
|
-
-
|
-
20,000
|
-
18.23
|
-
168,400
|
|
(1)
|
This
column represents the approximate value of the maximum payout pursuant to
our Cash Bonus Plan for each Named Executive Officer based upon the
attainment of specified performance targets that were established by the
Compensation Committee in March 2008. The amount represents
two-thirds of each executive's maximum cash bonus
opportunity. The Compensation Committee has discretion to pay
the executive less than the amount set forth in this column, but such
amount, if any, is undeterminable at this time. In addition to
the amount in this column, each Named Executive Officer may receive up to
an additional one-third of his maximum cash bonus opportunity based upon
the CEO's recommendations and the Compensation Committee's evaluation of
each Named Executive Officer's performance. This additional
one-third, will be awarded, if at all, outside of our Cash Bonus
Plan. The potential bonuses are based upon each Named Executive
Officer's 2007 salary because the 2008 salaries have not been
established. The potential bonuses are performance-driven and
therefore completely at risk.
|
|
(2)
|
This
represents the number of stock options granted in 2007 to the Named
Executive Officer. On December 31, 2007, 20% of these options vested with
the remaining options vesting 5% per calendar quarter thereafter and
becoming fully vested on December 31, 2011.
|
|
(3)
|
This
represents the number of stock options granted in 2007 to Mr.
Comen. This option vested 50% on March 1, 2008 and 50% will
vest on March 1, 2009.
|
|
(4)
|
In
connection with our movement toward more formal operating units, the
responsibilities formerly associated Mr. Kohl's position as President were
eliminated and Mr. Kohl left our Company at the end of October
2007. Pursuant to Item 402(a)(3)(iv), the stock option
grant made to Mr. Kohl in May of 2007 is included; however, upon his
departure, Mr. Kohl forfeited these options.
|
|
(5)
|
This
column represents the exercise price for the stock options granted, which
was the closing price of our stock on May 24, 2007, the grant
date.
|
|
(6)
|
This
column represents the grant date fair value of the stock options under
SFAS 123R granted to the Named Executive Officers in 2007. The
fair value was calculated using the Black Scholes value on the grant date
of approximately $8.42. The fair value of the option awards are
accounted for in accordance with SFAS 123R. For additional
information on the valuation assumptions, refer to note 8 of our financial
statements in the Form 10-K for the year-ended December 31, 2007, as filed
with the SEC. These amounts reflect our accounting expense to
be recognized over the vesting period of the options awarded, and do not
correspond to the actual value that will be recognized by the Named
Executive Officers.
|
Narrative
to Grants of Plan-Based Awards
See "Executive Compensation –
Compensation Discussion and Analysis" for a complete description of (i) the
performance targets for payment of annual incentives, and (ii) the options that
we awarded during the year.
The
following table sets forth information concerning all stock option grants held
by our Named Executive Officers as of December 31, 2007. All
outstanding equity awards are in shares of our Common Stock.
|
Option
Awards
|
|||||
|
Name
|
Option
Grant
Date
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(1)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|
Kevin
P. Knight
|
08/06/2004
08/19/2005
05/24/2006
05/24/2007
|
54,000
750,000
30,000
9,000
|
13,500
-
45,000
36,000
|
12.57
15.68
18.44
18.23
|
08/05/2014
08/18/2015
05/23/2016
05/23/2017
|
|
David
A. Jackson
|
03/01/2001
09/18/2001
06/05/2002
08/07/2003
08/06/2004
05/16/2005
05/24/2006
05/24/2007
|
5,063
3,375
3,375
1,575
6,000
9,000
6,000
2,500
|
-
-
-
2,363
1,500
6,000
9,000
10,000
|
4.40
4.89
8.44
11.44
12.57
15.53
18.44
18.23
|
02/28/2011
09/17/2011
06/04/2012
08/06/2013
08/05/2014
05/15/2015
05/23/2016
05/23/2017
|
|
Keith
T. Knight
|
08/06/2004
08/19/2005
05/24/2006
05/24/2007
|
18,000
18,000
12,000
4,000
|
4,500
12,000
18,000
16,000
|
12.57
15.68
18.44
18.23
|
08/05/2014
08/18/2015
05/23/2016
05/23/2017
|
|
Gary
Knight
|
08/06/2004
08/19/2005
05/24/2006
05/24/2007
|
18,000
13,500
6,000
2,500
|
4,500
9,000
9,000
10,000
|
12.57
15.68
18.44
18.23
|
08/05/2014
08/18/2015
05/23/2016
05/23/2017
|
|
Casey
Comen
|
03/01/2004
03/01/2005
05/16/2005
05/24/2006
05/24/2007
|
18,750
7,500
-
3,333
-
|
37,500
7,500
7,500
6,667
12,500
|
11.03
18.09
15.53
18.44
18.23
|
02/28/2014
02/28/2015
05/15/2015
05/23/2016
05/23/2017
|
|
Timothy
M. Kohl(2)
|
-
|
-
|
-
|
-
|
-
|
|
(1)
|
See
the Vesting Schedule Table below for the vesting date of options held at
fiscal year end by the Named Executive Officers.
|
|
(2)
|
In
connection with our movement toward more formal operating units, the
responsibilities formerly associated Mr. Kohl's position as President were
eliminated and Mr. Kohl left our Company at the end of October
2007. Upon his departure, Mr. Kohl forfeited all outstanding
options.
|
Vesting
Schedule Table
The
following table describes the vesting schedule as of December 31, 2007, for each
unexercisable option listed in the Outstanding Equity Awards at Fiscal Year-End
Table.
|
Name
|
Option
Grant Date
|
Option
Awards Vesting Schedule
|
|
Kevin
P. Knight
|
08/06/2004
|
20%
vested December 31, 2004, and 5% vests at the end of each calendar quarter
beginning March 2005.
|
|
05/24/2006
|
20%
vested December 31, 2006, and 5% vests at the end of each calendar quarter
beginning March 2007.
|
|
|
05/24/2007
|
20%
vested December 31, 2007, and 5% vests at the end of each calendar quarter
beginning March 2008.
|
|
|
David
A. Jackson
|
08/07/2003
|
20%
vests each year beginning August 7, 2006.
|
|
08/06/2004
|
20%
vested December 31, 2004, and 5% vests at the end of each calendar quarter
beginning March 2005.
|
|
|
05/16/2005
|
20%
vested December 31, 2005, and 5% vests at the end of each calendar quarter
beginning March 2006.
|
|
|
05/24/2006
|
20%
vested December 31, 2006, and 5% vests at the end of each calendar quarter
beginning March 2007.
|
|
|
05/24/2007
|
20%
vested December 31, 2007, and 5% vests at the end of each calendar quarter
beginning March 2008.
|
|
|
Keith
T. Knight
|
08/06/2004
|
20%
vested December 31, 2004, and 5% vests at the end of each calendar quarter
beginning March 2005.
|
|
08/19/2005
|
20%
vested December 31, 2005, and 5% vests at the end of each calendar quarter
beginning March 2006.
|
|
|
05/24/2006
|
20%
vested December 31, 2006, and 5% vests at the end of each calendar quarter
beginning March 2007.
|
|
|
05/24/2007
|
20%
vested December 31, 2007, and 5% vests at the end of each calendar quarter
beginning March 2008.
|
|
|
Gary
Knight
|
08/06/2004
|
20%
vested December 31, 2004, and 5% vests at the end of each calendar quarter
beginning March 2005.
|
|
08/19/2005
|
20%
vested December 31, 2005, and 5% vests at the end of each calendar quarter
beginning March 2006.
|
|
|
05/24/2006
|
20%
vested December 31, 2006, and 5% vests at the end of each calendar quarter
beginning March 2007.
|
|
|
05/24/2007
|
20%
vested December 31, 2007, and 5% vests at the end of each calendar quarter
beginning March 2008.
|
|
|
Casey
Comen
|
03/01/2004
|
33%
vests each year beginning March 1, 2007.
|
|
03/01/2005
|
25%
vests each year beginning March 1, 2006.
|
|
|
05/16/2005
|
20%
vests each year beginning May 16, 2008.
|
|
|
05/24/2006
|
33%
vests each year beginning March 1, 2007.
|
|
|
05/24/2007
|
50%
vests each year beginning March 1,
2008.
|
The
following table sets forth information concerning the stock option exercises
during 2007 for our Named Executive Officers.
|
Option
Awards
|
||
|
Name
|
Number
of Shares
Acquired
on
Exercise
(#)
|
Value
Realized on
Exercise
($)
|
|
Kevin
P. Knight
|
-
|
-
|
|
David
A. Jackson
|
-
|
-
|
|
Keith
T. Knight
|
-
|
-
|
|
Gary
Knight
|
-
|
-
|
|
Casey
Comen
|
-
|
-
|
|
Timothy
M. Kohl(1)
|
71,623
|
628,928
|
|
(1)
|
Exercise
Detail
|
|
Exercise
Date
|
Grant
Date
|
#
of Options
Exercised
|
Grant
Price
($)
|
Market
Price on
Exercise
Date
($)
|
|
08/10/2007
|
09/18/2001
|
6,700
|
4.89
|
19.85
|
|
08/17/2007
|
09/18/2001
|
10,175
|
4.89
|
19.29
|
|
08/17/2007
|
06/05/2002
|
18,748
|
8.44
|
19.29
|
|
08/17/2007
|
06/01/2003
|
15,000
|
11.04
|
19.29
|
|
08/17/2007
|
08/06/2004
|
6,750
|
12.59
|
19.29
|
|
10/22/2007
|
08/06/2004
|
1,125
|
12.59
|
15.56
|
|
10/23/2007
|
05/16/2005
|
13,125
|
15.53
|
16.01
|
The
following table sets forth information concerning the compensation of our
non-employee directors for fiscal 2007.
|
Name
|
Fees
Earned
or
Paid in
Cash(1)
($)
|
Stock
Awards(2)
($)
|
Option
Awards(3)
(4)
($)
|
Total
($)
|
|
Donald
A. Bliss
|
25,000
|
29,945(5)
|
1,153
|
56,098
|
|
Michael
Garnreiter
|
34,950
|
22,496(6)
|
1,153
|
58,599
|
|
Randy
Knight
|
22,500
|
4,947(7)
|
1,153
|
28,600
|
|
Richard
J. Lehmann
|
22,500
|
28,490(8)
|
3,436
|
54,426
|
|
G.
D. Madden
|
22,500
|
29,441(9)
|
1,153
|
53,094
|
|
Kathryn
L. Munro
|
25,500
|
29,751(10)
|
1,153
|
56,404
|
|
Mark
Scudder(12)
|
22,500
|
28,937(11)
|
1,153
|
52,590
|
|
(1)
|
This
column represents the amount of cash compensation paid in 2007 for Board
and committee service.
|
|
(2)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2007 fiscal year for the fair value
of stock awards granted to each non-employee director in 2007, in
accordance with SFAS 123R.
|
|
(3)
|
This
column represents the dollar amount recognized for financial statement
reporting purposes with respect to the 2007 fiscal year for the fair value
of stock options granted to each non-employee director in fiscal years
prior to 2007, in accordance with SFAS 123R. No stock options
were awarded to non-employee directors in 2007. 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 refer to note 8 of our financial
statements in the Form 10-K for the respective year-end. These
amounts reflect our accounting expense to be recognized over the full
vesting period, and do not correspond to the actual value that will be
recognized by the directors.
|
|
(4)
|
As
of December 31, 2007, (i) Mr. Bliss had 5,875 outstanding option awards;
(ii) Mr. Garnreiter had 9,250 outstanding option awards; (iii) Mr. Randy
Knight had 2,500 outstanding option awards; (iv) Mr. Lehmann had 3,500
outstanding option awards; (v) Mr. Madden had 7,000 outstanding option
awards; (vi) Ms. Munro had 6,250 outstanding option awards; and (vii) Mr.
Scudder had 7,000 outstanding option awards.
|
|
(5)
|
On
February 15, 2007, Mr. Bliss received 384 shares of our Common Stock,
determined by dividing the amount of the accrued director compensation
subject to payment in Common Stock by the closing market price of our
Common Stock as of February 14, 2007, or $19.40 per share, and on May 24,
2007, Mr. Bliss received 1,234 shares of our Common Stock, determined by
dividing the current year’s director compensation subject to payment in
Common Stock, by the closing market price of our Common Stock on the date
of grant, or $18.23 per share. The shares awarded on May 24, 2007 are
subject to certain holding and other restrictions.
|
|
(6)
|
On
May 24, 2007, Mr. Garnreiter received 1,234 shares of our Common Stock,
determined by dividing the current year’s director compensation subject to
payment in Common Stock, by the closing market price of our Common Stock
on the date of grant, or $18.23 per share. The shares awarded on May 24,
2007 are subject to certain holding and other
restrictions.
|
|
(7)
|
On
February 15, 2007, Mr. Randy Knight received 255 shares of our Common
Stock, determined by dividing the amount of the accrued director
compensation subject to payment in Common Stock by the closing market
price of our Common Stock as of February 14, 2007, or $19.40 per
share.
|
|
(8)
|
On
February 15, 2007, Mr. Lehmann received 309 shares of our Common Stock,
determined by dividing the amount of the accrued director compensation
subject to payment in Common Stock by the closing market price of our
Common Stock as of February 14, 2007, or $19.40 per share, and on May 24,
2007, Mr. Lehmann received 1,234 shares of our Common Stock, determined by
dividing the current year’s director compensation subject to payment in
Common Stock, by the closing market price of our Common Stock on the date
of grant, or $18.23 per share. The shares awarded on May 24, 2007 are
subject to certain holding and other restrictions.
|
|
(9)
|
On
February 15, 2007, Mr. Madden received 358 shares of our Common Stock,
determined by dividing the amount of the accrued director compensation
subject to payment in Common Stock by the closing market price of our
Common Stock as of February 14, 2007, or $19.40 per share, and on May 24,
2007, Mr. Madden received 1,234 shares of our Common Stock, determined by
dividing the current year’s director compensation subject to payment in
Common Stock, by the closing market price of our Common Stock on the date
of grant, or $18.23 per share. The shares awarded on May 24, 2007 are
subject to certain holding and other restrictions.
|
|
(10)
|
On
February 15, 2007, Ms. Munro received 374 shares of our Common Stock,
determined by dividing the amount of the accrued director compensation
subject to payment in Common Stock by the closing market price of our
Common Stock as of February 14, 2007, or $19.40 per share, and on May 24,
2007, Ms. Munro received 1,234 shares of our Common Stock, determined by
dividing the current year’s director compensation subject to payment in
Common Stock, by the closing market price of our Common Stock on the date
of grant, or $18.23 per share. The shares awarded on May 24, 2007 are
subject to certain holding and other restrictions.
|
|
(11)
|
On
February 15, 2007, Mr. Scudder received 332 shares of our Common Stock,
determined by dividing the amount of the accrued compensation subject to
payment in Common Stock by the closing market price of our Common Stock as
of February 14, 2007, or $19.40 per share, and on May 24, 2007, Mr.
Scudder received 1,234 shares of our Common Stock, determined by dividing
the current year’s director compensation subject to payment in Common
Stock, by the closing market price of our Common Stock on the date of
grant, or $18.23 per share. The shares awarded on May 24, 2007 are subject
to certain holding and other restrictions.
|
|
(12)
|
Mr.
Scudder resigned from the Board in November 2007. Pursuant to
the terms of the stock option award notices evidencing Mr. Scudder's
option awards, Mr. Scudder has one year to exercise his outstanding option
awards.
|
Narrative
to Director Compensation
The Board
of Directors, upon the recommendation of our Compensation Committee, establishes
the form and amount of compensation paid to our directors who are not 10%
shareholders or our officers or employees ("Outside Directors"). In
February 2007, the Board or Directors, at the recommendation of the Compensation
Committee, adopted a new compensation structure for Outside
Directors. In 2007, our Outside Directors received annual
compensation of $45,000 payable 50% in cash and 50% in Common
Stock. The number of shares issued on May 24, 2007, was determined by
dividing the amount of the compensation subject to payment in Common Stock by
the closing market price of our Common Stock on the date of the
grant. The Common Stock was issued as stock grants under the
Independent Director provision of our Amended and Restated 2003 Stock Option
Plan, which reserved 100,000 shares of our Common Stock for compensatory stock
grants to Outside Directors, subject to certain adjustments. See
"Proposal No. 2 – Approval of the Second Amendment to the Amended and Restated
2003 Stock Option Plan" for information with respect to increasing the number of
shares reserved for issuance to our
Outside
Directors to 200,000 shares. The Common Stock issued also is subject to certain holding
and other restrictions, including a requirement that each Outside
Director must hold all Common Stock granted as compensation until such director
holds a minimum of $100,000 in Common Stock. Pursuant to our former
Outside Director compensation structure, certain of our directors also elected
to receive a portion of their accrued compensation from 2006 in the form of
Common Stock on February 15, 2007. For directors making such an
election, the number of shares of our Common Stock issued, as indicated in the
footnotes to the Director Compensation table, was determined by dividing the
amount of the accrued compensation subject to payment in Common Stock by the
closing market price of our Common Stock as of February 14, 2007. Under our new
compensation structure for Outside Directors, director compensation is fully
paid in the year the services are provided.
No fees
were paid for attendance at meetings during 2007; however, in addition to the
$45,000 payable to the other Outside Directors, the Chair of the Audit Committee
received an annual fee of $5,000, the Chair of the Compensation Committee
received an annual fee of $3,000, and the Chair of the Nominating and Corporate
Governance Committee received an annual fee of $2,500.
Directors
who are our employees or 10% shareholders do not receive compensation for Board
or committee service. During 2007, we did, however, reimburse all
directors for travel and other related expenses.
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth, as of February 29, 2008, the number and percentage
of outstanding shares of our Common Stock beneficially owned by each person
known by us to beneficially own more than 5% of such stock, by each Named
Executive Officer and our directors, and by all of our directors and executive
officers as a group. Share numbers and other information for FMR LLC,
Wasatch Advisors, Inc., Wellington Management Company, LLP, and Ruane, Cunniff
& Goldfarb Inc. included in the following table and notes are as of February
14, 2008, and based solely upon Schedules 13G and 13G/A filed with the SEC on
February 14, 2008. We had outstanding 86,048,103 shares
of Common Stock as of February 29, 2008.
|
Name
and Address of Beneficial Owner(1)
|
Amount
and Nature of
Beneficial
Ownership(2)
|
Percent
of Class(2)
|
||
|
Kevin
P. Knight(3)
|
7,400,252
|
8.5%
|
||
|
Gary
J. Knight(4)
|
7,293,961
|
8.5%
|
||
|
Keith
T. Knight(5)
|
7,096,621
|
8.2%
|
||
|
Randy
Knight(6)
|
6,277,252
|
7.3%
|
||
|
Casey
Comen(7)
|
61,666
|
*
|
||
|
G.D.
Madden(8)
|
43,749
|
*
|
||
|
David
A. Jackson(9)
|
39,388
|
*
|
||
|
Donald
A. Bliss(10)
|
25,114
|
*
|
||
|
Michael
Garnreiter(11)
|
10,940
|
*
|
||
|
Kathryn
L. Munro(12)
|
9,321
|
*
|
||
|
Richard
J. Lehmann(13)
|
5,447
|
*
|
||
|
Ruane,
Cunniff & Goldfarb Inc.
(14)
|
15,161,998
|
17.6%
|
||
|
FMR
LLC(15)
|
10,938,777
|
12.7%
|
||
|
Wasatch
Advisors, Inc.
(16)
|
7,065,650
|
8.2%
|
||
|
Wellington
Management Company, LLP(17)
|
6,268,949
|
7.3%
|
||
|
All
directors and executive officers as a group 11 persons
|
28,286,711
|
32.4%
|
|
*
|
Represents
less than 1.0% of the outstanding Common Stock.
|
|
(1)
|
The
address of each Named Executive Officer and director is 5601 West Buckeye
Road, Phoenix, AZ 85043. The address for Ruane, Cunniff &
Goldfarb Inc. is 767 Fifth Ave., New York,
NY 10153. The address for FMR LLC is 82 Devonshire
St., Boston, MA 02109. The address of Wasatch
Advisors, Inc. is 150 Social Hall Ave., Salt Lake City, UT
84111. The address for Wellington Management Company, LLP is 75
State St., Boston, MA 02109.
|
|
(2)
|
In
accordance with applicable rules under the Exchange Act, the number of
shares indicated as beneficially owned by a person includes shares of
Common Stock and underlying options that are currently exercisable or will
be exercisable within 60 days from February 29, 2008. Shares of
Common Stock underlying stock options that are currently exercisable or
will be exercisable within 60 days from February 29, 2008, are deemed to
be outstanding for purposes of computing the percentage ownership of the
person holding such options and the percentage ownership of any group of
which the holder is a member, but are not deemed outstanding for purposes
of computing the percentage ownership of any other
person.
|
|
(3)
|
Includes:
(a) 6,521,585 shares beneficially owned by Kevin P. Knight over which he
and his wife, Sydney Knight, exercise sole voting and investment power
pursuant to a revocable living trust; (b) 22,312 shares held by the Kevin
P. Knight and Sydney B. Knight Family Foundation over which Kevin P.
Knight and his wife, Sydney Knight, as officers of the Foundation,
exercise sole voting and investment power on behalf of the Foundation; (c)
3,979 shares owned by a minor child who shares the same household with
Kevin P. Knight; and (d) 852,376 shares covered by stock options granted
to Kevin P. Knight that are currently exercisable or that will become
exercisable within 60 days. Kevin P. Knight has pledged as
security 2,908,046 of the shares that he beneficially
owns.
|
|
(4)
|
Includes:
(a) 7,250,336 shares beneficially owned by Gary J. Knight over which he
exercises sole voting and investment power as a trustee under a revocable
trust agreement; and (b) 43,625 shares covered by stock options granted to
Gary J. Knight that are currently exercisable or that will become
exercisable within 60 days. Gary J. Knight has pledged as
security 3,931,636 of the shares that he beneficially
owns.
|
|
(5)
|
Includes:
(a) 7,034,981 shares beneficially owned by Keith T. Knight over which he
and his wife, Fawna Knight, exercise sole voting and investment power as
trustees under a revocable trust agreement; (b) 1,119 shares beneficially
owned by Keith T. Knight; (c) 1,119 shares beneficially owned by Fawna
Knight; (d) 2,277 shares owned by minor children who share the same
household with Keith T. Knight; and (e) 57,125 shares covered by stock
options granted to Keith T. Knight that are currently exercisable or that
will become exercisable within 60 days. Keith T. Knight has pledged as
security 5,500,000 of the shares that he beneficially
owns.
|
|
(6)
|
Includes:
(a) 4,612,429 shares beneficially owned by Randy Knight over which he
exercises sole voting and investment power as a trustee under a revocable
trust agreement; (b) 1,662,323 shares held by a limited liability company
for which Randy Knight acts as manager and whose members include Randy
Knight and trusts for the benefit of his four children; and (c) 2,500
covered by stock options granted to Randy Knight that are currently
exercisable or that will become exercisable within 60
days. Randy Knight has pledged as security 4,612,429 of the
shares that he beneficially owns.
|
|
(7)
|
Represents
61,666 shares covered by stock options granted to Casey Comen that are
currently exercisable or that will become exercisable within 60
days.
|
|
(8)
|
Includes:
(a) 36,749 shares held directly by G.D. Madden; and (b) 7,000 shares
covered by stock options granted to Mr. Madden that are currently
exercisable or that will become exercisable within 60
days.
|
|
(9)
|
Represents
39,388 shares covered by stock options granted to David A. Jackson that
are currently exercisable or that will become exercisable within 60
days.
|
|
(10)
|
Includes:
(a) 19,239 shares beneficially owned by Donald A. Bliss over which he
exercises sole voting and investment powers under a revocable trust
agreement; and (b) 5,875 shares covered by stock options granted to Mr.
Bliss that are currently exercisable or that will become exercisable
within 60 days.
|
|
(11)
|
Includes:
(a) 1,690 shares held directly by Michael Garnreiter; and (b) 9,250 shares
covered by stock options granted to Mr. Garnreiter that are currently
exercisable or that will become exercisable within 60
days.
|
|
(12)
|
Includes:
(a) 3,071 shares held directly by Kathryn L. Munro; and (b) 6,250 shares
covered by stock options granted to Ms. Munro that are currently
exercisable or that will become exercisable within 60
days.
|
|
(13)
|
Includes: (a) 1,947 shares held
directly by Richard J. Lehmann; and (b) 3,500 shares
covered by stock options granted to Mr. Lehmann that are currently
exercisable or that will become exercisable within 60
days.
|
|
(14)
|
Ruane,
Cunniff & Goldfarb Inc. has sole voting power over 10,047,498 shares
and sole dispositive power over 15,161,998 shares. It has
shared voting power and shared dispositive power over no
shares.
|
|
(15)
|
FMR
LLC has sole voting power over 529,600 shares. It has sole
dispositive power of 10,938,777 shares. It has shared voting
power and shared dispositive power over no shares.
|
|
(16)
|
Wasatch
Advisors, Inc. has sole voting power and sole dispositive power over
7,065,650 shares. It has shared voting power and shared
dispositive power over no shares.
|
|
(17)
|
Wellington
Management Company, LLP has sole voting power and sole dispositive power
over no shares. It has shared voting power over 4,245,249
shares and shared dispositive power over 6,241,799
shares.
|
Our Audit
Committee has established policies and procedures relating to the review and
approval or ratification of any transaction, or any proposed transaction, in
which we were or are to be a participant and the amount involved exceeds
$120,000, and in which any "related person" (as that term is defined in
Instruction 1 to Item 404(a) of Regulation S-K) had or will have a direct or
indirect material interest, referred to as an "interested transaction." Upon review of the
material facts of all interested transactions, the Audit Committee will either
approve, ratify, or disapprove the interested transactions, subject to certain
exceptions, by taking into account, among other factors it deems appropriate,
whether the terms are arms'-length and the extent of the related person's
interest in the transaction. No director may participate in any
discussion or approval of an interested transaction for which he or she, or his
or her relative, is a related party. If an interested transaction
will be ongoing, the Audit Committee may establish guidelines for our management
to follow in its ongoing dealings with the related party and then at least
annually must review and assess ongoing relationships with the related
party. During 2007, the following interested transactions were
subject to such review and approval or ratification:
Mark
Scudder, who resigned as a member of the Board of Directors effective November
9, 2007, is president of a law firm to which we paid approximately $207,000 for
legal services in 2007 and which currently provides legal services to us. During
2007, Mr. Scudder received salary and bonuses from the law firm, none of which
is directly related to services provided to us. Based upon
information regarding the law firm's total revenues for each of the past three
years supplied by Mr. Scudder, the Audit Committee determined that this
relationship is not material and ratified the transaction.
The
Knight family has been involved in the transportation business for a number of
years, and family members of Kevin Knight, Gary Knight, Keith Knight, and Randy
Knight have been employed by us since our inception. The Knight
family members are employed on the same terms and conditions as non-related
employees. During 2007, we employed
two individuals who were compensated in excess of $120,000 and are considered
related persons under Item 404(a) of Regulation S-K. The
aggregate total compensation paid to these two individuals in 2007 was
$341,904. Based on the fact that these
two individuals are employed on the same terms and conditions as non-related
employees, the Audit Committee ratified these transactions. We
also employed eleven other related persons during 2007, none of whom received
compensation in excess of $120,000.
See "Corporate Governance –
The Board of Directors and Its Committees – Committees of the Board of Directors
– The Compensation Committee – Compensation Committee Interlocks and Insider
Participation" for a description of transactions between us and members of our
Compensation Committee or their affiliates.
TO
THE AMENDED AND RESTATED 2003 STOCK OPTION PLAN
At the
Annual Meeting, our shareholders are being asked to approve a proposed second
amendment (the "Amendment") to the Amended and Restated 2003 Stock Option Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder from 6,000,000 shares to 9,000,000 shares, of which 200,000 shares
will be reserved for issuance to our Outside Directors. Currently,
only 100,000 shares of the 6,000,000 shares are reserved for issuance to our
Outside Directors. Upon the recommendation of the Compensation
Committee, the Board of Directors has approved the Amendment and has directed
that it be submitted for shareholder approval at the Annual
Meeting.
In
February 2003, the Board of Directors adopted the Company's 2003 Stock Option
Plan (the "2003 Plan"), which was approved by our shareholders in May 2003. At
our annual meeting in May 2005, our shareholders approved an amendment to the
2003 Plan increasing the number of shares of Common Stock reserved for issuance
thereunder from 2,250,000 shares to 6,000,000 shares, both as adjusted to reflect a 3-for-2 stock
split, a 50% stock dividend on December 23, 2005. At a special meeting in
December 2005, our shareholders approved an amendment
to the
2003 Plan limiting the number of shares with respect to which options may be
granted to any one plan participant during a calendar year to 650,000 shares,
subject to adjustment for stock dividends, stock splits, reverse stock splits,
and similar transactions, and approved and ratified the amendment and
restatement of the 2003 Plan to incorporate all prior amendments to the 2003
Plan (the "Amended and Restated 2003 Plan").
The
purposes of the Amended and Restated 2003 Plan are to: (a) provide our employees
with an opportunity to purchase Common Stock as an incentive to continue
employment with us and to work toward our long-term growth, development, and
financial success; (b) attract qualified Outside Directors by providing the
automatic grant of certain nonqualified stock options to Outside Directors upon
their appointment to our Board of Directors; and (c) attract, motivate, and
retain the services of our Outside Directors and employees and reward such
directors and employees by the issuance of equity grants so that these directors
and employees will contribute to and participate in our long-term performance.
In furtherance of these purposes, the Amended and Restated 2003 Plan authorizes
the grant of stock options and restricted stock, subject to applicable law, to
our directors, executive officers, and certain other full-time
employees.
The Board
of Directors believes that our success in executing our strategy is largely due
to our talented and hard-working employees, including our drivers, and that our
future success will depend on our ability to continue to attract and retain high
caliber employees. We have maintained a stock option plan since 1994, and the
Board believes that stock option grants have served as a highly effective
recruiting and retention tool by allowing our employees to share in the
ownership of our Company and have contributed to our revenue and earnings growth
by aligning the long-term interests of our management and employees with those
of our shareholders.
The
Compensation Committee, which administers the Amended and Restated 2003 Plan,
believes that the increase in the number of shares of Common Stock available for
issuance under the Amended and Restated 2003 Plan is necessary for us to
continue to offer our employees and directors an effective and competitive
equity incentive program. The Compensation Committee believes that if additional
shares are not available for stock grants, 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 employees and
directors.
The
Compensation Committee recognizes its responsibility to strike a balance between
shareholder concerns regarding the potential dilutive impact of stock options
and other equity awards and our ability to attract, retain, and reward officers
and employees whose contributions are critical to our long-term success. The
total number of shares of Common Stock underlying stock option grants made over
the past three fiscal years represented approximately 3.7% of the total number
of shares of Common Stock outstanding as of December 31, 2007. The Compensation
Committee expects that the additional shares requested will fund the Amended and
Restated 2003 Plan for the next three to five years.
The
Amended and Restated 2003 Plan is our only active equity compensation plan. As
of December 31, 2007, there were 4,182,780 shares of our Common Stock subject to
outstanding option grants under the Amended and Restated 2003 Plan and our prior
stock option plan, the 1994 Amended and Restated Stock Option Plan (the "1994
Plan"). The 1994 Plan was terminated effective as of May 31, 2003,
and no additional awards may be made under that plan. As of December
31, 2007, there were 2,152,698 shares of Common Stock available for future
grants under the Amended and Restated 2003 Plan. On February 29,
2008, we made a special option grant of 916,602 shares, in the aggregate, to
certain of our employees, including recently hired employees. Of the
total number of shares covered by outstanding options under the Amended and
Restated 2003 Plan and the 1994 Plan, at December 31, 2007, 32.8% are issuable
to the executive officers and directors and 67.2% are issuable to other
employees.
The
principal provisions of the Amended and Restated 2003 Plan, as amended by the
Amendment, are summarized below. This summary is not a complete description of
the Amended and Restated 2003 Plan and is qualified by the full text of that
plan.
General. The Amended and
Restated 2003 Plan is a broad-based equity compensation plan that is designed to
attract and retain directors, officers, and key employees, including drivers, to
provide them with long-term incentives if we continue to achieve profitable
growth, and to align their interests with the interests of our shareholders. The
Amendment is effective, subject to the approval of our shareholders, as of June
1, 2008. The Amended and Restated 2003 Plan was effective as of the
date of its prior approval by our shareholders, and, if not terminated earlier,
will expire on February 5, 2013.
Administration. The Amended
and Restated 2003 Plan is administered by the Compensation Committee of our
Board of Directors.
Eligibility and Awards. Under
the Amended and Restated 2003 Plan, options and restricted stock may be granted
to any of our full-time employees who, in the judgment of the Compensation
Committee, (a) is qualified by position, training, ability, and responsibility
to contribute substantially to our progress, (b) has a material, positive effect
on our results of operations, or (c) is a key employee or critical line
employee. At December 31, 2007, we had approximately 4,404 employees, with more
than 1,100 participants who have outstanding options under the Amended and
Restated 2003 Plan or the 1994 Plan. To date, our directors are the only
individuals to have received restricted stock grants under the Amended and
Restated 2003 Plan.
Options
may be granted either as incentive stock options, as defined in section 422 of
the Code ("ISOs"), or as nonqualified stock options ("NSOs"). The Amended and
Restated 2003 Plan provides that an ISO may not have an exercise price that is
less than 100% of the fair market value of the underlying Common Stock on the
date of grant or be exercisable for a term of more than 10 years from the date
of grant. However, in the case of ISOs granted to a person that holds more than
10% of the voting power of our outstanding capital stock, the Amended and
Restated 2003 Plan provides that the exercise price may not be less than 110% of
the fair market value of the underlying Common Stock and that the ISO may not be
exercisable for a term of more than 5 years from the date of grant.
In March
2005, the Board of Directors adopted amendments (the "March 2005 Amendments") to
the 2003 Plan to provide, among other things, that the exercise price of NSOs
may not be less than 100% of the fair market value of the underlying Common
Stock on the date of grant and to increase the number of shares of Common Stock
reserved for issuance thereunder from 2,250,000 shares to 6,000,000 shares, both
as adjusted to
reflect a 3-for-2 stock split, effected in the form of a 50% stock dividend on
December 23, 2005. Our shareholders approved the March 2005 Amendments at
our May 2005 annual meeting. Prior to March 2005, the 2003 Plan had provided
that NSOs could be granted at an exercise price of not less than 85% of the fair
market value of the underlying Common Stock on the date of grant. The
only "below market" NSOs granted under the 2003 Plan prior to the March 2005
Amendments were the initial 2,500 shares grants to independent directors, as
discussed below. The Amended and Restated 2003 Plan provides that NSOs may be
granted for any reasonable term. Under the Amended and Restated 2003 Plan, the
exercise price of options may be paid in cash or immediately available funds or
in Common Stock valued at its then-current market value.
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 Amended and Restated 2003 Plan
provides, however, that the aggregate number of shares with respect to which
options may be granted to any one plan participant during a calendar year shall
not exceed 650,000 shares, subject to adjustment for stock dividends, stock
splits, reverse stock splits, and similar transactions.
Prior to
February 2007, upon their election or appointment to the Board, Outside
Directors received an automatic NSO grant covering 2,500 shares of Common Stock
equal to the fair market value on the date of grant. In addition to the initial
NSO grant, in 2003 we adopted an annual stock option grant program for Outside
Directors. Under this program, Outside Directors received an NSO
grant covering 1,000 shares of Common Stock on June 1 of each calendar year. The
exercise price of these options is the fair market value on the date of
grant. In connection with this program, Outside Directors who had
served on the Board for at least three years as of December 31, 2002, were
granted a catch-up, NSO for 1,000 shares of Common Stock at an exercise price
equal to the fair market value on June 2, 2003, the date of
grant. Except for the 1,000 share catch-up NSO described in the
preceding sentence, all NSOs granted to an Outside Director, including the
initial grant, are forfeitable if the Outside Director resigns within one year
of the date of grant.
In
February 2007, the Board of Directors adopted a new compensation structure for
Outside Directors. Under the new compensation structure, Outside
Directors receive annual compensation, one-half of which is paid in cash and
one-half of which is issued in common stock grants made under the Amended and
Restated 2003 Plan. The number of shares of Common Stock issued to a
director is determined by dividing the amount of the compensation subject to
payment in Common Stock by the closing market price of our Common Stock on the
date of the grant. Stock issued under the new program has been and
will continue to be issued as stock grants under the Independent Director
provision of our Amended and Restated 2003 Plan, which reserved 100,000 shares
of our Common Stock for compensatory stock grants to Outside Directors, subject
to certain adjustments. The Amendment will increase the shares reserved for
issuance to Outside Directors to 200,000.
All
grants made under the Amended and Restated 2003 Plan are evidenced by a written
agreement between us and the participant. The Compensation Committee, subject to
the limitations set forth in the Amended and Restated 2003 Plan, designates the
terms and conditions of any option or restricted stock grant including, without
limitation, the exercise price, vesting schedule, exercise rights, and
termination or forfeiture provisions. The Amended and Restated 2003 Plan
provides that stock options are non-transferable except pursuant to the laws of
descent and distribution and generally terminate upon termination of employment
for reasons other than death, disability, or early or normal retirement. The
March 2005 Amendments explicitly prohibit the repricing of any options granted
under the Amended and Restated 2003 Plan.
A
participant does not have any rights as one of our shareholders with respect to
shares of Common Stock subject to grants made under the Amended and Restated
2003 Plan until a stock certificate representing such shares is issued to the
participant.
Shares Available for
Issuance. There are presently 6,000,000 shares of Common Stock reserved
and available for issuance pursuant to the Amended and Restated 2003 Plan, of
which 100,000 shares are reserved for issuance to Outside Directors pursuant to
the provisions described above. From the total shares reserved for issuance of
grants under the Amended and Restated 2003 Plan, as of February 29, 2008, we had
made award grants covering 4,698,292 shares, net of all shares that have been
cancelled or forfeited. Any shares subject to outstanding option or restricted
stock grants are counted against the shares reserved and available for issuance
as one share for every share subject thereto. If an option expires or is
terminated without having been exercised in full, or if a restricted stock grant
is forfeited, the unexercised or forfeited option shares will become available
for future grant under the Amended and Restated 2003 Plan.
The total
number of shares reserved and available for issuance under the Amended and
Restated 2003 Plan is automatically adjusted, without further action by the
Board of Directors or shareholders, 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 Common Stock.
Mergers or Consolidations. If
(i) our Company dissolves or undergoes any reorganization, including, without
limitation, a merger or consolidation with any other organization, (ii) our
Company is not the surviving entity in such reorganization, and (iii) the
surviving entity does not agree to assume the options granted under the Amended
and Restated 2003 Plan or to issue substitute options therefor, the options
granted under the Amended and Restated 2003 Plan may be terminated. In
connection with any such termination, each participant holding unexercised
options must be notified of such termination and provided a reasonable period of
not less than 15 days to exercise such options to the extent such options are
then exercisable. The Compensation Committee may, in its sole discretion,
prescribe such terms and conditions as it deems appropriate and authorize the
exercise of stock options with respect to all shares covered in the event of a
merger or consolidation. Any stock option not exercised in accordance with the
terms and conditions prescribed by the Compensation Committee shall terminate as
of the date specified by the Compensation Committee and, simultaneously, the
Amended and Restated 2003 Plan itself shall be terminated without further action
by us or our Board of Directors.
Amendment and Termination.
The Board of Directors may terminate, suspend, discontinue, modify, or
amend the Amended and Restated 2003 Plan in any respect, except that, without
the approval of our shareholders, no amendment or modification may change the
number of shares of Common Stock reserved and available for issuance (other than
the automatic adjustments described above), change the designation of the class
of employees eligible to receive awards, decrease the price at which options may
be granted, or remove the administration of the Plan from the Compensation
Committee. Notwithstanding the foregoing, the Board of Directors may not
terminate the Amended and Restated 2003 Plan with respect to any outstanding
option unless it gives the participant notice of termination and at least 15
days to exercise such option to the extent then exercisable.
Stock Price. On February 29,
2008, the closing price of our Common Stock was $14.79 per share.
ISOs. An optionee is not
treated as receiving taxable income upon either the grant of 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 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 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 Common Stock (determined at the time the 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 Common Stock
becomes either transferable or not subject to a substantial risk of
forfeiture.
If 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 Common Stock is transferred to the optionee upon exercise,
any gain or loss resulting from its disposition is treated as long-term capital
gain or loss. If such Common Stock is disposed of before the expiration of the
above-mentioned holding periods, a "disqualifying disposition" occurs. If a
disqualifying disposition occurs, the optionee realizes ordinary income in the
year of the disposition in an amount equal to the difference between the fair
market value of the Common Stock on the date of exercise and the exercise price,
or the selling price of the Common Stock and the exercise price, whichever is
less. The balance of the optionee'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 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 optionee.
NSOs. An optionee does not
recognize any taxable income upon the grant of an NSO, and we are not entitled
to a tax deduction by reason of such grant. Upon exercise of an NSO, the
optionee 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 an NSO by the optionee, 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 optionee has no tax
consequence to us.
Restricted Stock. Unless the
recipient of a restricted stock grant elects to treat such grant as ordinary
income at the time the grant is made, the recipient does not recognize taxable
income upon the grant of restricted stock. Instead, the recipient will recognize
ordinary income at the time of vesting (i.e. when the restrictions on
the grant lapse) equal to the fair market value of the restricted shares on the
vesting date minus any amount paid for the restricted shares. At the time that
the recipient recognizes ordinary income in respect of the restricted stock
grant, we would be entitled to a tax deduction for compensation expense equal to
the amount of ordinary income recognized by the recipient.
The foregoing is only a summary of
the effect of federal income taxation upon us and the participants under the
Amended and Restated 2003 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.
Prior to
our adoption of the Statement of Financial Accounting Standards No. 123R ("SFAS
123R"), employee stock option awards at or above fair market value on the date
of grant typically did not result in any direct charge to our reported earnings.
However, the fair market value of these awards was required to be disclosed in
the notes to our financial statements. We were also required to disclose, in the
notes to the financial statements, the pro forma impact that these awards would
have on our reported earnings and earnings per share if the fair value of the
awards at the time of grant was treated as compensation expense.
Employee
stock option awards with exercise prices below the fair market value of the date
of grant resulted in direct compensation expense that was typically equal to the
"spread" (i.e., the
difference between the exercise price and the fair market value on the date of
grant). Typically, this expense was amortized over the award's vesting
period.
In
December 2004, and as revised in April 2005, the Financial Accounting Standards
Board ("FASB") released SFAS 123R. The accounting standards established by this
statement require, beginning January 1, 2006, the expensing of stock
options. Accordingly, the foregoing summary of the applicable
accounting treatment for stock options changed, effective with our fiscal year
beginning January 1, 2006, and the stock options which were, and will be,
granted under the Amended and Restated 2003 Plan have to be valued as of the
grant date under an appropriate valuation formula, and that value is charged as
a direct compensation expense against our reported earnings over the designated
vesting period of the award. Similar option expensing was and is required for
any unvested options on or after the January 1, 2006 effective date, with the
grant date fair value of such unvested options being expensed against our
earnings over the remaining vesting period.
The
following table sets forth certain information regarding grants of stock options
made under the Amended and Restated 2003 Plan during the year ended December 31,
2007, 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 Amended and Restated 2003 Plan are subject to the
discretion of the Compensation Committee. Accordingly, future grants under the
Amended and Restated 2003 Plan are not determinable.
|
Plan
Benefits
Amended and Restated 2003 Stock Option
Plan
|
||||||
|
Name
|
Number
of Options
Granted
During 2007
|
Percentage
of Total
Options
Granted
During
2007
|
Weighted
Average
Exercise
Price Per
Share
($/Share)
|
|||
|
Kevin
P. Knight,
Chairman and Chief
ExecutiveOfficer
|
45,000
|
6.5%
|
$18.23
|
|||
|
David
A. Jackson,(1)
Chief Financial
Officer
|
12,500
|
1.8%
|
$18.23
|
|||
|
Keith
T. Knight,
Chief Operating
Officer
|
20,000
|
2.9%
|
$18.23
|
|||
|
Gary
Knight
Vice Chairman
|
12,500
|
1.8%
|
$18.23
|
|||
|
Casey
Comen,(2)
Vice President of
Sales
|
12,500
|
1.8%
|
$18.23
|
|||
|
Timothy
Kohl(3)
|
20,000
|
2.9%
|
$18.23
|
|||
|
Executive
Officer Group
|
122,500
|
17.7%
|
$18.23
|
|||
|
Donald
A. Bliss(4)
|
-
|
-
|
-
|
|||
|
Richard
J. Lehman(4)
|
-
|
-
|
-
|
|||
|
Non-Executive
Director Group(4)
(5)
|
-
|
-
|
-
|
|||
|
Employee
Group(6)
|
572,615
|
82.4%
|
$18.13
|
|||
|
(1)
|
In
addition to the stock options reflected in the table, on February 29,
2008, Mr. Jackson was granted options with respect to 9,304 shares at an
exercise price of $14.79 per share.
|
|
(2)
|
In
addition to the stock options reflected in the table, on February 29,
2008, Mr. Comen was granted options with respect to 10,000 shares at an
exercise price of $14.79 per share.
|
|
(3)
|
In
connection with our movement toward more formal operating units, the
responsibilities formerly held by Mr. Kohl as President were eliminated,
and Mr. Kohl left our Company in October 2007. The options granted to Mr.
Kohl in 2007 were forfeited due to his departure.
|
|
(4)
|
No
options were granted to non-executive directors in 2007, including Mr.
Bliss and Mr. Lehman, our director nominees.
|
|
(5)
|
During
2007, our non-executive directors received an aggregate of 9,416 shares of
Common Stock in payment of directors' fees pursuant to the terms of the
Amended and Restated 2003 Plan, of which 7,404 shares are subject to
certain holding and other restrictions.
|
|
(6)
|
In
addition to the stock options reflected in the table, on February 29,
2008, many of our employees were granted options with respect to 916,602
shares, in the aggregate, at an exercise price of $14.79 per
share.
|
The
following table provides certain information, as of December 31, 2007, with
respect to our compensation plans under which shares of Common Stock are
authorized for issuance. The Amended and Restated 2003 Plan is our
only active equity compensation plan. The number of shares of Common
Stock reflected in column (a) of the following table is comprised of 3,643,675
shares subject to outstanding options granted under the Amended and Restated
2003 Plan and 539,105 shares subject to outstanding options granted under the
1994 Plan. The number of shares of Common Stock reflected in column
(c) of the following table is comprised entirely of shares available for future
grant under the Amended and Restated 2003 Plan as of December 31, 2007, and
neither takes into account the options granted on February 29, 2008, as
described below, nor includes the additional shares reserved for issuance
thereunder contemplated by the Amendment. Shares of Common Stock
underlying outstanding options granted under the Amended and Restated 2003 Plan
that are terminated or expire unexercised will be available for future
grant.
|
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
eligible for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
||||
|
Plan
category
|
(a)
|
(b)
|
(c)
|
|||
|
Equity
compensation plans approved by
security holders
|
4,182,780
|
$14.06
|
2,152,698
|
|||
|
Equity
compensation plans not approved
by security
holders
|
-
|
-
|
-
|
|||
|
Total
|
4,182,780
|
$14.06
|
2,152,698
|
On
February 29, 2008 we granted options with respect to 916,602 shares under the
Amended and Restated 2003 Plan. As of March 1, 2008, there were
1,301,708 shares available for future grant, adjusted for the forfeiture of
options since December 31, 2007, under the Amended and Restated 2003 Plan,
excluding the additional shares reserved for issuance thereunder contemplated by
the Amendment.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE SECOND
AMENDMENT TO THE AMENDED AND RESTATED 2003 STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER FROM 6,000,000 TO 9,000,000.
Brokers do not have discretion
to vote on this proposal without your instruction. If you do not instruct your
broker how to vote on this proposal, your broker will deliver a non-vote on this
proposal.
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has
appointed Deloitte & Touche LLP to serve as our principal independent
registered public accounting firm for fiscal 2008. Deloitte &
Touche also served as our principal independent registered public accounting
firm in fiscal 2007. At the Annual Meeting, our shareholders are
being asked to ratify the appointment of Deloitte & Touche as our
independent registered public accounting firm for fiscal 2008. A
representative of Deloitte & Touche is expected to be present at the Annual
Meeting and to be available to respond to appropriate questions, and such
representative will have an opportunity to make a statement at the Annual
Meeting if he or she desires to do so.
Approval
by our shareholders of the appointment of our independent registered public
accounting firm is not required by law, any applicable NYSE rule, or by our
organizational documents, but the Board of Directors is submitting this matter
to our shareholders for ratification as a corporate governance
practice. Ultimately, the Audit Committee retains full discretion and
will make all determinations with respect to the appointment and retention of
the independent registered public accounting firm.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
Deloitte
& Touche billed us the following amounts for services provided in the
following categories during the fiscal years ended December 31, 2007 and
2006, respectively:
|
Fiscal
2007
|
Fiscal
2006
|
||
|
Audit Fees(1)
|
$598,537
|
$507,851
|
|
|
Audit-Related Fees(2)
|
-
|
-
|
|
|
Tax Fees(3)
|
-
|
-
|
|
|
All Other Fees(4)
|
-
|
-
|
|
|
Total
|
$598,537
|
$507,851
|
|
(1)
|
"Audit
Fees" represents the aggregate fees billed for professional services
rendered by Deloitte & Touche for the audit of our annual financial
statements and the review of financial statements included in our
quarterly reports on Form 10-Q, or services that are normally
provided by Deloitte & Touche in connection with statutory or
regulatory filings or engagements for those fiscal
years.
|
|
(2)
|
"Audit-Related
Fees" represents the aggregate fees billed, other than Audit Fees, for
assurance and related services by Deloitte & Touche that are
reasonably related to the performance of the audit or review of our
financial statements and internal control over financial
reporting. We were not billed for any Audit-Related Fees in
2007 or 2006.
|
|
(3)
|
"Tax
Fees" represents the aggregate fees billed for professional services
rendered by Deloitte & Touche for tax compliance, tax advice, and tax
planning. We were not billed for any Tax Fees in 2007 or
2006.
|
|
(4)
|
"All
Other Fees" represents the aggregate fees billed for products and services
provided by Deloitte & Touche, other than Audit Fees, Audit-Related
Fees, and Tax Fees. We were not billed for any Other Fees in
fiscal 2007 or 2006.
|
Our Audit
Committee maintains a policy pursuant to which it pre-approves all audit,
audit-related, tax, and other permissible non-audit services provided by our
principal independent registered public accounting firm in order to assure that
the provision of such services is compatible with maintaining the accounting
firm's independence. Under this policy, the Audit Committee
pre-approves, on an annual basis, specific types or categories of engagements
constituting audit, audit-related, tax, or other permissible non-audit services
to be provided by the 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 independent registered public
accounting firm are required to periodically report to the Audit Committee
regarding the extent of services provided by the accounting firm in accordance
with the annual pre-approval and the fees for the services performed to
date. If 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 then such new or expanded services are
presented to the Audit Committee for its review and approval prior to the
engagement of the 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 minimus 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, 2007.
To be
eligible for inclusion in our proxy materials relating to the 2009 Annual
Meeting of Shareholders, shareholder proposals intended to be presented at that
meeting must be received in writing by us on or before
December 12, 2008. However, if the date of the 2009 Annual
Meeting of Shareholders is more than thirty days before or after May 22,
2009, then the deadline for submitting any such shareholder proposal for
inclusion in the proxy materials relating to the 2009 Annual Meeting of
Shareholders shall be a reasonable time before we begin to print or mail such
proxy materials. The inclusion of any such shareholder 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 shareholder proposals intended to be considered at our
2009 Annual Meeting of Shareholders, but not included in our proxy materials
relating to that meeting, by February 25, 2009. Pursuant to Rule
14(a)-4(c)(1) under the Exchange Act, the proxy holders designated by an
executed proxy in the
form
accompanying our 2009 proxy statement will have discretionary authority to vote
on any shareholder proposal that is considered at the Annual Meeting, but not
received on or prior to the deadline described above.
All
shareholder proposals should be sent via certified mail, return receipt
requested, and addressed to David A. Jackson, Secretary, Knight Transportation,
Inc., 5601 West Buckeye Road, Phoenix, Arizona 85043.
See "Corporate Governance –
The Board of Directors and Its Committees – Committees of the Board of Directors
– The Nominating and Corporate Governance Committee" for information regarding
how shareholders can recommend director candidates for consideration by the
Nominating and Corporate Governance Committee.
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. If any other matters are properly
brought before the Annual Meeting or any adjournment thereof, the proxy holders
named in the accompanying form of proxy will have discretionary authority to
vote proxies on such matters in accordance with the recommendations of the Board
of Directors, or, if no recommendations are given, in accordance with their
judgment, unless the person executing any such proxy indicates that such
authority is withheld.
|
Knight
Transportation, Inc.
|
|
|
/s/ Kevin P.
Knight
|
|
|
Kevin
P. Knight
Chairman
of the Board and Chief Executive Officer
|
|
|
April
11, 2008
|
 |
VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before
the cut-off date or meeting date. Have your proxy card in hand when you
access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
|
| ATTN:
PROXY DEPT.
5601
W. BUCKEYE RD.
PHOENIX,
AZ 85043
|
ELECTRONIC
DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If
you would like to reduce the costs incurred by Knight Transportation, Inc.
in mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate
that you agree to receive or access shareholder communications
electronically in future years.
|
|
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the
instructions.
|
|
|
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Knight Transportation, Inc., c/o
Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
|
|
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
KNIGH1
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
DETACH AND RETURN THIS PORTION ONLY
|
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
KNIGHT
TRANSPORTATION, INC.
|
For
All
|
Withhold
All
|
For All
Except
|
To
withhold authority to vote for any individual nominee(s), mark “For All
Except” and write the number(s) of the nominee(s) on the line
below.
|
|||||||||||
|
Proposal
No. 1:
|
Election
of Class I Directors.
NOMINEES:
01 - Donald A. Bliss
02 - Richard J. Lehmann
|
o
|
o
|
o
|
|||||||||||
|
For
|
Against
|
Abstain
|
|||||||||||||
|
CUMULATIVE VOTING - If you wish to
allocate your votes between the Class I Nominees using cumulative voting,
do not check any of the boxes
above, but instead, indicate in the space provided below the number of
votes you wish to cast for each Class I Nominee (the maximum number of
votes you may allocate is the number of shares you own multiplied by two,
the number of Class I Nominees).
|
Proposal No. 2:
Proposal to Approve the Second Amendment to the Company's Amended and
Restated 2003 Stock Option Plan to Increase the Number of Shares of Common
Stock Reserved for the Issuance of Stock Grants, Including Stock Options,
to Employees and Directors.
|
o
|
o
|
o
|
|||||||||||
|
For
|
Against
|
Abstain
|
|||||||||||||
|
Nominee
|
Number
of Votes
|
|
Proposal No. 3: Proposal to
Ratify the Appointment of Deloitte & Touche LLP as the Company's
Independent Registered Public Accounting Firm for Fiscal
2008.
|
o
|
o
|
o
|
|||||||||
|
Donald
A. Bliss
|
|||||||||||||||
|
Richard
J. Lehmann.
|
|||||||||||||||
|
(If
you exercised cumulative voting above, please mark the corresponding box
below.)
|
Other Action: In their
discretion, the proxies are also authorized to vote upon such other
matters as may properly come before the Annual Meeting or any adjournments
thereof.
|
||||||||||||||
|
Check
the box to the right if you exercised cumulative voting above. Please do not check the box unless you want to exercise
cumulative voting.
|
o
|
||||||||||||||
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. Your signature below should conform to the name in which you
hold the shares. 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.
|
|||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | ||||||||||||
As a
Knight Transportation, Inc. shareholder, you can view the shareholder account on
a secured internet website.
By
accessing Investor Service DirectSM at www.melloninvestor.com, you can view
the account profile, stock detail, and historical Knight Transportation, Inc.
stock price information. You can also change your address.
In
addition, you can use this site to consent to future access of Knight's annual
reports and proxy materials electronically via the internet.
Knight
also provides access to shareholder information, including its annual report and
proxy statement, through its website at www.knighttrans.com.
Important Notice Regarding Internet
Availability of Proxy Materials for the Annual Meeting: The annual report
and proxy statement are available at www.proxyvote.com.
Detach
here from proxy voting card
PROXY
KNIGHT
TRANSPORTATION, INC.
5601 West
Buckeye Road
Phoenix,
Arizona 85043
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE
2008 ANNUAL MEETING OF SHAREHOLDERS
TO BE
HELD
Thursday,
May 22, 2008, 8:30 A.M., Phoenix Time
By
executing this Proxy, the shareholder constitutes and appoints the Chairman and
Chief Executive Officer, Kevin P. Knight, and the Chief Financial Officer,
Secretary, and Treasurer, David A. Jackson, and each of them, as proxies for the
shareholder (or if only one proxy is present, that one shall have all power
granted herein), with full power of substitution, who may, and by a majority of
such proxies, represent the shareholder and vote all shares of Common Stock
which the shareholder is entitled to vote at the Annual Meeting of Shareholders
of Knight Transportation, Inc. to be held on May 22, 2008, at 8:30 A.M., Phoenix
Time, at the Wigwam Golf Resort & Spa, 300 East Wigwam Boulevard, Litchfield
Park, Arizona 85340, or at any adjournment thereof, on all matters described in
the Notice and Proxy Statement for the Annual Meeting dated April 11, 2008, as
set forth below. Cumulative voting will be applied in the election of
directors. See the Proxy Statement furnished for an explanation
of cumulative voting.
The
shareholder acknowledges receipt of the Notice and Proxy Statement dated April
11, 2008, grants authority to any of said proxies, or their substitutes, to act
in the absence of others, with all the powers which the shareholder would
possess if personally present at such meeting, and hereby ratifies and confirms
all that said proxies, or their substitutes, may lawfully do in the
shareholder's name, place, and stead.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KNIGHT TRANSPORTATION,
INC., AND THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS. IF NO CHOICE IS SPECIFIED BY YOU, THIS PROXY WILL BE VOTED
FOR ELECTION OF THE NOMINEES NAMED IN PROPOSAL NO. 1, FOR PROPOSAL NO. 2, AND
FOR PROPOSAL NO. 3.
Please
mark, sign, date, and return the Proxy Card promptly, using the enclosed
envelope, which requires no postage when mailed in the United
States.
|
TO
BE SIGNED ON THE REVERSE SIDE
|
||||
|
SEE REVERSE
SIDE
|
SEE REVERSE
SIDE
|