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
(Amendment No.
)
Filed by the Registrant
☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐
|
Preliminary Proxy Statement
|
☐
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
☒
|
Definitive Proxy Statement
|
☐
|
Definitive Additional Materials
|
☐
|
Soliciting Material Pursuant to §240.14a-12
|
J.B. HUNT TRANSPORT SERVICES, INC.
(Name of Registrant as
Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☐
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
(2)
|
Aggregate number of securities to which transaction applies:
|
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
|
|
(4)
|
Proposed maximum aggregate value of transaction:
|
☐
|
Fee paid previously with preliminary materials.
|
☐
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
|
|
(1)
|
Amount Previously Paid:
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
J.B. HUNT TRANSPORT SERVICES, INC.
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
479-820-0000
Internet Site: www.jbhunt.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 20, 2017
The Annual Meeting of Stockholders of J.B. Hunt Transport Services, Inc. (the Company) will be held April 20, 2017, at 10
a.m. (CDT) at the Companys headquarters, located at 615 J.B. Hunt Corporate Drive in Lowell, Arkansas, for the following purposes:
(1) To elect Directors for a term of one (1) year
(2) To approve the Companys Third Amended and Restated Management Incentive Plan, including the material terms of the
performance goals under such plan
(3) To consider and approve an advisory resolution regarding the Companys
compensation of its named executive officers
(4) To consider and act upon an advisory vote to determine the frequency with
which stockholders will consider and approve an advisory vote on the Companys compensation of its named executive officers
(5) To ratify the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm
for the 2017 calendar year
(6) To consider a stockholder proposal regarding reporting political contributions
(7) To transact such other business as may properly come before the Annual Meeting or any adjournments thereof
Only stockholders of record on February 14, 2017, will be entitled to vote at the meeting or any adjournments thereof. The
stock transfer books will not be closed.
The 2016 Annual Report to Stockholders is included in this publication.
|
By Order of the Board of Directors
|
|
DAVID G. MEE
|
Corporate Secretary
|
Lowell, Arkansas
March 9, 2017
YOUR VOTE IS IMPORTANT
PLEASE EXECUTE YOUR PROXY WITHOUT DELAY
J.B. HUNT TRANSPORT SERVICES, INC.
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
479-820-0000
Internet Site: www.jbhunt.com
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies by J.B. Hunt Transport Services, Inc. (the
Company), on behalf of its Board of Directors (the Board), for the 2017 Annual Meeting of Stockholders (the Annual Meeting). The Proxy Statement and the related proxy card are being distributed on or about March 9, 2017.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE STOCKHOLDERS MEETING
TO BE HELD APRIL 20, 2017
This Proxy Statement and our 2016 Annual Report to Stockholders, which includes our Annual Report on Form
10-K,
are available at www.jbhunt.com.
1
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND
THE ANNUAL MEETING
When And Where
Is The Annual Meeting?
Date:
|
Thursday, April 20, 2017
|
Time:
|
10 a.m. Central Daylight Time
|
Location:
|
J.B. Hunt Transport Services, Inc.
|
|
615 J.B. Hunt Corporate Drive
|
What Matters Will Be Voted Upon At The Annual Meeting?
At the Annual Meeting, you will be asked to:
|
|
|
Consider and vote upon a proposal to elect nominees Douglas G. Duncan, Francesca M. Edwardson, Wayne Garrison,
Sharilyn S. Gasaway, Gary C. George, Bryan Hunt, Coleman H. Peterson, John N. Roberts, III, James L. Robo, and Kirk Thompson as directors to hold office for a term of one year, expiring at the close of the Annual Meeting of Stockholders in 2018.
|
|
|
|
Consider and vote upon a proposal to approve the Companys Third Amended and Restated Management
Incentive Plan, including the material terms of the performance goals under such plan pursuant to Section 162(m) of the Internal Revenue Code, as amended (the Code).
|
|
|
|
Consider and approve an advisory resolution regarding the Companys compensation of its named executive
officers.
|
|
|
|
Consider and vote on an advisory basis, the frequency of a stockholder advisory vote on the Companys
compensation of its named executive officers.
|
|
|
|
Consider and vote upon a proposal to ratify the appointment of Ernst & Young LLP (E&Y) as the
Companys independent registered public accounting firm for the 2017 calendar year.
|
|
|
|
Consider and vote upon a stockholder proposal requesting the Company to prepare and disclose a report of the
Companys political contributions policy and political contributions made by the Company that could not be deducted under section 162(e) of the Internal Revenue Code.
|
|
|
|
Transact such other business as may properly come before the Annual Meeting or any adjournments thereof.
|
What Constitutes A Quorum?
The presence, either in person or by proxy, of the holders of at least a majority of our issued and outstanding shares of
common stock entitled to vote is required to constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes,
which are described in more detail below, are counted
as shares present at the Annual Meeting for purposes of determining whether a quorum exists.
Who Is Entitled To Vote?
Only stockholders of record of the Companys common stock at the close of business on Tuesday, February 14, 2017, which is
the record date, are entitled to notice of, and to vote at, the Annual Meeting. Shares that may be voted include shares that are held:
|
(1)
|
directly by the stockholder of record, and
|
|
(2)
|
beneficially through a broker, bank or other nominee.
|
Each share of our common stock will be entitled to one vote on all matters submitted for a vote at the Annual Meeting.
As of the record date, there were 111,310,853 shares of our common stock issued and outstanding and entitled to be voted at the
Annual Meeting.
What Is The Difference Between Holding Shares As A Registered Owner And A Beneficial Owner?
Most of the Companys stockholders hold their shares through a broker, bank or other nominee rather than directly in their
own name. As summarized below, there are some distinctions between registered shares and those owned beneficially:
|
|
|
Registered Owners If your shares are registered directly in your name with our transfer agent,
Computershare Trust Company N.A., you are, with respect to those shares, the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the Annual Meeting.
|
|
|
|
Beneficial Owners If your shares are held in a brokerage account, bank or by another nominee, you are,
with respect to those shares, the beneficial owner of shares held in street name. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote or to vote in person at the Annual
Meeting. However, since you are not a stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from your broker, bank or other nominee (who is the stockholder of record) giving
you the right to vote the shares.
|
2
What Stockholder Approval Is Necessary For Approval Of The Proposals?
Each director shall be elected by a vote of the majority of votes cast with respect to that director. This means that a
director must receive for votes from more than 50% of the number of shares voted with respect to that director. However, if the number of nominees is greater than the number of directors to be elected, the directors will be elected by
the vote of a plurality of the shares represented in person or by proxy at any stockholder meeting.
|
|
|
Approval of the Companys Third Amended and Restated Management Incentive Plan, including the material
terms of the performance goals under such plan
|
The approval of the Companys Third Amended and
Restated Management Incentive Plan, including the material terms of the performance goals under such plan pursuant to Section 162(m) of the Code, requires the affirmative vote of the majority of the votes cast at the Annual Meeting. For purposes of
this vote, a failure to vote, a vote to abstain or withholding your vote (or direction to your broker to do so) are not counted as votes cast and, therefore, will have no effect on the outcome of this vote. Stockholder approval is required for the
Companys Third Amended and Restated Management Incentive Plan.
|
|
|
Advisory vote on the resolution to approve the Companys compensation of its named executive officers
|
Approval of this resolution requires the affirmative vote of a majority of the votes cast at the Annual
Meeting. While this vote is required by law, it will neither be binding on the Company or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, the Company or the Board. However,
the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.
|
|
|
Advisory vote on the frequency of stockholder advisory votes on the Companys compensation of its named
executive officers
|
Generally, approval of any matter presented to stockholders requires a majority of
votes cast. However, because this vote is advisory and nonbinding, if none of the frequency options (1 year, 2 years or 3 years) receives a majority of the votes cast, the option receiving the greatest number of votes will be considered the
frequency recommended by the Companys stockholders. Even though this vote will neither be binding on the Company or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, the
Company or the Board, the Board of Directors will take into account the outcome of this vote in making a determination on the frequency with which advisory votes on executive compensation will be included in the Companys Proxy Statement.
|
|
|
Ratification of the appointment of E&Y as the Companys independent registered public accounting firm
|
Ratification of the Audit Committees appointment of E&Y as the Companys independent
registered public accounting firm requires the affirmative vote of a majority of the votes cast at the Annual Meeting. For purposes of this vote, a failure to vote, a vote to abstain or withholding your vote (or direction to your broker to do so) is
not counted as a vote cast and, therefore, will have no effect on the outcome of this vote. Stockholder ratification is not required for the appointment of the Companys independent registered public accounting firm. However, we are submitting
the proposal to solicit the opinion of our stockholders.
|
|
|
Vote on a stockholder proposal requesting the Company to prepare and disclose a report of the Companys
political contributions policy and political contributions made by the Company that could not be deducted under section 162(e) of the Internal Revenue Code
|
Approval of this resolution requires the affirmative vote of a majority of the votes cast at the Annual Meeting. For purposes
of this vote, a failure to vote, a vote to abstain or withholding your vote (or direction to your broker to do so) is not counted as a vote cast and, therefore, will have no effect on the outcome of this vote.
As of the record date, directors and executive officers of the Company beneficially owned an aggregate 4,736,668 shares of
common stock representing 4.3% of our common stock issued and outstanding and, therefore, 4.3% of the voting power entitled to vote at the Annual Meeting. The Company believes that its directors and executive officers currently intend to vote their
shares as follows:
|
|
|
FOR
the election of directors for one (1) year
|
|
|
|
FOR
the resolution approving the Companys Third Amended and Restated Management Incentive Plan,
including the material terms of the performance goals under such plan
|
|
|
|
FOR
the resolution approving the Companys compensation of its named executive officers
|
|
|
|
FOR
a stockholder advisory vote on the Companys executive compensation every year
|
|
|
|
FOR
ratification of the appointment of E&Y as the Companys independent registered public
accounting firm for the 2017 calendar year
|
|
|
|
AGAINST
the stockholder proposal requesting the Company to prepare and disclose a report of the
Companys political contributions policy and political contributions made by the Company that could not be deducted under section 162(e) of the Internal Revenue Code
|
3
May I Vote My Shares In Person At The Annual Meeting?
If you are the registered owner of shares of the Companys common stock on the record date, you have the right to vote
your shares in person at the Annual Meeting.
If you are the beneficial owner of shares of the Companys common stock
on the record date, you may vote these shares in person at the Annual Meeting if you request and obtain a legal proxy from your broker, bank or other nominee (the stockholder of record) giving you the right to vote the shares at the Annual Meeting,
complete such legal proxy and present it to the Company at the Annual Meeting.
Even if you plan to attend the Annual
Meeting, we recommend that you submit your proxy card or voting instructions so that your vote will be counted if you later decide not to attend the Annual Meeting.
How Can I Vote My Shares Without Attending The Annual Meeting?
If you are a registered owner, you may instruct the named proxy holders on how to vote your shares by completing, signing,
dating and returning the enclosed proxy card in the postage-paid envelope provided with this Proxy Statement, or by using the Internet voting site or the toll-free telephone number listed on the proxy card. Specific instructions for using the
Internet and telephone voting systems are provided on the proxy card. The Internet and telephone voting systems will be available until 11:59 p.m. Central Daylight Time on Wednesday, April 19, 2017 (the day before the Annual Meeting).
If you are the beneficial owner of shares held in street name, you should instruct your broker, bank or other
nominee on how to vote your shares. Your broker, bank or other nominee has enclosed with this Proxy Statement a voting instruction card for you to use in directing your nominee on how to vote your shares. The instructions from your nominee will
indicate whether Internet or telephone voting is available and, if so, will provide details regarding how to use those systems.
If My Shares Are
Held In Street Name, Will My Broker, Bank Or Other Nominee Vote My Shares For Me?
If you hold shares
in street name through a broker, bank or other nominee, your broker, bank or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon at the Annual Meeting. Under current stock exchange rules,
brokers who do not have instructions from their customers may not use their discretion in voting their customers shares on certain specific matters that are not considered to be routine matters, including the election of directors,
executive compensation and other significant matters. The proposals in this Proxy Statement regarding the election of directors, the approval of the Companys Third Amended and Restated Management Incentive Plan, the advisory votes concerning
executive compensation, and the frequency of future stockholder advisory votes on executive compensation, and the Companys political contributions policy are not considered to be routine matters.
Therefore, without your specific
instructions, your shares will not be voted on these matters and will not be counted in determining the number of shares necessary for approval.
Shares represented by such broker
non-votes,
however, will be counted in determining whether there is a quorum. You should follow the directions provided by your nominee regarding instructions on how to vote your shares.
Ratification of the appointment of E&Y as the Companys independent registered public accounting firm is considered a
routine matter and, therefore, if beneficial owners fail to give voting instructions, brokers, banks and other nominees will have the discretionary authority to vote shares of our common stock with respect to this proposal.
What Is A Broker
Non-Vote?
Generally, a broker
non-vote
occurs when a broker, bank or other nominee
that holds shares in street name for a customer is precluded from exercising voting discretion on a particular proposal because:
|
(1)
|
the beneficial owner has not instructed the nominee on how to vote, and
|
|
(2)
|
the nominee lacks discretionary voting power to vote such issues.
|
Under NASDAQ rules, a nominee does not have discretionary voting power with respect to the approval of nonroutine
matters absent specific voting instructions from the beneficial owners of such shares.
How Will My Proxy Be Voted?
Shares represented by a properly executed proxy (in paper form, by Internet or by telephone) that is received in a timely
manner, and not subsequently revoked, will be voted at the Annual Meeting or any adjournment or postponement thereof in the manner directed on the proxy. Kirk Thompson and John N. Roberts, III are named as proxies in the proxy form and have been
designated by the Board as the directors proxies to represent you and vote your shares at the Annual Meeting. All shares represented by a properly executed proxy on which no choice is specified will be voted:
|
(1)
|
FOR
the election of the nominees for director named in this Proxy Statement,
|
|
(2)
|
FOR
the resolution approving the Companys Third Amended and Restated Management Incentive Plan,
including the material terms of the performance goals under such plan,
|
|
(3)
|
FOR
the resolution approving the Companys compensation of its named executive officers,
|
|
(4)
|
FOR
a stockholder advisory vote on the Companys executive compensation every year,
|
|
(5)
|
FOR
ratification of the appointment of E&Y as the Companys independent registered public
accounting firm for the 2017 calendar year,
|
|
(6)
|
AGAINST
the stockholder proposal requesting the Company to prepare and disclose a report of the
Companys political contributions policy and political contributions made by the Company that could not be deducted under section 162(e) of the Internal Revenue Code, and
|
|
(7)
|
in accordance with the proxy holders best judgment as to any other business that properly comes before
the Annual Meeting.
|
4
This Proxy Statement is considered to be voting instructions for the trustees of
the J.B. Hunt Transport Services, Inc. Employee Retirement Plan for our common stock allocated to individual accounts under this plan. If account information is the same, participants in the plan (who are stockholders of record) will receive a
single proxy representing all of their shares. If a plan participant does not submit a proxy to us, the trustees of the plan in which shares are allocated to his or her individual account will vote such shares in the same proportion as the total
shares in such plan for which directions have been received.
May I Revoke My Proxy And Change My Vote?
Yes. You may revoke your proxy and change your vote at any time prior to the vote at the Annual Meeting.
If you are the registered owner, you may revoke your proxy and change your vote by:
|
(1)
|
submitting a new proxy bearing a later date (which automatically revokes the earlier proxy),
|
|
(2)
|
giving notice of your changed vote to us in writing mailed to the attention of David G. Mee, Corporate
Secretary, at our executive offices, or
|
|
(3)
|
attending the Annual Meeting and giving oral notice of your intention to vote in person.
|
You should be aware that simply attending the Annual Meeting will not in and of itself constitute a
revocation of your proxy.
Who Will Pay The Costs Of Soliciting Proxies?
Proxies will be solicited initially by mail. Further solicitation may be made in person or by telephone, electronic mail or
facsimile. The Company will bear the expense of preparing, printing and mailing this Proxy Statement and accompanying materials to our stockholders. Upon request, the Company will reimburse brokers, banks and other nominees for reasonable expenses
incurred in forwarding copies of the proxy materials relating to the Annual Meeting to the beneficial owners of our common stock.
In 2016, the Company retained Broadridge, an independent proxy solicitation firm, to assist in soliciting proxies from
stockholders. Broadridge received a fee of approximately $79,000 as compensation for its services and was reimbursed for its
out-of-pocket
expenses. The fee amount was
not contingent on the number of stockholder votes cast in favor of any proposal, and Broadridge is prohibited from making any recommendation to our stockholders to either accept or reject any proposal or otherwise express an opinion concerning a
proposal. Proxy solicitation fees in 2017 are expected to be comparable to those paid in 2016.
What Other Business Will Be Presented At The Annual
Meeting?
As of the date of this Proxy Statement, the Board knows of no other business that may properly be, or is
likely to be, brought before the Annual Meeting. If any other matters should arise at the Annual Meeting, the persons named as proxy holders, Kirk Thompson and John N. Roberts, III, will have the discretion to vote your shares on any additional
matters properly presented for a vote at the meeting. If, for any unforeseen reason, any of the director nominees are not available to serve as a director, the named proxy holders will vote your proxy for such other director candidate or candidates
as may be nominated by the Board.
What Is The Deadline For Stockholder Proposals For The 2018 Annual Meeting?
In order for a stockholder proposal to be eligible to be included in the Companys Proxy Statement and proxy card for the
2018 Annual Meeting of Stockholders, the proposal:
|
(1)
|
must be received by the Company at its executive offices, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas
72745, Attention: Corporate Secretary, on or before November 9, 2017, and
|
|
(2)
|
must concern a matter that may be properly considered and acted upon at the Annual Meeting in accordance with
applicable laws, regulations and the Companys Bylaws and policies, and must otherwise comply with Rule
14a-8
of the Securities Exchange Act of 1934, as amended (the Exchange Act).
|
Where Can I Find The Voting Results Of The Annual Meeting?
The Company will publish final voting results of the Annual Meeting on a Form
8-K
within four days after the annual stockholders meeting on April 20, 2017.
What Should I Do If I Receive More Than One Set Of Voting Materials?
You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and
multiple proxies or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account. If you are a registered owner and your shares are
registered in more than one name, you will receive more than one proxy card. Please vote each proxy and instruction card that you receive.
5
What Is Householding?
In an effort to reduce printing costs and postage fees, the Company has adopted a practice approved by the Securities and
Exchange Commission (the SEC) called householding. Under this practice, certain stockholders who have the same address and last name will receive only one copy of this Proxy Statement and the Companys Annual Report, unless one or
more of these stockholders notifies the Company that he or she wishes to continue receiving individual copies. Stockholders who participate in householding will continue to receive separate proxy cards.
If you share an address with another stockholder and received only one copy of this Proxy Statement and the Companys
Annual Report and would like to request a separate copy of these materials, or if you do not wish to participate in householding in the future, please:
|
(1)
|
mail such request to J.B. Hunt Transport Services, Inc., Attention: Corporate Secretary, 615 J.B. Hunt
Corporate Drive, Lowell, Arkansas 72745, or
|
|
(2)
|
call the Corporate Secretary toll-free at
800-643-3622.
|
Similarly, you may also contact the Company if you received multiple copies of the Companys proxy materials and would
prefer to receive a single copy in the future.
What Do I Need To Do Now?
First, read this Proxy Statement carefully. Then, if you are a registered owner, you should, as soon as possible, submit your
proxy by executing and returning the proxy card or by voting electronically via the Internet or by telephone. If you are the beneficial owner of shares held in street name, then you should follow the voting instructions of your broker,
bank or other nominee. Your shares will be voted in accordance with the directions you specify. If you submit an executed proxy card to the Company, but fail to specify voting directions, your shares will be voted:
|
(1)
|
FOR
the election of the nominees for director named in this Proxy Statement,
|
|
(2)
|
FOR
the resolution approving the Companys Third Amended and Restated Management Incentive Plan,
including the material terms of the performance goals under such plan,
|
|
(3)
|
FOR
the resolution approving the Companys compensation of its named executive officers,
|
|
(4)
|
FOR
a stockholder advisory vote on the Companys executive compensation every year,
|
|
(5)
|
FOR
ratification of the appointment of E&Y as the Companys independent registered public
accounting firm for the 2017 calendar year, and
|
|
(6)
|
AGAINST
the stockholder proposal requesting the Company to prepare and disclose a report of the
Companys political contributions policy and political contributions made by the Company that could not be deducted under section 162(e) of the Internal Revenue Code.
|
Who Can Help Answer My Questions?
If you have questions concerning a proposal or the Annual Meeting, if you would like additional copies of this Proxy Statement,
or if you need directions to or special assistance at the Annual Meeting, please call the Corporate Secretary toll-free at
800-643-3622.
In addition, information
regarding the Annual Meeting is available via the Internet at our website, www.jbhunt.com.
6
YOU SHOULD CAREFULLY READ THIS PROXY STATEMENT IN ITS ENTIRETY
The summary information provided above in the
question-and-answer
format is for your convenience only and is merely a brief description of material information contained in this Proxy Statement.
YOUR VOTE IS IMPORTANT
IF YOU ARE A REGISTERED OWNER, YOU MAY VOTE BY INTERNET, TELEPHONE,
OR BY COMPLETING, SIGNING AND DATING
THE ENCLOSED PROXY CARD AND RETURNING IT TO US
IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE
IF YOU ARE A BENEFICIAL OWNER, PLEASE FOLLOW THE VOTING INSTRUCTIONS
OF YOUR BROKER, BANK OR OTHER NOMINEE
AS PROVIDED WITH THIS PROXY STATEMENT AS PROMPTLY AS POSSIBLE
7
PROPOSALS TO BE VOTED AT THE ANNUAL MEETING
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
Our Board nominates
Douglas G. Duncan, Francesca M. Edwardson, Wayne Garrison, Sharilyn S. Gasaway, Gary C. George, Bryan Hunt, Coleman H. Peterson, John N. Roberts, III, James L. Robo, and Kirk Thompson as directors to hold office for a term of one year, expiring at
the close of the 2018 Annual Meeting of Stockholders or until their successors are elected and qualified or until their earlier resignation or removal. The Board believes that these incumbent directors standing for
re-election
are well-qualified and experienced to direct and manage the Companys operations and business affairs and will represent the interests of the stockholders as a whole. Biographical information
on each of these nominees is set forth below in Nominees for Director.
If any director nominee becomes
unavailable for election, which is not anticipated, the named proxies will vote for the election of such other person as the Board may nominate, unless the Board resolves to reduce the number of directors to serve on the Board and thereby reduce the
number of directors to be elected at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
EACH OF THE
DIRECTOR NOMINEES LISTED HEREIN
INFORMATION YOU NEED TO MAKE AN INFORMED DECISION
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Number
of Directors and Term of Directors and Executive Officers
The Companys Bylaws provide that the number of
directors shall not be less than three or more than 12, with the exact number to be fixed by the Board. Directors serve a term of one year from their election date to the Annual Meeting of Stockholders.
Directors are elected by a majority of votes cast with respect to each director, provided that the number of nominees does not
exceed the number of directors to be elected.
The stockholders of the Company elect at the Companys Annual Meeting
successors for directors whose terms have expired. The Board elects members to fill new membership positions and vacancies in unexpired terms on the Board. No director will be eligible to stand for
re-election
or be elected to a vacancy once he or she has reached 72 years of age. Executive officers are elected by the Board and hold office until their successors are elected and qualified or until their earlier death, retirement, resignation or removal.
8
NOMINEES FOR DIRECTOR
TERMS EXPIRE 2018
|
|
|
|
|
Douglas G. Duncan
|
Mr. Duncan, 66, was elected to the Board in 2010. He is a member of the Audit Committee and the Nominating
and Corporate Governance Committee. In February 2010, he retired as President and Chief Executive Officer of FedEx Freight Corporation, a wholly owned subsidiary of FedEx Corporation. FedEx Freight Corporation is a leading provider of regional and
national less-than- truckload (LTL) freight services. Mr. Duncan was the founding chief executive officer of FedEx Freight. He also served on the Strategic Management Committee of FedEx Corporation. Before the formation of FedEx Freight, he
served for two years as President and Chief Executive Officer of Viking Freight. With 30 years of transportation experience, Mr. Duncan has held management positions in operations, sales and marketing with Caliber System and Roadway Express. He
served on the Executive Committee of the American Trucking Associations and as Chairman of the American Transportation Research Institute. A graduate of Christopher Newport University, Mr. Duncan served on the universitys Board of
Visitors. He currently serves on the Board of Directors of Benchmark Electronics, Inc. and served on the Board of Directors of Brambles LTD.
|
|
|
|
|
|
Francesca M. Edwardson
|
Ms. Edwardson, 59, was elected to the Board in 2011. She serves on the Companys Executive
Compensation Committee and the Nominating and Corporate Governance Committee. She retired as the Chief Executive Officer of the American Red Cross of Chicago and Northern Illinois, a business unit of the American Red Cross, in 2016, a position she
held since 2005. She previously served as Senior Vice President and General Counsel for UAL Corporation, a predecessor company to United Continental Holdings, Inc. She has also been a partner in the law firm of Mayer Brown and the Executive Director
of the Illinois Securities Department. Ms. Edwardson is a graduate of Loyola University in Chicago, Illinois, holding degrees in economics and law. She serves on the Board of Directors of Duluth Holdings, Inc., where she chairs the Compensation
Committee, and also serves on the Boards of Trustees for Rush University Medical Center and the Lincoln Park Zoo.
|
|
|
|
|
|
Wayne Garrison
|
Mr. Garrison, 64, was elected to the Board in 1981. He served as Chairman of the Board of the Company from
1995 to December 31, 2010, and continues to serve as a member of the Board of Directors. Joining the Company in 1976 as Plant Manager, Mr. Garrison has also served as Vice President of Finance in 1978, Executive Vice President of
Finance in 1979, President in 1982, Chief Executive Officer in 1987 and Vice Chairman of the Board from January 1986 until May 1991.
|
|
|
|
|
|
Sharilyn S. Gasaway
|
Mrs. Gasaway, 48, was elected to the Board in 2009. She is a member of the Audit Committee, Compensation
Committee, and the Nominating and Corporate Governance Committee. She served as Executive Vice President and Chief Financial Officer of Alltel Corp., the Little Rock, Arkansas-based Fortune 500 wireless carrier, from 2006 to 2009. She was part of
the executive team that spearheaded publicly traded Alltels transition through the largest private equity buyout in the telecom sector and was an integral part of the successful combination of Alltel and Verizon. She also served as
Alltels Corporate Controller and Principal Accounting Officer from 2002 to 2006. Joining Alltel in 1999, she served as Director of General Accounting, Controller, and Vice President of Accounting and Finance. Prior to joining Alltel, she
worked for eight years at Arthur Andersen LLC. Mrs. Gasaway has a degree in accounting from Louisiana Tech University and is a Certified Public Accountant. She currently serves on the Board of Directors, chairs the Audit Committee and serves on
the Governance, Compensation and Business Development Committee of Genesis Energy, LP. She also serves on the Board of Directors and the Audit, Investment, and Nominating and Corporate Governance Committees of Waddell & Reed Financial,
Inc., as well as on the Louisiana Tech University Foundation and College of Business Advisory Board and the Board of Directors of Arkansas Childrens, Inc., and Arkansas Childrens Foundation.
|
9
|
|
|
|
|
Gary C. George
|
Mr. George, 66, was elected to the Board in 2006. He is Chairman of the Nominating and Corporate
Governance Committee and a member of the Executive Compensation Committee. He is Chairman of Georges, Inc., a private, fully integrated poultry company in northwest Arkansas, Missouri, and Virginia. He is a graduate of the University of
Arkansas with a degree in business administration. He served on the Board of Trustees for the University of Arkansas from 1995 through 2005 and was Chairman of the Board of Trustees in 2005. He also serves as Chairman of the Board of Legacy National
Bank in Springdale, Arkansas. In addition, he serves on the Board of Directors of Arkansas Childrens, Inc., Arkansas Childrens Northwest, and the National Chicken Council.
|
|
|
|
|
|
Bryan Hunt
|
Mr. Hunt, 58, was elected to the Board in 1991. Mr. Hunt served as an employee of the Company from
1983 through 1997. He is the Managing Member of Best Buy Here Pay Here of Arkansas, a private company with
used-car
operations in Arkansas, Missouri and Oklahoma; Progressive Car Finance, a private company
that provides subprime financing for automobile dealers; and 71B Auto Auction and
I-135
Auto Auction, both private companies engaged in the auction of automobiles, trucks, boats and other motor vehicles to
dealers and the general public in Arkansas and Kansas. A graduate of the University of Arkansas, he has a degree in marketing and transportation. He is the son of
co-founders
J.B. and Johnelle
Hunt.
|
|
|
|
|
|
Coleman H. Peterson
|
Mr. Peterson, 68, was elected to the Board in 2004. He is Chairman of the Executive Compensation Committee
and a member of the Nominating and Corporate Governance Committee. Mr. Peterson is the President and CEO of Hollis Enterprises LLC, a human resources consulting firm founded in 2004. He is retired from
Wal-Mart
Stores, Inc. as Executive Vice President of its People Division. During his tenure, Mr. Peterson was responsible for recruitment, retention and development of the worlds largest corporate
work force. Prior to his experience with
Wal-Mart,
Mr. Peterson spent 16 years with Venture Stores, with his last position being Senior Vice President of Human Resources. He holds bachelors and
masters degrees from Loyola University of Chicago. Mr. Peterson serves on the Board of Directors, chairs the Compensation Committee, and serves on the Nominating and Corporate Governance Committee of
Build-A-Bear
Workshop. He also serves on the Board of Directors, chairs the Compensation Committee, and serves on the Nominating and Corporate Governance Committee of Cracker Barrel Old Country Store,
Inc.
|
|
|
|
|
|
John N. Roberts, III
|
Mr. Roberts, 52, was elected to the Board in 2010, and was elected to serve as the Companys
President and Chief Executive Officer effective January 1, 2011. A graduate of the University of Arkansas, he served as Executive Vice President and President of Dedicated Contract Services from 1997 to December 31, 2010. Joining the Company in
1989, he began his career as a Management Trainee and subsequently served as an EDI Services Coordinator, Regional Marketing Manager for the Intermodal and Truckload business units, Business Development Executive for DCS and Vice President of
Marketing Strategy for the Company. Mr. Roberts also serves on the Board of Directors and the Audit Committee of the Federal Reserve Bank of St. Louis.
|
|
|
|
|
|
James L. Robo
|
Mr. Robo, 54, was elected to the Board in 2002. He is the Independent Lead Director, Chairman of the Audit
Committee, and a member of the Nominating and Corporate Governance Committee. Mr. Robo is Chairman and Chief Executive Officer of NextEra Energy, Inc., a leading clean energy company. He is Chairman of the companys rate-regulated electric
utility subsidiary, Florida Power & Light Company, as well as Chairman and CEO of NextEra Energy Partners, LP, a growth-oriented limited partnership formed by NextEra Energy to acquire, manage and own contracted clean energy projects. Prior
to joining NextEra Energy in 2002, Mr. Robo spent 10 years at General Electric Company. He served as President and Chief Executive Officer of GE Mexico from 1997 until 1999 and as President and Chief Executive Officer of the GE Capital
TIP/Modular Space division from 1999 until February 2002. From 1984 through 1992, Mr. Robo worked for Mercer Management Consulting. He received a BA summa cum laude from Harvard College and an MBA from Harvard Business School, where he was a
Baker Scholar.
|
10
|
|
|
|
|
Kirk Thompson
|
Mr. Thompson, 63, was elected to the Board in 1985. He was elected Chairman of the Board in 2010, assuming
that office on January 1, 2011. He served as President and Chief Executive Officer from 1987 to December 31, 2010. A graduate of the University of Arkansas and a Certified Public Accountant, Mr. Thompson joined the Company in 1973. He served as
Vice President of Finance from 1979 until 1984, Executive Vice President and Chief Financial Officer until 1985, and President and Chief Operating Officer from 1986 until 1987, when he was elected President and Chief Executive Officer. In 2014,
Mr. Thompson joined the Board of Directors of Rand Logistics, Inc., a leading provider of bulk freight shipping services in marine vessels throughout the Great Lakes region.
|
DIRECTOR COMPENSATION
Nonemployee Directors
The
Company pays only nonemployee directors for their services as directors. Directors who are also officers or employees of the Company are not eligible to receive any of the compensation described below.
For the period of January 1, 2015, through the Companys 2016 Annual Meeting, compensation for nonemployee directors
serving on the Board, was as follows:
|
|
|
an annual retainer of $155,000 paid in Company stock, cash or any combination thereof
|
|
|
|
an annual retainer of $20,000, paid in cash, to the Audit Committee Chairman
|
|
|
|
an annual retainer of $13,500, paid in cash, to the Executive Compensation Committee Chairman
|
|
|
|
an annual retainer of $7,500, paid in cash, to the Nominating and Corporate Governance Committee Chairman
|
|
|
|
$4,500 for each Board meeting attended
|
|
|
|
$2,500 for each Audit Committee meeting attended
|
|
|
|
$2,000 for each Executive Compensation Committee meeting attended
|
|
|
|
$1,500 for each Nominating and Corporate Governance Committee meeting attended
|
|
|
|
reimbursement of expenses to attend Board and Committee meetings
|
For the annual period between the Companys 2016 and 2017 Annual Meetings, compensation for nonemployee directors serving
on the Board, was as follows:
|
|
|
an annual retainer of $200,000 paid in Company stock, cash or any combination thereof
|
|
|
|
an annual retainer of $25,000, paid in cash, to the Audit Committee Chairman
|
|
|
|
an annual retainer of $15,000, paid in cash, to the Executive Compensation Committee Chairman
|
|
|
|
an annual retainer of $10,000, paid in cash, to the Nominating and Corporate Governance Committee Chairman
|
|
|
|
an annual retainer of $20,000, paid in cash, to each member of the Audit Committee
|
|
|
|
an annual retainer of $15,000, paid in cash, to each member of the Executive Compensation Committee
|
|
|
|
an annual retainer of $10,000, paid in cash, to each member of the Nominating and Corporate Governance
Committee
|
|
|
|
reimbursement of expenses to attend Board and Committee meetings
|
Nonemployee Board of Director Compensation Paid in Calendar Year 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
Fees
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Paid
|
|
|
Paid
|
|
|
Restricted Share
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
All Other or
|
|
|
|
|
|
|
in Cash
|
|
|
in Stock
|
|
|
Stock Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
Compensation
|
|
|
|
|
Board Member
|
|
($)
|
|
|
($)
|
|
|
Awards ($)
|
|
|
Compensation ($)
|
|
|
Earnings ($)
|
|
|
($) (1)
|
|
|
Total ($)
|
|
Douglas G. Duncan
|
|
|
43,500
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,124
|
|
|
|
249,624
|
|
Francesca M. Edwardson
|
|
|
33,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,643
|
|
|
|
237,643
|
|
Wayne Garrison
|
|
|
204,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,500
|
|
|
|
211,000
|
|
Sharilyn S. Gasaway
|
|
|
158,500
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
258,500
|
|
Gary C. George
|
|
|
43,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
243,000
|
|
Bryan Hunt
|
|
|
4,500
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
204,500
|
|
Coleman H. Peterson
|
|
|
48,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,683
|
|
|
|
252,683
|
|
James L. Robo
|
|
|
68,500
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,059
|
|
|
|
279,559
|
|
John A. White(2)
|
|
|
21,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
(1)
|
Reimbursement of expenses to attend Board and Committee meetings
|
(2)
|
Dr. White retired from the Board on April 21, 2016, and attended one Board meeting and multiple
committee meetings in 2016 prior to his retirement.
|
11
Each nonemployee member of the Board had the choice of receiving his or her
annual retainer of $200,000 in Company stock, cash or any combination thereof. Those directors choosing to receive their full retainer in Company stock received 2,328 shares based on the $85.92 closing market price on April 21, 2016. Sharilyn S.
Gasaway elected to receive half of her retainer in stock, totaling 1,164 shares, based on the closing market price shown above. Wayne Garrison elected to receive his annual retainer in cash.
To more closely align his or her interests with those of the stockholders, each Board member is required to own three times
his/her estimated annual compensation in Company stock within five years of his/her initial stockholder election to the Board. All Board members are in compliance with this requirement.
Nonemployee members of the Board did not participate in either a company-sponsored pension or deferred compensation plan in
calendar year 2016.
Chairman of the Board
The role of Chairman of the Board is an employed executive position of the Company. Therefore, the Chairman of the Board
participates in all primary compensation components available to executive officers of the Company as discussed in our Compensation Discussion and Analysis of this Proxy Statement, with the exception of short-term cash incentive awards. He does not
receive any director fees for his service on the Companys Board of Directors.
Chairman Compensation Paid in Calendar Year 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Board Member
|
|
Salary
($)
|
|
Restricted Share
or Stock Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation ($)
|
|
|
Change in Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
(1)
|
|
|
Total ($)
|
|
Kirk Thompson, Chairman of the Board
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,050
|
|
|
|
356,050
|
|
(1)
|
Includes $2,900 taxable allowance for financial counseling services and $3,150 Company contributions to
401(k) plan.
|
EXECUTIVE OFFICERS OF THE COMPANY
Kevin Bracy
, 46, joined the Company in 1998 as a Financial Analyst and currently serves as Vice President, Treasurer and
Assistant Secretary.
Craig Harper
, 59, joined the Company in 1992 as Vice President of Marketing and currently
serves as Executive Vice President. Prior to joining the Company, he worked for Rineco Chemical Industries as its Chief Executive Officer.
Nicholas Hobbs
, 54, joined the Company in 1984 as a Management Trainee and currently serves as Executive Vice President
and President of Dedicated Contract Services.
John Kuhlow
, 46, joined the Company in 2006 as Assistant Corporate
Controller. He currently serves as Senior Vice President Finance, Controller and Chief Accounting Officer. Prior to joining the Company, he was a Senior Audit Manager for KPMG LLP. Mr. Kuhlow is a Certified Public Accountant.
Terrence D. Matthews
, 58, joined the Company in 1986 as a National Accounts Manager and currently serves as Executive
Vice President and President of Intermodal. Prior to joining the Company, he worked as a National Accounts Manager for North American Van Lines.
David G. Mee
, 56, joined the Company in 1992 as Vice President Tax and currently serves as Executive Vice President of
Finance and Administration and Chief Financial Officer. He also serves as the Companys Corporate Secretary. Prior to joining the Company, he was a Senior Tax Manager for KPMG LLP. Mr. Mee is a Certified Public Accountant.
Stuart Scott
, 50, joined the Company on January 1, 2016, as Executive Vice President and Chief Information Officer.
Prior to joining the Company, he served as Chief Information Officer (CIO) at Tempur-Sealy International, CIO at Microsoft, and CIO for various General Electric businesses.
Shelley Simpson
, 45, joined the Company in 1994 as a Management Trainee and currently serves as Executive Vice
President, Chief Marketing Officer, and President of Integrated Capacity Solutions and Truckload.
12
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Companys common stock as of February 14, 2017, by each of
its current directors (including all nominees for director), the Named Executive Officers (the NEOs), and all other executive officers and directors as a group. Unless otherwise indicated in the footnotes below, beneficially owned means
the sole or shared power to vote or direct the voting of a security or the sole or shared power to dispose or direct the disposition of a security.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Number of Shares
|
|
|
|
|
Beneficially Owned
|
|
Beneficially Owned
|
|
Percent
|
Owner
|
|
Directly (1)
|
|
Indirectly (2)
|
|
of Class (%) (3)
|
Douglas G. Duncan
|
|
|
|
10,828
|
|
|
|
|
2,600
|
|
|
|
|
*
|
|
Francesca M. Edwardson
|
|
|
|
14,392
|
|
|
|
|
|
|
|
|
|
*
|
|
Wayne Garrison
|
|
|
|
2,271,138
|
|
|
|
|
|
|
|
|
|
2.0
|
|
Sharilyn S. Gasaway
|
|
|
|
18,426
|
|
|
|
|
275
|
|
|
|
|
*
|
|
Gary C. George
|
|
|
|
37,248
|
|
|
|
|
1,407,671
|
(4)
|
|
|
|
1.3
|
|
Nicholas Hobbs
|
|
|
|
70,090
|
|
|
|
|
168
|
|
|
|
|
*
|
|
Bryan Hunt
|
|
|
|
70,797
|
|
|
|
|
|
|
|
|
|
*
|
|
Terrence D. Matthews
|
|
|
|
55,915
|
|
|
|
|
38,672
|
|
|
|
|
*
|
|
David G. Mee
|
|
|
|
119,567
|
|
|
|
|
500
|
|
|
|
|
*
|
|
Coleman H. Peterson
|
|
|
|
34,173
|
|
|
|
|
|
|
|
|
|
*
|
|
John N. Roberts, III
|
|
|
|
253,098
|
|
|
|
|
70,000
|
(5)
|
|
|
|
*
|
|
James L. Robo
|
|
|
|
39,295
|
|
|
|
|
|
|
|
|
|
*
|
|
Shelley Simpson
|
|
|
|
74,823
|
|
|
|
|
43,699
|
|
|
|
|
*
|
|
Kirk Thompson
|
|
|
|
50,346
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
All executive officers and directors as a group (18)
|
|
|
|
3,173,083
|
|
|
|
|
1,563,585
|
|
|
|
|
4.3
|
|
(1)
|
Includes shares owned by the director or executive officer that are:
|
|
(a)
|
held in a 401(k) or deferred compensation account
|
|
(b)
|
held in trusts for the benefit of an immediate family member for which the director or executive officer is
the trustee
|
|
(c)
|
options that are currently exercisable or will become exercisable within 60 days from February 14, 2017
|
|
(d)
|
pledged shares as shown below:
|
|
|
|
|
|
David G. Mee
|
|
|
61,650
|
|
John N. Roberts, III
|
|
|
160,000
|
|
Kirk Thompson
|
|
|
40,000
|
|
All other executive officers and directors as a group
|
|
|
311,266
|
|
(2)
|
Indirect beneficial ownership includes shares owned by the director or executive officer:
|
|
(a)
|
as beneficiary or trustee of a personal trust
|
|
(b)
|
by a spouse or as trustee or beneficiary of a spouses trust
|
|
(c)
|
held in trusts for the benefit of an immediate family member for which the director or executive
officers spouse is the trustee
|
|
(d)
|
in a spouses retirement account
|
(3)
|
Calculated on the basis of 111,310,853 shares of common stock outstanding of the Company on
February 14, 2017.
|
(4)
|
The reporting person disclaims beneficial ownership of these shares, which are held in limited partnerships
or trusts. This report shall not be deemed an admission that the reporting person is the beneficial owner of such securities for the purposes of Section 16 or for any other purposes. Includes 40,362 shares currently pledged by the reporting
person.
|
(5)
|
The reporting person disclaims beneficial ownership of these shares, which are held in an irrevocable trust
for the benefit of immediate family members and managed by a third-party trustee. This report shall not be deemed an admission that the reporting person is the beneficial owner of such securities for the purposes of Section 16 or for any other
purposes.
|
13
CORPORATE GOVERNANCE
We believe that good corporate governance helps to ensure that the Company is managed for the long-term benefit of our
stockholders. We continually review and consider our corporate governance policies and practices, the SECs corporate governance rules and regulations, and the corporate governance listing standards of NASDAQ, the stock exchange on which our
common stock is traded. Key corporate governance principles observed by the Board and Company include:
|
|
|
maintaining a Board composed of a majority of directors who satisfy the criteria for independence under the
NASDAQ listing standards,
|
|
|
|
establishment of the position of Independent Lead Director,
|
|
|
|
utilization of independent director executive session meetings,
|
|
|
|
requiring that all committees of the Board be comprised solely of independent directors,
|
|
|
|
establishment of formal charters outlining the purpose, composition, and responsibility of each committee of
the Board,
|
|
|
|
granting authority to all committees of the Board to retain outside, independent advisors and consultants as
needed,
|
|
|
|
establishment of qualification guidelines for director nominees,
|
|
|
|
continual evaluation of current director performance and qualifications,
|
|
|
|
maintaining Board diversity in both gender and ethnic representation,
|
|
|
|
adoption of a formal Director Attendance Policy, and
|
|
|
|
adoption of a formal Code of Ethical and Professional Standards applicable to all directors, officers and
employees of the Company.
|
You can access and print the Charters of our Audit Committee, Executive
Compensation Committee (Compensation Committee), and Nominating and Corporate Governance Committee (Corporate Governance Committee), as well as our Corporate Code of Ethical and Professional Standards for Directors, Officers and Employees,
Whistleblower Policy, and other Company policies and procedures required by applicable law, regulation or NASDAQ corporate governance listing standards on the Corporate Governance page of the Investors section of our website
at www.jbhunt.com. Additionally, you can request copies of any of these documents by writing to our Corporate Secretary at the following address:
J.B. Hunt Transport Services, Inc.
Attention: Corporate Secretary
615
J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
Director Independence
The Board is composed of a majority of directors who satisfy the criteria for independence under the NASDAQ corporate
governance listing standards. In determining independence, each year the Board affirmatively determines, among other items, whether the directors have no material relationship with the Company or any of its subsidiaries pursuant to the NASDAQ
corporate governance listing standards. When assessing the materiality of a directors relationship with the Company, if any, the Board considers all relevant facts and circumstances, not merely from the directors standpoint,
but from that of the persons or organizations with which the director has an affiliation and the frequency or regularity of the services, whether the services are being carried out at arms length in the ordinary course of business, and whether
the services are being provided substantially on the same terms to the Company as those prevailing at the time from unrelated parties for comparable transactions. Material relationships can include commercial, banking, industrial, consulting, legal,
accounting, charitable and familial relationships. The Board also considers any other relationship that could interfere with the exercise of independence or judgment in carrying out the duties of a director.
Applying these independence standards, the Board has determined that Douglas G. Duncan, Francesca M. Edwardson, Sharilyn S.
Gasaway, Gary C. George, Coleman H. Peterson, and James L. Robo are all independent directors. After due consideration, the Board has determined that none of these nonemployee directors has a material relationship with the Company or any of its
subsidiaries (either directly or indirectly as a partner, stockholder or officer of any organization that has a relationship with the Company or any of its subsidiaries) and that they all meet the criteria for independence under the NASDAQ corporate
governance listing standards.
Risk Management and Oversight
As previously described in their biographies, current members of our Board represent diverse backgrounds of business and
academic experience. The Board, as a whole, performs the risk oversight of the Company and does not assign the task or responsibility to any one member or a committee. Therefore, the Board believes that the members each possess unique yet
complementary experiences and backgrounds that create diverse points of view, opinions, personalities and management styles that allow for the proper risk management and oversight of the Company.
Independent Lead Director
The Board has established the position of Independent Lead Director, to which James L. Robo was appointed. The Independent Lead
Director directs the executive sessions of independent directors at the Board meetings at which the Chairman is not present and has authority to call meetings of independent directors. The Independent Lead Director facilitates communication between
the Chairman, the CEO and the independent directors, as appropriate, and performs such other functions as the Board directs.
Independent Director
Meetings
Independent directors generally meet in executive session as part of each regularly scheduled Board meeting,
with discussion led by the Independent Lead Director.
14
Director Recommendations by Stockholders
In addition to recommendations from Board members, management or professional search firms, the Corporate Governance Committee
will consider director candidates properly submitted by stockholders who individually or as a group have beneficially owned at least 2% of the outstanding shares of the Companys common stock for at least one year from the date the
recommendation is submitted. Stockholders must submit director candidate recommendations in writing by Certified Mail to the Companys Corporate Secretary not less than 120 days prior to the first anniversary of the date of the Proxy Statement
relating to the Companys previous Annual Meeting. Accordingly, for the 2018 Annual Meeting of Stockholders, director candidates must be submitted to the Companys Corporate Secretary by November 9, 2017. Director candidates submitted by
stockholders must contain at least the following information:
|
|
|
the name and address of the recommending stockholder,
|
|
|
|
the number of shares of the Companys common stock beneficially owned by the recommending stockholder and
the dates such shares were purchased,
|
|
|
|
the name, age, business address and residence of the candidate,
|
|
|
|
the principal occupation or employment of the candidate for the past five years,
|
|
|
|
a description of the candidates qualifications to serve as a director, including financial expertise and
why the candidate does or does not qualify as independent under the NASDAQ corporate governance listing standards,
|
|
|
|
the number of shares of the Companys common stock beneficially owned by the candidate, if any, and
|
|
|
|
a description of the arrangements or understandings between the recommending stockholder and the candidate, if
any, or any other person pursuant to which the recommending stockholder is making the recommendation.
|
In addition, the recommending stockholder and the candidate must submit, with the recommendation, a signed statement agreeing
and acknowledging that:
|
|
|
the candidate consents to being a director candidate and, if nominated and elected, he or she will serve as a
director representing all of the Companys stockholders in accordance with applicable laws and the Companys Articles of Incorporation and Bylaws,
|
|
|
|
the candidate, if elected, will comply with the Companys Corporate Governance Guidelines and any other
applicable rule, regulation, policy or standard of conduct applicable to the Board and its individual members,
|
|
|
|
the recommending stockholder will maintain beneficial ownership of at least 2% of the Companys issued
and outstanding common stock through the date of the Annual Meeting for which the candidate is being recommended for nomination and that, upon the candidates nomination and election to the Board, the recommending stockholder intends to
maintain such ownership throughout the candidates term as director, and
|
|
|
|
the recommending stockholder and the candidate will promptly provide any additional information requested by
the Corporate Governance Committee and/or the Board to assist in the consideration of the candidate, including a completed and signed Questionnaire for Directors and Officers on the Companys standard form and an interview with the Corporate
Governance Committee or its representative.
|
For a complete list of the information that must be
included in director recommendations submitted by stockholders, please see the Director Recommendations by Stockholders Policy on the Corporate Governance page of the Investors section of our website at
www.jbhunt.com. The Corporate Governance Committee will consider all director candidates submitted through its established processes and will evaluate each of them, including incumbents, based on the same criteria. However, the Corporate Governance
Committee may prefer incumbent directors and director candidates whom they know personally or who have relevant industry experience and
in-depth
knowledge of the Companys business and operations.
The policies and procedures as set forth above are intended to provide flexible guidelines for the effective functioning of
the Companys director nomination process. The Board intends to review these policies and procedures periodically and anticipates that modifications may be necessary from time to time as the Companys needs and circumstances change.
Board Composition and Director Qualifications
The Corporate Governance Committee periodically assesses the appropriate size and composition of the Board and whether any
vacancies on the Board are expected. In the event that vacancies are anticipated or otherwise arise, the Corporate Governance Committee will review and assess potential director candidates. The Corporate Governance Committee utilizes various methods
for identifying and evaluating candidates for director. Candidates may come to the attention of the Corporate Governance Committee through recommendations of Board members, management, stockholders or professional search firms. Generally, director
candidates should, at a minimum:
|
|
|
possess relevant business and financial expertise and experience, including a basic understanding of
fundamental financial statements,
|
|
|
|
have exemplary character and integrity and be willing to work constructively with others,
|
|
|
|
have sufficient time to devote to Board meetings and consultation on Board matters, and
|
|
|
|
be free from conflicts of interest that violate applicable law or interfere with director performance.
|
15
In addition, the Corporate Governance Committee seeks director candidates who
possess the following qualities and skills:
|
|
|
the capacity and desire to represent the interests of the Companys stockholders as a whole,
|
|
|
|
occupational experience and perspective that, together with other directors, enhances the quality of the
Board,
|
|
|
|
leadership experience and sound business judgment,
|
|
|
|
accomplishments in their respective field, with superior credentials and recognition,
|
|
|
|
knowledge of the critical aspects of the Companys business and operations, and
|
|
|
|
the ability to contribute to the mix of skills, core competencies and qualifications of the Board through
expertise in one or more of the following areas:
|
|
-
|
|
mergers and acquisitions
|
|
-
|
|
executive leadership development
|
|
-
|
|
service as a senior officer of, or a trusted adviser to senior management of, a publicly held company.
|
The independent members of the Board each possess the general skills, experience, attributes and
qualifications that make them a proper fit for the Companys Board as described above. Specific strengths and qualities possessed by each member that makes him or her eligible to serve on the Companys Board include:
Douglas G. Duncan 30 years of experience in the transportation industry
Francesca M. Edwardson business experience in the transportation industry, law, human resources, and corporate
governance
Sharilyn S. Gasaway accounting, finance, mergers and acquisitions, and regulatory experience
Gary C. George business experience related to managing a diversified business headquartered in Springdale, Arkansas
Coleman H. Peterson human resource experience with a large international workforce, corporate governance, and
retail experience
James L. Robo financial expertise, leadership experience, and business experience related to
equipment and the transportation industry
Messrs. Garrison, Hunt, Roberts and Thompson, as nonindependent directors, have
extensive work experience and history with the Company from its origins, which the Board believes are critical to its composition.
Board Diversity
As indicated by the criteria above, the Board prefers a mix of background and experience among its members.
Furthermore, the Board is diverse both in gender and ethnic representation, with 30% of our current members reflecting demographic minorities. The Board does not follow any ratio or formula to determine the appropriate mix. Rather, it uses its
judgment to identify nominees whose backgrounds, attributes and experiences, taken as a whole, will contribute to the high standards of Board service to the Company. The effectiveness of this approach is evidenced by the directors
participation in insightful and robust yet mutually respectful deliberation that occurs at Board and Committee meetings.
Board Leadership Structure
The Company split the titles, roles and responsibilities of the Chairman of the Board and Chief Executive Officer in
1985. The Company and the Board believe that, while the duties may be performed by the same person without consequence to either Company operations or stockholders interest, separation of duties allows the Chairman to focus more on active
participation by the Board and oversight of management, while the Chief Executive Officer is better able to focus on
day-to-day
operations of the Company.
Communications With The Board
Stockholders and other interested parties may communicate with the Board, Board Committees, the independent or the
nonmanagement directors, each as a group or any director individually by submitting their communications in writing to the attention of the Companys Corporate Secretary. All communications must identify the recipient and author, state whether
the author is a stockholder of the Company, and be forwarded to the following address via Certified Mail:
J.B. Hunt Transport Services,
Inc.
Attention: Corporate Secretary
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
The directors of the Company have instructed the Corporate Secretary not to forward to the intended recipient any
communications that are reasonably determined in good faith by the Corporate Secretary to relate to improper or irrelevant topics or that are substantially incomplete.
16
Board Meetings
The Board held four scheduled meetings during the 2016 calendar year. All directors attended all of the Board meetings and
committee meetings on which each served during 2016. All members of the Board attended the 2016 Annual Meeting of Stockholders. The Company has adopted a Director Attendance Policy to stress the importance of attendance, director preparedness, and
active and effective participation at Board and Board Committee meetings.
Board Committees
Standing committees of the Board include the Audit, Executive Compensation, and Nominating and Corporate Governance committees.
Committee members are elected annually by the Board and serve until their successors are elected and qualified or until their earlier death, retirement, resignation or removal.
The following table summarizes the membership of the Board and each of its committees and the number of times each met during
calendar year 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
Director
|
|
Audit
|
|
Compensation
|
|
Governance
|
Douglas G. Duncan
|
|
X
|
|
|
|
X
|
Francesca M. Edwardson
|
|
|
|
X
|
|
X
|
Sharilyn S. Gasaway
|
|
X
|
|
X
|
|
X
|
Gary C. George
|
|
|
|
X
|
|
Chair
|
Coleman H. Peterson
|
|
|
|
Chair
|
|
X
|
James L. Robo
|
|
Chair
|
|
|
|
X
|
Number of Meetings in 2016
|
|
8
|
|
4
|
|
2
|
On January 25, 2017, the Corporate Governance Committee recommended, and the Board approved,
the same committee assignments as 2016 for 2017.
AUDIT COMMITTEE
Under the terms of its charter, the Audit Committee represents and assists the Board in fulfilling its oversight responsibility
relating to the integrity of the Companys financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Companys
financial statements, the Companys compliance with legal and regulatory requirements, the independent auditors qualifications and independence, the performance of the Companys internal audit function, and the performance of its
independent auditors.
In fulfilling its duties, the Audit Committee, among other things, shall:
|
|
|
appoint, terminate, retain, compensate and oversee the work of the independent registered public accounting
firm,
|
|
|
|
preapprove all services provided by the independent registered public accounting firm,
|
|
|
|
oversee the performance of the Companys internal audit function,
|
|
|
|
review the qualifications, performance and independence of the independent registered public accounting firm,
|
|
|
|
review external and internal audit reports and managements responses thereto,
|
|
|
|
monitor the integrity of the financial reporting process, system of internal accounting controls, and
financial statements and reports of the Company,
|
|
|
|
oversee the Companys compliance with legal and regulatory requirements,
|
|
|
|
review the Companys annual and quarterly financial statements, including disclosures made in
Managements Discussion and Analysis of Financial Condition and Results of Operations set forth in periodic reports filed with the SEC,
|
|
|
|
discuss with management earnings news releases,
|
|
|
|
meet with management, the internal auditors, the independent auditors and the Board,
|
|
|
|
provide the Board with information and materials as it deems necessary to make the Board aware of significant
financial accounting and internal control matters of the Company,
|
|
|
|
oversee the receipt, investigation, resolution and retention of all complaints of a financial nature submitted
under the Companys Whistleblower Policy, and
|
|
|
|
otherwise comply with its responsibilities and duties as set forth in the Companys Audit Committee
Charter.
|
The Board has determined that each member of the Audit Committee satisfies the independence
and other requirements for audit committee membership of the NASDAQ corporate governance listing standards and SEC requirements. The Board has also determined that all members of the Audit Committee have the attributes of an audit committee
financial expert as defined by the SEC. The Board determined that these members acquired such attributes through their experience in preparing, auditing, analyzing or evaluating financial statements, or actively supervising one or more persons
engaged in such activities, and their experience of overseeing or assessing the performance of companies and public accountants with respect to preparation, auditing or evaluation of financial statements. In 2016, the Audit Committee met eight
times. All members attended each of the Audit Committee meetings. For additional information concerning the Audit Committee, see Report of the Audit Committee set forth below.
17
EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the Compensation Committee) shall:
|
|
|
determine and approve base salary compensation of the Companys senior executive officers,
|
|
|
|
determine and approve annual equity-based awards for the Companys insiders as defined in
Section 16 of the Securities Exchange Act of 1934, with the exception of the Chairman of the Board and the Chief Executive Officer,
|
|
|
|
evaluate and recommend to the independent members of the Board for their approval base salary and annual
equity-based awards for the Chairman of the Board and the Chief Executive Officer,
|
|
|
|
review and approve the annual performance goals and objectives of the Companys senior executive
officers, including the Chief Executive Officer,
|
|
|
|
establish and certify the achievement of performance goals,
|
|
|
|
oversee the Companys incentive compensation and equity-based compensation plans,
|
|
|
|
assess the adequacy and competitiveness of the Companys executive and director compensation programs,
|
|
|
|
review and discuss with management the Compensation Discussion and Analysis (CD&A) and recommend whether
such analysis should be included in the Proxy Statement filed with the SEC,
|
|
|
|
produce an Annual Report on executive compensation for inclusion in the Companys Proxy Statement,
|
|
|
|
review and approve any employment agreements, severance agreements or arrangements, retirement arrangements,
change in control agreements/ provisions, and any special or supplemental benefits for each officer of the Company,
|
|
|
|
approve, disapprove, modify or amend any
non-equity
compensation plans
designed and intended to provide compensation primarily for officers,
|
|
|
|
make recommendations to the Board regarding adoption of equity-based compensation plans,
|
|
|
|
administer, modify or amend equity-based compensation plans,
|
|
|
|
review the Companys plan for succession of management,
|
|
|
|
monitor the diversity of the Companys workforce, and
|
|
|
|
otherwise comply with its responsibilities and duties as set forth in the Companys Compensation
Committee Charter.
|
None of the individuals serving on the Compensation Committee has ever been an
officer or employee of the Company. The Board has determined that all members of the Compensation Committee satisfy the independence requirements of the NASDAQ corporate governance listing standards. All members of the Compensation Committee qualify
as nonemployee directors for purposes of Rule
16b-3
of the Exchange Act and as outside directors for purposes of Section 162(m) of the Internal Revenue Code, as amended.
The Compensation Committee met four times in 2016. All members attended each of the Compensation Committee meetings.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee (the Corporate Governance Committee) shall:
|
|
|
annually review the Companys Corporate Governance Guidelines,
|
|
|
|
assist the Board in identifying, screening and recruiting qualified individuals to become Board members,
|
|
|
|
propose nominations for Board membership and committee membership,
|
|
|
|
assess the composition of the Board and its committees,
|
|
|
|
oversee the performance of the Board and committees thereof,
|
|
|
|
review and approve all related-party transactions (as required by law, NASDAQ rules, or SEC regulations), and
|
|
|
|
otherwise comply with its responsibilities and duties as set forth in the Companys Corporate Governance
Committee Charter.
|
The Board has determined that all members of the Corporate Governance Committee
satisfy the independence requirements of the NASDAQ corporate governance listing standards. The Corporate Governance Committee met two times during 2016. All members attended each of the Corporate Governance Committee meetings.
Code of Business Conduct and Ethics
The Board has adopted a Corporate Code of Ethical and Professional Standards for Directors, Officers and Employees (the Code of
Ethics) that applies to all of the Companys directors, officers and employees. The purpose and role of this Code of Ethics is to focus our directors, officers and employees on areas of ethical risk, provide guidance to help them recognize and
deal with ethical issues, provide mechanisms to report unethical or unlawful conduct, and help enhance and formalize our culture of integrity, honesty and accountability. As required by applicable law, the Company will post on the Corporate
Governance page of the Investors section of its website at www.jbhunt.com any amendments or waivers of any provision of this Code of Ethics made for the benefit of executive officers or directors of the Company.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines to assist it in exercising its responsibilities to the Company and its
stockholders. These guidelines address, among other items, director responsibilities, Board Committees and nonemployee director compensation.
18
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires each director, officer and any individual beneficially owning more than 10% of the
Companys common stock to file with the SEC reports of security ownership and reports on subsequent changes in ownership. These reports are generally due within two business days of the transaction giving rise to the reporting obligation.
To the Companys knowledge, based solely on a review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all Section 16(a) filings were made in a timely manner, with the exception of Nicholas Hobbs, who had one late filing to report the sale of shares.
Certain Relationships and Related Transactions
The Corporate Governance Committee is charged with the responsibility of reviewing and preapproving all related-party
transactions (as defined in SEC regulations) and periodically reassessing any related-party transaction entered into by the Company.
Bryan Hunt is the son of Johnelle Hunt, a principal stockholder of the Company. There are no other family relationships among
the foregoing directors.
Two
sons-in-law
of Kirk Thompson, Chairman of the Board of the Company, were employed by the Company in calendar year 2016. The first earned $298,061 and the second earned $227,041 in 2016 compensation. Shelley Simpsons husband was employed by the Company in
calendar year 2016 and earned $440,266 in 2016 compensation.
In the ordinary course of business, the Company has entered
into contractual service agreements with Georges, Inc., which is considered a related party. The customer agreements consist primarily of fleets of tractors and specialty trailers delivering feed and live poultry to and from plants located in
Cassville, Missouri; Edinburg, Virginia; Harrisonburg, Virginia; and Mt. Jackson, Virginia, as well as other agreed-upon services on an
as-needed
basis. Gary C. George is Chairman of Georges, Inc.
Mr. George was not involved in the establishment of these service agreements, nor did he solicit the Companys services on behalf of Georges, Inc. Total revenue earned in calendar year 2016 under these service agreements was
$4.2 million. Services provided under these contracts are and will be carried out at arms length in the ordinary course of business and are being provided substantially on the same terms as those of unrelated parties for comparable
transactions.
In October 2015, in the ordinary course of business, the Company entered into an agreement with 5431
Pinnacle Point LLC for the lease of office space located in Rogers, Arkansas. Bryan Hunt, a director of the Company, has a 50% ownership interest in 5431 Pinnacle Point LLC. The lease has a term of 24 months and annual base rent of $216,000. The
Company paid $216,225 under this lease agreement during calendar year 2016 and considers this a transaction carried out at arms length in the ordinary course of business and consistent with the same terms as those of unrelated parties for
comparable lease agreements.
In February and May 2016, in the ordinary course of business, the Company entered into two
agreements with North Pinnacle Properties, LLC for the lease of office space located in Rogers, Arkansas. Johnelle Hunt, a principal stockholder of the Company, is the controlling member of J.B. Hunt LLC, which is the parent company of North
Pinnacle Properties, LLC. The leases have terms of 15 and 12 months, respectively, and a combined annual base rent of $297,270. The Company paid $215,245 under these lease agreements during calendar year 2016 and considers these to be transactions
carried out at arms length in the ordinary course of business and consistent with the same terms as those of unrelated parties for comparable lease agreements.
In August 2010, the Company made a gift of $5 million to Arkansas Childrens, Inc. The gift was payable in equal
increments over a
10-year
period beginning in calendar year 2011. In 2016, the Company paid in full the outstanding balance of this commitment. In May, 2016, the Company made a gift of $5 million to
Arkansas Childrens Northwest, which was paid in full in 2016. Both Sharilyn S. Gasaway and Gary C. George are currently members of the Board of Directors of Arkansas Childrens, Inc. In addition, Mr. George is a member of the Board
of Directors of Arkansas Childrens Northwest. However, Ms. Gasaway and Mr. George did not solicit these contributions on behalf of these organizations, nor were they instrumental in the Companys decision to support the medical
facilities.
In December 2008, the Company made a gift of $250,000 to Northwest Arkansas Community College. The gift is
payable in equal increments over a
10-year
period beginning in calendar year 2009. At the time of the gift, Coleman H. Peterson served as Chairman of the Board of Trustees of this organization.
Mr. Peterson did not solicit the contribution on behalf of the organization, nor was he instrumental in the Companys decision to support the local junior college.
Compensation Committee Interlocks and Insider Participation
During the 2016 calendar year, none of the Companys executive officers served on the Board of Directors or Compensation
Committees of any entity whose directors or officers served on the Companys Board or Compensation Committee. No current or past executive officers or employees of the Company served on the Compensation Committee.
19
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth all persons known to be the beneficial owner of more than 5% of the Companys common stock
as of December 31, 2016. Unless otherwise indicated in the footnotes below, beneficially owned means the sole or shared power to vote or direct the voting of a security or the sole or shared power to dispose or direct the disposition of
a security.
|
|
|
|
|
|
|
|
|
Name and Address
|
|
Number of
Shares
|
|
|
Percent of
Class
|
|
Johnelle Hunt
3333 Pinnacle Hills Parkway
Rogers, AR 72756
|
|
|
19,301,981
|
|
|
|
17.3
|
%
|
|
|
|
Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
9,023,027
|
|
|
|
8.0
|
%
|
|
|
|
Wellington Management Group LLP
280 Congress Street
Boston, MA 02210
|
|
|
6,509,293
|
|
|
|
5.8
|
%
|
|
|
|
BlackRock, Inc.
40 East 52nd Street
New York, NY 10022
|
|
|
6,074,118
|
|
|
|
5.4
|
%
|
Information relating to Johnelle Hunt is based on the stockholders Form 5, filed with
the SEC on February 14, 2017. Information pertaining to the ownership of Vanguard Group, Inc., Wellington Management Group LLP, and BlackRock, Inc. are based on each organizations Schedule 13G filed with the SEC on February 10, 2017, February
9, 2017, and January 25, 2017, respectively. The Company makes no representation as to the accuracy of the information reported in such beneficial ownership reports.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The 2016 Executive Compensation Committee (the Compensation Committee) was composed of Coleman H. Peterson, Chairman, Francesca
M. Edwardson, Sharilyn S. Gasaway, and Gary C. George, none of whom is an officer or employee of the Company and all of whom have been determined by the Board of Directors of the Company (the Board) to be independent. Additionally, all members of
the Compensation Committee qualify as nonemployee directors for purposes of Rule
16b-3
of the Exchange Act and as outside directors for purposes of Section 162(m) of the Internal
Revenue Code, as amended (the Code).
The Compensation Committee operates under a written charter adopted by the Board, a
copy of which is available on the Corporate Governance page of the Investors section of the Companys website at www.jbhunt.com. In carrying out its responsibilities, the Compensation Committee, among other things:
|
|
|
evaluates and recommends to the independent Board members, for their approval, the annual salaries and bonuses
of the Chairman of the Board and the Chief Executive Officer,
|
|
|
|
reviews and approves annual corporate goals and objectives of the Chairman of the Board and the Chief
Executive Officer and other Section 16 reporting officers,
|
|
|
|
recommends for approval to the independent Board members equity-based compensation awards under the
Companys Management Incentive Plan (the MIP), as amended and restated, for the Chairman of the Board and the Chief Executive Officer,
|
|
|
|
reviews and approves equity-based compensation awards under the Companys MIP, as amended and restated,
for the Section 16 reporting officers,
|
|
|
|
establishes and certifies the achievement of performance goals under the Companys incentive and
performance-based compensation plans,
|
|
|
|
reviews and approves compensation recommendations for the Companys directors,
|
|
|
|
reviews other Company executive compensation programs, and
|
|
|
|
reviews and approves the Compensation Committee report to the stockholders and the Compensation Discussion and
Analysis (the CD&A) report included in the Proxy Statement.
|
The Chairman of the Board recommends to
the Compensation Committee the form and amount of compensation to be paid to the Chief Executive Officer. The Chief Executive Officer provides recommendations to the Compensation Committee regarding the form and amount of compensation to be paid to
executive officers who report directly to him. Additionally, the Chairman of the Board, the Chief Executive Officer and the Chief Financial Officer regularly attend Compensation Committee meetings, except for executive sessions. Upon request,
management has provided to the Compensation Committee historical and prospective breakdowns of primary compensation components for each executive officer, as well as tally sheets, wealth accumulation analyses and internal pay equity analyses as
described in more detail below.
At our 2014 Annual Meeting, the stockholders approved, on an advisory basis, the
compensation of the named executive officers (99.5% of votes cast). The Compensation Committee believes this level of stockholder support reflects a strong endorsement of the Companys compensation policies and decisions. The Compensation
Committee has considered the results of the last advisory vote on executive compensation in determining the Companys compensation policies and decisions for 2017, and has determined that these policies and decisions are appropriate and in the
best interests of the Company and its stockholders at this time. Previously, at our 2011 Annual Meeting, the stockholders voted for approval of a frequency of holding advisory votes every three years with respect to named executive officer
compensation (51% of votes cast). This nonbinding vote on frequency is required at least once every six years. Accordingly, advisory votes on both executive compensation and the frequency of holding future advisory votes have been included as
Proposal Number Three and Proposal Number Four, respectively, within this Proxy Statement.
20
In 2016, the Compensation Committee engaged Meridian Compensation Partners, LLC
(Meridian) to review the Companys executive compensation policies and practices. Meridian was also directed to determine a comparable peer group for executive compensation purposes and to report considerations regarding changes in compensation
levels for the NEOs to bring them into the 50th percentile of total direct compensation of the peer group. Meridian is retained by, and reports to, the Compensation Committee to provide compensation analyses and consultation at the Committees
request.
The Compensation Committee met four times in 2016 to discuss, among other items, the salaries, bonuses and other
compensation of the senior executive officers and other key employees of the Company, including the Chairman of the Board and the Chief Executive Officer. The Compensation Committee did not act by unanimous consent at any time in 2016.
Historically, the Compensation Committee meets during the first quarter to finalize discussion regarding the Companys
performance goals for the previous and current year with respect to performance-based compensation to be paid to executive officers and to approve its report for the Proxy Statement. These goals are approved within 90 days of the beginning of the
year, pursuant to the Code. During other regularly scheduled meetings throughout the year, the Compensation Committee meets to:
|
|
|
discusses any new compensation issues,
|
|
|
|
review base compensation, bonus and MIP award analyses,
|
|
|
|
approve the engagement of the compensation consultant for annual executive and director compensation surveys,
|
|
|
|
review and discuss information provided by the compensation consultant and the recommendations made by the
Chairman of the Board and the Chief Executive Officer,
|
|
|
|
review the performance of the Company and the individual officers,
|
|
|
|
approve short-term cash bonus and long-term incentive awards, and
|
|
|
|
determine executives base salaries.
|
Management also advises the full Board, including the Compensation Committee members, throughout the year of any new issues
and developments regarding executive compensation.
The Compensation Committee has reviewed and discussed the following
CD&A with management, and based upon such review and discussions, the Compensation Committee recommended to the Board that the CD&A be included in the Companys Proxy Statement.
J.B. Hunt Transport Services, Inc.
2016 Executive Compensation Committee
Coleman H. Peterson, Chairman
Francesca M. Edwardson
Sharilyn S.
Gasaway
Gary C. George
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
The Compensation Discussion and Analysis provides information regarding the compensation paid to our President and Chief
Executive Officer, Chief Financial Officer and certain other executive officers who were the most highly compensated in calendar year 2016. These individuals, referred to collectively as named executive officers or NEOs, are identified
below:
|
|
|
John N. Roberts, III President and Chief Executive Officer
|
|
|
|
David G. Mee Executive Vice President, Finance/Administration, Chief Financial Officer and Corporate
Secretary
|
|
|
|
Shelley Simpson Executive Vice President, Chief Marketing Officer and President of Integrated Capacity
Solutions and Truckload
|
|
|
|
Nicholas Hobbs Executive Vice President and President of Dedicated Contract Services
|
|
|
|
Terrence D. Matthews Executive Vice President and President of Intermodal The executive position of
Chairman of the Board is no longer an NEO of the Company.
|
Compensation Philosophy and Principles
The Compensation Committee acknowledges that the transportation industry is highly competitive and that experienced
professionals have career mobility. The Company believes that it competes for executive talent with a large number of companies, some of which have significantly larger market capitalizations and others of which are privately owned. Retention of key
talent remains critical to our success. The Companys need to focus on retention is compounded by its size and geographic location. The Companys compensation program is structured to attract, retain and develop executive talent with the
ability to assume a broad span of responsibilities and successfully lead complex business units to market-leading positions in the industry. The Compensation Committee believes that the ability to attract, retain and provide
appropriate incentives for professional personnel, including the senior executive officers and other key employees of the Company, is essential to maintaining the Companys leading competitive position, thereby providing for the long-term
success of the Company. The Compensation Committees goal is to maintain compensation programs that are competitive within the transportation industry. Each year, the Compensation Committee reviews the executive compensation program with
respect to external competitiveness and linkage between executive compensation and creation of stockholder value and determines what changes, if any, are appropriate.
21
The overall compensation philosophy of the Compensation Committee and management
is guided by the following principles:
|
|
|
Compensation levels should be sufficiently competitive to attract and retain key talent.
The Company
aims to attract, motivate and retain high-performance talent to achieve and maintain a leading position in its industry. Our total compensation package should be strongly competitive with other transportation companies.
|
|
|
|
Compensation should relate directly to performance and responsibility.
Total compensation should be
tied to and vary with performance and responsibility, both at the Company and individual level, in achieving financial, operational and strategic objectives. Differentiated pay for high-performing individuals should be proportional to their
contributions to the Companys success.
|
|
|
|
Short-term incentive compensation should constitute a significant portion of total executive compensation.
A large portion of total compensation should be tied to performance, and therefore at risk, as position and responsibility increase. Individuals with greater roles and the ability to directly impact strategic direction and long-term results
should bear a greater proportion of the risk.
|
|
|
|
Long-term incentive compensation, the Companys Management Incentive Plan (the MIP), should be closely
aligned with stockholders interests.
Awards of long-term compensation encourages executive officers to focus on the Companys long-range growth and development and incent them to manage from the perspective of stockholders with a
meaningful stake in the Company, as well as to focus on long-term career orientation. Participants in the MIP are required to own Company stock. The requirements are discussed in this CD&A under the caption Stock Ownership
Guidelines.
|
The Companys executive compensation program is designed to reward the
achievement of initiatives regarding growth, productivity and people, including:
|
|
|
setting, implementing and communicating strategies, goals and objectives to ensure that the Company grows
revenue and earnings at rates that are comparable to or greater than those of our peers and that create value for our stockholders,
|
|
|
|
motivating and exhibiting leadership that aligns the interests of our employees with those of our
stockholders,
|
|
|
|
developing a grasp of the competitive environment and taking steps to position the Company for growth and as a
competitive force in the industry,
|
|
|
|
constantly renewing the Companys business model and seeking strategic opportunities that benefit the
Company and its stockholders, and
|
|
|
|
implementing a discipline of compliance and focusing on the highest standards of professional conduct.
|
PROCESS OF SETTING COMPENSATION
Benchmarking Against a Peer Group
The Compensation Committee engaged Meridian to perform a competitive market assessment for the NEOs to evaluate base salary,
target annual incentives, target total cash compensation, long-term incentives and total direct compensation.
The
assessment involved the use of a peer group, as noted below, consisting of 12 transportation and logistics companies in the national marketplace. This peer group was updated in 2016 to more closely align the Companys peer group with peers
suggested by Institutional Shareholder Services. These companies represent both business competition and the most relevant labor market for our executives.
|
|
|
|
|
Avis Budget Group, Inc.
|
|
CH Robinson Worldwide, Inc.
|
|
CSX Corporation
|
Expeditors Intl of Washington, Inc.
|
|
Hertz Global Holdings, Inc.
|
|
Hub Group, Inc.
|
Kansas City Southern
|
|
Landstar System, Inc.
|
|
Norfolk Southern Corporation
|
Old Dominion Freight Line, Inc.
|
|
Ryder System, Inc.
|
|
Swift Transportation Company
|
The Compensation Committee has decided that the appropriate comparative total compensation
target should be at the 50th percentile of the respective peer groups.
Compensation Analysis Tools
In addition to the competitive compensation survey information for each officer that was compiled, the Compensation Committee
also reviewed a three-year history of executive compensation tally sheets. The Compensation Committee anticipates that pertinent compensation information will continue to be developed and enhanced to allow the Committee to perform the most relevant
analyses practicable.
Our objective for total executive compensation is to provide compensation at the 50th percentile of
the respective peer groups. We believe that a sizeable portion of overall compensation should be at risk and tied to stockholder value. Our bonuses are tied to earnings per share (EPS), revenue and earnings before interest and taxes (EBIT); as these
items increase, so do executive bonuses. Long-term incentives are used as tools to reward executives for current and future performance, to encourage an executive to remain with the Company and to align the executives interests with those of
our stockholders. As part of our long-term incentive strategy, executives are expected to maintain stock ownership values as a multiple of their base salaries. Long-term incentives for NEOs are performance- based. While certain components of
compensation are directly tied to the Companys reported financial performance, sufficient accounting and operational controls are in place and tested effectively to ensure that the Companys compensation practices and policies, including
those for nonexecutives, are not reasonably likely to have a material adverse effect on the Company.
22
Our Company has a 401(k) plan that assists participants in providing for
retirement. The Company contributes to each NEOs account per year based on the NEOs voluntary contribution amount. The equity buildup in unvested equity-based awards and stock owned currently is critical to each executives ability
to adequately provide for his or her retirement. As previously mentioned and explained in detail later, we have a Company stock ownership policy for our executives, but we do not have a hold until retirement restriction. We do not
believe that such a restriction is prudent for the employee or necessary to protect our Company.
Tally Sheets
A compensation tally sheet for each NEO was prepared and reviewed by the Compensation Committee in 2016. These tally sheets
detail a three-year history of dollar amounts for components of the NEOs total compensation, including current salary and estimated cash bonuses, equity-based awards, change in control severance payments, if any, personal benefits, if any, and
other perquisites.
Long -Term Compensation Analyses and Policies
With respect to long-term, equity-based awards, the Company maintains the MIP. The MIP was
originally adopted and approved by the Board on March 17, 1989, and an amended and restated MIP was subsequently approved by the stockholders on May 11, 1995. The MIP has been amended and restated since the time of its adoption, and all
amendments requiring approval of the stockholders have been approved, with the last approval occurring at our Annual Meeting of Stockholders held in 2012. Currently, there are 44 million shares of common stock authorized for issuance under the
MIP, of which approximately 6.9 million shares are available for future equity-based awards.
As discussed in
Proposal Two of this Proxy Statement, the Board of Directors has adopted, subject to stockholder approval, the Companys Third Amended and Restated Management Incentive Plan (the Restated MIP). The restatement of the MIP relates primarily to:
|
|
|
limitations on share recycling,
|
|
|
|
clarification regarding the effect of the Companys assumption of awards granted under another plan,
|
|
|
|
a limitation on the number of shares available each year for nonemployee directors,
|
|
|
|
a broader provision regarding the Companys discretion to reduce, cancel, seek to forfeit or recoup a
participants awards upon the occurrence of certain events,
|
|
|
|
clarification that recipients of restricted stock and share unit awards do not have voting or dividend rights
until such award is vested,
|
|
|
|
the addition of methods for payment of the purchase price for any existing or future options granted under the
Plan,
|
|
|
|
expanded methods for satisfying a participants withholding obligations,
|
|
|
|
the addition of a provision regarding acceleration of vesting following a change in control, and
|
|
|
|
a broader provision regarding amendment of the Plan to be based on current applicable law.
|
Certain provisions of the Restated MIP, as proposed to be approved by stockholders, are described in
the following sections of this CD&A. Such descriptions are qualified in their entirety by reference to the complete text of the Restated MIP, which is attached as Appendix A to this Proxy Statement.
Performance-based restricted share units, time-vested restricted share units and stock options of the Company are granted
under the MIP in an effort to link future compensation to the long-term financial success of the Company. These equity-based awards are granted to executive officers, including the NEOs, and other key employees (approximately 410 individuals) and
are intended to attract and retain employees, to provide incentives to enhance job performance, and to enable those persons to participate in the long-term success and growth of the Company through an equity interest in the Company.
The Compensation Committee typically grants time-vested restricted share units under the MIP to
non-NEO
employees of the Company, while granting performance-based restricted share units to the NEOs of the Company. Each grant typically vests ratably over five (5) years based on service and
performance conditions. Each portion that vests in a particular year, or each tranche, of performance-based awards is contingent on the Companys attainment of predetermined performance metrics established by the Compensation Committee.
Historically, the Compensation Committee has set operating income targets for each tranche of performance based restricted share units granted to NEOs. Therefore, while an NEO may receive a grant that vests over a period of years, the operating
income performance metric must be met for each tranche in order for the NEO to receive the full value of grant. Failure to meet the operating income metric for any tranche would cause that portion of the total grant to be forfeited by the NEO. The
Compensation Committee believes that restricted share units, both time- vested and performance-based, are currently more effective than stock options in achieving the Companys compensation objectives, as these grants are subject to less market
volatility and are less dilutive to stockholders. Employees realize immediate value as restricted share units vest, with such value increasing as the Companys stock performance increases. Cash dividends are not paid and there are no voting
rights on unvested restricted share units.
The Company does not have a formal policy, but has an established practice
described below, with respect to the granting of any form of equity compensation. The Company does not have a policy or practice of either timing equity-based compensation grants to current or new executive officers, or timing the release of
material, nonpublic information to affect the value of executive compensation. Recommendations for all Section 16 filers, except for the Chairman of the Board and the Chief Executive Officer, are presented to the Compensation Committee by the
Chief Executive Officer. The Chairman of the Board recommends to the Compensation Committee the award for the Chief Executive Officer. The Compensation Committee approves or adjusts the award using the above tools for all Section 16 filers,
except for the Chairman of the Board and the Chief Executive Officer. The awards for the Chairman of the Board and Chief Executive Officer are recommended by the Compensation Committee and submitted for final approval to the Companys
independent Board members. This process occurs in late October or early November of each year to coincide with our third-quarter Board meeting. We consider this our annual award date. The Compensation Committee does not expect to delegate approval
authority to grant awards to management or any subcommittee at this time or in the near future. The grant date is typically set by the Compensation Committee. Historically, annual awards of equity compensation have been granted to all awardees,
including the NEOs, in October. In 2016, 472,909 grants were made on October 19, and 61,855 grants were made on October 20, the date of the third-quarter Board meeting. Grants have been made in months other than the annual award date on a very
limited basis. The limited exceptions to this grant-date practice have included, for example, the hiring of a key employee or the promotion of an employee to an executive office.
23
The Compensation Committee is currently studying the effects of moving the annual
award date to January of each year because the Compensation Committee would have a more complete analysis of the Companys financial performance and the executives individual performance for the full calendar year and would have the most
recently available competitive market data.
Pursuant to the provisions of the MIP, all stock options are granted with an
exercise price equal to 100% of the fair market value of the Companys common stock on the grant date. Historically, stock options have been generally exercisable over five to 10 years from the grant date. The exercise price of stock options
may be satisfied with payment of cash or previously owned Company stock or, under the terms of the Restated MIP, in the discretion of the Compensation Committee, through a cashless simultaneous exercise and sale through a broker or by a net
exercise arrangement. In response to emerging changes in the area of accounting for equity-based compensation and to position ourselves competitively with our peers, the Compensation Committee began granting restricted share units in lieu of
stock options under the MIP in 2005. No stock options are currently outstanding. The Compensation Committee anticipates granting restricted share units in lieu of stock options for the foreseeable future, but in the event stock options are granted,
such stock options will be granted under the terms discussed above. Similar to stock options, the total number of restricted share units that may be awarded to an individual is within the discretion of the Compensation Committee but also limited by
the MIP and is generally based on the Companys performance and the individuals current level of compensation, individual performance, potential for promotion and marketability outside the Company. The number of restricted share units or
stock options previously granted to an individual may be, but is not always, a consideration in determining the amount of awards granted to that individual in the future. Generally, restricted share units vest over two to 10 years.
As stated above, the Company does not have a policy or practice of timing the grant of equity-based awards and the release of
material, nonpublic information in a manner that would affect compensation for new or current executive officers, nor has it deliberately or knowingly done so. In the event that material, nonpublic information becomes known to the Compensation
Committee, the Company or its employees at a time when such information could affect or otherwise impact the imminent grant of equity-based compensation, management and the Compensation Committee will take the existence of such information under
advisement and determine whether to delay the grant of such equity-based compensation to a later date to avoid the appearance of any impropriety.
Deductibility of Compensation and Other Regulatory Considerations
The Code places a limit of $1 million on the amount of compensation the Company may deduct
for federal income tax purposes in any one year with respect to the Companys Chief Executive Officer and the next three most highly compensated executive officers whose compensation is required to be disclosed in the Companys annual
Proxy Statement, other than the Chief Financial Officer (the Covered Employees). There is an exception to this $1 million limitation for performance-based compensation that meets certain requirements. In reviewing the effectiveness of the
Companys compensation program, the Compensation Committee considers the anticipated tax treatment to the Company and to its executives of various payments and benefits. Additionally, the deductibility of certain compensation payments depends
upon the timing of an executives vesting or exercise of previously granted awards, as well as interpretations and changes in the tax laws and other factors beyond the Compensation Committees control. For these and other reasons,
including the need to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee will not necessarily, nor in all circumstances, limit executive compensation to that
which is deductible under the Code. The Company has not adopted a policy requiring all compensation to be deductible.
The
MIP contains specific language and requirements regarding performance-based awards granted to a Covered Employee intended to be qualified performance-based compensation as defined by the Code. These awards shall be based on the
attainment of one or more objective performance goals established in writing by the Committee. Performance goals must be based on one or more criteria approved by the MIP (e.g., revenue, operating income, return on assets) and be based on an
objective formula or standard. The Committee is currently using approved targeted quarterly and annual operating income levels as the performance criteria for all outstanding qualified performance-based restricted share awards. Prior to any vesting
of an award, the Committee must certify in writing that all of the necessary performance goals have been met. Material terms of the performance goals must be disclosed to and reapproved by the stockholders every five years, and, accordingly, these
terms have been included in Proposal Two of the Proxy Statement. In October 2016, 142,114 grants of qualified performance- based compensation restricted share units were made to Covered Employees and vest, under the provisions of the
MIP, upon the Companys attainment of predetermined performance metrics established and approved by the Compensation Committee.
The Compensation Committee will continue to consider various alternatives to preserving the deductibility of compensation
payments and benefits to the extent reasonably practicable and to the extent consistent with its other compensation objectives. Base salary, bonuses or the vesting of
non-performance-based
restricted share
units do not qualify as performance-based compensation under the Code. In 2016, $878,092 in NEO compensation paid to Nicholas Hobbs was not deductible by the Company.
Derivative Trading, Hedging and Trading Plans
The Company has a policy that prohibits directors, officers or employees from engaging in short
sales or in transactions involving derivatives based on the Companys common stock, such as option contracts, straddles, collars, hedges and writing puts or calls. In addition, the Companys policy requires that directors and executive
officers must obtain authorization from the Board before entering into a trading plan that, under the SECs Rule
10b5-1,
would permit the sale of the Companys stock including at times when the
director or executive officer is in the possession of material nonpublic information.
24
Stock Ownership Guidelines
To motivate the Companys officers and senior management to emulate its stockholders, the Company expects its management
to own Company stock at levels described in the table shown below.
Stock ownership is defined as stock owned:
|
|
|
directly or indirectly, and/or
|
|
|
|
through the Companys 401(k) Employee Retirement Plan.
|
|
|
|
|
|
Position
|
|
Ownership Multiple
of Base Salary
|
|
Chief Executive Officer
|
|
|
6 times
|
|
Executive Vice Presidents
|
|
|
3.5 times
|
|
Senior Vice Presidents
|
|
|
2.75 times
|
|
Vice Presidents
|
|
|
2.5 times
|
|
The Compensation Committee has determined that as of the annual award dates, October 19 and
October 20, 2016, all of the Companys officers and members of senior management covered by these guidelines had met their ownership goals.
Stock
Retention Policy
In addition to the stock ownership guidelines indicated above, the Company requires all shares
obtained by an NEO from the vesting or exercise of restricted share units and stock options to be retained until the established ownership levels have been achieved. The Company does not have any other stock retention policy.
Recovery of Awards
The
Company does not have a policy, other than required by law, requiring replacement of awards or payments as a result of an officers illegal transactions or restatements. However, the Compensation Committee has formally adopted and explicitly
communicated the clawback provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act with regard to annual cash bonus awards paid to the Companys executive officers. With regard to equity-based awards, the Restated
MIP gives the Company broad discretion to reduce, cancel, seek to forfeit or recoup any Plan participants awards upon the breach of any agreement with or obligation to the Company, violation of any Company policy or procedure, or engagement in
conduct that is otherwise detrimental to the business or reputation of the Company. Since becoming a public company in 1983, the Company has had no illegal actions by its officers or restatements of financial information.
Summary
The Company
intends to continue its practice of compensating its executives through programs that emphasize performance. To that end, executive compensation is tied directly to the performance of the Company and is structured to ensure that, due to the nature
of the business and the degree of competitiveness for executive talent, there is an appropriate balance between:
|
|
|
base salary and incentive compensation,
|
|
|
|
short-term and long-term compensation, and
|
|
|
|
cash and noncash compensation.
|
Each is determined and measured by:
|
|
|
competitive compensation data,
|
|
|
|
financial, operational and strategic goals,
|
|
|
|
long-term and short-term performance of the Company compared with its peer group, and
|
|
|
|
individual contribution to the success of the Company.
|
25
2016 COMPENSATION
Elements of Compensation
The Companys primary compensation components are summarized below. Generally, the Companys compensation program
consists of an annual base salary, short-term cash incentive awards, and an annual long-term, equity-based award. Primary benefits for executives include participation in the Companys 401(k) plan, health, dental and vision plans, and various
insurance plans, including disability and life insurance, all of which are available to all employees on a nondiscriminatory basis. The Company provides limited perquisites to executive officers and other key employees as described in more detail on
page 29 under the section titled Other Perquisites.
Total direct compensation for executive officers,
including the NEOs, consists of one or more of the following components:
|
|
|
annual performance-based incentive cash bonus awards,
|
|
|
|
long-term incentive/equity-based compensation,
|
|
|
|
health and welfare benefits, and
|
The Compensation Committee, with recommendations from management, works to create what it believes is the best mix of these
components in delivering total direct compensation. In determining annual compensation, the Compensation Committee reviews all elements of compensation separately and in the aggregate. These compensation components are comparable to those of the
Companys competitors and peer group.
In its review of executive compensation, and, in particular, in determining
the amount and form of incentive awards discussed below, the Compensation Committee generally considers several factors. Among these factors are:
|
|
|
market information with respect to cash and long-term compensation for its peer group,
|
|
|
|
amounts paid to the executive officer in prior years as salary,
|
|
|
|
annual bonus and other compensation,
|
|
|
|
the officers responsibilities and performance during the calendar year, and
|
|
|
|
the Companys overall performance during prior calendar years and its future objectives and challenges.
|
At transportation companies, generally the largest elements of compensation are paid in the form of
annual short-term incentives and long-term compensation. Compensation mix and industry profitability vary as the industry faces many risk factors, such as the economy and fuel prices.
Cash compensation for our NEOs varies as the EPS of the Company changes or with the growth of the combination of revenue and
EBIT, due to the nature of our bonus plans described below. Grants of performance-based restricted share units are made annually. Performance-based restricted share units are based on each employees level of responsibility and are generally
computed as a multiple of base salary.
It has been the policy of the Company to put a significant portion of the
executives compensation at risk. This is accomplished by our cash bonus plans, which are directly tied to EPS and revenue and EBIT growth, and the issuance of performance-based restricted share units. Equity-based awards from the MIP may also
vary in vesting from two to 10 years. These awards are subject to forfeiture if the employee leaves the Company. Furthermore, the future vesting of performance- based equity awards is contingent on the Companys attainment of predetermined
performance metrics established by the Committee. The Committee and management believe that the proportion of compensation at risk should rise as the employees level of responsibility increases.
The Compensation Committee has retained Meridian as its compensation consultant. Meridian reports directly to the Compensation
Committee and has no other engagements with the Company. In 2016, Meridian prepared a study providing information and an independent analysis of the Companys executive compensation program and practices. The results of this study included
observations about the Companys target 2016 executive compensation.
The Compensation Committee does not rely solely
on predetermined formulas or a limited set of criteria when it evaluates the individual performances of the NEOs. The Compensation Committee considers actual results against deliverables and also bases its compensation decisions for the NEOs on:
|
|
|
the execution of business plans,
|
|
|
|
growth in EPS, revenue and EBIT,
|
|
|
|
size and complexity of the business,
|
|
|
|
strengthening of competitive position,
|
|
|
|
analysis of competitive compensation practices, and
|
|
|
|
assessment of the Companys performance.
|
Where possible, the above criteria were compared with the peer group selected as well as the Chief Executive Officers
input for his direct reports and the Chairman of the Boards input for the Chief Executive Officer.
26
Base Salary
The Compensation Committee believes that competitive levels of cash compensation, together with equity-based and other
incentive programs, are necessary for motivating and retaining the Companys executives. Salaries provide executives with a base level of monthly income and help achieve the objectives outlined above by attracting and retaining strong talent.
Base salaries are evaluated annually for all executive officers, including the Chairman of the Board and the Chief Executive Officer. Generally, base salaries are not directly related to specific measures of corporate performance, but are determined
by the relevance of experience, the scope and complexity of the position, current job responsibilities, retention and relative salaries of the peer group members. The Compensation Committee may elect not to increase an executive officers
annual salary, and has so elected in prior years. However, if warranted, the Compensation Committee may increase base salary where an executive officer takes on added responsibilities or is promoted.
Annual Bonus Awards
The
Company has had in place for several years a bonus plan that is tied to EPS (EPS plan). In 2016, the Compensation Committee established a second bonus plan, referred to as the Performance Growth Incentive (PGI) plan, which is tied to year-over-year
revenue and EBIT growth. When management presents its budget for the following year, the Compensation Committee establishes a matrix of EPS results with corresponding bonus payout levels and a separate PGI matrix of revenue and EBIT growth rates
with corresponding bonus payout levels. These forecasted revenue and earnings results are based on customer freight trends, strategies for growth and controlling costs, and corporate strategies to maximize stockholder return. Once presented to the
Board, the financial budget and bonus plan matrices remain fixed, though management continually reforecasts expectations based on actual results and on changing facts and assumptions. Changes in uncontrollable factors such as general economic
conditions, railroad or port authority service issues, or rapidly fluctuating fuel costs can have a significant impact on the Companys actual financial results. Therefore, as the Company performs against the original budget, the
executives bonus performs against the
pre-
established matrices. The Compensation Committee has formally adopted and explicitly communicated the clawback provisions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act with regard to both the EPS and PGI annual cash bonus awards paid to the Companys executive officers. The position of Chairman of the Board is not eligible to participate in the Companys EPS or
PGI bonus plans.
EPS Plan
For 2016, the EPS plan was based on annual reported EPS; however, quarterly EPS targets were established. If the Company met a
quarterly EPS target, the executive was eligible to receive a progress payment equal to approximately 12.5% of his or her projected annual bonus payout. The annual bonus payout was reduced by the progress payments received during the
year. We considered a single quarterly progress payment, computed at approximately 12.5% of the executives lowest possible annual bonus amount, to be the threshold bonus amounts described below. For 2017, the EPS plan has been amended to
create a single payout based on the full year 2017 EPS matrix approved by the Compensation Committee. The payout will occur in January 2018 after the full year financial results are publicly reported.
For 2016, the established matrix consisted of EPS ranging from $3.65 to $4.85, translating to annual bonus payout percentages
ranging from 6% to 170% of an executives base salary. The 2016 quarterly and annual bonus payout targets compared with actual reported EPS and actual payout percentages were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
Bonus Payout % of Salary
|
|
Period
|
|
Minimum
|
|
Target
|
|
Reported EPS
|
|
Minimum
|
|
Target
|
|
|
Actual
|
|
1Q 16
|
|
0.69
|
|
0.76
|
|
0.88
|
|
0.75
|
|
|
3.75
|
|
|
|
6.25
|
|
2Q 16
|
|
0.95
|
|
1.04
|
|
0.92
|
|
0.75
|
|
|
3.75
|
|
|
|
|
|
3Q 16
|
|
0.99
|
|
1.08
|
|
0.97
|
|
0.75
|
|
|
3.75
|
|
|
|
|
|
Annual
|
|
3.65
|
|
4.00
|
|
3.81
|
|
6.00
|
|
|
30.00
|
|
|
|
12.00
|
|
Actual earned EPS bonus amounts
by quarter for each NEO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q 16
|
|
|
2Q 16
|
|
3Q 16
|
|
|
4Q 16
|
|
|
Total
Annual
|
|
John N. Roberts, III
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
$
|
46,000
|
|
|
$
|
96,000
|
|
David G. Mee
|
|
|
29,688
|
|
|
|
|
|
|
|
|
|
27,312
|
|
|
|
57,000
|
|
Shelley Simpson
|
|
|
29,688
|
|
|
|
|
|
|
|
|
|
27,312
|
|
|
|
57,000
|
|
Nicholas Hobbs
|
|
|
28,125
|
|
|
|
|
|
|
|
|
|
25,875
|
|
|
|
54,000
|
|
Terrence D. Matthews
|
|
|
29,688
|
|
|
|
|
|
|
|
|
|
27,312
|
|
|
|
57,000
|
|
27
PGI Plan
The PGI bonus plan is based on targeted annual operating revenue, excluding fuel surcharges (net revenue), and EBIT growth
rates and utilizes a single payout in January after full year financial results are publicly reported. For 2016, the established PGI matrix consisted of net revenue growth rates ranging from 10% to 12% and EBIT growth rates ranging from 9% to 11%.
These ranges translate into annual bonus payout percentages ranging from 75% to 125% of the President and CEOs base salary and 50% to 100% of all other NEOs base salaries. The PGI plan is a blended bonus calculation requiring the minimum
threshold of both net revenue and EBIT to be met before payout occurs. The 2016 annual PGI bonus payout targets compared with actual reported results and actual payout percentages were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue / EBIT Growth %
|
|
|
Bonus Payout % of Salary
|
|
Period
|
|
Minimum
|
|
|
Target
|
|
|
Reported
|
|
|
Minimum
|
|
|
Target
|
|
|
Actual
|
|
President and CEO
|
|
|
10.0 / 9.0
|
|
|
|
10.0 / 9.0
|
|
|
|
8.9 / 0.7
|
|
|
|
75.0
|
|
|
|
75.0
|
|
|
|
|
|
All other NEOs
|
|
|
10.0 / 9.0
|
|
|
|
10.0 / 9.0
|
|
|
|
8.9 / 0.7
|
|
|
|
50.0
|
|
|
|
50.0
|
|
|
|
|
|
For 2016, the required minimum targeted growth rates under the PGI plan were not achieved and
no payout was made.
Long -Term, Equity-Based Award
Each executive is eligible to receive a long-term incentive award of performance-based
restricted share units. Performance-based restricted share units are intended to help achieve the objectives of the compensation program, including the retention of high-performing and experienced talent, a career orientation and strong alignment
with stockholders interests. The performance-based restricted share units are awarded and settled from shares reserved for issuance under the MIP. The Compensation Committee approves or adjusts the award based on the above criteria for all
Section 16 filers who are employees of the Company. The awards for the Companys Chairman of the Board and Chief Executive Officer are presented for final approval to the Companys independent Board members. The Compensation Committee
believes that performance-based restricted share units must be sufficient in size to provide a strong, long-term performance and retention incentive for executives and to increase their vested interest in the Company. Performance-based restricted
share units are used as long-term incentives because they are less dilutive to shares outstanding and to profits. Performance-based restricted share units generally vest from two to 10 years.
In administering the MIP and awarding long-term incentive awards, we are sensitive to the potential for dilution of future
EPS. The MIP is a broad-based equity compensation program. We focus the program on employees who will have the greatest impact on strategic direction and long-term results of the Company by virtue of their senior roles and responsibilities. A total
of 682,860 performance-based and time-vested restricted share units were granted in 2016. Approximately 21% of the total share units granted were performance-based restricted share units to the NEOs, and approximately 32% of the total share units
granted were to the executive officer group as a whole. As described above, MIP participants who hold the title of director and above have an ownership requirement in Company stock.
In determining the number of performance-based restricted share unit grants for each NEO, the Compensation Committee reviewed
peer market data provided by Meridian and a detailed analysis of each NEOs vested and unvested stock holdings. In considering unvested stock holdings, the Committee reviewed a forecast of the timing of potential future restricted stock unit
vesting for each NEO over the next 10 years.
The Compensation Committee subjectively considered the following objectives
(without any particular weighting) when determining the form and amount of performance-based restricted share units granted to NEOs in 2016:
|
|
|
align NEOs long-term interests with those of the Companys stockholders,
|
|
|
|
strengthen retention hooks for NEOs over the long term,
|
|
|
|
ensure competitiveness of NEOs total compensation opportunity through an emphasis on performance-based
long-term stock compensation,
|
|
|
|
reinforce share holdings of NEOs,
|
|
|
|
align NEOs compensation with the Companys long-term leadership succession planning initiatives,
and
|
|
|
|
bolster the continuity of the entire management team through an upcoming period of critical strategic goals
and milestones for the Company.
|
For 2016, the Compensation Committee and/or independent directors
approved the following performance-based restricted share unit grants to the NEOs:
|
|
|
|
|
John N. Roberts, III
|
|
|
61,855
|
|
David G. Mee
|
|
|
25,398
|
|
Shelley Simpson
|
|
|
22,351
|
|
Nicholas Hobbs
|
|
|
22,351
|
|
Terrence D. Matthews
|
|
|
10,159
|
|
No equity-based compensation was granted to the Chairman of the Board in 2016.
28
The 2016 NEO awards shown above are performance-based restricted share units.
These grants vest from two to five years annually, beginning July 15, 2017, upon the Companys attainment of predetermined operating metrics established and approved by the Compensation Committee, and are deemed qualified
performance-based compensation awards under Section 162(m) of the Code. The Compensation Committee acknowledges that the separate components of total direct compensation are not always in the 50th percentile of their respective peer groups, as
determined earlier, but it believes that its mix of current and long-term compensation is more appropriate to align the NEOs compensation with the stockholders interests in both the near and longer term.
The Committee also reviewed its compensation strategy in general and specific components of total direct compensation and
determined that none of the Companys compensation programs, individually or as a whole, would create risks that are reasonably likely to have a material adverse effect on the Company. The Committee presented its review and conclusion to the
entire Board.
Deferred Compensation
The Company administers a Deferred Compensation Plan for certain of its officers. The employee participant may elect on an
annual basis to defer part of his or her salary and/or annual bonus awards. This plan assists key employees in planning for retirement. The Company contributes nothing to the plan, and participants are not permitted to defer shares of Company stock.
Health and Welfare Benefits
The Company provides benefits such as medical, vision, life insurance, long-term disability
coverage, and 401(k) plan opportunities to all eligible employees, including the NEOs. The Company provides up to $750,000 in life insurance coverage and up to $10,000 per month in long-term disability coverage. The value of these benefits is not
required to be included in the Summary Compensation Table since they are available to all employees on a nondiscriminatory basis. The Company matches certain employee contributions to the 401(k) plan. The Company provides no postretirement medical
or supplemental retirement benefits to its employees.
The Company also provides vacation,
sick leave and other paid holidays to employees, including the NEOs, that are comparable to those provided at other transportation companies. The Companys commitment to provide employee benefits is due to our recognition that the health and
well-being of our employees contributes directly to a productive and successful work life that produces better results for the Company and for its employees.
Personal Benefits
The
Company provides certain perquisites to management employees, including the NEOs, as summarized below.
Company Aircraft
The Company actively participates in shared ownership of aircraft services with NetJets. With the approval of the Chief
Executive Officer, the NEOs and other management employees use Company aircraft services for business purposes. Personal use of Company aircraft services is provided to executive officers on a very limited basis and to other management employees in
the event of emergency or other urgent situations.
Company Vehicles
The Company does not provide Company-owned cars to executives.
Other Perquisites
The
Company provides executive officers a taxable allowance of up to $10,000 a year for financial counseling services, which may include legal, financial, estate and/or tax planning, and tax return preparation. This benefit is based on actual cost to
the Company. The Company also provides country club memberships to certain of its executive officers. These memberships are valued based on the actual costs of the membership, including dues, regardless of whether use was personal or business. The
Company believes that these clubs provide a quiet venue for negotiations and entertainment of clients, bankers, investment bankers, stockholders, etc.
Severance Agreements
The
Company does not have employment contracts or predetermined personal severance agreements with any of its executives. However, according to the terms of the awards granted under the previously mentioned MIP, all outstanding restricted share
units are subject to a double triggering event, where both a change in control and an NEOs retirement, termination by the Company without cause or resignation for good reason are required for an accelerated or immediate vesting of
the awards.
Generally, a change in control is deemed to occur when more than 30% of the outstanding shares of
common stock of the Company change ownership in a transaction that is a merger, reorganization or consolidation, when the persons who constitute the Companys incumbent board of directors cease to constitute a majority of the board, or upon the
consummation of a merger, reorganization, consolidation or similar form of corporate transaction involving the Company that requires the approval of the Companys stockholders where more than 50% of the outstanding shares change ownership or a
complete liquidation or dissolution of the Company or the sale or disposition of all or substantially all of the assets of the Company.
29
SUMMARY COMPENSATION
The following table summarizes the total compensation earned by or paid to the Chief Executive Officer, Chief Financial Officer
and the next three most highly compensated executive officers of the Company who served in such capacities as of December 31, 2016, for services rendered to the Company. These five officers are referred to as the NEOs in this Proxy Statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal
|
|
|
|
|
Salary
|
|
|
Share
Units
|
|
|
Option
Awards
|
|
|
Plan
Compensation
|
|
|
Deferred
Compensation
|
|
|
All Other
Compensation
|
|
|
|
|
Position
|
|
Year
|
|
|
($) (1)
|
|
|
($) (2)
|
|
|
($) (2)
|
|
|
($) (1)
|
|
|
($)
|
|
|
($)
|
|
|
Total ($)
|
|
John N. Roberts, III
|
|
|
2016
|
|
|
|
807,747
|
|
|
|
4,616,239
|
|
|
|
|
|
|
|
96,000
|
|
|
|
|
|
|
|
25,385
|
|
|
|
5,545,371
|
|
President
|
|
|
2015
|
|
|
|
796,132
|
|
|
|
4,342,186
|
|
|
|
|
|
|
|
225,000
|
|
|
|
|
|
|
|
19,053
|
|
|
|
5,382,371
|
|
and CEO
|
|
|
2014
|
|
|
|
695,000
|
|
|
|
3,465,876
|
|
|
|
|
|
|
|
157,550
|
|
|
|
|
|
|
|
28,044
|
|
|
|
4,346,470
|
|
|
|
|
|
|
|
|
|
|
David G. Mee
|
|
|
2016
|
|
|
|
480,660
|
|
|
|
1,899,262
|
|
|
|
|
|
|
|
57,000
|
|
|
|
|
|
|
|
21,954
|
|
|
|
2,458,876
|
|
EVP, Finance
|
|
|
2015
|
|
|
|
476,846
|
|
|
|
1,809,378
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
|
16,078
|
|
|
|
2,437,302
|
|
& Administration and CFO
|
|
|
2014
|
|
|
|
437,845
|
|
|
|
1,143,300
|
|
|
|
|
|
|
|
99,935
|
|
|
|
|
|
|
|
17,654
|
|
|
|
1,698,734
|
|
|
|
|
|
|
|
|
|
|
Shelley Simpson
|
|
|
2016
|
|
|
|
476,923
|
|
|
|
1,671,408
|
|
|
|
|
|
|
|
57,000
|
|
|
|
|
|
|
|
16,268
|
|
|
|
2,221,599
|
|
EVP, CMO and President of
|
|
|
2015
|
|
|
|
429,808
|
|
|
|
1,447,502
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
17,793
|
|
|
|
2,015,103
|
|
ICS & Truckload
|
|
|
2014
|
|
|
|
371,635
|
|
|
|
1,143,300
|
|
|
|
|
|
|
|
80,500
|
|
|
|
|
|
|
|
24,391
|
|
|
|
1,619,826
|
|
|
|
|
|
|
|
|
|
|
Nicholas Hobbs
|
|
|
2016
|
|
|
|
454,808
|
|
|
|
1,671,408
|
|
|
|
|
|
|
|
54,000
|
|
|
|
|
|
|
|
18,424
|
|
|
|
2,198,640
|
|
EVP and President
|
|
|
2015
|
|
|
|
403,846
|
|
|
|
1,447,502
|
|
|
|
|
|
|
|
112,500
|
|
|
|
|
|
|
|
14,998
|
|
|
|
1,978,846
|
|
of Dedicated Contract Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrence D. Matthews
|
|
|
2016
|
|
|
|
478,819
|
|
|
|
759,690
|
|
|
|
|
|
|
|
57,000
|
|
|
|
|
|
|
|
19,618
|
|
|
|
1,315,127
|
|
EVP and
|
|
|
2015
|
|
|
|
478,946
|
|
|
|
1,085,627
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
|
19,590
|
|
|
|
1,719,163
|
|
President of Intermodal
|
|
|
2014
|
|
|
|
442,589
|
|
|
|
762,200
|
|
|
|
|
|
|
|
101,200
|
|
|
|
|
|
|
|
19,438
|
|
|
|
1,325,427
|
|
(1)
|
Non-equity
incentive plan compensation (paid as a bonus) and salary
amounts shown above are reported as gross earnings. Totals may include amounts transferred into the deferred compensation plan and/or into the Companys 401(k) plan. All
non-equity
awards are reported in
the year in which they are earned.
|
(2)
|
Amounts reflect grant date fair value of each individuals specific award, which will be earned over
the vesting period (2 to 5 years) and the achievement of performance metrics established by the Compensation Committee at the time of grant. No stock options were granted during 2016, 2015 or 2014.
|
30
Components of All Other Compensation for Calendar Year 2016
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
Company
|
|
|
|
|
|
and Other
|
|
Contributions
|
|
|
|
|
|
Personal Benefits
|
|
to 401(k) Plan
|
|
Total
|
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
John N. Roberts, III
|
|
17,435
|
|
7,950
|
|
|
25,385
|
|
David G. Mee
|
|
14,004
|
|
7,950
|
|
|
21,954
|
|
Shelley Simpson
|
|
8,318
|
|
7,950
|
|
|
16,268
|
|
Nicholas Hobbs
|
|
10,474
|
|
7,950
|
|
|
18,424
|
|
Terrence D. Matthews
|
|
11,668
|
|
7,950
|
|
|
19,618
|
|
Components of Perquisites for Calendar Year 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Legal and
|
|
|
|
|
|
Perquisites
|
|
|
|
Personal Use
|
|
Accounting
|
|
|
Club
|
|
|
and Other
|
|
|
|
of Company Plane
|
|
Fees
|
|
|
Dues
|
|
|
Personal
|
|
Name
|
|
($) (1)
|
|
($)
|
|
|
($)
|
|
|
Benefits ($)
|
|
John N. Roberts, III
|
|
|
|
|
6,895
|
|
|
|
10,540
|
|
|
|
17,435
|
|
David G. Mee
|
|
|
|
|
3,500
|
|
|
|
10,504
|
|
|
|
14,004
|
|
Shelley Simpson
|
|
|
|
|
|
|
|
|
8,318
|
|
|
|
8,318
|
|
Nicholas Hobbs
|
|
|
|
|
2,195
|
|
|
|
8,279
|
|
|
|
10,474
|
|
Terrence D. Matthews
|
|
|
|
|
1,340
|
|
|
|
10,328
|
|
|
|
11,668
|
|
(1)
|
The value of personal aircraft usage reported above is based on the Companys actual invoiced amount
from NetJets for the variable costs incurred on each trip. Since the Companys aircraft is used primarily for business travel, this methodology excludes fixed costs that do not change based on usage, such as depreciation and management fees. On
certain occasions, an executives spouse or other family member may accompany the executive on a flight when such person is invited to attend the event for appropriate business purposes. No additional direct operating cost is incurred in such
situations under the foregoing methodology; however, the value of personal use of Company aircraft is imputed for federal income tax purposes as income to the NEO. Messrs. Roberts, Mee, and Matthews had such imputed income in 2016. This value is
calculated pursuant to Internal Revenue Service guidelines using Standard Industry Fare Level rates, which are determined by the U.S. Department of Transportation, and included in the NEOs base salary in the Summary Compensation Table shown on
page 30 of this Proxy Statement.
|
Grants of Plan-Based Awards
The following table reflects estimated possible payouts under equity and
non-equity
incentive plans to the NEOs during 2016. The Companys equity-based and
non-equity
incentive-based awards are granted to the NEOs based upon
pre-established
performance goals set annually by the Compensation Committee with a performance period equal to the calendar year for which the performance goals are set.
The MIP is an annual plan consisting of equity-based awards only. The number of performance-based restricted share units
awarded is measured based on the executives level of responsibility and other matters described on page 28 under Long-Term, Equity-Based Award. Dividends are not paid on awards of performance-based or
time-vested restricted share units.
31
NEOs are eligible to earn cash bonuses under the
non-equity
incentive award plans based on the Companys EPS, revenue and EBIT for the calendar year. Please refer to page 27 under Annual Bonus Award for further detail.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
|
|
Date Fair
|
|
|
|
|
Estimated Possible Payouts
Under Non-Equity
Incentive Awards
|
|
Estimated Possible Payouts
Under Equity Incentive
Plan Awards
|
|
Number
of
Shares
|
|
Number
of
Securities
|
|
Exercise
or Base
Price of
|
|
Value of
Stock
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($) (1)
|
|
(#)
|
|
(#) (2)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($) (3)
|
John. N. Roberts, III
|
|
|
|
10/20/2016
|
|
|
|
|
606,000
|
|
|
|
|
840,000
|
|
|
|
|
2,360,000
|
|
|
|
|
12,371
|
|
|
|
|
61,855
|
|
|
|
|
61,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.63
|
|
David G. Mee
|
|
|
|
10/19/2016
|
|
|
|
|
241,063
|
|
|
|
|
380,000
|
|
|
|
|
1,282,500
|
|
|
|
|
3,047
|
|
|
|
|
25,398
|
|
|
|
|
25,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.78
|
|
Shelley Simpson
|
|
|
|
10/19/2016
|
|
|
|
|
241,063
|
|
|
|
|
380,000
|
|
|
|
|
1,282,500
|
|
|
|
|
3,047
|
|
|
|
|
22,351
|
|
|
|
|
22,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.78
|
|
Nicholas Hobbs
|
|
|
|
10/19/2016
|
|
|
|
|
228,375
|
|
|
|
|
360,000
|
|
|
|
|
1,215,000
|
|
|
|
|
3,047
|
|
|
|
|
22,351
|
|
|
|
|
22,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.78
|
|
Terrence D. Matthews
|
|
|
|
10/19/2016
|
|
|
|
|
241,063
|
|
|
|
|
380,000
|
|
|
|
|
1,282,500
|
|
|
|
|
5,079
|
|
|
|
|
10,159
|
|
|
|
|
10,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.78
|
|
(1)
|
This column reflects the maximum
non-equity
incentive award each
NEO was eligible to receive for 2016 under the percentage assigned to each NEO for the cash bonus pools. The actual awards earned are reported in the Summary Compensation Table shown on page 30 of this Proxy Statement.
|
(2)
|
This column reflects the number of performance-based restricted share units that were granted to the NEOs
in 2016.
|
(3)
|
The fair value of the awards was based on a 3.8% discount from the Companys closing stock price of
$77.76 on October 19, 2016, or $77.60 on October 20, 2016. The discount represents the present value of expected dividends to be paid on the Companys common stock, using the current dividend rate and the risk-free interest rate, over the
vesting period. The Company believes that this discount is appropriate to value the performance-based restricted share units, as the units do not collect or accrue dividends until the awards vest and are settled with Company stock.
|
32
Outstanding Equity Awards at Calendar Year-end
As of December 31, 2016, there were no outstanding stock options held by the NEOs. The following table sets forth information
concerning restricted share units held by the NEOs as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Awards: Number of
|
|
|
Market Value of
|
|
|
|
Number of
|
|
|
Market Value of
|
|
|
Unearned Shares,
|
|
|
Unearned Shares,
|
|
|
|
Shares or Units
|
|
|
Shares or Units
|
|
|
Units or Other
|
|
|
Units or Other
|
|
|
|
of Stock That Have
|
|
|
of Stock That Have
|
|
|
Rights That Have
|
|
|
Rights That Have
|
|
Name
|
|
Not Vested (#) (1)
|
|
|
Not Vested ($) (2)
|
|
|
Not Vested (#) (1)
|
|
|
Not Vested ($) (2)
|
|
John N. Roberts, III
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
2,912,100
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
873,630
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
|
1,747,260
|
|
|
|
|
|
|
|
|
|
|
|
|
27,284
|
|
|
|
2,648,458
|
|
|
|
|
|
|
|
|
|
|
|
|
46,766
|
|
|
|
4,539,576
|
|
|
|
|
|
|
|
|
|
|
|
|
61,855
|
|
|
|
6,004,265
|
|
|
|
|
|
|
David G. Mee
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
2,329,680
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
873,630
|
|
|
|
|
|
|
|
|
|
|
|
|
21,190
|
|
|
|
2,056,913
|
|
|
|
|
|
|
|
|
|
|
|
|
25,398
|
|
|
|
2,465,384
|
|
|
|
|
|
|
Shelley Simpson
|
|
|
15,000
|
|
|
|
1,456,050
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
2,329,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
873,630
|
|
|
|
|
|
|
|
|
|
|
|
|
15,552
|
|
|
|
1,509,633
|
|
|
|
|
|
|
|
|
|
|
|
|
22,351
|
|
|
|
2,169,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas Hobbs
|
|
|
1,000
|
|
|
|
97,070
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
1,164,840
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
2,329,680
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
873,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,552
|
|
|
|
1,509,633
|
|
|
|
|
|
|
|
|
|
|
|
|
22,351
|
|
|
|
2,169,612
|
|
|
|
|
|
|
Terrence D. Matthews
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
1,456,050
|
|
|
|
|
|
|
|
|
|
|
|
|
21,500
|
|
|
|
2,087,005
|
|
|
|
|
|
|
|
|
|
|
|
|
3,334
|
|
|
|
323,631
|
|
|
|
|
|
|
|
|
|
|
|
|
9,720
|
|
|
|
943,520
|
|
|
|
|
|
|
|
|
|
|
|
|
10,159
|
|
|
|
986,134
|
|
33
(1)
|
Restricted share units are time-vested or performance-based awards. Effective vesting dates, pending
achievement of required performance goals set for performance-based awards, are noted below.
|
Time-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Vesting
|
|
|
Vesting Date
|
|
|
Shares Vesting
|
|
|
Vesting Date
|
|
Shelley Simpson
|
|
|
3,000
|
|
|
|
7/15/17
|
|
|
|
2,000
|
|
|
|
7/15/17
|
|
|
|
|
3,000
|
|
|
|
7/15/18
|
|
|
|
2,000
|
|
|
|
7/15/18
|
|
|
|
|
3,000
|
|
|
|
7/15/19
|
|
|
|
6,666
|
|
|
|
7/15/21
|
|
|
|
|
3,000
|
|
|
|
7/15/20
|
|
|
|
6,667
|
|
|
|
7/15/22
|
|
|
|
|
3,000
|
|
|
|
7/15/21
|
|
|
|
6,667
|
|
|
|
7/15/23
|
|
Nicholas Hobbs
|
|
|
1,000
|
|
|
|
7/15/17
|
|
|
|
6,666
|
|
|
|
7/15/21
|
|
|
|
|
3,000
|
|
|
|
7/15/17
|
|
|
|
6,667
|
|
|
|
7/15/22
|
|
|
|
|
3,000
|
|
|
|
7/15/18
|
|
|
|
6,667
|
|
|
|
7/15/23
|
|
|
|
|
3,000
|
|
|
|
7/15/19
|
|
|
|
3,000
|
|
|
|
7/15/17
|
|
|
|
|
3,000
|
|
|
|
7/15/20
|
|
|
|
3,000
|
|
|
|
7/15/18
|
|
|
|
|
2,000
|
|
|
|
7/15/17
|
|
|
|
3,000
|
|
|
|
7/15/19
|
|
|
|
|
2,000
|
|
|
|
7/15/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Vesting
|
|
|
Vesting Date
|
|
|
Shares Vesting
|
|
|
Vesting Date
|
|
John N. Roberts, III
|
|
|
15,000
|
|
|
|
7/15/17
|
|
|
|
11,691
|
|
|
|
7/15/18
|
|
|
|
|
15,000
|
|
|
|
7/15/18
|
|
|
|
11,692
|
|
|
|
7/15/19
|
|
|
|
|
9,000
|
|
|
|
7/15/17
|
|
|
|
11,692
|
|
|
|
7/15/20
|
|
|
|
|
9,000
|
|
|
|
7/15/17
|
|
|
|
12,371
|
|
|
|
7/15/17
|
|
|
|
|
9,000
|
|
|
|
7/15/18
|
|
|
|
12,371
|
|
|
|
7/15/18
|
|
|
|
|
9,094
|
|
|
|
7/15/17
|
|
|
|
12,371
|
|
|
|
7/15/19
|
|
|
|
|
9,095
|
|
|
|
7/15/18
|
|
|
|
12,371
|
|
|
|
7/15/20
|
|
|
|
|
9,095
|
|
|
|
7/15/19
|
|
|
|
12,371
|
|
|
|
7/15/21
|
|
|
|
|
11,691
|
|
|
|
7/15/17
|
|
|
|
|
|
|
|
|
|
David G. Mee
|
|
|
2,000
|
|
|
|
7/15/17
|
|
|
|
6,026
|
|
|
|
7/15/18
|
|
|
|
|
2,000
|
|
|
|
7/15/18
|
|
|
|
6,027
|
|
|
|
7/15/19
|
|
|
|
|
10,000
|
|
|
|
7/15/20
|
|
|
|
3,111
|
|
|
|
7/15/20
|
|
|
|
|
10,000
|
|
|
|
7/15/21
|
|
|
|
3,047
|
|
|
|
7/15/17
|
|
|
|
|
3,000
|
|
|
|
7/15/17
|
|
|
|
3,048
|
|
|
|
7/15/18
|
|
|
|
|
3,000
|
|
|
|
7/15/18
|
|
|
|
5,079
|
|
|
|
7/15/19
|
|
|
|
|
3,000
|
|
|
|
7/15/19
|
|
|
|
8,128
|
|
|
|
7/15/20
|
|
|
|
|
6,026
|
|
|
|
7/15/17
|
|
|
|
6,096
|
|
|
|
7/15/21
|
|
Shelley Simpson
|
|
|
3,000
|
|
|
|
7/15/17
|
|
|
|
3,888
|
|
|
|
7/15/20
|
|
|
|
|
3,000
|
|
|
|
7/15/18
|
|
|
|
3,047
|
|
|
|
7/15/17
|
|
|
|
|
3,000
|
|
|
|
7/15/19
|
|
|
|
3,048
|
|
|
|
7/15/18
|
|
|
|
|
3,888
|
|
|
|
7/15/17
|
|
|
|
5,182
|
|
|
|
7/15/19
|
|
|
|
|
3,888
|
|
|
|
7/15/18
|
|
|
|
8,026
|
|
|
|
7/15/20
|
|
|
|
|
3,888
|
|
|
|
7/15/19
|
|
|
|
3,048
|
|
|
|
7/15/21
|
|
Nicholas Hobbs
|
|
|
3,888
|
|
|
|
7/15/17
|
|
|
|
3,048
|
|
|
|
7/15/18
|
|
|
|
|
3,888
|
|
|
|
7/15/18
|
|
|
|
5,182
|
|
|
|
7/15/19
|
|
|
|
|
3,888
|
|
|
|
7/15/19
|
|
|
|
8,026
|
|
|
|
7/15/20
|
|
|
|
|
3,888
|
|
|
|
7/15/20
|
|
|
|
3,048
|
|
|
|
7/15/21
|
|
|
|
|
3,047
|
|
|
|
7/15/17
|
|
|
|
|
|
|
|
|
|
Terrence D. Matthews
|
|
|
3,000
|
|
|
|
7/15/17
|
|
|
|
2,000
|
|
|
|
7/15/18
|
|
|
|
|
3,000
|
|
|
|
7/15/18
|
|
|
|
3,334
|
|
|
|
7/15/17
|
|
|
|
|
3,000
|
|
|
|
7/15/19
|
|
|
|
4,860
|
|
|
|
7/15/17
|
|
|
|
|
3,000
|
|
|
|
7/15/20
|
|
|
|
4,860
|
|
|
|
7/15/18
|
|
|
|
|
3,000
|
|
|
|
7/15/21
|
|
|
|
5,079
|
|
|
|
7/15/17
|
|
|
|
|
19,500
|
|
|
|
7/15/17
|
|
|
|
5,080
|
|
|
|
7/15/18
|
|
(2)
|
Values are based on the last closing market price of $97.07 on December 31, 2016.
|
34
Restricted Share Units Vested
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($) (1) (2)
|
|
John N. Roberts, III
|
|
|
15,000
|
|
|
|
1,279,050
|
|
|
|
|
9,000
|
|
|
|
767,430
|
|
|
|
|
9,000
|
|
|
|
767,430
|
|
|
|
|
9,094
|
|
|
|
775,445
|
|
|
|
|
11,691
|
|
|
|
996,892
|
|
Total
|
|
|
53,785
|
|
|
|
4,586,247
|
|
David G. Mee
|
|
|
10,000
|
|
|
|
852,700
|
|
|
|
|
3,125
|
|
|
|
266,469
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
2,000
|
|
|
|
170,540
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
3,110
|
|
|
|
265,190
|
|
Total
|
|
|
24,235
|
|
|
|
2,066,519
|
|
Shelley Simpson
|
|
|
1,200
|
|
|
|
102,324
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
3,125
|
|
|
|
266,469
|
|
|
|
|
2,000
|
|
|
|
170,540
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
3,888
|
|
|
|
331,530
|
|
Total
|
|
|
16,213
|
|
|
|
1,382,483
|
|
Nicholas Hobbs
|
|
|
1,200
|
|
|
|
102,324
|
|
|
|
|
1,000
|
|
|
|
85,270
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
3,125
|
|
|
|
266,469
|
|
|
|
|
2,000
|
|
|
|
170,540
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
3,888
|
|
|
|
331,530
|
|
Total
|
|
|
20,213
|
|
|
|
1,723,563
|
|
Terrence D. Matthews
|
|
|
3,125
|
|
|
|
266,469
|
|
|
|
|
3,000
|
|
|
|
255,810
|
|
|
|
|
17,500
|
|
|
|
1,492,225
|
|
|
|
|
2,000
|
|
|
|
170,540
|
|
|
|
|
3,333
|
|
|
|
284,205
|
|
|
|
|
4,860
|
|
|
|
414,412
|
|
Total
|
|
|
33,818
|
|
|
|
2,883,661
|
|
(1)
|
Value realized on the acquired shares shown above is gross earnings. Values are earned over multiple years.
The receipt of vested shares in calendar year 2016 should not be interpreted to mean that all value was earned in the year the shares were received. Each executive retained a portion of the available vested shares as shown below:
|
|
|
|
|
|
John N. Roberts, III
|
|
|
32,618
|
|
David G. Mee
|
|
|
12,758
|
|
Shelley Simpson
|
|
|
10,317
|
|
Nicholas Hobbs
|
|
|
11,851
|
|
Terrence D. Matthews
|
|
|
17,465
|
|
(2)
|
Values represent the fair market value of the underlying common stock on the date of vesting.
|
35
Components of Nonqualified Deferred Compensation for Calendar Year 2016
We have a nonqualified deferred compensation plan that allows eligible employees to defer a portion of their compensation.
Participants can elect to defer up to a maximum of 50% of their base salary as well as up to 85% of their bonus for the year. The compensation deferred under this plan is credited with earnings or losses of investments elected by plan participants.
Each participant is fully vested in all deferred compensation and earnings; however, these amounts are subject to general creditor claims until actually distributed to the employee. A participant may elect to receive deferred amounts in one payment
or in quarterly installments payable over a period of two to 25 years upon reaching the age of 55, having 15 years of service, or becoming disabled. Our total liability under this plan was $14,887,624 as of December 31, 2016, and $13,569,119 as of
December 31, 2015. These amounts are included in other long-term liabilities in our Consolidated Balance Sheets. Participant withholdings are held by a trustee and invested as directed by participants. These investments are included in
other assets in our Consolidated Balance Sheets and totaled $14,887,624 as of December 31, 2016, and $13,569,119 as of December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals and
|
|
|
Balance
|
|
|
|
in 2016
|
|
|
in 2016
|
|
|
in 2016
|
|
|
Distributions
|
|
|
at 2016
|
|
Name
|
|
($) (1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($) (1)
|
|
John N. Roberts, III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David G. Mee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shelley Simpson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas Hobbs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terrence D. Matthews
|
|
|
238,269
|
|
|
|
|
|
|
|
120,250
|
|
|
|
|
|
|
|
3,481,794
|
|
(1)
|
Amounts of executive contributions are included as part of the NEOs salary in the Summary
Compensation Table detailed above. Total executive contributions for the three-year period ending December 31, 2016, were $684,270 for Mr. Matthews.
|
Potential Post-Employment Benefits
The Company does not have employment contracts or predetermined personal severance agreements with any of its executives.
However, according to the terms of the awards granted under the previously mentioned MIP, all outstanding restricted share units are subject to a double triggering event, where both a change in control, and an NEOs retirement,
termination by the Company without cause or resignation for good reason are required for an accelerated or immediate vesting of the awards.
Generally, a change in control is deemed to occur when more than 30% of the outstanding shares of common stock of
the Company change ownership in a transaction that is a merger, reorganization or consolidation, when the persons who constitute the Companys incumbent board of directors cease to constitute a majority of the board, or upon the consummation of
a merger, reorganization, consolidation or similar form of corporate transactions involving the Company that requires the approval of the Companys stockholders where more than 50% of the outstanding shares change ownership or a complete
liquidation or dissolution of the Company or the sale or disposition of all or substantially all of the assets of the Company.
Potential benefits to the NEOs due to his or her separation of service without cause, retirement or resignation for good
reason following a change in control are shown below. The amounts represent the immediate vesting of all outstanding restricted share units and are valued using the last closing market price of $97.07 on December 31, 2016.
|
|
|
|
|
John N. Roberts, III
|
|
$
|
18,725,289
|
|
David G. Mee
|
|
|
7,725,607
|
|
Shelley Simpson
|
|
|
8,338,605
|
|
Nicholas Hobbs
|
|
|
8,144,465
|
|
Terrence D. Matthews
|
|
|
5,796,340
|
|
36
PROPOSAL NUMBER TWO
APPROVAL OF THE COMPANYS THIRD AMENDED AND RESTATED
MANAGEMENT INCENTIVE PLAN
On January 25, 2017, the Board of Directors adopted and approved, subject to further modification and approval by the
Compensation Committee and stockholder approval, the Companys Third Amended and Restated Management Incentive Plan (the Restated MIP). On February 8, 2017, the Compensation Committee adopted and approved the Restated MIP, subject to
stockholder approval. The Management Incentive Plan (MIP) was originally adopted and approved by the Board on March 17, 1989, and an amended and restated MIP was subsequently approved by the stockholders on May 11, 1995. The MIP was last amended and
restated at our Annual Meeting of Stockholders on April 26, 2012. The Restated MIP will become effective immediately upon stockholder approval of this proposal at the Annual Meeting.
The purpose of this amendment and restatement of the MIP is to clarify and update certain provisions of the plan to enhance
the efficiency and effectiveness of the plan and to conform to current best practices. The material modifications include a limitation on share recycling, clarification regarding the effect of the Companys assumption of awards granted under
another plan, a limitation on the number of shares available each year for
non-employee
directors, a broader provision regarding the Companys discretion to reduce, cancel, seek to forfeit or recoup a
participants awards upon the occurrence of certain events, clarification that recipients of restricted stock and share units awards do not receive voting or dividend rights on such restricted shares or share units unless and until such award
is vested, the addition of methods for payment of the purchase price for any existing or future options granted under the Plan, expanded methods for satisfying a participants withholding obligations, the addition of a provision regarding
accelerated vesting following a change in control, and a broader provision regarding amendment of the Plan to be based on current applicable law. This amendment and restatement does not increase the number of shares authorized for issuance under the
Plan.
In addition, under Section 162(m) of the Internal Revenue Code, as amended (the Code), the material terms of the
performance goals outlined within the Restated MIP must be disclosed to and reapproved by the stockholders every five years. The material terms of the performance goals were last approved by the stockholders at our Annual Meeting in 2012.
Therefore, this proposal seeks stockholder approval of the Restated MIP, including the material terms of the performance goals under which compensation may be paid that is intended to meet the performance-based compensation exception under Section
162(m) of the Code. Each component of the Restated MIP has been approved by the Board of Directors.
Third Amended and Restated Management Incentive
Plan
The following summary of the material provisions of the Restated MIP, as proposed to be approved by stockholders,
is qualified in its entirety by reference to the complete text of the Restated MIP, which is attached as Appendix A to this Proxy Statement and incorporated by reference into this proposal. As used in the following summary, the term Plan
means the Restated MIP.
Purpose of the Plan.
The purpose of the Plan is to attract, retain and motivate key
employees by providing them with the opportunity to participate with the stockholders in the long-term growth and financial success of the Company through the purchase or awarding of shares of common stock or the awarding of share units, money
credits or stock appreciation rights, thereby more closely aligning managements interests with those of the Companys stockholders.
Administration of the Plan.
The Plan is administered by our Compensation Committee. The Compensation Committee, subject
to the limitations in the plan, may construe and interpret the provisions of the Plan; select eligible persons to receive awards; determine the type of grant, whether in the form of stock awards, money credits, share units, stock options, stock
appreciation rights or combinations thereof; determine the number of shares subject to the grant; determine the restriction and forfeiture provisions relating to restricted stock; and determine the time and conditions of vesting or exercise, the
form of payment, and all other terms of the award.
Term of the Plan.
The Plan will become effective immediately
upon stockholder approval and will terminate 10 years after it becomes effective unless terminated earlier by the Board of Directors.
Shares Available.
The shares of common stock of the Company issued or to be issued under the Plan may be authorized and
unissued shares of common stock, treasury stock or a combination thereof. The maximum number of shares of common stock that may be issued under the Plan is 44.0 million shares. As of December 31, 2016, approximately 6.9 million shares of
common stock were available for issuance under the Plan.
If there is a change in the shares of common stock of the
Company because of a recapitalization, reclassification, stock split, stock dividend or consolidation of the common stock, or a merger, consolidation or sale of the Company, the number of shares available for issuance under the Plan and the number
of shares that are the subject of any grant will be correspondingly adjusted. The Companys assumption of awards granted under another plan in connection with a merger, consolidation, reorganization or acquisition of property or stock, however,
will not reduce the maximum number of shares available for issuance under the Plan.
Share Recycling.
Generally,
stock subject to an award under the Plan that is canceled, forfeited or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the Plan. However, shares subject to an award under the Plan
shall not again be made available for issuance or delivery under the Plan if such shares are (i) shares tendered in payment of the exercise price of an option, (ii) shares delivered or withheld by the Company to satisfy a tax withholding
obligation, or (iii) shares covered by a stock-settled stock appreciation right or other awards that were not issued upon the settlement of the award.
Limitation of the Plan
. Benefits granted to any plan participant in any one year may not exceed 2% of the total shares
of common stock authorized for issuance under the Plan (i.e., 2% of 44 million shares or 880,000 shares). Additionally, benefits granted to any nonemployee director under the plan may not exceed 20,000 shares in any one year.
37
Performance-Based Criteria.
Section 162(m) of the Code limits publicly
held companies to an annual deduction for federal income tax purposes of $1.0 million for compensation paid to their Chief Executive Officer and the three next highest compensated executive officers (other than the Chief Financial Officer)
determined at the end of each year (referred to as covered employees). However, performance-based compensation that meets certain conditions is excluded from this limitation.
Any awards that the Compensation Committee intends to qualify for the Section 162(m) performance-based compensation deduction
exemption must be based on
pre-established,
objective performance goals. These goals must be established by the Compensation Committee in writing no later than 90 days after the beginning of the service period
to which the award relates and while the outcome is substantially uncertain (i.e., before 25% of the performance period has elapsed). Performance goals must be based on an objective formula or standard and may be based on one or more criteria,
including net revenue or net revenue growth, gross revenue, basic or diluted earnings per share (before or after taxes), return on assets, return on capital, return on investment, return on sales, productivity, market share, cash flow, generation of
free cash, common stock price, operating income, operating expense ratios, quality, delivery performance or level of improvement in any of the foregoing. A performance goal need not, however, be based upon an increase or positive result under a
business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to a specific business criterion). Before the recipient may receive any payment, the Compensation
Committee must certify in writing that all of the performance goals have been met. In addition, the material terms of the performance goals must be disclosed to and reapproved by the stockholders every five years.
Stock Options.
The Plan allows for the issuance of options that entitle the holder, upon exercise of the option, to
purchase from the Company shares of common stock. Such options do not meet the requirements for special tax treatment under the Code (nonqualified options). The options have an exercise price per share of not less than 100% of the fair market value
of the underlying shares on the date of grant. The term of each option is set by the Compensation Committee and may not exceed 10 years from the date of grant. The Compensation Committee also sets the exercise schedule and any other terms,
provisions and conditions of the options. Options may be exercised upon notice to the Company and payment of the option exercise price and any payroll taxes due. Additionally, if approved by the Compensation Committee, the exercise price for an
option may also be satisfied by (i) delivery of shares of common stock already owned by the Plan participant, valued at fair market value as of the time of exercise and equal to the purchase price, (ii) a cashless exercise
program established with a broker, (iii) reduction in the number of shares of common stock otherwise deliverable upon exercise of such option with a fair market value equal to the aggregate purchase price at the time of exercise, or (iv) a
combination of shares and cash by any of the foregoing methods, equal in the aggregate to the option price.
Share
Units.
The Compensation Committee may award a credit of share units, which entitles the holder, upon exercise, to receive from the Company shares of common stock, cash or any combination of the two as determined by the Compensation Committee.
Each share unit is equivalent to one share of Company common stock, without dividend or voting privileges. Share units may be granted in the form of performance-based or time-vested awards.
Other Awards.
The Compensation Committee may also award any of the following:
|
|
|
Stock awards, which are grants of shares of the Companys common stock subject to certain transfer
restrictions set forth by the Compensation Committee and which may be granted in the form of performance-based or fixed awards;
|
|
|
|
Money credits, which entitle the holder, upon exercise, to receive from the Company shares of common stock,
cash or any combination of the two as determined by the Compensation Committee. Each money credit is equivalent to one U.S. dollar; and
|
|
|
|
Stock appreciation rights (SARs), which entitle the holder, upon exercise of such SAR, to receive from the
Company shares of common stock, cash or any combination of the two as specified in the exercise request (but subject to approval of the Compensation Committee with respect to any cash payment) having an aggregate value equal to the product of
(i) the excess of the fair market value on the date of exercise over the exercise price per share specified in such SAR or its related option, multiplied by (ii) the number of shares for which such SAR may be exercised.
|
Eligibility Under the Plan.
As noted above, the purpose of the Plan is to provide key
employees of the Company the opportunity to receive awards under the Plan, subject to the discretion of the Compensation Committee. Key employees may include employees, officers, directors and consultants of the Company. Currently, the Company
believes approximately 410 persons are eligible to participate in the Plan, including 10 executive officers, 392 other employees and eight nonemployee directors. The number of consultants eligible to participate in the Plan is not determinable.
New Plan Benefits.
No determination has been made with respect to the future recipients of awards under the Plan, and
it is not possible to specify the names or positions of persons to whom awards will be granted, or the number of shares, within the limitations of the Plan, to be covered by such awards. However, as required by SEC rules, the following table shows
the number and dollar value benefit of all options granted during fiscal 2016 to (i) each of our named executive officers, (ii) all current executive officers as a group, (iii) all
non-executive
directors as a group, and (iv) all
non-executive
officers and employees as a group:
38
New Plan Benefits
Third Amended and Restated Management Incentive Plan
|
|
|
|
|
|
|
|
|
Name and Position
|
|
Dollar Value ($) (1)
|
|
|
Number of Restricted
Stock Units (#) (2)
|
|
NEOs
|
|
|
|
|
|
|
|
|
John N. Roberts, III, President and CEO
|
|
|
4,616,239
|
|
|
|
61,855
|
|
David G. Mee, EVP, Finance & Administration and CFO
|
|
|
1,899,262
|
|
|
|
25,398
|
|
Shelley Simpson, EVP, CMO and President of ICS & Truckload
|
|
|
1,671,408
|
|
|
|
22,351
|
|
Nicholas Hobbs, EVP and President of Dedicated Contract Services
|
|
|
1,671,408
|
|
|
|
22,351
|
|
Terry D. Matthews, EVP and President of Intermodal
|
|
|
759,690
|
|
|
|
10,159
|
|
Executive Officers Group (3)
|
|
|
16,127,990
|
|
|
|
220,069
|
|
Non-Executive
Directors Group
|
|
|
|
|
|
|
|
|
Non-Executive
Officers and Employees Group
|
|
|
35,064,813
|
|
|
|
462,791
|
|
(1)
|
Amounts reflect grant date fair value of the award, which will be earned over the vesting period (two to 10
years) of each individuals specific grant, pending achievement of required performance goals set for performance-based awards.
|
(2)
|
Represents 2016 grants of performance-based restricted stock units to NEOs and time-based restricted stock
units to all others listed.
|
(3)
|
No equity-based compensation was granted to the
executive position of Chairman of the Board in 2016.
|
Forfeiture; Recoupment.
The
Compensation Committee may cause a reduction, cancellation, forfeiture or recoupment of any Plan participants rights, payments and benefits with respect to any award granted under the Plan (including realized gains) in the event that such Plan
participant breaches any agreement with or obligation to the Company, violates any Company policy or procedure, or engages in conduct that is otherwise detrimental to the business or reputation of the Company, or in the event that such Plan
participants service with the Company is terminated for cause. All awards are subject to mandatory repayment if the participant becomes subject to any clawback or recoupment under Company policy or applicable law.
Repricing.
The Restated MIP prohibits the repricing of stock options and SARs awarded under the Plan, unless such
action is approved by the Companys stockholders if required under the rules of any national securities exchange on which the Companys common stock is listed.
Tax Withholding Obligations.
Subject to the Committees discretion, a Plan participant may satisfy any federal,
state or local tax withholding obligation relating to any award by any of the following means (or by a combination of such means): (i) remitting a cash payment for the withholding amount, (ii) authorizing the Company to withhold shares of
common stock from the shares otherwise issuable to the Plan participant as a result of the exercise or acquisition of common stock under the award, or (iii) remitting shares already owned by the Plan participant that have an aggregate fair
market value equal to the withholding amount.
Acceleration of Vesting.
All restricted stock and share unit awards
are subject to a double triggering event, whereby upon a change in control, a Participants retirement, termination by the Company without cause or resignation for good reason is also required for an accelerated or immediate vesting
of the awards. Generally, a change in control is deemed to occur when more than 30% of the outstanding shares of common stock of the Company change ownership in a transaction that is a merger, reorganization or consolidation, when the
persons who constitute the Companys incumbent board of directors cease to constitute a majority of the board, or upon the consummation of a merger, reorganization, consolidation or similar form of corporate transaction involving the Company
that requires the approval of the Companys stockholders where more than 50% of the outstanding shares change ownership or a complete liquidation or dissolution of the Company or the sale or disposition of all or substantially all of the assets
of the Company.
Amendment and Termination of the Plan.
The Board of Directors may amend or terminate the Plan at
any time; however, no amendment may be made without stockholder approval to the extent such stockholder approval is necessary to satisfy applicable laws.
Federal Income Tax Consequences
The following general summary of the typical federal income tax consequences of the issuance, vesting, exercise and sale of
share units, options, stock awards and other awards under the Plan is based on existing provisions of the Code, applicable Treasury regulations, administrative rulings and judicial decisions, all of which are subject to change. This summary does not
describe any foreign, state, local or other tax consequences that may also apply.
Restricted Share Units.
Restricted share units are awarded and settled from shares of common stock reserved for issuance under the Plan. A recipient of a restricted share unit has taxable income in an amount equal to the excess of the fair market value of the shares of
common stock received on the date the restricted share unit is settled over any consideration paid for the shares. The taxable income constitutes wages subject to income and employment tax withholding, and the Company receives a corresponding income
tax deduction. The recipient will have a basis in his or her shares of common stock received upon vesting of the units equal to the value of the shares on the date the units vest, at which time the holding period for the shares will begin. In
general, a sale of the shares will produce capital gain or loss that will be long term or short term depending on the period of time included in the recipients holding period.
Options.
Generally, an optionee will not be deemed to receive any income for federal income tax purposes upon the grant
of any option under the Plan, nor will the Company be entitled to a tax deduction at that time. Upon the exercise of a nonqualified option, the optionee will be deemed to have received taxable income in an amount equal to the excess of the market
price of the shares received on the exercise date over exercise price. The Company will be allowed a corresponding income tax deduction equal to the excess of market value of the shares on the date of exercise over the cost of such shares to the
optionee. Special federal income tax rules apply if the optionee uses shares of common stock to pay all or part of the option exercise price.
Stock Awards.
A recipient of a stock award, such as restricted stock, is generally treated in the same manner as a
recipient of a restricted share unit settled in shares of common stock.
39
Other Awards.
Income tax consequences for SARs, share units settled for
cash and money credits vary by award, but generally ordinary compensation income equal to the fair market value of the award will be recognized by the recipient at the time all rights and title of the award transfers to the recipient. The Company
will generally receive a tax deduction at the same time and in the same amount of ordinary income recognized by award recipient.
Limitation on Deduction of Certain Compensation.
A publicly held corporation may not deduct compensation over
$1 million that is paid in any year to one of its executive officers who is a covered employee under Section 162(m) of the Code unless the compensation constitutes qualified performance-based compensation under the Code.
The Compensation Committee may attempt to ensure that awards under the Plan will qualify for deduction, but may not necessarily do so in every instance.
Securities Authorized For Issuance Under Equity Compensation Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category(1)
|
|
Number of Securities
To Be Issued
Upon Exercise of
Outstanding Options,
Warrants, and Rights
|
|
|
Weighted-
Average Exercise
Price
of
Outstanding Options,
Warrants, and Rights
|
|
|
Number of Securities
Remaining Available for Future
Issuance Under Equity
Compensation Plans
(Excluding
Securities Reflected in Column (A))
|
|
|
|
(A)
|
|
|
(B)
|
|
|
(C)
|
|
Equity compensation plans approved by security holders
|
|
|
1,986,710
|
|
|
$
|
|
(2)
|
|
|
6,873,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We have no equity compensation plans that are not
approved by security holders. The Second Amended and Restated Management Incentive Plan is our only existing equity compensation plan.
|
(2)
|
Currently, only restricted share units remain outstanding under our equity compensation plan. Upon vesting,
restricted share units are settled with shares of our common stock on a
one-for-one
basis and, accordingly, do not include an exercise price.
|
Vote Required
Stockholder approval of this proposal is required. We urge you to read the text of the Restated MIP, which is attached to this
Proxy Statement as Appendix A and incorporated by reference into this proposal. We believe the modifications to the MIP will enhance the effectiveness of the Plan, better conform to good governance and compensation practices and continue our
practice of compensating our executives through programs that emphasize performance. Accordingly, we ask our stockholders to vote FOR the following resolution at the Annual Meeting:
RESOLVED, that the stockholders of J.B. Hunt Transport Services, Inc. approve the Third Amended and Restated Management
Incentive Plan, including the material terms of the performance goals under such plan.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE
FOR
THE APPROVAL OF THE COMPANYS THIRD AMENDED AND RESTATED
MANAGEMENT INCENTIVE PLAN, INCLUDING THE MATERIAL TERMS
OF THE PERFORMANCE GOALS UNDER SUCH PLAN
40
PROPOSAL NUMBER THREE
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act, enables our stockholders to vote to
approve, on an advisory (nonbinding) basis, the compensation of our NEOs as disclosed in the Proxy Statement in accordance with SEC rules. Accordingly, we are providing a vote on the resolution set forth below as required by the Dodd-Frank Act and
Section 14A of the Securities Exchange Act of 1934.
As discussed in our Compensation Discussion and Analysis (CD&A) on
page 21, our executive compensation programs for our NEOs, as well as other executives, are designed to be competitive within the transportation industry and to link executive compensation with the creation of stockholder value. The overall
compensation philosophy is guided by the following principles:
|
|
|
Compensation levels should be sufficiently competitive to attract and retain key talent.
The Company
aims to attract, motivate and retain high-performance talent to achieve and maintain a leading position in its industry. Our total compensation package should be strongly competitive with other transportation companies.
|
|
|
|
Compensation should relate directly to performance and responsibility.
Total compensation should be
tied to and vary with performance and responsibility, both at the Company and individual level, in achieving financial, operational and strategic objectives. Differentiated pay for high-performing individuals should be proportional to their
contributions to the Companys success.
|
|
|
|
Short-term incentive compensation should constitute a significant portion of total executive compensation.
A large portion of total compensation should be tied to performance, and therefore at risk, as position and responsibility increase. Individuals with greater roles and the ability to directly impact strategic direction and long-term results
should bear a greater proportion of the risk.
|
|
|
|
Long-term incentive compensation, the Companys MIP, should be closely aligned with stockholders
interests.
Awards of long-term compensation encourage executive officers to focus on the Companys long-range growth and development and incent them to manage from the perspective of stockholders with a meaningful stake in the Company, as
well as to focus on long-term career orientation. Participants in the MIP are required to own Company stock. The requirements are discussed in this CD&A under the caption Stock Ownership Guidelines.
|
Generally, the Companys compensation program consists of an annual base salary, a short-term cash incentive awards, and
an annual long-term, performance- based equity-based award. The Compensation Committee, with recommendations from management, works to create what it believes is the best mix of these components in delivering total direct compensation. Base salaries
are not directly related to specific measures of corporate performance, but are determined by the relevance of experience, the scope and complexity of the position, current job responsibilities, retention and peer group salaries. The short-term cash
incentive awards are tied to EPS, revenue and EBIT. The long-term, equity-based awards utilize restricted share units. The restricted share units awarded to the Companys NEOs are performance-based restricted share units, which vest over
multiple years annually upon the Companys attainment of predetermined operating metrics established and approved by the Compensation Committee.
We believe that the Companys executive compensation programs have been effective in incenting the achievement of our
positive results. We are asking our stockholders to indicate their support for our NEO compensation as described in the Proxy Statement. This proposal, commonly known as a say on pay proposal, gives you as a stockholder the opportunity
to express your views regarding our fiscal year 2016 executive compensation policies and procedures for NEOs. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and
procedures described in the Proxy Statement. Accordingly, we ask our stockholders to vote FOR the following resolution at the Annual Meeting:
RESOLVED, that the stockholders of J.B. Hunt Transport Services, Inc. approve, on an advisory basis, the compensation of
the NEOs as disclosed pursuant to Item 402 of Regulation S-K in the Compensation Discussion and Analysis, compensation tables and related narrative discussion in the Companys Proxy Statement for the 2017 Annual Meeting of Stockholders.
Although this is an advisory vote that will not be binding on the Compensation Committee or the Board, we will
carefully review the results of the vote. The Compensation Committee will consider stockholders concerns and take them into account when designing future executive compensation programs. The Board therefore recommends that you indicate your
support of the Companys executive compensation in fiscal year 2016, as outlined in the above resolution.
THE BOARD OF DIRECTORS
UNANIMOUSLY
RECOMMENDS A VOTE
FOR
PROPOSAL
NUMBER THREE
41
PROPOSAL NUMBER FOUR
FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION
In addition to the
nonbinding advisory vote on executive compensation, the Dodd-Frank Act also enables our stockholders to express their preference for having a say on pay vote every one, two or three years. This nonbinding frequency vote is
required at least once every six years beginning with our 2011 Annual Meeting. It is the Companys belief, and the Boards recommendation, that this vote should occur every year.
The Companys executive compensation practices are well established, having been in place for several years. The Board
believes that providing the Companys stockholders with an advisory vote on executive compensation every year is consistent with the Compensation Committees approach to evaluating the combination of both short-term and long-term executive
compensation policies and procedures.
For the above reasons, the Board recommends that the stockholders vote to hold an
advisory vote on executive compensation every year. Each stockholders vote, however, is not to approve or disapprove the Boards recommendation. When voting on this proposal, each stockholder has four choices, vote on executive pay every
year, every two years, every three years, or abstain from voting. As an advisory vote, the vote on this proposal is not binding upon the Board or the Company. However, the Compensation Committee and the Board will consider the outcome of the vote
when determining the frequency of future stockholder advisory votes on executive compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE OF
ONE YEAR
ON PROPOSAL FOUR
42
REPORT OF THE AUDIT COMMITTEE
The Audit Committee
The
2016 Audit Committee was composed of James L. Robo, Chairman, Douglas G. Duncan, and Sharilyn S. Gasaway. Each served as a member of the Audit Committee during the full 2016 calendar year. The Companys Board has determined that all members of
the Audit Committee satisfy the independence and other requirements for audit committee membership pursuant to the NASDAQ corporate governance listing standards and has also determined that Messrs. Robo and Duncan and Mrs. Gasaway each has the
attributes of an audit committee financial expert as defined by SEC requirements.
The Audit Committee operates under a
written charter adopted by the Board. A copy of the Audit Committee Charter is available on the Corporate Governance page of the Investors section of the Companys website at www.jbhunt.com. In carrying out its
responsibilities, the Audit Committee, among other things:
|
|
|
monitors the integrity of the financial reporting process, systems of internal accounting controls, and
financial statements and reports of the Company,
|
|
|
|
appoints, retains, compensates and oversees the Companys independent auditors, including reviewing the
qualifications, performance and independence of the independent auditors,
|
|
|
|
reviews and preapproves all audit, attest and review services and permitted nonaudit services,
|
|
|
|
oversees the performance of the Companys internal audit function, and
|
|
|
|
oversees the Companys compliance with legal and regulatory requirements.
|
In 2016, the Audit Committee met eight times. The Audit Committee schedules its meetings with a view to ensure that it devotes
appropriate attention to all of its responsibilities and duties. The Audit Committees meetings include, whenever appropriate, executive sessions with the Companys independent auditors and the Companys internal auditors, in each
case outside the presence of the Companys management.
In performing its oversight role, the Audit Committee
reviewed the audited consolidated financial statements for the 2016 calendar year and met and held discussions with management, the Companys internal auditors and E&Y, the Companys independent registered public accounting firm, to
discuss those financial statements and the audit related thereto. Management has represented to the Audit Committee that the Companys consolidated financial statements were prepared in accordance with generally accepted accounting principles.
The Audit Committee discussed with the independent auditors matters required to be discussed by
Auditing Standard
No.
16 of the Public Company Accounting Oversight Board
, as may be modified, supplemented or amended, which includes, among other items, matters related to the conduct of the audit of the Companys consolidated financial
statements. The independent auditors also provided the Audit Committee with written disclosures and the letter required by Rule 3526 of the Public Company Accounting Oversight Board, as may be modified, supplemented or amended, which relates to the
auditors independence from the Company and its related entities, and the Audit Committee discussed with the independent auditors their independence.
Based on the Audit Committees discussions with management, the internal auditors and the independent auditors as
described above, and upon its review of the representation of management and the independent auditors and the reports of the independent auditors, the Audit Committee recommended to the Board that the Companys audited consolidated financial
statements be included in the Companys Annual Report on Form
10-K
for the calendar year ended December 31, 2016, as filed with the SEC.
J.B. Hunt Transport Services, Inc.
2016 Audit Committee Members
James
L. Robo, Chairman
Douglas G. Duncan
Sharilyn S. Gasaway
43
PROPOSAL NUMBER FIVE
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
The Audit Committee has selected E&Y as the Companys independent registered public accounting firm to examine the
consolidated financial statements of the Company for the 2017 calendar year. The Board seeks an indication from our stockholders of their approval or disapproval of the Audit Committees selection of E&Y as the Companys independent
registered public accounting firm for the 2017 calendar year.
E&Y has been our independent auditor since 2005. No
relationships exist other than the usual relationships between auditor and client. Representatives of E&Y are expected to be present at the Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement if
they desire to do so. If our stockholders do not ratify the appointment of E&Y at the Annual Meeting, the Audit Committee will consider such event in its selection of the Companys independent registered public accounting firm for the 2017
calendar year. Additionally, even if the appointment is ratified, the Audit Committee, at its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the 2017 calendar year if it
determines that such a change would be in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE
FOR
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE 2017 CALENDAR YEAR
AUDIT AND
NONAUDIT FEES
The Audit Committee preapproves the audit and nonaudit services to be rendered to the Company, as well
as the fees associated with such services. Generally, management will submit to the Audit Committee a detailed list of services that it recommends the Audit Committee engage the independent auditors to provide for the calendar year. The Audit
Committee preapproves certain audit and nonaudit services and establishes a dollar limit on the amount of fees the Company will pay for each category of services. The Audit Committee is informed from time to time regarding the nonaudit services
actually provided pursuant to the preapproval process. During the year, the Audit Committee periodically reviews the types of services and dollar amounts approved and adjusts such amounts, as it deems appropriate. Unless a service to be provided by
the independent auditors has received general preapproval, it will require specific preapproval by the Audit Committee. The Audit Committee also periodically reviews all nonaudit services to ensure that such services do not impair the
independence of the Companys independent registered public accounting firm. The Audit Committee approved all services provided by E&Y for the 2016, 2015, and 2014 calendar years. These services included the audit of the Companys
annual financial statements, audit of the Companys internal control over financial reporting, review of the Companys quarterly financial statements, audit of the Companys employee benefit plan, and tax consultation services. See
Report of Audit Committee set forth earlier for a discussion of auditor independence.
The following table
shows the fees billed by E&Y for audit and other services provided to the Company for the 2016, 2015, and 2014 calendar years, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 ($)
|
|
|
2015 ($)
|
|
|
2014 ($)
|
|
Audit fees (1)
|
|
|
1,025,000
|
|
|
|
1,060,000
|
|
|
|
1,035,000
|
|
Audit-related fees (2)
|
|
|
27,500
|
|
|
|
34,000
|
|
|
|
288,275
|
|
Tax fees (3)
|
|
|
1,079,898
|
|
|
|
|
|
|
|
10,667
|
|
All other fees
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Audit fees consisted of the audit of the Companys annual financial statements, including the audit of
the effectiveness of internal control over financial reporting, and the review of the Companys quarterly reports on Form
10-Q.
|
(2)
|
Audit-related fees consisted of an audit of the Employee Benefit Plan.
|
(3)
|
Tax fees consisted principally of federal and state income tax consulting.
|
The Audit Committee has considered whether the nonaudit services provided by E&Y, including the services rendered in
connection with income tax consultation, were compatible with maintaining E&Ys independence and has determined that the nature and substance of the limited nonaudit services did not impair the status of E&Y as the Companys
independent registered public accounting firm. E&Y did not bill the Company for any other services during calendar years 2016, 2015, and 2014.
44
Policy on Audit Committee Preapproval of Audit and Permissible Nonaudit Services of Independent Auditor
The Audit Committee has the responsibility of appointing, setting compensation for and overseeing the work of the
independent auditor and has established a policy to preapprove all audit and permissible nonaudit services provided by the independent auditor.
Prior to the engagement of the independent auditor for next years audit, management will submit to the Audit Committee
for approval an aggregate of services expected to be rendered during that year for each of four categories of services:
|
|
|
Audit services
include audit work performed related to the financial statements, as well as work
that generally only the independent auditor can reasonably be expected to provide, including comfort letters, statutory audits, attestation services, and consultation regarding financial accounting and/or reporting standards.
|
|
|
|
Audit-related services
are for assurance and related services that are traditionally performed
by the independent auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
|
|
|
|
Tax services
i
nclude all services performed by the independent auditors tax
personnel except those services specifically related to the audit of the financial statements, including fees in the areas of tax compliance, tax planning and tax advice.
|
|
|
|
Other services
are those not captured in the other categories. The Company generally
doesnt request such services from the independent auditor.
|
Prior to the engagement, the Audit
Committee preapproves these services by category of service. The fees are budgeted and the Audit Committee requires the independent auditor and management to report actual fees versus the budget periodically throughout the year by category of
service. During the year, circumstances may arise that make it necessary to engage the independent auditor for additional services not contemplated in the original preapproval. In those instances, the Audit Committee requires specific preapproval
before engaging the independent auditor.
The Audit Committee may delegate preapproval authority to one or more of its
members. The member(s) to whom such authority is delegated must report, for informational purposes only, the preapproval decisions to the Audit Committee at its next scheduled meeting.
45
PROPOSAL NUMBER SIX
STOCKHOLDER PROPOSAL REGARDING
REPORTING POLITICAL
CONTRIBUTIONS
In accordance with SEC rules, we have set forth below a stockholder proposal, along with the supporting statement of the
stockholder proponent, for which we and the Board accept no responsibility. The International Brotherhood of Teamster General Fund (the Fund), located at 25 Louisiana Avenue, N.W., Washington, D.C. 20001, is the proponent of the following
stockholder proposal and has advised us that the Fund holds 190 shares of the Companys common stock which it has continuously held for at least one year and they intend to present the following proposal for a vote at the 2017 Annual Meeting.
RESOLVED, that the shareholders of J.B. Hunt Transport Services, Inc. (J.B. Hunt or Company),
hereby request the Company to prepare and semi-annually update a report, which shall be presented to the pertinent board of directors committee and posted on the Companys website, that discloses the Companys:
|
(a)
|
Policies and procedures for making political contributions and expenditures (direct and indirect) with
corporate funds, including the boards role (if any) in that process; and
|
|
(b)
|
Monetary and non-monetary political contributions or expenditures that could not be deducted as an
ordinary and necessary business expense under section 162(e) of the Internal Revenue Code; this would include (but not be limited to) contributions to or expenditures on behalf of political candidates, parties, and committees and
entities organized and operating under section 501(c)(4) of the Internal Revenue Code, as well as the portion of any dues or payments made to any tax-exempt organization (such as a trade association) that are used for an expenditure or contribution
that, if made directly by the Company, would not be deductible under section 162(e) of the Internal Revenue Code.
|
The report shall be made available within 12 months of the annual meeting and identify all recipients and the amount paid
to each from Company funds.
46
SUPPORTING STATEMENT
As long-term shareholders of J.B. Hunt, we support transparency and accountability in corporate political spending. Disclosure
is in the best interest of the company and its shareholders. The Supreme Court recognized this in Citizens United: [D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency
enables the electorate to make informed decisions and give proper weight to different speakers and messages.
We
acknowledge that public records indicate J.B. Hunt does not make direct political contributions. However, our Company maintains memberships in trade associations, such as the U.S. Chamber of Commerce that are actively involved in election-related
spending, including, but not limited to, independent political expenditures. Such contributions may be indirectly attributed to the Company, posing risks to the Companys reputation and shareholder value.
Publicly available data does not provide a complete picture of the Companys indirect political spending. Therefore, this
proposal asks the Company to disclose all payments to third parties that could be used for election-related purposes, including:
|
|
|
A list of trade associations to which it belongs and the
non-deductible
portion of payments to each; and,
|
|
|
|
Payments to any other third-party organization, including those organized under section 501(c)(4) of the
Internal Revenue Code that may be used for political purposes.
|
This would bring our Company in line
with CSX, UPS and Norfolk Southern, which present such information on their website.
The Companys Board and its
shareholders need comprehensive disclosure to be able to evaluate the political use of corporate assets. We urge your support FOR this critical governance reform.
Board of Directors Statement in Opposition to the Stockholder Proposal
The Board of Directors has carefully considered this stockholder proposal and concluded that it is unnecessary and not in the
best interest of the Company or its stockholders for the reasons described below. The Board of Directors therefore unanimously recommends voting against this proposal.
The Company is in a highly regulated industry, and actions by elected officials can have a significant impact on our industry
and our business. As noted by the stockholder proponent of this proposal, the Company generally does not make direct political contributions. However, the Board of Directors and management believe that targeted and responsible involvement in the
legislative, regulatory and electoral processes is prudent to protect and promote the interests of the Companys stockholders, employees and customers. The Company may, from time to time, make focused lobbying expenditures or contributions to
third-party organizations. The Company is also a member of several industry trade organizations.
While the Companys
limited involvement in the legislative, regulatory or electoral process serves an important corporate purpose, the Companys related expenses represent only a small fraction of our total annual expenses (less than 0.005% in fiscal 2016). The
Company conducts such activities only in compliance with all applicable federal, state and local laws. For example, U.S. federal law currently prohibits companies from making corporate contributions or providing anything of value to any political
candidate, campaign committee or other organization in connection with any federal election. The Company does not make such contributions.
The Companys participation in trade associations and organizations serves various business purposes, most importantly
allowing management to stay current on industry standards and best practices, emerging trends and other business or technical issues that may impact the Company. While these organizations may engage in
political or lobbying activities, the Companys membership or participation in its trade associations and organizations is not to advance political purposes and does not represent the Companys agreement with all positions, views or
objectives of these associations and organizations. Because the Companys involvement with trade associations and third-party organizations is based on reasons unrelated to any political activities and because our involvement and payments to
such associations and organizations do not necessarily reflect the Companys views on every action a trade association or organization may take, the Board of Directors believes the proposed report would not provide meaningful information to
investors. Further, the Board of Directors believes that providing such information could be used by special interest groups to pressure the Company to oppose actions taken by these organizations or to stop supporting positions or initiatives that
are in the best interests of the Company and its stockholders, employees, and customers, and such efforts could be counter to the Companys best interests to the extent it diverts managements focus from the operation of our business.
For the foregoing reasons, the Board of Directors believes this stockholder proposal is unnecessary and not in the best
interest of the Company or its stockholders. The Board of Directors therefore unanimously recommends voting against this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE
AGAINST
PROPOSAL
NUMBER SIX
47
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING
ARE URGED TO VOTE BY TELEPHONE, MAIL OR INTERNET
IF YOU VOTE BY TELEPHONE OR THE INTERNET,
DO NOT
RETURN YOUR PROXY CARD
|
By Order of the Board of Directors
|
|
DAVID G. MEE
|
Corporate Secretary
|
48
APPENDIX A
J.B. HUNT TRANSPORT SERVICES,
INC.
THIRD AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
I. NAME; PURPOSE
1.1 NAME. This instrument shall be known as the J.B. Hunt Transport Services, Inc. Third Amended and
Restated Management Incentive Plan (the
Plan
).
1.2 HISTORY OF PLAN. By action
of the Board of Directors in 1984, and after approval by the Companys stockholders, the Company adopted the J.B. Hunt Transport Services, Inc. Stock Option Plan of 1984 (
1984 Option Plan
). The 1984 Option Plan was modified
and approved by stockholders in March 1989, creating the J.B. Hunt Transport Services, Inc. Management Incentive Plan (the
MIP
). The Companys stockholders approved an amended and restated MIP on May 11, 1995, and approved
subsequent amendments to increase the authorized shares on April 16, 1998, April 20, 2000, and April 21, 2005, respectively. On April 26, 2012, the Companys stockholders approved a second amended and restated MIP, which was subsequently
amended by the Board of Directors on July 21, 2016. The Plan further amends and restates the second amended and restated MIP.
1.3 PURPOSE. The Plan is designed to benefit certain key employees, officers, directors and consultants
of J.B. Hunt Transport Services, Inc., an Arkansas corporation, and any entity in which J.B. Hunt Transport Services, Inc. or any subsidiary owns, directly or indirectly, a majority of the voting stock (collectively, these entities shall be the
Company
).
The overall objectives of the Plan are to increase the long-term financial success of the
Company, and increase the value of the Company to its stockholders, by:
|
(a)
|
attracting and retaining key personnel who are instrumental in the continued success of the Company; and
|
|
(b)
|
motivating key employees by providing them with the opportunity to participate with the stockholders in the
long-term growth and financial success of the Company.
|
1.4 OVERVIEW OF THE PLAN
BENEFITS. The benefits to be provided under this Plan, although more specifically set out herein, are stock awards, share units, money credits, stock options, stock appreciation rights, or any combination of the foregoing (collectively the
Plan Benefits
) subject to the terms and conditions stated in this Plan.
II. CREATION OF
COMMITTEE;
ADMINISTRATION OF THE PLAN; PARTICIPANTS; ETC.
2.1 THE COMMITTEE. The Plan shall be administered by the Compensation Committee (the
Committee
) of the Board of Directors of J.B. Hunt Transport Services, Inc. (the
Board
), comprised solely of two or more Outside Directors, unless another committee of the Board shall be designated. A director is
an
Outside Director
if the director: (a) is not a current employee of the Company; (b) is not a former employee of Company who receives compensation for prior services (other than benefits under a
tax-qualified
retirement plan) during the taxable year; (c) has not been an officer of the Company; (d) does not receive remuneration from the Company, either directly or indirectly, in any capacity other
than as a director; and (e) otherwise qualifies as an outside director within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
Code
) and Treasury Regulations Section
1.162-27(e)(3)
or any successor to such statute or regulation. Nothing herein shall create an inference that an award is not validly granted under the Plan in the event awards are granted under the Plan by a
compensation committee of the Board that does not at all times consist solely of two or more Outside Directors.
2.2 GRANT AND TERMS OF PLAN BENEFITS; ADMINISTRATION OF THE PLAN. The Committee may grant Plan Benefits
to Participants (hereafter defined) on the terms and subject to the conditions stated in this Plan.
The Committee shall,
subject to the limitations of this Plan, have full power and discretion to construe, interpret and administer the Plan; to establish selection guidelines; to select eligible persons for participation; and to determine the form of grant, either in
the form of stock awards, money credits, share units, stock options or stock appreciation rights or combinations thereof, the number of shares subject to the grant, the fair market value of the Common Stock when necessary, the restriction and
forfeiture provisions relating to restricted stock, the time and conditions of vesting or exercise, the conditions, if any, under which time of vesting or exercise may be accelerated, the conditions, form, time, manner and terms of payment of any
award, and all other terms and conditions of the grant provided that all stock options shall be granted in compliance with and subject to the terms of
Article V
of this Plan. The Committee may establish rules, regulations and guidelines for
the administration of the Plan, and impose, incidental to a grant of Plan Benefits, conditions with respect to employment or other activities not inconsistent with or conflicting with the Plan.
49
The Committee may, in its discretion, delegate to the Chief Executive Officer of
the Company the power and authority with respect to the selection of and grants of Plan Benefits to certain Participants who are not:
|
1.
|
the beneficial owner of more than 10% of any class of equity securities of the Company registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended;
|
|
2.
|
a director of the Company; or
|
|
3.
|
an officer of the Company, as that term is defined in Rule
16a-1(f)
of
the Rules of the Securities and Exchange Commission.
|
The interpretation by the Committee of the terms
and provisions of the Plan and the administration thereof, and all action taken by the Committee, shall be final, binding and conclusive on the Company, its stockholders, all Participants and employees of the Company, and upon their respective
beneficiaries, successors and assigns, and upon all other persons claiming under or through any of them. By accepting Plan Benefits each Participant, and each person claiming under or through him, shall be conclusively deemed to have indicated his
acceptance and ratification of, and consent to, all provisions of the Plan and any action or decision under the Plan by the Company, the Board or the Committee.
2.3 PLAN PARTICIPANTS. Unless denied the right to participate by specific sections hereof, the
following persons shall be eligible to be participants in the Plan and, subject to the discretion of the Committee, receive Plan Benefits:
|
(a)
|
employees of the Company;
|
|
(b)
|
officers of the Company;
|
|
(c)
|
directors of the Company; and
|
The foregoing class of persons shall be referred to herein as
Participants
.
2.4 LIMITATION ON SHARES TO BE ISSUED; REVERSION OF UNEXERCISED
SHARES.
The maximum number of shares of common stock of the Company, $0.01 par value (the
Common Stock
), to be issued under the Plan shall be 44,000,000 shares, including shares already issued or to
be issued pursuant to any previously exercised and outstanding options awarded under the 1984 Option Plan, the MIP or the first or second amended and restated MIP. Any shares of Common Stock subject to an award under this Plan (or any prior version
of this Plan) that is canceled, forfeited or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the Plan. Notwithstanding anything to the contrary contained herein, shares subject to
an award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of the purchase price upon exercise of a stock option, (b) shares delivered or withheld by
the Company to satisfy any tax withholding obligation, or (c) shares covered by a stock appreciation right or other award that were not issued upon the settlement of the award.
If the Committee authorizes the assumption of awards granted under another plan in connection with a merger, consolidation,
reorganization or acquisition of property or stock, such assumption shall not reduce the maximum number of shares available for issuance under the Plan or be subject to, or counted against, a Participants annual award limit set forth in
Section 2.8
below.
2.5 SHARES OF COMMON STOCK. Shares of Common Stock available for
distribution under the Plan may consist, in whole or in part, of authorized and unissued shares of Common Stock, treasury stock, shares reacquired by the Company in any manner or any combination thereof. It is contemplated that the Company, although
under no legal obligation to do so, may from time to time purchase shares of Common Stock for the purpose of paying all or any portion of any award payable in or measured by the value of shares of Common Stock, or for the purpose of replacing shares
issued or transferred in payment of all or part of an award. All shares so purchased shall, unless and until transferred in payment of an award, be at all times the property of the Company available for any corporate purpose, and no Participant or
employee or beneficiary, individually or as a group, shall have any right, title or interest in any shares of Common Stock so purchased.
2.6 ADJUSTMENT PROVISIONS. In the event that any recapitalization, or reclassification,
split-up
or consolidation of shares of Common Stock shall be effective, or the outstanding shares of Common Stock are, in connection with a merger or consolidation of the Company or a sale by the Company of all or a
part of its assets, exchanged for a different number or class of shares of stock or other securities of the Company, or for shares of the stock or other securities of any other corporation, or new, different or additional shares or other securities
of the Company or of another corporation are received by the holders of Common Stock or any distribution is made to the holders of Common Stock other than a cash dividend, (a) the maximum number of class of shares or other securities that may
be issued or transferred under the Plan, (b) the number of share units or the number and class of shares or other securities which are the subject of any grant and (c) the purchase price per share of any stock option or other award
exercisable upon payment of a purchase price, shall in each case be equitably adjusted. If an equitable adjustment cannot be made or the Board determines that further adjustment is appropriate to accomplish fairly the purposes of the Plan, the Board
shall make such equitable adjustment under the Plan as it determines will fairly preserve the Plan Benefits to the Participants and the Company.
2.7 EFFECTIVE DATE AND TERM OF PLAN. The Plan shall be effective immediately upon its approval by the
stockholders. Awards may be made and shares may be issued pursuant to the Plan on or after its effective date pursuant to, and in accordance with, agreements for the issuance thereof entered into prior to the effective date. The Plan shall terminate
ten years after it becomes effective unless terminated prior thereto by action of the Board. No further grants shall be made under the Plan after its termination, but termination shall not affect the rights of any Participant under any grants made
prior to termination. This Plan or any subsequent Plan may be amended and readopted by the Board and the stockholders from time to time. Each
re-adoption
shall constitute a new Plan. Participants may hold
awards under more than one Plan.
2.8 LIMITATION OF PLAN BENEFITS. Plan Benefits granted to any
Participant in any one year shall be limited to two percent (2%) of the total shares authorized for issuance under the Plan (i.e., 2% of 44,000,000). Subject to adjustment in accordance with
Section 2.6
, no Participant shall be granted,
during any one (1) year, options to purchase Common Stock and stock appreciation rights with respect to more than 880,000 shares of Common Stock in the aggregate or any other awards with respect to more than 880,000 shares of Common Stock in
the aggregate. Additionally, a
non-employee
director may not be granted awards covering more than 20,000 shares of Common Stock in any year.
50
2.9 PERFORMANCE BASED CRITERIA. If the Committee
determines that grants of stock awards, share units and money credits should be made to Participants in order to qualify for the compensation deduction exemption established by Section 162(m), the award shall be governed by this
Section 2.9
of the Plan in addition to other applicable sections of the Plan. The Committee shall base such compensation solely on account of the attainment of one or more
pre-
established,
objective performance goals. Such performance goals must be established in writing by the Committee prior to the commencement of the services to which the performance goals relate, but not later than ninety (90) days after the commencement of
the period of service to which the performance goals relate, and while the outcome is substantially uncertain (i.e., before 25% of the period of service, as scheduled in good faith at the time the goals are established, has elapsed). Performance
goals may be based on one or more business criteria: net revenue or net revenue growth, gross revenue, basic or diluted earnings per share (before or after taxes), return on assets, return on capital, return on investment, return on sales,
productivity, market share, cash flow, generation of free cash, Common Stock price, operating income, operating expense ratios, quality, delivery performance or level of improvement in any of the foregoing. A performance goal need not, however, be
based upon an increase or positive result under a business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to a specific business criterion).
The written performance goal for a Covered Employee (as defined in Section 162(m) of the Code) must state, in terms of an
objective formula or standard, the method for computing the amount of compensation payable to the Participant if the performance goal is attained, such that a third party having knowledge of the relevant performance results could calculate the
amount to be paid to the employee, and must specify the individual employees or class of employees to which it applies. Once established, the Committee shall not increase the amount of grants under the Plan that would otherwise be due upon
attainment of the performance goal.
Prior to any payment of remuneration, the Committee must certify in writing that all
of the performance goals and any other material terms of the arrangement for the remuneration were in fact met. This section of the Plan shall not apply to an award to a Participant unless the Committee has determined that such award should qualify
for the compensation deduction exemption of Section 162(m).
Material terms of the performance goals must be disclosed to
and reapproved by the stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which stockholders previously approved the performance goals.
2.10 FORFEITURE; RECOUPMENT. A Participants rights, payments and benefits with respect to any
award granted pursuant to this Plan (including, but not limited to, any gain realized by a Participant with respect to an award) shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition
to applicable vesting conditions of any such award. Such events shall include, without limitation, breach of
non-competition,
non-
solicitation, confidentiality, or
other restrictive covenants that are contained in the award agreement or otherwise applicable to the Participant, breach of any employment agreement, Company policy or procedure, or any other agreement between the Participant and the Company, a
termination of the Participants Continuous Service for cause, or any other conduct by the Participant that is detrimental to the business or reputation of the Company. The Committee reserves the right to specify additional events in any
Participants award agreement.
For purposes of this
Section 2.10
,
Continuous Service
means that the Participants service with the Company is not interrupted or terminated. The Participants Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders
service to the Company or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participants Continuous Service; provided further that if any award is subject to
Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an employee of the company to a director of an affiliate will not constitute an
interruption of Continuous Service. The Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Committee, including sick leave, military leave
or any other personal or family leave of absence.
Notwithstanding any other provisions in this Plan, any award which is
subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing
requirement, or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement.
III. STOCK AWARDS AND SHARE UNITS
3.1 FORM OF AWARD. The Committee may in its discretion provide that a Participant shall receive
(i) an award of actual shares of Common Stock or (ii) hypothetical Common Stock share units having a value equal to the fair market value of an identical number of shares of Common Stock. Such awards may, but need not, provide that such
award may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purposes for such period as the Committee shall determine.
The Committee shall have the authority to remove any or all of such restrictions whenever it may determine that, by reason of changes in applicable law or other changes in circumstances arising after the date the awards are granted, such action is
appropriate. Each award of Common Stock or hypothetical Common Stock share units under the Plan shall be evidenced by an award agreement. Each award so granted shall be subject to the conditions set forth in this
Article III
, and to such
other conditions not inconsistent with the Plan as may be reflected in the applicable award agreement.
3.2 PERFORMANCE AWARDS. Awards may be made in terms of a stated potential maximum number of shares,
with the actual number earned to be determined by reference to the level of achievement of corporate, group, division, individual or other specific objectives over a period or periods of not less than one nor more than ten years. No interests of any
kind shall be vested in an individual receiving a performance award until the conclusion of the period or periods and the determination of the level of achievement specified in the award, and the time of vesting thereafter shall be specified in the
award agreement.
3.3 FIXED AWARDS. Awards may be made to Participants which are not contingent on
the performance of objectives but which are contingent on the Participants continuing in the employ of the Company, rendering consulting services or refraining from competitive activities for a period to be specified in the award, which period
shall not be less than one year, unless otherwise provided by the Committee.
51
3.4 RIGHTS WITH RESPECT TO RESTRICTED SHARES. The
Participant shall have no rights to vote or to receive dividends on restricted shares of Common Stock unless and until such award is vested.
3.5 RIGHTS WITH RESPECT TO SHARE UNITS. No shares of Common Stock shall be issued at the time a share
unit is granted, and the Company will not be required to set aside a fund for the payment of any such award. A Participant shall have no voting rights with respect to any share units granted hereunder. The Participant shall not be eligible to
receive dividends on any share unit (representing one share of Common Stock) unless and until such award is vested.
3.6 TERMS AND CONDITIONS. Awards shall contain such terms and conditions as the Committee shall
specify, including without limitation, restrictions on the sale or other disposition of the shares, or the forfeiture of the awards upon termination of Continuous Service (as defined in Section 2.10) prior to the expiration of a designated
period of time or the occurrence of other events. In addition, shares of restricted Common Stock issued pursuant to an award shall be released from the restrictions at the times determined by the Committee. The award shall be paid to the Participant
either in shares of Common Stock having a fair market value equal to the maturity value of the award, or in cash equal to the maturity value of the award, or in such combination thereof as the Committee shall determine. No award pursuant to this
Article III shall be granted or settled for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting in the terms of any award agreement upon the occurrence of a specified event.
3.7 STATUS OF AWARDS UNDER CODE SECTION 162(m). It is the intent of the Company that Awards
granted under
Section 2.9
to Covered Employees (as defined in Section 162(m) of the Code) shall, if so designated by the Committee, constitute qualified performance-based compensation (as defined in Code Section 162(m)).
Accordingly, the terms of Section 2.9 including the definition of Covered Employee, shall be interpreted in a manner consistent with Section 162(m). If any provision of the Plan or any agreement relating to any such award does not comply or is
inconsistent with the requirements of Section 162(m), such provision shall be considered or deemed amended to the extent necessary to conform to such requirements.
3.8 ACCELERATION OF VESTING UPON CHANGE OF CONTROL. Notwithstanding anything contained herein to the
contrary, in the event that, at any time following the date of a change of control (as hereinafter defined) (i) the Participants Continuous Service with the Company or one of its subsidiaries terminates as a result of such
Participants retirement, termination without just cause (as hereinafter defined) by the Company or one of its subsidiaries, or resignation by the Participant for good reason; or (ii) with respect to a Participant employed by
one of the Companys subsidiaries, a sale transaction (as hereinafter defined) is effected; then all vesting restrictions on any shares of Common Stock (with the exception of any shares granted subject to performance- based vesting)
or acquiring Company common stock awarded to that Participant under this Plan shall immediately lapse and such shares shall be vested.
For any award granted subject to performance-based vesting criteria, if less than half of the performance period has lapsed,
such award shall be converted into restricted stock assuming target performance has been achieved as of the date of the triggering event described in the preceding paragraph (the Trigger Date) (or into unrestricted stock if no further
restrictions apply). If at least half the performance period has lapsed as of the Trigger Date, such award shall be converted into restricted stock based on actual performance to date (or into unrestricted stock if no further restrictions apply). If
actual performance is not determinable, such award shall be converted into restricted stock assuming target performance has been achieved as of the Trigger Date, based on the discretion of the Committee (or into unrestricted stock if no further
restrictions apply).
For purposes of this Plan, just cause shall mean the willful and continued failure of
the Participant to substantially perform his or her duties with the Company or one of its subsidiaries after a written demand for substantial performance is delivered to such Participant by the Board, or its subsidiary, which specifically identifies
the manner in which the Board believes that such Participant has not substantially performed his duties; or willful misconduct by the Participant materially injures the Company or its subsidiaries monetarily or otherwise (it being understood that no
act, or failure to act, on the part of the Participant shall be considered willful unless done, or omitted to be done, by the Participant in bad faith and with knowledge that the action or omission was not in the best interest of the
Company or such subsidiary).
Sale transaction shall mean, with respect to an employee of one of the
Companys subsidiaries, the direct or indirect sale or other disposition by the Company of in excess of fifty percent (50%) of the voting capital stock of such subsidiary, the complete liquidation of such subsidiary, or the sale by such
subsidiary or all or substantially all of its assets.
For purposes of this
Section 3.8
, change of
control means:
|
(1)
|
Any transaction involving the acquisition (Acquisition Transaction), by any person, corporation,
partnership or other entity, or any group (collectively referred to herein as a person), of beneficial ownership of shares representing thirty percent (30%) or more of the Companys then outstanding voting securities entitled to vote generally
in the election of directors (Voting Securities), but excluding, for this purpose, any such acquisition by (a) the Company or any of its subsidiaries or any employee benefit plan (or related trust) of the Company, or any of its
subsidiaries, or (b) any corporation with respect to which immediately following such acquisition, shares representing more than fifty percent (50%) of such corporations Voting Securities are beneficially owned, directly or indirectly, by
those persons who are the beneficial owners of the Companys voting securities immediately prior to such acquisition; or
|
|
(2)
|
The replacement of a majority of members of the Companys Board of Directors during any
12-month
period by directors whose appointment or election is not approved by a vote of at least a majority of the members of the Companys Board of Directors prior to the date of such appointment or election;
or
|
52
|
(3)
|
The consummation of a reorganization, merger, consolidation or similar form of corporate transaction involving
the Company that requires the approval of the Companys stockholders with respect to which those persons who were the beneficial owners of the Companys voting securities immediately prior to such reorganization, merger or consolidation,
do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, shares representing more than fifty percent (50%) of the voting securities of the corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company.
|
For purposes of this
Section 3.8
, acquisition transaction means any of the following events:
|
(1)
|
A merger, reorganization or consolidation involving the Company in which the outstanding stock is converted
into or exchanged for the common stock of another entity, provided that such other entity has not, prior to or at the time of such merger, reorganization or consolidation, directly or indirectly acquired beneficial ownership of in excess of twenty
percent (20%) of the outstanding shares of the Company for consideration other than such common stock (such a merger, reorganization or consolidation being herein referred to as a Stock Merger Transaction); or
|
|
(2)
|
Any merger, reorganization or consolidation involving the Company which is not a Stock Merger Transaction and
with respect to which those persons who were the beneficial owners of the Company stock immediately prior to such merger, reorganization, or consolidation, do not, following such merger, reorganization, or consolidation, beneficially own, directly
or indirectly, shares representing more than fifty percent (50%) of the common stock of the corporation resulting from such merger, reorganization or consolidation, or a complete liquidation or dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company.
|
IV. MONEY CREDITS
4.1 CREDITS. The Committee may in its discretion provide that a Participant shall receive a credit of
money credits, which shall be in units of a dollar or a fraction thereof.
4.2 RIGHTS WITH RESPECT
TO MONEY CREDITS. If a Participant is credited with money credits, a money account shall be established for the Participant which shall be credited with interest equivalents on amounts previously credited to the account, or an amount equal thereto
paid to the Participant, on a calendar quarter basis compounded and at such rate as the Committee determines to be appropriate from time to time. Money credits may be paid to the Participant in the form
of cash or shares of the Companys Common Stock according to such requirements and guidelines as the Committee shall deem appropriate.
V. STOCK OPTIONS
5.1 OPTIONS ISSUED UNDER PREVIOUS OPTION PLANS. All stock options issued pursuant to prior versions of
the Plan shall be governed by the terms and conditions set forth herein; provided, however, that a Participants rights under any such award shall not be impaired by the terms hereof unless (a) the Company has requested the consent of the
affected Participant and (b) such Participant has consented in writing.
5.2 GRANT OF OPTIONS.
Subject to the limitations of the Plan, the Committee may, from
time-to-time
on and after the effective date of this Plan, grant to Participants options to purchase an
aggregate number of shares of Common Stock as determined by the Committee. Each option granted under the Plan shall be evidenced by an award agreement. Each option so granted shall be subject to the conditions set forth in this
Article V
, and
to such other conditions not inconsistent with the Plan as may be reflected in the applicable award agreement. The terms of the award agreement may be amended from time to time upon execution of a written amendment approved by the Committee and
signed by the Company and the Participant to whom the option is granted (the
Optionee
).
5.3
PURCHASE PRICE; TERMS; EXERCISE OF OPTIONS.
|
(a)(1)
|
Calculation of Purchase Price
. The purchase price of the Common Stock under each stock option shall be
100% of the fair market value of the Common Stock subject to the option on the date of grant (the
Purchase Price
). The fair market value of the Common Stock on any day shall be (i) if the principal market for the Common Stock
is a national securities exchange, the closing price of the Common Stock on such exchange or system on the day the option is granted, or if no sale of the Common Stock shall have been reported on that day, the closing price of the Common Stock on
the nearest preceding day on which a sale of the Common Stock was reported, or (ii) if the principal market for the Common Stock is not a national securities exchange and the Common Stock is quoted on an
over-the-counter
securities market, the mean between the highest bid and lowest asked price for the Common Stock on such day as reported by the principal
over-the-counter
securities market on which the Common Stock is quoted, or (iii) if clauses (i) and (ii) of this paragraph are inapplicable, as determined by the Committee by any method consistent
with applicable regulations adopted by the Commissioner of Internal Revenue relating to the stock options. The Purchase Price shall be subject to adjustment as provided in
Section 2.6
hereof.
|
|
(2)
|
Payment of Purchase Price
. The Purchase Price shall become due immediately upon exercise of the option
and shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in full in cash or cash equivalents or (b) in the discretion of the Committee, by one or more of the following methods upon such terms as the
Committee shall approve:
|
53
|
(i)
|
full payment in shares of Common Stock having a fair market value on the Exercise Date (as such term is
defined below) equal to the Purchase Price; or
|
|
(ii)
|
a cashless exercise program established with a broker whereby the Participant delivers written
notice of exercise to the Company and delivers written notice of exercise and irrevocable instructions to a broker to promptly deliver to the Company the Purchase Price; or
|
|
(iii)
|
by reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such option with a
fair market value on the Exercise Date equal to the aggregate Purchase Price; or
|
|
(iv)
|
any combination of the foregoing methods.
|
For purposes of this paragraph
5.3(a)(2)
, the
Exercise Date
shall be the date on which the Company
receives written notice of the exercise of the option, together with payment of the Purchase Price in the form authorized by the Committee.
|
(b)
|
Terms and Conditions of Options
. The term of each option shall be for such a period of time, not more
than ten years from the date it is granted, as the Committee may determine. Each option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The option may be subject to such other terms
and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual options may vary; provided that the minimum vesting period
for any option shall be not less than one year, unless otherwise provided by the Committee. No option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for acceleration of vesting
and exercisability in the terms of any award agreement upon the occurrence of a specified event; provided, however, that all unvested options shall become immediately vested in full upon the death or total and permanent disability of the Optionee.
During the lifetime of the Optionee, the option shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of descent and distribution.
|
|
(c)
|
Exercise of Option
. Each option shall be exercisable at any time and from
time-to-time
in accordance with the terms set forth in the award agreement and the following:
|
|
(1)
|
Method of Exercise
. The option shall be exercisable by a written notice delivered by the Optionee (or
other person exercising the option) to the Committee. The notice shall be addressed to the Committee c/o Mr. John Roberts, J.B. Hunt Transport Services, Inc., P.O. Box 130, Lowell, Arkansas 72745. The notice shall:
|
|
(i)
|
state the election to exercise the option, the number of shares in respect of which the option is being
exercised, the person in whose name the stock certificate(s) (if any) for such shares of Common Stock is to be registered, his or her address and Social Security Number (or if more than one, the names, addresses and Social Security Numbers of such
persons);
|
|
(ii)
|
contain such representations and agreements as to the investment intent of the person exercising the option
with respect to such shares of Common Stock as may be satisfactory to the Companys counsel;
|
|
(iii)
|
be signed by the person or persons entitled to exercise the option and, if the option is being exercised by
any person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the option; and
|
|
(iv)
|
be accompanied by payment to the Company of the full Purchase Price of the shares with respect to which the
option is exercised. The Purchase Price shall be paid in cash or cash equivalents or by such other method or methods provided in the award agreement or as otherwise permitted by the Committee in accordance with
Section 5.3(a)(2)
of this Plan.
|
|
(2)
|
Conditions to be Satisfied Prior to Issuance of Common Stock
. The Company shall not be required to
issue or deliver any certificates (if any) for shares of Common Stock purchased upon the exercise of an option (i) prior to the completion of any registration or other qualification of such shares under any state or federal laws or rulings or
regulations of any government regulatory body, which the Company shall determine to be necessary or advisable, or (ii) prior to receiving an opinion of counsel, satisfactory to the Company, that the sale or issuance of such shares is exempt
from these registration or qualification requirements.
|
|
(3)
|
Restrictions on Exercise
. As a condition to exercise of an option granted pursuant to this Plan, the
Company may require the person exercising the option to make any representation and warranty to the Company as may be required by any applicable law or regulation.
|
5.4 NO REPRICING WITHOUT STOCKHOLDER APPROVAL. Except for adjustments pursuant to
Sections 2.6
herein (relating to adjustments upon changes in the shares of Common Stock), or reductions of the Purchase Price approved by the stockholders of the Company, the Purchase Price for any outstanding option granted pursuant to this Plan may not be
decreased after the date of grant nor may an outstanding option granted under this Plan be surrendered to the Company as consideration for the grant of a replacement option with a lower Purchase Price. Except as approved by the Companys
stockholders, in no event shall any option granted under this Plan be surrendered to the Company in consideration for a cash payment or the grant of any other award if, at the time of such surrender, the Purchase Price of the option is greater than
the then current fair market value of a share of Common Stock as determined pursuant to
Section 5.3(a)(1)
of this Plan. In addition, no repricing of an option shall be permitted without the approval of the Companys stockholders if such
approval is required under the rules of any national securities exchange on which the Common Stock is listed.
5.5 USE OF PROCEEDS. Proceeds realized from the sale of Common Stock pursuant to options granted under
the Plan shall constitute general funds of the Company.
54
5.6 ASSUMPTION OF OPTIONS UPON CHANGE IN CONTROL. Subject
to any required action by the stockholders, if the Company shall not be the surviving corporation in any merger, consolidation, or reorganization, every option outstanding hereunder shall terminate, unless the surviving corporation shall (subject to
any applicable provisions of the Internal Revenue Code) assume (with appropriate changes) the outstanding options or replace them with new options of comparable value (in accordance with Section 425(a) of the Code). Notwithstanding the
preceding provisions, if such surviving corporation does not so assume or replace the outstanding options hereunder, each Optionee shall have the right immediately prior to such merger, consolidation, or reorganization to exercise all his or her
outstanding option(s), whether or not the options have vested.
VI. STOCK APPRECIATION RIGHTS
6.1 GRANTS. Stock appreciation rights may be granted to selected Participants entitling the grantee to
receive cash or shares of Common Stock having a fair market value equal to the appreciation in market value of a stated number of shares of Common Stock from the date of grant, or in the case of rights granted in tandem with or by reference to a
stock option granted simultaneously with or prior to the grant of such rights, from the date of grant of the related stock option to the date of exercise. Each stock appreciation right (
SAR
) granted under the Plan shall be
evidenced by an award agreement. Each SAR so granted shall be subject to the conditions set forth in this
Article VI
and to such other conditions not inconsistent with the Plan as may be reflected in the applicable award agreement.
6.2 TERM OF STOCK APPRECIATION RIGHTS. The term of an SAR granted under the Plan shall be determined by
the Committee; provided, however, that no SAR shall be exercisable later than the tenth anniversary of the grant date.
6.3 VESTING OF STOCK APPRECIATION RIGHTS. Each SAR may, but need not, vest and therefore become
exercisable in periodic installments that may, but need not, be equal. The SAR may be subject to such other terms and conditions on the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of
individual SARs may vary. No SAR may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any SAR upon the occurrence of a
specified event.
6.4 EXERCISE AND PAYMENT. Upon exercise of an SAR, the holder shall be entitled
to receive from the Company an amount equal to the number of shares of Common Stock subject to the SAR that is being exercised multiplied by the excess of (i) the fair market value of a share of Common Stock on the date the award is exercised,
over (ii) the exercise price specified in the SAR or related option award agreement. Payment with respect to the exercise of an SAR shall be made on the date of exercise. Payment shall be made in the form of shares of Common Stock (with or
without restrictions as to substantial risk of forfeiture and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined by the Committee.
6.5 EXERCISE PRICE. The exercise price of a free standing SAR shall be determined by the Committee, but
shall not be less than 100% of the fair market value of one share of Common Stock on the grant date of such SAR. A SAR granted simultaneously with or subsequent to the grant of an option and in conjunction therewith or in the alternative thereto
shall have the same exercise price as the related option, shall be transferable only upon the same terms and conditions as the related option, and shall be exercisable only to the same extent as the related option; provided, however, that a SAR, by
its terms, shall be exercisable only if the fair market value per share of Common Stock subject to the SAR and related option exceeds the exercise price per share thereof.
6.6 REDUCTION IN THE UNDERLYING OPTION SHARES. Upon any exercise of a SAR granted in tandem with or by
reference to a stock option granted simultaneously with or prior to the grant of such SAR, the number of shares of Common Stock for which any related option shall be exercisable shall be reduced by the number of shares for which the SAR has been
exercised. Likewise, the number of shares of Common Stock for which such SAR shall be exercisable shall be reduced upon any exercise of any related option by the number of shares of Common Stock for which such option has been exercised.
6.7 NO REPRICING WITHOUT STOCKHOLDER APPROVAL. Except for adjustments pursuant to
Section 2.6
herein (relating to adjustments upon changes in the shares of Common Stock), or reductions of the exercise price approved by the stockholders of the Company, the exercise price for any outstanding SAR granted pursuant to
Section 6.1
may not be decreased after the date of grant nor may an outstanding SAR granted under this Plan be surrendered to the Company as consideration for the grant of a replacement SAR with a lower exercise price. Except as approved
by the Companys stockholders, in no event shall any SAR granted under this Plan be surrendered to the Company in consideration for a cash payment or the grant of any other award if, at the time of such surrender, the exercise price of the SAR
is greater than the then current fair market value of a share of Common Stock as determined pursuant to
Section 5.3(a)(1)
of this Plan. In addition, no repricing of a SAR shall be permitted without the approval of the Companys
stockholders if such approval is required under the rules of any national securities exchange on which the Common Stock is listed.
VII.
INDEMNIFICATION OF COMMITTEE
7.1 In addition to such other rights of indemnification as they may have as directors or as
members of the Committee, and to the extent allowed by applicable law, the members of the Committee shall be indemnified by the Company against the reasonable expenses, including attorneys fees, actually incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to which the members of the Committee, or any one of them, may be a party by reason of any action taken or failure to act under or in connection with the Plan or any award
granted under the Plan, and against all amounts paid by the member or members of the Committee in settlement thereof; provided, however, that such settlement has been approved by the Company, which approval shall not be unreasonably withheld, or
paid by the member or members of the Committee in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such member or members of the
Committee did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful;
provided, however, that within sixty (60) days after institution of any such action, suit or proceeding, such member or members of the Committee shall, in writing, offer the Company the opportunity at its own expense to handle and defend such
action, suit or proceeding.
55
VIII. AMENDMENTS
8.1 AMENDMENTS. The Board at any time, and from time to time, may amend or terminate the Plan. However,
except as provided in
Section 2.6
relating to adjustments upon changes in Common Stock and
Section 8.2
, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is
necessary to satisfy applicable laws, regulations and listing requirements. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on stockholder approval.
8.2 CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Participants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder and/or to bring the Plan and/or the
awards granted hereunder into compliance therewith.
8.3 NO IMPAIRMENT OF RIGHTS. Rights under any
award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
8.4 AMENDMENT OF AWARDS. Except as provided in
Sections 5.4 and 6.7
above, the Committee at any
time, and from time to time, may amend the terms of any one or more awards, provided, however, that the Committee may not affect any amendment which would otherwise constitute an impairment of the rights under any award unless (a) the Company
requests the consent of the Participant and (b) the Participant consents in writing.
IX. MISCELLANEOUS
9.1 STOCKHOLDER RIGHTS. Except as provided in the Plan or an award agreement, no Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such award unless and until such Participant has satisfied all requirements for exercise of the award pursuant to its terms
and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Common Stock certified is issued, except as
provided in
Section 2.6
hereof.
9.2 NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in
the Plan or any instrument executed or award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company in the capacity in effect at the time the award was granted or shall affect the right of the Company
to terminate (a) the employment of an employee with or without notice and with or without cause or (b) the service of a director pursuant to the Bylaws of the Company, and any applicable provisions of the corporate law of the state in
which the Company is incorporated, as the case may be.
9.3 WITHHOLDING OBLIGATIONS. To the extent
provided by the terms of an award agreement and subject to the discretion of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an award by
any of the following means (in addition to the Companys right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to
withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.
9.4 OTHER COMPENSATION ARRANGEMENTS. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
9.5 NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be issued or delivered pursuant to
the Plan. The Committee shall determine whether cash, additional awards or other securities or property shall be issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise
eliminated.
9.6 SECTION 409A. Neither the Company nor the Committee shall have any obligation to
take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.
9.7 NON-UNIFORM
TREATMENT. The Committees determinations
under the Plan need not be uniform and may be made by it selectively among persons who are eligible to receive, or who actually receive, awards. Without limited the generality of the foregoing, the Committee shall be entitled to make
non-uniform
and selective determinations, amendments and adjustments, and to enter into
non-uniform
and selective award agreements.
9.8 PLAN HEADINGS. The headings in the Plan are for purposes of convenience only and are not intended
to define or limit the construction of the provisions hereof.
9.9 SEVERABILITY. The various
provisions of this Plan are severable in their entirety. Any determination of invalidity or unenforceability of any one provision shall have no effect on the continuing force and effect of the remaining provisions.
9.10 PREVAILING LAWS. This Plan shall be construed and enforced in accordance with and governed by the
laws of the State of Arkansas applicable to corporations and the issuance of stock by Arkansas corporations.
9.11 RESOLUTION OF DISPUTES. Any dispute or disagreement which should arise under, or as a result of or
in any way relate to, the interpretation, construction or application of this Plan will be determined by the Board of Directors of the Company. Any determination made hereunder shall be final, binding and conclusive for all purposes.
56
FORM OF
RESTRICTED STOCK UNIT AGREEMENT
FOR THE
J.B. HUNT
TRANSPORT SERVICES, INC.
THIRD AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
THIS
Restricted Stock Agreement (Agreement) made as of
XXXXXXX
, by and between J.B. Hunt Transport
Services, Inc. (Company) and
XXXXXX
(Recipient):
WHEREAS
, the Company maintains the
J.B. Hunt Transport Services, Inc. Third Amended and Restated Management Incentive Plan (the Plan) under which the Companys Compensation Committee of the Board of Directors (Committee) may, among other things, award
shares of the Companys $0.01 par value common stock (Common Stock) to such members of the Companys management as the Committee may determine, subject to terms, conditions, or restrictions as it may deem appropriate;
WHEREAS
, pursuant to the Plan the Committee has awarded to Recipient, a Restricted Stock Unit Award (Award)
conditioned upon the execution by the Company and the Recipient of this Agreement setting forth all the terms and conditions applicable to such Award in accordance with the laws of the State of Arkansas;
THEREFORE
, in consideration of the past services of the Recipient and the mutual promises and covenants contained
herein it is hereby agreed as follows:
1. AWARD OF SHARES
Under the terms of the Plan, the Committee has awarded to the Recipient an Award on
XXXXXXXXXXX
(Award
Date), for
XXXXXX
shares of Common Stock subject to the terms, conditions and restrictions set forth in this Agreement. There will be no purchase price required by the Recipient in connection with this transaction.
2. AWARD RESTRICTIONS
The Award vests as described below and each vested portion of the Award shall expire thirty (30) days after each
designated vesting date.
Vesting to occur over a period of
years in
increments of
% beginning
.
During the vesting period, this Award and the shares of Common Stock subject to this Award, but not vested, are not
transferable by the Recipient by means of sale, assignment, exchange, pledge or otherwise. The shares of Common Stock subject to this Award are not eligible for dividend distributions (other than adjustments described in Section 8), not
eligible to be voted and not eligible to be enrolled in any dividend reinvestment program until the restrictions thereon expire.
3.
ISSUANCE OF SHARES
Upon the applicable vesting date and upon satisfaction of the requirements of Section 8 below,
the Company shall issue the shares in book entry form to the Recipient in any amount reflecting the number of shares vested less any previously delivered shares registered on the Companys books in the name of the Recipient. Upon receipt of the
shares, the Recipient is free, upon compliance with applicable laws and regulations, including Rule 144 under the Securities Act of 1933, as amended, to hold or dispose of such shares at will.
4. EMPLOYMENT TERMINATION
Except as provided in this Section 4 and in Section 10 below, termination of the Recipients Continuous Service
with the Company for any reason and by any party, other than death or disability, shall result in forfeiture of the Award on the date of termination to the extent not already vested. Upon forfeiture of the Award, the employee shall have no further
rights with respect thereto. If the Recipient terminates Continuous Service with the Company due to death or disability during the vesting period, that Award, to the extent not already vested, shall vest in full as of the date of such termination.
If the Recipients Continuous Service terminates on account of early retirement (as defined by the Committee), or under special circumstances determined by the Committee, the Award, to the extent not already vested, may be vested in
full or in part as determined by the Committee.
As used herein,
Continuous Service
means that the Recipients service with the Company is not
interrupted or terminated. The Recipients Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Recipient renders service to the Company or a change in the entity for which the
Recipient renders such service, provided that there is no interruption or termination of the Recipients Continuous Service; provided further that if any award is subject to Section 409A of the Internal Revenue Code of 1986, as amended (the
Code), this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an employee of the company to a director of an affiliate will not constitute an interruption of
Continuous Service. The Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Committee, including sick leave, military leave or any other
personal or family leave of absence.
57
5. ADJUSTMENT OF SHARES FOR RECAPITALIZATION, ETC.
In the event there is a change in the outstanding Common Stock of the Company by reason of any reorganization,
recapitalization, stock split, stock dividend, combination of shares or otherwise, there shall be substituted for or added to each share of Common Stock theretofore appropriated or thereafter subject, or which may become subject, to this Award, the
number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or to which each share shall be exchanged, or to which each such share shall be entitled, as the case may be. Adjustment
under the preceding provisions of this Section 5 will occur automatically upon any such change in the outstanding Common Stock of the Company. No fractional interest will be issued under the Agreement on account of any such adjustment.
6. COMPANY RECORDS
Records of the Company or its subsidiaries or affiliates regarding any period(s) of service, termination of service and the
reason therefore, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
7. NO LIABILITY FOR GOOD FAITH DETERMINATION
The members of the Board and the Committee shall not be liable for any act, omission, interpretation or determination taken or
made in good faith with respect to this Agreement or the Award granted hereunder and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action, determination or interpretation.
8. WITHHOLDING TAXES
The Company will require the Recipient receiving the shares of Common Stock under an Award, to reimburse the Company for such
taxes required to be withheld by the Company and withhold any distribution in whole or in part until the Company is so reimbursed. The Recipient may satisfy the withholding obligation using cash or Company Common Stock owned by the Recipient or by
having the Company reduce the number of shares of Common Stock to be received upon vesting of the Award (such reduction being referred to hereinafter as a Net Settlement). The number of shares to be withheld shall have a fair market
value as of the date that the amount of tax to be withheld is determined as nearly equal as possible to (but not exceeding) the amount of such obligations being satisfied. Any withholding obligation in connection with an Award that vests upon the
Recipients termination due to death shall be satisfied by Net Settlement.
9. IMPACT ON OTHER BENEFITS
The value of the Award (either on the Award Date or at the time the shares are vested) shall not be includable as compensation
or earnings for purposes of any other benefit plan offered by the Company.
10. ACCELERATION OF VESTING
Notwithstanding anything contained in this agreement to the contrary, in the event that, at any time following the date of a
change of control (as hereinafter defined) (i) the Recipients employment with the Company or one of its subsidiaries terminates as a result of such recipients retirement, termination without just cause (as
hereinafter defined) by the Company or one of its subsidiaries, or resignation by the Recipient for good reason; or (ii) with respect to a Recipient employed by one of the Companys subsidiaries, a sale transaction (as
hereinafter defined) is effected; then all vesting restrictions on any shares of the Companys Common Stock (with the exception of any shares granted subject to performance-based vesting) or acquiring Company common stock awarded to that
Recipient under this Agreement shall immediately lapse and such shares shall be vested.
For any Award granted subject to
performance-based vesting criteria, if less than half of the performance period has lapsed, such Award shall be converted into restricted stock assuming target performance has been achieved as of the date of the triggering event described in the
preceding paragraph (the Trigger Date) (or into unrestricted stock if no further restrictions apply). If at least half the performance period has lapsed as of the Trigger Date, such Award shall be converted into restricted stock based on
actual performance to date (or into unrestricted stock if no further restrictions apply). If actual performance is not determinable, such Award shall be converted into restricted stock assuming target performance has been achieved as of the Trigger
Date, based on the discretion of the Committee (or into unrestricted stock if no further restrictions apply).
For
purposes of this Agreement, just cause shall mean the willful and continued failure of the Recipient to substantially perform his or her duties with the Company or one of its subsidiaries after a written demand for substantial
performance is delivered to such Recipient by the Board of Directors of the Company, or its subsidiary, which specifically identifies the manner in which the Board believes that such Recipient has not substantially performed his duties; or willful
misconduct by the Recipient materially injures the Company or its subsidiaries monetarily or otherwise (it being understood that no act, or failure to act, on the part of the Recipient shall be considered willful unless done, or omitted
to be done, by the Recipient in bad faith and with knowledge that the action or omission was not in the best interest of the Company or such subsidiary).
Sale transaction shall mean, with respect to an employee of one of the Companys subsidiaries, the direct or
indirect sale or other disposition by the Company of in excess of fifty percent (50%) of the voting capital stock of such subsidiary, the complete liquidation of such subsidiary, or the sale by such subsidiary or all or substantially all of its
assets.
58
For purposes of this Section 10, change of control means:
|
(1)
|
Any transaction involving the acquisition (Acquisition Transaction), by any person, corporation, partnership
or other entity, or any group (collectively referred to herein as a person), of beneficial ownership of shares representing thirty percent (30%) or more of the Companys then outstanding voting securities entitled to vote generally
in the election of directors (Voting Securities), but excluding, for this purpose, any such acquisition by (a) the Company or any of its subsidiaries or any employee benefit plan (or related trust) of the Company, or any of its
subsidiaries, or (b) any corporation with respect to which immediately following such acquisition, shares representing more than fifty percent (50%) of such corporations Voting Securities are beneficially owned, directly or indirectly, by
those persons who are the beneficial owners of the Companys voting securities immediately prior to such acquisition; or
|
|
(2)
|
The replacement of a majority of members of the Companys Board of Directors during any
12-month
period by directors whose appointment or election is not approved by a vote of at least a majority of the members of the Companys Board of Directors prior to the date of such appointment or election;
or
|
|
(3)
|
The consummation of a reorganization, merger, consolidation or similar form of corporate transaction involving
the Company that requires the approval of the Companys stockholders with respect to which those persons who were the beneficial owners of the Companys voting securities immediately prior to such reorganization, merger or consolidation,
do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, shares representing more than fifty percent (50%) of the voting securities of the corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company.
|
For purposes of this Section 10, acquisition transaction means any of the following events:
|
(a)
|
A merger, reorganization or consolidation involving the Company in which the outstanding stock is converted
into or exchanged for the common stock of another entity, provided that such other entity has not, prior to or at the time of such merger, reorganization or consolidation, directly or indirectly acquired beneficial ownership of in excess of twenty
percent (20%) of the outstanding shares of the Company for consideration other than such common stock (such a merger, reorganization or consolidation being herein referred to as a Stock Merger Transaction); or
|
|
(b)
|
Any merger, reorganization or consolidation involving the Company which is not a Stock Merger Transaction and
with respect to which those persons who were the beneficial owners of the Company stock immediately prior to such merger, reorganization, or consolidation, do not, following such merger, reorganization, or consolidation, beneficially own, directly
or indirectly, shares representing more than fifty percent (50%) of the common stock of the corporation resulting from such merger, reorganization or consolidation, or a complete liquidation or dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company.
|
11. ADMINISTRATION
The Committee shall have full authority and discretion (subject only to the express provisions of the Plan) to decide all
matters relating to the administration and interpretation of the Plan and this Agreement. All such Committee determinations shall be final, conclusive and binding upon the Company, the Recipient, and any and all interested parties.
12. NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in this Agreement or in the Plan shall confer on a Recipient any right to continue in the employ of the Company or in
any way affect the Companys right to terminate the Recipients employment without prior notice at any time for any and no reason.
13. AMENDMENTS
This Agreement shall be subject to the terms of the Plan as amended except that the Award that is the subject of this Agreement
may not in any way be restricted or limited by any Plan amendment or termination approved after the date of the Award without the Recipients written consent.
14. FORCE AND EFFECT
The various provisions of this Agreement are severable in their entirety. Any determination of invalidity or unenforceability
of any one provision shall have no effect on the continuing force and effect of the remaining provisions.
15. PREVAILING LAWS
This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Arkansas applicable
to corporations and the issuance of stock by Arkansas corporations.
59
16. SUCCESSORS
This Agreement shall be binding upon and inure to the benefit of the successors, assigns and heirs of the respective parties.
17. NOTICE
Any notice or other communication provided for hereunder shall be made in writing and deemed given (a) three days after
being deposited in the U.S. mail, first class, postage prepaid, certified receipt requested, or (b) when delivered by a nationally recognized overnight courier which provides confirmation of delivery. Unless waived by the Company, any notice to
the Company required under or relating to this Agreement shall be in writing and addressed to:
J.B. HUNT TRANSPORT
SERVICES, INC.
Attention: John Roberts
P. O. Box 130
Lowell, Arkansas 72745
18. TERMS
Any terms used in this Agreement that are not otherwise defined shall have the meanings prescribed to them in the Plan.
19. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties concerning the matters covered in it and shall not be modified
or amended except in writing and duly signed by the parties. No waiver by either party of any default under this Agreement shall be deemed a waiver of any later default.
I
N WITNESS THEREOF
, the parties have signed this Agreement as of the date hereof.
|
|
|
J.B. HUNT TRANSPORT SERVICES, INC.
|
|
|
By:
|
|
|
|
|
John Roberts
President and Chief Executive Officer
|
|
Recipient:
|
|
|
60
FORM OF
NEO RESTRICTED STOCK UNIT AGREEMENT
FOR THE
J.B. HUNT
TRANSPORT SERVICES, INC.
THIRD AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
THIS
Restricted Stock Agreement (Agreement) made as of
, by and between J.B. Hunt Transport Services, Inc. (Company) and
XXXXXX
(hereinafter referred to as
the Recipient, NEO, Named Executive Officer, or Covered Employee):
WHEREAS
, the Company maintains the J.B. Hunt Transport Services, Inc. Third Amended and Restated Management Incentive
Plan (the Plan) under which the Companys Compensation Committee of the Board of Directors (Committee) may, among other things, award shares of the Companys $0.01 par value common stock (Common Stock)
to such members of the Companys management as the Committee may determine, subject to terms, conditions, or restrictions as it may deem appropriate;
WHEREAS
, pursuant to the Plan the Committee has awarded to Recipient, a Restricted Stock Unit Award (Award)
conditioned upon the execution by the Company and the Recipient of this Agreement setting forth all the terms and conditions applicable to such Award in accordance with the laws of the State of Arkansas;
THEREFORE
, in consideration of the past services of the Recipient and the mutual promises and covenants contained
herein it is hereby agreed as follows:
1. AWARD OF SHARES
Under the terms of the Plan, the Committee has awarded to the Recipient an Award on
(Award Date), for
XXXXXX
shares of Common Stock subject to the terms, conditions and restrictions set
forth in this Agreement. There will be no purchase price required by the Recipient in connection with this transaction.
2. AWARD
RESTRICTIONS
The Award shall vest according to the schedule set forth below and each vested portion shall expire
thirty (30) days after each designated vesting date:
XXXXX
shares (20% of total shares awarded on Award
Date) shall vest on the later to occur of (i)
or
(ii) the date on which the Committee makes the certification described below (the First Vest);
XXXXX
shares (20% of total shares awarded on Award Date) shall vest on the later to occur of
(i)
or
(ii) the date on which the Committee makes the certification described below (the Second Vest);
XXXXX
shares (20% of total shares awarded on Award Date) shall vest on the later to occur of
(i)
or
(ii) the date on which the Committee makes the certification described below (the Third Vest);
XXXXX
share (20% of total shares awarded on Award Date) shall vest on the later to occur of
(i)
or
(ii) the date on which the Committee makes the certification described below (the Fourth Vest);
XXXXX
share (20% of total shares awarded on Award Date) shall vest on the later to occur of
(i)
or
(ii) the date on which the Committee makes the certification described below (the Final Vest);
Notwithstanding the provisions of this section,
|
(i)
|
the First Vest shall be conditioned on, subject to and shall not occur until certification by the Committee
(either by resolution or in such other manner as the Committee deems appropriate) that the performance goals for the period
of
have been achieved. If the Committee does not or cannot certify that the performance goals have
been achieved by December 31st of the following year after the First Vest, then the Recipient shall forfeit the right to the shares for that year and such shares shall be cancelled;
|
|
(ii)
|
the Second Vest shall be conditioned on, subject to and shall not occur until certification by the Committee
(either by resolution or in such other manner as the Committee deems appropriate) that the performance goals for the period
of
have been achieved. If the Committee does not or cannot certify that the performance goals have
been achieved by December 31st of the following year after the Second Vest, then the Recipient shall forfeit the right to the shares for that year and such shares shall be cancelled;
|
|
(iii)
|
the Third Vest shall be conditioned on, subject to and shall not occur until certification by the Committee
(either by resolution or in such other manner as the Committee deems appropriate) that the performance goals for the period
of
have been achieved. If the Committee does not or cannot certify that the performance goals have
been achieved by December 31st of the following year after the Third Vest, then the Recipient shall forfeit the right to the shares for that year and such shares shall be cancelled;
|
61
|
(iv)
|
the Fourth Vest shall be conditioned on, subject to and shall not occur until certification by the Committee
(either by resolution or in such other manner as the Committee deems appropriate) that the performance goals for the period
of
have been achieved. If the Committee does notor cannot certify that the performance goals have
been achieved by December 31st of the following year after the Fourth Vest, then the Recipient shall forfeit the right to the shares for that year and such shares shall be cancelled;
|
|
(v)
|
the Final Vest shall be conditioned on, subject to and shall not occur until certification by the Committee
(either by resolution or in such other manner as the Committee deems appropriate) that the performance goals
for
have been achieved. If the Committee does not or cannot certify that the performance goals have
been achieved by December 31st of the following year after the Final Vest, then the Recipient shall forfeit the right to the shares for that year and such shares shall be cancelled.
|
During the vesting period, this Award and the shares of Common Stock subject to this Award, but not vested, are not
transferable by the Recipient by means of sale, assignment, exchange, pledge or otherwise. The shares of Common Stock subject to this Award are not eligible for dividend distributions (other than adjustments described in Section 8), not
eligible to be voted and not eligible to be enrolled in any dividend reinvestment program until the restrictions thereon expire.
3.
ISSUANCE OF SHARES
Upon the applicable vesting date and upon satisfaction of the requirements of Section 8 below,
the Company shall issue the shares in book entry form to the Recipient in any amount reflecting the number of shares vested less any previously delivered shares registered on the Companys books in the name of the Recipient. Upon receipt of the
shares, the Recipient is free, upon compliance with applicable laws and regulations, including Rule 144 under the Securities Act of 1933, as amended, to hold or dispose of such shares at will.
4. EMPLOYMENT TERMINATION
Except as provided in this Section 4 and in Section 10 below, termination of the Recipients Continuous Service
with the Company for any reason, other than death or disability, shall result in forfeiture of the Award on the date of termination to the extent not already vested. Upon forfeiture of the Award, the employee shall have no further rights with
respect thereto. For a Recipient who is a Covered Employee (as defined by Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code)), if Continuous Service is terminated due to death or disability during the vesting
period, then the Award may vest in full or in part before the performance goal applicable to the Award is attained, and irrespective of whether the performance goal applicable to the Award is thereafter attained, but only if and to the extent that
(i) the Committee so provides with respect to such Award, and (ii) the Award will nevertheless qualify as performance-based compensation if the performance goal applicable to such Award is attained and the employees death or
disability does not occur. For a Recipient who is not a Covered Employee, if such Recipients Continuous Service with the Company terminates due to death or disability during the vesting period, that Award, to the extent not already vested,
shall vest in full as of the date of such termination, or if such Recipients Continuous Service terminates on account of early retirement (as defined by the Committee), or under special circumstances determined by the Committee,
the Award, to the extent not already vested, may be vested in full or in part as determined by the Committee.
As used
herein,
Continuous Service
means that the Recipients service with the Company is not interrupted or terminated. The Recipients Continuous Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Recipient renders service to the Company or a change in the entity for which the Recipient renders such service, provided that there is no interruption or termination of the Recipients Continuous Service; provided further
that if any award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an employee of the company to a director of an affiliate
will not constitute an interruption of Continuous Service. The Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Committee, including sick
leave, military leave or any other personal or family leave of absence.
5. ADJUSTMENT OF SHARES FOR RECAPITALIZATION, ETC.
In the event there is a change in the outstanding Common Stock of the Company by reason of any reorganization,
recapitalization, stock split, stock dividend, combination of shares or otherwise, there shall be substituted for or added to each share of Common Stock theretofore appropriated or thereafter subject, or which may become subject, to this Award, the
number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or to which each share shall be exchanged, or to which each such share shall be entitled, as the case may be. Adjustment
under the preceding provisions of this Section 5 will occur automatically upon any such change in the outstanding Common Stock of the Company. No fractional interest will be issued under the Agreement on account of any such adjustment.
6. COMPANY RECORDS
Records of the Company or its subsidiaries or affiliates regarding any period(s) of service, termination of service and the
reason therefore, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
7. NO LIABILITY FOR GOOD FAITH DETERMINATION
The members of the Board and the Committee shall not be liable for any act, omission, interpretation or determination taken or
made in good faith with respect to this Agreement or the Award granted hereunder and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action, determination or interpretation.
62
8. WITHHOLDING TAXES
The Company will require the Recipient receiving the shares of Common Stock under an Award, to reimburse the Company for such
taxes required to be withheld by the Company and withhold any distribution in whole or in part until the Company is so reimbursed. The Recipient may satisfy the withholding obligation using cash or Company Common Stock owned by the Recipient or by
having the Company reduce the number of shares of Common Stock to be received upon vesting of the Award (such reduction being referred to hereinafter as a Net Settlement). The number of shares to be withheld shall have a fair market
value as of the date that the amount of tax to be withheld is determined as nearly equal as possible to (but not exceeding) the amount of such obligations being satisfied. Any withholding obligation in connection with an Award that vests upon the
Recipients termination due to death shall be satisfied by Net Settlement.
9. IMPACT ON OTHER BENEFITS
The value of the Award (either on the Award Date or at the time the shares are vested) shall not be includable as compensation
or earnings for purposes of any other benefit plan offered by the Company.
10. ACCELERATION OF VESTING
Notwithstanding anything contained in this agreement to the contrary, in the event that, at any time following the date of a
change of control (as hereinafter defined) (i) the Recipients employment with the Company or one of its subsidiaries terminates as a result of such recipients retirement, termination without just cause (as
hereinafter defined) by the Company or one of its subsidiaries, or resignation by the Recipient for good reason; or (ii) with respect to a Recipient employed by one of the Companys subsidiaries, a sale transaction (as
hereinafter defined) is effected; then all vesting restrictions on any shares of the Companys Common Stock (with the exception of any shares granted subject to performance-based vesting) or acquiring Company common stock awarded to that
Recipient under this Agreement shall immediately lapse and such shares shall be vested.
For any Award granted subject to
performance-based vesting criteria, if less than half of the performance period has lapsed, such Award shall be converted into restricted stock assuming target performance has been achieved as of the date of the triggering event described in the
preceding paragraph (the Trigger Date) (or into unrestricted stock if no further restrictions apply). If at least half the performance period has lapsed as of the Trigger Date, such Award shall be converted into restricted stock based on
actual performance to date (or into unrestricted stock if no further restrictions apply). If actual performance is not determinable, such Award shall be converted into restricted stock assuming target performance has been achieved as of the Trigger
Date, based on the discretion of the Committee (or into unrestricted stock if no further restrictions apply).
For
purposes of this Agreement, just cause shall mean the willful and continued failure of the Recipient to substantially perform his or her duties with the Company or one of its subsidiaries after a written demand for substantial
performance is delivered to such Recipient by the Board of Directors of the Company, or its subsidiary, which specifically identifies the manner in which the Board believes that such Recipient has not substantially performed his duties; or willful
misconduct by the Recipient materially injures the Company or its subsidiaries monetarily or otherwise (it being understood that no act, or failure to act, on the part of the Recipient shall be considered willful unless done, or omitted
to be done, by the Recipient in bad faith and with knowledge that the action or omission was not in the best interest of the Company or such subsidiary).
Sale transaction shall mean, with respect to an employee of one of the Companys subsidiaries, the direct or
indirect sale or other disposition by the Company of in excess of fifty percent (50%) of the voting capital stock of such subsidiary, the complete liquidation of such subsidiary, or the sale by such subsidiary or all or substantially all of its
assets.
For purposes of this Section 10, change of control means:
|
(1)
|
Any transaction involving the acquisition (Acquisition Transaction), by any person, corporation,
partnership or other entity, or any group (collectively referred to herein as a person), of beneficial ownership of shares representing thirty percent (30%) or more of the Companys then outstanding voting securities entitled to
vote generally in the election of directors (Voting Securities), but excluding, for this purpose, any such acquisition by (a) the Company or any of its subsidiaries or any employee benefit plan (or related trust) of the Company, or
any of its subsidiaries, or (b) any corporation with respect to which immediately following such acquisition, shares representing more than fifty percent (50%) of such corporations Voting Securities are beneficially owned, directly or
indirectly, by those persons who are the beneficial owners of the Companys voting securities immediately prior to such acquisition; or
|
|
(2)
|
The replacement of a majority of members of the Companys Board of Directors during any
12-month
period by directors whose appointment or election is not approved by a vote of at least a majority of the members of the Companys Board of Directors prior to the date of such appointment or election;
or
|
|
(3)
|
The consummation of a reorganization, merger, consolidation or similar form of corporate transaction involving
the Company that requires the approval of the Companys stockholders with respect to which those persons who were the beneficial owners of the Companys voting securities immediately prior to such reorganization, merger or consolidation,
do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, shares representing more than fifty percent (50%) of the voting securities of the corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company.
|
63
For purposes of this Section 10, acquisition transaction means
any of the following events:
|
(a)
|
A merger, reorganization or consolidation involving the Company in which the outstanding stock is converted
into or exchanged for the common stock of another entity, provided that such other entity has not, prior to or at the time of such merger, reorganization or consolidation, directly or indirectly acquired beneficial ownership of in excess of twenty
percent (20%) of the outstanding shares of the Company for consideration other than such common stock (such a merger, reorganization or consolidation being herein referred to as a Stock Merger Transaction); or
|
|
(b)
|
Any merger, reorganization or consolidation involving the Company which is not a Stock Merger Transaction and
with respect to which those persons who were the beneficial owners of the Company stock immediately prior to such merger, reorganization, or consolidation, do not, following such merger, reorganization, or consolidation, beneficially own, directly
or indirectly, shares representing more than fifty percent (50%) of the common stock of the corporation resulting from such merger, reorganization or consolidation, or a complete liquidation or dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company.
|
11. ADMINISTRATION
The Committee shall have full authority and discretion (subject only to the express provisions of the Plan) to decide all
matters relating to the administration and interpretation of the Plan and this Agreement. All such Committee determinations shall be final, conclusive and binding upon the Company, the Recipient, and any and all interested parties.
12. NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in this Agreement or in the Plan shall confer on a Recipient any right to continue in the employ of the Company or in
any way affect the Companys right to terminate the Recipients employment without prior notice at any time for any and no reason.
13. AMENDMENTS
This Agreement shall be subject to the terms of the Plan, as amended, except that the Award that is the subject of this
Agreement may not in any way be restricted or limited by any Plan amendment or termination approved after the date of the Award without the Recipients written consent.
14. FORCE AND EFFECT
The various provisions of this Agreement are severable in their entirety. Any determination of invalidity or unenforceability
of any one provision shall have no effect on the continuing force and effect of the remaining provisions.
15. PREVAILING LAWS
This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Arkansas applicable
to corporations and the issuance of stock by Arkansas corporations.
16. SUCCESSORS
This Agreement shall be binding upon and inure to the benefit of the successors, assigns and heirs of the respective parties.
17. NOTICE
Any notice or other communication provided for hereunder shall be made in writing and deemed given (a) three days after
being deposited in the U.S. mail, first class, postage prepaid, certified receipt requested, or (b) when delivered by a nationally recognized overnight courier which provides confirmation of delivery. Unless waived by the Company, any notice to
the Company required under or relating to this Agreement shall be in writing and addressed to:
J.B. HUNT
TRANSPORT SERVICES, INC.
Attention: John Roberts
P. O. Box 130
Lowell, Arkansas 72745
18. TERMS
Any terms used in this Agreement that are not otherwise defined shall have the meanings prescribed to them in the Plan.
19. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties concerning the matters covered in it and shall not be modified
or amended except in writing and duly signed by the parties. No waiver by either party of any default under this Agreement shall be deemed a waiver of any later default.
IN WITNESS THEREOF
, the parties have signed this Agreement as of the date hereof.
|
|
|
J.B. HUNT TRANSPORT SERVICES, INC.
|
|
|
By:
|
|
|
|
|
John N. Roberts
|
|
|
President and Chief Executive Officer
|
|
Recipient:
|
|
|
64
FORM OF
STOCK OPTION AGREEMENT
J.B. HUNT TRANSPORT SERVICES, INC.
STOCK OPTION AGREEMENT
, hereinafter referred to as the Option or the Agreement made on this day
of
between J.B. Hunt Transport Services, Inc., an Arkansas corporation, (the Company)
and
(the Optionee).
The Company, pursuant to the terms of the J.B. Hunt Transport Services, Inc. Third Amended and Restated Management Incentive
Plan (the Plan), hereby grants an option
shares of Common Stock of the Company, par value $0.01 per share
(Common Stock) to the Optionee at the price and in all respects subject to the terms, definitions and provisions of the Agreement.
1.
Option Price.
The Option price is
$
for each share.
2.
Exercise and Option.
This Option shall be exercisable at any time and from time to time pursuant to the
exercise schedule and in accordance with the terms of this Agreement as follows:
(a) Exercise Schedule
. This Option
shall be exercisable in installments as indicated below:
|
|
|
|
|
June 1, 20
|
|
|
|
%
|
June 1, 20
|
|
|
|
%
|
June 1, 20
|
|
|
|
%
|
All Options expire at the earliest to occur of the following:
(i) the
anniversary of this Agreement; (ii) 730 days after the Optionees death, disability or retirement after
reaching age 55; or (iii) termination of Continuous Service with the Company (for any reason) other than by death or disability or by retirement after reaching age 55.
As used herein,
Continuous Service
means that the Optionees service with the Company is not
interrupted or terminated. The Optionees Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders service to the Company or a change in the entity for which the Optionee
renders such service, provided that there is no interruption or termination of the Optionees Continuous Service; provided further that if any award is subject to Section 409A of the Internal Revenue Code of 1986, as amended (the
Code), this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an employee of the company to a director of an affiliate will not constitute an interruption of
Continuous Service. The Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Committee, including sick leave, military leave or any other
personal or family leave of absence.
(b) Method of Exercise.
This Option shall be exercisable by a written notice
which shall:
|
(i)
|
state the election to exercise the Option, the number of shares in respect of which it is being exercised, the
person in whose name the stock certificate(s) (if any) for such shares of Common Stock is to be registered, his address and Social Security Number (or if more than one, the names, addresses and Social Security Numbers of such persons);
|
|
(ii)
|
contain such representations and agreements as to the holders investment intent with respect to such
shares of Common Stock as may be satisfactory to the Companys counsel;
|
|
(iii)
|
be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by
any person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the Option.
|
|
(iv)
|
be accompanied by payment to the Company of the full Option price of the shares with respect to which the
Option is exercised. The Option price shall be paid in the following manner:
|
|
(i)
|
full payment in cash or equivalent; or
|
|
(ii)
|
full payment in shares of Common Stock having a fair market value on the Exercise Date (as such term is
defined below) equal to the Option price; or
|
|
(iii)
|
a cashless exercise program established with a broker whereby the Optionee delivers written notice
of exercise to the Company and delivers written notice of exercise and irrevocable instructions to a broker to promptly deliver to the Company the Option price; or
|
|
(iv)
|
by reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such option with a
fair market value on the Exercise Date equal to the aggregate Option price; or
|
|
(v)
|
any combination of the foregoing methods.
|
65
The Companys Option Committee also has the discretion to permit payment of
the option price in full or in part in accordance with any other method provided in paragraph 5.3 (a) (2) of the Plan.
|
(c)
|
The Company shall not be required to issue or deliver any certificates (if any) for shares of Common
Stock purchased upon the exercise of an option (i) prior to the completion of any registration or other qualification of such shares under any state or federal laws or rulings or regulations of any government regulatory body, which the Company shall
determine to be necessary or advisable or, (ii) prior to receiving adoption of counsel, satisfactory to the Company that the sale or issuance of such shares is exempt from these registration or qualification requirements.
|
|
(d)
|
Restrictions on Exercise.
As a condition to his exercise of this Option, the Company may require the
person exercising this Option to make any representation and warranty to the Company as may be required by any applicable law or regulation.
|
|
(e)
|
Employment Related Taxes.
As a general rule, the exercise of an Option creates taxable income to the
Optionee for which Federal and States income tax withholding may apply. The withholding obligations of the Optionee may be satisfied at their election using cash or Company common stock owned by the Optionee for at least six months before the
Exercise Date.
|
|
3.
|
Non Transferability of Option.
This Option may not be assigned or transferred other than by will or the
laws of descent and distribution and may be exercised during the lifetime of the Optionee only by him.
|
|
4.
|
Stock Subject to the Option.
In addition to the restrictions set forth above, the Company and the
Optionee agree that the Common Stock of the Company acquired pursuant to this Agreement shall be subject to the restrictions set forth in the Plan.
|
|
5.
|
Adjustments Upon Changes in Capitalization.
The number of shares of Common Stock subject to this
Agreement shall be proportionately adjusted for any change in the stock structure of the Company because of share dividends, recapitalization, reorganizations, mergers or other restructuring.
|
|
6.
|
Notices.
Each notice relating to this Agreement shall be in writing and delivered in person or by
certified mail to the proper address.
|
Each notice shall be deemed to have been given (a) three
days after being deposited in the U.S. mail, first class, postage prepaid, certified receipt requested, or (b) when delivered by a nationally recognized overnight courier which provides confirmation of delivery. Each notice to the Company shall be
addressed to it at its principal office, now at 615 J.B. Hunt Corporate Drive, Lowell, Arkansas 72745, attention John Roberts. Each notice to the Optionee or other person or persons then entitled to exercise the Option shall be addressed to the
Optionee or such other person or persons at the Optionees address set forth in the heading of this Agreement. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to that effect.
|
7.
|
Benefits of Agreement.
This Agreement shall inure to the benefit of and be binding upon each successor
of the Company. All obligations imposed upon the Optionee and all rights granted to the Company under this Agreement shall be binding upon Optionees heirs, legal representatives, and successors. This Agreement shall be sole and exclusive
source of any and all rights which the Optionee, his heirs, legal representatives or successors may have in respect to the Plan or any options or Common Stock granted or issued hereunder, whether to himself or to any other person.
|
|
8.
|
Plan Amendments.
This Agreement shall be subject to the terms of the Plan as amended except that the
Award that is the subject of this Agreement may not in any way be restricted or limited by any Plan amendment or termination approved after the date of the award without the Recipients written consent.
|
|
9.
|
Successors.
This Agreement shall be binding upon and inure to the benefit of the successors, assigns
and heirs of the respective parties.
|
|
10.
|
Terms.
Any terms used in this Agreement that are not otherwise defined shall have the meanings
prescribed to them in the Plan.
|
|
11.
|
Entire Agreement.
This Agreement contains the entire understanding of the parties concerning the
matters covered in it and shall not be modified or amended except in writing and duly signed by the parties. No waiver by either party of any default under this Agreement shall be deemed a waiver of any later default.
|
IN WITNESS WHEREOF
, the Company and the
Optionee have caused this Agreement to be executed as of the day, month and year first above written.
|
|
|
J.B. HUNT TRANSPORT SERVICES, INC.
|
|
|
By:
|
|
|
|
|
John Roberts
|
|
|
President and Chief Executive Officer
|
|
OPTIONEE
|
|
|
By:
|
|
|
66
STOCK OPTION EXERCISE FORM
|
|
|
To:
|
|
Office of the Chief Financial Officer
|
|
|
J.B. Hunt Transport Services, Inc.
|
This memorandum will confirm my desire to exercise my available vested options in the following manner:
|
¡
|
|
Exercise and sell for cash
|
|
¡
|
|
Exercise and sell only enough shares to cover option costs and taxes and keep the remaining shares
|
|
¡
|
|
Exercise and hold (buy)
|
|
¡
|
|
Exercise and swap/surrender owned shares for option costs and/or taxes
|
The following options are the ones I have selected for the above transaction(s):
|
|
|
|
|
Grant Date
|
|
Number of
Options Exercised
|
|
Option Price
|
I understand that the difference between
market value and option price for the options exercised is taxable compensation to be included in my Form
W-2.
Therefore, the withholding amounts for Federal and State tax should be withheld at the following
rates:
|
Received by CFO Office:
|
|
|
Signature
|
|
Date
|
67
FORM OF
AMENDMENT TO
STOCK
OPTION AGREEMENT
J.B. HUNT TRANSPORT SERVICES, INC.
This Amendment is made
this
day
of
,
20
, (the Amendment) by and between J.B. Hunt Transport Services, Inc. (the Company)
and
(the Optionee) and amends that certain Stock Option Agreement between the Company and the Optionee
dated
, (the Agreement).
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Optionee and the Company
amend the Agreement as follows (check those which apply):
The remaining unexercised portions of this Option shall be
exercisable as follows:
This Option shall terminate as follows:
All other terms and conditions of the Agreement continue in full force and effect.
|
J.B. HUNT TRANSPORT SERVICES, INC.
|
|
By:
|
, Optionee
68
|
|
|
Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
|
|
☒
|
|
|
|
|
Electronic Voting Instructions
|
Available 24 hours a day, 7 days a week!
|
Instead of mailing your proxy, you may choose one of the voting
methods outlined below to vote your proxy.
|
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE
BAR.
|
Proxies submitted by the Internet or telephone must be
received by 11:59 p.m., Central Time, on April 19, 2017.
|
|
|
Vote by Internet
|
|
Go to
www.envisionreports.com/JBHT
|
|
Or scan the QR code with your smartphone
|
|
Follow the steps outlined on the secure website
|
Vote by telephone
|
Call toll free 1-800-652-VOTE (8683) within the USA, US territories
& Canada on a touch tone telephone
|
Follow the instructions provided by the recorded message
|
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
|
|
|
A
|
|
Proposals The Board of Directors recommends a vote
FOR
all the nominees listed,
FOR
Proposals 2, 3 and 5,
AGAINST
Proposal 6 and
ONE YEAR
on
Proposal 4.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+
|
|
|
1.
|
|
Election of Directors:
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
For
|
|
Against
|
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01 - Douglas G. Duncan
|
|
☐
|
|
☐
|
|
☐
|
|
02 - Francesca M. Edwardson
|
|
☐
|
|
☐
|
|
☐
|
|
03 - Wayne Garrison
|
|
☐
|
|
☐
|
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04 - Sharilyn S. Gasaway
|
|
☐
|
|
☐
|
|
☐
|
|
05 - Gary C. George
|
|
☐
|
|
☐
|
|
☐
|
|
06 - J. Bryan Hunt, Jr.
|
|
☐
|
|
☐
|
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
07 - Coleman H. Peterson
|
|
☐
|
|
☐
|
|
☐
|
|
08 - John N. Roberts III
|
|
☐
|
|
☐
|
|
☐
|
|
09 - James L. Robo
|
|
☐
|
|
☐
|
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 - Kirk Thompson
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
|
To approve the Companys Third Amended and Restated Management Incentive Plan, including the material terms of the performance goals under such plan.
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
3.
|
|
To approve an advisory resolution regarding the Companys compensation of its named executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
2 Years
|
|
3 Years
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
4.
|
|
Frequency of advisory resolution regarding the Companys compensation of its named executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
☐
|
|
5.
|
|
To ratify the appointment of Ernst & Young LLP as the Companys independent public accountants for calendar year 2017.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
|
To approve a stockholder proposal reporting political contributions.
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
7.
|
|
To transact such other business as may properly come before the meeting or any adjournments thereof.
|
|
|
|
|
|
|
|
|
|
B
|
|
Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
|
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title.
|
|
|
|
|
|
|
|
|
|
|
|
|
Date (mm/dd/yyyy) Please print date below.
|
|
|
|
Signature 1 Please keep signature within the box.
|
|
|
|
Signature 2 Please keep signature within the box.
|
|
|
/ /
|
|
|
|
|
|
|
|
|
IF VOTING BY MAIL, YOU
MUST
COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
Dear Stockholder:
If
voting by proxy, we encourage you to vote your shares electronically this year either by telephone or via the Internet. This will eliminate the need to return your proxy card.
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned your proxy card. When
voting your shares electronically by telephone or via the Internet, you will need the fifteen digit number on the front of this proxy card. The Computershare Vote by Telephone and Vote by Internet systems are maintained by our transfer agent,
Computershare Trust Company, N.A. (Computershare) and can be accessed 24 hours a day, seven days a week up until the day prior to the annual meeting; votes may be cast by Internet up until 11:59 p.m. (CDT) on the day before the annual
meeting.
If you do not vote via proxy card, telephone or the Internet, you may attend the Annual Meeting of Stockholders on April 20, 2017 at the offices of
the corporation, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas and at any adjournment thereof.
Direct Deposit of Dividends
We encourage all stockholders who receive their dividends in cash to participate in direct deposit. To enroll in this service, please mail your request along with
a copy of a voided check to Computershare at the address noted below.
Transfer Agent Contact Information
|
|
|
|
|
Computershare Trust Company, N.A.
|
|
Telephone Inside the USA:
|
|
(877) 498-8861
|
211 Quality Circle, Suite 210
|
|
Telephone Outside the USA:
|
|
(781) 575-2723
|
College Station, TX 77845
|
|
TDD/TTY for Hearing Impaired:
|
|
(800) 952-9245
|
|
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
|
|
|
|
Proxy J.B. HUNT TRANSPORT SERVICES, INC.
|
|
+
|
This Proxy is being solicited on behalf of the Board of Directors of:
J.B. HUNT TRANSPORT SERVICES, INC.
615 J. B. Hunt Corporate
Drive
Lowell, Arkansas 72745
The undersigned hereby
constitutes and appoints Kirk Thompson and John N. Roberts III or either of them, proxies for the undersigned, with power of substitution, to represent the undersigned and to vote all of the shares of common stock of J.B. Hunt Transport Services,
Inc. (the Company) which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held on April 20, 2017, at the offices of the Company, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas, and at any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by the undersigned. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED
FOR
ALL DIRECTOR NOMINEES LISTED,
FOR
PROPOSALS 2, 3 AND 5,
AGAINST
PROPOSAL 6 AND
ONE YEAR
ON PROPOSAL 4.
The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors recommendations. The Proxy Committee cannot vote your shares unless you sign and return this card.
Important Notice
Regarding Internet Availability of Proxy Materials for the Stockholder Meeting to be Held on April 20, 2017
The proxy materials for the Companys
Annual Meeting of Stockholders, including the 2016 Annual Report and Proxy Statement, are available over the Internet by accessing
www.envisionreports.com/jbht.
|
|
|
|
|
Change of Address
Please print new address below.
|
|
|
|
Comments
Please print your comments below.
|
|
|
|
|
|
|
|
|
|
|
⬛
|
|
IF VOTING BY MAIL, YOU
MUST
COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
|
|
+
|
|
|
|
Using a
black ink
pen, mark your votes with an
X
as shown in
this example. Please do not write outside the designated areas.
|
|
☒
|
q
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
|
|
|
A
|
|
Proposals The Board of Directors recommends a vote
FOR
all the nominees listed,
FOR
Proposals 2, 3 and 5,
AGAINST
Proposal 6
and
|
|
|
|
|
ONE YEAR on Proposal
4.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of Directors:
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
+
|
|
|
01 - Douglas G. Duncan
|
|
☐
|
|
☐
|
|
☐
|
|
02 - Francesca M. Edwardson
|
|
☐
|
|
☐
|
|
☐
|
|
03 - Wayne Garrison
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04 - Sharilyn S. Gasaway
|
|
☐
|
|
☐
|
|
☐
|
|
05 - Gary C. George
|
|
☐
|
|
☐
|
|
☐
|
|
06 - J. Bryan Hunt, Jr.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
07 - Coleman H. Peterson
|
|
☐
|
|
☐
|
|
☐
|
|
08 - John N. Roberts III
|
|
☐
|
|
☐
|
|
☐
|
|
09 - James
L. Robo
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 - Kirk Thompson
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
|
To approve the Companys Third Amended and Restated Management Incentive Plan, including the material terms of the performance goals under such plan.
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
3.
|
|
To approve an advisory resolution regarding the Companys compensation of its named executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
2 Years
|
|
3 Years
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
4.
|
|
Frequency of advisory resolution regarding the Companys compensation of its named executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
☐
|
|
5.
|
|
To ratify the appointment of Ernst & Young LLP as the Companys independent public accountants for calendar year 2017.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
|
To approve a stockholder proposal regarding reporting political contributions.
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
7.
|
|
To transact such other business as may properly come before the meeting or any adjournments thereof.
|
|
|
|
|
|
|
|
|
|
B
|
|
Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
|
|
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please
give full title.
|
|
|
|
|
|
|
|
|
|
|
|
Date (mm/dd/yyyy) Please print date below.
|
|
Signature 1 Please keep signature within the box.
|
|
Signature 2 Please keep signature within the box.
|
|
|
/
/
|
|
|
|
|
|
|
|
|
q
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
Proxy J.B. HUNT TRANSPORT SERVICES, INC.
This Proxy is being solicited on behalf of the
Board of Directors of:
J.B. HUNT TRANSPORT SERVICES, INC.
615 J. B. Hunt Corporate Drive
Lowell, Arkansas 72745
The undersigned hereby constitutes and appoints Kirk Thompson and John N. Roberts III or either of them, proxies for the undersigned, with power of
substitution, to represent the undersigned and to vote all of the shares of common stock of J.B. Hunt Transport Services, Inc. (the Company) which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company
to be held on April 20, 2017, at the offices of the Company, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas, and at any adjournment thereof.
This proxy
when properly executed will be voted in the manner directed herein by the undersigned. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR
ALL DIRECTOR NOMINEES LISTED,
FOR
PROPOSALS 2, 3 AND 5,
AGAINST
PROPOSAL 6 AND
ONE
YEAR
ON PROPOSAL 4.
The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors recommendations. The Proxy Committee cannot vote your shares unless you sign and return this card.
Important Notice
Regarding Internet Availability of Proxy Materials for the Stockholder Meeting to be Held on April 20, 2017
The proxy materials for the Companys
Annual Meeting of Stockholders, including the 2016 Annual Report and Proxy Statement, are available over the Internet by accessing
www.edocumentview.com/jbht
.
J B Hunt Transport Servi... (NASDAQ:JBHT)
Historical Stock Chart
From Aug 2024 to Sep 2024
J B Hunt Transport Servi... (NASDAQ:JBHT)
Historical Stock Chart
From Sep 2023 to Sep 2024