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:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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AMERICA’S CAR-MART, 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):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which the transaction applies:
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Aggregate number of securities to which the transaction applies:
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Per unit price or other underlying value of the 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):
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Proposed maximum aggregate value of the transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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AMERICA’S CAR-MART, INC.
802 Southeast Plaza Ave., Suite 200
Bentonville, Arkansas 72712
Notice of Annual Meeting of Stockholders
To be held August 29, 2018
To the holders of common stock of America’s Car-Mart,
Inc.:
Notice is hereby given
that the annual meeting of stockholders of America’s Car-Mart, Inc., a Texas corporation, will be held at the Company’s
principal executive office, 802 Southeast Plaza Avenue, Suite 200, Bentonville, Arkansas 72712, on Wednesday, August 29, 2018 at
10:00 a.m., local time, for the following purposes:
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(1)
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To elect six directors to serve until the next annual meeting of stockholders and until their successors
have been elected and qualified;
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(2)
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To consider and approve an advisory resolution regarding the Company’s compensation of its
named executive officers;
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(3)
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To ratify the selection of Grant Thornton LLP as the independent registered public accounting firm
for the fiscal year ending April 30, 2019;
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(4)
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To approve an amendment to the Company’s Amended and Restated Stock Incentive Plan, increasing
the number of shares authorized for issuance under the plan by 100,000;
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(5)
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To approve an amendment to the Company’s Amended and Restated Stock Option Plan, increasing
the number of shares authorized for issuance under the plan by 200,000;
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(6)
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To conduct such other business as may properly come before the meeting or any adjournments or postponements
thereof.
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These items of business are more
fully described in the proxy statement accompanying this notice.
Only stockholders of
record as of the close of business on July 17, 2018 will be entitled to notice of and to vote at the annual meeting of stockholders
or any adjournment or postponement thereof.
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Very truly yours,
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/s/ Jeffrey A. Williams
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Jeffrey A. Williams
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President and Chief Executive Officer
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July 18, 2018
Your vote is important. Whether or not
you plan to attend the meeting in person, you are urged to vote as promptly as possible by the Internet. If you request a printed
copy of the proxy materials, you may complete and mail the proxy you will receive in response to your request or you may vote by
the Internet. If you attend the meeting and wish to change your vote, you may do so by voting in person at the meeting.
AMERICA’S CAR-MART, INC.
802 Southeast Plaza Ave., Suite 200
Bentonville, Arkansas 72712
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
AUGUST 29, 2018
PROXY STATEMENT
Unless the context
indicates otherwise, all references in this proxy statement to "we," "us," "our" and "the Company"
refer to America’s Car-Mart, Inc. and its subsidiaries.
INFORMATION ABOUT THE ANNUAL MEETING
This proxy statement,
which is first being mailed to stockholders on or about July 20, 2018, is furnished in connection with the solicitation of proxies
by and on behalf of our board of directors for use at the annual meeting of stockholders to be held at the Company’s principal
executive office, 802 Southeast Plaza Avenue, Suite 200, Bentonville, Arkansas 72712, on Wednesday, August 29, 2018 at 10:00 a.m.,
local time, and at any or all adjournments or postponements thereof. To receive directions to the annual meeting, please call (479)
464-9944. The address of our principal executive offices is 802 Southeast Plaza Ave., Suite 200, Bentonville, Arkansas 72712, and
our telephone number is (479) 464-9944.
Stockholders of record
can vote on the Internet, by mail or by attending the annual meeting and voting by ballot as described below. On or about July
20, 2018, we will mail a Notice of Internet Availability of Proxy Materials to our stockholders advising them that they can access
this proxy statement, the 2018 Annual Report and voting instructions over the Internet at www.onlineproxyvote.com/CRMT. You may
then access these materials and vote your shares over the Internet. Please keep the notice for your reference through the meeting
date.
Alternatively, you
may request that a printed copy of the proxy materials be mailed to you for this meeting. If you want to receive a paper copy of
the proxy materials, you may request one by calling the Company’s transfer agent, Securities Transfer Corporation, toll-free
at 1-844-230-4626, or by sending an email to car-mart@stctransfer.com with “Proxy Materials Order” in the subject line
and in the body of the message include your full name, address, and request. There is no charge to you for requesting a copy. Please
make your request for a copy on or before August 15, 2018, to facilitate timely delivery. If you request a paper copy of the proxy
materials, you may vote by mail by completing and returning the proxy card you will receive in response to your request or you
may vote by the Internet.
We encourage you to
vote your shares through our Internet voting option. You can vote on the Internet by following the instructions in the notice that
was mailed to you. Easy-to-follow prompts allow you to vote your shares and confirm that your instructions have been properly recorded.
The Internet voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm
that your instructions have been properly recorded. Internet voting facilities for stockholders of record will be available 24
hours a day and will close at 8:30 a.m. Central time on August 29, 2018. If you vote on the Internet, you do not need to return
your proxy card.
Please note: If
you are a beneficial owner of shares held in the name of a bank, broker or other holder, please refer to the Notice of Internet
Availability of Proxy Materials that was mailed to you by your bank, broker or other holder of record to see which voting options
are available to you and for instructions on how to vote your shares and how to request a printed copy of the proxy materials.
If you request a paper
copy of the proxy materials and choose to vote by mail, please complete, sign, date and promptly return the accompanying proxy
card in the enclosed addressed envelope that will be provided to you in response to your request, even if you plan to attend the
annual meeting. Postage need not be affixed to the envelope if mailed within the United States. The immediate return of your proxy
card will be of great assistance in preparing for the annual meeting and is, therefore, urgently requested. If you attend the annual
meeting and vote in person, your proxy card will not be used.
If you plan to attend
the Annual Meeting, we would appreciate it if you would notify our Investor Relations Manager by telephone at
(479) 464-9944
or by e-mail at
zachary.jennings@car-mart.com
. This will assist us with meeting preparations. You also can obtain directions
to the meeting by calling this number. Please bring the Notice of Internet Availability of Proxy Materials with you for admission
to the meeting.
Any person giving a
proxy pursuant to this proxy statement may revoke it at any time before it is exercised at the annual meeting of stockholders by
notifying, in writing, our Secretary at the address above prior to the annual meeting date. In addition, if the person executing
the proxy is present at the annual meeting, he or she may, but need not, revoke the proxy by notice of such revocation to our Secretary
at the annual meeting, and vote his or her shares in person. Proxies in the form provided, if duly signed or authenticated electronically
and received in time for voting, and not so revoked, will be voted at the annual meeting in accordance with the instructions specified
thereon. Where no choice is specified, proxies will be voted “FOR” the election of the nominees for director named
in the proxy statement; “FOR” the resolution approving the Company’s compensation of its named executive officers;
“FOR” the ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm;
“FOR” the approval of the amendment to the Company’s Amended and Restated Stock Incentive Plan, increasing the
number of shares authorized for issuance under the plan by 100,000; “FOR” the approval of the amendment to the Company’s
Amended and Restated Stock Option Plan, increasing the number of shares authorized for issuance under the plan by 200,000; and,
on any other matters presented for a vote, in accordance with the judgment of the persons acting under the proxies.
Only stockholders of
record at the close of business on July 17, 2018 will be entitled to notice of and to vote at the annual meeting and any adjournments
or postponements thereof. Each share of our common stock issued and outstanding on such record date is entitled to one vote. As
of July 17, 2018, we had 7,082,063 shares of common stock outstanding.
The presence at the
annual meeting of the holders of a majority of the shares of our common stock issued and outstanding and entitled to vote as of
the record date is necessary to constitute a quorum. Stockholders will be counted as present at the annual meeting if they are
present in person at the annual meeting or if they have properly submitted a proxy card. In accordance with the bylaws of the Company,
each director shall be elected by a majority of the votes cast with respect to that director at the annual meeting. However, if
the number of nominees is greater than the number of directors to be elected, the directors shall be elected by the vote of a plurality
of the shares represented in person or by proxy at the annual meeting. The proposals regarding the advisory vote to approve the
Company’s executive compensation, the ratification of Grant Thornton LLP as our independent registered public accounting
firm, the approval of the amendment to the Company’s Amended and Restated Stock Incentive Plan, increasing the number of
shares authorized for issuance under the plan by 100,000, and the approval of the amendment to the Company’s Amended and
Restated Stock Option Plan, increasing the number of shares authorized for issuance under the plan by 200,000 require the affirmative
vote of the holders of a majority of the shares entitled to vote on, and that vote for or against or expressly abstain with respect
to, the proposals.
Any abstaining votes
and broker “non-votes” will be counted as present and entitled to vote, and therefore will be included for purposes
of determining whether a quorum is present at the annual meeting. For the election of directors, abstentions and broker “non-votes”
will not be deemed to be “votes cast.” For each other proposal, abstentions will be treated as “votes cast,”
but broker “non-votes” will not be deemed to be “votes cast.” As a result, broker “non-votes”
will not be included in the tabulation of the voting results on the election of directors and the other proposals presented in
this proxy statement, and therefore will not have any effect on such votes. A broker “non-vote” occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received voting instructions from the beneficial owner. Abstentions will not be included
in the tabulation of the voting results on the election of directors, and therefore will not have any effect on such vote, but
will have the same effect as a vote against the proposals regarding the advisory vote on executive compensation, the ratification
of Grant Thornton LLP as our independent registered public accounting firm, the approval of the amendment to the Company’s
Amended and Restated Stock Incentive Plan, increasing the number of shares authorized for issuance under the plan by 100,000, and
the approval of the amendment to the Company’s Amended and Restated Stock Option Plan, increasing the number of shares authorized
for issuance under the plan by 200,000.
The Dodd-Frank Wall
Street Reform and Consumer Protection Act, referred to in this proxy statement as the Dodd-Frank Act, directed national securities
exchanges to prohibit broker discretionary voting of uninstructed shares held in “street name” (through a broker or
nominee) for the election of directors, executive compensation and certain other matters. Under current stock exchange rules, broker
discretionary voting is not permitted for the election of directors and executive compensation matters, including proposals to
approve the implementation of, or material revisions to, any equity compensation plan.
Therefore, if you hold shares through
a broker or other nominee and you do not give your broker or nominee specific instructions, including regarding the election of
directors, the advisory vote on our executive compensation, the approval of the amendment to the Company’s Amended and Restated
Stock Incentive Plan, increasing the number of shares authorized for issuance under the plan by 100,000, and the approval of the
amendment to the Company’s Amended and Restated Stock Option Plan, increasing the number of shares authorized for issuance
under the plan by 200,000, your shares may not be voted on those matters and will not be counted in determining the number of shares
necessary for approval
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We will bear the entire
cost of the proxy solicitation, including preparation, assembly, printing and mailing of this proxy statement, the proxy card and
any additional materials furnished to stockholders. Individual stockholders of record will receive copies of the proxy solicitation
materials even if they share the same mailing address. Copies of proxy solicitation materials will be furnished to brokerage houses,
fiduciaries and custodians holding shares in their names that are beneficially owned by others to forward to such beneficial owners.
In addition, we may reimburse such persons for their cost of forwarding the solicitation materials to such beneficial owners. Solicitation
of proxies by mail may be supplemented by one or more of telephone, e-mail, facsimile or personal solicitation by our directors,
officers or regular employees. No additional compensation will be paid for such services. We have not engaged, and do not plan
to engage, the services of a professional proxy solicitation firm to aid in the solicitation of proxies from certain brokers, bank
nominees and other institutional owners. Our costs for such services, if any, will not be material.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table
sets forth certain information as of July 13, 2018 with respect to ownership of our outstanding common stock by (i) all persons
known to us to beneficially own more than five percent of our outstanding common stock, (ii) each of our directors and nominees
for director, (iii) each of our named executive officers, and (iv) all directors and executive officers as a group.
Name of Beneficial Owner
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Number of Shares
Beneficially
owned
(1)
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Percent of Shares
Outstanding
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Magnolia Capital Fund, LP
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755,282
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(2)
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10.7%
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Dimensional Fund Advisors LP
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600,247
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(3)
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8.5%
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BlackRock, Inc.
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512,864
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(4)
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7.2%
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Yacktman Asset Management LP
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403,460
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(5)
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5.7%
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Invesco Ltd.
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353,156
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(6)
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5.0%
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Daniel J. Englander
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234,478
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(7)
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3.3%
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William H. Henderson
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174,529
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(8)
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2.4%
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Joshua G. Welch
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142,761
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(9)
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2.0%
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Jeffrey A. Williams
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106,295
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(10)
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1.5%
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Jim von Gremp
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25,000
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(11)
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*
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Robert Cameron Smith
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23,550
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(12)
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*
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Vickie D. Judy
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13,532
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(13)
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*
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Ray C. Dillon
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5,750
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(14)
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*
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All directors and executive officers as a group (8 persons)
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725,895
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(15)
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10.0%
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_________________________________
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Less than 1% of outstanding shares.
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(1)
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"Beneficial ownership" includes shares for which an
individual, directly or indirectly, has or shares voting or investment power, or both, and also includes options that are
exercisable within 60 days of July 13, 2018. Unless otherwise indicated, all of the listed persons have sole voting
and investment power over the shares listed opposite their names. Beneficial ownership as reported in the above table has
been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, referred to in this proxy
statement as the Exchange Act. Pursuant to the rules of the Securities and Exchange Commission, referred to in
this proxy statement as the SEC, certain shares of our common stock that a beneficial owner has the right to acquire within
60 days pursuant to the exercise of stock options are deemed to be outstanding for the purpose of computing the percentage
ownership of such owner, but are not deemed outstanding for the purpose of computing the percentage ownership of any other
person. Applicable percentages are based on 7,089,063 shares of the Company’s common stock outstanding on
July 13, 2018, adjusted as required by rules promulgated by the SEC.
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(2)
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Based on a Schedule 13G/A filed with the SEC on February 7, 2018 and Form 4 reports filed
with the SEC on June 25, 2018, June 28, 2018 and July 10, 2018 by Magnolia Capital Fund, LP, Magnolia Group, LLC and Adam
K. Peterson, each with an address of 1411 Harney Street, Suite 200, Omaha, Nebraska 68102. The reporting persons reported
in the Schedule 13G/A beneficial ownership of 887,411 shares for which each has sole voting power and sole dispositive power
over zero shares and shared voting power and shared dispositive power over 887,411 shares. Subsequent Form 4 filings
reported sales of an aggregate of 132,129 shares. We make no representation as to the accuracy or completeness
of the information reported.
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(3)
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Based on a Schedule 13G/A filed with the SEC on February 9, 2018 by Dimensional Fund Advisors
LP with an address of Building One, 6300 Bee Cave Road, Austin, Texas 78746. The reporting person reported beneficial
ownership of 600,247 shares for which it has sole voting power over 561,706 shares and sole dispositive power over 600,247
shares. We make no representation as to the accuracy or completeness of the information reported.
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(4)
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Based on a Schedule 13G/A filed with the SEC on January 29, 2018 by BlackRock, Inc. with
an address of 55 East 52
nd
Street, New York, NY 10055. The reporting person reported beneficial ownership of 512,864 shares for
which it has sole voting power over 502,214 shares and sole dispositive power over 512,864 shares. We make no representation
as to the accuracy or completeness of the information reported.
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(5)
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Based on a Schedule 13G/A filed with the SEC on February 2, 2018 by Yacktman Asset Management
LP with an address of 6300 Bridgepoint Parkway, Building One, Suite 500, Austin, Texas 78730. The reporting person
reported beneficial ownership of 403,460 shares for which it has sole voting power over 401,460 shares, sole dispositive power
over 401,460 shares, shared voting power of 2,000 shares and shared dispositive power of 2,000 shares. We make
no representation as to the accuracy or completeness of the information reported.
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(6)
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Based on a Schedule 13G/A filed with the SEC on February 7, 2018 by Invesco Ltd. with an
address of 1555 Peachtree Street NE, Atlanta, GA 30309. The reporting person reported beneficial ownership of 353,156 shares
for which it has sole voting power and sole dispositive power over 353,156 shares. We make no representation as
to the accuracy or completeness of the information reported.
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(7)
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Includes 172,965 shares held by Ursula Capital Partners of which Mr. Englander is the sole
general partner and 46,250 shares which Mr. Englander has the right to acquire within 60 days of July 13, 2018 upon exercise
of outstanding stock options.
Mr.
Englander disclaims beneficial ownership of the shares held by Ursula Capital Partners except to the extent of his pecuniary
interest therein.
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(8)
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Includes 60,000 shares which Mr. Henderson has the right to acquire within 60 days of July
13, 2018 upon exercise of outstanding stock options, 1,874 shares held in the Company’s Employee Stock Purchase Plan
and 750 shares held as custodian for minor children.
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(9)
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Includes 137,761 shares held by Vicuna Capital I, LP of which Mr. Welch is the managing member
and 5,000 shares which Mr. Welch has the right to acquire within 60 days of July 13, 2018 upon exercise of outstanding stock
options.
Mr.
Welch disclaims beneficial ownership of the shares held by Vicuna Capital I, LP except to the extent of his pecuniary interest
therein.
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(10)
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Includes 30,000 shares which Mr. Williams has the right to acquire within 60 days of July
13, 2018 upon exercise of outstanding stock options, 2,014 shares held in the Company’s Employee Stock Purchase Plan,
2
,565 shares held in the
Company’s 401(k) Plan and 25,000 shares pledged as security.
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(11)
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Includes 10,000 shares which Mr. von Gremp has the right to acquire
within 60 days of July 13, 2018 upon exercise of outstanding stock options and 15,000 shares held in a family trust, of which
Mr. von Gremp and his wife are co-trustees. Mr. von Gremp and his wife share voting and investment power over the
shares held by the trust.
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(12)
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Includes 20,000 shares which Mr. Smith has the right to acquire within 60 days of July 13,
2018 upon exercise of outstanding stock options.
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(13)
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Includes 10,500 unvested shares of restricted stock, 2,500 shares which Ms. Judy has the
right to acquire within 60 days of July 13, 2018 upon exercise of outstanding stock options and 532 shares held in the Company’s
Employee Stock Purchase Plan.
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(14)
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Includes 5,000 shares which Mr. Dillon has the right to acquire
within 60 days of July 13, 2018 upon exercise of outstanding stock options.
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(15)
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Includes 178,750 shares which all current executive officers and directors in the aggregate
have the right to acquire within 60 days of July 13, 2018 upon exercise of outstanding options.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to our bylaws,
our board of directors has set the number of directors for the ensuing year at seven, six of whom are proposed to be elected at
the annual meeting of stockholders. Robert Cameron Smith has announced that he will retire from our board of directors effective
as of the 2018 Annual Meeting, when his current term expires. Because the board of directors has named only six nominees in this
proxy statement, proxies cannot be voted for greater than six director candidates at the 2018 Annual Meeting.
In the event any nominee
is unable or declines to serve as a director at the time of the annual meeting, the persons named as proxies therein will have
discretionary authority to vote the proxies for the election of such person or persons as may be nominated in substitution by the
present board of directors, upon the recommendation of the nominating committee of the board of directors. Management knows of
no current circumstances that would render any nominee named herein unable to accept nomination for election.
In accordance with
the bylaws of the Company, each director shall be elected by a majority of the votes cast with respect to that director at the
annual meeting. However, if the number of nominees is greater than the number of directors to be elected, the directors shall be
elected by the vote of a plurality of the shares represented in person or by proxy at the annual meeting.
Members of our board
of directors are elected annually to serve until the next annual meeting and until their successors are elected and qualified.
The following persons have been nominated for election to our board of directors:
Ray C. Dillon
,
age 62, has served as a director since August 2017. Mr. Dillon was the President, Chief Executive Officer and a director of Deltic
Timber Corporation (NYSE: DEL) from July 2003 until his retirement in October 2016. Mr. Dillon has over 40 years of experience
in the paper and forest products industry. Prior to joining Deltic Timber, Mr. Dillon served in various executive positions
with Gaylord Container Corporation from 1994 through mid-2003, including Executive Vice President from 2000 through mid-2003, Vice
President Primary Products from 1997 through 2000, and Vice President Mill Operations from 1994 through 1997. Mr. Dillon’s
other public board experience includes U.S. Concrete, Inc. (NASDAQ: USCR) from 2009 to 2010. Mr. Dillon has also been a director
of Stone Bank in Little Rock, Arkansas since December 2017, and served as a director and chairman of the board of the Little Rock
Branch of the Federal Reserve Bank of St. Louis for seven years. Mr. Dillon graduated from Mississippi State University where he
received a B.S. in Chemical Engineering. He also holds a Master of Business Administration degree from the University of Chicago.
Mr. Dillon’s public and private company board and executive experience and operational and strategic expertise qualifies
him to serve on the Company’s board.
Daniel J. Englander
,
age 49, has served as a director since February 2007. Mr. Englander is the founder and currently the Managing Partner of Ursula
Capital Partners, an investment management partnership founded in 2004. From January 2005 to June 2006, Mr. Englander was a partner
of Prescott Securities, an investment fund, and from October 1994 to January 2005, he was employed by Allen & Company, an investment
merchant bank, most recently as Managing Director. Mr. Englander is also currently on the board of directors of Copart, Inc. (NASDAQ:
CPRT). Mr. Englander’s qualifications to serve on the board include his financial and investment experience. He also brings
operational and strategic expertise, as well as business development expertise, to the board.
William H. Henderson
,
age 55, has served as a director since September 2002. Mr. Henderson also served as our Chief Executive Officer from October 2007
to December 2017, and as our President from May 2002 to March 2016. From 1999 until May 2002, Mr. Henderson served as Chief Operating
Officer of our wholly owned operating subsidiary. From 1992 until 1998, Mr. Henderson served as General Manager of our wholly owned
operating subsidiary. From 1987 until 1992, Mr. Henderson primarily held positions of District Manager and Regional Manager of
our wholly owned operating subsidiary. Mr. Henderson’s qualifications to serve on the board include his more than 30 years
of experience with our company and his in-depth knowledge of our company and its operations. In addition, Mr. Henderson provides
significant industry experience and expertise to the board.
Jim
von Gremp
, age 68, has served as a director since December 2015 and Chairman of the Board since August 2016. Mr. von Gremp
is a real estate investor, communication consultant, and former Wal-Mart executive. While with Wal-Mart he served in various areas
including accounting, auditing, treasury, employee benefits, training/development, and public/corporate affairs. He was a member
of the Board of Trustees of the University of Arkansas System from March 2005 to March 2016, serving as Chairman in 2014 and has
been a Board Member of Arvest Bank-Benton County since 2005.
He served as a member of the Arkansas Department of Higher
Education Coordinating Board.
Mr. von Gremp was Chairman of the Arkansas Public Service Commission
from 1999 to 2000, and served as Executive Director of Governmental Operations for the State of Arkansas, Governor's Office under
Governor Mike Huckabee from 1996 to 1997, and represented Arkansas District 2 (Benton County) from 1993 to 1996 as a State Representative.
He is a Certified Public Accountant-Retired. Mr. von Gremp’s qualifications to serve on the board include his financial and
investment experience.
Joshua
G. Welch
, age 53, has served as a director since January 2018. Mr. Welch is the founder and currently the Managing Partner
of Vicuna Capital I, LP, an investment management partnership founded in 1998. From June 1990 to June 1998, Mr. Welch was a securities
analyst with the Tisch Family Interests, where he served on the board of Equimark Corp, then a publicly-traded national bank. Mr.
Welch is a graduate of Williams College and Columbia Business School and has served on numerous charitable boards. Mr. Welch’s
qualifications to serve on the board include his financial and analytical skills.
Jeffrey A. Williams
,
age 55, has served as Chief Executive Officer of the Company since January 2018, President of the Company since March 2016, and
as a director since August 2011. Before becoming Chief Executive Officer, Mr. Williams served as Chief Financial Officer of the
Company since 2005. He also served as Vice President Finance from 2005 to March 2016 and as Secretary of the Company from 2005
to May 2018. Mr. Williams is a Certified Public Accountant and prior to joining the Company, his experience included approximately
seven years in public accounting with Arthur Andersen & Co. and Coopers and Lybrand LLC in Tulsa, Oklahoma and Dallas, Texas.
His experience also includes approximately five years as Chief Financial Officer and Vice President of Operations of Wynco, LLC,
a nationwide distributor of animal health products. Mr. Williams' qualifications to serve on the Board include his financial and
operational experience.
The board of directors recommends a vote
"FOR" each of the six nominees to our board of directors.
PROPOSAL NO. 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank
Act and Section 14A of the Exchange Act, the Company’s stockholders are entitled to vote to approve, on an advisory (non-binding)
basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement in accordance with
SEC rules.
At the 2017 Annual
Meeting, the stockholders approved (94.7% of votes cast), on an advisory basis, the compensation of the Company’s named executive
officers. The Compensation Committee believes this level of stockholder support reflects a strong endorsement of the Company’s
compensation policies and decisions. The Compensation Committee has considered the results of this advisory vote on executive compensation
in determining the Company’s compensation policies and decisions for 2018, and has determined that these policies and decisions
are appropriate and in the best interests of the Company and its stockholders at this time. At the 2017 Annual Meeting, the stockholders
also recommended, in an advisory vote, to hold future say-on-pay votes on an annual basis. As such, the board of directors has
determined to hold this advisory vote on the compensation of named executive officers each year. The next advisory vote to determine
the frequency with which stockholders will consider to approve an advisory vote on the Company’s compensation of its named
executive officers will be in 2023.
Accordingly, the board
of directors is seeking the advisory vote of stockholders on the compensation of the Company’s Chief Executive Officer and
Chief Financial Officer (collectively, our “named executive officers”) as disclosed in this proxy statement. This proposal,
commonly known as a “say-on-pay” proposal, gives the Company’s stockholders the opportunity to express their
views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation,
but rather the overall compensation of the named executive officers.
The Company’s
named executive officers made and effectively managed the execution of key business and strategic decisions that helped the Company
continue to navigate difficult competitive conditions. In fiscal year 2018, the Company increased revenues by 4.2% to $612 million,
and added only $34 million in debt while growing the receivable base by $34.6 million and repurchasing $42 million of the Company’s
common stock. These accomplishments were especially significant given continuing competitive pressures resulting from sustained
increases in the level of financing available to the sub-prime auto industry and corresponding significant credit loss increases
for the industry.
As discussed in our
“Compensation Discussion and Analysis” below, we have designed our executive compensation program to attract and retain
the highest quality executive officers, directly link pay to performance, and build value for our stockholders. The program provides
total compensation opportunities at levels that are competitive in our industry, ties a significant portion of each executive’s
compensation to his or her individual performance and contribution to achieving our business objectives, and closely aligns the
interests of our executives with the interests of our stockholders. Accordingly, the board of directors encourages you to review
carefully the Compensation Discussion and Analysis and the tabular and other disclosures on compensation under Executive Compensation,
and asks you to cast a vote to approve the compensation of our named executive officers through the following resolution:
“RESOLVED, that
the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed
in the Company’s proxy statement for the 2018 Annual Meeting pursuant to the compensation disclosure rules of the SEC, including
the Compensation Discussion and Analysis, the compensation tables and related narrative discussion.”
The say-on-pay vote
is advisory and therefore not binding on the Company, the compensation committee or the board of directors. The board and compensation
committee value the opinions of our stockholders. To the extent there is any significant vote against the named executive officer
compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and the compensation committee
will evaluate whether any actions are necessary to address those concerns.
The board of directors recommends a vote
"FOR" the approval of the compensation of the Company’s named executive officers, as disclosed in this proxy statement.
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee
has appointed Grant Thornton LLP as our Company’s independent registered public accounting firm to audit the consolidated
financial statements of our Company for the fiscal year ending April 30, 2019. Grant Thornton LLP served as our independent registered
public accounting firm for the fiscal year ended April 30, 2018.
A representative of
Grant Thornton LLP is expected to be present at the annual meeting of stockholders, will have an opportunity to make a statement
and will be available to respond to appropriate questions that stockholders may have.
Principal Accountant Fees and Services
The aggregate fees
billed by Grant Thornton LLP through July 17, 2018 for professional services rendered for the fiscal years ended April 30, 2018
and 2017, respectively, were as follows:
|
|
2018
|
|
2017
|
Audit fees
|
$
|
307,444
|
$
|
302,207
|
Audit related fees
|
|
-
|
|
-
|
Tax fees
|
|
-
|
|
-
|
All other fees
|
|
-
|
|
-
|
Total fees
|
$
|
307,444
|
$
|
302,207
|
The audit fees for
the years ended April 30, 2018 and 2017 were for the audits of our annual financial statements included in our annual report on
Form 10-K, the audit of the effectiveness of our internal control over financial reporting, the review of the financial statements
included in our quarterly reports on Form 10-Q and consents for and review of other documents filed with the SEC.
Policy on Audit Committee Pre-Approval of Services of Independent
Auditors
Our audit committee
has established policies and procedures regarding pre-approval of all services provided by our independent auditor. Our audit committee
will annually review and pre-approve the services that may be provided by our independent auditor without obtaining specific pre-approval
from the audit committee. Unless a type of service has received general pre-approval, it requires specific pre-approval by our
audit committee if it is to be provided by our independent auditor. During the fiscal year ended April 30, 2018, our audit committee
pre-approved all audit and permitted non-audit services that were provided to us by our independent auditors.
Ratification of the Independent Registered Public Accounting
Firm
Although stockholder
ratification is not required by our bylaws or otherwise, the appointment of Grant Thornton LLP as our Company’s independent
registered public accounting firm to audit the consolidated financial statements for the fiscal year ending April 30, 2019 is being
submitted to our stockholders for ratification because we believe it is a matter of good corporate governance. In the event our
stockholders do not ratify the appointment of Grant Thornton LLP as the independent registered public accounting firm for the fiscal
year ending April 30, 2019, the adverse vote will be considered as a recommendation to the audit committee to select other auditors
for the following fiscal year. However, due to the difficulty in making any substitution of auditors after the beginning of the
fiscal year, it is contemplated that the appointment of Grant Thornton LLP for the fiscal year ending April 30, 2019 will be permitted
to stand unless the audit committee finds other good reason for making a change. The audit committee may terminate Grant Thornton
LLP’s engagement as our company’s independent registered public accounting firm without the approval of our stockholders
if it deems termination appropriate and in our best interest and the best interests of our stockholders.
The board of directors
recommends a vote "FOR" the ratification of Grant Thornton LLP as our independent registered public accounting firm for
the fiscal year ending April 30, 2019.
PROPOSAL NO. 4
APPROVAL OF AMENDMENT
TO AMENDED AND RESTATED STOCK INCENTIVE PLAN
On May 23, 2018, the
board of directors adopted, subject to stockholder approval, an amendment to the Amended and Restated Stock Incentive Plan, referred
to in this proxy statement as the Restated Incentive Plan, to increase to 450,000 the number of shares of our common stock that
may be issued under the Incentive Plan. The amendment to the Restated Incentive Plan will become effective upon stockholder approval.
The following summary
of certain features of the Restated Incentive Plan, as proposed to be amended by the stockholders, is qualified in its entirety
by reference to the full text of the Restated Incentive Plan, which is attached to this proxy statement as Appendix A and incorporated
herein by reference.
The affirmative vote
of the holders of a majority of the shares entitled to vote on, and that vote for or against or expressly abstain with respect
to, this proposal at the annual meeting, if a quorum is present, shall be the act of the stockholders.
Nature and Purpose of the Restated Incentive
Plan
The Restated Incentive
Plan permits us to grant restricted shares of common stock subject to time-based and/or performance-based vesting conditions as
part of the equity alternatives available to our compensation committee when designing compensation incentives. The purpose of
the Restated Incentive Plan is to promote our success and enhance our value by linking the personal interests of participants to
those of our stockholders, and by providing participants with an incentive for outstanding performance and service. The Restated
Incentive Plan is further intended to provide flexibility to us in our ability to motivate, attract and retain the services of
participants upon whose judgment, interest and special effort the successful conduct of our operations is largely dependent.
Authorized Shares
The America’s
Car-Mart, Inc. Stock Incentive Plan (formerly the 2005 Restricted Stock Plan), referred to in this proxy statement as the 2005
Incentive Plan, originally provided for the grant of 100,000 shares of common stock. In fiscal year 2008, our stockholders approved
an increase in the number of shares that may be issued under the 2005 Incentive Plan by 50,000 to a total of 150,000 shares. In
August 2009, our stockholders approved an additional increase in the number of shares that may be issued under the plan from 150,000
shares to 350,000 shares. In August 2015, our stockholders approved the Restated Incentive Plan, which amended and restated the
2005 Incentive Plan. The Restated Incentive Plan extended the plan for a new ten-year term, included provisions designed to further
the Company’s eligibility to deduct for federal income tax purposes certain performance-based equity awards, and made certain
other changes to the 2005 Incentive Plan but did not increase the number of shares available for issuance. A total of 350,000 shares
are authorized for issuance under the Restated Incentive Plan, which includes all shares available for delivery under the 2005
Incentive Plan. As of July 13, 2018, 6,027 shares of common stock remained available for grant under the Restated Incentive Plan.
Pursuant to section 9.1 of the Restated Incentive Plan, our board of directors recommends that the number of shares that may be
issued under the Restated Incentive Plan be increased from 350,000 to 450,000. The proposed increase in the number of authorized
shares would ensure uninterrupted continuation of the Restated Incentive Plan.
If an award granted
under the Restated Incentive Plan is canceled, terminates, expires, lapses or is forfeited for any reason without delivery of any
common stock, then the number of shares of common stock counted against the aggregate number of shares available under the Restated
Incentive Plan with respect to the award will, to the extent of any such cancellation, termination, expiration, lapse or forfeiture,
again be available for making future awards.
Certain certificates
for shares of common stock delivered under the Restated Incentive Plan are subject to restrictions and legends as our compensation
committee deems advisable and/or required by applicable law or Federal or state securities laws. The number and kind of shares
issued under the Restated Incentive Plan or authorized for issuance will be appropriately adjusted by our compensation committee
to reflect certain spinoffs and other changes in our capital structure that might result in unintended increases or decreases in
the value of a participant’s award.
Administration
The Restated Incentive
Plan is administered by our compensation committee, and will continue to be so as long as the membership on such committee meets
the requirements necessary for awards under the Restated Incentive Plan to satisfy exemption from the short-swing profit provisions
of Rule 16b-3 under the Exchange Act and, to the extent available for existing awards, the performance-based exemption to the limitations
of Section 162(m) of the Internal Revenue Code of 1986, as amended, referred to in this proxy statement as the Code. See “Performance-Based
Criteria” and “Federal Income Tax Consequences – Limitation on Deduction of Certain Compensation” below
for information regarding Section 162(m) of the Code. We believe that our compensation committee currently satisfies these requirements.
If at any future time the compensation committee fails to meet these requirements, our board of directors may appoint a new committee.
Subject to the provisions of the Restated Incentive Plan, our compensation committee has plenary authority in its discretion to
select the individuals to whom shares are awarded, the number of shares to be included in each award, the time or times at which
shares are awarded and the terms and conditions of such awards in a manner consistent with the plan. Our compensation committee
has the discretionary authority to interpret the Restated Incentive Plan and to prescribe, amend and rescind rules and regulations
relating to it.
Term
The effective date
of the Restated Incentive Plan is June 10, 2015, and it will expire on June 10, 2025.
Eligibility
An award of shares
may be made only to those persons selected by our compensation committee from among our employees, officers and directors or the
employees, officers and directors of one of our subsidiaries. As of April 30, 2018, approximately 1,500 persons were eligible to
receive shares pursuant to the Restated Incentive Plan.
In making awards of
restricted shares to participants, our compensation committee takes into account the duties of the respective participants, their
present and potential contribution to our success and the success of our subsidiaries, and such other factors as our compensation
committee deems relevant in connection with accomplishing the purposes of the Restated Incentive Plan.
New Plan Benefits
Although all of our
executive and non-executive officers, employees and directors will be eligible for awards under the Restated Incentive Plan if
selected by our compensation committee in its discretion, it is not possible, at this time, to predict the benefits and amounts
that will actually be received by any individual participants or groups of participants in the future. The Restated Incentive Plan
does not mandate set benefits or amounts, and no awards have been granted under the Restated Incentive Plan that are contingent
upon approval of this Proposal Four.
Limitation of Awards
Awards granted to any
plan participant and designed to meet the performance-based compensation exception under Section 162(m) of the Code, to the extent
such exception is available in any one fiscal year may not exceed 100,000 shares of common stock authorized for issuance under
the Restated Incentive Plan. Awards granted in any one fiscal year to any plan participant who is a non-employee director of the
Company or any of its subsidiaries may not exceed 10,000 shares of common stock authorized for issuance under the Restated Incentive
Plan.
Restricted and Performance Shares
Our compensation committee
may impose such conditions and/or restrictions on any award made pursuant to the Restated Incentive Plan as it may deem advisable,
including, without limitation, payment of a purchase price for each share, restrictions based upon the achievement of specific
performance goals, time-based restrictions, and/or restrictions under applicable Federal or state securities laws. The conditions
and restrictions imposed on any award need not be uniform among all awards or shares issued to the same participant or to other
participants pursuant to the Restated Incentive Plan. Our compensation committee, in its sole discretion, may accelerate or otherwise
modify the period of restriction applicable to any awards of shares or substitute new awards in place of outstanding awards, provided
that the vesting period for any award may not be less than one year, except in certain limited circumstances, and provided further
that in the event that outstanding awards will be materially and adversely affected, the participant’s written consent must
be obtained.
Upon the award to a
participant of restricted shares, the participant will become a stockholder with respect to such shares and, subject to the provisions
of the Restated Incentive Plan, will have the rights of a stockholder with respect to such shares; provided, however, that a participant
may be required by the compensation committee to execute an irrevocable proxy granting us the right to vote his or her shares until
the end of any period of restriction and no dividends issued in relation to any award that is subject to performance-based vesting
conditions may be settled before the award becomes vested.
Transferability
Awards granted under
the Restated Incentive Plan are not transferable until the end of the restricted period for such award as determined by the compensation
committee in accordance with the terms of the Restated Incentive Plan.
Termination of Service
Following a participant’s
separation from service with the Company or a subsidiary, the participant will not have any right to receive shares under any award
for which the restricted period has not yet ended as of the date of the participant’s separation from service, other than
as determined by the compensation committee and provided in the award agreement.
Performance-Based Criteria
The compensation committee
may in its discretion condition the grant, vesting, and/or exercisability of any award under the Restated Incentive Plan, in whole
or in part, on the attainment of performance targets related to one or more performance measures over a performance period. The
performance targets and any other terms, conditions, and restrictions on such awards are determined by the compensation committee.
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, chief financial officer and the three next highest compensated executive officers determined
at any time during the taxable year (referred to as covered employees). Once an individual becomes a covered employee, that individual
will remain a covered employee for all future years. Prior to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”)
in December 2017, performance-based compensation meeting certain conditions was exempted from the $1 million deduction limitation.
Under the Tax Act, the performance-based exemption to the Section 162(m) limit remains available for any written binding contract
that was in effect on November 2, 2017 and is not modified in any material respect on or after such date.
For any awards existing
on November 2, 2017 that the compensation committee intended to qualify for the Section 162(m) performance-based compensation deduction
exemption, such award must be based on pre-established, objective performance goals. These goals must be established by the Board
in writing no later than 90 days after the beginning of the performance period to which the award relates (or before 25% of the
performance period has elapsed for a period shorter than one year) and while the outcome is substantially uncertain. The performance
goals must be based on an objective formula or standard and may be based on one or more criteria, including (1) earnings or earnings
per share; (2) net operating margin; (3) cash flow return on investment; (4) earnings before interest, taxes, depreciation, and/or
amortization; (5) return on stockholders’ equity achieved; (6) total stockholders’ return achieved; (7) any of the
foregoing calculated on a “non-GAAP basis”; (8) the price of a share of common stock of the Company; (9) market share;
(10) sales; (11) operating income; (12) operating expense ratios; (13) economic value added; or (14) any combination of the foregoing.
Before the participant may receive any shares pursuant to such award, the compensation committee must certify that all of the performance
goals have been met.
Amendment, Modification or Termination of the Incentive Plan
Our board of directors
may at any time alter, amend, suspend or terminate the Restated Incentive Plan in whole or in part; provided, however, that to
the extent required by applicable laws or Federal or state securities laws, any such modification or termination will be subject
to the approval of our stockholders; and provided further, however, that such amendment will not materially adversely affect any
outstanding awards unless the affected participant’s written consent is obtained.
Federal Income Tax Consequences
The following discussion
of the Federal income tax consequences of the issuance, vesting, payment, sale and forfeiture of awards under the Restated Incentive
Plan is based on an analysis of the Code, existing laws, judicial decisions and administrative rulings and regulations, all of
which are subject to change. In addition to being subject to the Federal income tax consequences described below, a participant
may also be subject to state and local tax consequences in the jurisdiction in which he or she works and/or resides.
In general, no income
will be recognized by a participant at the time an award of restricted stock is granted to him or her. Ordinary income will be
recognized by a participant at the time any restrictions that apply to any restricted share terminate and the participant is no
longer subject to a substantial risk of forfeiting such restricted share to us. The amount of such ordinary income with respect
to the award will normally equal the excess, if any, of the fair market value of the underlying shares of the common stock on the
date the restricted share vests, over the price paid by the participant for the shares, if any. This ordinary income will also
constitute wages subject to withholding by us. Any subsequent realized gain or loss on shares will be a capital gain or loss with
the participant’s holding period measured from the date of vesting and with the participant’s basis in each share being
equal to the price paid by the participant for such share, if any, plus the amount of ordinary income, if any, recognized with
respect to such share upon vesting.
Notwithstanding the
foregoing, within 30 days after a restricted share is granted to a participant under the Restated Incentive Plan, he or she may
elect under Section 83(b) of the Code, referred to in this proxy statement as a Section 83(b) election, to include in income as
of the date of such grant the excess, if any, of the fair market value of a share of the common stock on the date of grant, over
the price paid by the participant for such restricted share, if any. Such income will be ordinary income that will also constitute
wages subject to withholding by us. If a participant makes a Section 83(b) election with respect to restricted shares and such
restricted shares subsequently vest pursuant to the terms of the award, then such vesting will not result in a taxable event to
the participant. If a participant makes a Section 83(b) election with respect to any restricted share, and subsequently is required
under the Restated Incentive Plan to forfeit such restricted share or to sell the restricted share to us for the price paid by
the participant, if any, the participant will not be entitled to a deduction with respect thereto and will not have a capital loss
as a result thereof. Any gain or loss subsequently realized on a restricted share with respect to which a Section 83(b) election
was made will be a capital gain or loss with the participant’s holding period measured from the date of grant and with the
participant’s basis in each share being equal to the price paid by the participant for such share, if any, plus the amount
of ordinary income, if any, recognized with respect to such share at the time of the Section 83(b) election.
We are entitled to
a deduction for Federal income tax purposes for our taxable year in which ends the participant’s taxable year in which the
participant is required to recognize the income from the award. Such deduction will ordinarily be in an amount equal to the amount
included in income by the participant, although it is subject to certain specified limitations under Section 162(m) of the Code.
Limitation on Deduction
of Certain Compensation.
A publicly held corporation may not deduct compensation over $1.0 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, which includes
the corporation’s chief executive officer, chief financial officer and the three next highest compensated executive officers.
Awards granted before November 2, 2017 which constitute “qualified performance-based compensation” under the Code and
are not modified in any material respect on or after such date may be exempt from this $1.0 million deduction limitation. The compensation
committee considers many factors when designing its compensation arrangements in addition to the deductibility of the compensation,
and maintains the flexibility to grant awards pursuant to the Restated Incentive Plan that are non-deductible if they believe it
is in the best interest of our Company and our shareholders.
Section 409A
.
Awards granted pursuant to the Restated Incentive Plan are generally not intended to constitute “deferred compensation”
subject to Section 409A of the Code. If an award does constitute “deferred compensation,” it is intended to comply
with Section 409A of the Code. A violation of Section 409A of the Code may subject a participant to immediate taxation of an award
plus a 20 percent excise tax and interest.
Change In Control.
Any acceleration of the vesting of restricted stock under the Restated Incentive Plan in the event of a change in control
in the Company may cause part or all of the consideration involved to be treated as an "excess parachute payment" under
the Code, which may subject the participant to a 20% excise tax and preclude deduction by the Company.
Tax Advice
.
The preceding discussion is based on U.S. tax laws and regulations presently in effect, which are subject to change, and the discussion
does not purport to be a complete description of the Federal income tax aspects of the Restated Incentive Plan. A participant may
also be subject to state and local taxes, or taxes in other jurisdictions, in connection with the grant of awards under the Restated
Incentive Plan. The Company suggests that participants consult with their individual tax advisors to determine the applicability
of the tax rules to the awards granted to them in their personal circumstances.
The board of directors
recommends a vote "FOR" the approval of the amendment to the Company’s Amended and Restated Stock Incentive Plan,
increasing the number of shares authorized for issuance under the plan by 100,000.
PROPOSAL NO. 5
APPROVAL OF AMENDMENT
TO AMENDED AND RESTATED STOCK OPTION PLAN
On May 23, 2018, the
board of directors adopted, subject to stockholder approval, an amendment to the Amended and Restated Stock Option Plan, referred
to in this proxy statement as the Restated Option Plan, to increase to 2,000,000 the number of shares of our common stock that
may be issued under the Option Plan. The amendment to the Restated Option Plan will become effective upon stockholder approval.
The following summary
of certain features of the Restated Option Plan, as proposed to be amended by the stockholders, is qualified in its entirety by
reference to the full text of the Restated Option Plan, which is attached to this proxy statement as Appendix B and incorporated
herein by reference.
The affirmative vote
of the holders of a majority of the shares entitled to vote on, and that vote for or against or expressly abstain with respect
to, this proposal at the annual meeting, if a quorum is present, shall be the act of the stockholders.
Nature and Purpose of the Restated Option
Plan
The Restated Option
Plan permits us to grant incentive options to selected employees and non-qualified options to selected employees, directors and
independent contractors. The purpose of the Restated Option Plan is to encourage and enable selected employees, directors, and
independent contractors to acquire or increase their holdings of our common stock in order to promote a closer identification of
their interests with those of the company and our stockholders, thereby further stimulating their efforts to enhance the efficiency,
soundness, profitability, growth and stockholder value of the company.
Shares of Stock Subject to the Restated
Option Plan
The America’s
Car-Mart, Inc. 2007 Stock Option Plan, referred to in this proxy statement as the 2007 Option Plan, originally set aside 1,000,000
shares of our common stock for option grants to employees, directors and certain independent contractors, consultants and advisors.
In October 2010, our stockholders approved an amendment to the 2007 Option Plan to increase the number of shares available under
the 2007 Option Plan by 500,000 shares to 1,500,000 shares. In August 2015, our stockholders approved the Restated Option Plan,
which amended and restated the 2007 Option Plan. The Restated Option Plan extended the plan for a new ten-year term, increased
the number of shares available for stock option grants by 300,000 shares to 1,800,000 shares, and made certain other changes to
the 2007 Option Plan. As of July 13, 2018, 98,500 options to purchase shares of common stock remained available for grant under
the Restated Option Plan. Pursuant to Section 12 of the Restated Option Plan, our board of directors recommends that the number
of shares that may be issued upon the exercise of options issued under the Restated Option Plan be increased from 1,800,000 to
2,000,000.
If any shares covered
by a stock option are not purchased or are forfeited, or if an award is settled in cash or otherwise terminates without delivery
of any common stock, then the number of shares of common stock counted against the aggregate number of shares available under the
Restated Option Plan with respect to the award will, to the extent of any such forfeiture or termination, again be available for
making awards. If, however, the option price, a withholding obligation or any other payment is satisfied by tendering shares or
by withholding shares, or shares are purchased by the Company on the open market with the proceeds from a stock option exercise,
those shares will not again be available for issuance under the Restated Option Plan.
If there is any change
in the shares of our common stock because of a merger, consolidation or reorganization, or if the board of directors declares a
stock dividend or stock split distributable in shares of common stock, or if there is a change in our capital stock structure affecting
our common stock, the number of shares of common stock reserved for issuance under the Restated Option Plan will be correspondingly
adjusted to prevent dilution or enlargement of options granted under the Restated Option Plan.
Option Provisions
Options for shares
of common stock granted under the Restated Option Plan are issued at a price not less than the fair market value of the stock on
the date of grant (or, in the case of an owner of more than 10% of the total combined voting power of all classes of our stock
receiving an incentive option, 110% of such fair market value). The closing market price of our common stock as reported on the
NASDAQ Stock Market, referred to in this proxy statement as NASDAQ, on July 13, 2018 was $62.70. The term of an option granted
under the Restated Option Plan is determined by the compensation committee. The term of incentive options may not be more than
ten years (five years for a 10% owner). Options are subject to vesting restrictions as our compensation committee deems advisable
and/or as required by applicable law or Federal or state securities laws. Unless otherwise provided in an award agreement, the
exercise price of options granted under the Restated Option Plan may be paid (1) by cash, (2) by delivery of written notice of
exercise and irrevocable instructions to a broker to promptly deliver the amount of sale or loan proceeds to pay the exercise price,
(3) at the sole discretion of our compensation committee, by delivery of other shares of common stock of the Company that have
been held by the participant for more than six months (or such longer or shorter period of time required to avoid a charge to earnings
for financial accounting purposes) or by a “net exercise” arrangement in which the number of shares issued upon exercise
of the option is reduced by a number of shares with a fair market value that does not exceed the aggregate option price, or (4)
by a combination of the foregoing methods.
Administration
The Restated Option
Plan is administered by our compensation committee, and will continue to be so as long as the membership on such committee meets
the requirements necessary for awards under the Restated Option Plan to satisfy exemption from the short-swing profit provisions
under Rule 16b-3 of the Exchange Act and, to the extent available for existing awards, the performance-based exemption to the limitations
of Section 162(m) of the Code. See “Federal Income Tax Consequences – Limitation on Deduction of Certain Compensation”
below for a discussion of Section 162(m) of the Code. We believe that our compensation committee currently satisfies these requirements.
If at any future time the compensation committee fails to meet these requirements, our board of directors will serve in its place.
Subject to the provisions of the Restated Option Plan, our compensation committee has plenary authority in its discretion to select
the individuals to whom options are awarded, the number of options to be included in each award, the time or times at which options
are awarded and the terms, conditions, restrictions and limitations of awards, including vesting restrictions. Our compensation
committee has the discretionary authority to interpret the Restated Option Plan and to establish, amend and rescind rules and regulations
relating to it.
Term
The effective date
of the Restated Option Plan is June 10, 2015 and it will expire on June 10, 2025.
Eligibility
An award of options
may be made only to those persons selected by our compensation committee from among our employees, directors and independent contractors
and the employees, directors and independent contractors of any of our parents, predecessors and subsidiaries. As of April 30,
2018, approximately 1,500 persons were eligible to receive options pursuant to the Restated Option Plan. In addition, an incentive
option may only be granted to our employees or employees of one of our parents, predecessors or subsidiaries who do not own, immediately
before the option grant, stock representing more than 10% of the total combined voting power of all classes of our stock; provided,
however, that a 10% owner-employee may be granted an incentive option if the option price is at least 110% of the fair market value
of the common stock and the option period does not exceed five years.
In making awards of
options to participants, our compensation committee takes into account the duties of the respective participants, their present
and potential contribution to our success and the success of our parents, predecessors and subsidiaries, and such other factors
as our compensation committee deems relevant in connection with accomplishing the purposes of the Restated Option Plan.
Limitation of Awards
Stock options granted
to any plan participant in any one fiscal year may not exceed 250,000 shares of common stock authorized for issuance under the
Restated Option Plan. Stock options granted in any one fiscal year to any plan participant who is a non-employee director of the
Company or any of its parents, predecessors and subsidiaries may not exceed 25,000 shares of common stock authorized for issuance
under the Restated Option Plan.
Repricing
The Restated Option
Plan prohibits the repricing of stock options awarded under the Restated Option Plan, unless such action is approved by the Company’s
stockholders if required by the applicable rules of the NASDAQ Stock Market, referred to in this proxy statement as NASDAQ.
Transferability
Unless otherwise permitted
by the compensation committee or provided for in a written agreement evidencing an award, stock options granted under the Restated
Option Plan are not transferable other than by will or by the laws of intestate succession. A plan participant may designate a
beneficiary to exercise the options in the event of the participant’s death.
Termination of Service
An option may not be
exercised after the termination date of such option as set forth in the stock option agreement. In the event a participant in the
Restated Option Plan terminates continuous service with the Company, a stock option may not be exercised except to the extent provided
in the stock option agreement. In the event of a participant’s death, disability or termination without cause, unless an
option agreement provides otherwise, the compensation committee may generally accelerate the exercisability or vesting of an option
and the option may be exercised for a certain time period following the participant’s termination of service. The option
will terminate to the extent not exercised on the last day of the period specified in the option agreement or the plan, or the
last day of the original term of the option, whichever comes first.
Change in Control
In the event of a change
in control (as defined in the Option Plan), the Company or the surviving entity or successor to the Company may elect to cancel
the outstanding stock options. If such stock options are cancelled pursuant to the previous sentence, then each unvested stock
option will vest automatically immediately before the stock options are cancelled, and each participant holding outstanding options
will be entitled to receive a cash payment or distribution equal to the excess of the fair market value (as of the date of the
change in control) of each share of common stock exercisable under such options over the exercise price for such share, multiplied
by the number of shares covered by the stock options. However, if the exercise price exceeds the fair market value of the common
stock as of the date of the change in control, such stock option will be cancelled and forfeited and the participant will not receive
any payment or distribution for such option. If, in connection with a change in control (as defined in the Option Plan), a plan
participant’s employment is terminated by the Company or the surviving entity or by such participant voluntarily with good
reason (as defined in the Option Plan) within the period beginning six months before and ending two years after the change in control,
all stock options held by the affected participant will become fully vested and immediately exercisable on the later of the date
of the change in control or the date of termination of the participant’s employment in connection with a change in control.
New Plan Benefits
Although all of our
executive and non-executive officers, employees and directors will be eligible for awards under the Restated Option Plan if selected
by our compensation committee in its discretion, it is not possible, at this time, to predict the benefits and amounts that will
actually be received by any individual participants or groups of participants in the future. The Restated Option Plan does not
mandate set benefits or amounts, and no awards have been granted under the Restated Option Plan that are contingent upon approval
of this Proposal Five.
Existing Plan Benefits
The following table
sets forth the number of shares of our common stock subject to all stock options granted under the Restated Option Plan through
July 13, 2018 to each of our named executive officers whose compensation is set forth in the Summary Compensation Table on page
30 of this proxy statement, each person nominated for election as a director, and the other indicated persons and groups. These
share numbers do not take in to account the effect of options that have been exercised (or were cancelled or that expired unexercised).
Name and Position
|
Number of Option Shares Granted
|
Jeffrey A. Williams
President, Chief Executive Officer and Director
|
342,000
|
William H. Henderson
Former Chief Executive Officer and Director
|
450,000
|
Vickie D. Judy
Chief Financial Officer and Secretary
|
18,750
|
Ray C. Dillon
Director
|
5,000
|
Daniel J. Englander
Director
|
50,000
|
Jim von Gremp
Director
|
15,000
|
Joshua G. Welch
Director
|
5,000
|
Eddie L. Hight
Former Chief Operating Officer and Former Director
1
|
243,000
|
All current executive officers as a group (2 persons)
2
|
360,750
|
All current directors (other than executive officers) as a group (6 persons)
2
|
567,500
|
All other employees, including current officers who are not executive officers, as a group
|
494,000
|
___________________
1
Mr. Hight retired from Chief Operating Officer in November 2013 and retired from Director
in November 2017.
2
Mr. Henderson is not included as a current executive officer because he retired as Chief
Executive Officer on December 31, 2017.
Amendment and Termination of the Restated
Option Plan
Our board of directors
may at any time amend or terminate the Restated Option Plan and any award granted pursuant to the Restated Option Plan, in whole
or in part; provided, however, that to the extent required by applicable law, rule or regulation, any such amendment or termination
will be subject to the approval of our stockholders; and provided further, however, that such amendment or termination will not
adversely affect any outstanding awards unless the affected participant’s written consent is obtained.
Federal Income Tax Consequences
The following discussion
of the Federal income tax consequences of the issuance, vesting, payment, sale and forfeiture of options granted under the Restated
Option Plan is based on an analysis of the Code, existing laws, judicial decisions and administrative rulings and regulations,
all of which are subject to change. In addition to being subject to the Federal income tax consequences described below, a participant
may also be subject to state and local tax consequences in the jurisdiction in which he or she works and/or resides.
Non-Qualified Options.
The grant of a non-qualified option will not result in taxable income to the participant. Except as described below, the participant
will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares of
common stock acquired over the exercise price for those shares, and the Company will be entitled to a corresponding deduction.
Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the
basis in such shares equal to the fair market value of the shares at the time of exercise.
The exercise of a non-qualified
option through the delivery of previously acquired shares will generally be treated as a non-taxable, like-kind exchange as to
the number of shares surrendered and the identical number of shares received under the option. That number of shares will take
the same basis and, for capital gains purposes, the same holding period as the shares that are given up. The value of the shares
received upon such an exchange that are in excess of the number of shares given up will be includible as ordinary income to the
participant at the time of the exercise. The excess shares will have a new holding period for capital gain purposes and a basis
equal to the value of such shares of common stock determined at the time of exercise.
Incentive Stock
Options.
The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive
stock option will not result in taxable income to the participant provided that the participant was, without a break in service,
an employee of the Company or a subsidiary during the period beginning on the date of the grant of the option and ending on the
date three months prior to the date of exercise or ending one year prior to the date of exercise if the participant is disabled,
as that term is defined in the Code.
The excess of the fair
market value of the shares of common stock at the time of the exercise of an incentive stock option over the exercise price is
an adjustment item that may be included in the calculation of the participant’s alternative minimum taxable income for the
tax year in which the incentive stock option is exercised. For purposes of determining the participant’s alternative minimum
tax liability for the year of disposition of the shares of common stock acquired pursuant to the incentive stock option exercise
(other than a disposition that occurs in the same year in which the option is exercised), the participant will have a basis in
those shares equal to the exercise price increased by the amount that the participant’s alternative minimum taxable income
was increased due to the earlier exercise of the incentive stock option.
If the participant
does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within
one year after the date of exercise of the incentive stock option, then, upon disposition of such shares of common stock received
upon exercise of the incentive stock option, any amount realized in excess of the exercise price will be taxed to the participant
as capital gain, and the Company will not be entitled to any deduction. A capital loss will be recognized to the extent that the
amount realized on disposition is less than the exercise price.
If the foregoing holding
period requirements are not met, the participant will generally realize ordinary income, and a corresponding deduction will be
allowed to the Company, at the time of the disposition of the shares, in an amount equal to the lesser of (i) the excess of the
fair market value of the shares of common stock on the date of exercise over the exercise price, or (ii) the excess, if any, of
the amount realized upon disposition of the shares over the exercise price. If the amount realized exceeds the fair market value
of the shares on the date of exercise, then the difference between the amount realized and the fair market value of the shares
on the date of exercise will be treated as a capital gain. If the amount realized is less than the exercise price, the participant
will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized
upon the disposition of the shares.
The exercise of an
incentive stock option through the exchange of previously acquired shares of common stock will generally be treated in the same
manner as such an exchange would be treated in connection with the exercise of a non-qualified option; that is, as a non-taxable,
like-kind exchange as to the number of shares given up and the identical number of shares received under the option. That number
of shares will take the same basis (increased, if applicable, by any amount included in gross income as compensation) and, for
capital gain purposes, the same holding period as the shares that are given up. However, such holding period will not be credited
for purposes of the minimum incentive stock option holding period required for the new shares to receive incentive stock option
treatment (i.e., two years from the grant date or one year from the date of exercise). Shares received in excess of the number
of shares given up will have a new holding period and will have a basis of zero or, if any cash was paid as part of the exercise
price, the excess shares received will have a basis equal to the amount of the cash paid. In the event of a disqualifying disposition,
which is a disposition before the end of the applicable holding period, with respect to any of the shares received upon exercise
of the incentive stock option, the shares with the lowest basis are deemed to be disposed of first.
If the exercise price
of an incentive stock option is paid with shares of common stock acquired through a prior exercise of an incentive stock option,
gain will be realized on the shares given up and will be taxed as ordinary income if those shares have not been held for the minimum
incentive stock option holding period, which holding period is two years from the date of grant and one year from the date of exercise,
but the exchange will not affect the tax treatment, as described in the immediately preceding paragraph, of the shares received.
In general, an option
granted under the Restated Option Plan that is designated as an incentive stock option would be taxed as described above. However,
in some circumstances an option that is designated as an incentive stock option will be treated as a non-qualified stock option
and the holder taxed accordingly. For example, a change in the terms of an option that gives the employee additional benefits may
be treated as the grant of a new option. Unless all the criteria for treatment as an incentive stock option are met on the date
the “new option” is considered granted (such as the requirement that the option be granted only to an employee), the
option will be treated and taxed as a non-qualified stock option.
Withholding.
In
connection with the grant, exercise or disposition of stock options, we will withhold all applicable amounts as required by the
appropriate taxing authorities. There is no required federal withholding with respect to the grant, exercise or disposition of
incentive stock options, but there will be withholding following the exercise or disposition of non-qualified stock options.
Limitation on Deduction
of Certain Compensation.
A publicly held corporation may not deduct compensation over $1.0 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, which includes
the corporation’s chief executive officer, chief financial officer and the three next highest compensated executive officers.
Stock options granted before November 2, 2017 which constitute “qualified performance-based compensation” under the
Code and are not modified in any material respect on or after such date may be exempted from this $1.0 million deduction limitation.
As noted above, the compensation committee considers many factors when designing its compensation arrangements in addition to the
deductibility of the compensation, and maintains the flexibility to grant awards pursuant to the Restated Option Plan that are
non-deductible if they believe it is in the best interest of our Company and our shareholders.
Section 409A
.
Options granted pursuant to the Restated Option Plan are generally not intended to constitute “deferred compensation”
subject to Section 409A of the Code. If an award does constitute “deferred compensation,” it is intended to comply
with Section 409A of the Code. A violation of Section 409A of the Code may subject a participant to immediate taxation of an award
plus a 20 percent excise tax and interest.
Change In Control.
Any acceleration of the vesting or payment of options under the Restated Option Plan in the event of a change in control in
the Company may cause part or all of the consideration involved to be treated as an "excess parachute payment" under
the Code, which may subject the participant to a 20% excise tax and preclude deduction by the Company.
Tax Advice
.
The preceding discussion is based on U.S. tax laws and regulations presently in effect, which are subject to change, and the discussion
does not purport to be a complete description of the Federal income tax aspects of the Restated Option Plan. A participant may
also be subject to state and local taxes, or taxes in other jurisdictions, in connection with the grant of awards under the Restated
Option Plan. The Company suggests that participants consult with their individual tax advisors to determine the applicability of
the tax rules to the awards granted to them in their personal circumstances.
General.
The
Restated Option Plan is not qualified under Section 401(a) of the Code and is not subject to the provisions of the Employee Retirement
Income Security Act of 1974.
The board of directors
recommends a vote "FOR" the approval of the amendment to the Company’s Amended and Restated Stock Option Plan,
increasing the number of shares authorized for issuance under the plan by 200,000.
EQUITY COMPENSATION
PLAN INFORMATION
The following table sets forth information
regarding outstanding options and shares reserved for future issuance under the Restated Incentive Plan and the Restated Option
Plan as of April 30, 2018:
|
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
shares reflected in column (a))
|
Plan Category
|
(a)
|
(b)
|
(c)
|
Equity compensation plans
approved by the stockholders:
|
|
|
|
Restated Incentive Plan
|
|
|
8,027
|
Restated Option Plan
|
695,500
|
$33.51
|
243,500
|
Total All Plans
|
695,500
|
$33.51
|
251,527
|
Equity compensation plans
not approved by the stockholders
|
|
|
|
CORPORATE GOVERNANCE AND BOARD MATTERS
Meetings of the Board of Directors
During our last fiscal
year, our board of directors held nine meetings. Each incumbent director attended at least 75% of the aggregate number of meetings
held by the board of directors and by the committees of the board of directors on which such director served.
It is the policy of
our board of directors that all directors should attend the annual meeting of stockholders unless unavoidably prevented from doing
so by unforeseen circumstances. All seven board members that were serving as of the 2017 annual meeting of stockholders attended
the meeting.
Board Independence
Our board of directors
currently consists of seven members. Our board of directors has determined that Ray C. Dillon, Daniel J. Englander, Robert Cameron
Smith, Jim von Gremp, and Joshua G. Welch are “independent” as defined by the listing standards of NASDAQ. Our independent
directors meet separately at least twice each year.
Board Leadership Structure
Currently, Mr. Williams
serves as President and Chief Executive Officer and Mr. von Gremp serves as the Chairman of the board. The board of directors believes
that allowing Mr. Williams to focus on the management of our business and our day-to-day operations rather than also serving as
chairman of the board is in the best interest of the Company. However, the board of directors does not have a policy that prohibits
the Chief Executive Officer from serving as the chairman of the board because it desires the flexibility to determine in the future
that one person should hold both positions if such leadership structure would be in our best interests and the best interests of
our stockholders.
The Board’s Role in Risk Oversight
The audit committee
reviews and discusses with management our processes and policies with respect to risk assessment and risk management. In addition,
our risk oversight process involves the board receiving information from management on a variety of matters, including operations,
legal, regulatory, finance, reputation and strategy, as well as information regarding any material risks associated with each matter.
The full board (or the appropriate board committee, if the board committee is responsible for the oversight of the matter) receives
this information through updates from the appropriate members of management to enable it to understand and monitor the Company’s
risk management practices. When a board committee receives an update, the chairperson of the relevant board committee reports on
the discussion to the full board during the next board meeting. This enables the board and the board committees to coordinate the
risk oversight role.
Stockholder Communications with the Board of Directors
Our board of directors
has implemented a process for stockholders to send communications to our board of directors. Any stockholder desiring to communicate
with our board of directors, or with specific individual directors, may do so by writing to our Secretary at 802 Southeast Plaza
Ave., Suite 200, Bentonville, Arkansas 72712. Our Secretary has been instructed by our board of directors to promptly forward all
such communications to our board of directors or such individual directors.
Committees of the Board of Directors
Our board of directors
presently has four standing committees: audit committee, compensation and stock option committee (referred to in this proxy statement
as the compensation committee), compliance committee and nominating committee. Each of these committees is described in the following
paragraphs.
Audit Committee
Our audit committee
assists our board of directors in overseeing our accounting and financial reporting process and audits for our financial statements.
It is directly responsible for the appointment, compensation, retention and oversight of the work of our independent registered
public accounting firm. Our audit committee reviews the auditing accountant’s audit of our financial statements and its report
thereon, management’s report on our system of internal controls over financial reporting, various other accounting and auditing
matters and the independence of the auditing accountants. The committee reviews and pre-approves all audit and non-audit services
performed by our auditing accountants, or other accounting firms, other than as may be allowed by applicable law. Our audit committee
has established procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls
or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting and
auditing matters. Our audit committee meets with management to review any issues related to matters within the scope of the audit
committee’s duties. The committee operates pursuant to a written charter adopted by our board of directors, which may be
found on our website at www.car-mart.com.
Our audit committee
presently consists of Ray C. Dillon, Daniel J. Englander, Chairman, Robert Cameron Smith, and Jim von Gremp, each of whom is “independent,”
as such term is defined by the NASDAQ listing standards and Rule 10A-3 of the Exchange Act. In addition, the board has determined
that each audit committee member is able to read and understand fundamental financial statements and, other than strictly in his
capacity as a member of our board of directors or a committee of our board of directors, has not participated in preparing our
financial statements in any of the past three years. Our board of directors has determined that Daniel J. Englander is an “audit
committee financial expert,” as defined by the rules of the SEC. Our audit committee held four meetings during the last fiscal
year. See “Audit Committee Report” for additional information regarding our audit committee.
Compensation Committee
Our compensation committee
presently consists of Ray C. Dillon, Daniel J. Englander, Robert Cameron Smith, Chairman, Jim von Gremp and Joshua Welch, each
of whom the board of directors has determined to be “independent” as defined by the NASDAQ listing standards. In addition,
all compensation committee members are “outside directors” within the meaning of Section 162(m) of the Code, and also
“non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act. Our compensation committee assists
our board of directors with respect to our compensation programs and compensation of our executive officers and is authorized to
administer our equity and non-equity incentive plans. Our compensation committee operates pursuant to a written charter adopted
by our board of directors, which may be found on our website at www.car-mart.com. Our compensation committee held six meetings
during the last fiscal year. See “Executive Compensation – Compensation Discussion and Analysis – Role of Compensation
Committee” for additional information.
Compliance Committee
Our compliance committee
presently consists of Ray C. Dillon, Chairman, Daniel J. Englander, Jim von Gremp and Joshua G. Welch, each of whom the board of
directors has determined to be “independent” as defined by the NASDAQ listing standards. Our compliance committee assists
our board of directors with respect to our compliance and ethics programs, policies and procedures. Our compliance committee operates
pursuant to a written charter adopted by our board of directors, which may be found on our website at www.car-mart.com. Our compliance
committee held one meeting during the last fiscal year.
Nominating Committee
Our nominating committee
presently consists of our current independent board members, Ray C. Dillon, Daniel J. Englander, Chairman, Robert Cameron Smith,
Jim von Gremp and Joshua G. Welch. Our nominating committee operates pursuant to a written charter adopted by our board of directors,
which may be found on our website at www.car-mart.com. Nominees for election to our board of directors are considered and recommended
by our nominating committee. Our full board of directors considers the recommendations of the nominating committee and recommends
the nominees to our stockholders. Our nominating committee’s process for identifying and evaluating potential nominees includes
soliciting recommendations from our directors and officers and considering nominations from our stockholders. Absent special circumstances,
our nominating committee will continue to nominate qualified incumbent directors whom the nominating committee believes will continue
to make important contributions to our board of directors. While there are no minimum qualifications for nomination, our nominating
committee generally requires that nominees be persons of sound ethical character, be able to represent all stockholders fairly,
have no material conflicts of interest, have demonstrated professional achievement, have meaningful experience and have a general
appreciation of the major issues facing us. In addition, the board of directors believes that it, as a whole, should possess a
combination of skills, professional experience and diversity of backgrounds necessary to oversee our business. In seeking a diversity
of background, the nominating committee seeks a variety of occupational and personal backgrounds in order to obtain a range of
viewpoints and perspectives. Accordingly, the nominating committee considers the qualifications of directors and director candidates
individually and in the broader context of the board’s overall composition and our current and future needs. In evaluating
nominees, and considering incumbent directors for nomination, the nominating committee has considered all of the criteria described
above and believes that all of the six director nominees listed above are highly qualified and have the skills and experience required
for service on our board of directors. The biographies above contain specific information regarding the experiences, qualifications
and skills of each of our director nominees. Our nominating committee held two meetings during the last fiscal year.
Stockholder Nominations
Our nominating committee
will consider persons recommended by our stockholders in selecting nominees for election. Our nominating committee does not have
a formal policy with regard to the consideration of any director candidates recommended by stockholders because it believes that
it can adequately evaluate any such nominee on a case-by-case basis. However, our nominating committee would consider for possible
nomination qualified nominees recommended by stockholders. Stockholders who wish to propose a qualified nominee for consideration
should submit complete information as to the identity and qualifications of that person to our Secretary at 802 Southeast Plaza
Ave., Suite 200, Bentonville, Arkansas 72712. See “Stockholder Proposals” for information regarding the procedures
that must be followed by stockholders in order to submit stockholder proposals, including proposals to nominate director candidates.
Compensation Committee Interlocks and Insider Participation
During the fiscal year
ended April 30, 2018, Ray C. Dillon, Daniel J. Englander, Robert Cameron Smith, Jim von Gremp and Joshua G. Welch served on the
compensation committee. None of the members of our compensation committee is or has been one of our officers or employees or has
had any related party relationship that is required to be disclosed in this proxy statement. In addition, none of our executive
officers served on the board of directors or compensation committee of any entity that has one or more executive officers who serve
on our board of directors or compensation committee.
Code of Ethics
We have adopted a code
of business conduct and ethics that applies to all employees, including executive officers and directors. A copy of our code was
filed as Exhibit 14.1 to our current report on Form 8-K filed on July 22, 2016. In the event that we make any amendments to, or
grant any waiver from, a provision of the code that requires disclosure under applicable SEC or NASDAQ rules, we will disclose
such amendment or waiver and the reasons for such amendment or waiver as required.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our outstanding common stock
to file with the SEC reports of changes in ownership of our common stock held by such persons. Executive officers, directors and
greater than 10% stockholders are also required to furnish us with copies of all forms they file under Section 16(a). To our knowledge,
based solely on a review of the copies of such reports furnished to us and representations that no other reports were required,
during the fiscal year ended April 30, 2018, our executive officers, directors and greater than 10% stockholders complied on a
timely basis with all Section 16(a) filing requirements applicable to them, except as follows: Vickie D. Judy inadvertently
failed to timely file a Form 4 to report an award of restricted stock and Ray C. Dillon inadvertently failed to timely file a Form
3 to report his initial stock ownership upon his election as a director.
Director Compensation Table
The following table
provides certain information concerning compensation for each director during the fiscal year ended April 30, 2018. Mr. Henderson
and Mr. Williams, who are members of our board of directors, have been omitted from this table since their compensation is included
in the Summary Compensation Table on page 30 of this proxy statement. Mr. Williams received no compensation for serving on our
board of directors during fiscal year 2018.
Name
|
Fees Earned or
Paid in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
1, 2
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
($)
|
Total
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
Ray C. Dillon
3
|
$26,667
|
-
|
-
|
-
|
-
|
-
|
$26,667
|
Daniel J. Englander
|
$50,000
|
-
|
$67,285
|
-
|
-
|
-
|
$117,285
|
Kenny Gunderman
4
|
$13,333
|
-
|
$67,285
|
-
|
-
|
-
|
$80,618
|
Robert Cameron Smith
|
$40,000
|
-
|
$67,285
|
-
|
-
|
-
|
$107,285
|
Jim von Gremp
|
$50,000
|
-
|
$67,285
|
-
|
-
|
-
|
$117,285
|
Joshua G. Welch
5
|
$10,000
|
-
|
-
|
-
|
-
|
-
|
$10,000
|
Eddie L. Hight
6
|
$23,333
|
-
|
$67,285
|
-
|
-
|
-
|
$90,618
|
___________________
1
In accordance with SEC rules, the amount shown reflects the grant date fair value of
stock options granted during the fiscal year ended April 30, 2018 calculated pursuant to Financial Accounting Standards Board
Codification (ASC) 718, Compensation – Stock Compensation. Refer to “Financial Statements and Supplementary Data –
Notes to Consolidated Financial Statements – Note K: Stock-Based Compensation Plans” included in our Annual Report
on Form 10-K filed on June 13, 2018 for the relevant assumptions used to determine the valuation of our option awards.
2
The following are the aggregate number of option awards outstanding held by each of
the directors as of April 30, 2018: Mr. Dillon - 0; Mr. Englander – 45,000; Mr. Gunderman – 15,000; Mr. Hight –
50,000; Mr. Smith – 37,500; Mr. von Gremp – 5,000; and Mr. Welch - 0.
3
Mr. Dillon was elected to the board of directors on August 2, 2017. This compensation
relates to his services provided from August 2, 2017 through April 30, 2018.
4
Mr. Gunderman retired from the board of directors as of August 2, 2017. This compensation
relates to his services provided from May 1, 2017 through the date of his retirement from the board.
5
Mr. Welch was elected to the board of directors on January 9, 2018. This compensation
relates to his services provided from January 9, 2018 through April 30, 2018.
6
Mr. Hight retired from the board of directors as of November 21, 2017. This compensation
relates to his services provided from May 1, 2017 through the date of his retirement from the board.
Discussion of Director Compensation
Effective November
1, 2011, each non-employee director receives a $40,000 annual retainer. As of September 1, 2016, the chairman of the board receives
an additional $10,000 annual retainer. The chairman of our audit committee also receives an additional $10,000 annual retainer.
Directors who are also our employees do not receive separate compensation for their services as a director. On the first business
day of May in each year, each of our non-employee directors also receives an option under our stock option plan to purchase 5,000
shares of common stock. These options are issued at an exercise price equal to the fair market value of our common stock on the
date of grant. These options are vested upon grant and are exercisable for a period of up to ten years from the date of grant or,
in the event that a director ceases to be one of our directors for any reason, one year following the date on which such director
ceased to be a director, if earlier.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Philosophy
Our compensation philosophy
is to align the interests of our executive officers with those of our stockholders and induce our executive officers to remain
in our employ. We believe that this is best accomplished by the following:
|
·
|
paying executives a base salary commensurate with their backgrounds, industry knowledge, special
skill sets and responsibilities;
|
|
·
|
offering incentive cash bonuses conditioned on our consolidated financial results; and
|
|
·
|
making periodic grants of restricted stock and/or stock options.
|
Our overall goal is
to ensure that our executive compensation program and policies are consistent with our strategic business objectives and that we
provide incentives for the attainment of those objectives. We strive to accomplish this goal in the context of a compensation program
that includes annual base salary, annual cash incentives and stock ownership.
Role of Compensation Committee
Our compensation committee
retains broad flexibility in the administration of our executive compensation program. We believe this flexibility is critical
to retaining key executives. Our compensation committee is focused on ensuring that executive compensation is directly tied to
our economic performance.
Our compensation committee
operates under a written charter adopted by our board of directors. Our compensation committee has several duties and responsibilities,
including the following:
|
·
|
establish and review our overall executive compensation philosophy;
|
|
·
|
review and approve our goals and objectives relevant to the compensation of our Chief Executive
Officer and other executive officers, including annual performance objectives;
|
|
·
|
on an annual basis, review the compensation and performance of our officers, review and approve
corporate goals relevant to the compensation of our Chief Executive Officer and other executive officers, evaluate our Chief Executive
Officer’s performance in light of these goals and objectives, evaluate the performance of our other executive officers, and
based on such evaluation, approve the annual compensation of our Chief Executive Officer and other executive officers;
|
|
·
|
review the annual compensation discussion and analysis and produce an annual report on executive
compensation for inclusion in our annual proxy statement, in accordance with all applicable rules and regulations;
|
|
·
|
as requested by our board of directors, make recommendations to our board of directors with respect
to the approval of incentive compensation plans and equity-based incentive plans, and administer such plans;
|
|
·
|
periodically review the policies and criteria for the administration of all executive compensation
programs, the operations of the compensation programs and whether they are achieving their intended purposes;
|
|
·
|
monitor compliance by executives with the terms and conditions of our executive compensation plans
and programs;
|
|
·
|
establish and periodically review policies in the area of senior management perquisites;
|
|
·
|
review board of director compensation levels and practices periodically, and recommend to our board
of directors, from time to time, changes in such compensation levels and practices;
|
|
·
|
review and approve plans and processes for management development and succession; and
|
|
·
|
periodically review and reassess the adequacy of the compensation committee charter and recommend
any proposed changes to our board of directors for approval.
|
For additional information
on the duties and responsibilities of our compensation committee, see our compensation committee charter available on our website
at www.car-mart.com.
Compensation Process
Our compensation committee
reviews and administers our compensation program for each of our “named executive officers”. Our named executive officers
for fiscal year 2018 consisted of our Chief Executive Officer, Mr. Jeffrey A. Williams, our former Chief Executive Officer William
H. Henderson, and our Chief Financial Officer, Ms. Vickie D. Judy. Mr. Williams assumed the role of Chief Executive Officer in
connection with Mr. Henderson’s retirement on December 31, 2017, and Ms. Judy assumed the role of Chief Financial Officer
in connection with Mr. Williams’ promotion to Chief Executive Officer.
Ms. Judy, age 52, has
served as Chief Financial Officer of the Company since January 1, 2018. Before becoming Chief Financial Officer, she served as
Principal Accounting Officer of the Company since March 2016 and Vice President of Accounting since August 2015. Since joining
Car-Mart in May 2010, Ms. Judy has also served as Controller and Director of Financial Reporting. Ms. Judy is a Certified Public
Accountant and prior to joining the Company her experience included approximately five years in public accounting with Arthur Andersen
& Co. and approximately 17 years at National Home Centers, Inc., a home improvement products and building materials retailer,
most recently as Vice President of Financial Reporting. Ms. Judy will be paid an annual salary of $225,000 effective January 1,
2018.
Compensation is typically
set at multi-year increments in order to help ensure that longer-term results are the primary focus, which we believe is critically
important in our industry. Our compensation committee also periodically meets with our named executive officers, who provide insight
into how other individual executives are performing.
Consideration of
2017 Stockholder
Say
on Pay Vote
At our 2017 Annual
Meeting of Stockholders, the stockholders approved, on an advisory basis, the compensation of the named executive officers (94.7%
of votes cast). The compensation committee believes this level of stockholder support reflects a strong endorsement of our company’s
compensation policies and decisions. The compensation committee has considered the results of this advisory vote on executive compensation
in determining our compensation policies and decisions for 2018, and has determined that these policies and decisions are appropriate
and in the best interests of our company and its stockholders at this time. In addition, our board of directors has considered
the 2017 stockholder vote and management’s recommendation regarding the frequency of future stockholder advisory votes on
the compensation of our named executive officers and has adopted the stockholders’ recommendation of an annual advisory vote
on the compensation of our named executive officers until the next required vote on this matter which will be in 2023, or until
the board of directors otherwise determines that a different frequency for such advisory votes is in the best interests of our
stockholders.
Employment Agreements
We have an employment
agreement with our Chief Executive Officer, Mr. Williams. We believe that the employment agreement, which includes a change-in-control
provision, is necessary to attract and retain the executive in light of all relevant factors, which includes the officer’s
past employment experience, desired terms and conditions of employment, and the strategic importance of the officer’s position.
We believe that the change-in-control provision is necessary to maintain stability among our executive leadership and that the
terms of the provision are reasonable based on our review of similar provisions for similar companies. Our compensation committee
reviews the employment agreements at the time such agreements are entered into in order to determine current market terms for the
particular executive and agreement. See “Executive Compensation – Employment Agreements” and “Executive
Compensation – Change in Control Agreements” for a discussion of the terms of the employment agreements.
Prior to his retirement
on December 31, 2017, we had a similar employment agreement in effect with our former Chief Executive Officer, Mr. Henderson. Effective
January 1, 2018, we entered into a Retirement and Transition Agreement (“Retirement Agreement”) with Mr. Henderson,
under which he agreed to continue serving as a director and to provide consulting services to the Company for two years following
his retirement and will receive director and consulting fees and certain other benefits, including the continued vesting of his
existing stock options, and under which we paid him a special one-time retirement bonus in recognition of his long-time service
to the Company. The Retirement Agreement also extends the covenants in Mr. Henderson’s employment agreement prohibiting him
from competing against the Company or soliciting our customers or employees until one year after he is no longer providing consulting
services to the Company. See “Executive Compensation – Employment Agreements” for more information regarding
the Retirement Agreement.
We do not currently
have an employment agreement with our Chief Financial Officer, Ms. Judy.
Total Compensation and Elements of Compensation
Our principal focus
is on total compensation, a significant portion of which is based on each executive’s performance and is not guaranteed.
Although we do informally review what other companies within our industry or other companies of comparable size, growth, performance
and complexity are offering to their executives, we believe the appropriate level of compensation is determined through careful
consideration of the individual employee and our business goals. We consider a variety of factors in determining the total compensation
for our named executive officers, including their backgrounds, industry knowledge, special skill sets and responsibilities.
Our executive compensation
program primarily consists of base salary, annual short-term incentives in the form of cash awards, and long-term incentives in
the form of restricted stock and/or stock options. We also provide our named executive officers with minimal perquisites and personal
benefits. In addition, we provide our named executive officers with the ability to contribute a portion of their earnings to our
401(k) plan. Our 401(k) plan is available generally to all of our employees. In September 2014, we also adopted a nonqualified
deferred compensation plan under which our named executive officers may defer a portion or all of their salary and bonus to be
paid following the executive’s termination, death or other date specified upon the executive’s election to make such
deferrals. See “Executive Compensation – Deferred Compensation Plan” and “Executive Compensation –
Change in Control Agreements” for a discussion of the terms of the nonqualified deferred compensation plan.
Base Salary
We offer what we believe
to be competitive base salaries to our named executive officers. The base salary must be sufficient to attract talented executives
and provide a secure base of cash compensation. Due to the relatively small size of our industry and the limited number of public
competitors, we have not engaged in any formal compensation benchmarking studies; however, our base salary levels for our named
executive officers are generally set to be competitive in relation to salary levels of executive officers in other companies within
our industry or other companies of comparable size, growth, performance and complexity, while also taking into consideration the
executive officer’s position, responsibility and special expertise. Annual base salary increases, typically determined in
May of each year, are not assured, and adjustments to base salary take into account subjective factors such as the executive’s
performance during the prior year, responsibilities and experience. Mr. Williams received a 17% increase in base salary to $430,000
in connection with his appointment as Chief Executive Officer, effective January 1, 2018, and Ms. Judy received a $225,000 base
salary in connection with her appointment as Chief Financial Officer, effective January 1, 2018. We did not grant salary increases
during fiscal year 2017 or fiscal year 2016 to Mr. Henderson or Mr. Williams, who were our named executive officers during those
years. The factors considered in deciding to grant the increases in fiscal year 2018 included primarily the executives’ increased
responsibilities in connection with their respective promotions, along with the Company’s recent operating performance, the
executives’ direct contributions to the increased profitability of the Company, their increased experience and specialized
industry knowledge as well as compensation levels the compensation committee considered to be appropriate to remain generally competitive
with similarly sized public companies.
GAAP Earnings per Share
The performance criteria
for Mr. Williams’ short-term incentive compensation and a portion of his long-term incentive compensation have been based
on fully diluted GAAP earnings per share. Because we have fully instituted measures to better monitor operating results, including
economic profits (net operating profit after taxes minus the cost of capital (after tax) necessary to generate those profits),
and significant infrastructure investments have been made and have become a standard part of our operations, the compensation committee
has used fully diluted GAAP earnings per share as the measure for incentive compensation. We believe that using fully diluted GAAP
earnings per share directly aligns the goals of our named executive officers with our stockholders. See “Executive Compensation
– Employment Agreements” for a discussion of the terms of the employment agreements and the performance criteria for
Mr. Williams.
Short-Term Incentive Compensation
Our short-term incentive
plan for Mr. Williams, which is contained in his employment agreement, is intended to drive short-term operating and financial
results deemed crucial to our long term success. Our program entails granting annual cash incentive bonuses which are dependent
on our performance. The purpose of the annual cash incentive bonuses paid to Mr. Williams is to reflect the breadth of experience
and responsibility, and to make the cash component of his compensation competitive. These cash incentive bonuses are a material
portion of Mr. Williams’ overall compensation. All such cash incentive bonuses are subject to our compensation committee’s
discretion to award cash incentives greater than the target if deemed appropriate. Our compensation committee also administers
the calculation of amounts earned under the short-term incentive plans.
The performance criteria
for our short-term incentive plan for Mr. Williams is based on fully diluted GAAP earnings per share. Under his current employment
agreement, target payments range from 15% to 29% of base salary, depending on Mr. Williams’ position and our performance
as related to our fully diluted GAAP earnings per share goals. Our compensation committee set the awards for Mr. Williams based
on the duration of employment with us, job responsibilities, industry knowledge, special skills and performance. The performance
goals are set at levels that our compensation committee considers attainable, but not assured, and representative of solid operating
and financial performance within our industry. In connection with the financial results of fiscal 2018, Mr. Williams was awarded
a $79,800 bonus. See “Executive Compensation – Employment Agreements” for a discussion of the applicable performance
criteria.
Long-Term Incentive Compensation
Our compensation objective
of inducing executives to remain in our employ as well as aligning their interests with those of our stockholders leads us to make
periodic equity awards. These awards provide incentives for our named executive officers to remain with us over the long term and
gives the compensation committee additional flexibility to reward superior performance by our named executive officers. We believe
that dependence on equity for a significant portion of a named executive officer’s compensation more closely aligns such
executive’s interests with those of our stockholders, since the ultimate value of such compensation is linked directly to
our stock price.
We utilize our two
equity incentive plans for our long-term incentive compensation, the America’s Car-Mart, Inc. Amended and Restated Stock
Option Plan, referred to in this proxy statement as the Restated Option Plan, and the America’s Car-Mart, Inc. Amended and
Restated Stock Incentive Plan, referred to in this proxy statement as the Restated Incentive Plan. The allocation of long-term
incentive compensation between stock options and restricted stock is generally made with the goal of rewarding long-term service
with the issuance of restricted shares and rewarding efforts related to increasing the stock price over the long-term with the
issuance of stock options.
Under Mr. Williams’
and Mr. Henderson’s employment agreements effective May 1, 2015, each named executive was granted stock options on the date
of our 2015 annual meeting, which will vest, if at all, at the end of fiscal year 2020. A portion of these stock options are subject
to time-based vesting while the remainder are subject to performance vesting based on the attainment of certain cumulative consolidated
net income growth goals. See “Executive Compensation – Employment Agreements” for a discussion of the terms of
these long-term incentive compensation awards to our named executive officers. Under Mr. Henderson’s Retirement Agreement,
his existing stock options will continue to vest in accordance with the original terms of the awards, subject to his continuous
service as a director or consultant of the Company.
Based on the Company’s
financial results for fiscal 2018, Mr. Williams was awarded 120,000 stock options on May 8, 2018, which will vest, in their entirety
(or “cliff” vest) on May 8, 2023.
The compensation committee
does not have any current plans to make additional specific grants of stock options or restricted stock to our named executive
officers. However, the compensation committee may in the future grant additional equity awards to our named executives as part
of our strategy of providing meaningful long-term performance-based incentives for our management team in order to more closely
align management’s interest with the interests of our stockholders.
Perquisites and Personal Benefits
Our named executive
officers receive additional compensation consistent with our philosophy of hiring and retaining key personnel. Such perquisites
include executive health insurance, automobile allowances, club dues and matching contributions to our 401(k) plan. See “Executive
Compensation – Summary Compensation Table for Fiscal Years 2018, 2017 and 2016” for the aggregate incremental cost
to us of such benefits.
Equity Ownership Guidelines
We have an ownership
philosophy, rather than a formal policy, regarding equity ownership by our named executive officers. The objectives of our philosophy
are to instill an ownership mindset among our senior management and to align the interests of our named executive officers with
the interests of our stockholders. The long-term incentive compensation arrangements discussed above are intended to align the
beneficial ownership interests of our named executive officers with our compensation committee’s ownership level expectations.
Deductibility of Executive Compensation
Section 162(m) of the
Code generally limits the deductibility of compensation paid to our named executive officers to $1 million during any fiscal year.
Historically, Section 162(m) has not been a material consideration for our compensation committee due to the levels and types of
compensation paid to our named executive officers. We track the potential consequences of the deduction limitation of Section 162(m)
in relation to our compensation arrangements, and generally, we intend to structure our compensation arrangements for our executive
officers in order to avoid the deduction limitation of Section 162(m). However, the compensation committee considers many factors
when designing its compensation arrangements in addition to the deductibility of the compensation, and maintains the flexibility
to grant awards or pay compensation amounts that are non-deductible if they believe it is in the best interest of our Company and
our stockholders.
Accounting for Stock-Based Compensation
Stock-based compensation
expense is computed in accordance with accounting rules that are a part of GAAP as set forth in Financial Accounting Standards
Board’s Accounting Standards Codification Topic 718. The expense related to equity compensation has been and will continue
to be a material consideration in our overall compensation program.
Risk Considerations in our Compensation Program
The compensation committee
is responsible for reviewing and overseeing the compensation and other benefits structure applicable to our employees generally.
We do not believe that our compensation policies and practices for our employees give rise to risks that are reasonably likely
to have a material adverse effect on our company. In reaching this conclusion, we considered the following factors:
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·
|
Our compensation program is designed to provide a combination of both fixed and variable incentive
compensation.
|
|
·
|
The variable portions of compensation are designed to reward both annual performance and longer
term performance. We believe this lessens any incentive for short-term risk taking that could be detrimental to our company’s
long-term best interests.
|
|
·
|
A significant portion of our management’s compensation is based on the performance of our
company as a whole.
|
Summary Compensation Table for Fiscal Years 2018, 2017, and
2016
The following table
provides certain information concerning compensation earned for services rendered in all capacities by our named executive officers
during the fiscal years ended April 30, 2018, 2017 and 2016.
Name and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
1
($)
|
Option
Awards
1
($)
|
Non-Equity Incentive Plan Compensation
($)
|
Change in Pension Value and Nonqualified
Deferred Compensation Earnings
($)
|
All Other Compensation
($)
|
Total
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Jeffrey A. Williams,
President, Chief Executive Officer
|
2018
2017
2016
|
$401,609
$367,290
$367,290
|
-
-
-
|
-
-
-
|
-
-
$464,520
|
-
-
-
|
-
-
-
|
$36,399
2
$33,198
$30,805
|
$438,008
$400,488
$862,615
|
William H. Henderson,
Former Chief Executive Officer
3
|
2018
2017
2016
|
$328,274
4
$466,400
4
$466,400
4
|
$1,100,000
5
-
-
|
-
-
-
|
-
-
$464,520
|
-
-
-
|
-
-
-
|
$45,080
6
$34,409
$35,011
|
$1,473,354
$500,809
$965,931
|
Vickie D. Judy,
Chief Financial Officer, Secretary
|
2018
|
$165,577
|
-
|
$504,500
|
-
|
-
|
-
|
$12,155
7
|
$682,232
|
_________________
1
In accordance with SEC rules, the amounts shown reflect grant date fair value of the
awards calculated pursuant to Financial Accounting Standards Board Codification (ASC) 718, Compensation – Stock compensation.
Refer to “Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note K:
Stock-Based Compensation Plans” included in our Annual Report on Form 10-K filed on June 13, 2018 for the relevant assumptions
used to determine the valuation of our option awards. Performance based awards are reflected assuming the performance criteria
are met and awards become 100% vested.
2
For fiscal 2018, Mr. Williams’ all other compensation included - $3,600 for use
of company automobile, $3,760 for club dues, $5,603 for matching contributions to our 401(k) plan, $576 for insurance premiums,
$620 for Christmas bonus and $22,240 for premiums paid under our executive health insurance plan.
3
Mr. Henderson retired from his position of Chief Executive Officer on December 31, 2017
and began serving as a consultant to senior management of the Company effective January 1, 2018. He continues to serve on the
Company’s board of directors. Mr. Williams assumed the role of Chief Executive Officer and Ms. Judy assumed the role of
Chief Financial Officer effective January 1, 2018.
4
Mr. Henderson deferred $269,185, $284,863 and $324,686 of his salary for fiscal years
2018, 2017 and 2016, respectively, under our nonqualified deferred compensation plan.
5
Consists of a special one-time retirement bonus paid in accordance with Mr. Henderson’s
Retirement Agreement.
6
For fiscal 2018, Mr. Henderson’s all other compensation included - $7,750 for
use of company automobile, $595 for matching contributions to our 401(k) plan, $576 for insurance premiums, $1,050 for Christmas
bonus, $13,776 for premiums paid under our executive health insurance plan, and in accordance with Mr. Henderson’s retirement
he received $13,333 in fees earned for board services and $8,000 for consulting services.
7
For fiscal 2018, Ms. Judy’s all other compensation included - $1,033 for use of
company automobile, $3,315 for matching contributions to our 401(k) plan, $240 for insurance premiums, $570 for Christmas bonus,
and $6,996 for premiums paid under our executive health insurance plan.
Our named executive
officers are entitled to all benefits generally made available to our employees, including the eligibility to participate in our
401(k) plan. Our 401(k) plan is intended to be a tax-qualified defined contribution plan under Section 401(k) of the Code. In general,
all of our employees who are at least 21 years of age are eligible to participate in our 401(k) plan immediately upon hire. Our
401(k) plan includes a salary deferral arrangement pursuant to which the participants may contribute up to the maximum amount permitted
by the Code. We may make both matching and additional contributions, subject to certain Code limitations, at the discretion of
our board of directors. A separate account is maintained for each participant in our 401(k) plan. The portion of a participant’s
account attributable to his or her own contributions is 100% vested. Distributions from our 401(k) plan may be made in the form
of a lump sum cash payment or, for required minimum distribution, in installment payments.
Grants of Plan-Based Awards during Fiscal Year 2018
The following table provides certain information
concerning the grants of plan-based awards for each named executive officer during fiscal year 2018.
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
All Other Stock Awards:
Number of Shares of Stocks or Units
(#)
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
Exercise or Base
Price of
Option
Awards
($/Sh)
|
Grant
Date Fair
Value of
Stock and
Option
Awards
1
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
(l)
|
Jeffrey A. Williams
|
|
|
|
|
|
|
|
|
|
|
|
William H. Henderson
|
|
|
|
|
|
|
|
|
|
|
|
Vickie D. Judy
|
05/22/2017
|
|
|
|
|
|
|
500
|
|
|
$17,500
|
03/01/2018
|
|
|
|
|
|
|
10,000
|
|
|
$487,000
|
_________________
1
In accordance with SEC rules, the amounts shown reflect grant date fair value of the
awards calculated pursuant to Financial Accounting Standards Board Codification (ASC) 718, Compensation – Stock compensation.
The restricted shares
granted to Ms. Judy on May 22, 2017 will “cliff” vest on the fifth anniversary of the grant date, and the restricted
shares granted to Ms. Judy on March 1, 2018 will “cliff” vest on the tenth anniversary of the grant date. Ms. Judy
will be entitled to receive any dividends issued with respect to these shares during the vesting period.
Employment Agreements
In June 2015, we entered
into employment agreements with Mr. Williams and Mr. Henderson effective May 1, 2015, covering their employment and compensation
through fiscal year 2020. The following is a discussion of the compensation earned by and paid to Mr. Williams and Mr. Henderson
for fiscal year 2018 pursuant to their employment agreements, the compensation paid to Mr. Henderson in connection with his retirement
pursuant to his Retirement Agreement, as well as certain other terms of these agreements. The following narrative also discusses
potential payments to which Mr. Williams and Ms. Judy would be entitled upon termination of their employment.
Each of the employment
agreements with Mr. Williams and Mr. Henderson contains an agreement not to compete, which covers the term of employment and one
year thereafter, a covenant against the solicitation of employees and customers, which covers the term of employment and one year
thereafter, a provision against the use and disclosure of trade secrets, which covers the term of employment and an indefinite
period thereafter, and a provision against the use and disclosure of confidential information, which covers the term of employment
and two years thereafter. Under Mr. Henderson’s Retirement Agreement, these covenants remain applicable to Mr. Henderson
during the period in which he is providing consulting services to the Company and for one year thereafter.
Jeffrey A. Williams.
Pursuant to his employment agreement effective May 1, 2015, Mr. Williams agreed to serve as a senior executive officer of our operating
subsidiary for a term beginning on May 1, 2015 and ending on April 30, 2020. Mr. Williams is entitled to an annual salary of $367,290,
or such higher annual salary approved by our board of directors. Effective January 1, 2018, the board of directors approved an
increase to Mr. Williams’ annual salary to $430,000. Mr. Williams has the right to participate in any operating subsidiary
401(k) profit sharing plan, as well as the medical and life insurance programs offered by our operating subsidiary and the nonqualified
deferred compensation plan adopted by the Company in September 2014. See “Executive Compensation – Deferred Compensation
Plan” for more information regarding the nonqualified deferred compensation plan.
Under his current employment
agreement, Mr. Williams is entitled to earn an annual incentive bonus during the term beginning May 1, 2015 and ending April 30,
2020. Such incentive bonus is based upon the attainment of our fully diluted GAAP earnings per share for each fiscal year. Mr.
Williams’ targeted bonus potential is $60,000, $70,000 and $80,000 for fiscal years 2018, 2019 and 2020, respectively. If
our actual fully diluted GAAP earnings per share equals 95-99% of the projected fully diluted GAAP earnings per share, the bonus
for each fiscal year will be the targeted bonus potential amount for such year multiplied by 0.67. If our actual fully diluted
GAAP earnings per share equals 100-104% of the projected fully diluted GAAP earnings per share, the bonus for each fiscal year
will be the targeted bonus potential amount for such year multiplied by 1.0. If our actual fully diluted GAAP earnings per share
equals 105% or more of the projected fully diluted GAAP earnings per share, the bonus for each fiscal year will be the targeted
bonus potential amount for such year multiplied by 1.33. Mr. Williams earned a $79,800 bonus for fiscal year 2018 as the actual
fully diluted GAAP earnings per share of $4.90 was 113% of the projected fully diluted GAAP earnings per share of $4.33.
Under the employment
agreement, in August 2015 Mr. Williams was granted non-qualified stock options to purchase an aggregate of 30,000 shares of our
common stock pursuant to our Restated Option Plan. Mr. Williams received an option for 10,000 shares that are subject to time-based
vesting and will “cliff” vest on April 30, 2020. He also received an option for 20,000 shares that are subject to performance
vesting based on the Company’s consolidated net income growth during fiscal years 2016 through 2020. For the performance-based
option, if the Company’s cumulative consolidated net income growth, calculated on a compound basis, for the five fiscal years
ending April 30, 2020 is equal to 10% or more, the option will vest in full (20,000 shares) on April 30, 2020. If the Company’s
cumulative consolidated net income growth, calculated on a compound basis, for the five fiscal years ending April 30, 2020 is equal
to 5% or more but less than 10%, one half of the option (10,000 shares) will vest on April 30, 2020. If the Company’s cumulative
consolidated net income growth, calculated on a compound basis, for the five fiscal years ending April 30, 2020 is less than 5%,
the option will be forfeited.
In addition, pursuant
to the terms of his current employment agreement, if we terminate Mr. Williams without cause or due to disability, Mr. Williams’
base salary will continue to be payable through the term of the employment agreement. In addition, Mr. Williams will be paid, within
60 days after termination, the pro rata portion of any bonus earned through the date of termination, and all unvested restricted
stock and stock options will immediately vest in full without regard to the achievement of any applicable performance goals; provided,
however, that any shares of restricted stock that are intended to constitute performance-based compensation within the meaning
of Section 162(m) of the Code (applicable to awards granted prior to November 2, 2017) will become vested only to the extent provided
under the applicable restricted stock agreement. This provision has generally been in place in Mr. Williams’ employment agreement
since the inception of his earlier employment agreement in August 2007. Assuming Mr. Williams was terminated on April 30, 2018,
and using the closing market price of our common stock on April 30, 2018 of $53.30, the aggregate estimated payment amounts to
Mr. Williams would have been $1,015,663.
If Mr. Williams’
employment is terminated due to his death, pursuant to his employment agreement Mr. Williams’ estate will be entitled to
receive within 60 days after his death, or as soon thereafter as is administratively practicable, his base salary then in effect
through the end of the calendar month in which his death occurs and the pro rata portion of any bonus earned through the date of
his death. In addition, all unvested restricted stock and stock options will immediately vest in full without regard to the achievement
of any applicable performance goals, unless otherwise prohibited by the plans or award agreements applicable to such restricted
shares or stock options. Assuming Mr. Williams was terminated due to death on April 30, 2018, and using the closing market price
of our common stock on April 30, 2018 of $53.30, the aggregate estimated payment amounts to Mr. Williams would have been $235,463.
If Mr. Williams’
employment is terminated due to his resignation or by the Company for cause, which includes an act involving moral turpitude detrimental
to the economic interests of the Company, conviction of a felony, intentional failure to perform or gross negligence in the performance
of his duties, and any other breach of the employment agreement not cured within 30 days, the Company would have no obligation
under his current employment agreement to pay base salary or benefits beyond the last day worked. In addition, any unvested shares
of restricted stock or stock options would be forfeited unless Mr. Williams’ service on our board of directors continues
uninterrupted.
See “Executive
Compensation – Change in Control Agreements” for more information regarding payments to which Mr. Williams would be
entitled in connection with a change in control of the Company.
William H. Henderson.
Mr. Henderson’s employment agreement terminated upon his retirement as Chief Executive Officer on December 31, 2017. Prior
to his retirement, Mr. Henderson was entitled under his employment agreement to a base annual salary of $466,400, or such higher
annual salary approved by our board of directors. Mr. Henderson’s annual salary for fiscal year 2018 was $466,400. Mr. Henderson
had the right to participate in any operating subsidiary 401(k) profit sharing plan, as well as the medical and life insurance
programs offered by our operating subsidiary and the nonqualified deferred compensation plan adopted by the Company in September
2014. See “Executive Compensation – Deferred Compensation Plan” for more information regarding the nonqualified
deferred compensation plan.
Pursuant to the terms
of his employment agreement, Mr. Henderson was entitled to earn an annual incentive bonus during the term of the agreement based
upon the attainment of our fully diluted GAAP earnings per share for each fiscal year using the same performance thresholds and
payment multiples as described above with respect to Mr. Williams’ annual incentive bonus. Mr. Henderson’s targeted
bonus potential was $70,000 for fiscal year 2018. However, Mr. Henderson did not earn an annual incentive bonus for fiscal year
2018, as his retirement from Chief Executive Officer was effective December 31, 2017.
Under the employment
agreement, in August 2015 Mr. Henderson was granted non-qualified stock options to purchase an aggregate of 30,000 shares of our
common stock pursuant to our Restated Option Plan. Mr. Henderson received an option for 10,000 shares that are subject to time-based
vesting and will “cliff” vest on April 30, 2020. He also received an option for 20,000 shares that are subject to performance
vesting based on the Company’s consolidated net income growth during fiscal years 2016 through 2020. For the performance-based
option, if the Company’s cumulative consolidated net income growth, calculated on a compound basis, for the five fiscal years
ending April 30, 2020 is equal to 10% or more, the option will vest in full (20,000 shares) on April 30, 2020. If the Company’s
cumulative consolidated net income growth, calculated on a compound basis, for the five fiscal years ending April 30, 2020 is equal
to 5% or more but less than 10%, one half of the option (10,000 shares) will vest on April 30, 2020. If the Company’s cumulative
consolidated net income growth, calculated on a compound basis, for the five fiscal years ending April 30, 2020 is less than 5%,
the option will be forfeited. Pursuant to his Retirement Agreement and our Restated Option Plan, Mr. Henderson remains eligible
for continued vesting of these stock option awards.
The terms of Mr. Henderson’s
employment agreement regarding payments upon termination were substantially the same as the provisions of Mr. Williams’ employment
agreement. Effective January 1, 2018, we entered into the Retirement Agreement with Mr. Henderson. The principal terms of the Retirement
Agreement provide that Mr. Henderson will serve as a consultant and adviser to senior management for a two-year period following
his retirement date for a monthly fee of $2,000; his existing stock options will continue to vest and remain exercisable to the
extent vested in accordance with the applicable stock option agreements and the Restated Option Plan, subject to his continuous
service as a director or consultant of the Company; he will receive any vested accrued benefits under the Company’s 401(k)
and nonqualified deferred compensation plans in accordance with the terms of those plans; he will continue to receive health insurance
coverage under the Company’s employee and executive health insurance plans for two years following the retirement date as
a former executive who remains a director of the Company, subject to his continued service as a director; he will be eligible to
receive the annual $40,000 retainer payable to each of the Company’s non-employee directors as of his retirement date; and
in recognition of Mr. Henderson’s significant contributions and long-standing service to the Company, he received a special
retirement bonus of $1.1 million in a lump sum.
Vickie D. Judy.
We have not previously had and do not currently have an employment agreement with Ms. Judy. Because we do not have an employment
agreement with Ms. Judy, in the event her employment is terminated for any reason, the Company would have no obligation to pay
base salary or benefits beyond the last day worked. However, if her employment is terminated due to her death or disability, a
portion of her unvested shares of restricted stock will become fully vested as of the date of her death or termination due to disability.
Assuming Ms. Judy’s employment was terminated due to her death or disability on April 30, 2018, and using the closing market
price of our common stock on April 30, 2018 of $53.30, the aggregate estimated payment amounts to Ms. Judy would have been $781,912.
See “Executive Compensation – Change in Control Agreements” for more information regarding payments to which
Ms. Judy would be entitled in connection with a change in control of the Company.
Stock Plans
Restated Option
Plan.
In August 2007, our board of directors adopted the 2007 Option Plan, which was subsequently approved by our stockholders
at our 2007 annual meeting of stockholders. The 2007 Option Plan originally set aside 1,000,000 shares of our common stock for
option grants to employees, directors and certain independent contractors, consultants and advisors at a price not less than the
fair market value of our common stock on the date of grant or the par value per share of our common stock. Our stockholders approved
an amendment to the 2007 Option Plan on October 13, 2010 to increase the number of shares available under the 2007 Option Plan
by 500,000 shares to 1,500,000 shares. On June 10, 2015, our board of directors adopted the Restated Option Plan, which was subsequently
approved by our stockholders at our 2015 annual meeting of stockholders and which amended and restated the 2007 Option Plan. The
Restated Option Plan extended the plan for a new ten-year term, increased the number of shares available for stock option grants
by 300,000 shares to 1,800,000 shares, and made certain other changes to the 2007 Option Plan. The Restated Option Plan will expire
on June 10, 2025. At July 13, 2018, there were 98,500 shares of common stock available for grant under the Restated Option Plan.
See “Proposal No. 5 – Approval of Amendment to Amended and Restated Stock Option Plan” for information regarding
the proposal to increase the authorized shares issuable under the Restated Option Plan.
Under the Restated
Option Plan, options may be exercised in whole or in part, but in no event later than ten years from the date of grant with respect
to incentive options. Any incentive option granted to an individual who owns more than 10% of the total combined voting of all
classes of our stock or the stock of one of our subsidiaries may not be purchased at a price less than 110% of the fair market
value on the date of grant, and no such option may be exercised more than five years from the date of grant.
Stock Incentive
Plan.
In August 2005, our board of directors adopted the 2005 Incentive Plan, which was subsequently approved by our stockholders
at our 2005 annual meeting of stockholders. The 2005 Incentive Plan originally set aside 150,000 shares of our common stock for
grants to our employees, officers and directors. Our stockholders approved an amendment to the 2005 Incentive Plan on October 14,
2009 to increase the number of shares available under the 2005 Incentive Plan by 200,000 shares to 350,000 shares. On June 10,
2015, our board of directors adopted the Restated Incentive Plan, which was subsequently approved by our stockholders at our 2015
annual meeting of stockholders and which amended and restated the 2005 Incentive Plan. The Restated Incentive Plan extended the
plan for a new ten-year term, included provisions designed to further the Company’s eligibility to deduct for federal income
tax purposes certain performance-based equity awards that may be granted to our named executive officers under the Restated Incentive
Plan in accordance with Section 162(m) of the Code (applicable to awards granted prior to November 2, 2017), and made certain
other changes to the 2005 Incentive Plan. The Restated Incentive Plan did not increase the number of shares available for issuance
and will expire on June 10, 2025. See “Proposal No. 4 – Approval of Amendment to Amended and Restated Stock Incentive
Plan” for information regarding the proposal to increase the authorized shares issuable under the Restated Incentive Plan.
Shares granted under
the Restated Incentive Plan have full voting rights prior to the date of vesting, if any; however, holders of any unvested shares
must execute an irrevocable proxy granting us the right to vote such shares until the shares vest. At July 13, 2018, there were
6,027 shares of common stock available for grant under the Restated Incentive Plan.
Outstanding Equity Awards at 2018 Fiscal Year-End
The following table
provides certain information concerning the outstanding equity awards for each named executive officer as of April 30, 2018.
|
Option Awards
|
Stock Awards
|
Name
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Equity Incentive Plan Awards: Number of
Securities Underlying Unexercised Unearned Options
(#)
|
Option Exercise Price ($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That
Have Not Vested
(#)
|
Market Value of Shares or Units of Stock
That Have Not Vested
($)
|
Equity Incentive Plan Awards: Number of
Unearned Shares, Units or Other Rights That Have Not Vested
(#)
|
Equity Incentive Plan Awards: Market or
Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Jeffrey A. Williams
|
60,000
|
|
|
$24.47
|
11/27/19
|
|
|
|
|
|
10,000
1
|
|
$46.47
|
08/05/25
|
|
|
|
|
|
|
20,000
2
|
$46.47
|
08/05/25
|
|
|
|
|
William H. Henderson
|
85,000
|
|
|
$24.47
|
11/27/19
|
|
|
|
|
|
10,000
1
|
|
$46.47
|
08/05/25
|
|
|
|
|
|
|
20,000
2
|
$46.47
|
08/05/25
|
|
|
|
|
Vickie D. Judy
|
5,000
|
|
|
$45.72
|
03/27/22
|
500
3
|
$26,650
4
|
|
|
|
1,250
1
|
|
$53.02
|
05/22/25
|
10,000
5
|
$533,000
4
|
|
|
|
|
2,500
2
|
$53.02
|
05/22/25
|
|
|
|
|
|
10,000
6
|
|
$26.37
|
03/02/26
|
|
|
|
|
____________________
1
These options will “cliff” vest on April 30, 2020.
2
These options will “cliff” vest on April 30, 2020 subject to the achievement of performance conditions based on the
Company’s consolidated net income growth during fiscal years 2016 through 2020. See the narrative discussion above under
“Executive Compensation – Employment Agreements” for more information regarding the performance conditions for
these awards.
3
These restricted shares will “cliff” vest on May 22, 2022.
4
Fair value was calculated by using the closing market price of our common stock on April 30, 2018 of $53.30.
5
These restricted shares will “cliff” vest on March 1, 2028.
6
These options will “cliff” vest on March 2, 2021.
Option Exercises and Stock Vested during Fiscal Year 2018
The following table provides certain information
concerning the option exercises and stock awards vested for each named executive officer during the fiscal year ended April 30,
2018.
|
Option Awards
|
Stock Awards
|
Name
|
Number of Shares
Acquired on Exercise
(#)
|
Value Realized on
Exercise
1
($)
|
Number of Shares
Acquired on Vesting
(#)
|
Value Realized on
Vesting
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Jeffrey A. Williams
|
87,000
2
|
$2,487,900
2
|
-
|
-
|
William H. Henderson
|
149,000
3
|
$3,861,641
3
|
-
|
-
|
Vickie D. Judy
|
-
|
-
|
-
|
-
|
____________________
1
Amount is calculated
by using the closing market price of our common stock as reported on NASDAQ on the date of exercise less the exercise price.
2
Includes 57,719 shares
forfeited to pay the exercise price and tax withholding pursuant to a net settlement arrangement.
3
Includes 48,647 shares
forfeited to pay the exercise price and tax withholding pursuant to a net settlement arrangement.
Deferred Compensation Plan
On September 17, 2014,
the compensation committee of our board of directors approved the America’s Car-Mart, Inc. Nonqualified Deferred Compensation
Plan, referred to in this proxy statement as the Deferred Compensation Plan. The Deferred Compensation Plan is an unfunded, nonqualified
deferred compensation plan designed to allow a select group of management or highly compensated employees of the Company, including
our named executive officers, to save for retirement on a tax-deferred basis. The eligibility of each participant will be determined
by the compensation committee. The Deferred Compensation Plan is intended to comply with the requirements of Section 409A of the
Code.
Under the terms of
the Deferred Compensation Plan, a named executive officer may defer a portion or all of his salary and bonus for any calendar year
in which the plan is in effect, provided that the executive makes an irrevocable election for such deferral prior to the end of
the preceding calendar year or, if permitted by the compensation committee, within 30 days after the executive first becomes eligible
to participate in the plan. Compensation amounts deferred under the Deferred Compensation Plan are credited or debited with earnings
or losses based on an investment fund, known as a “measurement fund,” elected by the executive at the time of his deferral
election from among several measurement funds that the compensation committee may select from time to time, although the deferred
payments are not actually invested in the measurement fund. The executive’s account balance under the Deferred Compensation
Plan will be distributed to the executive or his beneficiary upon the earliest of the executive’s termination, death or such
other date as selected by the executive upon his deferral election. During fiscal year 2018, Mr. Henderson deferred a total of
$269,185 under the Deferred Compensation Plan. No other executives participated in the plan during fiscal year 2018.
The Deferred Compensation
Plan constitutes an unsecured promise by the Company to pay benefits in the future. Participants in the Deferred Compensation Plan
have the status of general unsecured creditors of the Company. We (or one or more of our subsidiaries) are solely responsible for
paying benefits to plan participants and their beneficiaries.
Nonqualified Deferred Compensation Table for Fiscal Year
2018
The following table provides information
about contributions, earnings, withdrawals and distributions in regard to the named executive officers under the Deferred Compensation
Plan.
Name
|
Executive
Contributions in
Last Fiscal Year
1
|
Company
Contributions in
Last Fiscal Year
|
Aggregate
Earnings (Loss) in
Last Fiscal Year
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance at Last
Fiscal Year-End
2
|
Jeffrey A. Williams
|
|
|
|
|
|
William H. Henderson
|
$269,185
|
|
$134,555
|
|
$1,337,369
|
Vickie D. Judy
|
|
|
|
|
|
____________________
1
This amount was included
in the named executive officer’s salary for fiscal year 2018 reported in the Summary Compensation Table of this proxy statement.
2
$284,863 and $324,686
of the amount reported for Mr. Henderson is included in his salary for fiscal years 2017 and 2016, respectively, reported in the
Summary Compensation Table of this proxy statement.
Change in Control Agreements
Certain of our executive
compensation plans and agreements, including our employment agreement with Mr. Williams, our Restated Option Plan and certain of
our restricted stock agreements for shares granted under our Restated Incentive Plan, contain change in control provisions (collectively,
the “Change in Control Provisions”) entitling our executives to certain benefits upon the occurrence of certain events,
involving a change in control of the Company. Payments to Mr. Williams and Ms. Judy under these Change in Control Provisions are
triggered upon an involuntary termination of the executive’s employment, or a voluntary termination of employment by the
executive for good reason (as defined in the Change in Control Provisions), in connection with a change in control of the Company
(referred to as a double trigger event). Under the Change in Control Provisions, a change in control generally means the following:
|
·
|
the
acquisition by an individual, entity or group (within the meaning of Section 409A of the Code) of ownership of our stock that,
together with stock held by such person, constitutes more than 50% of the total fair market value or total voting power of our
stock;
|
|
·
|
the
acquisition by an individual, entity or group (within the meaning of Section 409A of the Code) during the twelve-month period
ending on the date of the most recent acquisition by such person of ownership of our stock possessing 35% or more of the total
voting power of our stock;
|
|
·
|
the
replacement of a majority of the members of our board of directors during any twelve-month period by directors whose appointment
or election is not endorsed by a majority of the members of our board of directors prior to the date of the appointment or election;
or
|
|
·
|
the
acquisition by an individual, entity or group (within the meaning of Section 409A of the Code) during the twelve-month period
ending on the date of the most recent acquisition by such person of our assets that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of all of our assets immediately prior to such acquisition.
|
If a double trigger
event occurs in connection with a change in control of the Company:
|
·
|
under Mr. Williams’ employment agreement, we must pay Mr. Williams a lump sum cash payment
equal to 2.99 times his then current base salary on the 60-day anniversary of such double trigger event and all unvested restricted
stock and stock options previously granted vest in full, without regard to the achievement of any applicable performance goals,
unless otherwise prohibited by the applicable equity compensation plans and award agreements;
|
|
·
|
under the Restated Option Plan, all unvested stock options previously granted to plan participants
will vest in full, without regard to the achievement of any applicable performance goals, unless otherwise prohibited by the applicable
stock option agreements or the participant’s employment agreement; and
|
|
·
|
under certain of our restricted stock award agreements, all unvested shares of restricted stock
subject to such agreements held by the participant on the date of the double trigger event will automatically become fully vested.
|
Such payments are referred
to in this proxy statement as change in control payments.
A “double trigger
event” (as defined in the Change in Control Provisions) occurs if, within the period beginning six months before a change
in control of the Company and ending two years after such change in control, the executive’s employment is involuntarily
terminated by the Company or our operating subsidiary (or the surviving or acquiring entity, as the case may be), for any reason
other than for cause, or the executive terminates his employment for good reason. A termination for “cause” generally
consists of a breach, gross negligence or wrongdoing by the executive officer. For purposes of the Change in Control Provisions,
“good reason” generally means the executive’s resignation within 30 days after the occurrence of any of the following
events:
|
·
|
a significant reduction of the executive’s duties, authority, responsibilities, or reporting
relationships or the assignment to him of such reduced duties, authority, responsibilities, or reporting relationships, without
his written consent; provided, however, that the change in control is not, in and of itself, a material adverse change in the executive’s
duties, authority, responsibilities or reporting relationships;
|
|
·
|
a material reduction in the executive’s base salary, bonus structure or benefits, with the
result that the executive’s overall benefits package is significantly reduced; or
|
|
·
|
the relocation of the executive’s principal work location to a facility or a location more
than 50 miles from his then present principal work location, without his written consent.
|
In addition, if, within
six months prior to the change in control, we terminated Mr. Williams or Ms. Judy without cause and the termination is related
to the change in control, then, for purposes of his or her change in control payments, he or she will be treated as being employed
on the date the change in control becomes effective. In such case, Mr. Williams will receive the change in control payment in addition
to any other compensation to which he is entitled under his employment agreement as a result of his termination.
Under the terms of
Mr. Williams’ employment agreement, in the event the change in control payments and any other payments to which Mr. Williams
may be entitled in connection with the change in control of the Company equal or exceed in the aggregate three times “base
amount” (as defined by Section 280G of the Code) with respect to his compensation, which would result in excise taxes being
owed by him under Code Section 4999 and the loss of a tax deduction by the Company under Code Section 280G for the excess payment
above the base amount, the Company and Mr. Williams agree to retain an independent accounting firm to evaluate whether he would
be better off by receiving the full change in control payments and paying the excise tax or by the Company reducing the aggregate
payment amount so that it would not be subject to excise taxes under Section 4999 of the Code. Based on the accountant’s
finding that Mr. Williams would be better off receiving the full payment amount and paying the required excise taxes, no change
will be made in the change in control payments and the Company will forego its deduction for the amount of such payments above
the base amount. Based on the accountant’s finding that Mr. Williams would be better off receiving the reduced change in
control payments and not being subject to excise tax, the change in control payments will be reduced to an aggregate amount that
does not equal or exceed three times the base amount and the Company will retain its eligibility to deduct the amount actually
paid.
Assuming that (1) a
double trigger event occurred on April 30, 2018, and (2) Mr. Williams’ employment was terminated by him for good reason in
connection with the change in control, and using the closing market price of our common stock on April 30, 2018 of $53.30, the
aggregate estimated payment amount to Mr. Williams would have been $1,441,363. Assuming that (1) a double trigger event occurred
on April 30, 2018, and (2) Mr. Williams’ employment was terminated by the Company without cause in connection with the change
in control, and using the closing market price of our common stock on April 30, 2018 of $53.30, the aggregate estimated payment
amount to Mr. Williams would have been $2,301,363, which includes compensation to which he would be entitled for his termination
without cause.
Assuming that a double
trigger event occurred on April 30, 2018, and using the closing market price of our common stock on April 30, 2018 of $53.30, the
aggregate estimated payment amount to Ms. Judy would have been $892,795 regardless of whether her employment was terminated by
her for good reason or by the Company without cause in connection with the change in control.
If Mr. Williams is
a “specified employee” within the meaning of Section 409A of the Code, any benefits or payments that constitute a “deferral
of compensation” under the Section 409A of the Code that become payable as a result of his termination for reasons other
than death, and become due under the employment agreement during the first six months after termination of employment, will be
delayed and all such delayed payments will be paid to Mr. Williams in full in the seventh month after the date of termination and
all subsequent payments will be paid in accordance with their original payment schedule.
Chief Executive Officer Pay Ratio
The following information
about the relationship between the compensation of our associates and the compensation of our Chief Executive Officer is provided
in compliance with the requirements of Item 402(u) of Regulation S-K under the Exchange Act (“Item 402(u)”). In fiscal
2018, the estimated median of the annual total compensation of our associates, excluding our current and former Chief Executive
Officers, Mr. Williams and Mr. Henderson, was $43,684. Our Chief Executive Officer’s annual total compensation for fiscal
2018, calculated according to the method described below, was $466,399. The resulting estimated ratio of the annual total compensation
of the Chief Executive Officer to the median of the annual total compensation of all associates was 11 to 1.
We took the following
steps in identifying the median of the annual compensation of all our associates. We determined that as of April 30, 2018, we employed
1,690 associates, all located in the United States. This number includes all the individuals determined to be employees for federal
tax purposes during the year, whether full-time, part-time, seasonal, or temporary. We determined the median employee by conducting
a full analysis of this employee population using total pay, which included regular wages, overtime, bonuses, commissions and any
other taxable income.
For full-time associates
that were not employed for the whole year, regular wages were annualized. For part-time associates that were not employed for the
whole year, we calculated the average hours worked per week for each associate, and annualized regular wages based on a 52-week
fiscal year. No adjustments were made for seasonal or temporary associates.
Due to Mr. Williams’
appointment to Chief Executive Officer as of January 1, 2018, we estimated the Chief Executive Officer’s annual compensation
by substituting his annual salary as of April 30, 2018 ($430,000) in place of his actual regular wages for fiscal 2018. We then
calculated the Chief Executive Officer’s and the median employee’s annual total compensation in accordance with the
requirements of Item 402(c)(2)(x) of Regulation S-K.
The resulting pay ratio
was calculated in a manner consistent with Item 402(u) and we believe it constitutes a reasonable estimate. However, as contemplated
by Item 402(u), we relied on methods and assumptions that we determined to be appropriate for calculating the Company’s pay
ratio. Other public companies will use methods and assumptions that differ from the ones we chose, but are appropriate for their
circumstances. It may therefore be difficult to compare our reported pay ratio to pay ratios reported by other companies.
TRANSACTIONS WITH RELATED PERSONS
In accordance with
our audit committee charter, our audit committee is responsible for reviewing and approving, or rejecting, any transactions with
“related persons” as defined by SEC rules and any potential conflicts of interest between us and any third party. The
audit committee reviews and considers such transactions on a case-by-case basis in light of all facts and circumstances and does
not use any prescribed criteria for approving or rejecting any proposed transaction or relationship
.
For
the fiscal year ended April 30, 2018, there were no transactions with related persons required to be disclosed in this proxy statement.
AUDIT COMMITTEE REPORT
In accordance with
the written charter adopted by our board of directors, a copy of which is available on our website, the audit committee assists
the board of directors in fulfilling its responsibility for oversight of the quality and integrity of our accounting, auditing
and financial reporting practices. During the fiscal year ended April 30, 2018, the audit committee met four times and discussed
internal control, accounting, auditing and our financial reporting practices with our Chief Financial Officer and our independent
auditors and accountants, Grant Thornton LLP. In discharging its oversight responsibility as to the audit process, each member
of our audit committee has reviewed our audited financial statements as of and for the fiscal year ended April 30, 2018 and the
audit committee held one meeting with management and Grant Thornton LLP to discuss the audited financial statements prior to filing
our annual report on Form 10-K. Our audit committee also met with Grant Thornton LLP to discuss the matters required to be discussed
by Auditing Standard No. 1301,
Communications with Audit Committees
, issued by the Public Company Accounting Oversight Board,
prior to filing our annual report on Form 10-K.
In addition, the audit
committee has received from Grant Thornton LLP the written disclosures and the letter required by the applicable requirements of
the Public Company Accounting Oversight Board regarding Grant Thornton LLP’s communications with the audit committee concerning
independence and has discussed with Grant Thornton LLP its independence in connection with its audit of our financial statements
for the fiscal year ended April 30, 2018. Our audit committee has also considered whether Grant Thornton LLP’s provision
of non-audit services to us is compatible with maintaining such firm’s independence with respect to us and has determined
that the provision of certain non-audit services is consistent with and compatible with Grant Thornton LLP maintaining its independence.
See “Principal Accounting Fees and Services.” Based upon the foregoing reviews and discussions, the audit committee
recommended to our board of directors that the audited financial statements be included in our annual report on Form 10-K for the
fiscal year ended April 30, 2018.
Daniel J. Englander, Chairman
Ray C. Dillon
Robert Cameron Smith
Jim von Gremp
COMPENSATION COMMITTEE REPORT
The compensation committee
has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement with management. Based upon
such review and discussion, the compensation committee recommended to our board of directors that the Compensation Discussion and
Analysis be included in this proxy statement.
Robert Cameron Smith, Chairman
Ray C. Dillon
Daniel J. Englander
Jim von Gremp
Joshua G. Welch
ANNUAL REPORT ON FORM 10-K
Our annual report on
Form 10-K for the fiscal year ended April 30, 2018, as filed with the SEC, is available to stockholders who make a written request
for such report to our Secretary at our offices, 802 Southeast Plaza Ave., Suite 200, Bentonville, Arkansas 72712. Copies of exhibits
filed with that report or referenced therein will be furnished to stockholders of record upon request and payment of our expenses
in furnishing such documents. Our annual report on Form 10-K (including exhibits thereto) and this proxy statement are also available
by the following link on our website at www.car-mart.com under the “SEC Filings” section, which is under the “Investor
Relations” section.
STOCKHOLDER PROPOSALS
Any proposal to be
presented at the 2019 annual meeting of stockholders must be received at our principal executive offices no later than March 22,
2019, directed to the attention of the Secretary, for consideration for inclusion in our proxy statement and form of proxy relating
to that meeting. In connection with next year’s annual meeting, our bylaws provide that we must receive notice of a matter
or proposal, including any nomination of a director candidate, on or before May 21, 2019 for such proposal or nomination to be
considered or voted upon at the annual meeting. The persons appointed by our board of directors to act as the proxies for such
annual meeting (named in the form of proxy) will be allowed to use their discretionary voting authority with respect to any such
matter or proposal at the annual meeting if such matter or proposal is raised at that annual meeting. Any such proposals must comply
in all respects with applicable laws, including the rules and regulations of the SEC, and any stockholder nominations of director
candidates must set forth the information required in Article V, Section 2 of our bylaws. A copy of our bylaws may be obtained
upon written request to the Secretary at the address stated above.
OTHER MATTERS
Management does not
know of any matter to be brought before the meeting other than those referred to above. If any other matter properly comes before
the meeting, the persons designated as proxies will vote on each such matter in accordance with their best judgment.
APPENDIX A
AMERICA’S CAR-MART, INC.
AMENDED AND RESTATED STOCK INCENTIVE
PLAN
ARTICLE I.
ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment.
America’s Car-Mart, Inc., a Texas corporation (hereinafter referred to as the “
Company
”), hereby adopts
the “America’s Car-Mart, Inc. Amended and Restated Stock Incentive Plan” (the “
Plan
”), as
set forth in this document. The Plan is an amendment and restatement of America’s Car-Mart, Inc. Stock Incentive Plan, originally
effective as of October 12, 2005 and amended on December 11, 2006, August 27, 2007 and August 28, 2009. The Plan provides for the
grant of Shares and Restricted Stock to certain officers, employees and directors of the Company and its subsidiaries who are selected
by the Company’s Compensation Committee.
1.2 Purpose of Plan.
The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of Participants
to those of the Company’s shareholders, and by providing Participants with an incentive for outstanding performance and service
to the Company. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain
the services of Participants upon whose judgment, interest and special effort the successful conduct of its operation largely is
dependent.
1.3 Duration of
the Plan.
Subject to approval by the Company’s shareholders, the Plan shall become effective as of June 10, 2015 (the
“
Effective Date
”) and shall remain in effect, subject to the right of the Board to amend or terminate the Plan
at any time pursuant to Article IX, until all Shares subject to it shall have been purchased or acquired according to the Plan’s
provisions. However, in no event may Restricted Stock be granted under the Plan more than ten (10) years after the Plan’s
Effective Date.
ARTICLE II.
DEFINITIONS
Whenever used in the
Plan, the following terms shall have the meanings set forth below, unless a different meaning is plainly required by the context.
When the below meaning is intended, the initial letter of the word is capitalized:
2.1 “Award”
means the grant to a Participant of Restricted Stock and any related benefits under this Plan.
2.2 “Board”
or
“Board of Directors”
means the Board of Directors of the Company.
2.3 “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any regulations and official guidance promulgated
thereunder.
2.4 “Committee”
means the Compensation and Stock Option Committee administering the Plan pursuant to Article III or such other committee as appointed
in accordance with Article III. In the absence of such appointment, the Board shall serve as the Committee.
2.5 “Company”
means America’s Car-Mart, Inc., a Texas corporation, and any successor as provided in Article XI.
2.6 “Effective
Date”
shall have the meaning ascribed to such term in Section 1.3.
2.7 “Employer”
means the Company and each of its subsidiaries.
2.8 “Exchange
Act”
means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto, and includes
all rules and official guidance promulgated thereunder.
2.9 “Participant”
means an individual who has outstanding a grant of Restricted Stock subject to a Period of Restriction under the Plan.
2.10 “Performance
Award”
means a Restricted Stock Award granted to a Participant that is conditioned in some manner upon the achievement
of one or more of the performance measures described in Article VII of the Plan.
2.11 “Period(s)
of Restriction”
means the period(s) during which the transfer of Shares of Restricted Stock is limited by the Plan in
some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined
by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article VI.
2.12 “Restricted
Stock”
means Shares granted to a Participant under this Plan which are subject to a Period of Restriction.
2.13 “Restricted
Stock Agreement”
means an agreement entered into by the Company and the applicable Participant, setting forth the terms
and conditions applicable to the Award granted to such Participant under this Plan.
2.14 “Restricted
Stock Award”
means the grant to a Participant of Restricted Stock and any related benefits under this Plan.
2.15 “Shares”
means shares of common stock of the Company.
ARTICLE III.
ADMINISTRATION
3.1 The Committee.
The Plan shall be administered by the Committee. The Committee shall be comprised of not less than two (2) members appointed
by the Board from among its members, each of whom qualifies as a “Non-Employee Director” as such term is defined in
Rule 16b-3 under the Exchange Act and who are considered outside directors for the purposes of the performance-based exception
from the deductibility limitations of Code Section 162(m) (the “
Performance-Based Exception
”). The members of
the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board. If for any reason the Committee
does not qualify to administer the Plan, as contemplated by Rule 16b-3 under the Exchange Act or the Performance-Based Exception
from the deductibility limitations of Code Section 162(m), the Board may appoint a new Committee so as to comply with Rule 16b-3
and/or the Performance-Based Exception.
3.2 Authority of
the Committee.
Except as limited by law or by the Articles of Incorporation or By-laws of the Company, and subject to the provisions
herein, the Committee shall have full power to select individuals who shall participate in the Plan; determine the sizes and types
of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and
any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan’s
administration; and (subject to the provisions of Article IX) amend the terms and conditions of any outstanding Award to the extent
such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make
all other determinations and interpretations which may be necessary or advisable for the administration of the Plan. As permitted
by law, the Committee may delegate, from time to time, its authority with respect to the Plan, administration of the Plan and the
making of Awards, to one or more individuals, including, without limitation, the authority described above.
3.3 Action.
If a member of the Committee is a Participant, he or she shall not participate in any decision that solely affects his or her own
Awards under the Plan. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related
orders and resolutions of the Board shall be final, conclusive and binding on all persons, including any Employer and its shareholders
and employees, and Participants and their estates and beneficiaries.
3.4 Compensation,
Indemnity and Liability.
The Committee shall serve as such without bond and without compensation for services hereunder. All
expenses of the Plan and the Committee shall be paid by the Company. No member of the Committee shall be liable for any act or
omission of any other member of the Committee, nor for any act or omission on his or her own part, excepting his own gross negligence
or willful misconduct. Each Employer shall indemnify and hold harmless the Committee and each member of the Committee, if any,
against any and all expenses and liabilities, including reasonable legal fees and expenses, arising out of his or her membership
on the Committee, excepting only expenses and liabilities arising out of his or her own gross negligence or willful misconduct.
The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may
be entitled under the Company’s Articles of Incorporation or By-laws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.
ARTICLE IV.
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares
Available.
Subject to adjustment as provided in Section 4.3, there is hereby authorized 350,000 Shares for issuance under this
Plan (which number includes all shares available for delivery under this Section 4.1 since the establishment of the Plan in 2005).
4.2 Lapsed Awards.
If any Award granted under this Plan, in whole or in part, is canceled, terminates, expires, lapses, or is forfeited for any reason,
any Shares subject to such Award, or portion thereof, that is cancelled, terminates, expires, lapses or is forfeited shall again
be available for the grant of a new Award under the Plan.
4.3 Adjustments
in Authorized Shares.
In the event of any change in corporate capitalization in which the Company receives less than full value
for its Shares or a corporate transaction, such as any stock split, reorganization (whether or not such reorganization comes within
the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares that may be delivered under Section 4.1, and in the number and class of and/or price of
Shares granted under the Plan, as the Committee, in its sole discretion, determines is appropriate and equitable to prevent dilution
or enlargement of rights; provided, however, that the number of Shares shall always be a whole number and fractional Shares shall
be disregarded.
4.4 Limitation of
Awards.
Subject to the provisions of Section 4.3 of the Plan relating to adjustments upon any change in corporate capitalization
of the Company, no Participant shall be granted Awards designed to comply with the Performance-Based Exception from the deductibility
limitations of Code Section 162(m) covering more than one hundred thousand (100,000) Shares during any fiscal year. Subject to
the provisions of Section 4.3 of the Plan relating to adjustments upon any change in corporate capitalization of the Company, the
maximum number of Shares that may be granted to any one Participant who is a member of the Board but who is not an employee of
the Company or a Related Company during any one fiscal year shall be ten thousand (10,000) Shares.
ARTICLE V.
ELIGIBILITY AND PARTICIPATION
Awards may be granted
under this Plan to employees, officers and directors of an Employer. The Committee, in its sole discretion, shall determine the
specific individuals to whom Awards shall be granted.
ARTICLE VI.
RESTRICTED STOCK
6.1 Grant of Restricted
Stock.
Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted
Stock Awards to eligible individuals in such amounts and subject to such restrictions as the Committee shall in its sole discretion
determine.
6.2 Restricted Stock
Agreement.
Each Restricted Stock Award shall be evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, the number of Shares granted, and such other provisions as the Committee shall determine. Each Restricted Stock Agreement
shall be subject to the terms of the Plan, and any provision therein that is inconsistent with the Plan shall be null and void.
6.3 Period of Restriction.
The Committee may impose such conditions and/or restrictions or combination thereof on any Restricted Stock Award granted pursuant
to the Plan as it may deem advisable including, without limitation, a requirement that a Participant pay a stipulated purchase
price for each Share, restrictions based upon the achievement of specific performance goals (e.g., Employer-wide, divisional and/or
individual) pursuant to Article VII of the Plan, time-based restrictions on vesting, and/or restrictions under applicable Federal
or state securities laws; provided that any such conditions or restrictions, including but not limited to those affecting the timing
of payment of a Restricted Stock Award, shall not cause the Award to become “deferred compensation” as defined by Code
Section 409A. The conditions and restrictions imposed hereunder need not be uniform among all Awards issued pursuant to the Plan.
Subject to the provisions of Article IX, the Committee, in its sole discretion, may accelerate or otherwise modify the Period of
Restriction applicable to any Restricted Stock Award or Shares issued thereunder; provided, however, that in no event shall any
Restricted Stock Award that is a Performance Award vest (or be accelerated such that it vests) in under one year from the date
of grant (subject, to the extent provided by the Committee, to the acceleration of vesting in the event of the Participant’s
death, Disability, involuntary termination without cause or in connection with a change in control); provided further, that if
a Participant’s right to become vested in a Restricted Stock Award is conditioned on the completion of a specified period
of service with the Company or the Related Companies, without achievement of performance targets or other performance objectives
being required as a condition of vesting, and without it being granted in lieu of other compensation, then the required period
of service for full vesting shall be not less than one year (subject, to the extent provided by the Committee, to the acceleration
of vesting in the event of the Participant’s death, Disability, involuntary termination without cause or in connection with
a change in control).
6.4 Transferability.
Except as provided in this Article VI, the Restricted Stock Awards and Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. Shares
covered by a Restricted Stock Award including but not limited to those made under the Plan shall become freely transferable by
the Participant after the last day of the Period of Restriction applicable to such Restricted Stock Award. Once the Shares are
released from the restrictions, the Participant shall be entitled to have the legend required by Section 6.5 removed from his or
her Share certificate or book-entry registration. All rights with respect to the Award granted to a Participant shall be available
during his or her lifetime only to such Participant.
6.5 Certificate
Legend.
Each certificate or book-entry registration representing Shares of Restricted Stock granted pursuant to the Plan may
bear the following legend:
The sale or other transfer of the Shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the America’s Car-Mart, Inc. Amended and Restated Stock Incentive Plan, and in a Restricted Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be obtained from America’s Car-Mart, Inc.
The Company shall have
the right to retain in the Company’s possession the certificates representing Shares of Restricted Stock until such time
as all conditions and/or restrictions applicable to such Shares have been satisfied, provided that no such retention shall result
in “deferred compensation” as defined by Code Section 409A.
6.6 Voting Rights.
During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder shall have full voting rights
with respect to those Shares; provided, however, that the Committee may require in the applicable Restricted Stock Agreement that
the Participant execute an irrevocable proxy granting the Company the right to vote his or her Shares during the Period of Restriction.
6.7 Dividends and
Other Distributions.
During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may
be credited with regular cash dividends paid with respect to the underlying Shares while they are so held; provided, however, that
no dividends granted in relation to Performance Awards (whether or not such Performance Award is intended to qualify for the Performance-Based
Exception) shall be settled prior to the date that such Performance Award (or applicable portion thereof) becomes vested. The Committee
may apply any restrictions to the dividends that the Committee deems appropriate. In the event that any dividend constitutes a
“derivative security” or an “equity security” pursuant to Rule 16(a) of the Exchange Act, such dividend
shall be subject to a period of restriction equal to the remaining Period of Restriction of the Shares of Restricted Stock with
respect to which the dividend is paid, and may be held in the Company’s possession as described in Section 6.5.
6.8 Separation from
Service.
Each Restricted Stock Agreement shall set forth the extent to which the Participant shall have the right, if any,
to receive Shares on which the Period of Restriction has not yet ended following the Participant’s separation from service
with the Company and its subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included
in the Restricted Stock Agreement, need not be uniform among all Shares of Restricted Stock or Awards issued pursuant to the Plan,
and may reflect distinctions based on the reasons for separation from service. The Committee shall have the full power and authority,
in its discretion, to determine whether a separation from service has occurred.
For purposes of the
Plan, a transfer of a Participant’s employment or service relationship between Employers or a change in the Participant’s
capacity of service (such as, for example, from an employee to a director of an Employer or from one Employer to another Employer)
shall not be deemed to be a separation from service. Upon such a transfer or change in capacity of service, the Committee may make
such adjustments to outstanding Awards as it deems appropriate to reflect the changed reporting relationships.
ARTICLE VII.
PERFORMANCE AWARDS
7.1 Performance
Awards.
The grant, vesting, and/or exercisability of any Award may, in the Committee’s sole discretion, be conditioned,
in whole or in part, on the attainment of performance targets related to one or more performance measures over a performance period,
in which case, such Award shall constitute a Performance Award under the Plan.
7.2 Performance-Based
Exception.
Performance Awards that are not intended to qualify for the Performance-Based Exception from the deductibility limitations
of Code Section 162(m) may be based on the achievement of such goals and be subject to such terms, conditions, and restrictions
as the Committee shall determine. Performance Awards that are intended to qualify for the Performance-Based Exception based on
the satisfaction of one or more performance measures shall be conditioned upon the achievement during a specified performance period
of specified levels of one or more of the measures listed below.
7.3 Establishment
of Performance Goals.
The Committee shall establish the performance measures applicable to such performance either (i) prior
to the beginning of the performance period or (ii) within 90 days after the beginning of the performance period if the outcome
of the performance targets is substantially uncertain at the time such targets are established and if the performance period is
one year or longer (in no event later than the date on which 25% of the performance period has elapsed for a period shorter than
a year); provided such measures may be made subject to adjustment as specified by the Committee in the applicable award agreement
to the extent consistent with the Performance-Based Exception.
7.4 Performance-Based
Criteria.
The performance measures established by the Committee may be based upon one or more of the following criteria of
the Company, any Employer or any business unit of the Company or Employer designated by the Committee: (1) earnings or earnings
per share; (2) net operating margin; (3) cash flow return on investment; (4) earnings before interest, taxes, depreciation, and/or
amortization; (5) return on shareholders’ equity achieved; (6) total shareholders’ return achieved; (7) any of the
foregoing calculated on a “non-GAAP basis”; (8) the price of a share of common stock of the Company; (9) market share;
(10) sales; (11) operating income; (12) operating expense ratios; (13) economic value added; or (14) any combination of the foregoing.
A measure that is calculated on a “non-GAAP basis” is a measure that is adjusted (to the extent consistent with the
Performance-Based Exception) to reflect the impact of special items, which items are reflected from time to time in the Company’s
published financials. Special items are material nonrecurring adjustments deemed appropriate to exclude by the Committee and may
include, without limitation, (a) unrealized gains or losses and other items that are recorded by the Company as a result of Accounting
Standards Codification Topic 815 (previously issued as Statement of Financial Accounting Standards No. 133,
Accounting for Derivative
Instruments and Hedging Activities
, as amended); (b) impairment and other non-cash charges including the impact of changes
in accounting principles or estimates or other unusual, infrequent non-cash items; and (c) other items not considered to be representative
of the Company’s ongoing operations.
7.5 Modification
of Performance-Based Awards
. Once established, the Committee shall not be entitled to any discretion to increase the amount
of compensation under any Award intended to qualify for the Performance-Based Exception that would otherwise be due upon the attainment
of the performance goals.
7.6 Certification.
To the extent the Committee intends for Awards to qualify for the Performance-Based Exception, prior to the Participants’
receipt of Shares (or cash, as applicable) pursuant to such Awards (or prior to receipt of the Awards themselves, if applicable),
the Committee shall certify whether the performance targets and measure(s) related to such Awards have been achieved. The Committee,
in its sole discretion, may provide for a reduction in a Participant’s Performance Award.
7.7 Shareholder
Approval.
Material terms of the performance goals must be disclosed to and reapproved by the shareholders no later than the
first shareholder meeting that occurs in the fifth year following the year in which shareholders previously approved the performance
goals.
ARTICLE VIII.
RIGHTS OF EMPLOYEES
8.1 Employment.
Nothing in the Plan shall interfere with or limit in any way the right of an Employer to terminate any Participant’s employment
or service at any time, nor confer upon any Participant any right to continue in the employ or service of any Employer.
8.2 Participation.
Participation by any individual shall be determined by the Committee and no individual shall otherwise have the right to be selected
to receive Awards granted under this Plan, or, having been so selected, to be selected to receive a future Award.
8.3 No Trust or
Fund Created.
Neither a Participant nor any other person shall, by reason of the Plan or any Award, acquire any right in or
title to any assets, funds or property, other than the Shares or amounts which become payable hereunder, of the Company or any
Employer whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Employer,
it its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual
right to the Shares or amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Employer. Nothing
contained in the Plan shall constitute a guarantee that the assets of such entities shall be sufficient to pay any benefits to
any person.
ARTICLE IX.
AMENDMENT, MODIFICATION, AND TERMINATION
9.1 Amendment, Modification,
and Termination.
The Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in
part; provided, however, that no amendment that requires shareholder approval in order for the Plan to continue to comply with
Rule 16b-3 under the Exchange Act, the rules of the stock exchange or market on which the Shares are listed, or any other applicable
law shall be effective unless such amendment shall be approved by the requisite vote of shareholders of the Company entitled to
vote thereon.
Subject to Section
9.2, the Committee shall have the authority to cancel outstanding Awards and issue substitute Awards in replacement thereof.
9.2 Awards Previously
Granted.
No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously
granted under the Plan or otherwise be contrary to an Employer’s obligations under any employment, severance or other service
agreement with the applicable Participant, without the written consent of the Participant holding such Award.
ARTICLE X.
WITHHOLDING
10.1 Tax Withholding.
The Employer shall have the power and the right to deduct or withhold from amounts or property due hereunder or any other monies
or property of the Participant held or payable by the Employer, or require a Participant (or his or her estate or beneficiary)
to remit to the Employer, an amount sufficient to satisfy Federal, state, local, and any other applicable taxes (including any
foreign taxes and the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event arising
as a result of this Plan.
10.2 Share Withholding.
The Committee may allow a Participant to elect to satisfy all or part of the withholding requirement described in Section 10.1
by tendering to the Company Shares owned by such Participant for at least six (6) months (or by having the Company retain Shares
then in the possession of the Company but held for the benefit of such Participant); provided that such Shares are not then subject
to any restrictions. Such withholding requirement shall be deemed satisfied to the extent of the then current fair market value,
as determined by the Plan Administrator in accordance with reasonable accounting principles, of the Shares so tendered to or retained
by the Company. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any
restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
ARTICLE XI.
LEGAL CONSTRUCTION
11.1 Successors.
All obligations of an Employer or the Company under the Plan with respect to Awards shall be binding on their successors, whether
the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the entity.
11.2 Gender and
Number.
Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
11.3 Severability.
In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had
not been included.
11.4 Transfer of
Property.
Any Restricted Stock Award or a Performance Award granted under this Plan is intended to be subject to taxation as
a transfer of property in connection with the performance of services pursuant to Section 83 of the Code and is intended to be
exempt from Section 409A of the Code. Notwithstanding anything contained herein to the contrary, the interpretation and operation
of any Restricted Stock Award or Performance Award granted under the Plan shall be made in a manner consistent with the previous
sentence. Any right to payments that a Participant may have pursuant to Section 6.7 of the Plan is intended to be structured to
be exempt from or comply with Section 409A of the Code as provided in the applicable award agreement.
11.5 Requirements
of Law.
The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Any provision
of the Plan or any Restricted Stock Agreement notwithstanding, the Participant shall not be entitled to receive the benefits of
Awards and the Company shall not be obligated to pay any benefits to a Participant if such exercise, delivery, receipt or payment
of benefits would cause a violation of Code Section 409A or constitute a violation by the Participant or the Company of any law
or regulation. If additional guidance is issued under or modifications are made to Code Section 409A or any other law affecting
the Awards issued hereunder, the Committee shall take such actions (including amending the Plan or any Restricted Stock Agreement)
as it seems necessary, in its sole discretion, to ensure continued compliance with this Section 11.5.
11.6 Securities
Law Compliance.
With respect to an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial
owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all
as defined under Section 16 of the Exchange Act (an “Insider”), transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 under the Exchange Act. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. To
the extent that compensation to be received by an Insider under this Plan for purposes of Code Section 162(m) as a result of the
lapse of Period(s) of Restriction or other restriction on Restricted Stock, when added to all other compensation subject to the
$1 million limitation on deductibility of compensation (the “cap”) imposed by Code Section 162(m), would cause such
Insider’s compensation to exceed the cap for that year, restrictions on the number of Shares of Restricted Stock necessary
to reduce the Insider’s compensation to the cap will not lapse, and instead, restrictions on such Shares of Restricted Stock
will continue, all or in part, until such time that they may lapse and the Company’s tax deduction (as limited by Code Section
162(m)) is preserved.
11.7 Governing Law.
To the extent not preempted by United States Federal law, the Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Texas.
|
AMERICA’S CAR-MART, INC.
By: /s/ Jeffrey A. Williams
Its: Chief Financial Officer
|
Amendment to Amended and Restated Stock
Incentive Plan
AMENDMENT TO AMERICA’S CAR-MART,
INC.
Amended and Restated Stock Incentive
Plan
Adopted May 23, 2018
America’s Car-Mart, Inc., a Texas
corporation (the “Company”), hereby amends (the “Amendment”) the America’s Car-Mart, Inc. Amended
and Restated Stock Incentive Plan (the “Plan”), as set forth herein.
1.
Background
Information.
The Company originally established the Plan effective as of October 12, 2005 and subsequently amended and restated
the Plan effective as of August 5, 2015. Section 9.1 of the Plan provides that the board of directors of the Company may at any
time amend the Plan in whole or in part; provided, however, that no amendment that requires stockholder approval will be effective
unless such amendment is approved by the requisite vote of stockholders of the Company entitled to vote thereon. The Company wishes
to amend the Plan as set forth in this Amendment to increase the number of authorized shares that may be issued under the Plan.
The Company will submit this Amendment for approval by the requisite vote of stockholders of the Company entitled to vote thereon
at the 2018 annual meeting of stockholders to be held on August 29, 2018.
2.
Amendment
to Article IV – Shares Subject to the Plan.
Article IV,
Section 4.1 of the Plan
is hereby amended in its entirety to read as follows:
“4.1 Number of Shares Available.
Subject to adjustment as provided in Section 4.3, there is hereby authorized 450,000 shares for issuance under this Plan (which
number includes all shares available for delivery under this Section 4.1 since the establishment of the Plan in 2005).”
IN WITNESS WHEREOF, the Company has caused
this Amendment to be duly executed on this 23
rd
day of May, 2018.
|
America’s Car-Mart, Inc.
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By:
/s/ Vickie D. Judy
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Vickie D. Judy
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Chief Financial Officer and Secretary
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(Principal Financial and Accounting Officer)
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APPENDIX B
AMERICA’S CAR-MART, INC.
AMENDED AND RESTATED STOCK OPTION PLAN
Effective June 10, 2015
1.
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Establishment; Effective Date; Purpose
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(a) This
Amended and Restated Stock Option Plan (the “
Plan
”) of America’s Car-Mart, Inc., a Texas corporation (the
“
Corporation
”), is an amendment and restatement of America’s Car-Mart, Inc. 2007 Stock Option Plan, which
was adopted by the Board of Directors of the Corporation (the “
Board
”) on August 27, 2007 and approved by the
Corporation’s stockholders on October 16, 2007, and subsequently amended on August 27, 2010 and October 7, 2013. The effective
date of the Plan shall be June 10, 2015 (the “
Effective Date
”), subject to the approval of the Corporation’s
stockholders at the 2015 Annual Meeting. Awards may be granted under the Plan on and after the Effective Date and may be made pursuant
to and in accordance with agreements for the issuance thereof entered into prior to the Effective Date, but no Awards will be granted
under the Plan after the tenth (10
th
) anniversary of the Effective Date.
(b) The
purpose of the Plan is to encourage and enable selected employees, directors and independent contractors of the Corporation and
its Related Corporations to acquire or to increase their holdings of common stock of the Corporation (the “
Common Stock
”)
and other proprietary interests in the Corporation in order to promote a closer identification of their interests with those of
the Corporation and its stockholders, thereby further stimulating their efforts to enhance the efficiency, soundness, profitability,
growth and stockholder value of the Corporation. This purpose will be carried out through the granting of benefits (collectively
referred to herein as “
Awards
”) to selected employees, independent contractors and directors, including the
granting of incentive stock options that qualify as statutory stock options under Section 422(b) of the Code (“
Incentive
Options
”) and stock options that do not qualify as statutory stock options (“
Nonqualified Options
”)
to such participants. Incentive Options and Nonqualified Options shall be referred to herein collectively as “
Options
.”
For purposes of the
Plan, the following terms shall have the meaning indicated:
(a) “
Administrator
”
shall have the meaning given the term in Section 3(a) of the Plan.
(b) “
Code
”
means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder from time to time by the Secretary
of the Treasury (“
Treasury Regulations
”).
(c) “
Disability
”
shall mean the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of
not less than twelve months (or, in the case of Incentive Options, such other definition as required by Section 422 of the Code).
The Administrator may require the Participant to furnish proof of the existence of the Disability in accordance with Code Section
22(e)(3).
(d) “
Option
Agreement
” means any written agreement or agreements between the Corporation and the recipient of an Award pursuant to
the Plan relating to the terms, conditions and restrictions of Options.
(e) “
Parent
”
means any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation if each corporation
other than the Corporation owns stock possessing 50% or more of the total combined voting power of all classes of stock in another
corporation in the chain.
(f) “
Participant
”
means an individual, being otherwise eligible under this Section 5, selected by the Administrator as an individual to whom an Award
shall be granted under the Plan.
(g) “
Predecessor
”
means a corporation which was a party to a transaction described in Section 424(a) of the Code (or which would be so described
if a substitution or assumption under that Section had occurred) with the Corporation, or a corporation which is a Parent or Subsidiary
of the Corporation, or a predecessor of any such corporation.
(h) “
Related
Corporation
” means any Parent, Subsidiary or Predecessor of the Corporation.
(i) “
Subsidiary
”
means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if each
corporation other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in another corporation in the chain.
3.
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Administration of the Plan
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(a) The Plan shall
be administered by the Board of Directors of the Corporation. The Board may, in its sole discretion, delegate all or part of its
administrative authority with respect to the Plan to a committee of the Board (the “
Committee
”). For purposes
herein, the Board, and, upon its delegation of the administrative responsibilities for the Plan to the Committee, the Committee
shall be referred to as the “
Administrator
.” The Committee shall be comprised solely of two or more “non-employee
directors,” as said term is defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “
Exchange
Act
”), unless the Board determines that such committee composition is not necessary or advisable. Further, the Committee
shall, unless the Board determines otherwise, be comprised solely of two or more “outside directors,” as such term
is defined under Section 162(m) of the Code, or otherwise in accordance with Code Section 162(m). Further, the composition of the
Committee shall be in compliance with the applicable rules and regulations of the Nasdaq Stock Market.
(b) Any action of the
Administrator with respect to the Plan may be taken by a written instrument signed by all of the members of the Administrator and
any such action so taken by written consent shall be as fully effective as if it had been taken by a majority of the members at
a meeting duly held and called. Subject to the provisions of the Plan and consistent with the requirements necessary under Section
409A of the Code to prevent any Option granted hereunder from constituting the deferral of compensation, and unless authority is
granted to the chief executive officer or president as provided in Section 3(c), the Administrator shall have full and sole authority
in its discretion to take any action with respect to the Plan including, without limitation, the authority (i) to determine all
matters relating to Awards, including selection of individuals to be granted Awards, the types of Awards, the number of shares
of the Common Stock, if any, subject to an Award, and all terms, conditions, restrictions and limitations of an Award, (ii) to
prescribe the form or forms of the agreements evidencing any Awards granted under the Plan; (iii) to amend the Plan and any Award
as provided in Sections 12 and 14 of the Plan; (iv) to establish, amend and rescind rules and regulations for the administration
of the Plan; (v) to construe and interpret the Plan and Option Agreements evidencing Awards granted under the Plan; (vi) to establish
and interpret rules and regulations for administering the Plan and to make all other determinations deemed necessary or advisable
for administering the Plan. The Administrator shall also have authority, in its sole discretion, to accelerate the date that any
Award which was not otherwise exercisable or vested shall become exercisable or vested in whole or in part without any obligation
to accelerate such date with respect to any other Award granted to any Participant. In addition, the Administrator shall have the
authority and discretion to establish terms and conditions of Awards as the Administrator determines to be necessary or appropriate
to conform to the applicable requirements or practices of jurisdictions outside of the United States.
(c) Notwithstanding
the other provisions of Section 3 herein, and provided such delegation is permitted under applicable law, including the law of
the state of incorporation, the Administrator may delegate to the chief executive officer or president of the Corporation the authority
to grant Awards, and to make any or all of the determinations reserved for the Administrator in the Plan and summarized in Section
3(b) herein with respect to such Awards, to eligible individuals;
provided, however
, that, to the extent required by Section
16 of the Exchange Act or Section 162(m) of the Code, the individual to whom such grant is made, at the time of said grant or other
determination, is not deemed to be an officer or director of the Corporation within the meaning of Section 16 of the Exchange Act
and the Options granted are not intended to constitute performance-based compensation within the meaning of Section 162(m) of the
Code. To the extent that the Administrator has delegated authority to grant Awards pursuant to this Section 3(c) to the chief executive
officer or president, references to the Administrator shall include references to such person, subject, however, to the requirements
of the Plan, Rule 16b-3 and other applicable law.
(d) The
Administrator’s determinations under the Plan need not be uniform and may be made by it selectively among individuals who
receive, or are eligible to receive, Awards under the Plan (whether or not such individuals are similarly situated). All determinations,
interpretations and constructions made by the Administrator in good faith shall not be subject to review by any person and shall
be final, binding and conclusive on all persons.
4.
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Shares of Stock Subject to the Plan; Award Limitations
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(a) The number of shares
of Common Stock that may be issued pursuant to Awards shall be one million eight hundred thousand (1,800,000) shares (which number
includes all shares available for delivery under this Section 4(a) since the establishment of the Plan in 2007). Such shares shall
be authorized but unissued shares or treasury shares of the Corporation, or shares purchased on the open market or by private purchase.
(b) The Corporation
hereby reserves sufficient authorized shares of Common Stock to meet the grant of Awards hereunder. Any shares subject to an Award
which is subsequently forfeited, expires or is terminated may again be the subject of an Award granted under the Plan. To the extent
that any shares of Common Stock subject to an Award are not delivered to a Participant (or his beneficiary) because the Award is
forfeited, canceled, or settled in cash, such shares shall not be deemed to have been issued for purposes of determining the maximum
number of shares of Common Stock available for issuance under the Plan. Notwithstanding the foregoing, shares of Common Stock subject
to an Award may not again be available for issuance under this Plan if such shares are: (i) shares that were subject to an Option
and were not issued upon the net exercise of such Option; (ii) existing shares used to pay the exercise price of an Option; (iii)
shares delivered to or withheld by the Corporation to pay the withholding taxes related to an Award in accordance with Section
7; or (iv) shares repurchased on the open market with the proceeds of an Option exercise.
(c) If there is any
change in the shares of Common Stock because of a merger, consolidation or reorganization involving the Corporation or a Related
Corporation, or if the Board declares a stock dividend or stock split distributable in shares of Common Stock, or if there is a
change in the capital stock structure of the Corporation or a Related Corporation affecting the Common Stock, the number of shares
of Common Stock reserved for issuance under the Plan shall be correspondingly adjusted, the Administrator shall make such adjustments
to Awards or to any provisions of this Plan as the Administrator deems equitable to prevent dilution or enlargement of Awards and
in compliance with Section 409A of the Code.
(d) Subject
to the provisions of Section 4(c) herein relating to adjustments upon changes in the shares of Common Stock, the maximum number
of shares that may be covered by Options granted to any one Participant during any one fiscal year shall be 250,000 shares.
(e) Subject
to the provisions of Section 4(c) herein relating to adjustments upon changes in the shares of Common Stock, the maximum number
of shares that may be covered by Options granted to any one Participant who is a member of the Board but who is not an employee
of the Corporation or a related Corporation during any one fiscal year shall be 25,000 shares.
(f) Subject
to the provisions of Section 4(c) herein relating to adjustments upon changes in the shares of Common Stock, the maximum number
of shares that may be delivered to Participants with respect to Incentive Options under the Plan shall be 1,800,000 shares.
An Award may be granted
only to an individual who satisfies the following eligibility requirements on the date the Award is granted:
(a) The
individual is either (i) an employee of the Corporation or a Related Corporation, (ii) a director of the Corporation or a Related
Corporation, or (iii) an independent contractor, consultant or advisor (collectively, “
independent contractors
”)
providing bona fide services to the Corporation or a Related Corporation. For this purpose, an individual shall be considered to
be an “
employee
” if there exists between the individual and the Corporation or a Related Corporation the legal
and bona fide relationship of employer and employee, or if the individual otherwise is included in the definition of “employee”
contained in the General Instructions to the Registration Statement on Form S-8 under the Securities Act of 1933, as amended.
(b) With
respect to the grant of Incentive Options, the individual is an employee of the Corporation or a Related Corporation (within the
meaning of Section 1.421-1 of the Treasury Regulations) and does not own, immediately before the time that the Incentive Option
is granted, stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation.
Notwithstanding the foregoing, an individual who otherwise qualifies but owns more than ten percent (10%) of the total combined
voting power of the Corporation (a “
10% Owner
”) may be granted an Incentive Option if the Option Price (as determined
pursuant to Section 6(b) herein), is at least 110% of the Fair Market Value of the Common Stock (as defined in Section 6(b) herein),
and the Option Period (as defined in Section 6(c) herein) does not exceed five years. For this purpose, an individual will be deemed
to own stock which is attributable to him or her under Section 424(d) of the Code.
(a)
Grant
of Options:
Subject to the limitations of the Plan, the Administrator may in its sole and absolute discretion grant Options
to such eligible individuals in such numbers, upon such terms and at such times as the Administrator shall determine. Both Incentive
Options and Nonqualified Options may be granted under the Plan. Each Option grant shall be evidenced by an option agreement (an
“
Option Agreement
”) specifying the type of Option being granted and all other terms and conditions as required
by this Plan. To the extent necessary to comply with Section 422 of the Code, if an Option is designated as an Incentive Option
but does not qualify as such under Section 422 of the Code, the Option (or portion thereof) shall be treated as a Nonqualified
Option.
(b)
Option
Price
: The price per share at which an Option may be exercised (the “
Option Price
”) shall be established
by the Administrator at the time the Option is granted and shall be set forth in the terms of the Option Agreement evidencing the
grant of the Option; provided that the Option Price shall in no event be less than the Fair Market Value (as defined in Section
6(b)(ii)herein) per share of the Common Stock on the date the Option is granted (or, in the case of an Incentive Option granted
to a 10% Owner, 110% of such Fair Market Value). In addition, the following rules shall apply:
(i) An Incentive
Option shall be considered to be granted on the date that the Administrator acts to grant the Option, or on any later date specified
by the Administrator as the effective date of the Option. A Nonqualified Option shall be considered to be granted on the date the
Administrator acts to grant the Option or any later date specified by the Administrator as the date of grant of the Option.
(ii) For the
purposes of the Plan, the “
Fair Market Value”
of the shares shall be determined in good faith by the Administrator
in accordance with the following provisions: (A) if the shares of Common Stock are listed or admitted for trading on an established
national securities exchange, the Fair Market Value shall be the closing sales price of the shares on the principal exchange on
the date immediately preceding the date the Option is granted, or, if there is no transaction on such date, then on the trading
date nearest preceding the date the Option is granted for which closing price information is available, or (B) if the shares of
Common Stock are not listed or admitted to trading on an established securities market, then the Fair Market Value shall be determined
by the Administrator by the reasonable application of any other reasonable valuation method which is consistently applied for all
equity compensation arrangements of the Corporation and which is in compliance with applicable law, is compliant with Section 409A
of the Code, and satisfies any applicable requirements for Incentive Options under Section 422 of the Code.
(iii) To the
extent that there first becomes exercisable by an employee in any one calendar year Incentive Options granted by the Corporation
or any Related Corporation with respect to shares having an aggregate Fair Market Value (determined at the time an Incentive Option
is granted) greater than $100,000, such excess Options shall be treated as Nonqualified Options.
(c)
Option
Period and Limitations on the Right to Exercise Options
(i) The term
during which an Option may be exercised (the “
Option Period
”) shall be determined by the Administrator at the
time the Option is granted. With respect to Incentive Options, such period shall not extend more than ten (10) years (or, in the
case of a 10% Owner, five (5) years) from the date on which the Option is granted. Any Option or portion thereof not exercised
before expiration of the Option Period shall terminate.
(ii) An Option
may be exercised by giving written notice to the Corporation at such place as the Corporation or its designee shall direct. Such
notice shall specify the number of shares to be purchased pursuant to an Option and the aggregate Option Price to be paid therefor,
and shall be accompanied by the payment of such Option Price. Unless an individual Option Agreement provides otherwise, such payment
shall be in the form of (A) cash; (B) delivery of written notice of exercise to the Corporation and delivery to a broker of written
notice of exercise and irrevocable instructions to promptly deliver to the Corporation the amount of sale or loan proceeds to pay
the Option Price; (C) if the Administrator, in its sole discretion, permits, (1) delivery of other shares of Common Stock of the
Corporation that that have been held by the Participant for more than six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) or (2) a “net exercise” arrangement pursuant
to which the Corporation will reduce the number of shares of Common Stock issued upon exercise by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate Option Price; provided, however, that the Corporation shall accept
a cash or other payment from the Participant to the extent of any remaining balance of the aggregate Option Price not satisfied
by such reduction in the number of whole shares to be issued; or (D) a combination of the foregoing methods.
(iii) Unless
an individual Option Agreement provides otherwise, no Option granted to a Participant shall be exercised unless, at the time of
exercise, the Participant’s provision of services to the Corporation, whether as an employee, director or independent contractor,
as described in Section 5(a), of the Corporation or a Related Corporation has not been interrupted or terminated (“
Continuous
Service
”) since the date the Option was granted, subject to the following:
(A) The Continuous
Service of a Participant shall not be deemed to have terminated merely because of a change in the terms, conditions or capacity
in which the Participant renders service to the Corporation or a Related Corporation as an employee, director or independent contractor
or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination
of the Participant’s Continuous Service. For example, a change in status from an employee of the Corporation to a consultant
of a Related Corporation or a non-employee director will not constitute an interruption of Continuous Service.
(B) The Continuous
Service of a Participant shall be treated as continuing intact for any period that the Participant is on military or sick leave
or other bona fide leave of absence, provided that the period of such leave does not exceed ninety days (or such other period as
required by applicable law), or, if longer, as long as the Participant’s right to re-employment is guaranteed either by statute
or by contract. The Continuous Service of a Participant shall also be treated as continuing intact while the Participant is not
actively performing services as an employee, director or independent contractor because of Disability. The Administrator shall
determine the date of a Participant’s termination of Continuous Service for any reason (the “
Termination Date
”).
(C) Unless an
individual Option Agreement provides otherwise, if the Continuous Service of a Participant is terminated because of the Participant’s
death or Disability, or if the Participant dies after the termination of his Continuous Service because of Disability, the Option
may be exercised only to the extent exercisable on the Participant’s Termination Date, except that, to the extent permitted
under Section 3(b) of the Plan, the Administrator may in its discretion accelerate the date for exercising all or any part of the
Option which was not otherwise exercisable on the Termination Date. The Option must be exercised, if at all, prior to the first
to occur of the following, whichever shall be applicable: (X) the close of the period of twelve (12) months next succeeding the
Termination Date; or (Y) the close of the Option Period. In the event of the Participant’s death, such Option shall be exercisable
by such person or persons as shall have acquired the right to exercise the Option by will or by the laws of intestate succession
or by such person designated to exercise the Option upon the Participant’s death pursuant to Section 6(d) of the Plan.
(D) Unless an
individual Option Agreement provides otherwise, if the Continuous Service of the Participant is terminated for any reason other
than Disability or death or for Cause (as defined in Section 6(c)(iii)(E) herein), the Option may be exercised to the extent exercisable
on such Termination Date, except that, to the extent permitted under Section 3(b) of the Plan, the Administrator may in its discretion
accelerate the date for exercising all or any part of the Option which was not otherwise exercisable on the Termination Date. The
Option must be exercised, if at all, prior to the first to occur of the following, whichever shall be applicable: (X) the close
of the period of three (3) months next succeeding the Termination Date (or twelve (12) months next succeeding the Termination Date
if the Participant was a non-employee director or independent contractor at the Termination Date); or (Y) the close of the Option
Period. If the Participant dies following such Termination Date and prior to the earlier of the dates specified in (X) or (Y) of
this subparagraph (D), the Option shall be exercisable for the period specified in subparagraph (C) immediately preceding (treating
for this purpose the Participant’s date of termination of employment as the Termination Date). In the event of the Participant’s
death, such Option shall be exercisable by such person or persons as shall have acquired the right to exercise the Option by will
or by the laws of intestate succession or by such person designated to exercise the Option upon the Participant’s death pursuant
to Section 6(d) of the Plan.
(E) Unless an
individual Option Agreement provides otherwise, if the employment of the Participant is terminated for Cause (as defined herein),
the Option shall immediately lapse and no longer be exercisable as of such termination, as determined by the Administrator. For
purposes of this subparagraph (E) and subparagraph (D), the Participant’s termination shall be for “
Cause
”
if such termination results from the Participant’s: (W) termination, if any, for “cause” under the terms of the
Participant’s employment agreement with the Corporation or a Related Corporation; or, if there is no written employment agreement
between the Participant and the Corporation or one of its Related Corporations, termination shall be for “cause” if
such termination results from: (X) dishonesty or conviction of a crime; (Y) failure to perform his duties to the satisfaction of
the Corporation; or (Z) engaging in conduct that could be materially damaging to the Corporation without a reasonable good faith
belief that such conduct was in the best interest of the Corporation. The determination of “Cause” shall be made by
the Administrator and its determination shall be final and conclusive.
(F) Notwithstanding
the foregoing and subject to compliance with Section 409A of the Code, to the extent permitted under Section 3(b) of the Plan,
the Administrator shall have authority, in its discretion, to extend the period during which an Option may be exercised or modify
the other terms and conditions of exercise; provided that, in the event that any such extension or modification shall cause an
Incentive Option to be designated as a Nonqualified Option, no such extension or modification shall be made without the prior written
consent of the Participant.
(G) Notwithstanding
the foregoing, in no event shall an Option granted to any Participant become exercisable or vested prior to the first anniversary
of the date on which it is granted (subject to acceleration of exercisability and vesting, to the extent permitted by the Administrator,
in the event of the Participant’s death, Disability, involuntary termination without Cause or in connection with a Change
in Control, or as permitted or required pursuant to Section 14(c) herein).
(iv) A Participant
or his legal representative, legatees or distributees shall not be deemed to be the holder of any shares subject to an Option and
shall not have any rights as a stockholder unless and until certificates for such shares are delivered to him or them under the
Plan or such shares have been registered in book-entry form in the Participant’s name or otherwise credited to the Participant.
(v) A certificate
or certificates or a book-entry registration for shares of Common Stock acquired upon exercise of an Option shall be issued or
made in the name of the Participant (or his or her beneficiary) and distributed to the Participant (or his or her beneficiary)
as soon as practicable following receipt of notice of exercise and payment of the purchase price.
(d)
Nontransferability
of Options:
Incentive Options shall not be transferable other than by will or the laws of intestate succession. Nonqualified
Options shall not be transferable other than by will or the laws of intestate succession, except as may be permitted by the Administrator
in a manner consistent with the registration provisions of the Securities Act of 1933, as amended (the “
Securities Act
”).
Except as may be permitted by the preceding sentence, an Option shall be exercisable during the Participant’s lifetime only
by him or by his guardian or legal representative. Notwithstanding the foregoing, the Participant may, by delivering written notice
to the Corporation, in a form satisfactory to the Corporation, designate a third party who, in the event of the death of the Participant,
shall thereafter be entitled to exercise the Option. The designation of a beneficiary does not constitute a transfer.
(e)
No
Repricing
. Except for adjustments pursuant to Section 4(c) herein (relating to adjustments upon changes in the shares of Common
Stock), or reductions of the Option Price approved by the Corporation’s stockholders, the Option Price for any outstanding
Option may not be decreased after the date of grant nor may an outstanding Option granted under the Plan be surrendered to the
Corporation as consideration for the grant of a replacement Option with a lower Option Price. Except as approved by the Corporation’s
stockholders, in no event shall any Option granted under the Plan be surrendered to Corporation in consideration for a cash payment
or the grant of any other award if, at the time of such surrender, the Option Price of the Option is greater than the then current
Fair Market Value of a share of Common Stock. In addition, no repricing of an Option shall be permitted without the approval of
Corporation’s stockholders if such approval is required under the rules of any stock exchange on which Common Stock is listed.
(f)
No
Dividends
. No dividend equivalents (current or deferred) with respect to any Option shall be granted under the Plan.
The Corporation shall
withhold all required local, state and federal taxes from any amount payable in cash with respect to an Award. The Corporation
shall require any recipient of an Award payable in shares of the Common Stock to pay to the Corporation in cash the amount of any
tax or other amount required by any governmental authority, to be withheld and paid over by the Corporation to such authority for
the account of such recipient. Notwithstanding the foregoing, the recipient may satisfy such obligation in whole or in part, and
any other local, state or federal income tax obligations relating to such an Award, by electing (the “
Election
”)
to have the Corporation withhold shares of Common Stock from the shares to which the recipient is entitled. 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 (the “
Tax
Date
”) as nearly equal as possible to (but not exceeding) the amount of such obligations being satisfied. Each Election
must be made in writing to the Administrator in accordance with election procedures established by the Administrator.
8.
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Performance-Based Compensation
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To the extent that
Section 162(m) of the Code is applicable, the Administrator shall determine the extent, if any, that Awards conferred under the
Plan are intended to comply with the qualified performance-based compensation exception to employer compensation deductions set
forth in Section 162(m) of the Code.
9.
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Section 16(b) Compliance
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It is the general intent
of the Corporation that transactions under the Plan which are subject to Section 16 of the Exchange Act shall comply with Rule
16b-3 under the Exchange Act. Notwithstanding anything in the Plan to the contrary, the Administrator, in its sole and absolute
discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Participants who
are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other Participants.
10.
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No Right or Obligation of Continued Employment
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Nothing contained in
the Plan shall confer upon a Participant any right to continue in the employment or service of the Corporation or a Related Corporation
as an employee, director or independent contractor or to interfere in any way with the right of the Corporation or a Related Corporation
to terminate the Participant’s employment or service at any time. Except as otherwise provided in the Plan, or a related
agreement, Awards granted under the Plan to employees of the Corporation or a Related Corporation shall not be affected by any
change in the duties or position of the Participant, as long as such individual remains an employee of the Corporation or a Related
Corporation.
11.
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Unfunded Plan; Not a Retirement Plan
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(a) Neither a Participant
nor any other person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Corporation
or any Related Corporation including, without limitation, any specific funds, assets or other property which the Corporation or
any Related Corporation, in their discretion, may set aside in anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the Common Stock or amounts, if any, payable under the Plan, unsecured by any assets of the Corporation
or any Related Corporation. Nothing contained in the Plan shall constitute a guarantee that the assets of such corporations shall
be sufficient to pay any benefits to any person.
(b) In no event shall
any amounts accrued, distributable or payable under the Plan be treated as compensation for the purpose of determining the amount
of contributions or benefits to which any person shall be entitled under any retirement plan sponsored by the Corporation or a
Related Corporation that is intended to be a qualified plan within the meaning of Section 401(a) of the Code.
12.
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Amendment and Termination of the Plan
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Except as may be otherwise
provided in the Plan, the Plan and any Award granted pursuant to the Plan, may be amended or terminated at any time by the Board;
provided, that (i) amendment or termination of an Award shall not, without the consent of the applicable Participant, adversely
affect the rights of the Participant with respect to an outstanding Award; and (ii) approval of an amendment to the Plan by the
stockholders of the Corporation shall only be required in the event such stockholder approval of any such amendment is required
for purposes of complying with Section 422 of the Code or by other applicable law, rule or regulation.
13.
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Restrictions on Shares
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The Administrator may
impose such restrictions on any shares representing Awards hereunder as it may deem advisable, including without limitation restrictions
under the Securities Act, under the requirements of any stock exchange or similar organization and under any blue sky or state
securities laws applicable to such shares. The Corporation may cause a restrictive legend to be placed on any certificate issued
pursuant to an Award hereunder in such form as may be prescribed from time to time by applicable laws and regulations or as may
be advised by legal counsel. As a condition to the issuance and delivery of Common Stock hereunder, or the grant of any benefit
pursuant to the terms of the Plan, the Corporation may require a Participant or other person to become a party to a stockholders’
agreement, buy-sell agreement, redemption agreement, repurchase agreement, restriction agreement or similar agreement between the
Corporation and stockholders of the Corporation or among stockholders of the Corporation restricting the transfer of the Common
Stock.
(a) The
Plan shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflict of laws
provisions of any state. The Plan and all Awards granted hereunder shall comply at all times with all laws and regulations of any
governmental authority which may be applicable thereto. To the extent that an Award granted hereunder is designated as an Incentive
Option, it shall comply with Section 422 of the Code, and all provisions of the Plan and any Option Agreement for such Option shall
be construed in such manner as to effectuate that intent. Any provision of the Plan or any Option Agreement notwithstanding, the
Participant shall not be entitled to receive the benefits of Awards and the Corporation shall not be obligated to pay any benefits
to a Participant if such exercise, delivery, receipt or payment of benefits would constitute a violation by such individual or
the Corporation of any provision of any such law or regulation.
(b) Any
reference herein to “compliance with Section 409A of the Code” or words of similar import shall be interpreted to mean
application of the terms of the Plan or any Award, or administration of the Plan or any Award, as the case may be, in such a manner
that no additional tax is imposed on a Participant pursuant to Section 409A(a)(1)(B) of the Code;
provided, however,
that
nothing in this provision shall permit any Incentive Option to exceed the $100,000 annual limitation set forth in Treasury Regulation
Section 1.422-4(a)(2) and in Section 6(b)(iii) of the Plan or any recharacterization of an Option resulting therefrom. If additional
guidance is issued under or modifications are made to Section 409A of the Code or any other law affecting the Awards issued hereunder,
the Administrator shall take such actions (including amending the Plan or any Option Agreement without the necessity of obtaining
any Participant’s consent as otherwise required by the Plan) as it deems necessary, in its sole discretion, to ensure continued
compliance with such law.
The Plan is subject
to approval by the stockholders of the Corporation, which approval must occur, if at all, within twelve months of the Effective
Date of the Plan. Awards granted prior to such stockholder approval shall be conditioned upon and shall be effective only upon
approval of the Plan by such stockholders on or before such date.
(a) Notwithstanding
any other provision of the Plan to the contrary, if a Double Trigger Event (as defined in Section 16(c) herein) occurs in connection
with a Change in Control (as defined in Section 16(b) herein) of the Corporation, unless specifically modified by an individual’s
Option Agreement or employment agreement between the Participant and the Corporation or a Related Corporation (in which case the
terms of such Option Agreement or employment agreement shall supersede this Section 16), all Options outstanding as of the date
of such Double Trigger Event held by the affected Participant shall become fully exercisable, whether or not then otherwise exercisable.
In addition, in the event of a Change in Control of the Corporation, the Corporation or the surviving entity or successor to the
Corporation following such transaction, as the case may be, may elect to (i) to continue the outstanding Options subject to the
terms of the individual Option Agreements and this Plan and subject to such adjustments, if any, by the Administrator as permitted
by Section 4(c) of the Plan; or (ii) to terminate the outstanding Options in exchange for a cash payment or distribution to the
Participant as determined in the following sentence. In the event that the Corporation or its successor chooses to terminate the
Options upon a Change in Control, each unvested Option shall vest automatically immediately prior to termination of the Options,
and the Participant shall be entitled to a payment or distribution equal to the excess of the Fair Market Value of one share of
Common Stock as of the date of the Change in Control over the Option Price, multiplied by the number of shares covered by the Option;
provided that if Option Price exceeds the Fair Market Value of the Common Stock as of the date of the Change in Control, such Option
shall be cancelled and forfeited and no payment or distribution shall be made for such Option.
(b) For
purposes of this Section 16, “
Change in Control
” of the Corporation shall mean:
(i)
Change
in Ownership.
The acquisition by an individual, entity or group (within the meaning of Code Section 409A) (a “
Person
”)
of ownership of stock of the Corporation that, together with stock held by such Person, constitutes more than 50% of the total
fair market value or total voting power of the stock of the Corporation. However, if any Person is considered to own more than
50% of the total fair market value of total voting power of the stock of the Corporation, the acquisition of additional stock by
the same Person is not considered to cause a change in ownership of the Corporation (or to cause a change in the effective control
of the Corporation). An increase in the percentage of stock owned by any one Person as a result of a transaction in which the Corporation
acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this paragraph. This paragraph
applies only when there is a transfer of stock of the Corporation (or issuance of stock of the Corporation) and stock in the Corporation
remains outstanding after the transaction; or
(ii)
Change
in Effective Control.
(A) the acquisition by any Person during the 12-month period ending on the date of the most recent acquisition
by such Person, of ownership of stock of the Corporation possessing 35% or more of the total voting power of the stock of the Corporation;
or (B) the replacement of a majority of members of the Corporation’s Board of Directors during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of the Corporation’s Board of Directors prior
to the date of the appointment or election.
A change in effective
control also may occur in any transaction in which either of the two corporations involved in the transaction has a “Change
in Ownership” under paragraph (i) or “Change in Ownership of a Substantial Portion of the Company’s Assets”
under paragraph (iii). If any one Person is considered to effectively control the Corporation, the acquisition of additional control
of the Corporation by the same Person is not considered to cause a change in the effective control of the Corporation (or to cause
a “Change in Ownership” of the Corporation within the meaning of paragraph (i) above); or
(iii)
Change
in Ownership of a Substantial Portion of Assets.
The acquisition by any Person during the 12-month period ending on the date
of the most recent acquisition by such Person, of assets from the Corporation that have a total gross fair market value equal to
or more than 40% of the total gross fair market value of all of the assets of the Corporation immediately prior to such acquisition(s).
For this purpose, gross fair market value means the value of the assets of the Corporation, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets. No change in control shall be deemed to have occurred
in the event of a transfer to a related person or as described in Code Section 409A.
The definition
of Change in Control in this Section 16(b), and all other terms and provisions of this Section 16, shall be interpreted at all
times in such a manner as to comply with Code Section 409A, meaning that no additional income tax is imposed on the Participant
pursuant to Code Section 409A(1)(a).
(c) For
purposes of this Section 16, a “
Double Trigger Event
” shall be deemed to occur with respect to an Option if,
within the period beginning six (6) months prior to a Change in Control and ending two (2) years following such Change in Control,
(i) the Participant’s employment is involuntarily terminated by the Corporation (or the surviving or acquiring corporation,
as the case may be), other than for Cause, or (ii) the Participant terminates his or her employment for Good Reason (as defined
in Section 16(d) herein). If the termination of the Participant’s employment, as contemplated by this paragraph (c), occurs
prior to the Change in Control, then the Participant shall be treated for purposes of this Section 16 as being employed on the
date the Change in Control becomes effective. For purposes of this Section 16, the date of the Double Trigger Event shall be the
later of the effective date of the Change in Control and the date of the Participant’s termination of employment as contemplated
in this paragraph (c).
(d) For
purposes of this Section 16, “
Good Reason
” shall mean:
(i) If
the Participant is a party to an employment or service agreement with the Corporation or a Related Corporation and such agreement
provides for a definition of Good Reason, the definition contained therein;
(ii) If
the Participant is subject to any other benefit plan of the Corporation that supersedes and replaces, in whole or in part, any
provisions of this Plan, and such other benefit plan provides for a definition of Good Reason, the definition contained therein;
or
(iii) If
no such agreement exists or other benefit plan is applicable, a Participant’s resignation from the Corporation within thirty
(30) days following the occurrence of any of the following events with respect to such Participant:
(A) Without
the Participant’s express written consent, the significant reduction of the Participant’s duties, authority, responsibilities,
or reporting relationships relative to the Participant’s duties, authority, responsibilities, or reporting relationships
as in effect immediately prior to such reduction, or the assignment to the Participant of such reduced duties, authority, responsibilities,
or reporting relationships, which reduction or assigned reduction remains in effect five (5) business days after written notice
by the Participant to the Chief Executive Officer or the Chief Financial Officer of the Corporation (or the surviving or acquiring
corporation, as the case may be) of such conditions; provided, however, that the mere occurrence of a Change in Control shall not,
in and of itself, constitute a material adverse change in the Participant’s duties, authority, responsibilities or reporting
relationships.
(B) A
material reduction by Corporation (or the surviving or acquiring corporation, as the case may be) in the base salary, bonus structure
or benefits of the Participant as in effect immediately prior to such reduction, with the result that the Participant’s overall
benefits package is significantly reduced; or
(C) The
relocation of the Participant’s principal work location to a facility or a location more than fifty (50) miles from the Participant’s
then present principal work location, without the Participant’s express written consent.
This will certify that
the Plan was adopted by vote of the Board and stockholders of the Corporation effective as of June 10, 2015 and August 5, 2015,
respectively.
Name: Jeffrey A. Williams
Title: Chief Financial Officer
Date: June 10, 2015
Amendment to Amended and Restated Stock
Option Plan
AMENDMENT TO AMERICA’S CAR-MART,
INC.
Amended and Restated Stock Option Plan
Adopted May 23, 2018
America’s Car-Mart, Inc., a Texas
corporation (the “Company”), hereby amends (the “Amendment”) the America’s Car-Mart, Inc. Amended
and Restated Stock Option Plan (the “Plan”), as set forth herein.
1.
Background
Information.
The Company originally established the Plan effective as of August 27, 2007 and subsequently amended and restated
the Plan effective as of August 5, 2015. Section 12 of the Plan provides that the board of directors of the Company may at any
time amend the Plan, provided that such amendment is approved by the stockholders of the Corporation if required by applicable
law, rule or regulation. The listing rules of the NASDAQ Stock Market require the Company to obtain stockholder approval of any
amendment to an equity compensation of the Company that materially increases the number of shares to be issued under such plan.
The Company wishes to amend the Plan as set forth in this Amendment to increase the number of authorized shares that may be issued
under the Plan. The Company will submit this Amendment for approval by the requisite vote of stockholders of the Company entitled
to vote thereon at the 2018 annual meeting of stockholders to be held on August 29, 2018.
2.
Amendment
to Section 4 – Shares of Stock Subject to the Plan; Award Limitation.
Paragraph (a) of Section 4 of the Plan is hereby
amended in its entirety to read as follows:
“(a) The number of shares of
Common Stock that may be issued pursuant to Awards shall be two million (2,000,000) shares (which number includes all shares available
for delivery under this Section 4(a) since the establishment of the plan in 2007). Such shares shall be authorized but unissued
shares or treasury shares of the Corporation, or shares purchased on the open market or by private purchase.
IN WITNESS WHEREOF, the Company has caused
this Amendment to be duly executed on this 23
rd
day of May, 2018.
|
America’s Car-Mart, Inc.
|
|
|
|
By:
/s/ Vickie D. Judy
|
|
Vickie D. Judy
|
|
Chief Financial Officer and Secretary
|
|
(Principal Financial and Accounting Officer)
|
America’s Car-Mart,
Inc.
802 S.E. Plaza Avenue, Suite
200
Bentonville, AR 72712
Important Notice Regarding
the Availability of Proxy Materials for the
2018 Annual Meeting of Stockholders
to be Held August 29, 2018
Notice of Internet Availability
of Proxy Materials
Your name, Account Number
and Control Number appear in the upper-left-hand-corner of this Notice for online voting purposes. To vote your shares, please
follow the instructions listed below.
The
America’s Car-Mart, Inc. 2018 Annual Meeting will be held on August 29, 2018, at 10:00 a.m. local time, at America’s
Car-Mart, Inc. principal executive office, 802 Southeast Plaza Avenue, Suite 200, Bentonville, Arkansas 72712.
A
description of the matters to be voted on and the recommendations of the Board of Directors of America’s Car-Mart, Inc. regarding
these matters, appear on the reverse side of this Notice. Instructions for voting your shares appear below.
This
is not a ballot. This communication presents only an overview of the more complete proxy materials that are available to you on
the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting.
The
2018 Annual Report, the Proxy Statement, and proxy card of America’s Car-Mart, Inc. are available at
www.onlineproxyvote.com/CRMT
.
If
you want to receive a paper or e-mail copy of these documents, you must request one. There is no charge to you for requesting a
copy. Please make your request for a copy as instructed below on or before August 15, 2018 to facilitate timely delivery.
How to vote online:
Step 1:
Go
to
www.onlineproxyvote.com/CRMT
at any time 24 hours a day.
Step 2:
L
ogin
using the
Control number
located in the top left hand corner of the Notice of Internet Availability of Proxy Materials that
you received in the mail to access the Proxy Materials.
Step 3:
Access
the proxy voting link within that website to vote your proxy.
How
to receive a copy of the proxy materials by mail for this meeting or for future shareholder meetings
:
Telephone
:
Call the transfer agent of America’s Car-Mart, Inc., Securities Transfer Corporation, at 1-844-230-4626
E-Mail
: Send an
e-mail to:
car-mart@stctransfer.com
with “Proxy Materials Order” in the subject
line and in the body of the message include your full name, address, and request.
How to attend the meeting
and vote in person:
America’s
Car-Mart, Inc.’s 2018 Annual Meeting will be held at on August 29, 2018, at 10:00 a.m. local time, at America’s Car-Mart,
Inc. principal executive office, 802 Southeast Plaza Avenue, Suite 200, Bentonville, Arkansas 72712.
If
you plan to attend the Annual Meeting, we would appreciate it if you would notify our Investor Relations Manager by telephone at
(479) 464-9944
or by e-mail at zachary.jennings@car-mart.com. This will assist
us with meeting preparations. You also can obtain directions to the meeting by calling this number. Please bring this
notice with you for admission to the meeting.
Proposals to be voted
on at America’s Car-Mart, Inc.’s 2018 Annual Meeting are listed on the reverse side along with the recommendations
of the Board of Directors of America’s Car-Mart, Inc.
Voting Items:
The Board of Directors of America’s Car-Mart, Inc. recommends
that you vote FOR ALL NOMINEES listed in Proposal 1.
Proposal 1
|
|
To elect six directors for a term of one year and until their successors are elected and qualified:
|
|
|
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|
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Ray C. Dillon
|
Jim von Gremp
|
|
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Daniel J. Englander
|
Joshua G. Welch
|
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William H. Henderson
|
Jeffrey A. Williams
|
The Board of Directors of America’s Car-Mart, Inc. recommends
that you vote FOR Proposals 2, 3, 4 and 5:
Proposal 2
|
|
To approve an advisory resolution regarding the Company’s compensation of its named executive officers;
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Proposal 3
|
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To ratify the selection of Grant Thornton LLP as the independent registered public accounting firm for the fiscal year ending April 30, 2019;
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Proposal 4
|
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To approve an amendment to the Company’s Amended and Restated Stock Incentive Plan, increasing the number of shares authorized for issuance under the plan by 100,000;
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Proposal 5
|
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To approve an amendment to the Company’s Amended and Restated Stock Option Plan, increasing the number of shares authorized for issuance under the plan by 200,000;
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Proposal 6
|
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To conduct such other business as may properly come before the meeting or any adjournments or postponements thereof.
|
This proxy is solicited on behalf of
the Board of Directors
of
AMERICA’S CAR-MART, INC.
The undersigned stockholder(s)
of America’s Car-Mart, Inc., a Texas corporation, hereby appoints Jeffrey A. Williams and Vickie D. Judy, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the annual meeting of the stockholders of America’s Car-Mart, Inc. to be held on August 29, 2018 at 10:00
a.m. local time at the Company’s principal executive office, 802 SE Plaza Avenue, Bentonville, AR 72712, to vote the shares
of common stock which the undersigned would be entitled to vote if then and there personally present, on the matters set forth
below:
|
(1)
|
To elect six directors for a term of one year and until their successors are elected
and qualified:
|
Ray C. Dillon
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
Daniel J. Englander
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
William H. Henderson
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
Jim von Gremp
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
Joshua G. Welch
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
Jeffrey A. Williams
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
|
(2)
|
To approve an advisory resolution regarding the Company’s compensation of its named executive officers.
|
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
|
(3)
|
To ratify the selection of Grant Thornton LLP as the independent registered public accounting firm
for the fiscal year ending April 30, 2019.
|
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
|
(4)
|
To approve an amendment to the Company’s Amended and Restated Stock Incentive Plan, increasing
the number of shares authorized for issuance under the plan by 100,000.
|
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
|
(5)
|
To approve an amendment to the Company’s Amended and Restated Stock Option Plan, increasing
the number of shares authorized for issuance under the plan by 200,000.
|
|
☐
|
FOR
|
☐
|
AGAINST
|
☐
|
ABSTAIN
|
|
(6)
|
To conduct such other business as may properly come before the meeting or any adjournments or postponements
thereof.
|
How to vote online:
Instead of mailing your proxy,
you may choose to vote your shares online by following the instructions outlined below. Proxies submitted by the Internet must
be received by 8:30 a.m. Central Time on August 29, 2018.
Step 1: Go
to
www.onlineproxyvote.com/CRMT
at any time 24 hours a day.
Step 2: L
ogin
using the
Control number
located in the top left hand corner of the Notice of Internet Availability of Proxy Materials that
you received in the mail to access the Proxy Materials.
Step 3: Access
the proxy voting link within that website to vote your proxy.
How to vote on this paper form:
PLEASE COMPLETE, DATE, SIGN AND RETURN
THIS PROXY PROMPTLY. This proxy, when properly executed, will be voted in accordance with directions given by the undersigned stockholder.
If no direction is made, it will be voted FOR each of the director nominees, FOR Proposals 2 3, 4 and 5, and as the proxies deem
advisable on such other matters as may come before the meeting.
|
Date: _________________________________
|
|
Signature: ______________________________
|
|
Signature: ______________________________
|
(This proxy should be marked, dated and
signed by the stockholder(s) exactly as his or her name appears hereon and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both should sign.)
1
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