DEF 14A of Heartland Express Inc
Filed Mar 29, 2024 · FY20230000799233-24-000012
What happens if a nominee for director declines or is unable to accept election?
What happens if a nominee for director declines or is unable to accept election? If you vote by proxy, and if unforeseen circumstances make it necessary for the Board to substitute another person for a nominee, we will vote your shares for that other person.
What happens if a nominee for director declines or is unable to accept election?
| ANNUAL REPORT |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS At the Annual Meeting, the stockholders will elect seven (7) directors to serve on the Board until the 2025 Annual Meeting or until their successors are duly elected and qualified. Upon the recommendation of the Nominating and Governance Committee of the Board, our Board has nominated for election as directors the following seven individuals, each of whom is presently serving as a director: Mr. Michael J. Gerdin, Dr. Benjamin J. Allen, Mr. James G. Pratt, Ms. Brenda S. Neville, Mr. Michael J. Sullivan, Mr. David P. Millis, and Dr. Brenda M. Lantz. In the absence of contrary instructions, each proxy will be voted for the election of each of the below listed directors.
Information Concerning Directors
Information Concerning Directors Information concerning the names, ages, positions with the Company, tenure as a director, and business experience of the nominees for directors is set forth below.
Information Concerning Directors
| NAME | AGE | POSITION | DIRECTOR SINCE | | Mr. Michael J. Gerdin | 54 | Chairman of the Board, Chief Executive Officer, President and Director | 1996 | | Dr. Benjamin J. Allen | 77 | Director | 1995 | | Mr. James G. Pratt | 75 | Director | 2006 | | Ms. Brenda S. Neville | 61 | Director | 2017 | | Mr. Michael J. Sullivan | 71 | Director | 2018 | | Mr. David P. Millis | 63 | Director and President of Millis Transfer | 2020 | | Dr. Brenda M. Lantz | 55 | Director | 2023 |
Information Concerning Directors
| BOARD DIVERSITY MATRIX | | | | | | | AS OF DECEMBER 31, 2023 | | AS OF DECEMBER 31, 2022 | | | Total Number of Directors | 7 | | 7 | | | Part I: Gender Identity | FEMALE | MALE | FEMALE | MALE | | Directors | 2 | 5 | 1 | 6 | | Part II: Demographic Background | | | | | | White | 2 | 5 | 1 | 6 |
Information Concerning Directors
| Director Qualifications and Demographics | | | | | | | | | NAME | Mr. Michael J. Gerdin | Dr. Benjamin J. Allen | Mr. James G. Pratt | Ms. Brenda S. Neville | Mr. Michael J. Sullivan | Mr. David P. Millis | Dr. Brenda M. Lantz | | Qualification: | | | | | | | | | Public Company Officer or Key Employee | X | | X | | | X | | | Financial Reporting | | X | X | X | X | X | | | Industry | X | X | X | X | X | X | X | | Environmental | | | | X | | | | | Risk Management | | X | X | X | X | X | X | | Information Security | | | X | X | | | | | Governance | X | X | X | X | X | X | X | | Race/Ethnicity: | | | | | | | | | White | X | X | X | X | X | X | X | | Gender: | | | | | | | | | Female | | | | X | | | X | | Male | X | X | X | | X | X | |
Information Concerning Directors
Mr. Michael J. Gerdin has served as Chief Executive Officer and Chairman of the Board since 2011. Mr. Gerdin does not serve on any committees of the Board. He was appointed President in 2006. Mr. Gerdin served as the Company's Vice President of Regional Operations from 2001 until 2006. From 1998 to 2001, he was President of A & M Express, Inc., a wholly-owned subsidiary of the Company. From 1983 until 1998, Mr. Gerdin held a variety of positions within the Company, including positions in the operations, sales, safety, maintenance and driver recruiting departments. Mr. Gerdin previously served on the Board of Directors of the Iowa Motor Truck Association, an educational and advocacy group for the trucking industry. Mr. Gerdin served as a director of West Bancorporation and West Bank, a wholly owned subsidiary of West Bancorporation, Inc., from 2013 to 2023. Mr. Gerdin also serves on the Iowa State University College of Business Dean's Advisory Council. Under his leadership as CEO the Company has grown from $529 million in annual revenue to $1.2 billion. The selection of Mr. Gerdin was based upon, among other things, his 40 years of industry experience and expertise, in addition to his exemplary leadership during a period of growth and in all roles in which he has served as an employee and director of the Company. Dr. Benjamin J. Allen has served as a director since 1995 and is Chairperson of the Compensation Committee and a member of the Audit and Risk Committee. Dr. Allen served as interim president of Iowa State University (a public university) from May 2017 to November 2017. Dr. Allen served as the President of the University of Northern Iowa (a public university) from 2006 to June 2013. Dr. Allen was the Vice President for Academic Affairs and Provost at Iowa State University from 2002 through 2006. He also served as a Distinguished Professor in Business at Iowa State University, a position to which he was originally appointed in 1988. In addition, Dr. Allen served as Dean of the College of Business at Iowa State University from 1994 to 2001 and as the Interim Vice President for External Affairs of Iowa State University in 2001 and 2002. He earned his B.S. degree in business economics at Indiana University and his Ph.D. degree in economics at the University of Illinois. He taught and conducted research in the area of transportation economics and management for more than 25 years. He has gained a thorough understanding of the Company and the industry in his role as a director for the past 29 years. His experiences in leadership positions at two of Iowa's major universities are highly valuable in the performance of his duties on board committees. Mr. James G. Pratt has served as a director since 2006 and is Chairperson of the Audit and Risk Committee and is Vice Chairperson of the Compensation Committee. Mr. Pratt retired in 2012 after 30 years of employment with Hills Bank and Trust Company, a bank providing consumer and commercial services, with several branches in Iowa, and Hills Bancorporation, the holding company for Hills Bank and Trust Company. Prior to his retirement, Mr. Pratt served as the Senior Vice President and Chief Financial Officer of Hills Bank and Trust Company in Hills, Iowa, positions he held since 1986. In addition, he served as the Treasurer of Hills Bancorporation, an SEC reporting one-bank holding company with over $2 billion in assets, since 1983, and Secretary of Hills Bancorporation since 2004. Mr. Pratt is an inactive holder of the certified public accountant certification. Before joining Hills Bank and Trust Company in 1982 he was employed by Ernst & Ernst, now Ernst & Young (a professional services company), and McGladrey & Pullen, now RSM (an accounting and consulting firm). Mr. Pratt brings to our Board extensive knowledge of finance, as well as significant experience in the oversight of the operations of a successful and disciplined banking enterprise. He makes a highly valuable contribution to the oversight of risk management and financial matters. Mr. Pratt has made significant contributions to the Audit and Risk Committee in his leadership role as its Chair. Ms. Brenda S. Neville has served as a director since 2017 and is Chairperson of the Nominating and Governance Committee. Ms. Neville is the President and Chief Executive Officer of the Iowa Motor Truck Association (IMTA). Prior to being named President of IMTA in 2008, Ms. Neville was named Vice President and retained the position for 12 years. In the 37 years that Ms. Neville has been with IMTA she has been a strong advocate for Iowa's trucking industry both on the state and national level, as well as providing assistance and expertise in public policy development and trucking industry specific research. IMTA is a statewide trade association that is headquartered in Des Moines, Iowa and represents approximately 700 member companies, as well as a number of different divisions that are affiliated with the trucking, towing and transportation industry. Ms. Neville is a current board member of Trucking Association Executive Council (TAEC)/Federation of the American Trucking Associations (ATA), advisory member for Iowa Freight Management Council and a committee member on the ATA Technology & Engineering Policy, ATA Automated Trucking Policy, ATA Image & Communications, and ATA Nominating and Bylaws Committees. Ms. Neville is a 1985 graduate of University of Northern Iowa with a B.S. in Business/Marketing. Ms. Neville also holds a Certification in Institutes of Organizational Management (IOM) from University of Oklahoma/US Chamber of Commerce and a Certification in Association Management (CAE) both of which she obtained in 1993. Ms. Neville's qualifications to serve on our Board include her extensive background as an advocate for the trucking industry both at a state and national level, as well as her experience in the oversight of the operations of a non-profit trade association promoting the success of the trucking industry. Mr. Michael J. Sullivan has served as a director since 2018, is Vice Chairperson of the Audit and Risk Committee and is a member of the Nominating and Governance Committee. Mr. Sullivan retired in 2015 following more than twenty years as General Manager of Kenworth Mid-Iowa (a Kenworth Truck dealer) and currently practices as a CPA providing general accounting services to his clients. Prior to his role at Kenworth Mid-Iowa, Mr. Sullivan held roles as Regional VP of Interstate Detroit Diesel, Inc. (a Detroit Diesel Allison Distributor), operated a self-employed CPA practice, was CFO/Treasurer/ Controller at Hicklin GM Power Company (a Detroit Diesel Allison Distributor), and was employed by Ernst & Whinney, now Ernst & Young (a professional services company). Mr. Sullivan also served the Iowa Motor Truck Association as Treasurer of the IMTA Allied Division for over twenty years and was actively involved with the IMTA and its legislative activities in Iowa and in Washington, D.C. Mr. Sullivan graduated from Iowa State University in 1974 with a B.S. in Accounting and received the CPA designation in 1976. Mr. Sullivan is also affiliated with the Iowa Society of CPAs and American Institute of Certified Public Accountants professional organizations. Mr. Sullivan's qualifications to serve on our Board include a strong financial background with specific experience and expertise in the trucking industry through a variety of leadership and financial roles and as an advocate for the trucking industry.
Information Concerning Directors
Mr. David P. Millis has served as a director since 2020. Mr. Millis is an employee director of the Company. Mr. Millis does not serve on any committees of the Board. Mr. Millis is the President of Millis Transfer, LLC ("Millis Transfer") a subsidiary of the Company, where over the last 48+ years he has worked in nearly every area of the organization, from truck wash to President. He has held top leadership roles focused on Accounting/Finance, Administration, and Operations before being named President in 1992. Mr. Millis is a third generation family member to lead Millis Transfer. The selection of Mr. Millis to serve as a director was based upon, among other things, his significant industry knowledge and expertise that we believe strengthens and expands the expertise of the Board. Dr. Brenda M. Lantz has served as a director since October 2023 and is Vice Chairperson of the Nominating and Governance Committee and is a member of the Compensation Committee. Dr. Lantz is the Associate Director of North Dakota State University's Upper Great Plains Transportation Institute (the "UGPTI") as well as the Program Director for the Commercial Vehicle Safety Center (the "CVSC") at UGPTI. As Associate Director, Dr. Lantz, helps lead the UGPTI’s research, education, and outreach activities. She assists in managing and promoting the institute while working to improve coordination among the institute’s centers and encouraging synergy among staff. As Program Director of the CVSC, Dr. Lantz serves as a point of contact for universities, law enforcement, and other agencies seeking assistance to establish partnerships to improve commercial vehicle safety in the U.S. Western region. She also conducts safety-related research and analysis. Dr. Lantz holds a Master’s degree in Statistics from North Dakota State University, and a Ph.D. in Business Administration, Supply Chain and Information Systems, from the Pennsylvania State University. She has more than 30 years of experience in transportation research, primarily in the commercial vehicle safety field, and has worked extensively with both government and private industry agencies. Dr. Lantz's qualifications to serve on our Board include her extensive leadership background as an advocate for commercial vehicle safety, including safety-related research and analysis, education and outreach. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
Meetings and Director Compensation
Meetings and Director Compensation The Board's meetings are regularly scheduled. The Board held a total of four regularly scheduled meetings and one special session during the last fiscal year. Each of the then-current directors attended 100% of the regular meetings and special session of the Board. Committee members attended 100% of the meetings held by all of the committees of the Board of which each such director is a member. We have no formal policy regarding attendance by its directors at annual meetings of stockholders. All of our then-current directors attended the 2023 Annual Meeting.
Elements of Compensation
Retirement Plans. We had five qualified 401(k) savings plans during 2023, the Heartland Express Plan, the Millis Transfer Plan, the Smith Transport 401(k) Plan, the Smith Transport Profit Sharing Plan, and the CFI Plan. The Heartland Express Plan covered all of the respective employees of Heartland, excluding Millis Transfer, Smith Transport, and CFI employees, including highly compensated employees on a limited basis. However, highly compensated employees covered by the Heartland Express Plan are not eligible to receive any employer profit sharing or matching contributions as these employees are eligible for the Deferred Compensation Plan. Highly compensated employees are defined by the Internal Revenue Code of 1986, as amended (the "Code"). Our Named Executive Officers, except Mr. Millis, Mr. Smith and Mr. Donovan were eligible to participate in the Heartland Express Plan but were not eligible to receive, and did not receive, any employer profit sharing or matching contributions during 2023. Highly compensated employees, including Mr. Millis, Mr. Smith and Mr. Donovan covered by the respective Millis Transfer Plan or Smith Transport 401(k) Plan, as well as the CFI Plan were eligible to participate on an unlimited basis, including matching contributions, but were excluded from participation in the non-qualified deferred compensation plan. Deferred Compensation Plan. We have a non-qualified deferred compensation plan ("DC Plan") for employees of Heartland Express, Inc., primarily for those with limited participation in our qualified retirement plan due to being highly compensated employees as determined by Code limitations. The DC Plan participation excludes employees at Millis Transfer, Smith Transport and CFI. We offer this plan to allow employees to set aside a portion of their income for retirement on a pre-tax basis. The DC Plan is unfunded for tax purposes and for purposes of ERISA. The Named Executive Officers other than Mr. Millis, Mr. Donovan, and Mr. Smith are eligible to participate in the DC Plan. We also have the ability to make contributions to the DC Plan, which are discretionary. Discretionary contributions made for Named Executive Officers are subject to the approval of the Compensation Committee. There were no discretionary Company contributions made to the DC Plan during 2023. Employees are fully vested in amounts they contribute to the plan but discretionary contributions are unvested and are subject to forfeiture until the employee reaches the age of fifty-five, at which time these contributions vest over the next ten years. Discretionary contributions fully vest in the event of death, disability, or change in control, if not otherwise fully vested. Contributions under the DC Plan are intended to attract and retain qualified executives and to reward our executives for contributions to Company performance. Participants may elect to defer up to 100% of their salary, and any cash bonus, if applicable, to the DC Plan. The election to defer compensation under the DC Plan is irrevocable for each plan year as of the beginning of each plan year. Participant contributions are made into a trust account for the purpose of administering and providing for payment of the deferred compensation under this plan. The investment of contributions are self-directed by participants within an established array of money market, equity funds, fixed income mutual funds or individual stocks at the participant's direction. Investment in Heartland Express, Inc. stock is prohibited under the DC Plan. We do not pay interest or other earnings on the invested contributions. Earnings are generated by the investments selected by the participants. Therefore, earnings on the respective accounts are not deemed to be above-market value. The aggregate earnings on these investments, by each Named Executive Officer who is a participant in the DC Plan, are included in the Nonqualified Deferred Compensation table set forth herein and are attributable to the specific investments selected by each participant. Participants may change the designation of their salary deferral percentage at such times as mutually agreed by the parties but the change is only effective at the beginning of each plan year. Participants can change their investment designation on a daily basis. Participants elect in advance of the deferral of their compensation when the funds will be distributable. The aggregate vested balances of the participants are distributable, when any of the following occur, based on the participants' individual election: six months following the participant's termination of employment; a change in control (as discussed below in "Compensation Discussion and Analysis - Potential Payments upon Change in Control"); the participant's death or disability; or obtaining retirement age. The DC Plan provides for distributions to be made in either a lump sum amount or installments at the election of the participant. Compensation Elements of Acquired Entities. Elements of compensation for employees of acquired entities may have different legacy features as compared to Heartland Express. Specifically, discretionary and short-term cash bonuses exist at recently acquired companies. These elements are under review to identify and implement consistent compensation components that efficiently and effectively achieve our primary compensation policy objectives as discussed throughout this section of Elements of Compensation. Discretionary features may be expanded or eliminated to better meet the compensation objectives.
Compensation Paid to Our Named Executive Officers During 2023
Compensation Paid to Our Named Executive Officers During 2023 A summary of the Compensation Committee's considerations for setting the compensation for 2023 earned by or paid to those persons who were at any time during 2023 our Named Executive Officers are set forth below. The Compensation Committee evaluates and sets the compensation of the Chief Executive Officer differently than it does the other Named Executive Officers. Compensation of the Chief Executive Officer. Mr. Michael J. Gerdin serves as the Chief Executive Officer. The Compensation Committee recognized Mr. Gerdin's substantial responsibility and continued contribution to our operating performance, operating margin, revenue, net income, and attainment of our goals. The Compensation Committee believed that Mr. Gerdin's salary was reasonable compared to similarly situated executives within our Peer Group, and that as a direct and indirect holder of a significant amount of our common stock, Mr. Gerdin receives an incentive through exposure to the market value of our common stock and the receipt of any cash dividends payable in respect of the Company's common stock. Mr. Gerdin's ownership interest has the effect of maintaining a direct link between to the Company's performance and Mr. Gerdin's wealth before consideration of the elements of his compensation. In connection with his leadership as Chief Executive Officer and Chairman of the Company the Compensation Committee approved a $190,000 annual salary increase for Mr. Gerdin in May 2023. After this increase, Mr. Gerdin's new annual salary became $1,050,000, which remained his salary through the end of 2023. Mr. Gerdin received no additional equity compensation and the only non-equity compensation received was through the Tuition Plan. Compensation of The Other Named Executive Officers. The other Named Executive Officers are compensated through salary and periodically through incentive compensation and equity grants. The Compensation Committee relies on the business experience of its members, the historical compensation levels of the Named Executive Officers, and its general understanding of compensation levels within our Peer Group to determine the compensation levels for Named Executive Officers. The Chief Executive Officer recommends to the Compensation Committee the compensation levels and forms for the other Named Executive Officers. The form of compensation for 2023 was consistent with past years, with compensation consisting primarily of base salary, with the exception of individuals whose employment with the Company began as the result of an acquisition. These individuals may have unique pay features in addition to base salary not recently utilized as components of compensation to Named Executive Officers. Mr. Millis's pay consists of company 401(k) contributions and a discretionary cash bonus component established prior to the Company's acquisition of Millis Transfer. Mr. Smith and Mr. Donovan's pay consist of discretionary cash bonus and auto allowance components established prior to the Company's acquisition of Smith Transport. These pay features represent a continuation of inherited compensation components. We pay base salaries that we believe are competitive in comparison to industry standards and the local business environment. In addition, we rely on conservative operating principles and generally do not implement compensation elements for Named Executive Officers or other employees that would create incentives to take undue risks. For each of the Named Executive Officers, the Compensation Committee considered, among other things, the financial and operating results during 2022, the duties and responsibilities of each executive, restricted stock awards previously granted under the Stock Plans and the length of time each executive has been with the Company, as further described in Named Executive Officer's biography found in "Corporate Governance and the Board of Directors - Named Executive Officers." The base salaries of our Named Executive Officers during 2023 were as follows:
Compensation Paid to Our Named Executive Officers During 2023
Except as provided by the terms of the DC Plan and award notices under the Stock Plans, there are generally no employment contracts, termination of employment agreements, change in control agreements, or other arrangements with our executive officers, including our Named Executive Officers, that provide for payment or benefits to any executive officer at, following, or in connection with a change in control of the Company, a change in an executive officer's responsibilities, or an executive officer's termination of employment, including resignation, severance, retirement, or constructive termination. Employer contributions under the DC Plan, as well as unvested restricted stock under the 2011 Stock Plan, immediately vest in the event of a change in control of the Company. Awards granted under the 2021 Stock Plan includes double trigger provisions, whereupon within a period of twenty-four (24) months following the consummation of a change in control vesting only occurs if the participant's employment or services is terminated without cause or for good reason. See "Compensation Discussion and Analysis - Potential Payments upon Change in Control" for additional details. We did not make any contributions under the 401(k) Heartland Express Plan or DC Plan to our Named Executive Officers in 2023. Mr. Millis participates in the Millis Transfer Plan and is eligible to receive 401(k) matching contributions, but is excluded from participation in the DC Plan. See "Summary Compensation Table" for matching contributions. The Role of Stockholder Say-on-Pay Vote. At our 2023 Annual Meeting, the stockholders had the opportunity to cast an advisory vote on the compensation of the executive officers (a "say-on-pay" proposal) as disclosed in our proxy statement for that meeting. Stockholders approved the say-on-pay proposal by the affirmative vote of 99.5% of the votes cast on that proposal. The Compensation Committee believes this affirms stockholders' strong support of our approach to executive compensation and did not change its approach to executive compensation following this advisory stockholder vote. A say-on-pay advisory vote has been included as Proposal 3 for the Annual Meeting. Accordingly, the Compensation Committee will continue to consider the outcome of the say-on-pay proposals when making future compensation decisions for the Named Executive Officers. During the 2023 Annual Meeting, our stockholders also had the opportunity to cast an advisory vote (a "say-on-frequency" proposal) on how often we should include a say-on-pay proposal in its proxy statements for future annual meetings. Stockholders had the choice of voting to have the say-on-pay vote every year, every two years, or every three years. The Board recommended holding a say-on-pay vote every year. The frequency receiving the highest number of votes was every year and therefore, the say-on-pay vote will take place each year until the next vote on say-on-frequency, which will take place at our 2029 Annual Meeting. Compensation Decisions with Respect to 2024. The Compensation Committee annually reviews and considers increases in the base salaries of the Named Executive Officers, as well as the possibility of granting restricted stock awards, based on performance, current compensation, and responsibilities, as described above. As of March 29, 2024, the Compensation Committee had not considered any changes to the salaries of or equity grants to the Named Executive Officers for 2024. Nevertheless, the Compensation Committee may consider such changes or grants in the future. Potential Payments upon Change in Control. As noted above, we generally do not have any employment contracts, termination of employment agreements, change in control agreements, or other arrangements with any of the Named Executive Officers. However, as discussed above, under certain circumstances in which there is a change in control of the Company, unvested stock under the 2011 Stock Plan and employer contributions to the DC Plan immediately become fully vested, and unvested stock under the 2021 Stock Plan includes double trigger change in control provisions. In addition, under the DC Plan upon a change in control, employees can change elections on the timing of distributions, which could result in immediate payment of all contributions. The estimated value of restricted stock granted under the Stock Plans and contributions under the DC Plan that would have vested for the Named Executive Officers who were serving as of December 31, 2023, under the respective acceleration scenarios described above is set forth in the table below. The value for the accelerated restricted stock was calculated by multiplying the closing market price of the stock on December 29, 2023, the last trading day of 2023 ($14.26), by the number of shares of accelerated restricted stock. Payments upon a change in control under the DC Plan may be made in installments or a lump sum at the election of the participant.
Compensation Paid to Our Named Executive Officers During 2023
| Name | Value of Accelerated Restricted Stock ($) | Value of Accelerated Contributions to Non-Qualified Deferred Compensation Plan ($) (1) | | Mr. Michael J. Gerdin | — | 223,169 | | Mr. Christopher A. Strain | — | 570,309 | | Mr. Kent D. Rigdon | — | 663,650 | | Mr. David P. Millis | 53,561 | — | | Mr. Michael P. Donovan | 142,600 | — |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following is a tabular presentation of pay vs performance presenting certain information regarding the compensation earned by the Chief Executive Officer (our Principal Executive Officer (or "PEO")) and the Named Executive Officers (or "NEO's"), and comparing such information to a "total shareholder return" (or "TSR") measure.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total Non-PEO NEO's(3) ($) | Average Compensation Actually Paid to Non-PEO NEO's(4) ($) | Value of Initial Fixed $100 Investment Based On: | | Net Income (in millions)(7)($) | Operating Ratio(8) (%) | | | | | | | TSR(5) ($) | Peer Group TSR(6) ($) | | | | 2023 | 1,012,483 | 1,012,483 | 408,884 | 409,249 | 71.11 | 152.09 | 14.8 | 96.5% | | 2022 | 839,665 | 839,665 | 340,087 | 342,053 | 76.09 | 138.87 | 133.6 | 80.5% | | 2021 | 797,900 | 797,900 | 254,162 | 252,011 | 82.99 | 155.32 | 79.3 | 82.6% | | 2020 | 820,753 | 820,753 | 301,232 | 297,315 | 86.34 | 112.49 | 70.8 | 85.5% |
PAY VERSUS PERFORMANCE
| (1) Reflects compensation amounts reported in the Summary Compensation Table (the “SCT”) for our PEO, Michael J. Gerdin, for the respective years shown. | | (2) For 2023, 2022, 2021, and 2020, the only compensation received by Mr. Gerdin was reported in the “Salary” and “All Other Compensation” columns of the SCT and Mr. Gerdin does not receive any stock awards from the Company. Therefore, no adjustments were made to determine the compensation actually paid to Mr. Gerdin. | | (3) The following non-PEO named executive officers are included in the average figures shown: | | 2023: Christopher A. Strain, Kent D. Rigdon, David P. Millis, Todd A. Smith and Michael P. Donovan. | | 2022: Christopher A. Strain, Kent D. Rigdon, David P. Millis and Todd A. Smith. | | 2021: Christopher A. Strain, Kent D. Rigdon, David P. Millis and Jo A. Borden. | | 2020: Christopher A. Strain, Kent D. Rigdon, David P. Millis and Jo A. Borden. | | (4) To calculate the compensation actually paid for our non-PEO NEOs, the following adjustments were made to SCT total compensation, calculated in accordance with the SEC methodology for determining compensation actually paid for each year shown: |
PAY VERSUS PERFORMANCE
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Deduct Stock and Option Awards Reported in the Summary Compensation Table ($) | Add YE Fair Value of Awards Granted During the Covered FY that are Outstanding and Unvested as of the End of the Covered FY ($) | Add Change in Fair Value as of the End of the Covered FY for Awards Granted in a Prior FY that are Outstanding and Unvested as of the Covered FY ($) | Add Vesting-Date Fair Value of Awards Granted During the Covered FY that Vested During the Covered FY ($) | Add Change in Fair Value as of the Vesting Date for Awards Granted in a Prior FY that Vested During the Covered FY ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 408,884 | (22,967) | 10,712 | (2,160) | 12,721 | 2,059 | 409,249 | | 2022 | 340,087 | (51,039) | 12,886 | — | 40,119 | — | 342,053 | | 2021 | 254,162 | (2,511) | — | (320) | 2,511 | (1,831) | 252,011 | | 2020 | 301,232 | (55,341) | 22,625 | (2,397) | 31,179 | 17 | 297,315 |
PAY VERSUS PERFORMANCE
| (5) The total shareholder returns assumes that $100 was invested on December 31, 2019 in the Company and that dividends were reinvested when and as paid. | | (6) The Peer Group TSR assumes that $100 was invested on December 31, 2019 in the Peer Group made up of the six companies listed in the Compensation Discussion and Analysis section of this proxy statement (Covenant Logistics Group, Inc., Knight-Swift Transportation Holdings Inc., Marten Transport, Ltd., P.A.M Transportation Services, Inc., Schneider National, Inc., and Werner Enterprises, Inc.) and that dividends were reinvested when and as paid. In 2022, we used a peer group consisting of Covenant Logistics Group, Inc., Knight-Swift Transportation Holdings Inc., Marten Transport, Ltd., P.A.M Transportation Services, Inc., U.S. Xpress Enterprises, Inc., and Werner Enterprises, Inc. (collectively, the “Former Peer Group”). We substituted Schneider National, Inc. for U.S. Xpress Enterprises, Inc. because U.S. Xpress Enterprises, Inc. was acquired by Knight-Swift Transportation Holdings Inc. in July 2023 and is therefore no longer a public company. The TSR for the Former Peer Group was $115.69 for 2020, $160.35 for 2021, and $142.26 for 2022. It is impracticable to calculate the TSR for the Former Peer Group for 2023 as information regarding U.S. Xpress Enterprises, Inc. for 2023 is not available as it is no longer a public company. |
PAY VERSUS PERFORMANCE
| (7) Reflects Net Income in the Company’s Consolidated Statements of Comprehensive Income included in the Company’s Annual Reports on Form 10-K for each of the years ended December 31, 2023, 2022, 2021, and 2020. | | (8) Our company-selected measure is Operating Ratio, which is described below. |
PAY VERSUS PERFORMANCE
The relationship between the compensation actually paid to the PEO and the average compensation actually paid to the non-PEO NEOs and the cumulative total shareholder return of the Company and the Peer Group for 2023, 2022, 2021, and 2020 is represented by the graph below: The relationship between the compensation actually paid to the PEO and the average compensation actually paid to the non-PEO NEOs and the Company’s net income for 2023, 2022, 2021, and 2020 is represented by the graph below: The relationship between the compensation actually paid to the PEO and the average compensation actually paid to the non-PEO NEOs and the Company’s Operating Ratio for 2023, 2022, 2021, and 2020 is represented by the graph below:
Tabular Disclosure of the Most Important Measures to Link Compensation Actually Paid for 2023 to Company Performance
Tabular Disclosure of the Most Important Measures to Link Compensation Actually Paid for 2023 to Company Performance The following three financial metrics were the most important measures used to link compensation actually paid for 2023 to Company Performance. Please see the Compensation Discussion and Analysis section for a further description of the metrics used in the Company's executive compensation program.
Tabular Disclosure of the Most Important Measures to Link Compensation Actually Paid for 2023 to Company Performance
| Total Shareholder Return - Key metric in determining salary and equity awards. This metric, which compares Company TSR to the TSR of comparable publicly traded peers operating in the transportation industry. The Compensation Committee utilizes this metric for decisions on base salary and equity awards as discussed in the “Compensation Discussion and Analysis. | | Net Income - Key metric in determining salary and equity awards. | | Operating Ratio - Key metric in determining salary and equity awards and is defined as operating expenses as a percentage of operating revenues. The Compensation Committee believes that this metric represents the overall operating effectiveness of the Company, as compared to other publicly traded trucking companies, and is an important measure to be considered when making decisions on salary and equity awards. |
Summary Compensation Table
Summary Compensation Table The following table sets forth information concerning the total compensation for the fiscal year 2023 awarded to, earned by, or paid to those persons who were our Named Executive Officers. There was no other compensation paid to our Named Executive Officers other than as detailed below.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | | Mr. Michael J. Gerdin, Chief Executive Officer, Chairman, President and Director | 2023 | 980,577 | — | — | 31,906 (3) | 1,012,483 | | | 2022 | 830,770 | — | — | 8,895 (3) | 839,665 | | | 2021 | 780,380 | — | — | 17,520 (3) | 797,900 | | Mr. Christopher A. Strain, Vice President of Finance, Treasurer, and Chief Financial Officer | 2023 | 331,160 | — | — | — | 331,160 | | | 2022 | 295,115 | — | 104,160 | — | 399,275 | | | 2021 | 276,190 | — | — | — | 276,190 | | Mr. Kent D. Rigdon, Chief Operating Officer | 2023 | 314,630 | — | — | 19,810 (3) | 334,440 | | | 2022 | 292,865 | — | — | 19,184 (3) | 312,049 | | | 2021 | 276,240 | — | — | 13,704 (3) | 289,944 | | Mr. David P. Millis, Director and President of Millis Transfer | 2023 | 176,965 | 28,560 (4) | 114,837 | 8,123 (5) | 328,485 | | | 2022 | 131,800 | 55,400 (4) | 99,994 | 4,905 (5) | 292,099 | | | 2021 | 130,000 | 51,120 (4) | 10,044 | 5,850 (5) | 197,014 | | Mr. Todd A. Smith, Former President of Smith Transport (6) | 2023 | 378,564 | 275,000 (4) | — | 20,654 (7) | 674,218 | | | 2022 | 338,462 | — | — | 18,462 (7) | 356,924 | | Mr. Michael P. Donovan, Chief Operating Officer of Smith Transport (8) | 2023 | 277,115 | 75,000 (4) | — | 24,000 (7) | 376,115 |
Summary Compensation Table
| (1) Any differences between salary reported below and salary rates reported elsewhere in this Proxy Statement are attributable to payroll timing differences. | | (2) This column represents the aggregate grant date fair value of restricted stock grants computed in accordance with the Financial Accounting Standards Board authoritative guidance on stock-based compensation, FASB ASC Topic 718. The amount reflects the accounting expense to be recognized over the vesting period of the restricted stock award, and does not necessarily correspond to the actual value that will be recognized by the Named Executive Officer. | | (3) Amounts reflect payments made under our Tuition Plan as discussed in the Compensation Discussion and Analysis. | | (4) Mr. Millis, Mr. Smith, and Mr. Donovan's compensation includes components that were established prior to the Company acquiring Millis Transfer and Smith Transport, with discretionary cash bonuses being a component of their compensation. Mr. Millis, Mr. Smith, and Mr. Donovan are the only Named Executive Officer that received cash bonuses in 2023. | | (5) Represents Company contributions to Mr. Millis under the Millis Transfer 401(k) Plan. Mr. Millis is the only Named Executive Officer that received Company 401(k) contributions. | | (6) Mr. Smith was not a Named Executive Officer in 2021. The 2022 salary includes pay subsequent to the Smith Transport acquisition date of May 31, 2022. | | (7) Represents an automobile allowance that was established prior to the Company acquiring Smith Transport. Amount presented represents payments made subsequent to Smith Transport acquisition date of May 31, 2022. Mr. Smith and Mr. Donovan are the only Named Executive Officers that received an automobile allowance. | | (8) Mr. Donovan was not a Named Executive Officer in 2022 and 2021. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information concerning each grant of an award made to the Named Executive Officers during the fiscal year ended December 31, 2023. The awards detailed in the table below were discretionary and were not related to any performance-based criteria that would change the amount of the award.
Grants of Plan-Based Awards
| Name | Grant Date | All Other Stock Awards: Number of Shares of Stock (#) | Grant Date Fair Value of Stock Awards ($) (1) | | Mr. Michael J. Gerdin | — | — | — | | Mr. Christopher A. Strain | — | — | — | | Mr. Kent D. Rigdon | — | — | — | | Mr. David P. Millis | November 3, 2023 | 1,000 (2) | 12,360 (3) | | | December 1, 2023 | 7,513 (4) | 102,477 (5) | | Mr. Todd A. Smith | — | — | — | | Mr. Michael P. Donovan | — | — | — |
Grants of Plan-Based Awards
| (1) This column represents the aggregate grant date fair value of restricted stock grants computed in accordance with the Financial Accounting Standards Board authoritative guidance on stock-based compensation, FASB ASC Topic 718. | | (2) Represents the number of shares under new awards granted during 2023. All of the shares vested on November 3, 2023. | | (3) The amount was determined based on the market closing price of the stock on the November 3, 2023 grant date, which was $12.36 per share. | | (4) Represents the number of shares under new awards granted during 2023. 3,757 shares vested on December 1, 2023. Subject to the terms and conditions of the award notice, including continued employment, the remainder of the shares underlying this grant will vest on May 15, 2024. | | (5) The amount was determined based on the market closing price of the stock on the December 1, 2023 grant date, which was $13.64 per share. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information concerning all outstanding equity grants held as of December 31, 2023 by the Named Executive Officers. All outstanding equity awards are restricted shares of the Company's Common Stock. There were no shares forfeited by Named Executive Officers during 2023. Unvested stock under the Stock Plans becomes vested in the event of a change of control of the Company subject to double trigger provisions, as described in "Compensation Discussion and Analysis - Potential Payments upon Change in Control."
Outstanding Equity Awards at Fiscal Year-End
| | Stock Awards Outstanding | | | | Name | Stock Award Grant Date | Number of Shares of Stock That Have Not Vested (#) | Market Value of Shares of Stock That Have Not Vested ($) (1) | | Mr. Michael J. Gerdin | — | — | — | | Mr. Christopher A. Strain | — | — | — | | Mr. Kent D. Rigdon | — | — | — | | Mr. David P. Millis | December 1, 2023 | 3,756 (2) | 53,561 | | Mr. Todd A. Smith | — | — | — | | Mr. Michael P. Donovan | August 5, 2022 | 10,000 (3) | 142,600 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Market value of unvested stock awards was based on the market closing price of our stock on December 29, 2023, the last trading day of 2023, which was $14.26 per share. | | (2) Stock award that vests on May 15, 2024. | | (3) Stock award that vested on February 1, 2024. |
Stock Vested
Stock Vested The following table sets forth information concerning the values realized upon vesting of restricted stock for the fiscal year ended December 31, 2023. The stock awards were contingent upon the recipient’s continued employment through each vesting date.
Stock Vested
| | Stock Awards Vested | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Mr. Michael J. Gerdin | — | — | | Mr. Christopher A. Strain | — | — | | Mr. Kent D. Rigdon | — | — | | Mr. David P. Millis | 8,117 (1) | 114,241 | | Mr. Todd A. Smith | — | — | | Mr. Michael P. Donovan | 10,000 (2) | 164,600 |
Stock Vested
| (1) Represents 3,360 shares of stock vested on May 11, 2023, 1,000 shares of stock vested on November 3, 2023, and 3,757 shares of stock vested on December 1, 2023, upon achieving service requirements. The value realized on vesting was based on the closing price of $15.07 on May 11, 2023, $12.36 on November 3, 2023, and $13.64 on December 1, 2023, the respective vesting dates. | | (2) Represents 5,000 shares of stock vested on February 1, 2023 and 5,000 shares of stock vested on August 1, 2023, upon achieving service requirements. The value realized on vesting was based on the closing price of $17.25 on February 1, 2023 and $15.67 on August 1, 2023, the respective vesting dates. |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The following table provides information with respect to the DC Plan as discussed in "Compensation Discussion and Analysis - Elements of Compensation - Deferred Compensation Plan." The amounts shown include compensation earned and deferred in current and prior years, and earnings on, or distributions of, such amounts.
Nonqualified Deferred Compensation
| Name | Executive Employee Contributions in 2023 ($) | Aggregate Earnings in 2023 ($) (1) | Aggregate Withdrawals/Distributions ($) | Aggregate Balance at December 31, 2023 ($) (2) | | Mr. Michael J. Gerdin | — | 16,012 | — | 223,169 | | Mr. Christopher A. Strain | 43,030 | 60,172 | — | 570,309 | | Mr. Kent D. Rigdon | 39,000 | 122,450 | — | 663,650 | | Mr. David P. Millis | — | — | — | — | | Mr. Todd A. Smith | — | — | — | — | | Mr. Michael P. Donovan | — | — | — | — |
Nonqualified Deferred Compensation
| (1) Amounts reported in this column are not reported as compensation for 2023 in the Summary Compensation Table. | | (2) Amounts reported in this column were not reported as compensation in the Summary Compensation Table for previous years, except for amounts attributable to employer discretionary contributions. No such contributions were made in 2023. |
Narrative to Nonqualified Deferred Compensation
Narrative to Nonqualified Deferred Compensation A complete description of the DC Plan is included in "Compensation Discussion and Analysis - Elements of Compensation - Deferred Compensation Plan." Under the terms of the DC Plan, in the event of a change of control of the Company, the employer contributions to this plan immediately become fully vested as described in "Compensation Discussion and Analysis - Potential Payments upon Change in Control."
Director Compensation
Director Compensation The following table provides information concerning the compensation of all directors for the fiscal year ended December 31, 2023. Mr. Gerdin and Mr. Millis do not receive compensation as directors that is separate from their compensation as employees of the Company.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | Dr. Benjamin J. Allen | 65,750 | 10,052 | 75,802 | | Mr. James G. Pratt | 71,250 | 10,052 | 81,302 | | Mr. Larry J. Gordon (retired in November 2023) | 49,165 | 10,052 | 59,217 | | Ms. Brenda S. Neville | 66,500 | 10,052 | 76,552 | | Mr. Michael J. Sullivan | 61,000 | 10,052 | 71,052 | | Dr. Brenda M. Lantz (joined in October 2023) | 9,955 | — | 9,955 |
Director Compensation
| (1) Represents stock granted from the 2021 Restricted Stock Award Plan of 667 shares per director on May 11, 2023 that vested immediately. The value realized on vesting was based on the closing price of $15.07 on the May 11, 2023 vesting date. |
Narrative to Director Compensation Table
Narrative to Director Compensation Table At the May 11, 2023 Board Meeting the annual cash retainer was increased by $5,000 from $40,000 to $45,000. All non-employee directors are paid the annual cash retainer in quarterly installments of $11,250 (previously $10,000 per quarterly installment). Non-employee directors are paid additional compensation of $1,500 and $750 based on attendance at each regular board and committee meeting, respectively. Mr. Pratt is the Audit and Risk Committee chairperson and earned an additional $12,500 in 2023 for his service in this position. Dr. Allen, the Compensation Committee chairperson, earned an additional $7,000 in 2023 for his service in this position. Ms. Neville is the Nominating and Governance Committee chairperson and earned an additional $7,000 in 2023 for her service in this position. Mr. Gordon and Dr. Lantz's annual cash retainers were prorated to reflect the period of time they served on the Board during 2023. The 2021 Stock Plan allows for stock awards to directors. Stock awards under the 2021 Stock Plan is designed to more closely align director and stockholder interests. At the May 11, 2023 Board Meeting a stock award for all non-employee directors was approved, which is in addition to the aforementioned director fees. We have stock ownership and holding guidelines to more fully align the interests of our directors with those of our stockholders. The director stock ownership guidelines require directors to own a multiple of three times the base annual cash retainer within four years. All directors are also reimbursed for expenses incurred related to travel associated with board meetings.