DEF 14A of Forward Air Corp
Filed May 20, 2024 · FY20230001628280-24-024198
PROPOSAL 2 - ELECTION OF DIRECTORS
PROPOSAL 2 - ELECTION OF DIRECTORS Our Bylaws permit the Board to fix the size of the Board. At the date of this Proxy Statement, our Board is currently comprised of sixteen directors, fifteen of which are non-employee directors. Immediately following the Annual Meeting, the Board’s size will be set at twelve directors. The Board is committed to recruiting and nominating directors for election who will collectively provide the Board with the necessary diversity of experiences, skills and characteristics to enhance the Board’s ability to manage and direct the affairs and business of the Company and to make fully informed, comprehensive decisions. In recommending candidates for election to the Board, in the context of the perceived needs of the Board at that time, the Corporate Governance and Nominating Committee evaluates a candidate’s knowledge, experience, skills, expertise and diversity, and any other factors that the Corporate Governance and Nominating Committee deems relevant. In particular, the Board and the Corporate Governance and Nominating Committee believe that the Board should be comprised of a well-balanced group of individuals. In 2024, the Corporate Governance and Nominating Committee has unanimously recommended to the Board, and the Board unanimously approved, the nominations of Ana B. Amicarella, Charles L. Anderson, Valerie A. Bonebrake, Dale W. Boyles, R. Craig Carlock, Robert L. Edwards, Jr., Christine M. Gorjanc, Michael B. Hodge, George S. Mayes, Jr., Javier Polit, Shawn Stewart and Laurie A. Tucker, each to hold office until the 2025 Annual Meeting of Shareholders or until a successor has been duly elected and qualified. Each nominee has consented to serve if elected.
Director Nominees
Director Nominees At the closing of our acquisition of Omni Newco, LLC, the Company entered into (i) a shareholder agreement (the “REP Shareholders Agreement”) with affiliates of Ridgemont Equity Partners (“REP”) that provides, among other things, that REP has the ongoing right to nominate two directors to the Board and (ii) a shareholders agreement (the “EVE Shareholders Agreement” and, together with the REP Shareholders Agreement, the “Shareholders Agreements”) with certain former indirect equity holders of Omni related to EVE Omni Investor, LLC (the “EVE Related Holders” and, together with REP, the “Major Shareholders”) that provides, among other things, that the EVE Related Holders have the ongoing right to nominate one director to the Board. The Shareholders Agreements provide the Major Shareholders the right to nominate their respective nominees, subject to terms and conditions related to ongoing ownership of equity securities of the Company by each respective Major Shareholder. Pursuant to the Shareholder Agreements, the Major Shareholders have nominated Charles L. Anderson, Robert L. Edwards and Michael B. Hodge to serve on our Board. Our Board has determined that all of the director nominees are qualified to serve as directors of the Company. In addition to the specified business experience listed below, each of the directors has the background skills and attributes that the Board believes are required to be an effective director of the Company, including experience at senior levels in areas of expertise helpful to the Company, a willingness and commitment to assume the responsibilities required of a director of the Company and the character and integrity the Board expects of its directors. In addition, each Shareholders Agreement, among other things, (a) requires the applicable Major Shareholders to vote such Major Shareholders’ voting securities of the Company in favor of directors nominated by the Board and against any other nominees, (b) provides that each of the applicable Major Shareholders is subject to standstill restrictions, subject to certain exceptions, and (c) prohibits the applicable Major Shareholders from transferring equity securities of the Company, subject to certain exceptions, to certain competitors of the Company and to other shareholders of the Company beneficially owning more than 10% of the Company’s voting power. The following persons are our Board’s nominees for election to serve as directors. There are no family relationships between any of the director nominees. Certain information relating to our Board’s nominees, furnished by the nominees, is set forth below. The ages set forth below are accurate as of the date of this Proxy Statement.
Director Nominees
| ANA B. AMICARELLA | Director since 2017 Age 57 |
Director Nominees
Ms. Amicarella is the Chief Executive Officer of EthosEnergy, an independent service provider of rotating equipment services and solutions to the global power, oil and gas and industrial markets. Prior to joining EthosEnergy in December 2019, Ms. Amicarella served as Managing Director for the Latin America business of Aggreko PLC, a rental business of mobile power plants and temperature control solutions, after serving as Vice President of various business units from 2011 to April 2019. Previously, she was general manager of GE Oil & Gas Services for North America. Ms. Amicarella began her career as a field engineer with GE in 1988, and during her tenure, she served in various professional capacities within the areas of services, sales, strategy and P&L leadership. Ms. Amicarella was elected to the board of Warrior Met Coal, Inc. in August 2018 and serves as a member of its audit, nominating and governance, and environmental health and safety committees. Ms. Amicarella received a B.S. in electrical engineering from The Ohio State University and an MBA from Oakland University. She competed in the 1984 Olympics in synchronized swimming for Venezuela and was an All-American while at The Ohio State University. Qualifications. The Board believes that Ms. Amicarella’s extensive business, prior management experience and diversity, including her Hispanic background, bring sound guidance to our Board. The Board believes that Ms. Amicarella utilizes that experience in her service as a member of both the Audit Committee and the Corporate Governance and Nominating Committee.
Director Nominees
| CHARLES L. ANDERSON | Director since 2024 Age 40 |
Director Nominees
Mr. Anderson serves as a Partner at Ridgemont Equity Partners, a private equity firm that provides buyout and growth capital to industry-leading companies, since 2019. As part of Mr. Anderson’s portfolio involvement, he also serves on the boards of several private companies which provide business and tech-enabled services. Prior to joining Ridgemont in 2014, Mr. Anderson was also Vice President and an associate of Crestview Partners from 2012 until 2014 and 2008 until 2010, respectively. Mr. Anderson was also a financial analyst at J.P. Morgan Securities, Inc. from 2006 until 2008. As more fully discussed above, Mr. Anderson was selected as a designee of REP to join our Board pursuant to the REP Shareholders Agreement. Mr. Anderson holds an M.B.A. from Harvard University and a B.A. in Economics from Washington and Lee University. Qualifications. The Board believes that Mr. Anderson’s board and investment management experience will provide the Board significant insight into the Company’s strategy and investment decisions. Mr. Anderson was nominated to the Board by a security holder.
Director Nominees
| VALERIE A. BONEBRAKE | Director since 2018 Age 72 |
Director Nominees
Ms. Bonebrake retired as a Senior Vice President of Tompkins International, a global supply chain consulting firm, in March 2018 and has more than 30 years of industry experience in logistics services. In her role at Tompkins, she consulted with an array of companies and industries in North America and across the globe. Prior to joining Tompkins in 2009, she was the Executive Vice President, COO North America, and a cofounder of the YRC Worldwide subsidiary, Meridian IQ (now Noatum Logistics), a global third-party logistics company. Ms. Bonebrake spent 19 years at Ryder System, Inc. in various leadership roles of increasing responsibility in the company’s supply chain solutions segment. She also has been recognized by Ingram Magazine as one of the Top Ten Female Executives in Kansas, and was a 2010 recipient of Supply & Demand Chain Executive’s Pros to Know award. She holds a M.S. in International Logistics from the Georgia Institute of Technology. Ms. Bonebrake has served from 2018 to present as a member of the Board for UC San Diego Rady School of Management, Institute for Supply Excellence and Innovation (ISEI). She received her NACD Directorship Certification in 2021. Qualifications. The Board believes that Ms. Bonebrake contributes strategic insight to our Board based on her extensive experience in the transportation industry. The Board believes that Ms. Bonebrake utilizes that experience in her service as a member of the Compensation Committee.
Director Nominees
| DALE W. BOYLES | Director Nominee Age 63 |
Director Nominees
Mr. Boyles has served as the Chief Financial Officer of Warrior Met Coal, Inc., a U.S.-based environmentally and socially minded supplier of metallurgical coal since his appointment in January 2017. From November to December 2016, he provided consulting services to Warrior Met Coal, LLC. Mr. Boyles was the Chief Financial Officer of Noranda Aluminum Holding Corporation (formerly NYSE listed under “NOR”), a primary aluminum and aluminum coil manufacturer, from November 2013 to November 2016. While in that role, he oversaw the voluntary reorganization under Chapter 11 of the Bankruptcy Code of Noranda in 2016. From 2006 to June 2012, Mr. Boyles served in several capacities for Hanesbrands, Inc. (NYSE listed under “HBI”), an apparel company, including Operating Chief Financial Officer from October 2011 to June 2012, Interim Chief Financial Officer from May 2011 to October 2011, and Vice President, Controller and Chief Accounting Officer from 2006 to May 2011. From 1997 to 2006, he served in various capacities for KPMG LLP, most recently as Audit Partner, Consumer & Industrial Markets. Mr. Boyles was Corporate Division Controller for Collins & Aikman Corporation from 1993 to 1996. Mr. Boyles holds a B.S. in Accounting from University of North Carolina - Charlotte. Mr. Boyles is a certified public accountant. Qualifications. The Board believes that Mr. Boyles is qualified to serve on the Board because of his extensive experience serving in various leadership roles at several companies and his knowledge of accounting principles, financial reporting and internal controls. Mr. Boyles was nominated to the Board by a non-management director.
Director Nominees
| R. CRAIG CARLOCK | Director since 2015 Age 57 |
Director Nominees
Mr. Carlock served as the Company’s Lead Independent Director from May 2019 until February 2024. He serves as the Chief Operating Officer of The Carroll Companies and assumed that position in March 2023. Prior to The Carroll Companies, he served as the Chief Executive Officer and a director of Omega Sports, Inc. (“Omega”) from April 2017 to March 2023. Prior to Omega, he served as the President and Chief Executive Officer of The Fresh Market from January 2009 to January 2015 and as a member of its board of directors from June 2012 to January 2015. He began his career with The Fresh Market in 1999 and served in various capacities culminating with the position of President and Chief Executive Officer. During his time with The Fresh Market, Mr. Carlock served as its Executive Vice President and Chief Operating Officer as well as its Senior Vice President-Store Operations, Vice President-Merchandising and Marketing, and Director of Merchandising & Marketing Strategy. Prior to joining The Fresh Market, Mr. Carlock was Financial Manager, Fabric Care Category, at Procter & Gamble Company. Qualifications. The Board believes that Mr. Carlock’s leadership experience is invaluable to management and the Board in, among other things, the areas of strategy, development and corporate governance. The Board believes that Mr. Carlock utilizes that experience in his service as Lead Independent Director and Chair of the Compensation Committee.
Director Nominees
| ROBERT L. EDWARDS, JR. | Director since 2024 Age 57 |
Director Nominees
Mr. Edwards co-founded and began serving as a Partner of Ridgemont Equity Partners, a private equity firm that provides buyout and growth capital to industry-leading companies, in 2010 and has served as a Managing Partner since 2021. As part of Mr. Edwards’ portfolio involvement, he also serves on the board of several private companies which provide business and tech-enabled services. Prior to co-founding Ridgemont in 2010, Mr. Edwards was a Managing Director at Banc of America Capital Investors (predecessor to Ridgemont), a Management Consultant at McKinsey & Co., Inc. and served as an investment banker at Allied Capital and Bowles Hollowell Conner & Co, Inc. As more fully discussed above, Mr. Edwards was selected as a designee of REP to join our Board pursuant to the REP Shareholders Agreement. Mr. Edwards holds an M.B.A. from Harvard University and a B.A. in Economics from the University of North Carolina at Chapel Hill. Qualifications. The Board believes that Mr. Edwards’ board, investment management and industry experience will provide the Board significant insight into the Company’s management and investment decisions. Mr. Edwards was nominated to the Board by a security holder.
Director Nominees
| CHRISTINE M. GORJANC | Director Nominee Age 67 |
Director Nominees
Ms. Gorjanc currently serves as an independent director for various public companies, including as a member of the board of directors of Shapeway Holdings, Inc., a publicly-traded digital manufacturing platform since April 2023. Since November 2015, Ms. Gorjanc has served on the board of directors of Invitae, Inc., a genetic testing and services company, where she serves as a chairman of the audit committee as well as a member of the compensation committee. Ms. Gorjanc briefly served as the Interim Chief Executive Officer of Invitae, Inc. from July until August 2023. Following her time as Interim Chief Financial Officer, Invitae, Inc. entered into Chapter 11 of the Bankruptcy Code in February 2024. In May 2019, Ms. Gorjanc joined the board of Juniper Networks, Inc., a leader in secure AI driven networks where she is the lead director and serves on the audit committee. From March 2021 to October 2022, Ms. Gorjanc also served on the board of directors of Zymergen, Inc., a biotechnology company, where she served on the compensation committee and audit committee. Ms. Gorjanc served as the Chief Financial Officer of Arlo Technologies, Inc., an intelligent cloud infrastructure and mobile app platform company, from August 2018 to June 2020. She previously served as the Chief Financial Officer of NETGEAR, Inc., a provider of networking products and services from January 2008 to August 2018, where she also served as Chief Accounting Officer from December 2006 to January 2008 and Vice President, Finance from November 2005 through December 2006. Prior to joining NETGEAR, Inc., Ms. Gorjanc served in a number of roles including Vice President, Controller, Treasurer, Tax Director and Assistant Secretary for Aspect Communications Corporation, a provider of workforce and customer management solutions, from September 1996 through November 2005. Ms. Gorjanc served as the Manager of Tax for Tandem Computers, Inc., a provider of fault-tolerant computer systems from October 1988 through September 1996, Ms. Gorjanc served in management positions at Xidex Corporation, a manufacturer of storage devices, and spent eight years in public accounting. Ms. Gorjanc has also received her director certification from the NACD (National Association of Corporate Directors). Qualifications. The Board believes that Ms. Gorjanc is well qualified to serve on the board because of her extensive experience in senior leadership roles, executive experience and financial expertise gained through service as a chief financial officer of rapidly growing international technology companies including experience in operations, supply chain and information technology. Ms. Gorjanc was nominated to the Board by a non-management director.
Director Nominees
| MICHAEL B. HODGE | Director since 2024 Age 51 |
Director Nominees
Mr. Hodge has served as a Principal at EVE Partners, a private equity firm focused on logistics, since October 2011 and is the Co-Founder of EVE Atlas, a venture capital firm focused on logistics. Mr. Hodge currently serves as the Chairman of Energy Transport Logistics and Point Dedicated Services and serves as a board member of Integrity Express Logistics and Rothschild Investment Corporation. Prior to joining EVE Partners in 2011, Mr. Hodge was the Founder and Managing Partner of Hilliard Street Capital, a long/short equity hedge fund where he served as its Chief Investment Officer from 2008 until 2011. Mr. Hodge was also the Chief Executive Officer and Chief Financial Officer of Skybus Airlines from 2007 to 2008. From 2002 to 2007, Mr. Hodge was the Co-Head of Tiger Management, a multi-billion-dollar family office managing the assets of Julian H. Robertson, Jr. From 1997 to 2000, he was also a Managing Director at Tiger Management. From 1994 to 1997, Mr. Hodge was a foreign currency trader at Bankers Trust. As more fully discussed above, Mr. Hodge was selected as a designee of EVE to join our Board pursuant to the EVE Shareholders Agreement. Mr. Hodge graduated magna cum laude from Princeton University in 1994 with an A.B. degree in Economics and a certificate in Politics. Mr. Hodge also holds an M.B.A. from the Harvard Business School. Qualifications. The Board believes that Mr. Hodge’s industry and investment management experience will provide the Board significant insight into the Company’s management, strategy and investment decisions. Mr. Hodge was nominated to the Board by a security holder.
Director Nominees
| GEORGE S. MAYES, JR. | Director since 2021; Chairman since 2024 Age 65 |
Director Nominees
Mr. Mayes was appointed to the position of independent Chairman of the Board on February 6, 2024. Mr. Mayes also serves as Founder and Chief Executive Officer for LeanVue, LLC, which provides strategic analysis for global supply chain design and strategy development for managing complex global supply webs. From 2013 to 2015, Mr. Mayes was Chief Operating Officer for Diebold, Inc., a global leader in automated teller machine manufacturing and service. He was selected to serve as interim Chief Executive Officer in 2013. From 2005 to 2012, Mr. Mayes held leadership roles in global operations and supply chain management at Diebold. Prior to that role, he was Chief Operating Officer for Tinnerman Palnut Engineered Products, LLC. He also served as Vice President of Manufacturing for Stanley Fastening Systems. Mr. Mayes is currently a board member for Stoneridge, Inc. Mr. Mayes served in the United States Army from 1980 to 1985. He holds a bachelor’s degree in Engineering from the United States Military Academy at West Point. Qualifications. The Company believes that Mr. Mayes provides in-depth knowledge of operations, business acumen and leadership to the Board, which strengthens the Board’s collective qualifications, skills and experience. The Board believes that Mr. Mayes utilizes that experience in his service as a member of the Corporate Governance and Nominating Committee.
Director Nominees
| JAVIER POLIT | Director since 2021 Age 59 |
Director Nominees
Mr. Polit is an experienced Fortune 100 Chief Information Officer, with extensive experience across consumer goods, retail and financial services. In December 2023, Mr. Polit was appointed as Executive Vice President, Chief Information Officer - Information Technology of Costco Wholesale Corporation. From 2020 until 2023, Mr. Polit served as Chief Information Officer for Mondelez International (formerly Kraft Foods). From 2017 to 2020, he was Chief Information Officer for Procter & Gamble Company. Prior to that role, he served as Group Chief Information Officer for Coca Cola Bottling from 2007 to 2017 and as Global Director Customer Solutions, Business Intelligence and Distributions for the Coca Cola Company from 2003 to 2007. Mr. Polit was also Vice President, Global Corporate Systems for Office Depot and Vice President Information Technology for NationsBank NA. Mr. Polit is a member of the University of Miami President’s Advisory Board and the Professional Advisory Board of ALSAC/St. Jude Children’s Research Hospital. Mr. Polit is a graduate of the Advanced Management program at Harvard Business School. He holds a Master of Science from Barry University, a Masters of International Management from Budapest University of Technology and Economics and a Masters in International Business Management from TiasNimbas Business School. He also holds an MBA from Purdue University and a bachelor’s degree in Business Administration from the University of Miami. Qualifications. The Board believes that Mr. Polit brings deep B2B technology expertise including cybersecurity, data, digitization across multiple industries and complex organizations. He has helped drive digital transformation in large scale and has operated at the highest levels of Fortune 100 global companies where he contributed to technology strategy. The Board believes that Mr. Polit utilizes that experience in his service as a member of the Audit Committee.
Director Nominees
| SHAWN STEWART | Director since 2024 Age 50 |
Director Nominees
Mr. Stewart was appointed as Chief Executive Officer of the Company in April 2024. Previously Mr. Stewart served as President and Managing Director, North America at CEVA Logistics, a global end-to-end logistics company, from April 2020 to March 2024. Prior to being named President and Managing Director, North America, Mr. Stewart held numerous leadership positions of increasing responsibility at CEVA Logistics since joining its predecessor, EGL, Inc., in 1995, including serving as Executive Vice President – Freight Management, North America, Senior Vice President – Ground Transport, North America and Regional Vice President. From 1992 to 1998, Mr. Stewart served with distinction in the United States Navy, where he received the Navy Achievement Medal for his exemplary service aboard the USS Inchon and USS Theodore Roosevelt. Qualifications. The Board believes that Mr. Stewart’s experience in senior leadership positions in the logistics and transportation industry will promote substantial business growth and operational improvements.
Director Nominees
| LAURIE A. TUCKER | Director since 2019 Age 67 |
Director Nominees
Ms. Tucker has served as the Founder and Chief Strategy Officer of Calade Partners LLC, a marketing consultancy firm, since January 2014. She previously served as the Senior Vice President, Corporate Marketing of FedEx Services, Inc. (“FedEx”), a subsidiary of FedEx Corporation, from 2000 until she retired in December 2013. She was employed by FedEx in various capacities of increasing experience and responsibilities since 1978. Ms. Tucker has served as a director of publicly traded companies, such as, Bread Financial Holdings, since May 2015 and Iron Mountain Incorporated from May 2007 to May 2014. Ms. Tucker holds a B.B.A. in Accountancy and an M.B.A. in Finance from the University of Memphis. Qualifications. Ms. Tucker’s 35 years of experience at FedEx provide the Board with valuable insight with respect to corporate marketing strategies and large-scale operations. The Board believes that her experience overseeing finance, pricing, and customer technology will benefit her as the Chair of the Corporate Governance and Nominating Committee.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The general policy of the Board is that compensation for non-employee directors should be a mix of cash and equity-based compensation. The Company does not pay employee directors for Board service in addition to their regular employee compensation. The Corporate Governance and Nominating Committee, which consists solely of independent non-employee directors, has the primary responsibility for reviewing and considering any revisions to the non-employee director compensation program. In accordance with the Corporate Governance and Nominating Committee’s recommendations, during 2023, the non-employee directors’ cash compensation program is as follows, which is expected to continue in 2024: •an annual cash retainer of $85,000 for all non-employee directors; •an additional annual cash retainer of $125,000 for the Independent Chairman (which was created in 2024); •an additional annual cash retainer of $50,000 for the Lead Independent Director, if any; •an additional annual cash retainer of $20,000 for each of the Chairs of the Audit Committee, Corporate Governance and Nominating Committee and Compensation Committee; and •an additional annual cash retainer of $10,000 for all non-Chair Audit Committee members, Compensation Committee members and Corporate Governance and Nominating Committee members. All directors are reimbursed reasonable travel expenses for meetings attended in person. The Company also reimburses directors for expenses associated with participation in continuing director education programs. In addition, on the first business day after each Annual Meeting of Shareholders, each non-employee director is granted an award (the “Annual Grant”) in such form and size as the Board determines from year to year. Unless otherwise determined by the Board, the Annual Grants will become vested and non-forfeitable on the earlier of (a) the day immediately prior to the first Annual Meeting that occurs after the grant date or (b) the first anniversary of the grant date, so long as the non-employee director’s service with the Company does not earlier terminate. Each director may elect to defer receipt of the shares until the director departs from the Board. If a director elects to defer receipt, the Company will issue deferred stock units in which the director does not have voting rights or other incidents of ownership until the shares are issued. Each deferred stock unit is eligible for a dividend equivalent in the form of additional restricted stock units for each cash dividend paid by the Company. In 2023, each non-employee director received restricted shares valued at $130,000. For 2024, this amount is expected to remain the same. Finally, the Board believes that directors more effectively represent the Company’s shareholders, whose interests they are charged with advancing, if they are shareholders themselves. Therefore, the Board established certain independent director stock ownership guidelines which are set forth in the Company’s Corporate Governance Guidelines. Specifically, the Company’s independent directors are required to own shares of Company Common Stock, with a value equal to at least five times the annual cash retainer for independent directors. Each new independent director has three years from the date he or she joins the Board to accumulate this ownership position. Unvested restricted stock is permitted to count towards the stock ownership guidelines. As of December 31, 2023, each of the Company’s independent directors who had served on the Board for at least three years had met or exceeded these ownership guidelines. However, in 2024, fluctuations in stock price caused several directors to fall out of compliance with these requirements. The Board continues to monitor the progress of each independent director towards meeting their ownership guidelines and will determine what actions, if any, to take to address the noncompliance. The following table shows the compensation the Company paid in 2023 to its non-employee directors:
DIRECTOR COMPENSATION
| Name | Fees Paid in Cash ($) | Stock Awards ($)(1)(2) | All Other Compensation ($)(3) | Total ($) | | Ronald W. Allen | 105,000 | 130,000 | 7,891 | 242,891 | | Ana B. Amicarella | 105,000 | 130,000 | 1,268 | 236,268 | | Valerie A. Bonebrake | 95,000 | 130,000 | 6,991 | 231,991 | | C. Robert Campbell | 95,000 | 130,000 | 6,548 | 231,548 | | R. Craig Carlock | 135,000 | 130,000 | 1,268 | 266,268 | | G. Michael Lynch | 105,000 | 130,000 | 1,268 | 236,268 | | George S. Mayes, Jr. | 95,000 | 130,000 | 1,268 | 226,268 | | Chitra Nayak | 95,000 | 130,000 | 1,268 | 226,268 | | Javier Polit | 95,000 | 130,000 | 1,268 | 226,268 | | Laurie A. Tucker | 105,000 | 130,000 | 1,268 | 236,268 | | (1) Represents the aggregate grant date fair value of non-vested restricted shares and deferred stock unit awards. The fair values of these awards were determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation - Stock Compensation” (“ASC 718”). The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. | | | | | | (2) As of December 31, 2023, an aggregate of 32,348 deferred stock units, non-vested restricted shares and dividend equivalent rights were outstanding. | | | | | | (3) Represents dividend payments on non-vested restricted shares or dividend equivalents credited on deferred stock unit awards. These dividend payments and dividend equivalents are non-forfeitable. | | | | |
DIRECTOR COMPENSATION
The following table indicates the aggregate number of deferred stock units and/or non-vested restricted shares held by each incumbent director at the end of 2023 and those shares or units that have not yet vested.
DIRECTOR COMPENSATION
| Name | Number of Deferred Stock Units and/or Non-Vested Restricted Shares | | Ronald W. Allen | 8,626 | | Ana B. Amicarella | 1,352 | | Valerie A. Bonebrake | 7,362 | | C. Robert Campbell | 6,896 | | R. Craig Carlock | 1,352 | | G. Michael Lynch | 1,352 | | George S. Mayes, Jr. | 1,352 | | Chitra Nayak | 1,352 | | Javier Polit | 1,352 | | Laurie A. Tucker | 1,352 |
Compensation Practices
| What We Do | What We Don’t Do | | ■Provide pay opportunities that are appropriate to the size of the Company | ■Allow repricing or backdating of stock options without shareholder approval | | ■Maintain a pay program that is heavily performance-based and uses multiple performance measures | ■Provide excise tax gross-ups | | ■Disclose financial performance metrics and goals used in our incentive plans | ■Allow executive officers to hedge or pledge Company Common Stock | | ■Create alignment between executives and shareholders through a long-term incentive linked to stock price and measurement of stock performance versus peer companies | ■Provide special supplemental executive retirement programs | | ■Maintain meaningful executive stock ownership and retention guidelines | ■Provide tax gross-ups on perquisites | | ■Annually review the risk profile of compensation programs and maintain risk mitigators | ■Provide significant perquisites | | ■Provide market-aligned severance and change-in-control protection | | | ■Require double-trigger vesting on long-term equity awards in the event of a change in control | | | ■Maintain a Dodd-Frank compliant clawback policy requiring the mandatory recovery of erroneously awarded incentive-based compensation paid to an executive officer upon an accounting restatement | | | ■Maintain an additional recoupment policy allowing recovery of cash or equity-based compensation in certain circumstances, including material negative revisions to relevant financial results, material violations of the Code of Business Conduct and reckless supervision under certain circumstances | | | ■Retain an independent compensation consultant engaged by, and reporting directly to, the Committee | |
Key Elements of Executive Compensation Program
| | Target Annual Incentives | | | | | | NEO | Base Salary ($) | Target Annual Incentives ($) | As a Percent of Base Salary | Target Long-Term Incentive ($) | Total Target Compensation ($) | | Thomas Schmitt | 905,000 | 905,000 | 100% | 3,815,000 | 5,625,000 | | Rebecca J. Garbrick | 400,000 | 300,000 | 75% | 500,000 | 1,200,000 | | Chris C. Ruble | 606,000 | 454,500 | 75% | 700,000 | 1,760,500 | | Michael L. Hance | 456,000 | 342,000 | 75% | 525,000 | 1,323,000 | | Kyle R. Mitchin | 350,000 | 262,500 | 75% | 350,000 | 962,500 |
Key Elements of Executive Compensation Program
Annual Incentive Compensation The objective of our annual cash incentive plan is to focus our executives on attaining specific short-term financial and business goals that we believe will lead to our long-term success and promote retention of our executive talent. The annual cash incentive plan is designed to reward achievement of operating income targets and individual objectives important to the Company’s short-term and long-term success. Payments made under the annual incentive compensation program were made in cash, calculated as a percentage of annual base salary as described in more detail below. Annual cash incentive plan target opportunity levels (reflected as a percentage of base salary) approved by the Committee for the NEOs in 2023, which remained unchanged from the prior year, were as follows:
Key Elements of Executive Compensation Program
| | 2023 Target Bonus Opportunity | | NEO | (as a percent of base salary) | | Thomas Schmitt | 100% | | Rebecca J. Garbrick | 75% | | Chris C. Ruble | 75% | | Michael L. Hance | 75% | | Kyle R. Mitchin | 75% |
Key Elements of Executive Compensation Program
| Annual Cash Incentive Plan | | | Components of Plan | Weighing As a Percent of Target | | Corporate Performance | 80% | | Individual Performance | 20% |
Key Elements of Executive Compensation Program
In 2023, potential payout under the Corporate Performance component ranged from 0% of target (when threshold performance is not achieved) to 300% of target (when “beyond stretch” performance is achieved); payout under the Individual Performance component ranged from 0% to 120% of target. Corporate Performance Operating Income Goals. The Committee established corporate operating income goals for 2023 and corresponding incentive payments for achievement of such goals. Like in 2022, goals in 2023 were set to represent six incremental performance levels: downside, low, target, high, stretch and beyond stretch. As in past years, the target level for operating income generally reflects our internal business plan at the time the target is established, subject to adjustment in response to known headwinds or tailwinds or other economic conditions. Downside, low, high, stretch and beyond stretch levels are designed to provide a smaller award for lower levels of acceptable performance (downside and low) and to reward exceptional levels of performance (high, stretch and beyond stretch). The downside and low levels reflect decreases over 2022 actual performance of 10.8% and 5.4%, respectively, given the record performance in 2022, while target reflects a 0.5% increase over 2022 actual performance. The beyond stretch level reflects a 50.7% increase over 2022 actual performance. The Committee retains discretion as to the amount of the ultimate short-term incentive to be paid. The 2023 operating income goals and corresponding performance levels are noted below. Payout for performance between points is interpolated on a straight-line basis.
Key Elements of Executive Compensation Program
| Operating Income (000s) | Downside | Low | Target | High | Stretch | Beyond Stretch | Fiscal Year 2023 Results | % of Target Payout | | Corporate | $237,323 | $251,487 | $267,255 | $283,023 | $297,188 | $400,883 | $95,276 | 0% | | % of Target Payout | 25% | 50% | 100% | 150% | 200% | 300% | | |
Key Elements of Executive Compensation Program
Individual Objectives. Individual personal objectives specific to each executive officer position were set at the start of the fiscal year. At the end of the fiscal year, the Committee evaluated the performance of the NEOs against those personal objectives, taking into account the extent to which the goals were met, unforeseen financial, operational and strategic issues experienced by the Company, and any other information deemed relevant. The Committee evaluated the performance of the Chief Executive Officer in a similar manner with input from the full Board. Based on the results of this review, the Committee determined the payout, if any, based on executive’s attainment of the executive’s individual objectives. 2023 Annual Incentive Payout. The Committee met in February 2024 to determine whether the Company’s 2023 performance merited payment to the NEOs under the annual cash incentive plan, and, if so, to determine the amount of such payouts. •Corporate Performance Component: Income from operations was $95.3 million, which resulted in no payout under the Corporate Performance annual incentive opportunity. •Individual Performance: The Committee also considered performance against the individual objectives set for the NEOs. In 2023, those objectives encompassed individual contributions to executing the following: ◦Strategic and operational goals; ◦Optimization of the LTL network; ◦Forward Force, an initiative to grow high-value freight; ◦Forward Game Shape, a cost reduction initiative relating to efficiency and effectiveness, including safety standards; and ◦Contributions in connection with the pursuit of accretive acquisitions. After a performance appraisal of each executive officer and a review of their achievement of the personal goals that had been set for them, the Committee approved an achievement of 93%, 107%, 75% and 104% of target for Ms. Garbrick and Messrs. Ruble, Hance and Mitchin, respectively. The Committee evaluated the performance of Mr. Schmitt in a similar manner. Based on its review, the Committee determined that Mr. Schmitt achieved 68% of target for the Individual Performance component for 2023. The actual awards made to each NEO under the Operating Income and Individual Objectives Component of the annual cash incentive plan are shown in the chart below.
Key Elements of Executive Compensation Program
| Executive | Corporate Performance Component ($) | Individual Objectives Component ($) | Total Payout Under 2023 Annual Cash Incentive Plan ($) | Total Payout as a % of Total Target Annual Cash Incentive Plan Opportunity | | Thomas Schmitt | — | 123,080 | 123,080 | 13.6% | | Rebecca J. Garbrick | — | 55,800 | 55,800 | 18.6% | | Chris C. Ruble | — | 97,263 | 97,263 | 21.4% | | Michael L. Hance | — | 51,300 | 51,300 | 15.0% | | Kyle R. Mitchin | — | 54,600 | 54,600 | 20.8% |
Long-Term Equity Incentive Awards
Long-Term Equity Incentive Awards The objective of providing long-term equity incentives is to attract and retain critical leadership, align executive interests to those of shareholders, enhance long-term thinking in general and focus executives on metrics that lead to increased shareholder value over the long term. Our long-term equity incentives are specifically designed to reward stock price appreciation and outperformance of shareholder return relative to industry peer companies. The structure of the 2023 LTI Program was unchanged from the structure of the 2022 Program except that in 2023, the target grant date fair value of the LTI awards to all NEOs (other than Mr. Hance) increased by 12% to 33% from the 2022 grant date fair value. Accordingly, in 2023, the Committee approved the following target long-term incentive awards for the NEOs:
Long-Term Equity Incentive Awards
| Executive | 2023 Restricted Stock Grant ($) | 2023 Target TSR Performance Share Grant ($) | 2023 Stock Options ($) | 2023 Total Long-Term Incentive Award ($) | | Thomas Schmitt | 1,271,667 | 1,271,666 | 1,271,667 | 3,815,000 | | Rebecca J. Garbrick | 250,000 | 125,000 | 125,000 | 500,000 | | Chris C. Ruble | 350,000 | 175,000 | 175,000 | 700,000 | | Michael L. Hance | 262,500 | 131,250 | 131,250 | 525,000 | | Kyle R. Mitchin | 175,000 | 87,500 | 87,500 | 350,000 |
Long-Term Equity Incentive Awards
The number of shares of restricted stock and performance shares issued to the NEOs under the 2016 Plan for the fiscal year ended December 31, 2023 are set forth in the Grants of Plan-Based Awards for Fiscal 2023 Table on page 69 of this Proxy Statement. Equity-based awards. The value to the executive of all three components comprising long-term equity compensation in 2023 (restricted stock, TSR performance shares and stock options) is impacted by the performance of the Company’s stock. •Restricted stock becomes more valuable to the executive if our stock price increases, and the executive shares in the downside risk of a decline in our stock price. •The number of performance shares earned, if any, will depend on how the Company’s stock performs relative to transportation industry peers. Like restricted stock, the value ultimately delivered rises or falls based on the performance of the Company’s stock from grant to settlement date. •Stock options have value only if the Company’s stock price increases after the grant date, and the amount of value is dependent upon the amount of the increase. As it is possible that there will be no payout under the performance shares element, these awards are completely “at risk” compensation. In addition, there will be no value realized in stock options unless the stock price increases from the date of grant. This emphasis on at-risk compensation in the LTI awards accomplishes our goal of creating a pay-for-performance culture at the executive level, while striking the appropriate balance among risk, retention and reward. Each element of the LTI is discussed in more detail below. Restricted Stock. A share of restricted stock is a share of Company Common Stock that is subject to vesting requirements based on continued employment. Restricted stock grant sizes are calculated generally by multiplying the target LTI economic value by the weighting assigned to the restricted stock component and dividing it by the value of a single share of Company Common Stock determined using the estimated grant date fair value. The estimated grant date fair value of the restricted shares awarded to the NEOs in February 2023 was $115.42, which represents the closing price of Company Common Stock on the date of grant. Shares granted under restricted stock awards are restricted from sale or transfer until vesting occurs, and restrictions lapse in three equal installments beginning one year after the date of grant. Dividends are paid in cash on a current basis throughout the vesting period. To the extent not earlier vested, the shares of restricted stock will vest upon the death or disability of the recipient, as well as upon involuntary termination of employment in connection with or within 24 months after a change in control. Performance Shares. A performance share is the right to receive a share of Company Common Stock based upon the achievement of certain performance criteria. TSR performance share grant sizes awarded in 2023 were calculated by multiplying the target LTI economic value by the weighting assigned to the TSR performance share component and dividing it by $120.27, the estimated value of a single performance share on the grant date determined using a Monte Carlo valuation model. TSR Performance Shares. TSR performance shares are earned on the basis of our Total Shareholder Return (“TSR”) measured over a three-year period, relative to the TSR of a peer group of transportation companies. The TSR peer group used for the 2023 grants consisted of the following 14 companies, which were selected based on the Committee’s assessment that these companies would better align the peer group with the Company from a size and target market perspective:
Long-Term Equity Incentive Awards
| ArcBest Corporation | Landstar Systems, Inc. | | C.H. Robinson Worldwide, Inc. | Marten Transport, Ltd. | | Expeditors International of Washington, Inc. | Old Dominion Freight Line, Inc. | | Heartland Express, Inc. | Saia, Inc. | | Hub Group, Inc. | Schneider National, Inc. | | J.B. Hunt Transport Services, Inc. | Werner Enterprises, Inc. | | Knight Transportation, Inc. | XPO Logistics, Inc. |
Long-Term Equity Incentive Awards
For prior awards, the peer group included Echo Global Logistics, Inc. and did not include XPO Logistics, Inc., which was added in 2023. The actual number of performance shares earned is based on the percentile of our TSR relative to the TSRs of the comparator group companies described above during the three-year performance period. Calculations are conducted at the end of each of the last four quarters of the performance period using the payout/performance scale below, and then averaged to determine the actual payout. Payouts can range from 0% to 200% of the target number of performance shares awarded. Payout for performance between points is calculated using straight-line interpolation.
Long-Term Equity Incentive Awards
| | Payout | | Performance Level | (as a % of Target) | | 90th percentile or higher | 200% | | 70th percentile | 150% | | 50th percentile | 100% | | 25th percentile | 50% | | Below 25th percentile | 0 % |
Long-Term Equity Incentive Awards
TSR is calculated based on the change in share price plus reinvestment of dividends, with beginning and ending share price calculated as follows: •Beginning market price equals the closing price on the last trading day immediately preceding the first day of the performance period. •Ending market price equals the last trading day of each measurement period (i.e., the final four calendar quarters). The performance shares pay out in shares of Company Common Stock shortly after the close of the three-year performance period. Dividends are not paid on unvested TSR performance shares but rather are paid as and when the underlying performance shares have been earned and vested. TSR performance shares vest upon the death or disability of the recipient at target, as well as upon involuntary termination of employment in connection with or within 24 months after a change in control (as such term is defined in the 2016 Plan). 2021 Performance Shares. 2021 Relative TSR Performance Shares. The final payout for the January 2021 to December 2023 performance period was 69.4% of target. This payout was a result of the four-quarter averaging of the payouts generated from the relative TSR ranking, which were as follows:
Long-Term Equity Incentive Awards
| Measurement Period | Relative TSR Ranking | Percent of Target Payout | Payout Weighting | | January 2021 - March 2023 | 69th percentile | 148% | 25% | | January 2021 - June 2023 | 62nd percentile | 130% | 25% | | January 2021 - September 2023 | 8th percentile | 0% | 25% | | January 2021 - December 2023 | 8th percentile | 0% | 25% |
Long-Term Equity Incentive Awards
2021 EBITDA Performance Shares. EBITDA performance shares are earned on the basis of our EBITDA Per Share measured over a three-year period. For purposes of determining the achievement of EBITDA Per Share, the Committee may determine to exclude from earnings, non-recurring, non-operational or other items, as deemed appropriate. The actual number of EBITDA performance shares earned is based on achievement of EBITDA Per Share over a three-year period against pre-set cumulative EBITDA Per Share targets. The performance shares provide an opportunity for shares to be earned at the end of a three-year performance period if pre-established financial goals are met. The EBITDA performance shares pay out in shares of Company Common Stock shortly after the close of the three-year performance period. Payouts can range from 0% to 200% of the target number of performance shares awarded based on performance relative to the targets. Dividends are not paid on unvested EBITDA performance shares but rather are paid as and when the underlying performance shares have been earned and vested. EBITDA performance shares vest upon the death or disability of the recipient at target, as well as upon involuntary termination of employment in connection with or within 24 months after a change in control (as such term is defined in the 2016 Plan). The cumulative EBITDA per share for the January 2021 to December 2023 performance period was $25.24, which represented performance above target of $17.70 and resulted in a payout at 200% of target. The strong EBITDA performance in both 2021 and 2022, which significantly exceeded the maximum, led to cumulative results exceeding the maximum despite weaker performance in 2023. Stock Options. A stock option is the right to purchase Company Common Stock at a fixed price for a defined period of time. In 2023, the grant size of the stock options awarded to NEOs was calculated generally by multiplying the target LTI economic value by the weighting assigned to the options component and dividing it by the value of a single option, determined under the Black-Scholes methodology and based on assumptions used for recognizing expense in our financial statements contained in our Annual Report in accordance with U.S. generally accepted accounting principles (“GAAP”). For 2023 option grants, the grant date fair value was $39.75 per share. The stock options granted to NEOs in 2023 have a seven-year term and: •will vest and become exercisable ratably in annual installments on each anniversary of the grant date over a three-year period; and •with respect to performance stock options awarded to Mr. Schmitt, will vest and become exercisable upon the Company’s achievement of pre-established annual operating income goals within a three-year period. For each year, target performance would be achieved if the Company’s operating income was at least 75% of the prior year’s operating income. 2023 Option Vesting. Based on the Company’s 2023 operating income, the operating income performance conditions attached to Mr. Schmitt’s 2023 performance option award were satisfied, and therefore, 33% of Mr. Schmitt’s 2023 performance options vested. Changes to the LTI Program for 2024. In March 2024, management proposed, and, after discussion with Meridian, the Committee approved, eliminating stock options from the LTI program, so that 50% of the NEO’s LTI award is comprised of time-based restricted stock and 50% of performance shares earned based on relative TSR performance versus peers. The Committee believes these are appropriate changes in that they continue to promote retention and stock ownership; focus executives on share price appreciation, further aligning our executives’ interests with the interests of our shareholders; and continue to be heavily focused on performance-oriented awards measured by share price appreciation.
Retirement and Other Benefits
Retirement and Other Benefits Our NEOs receive the same retirement and other benefits as other employees at the Company. We choose to pay these benefits to meet the objective of having a competitive retirement and benefit package in the marketplace. Retirement benefits reward employees for saving for their retirement and for continued employment. Welfare benefits such as medical and life insurance reward continued employment. All full-time Company employees, including the NEOs, are entitled to participate in the 401(k) retirement savings plan. Under that plan, for each pay period, the Company provides a $0.25 matching contribution for every dollar an employee elects to defer into the 401(k) plan, limited to elective deferrals up to 6% of the employee’s compensation for the pay period. The matching contribution is subject to the rules and regulations on maximum contributions by individuals under such a plan. Matching contributions to the NEOs for the fiscal year ended December 31, 2023 are reflected in the “401(k) Match” column of the All Other Compensation table on page 68 of this Proxy Statement. Additionally, all full-time employees, including the NEOs, are eligible to participate in the 2005 Employee Stock Purchase Plan (the “ESPP”) upon enrolling in the ESPP during one of the established enrollment periods. Under the terms of the ESPP, eligible employees can purchase shares of Company Common Stock through payroll deduction and lump sum contributions at a discounted price. The purchase price for such shares of Company Common Stock for each option period, as described in the ESPP, will be the lower of: (a) 90% of the closing market price on the first trading day of an option period (there are two option periods each year — January 1 to June 30 and July 1 to December 31); or (b) 90% of the closing market price on the last trading day of the option period. Under the ESPP, no employee is permitted to purchase more than 2,000 shares of Company Common Stock per option period or shares of Company Common Stock having a market value of more than $25,000 per calendar year, as calculated under the ESPP. Mr. Schmitt does not participate in the ESPP. The NEOs are also eligible to participate in the Company’s health, dental, disability and other insurance plans on the same terms and at the same cost as such plans are available to all full-time employees. The Company does not have a supplemental executive retirement plan or one that provides for the deferral of compensation on a basis that is not tax-qualified. Departure of Chairman, President and Chief Executive Officer; Appointment of Interim Chief Executive Officer and President; Appointment of Chief Executive Officer On February 6, 2024, Mr. Schmitt ceased serving as Chairman, President and Chief Executive Officer of the Company and as a member of the Board, with his last day of employment being February 9, 2024. This event was a termination without cause, which met the definition of an “Involuntary Termination” under the Severance Plan. Under the Severance Plan and subject to Mr. Schmitt’s execution and non-revocation of a general release of claims, Mr. Schmitt is eligible to receive certain payments including a Severance Payment and Healthcare Assistance Payment (in each case, as defined in the Severance Plan and described below under the Section entitled “Potential Payments upon Termination, Change of Control, Death or Disability” on pages 78 to 81 of this Proxy Statement and in the table set forth on pages 80 to 81 of that Section.) and up to $20,000 in outplacement services. The restrictive covenants agreement entered into between Mr. Schmitt and the Company on May 27, 2022 includes a perpetual obligation to keep confidential information and trade secrets, provisions covering obligations with respect to non-competition, non-solicitation of employees and customers and non-disparagement, each of which apply to Mr. Schmitt for 24 months following his separation. In connection with Mr. Schmitt’s departure, Mr. Schmitt entered into a Separation and Release Agreement with the Company. For a description of the Separation and Release Agreement, see Potential Payments Upon Termination, Change of Control, Death or Disability on pages 78 to 81 of this Proxy Statement. As a result of Mr. Schmitt’s departure, Mr. Hance was appointed as Interim Chief Executive Officer of the Company in addition to his roles as Chief Legal Officer and Secretary. Accordingly, in March 2024, after discussion with Meridian, the Committee approved paying Mr. Hance $37,500 per month while he serves as Interim Chief Executive Officer to match Mr. Schmitt’s salary as CEO. In addition, Mr. Ruble was appointed as President of the Company in addition to his role as Chief Operating Officer. Accordingly, in March 2024, after discussion with Meridian, the Committee approved a base salary increase from $606,000 to $625,000 which was above the 50th percentile based on his new role as President. In April 2024, Mr. Shawn Stewart succeeded Mr. Hance as CEO of the Company and Mr. Hance continued in his position as Chief Legal Officer and Secretary of the Company. The Company entered into an employment agreement with Mr. Stewart (the “Stewart Employment Agreement”). Under the Stewart Employment Agreement, Mr. Stewart’s compensation will consist of an initial base salary of $900,000 and an annual target bonus (pro-rated for 2024) set at 100% of base salary, with a maximum possible bonus of 200% of base salary. Mr. Stewart will also receive (i) a signing bonus of $400,000, (ii) 50,955 restricted shares of Company Common Stock, which will vest equally on each of the first, second and third anniversaries of the grant date, subject to Mr. Stewart’s continuous employment through the applicable vesting date and (iii) 76,433 performance share units, with the performance period ending on December 31, 2026, in alignment with the performance period of other executive officers of the Company and subject to Mr. Stewart’s continuous employment through the applicable vesting date. The equity awards will be granted pursuant to stand-alone inducement award agreements outside of the 2016 Plan but are generally subject to the same terms and conditions that apply to awards granted under the 2016 Plan. Beginning in 2025, Mr. Stewart will participate in the Company’s employee incentive programs, as administered by the Compensation Committee of the Board. In addition to the Stewart Employment Agreement, Mr. Stewart entered into the Company’s standard form of participation and restrictive covenants agreement for senior executives, which includes non-compete and non-solicit covenants that apply during employment and for twenty-four (24) months thereafter, and indefinite confidentiality, non-disparagement, publicity, and invention assignment covenants, and will participate in the Company’s Executive Severance and Change in Control Plan (the “Severance Plan”).
Severance Arrangements
Severance Arrangements Our NEOs, other than Mr. Schmitt, are, and prior to ceasing his employment with the Company, Mr. Schmitt, was, covered by the Severance Plan, which became effective January 1, 2013, and was amended and restated on October 25, 2021. The objectives of the Severance Plan are to enhance the attraction and retention of executive talent during corporate upheaval, enable management to evaluate and support potential transactions that might be beneficial to shareholders even though the result would be a change in control of the Company, and obtain important corporate protections upon terminations of employment. The plan is designed to reward executives for remaining with the Company when their prospects for continued employment following a change in control or other corporate upheaval may be uncertain. We chose to adopt the plan to protect shareholder value in such events by increasing the probability of retaining an intact management team. The severance benefits available to our NEOs under the Severance Plan are described in more detail under Potential Payments upon Termination, Change of Control, Death or Disability on pages 78 to 81 of this Proxy Statement and in the table set forth on pages 80 to 81 of that Section. In connection with the Omni Acquisition, in March 2024, the Committee amended the Severance Plan to provide enhanced severance protections for NEOs and other executives from March 15, 2024 to December 31, 2025. For additional information, see Potential Payments Upon Termination, Change of Control, Death or Disability.
Risk Management
Risk Management Our incentive program rewards reasonable risk-taking, accomplished through both program design and Committee processes. Program design features for NEOs that mitigate risk include the following: •Balanced mix of pay including base salary (fixed compensation) and a balance of annual (cash) and long-term (equity) incentives; •Capped short-term incentives; •Short-term incentive goals tied to financial goals of the corporate-level strategic plan; •Annual equity-based incentive grants without backdating or repricing; •Stock ownership guidelines applicable to senior executive officers, as described below; •Prohibition on hedging and pledging Company Common Stock, as described below; and •A compensation recoupment or “clawback” policy, as described below. Committee processes mitigating risk include: •Overall administration of executive plans by the Committee; •Reasonable short-term incentive goals; •Financial performance objectives based upon budget objectives that are reviewed and approved by the Committee and the Board; •Avoidance of steep payout cliffs; •Ongoing and active discussion between the Committee and management regarding process on short-term and long-term goals; and •Committee authority to pay less than the maximum short-term incentive amount after assessing the overall contribution and performance of the executive officers. Other incentive programs either have similar characteristics or are small in potential payout amount.
Key Provisions of Stock Incentive Plan and 2016 Plan
Key Provisions of Stock Incentive Plan and 2016 Plan The Company’s Amended and Restated Stock Incentive Plan (the “Stock Incentive Plan”) and 2016 Plan incorporate certain terms and procedures that reflect the current compensation philosophy of the Company’s Compensation Committee. Specifically, both plans prohibit the re-pricing or cash-out of underwater stock options and SARs without prior shareholder approval. They also provide that the taking of certain permitted actions affecting outstanding awards in the event of a change in control of the Company will be conditioned upon the consummation of the transaction giving rise to the change in control and will not be taken with respect to any awards that are subject to the provisions of Section 409A of the Internal Revenue Code (“Section 409A”) if the action would result in a violation of Section 409A. Finally, awards granted under the Stock Incentive Plan and 2016 Plan are made subject to the Recoupment Policy. For additional information regarding the Company’s 2016 Plan, see Proposal 3 starting on page 82.
Summary Compensation Table
Summary Compensation Table The following table shows the compensation earned in 2023, 2022 and 2021 by the NEOs.
Summary Compensation Table
| Name and | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Principle Position | | | | | | | | | | Thomas Schmitt(5) | 2023 | 902,000 | — | 2,543,333 | 1,271,667 | 123,080 | 26,241 | 4,866,321 | | President and CEO | 2022 | 877,777 | — | 1,916,667 | 958,333 | 2,280,250 | 22,783 | 6,055,810 | | | 2021 | 875,000 | — | 2,156,250 | 718,750 | 2,275,000 | 23,000 | 6,048,000 | | Rebecca J. Garbrick(6) | 2023 | 400,000 | — | 375,000 | 125,000 | 55,800 | 10,689 | 966,489 | | CFO and | 2022 | 385,000 | — | 326,250 | 108,750 | 743,820 | 10,689 | 1,572,209 | | Treasurer | 2021 | 272,782 | — | 65,000 | — | 373,902 | 3,870 | 715,554 | | Chris C. Ruble(5) | 2023 | 606,000 | — | 525,000 | 175,000 | 97,263 | 12,955 | 1,416,218 | | Chief Operating | 2022 | 585,000 | — | 468,750 | 156,250 | 1,146,893 | 9,452 | 2,366,345 | | Officer | 2021 | 585,000 | — | 625,000 | — | 1,134,608 | 10,196 | 2,354,804 | | Michael L. Hance(5) | 2023 | 456,000 | — | 393,750 | 131,250 | 51,300 | 11,712 | 1,044,012 | | Chief Legal Officer | 2022 | 440,000 | — | 393,750 | 131,250 | 853,380 | 10,832 | 1,829,212 | | and Secretary | 2021 | 440,000 | — | 525,000 | — | 854,700 | 9,593 | 1,829,293 | | Kyle R. Mitchin | 2023 | 350,000 | — | 262,500 | 87,500 | 54,600 | 9,699 | 764,299 | | Chief People Officer | 2022 | 312,000 | — | 206,250 | 68,750 | 606,528 | 8,369 | 1,201,897 | | | 2021 | 312,000 | — | 275,000 | — | 605,124 | 7,994 | 1,200,118 |
Summary Compensation Table
| (1) Represents the aggregate grant date fair value of restricted share and performance share awards (and assuming achievement at target for such performance share awards). The fair values of these awards were determined in accordance with ASC 718. The awards for which the aggregate grant date fair value is shown in this table include the awards described in the Grants of Plan-Based Awards for Fiscal 2023 Table on page 69 of this Proxy Statement. The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. | | (2) Represents the aggregate grant date fair value of stock option awards. The fair value of these awards were determined in accordance with ASC 718. The awards for which the aggregate grant date fair value is shown in this table include the awards described in the Grants of Plan-Based Awards for Fiscal 2023 Table on page 69 of this Proxy Statement. The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. | | (3) Represents cash incentives earned under the 2023 Annual Cash Incentive Plan. | | (4) See the All Other Compensation Table below for additional information. | | (5) On February 9, 2024, Mr. Schmitt ceased serving as Chairman, President and Chief Executive Officer of the Company and as a member of the Board. At that time, Mr. Hance was appointed as Interim Chief Executive Officer of the Company in addition to his roles as Chief Legal Officer and Secretary, and Mr. Ruble was appointed as President of the Company in addition to his role as Chief Operating Officer. | | (6) Ms. Garbrick was appointed as our Chief Financial Officer and Treasurer in July 2021. Ms. Garbrick’s target annual incentive compensation was adjusted in July 2021 to reflect this change. |
Grants of Plan-Based Awards for Fiscal 2023
Grants of Plan-Based Awards for Fiscal 2023 In this table, we provide information about each grant of awards made to an NEO in the most recently completed year. This includes the awards under the Company’s Annual Cash Incentive Plan, as well as performance share awards, restricted stock awards and stock option awards.
Grants of Plan-Based Awards for Fiscal 2023
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Shares to be Issued Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | | | | Thres-hold | Target | Maxi-mum | Thres-hold | Target | Maxi-mum | | | | | | Name | Award Type | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(2) | (3) | (4) | | | Thomas Schmitt | Annual Cash Incentive Plan | | 181,000 | 905,000 | 2,389,200 | | | | | | | | | | Performance Shares(6) | 2/7/2023 | | | | 5,287 | 10,573 | 21,146 | | | | 1,271,666 | | | Restricted Stock | 2/7/2023 | | | | | | | 11,018 | | | 1,271,667 | | | Stock Options | 2/7/2023 | | | | | | | | 31,991 | 115.42 | 1,271,667 | | Rebecca J. Garbrick | Annual Cash Incentive Plan | | 60,000 | 300,000 | 792,000 | | | | | | | | | | Performance Shares(6) | 2/7/2023 | | | | 520 | 1,039 | 2,078 | | | | 125,000 | | | Restricted Stock | 2/7/2023 | | | | | | | 2,166 | | | 250,000 | | | Stock Options | 2/7/2023 | | | | | | | | 3,145 | 115.42 | 125,000 | | Chris C. Ruble | Annul Cash Incentive Plan | | 90,900 | 454,500 | 1,199,880 | | | | | | | | | | Performance Shares(6) | 2/7/2023 | | | | 728 | 1,455 | 2,910 | | | | 175,000 | | | Restricted Stock | 2/7/2023 | | | | | | | 3,032 | | | 350,000 | | | Stock Options | 2/7/2023 | | | | | | | | 4,402 | 115.42 | 175,000 | | Michael L. Hance | Annual Cash Incentive Plan | | 68,400 | 342,000 | 902,880 | | | | | | | | | | Performance Shares(6) | 2/7/2023 | | | | 546 | 1,091 | 2,182 | | | | 131,250 | | | Restricted Stock | 2/7/2023 | | | | | | | 2,274 | | | 262,500 | | | Stock Options | 2/7/2023 | | | | | | | | 3,302 | 115.42 | 131,250 | | Kyle R. Mitchin | Annual Cash Incentive Plan | | 52,500 | 262,500 | 693,000 | | | | | | | | | | Performance Shares(6) | 2/7/2023 | | | | 364 | 728 | 1,456 | | | | 87,500 | | | Restricted Stock | 2/7/2023 | | | | | | | 1,516 | | | 175,000 | | | Stock Options | 2/7/2023 | | | | | | | | 2,201 | 115.42 | 87,500 |
Grants of Plan-Based Awards for Fiscal 2023
| (1) Amounts included in the table above represent the threshold (which we refer to as “downside”), target and maximum (which we refer to as “beyond stretch”) potential payout levels related to both the corporate and individual objectives for the fiscal year 2023 under the Company’s Annual Cash Plan. The awards also provide for low, high and stretch potential payout levels as described under “Key Elements of Executive Compensation Program – Annual Cash Incentive Awards” in the Compensation Discussion and Analysis. The payments for these awards have already been determined and were paid in March 2024 to the NEOs and disclosed in the Summary Compensation Table. | | (2) Each grant vests equally over a three-year period with the first vesting occurring on the one-year anniversary of the grant date. | | (3) Stock options vest equally over a three-year period from the date of grant, and options granted to our CEO vest upon the achievement of pre-established annual operating income goals within a three-year period. | | (4) In accordance with the provisions of the 2016 Plan, the exercise price of stock option grants is set using the closing price on the day of grant. In the event there is no public trading of Company Common Stock on the date of grant, the exercise price will be the closing price on the most recent, prior date that Company Common Stock was traded. | | (5) Represents the aggregate grant date fair value of performance share, restricted stock and stock option awards. The fair value of those awards were determined in accordance with ASC 718. The assumptions used in determining the grant date fair value of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. | | (6) The performance shares vest two-and-a-half months after the last day of the three-year performance period. The number of shares earned are based on the TSR of Company Common Stock compared to the TSR of a peer group. See pages 57 to 58 of this Proxy Statement for additional information. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table shows information about outstanding equity awards at December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | Number of Shares of Stock That Have Not Vested (2) | Market Value of Shares of Stock That Have Not Vested (4)($) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (3) | Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested | | Name | | | | | | | | | (4)($) | | Thomas Schmitt | 100,000 | — | 64.26 | 9/1/2018 | 9/1/2025 | | | | | | | 35,918 | — | 65.96 | 2/4/2020 | 2/4/2027 | | | | | | | 26,093 | 13,046 | 75.05 | 2/2/2021 | 2/2/2028 | | | | | | | 11,041 | 22,081 | 106.29 | 2/8/2022 | 2/8/2029 | | | | | | | — | 31,991 | 115.42 | 2/7/2023 | 2/7/2030 | | | | | | | | | | | | 20,220 | 1,271,231 | 34,522 | 2,170,398 | | Rebecca J. Garbrick | 1,253 | 2,506 | 106.29 | 2/8/2022 | 2/8/2029 | | | | | | | — | 3,145 | 115.42 | 2/7/2023 | 2/7/2030 | | | | | | | | | | | | 3,819 | 240,101 | 1,893 | 119,013 | | Chris C. Ruble | 1,800 | 3,600 | 106.29 | 2/8/2022 | 2/8/2029 | | | | | | | — | 4,402 | 115.42 | 2/7/2023 | 2/7/2030 | | | | | | | | | | | | 6,380 | 401,111 | 6,253 | 393,126 | | Michael L. Hance | 9,098 | — | 47.82 | 2/6/2017 | 2/6/2024 | | | | | | | 5,303 | — | 58.40 | 2/5/2018 | 2/5/2025 | | | | | | | 1,512 | 3,024 | 106.29 | 2/8/2022 | 2/8/2029 | | | | | | | — | 3,302 | 115.42 | 2/7/2023 | 2/7/2030 | | | | | | | | | | | | 5,086 | 319,757 | 5,120 | 321,894 | | Kyle R. Mitchin | 792 | 1,584 | 106.29 | 2/8/2022 | 2/8/2029 | | | | | | | — | 2,201 | 115.42 | 2/7/2023 | 2/7/2030 | | | | | | | | | | | | 2,989 | 187,918 | 2,839 | 178,488 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Each grant vests equally over a three-year period from the date of grant. Stock options granted to our CEO vest upon the achievement of pre-established annual operating income goals within a three-year period. | | (2) The amounts shown represent restricted stock awards granted under the 2016 Plan. Each grant of restricted stock vests equally over a three-year period with the first vesting occurring on the one-year anniversary of the grant date. | | (3) The amounts shown represent performance share awards granted under the 2016 Plan. The performance shares vest two-and-a-half months after the last day of three-year performance periods that end December 31, 2023, December 31, 2024, and December 31, 2025. The number of shares earned is based on either (a) the TSR of Company Common Stock compared to the TSR of a determined peer group or (b) the EBITDA Per Share compared to a pre-determined EBITDA Per Share target. See pages 57 to 58 of this Proxy Statement for additional information. Shares presented represent the award at the target amount. The actual amounts that will be earned are dependent upon the achievement of pre-established performance goals during the respective performance cycles. | | (4) The market value of the awards that have not vested is based on the closing price of Company Common Stock on Nasdaq on December 29, 2023, which was $62.87. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table shows information about options exercised or shares acquired on vesting during 2023.
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1)(2) | | Thomas Schmitt | — | — | 26,288 | 2,817,069 | | Rebecca J. Garbrick | — | — | 1,238 | 127,790 | | Chris C. Ruble | — | — | 7,191 | 780,154 | | Michael L. Hance | — | — | 5,527 | 600,907 | | Kyle R. Mitchin | — | — | 3,400 | 368,285 | | (1) The value realized upon exercise or vesting is based on the market price on the date of exercise or vesting. | | | | | | (2) Shares withheld for income tax purposes related to stock vested were as follows: Mr. Hance – 1,487 shares, Ms. Garbrick - 470 shares, Mr. Ruble – 3,243 shares, Mr. Mitchin – 1,009 shares and Mr. Schmitt – 11,857. | | | | |
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees to the annual total compensation of Mr. Schmitt, who served as our Chief Executive Officer (our “CEO”) until February 6, 2024. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. There were no changes in our employee population or employee compensation arrangements in 2023 that we reasonably believe would result in a significant change in our pay ratio disclosure. Therefore, we have based our pay ratio calculation for 2023 using compensation for the same median employee identified for 2021, which median employee was identified under the process described in our 2021 pay ratio calculation set forth in our 2022 proxy statement. For 2023, our last completed fiscal year: •The annual total compensation of our median employee was $48,536; and •Mr. Schmitt’s total annual compensation, as set forth in the Summary Compensation Table, was $4,866,321. Based on this information, for 2023, the ratio of the annual total compensation of our CEO, to the total compensation of the median employee was 100.3 to 1.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. The following table discloses information on “compensation actually paid” (CAP) to our principal executive officer (PEO) and to our other non-PEO NEOs (on average) and certain financial performance measures of the Company. For further information regarding the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with performance, see the Compensation, Discussion and Analysis (CD&A) starting on page 46.
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO1 | Compensation Actually Paid to PEO2 | Average Summary Compensation Table Total for Non-PEO NEOs3 | Average Compensation Actually Paid to Non-PEO NEOs4 | Value of Initial Fixed $100 Investment Based On: | | Net Income (millions)7 | Relative TSR Performance Percentile8 | | | | | | | Total Shareholder Return5 | Peer Group Total Shareholder Return6 | | | | 2023 | $4,866,321 | $(766,293) | $1,047,755 | $320,635 | $94 | $124 | $167.4 | 0th | | 2022 | $6,055,810 | $6,356,982 | $1,742,416 | $1,711,824 | $155 | $100 | $193.2 | 64th | | 2021 | $6,048,000 | $9,065,745 | $1,525,473 | $1,726,305 | $177 | $125 | $105.9 | 77th | | 2020 | $3,200,911 | $2,353,212 | $1,006,555 | $644,923 | $111 | $104 | $23.7 | 42nd | | 1The amounts reported in this column are the amounts of total compensation reported for Mr. Schmitt (our President, Chief Executive Officer and Chairman) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Summary Compensation Table.” | | | | | | | | | | 2The amounts reported in this column represent the amount of “compensation actually paid” to Mr. Schmitt, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. Schmitt during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Schmitt’s total compensation for each year to determine the compensation actually paid: | | | | | | | | |
Pay Versus Performance
| PEO | 2023 | 2022 | 2021 | 2020 | | Reported Summary Compensation Table Total for PEO | $4,866,321 | $6,055,810 | $6,048,000 | $3,200,911 | | - Reported Value of Equity Awards | $(3,815,000) | $(2,875,000) | $(2,875,000) | $(2,125,000) | | + Year End Fair Value of Equity Awards | $1,499,165 | $3,099,190 | $4,472,901 | $1,238,623 | | + Year Over Year Change in Fair Value of Outstanding and Unvested Equity Awards | $(3,472,861) | $234,398 | $1,183,652 | $176,287 | | +/- Year Over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | $156,082 | $(157,416) | $236,192 | $(137,609) | | +/- Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | $— | $— | $— | $— | | +/- Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | $— | $— | $— | $— | | Compensation Actually Paid to PEO | $(766,293) | $6,356,982 | $9,065,745 | $2,353,212 |
Pay Versus Performance
| 3The amounts reported in this column represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Schmitt, who has served as our CEO since 2018) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Schmitt) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Michael L. Hance, Rebecca J. Garbrick, Chris C. Ruble and Kyle R. Mitchin; (ii) for 2022, Rebecca J. Garbrick, Chris C. Ruble, Michael L. Hance, and Kyle R. Mitchin; (iii) for 2021, Rebecca J. Garbrick, Scott E. Schara, Chris C. Ruble, Michael L. Hance and Michael J. Morris; and (iv) for 2020, Michael J. Morris, Scott E. Schara, Chris C. Ruble, Michael L. Hance and Matthew J. Jewell. | | 4The amounts reported in this column represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Schmitt), as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Schmitt) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Schmitt) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |
Pay Versus Performance
| Average for Non-PEO NEOs | 2023 | 2022 | 2021 | 2020 | | Average Reported Summary Compensation Table Total for Non-PEO NEOs | $1,047,755 | $1,742,416 | $1,525,473 | $1,006,555 | | - Average Reported Value of Equity Awards | $(518,750) | $(465,000) | $(448,000) | $(375,000) | | + Average Year End Fair Value of Equity Awards | $223,513 | $490,666 | $615,596 | $281,071 | | +/- Year Over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | $(453,197) | $(4,743) | $144,644 | $(19,014) | | +/- Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | $21,314 | $(51,515) | $12,362 | $(153,176) | | - Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | $— | $— | $(123,770) | $(95,513) | | + Average Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | $— | $— | $— | $— | | Average Compensation Actually Paid to Non-PEO NEOs | $320,635 | $1,711,824 | $1,726,305 | $644,923 |
Pay Versus Performance
| 5Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period. | | 6Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: Nasdaq Trucking and Transportation Stocks Index, which is the same peer group used for the Stock Return Performance Graph included in our Annual Report. | | 7The amounts reported represent the net income as reflected in the Company’s audited financial statements for the applicable year. | | 8Relative TSR Performance Percentile is based on the metric used for our TSR performance shares, as discussed in more detail on pages 57 to 58. Amounts shown in this table for each year reflect the Company’s one year TSR relative to the one year TSR of the peer group used for the TSR performance shares awarded for that year. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Relative TSR Performance Percentile is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. |
Pay Versus Performance
Financial Performance Measures As described in greater detail in the CD&A, the Company’s executive compensation program reflects a pay-for-performance philosophy to support the achievement of short- and long-term financial, operational and strategic objectives. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase shareholder value. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows: •Operating Income •Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) •Relative TSR Performance Percentile (the Company’s TSR as compared to a peer group established by the Compensation Committee) Description of the Relationship between Pay and Performance The following graphs illustrate the relationship between the amount of compensation actually paid to Mr. Schmitt and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Schmitt) with the Company’s (i) cumulative TSR, (ii) net income and (iii) relative TSR performance percentile over the four years presented in the table. Compensation actually paid is impacted by numerous factors, including, but not limited to, the timing of new equity awards, vesting of outstanding awards, share price volatility and mix of performance metrics. A large portion of the compensation actually paid to our NEOs is comprised of equity awards. As described in more detail in CD&A, the Company targets that approximately 68% and 40% of the value of total compensation awarded to Mr. Schmitt and other NEOs, respectively, is comprised of equity awards, including restricted stock, performance shares and stock options. Over the last four years, changes in the Company’s share price have led to changes in the compensation actually paid. The graphs below illustrate: •From 2020 to 2021, the compensation actually paid to our PEO increased by 285.2% and average compensation actually paid to our Non-PEO NEOs (excluding Mr. Schmitt) increased by 167.7%, cumulative TSR increased from $111 to $177 or 59.5%, net income increased from $23.7 million to $105.9 million or 346.8% and relative TSR performance percentile increased from the 42nd percentile to the 77th percentile. •From 2021 to 2022, the compensation actually paid to our PEO decreased by 29.9% and average compensation actually paid to our Non-PEO NEOs (excluding Mr. Schmitt) decreased by 0.8%, cumulative TSR decreased from $177 to $155 or 12.4%, net income increased from $105.9 million to $193.2 million or 82.4% and relative TSR performance percentile decreased from the 77 percentile to the 64 percentile. •From 2022 to 2023, the compensation actually paid to our PEO decreased by 112.1% and average compensation actually paid to our Non-PEO NEOs (excluding Mr. Schmitt) decreased by 81.3%, cumulative TSR decreased from $155 to $94 or 39.4%, net income decreased from $193.2 million to $167.4 million or 13.4% and relative TSR performance percentile decreased from the 64 percentile to the 0 percentile. For additional information regarding the Company’s executive compensation program, compensation setting process and compensation philosophy, see the CD&A starting on page 46.
Potential Payments Upon Termination, Change of Control, Death or Disability
Potential Payments Upon Termination, Change of Control, Death or Disability Under the Severance Plan, which is applicable to selected employees of the Company, including Mr. Stewart and the NEOs, each participant would receive severance benefits in the event his or her employment is terminated in certain circumstances. Under the Severance Plan, a participant would receive severance benefits if his or her employment is involuntarily terminated by the Company (other than for cause or upon death or disability, as those terms are defined in the Severance Plan) or in the event the participant voluntarily terminates his or her employment for “good reason” (as defined in the Severance Plan). The circumstances that permit a participant to terminate employment for good reason and receive severance benefits after a change in control differ from the more limited circumstances that permit a termination of employment for good reason prior to or absent a change in control. Generally, eligible participants would be entitled to the severance benefits included in the chart below upon an involuntary termination of their employment, in addition to any accrued obligations (such as unpaid salary through the termination date) and vested amounts to which they may be entitled under the Company’s benefit plans:
Potential Payments Upon Termination, Change of Control, Death or Disability
| General Severance Upon Involuntary Termination Absent a Change in Control | | Severance Upon Involuntary Termination as of or Within Two Years After a Change in Control | | | ■ | a lump sum severance payment in an amount equal to two years of the CEO’s annualized base salary, one and half years of the C-Suite employee’s annualized base salary and one year for all other participants’ annualized base salary | ■ | an amount equal to two times the sum of the participant’s annual base salary and target annual incentive amount | | ■ | a pro-rata annual incentive for the fiscal year in which the termination occurs based on actual performance results, reduced by the amount of any annual incentive previously paid to the participant for such fiscal year | ■ | a pro-rata target annual incentive amount for the fiscal year in which the termination occurs, reduced by the amount of any annual incentive previously paid to the participant for such fiscal year | | ■ | a lump sum healthcare assistance payment in an amount equal to the excess of the monthly COBRA premium to provide the group medical, dental, vision, and/or prescription drug plan benefits the participant had been receiving before the termination above the monthly premium payable by active employees under the Company’s healthcare plan for similar coverage, multiplied by 18 months for all NEOs other than the CEO and by 24 months for the CEO | ■ | a lump sum healthcare assistance payment in an amount equal to the excess of the monthly COBRA premium to provide the group medical, dental, vision, and/or prescription drug plan benefits the participant had been receiving before the termination above the monthly premium payable by active employees under the Company’s healthcare plan for similar coverage, multiplied by 24 months | | ■ | access to up to $20,000 of employer-paid outplacement services for 12 months following termination | ■ | access to up to $20,000 of employer-paid outplacement services for 12 months following termination |
Potential Payments Upon Termination, Change of Control, Death or Disability
A condition in the Severance Plan is the execution of the Participation and Restrictive Covenants Agreement, which contains a non-competition and non-solicitation agreement with respect to the Company’s employees and customers. The term of the non-competition and non-solicitation prohibitions for the CEO and all other NEOs is 24 months and 18 months, respectively, following termination of employment. In addition, any severance benefits payable under the Severance Plan are subject to the execution by the participant of a general release of claims against the Company and certain affiliated persons and entities. The Severance Plan does not provide for any tax gross-up payments to participants. Payments and benefits under the Severance Plan are subject to recovery under any clawback, recovery or recoupment policy. In connection with the Omni Acquisition, in March 2024, the Compensation Committee amended the Severance Plan to provide enhanced severance protections for participating executives from March 15, 2024 to December 31, 2025. The amendment provides that a participating executive would be eligible to receive the severance benefits set forth above under “Severance Upon Involuntary Termination as of or Within Two Years After a Change in Control” in the event of a termination of employment by the Company “not for cause” that occurs from March 15, 2024 to December 31, 2025. In connection with the negotiation of Mr. Schmitt’s separation from the Company, the Company and Mr. Schmitt entered into (i) a separation agreement (the “Separation and Release Agreement”), effective March 19, 2024, setting forth the terms of Mr. Schmitt’s separation from the Company and (ii) an amended and restated restrictive covenants agreement originally entered into between Mr. Schmitt and the Company on May 27, 2022 (as amended and restated on March 19, 2024 the “Restrictive Covenants Agreement”). The Separation and Release Agreement provides for (i) compensation owed to Mr. Schmitt equal to $1,981,156, which is consistent with the amounts owed under the Severance Plan and described in the table below, (ii) accelerated vesting of Mr. Schmitt’s 2021 EBITDA and TSR performance share awards based on actual performance (additional detail regarding these awards was set forth in the Company’s 2022 annual proxy filed with the Securities and Exchange Commission on March 28, 2022) and (iii) the continued exercisability of all of Mr. Schmitt’s vested stock options until the earlier of (x) the applicable original expiration date and (y) February 9, 2029. The Restrictive Covenants Agreement clarifies the definition of a competing business and adds a mutual non-disparagement provision. In addition to the benefits available under the Severance Plan, all of the NEOs are eligible to receive certain other benefits in the event of specific termination of employment, including as a consequence of a change in control. Under the Company’s Annual Incentive Plan, any unpaid incentive amounts previously earned under this plan would be payable to any NEO terminated without cause. Under the Stock Incentive Plan, any non-vested restricted shares, options or other forms of equity-based compensation granted prior to 2016 will vest upon a “Change in Control.” Beginning with long-term incentive grants made in 2016 made pursuant to either the Stock Incentive Plan or 2016 Plan, vesting of such awards upon a change in control is double-trigger (i.e., not accelerated unless the awards are not assumed or converted by the acquirer or in the event there is an involuntary termination of employment in connection with or within 24 months after the change in control). The following table shows the estimated benefits payable to each NEO in the event of termination of employment or change of control of the Company. The amounts shown assume that a termination of employment or a change of control occurs on December 31, 2023. The amounts do not include payments or benefits provided under insurance or other plans that are generally available to all full-time employees.
Potential Payments Upon Termination, Change of Control, Death or Disability
| Name | Involuntary Termination Without Cause ($) | Death and Disability ($) | Change in Control ($) | | Thomas Schmitt | | | | | Severance(1) | 1,810,000 | — | — | | Annual Incentive(2) | 123,080 | — | — | | Accelerated Vesting of Equity(3) | — | — | — | | Insurance Benefits(4) | 27,427 | — | — | | Placement Services(5) | 20,000 | — | — | | Total | 1,980,507 | — | — | | Rebecca J. Garbrick | | | | | Severance(1) | 600,000 | — | 1,400,000 | | Annual Incentive(2) | 55,800 | 55,800 | 55,800 | | Accelerated Vesting of Equity(3) | — | 291,773 | 359,113 | | Insurance Benefits(4) | 13,321 | — | 17,761 | | Placement Services(5) | 20,000 | — | 20,000 | | Total | 689,121 | 347,573 | 1,852,674 | | Chris C. Ruble | | | | | Severance(1) | 909,000 | — | 2,121,000 | | Annual Incentive(2) | 97,263 | 97,263 | 97,263 | | Accelerated Vesting of Equity(3) | — | 684,080 | 794,237 | | Insurance Benefits(4) | 11,502 | — | 15,336 | | Placement Services(5) | 20,000 | — | 20,000 | | Total | 1,037,765 | 781,343 | 3,047,836 | | Michael L. Hance | | | | | Severance(1) | 684,000 | — | 1,596,000 | | Annual Incentive(2) | 51,300 | 51,300 | 51,300 | | Accelerated Vesting of Equity(3) | — | 555,001 | 641,651 | | Insurance Benefits(4) | 27,663 | — | 36,884 | | Placement Services(5) | 20,000 | — | 20,000 | | Total | 782,963 | 606,301 | 2,345,835 | | Kyle R. Mitchin | | | | | Severance(1) | 525,000 | — | 1,225,000 | | Annual Incentive(2) | 54,600 | 54,600 | 54,600 | | Accelerated Vesting of Equity(3) | — | 314,019 | 366,406 | | Insurance Benefits(4) | 27,663 | — | 36,884 | | Placement Services(5) | 20,000 | — | 20,000 | | Total | 627,263 | 368,619 | 1,702,890 |
Potential Payments Upon Termination, Change of Control, Death or Disability
| (1) Severance includes: (a) base salary for two years for the CEO and one and half years for NEO’s if involuntary terminated without cause, or base salary for two years if terminated within two years following a Change in Control, and (b) in the event of termination within two years following a Change in Control, payment in the amount of two times the target annual incentive amount determined as of the termination date. | | (2) Annual Incentive includes: (a) target annual incentive if involuntary terminated without cause, death or disability, and (b) target annual incentive if terminated within two years following a Change in Control. | | (3) In the event of termination due to death or disability, the amount includes (a) the unvested restricted shares valued at the market price of Company Common Stock on December 29, 2023 ($62.87), (b) the unvested stock option awards multiplied by the excess, if any, of the market price of Company Common Stock on December 29, 2023 ($62.87) over the exercise price, and (c) the unvested performance shares, calculated as the target number of performance shares specified in each grant multiplied by the percentage of months of service completed in the full performance period, multiplied by the market price of Company Common Stock on December 29, 2023 ($62.87). In the event of termination due to a Change in Control, the amount includes (i) the unvested restricted shares valued at the market price of Company Common Stock on December 29, 2023 ($62.87), (ii) the unvested stock option awards multiplied by the excess, if any, of the market price of Company Common Stock on December 29, 2023 ($62.87) over the exercise price, and (iii) the greater of (x) 100% of the target number of unvested performance shares specified on the grant notice or (y) the number of performance shares that otherwise would have become vested as of the vesting date, based on the TSR multiplier or EBITDA Per Share performance factor attained as of the date of termination, shall become vested performance shares valued at the market price of Company Common Stock on December 29, 2023 ($62.87). For purposes of calculating the Change in Control amount, we assume that 100% of the target number of unvested performance shares is greater than the number of shares that would have become vested based on the TSR multiplier or EBITDA Per Share performance factor as of the date of termination. | | (4) Participants are entitled to a lump sum healthcare assistance payment in an amount equal to the excess of the monthly COBRA premium to provide the group medical, dental, vision, and/or prescription drug plan benefits the participant had been receiving before termination above the monthly premium payable by active employees under the Company’s healthcare plan for similar coverage, multiplied by 18 months for all NEOs other than the CEO and by 24 months for the CEO if the termination date is prior to or absent a Change in Control, or by 24 months if the termination date is on or within two years following a Change in Control. | | (5) Participants are entitled to access up to $20,000 of employer-paid outplacement services for 12 months following termination. |