FORWARD AIR CORPORATION - FORM DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No.
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þ Definitive
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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Forward Air Corporation
(Name of Registrant as Specified In Its Charter)
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other than the Registrant)
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April 19, 2007
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Forward
Air Corporation, you are cordially invited to attend the Annual
Meeting of Shareholders on Tuesday, May 22, 2007, at
8:00 a.m., EDT, in the Catalpa Room at The Ritz-Carlton
Lodge, Reynolds Plantation, One Lake Oconee Trail, Greensboro,
Georgia 30642.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend
the meeting in person, please vote and submit your proxy over
the Internet, by telephone or by completing, signing, dating and
returning the enclosed proxy in the envelope provided as
promptly as possible. If you attend the meeting and desire to
vote in person, you may do so even though you have previously
sent a proxy.
I hope you will be able to join us, and we look forward to
seeing you at the meeting.
Sincerely yours,
Bruce A. Campbell
President and Chief Executive Officer
TABLE OF CONTENTS
FORWARD
AIR CORPORATION
430 Airport Road
Greeneville, Tennessee 37745
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 2007
To the Shareholders of Forward Air Corporation:
The Annual Meeting of Shareholders of Forward Air Corporation
(the Company) will be held on Tuesday, May 22,
2007, beginning at 8:00 a.m., EDT, in the Catalpa Room at
The Ritz-Carlton Lodge, Reynolds Plantation, One Lake Oconee
Trail, Greensboro, Georgia 30642.
Attendance at the Annual Meeting will be limited to
shareholders, those holding proxies from shareholders and
representatives of the press and financial community. To gain
admission to the Annual Meeting, you will need to show that you
are a shareholder of the Company. If your shares are registered
in your name and you plan to attend the Annual Meeting, please
retain and bring the top portion of the enclosed proxy card as
your admission ticket. If your shares are in the name of your
broker or bank, or you received your proxy materials
electronically, you will need to bring evidence of your stock
ownership, such as your most recent brokerage account statement.
The purposes of this meeting are:
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To elect eight members of the Board of Directors with terms
expiring at the next Annual Meeting of Shareholders in 2008;
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To ratify the appointment of Ernst & Young LLP as the
independent registered public accounting firm of the Company;
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To approve the Amended and Restated Non-Employee Director Stock
Plan; and
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To transact such other business as may properly come before the
meeting and at any adjournment or postponement thereof.
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We will make available a list of shareholders of record as of
the March 15, 2007 record date for inspection by
shareholders during normal business hours from April 23,
2007 until May 21, 2007 at the Companys principal
place of business, 430 Airport Road, Greeneville, Tennessee
37745. The list also will be available to shareholders at the
meeting.
Only shareholders of the $0.01 par value common stock of
the Company of record at the close of business on March 15,
2007 are entitled to notice of and to vote at the Annual
Meeting. Shareholders are cordially invited to attend the
meeting in person.
It is important that your shares be represented at the Annual
Meeting. Whether or not you expect to attend the meeting, please
vote and submit your proxy over the Internet, by telephone or by
mail. Please refer to the proxy card for specific voting
instructions. You may revoke your proxy at any time before it is
voted.
By Order of the Board of Directors,
Matthew J. Jewell
Senior Vice President, General Counsel
and Secretary
Greeneville, Tennessee
April 19, 2007
FORWARD
AIR CORPORATION
430 Airport Road
Greeneville, Tennessee 37745
(423) 636-7000
PROXY
STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to the shareholders of Forward
Air Corporation (the Company) in connection with the
solicitation of proxies by the Board of Directors (the
Board) for use at the Annual Meeting of Shareholders
to be held on Tuesday, May 22, 2007, beginning at
8:00 a.m., EDT, in the Catalpa Room at The Ritz-Carlton
Lodge, Reynolds Plantation, One Lake Oconee Trail, Greensboro,
Georgia 30642, and any adjournment thereof, for the purposes set
forth in the foregoing Notice of Annual Meeting of Shareholders.
This proxy material was first mailed to shareholders on or about
April 19, 2007.
You can ensure that your shares are voted at the Annual Meeting
by submitting your instructions over the Internet, by telephone
or by completing, signing, dating and returning the enclosed
proxy in the envelope provided. You may revoke your proxy at any
time before it is exercised by voting in person at the Annual
Meeting or by delivering written notice of your revocation to,
or a subsequent proxy to, the Secretary of the Company at its
principal executive offices. Each proxy will be voted FOR
Proposals 1, 2 and 3 if no contrary instruction is
indicated in the proxy, and in the discretion of the persons
named in the proxy on any other matter that may properly come
before the shareholders at the Annual Meeting.
Shareholders are entitled to one vote for each share of common
stock held of record at the close of business on March 15,
2007 (the Record Date). There were
30,391,176 shares of our $0.01 par value common stock
issued and outstanding on the Record Date. The presence, in
person or by proxy, of a majority of those shares will
constitute a quorum at the Annual Meeting.
The affirmative vote of a plurality of the votes cast by the
shareholders entitled to vote at the Annual Meeting is required
for the election of directors. A properly executed proxy marked
Withhold Authority with respect to the
election of one or more directors will not be voted with respect
to the director or directors indicated, although it will be
counted in determining whether there is a quorum. Therefore, so
long as a quorum is present, withholding authority will have no
effect on whether one or more directors is elected.
Any matter that properly comes before the Annual Meeting will be
approved if the number of shares of common stock voted in favor
of the proposal exceeds the number of shares of common stock
voted against it. A properly executed proxy marked
Abstain with respect to a proposal will not
be voted on that proposal, although it will be counted in
determining whether there is a quorum. Therefore, as long as a
quorum is present, abstaining from any proposal that properly
comes before the Annual Meeting will have no effect on whether
the proposal is approved.
Brokers who hold shares for the accounts of their clients who do
not receive voting instructions may not vote for certain of the
proposals contained in this Proxy Statement unless specifically
instructed to do so by their clients. Proxies that are returned
to us where brokers have received instructions to vote on one or
more proposal(s) but have not received instructions to vote on
other proposal(s) are referred to as broker
non-votes with respect to the proposal(s) not voted upon.
Broker non-votes are included in determining the presence of a
quorum.
The Company will bear the cost of soliciting proxies for the
Annual Meeting. Our officers and employees may also solicit
proxies by mail, telephone,
e-mail or
facsimile transmission. They will not be paid additional
remuneration for their efforts. Upon request, we will reimburse
brokers, dealers, banks and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy
material to beneficial owners of shares of our common stock.
PROPOSAL 1
ELECTION OF DIRECTORS
At the date of this Proxy Statement, our Board is comprised of
eight directors, seven of whom are non-employee directors. There
are eight nominees for election at the Annual Meeting of
Shareholders, each to hold office until the next Annual Meeting
of Shareholders or until a successor has been duly elected and
qualified. The Board of Directors recommends a vote FOR
the election of the eight nominees named below. Duly executed
proxies will be so voted unless record holders specify a
contrary choice on their proxies. If for any reason a
nominee is unable to serve as a director, it is intended that
the proxies solicited hereby will be voted for such substitute
nominee as the Board may propose, or the Board may reduce the
number of directors. The Board has no reason to expect that the
nominees will be unable to serve and, therefore, at this time it
does not have any substitute nominees under consideration.
Proxies cannot be voted for a greater number of persons than the
number named.
Shareholder
Vote Requirement
The nominees for election shall be elected by a plurality of the
votes cast by the shares of common stock entitled to vote at the
Annual Meeting. Shareholders have no right to vote cumulatively
for directors. Each share shall have one vote for each
directorship to be filled on the Board of Directors.
Director
Nominees
The following persons are the nominees for election to serve as
directors. There are no family relationships between any of the
director nominees. Each director nominee is standing for
re-election by the shareholders except for Tracy A. Leinbach,
who is standing for election for the first time. A third-party
search firm initially identified Ms. Leinbach as a Board
candidate to the Corporate Governance and Nominating Committee
and, after a screening process and recommendation by the
Committee, the Board elected Ms. Leinbach as a new director
on March 29, 2007. Certain information relating to the
nominees, furnished by the nominees, is set forth below. The
ages set forth below are accurate as of the date of this Proxy
Statement.
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BRUCE A. CAMPBELL
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Director since 1993
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Greeneville, Tennessee
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Age 55
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Mr. Campbell has served as a director since April 1993, as
President since August 1998 and as Chief Executive Officer since
October 2003. Mr. Campbell was Chief Operating Officer from
April 1990 until October 2003 and Executive Vice President from
April 1990 until August 1998. Prior to joining the Company,
Mr. Campbell served as vice president of Ryder-Temperature
Controlled Carriage in Nashville, Tennessee from September 1985
until December 1989. Mr. Campbell also serves as a director
of Greene County Bancshares, Inc.
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C. ROBERT CAMPBELL
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Director since 2005
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Coral Gables, Florida
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Age 62
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Mr. Campbell has been Executive Vice President and Chief
Financial Officer of MasTec, Inc., a leading communications and
energy infrastructure service provider in North America, since
October 2004. Mr. Campbell has over 25 years of senior
financial management experience. From January 2002 to October
2004, Mr. Campbell was executive vice president and chief
financial officer for TIMCO Aviation Services, Inc. From April
1998 to June 2000, Mr. Campbell was the president and chief
executive officer of BAX Global, Inc., and from March 1995 to
March 1998, he was executive vice president-finance and chief
financial officer for Advantica Restaurant Group, Inc.
Mr. Campbell is a Certified Public Accountant.
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RICHARD W. HANSELMAN
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Director since 2004
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Nashville, Tennessee
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Age 79
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Mr. Hanselman has served as Chairman of the Board of the
Company since May 2005. Mr. Hanselman was a director of
ArvinMeritor, Inc., a global supplier of a broad range of
systems, modules and components to the motor vehicle industry,
from July 2000 until his retirement from its Board in January
2007. Mr. Hanselman was a director of Arvin Industries,
Inc. from 1983 until it merged with ArvinMeritor, Inc.
Mr. Hanselman was the non-executive chairman of the board
of Health Net, Inc., a managed care provider, from May 1999
until December 2003, and he continued to serve as a director
until May 2005. Mr. Hanselman also served as a director of
predecessor corporations of Health Net, Inc. Formerly,
Mr. Hanselman was chairman, president and chief executive
officer of Genesco, Inc. from May 1980 until January 1986. In
addition, Mr. Hanselman is an Honorary Trustee of the
Committee for Economic Development.
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C. JOHN LANGLEY, JR.
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Director since 2004
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Knoxville, Tennessee
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Age 61
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Dr. Langley is The Supply Chain and Logistics Institute
Professor of Supply Chain Management and a member of the faculty
of the School of Industrial and Systems Engineering at the
Georgia Institute of Technology. Dr. Langley serves as
Director of Supply Chain Executive Programs at Georgia Tech and
as Executive Director of the Supply Chain Executive Forum. Prior
to his September 2001 appointment with Georgia Tech,
Dr. Langley served as a Professor at the University of
Tennessee since September 1973, where most recently he was the
Dove Distinguished Professor of Logistics and Transportation.
Dr. Langley also is a director of UTi Worldwide Inc.
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TRACY A. LEINBACH
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Director since 2007
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Miami, Florida
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Age 47
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Ms. Leinbach served as Executive Vice President and Chief
Financial Officer of Ryder System, Inc., a global leader in
supply chain, warehousing and transportation management
solutions, from March 2003 until her retirement in February
2006. Ms. Leinbach served as Executive Vice President of
Ryders Fleet Management Solutions from March 2001 to March
2003, Senior Vice President, Sales and Marketing from September
2000 to March 2001, and she was Senior Vice President, Field
Management from July 2000 to September 2000. Ms. Leinbach
also served as Managing Director-Europe of Ryder Transportation
Services from January 1999 to July 2000 and previously she had
served Ryder Transportation Services as Senior Vice President
and Chief Financial Officer from 1998 to January 1999, Senior
Vice President, Business Services from 1997 to 1998, and Senior
Vice President, Purchasing and Asset Management for six months
during 1996. From 1985 to 1996, Ms. Leinbach held various
financial positions in Ryder subsidiaries.
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G. MICHAEL LYNCH
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Director since 2005
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Bloomfield Hills, Michigan
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Age 64
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Mr. Lynch is Executive Vice President and Chief Financial
Officer and a member of the Strategy Board for Federal-Mogul
Corporation. Federal-Mogul is a global manufacturer and marketer
of automotive component parts. Prior to joining Federal-Mogul in
July 2000, Mr. Lynch worked at Dow Chemical Company, where
he was vice president and controller. Mr. Lynch also spent
29 years at Ford Motor Company, where his most recent
position was controller, automotive components division, which
ultimately became Visteon. While at Ford, Mr. Lynch held a
number of varied financial assignments, including executive vice
president and chief financial officer of Ford New Holland.
Mr. Lynch also sits on the board of Champion Enterprises,
Inc.
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RAY A. MUNDY
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Director since 2000
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St. Louis, Missouri
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Age 62
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Dr. Mundy has served as director of the Center for
Transportation Studies and Barriger Endowed Professor of
Transportation and Logistics at the University of Missouri since
January 2000. From January 1996 until December 1999, he was the
Taylor Distinguished Professor of Logistics and Transportation
at the University of Tennessee. Also, while at the University of
Tennessee, Dr. Mundy managed its Transportation
Management & Policies Studies program and was one of
the directors of its Supply Chain Forum. Additionally,
Dr. Mundy serves as a consultant to both the public and
private sectors and sits on advisory boards for Internet,
transportation and logistics companies.
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B. CLYDE PRESLAR
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Director since 2004
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Tampa, Florida
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Age 52
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Mr. Preslar served as Executive Vice President and Chief
Financial Officer of Cott Corporation, the worlds leading
supplier of retailer brand carbonated soft drinks, from August
2005 until December 2006. From April 1996 until August 2005,
Mr. Preslar was chief financial officer and vice president
of Lance, Inc., and was its secretary from February 2002 until
August 2005. Mr. Preslar was director of finance at
Black & Decker Corporation from July 1989 until April
1996. Mr. Preslar is a Certified Public Accountant and a
Certified Management Accountant. Mr. Preslar also is a
director of Alliance One International, Inc.
CORPORATE
GOVERNANCE
Independent
Directors
The Companys common stock is listed on The NASDAQ Stock
Market LLC (Nasdaq). Nasdaq requires that a majority
of the directors be independent directors, as
defined in Nasdaq Marketplace Rule 4200. Generally, a
director does not qualify as an independent director if the
director (or in some cases, members of the directors
immediate family) has, or in the past three years has had,
certain material relationships or affiliations with the Company,
its external or internal auditors, or other companies that do
business with the Company. The Board has affirmatively
determined that seven of the Companys eight current
directors have no other direct or indirect relationships with
the Company and therefore are independent directors on the basis
of Nasdaqs standards and an analysis of all facts specific
to each director. The independent directors are C. Robert
Campbell, Richard W. Hanselman, C. John Langley, Jr., Tracy
A. Leinbach, G. Michael Lynch, Ray A. Mundy and B. Clyde Preslar.
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Corporate
Governance Guidelines
The Board of Directors has adopted Corporate Governance
Guidelines that give effect to Nasdaqs requirements
related to corporate governance and various other corporate
governance matters. The Companys Corporate Governance
Guidelines, as well as the charters of the Audit Committee,
Compensation Committee and Corporate Governance and Nominating
Committee, are available on the Companys website at
www.forwardair.com and are available in print by contacting the
Corporate Secretary by mail at Forward Air Corporation, 430
Airport Road, Greeneville, Tennessee 37745, or by telephone at
(423) 636-7000.
Non-Employee
Director Meetings
Pursuant to the Companys Corporate Governance Guidelines,
the Companys non-employee directors meet in executive
session without management on a regularly scheduled basis, but
not less frequently than quarterly. The non-executive Chairman
presides at such executive sessions or, in his or her absence, a
non-employee director designated by such non-executive Chairman.
Interested parties who wish to communicate with the Chairman of
the Board or the non-employee directors as a group should follow
the procedures found below under Corporate
Governance Shareholder Communications.
Director
Nominating Process
The Corporate Governance and Nominating Committee evaluates a
candidate for director who was recommended by a shareholder in
the same manner as a candidate recommended by other means.
Shareholders wishing to communicate with the Corporate
Governance and Nominating Committee concerning potential
director candidates may do so by corresponding with the
Corporate Secretary at Forward Air Corporation, 430 Airport
Road, Greeneville, Tennessee 37745, and including the name and
biographical data of the individual being suggested.
All recommendations should include the written consent of the
nominee to be nominated for election to the Companys Board
of Directors. To be considered, the Company must receive
recommendations at least 120 calendar days prior to the one year
anniversary of the Companys proxy statement date for the
prior years Annual Meeting of Shareholders and include all
required information to be considered. In the case of the 2008
Annual Meeting of Shareholders, this deadline is
December 21, 2007. All recommendations will be brought to
the attention of the Corporate Governance and Nominating
Committee.
The Corporate Governance and Nominating Committee annually
reviews the appropriate experience, skills and characteristics
required of Board members in the context of the current
membership of the Board. This assessment includes among other
relevant factors in the context of the perceived needs of the
Board at that time, the possession of such knowledge,
experience, skills, expertise and diversity to enhance the
Boards ability to manage and direct the affairs and
business of the Company.
The Companys Board of Directors has established the
following process for the identification and selection of
candidates for director. The Corporate Governance and Nominating
Committee, in consultation with the Chairman of the Board,
periodically examines the composition of the Board and
determines whether the Board would better serve its purposes
with the addition of one or more directors. If the Corporate
Governance and Nominating Committee determines that adding a new
director is advisable, the Committee initiates the search,
working with other directors and management and, if appropriate
or necessary, a third-party search firm that specializes in
identifying director candidates.
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The Corporate Governance and Nominating Committee will consider
all appropriate candidates proposed by management, directors and
shareholders. Information regarding potential candidates shall
be presented to the Corporate Governance and Nominating
Committee, and the Committee shall evaluate the candidates based
on the needs of the Board at that time and issues of knowledge,
experience, skills, expertise and diversity, as set forth in the
Companys Corporate Governance Guidelines. Potential
candidates will be evaluated according to the same criteria,
regardless of whether the candidate was recommended by
shareholders, the Corporate Governance and Nominating Committee,
another director, Company management, a search firm or another
third party. The Corporate Governance and Nominating Committee
will submit any recommended candidate(s) to the full Board of
Directors for approval and recommendation to the shareholders.
Shareholder
Communications
Shareholders who wish to communicate with the Board, a Board
committee or any such other individual director or directors may
do so by sending written communications addressed to the Board
of Directors, a Board committee or such individual director or
directors, c/o Corporate Secretary, Forward Air
Corporation, 430 Airport Road, Greeneville, Tennessee 37745. All
communications will be compiled by the General Counsel of the
Company and forwarded to the members of the Board to whom the
communication is directed or, if the communication is not
directed to any particular member(s) of the Board, the
communication shall be forwarded to all members of the Board of
Directors.
Annual
Performance Evaluations
The Companys Corporate Governance Guidelines provide that
the Board of Directors shall conduct an annual evaluation to
determine, among other matters, whether the Board and the
Committees are functioning effectively. The Audit Committee,
Compensation Committee and Corporate Governance and Nominating
Committee are also required to each conduct an annual
self-evaluation. The Corporate Governance and Nominating
Committee is responsible for overseeing this self-evaluation
process.
Code of
Ethics
The Board of Directors has adopted a Code of Ethics that applies
to all Company employees, officers and directors, which is
available on the Companys website at www.forwardair.com.
The Code of Ethics complies with Nasdaq and Securities and
Exchange Commission (the SEC) requirements,
including procedures for the confidential, anonymous submission
by employees or others of any complaints or concerns about the
Company or its accounting practices, internal accounting
controls or auditing matters. The Company will also mail the
Code of Ethics to any shareholder who requests a copy. Requests
may be made by contacting the Corporate Secretary as described
above under Corporate Governance Corporate
Governance Guidelines.
Board
Attendance
The Companys Corporate Governance Guidelines provide that
all directors are expected to attend all meetings of the Board
and committees on which they serve and are also expected to
attend the Annual Meeting of Shareholders. During 2006, the
Board of Directors held five meetings. All of the incumbent
directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and meetings of committees of
the Board on which they served during 2006. Six of the seven
incumbent director nominees attended the 2006 Annual Meeting of
Shareholders.
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Board
Committees
The Board presently has four standing committees: an Executive
Committee, an Audit Committee, a Compensation Committee and a
Corporate Governance and Nominating Committee. With the
exception of the Executive Committee, each committee has
authority to engage legal counsel or other experts or
consultants as it deems appropriate to carry out its
responsibilities. In addition, the Board has determined that
each member of the Audit Committee, Compensation Committee and
Corporate Governance and Nominating Committee is
independent, as defined in Nasdaq Marketplace
Rule 4200, and that each member is free of any relationship
that would interfere with his or her individual exercise of
independent judgment. Additional information regarding the
functions of the Boards committees, the number of meetings
held by each committee during 2006 and their present membership
is set forth below.
The Board nominated each of the nominees for election as a
director and each nominee currently is a director. Assuming
election of all of the director nominees, following is a list of
persons who will constitute the Companys Board of
Directors following the meeting, including their current
committee assignments.
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Name
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Committees
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Bruce A. Campbell
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Executive
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C. Robert Campbell
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Audit and Compensation
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Richard W. Hanselman
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Executive
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C. John Langley, Jr.
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Compensation (Chair) and Corporate
Governance and Nominating
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Tracy A. Leinbach
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G. Michael Lynch
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Audit and Corporate Governance and
Nominating
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Ray A. Mundy
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Corporate Governance and
Nominating (Chair)
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B. Clyde Preslar
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Audit (Chair) and Compensation
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The Board elected Ms. Leinbach as a director on
March 29, 2007 and she currently does not serve on a
committee. |
Executive Committee. The Executive Committee
is authorized, to the extent permitted by law and the Bylaws of
the Company, to act on behalf of the Board of Directors on all
matters that may arise between regular meetings of the Board
upon which the Board of Directors would be authorized to act,
subject to certain materiality restrictions established by the
Board. During 2006, there were no meetings of the Executive
Committee.
Audit Committee. The Audit Committee engages
the Companys independent registered public accounting
firm, considers the fee arrangement and scope of the audit,
reviews the financial statements and the independent registered
public accounting firms report, considers comments made by
such firm with respect to the Companys internal control
structure, and reviews the internal audit process and internal
accounting procedures and controls with the Companys
financial and accounting staff. A more detailed description of
the Audit Committees duties and responsibilities can be
found in the Audit Committee Report on page 25 of this
Proxy Statement and in the Audit Committee Charter. A current
copy of the written charter of the Audit Committee is attached
as Appendix A to this Proxy Statement and is available on
the Companys website at www.forwardair.com.
The Board of Directors has determined that each member of the
Audit Committee, B. Clyde Preslar (Chair), C. Robert Campbell
and G. Michael Lynch, meets the definition of an audit
committee financial expert, as that term is defined by the
rules and regulations of the SEC. The Audit Committee held seven
meetings during 2006.
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Compensation Committee. The Compensation
Committee is responsible for determining the overall
compensation levels of certain of the Companys executive
officers and administering the Companys employee incentive
plans and other employee benefit plans. In addition, it approves
the Compensation Discussion and Analysis for inclusion in the
proxy statement (see page 14 of this Proxy Statement). A
current copy of the written charter of the Compensation
Committee is available on the Companys website at
www.forwardair.com. The Compensation Committee held four
meetings during 2006.
Corporate Governance and Nominating
Committee. The Corporate Governance and
Nominating Committee is responsible for identifying individuals
qualified to become Board members and recommending them to the
full Board for consideration. This responsibility includes all
potential candidates, whether initially recommended by
management, other Board members or shareholders. In addition,
the Committee makes recommendations to the Board for Board
committee assignments, develops and annually reviews corporate
governance guidelines for the Company, and otherwise oversees
corporate governance matters. In addition, the Committee
coordinates an annual performance review for the Board, Board
committees and individual director nominees. The Committee
periodically reviews and makes recommendations to the Board
regarding director compensation for the Boards approval.
Also, the Committee oversees management succession planning.
A description of the Committees policy regarding director
candidates nominated by shareholders appears in Corporate
Governance Director Nominating Process above.
A current copy of the written charter of the Corporate
Governance and Nominating Committee is available on the
Companys website at www.forwardair.com. The Corporate
Governance and Nominating Committee held four meetings during
2006.
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 to review and consider any revisions to
the non-employee director compensation program. In accordance
with the Committees recommendations, the Board revised the
non-employee directors cash compensation program effective
May 24, 2006 as follows:
|
|
|
|
|
increased the non-employee Chairman of the Boards annual
cash retainer from $50,000 to $77,500;
|
|
|
|
increased all other non-employee directors annual cash
retainer from $20,000 to $27,500;
|
|
|
|
increased the Audit Committee Chairs annual cash retainer
from $10,000 to $15,000;
|
|
|
|
added an annual cash retainer of $7,500 for the Corporate
Governance and Nominating Committee and Compensation Committee
Chairs;
|
|
|
|
increased all non-Chair Audit Committee members fees from
$5,000 to $7,500;
|
|
|
|
maintained the $1,500 per in-person meeting fee; and
|
8
|
|
|
|
|
maintained the $750 per teleconference meeting fee.
|
No additional fee is paid for committee meetings held on the
same day as Board meetings. All directors are reimbursed
reasonable travel expenses for meetings attended in person. In
addition, the Company reimburses directors for expenses
associated with participation in continuing director education
programs.
In addition, effective May 24, 2006, shareholders of the
Company adopted the 2006 Non-Employee Director Stock Plan (the
2006 Director Stock Plan), which replaced and
terminated the 1996 Non-Employee Director Stock Option Plan (the
1996 Plan). The 2006 Director Stock Plan
provides for each non-employee director to receive an automatic
annual grant of 2,250 restricted shares of common stock, subject
to a three-year vesting schedule. Under the 1996 Plan,
non-employee directors received an automatic annual grant of an
option for the purchase of 7,500 shares of common stock.
See Proposal 3, Approval of the Amended and Restated
Non-Employee Director Stock Plan on page 27 of this
Proxy Statement.
The following table shows the compensation we paid in 2006 to
our incumbent non-employee directors. The Company does not pay
employee directors for Board service in addition to their
regular employee compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Paid in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Stock Awards
|
|
|
Dividends
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Richard W. Hanselman
|
|
$
|
66,621
|
|
|
$
|
15,868
|
|
|
$
|
473
|
|
|
$
|
82,962
|
|
C. Robert Campbell
|
|
|
40,794
|
|
|
|
15,868
|
|
|
|
473
|
|
|
|
57,135
|
|
C. John Langley, Jr.
|
|
|
38,066
|
|
|
|
15,868
|
|
|
|
473
|
|
|
|
54,407
|
|
G. Michael Lynch
|
|
|
44,544
|
|
|
|
15,868
|
|
|
|
473
|
|
|
|
60,885
|
|
Ray A. Mundy
|
|
|
40,316
|
|
|
|
15,868
|
|
|
|
473
|
|
|
|
56,657
|
|
B. Clyde Preslar
|
|
|
51,055
|
|
|
|
15,868
|
|
|
|
473
|
|
|
|
67,396
|
|
|
|
|
(1) |
|
Represents the proportionate amount of the total fair value of
non-vested restricted shares and deferred stock unit awards
recognized by the Company as an expense in 2006 for financial
accounting purposes, disregarding for this purpose the estimate
of forfeitures related to service-based vesting conditions. |
|
(2) |
|
Represents dividend payments or dividend equivalents on
non-vested restricted shares or deferred stock unit awards
granted during 2006. These dividend payments are nonforfeitable. |
9
The following table indicates the aggregate number of
outstanding options, deferred restricted stock units or
non-vested restricted shares held by each incumbent director at
the end of 2006 and those shares or units that have not yet
vested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares or
|
|
|
|
Number of Securities
|
|
|
Units of Stock Held
|
|
|
|
Underlying Unexercised
|
|
|
That Have Not
|
|
Name
|
|
Options (#) Exercisable
|
|
|
Vested (#)
|
|
|
Richard W. Hanselman
|
|
|
18,750
|
|
|
|
2,250
|
|
C. Robert Campbell
|
|
|
|
|
|
|
2,250
|
|
C. John Langley, Jr.
|
|
|
10,625
|
|
|
|
2,250
|
|
G. Michael Lynch
|
|
|
|
|
|
|
2,250
|
|
Ray A. Mundy
|
|
|
63,750
|
|
|
|
2,250
|
|
B. Clyde Preslar
|
|
|
18,750
|
|
|
|
2,250
|
|
Certain
Relationships and Related Person Transactions
We review all relationships and transactions in which the
Company and our directors and executive officers or their
immediate family members are participants to determine whether
such persons have a direct or indirect material interest. Other
than as provided in the Audit Committee Charter, the Company
does not have a written policy governing related person
transactions. The Companys legal staff is primarily
responsible for the development and implementation of processes
and controls to obtain information from the directors and
executive officers with respect to related person transactions
and for then determining, based on the facts and circumstances,
whether the Company or a related person has a direct or indirect
material interest in the transaction. As required under SEC
rules, transactions that are determined to be directly or
indirectly material to the Company or a related person are
disclosed in the Companys proxy statement. In addition,
the Audit Committee reviews and approves or ratifies any related
person transaction that is required to be disclosed. In the
course of its review and approval or ratification of a
disclosable related person transaction, the Committee considers:
|
|
|
|
|
the nature of the related persons interest in the
transaction;
|
|
|
|
the material terms of the transaction, including, without
limitation, the amount and type of transaction;
|
|
|
|
the importance of the transaction to the related person;
|
|
|
|
the importance of the transaction to the Company;
|
|
|
|
whether the transaction would impair the judgment of a director
or executive officer to act in the best interest of the Company;
and
|
|
|
|
any other matters the Committee deems appropriate.
|
10
Any member of the Audit Committee who is a related person with
respect to a transaction under review may not participate in the
deliberations or vote respecting approval or ratification of the
transaction, provided, however, that such director may be
counted in determining the presence of a quorum at a meeting of
the committee that considers the transaction.
Based on information provided by the directors, director
nominees and executive officers, and the Companys legal
department, the Audit Committee determined that there are no
related person transactions to be reported in this Proxy
Statement.
C. John Langley, Jr. serves as a director of UTi
Worldwide, Inc. In its ordinary course of business, the Company
provided transportation services to UTi Worldwide, Inc. during
2006 and may continue to do so in the future.
Compensation
Committee Interlocks and Insider Participation
During all of 2006, the Compensation Committee was fully
comprised of independent non-employee directors. Since
May 23, 2006, C. John Langley, Jr. (Chair), C. Robert
Campbell and B. Clyde Preslar have been members of the
Compensation Committee.
11
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of shares of our outstanding common stock
held as of the Record Date by (i) each director and
director nominee; (ii) our Chief Executive Officer, Chief
Financial Officer, each of the next three most highly
compensated executive officers and a former executive officer,
as required under SEC rules (collectively, the Named
Executive Officers); and (iii) all directors and
executive officers as a group. The table also sets forth
information as to any person, entity or group known to the
Company to be the beneficial owner of 5% or more of the
Companys common stock as of December 31, 2006.
Under the rules of the SEC, a person is deemed to be a
beneficial owner of a security if that person has or
shares the power to vote or direct the voting of the security,
has or shares the power to dispose of or direct the disposition
of the security, or has the right to acquire the security within
60 days. Except as otherwise indicated, the shareholders
listed in the table are deemed to have sole voting and
investment power with respect to the common stock owned by them
on the dates indicated above. Shareholders of non-vested
restricted shares included in the table are entitled to voting
and dividend rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned
|
|
Name and Address of Beneficial Owner (1)
|
|
Number
|
|
|
Percent (%)(2)(3)
|
|
|
Directors, Nominees and Named
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Campbell
|
|
|
469,661
|
|
|
|
(4
|
)
|
|
|
1.5
|
|
C. Robert Campbell
|
|
|
|
|
|
|
(5
|
)
|
|
|
*
|
|
Andrew C. Clarke
|
|
|
38,113
|
|
|
|
(6
|
)
|
|
|
*
|
|
Richard W. Hanselman
|
|
|
21,750
|
|
|
|
(7
|
)
|
|
|
*
|
|
C. John Langley, Jr.
|
|
|
13,550
|
|
|
|
(8
|
)
|
|
|
*
|
|
Tracy A. Leinbach
|
|
|
|
|
|
|
|
|
|
|
*
|
|
G. Michael Lynch
|
|
|
2,750
|
|
|
|
(9
|
)
|
|
|
*
|
|
Ray A. Mundy
|
|
|
66,997
|
|
|
|
(10
|
)
|
|
|
*
|
|
B. Clyde Preslar
|
|
|
21,375
|
|
|
|
(7
|
)
|
|
|
*
|
|
Rodney L. Bell
|
|
|
250,141
|
|
|
|
(11
|
)
|
|
|
*
|
|
Craig A. Drum
|
|
|
81,943
|
|
|
|
(12
|
)
|
|
|
*
|
|
Matthew J. Jewell
|
|
|
203,468
|
|
|
|
(13
|
)
|
|
|
*
|
|
Chris C. Ruble
|
|
|
138,335
|
|
|
|
(14
|
)
|
|
|
*
|
|
All directors and executive
officers as a group (14 persons)
|
|
|
1,313,083
|
|
|
|
(15
|
)
|
|
|
4.3
|
|
Other Principal Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellington Management Company, LLP
|
|
|
4,132,407
|
|
|
|
(16
|
)
|
|
|
13.5
|
|
Columbia Wanger Asset Management,
L.P.
|
|
|
2,200,000
|
|
|
|
(17
|
)
|
|
|
7.2
|
|
Federated Investors, Inc.
|
|
|
2,025,891
|
|
|
|
(18
|
)
|
|
|
6.6
|
|
Kayne Anderson Rudnick Investment
Management, LLC
|
|
|
1,867,503
|
|
|
|
(19
|
)
|
|
|
6.1
|
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
The business address of each listed director, nominee and Named
Executive Officer is c/o Forward Air Corporation, 430
Airport Road, Greeneville, Tennessee 37745. |
|
(2) |
|
The percentages shown for directors, nominees and executive
officers are based on 30,391,176 shares of common stock
outstanding on the Record Date. |
|
(3) |
|
The percentages shown for other principal shareholders are based
on 30,498,931 shares of common stock outstanding on
December 31, 2006. |
|
(4) |
|
Includes 10,053 non-vested restricted shares and 424,459 options
that are fully exercisable; however, 50,000 of such options are
subject to certain exercise restrictions pursuant to an Option
Restriction Agreement between Mr. Campbell and the Company. |
|
(5) |
|
Excludes 2,250 deferred stock units and 18.74 dividend
equivalent rights. |
|
(6) |
|
Includes 36,988 shares held jointly by Mr. Clarke and
his wife and 1,125 shares held by his wife as custodian for
their minor children. Mr. Clarke resigned as Chief
Financial Officer, Senior Vice President and Treasurer effective
June 2, 2006. |
12
|
|
|
(7) |
|
Includes 2,250 non-vested restricted shares and 18,750 options
that are fully exercisable. |
|
(8) |
|
Includes 2,250 non-vested restricted shares and 10,625 options
that are fully exercisable. |
|
(9) |
|
Includes 2,250 non-vested restricted shares. |
|
(10) |
|
Includes 2,250 non-vested restricted shares and 63,750 options
that are fully exercisable. |
|
(11) |
|
Includes 8,666 non-vested restricted shares and 213,186 options
that are fully exercisable; however, 63,750 of such options are
subject to certain exercise restrictions pursuant to an Option
Restriction Agreement between Mr. Bell and the Company. |
|
(12) |
|
Includes 6,666 non-vested restricted shares and 71,250 options
that are fully exercisable; however, 45,000 of such options are
subject to certain exercise restrictions pursuant to an Option
Restriction Agreement between Mr. Drum and the Company. |
|
(13) |
|
Includes 7,333 non-vested restricted shares and 190,402 options
that are fully exercisable; however, 63,750 of such options are
subject to certain exercise restrictions pursuant to an Option
Restriction Agreement between Mr. Jewell and the Company. |
|
(14) |
|
Includes 7,000 non-vested restricted shares and 127,500 options
that are fully exercisable; however, 63,750 of such options are
subject to certain exercise restrictions pursuant to an Option
Restriction Agreement between Mr. Ruble and the Company. |
|
(15) |
|
Includes 55,134 non-vested restricted shares and 1,138,672
options that are fully exercisable; however, 286,250 of such
options are subject to certain exercise restrictions pursuant to
Option Restriction Agreements between the Named Executive
Officers and the Company. |
|
(16) |
|
Wellington Management Company, LLP (Wellington), 75
State Street, Boston, Massachusetts 02109, reported beneficial
ownership of the shares as of December 31, 2006 in a
Schedule 13G/A filed with the SEC. Wellington, an
investment adviser, reported having shared voting power over
3,066,057 shares and dispositive power over
4,132,407 shares and no sole voting or dispositive over the
shares. |
|
(17) |
|
Columbia Wanger Asset Management, L.P. (WAM) and
Columbia Acorn Trust (CAT), 227 West Monroe
Street, Suite 3000, Chicago, Illinois 60606, reported
beneficial ownership of the shares as of December 31, 2006
in a Schedule 13G/A filed with the SEC. WAM, an investment
adviser, and CAT, a Massachusetts business trust advised by WAM,
reported having sole voting power over 2,050,000 shares,
sole dispositive power over 2,200,000 shares, shared voting
power over 150,000 shares and no shared dispositive power
over the shares. |
|
(18) |
|
Federated Investors, Inc. (Federated), Federated
Investors Tower, Pittsburg, Pennsylvania 15222, reported
beneficial ownership of the shares as of December 31, 2006
in a Schedule 13G/A filed with the SEC. All of
Federateds shares were reported as being held in the
Voting Shares Irrevocable Trust (the Trust),
for which John F. Donahue, Rhodora J. Donahue and J. Christopher
Donahue act as trustees (collectively, the
Trustees). Federated, a parent holding company, and
the Trust were reported to have sole voting and dispositive
power over the shares and no shared voting or dispositive power
over the shares. Each of the Trustees was reported to have
shared voting and dispositive power over the shares and no sole
voting or dispositive power over the shares. Each of Federated,
the Trust and the Trustees declared that this information should
not be construed as an admission that they were the beneficial
owners of the shares and expressly disclaimed beneficial
ownership of the shares. |
|
(19) |
|
Kayne Anderson Rudnick Investment Management, LLC (Kayne
Anderson), 1800 Avenue of the Stars, Second Floor, Los
Angeles, California 90067, reported beneficial ownership of the
shares as of December 31, 2006 in a Schedule 13G/A
filed with the SEC. Kayne Anderson, an investment adviser,
reported having sole voting and dispositive power over the
shares and no shared voting or dispositive power over the shares. |
13
EXECUTIVE
COMPENSATION
Compensation
Discussion And Analysis
Overview
of Compensation Program
The Compensation Committee (for purposes of this analysis, the
Committee) of the Board is comprised of three
independent, non-employee directors. The Committee has the
responsibility for establishing and monitoring adherence to the
Companys executive compensation philosophy and
implementing compensation programs consistent with such
philosophy. The Committee reviews and approves the
Companys goals and objectives relevant to the compensation
of the Chief Executive Officer (CEO) and the other
Named Executive Officers (each of whom is identified in the
Summary Compensation Table on page 20 of this Proxy
Statement). The Committee then evaluates the performance of the
Named Executive Officers in light of these established goals and
objectives to determine the compensation of the Named Executive
Officers, including base pay, annual incentive pay, long-term
equity incentive pay and any other benefits
and/or
perquisites.
Compensation
Philosophy and Objectives
The Committee believes that the most effective executive
compensation program is one that is designed to attract,
develop, reward and retain quality management talent in order to
facilitate the Companys achievement of its annual,
long-term and strategic goals. The Committee believes that such
a philosophy will properly align our executives interests
with our shareholders interests by creating a
pay-for-performance
culture at the executive level, with the ultimate objective of
increasing shareholder value. It is the Committees
philosophy that executive compensation should recognize the
contributions of individual executives to the Companys
goals and objectives, and should be competitive with
compensation provided by both the Companys functional
industry peers as well as financial peers. The Committee
believes that while executive compensation should be directly
linked to performance, it should also be an incentive for
executives to continually improve performance.
In order to meet its goals of attracting, developing, rewarding
and retaining superior executive management, the Committee
utilizes a compensation package that considers the compensation
of similarly situated executives at peer organizations, the
length of tenure of the executive, and value of the executive to
the organization. Additionally, the Committee utilizes annual
cash incentives tied directly to the Companys performance
measured against established goals. Finally, the Committee
awards long-term compensation to its executives to recognize and
reward past performance of the Company measured against
established goals, to encourage retention of its executive
management team, to encourage the Companys executives to
hold a long-term stake in the Company and to align the
executives long-term compensation directly with the
shareholders long-term value.
Employment
Agreement with Bruce A. Campbell
There is an Employment Agreement between Bruce A. Campbell and
the Company, which was effective January 24, 2006, and is
for a term ending on the day before the annual meeting of
shareholders in 2008. The term automatically extends for one
additional year unless otherwise terminated by the Board of
Directors or Mr. Campbell upon notice. Under the Employment
Agreement, Mr. Campbell will receive an annual base salary
of no less than $400,000. In addition, Mr. Campbell is
eligible to receive long-term equity incentive awards under the
Companys 1999 Stock Option and Incentive Plan (the
1999 Plan), or such other plans that the Company may
adopt. Mr. Campbell will be eligible to receive an annual
year-end cash bonus dependent upon the achievement of
performance objectives by Mr. Campbell and the Company as
established
14
by the Compensation Committee. The Employment Agreement provides
that Mr. Campbell will be entitled to the same fringe
benefits as are generally available to the Companys
executive officers.
Under the Employment Agreement, the Company may terminate
Mr. Campbell at any time with or without just
cause, as defined in the Employment Agreement. If the
Company should terminate Mr. Campbell without just cause,
he would be entitled to receive (i) his base salary for the
longer of one year from the date of termination or the remainder
of the then-pending term of the Employment Agreement;
(ii) any unpaid bonus amounts previously earned; and
(iii) continued insurance coverage for one year from the
date of such termination. Mr. Campbell would not be
entitled to any unearned salary, bonus or other benefits if the
Company were to terminate him for just cause.
Mr. Campbell also may terminate the Employment Agreement at
any time; however, he would not be entitled to any unearned
salary, bonus or other benefits if he does so absent
circumstances resulting from a change of control or
material change in duties, each as defined in the
Employment Agreement. In the event of a change of control or
material change in duties, Mr. Campbell would have two
options. Mr. Campbell may resign and receive (i) his
base salary for twelve months following the date of the change
of control or material change in duties; (ii) a cash bonus
equal to the prior years year-end cash bonus, plus any
unpaid bonus amounts previously earned; (iii) any other
payments due, including, among others, accrued and unpaid
vacation pay; (iv) immediate acceleration of any stock
options which are not then exercisable; and (v) continued
insurance coverage for one year following the date of the change
of control or material change in duties. Alternatively,
Mr. Campbell could continue to serve as President and CEO
of the Company for the duration of the term of the Employment
Agreement or until he or the Company terminates it. The
Employment Agreement also contains non-competition,
non-solicitation and non-disclosure provisions following
termination.
The Company does not have employment agreements with any other
of its Named Executive Officers.
Role of
Executive Officers in Compensation Decisions
The Committee makes all compensation decisions related to the
CEO subject to and consistent with the terms of the employment
agreement between the Company and the CEO. The CEO makes
recommendations regarding base salary, annual incentive pay and
long-term equity incentive awards for the other Named Executive
Officers and provides the Committee with justification for such
awards. Specifically, the CEO will review the performance of
each of the other Named Executive Officers for the Committee and
then make compensation recommendations. While the Committee
gives great weight to the recommendations of the CEO, it has
full discretion and authority to make the final decision on the
salaries, annual incentive awards and long-term equity incentive
awards as to all of the Named Executive Officers.
Setting
Executive Compensation
Based on the foregoing objectives, the Committee has structured
the Companys annual and long-term incentive-based cash and
non-cash executive compensation to motivate executives to
achieve the business goals set by the Company and to reward the
executives for achieving such goals. In furtherance of this
goal, in 2005, the Committee engaged Ernst & Young
LLPs Human Capital Group, an outside global human
resources consulting firm, to conduct a review of its total
compensation program for the CEO, Chief Financial Officer and
other key executives. The Human Capital Group provided the
Committee with relevant market data and alternatives to consider
when making compensation decisions for the Named Executive
Officers.
15
In making compensation decisions, the Committee compares each
element of total compensation against a group of publicly-traded
functional industry peers and a group of financial peers
(collectively, the Peer Group). The functional
industry peers consist of a variety of publicly-traded
transportation and logistics companies, which while having a
median revenue size larger than the Company, most accurately
resemble the Company in model and performance in the
transportation sector. The financial peers consist of a variety
of publicly-traded companies that have similar financial traits
as the Company in such areas as, but not limited to, net sales,
EBITDA and ROE. The financial peers are not direct competitors
but they serve as good comparisons because of their financial
size and performance. Since the completion of this study, the
Committee has updated the Peer Group compensation data by
reviewing publicly-available information relating to the Peer
Groups compensation practices.
The Peer Group for the fiscal year ended December 31, 2006
consisted of the following companies:
|
|
|
|
|
EGL, Inc.
|
|
|
Heartland Express, Inc.
|
|
|
Knight Transportation, Inc.
|
|
|
Old Dominion Freight Line, Inc.
|
|
|
UTi Worldwide, Inc.
|
|
|
Cedar Fair, LP
|
|
|
Commonwealth Telephone Enterprises, Inc.
|
|
|
Franklin Electric Co., Inc.
|
|
|
Expeditors International of Washington, Inc.
|
|
|
Hub Group, Inc.
|
|
|
Landstar System, Inc.
|
|
|
Pacer International, Inc.
|
|
|
ACE Cash Express, Inc.
|
|
|
Celadon Group, Inc.
|
|
|
Ennis, Inc.
|
|
|
ESCO Technologies, Inc.
|
|
|
Hydril Company.
|
The Committee establishes base salaries for the Named Executive
Officers at approximately the 50th percentile of executive
pay for executives holding similar positions in the Peer Group.
Variations to this objective may occur as dictated by the
experience level of the individual, the value of the individual
executive to the Company, as well as market and other factors.
Annual incentive payments to the Named Executive Officers are
tied to annual financial goals which include payments of up to
50% of the executives base pay for reaching a
pre-established annual target performance goal and
up to 100% of the executives base pay for reaching a
pre-established annual stretch performance goal. The
Committee has discretion as to the amount of the incentive
awards to the Companys executives for results that fall
below the target performance goal, between the
target and stretch goals or which exceed
the stretch goal.
2006
Executive Compensation Components
For the fiscal year ended December 31, 2006, the principal
components of compensation for Named Executive Officers were:
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base salary;
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performance-based incentive compensation;
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long-term equity incentive compensation;
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|
retirement and other benefits (available to all employees); and
|
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perquisites and other personal benefits.
|
16
Base
Salary
The Company provides its Named Executive Officers and other
employees with base salaries to compensate them for services
rendered during the fiscal year. Base salary ranges for the
Named Executive Officers are determined for each executive based
on his position and responsibility and by reference to the Peer
Group data. The Committee uses the median, or
50th percentile, Peer Group base salary for similarly
situated executives as one of the factors in considering an
executives base salary. Additionally, the Committee
conducts an internal review of each executives
compensation, both individually and compared to other Named
Executive Officers, including factors such as level of
experience and qualifications of the individual, scope of
responsibilities and future potential, goals and objectives
established for the executive as well as the executives
past performance. Review and adjustments to the base salaries
for the Named Executive Officers and other executives at the
Company are made on an annual basis as part of the
Companys overall performance review process (or upon a
promotion or change in the executives duties). The base
salaries for the Named Executive Officers for the fiscal year
ended December 31, 2006 are set forth in the
Salary column of the Summary Compensation Table on
page 20 of this Proxy Statement.
Performance-Based
Incentive Compensation
Annual Cash Incentive. The Committee adopts an
incentive performance plan every year upon which the
executives performance and incentive pay will be based. In
reviewing these plans, the Committee tries to ensure that the
plan will promote high performance and achievement, encourage
growth in shareholder value, and promote and encourage retention
of the Companys executive talent. The plan adopted by the
Committee for the fiscal year ended December 31, 2006 set
target and stretch operating income
goals for the annual cash incentive award. The Committee set the
annual cash incentive amount at 50% of the executives base
pay for reaching the target performance goal and up
to 100% of the executives base pay for reaching the
stretch performance goal. The Committee had
discretion as to the amount, if any, of any annual incentive
awards to the Companys executives for results that fell
below the target performance goal, between the
target and stretch goals or which
exceeded the stretch goal. The Committee met in
February of this year to determine whether the Companys
prior-year performance merited payment to the executives under
the annual incentive plan and, if so, to determine the amount of
such incentive award. The annual incentive awards made to the
Named Executive Officers for the Companys performance for
the fiscal year ended December 31, 2006 are set forth in
the Bonus column of the Summary Compensation Table
on page 20 of this Proxy Statement.
Long-Term
Equity Incentive Awards
The Named Executive Officers receive incentive awards under the
Companys 1999 Plan. The Committee is charged with
administration of the 1999 Plan and has the sole authority to
make awards under the 1999 Plan. The Committee has the
discretion to award stock options, non-vested restricted shares
of common stock, stock appreciation rights and other forms of
long-term equity incentives under the 1999 Plan. Annual
long-term equity incentive awards to executives are made at the
Committees regularly scheduled meeting in February.
Additionally, newly hired or promoted executives may receive
their stock option or non-vested restricted share awards on or
soon after their date of hire or promotion.
In making individual awards under the 1999 Plan, the Committee
considers a number of factors including the Companys past
financial performance, individual performance of each executive,
the retention goal of such a long-term equity incentive award,
the grant date value of any proposed award, the other
compensation components for the executive, equity plan
compensation dilution, the executives stock ownership and
option holdings and long-term equity incentive awards to
executives holding similar positions within the Peer Group.
17
During 2006, the Committee awarded non-vested restricted shares
to the Named Executive Officers. The awards have a vesting
period of three years and vest equally over that three-year
period. Under the 1999 Plan, the recipients of these non-vested
restricted shares are entitled to vote the shares and receive
dividends on the shares; however, the shares shall not be sold,
assigned, transferred, pledged, hypothecated or otherwise
disposed of until they vest pursuant to the terms of the 1999
Plan. Other than the vesting schedule established by the
restricted share awards, such shares will vest upon the death or
disability of the recipient, as well as a Change in
Control, as such term is defined in the 1999 Plan.
Awards made to the Named Executive Officers under the 1999 Plan
for the fiscal year ended December 31, 2006 are set forth
in the Grants of Plan-Based Awards for Fiscal 2006 Table on
page 22 of this Proxy Statement.
Stock
Ownership Guidelines
Although the Company encourages ownership of Company common
stock by the Named Executive Officers, no written required
ownership guidelines have been established.
Retirement
and Other Benefits
All full-time Company employees are entitled to participate in
the Companys 401(k) retirement plan. Under the
Companys 401(k) retirement plan, the Company will match
25% of an employees contribution up to 6% of the
employees salary, subject to the rules and regulations on
maximum contributions by individuals under such a plan. Matching
contributions to the Named Executive Officers for the fiscal
year ended December 31, 2006 are reflected in the
401(k) Match column of the All Other Compensation
Table on page 21 of this Proxy Statement.
Additionally, all full-time employees of the Company are
eligible after one year of continuous service to the Company to
participate in the Companys 2005 Employee Stock Purchase
Plan (the 2005 ESPP). Under the terms of the 2005
ESPP, eligible employees of the Company can purchase Company
common stock through payroll deduction and lump sum
contributions at a discounted price. The purchase price for such
shares of common stock for each Option Period, as described in
the 2005 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 2005 ESPP, no Company employee
shall purchase more than 2,000 shares of Company common
stock per Option Period or shares of common stock having a
market value of more that $25,000 per calendar year, as
calculated under the 2005 ESPP.
Other than as described above, the Company does not have or
provide any supplemental executive retirement plan, or similar
plan that provides for specified retirement payments or
benefits. Moreover, the Company does not have or provide any
defined contribution or other plan that provides for the
deferral of compensation on a basis that is not tax-qualified.
Potential
Payments upon Termination or Change in Control
Under the 1999 Plan, any non-vested restricted shares, options
or other forms of equity-based compensation will vest upon a
Change in Control, as such term is defined in the
1999 Plan. The market value of all non-vested restricted shares
held by the Named Executive Officers as of December 31,
2006, which would vest upon a Change in Control are set forth in
the Market Value of Shares of Stock That Have
18
Not Vested column of the Outstanding Equity Awards at
Fiscal Year-End Table on page 23 of this Proxy Statement.
Perquisites
and Other Personal Benefits
The Company provides its Named Executive Officers with
perquisites and other personal benefits that the Company and the
Committee believe are reasonable and consistent with its overall
compensation program to better enable the Company to attract and
retain superior employees for key positions. The Committee
periodically reviews the levels of perquisites and other
personal benefits provided to the Named Executive Officers. The
Named Executive Officers are provided a monthly car allowance
and reimbursement of certain commuting expenses. The amounts of
such benefits received by each Named Executive Officer for the
fiscal year ended December 31, 2006 are set forth in the
Car Allowance and Commuting Expenses column of the
All Other Compensation Table on page 21 of this Proxy
Statement.
Additionally, the Named Executive Officers are eligible to
participate in the Companys health, dental, disability and
other insurance plans on the same terms and at the same cost as
such plans are available to all of the Companys full-time
employees.
Tax and
Accounting Implications
Deductibility of Executive Compensation. As
part of its role, the Committee reviews and considers the
deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code), which provides that the Company
may not deduct compensation of more than $1,000,000 that is paid
to certain individuals. The Company believes that compensation
paid under the management incentive plans is generally fully
deductible for federal income tax purposes. However, in certain
situations, the Committee may approve compensation that will not
meet these requirements in order to ensure competitive levels of
total compensation for its executive officers. In this regard,
for fiscal 2006, any amount of base salary in excess of
$1,000,000 for any Named Executive Officer would not be
deductible for federal income tax purposes.
Compensation
Committee Report on Executive Compensation
The Compensation Committee of the Company has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included on page 14
of this Proxy Statement.
Submitted by:
C. John Langley, Jr., Chairman
C. Robert Campbell
B. Clyde Preslar
The Compensation Committee of the
Board of Directors
19
Summary
Compensation Table
The following table shows the compensation earned in 2006 by the
Named Executive Officers as of December 31, 2006.
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Stock
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All Other
|
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|
Salary
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Bonus ($)
|
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Awards
|
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Compensation
|
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Name and Principal Positions
|
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Year
|
|
($)
|
|
(1)
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($) (2)
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|
($) (3)
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Total ($)
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Bruce A. Campbell
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2006
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$393,132
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$200,000
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$166,571
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$18,793
|
|
|
|
$778,496
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|
Chief Executive Officer and
President
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|
|
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|
|
|
|
|
|
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|
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|
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Rodney L. Bell(4)
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2006
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|
223,246
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120,000
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125,615
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18,883
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487,744
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|
Chief Financial Officer, Senior
Vice President and Treasurer
|
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|
|
|
|
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|
|
|
|
|
|
|
|
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Matthew J. Jewell
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2006
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231,465
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120,000
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121,504
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21,110
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494,079
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|
Senior Vice President, General
Counsel and Secretary
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris C. Ruble
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|
2006
|
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218,191
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112,500
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115,981
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19,732
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466,404
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Senior Vice President, Operations
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Craig A. Drum
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2006
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204,917
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105,000
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110,458
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20,000
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440,375
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Senior Vice President, Sales
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Andrew C. Clarke(4)
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2006
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110,435
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60,967
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171,402
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Chief Financial Officer, Senior
Vice President and Treasurer
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(1) |
|
Represents the Company meeting its 2006 target goal
for operating income. Under the 2006 annual cash incentive plan,
each Named Executive Officer was paid a cash incentive equal to
50% of his respective base salary as of December 31, 2006. |
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(2) |
|
Represents the proportionate amount of the total fair value of
awards of non-vested restricted shares of common stock
recognized by the Company as an expense in 2006 for financial
accounting purposes, disregarding for this purpose the estimate
of forfeitures related to service-based vesting conditions. The
fair values of these awards and the amounts expensed in 2006
were determined in accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standards
No. 123 (revised 2004), Share-Based Payments,
disregarding adjustments for forfeiture assumptions. The awards
for which expense is shown in this table include the awards
described in the Grants of Plan-Based Awards for Fiscal 2006
Table on page 22 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 Companys consolidated
financial statements, which are included in our Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the SEC.
Pursuant to the terms of the Companys 1999 Plan, upon his
resignation Mr. Clarke forfeited 12,000 non-vested
restricted shares granted to him during 2006. The forfeited
non-vested restricted shares had a grant date fair value of
$433,800, which is not included in this column. |
|
(3) |
|
See the All Other Compensation Table on page 21 of this
Proxy Statement for additional information. |
|
(4) |
|
Rodney L. Bell was promoted to Chief Financial Officer, Senior
Vice President and Treasurer effective June 2, 2006.
Previously, Mr. Bell served as Chief Accounting Officer,
Vice President, and Controller. Also, effective June 2,
2006, Andrew C. Clarke resigned as Chief Financial Officer,
Senior Vice President and Treasurer. |
20
All Other
Compensation Table
The following table shows the components of all other
compensation earned in 2006 by the Named Executive
Officers as of December 31, 2006.
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Car
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Allowance
|
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Long-
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and
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Term
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Total
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Payroll
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Commuting
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401(k)
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Disability
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All Other
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Taxes
|
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Expenses
|
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Dividends
|
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Match
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Insurance
|
Name and Principal Positions
|
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($)
|
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($) (1)
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($) (2)
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(3)
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($) (4)
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($) (5)
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Bruce A. Campbell
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$18,793
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$
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|
$11,194
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|
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$4,222
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|
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$2,743
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$634
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|
Chief Executive Officer and
President
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|
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Rodney L. Bell(6)
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18,883
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2,616
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10,510
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3,080
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2,043
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|
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|
634
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|
Chief Financial Officer, Senior
Vice President and Treasurer
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Matthew J. Jewell
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21,110
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3,876
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9,739
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3,080
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|
3,781
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|
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|
634
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Senior Vice President, General
Counsel and Secretary
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Chris C. Ruble
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19,732
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5,089
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9,000
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|
|
2,940
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|
|
2,069
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|
|
|
634
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|
Senior Vice President, Operations
|
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|
|
|
|
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|
|
|
|
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Craig A. Drum
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20,000
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|
5,302
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9,000
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|
|
2,800
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|
|
|
2,264
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|
|
|
634
|
|
Senior Vice President, Sales
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
|
|
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Andrew C. Clarke(6)
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60,967
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51,667
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|
|
|
5,496
|
|
|
|
1,680
|
|
|
|
1,807
|
|
|
|
317
|
|
Chief Financial Officer, Senior
Vice President and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1) |
|
This column reports payment by the Company on behalf of the
Named Executive Officers for payroll taxes incurred in
conjunction with the exercise of nonqualified stock options. |
|
(2) |
|
The Company provides a $9,000 annual car allowance plus
reimbursement of certain commuting expenses to officers. |
|
(3) |
|
Represents dividend payments on non-vested restricted shares
granted during 2006. These dividend payments are nonforfeitable. |
|
(4) |
|
The amount shown represents the Companys contributions to
the 401(k) Plan. |
|
(5) |
|
Represents premiums paid by the Company for long-term disability
insurance for officers of the Company. |
|
(6) |
|
Rodney L. Bell was promoted to Chief Financial Officer, Senior
Vice President and Treasurer effective June 2, 2006.
Previously, Mr. Bell served as Chief Accounting Officer,
Vice President, and Controller. Also, effective June 2,
2006, Andrew C. Clarke resigned as Chief Financial Officer,
Senior Vice President and Treasurer. |
21
Grants of
Plan-Based Awards for Fiscal 2006
The following table shows the plan-based awards granted to the
Named Executive Officers in 2006.
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|
All Other Stock
|
|
|
|
|
|
|
|
|
|
Awards; Numbers
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
of Shares of Stock
|
|
|
Value of Stock and
|
|
Name
|
|
Grant Date
|
|
|
or Units(1)(2)
|
|
|
Option Awards
|
|
|
Bruce A. Campbell
|
|
|
02/12/2006
|
|
|
|
15,080
|
|
|
$
|
545,142
|
|
Rodney L. Bell(3)
|
|
|
02/12/2006
|
|
|
|
10,000
|
|
|
|
361,500
|
|
|
|
|
06/02/2006
|
|
|
|
2,000
|
|
|
|
77,960
|
|
Matthew J. Jewell
|
|
|
02/12/2006
|
|
|
|
11,000
|
|
|
|
397,650
|
|
Chris C. Ruble
|
|
|
02/12/2006
|
|
|
|
10,500
|
|
|
|
379,575
|
|
Craig A. Drum
|
|
|
02/12/2006
|
|
|
|
10,000
|
|
|
|
361,500
|
|
Andrew C. Clarke(3)
|
|
|
02/12/2006
|
|
|
|
12,000
|
|
|
|
433,800
|
|
|
|
|
(1) |
|
Represents non-vested restricted shares granted under the 1999
Plan. |
|
(2) |
|
Each grant vests equally over a three-year period commencing on
the one year anniversary of the grant date. |
|
(3) |
|
Rodney L. Bell was promoted to Chief Financial Officer, Senior
Vice President and Treasurer effective June 2, 2006.
Previously, Mr. Bell served as Chief Accounting Officer,
Vice President, and Controller. Also, effective June 2,
2006, Andrew C. Clarke resigned as Chief Financial Officer,
Senior Vice President and Treasurer. Pursuant to the terms of
the 1999 Plan, upon his resignation Mr. Clarke forfeited
the 12,000 non-vested restricted shares granted to him during
2006. |
22
Outstanding
Equity Awards at Fiscal Year-End
The following table shows information about outstanding equity
awards at December 31, 2006.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
|
Market
|
|
|
Number of
|
|
|
|
|
|
|
|
Value of
|
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Shares of
|
|
|
Underlying
|
|
|
|
|
|
Shares of
|
|
Stock
|
|
|
Unexercised
|
|
Option
|
|
|
|
Stock That
|
|
That Have
|
|
|
Options (#)
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Not
|
|
|
Exercisable
|
|
Price
|
|
Expiration
|
|
Vested (#)
|
|
Vested ($)
|
Name and Principal Positions
|
|
(1)
|
|
($)
|
|
Date
|
|
(2)
|
|
(3)
|
|
Bruce A. Campbell
|
|
|
57,005
|
|
|
$
|
4.17
|
|
|
|
01/01/2009
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
172,453
|
|
|
|
13.25
|
|
|
|
02/07/2013
|
|
|
|
|
|
|
|
|
|
and President
|
|
|
45,001
|
|
|
|
20.21
|
|
|
|
10/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
28.97
|
|
|
|
02/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,080
|
|
|
$
|
436,264
|
|
Rodney L. Bell(4)
|
|
|
70,686
|
|
|
|
23.17
|
|
|
|
02/03/2010
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer,
|
|
|
30,000
|
|
|
|
18.82
|
|
|
|
02/04/2014
|
|
|
|
|
|
|
|
|
|
Senior Vice President and
|
|
|
112,500
|
|
|
|
28.97
|
|
|
|
02/14/2015
|
|
|
|
|
|
|
|
|
|
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
289,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
57,860
|
|
Matthew J. Jewell
|
|
|
37,500
|
|
|
|
21.88
|
|
|
|
07/01/2012
|
|
|
|
|
|
|
|
|
|
Senior Vice President,
|
|
|
10,402
|
|
|
|
13.25
|
|
|
|
02/07/2013
|
|
|
|
|
|
|
|
|
|
General Counsel and
|
|
|
30,000
|
|
|
|
18.82
|
|
|
|
02/04/2014
|
|
|
|
|
|
|
|
|
|
Secretary
|
|
|
112,500
|
|
|
|
28.97
|
|
|
|
02/04/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000
|
|
|
|
318,230
|
|
Chris C. Ruble
|
|
|
15,000
|
|
|
|
18.82
|
|
|
|
02/04/2014
|
|
|
|
|
|
|
|
|
|
Senior Vice President,
|
|
|
112,500
|
|
|
|
28.97
|
|
|
|
02/14/2015
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,500
|
|
|
|
303,765
|
|
Craig A. Drum
|
|
|
15,000
|
|
|
|
18.82
|
|
|
|
02/04/2014
|
|
|
|
|
|
|
|
|
|
Senior Vice President,
|
|
|
56,250
|
|
|
|
28.97
|
|
|
|
02/14/2015
|
|
|
|
|
|
|
|
|
|
Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
289,300
|
|
Andrew C. Clarke(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer, Senior
Vice President and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Effective December 31, 2005, all outstanding stock options
were fully exercisable as the result of the Companys Board
of Directors accelerating the vesting of all outstanding stock
options awarded to employees, officers and non-employee
directors under the Companys stock option award plans.
However, portions of these options are subject to certain
exercise restrictions pursuant to Option Restriction Agreements
between the Company and the Named Executive Officers. The Option
Restriction Agreements primarily prevent the Named Executive
Officers during their employment with the Company from
exercising the underlying options until the original exercisable
date prior to the vesting acceleration by the Board of
Directors. These restrictions lapse upon termination of the
officers employment. The following table sets forth the
scheduled lapsing of the option exercise restrictions. |
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Campbell
|
|
|
Mr. Bell
|
|
|
Mr. Jewell
|
|
|
Mr. Ruble
|
|
|
Mr. Drum
|
|
|
|
Amounts
|
|
|
Amounts
|
|
|
Amounts
|
|
|
Amounts
|
|
|
Amounts
|
|
Date Restriction Lapses
|
|
Lapsing (#)
|
|
|
Lapsing (#)
|
|
|
Lapsing (#)
|
|
|
Lapsing (#)
|
|
|
Lapsing (#)
|
|
|
02/04/2007
|
|
|
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
7,500
|
|
02/14/2007
|
|
|
50,000
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
18,750
|
|
02/04/2008
|
|
|
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
7,500
|
|
02/14/2008
|
|
|
50,000
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
18,750
|
|
02/14/2009
|
|
|
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
18,750
|
|
|
|
|
(2) |
|
Each grant vests equally over a three-year period commencing on
the one year anniversary of the grant date. |
|
(3) |
|
The market value is based on the closing price of the
Companys common stock on Nasdaq on December 29, 2006,
which was $28.93. |
|
(4) |
|
Rodney L. Bell was promoted to Chief Financial Officer, Senior
Vice President and Treasurer effective June 2, 2006.
Previously, Mr. Bell served as Chief Accounting Officer,
Vice President, and Controller. Also, effective June 2,
2006, Andrew C. Clarke resigned as Chief Financial Officer,
Senior Vice President and Treasurer. |
Option
Exercises and Stock Vested
The following table shows information about option exercises
during 2006.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on Exercise
|
|
|
Valued Realized Upon
|
|
Name
|
|
(#)
|
|
|
Exercise ($)(1)
|
|
|
Bruce A. Campbell
|
|
|
7,547
|
|
|
$
|
196,901
|
|
Rodney L. Bell(2)
|
|
|
7,500
|
|
|
|
180,413
|
|
|
|
|
4,316
|
|
|
|
73,164
|
|
Matthew J. Jewell
|
|
|
10,000
|
|
|
|
267,500
|
|
Chris C. Ruble
|
|
|
20,000
|
|
|
|
418,700
|
|
|
|
|
7,500
|
|
|
|
155,850
|
|
Craig A. Drum
|
|
|
26,250
|
|
|
|
365,663
|
|
Andrew C. Clarke(2)
|
|
|
15,000
|
|
|
|
342,900
|
|
|
|
|
17,266
|
|
|
|
246,250
|
|
|
|
|
258,984
|
|
|
|
3,220,365
|
|
|
|
|
(1) |
|
The value realized upon exercise is based on the current market
price at the time of exercise less the option exercise price. |
|
(2) |
|
Rodney L. Bell was promoted to Chief Financial Officer, Senior
Vice President and Treasurer effective June 2, 2006.
Previously, Mr. Bell served as Chief Accounting Officer,
Vice President, and Controller. Also, effective June 2,
2006, Andrew C. Clarke resigned as Chief Financial Officer,
Senior Vice President and Treasurer. |
24
Audit
Committee Report
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Audit Committee reviewed the audited financial statements in
the 2006 Annual Report with management and the Companys
independent registered public accounting firm, Ernst &
Young LLP, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness
of significant judgments and the clarity of disclosures in the
financial statements. The Committees function is more
fully described in its charter, which is attached as
Appendix A to this Proxy Statement. The Committee reviews
the charter on an annual basis. The Board annually reviews the
definition of independence under Nasdaqs listing standards
for audit committee members and has determined that each member
of the Committee meets that standard.
Management is responsible for the preparation, presentation and
integrity of the Companys financial statements, accounting
and financial reporting principles, internal controls and
procedures designed to ensure compliance with accounting
standards, and applicable laws and regulations. Ernst &
Young LLP is responsible for performing an independent audit and
reporting on the consolidated financial statements of the
Company and its subsidiaries, managements assessment of
the effectiveness of the Companys internal controls over
financial reporting, and the effectiveness of the Companys
internal controls over financial reporting.
The Audit Committee has been updated quarterly on
managements process to assess the adequacy of the
Companys system of internal controls over financial
reporting, the framework used to make the assessment, and
managements conclusions on the effectiveness of the
Companys internal controls over financial reporting. The
Audit Committee has also discussed with representatives of
Ernst & Young LLP the Companys internal control
assessment process, managements assessment with respect
thereto and the firms audit of the Companys system
of internal controls over financial reporting.
The Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended
December 31, 2006 with the Companys management and
has discussed with Ernst & Young LLP the matters
required to be discussed by the Statement on Auditing Standards
No. 61, as amended, as adopted by the Public Company
Accounting Oversight Board (PCAOB) in
Rule 3200T. In addition, Ernst & Young LLP has
provided, and the Audit Committee has received, written
disclosures and the letter required by Independence Standards
Board Standard No. 1, Independence Discussions with
Audit Committees, as adopted by the PCAOB in
Rule 3200T.
In performing all of these functions, the Audit Committee acts
in an oversight capacity. The Audit Committee reviews the
Companys quarterly reports on
Form 10-Q
and annual reports
Form 10-K
prior to filing with the SEC. In its oversight role the Audit
Committee relies on the work and assurances of the
Companys management, which has the primary responsibility
for establishing and maintaining adequate internal controls over
financial reporting and for preparing the financial statements,
and other reports, and of the independent registered public
accountants, who are engaged to audit and report on the
consolidated financial statements of the Company and its
subsidiaries, managements assessment of the effectiveness
of the Companys internal controls over financial
reporting, and the effectiveness of the Companys internal
controls over financial reporting.
Based on these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial
statements be included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006 for filing with
the SEC.
25
In addition, the Audit Committee has discussed with
Ernst & Young LLP their independence from management
and the Company and considered the compatibility of non-audit
services with Ernst & Young LLPs independence.
B. Clyde Preslar, Chairman
C. Robert Campbell
G. Michael Lynch
Independent
Registered Public Accounting Firm
The Audit Committee has appointed Ernst & Young LLP to
serve as the Companys independent registered public
accounting firm for 2007, subject to ratification of the
appointment by the shareholders of the Company. The fees billed
by Ernst & Young LLP for services rendered to the
Company and its subsidiaries in 2006 and 2005 were as follows:
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
Audit Fees(1)
|
|
$
|
668,216
|
|
|
$
|
711,093
|
|
Audit-Related Fees(2)
|
|
|
59,502
|
|
|
|
60,000
|
|
Tax Fees(2)
|
|
|
167,119
|
|
|
|
199,742
|
|
All Other Fees(2)
|
|
|
2,500
|
|
|
|
66,148
|
|
|
|
|
(1) |
|
Includes fees and expenses related to the audit and interim
reviews of the Companys financial statements, the audit of
managements assessment of the effectiveness of the
Companys internal controls over financial reporting, and
the effectiveness of the Companys internal controls over
financial reporting for the fiscal year notwithstanding when the
fees and expenses were billed or when the services were rendered. |
|
(2) |
|
Includes fees and expenses for services rendered from January
through December of the fiscal year notwithstanding when the
fees and expenses were billed. |
Pre-Approval
Policies and Procedures
The Audit Committee has adopted a policy that requires advance
approval of all audit, audit-related, tax services and other
services performed by the independent registered public
accounting firm. The policy provides for pre-approval by the
Audit Committee of specifically defined audit and non-audit
services. The Audit Committee must approve the permitted service
before the independent registered public accounting firm is
engaged to perform it. During 2006 and as of the date of this
Proxy Statement, the Audit Committee pre-approved all of these
services.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP to
serve as the Companys independent registered public
accounting firm for 2007. As in the past, the Board has
determined that it would be desirable to request ratification of
the appointment by the shareholders of the Company. If the
shareholders do not ratify the appointment of Ernst &
Young LLP, the Audit Committee will reconsider the appointment
of the independent registered public accounting firm.
26
A representative of Ernst & Young LLP is not expected
to be present at the Annual Meeting, and thus, is not expected
to make a statement or be available to respond to appropriate
questions.
Shareholder
Vote Requirement
This Proposal will be approved if the votes cast in favor of the
Proposal exceed the votes cast against it. Unless otherwise
directed therein, the proxies solicited hereby will be voted for
approval of Ernst & Young LLP.
The Board of Directors recommends that shareholders
vote FOR ratification of appointment of Ernst &
Young LLP as the Companys independent registered public
accounting firm for 2007.
PROPOSAL 3
APPROVAL OF THE AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR STOCK
PLAN
Last year, our shareholders approved the Companys adoption
of the 2006 Non-Employee Director Stock Plan (the
2006 Director Stock Plan), which provides for
the annual grant of a fixed number of shares of restricted stock
to our non-employee directors as part of their annual
compensation. At this years Annual Meeting, the Board of
Directors asks shareholders to approve an amendment and
restatement of the 2006 Director Stock Plan, to be known as
the Forward Air Corporation Amended and Restated Non-Employee
Director Stock Plan (the 2007 Director Stock
Plan). The Board of Directors recommends approval of the
2007 Director Stock Plan in order to provide the Company
flexibility to grant different types of stock-based awards to
the non-employee directors and flexibility to adjust the size of
the grants to take into account such factors as the
Companys performance and changes in the value of the
Companys common stock.
Currently, under the 2006 Director Stock Plan, each
non-employee director receives on the first business day
following each Annual Meeting of Shareholders an automatic grant
of 2,250 restricted shares of common stock that are subject to a
three-year ratable vesting schedule. If the 2007 Director
Stock Plan is approved, the Board of Directors will have
discretion, in lieu of this fixed annual grant, to grant
restricted or unrestricted shares or nonqualified stock options
in such quantities and subject to such terms and conditions as
the Board of Directors will determine from year to year.
The Company reserved 200,000 shares of its common stock for
issuance under the 2006 Director Stock Plan which is
projected to enable the Company to operate the plan for
approximately eight to ten years. Since its inception,
11,250 shares of the Companys common stock and 2,250
deferred stock units have been awarded to our incumbent
non-employee directors under the 2006 Director Stock Plan
and 186,500 shares remain available for issuance. These
remaining shares will be issuable under the 2007 Director
Stock Plan if it is approved. We are not asking shareholders to
approve any additional shares for issuance under the
2007 Director Stock Plan.
The following description of the principal features of the
2007 Director Stock Plan is qualified in its entirety by
reference to the applicable provisions of the plan document. The
full text of the 2007 Director Stock Plan is attached to
this Proxy Statement as Appendix B.
27
If the Companys shareholders do not approve the
2007 Director Stock Plan, the Company will continue to
operate the 2006 Director Stock Plan in its current form.
Please write to the Secretary at the address on the cover of
this Proxy Statement to request a copy of the 2006 Director
Stock Plan. A copy of the 2006 Director Stock Plan was
included as Appendix A to the Companys Proxy
Statement filed with the SEC on April 24, 2006, and
consequently is also available for viewing on the Internet at
the SECs website at www.sec.gov.
Summary
of Material Provisions of the 2007 Director Stock
Plan
Purpose: The 2007 Director Stock Plan is
designed to better enable the Company to attract and retain
well-qualified persons for service as directors of the Company.
The plan provides directors with an opportunity to increase
their ownership interest in the Company and thereby increase
their personal interest in the Companys continued success.
Eligibility: All members of the Board of
Directors who are not employees or officers of the Company will
participate in the 2007 Director Stock Plan. As of
April 19, 2007, seven directors are eligible to participate.
Shares Subject to the Plan: The
2007 Director Stock Plan authorizes the issuance of up to
200,000 shares of the common stock of the Company with
respect to awards in the form of restricted or unrestricted
shares and nonqualified stock options. The number of shares
underlying awards granted under the 2006 Director Stock
Plan since its inception count against this 200,000 share
limit. If any of the awarded shares or options are forfeited or
otherwise terminate unexercised, the corresponding shares will
be restored to the 2007 Director Stock Plan and will be
available for regrant. The number and kind of shares issuable
under the 2007 Director Stock Plan, and with respect to
outstanding and subsequent awards, will be adjusted to reflect
any reorganization, recapitalization, stock split, reverse stock
split, stock dividend, exchange or combination of shares,
merger, consolidation, rights offering, or any change in
capitalization of the Company. The common stock issued under the
2007 Director Stock Plan will come from authorized but
unissued shares of common stock, treasury shares, purchases by
the Company on the open market or from any other proper source.
Administration: The Companys Board of
Directors is the plan administrator. As such, the Board of
Directors has the power to construe the plan, to determine all
questions arising under the plan and to adopt and amend rules
and regulations for the administration of the plan. Such power
includes the discretion to determine the form, size, timing and
vesting of awards, and such discretion may be exercised with
respect to future or then-outstanding awards and need not be
exercised uniformly among all directors.
Grants of Awards: On the first business day
after each Annual Meeting of the Shareholders, each non-employee
director will automatically be granted an award in such form and
quantity as the Board of Directors determines from year to year.
Anyone who becomes an eligible director of the Company at a time
other than the date of an Annual Meeting of Shareholders will
receive, within 30 days of becoming an eligible director, a
pro-rata grant reflecting the balance of the period remaining
until the next Annual Meeting of Shareholders. Awards will be in
the form of restricted or unrestricted shares or nonqualified
stock options. The number of shares that will be allocated under
awards to eligible directors in the future is not presently
determinable.
Terms and Conditions of Restricted
Shares: Each grant of restricted shares will be
evidenced by an award agreement setting forth the terms and
conditions of the award. All restricted share awards will be
non-vested and forfeitable when granted. The restricted shares
will become vested and nonforfeitable one year after grant,
unless the Board of Directors determines otherwise. Until
vested, the director may not sell, assign, pledge or otherwise
dispose of the shares, but otherwise will have all incidents of
ownership of such shares.
28
Unless the Board of Directors determines otherwise, the director
will forfeit the non-vested shares upon ceasing to serve as a
director for any reason other than death or disability.
Non-vested restricted shares become fully vested if the director
dies or becomes totally disabled. When the restricted shares
become vested and nonforfeitable, the restrictions on transfer
lapse. Even though a restricted share award may be non-vested at
the time, the director will receive dividend payments on the
restricted shares when dividends are paid to the Companys
shareholders.
Terms and Conditions of Unrestricted
Shares: Unrestricted shares are fully vested,
nonforfeitable and freely transferable upon grant.
Terms and Conditions of Options: Each grant of
options will be evidenced by an award agreement setting forth
the terms and conditions of the award. Unless the Board of
Directors determines otherwise, all options become exercisable
one year after the grant date. Once an option becomes
exercisable, it remains exercisable to the extent not exercised
until its expiration date or earlier termination. The Board of
Directors will determine the term of options, but in no event
will options expire later than ten years after the grant date.
If a directors service with the Company terminates due to
death or disability, his or her outstanding options become fully
exercisable and will remain exercisable for one year thereafter
or, if earlier, until the expiration date. If a directors
service with the Company terminates for any other reason, unless
the Board of Directors determines otherwise, his or her options
which are not then exercisable will be cancelled and the
remaining options will remain exercisable for 90 days
thereafter or, if earlier, until the expiration date. Options
are exercisable only by the director during his or her lifetime
and may not be transferred other than by will or the laws of
descent and distribution unless the Board of Directors provides
otherwise.
The exercise price per share of an option is 100% of the fair
market value of a share of Company common stock as of the grant
date. For this purpose, fair market value as of a
given date means (i) the closing sale price for the shares
of Company common stock on Nasdaq or any national exchange on
which such shares are traded on such date (or if such market or
exchange was not open for trading on such date or no shares of
Company common stock traded on that date, the next preceding
date on which it was open and the shares did trade); or
(ii) if the Company stock is not listed on Nasdaq or on an
established and recognized exchange, such value as the Board of
Directors, in good faith, determines based on such relevant
facts, which may include opinions of independent experts, as may
be available to the Board of Directors.
Elective Deferral of Shares: Each director may
elect to defer receipt of the shares under a restricted or
unrestricted share award, but not an option award, until the
director terminates service on the Board of Directors. Any such
election must be made in accordance with applicable federal tax
laws and is irrevocable once made. If a director elects to defer
receipt of shares, the Company will create a bookkeeping reserve
account to which it will credit a number of stock units under
the directors name equal to the number of restricted or
unrestricted shares that the director otherwise would have
received on the respective grant date. Each stock unit
represents the right to receive one share of common stock of the
Company in the future when the directors service
terminates, subject to the same vesting terms and conditions
that apply to the restricted share awards, as applicable. The
stock units do not represent actual ownership in shares and the
director will not have voting rights or other incidents of
ownership until the shares are issued. The Company will,
however, credit dividend equivalent payments in the form of
additional, vested stock units to the bookkeeping reserve
account on each cash dividend payment date.
Change of Control Transactions. Upon a change
of control of the Company, non-vested restricted shares become
fully vested and nonforfeitable and unexercised options not then
exercisable become fully exercisable. In addition, upon a change
of control of the Company, all outstanding options not exercised
prior to or upon the change of control will terminate at the
effective time of such change of control unless provision is
made in connection with the transaction for the continuation,
assumption or settlement of such options by,
29
or for the substitution of equivalent options of, the surviving
or successor entity or a parent thereof. All stock units will be
settled in shares of Company common stock or in cash at the
discretion of the Board of Directors upon the change of control
or as soon as practicable thereafter but in no event later than
the close of the calendar year in which the change of control
occurs.
A change of control means the happening of any of
the following:
(i) the acquisition, other than from the Company, in one or
more transactions by any person (other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly
or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock
of the Company), of the beneficial ownership of more than a
majority of (A) the then-outstanding shares of the
securities of the Company, or (B) the combined voting power
of the then-outstanding securities of the Company entitled to
vote generally in the election of directors (the Company
Voting Stock);
(ii) the closing of a sale or other conveyance of all or
substantially all of the assets of the Company;
(iii) upon the effective time of any merger, share
exchange, consolidation or other business combination involving
the Company if immediately after such transaction persons who
hold a majority of the outstanding voting securities entitled to
vote generally in the election of directors of the surviving
entity (or the entity owning 100% of such surviving entity) are
not persons who, immediately prior to such transaction, held the
Company Voting Stock; or
(iv) when, during any period of two consecutive years
during the existence of the plan, the individuals who, at the
beginning of such period, constitute the Board of Directors
cease for any reason to constitute at least a majority of the
members of the Board of Directors. Persons who were elected by
or on the recommendation or approval of at least two-thirds of
the members of the Board of Directors who were in office at the
beginning of such period are deemed to have been in office
during the two-year period for purposes of this provision.
Term of the Plan; Amendments: The
2007 Director Stock Plan will become effective on the day
after the date of this years Annual Meeting of
Shareholders if it is approved by the shareholders and will
supersede the terms of the 2006 Director Stock Plan. It
will continue in effect indefinitely until all shares of common
stock approved for issuance under the 2007 Director Stock
Plan have been issued, unless the Board of Directors acts to
terminate the plan sooner. The Board of Directors may amend,
suspend or terminate the 2007 Director Stock Plan or any
portion of it at any time as it determines appropriate, without
further action by the Companys shareholders, except to the
extent required by applicable law or by any stock exchanges upon
which the common stock may be listed; provided, however, that no
action of the Board of Directors to amend, suspend or terminate
the plan may impair a directors rights with respect to any
grant of an award previously made under the plan without the
directors consent. The 2007 Director Stock Plan also
may be amended by the Board of Directors at any time,
retroactively if required in the opinion of the Company, in
order to ensure that the plan complies with the requirements of
Section 409A of the Code.
U.S. Federal
Income Tax Consequences
The following discussion of the U.S. federal income tax
consequences relating to the 2007 Director Stock Plan is
based on present U.S. federal tax laws and regulations.
This is not a complete description of the U.S. federal tax
laws. A non-employee director may be subject to certain
U.S. state and local taxes and
non-U.S. taxes,
which are not described below.
30
Options: A non-employee director recognizes no
income when the options are granted. Upon exercising the
options, the non-employee director recognizes compensation
income equal to the excess of the fair market value of the
underlying shares on that date over the exercise price. Upon the
sale of the stock, the non-employee director recognizes capital
gain or loss equal to the difference between the sale proceeds
and the fair market value of the stock on the exercise date. The
capital gain or loss is long-term if the stock was held for more
than one year; otherwise it is short-term. The Company generally
may deduct the compensation recognized by the non-employee
director.
Restricted Shares: A non-employee director
generally recognizes no income when the restricted shares are
granted. However, the non-employee director may elect to
recognize income equal to the fair market value of the
underlying shares on the grant date. When the restricted shares
vest, a non-employee director who did not recognize income on
the grant date recognizes compensation equal to the fair market
value of the underlying shares on that vesting date.
Alternatively, a non-employee director who elected to recognize
income on the grant date does not recognize, on the vesting
date, the gain in or loss of value of the underlying shares.
Such gain or loss will be recognized when the restricted shares
are transferred. The Company generally may deduct an amount
equal to the income recognized by the non-employee director on
the grant date or the vesting date, as applicable.
Unrestricted Shares: A non-employee director
recognizes income when the unrestricted shares are granted. The
Company generally may deduct an amount equal to the income
recognized by the non-employee director.
Stock Units: A non-employee director
recognizes no income when the stock units are granted. When the
stock units are settled, the non-employee director will
recognize income for the year of the settlement equal to the
fair market value of the shares received. Upon selling those
shares, the non-employee director recognizes capital gain or
loss equal to the sale price less the fair market value of the
shares on the settlement date. The Company generally may deduct
an amount equal to the income recognized by the non-employee
director on the settlement date. The grant of stock units under
the Plan is intended to comply with Section 409A of the
Code. If any of the Plan terms subjects a non-employee director
to gross income inclusion, interest, or additional tax under
Section 409A of the Code, those terms are inapplicable.
Shareholder
Vote Requirement
This Proposal will be approved if the votes cast in favor of the
Proposal exceed the votes cast against it. Unless otherwise
directed therein, the proxies solicited hereby will be voted for
approval of the Amended and Restated Non-Employee Director Stock
Plan.
The Board of Directors recommends that shareholders
vote FOR approval of the Amended and Restated Non-Employee
Director Stock Plan.
Other
Matters
The Board of Directors knows of no other matters that may come
before the meeting; however, if any other matters should
properly come before the meeting or any adjournment thereof, it
is the intention of the persons named in the proxy to vote the
proxy in accordance with their best judgment.
31
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the Exchange Act), and the disclosure
requirements of Item 405 of
Regulation S-K
require the directors and executive officers of the Company, and
any persons holding more than 10% of any class of equity
securities of the Company, to report their ownership of such
equity securities and any subsequent changes in that ownership
to the SEC, Nasdaq and the Company. Based solely on a review of
the reports that have been filed by or on behalf of such persons
in this regard and written representations from our directors
and executive officers that no other reports were required,
during and for the fiscal year ended December 31, 2006, all
Section 16(a) filing requirements applicable to the
Companys directors, executive officers and greater than
10% shareholders were complied with, except that the accrual of
dividend equivalent rights on previously granted restricted
stock units was not timely reported on one Form 4 by C.
Robert Campbell.
Deadline
for Submission to Shareholders of Proposals to be Presented at
the 2008 Annual Meeting of Shareholders
Any proposal intended to be presented for action at the 2008
Annual Meeting of Shareholders by any shareholder of the Company
must be received by the Secretary of the Company at its
principal executive offices not later than December 21,
2007 in order for such proposal to be considered for inclusion
in the Companys proxy statement and form of proxy relating
to its 2008 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the Company to include any
shareholder proposal which does not meet all the requirements
for such inclusion established by
Rule 14a-8
of the Exchange Act.
For other shareholder proposals to be timely (but not considered
for inclusion in the proxy statement for the 2008 Annual Meeting
of Shareholders), a shareholders notice must be received
by the Secretary of the Company not later than March 5,
2008 and the proposal and the shareholder must comply with
Rule 14a-4
under the Exchange Act. In the event that a shareholder proposal
intended to be presented for action at the next Annual Meeting
is not received prior to March 5, 2008, proxies solicited
by the Board of Directors in connection with the Annual Meeting
will be permitted to use their discretionary voting authority
with respect to the proposal, whether or not the proposal is
discussed in the proxy statement for the Annual Meeting.
Householding
of Annual Meeting Materials
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
this Notice of 2007 Annual Meeting of Shareholders, Proxy
Statement and 2006 Annual Report may have been sent to multiple
shareholders in your household. We will promptly deliver a
separate copy of each document to you if you write the
Companys Secretary at Forward Air Corporation, 430 Airport
Road, Greeneville, Tennessee 37745, or call
(423) 636-7000.
If you want to receive separate copies of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Report in
the future, or if you are receiving multiple copies and would
like to receive only one copy for your household, you should
contact your bank, broker or other nominee record holder, or, if
the shares are not held in street name, you may
contact the Company at the above address and phone number.
32
Miscellaneous
It is important that proxies be returned promptly to avoid
unnecessary expense. Therefore, shareholders who do not expect
to attend the Annual Meeting in person are urged, regardless of
the number of shares of common stock owned, to please vote and
submit your proxy over the Internet, by telephone or by
completing, signing, dating and returning the enclosed proxy in
the envelope provided as promptly as possible. If you attend the
meeting and desire to vote in person, you may do so even though
you have previously sent a proxy.
A copy of the Companys Annual Report on
Form 10-K
for the year ended December 31, 2006 is included within the
Annual Report provided with this Proxy Statement. The Annual
Report does not constitute a part of the proxy solicitation
material. Copies of exhibits filed with the
Form 10-K
are available upon written request. Requests should be made in
writing to Matthew J. Jewell, Secretary of the Company, at
Forward Air Corporation, 430 Airport Road, Greeneville,
Tennessee 37745.
By Order of the Board of Directors,
Matthew J. Jewell
Senior Vice President, General Counsel and Secretary
Greeneville,
Tennessee
April 19, 2007
33
APPENDIX A
FORWARD
AIR CORPORATION
AUDIT
COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the Audit Committee (the
Committee) of Forward Air Corporation (the
Company). The Committee shall review and reassess
this charter at least annually and obtain the approval of the
board of directors. The Committee shall be appointed by the
board of directors and shall comprise of at least three
directors, each of whom shall meet the independence and
qualification requirements of The Nasdaq Stock Market, Inc.,
Section 104(m)(3) of the Securities and Exchange Act of
1934, as amended (the Exchange Act), and the rules
and regulations of the Securities and Exchange Commission (the
SEC). The Committee should also disclose, in
accordance with applicable regulatory requirements, whether any
member of the Committee is a financial expert as
defined by the SEC. In fulfilling its responsibilities, the
Committee may delegate responsibilities to a subcommittee
consisting of one or more members of the Committee.
STATEMENT
OF POLICY
The Committee shall provide assistance to the board of directors
in its oversight of the Companys financial statements and
the financial reporting process, the systems of internal
accounting and financial controls, the internal audit process,
the annual independent audit of the Companys financial
statements, and the legal compliance and ethics programs as
established by management and the board.
In so doing, it is the responsibility of the Committee to
maintain free and open communication among the Committee,
independent auditors, internal audit personnel and management of
the Company and the Committee shall from time to time meet
separately in executive session with the independent auditors,
internal audit personnel and management. In discharging its
oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books,
records, facilities and personnel of the Company. The Committee
shall have the authority to engage independent counsel and other
advisers, as it deems necessary to carry out its duties, and the
Company shall provide for appropriate funding, as determined by
the Committee for the payment of (a) compensation to the
independent auditor(s) engaged for the purpose of preparing or
issuing the audit report or performing other audit, review or
attest services for the Company; (b) compensation to any
independent advisers employed by the Committee; and
(c) ordinary administrative expenses of the Committee that
are necessary or appropriate in carrying out its duties. The
Committee will work closely with management and independent
auditors to promote accurate, high-quality, and timely
disclosure of financial and other information to the board, the
public markets and shareholders.
A-1
RESPONSIBILITIES
AND PROCESSES
The primary responsibility of the Committee is to oversee the
Companys financial reporting process on behalf of the
board and report the results of its activities to the board. The
Committee recognizes that management is responsible for
preparing the Companys financial statements, and that the
independent auditors are responsible for auditing those
financial statements. The Committee should take the appropriate
actions to set the overall corporate tone for
quality financial reporting, sound business risk practices and
ethical behavior.
The following shall be the principal recurring processes of the
Committee in carrying out its oversight responsibilities. The
processes are set forth as a guide with the understanding that
the Committee may supplement them as appropriate. In carrying
out its responsibilities, the Committee believes its policies
and procedures should remain flexible, in order to best react to
changing conditions and circumstances, and to ensure to the
directors and shareholders that the corporate accounting and
reporting practices of the Company are in accordance with all
requirements and are of the highest quality.
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The Committee shall have a clear understanding with management
and the independent auditors that the independent auditors are
ultimately accountable to the board and the Committee, as
representatives of the Companys shareholders. The
Committee shall have the ultimate authority and responsibility
to select, appoint, compensate, evaluate and, where appropriate,
replace the independent auditors. The Committee shall discuss
with the auditors their objectivity and independence from
management and the Company and matters included in the formal
written statement required by the Independence Standards Board
which delineates all relationships between the independent
auditors and the Company. Annually, the Committee shall review
and appoint the Companys independent auditors, subject to
ratification by the shareholders at the Annual Meeting. In the
event that the shareholders do not ratify the Committees
appointment of independent auditors, the Committee will
reconsider the appointment. The Committee will ensure the
independence of the outside auditors through the pre-approval of
all audit and permitted non-audit services (including the fees
and terms thereof) to be performed for the Company by its
independent auditors, subject to and in accordance with
Section 10A(i) of the Exchange Act and the Committees
pre-approval policy, as it may be amended from time to time.
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The Committee shall discuss with the independent auditors and
with Company financial management and internal audit personnel
the overall scope and plans for audits including the scope of
the proposed audit for the current year, audit procedures to be
utilized, and the adequacy of audit staffing and compensation.
At the conclusion thereof, the Committee shall review such
audit, including any comments or recommendations of the
independent auditors. Also, the Committee shall discuss with
management and the independent auditors the adequacy and
effectiveness of the accounting and financial controls,
including the Companys system to monitor and manage
business risk, and legal and ethical compliance programs.
Further, the Committee shall meet separately with the
independent auditors, with and without management present, to
discuss the results of their examinations.
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A-2
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The Committee shall review with the Companys financial and
accounting personnel the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed
controls or procedures are desirable. The Committee shall, at
least annually, meet with the Companys financial and
accounting personnel for a report including the review of any
related party transactions and any issues that may affect in any
material way the financial reporting process, the financial
risks of the Company and the internal control systems of the
Company. Further, the Committee periodically should review
Company policy statements to determine their adherence to the
code of conduct. The Committee shall also monitor and oversee
the Companys legal compliance programs and code of
business conduct and ethics.
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The Committee shall establish procedures for (i) the
receipt, retention and treatment of complaints and concerns
received by the Company regarding accounting, internal
accounting controls or auditing or related matters and
(ii) the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or
auditing matters.
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The Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of
the Companys Quarterly Report on
Form 10-Q.
Also, the Committee shall discuss the results of the quarterly
review and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted
auditing standards. Review of the quarterly financial statements
by the independent auditors and Committee will occur prior to
the public release of such quarterly financial results. Review
of the Form
10-Q by the
independent auditors and Committee will occur prior to the
Companys filing of the
Form 10-Q.
The chair of the Committee may represent the entire Committee
for the purposes of this review.
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The Committee shall review with management and the independent
auditors the financial statements to be included in the
Companys Annual Report on
Form 10-K
(or the annual report to shareholders, if distributed prior to
the filing of
Form 10-K).
The Committee shall review with the independent auditors
(i) all critical accounting policies and practices to be
used; (ii) all alternative treatments of financial
information within GAAP that have been discussed with
management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditors; and (iii) other material written
communications between the independent auditors and management,
such as any management letter or schedule of unadjusted
differences. The Committee shall also discuss with the
independent auditors their judgment about the quality, not
merely the acceptability, of accounting principles relied upon
therein, the reasonableness of significant judgments, and the
clarity of the disclosures in the financial statements, as well
as matters affecting the quality of the Companys financial
reporting and the fairness of the presentation in the financial
statements of the financial condition and the financial risks of
the Company. Also, the Committee shall discuss the results of
the annual audit and any other matters required to be
communicated to the Committee by the independent auditors under
generally accepted auditing standards. Based on such review and
discussion, the Committee shall consider whether to recommend to
the Companys board of directors that the audited financial
statements be included in the Companys Annual Report on
Form 10-K.
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The Committee shall review disclosures made to the Committee by
the Companys Chief Executive Officer, Chief Financial
Officer, Chief Accounting Officer and internal audit personnel
regarding: (i) any significant deficiencies in the design
or operation of internal controls of the Company which could
adversely affect the Companys ability to record, process,
summarize and report financial data; and (ii) any fraud,
material or otherwise, that involves management or other senior
personnel.
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A-4
APPENDIX B
FORWARD
AIR CORPORATION
AMENDED
AND RESTATED NON-EMPLOYEE DIRECTOR STOCK PLAN
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SECTION 1.
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Establishment;
Purpose.
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Effective May 24, 2006, Forward Air Corporation, a
Tennessee corporation (the Company),
established and currently maintains the 2006 Non-Employee
Director Stock Plan (the 2006 NED Plan) to
attract and retain well-qualified persons for service as
directors of the Company and to provide directors with an
opportunity to increase their ownership interest in the Company
and, thereby, increase their personal interest in the
Companys continued success. The Companys Board of
Directors (the Board) now finds it desirable
and in the best interests of the Company and its shareholders to
amend and restate the 2006 NED Plan as set forth herein and to
be known hereafter as the Amended and Restated Non-Employee
Director Stock Plan (the Plan). The Plan,
upon its approval by the Companys shareholders, shall be a
continuation of the 2006 NED Plan under these amended and
restated terms.
Under the Plan, the Company may grant non-employee directors
equity compensation in the from of restricted shares (the
Restricted Shares) of the $0.01 par
value common stock of the Company (the Common
Stock), unrestricted shares of Common Stock (the
Unrestricted Shares and, together with the
Restricted Shares, the Award Shares), and
nonqualified stock options (the Options) for
the purchase of Common Stock (all such grants are referred to
individually as an Award and collectively as
Awards).
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SECTION 2.
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Administration.
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Responsibility and authority to administer and interpret the
provisions of the Plan shall be conferred upon the Board. The
Board shall, subject to the provisions of the Plan, have the
power to construe the Plan, to determine all questions arising
thereunder and to adopt and amend rules and regulations for the
administration of the Plan. Without limiting the foregoing, the
Board shall have the discretion to determine the form, size,
timing and vesting of Awards, and such discretion may be
exercised with respect to future or then-outstanding Awards and
need not be exercised uniformly among all directors. The Board
may employ attorneys, consultants, accountants or other persons,
and the Board, the Company and its officers shall be entitled to
rely upon the advice, opinions or valuations of any such
persons. All usual and reasonable expenses of the Board shall be
paid by the Company. All actions taken and all interpretations
and determinations made by the Board in good faith shall be
final and binding upon all recipients who have received Awards,
the Company and other interested persons. No member of the Board
shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the
Plan or Awards made hereunder, and all members of the Board
shall be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
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SECTION 3.
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Shares of
Common Stock Subject to the Plan.
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(a) Number of Shares Issuable Under the
Plan. Subject to Section 3(b), up to
200,000 shares of Common Stock may be issued with respect
to grants of Awards under the Plan (inclusive of Awards granted
under the 2006 NED Plan prior to its amendment and restatement
herein). In the event that any Awards, or portions of an Award,
granted under the Plan, or Stock Units credited to a bookkeeping
reserve account with respect to deferred Award Shares, terminate
unexercised or are canceled, surrendered or forfeited for any
reason, then the number of Award Shares and Stock Units or the
number of shares underlying the Options which terminated
unexercised or were canceled, surrendered or forfeited shall be
added to the remaining number of shares of Common Stock for
which Awards may be issued under the Plan.
(b) Adjustments. The Board shall
appropriately adjust the exercise price of outstanding Options
and the maximum number and kind of shares subject to the Plan,
Stock Units credited under the Plan, outstanding Awards and
subsequent Awards in the event of reorganization,
recapitalization, stock split, reverse stock split, stock
dividend, exchange or combination of shares, merger,
consolidation, rights offering or any change in capitalization
of the Company.
(c) Source of Shares. The Common
Stock issued under the Plan will come from authorized but
unissued shares of Common Stock, treasury shares, purchases by
the Company on the open market or from any other proper source.
The Company will set aside and reserve for issuance under the
Plan the number of shares set forth in Section 3(a), as
adjusted.
All directors of the Company who are neither employees of the
Company nor officers of the Company shall be eligible
participants in the Plan.
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SECTION 5.
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Grants of
Awards.
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(a) Annual Grants. Each individual who
serves as a director of the Company and is, on the grant date,
an eligible participant shall automatically be granted an Award,
in such form and size as the Board determines from year to year
(the Annual Grant), on the first business day
after each Annual Meeting of Shareholders of the Company at
which directors are elected (an Annual
Meeting). Each Annual Grant shall be evidenced by a
written agreement or other evidence of issuance (an
Award Agreement) in such form acceptable to
the Company and not inconsistent with the terms and conditions
specified in the Plan.
(b) Pro-Rata Grants. Each person who
first becomes an eligible director on a date other than the date
of an Annual Meeting shall receive, within 30 days of the
date such person is appointed as or first becomes a non-employee
director, a pro-rata grant of a number of Award Shares or
Options, depending on the form of Annual Grant granted on the
first business day following the last preceding Annual Meeting
(the Preceding Annual Grant), equal to the
number, rounded up to the nearest whole number, determined by
multiplying the shares underlying the Preceding Annual Grant by
a fraction, (i) the numerator of which is the number of
whole and partial months during the period
B-2
measured from the date of appointment as an eligible director
until the next following May 1st, and (ii) the
denominator of which is 12.
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SECTION 6.
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Terms and
Conditions of Award Shares.
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Award Shares may be granted with or without restrictions. The
terms and conditions of such Awards shall be as set forth below.
(a) Unrestricted Shares. Unrestricted
Shares are vested, nonforfeitable and freely transferable when
granted under the Plan.
(b) Restricted Shares.
(i) Vesting. Restricted Shares are
non-vested and forfeitable when granted under the Plan. Unless
otherwise determined by the Board, Restricted Shares shall
become vested and nonforfeitable one year after the date of
grant so long as the directors service with the Company
has not earlier terminated. If the directors service with
the Company terminates due to death or total disability, the
Restricted Shares that have not previously become vested and
nonforfeitable shall become vested and nonforfeitable as of the
date that the directors service with the Company so
terminates. If the directors service with the Company
terminates for any reason other than death or total disability,
then, unless the Board determines otherwise, all Restricted
Shares that are not then vested and nonforfeitable will be
immediately forfeited by the director and transferred to the
Company upon such termination at no cost to the Company.
(ii) Restrictions on Transfer. Until the
Restricted Shares become vested and nonforfeitable, the
Restricted Shares may not be assigned, transferred, pledged,
hypothecated or disposed of in any way (whether by operation of
law or otherwise), except by will or the laws of descent and
distribution, and shall not be subject to execution, attachment
or similar process. The Company shall not be required to
(i) transfer on its books any Restricted Shares that have
been sold or transferred in contravention of the Plan or
(ii) treat as the owner of shares, or otherwise accord
voting, dividend, distribution or liquidation rights to, any
transferee to whom Restricted Shares have been transferred in
contravention of the Plan.
(iii) Shareholder Rights; Share
Certificates. Each participating director shall
be reflected on the Companys books as the owner of record
of the Restricted Shares as of the date of grant and shall
possess all incidents of ownership of such shares, subject to
Section 6(b)(ii), including the right to receive cash
dividends with respect to such shares and to vote such shares;
provided, that shares of Common Stock distributed in connection
with a stock split or stock dividend shall be subject to
restrictions on transfer and a risk of forfeiture to the same
extent as the Restricted Shares with respect to which such
shares are distributed. The Company will hold the share
certificates for safekeeping, or otherwise retain the shares in
uncertificated book entry form, until the Restricted Shares
become vested and nonforfeitable. Until the Restricted Shares
become vested and nonforfeitable, any share certificates
representing such shares will include a legend to the effect
that the director may not sell, assign, transfer, pledge or
hypothecate the Restricted Shares. All regular cash
B-3
dividends on the Restricted Shares held by the Company will be
paid directly to the director. As soon as practicable after
vesting of the Restricted Shares, the Company will deliver such
shares in uncertificated book entry form or in certificate form
to the director, or deliver such shares electronically or in
certificate form to the directors designated broker on the
directors behalf.
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SECTION 7.
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Terms and
Conditions of Options.
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(a) Exercisability. Unless the Board
determines otherwise, the Options shall become exercisable one
year after the date of grant so long as the directors
service with the Company has not earlier terminated. Once an
Option has become exercisable, it shall remain exercisable, to
the extent not exercised, until its expiration date or earlier
termination pursuant to Section 7(b).
(b) Post-Termination Exercise. If a
directors service with the Company terminates due to the
directors death or total disability, the outstanding
Options granted to such director shall become exercisable in
full and shall remain exercisable for a period of one year
thereafter but not beyond their expiration date. If a
directors service with the Company terminates for any
other reason, unless the Board determines otherwise, all Options
granted to such director which are not then exercisable shall be
canceled and the remaining Options shall continue to be
exercisable for 90 days thereafter but not beyond their
expiration date.
(c) Exercise Price. The exercise price
per share for each Option granted under the Plan shall be 100%
of the Fair Market Value (as defined below) of a share of Common
Stock as of the date of grant. Fair Market
Value as of a given date for purposes of the Plan and
any Award Agreement means (i) the closing sale price for
the shares on The NASDAQ Stock Market or any national exchange
on which shares of Common Stock are traded on such date (or if
such market or exchange was not open for trading on such date or
no shares of Common Stock traded on that day but were listed for
trade, the next preceding date on which it was open and the
shares of Common Stock did trade); or (ii) if the Common
Stock is not listed on The NASDAQ Stock Market or on an
established and recognized exchange, such value as the Board, in
good faith, shall determine based on such relevant facts, which
may include opinions of independent experts, as may be available
to the Board.
(d) Method of Exercise. Unless the Board
determines otherwise, payment of the exercise price shall be in
cash, in shares of Common Stock valued at their Fair Market
Value on the date of exercise, or both, as elected by the
director.
(e) Restrictions on Transfer. The Options
shall be exercisable only by the director during his or her
lifetime and may not be transferred other than by will or the
laws of descent and distribution unless the Board determines
otherwise.
(f) Expiration of the Options. The
Options shall expire, if not sooner exercised or terminated, as
of such date determined by the Board and set forth in the
applicable Award Agreement; provided, however, that no Option
shall expire later than 10 years after its date of grant.
B-4
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SECTION 8.
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Deferral
of Award Shares.
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(a) Deferral of Award Shares. Directors
may elect to defer receipt of Award Shares in accordance with
the election procedures set forth below. If a director elects to
defer the receipt of Award Shares, the number of Award Shares
deferred shall be credited as Stock Units to a bookkeeping
reserve account established for the director under the Plan as
of the date that the Award Shares otherwise would have been
issued to the director. Each Stock Unit shall represent the
right to receive one share of Common Stock when the director
incurs a separation from service with the Company (a
Separation From Service) within the meaning
of Section 409A of the Internal Revenue Code of 1986, as
amended (the Code), provided that the Stock
Unit is or has become vested and nonforfeitable on or before
such date. Stock Units representing deferred Restricted Shares
shall become vested and nonforfeitable at the same time and
subject to the same conditions as the corresponding Restricted
Shares to which they relate would have become vested and
nonforfeitable but for their deferral of issuance.
(b) Settlement of Stock Units. Except as
provided in Section 9(a), all vested Stock Units shall be
settled upon the date that the director incurs a Separation From
Service with the Company or as soon as practicable thereafter
but in no event later than the close of the calendar year in
which the Separation From Service occurs or such later date as
may be permitted under Section 409A of the Code. Except as
provided in Section 9(a), all vested Stock Units shall be
settled in the form of shares of Common Stock issued to the
director or the directors estate as applicable, provided
that any vested fractional Stock Units credited to a
directors bookkeeping reserve account shall be settled in
cash. If the directors service with the Company terminates
for any reason other than death or total disability, all Stock
Units that are not then vested will be immediately forfeited by
the director.
(c) Deferral Election Procedures. All
deferral elections shall be made in accordance with the
following procedures:
(i) An election pursuant to Section 8(a) shall be made
by the director by executing and delivering a deferral
agreement, in the form approved by the Company, to the Secretary
of the Company. The deferral agreement shall become effective
with respect to such director as of the first day of January
following the date such deferral agreement is received by the
Secretary of the Company; provided, however, that in the case of
the first year in which the director becomes eligible to
participate in the Plan, the director may execute and deliver a
deferral agreement to the Secretary of the Company before or
within 30 days after the date the individual becomes an
eligible director to be effective as of the first day following
the date such deferral agreement is received by the Secretary of
the Company. A directors election shall continue in
effect, unless earlier modified by the director, until the
director no longer serves as a director of the Company or, if
earlier, until the director ceases to participate in the Plan.
(ii) A director may unilaterally modify a deferral
agreement (either to terminate, increase or decrease the portion
of the directors future grants of Award Shares which are
subject to deferral) by providing a written modification of the
deferral agreement, in a form approved by the Company, to the
Secretary of the Company. The modification shall become
B-5
effective as of the first day of January following the date such
written modification is received by the Secretary of the Company.
(iii) The Board may from time to time establish policies or
rules consistent with the requirements of Section 409A of
the Code, to govern the manner in which deferrals of Award
Shares may be made.
(d) Rights in Respect of Deferred Award
Shares. Award Shares that are deferred shall not
represent an actual ownership in shares of Common Stock and the
director shall have no voting or other rights as a shareholder
in respect of Stock Units credited to the directors
bookkeeping reserve account. On each cash dividend payment date
with respect to shares of Common Stock, each director who has
Stock Units credited to a bookkeeping reserve account under the
Plan on the record date for such dividend shall have credited to
such account, as a dividend equivalent payment, additional Stock
Units which shall be fully vested. The number of additional
Stock Units to be so credited shall equal: (i) the product
of (x) the per-share cash dividend payable, multiplied by
(y) the total number of Stock Units which have not been
settled or forfeited as of the record date for such dividend,
divided by (ii) the Fair Market Value (as defined in
Section 7(c)) of one share of Common Stock on the payment
date of such dividend. If the unit holders Stock Units
have been settled after the record date but prior to the
dividend payment date, any Stock Units that would be credited
pursuant to the preceding sentence shall be settled on or as
soon as practicable after the dividend payment date.
(e) Transferability of Rights. No
director shall have the right to assign any right or interest in
any Stock Unit or shares of Common Stock subject to a Stock
Unit, or to cause or permit any encumbrance, pledge or charge of
any nature to be imposed on any such Stock Unit or shares of
Common Stock so deferred or any such right or interest, other
than by will or the laws of descent and distribution.
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SECTION 9.
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Change of
Control.
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(a) Acceleration of Vesting, Exercisability, and Award
Termination upon Change of Control. In the event
of a Change of Control (as defined below),
(1) all Restricted Shares, Options and Stock Units awarded
under the Plan not previously vested, exercisable and
nonforfeitable shall become fully vested, exercisable and
nonforfeitable as of the date of, and immediately before, such
Change of Control; (2) all outstanding Options not
exercised prior to or upon the Change of Control will terminate
at the effective time of such Change of Control unless provision
is made in connection with the transaction for the continuation,
assumption or settlement of such Options by, or for the
substitution of equivalent options of, the surviving or
successor entity or a parent thereof; and (3) all Stock
Units credited to accounts as of the Change of Control will be
settled in shares or in cash at the discretion of the Board upon
the Change of Control or as soon as practicable thereafter but
in no event later than the close of the calendar year in which
the Change of Control occurs.
(b) Definition of Change of Control. For
purposes of this Section 9, a Change of
Control means the happening of any of the following:
B-6
(i) the acquisition (other than from the Company) in one or
more transactions by any Person, as defined in this
Section 9(b), of the beneficial ownership (within the
meaning of
Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as
amended) of more than a majority of (A) the
then-outstanding shares of the securities of the Company, or
(B) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the
election of directors (the Company Voting
Stock);
(ii) the closing of a sale or other conveyance of all or
substantially all of the assets of the Company;
(iii) the effective time of any merger, share exchange,
consolidation or other business combination involving the
Company if immediately after such transaction persons who hold a
majority of the outstanding voting securities entitled to vote
generally in the election of directors of the surviving entity
(or the entity owning 100% of such surviving entity) are not
persons who, immediately prior to such transaction, held the
Company Voting Stock; or
(iv) when, during any period of two consecutive years
during the existence of the Plan, the individuals who, at the
beginning of such period, constitute the Board cease for any
reason to constitute at least a majority thereof; provided,
however, that a director who was not a director at the beginning
of such period shall be deemed to have satisfied the two-year
requirement if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds
of the directors who were directors at the beginning of such
period (either actually or by prior operation of this
Section 9(b)(iv)).
For purposes of this Section 9(b), a
Person means any individual, entity or group
within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended, other than
(A) the Company, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of the
Company, or (C) any corporation owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
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SECTION 10.
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Amendment
or Discontinuance.
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The Board may amend, suspend or terminate the Plan or any
portion thereof at any time as it determines appropriate,
without further action by the Companys shareholders,
except to the extent required by applicable law or by any stock
exchanges upon which the Common Stock may be listed; provided,
however, that no action of the Board to amend, suspend or
terminate the Plan may impair a directors rights with
respect to any Awards or Stock Units previously made under the
Plan without the directors consent. Notwithstanding the
foregoing, the Plan may be amended by the Board at any time,
retroactively if required in the opinion of the Company, in
order to ensure that the Plan complies with the requirements of
Section 409A of the Code. No such amendment shall be
considered prejudicial to any interest of a director.
B-7
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SECTION 11.
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Effective
Date and Term of Plan.
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The Plan as herein amended and restated shall become effective
on the day after the date of the 2007 Annual Meeting of
Shareholders of the Company, subject to the approval of a
majority of the shareholders of the Company. Unless sooner
terminated by the Board, the Plan shall continue in effect
indefinitely until all shares of Common Stock approved for
issuance under the Plan by the shareholders of the Company have
been issued. Awards and Stock Units granted prior to termination
of the Plan shall, notwithstanding termination of the Plan,
continue to be effective and shall be governed by the Plan.
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SECTION 12.
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Continuation
of Director or Other Status.
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Nothing in the Plan or in any instrument executed pursuant to
the Plan or any action taken pursuant to the Plan shall be
construed as creating or constituting evidence of any agreement
or understanding, express or implied, that the Company will
retain a participant as a director or in any other capacity for
any period of time or at a particular retainer or other rate of
compensation, as conferring upon any participant any legal or
other right to continue as a director or in any other capacity,
or as limiting, interfering with or otherwise affecting the
provisions of the Companys charter, bylaws or the
Tennessee Business Corporation Act relating to the removal of
directors.
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SECTION 13.
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The
Companys Rights.
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The existence of the Plan, grants of Awards, or crediting of
Stock Units shall not affect in any way the right or power of
the Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes
in the Companys capital structure or its business, or any
merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or other stocks with preference ahead of
or convertible into, or otherwise affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of the
Companys assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
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SECTION 14.
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No Trust
or Fund Created.
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Neither the Plan nor any Awards or crediting of Stock Units to a
bookkeeping reserve account shall create or be construed to
create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a director or any other
person. To the extent that any director or other person acquires
a right to receive payments from the Company pursuant to the
Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company.
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SECTION 15.
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Governing
Law.
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The Plan and all determinations made and actions taken pursuant
to the Plan shall be governed by the laws of the State of
Tennessee pertaining to contracts made and to be performed
wholly within such jurisdiction.
B-8
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SECTION 16.
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409A
Savings Clause.
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It is intended that the Plan comply with Section 409A of
the Code. The Plan shall be administered, interpreted and
construed in a manner consistent with such Section. Should any
provision of the Plan not comply with the provisions of
Section 409A of the Code, that provision shall have no
effect on the remaining parts of the Plan and the Plan shall be
construed and enforced as if such provision had never been
inserted herein.
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SECTION 17.
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Compliance
with Laws.
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To the extent the Company is unable to or the Board deems it
infeasible to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Companys
counsel to be necessary to the lawful issuance of any shares
under the Plan, the Company shall be relieved of any liability
with respect to the failure to issue such shares as to which
such requisite authority shall not have been obtained.
B-9
ATTN: LEGAL DEPARTMENT
430 AIRPORT ROAD
GREENEVILLE, TN 37745
VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the
day before the cut-off date or meeting date. Have
your proxy card in hand when you access the web
site and follow the instructions to obtain your
records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE
SHAREHOLDER
COMMUNICATIONS
If you would like to reduce the costs incurred by
Forward Air Corporation in mailing proxy
materials, you can consent to receiving all
future proxy statements, proxy cards and annual
reports electronically via e-mail or the
Internet. To sign up for electronic delivery,
please follow the instructions above to vote
using the Internet and, when prompted, indicate
that you agree to receive or access shareholder
communications electronically in future years.
VOTE BY PHONE 1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions up until 11:59 P.M. Eastern
Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you call
and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it
in the postage-paid envelope we have provided or
return it to Forward Air Corporation, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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FORWA1
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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FORWARD AIR CORPORATION |
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The Board of Directors recommends a vote FOR Proposals 1, 2 and 3. |
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Vote on Directors |
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1.
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Election of Directors for terms
that will expire at the 2008 Annual Meeting of Shareholders 01)
Bruce A.
Campbell 05)
Tracy A. Leinbach 02) C. Robert
Campbell 06)
G. Michael Lynch 03) Richard W.
Hanselman 07)
Ray A. Mundy 04) C. John Langley, Jr. 08) B. Clyde Preslar
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the number(s) of
the
nominee(s) on the line below.
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Vote on Proposals |
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For |
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Against |
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Abstain |
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2.
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Ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm.
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3.
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Approval of the Amended and
Restated Non-Employee Director Stock Plan.
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4.
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In their discretion, to transact all other business as may properly come before the meeting or any adjournment or postponement thereof.
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PLEASE SIGN AND DATE BELOW AND RETURN PROMPTLY.
Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
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Yes |
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No |
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Please
indicate if you plan to attend this meeting. |
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MATERIALS
ELECTION - As of July 1, 2007, SEC rules permit companies
to send you a notice that proxy information is available on the
Internet, instead of mailing you a complete set of materials.
Check the box to the right if you want to receive a complete set
of future proxy materials by mail, at no cost to you. If you do
not take action you may receive only a Notice. |
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date |
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PROXY
FORWARD AIR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF FORWARD AIR CORPORATION
The
undersigned, having received the Notice of Annual Meeting of Shareholders and Proxy Statement, hereby appoints Bruce A. Campbell
and Richard W. Hanselman, and each of them, proxies with full power of substitution, for and in the name of the undersigned,
to vote all shares of common stock of Forward Air Corporation owned of record by the undersigned on all matters which may come before the
2007 Annual Meeting of Shareholders to be held in
the
Catalpa Room at The Ritz-Carlton Lodge, Reynolds Plantation, One Lake
Oconee Trial, Greensboro,
Georgia
30642,
on May
22,
2007, at 8:00 a.m., EDT, and any adjournments
thereof, unless otherwise specified herein. The proxies, in their discretion, are further authorized to vote for the election of a
person to the Board of Directors if any nominee named herein becomes unable to serve, or for good cause will not serve, on matters which the Board of
Directors does not know a reasonable time before making the proxy
solicitation will be presented at the meeting and on other matters which may properly come before the 2007 Annual Meeting and any adjournments thereof.
You
are encouraged to specify your choice by marking the appropriate box
(see reverse side), but you need not mark any box if you wish to vote
in accordance with the Board of Directors recommendations. The proxies cannot vote these shares unless you sign and return this card.
This
proxy, when properly executed, will be voted in the manner directed
herein. If no direction is made, this proxy will be voted
FOR all of the director nominees and FOR Proposals 2 and 3.