UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.              )

Filed by the Registrant  x

Filed by a Party other than the Registrant  o

Check the appropriate box:

o

Preliminary Proxy Statement

o

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material Pursuant to §240.14a-12

 

RUSH ENTERPRISES, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

x

No fee required.

o

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

o

Fee paid previously with preliminary materials.

o

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

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(4)

Date Filed:

 

 

 

 


 

 

555 IH-35 SOUTH
NEW BRAUNFELS, TEXAS 78130

 

April 9, 20087, 2009

 

Dear Shareholder:

On behalf ofTo the Board of Directors, I cordially invite you to attend the 2008 Annual Meeting of Shareholders of Rush Enterprises, Inc.  The:

Rush Enterprises, Inc.’s 2009 Annual Meeting of Shareholders will be held on Tuesday, May 20, 2008,19, 2009, at 10:00 a.m., local time, in the main conference room at Rush Enterprises, Inc.’s executive offices, which are located at 555 IH-35 South, Suite 500, New Braunfels, Texas 78130.  The formal Notice of

At the annual meeting, we will ask you to:

1.Elect W. Marvin Rush, W.M. “Rusty” Rush, Ronald J. Krause, James C. Underwood, Harold D. Marshall, Thomas A. Akin and Gerald R. Szczepanski as directors to hold office until the 2010 Annual Meeting of Shareholders is set forth inShareholders;

2.Ratify the enclosed materials.appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2009 fiscal year; and

3.Transact such other business as may properly come before the annual meeting or any adjournments or postponements thereof.

 

The accompanying formal notice and proxy statement further discuss the matters that we expect to act upon atwill be presented for shareholder vote.  Following the meeting are described in the accompanying proxy statement.  Following theannual meeting, shareholders will have the opportunity to ask questions and comment on our operations.

 

It is important that your views be represented whether or not you are able to be present atattend the Annual Meeting.  Pleaseannual meeting.  If you are unable to attend the annual meeting in person and wish to have your shares voted, please sign, date and return the enclosed proxy card promptly.in the accompanying envelope as promptly as possible or otherwise follow the voting instructions enclosed herewith.

 

We appreciate your investment in Rush Enterprises, Inc.hope that you will take this opportunity to meet with us to discuss the results and urge you to return your proxy card as soon as possible.operations of the Company for the 2008 fiscal year.

 

 

Sincerely,

 

 

 

GRAPHIC

 

W. Marvin Rush

 

Chairman

 


RUSH ENTERPRISES, INC.


NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

NOTICE IS HEREBY GIVEN that the 20082009 Annual Meeting of Shareholders (the “Annual Meeting”) of Rush Enterprises, Inc. (the “Company”) will be held on Tuesday, May 20, 2008,19, 2009, at 10:00 a.m., local time, in the main conference room at Rush Enterprises, Inc.’s executive offices, which are located at 555 IH-35 South, Suite 500, New Braunfels, Texas 78130, for the following purposes:

 

·                                          toTo elect sixW. Marvin Rush, W.M. “Rusty” Rush, Ronald J. Krause, James C. Underwood, Harold D. Marshall, Thomas A. Akin and Gerald R. Szczepanski as directors to servehold office until the next2010 Annual Meeting of Shareholders andor until their successors are duly elected and qualified;

 

·                                          to approve the adoption of the Amended and Restated 2006 Non-Employee Director Stock Plan;

·toTo ratify the appointment of Ernst & Young LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008;2009; and

 

·                                          to consider and act upon anyTo transact such other matter thatbusiness as may properly come before the annual meeting or any adjournments or postponements thereof, although the Board of Directors is presently unaware of any other business that may be presented for a vote of the shareholders at the Annual Meeting.thereof.

 

Information with respect to the above matters is set forth in the proxy statement that accompanies this Notice of Annual Meeting of Shareholders.

 

The Board of Directors fixed the close of business on April 4, 2008,3, 2009, as the record date for determining shareholders entitled to receive notice of and to vote at the Annual Meeting.annual meeting.  The Company will maintain a list of shareholders entitled to vote at the Annual Meetingannual meeting at the Company’s principal executive offices during ordinarynormal business hours for ten days prior to the Annual Meeting.annual meeting.  Any shareholder may examine the list for any purpose relevant to the Annual Meetingannual meeting during such ten-day period.  The list will also be available for examination throughout the duration of the Annual Meeting.annual meeting.

 

By Order of the Board of Directors,

By Order of the Board of Directors,

GRAPHIC

W. MARVIN RUSH

Chairman

 

San Antonio, Texas

April 9,7, 2009

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

Important Notice Regarding Internet Availability of Proxy Materials for the Shareholder Meeting to be Held on May 19, 2009

The proxy materials for the Company’s Annual Meeting of Shareholders, including the 2008 Annual Report, the Proxy Statement and any other additional soliciting materials, are available over the Internet by accessing the “Investor Relations—Financial Information—Annual Report & Proxy Materials” section of the Company’s website at http://investor.rushenterprises.com/annuals.cfm.  Other information on the Company’s website does not constitute part of the Company’s proxy materials.

 


IMPORTANT

 

You are cordially invited to attend the Annual Meetingannual meeting in person.  Even if you plan to be present, please mark, sign, date and return the enclosed proxy at your earliest convenience in the envelope provided, which requires no postage if mailed in the United States.States, or otherwise follow the enclosed voting instructions.

 


RUSH ENTERPRISES, INC.

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

Toto be held on May 20, 200819, 2009

General Information

 

This proxy statement is furnished in connection with the solicitation of proxies by Rush Enterprises, Inc. (the “Company”), on behalf of its Board of Directors, for the 2009 Annual Meeting of Shareholders. This proxy statement and the accompanyingrelated proxy card are furnished to the shareholders of Rush Enterprises, Inc., a Texas corporation (the “Company,” “we”being distributed on or “our”), in connection with the solicitation by the Board of Directors of proxies for use at the 2008about April 23, 2009.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND

THE ANNUAL MEETING

When And Where Is The Annual Meeting of Shareholders (the “Annual Meeting”) toMeeting?

The annual meeting will be held on May 20, 2008,19, 2009, at 10:00 a.m., local time, in the main conference room at Rush Enterprises, Inc.’s executive offices, which are located at 555 IH-35 South, Suite 500, New Braunfels, Texas 78130, and at any adjournments or postponements thereof, for the purposes set forth in the preceding Notice of Annual Meeting of Shareholders.

What Matters Will Be Voted Upon At The Annual Meeting?

At the annual meeting you will be asked to:

·Consider and vote upon a proposal to elect W. Marvin Rush, W.M. “Rusty” Rush, Ronald J. Krause, James C. Underwood, Harold D. Marshall, Thomas A. Akin and Gerald R. Szczepanski as directors to hold office until the 2010 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

 

The securities·                                          Consider and vote upon a proposal to ratify the appointment of Ernst & Young LLP (“E&Y”) as the Company’s independent registered public accounting firm for the 2009 fiscal year.

·                                          Transact such other business as may properly come before the annual meeting or any adjournments or postponements thereof.

Who Is Entitled To Vote?

Shareholders of record of the Company entitled to vote at the Annual Meeting consist of shares ofCompany’s Class A common stock,Common Stock, $.01 par value per share (the “Class A Common Stock”), and shares of Class B common stock,Common Stock, $.01 par value per share (the “Class B Common Stock”). at the close of business on April 3, 2009, which is the “Record Date,” are entitled to notice of, and to vote at, the annual meeting. The Class A Common Stock and the Class B Common Stock are sometimes collectively referred to in this proxy statement as the “Common Stock.”  Shares that may be voted include shares that are held (a) directly by the shareholder of record, and (b) beneficially through a broker, bank or other nominee.

At the close of business on April 4, 2008 (the “Record Date”),the Record Date, there were outstanding and entitled to vote 26,137,94626,482,069 shares of Class A Common Stock and 12,272,93710,685,894 shares of Class B Common Stock.Stock entitled to be voted at the annual meeting.  On September 20, 2007, ourthe Board of Directors declared a 3-for-2 stock split of the Class A Common Stock and Class B Common Stock, to be effected in the form of a stock dividend.  On October 10, 2007, the Company distributed one additional share of stock for every two shares of Class A Common Stock and Class B Common Stock held by shareholders of record as of October 1, 2007.All share and per share data (except par value) in this proxy statement have been adjusted and restated to

3


reflect the stock dividend.  The holders of record of Class B Common Stock on the Record Date will be entitled to one vote per share, and the holders of record of Class A Common Stock on the Record Date will be entitled to 1/20th of one vote per share.share, on each matter voted on at the annual meeting.  The Company’s Articles of Incorporation do not permit cumulative voting in the election of directors.

 

What Is The Difference Between Holding Shares As A “Registered Owner” And As A “Beneficial Owner”?

Most of the Company’s Annual Report forshareholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some distinctions between registered shares and those owned beneficially:

·                                          Registered Owners – If your shares are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, LLC, you are the year ended December 31, 2007 is also being furnished with thisshareholder of record.  As the shareholder of record, you have the right to grant your voting proxy statement.  This proxy statement and the related proxy card are being maileddirectly to the holders of our Common Stock onCompany or to vote in person at the Record Date on or about April 15, 2008.  The Annual Report does not constitute a part of the proxy materials.annual meeting.

 

Voting and Proxy Procedures

Properly executed proxies received in time for the Annual Meeting will be voted in the manner directed therein.·                                          Beneficial Owners – If your proxy cardshares are held in a brokerage account, bank or by another nominee, you are the “beneficial owner” of shares held in “street name.” As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote on your behalf or to vote in person at the annual meeting. However, since you are not a shareholder of record, you may not vote these shares in person at the annual meeting unless you obtain a “legal proxy” from your broker, bank or other nominee (who is signed and returned but does not indicate howthe shareholder of record), giving you would likethe right to vote the shares represented byin person at the proxy card will be voted “for” the election of the six nominees for director named herein, “for” adoption of the Company’s Amended and Restated 2006 Non-Employee Director Stock Plan and “for” ratification of the appointment of Ernst & Young LLP (“E&Y”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008.  Management of the Company does not know of any other matters that may be brought before the Annual Meeting.  However, if any other matters should properly come before the Annual Meeting, the persons named in the enclosed proxy card as proxy holders, Steven L. Keller and Martin A. Naegelin, Jr., will have discretionary authority to vote such proxy in accordance with their best judgment on such matters.annual meeting.

 

1


What Constitutes A Quorum?

If the enclosed proxy is executed and returned, it may nevertheless be revoked by a later-dated proxy or by written notice filed with the Secretary of the Company at the Company’s executive offices at any time before the enclosed proxy card is exercised.  Shareholders attending the Annual Meeting may revoke their prior proxies and vote in person.  The Company’s executive offices are located at 555 IH-35 South, Suite 500, New Braunfels, Texas 78130, and the Company’s mailing address is P.O. Box 34630, San Antonio, Texas 78265-4630.

The holders of a majority of the aggregate voting power represented by the shares of Class A Common Stock and Class B Common Stock, taken together, issued and outstanding at the close of business on the Record Date, whether present in person or represented by proxy at the Annual Meeting,annual meeting, will constitute a quorum for the transaction of business at the Annual Meeting.annual meeting.  Shares held by persons attending the Annual Meetingannual meeting but not voting, shares represented by proxies that reflect abstentions as to a particular proposal, and “broker non-votes” will all be counted as present for purposes of determining a quorum.

What Is A Broker Non-Vote?

Generally, a “broker non-vote” occurs when a broker, bank or other nominee holdingthat holds shares in “street name” for customers is precluded from exercising voting discretion on a particular proposal because (a) the beneficial owner has not receivedinstructed the nominee how to vote, and (b) the nominee lacks discretionary voting power to vote such shares.  Generally, a nominee does not have discretionary voting power with respect to the approval of “non-routine” matters absent specific voting instructions from the beneficial owner and does not have discretionary authority to vote theowners of such shares.

What Shareholder Approval Is Necessary For Approval Of The Proposals?

·                                          Election of Directors

 

A plurality of the votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meetingannual meeting is required for the election of directors. Accordingly, the sixseven director nominees receiving the highest number of votes will be elected.  Abstentions and broker non-votes willare not be treated as votes cast and, therefore, will not have any effect on the outcome of the election of directors.

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·                                          Ratification of the Appointment of the Company’s Independent Registered Public Accounting Firm

 

The vote of the holders of a majority of the aggregate voting power represented by the shares of Class A Common Stock and Class B Common Stock, taken together, entitled to vote and present in person or represented by proxy at the Annual Meeting,annual meeting, is required for (i) approval of the adoption of the Company’s Amended and Restated 2006 Non-Employee Director Stock Plan, (ii) the ratification of the appointment of Ernst & Young LLP and (iii) any other matters that may properly come before the Annual Meeting or any adjournments or postponements thereof.E&Y.  Abstentions will have the same effect as votes against the proposals to approve the Company’s Amended and Restated 2006 Non-Employee Director Stock Plan andproposal to ratify the appointment of Ernst & Young LLP.E&Y.  Broker non-votes will not be treated as votes for or against these proposalsthis proposal and, therefore, will not have any effect on the outcome of these proposals.this proposal.

 

May I Vote My Shares In Person At The Annual Meeting?

If you are the registered owner of shares of our Common Stock on the Record Date, you have the right to vote these shares in person at the annual meeting.

If you are the beneficial owner of shares of our Common Stock on the Record Date, you may vote these shares in person at the annual meeting if you have requested and received a legal proxy from your broker, bank or other nominee (the shareholder of record) giving you the right to vote such shares at the annual meeting, complete such legal proxy and present it to the Company at the annual meeting.

Even if you plan to attend the annual meeting, we recommend that you submit your proxy card or voting instructions so that your vote will be counted if you later decide not to attend the annual meeting.

How Can I Vote My Shares Without Attending The Annual Meeting?

If you are the registered owner of shares of our Common Stock on the Record Date, you may instruct the named proxy holders on how to vote these shares by completing, signing, dating and returning the enclosed proxy card in the postage pre-paid envelope provided with this proxy statement.

If you are the beneficial owner of shares of our Common Stock on the Record Date, you may instruct your broker, bank or other nominee on how to vote these shares. Your nominee has enclosed with this proxy statement a voting instruction card for you to use in directing your nominee on how to vote such shares.  You should follow the instructions provided by your nominee in directing your nominee on how to vote these shares.

If My Shares Are Held In “Street Name,” Will My Broker, Bank Or Other Nominee Vote My Shares For Me?

Brokers, banks and other nominees who do not have instructions from their “street name” customers may not use their discretion in voting their customers’ shares on “non-routine” matters. The proposals to elect directors and ratify the appointment of E&Y as the Company’s independent registered public accounting firm are both considered routine matters and, therefore, if beneficial owners fail to give voting instructions, nominees will have discretionary authority to vote such shares of our Common Stock with respect to these proposals. You should follow the instructions provided by your nominee in directing your nominee on how to vote your shares.

How Will My Proxy Be Voted?

Shares represented by a properly executed proxy that is timely received, and not subsequently revoked, will be voted at the annual meeting or any adjournments or postponements thereof in the manner directed on the proxy. Steven L. Keller, our Chief Financial Officer and Treasurer, and Martin A. Naegelin, our Executive Vice President, are named as proxies in the proxy card and have been designated by the Board of Directors as the directors’ proxies to represent you and vote your shares at the annual meeting. All shares represented by a properly executed proxy on which no choice is specified will be voted (a) FOR the election of directors, (b) FOR the ratification of the appointment of E&Y as the

5


Company’s independent registered public accounting firm for the 2009 fiscal year and (c) in accordance with the proxy holders’ best judgment as to any other business that properly comes before the annual meeting or any adjournments or postponements thereof.

May I Revoke My Proxy and Change My Vote?

Yes. You may revoke your proxy and change your vote at any time prior to the vote at the annual meeting.

If you are the registered owner of shares of our Common Stock on the Record Date, you may revoke your proxy and change your vote by (a) submitting a new proxy bearing a later date (which automatically revokes the earlier proxy), (b) giving notice of your changed vote to us in writing mailed to 555 IH 35 South, Suite 500, New Braunfels Texas 78130, Attn: Secretary, or (c) attending the annual meeting and giving oral notice of your intention to vote in person.

If you are the beneficial owner of shares of our Common Stock on the Record Date, you may revoke your proxy and change your vote (a) by submitting new voting instructions to your broker, bank or other nominee in accordance with their voting instructions, or (b) if you have obtained a legal proxy from your nominee giving you the right to vote your shares in person at the annual meeting, by attending the annual meeting, presenting the completed legal proxy to the Company and voting in person.

You should be aware that simply attending the annual meeting will not in and of itself constitute a revocation of your proxy.

Who Will Pay The Costs of Soliciting Proxies?

The costs of soliciting proxies pursuant to this proxy statement will be borne by the Company. Proxies will be solicited by mail, in person or by telephone, electronic mail or facsimile. The Company will paybear the costexpense of solicitation of proxies.  In additionpreparing, printing and mailing this proxy statement and accompanying materials to solicitation by mail, proxies may be solicited by directors, officers and employees of the Company, without additional compensation (other than reimbursement of out-of-pocket expenses), by personal interview, telephone, facsimile and other electronic means.our shareholders.  Upon request, the Company will reimburse brokers, banks or similar entities acting asother nominees for reasonable expenses incurred in forwarding copies of the proxy materials relating to the Annual Meetingannual meeting to the beneficial owners of our Common Stock.

What Other Business Will Be Presented at the Annual Meeting?

As of the date of this proxy statement, the Board of Directors knows of no other business that may properly be, or is likely to be, brought before the annual meeting. If any other matters should properly arise at the annual meeting, the persons named as proxy holders, Steven L. Keller and Martin A. Naegelin, will have the discretion to vote your shares on any additional matters properly presented for a vote at the annual meeting.

What Are The Deadlines To Nominate Directors or to Propose Other Business For Consideration at the 2010 Annual Meeting of Shareholders?

In order for a shareholder proposal to be eligible to be included in the Company’s proxy statement and proxy card for the 2010 Annual Meeting of Shareholders, the proposal (a) must be received by the Company at its executive offices, 555 IH 35 South, Suite 500, New Braunfels, Texas 78130, Attn: Secretary, on or before December 8, 2009, and (b) must concern a matter that may be properly considered and acted upon at the annual meeting in accordance with applicable laws, regulations and the Company’s Bylaws and policies, and must otherwise comply with Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Notice of any director nomination or the proposal of other business that you intend to present at the 2010 Annual Meeting of Shareholders, but do not intend to have included in the Company’s proxy statement and form of proxy relating to the 2010 Annual Meeting of Shareholders, must be received by

6


the Company at its executive offices, 555 IH 35 South, Suite 500, New Braunfels, Texas 78130, Attn: Secretary, not later than the close of business on February 18, 2010 and not earlier than the close of business on January 19, 2010.  In the event that the date of the 2010 Annual Meeting of Shareholders has changed by more than 30 days from the anniversary date of the 2009 Annual Meeting of Shareholders, the notice must be delivered to and received by the Company not earlier than the 120th day prior to the 2010 Annual Meeting of Shareholders and not later than the later of (a) the 90th day prior to such annual meeting, or (b) the 10th day following the day on which public announcement of the date of such annual meeting is first made by the Company.  In addition, your notice must set forth the information required by the Company’s Bylaws with respect to each director nomination or proposal of other business that you intend to present at the 2010 Annual Meeting of Shareholders.

Any shareholder desiring a copy of the Company’s bylaws will be furnished one without charge upon written request to the Chief Compliance Officer at 555 IH-35 South, Suite 500, New Braunfels, Texas 78130.

Where Can I Find The Voting Results Of the Annual Meeting?

The Company will publish final voting results of the annual meeting in its quarterly report on Form 10-Q for the second quarter of the 2009 fiscal year.

What Should I Do If I Receive More Than One Set Of Voting Materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account. If you are a registered owner and your shares are registered in more than one name, you will receive more than one proxy card.  Please vote each proxy and voting instruction card that you receive.

What Is Householding?

In an effort to reduce printing costs and postage fees, the Company has adopted a practice approved by the Securities and Exchange Commission (the “SEC”) called “householding.” Under this practice, certain shareholders who have the same address and last name will receive only one copy of this proxy statement and the Company’s Annual Report on Form 10-K, unless one or more of these shareholders notifies the Company that he or she wishes to continue receiving individual copies.  Shareholders who participate in householding will continue to receive separate proxy cards.

If you share an address with another shareholder and received only one copy of this proxy statement and the Company’s Annual Report on Form 10-K, and would like to request a separate copy of these materials, or you do not wish to participate in householding in the future, please mail such request to Rush Enterprises, Inc. Attn: Steven L. Keller, 555 IH 35 South, Suite 500, New Braunfels, Texas 78130.  Similarly, you may also contact the Company if you received multiple copies of the Company’s proxy materials and would prefer to receive a single copy in the future.

What Do I Need To Do Now?

First, read this proxy statement carefully. Then, if you are a registered owner, you should, as soon as possible, submit your proxy by executing and returning the proxy card.  If you are the beneficial owner of shares held in street name, then you should follow the voting instructions of your broker, bank or other nominee. Your shares will be voted in accordance with the directions you specify. If you submit an executed proxy card to the Company, but fail to specify voting directions, your shares will be voted (a) FOR the approval of W. Marvin Rush, W.M. “Rusty” Rush, Ronald J. Krause, James C. Underwood, Harold D. Marshall, Thomas A. Akin, and Gerald R. Szczepanski as directors to hold office until the 2010 Annual Meeting of Shareholders, and (b) FOR the ratification of E&Y as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

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Who Can Help Answer My Questions?

If you have questions concerning a proposal or the annual meeting, if you would like additional copies of this proxy statement or our 2008 Annual Report, or if you need special assistance at the annual meeting, please call Derrek Weaver toll free at (800) 973-7874. In addition, information regarding the annual meeting is available via the Internet at our websitewww.rushenterprises.com.

YOU SHOULD CAREFULLY READ THIS PROXY STATEMENT IN ITS ENTIRETY.    The summary information provided above in “question and answer” format is for your convenience only and is merely a brief description of material information contained in this proxy statement.

YOUR VOTE IS IMPORTANT. IF YOU ARE A REGISTERED OWNER, YOU MAY VOTE BY FILLING IN, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. IF YOU ARE A BENEFICIAL OWNER, PLEASE FOLLOW THE VOTING INSTRUCTIONS OF YOUR BROKER, BANK OR OTHER NOMINEE AS PROVIDED WITH THIS PROXY STATEMENT AS PROMPTLY AS POSSIBLE.

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PRINCIPAL SHAREHOLDERS

 

The table below sets forth certain information with respect to the beneficial ownership of our Common Stock as of March 15, 2008,2009, except as otherwise noted below, by:

 

·                                          eachEach person or entity known by us to beneficially own more than five percent (5%) of either class of Common Stock;

 

·                                          eachEach director, director nominee and named executive officer; and

 

·                                          allAll of our directors and executive officers as a group.

2


 

Unless otherwise stated, each of the persons named in the table has sole voting and investment power with respect to the securities beneficially owned by them as set forth opposite their name. Beneficial ownership of our Common Stock has been determined in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”).SEC.  The percentage of total voting power is based on 1/20th of one vote for each share of Class A Common Stock, and one vote for each share of Class B Common Stock, beneficially owned by each person.

 

Beneficial Ownership

 

 

 

Class A
Common Stock

 

Class B
Common Stock

 

 

 

Name and Address(1)

 

Shares

 

% of
Class

 

Shares

 

% of
Class

 

% Total
Voting
Power(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Marvin Rush(3)

 

73,136

 

 

*

4,236,113

 

33.9

 

30.6

 

Munder Capital Management (4)

 

—

 

 

*

1,682,202

 

13.5

 

12.2

 

Columbia Wanger Asset Management, L.P.(5)

 

—

 

 

*

1,389,350

 

11.1

 

10.0

 

Wasatch Advisors, Inc. (6)

 

—

 

 

*

1,224,092

 

9.8

 

8.8

 

FMR LLC(7)

 

4,945,625

 

18.3

 

765,654

 

6.1

 

7.3

 

Dimensional Fund Advisors LP (8)

 

2,242,406

 

8.3

 

802,264

 

6.4

 

6.6

 

Barclays Global Investors, NA(9)

 

1,769,920

 

6.5

 

—

 

 

*

 

*

Lord, Abbett & Co. LLC (10)

 

1,614,625

 

6.0

 

—

 

 

*

 

*

Ronald J. Krause(11)

 

120,000

 

 

*

45,000

 

 

*

 

*

Harold D. Marshall(12)

 

120,000

 

 

*

—

 

 

*

 

*

Thomas A. Akin(13)

 

91,500

 

 

*

—

 

 

*

 

*

James C. Underwood

 

—

 

 

*

—

 

 

*

 

*

W.M. “Rusty” Rush(14)

 

54,541

 

 

*

91,789

 

 

*

 

*

Martin A. Naegelin, Jr. (15)

 

39,003

 

 

*

6,502

 

 

*

 

*

Daryl L. Gorup(16)

 

25,273

 

 

*

—

 

 

*

 

*

James E. Thor (17)

 

10,502

 

 

*

—

 

 

*

 

*

Steven L. Keller (18)

 

7,378

 

 

*

877

 

 

*

 

*

All executive officers and directors as a group (14 persons, including the executive officers and directors listed above)

 

537,831

 

2.0

 

4,288,492

 

34.3

 

31.2

 

 

 

Class A
Common Stock

 

Class B
Common Stock

 

% Total

 

Name and Address(1)

 

Shares

 

% of
Class

 

Shares

 

% of
Class

 

Voting
Power(2)

 

W. Marvin Rush(3)

 

71,091

 

*

 

4,156,074

 

38.3

 

34.0

 

Wasatch Advisors, Inc.(4)

 

—

 

*

 

1,346,518

 

12.4

 

11.0

 

Dimensional Fund Advisors LP(5)

 

2,226,220

 

8.1

 

1,102,774

 

10.1

 

9.9

 

FMR LLC(6)

 

3,376,127

 

12.2

 

105,532

 

1.0

 

2.2

 

GAMCO Investors, Inc. et al(7)

 

—

 

—

 

634,121

 

5.8

 

5.2

 

Columbia Wanger Asset Management, L.P.(8)

 

2,856,000

 

10.3

 

—

 

*

 

1.2

 

Lord, Abbett & Co. LLC(9)

 

2,149,948

 

7.8

 

—

 

*

 

*

 

Barclays Global Investors, NA(10)

 

1,810,491

 

6.5

 

—

 

*

 

*

 

Ronald J. Krause(11)

 

125,000

 

*

 

45,000

 

*

 

*

 

Harold D. Marshall(12)

 

120,000

 

*

 

—

 

*

 

*

 

Thomas A. Akin(13)

 

108,066

 

*

 

—

 

*

 

*

 

James C. Underwood

 

7,566

 

*

 

—

 

*

 

*

 

Gerald R. Szczepanski

 

—

 

*

 

—

 

*

 

*

 

W.M. “Rusty” Rush(14)

 

109,538

 

*

 

101,788

 

*

 

*

 

Martin A. Naegelin, Jr.(15)

 

71,752

 

*

 

6,502

 

*

 

*

 

Daryl J. Gorup(16)

 

53,172

 

*

 

—

 

*

 

*

 

Steven L. Keller(17)

 

21,030

 

*

 

877

 

*

 

*

 

All executive officers and directors as a group (15 persons, including the executive officers and directors listed above)

 

792,300

 

2.9

 

4,310,240

 

39.7

 

35.5

 

 

*                                         Represents less than 1% of the issued and outstanding shares of common stockCommon Stock or total voting power.

 

(1)                                  Except as otherwise noted, the business address of the named beneficial owner is 555 IH-35 South, Suite 500, New Braunfels, Texas 78130.

(2)                                  Based on a total of26,096,291 shares of Class A Common Stock and 12,272,937 shares of Class B Common Stock issued and outstanding onMarch 15, 2008, plus vested options and options that will vest within 60 days of March 15, 2008.

(3)                                  Includes 2,749 shares of Class A Common Stock and 3,002,749shares of Class B Common Stock held by 3MR Partners, L.P., of which W. Marvin Rush is the general partner, and15,003 shares of Class A Common Stock and 36,750shares of Class B Common Stock issuable upon the exercise of options.  W. Marvin Rush is the beneficial owner of the shares held by 3MR Partners, L.P.

 

39


 

(4)

(2)                                  Munder Capital Management has (i) sole voting power of 1,668,377 shares of Class B Common Stock, and (ii) sole dispositive power of 1,682,202 shares of Class B Common Stock.  The address of Munder Capital Management is 480 Pierce Street, Birmingham, Michigan 48009.  This information is based solely on information contained in Schedule 13G, as amended, filed with the SEC on February 14, 2008.  Munder Capital Management is not affiliated with the Company or any member of the Company’s management.  The Company does not know what natural person or public company has the ultimate voting or investment control over the shares held by Munder Capital Management.

(5)                                  Columbia Wanger Asset Management, L.P. has (i) sole voting power of 1,389,350 shares of Class B Common Stock, and (ii) sole dispositive power of 1,389,350 shares of Class B Common Stock.  The address of Columbia Wanger Asset Management, L.P. is 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606.  This information is based solely on the information contained in Schedule 13G, as amended, filed with the SEC on January 23, 2008.  Columbia Wanger Asset Management, L.P. is not affiliated with the Company or any member of the Company’s management.  The Company does not know what natural person or public company has the ultimate voting or investment control over the shares held by Columbia Wanger Asset Management, L.P.

(6)                                  Wasatch Advisors, Inc. has (i) sole voting power of 1,224,092 shares of Class B Common Stock, and (ii) sole dispositive power of 1,224,092 shares of Class B Common Stock.  The address of Wasatch Advisors, Inc. is 150 Social Hall Avenue, Salt Lake City, Utah 84111.  This information is based solely on information contained in Schedule 13G, as amended, filed with the SEC on February 14, 2008.  Wasatch Advisors, Inc. is not affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or public company has the ultimate voting or investment control over the shares held by Wasatch Advisors, Inc.

(7)                                  FMR LLC, together with certain affiliates and subsidiaries, has (i) sole voting power of 633,544 shares of Class A Common Stock and 106,900 shares of Class B Common Stock and (iii) sole dispositive power of 4,945,625 shares of Class A Common Stock and 765,654 shares of Class B Common Stock.  The address of FMR LLC is 82 Devonshire Street, Boston, Massachusetts 02109.  This information is based solely on the information contained in Schedule 13G, as amended, filed with the SEC on February 14, 2008.  Neither FMR LLC nor its affiliates and subsidiaries listed in such 13G is affiliated with the Company or any member of the Company’s management.  The Company does not know what natural person or public company has the ultimate voting or investment control over the shares held by FMR LLC.

(8)                                  Dimensional Fund Advisors LP has (i) sole voting power of 2,242,406 shares of Class A Common Stock and sole voting power of 802,264 shares of Class B Common Stock, and (ii) sole dispositive power of 2,242,406 shares of Class A Common Stock and sole dispositive power of 802,264 shares of Class B Common Stock.  The address of Dimensional Fund Advisors LP is 1299 Ocean Avenue, Santa Monica, California 90401.  This information is based solely on information contained in Schedule 13G filed with the SEC on February 6, 2008. Dimensional Fund Advisors LP is not affiliated with the Company or any member of the Company’s management.  The Company does not know what natural person or public company has the ultimate voting or investment control over the shares held by Dimensional Fund Advisors LP.

(9)                                  Barclays Global Investors, NA, together with certain affiliates and subsidiaries, has (i) sole voting power of 1,632,669 shares of Class A Common Stock, and (ii) sole dispositive power of 1,769,920 shares of Class A Common Stock.  The address of Barclays Global Investors, NA is 45 Fremont Street, San Francisco, California 94105.  This information is based solely on information contained in Schedule 13G filed with the SEC on February 6, 2008.  Barclays Global Investors, NA is not affiliated with the Company or any member of the Company’s management.  The Company does not know what natural person or public company has the ultimate voting or investment control over the shares held by Barclays Global Investors, NA.

Based on a total of(a) 26,329,243 shares of Class A Common Stock and 10,685,894 shares of Class B Common Stock outstanding onMarch 15, 2009, (b)  and 1,169,023 shares of Class A Common Stock and 179,325 shares of Class B Common Stock underlying vested options and options that will vest within 60 days of March 15, 2009 (collectively referred to herein as “Vested Options”), and (c) 151,626 shares of Class A Common Stock underlying unvested restricted stock awards as of March 15, 2009.

(3)

Includes (a) 2,749 shares of Class A Common Stock and 3,002,749shares of Class B Common Stock held by 3MR Partners, L.P., of which W. Marvin Rush is the general partner, (b) 45,000 shares of Class A Common Stock and 48,499shares of Class B Common Stock with respect to Vested Options, and (c) 17,334 shares of unvested restricted Class A Common Stock with regard to which the person indicated has voting rights. W. Marvin Rush is the beneficial owner of the shares held by 3MR Partners, L.P.

(4)

Wasatch Advisors, Inc. has (a) sole voting power of 1,346,518 shares of Class B Common Stock, and (b) sole dispositive power of 1,346,518 shares of Class B Common Stock. The address of Wasatch Advisors, Inc. is 150 Social Hall Avenue, Salt Lake City, Utah 84111. This information is based solely on information contained in a Schedule 13G/A3, filed with the SEC on February 17, 2009. Wasatch Advisors, Inc. is not affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or other entity has the ultimate voting or investment control over the shares held by Wasatch Advisors, Inc.

(5)

Dimensional Fund Advisors LP has (a) sole voting power of 2,144,077 shares of Class A Common Stock and sole voting power of 1,098,174 shares of Class B Common Stock, and (b) sole dispositive power of 2,226,220 shares of Class A Common Stock and sole dispositive power of 1,102,774 shares of Class B Common Stock. The address of Dimensional Fund Advisors LP is Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746. This information is based solely on information contained in a Schedule 13G/A3 and 13G/A1, filed with the SEC on February 9, 2009. Dimensional Fund Advisors LP is not affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or other entity has the ultimate voting or investment control over the shares held by Dimensional Fund Advisors LP.

(6)

FMR LLC, together with certain affiliates and subsidiaries, has (a) sole voting power of 1,090,380 shares of Class A Common Stock and 25,000 shares of Class B Common Stock, and (b) sole dispositive power of 3,376,127 shares of Class A Common Stock and 105,532 shares of Class B Common Stock. The address of FMR LLC is 82 Devonshire Street, Boston, Massachusetts 02109. This information is based solely on the information contained in a Schedule 13G/A4, filed with the SEC on February 17, 2009, and a Schedule 13G/A1, filed with the SEC on November 10, 2008. Neither FMR LLC nor its affiliates and subsidiaries listed in such Schedule 13Gs is affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or other entity has the ultimate voting or investment control over the shares held by FMR LLC and its affiliates and subsidiaries.

(7)

GAMCO Investors, Inc., together with certain affiliates and subsidiaries, has (a) sole voting power of 634,121 shares of Class B Common Stock, and (b) sole dispositive power of 634,121 shares of Class B Common Stock. The address of GAMCO Investors, Inc. is One Corporate Center, Rye, New York 10580-1435. This information is based solely on information contained in Schedule 13D/A1, filed with the SEC on March 19, 2009. Neither GAMCO Investors, Inc. nor its affiliates and subsidiaries listed in such Schedule 13D is affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or other entity has the ultimate voting or investment control over the shares held by GAMCO Investors, Inc. and its affiliates and subsidiaries.

(8)

Columbia Wanger Asset Management, L.P. has (a) sole voting power of 2,706,000 shares of Class A Common Stock, and (b) sole dispositive power of 2,856,000 shares of Class A Common Stock. The address of Columbia Wanger Asset Management, L.P. is 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606. This information is based solely on the information contained in Schedule 13G/A3, filed with the SEC on February 6, 2009. Columbia Wanger Asset Management, L.P. is not affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or other entity has the ultimate voting or investment control over the shares held by Columbia Wanger Asset Management, L.P.

 

410


 

(10)

(9)                            Lord, Abbett & Co. LLC has (i) sole voting power of 1,363,825 shares of Class A Common Stock, and (ii) sole dispositive power of 1,614,625 shares of Class A Common Stock. The address of Lord, Abbett & Co. LLC is 90 Hudson Street, Jersey City, New Jersey 07302.  This information is based solely on information contained in Schedule 13G, as amended, filed with the SEC on February 14, 2008.  Lord, Abbett & Co. LLC is not affiliated with the Company or any member of the Company’s management.  The Company does not know what natural person or public company has the ultimate voting or investment control over the shares held by Lord, Abbett & Co. LLC.

(11)                            Includes 120,000shares of Class A Common Stock and 45,000 shares of Class B Common Stock to be issued upon the exercise of options.

(12)                            Includes 120,000 shares of Class A Common Stock to be issued upon the exercise of options.

(13)                            Includes 90,000 shares of Class A Common Stock to be issued upon the exercise of options.

(14)                            Includes 51,479 shares of Class A Common Stock and 88,727 shares of Class B Common Stock to be issued upon the exercise of options.

(15)                            Includes 36,003 shares of Class A Common Stock and 3,502 shares of Class B Common Stock to be issued upon the exercise of options.

(16)                            Includes 22,250 shares of Class A Common Stock to be issued upon the exercise of options.

(17)                            Includes 10,502 shares of Class A Common Stock to be issued upon the exercise of options.

(18)                            Includes 7,378 shares of Class A Common Stock and 877 shares of Class B Common Stock to be issued upon the exercise of options.

Lord, Abbett & Co. LLC has (a) sole voting power of 1,811,748 shares of Class A Common Stock, and (b) sole dispositive power of 2,149,948 shares of Class A Common Stock. The address of Lord, Abbett & Co. LLC is 90 Hudson Street, Jersey City, New Jersey 07302. This information is based solely on information contained in Schedule 13G/A5, filed with the SEC on February 13, 2009. Lord, Abbett & Co. LLC is not affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or other entity has the ultimate voting or investment control over the shares held by Lord, Abbett & Co. LLC.

(10)

Barclays Global Investors, NA, together with certain affiliates and subsidiaries, has (a) sole voting power of 1,638,001 shares of Class A Common Stock, and (b) sole dispositive power of 1,810,491 shares of Class A Common Stock. The address of Barclays Global Investors, NA is 400 Howard Street, San Francisco, California 94105. This information is based solely on information contained in Schedule 13G filed with the SEC on February 5, 2009. Neither Barclays Global Investors, NA nor any of its affiliates or subsidiaries is affiliated with the Company or any member of the Company’s management. The Company does not know what natural person or other entity has the ultimate voting or investment control over the shares held by Barclays Global Investors, NA and its affiliates or subsidiaries.

(11)

Includes 120,000shares of Class A Common Stock with respect to Vested Options.

(12)

Includes 120,000 shares of Class A Common Stock with respect to Vested Options.

(13)

Includes 90,000 shares of Class A Common Stock with respect to Vested Options.

(14)

Includes (a) 81,476 shares of Class A Common Stock and 98,726 shares of Class B Common Stock with respect to Vested Options, and (b) 21,667 shares of unvested restricted Class A Common Stock with regard to which the person indicated has voting rights.

(15)

Includes (a) 51,502 shares of Class A Common Stock and 3,502 shares of Class B Common Stock with respect to Vested Options, and (b) 8,667 shares of unvested restricted Class A Common Stock with regard to which the person indicated has voting rights.

(16)

Includes (a) 40,500 shares of Class A Common Stock with respect to Vested Options, and (b) 6,197 shares of unvested restricted Class A Common Stock with regard to which the person indicated has voting rights.

(17)

Includes (a) 10,753 shares of Class A Common Stock and 877 shares of Class B Common Stock with respect to Vested Options, and (b) 3,080 shares of unvested restricted Class A Common Stock with regard to which the person indicated has voting rights.

 

511


 

MATTERSPROPOSALS TO COME BEFOREBE VOTED ON AT THE ANNUAL MEETING

 

PROPOSAL 1: 1

ELECTION OF DIRECTORS

The Company’s Board of Directors currently consists of sixseven directors, one of whom serves as our Chairman, one of whom serves as our President and Chief Executive Officer, and fourfive of whom the Board of Directors has determined to be independent in accordance with the listing standards of the NASDAQ® Global Select Market.  Applying these independence standards, the Board of Directors has determined that Messrs. Krause, Underwood, Marshall, Akin and AkinSzczepanski are all independent directors.  After due consideration, the Board of Directors has determined that none of these directors has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and they all meet the criteria for independence under the listing standards of the NASDAQ® Global Select Market.  In particular, the Board of Directors considered Messrs. Krause’s, Marshall’s and Akin’s interest in the business transactiontransactions between the Company and Texstar National Bank described below under “Certain Relationships and Related Transactions.”

 

SixSeven directors (constituting the entire Board of Directors) are to be elected at the Annual Meetingannual meeting to serve for a one-year term and until their successors are elected and qualified or their earlier resignation or removal.  All of the nominees named below are current directors of the Company.  All nomineesCompany, have consented to be named as director nominees in this proxy statement and have indicated their intent to serve as a director if elected.

 

Name

 

Age

 

Positions and Offices with the Company

 

Served as a
Director Since

 

Age

 

Positions and Offices with the Company

 

Served as a
Director Since

 

W. Marvin Rush

 

70

 

Chairman and Director

 

1965

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Marvin Rush

 

69

 

Chairman and Director

 

1965

W.M. “Rusty” Rush

 

49

 

President, Chief Executive Officer and Director

 

1996

 

50

 

President, Chief Executive Officer and Director

 

1996

 

 

 

 

 

 

 

 

Ronald J. Krause

 

80

 

Director

 

1996

 

81

 

Director

 

1996

 

 

 

 

 

 

 

 

James C. Underwood

 

64

 

Director

 

2008

 

65

 

Director

 

2008

 

 

 

 

 

 

 

 

Harold D. Marshall

 

72

 

Director

 

1999

 

73

 

Director

 

1999

 

 

 

 

 

 

 

 

Thomas A. Akin

 

53

 

Director

 

2004

 

54

 

Director

 

2004

 

 

 

 

 

 

 

 

Gerald R. Szczepanski

 

60

 

Director

 

2008

 

 

Biographical information on the nominees is set forth below under “Further Information — Board of Directors, Executive Officers and Nominees for Board of Directors.”

 

ManagementIf any director nominee becomes unavailable for election, which is not anticipated, the named proxies will vote for the election of such other person as the Company does not contemplate that anyBoard of Directors may nominate, unless the director nominees will become unavailableBoard of Directors resolves to reduce the number of directors to serve but if that occurs beforeon the Annual Meeting, proxies that do not withhold authorityBoard of Directors and thereby reduce the number of directors to vote for directors will be voted “for” another nominee, or other nominees, in accordance withelected at the best judgment of the person or persons appointed to vote the proxy.annual meeting.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE ABOVE DIRECTOR NOMINEES.

6

12


Committees of the Board of Directors

 

The business of the Company is managed under the direction of itsthe Board of Directors.  The Audit Committee, the Compensation Committee and the Nominating and Governance Committee are the three standing committees of the Board of Directors.  The charters for the three standing Board committees are available at the “Investor Relations — Corporate Governance” section of the Company’s website at www.rushenterprises.com.

 

Audit Committee

 

In 2007,2008, the Company’s Audit Committee consisted of the following directors: Thomas A. Akin, Chairperson of the Audit Committee, Ronald J. Krause and Harold D. Marshall.  The Board of Directors has determined that each member of the Audit Committee is independent, as defined by the listing standards of the NASDAQ® Global Select Market and applicable SEC rules and regulations.  The Board of Directors has also determined that each member of the Audit Committee is financially literate and that Mr. Thomas A. Akin has the attributes of an “Audit Committee Financial Expert,” as defined in the applicable SEC regulations.  The Audit Committee met four times during 2007.2008.

 

As set forth in more detail in the Audit Committee charter, the Audit Committee’s purpose is to assist the Board of Directors in its oversight responsibilities related to the quality and integrity of the Company’s accounting, auditing and financial reporting practices.  The specific responsibilities of the Audit Committee include:

 

·reviewing and discussing with management and the Company’s independent registered public accounting firm the annual and quarterly financial statements of the Company, including the Company’s disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations therein;

·appointing, compensating, overseeing and terminating the Company’s independent registered public accounting firm;

·approving all audit and non-audit services to be provided by the independent registered public accounting firm;

·reviewing the integrity of the Company’s external financial reporting processes and internal controls over financial reporting;

·reviewing and approving all related-person transactions (as defined by the SEC) as required by the SEC and the NASDAQ® Global Select Market, and periodically reassessing these transactions to ensure their continued appropriateness;

·discussing with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures;

·reviewing periodically with the Chief Compliance Officer legal matters that may have a material impact on the Company’s financial statements, the Company’s compliance with applicable rules and regulations, and any material reports or inquiries received from regulators or governmental agencies;

·preparing the Audit Committee Report for inclusion in the Company’s annual proxy statements; and

·complying with all other responsibilities and duties set forth in the Audit Committee charter.

Reviewing and discussing with management and the Company’s independent registered public accounting firm the annual and quarterly financial statements of the Company, including the Company’s disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations therein;

 

·

Appointing, compensating, overseeing and terminating the Company’s independent registered public accounting firm;

·

Approving all audit and non-audit services to be provided by the independent registered public accounting firm;

·

Reviewing the integrity of the Company’s external financial reporting processes and internal controls over financial reporting;

·

Reviewing and approving all related-person transactions (as defined by the SEC) as required by the SEC and the NASDAQ® Global Select Market, and periodically reassessing these transactions to ensure their continued appropriateness;

·

Discussing with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures;

·

Reviewing periodically with the Chief Compliance Officer legal matters that may have a material impact on the Company’s financial statements, the Company’s compliance with applicable rules and regulations, and any material reports or inquiries received from regulators or governmental agencies;

·

Preparing the Audit Committee Report for inclusion in the Company’s annual proxy statements; and

·

Complying with all other responsibilities and duties set forth in the Audit Committee charter.

7

13


 

For more information regarding the Audit Committee, please refer to the Audit Committee Report contained in this proxy statement.

 

Compensation Committee

 

In 2007,2008, the Company’s Compensation Committee consisted of the following directors: Harold D. Marshall, Chairperson of the Compensation Committee, Ronald J. Krause, James C. Underwood and Thomas A. Akin and John D. Rock until his passing on November 16, 2007.Akin.  The Board of Directors has determined that each member of the Compensation Committee is independent, as defined by the listing standards of the NASDAQ® Global Select Market.  The Compensation Committee met sixfive times during 2007.2008.

 

The specific responsibilities of the Compensation Committee include:

 

·                       administering the Company’s compensation philosophy and programs and reviewing and modifying such philosophy and programs, as necessary;

·                       reviewing and approving all compensation for the Company’s directors and executive officers, including the Company’s Chief Executive Officer, and supervising all bonus and equity-based compensation awards to all Company employees;

·                       supervising the administration of the Company’s incentive compensation and equity-based compensation plans;

·                       overseeing, reviewing and discussing with management the preparation of the Compensation Discussion and Analysis for inclusion in the Company’s proxy statement;

·                       preparing the Compensation Committee Report for inclusion in the Company’s proxy statement; and

·                       complying with all other responsibilities and duties set forth in the Compensation Committee charter.

·

Administering the Company’s compensation philosophy and programs and reviewing and modifying such philosophy and programs, as necessary;

·

Reviewing and approving all compensation for the Company’s directors and executive officers, including the Company’s Chief Executive Officer, and supervising all bonus and equity-based compensation awards to all Company employees;

·

Supervising the administration of the Company’s incentive compensation and equity-based compensation plans;

·

Overseeing, reviewing and discussing with management the preparation of the Compensation Discussion and Analysis for inclusion in the Company’s proxy statement;

·

Preparing the Compensation Committee Report for inclusion in the Company’s proxy statement; and

·

Complying with all other responsibilities and duties set forth in the Compensation Committee charter.

 

The Compensation Committee may establish subcommittees of one or more members, and delegate its authority and responsibilities to such subcommittees, when appropriate and in accordance with applicable rules and regulations.  The Compensation Committee may also engage compensation consultants and other advisors, from time to time, to advise the Compensation Committee on executive compensation practices and policies or any other matters within the scope of its charter.

 

Nominating and Governance Committee

 

In 2007,2008, the Company’s Nominating and Governance Committee consisted of the following directors: Ronald J. Krause, Harold D. Marshall and John D. Rock until his passing on November 16, 2007.  Mr. Rock served as Chairperson of the Nominating and Governance Committee, until November 16, 2007, at which time Mr. Krause was appointed ChairpersonHarold D. Marshall, James C. Underwood and Thomas A. Akin joined the committee.Akin.  The Board of Directors has determined that each member of the Nominating and Governance Committee is independent, as defined by the listing standards of the NASDAQ® Global Select Market.  The Nominating and Governance Committee met five times during 2007.2008.

8


 

The specific responsibilities of the Nominating and Governance Committee include:

 

·identifying

·

Identifying individuals believed to be qualified to become members of the Board of Directors and recommending qualified individuals to the Board of Directors to stand for election as directors;

·

Recommending individuals to fill vacancies on the Board of Directors;

14


 

·recommending individuals to fill vacancies in the Board of Directors;

·identifying and recommending directors qualified to fill vacancies on any committee of the Board of Directors;

·making recommendations to the Board of Directors from time to time regarding changes to the size of the Board of Directors or any committee thereof;

·developing, reviewing and reassessing the adequacy of corporate governance guidelines for the Company;

·assessing annually the performance of the Board of Directors and receiving comments from all directors related to such annual performance review;

·developing succession planning policies and principles for the Company’s Chief Executive Officer; and

·complying with all other responsibilities and duties set forth in the Nominating and Governance Committee charter.

Identifying and recommending directors qualified to fill vacancies on any committee of the Board of Directors;

 

·

Making recommendations to the Board of Directors from time to time regarding changes to the size of the Board of Directors or any committee thereof;

·

Developing, reviewing and reassessing the adequacy of corporate governance guidelines for the Company;

·

Assessing annually the performance of the Board of Directors and receiving comments from all directors related to such annual performance review;

·

Developing succession planning policies and principles for the Company’s Chief Executive Officer; and

·

Complying with all other responsibilities and duties set forth in the Nominating and Governance Committee charter.

Communications with Directors

 

The Board of Directors welcomes input and suggestions from shareholders and other interested parties by mail at Rush Enterprises, Inc., 555 IH-35 South, New Braunfels, Texas 78130 or through the Company’s Ethics and Compliance Hotline at (877) 888-0002.  Interested parties may direct their input or suggestions to specific directors, Board committees, or all of the members of the Board of Directors.

 

To communicate to the Audit Committee issues or complaints regarding questionable accounting, internal accounting controls or auditing matters, you may anonymously and, to the extent allowedprovided by law, confidentially contact the Audit Committee by calling the Company’s Ethics and Compliance Hotline at the number above.

 

Code of Conduct for Employees and Directors

 

The Company has adopted the Rush Driving Principles, a Codecode of Conductconduct, that applies to all Company officers, directors and employees.  The Code of ConductRush Driving Principles is available at the “Investor Relations – Relations—Corporate Governance” section of the Company’s website at www.rushenterprises.com.

 

Code of Ethics for Senior Financial Officers

 

The Company has adopted a Code of Ethics for Senior Financial Officers that applies to the Company’s Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Controller and other employees performing similar functions, including the Principal Accounting Officer.  Only the Board of Directors (or the Audit Committee or other appropriate committee thereof) can amend or grant waivers from the provisions of the Code of Ethics for Senior Financial Officers, and any such amendments or waivers will be promptly posted on the Company’s website, or otherwise disclosed as required by applicable laws, rules or regulations. The Code of Ethics for Senior Financial Officers is available at the “Investor Relations –— Corporate Governance” section of the Company’s website.  The

9


Company will provide a copy of its Code of Ethics for Senior Financial Officers to any person, without charge, upon written request to Rush Enterprises, Inc., 555 IH-35 South, New Braunfels, Texas 78130, Attention: Chief Compliance Officer.

 

15


Shareholder Nominations of Candidates for Director

 

Any shareholder wishing to recommend a candidate for consideration as a director nominee must submit the recommendation in writing not later than the close of business on the 90th day, and not earlier than the close of business on the 120th day, prior to the first anniversary of the date on which the Company first mailed its proxy statement for the immediately preceding year’s Annual Meeting of Shareholders to Rush Enterprises, Inc. – Nominating and Governance Committee, 555 IH-35 South, New Braunfels, Texas 78130.  Therefore, to submit a candidate for consideration as a director nominee for the 2009 Annual Meeting of Shareholders, a shareholder must submit a written recommendation of the nominee no earlier than December 16, 2008, and no later than January 15, 2009.  The written recommendation must contain the following information:

·the name and address of the shareholder making the nomination and the name and address of the person or persons to be nominated;

·the number of shares of Class A Common Stock and Class B Common Stock that the shareholder owns and is entitled to vote at the annual meeting;

·a description of all arrangements or understandings (if any) between the shareholder and each nominee, or other person (naming such person) pursuant to which the nomination is, or the nominations are, to be made;

·information about each nominee that would be required to be included in a proxy statement filed under the then current rules and regulations of the SEC; and

·the consent of each nominee to serve as a director of the Company if elected.

The Nominating and Governance Committee will consider all candidates for director properly recommended by shareholders who comply with the foregoing procedures.shareholders.  The Nominating and Governance Committee, in its sole discretion, will determine whether the candidates recommended by shareholders are qualified to become a member of the Company’s Board of Directors.  Candidates recommended by shareholders are evaluated on the same basis as candidates recommended by the Company’s directors, Chairman, Chief Executive Officer, other executive officers, third-party search firms and other sources.

 

Minimum Qualifications for Director Nominees and Board Member Attributes

 

Persons considered for Board positions should, at a minimum, possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the Company’s shareholders.  To comply with regulatory requirements, a majority of the Board members must qualify as independent members under the listing standards of the NASDAQ® Global Select Market, all of the members of the Audit Committee must be financially literate, and one or more members of the Company’s Audit Committee must qualify as an “Audit Committee Financial Expert” as such term is defined by applicable regulations of the SEC.

 

10


Identification and Evaluation of Director Candidates

 

The Nominating and Governance Committee strives to identify future potential directors sufficiently in advance so that the Nominating and Governance Committee can provide both the candidates and the Company the opportunity to evaluate one another and potential Board service over a period of time.  With respect to potential Board candidates identified by management, individual directors, shareholders or others, the Nominating and Governance Committee makes a preliminary review of the candidate’s background, career experience and qualifications based on publicly available information or information provided by the person who identifies the candidate.  If a consensus is reached by the Nominating and Governance Committee that a particular candidate would likely contribute positively to the Board of Directors’ mix of skills and experiences, and a Board vacancy exists or is likely to occur in the foreseeable short term, the candidate is contacted to confirm his or her interest and willingness to serve.  The Nominating and Governance Committee conducts in-person interviews and may invite other Board members or senior Company officers or managers to interview the candidate to assess his or her overall qualifications.  In the context of the current composition and needs of the Board of Directors and its committees, the Nominating and Governance Committee considers factors such as independence, judgment, skill, diversity, experience with businesses and other organizations of comparable size, experience as an officer of a publicly traded company, the interplay of the candidate’s experience with the experience of other Board members and the extent to which the candidate would be a desirable addition to the Board of Directors and any committees thereof.

 

At the conclusion of this process, the Nominating and Governance Committee reaches a conclusion and reports the results of its review to the full Board of Directors.  The report includes a recommendation whether the candidate should be nominated for election to the Board of Directors.  This procedure is the same for all candidates, including director candidates identified by shareholders.

 

Policies Affecting Members of the Board of Directors

 

Members of the Company’s Board of Directors are prohibited from serving on the board of directors of more than four public companies.  Additionally, if a member of the Board of Directors changes jobs, he is required to submit a letter of resignation to the Chairman of the Board.  Upon submission of the letter of resignation, the remaining members of the Board of Directors shall consider whether to accept such director’s resignation based upon the circumstances surrounding such director’s job change.  Members of the Board of Directors that are elected or appointed after February 28, 2008 will be required to retire at age 72.

 

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Effective February 27, 2009, Members of the Company’s Board of Directors who are not also officers of the Company are expected to own and hold 15,000 shares of the Company’s Common Stock. Each current director will be given five years to comply with these stock ownership guidelines and any new directors will be given five years from the date they are first appointed or elected to the Board of Directors to comply with these stock ownership guidelines. Until the stock ownership guideline is achieved, each director is encouraged to retain at least 25 percent of net shares obtained through the Company’s stock incentive plans. Net shares are the number of shares from the sale of stock options or the vesting of restricted stock, less the number of shares the director sells to cover any exercise price of equity awards or tax withholding obligations.

Meetings of the Board of Directors

 

During 2007,2008, the Board of Directors met 1312 times.  Each of the directors attended at least 75% of the meetings of the Board of Directors and committees of which he was a member.  The Board of Directors regularly schedules a Board meeting to occur the day of the Annual Meeting of Shareholders.  Although the Company has no formal policy on director attendance at Annual Meetings of Shareholders, this scheduling facilitates their attendance.  All of the directors in office at the time attended the Company’s 20072008 Annual Meeting of Shareholders and all directors currently in office are expected to attend the 20082009 Annual Meeting of Shareholders.

 

The non-management directors hold executive sessions at least two times per year following regularly scheduled Board meetings.  Different non-management directors preside over these executive sessions depending on the topics to be discussed.

 

1117


 

Director Compensation

 

The Board of Directors, upon the recommendation of the Compensation Committee, approves annual compensation for non-employee directors.  In approving non-employee director compensation, the Compensation Committee considers the significant amount of time that directors spend in fulfilling their duties to the Company, as well as the skill level required of Board members.  The Company’s executive officers do not make recommendations regarding the non-employee directors’ compensation.

 

The Company’s 20072008 non-employee director compensation structure, described in more detail below, consisted of (i)(a) cash compensation in the form of annual retainerretainer(s) and meeting fees, (ii)(b) equity compensation in the form of stock options,awards of the Company’s Class A Common Stock, and (iii)(c) use of a Company-owned vehicle.automobile.

 

Annual Retainer and Meeting Fees

 

The 20072008 annual retainer and meeting fees were as follows:

 

·each non-employee director received an annual cash retainer of $25,000 for service on the Board of Directors;

·the Chairperson of the Compensation Committee and the Chairperson of the Nominating and Governance Committee each received an additional annual cash retainer of $5,000.  The Chairperson of the Audit Committee received an additional annual cash retainer of $10,000; and

·each non-employee director also received a fee of $1,500 for attendance at each meeting of the full Board of Directors and an additional $1,500 for attendance at each meeting of the Audit Committee, the Nominating and Governance Committee, and the Compensation Committee.

Each non-employee director received an annual cash retainer of $30,000 for service on the Board of Directors;

 

·

The Chairperson of the Compensation Committee and the Chairperson of the Nominating and Governance Committee each received an additional annual cash retainer of $5,000. The Chairperson of the Audit Committee received an additional annual cash retainer of $10,000; and

·

Each non-employee director also received a fee of $1,500 for attendance at each meeting of the Board of Directors and an additional $1,500 for attendance at each meeting of the Audit Committee, the Nominating and Governance Committee, and the Compensation Committee.

Stock OptionsAwards

 

Each non-employee director who served during 2007 was granted stock options to purchase 20,0002008, except for Mr. Szczepanski, received an outright grant of 7,566 shares of the Company’s Class A Common Stock.Stock, valued at the time of grant of $125,000.  The stock options had an exercise price equal to the fair market value of the Class A Common Stock on the date of grant and were fully vested on the date of grant.  Additionally, the stock optionsawards were granted under the Amended and Restated 2006 Non-Employee Director Stock Option Plan.  See Proposal 2 of this proxy statement for a description of material changes to the 2006 Non-Employee Director Stock Option Plan that are being solicited for shareholder approval at this Annual Meeting.

 

Company Vehicle

 

In 2007,2008, each non-employee director, except for Mr. Szczepanski, was granted use of a vehicle that was owned and insured by the Company.

 

Mr. Szczepanski was appointed to the Board of Directors on October 28, 2008 and only received fees for attending meetings of the Board of Directors in 2008.  Commencing in 2009, Mr. Szczepanski will be entitled to receive the Company’s standard non-employee director compensation.

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2009 Compensation Decisions

The Compensation Committee engaged Longnecker & Associates (“Longnecker”), an independent compensation consultant, in 2007 to reviewreviewed and assessassessed the Company’s non-employee director compensation program.program in February 2009.  As a result of this review, the Board approved numerous changes to the Company’s non-employee director compensation program to be effective for the 20082009 fiscal year.  Foryear, including a detailed descriptionreduction in the value of these changes, see the Company’s Current Report on Form 8-K, filed withannual stock award from $125,000 to $100,000 and a reduction in meeting fees from $1,500 to $1,000 for each meeting of the SEC on February 27, 2008.Board of Directors and its three standing committees.

 

12The following table provides information of compensation paid to our non-employee directors that served during 2008:


 

20072008 DIRECTOR COMPENSATION TABLE

 

Name

 

Fees Earned or
Paid in Cash
($)

 

Option Awards
($)(1)

 

All Other
Compensation
($)(2)

 

Total ($)

 

 

Fees Earned or
Paid in Cash ($)

 

Stock
Awards ($)(1)

 

All other
Compensation
($)(2)

 

Total ($)

 

 

 

 

 

 

 

 

 

 

W. Marvin Rush(3)

 

—

 

—

 

—

 

—

 

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

W.M. “Rusty” Rush(3)

 

—

 

—

 

—

 

—

 

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

Ronald J. Krause

 

67,000

 

203,400

 

16,116

 

286,516

 

 

71,000

 

125,000

 

16,593

 

212,593

 

 

 

 

 

 

 

 

 

 

John D. Rock(4)

 

57,000

 

203,400

 

58,503

 

318,903

 

 

 

 

 

 

 

 

 

 

Harold D. Marshall

 

72,000

 

203,400

 

60,538

 

335,938

 

 

69,500

 

125,000

 

61,348

 

255,848

 

 

 

 

 

 

 

 

 

 

Thomas A. Akin

 

71,000

 

203,400

 

9,558

 

283,958

 

 

76,000

 

125,000

 

9,456

 

210,456

 

James C. Underwood

 

48,000

 

125,000

 

7,614

 

180,614

 

Gerald R. Szczepanski(4)

 

3,000

 

—

 

—

 

3,000

 

 

(1)                                  The amounts reflect Class A stock options granted during 2007 under the 2006 Non-Employee Director Stock Option Plan.  The amounts listed are equal to the compensation cost recognized during 2007 for financial statement purposes in accordance with Statement of Financial Accounting Standards No. 123R (“FAS 123R”), except no assumptions for forfeitures were included.  Since stock options granted to our non-employee directors vest immediately, this amount also equals the grant date fair value of stock options granted in 2007, computed in accordance with FAS 123R.  Additional information related to the calculation of the compensation cost is set forth in Notes 2 and 12 of the Notes to Consolidated and Combined Financial Statements of our Annual Report on Form 10-K, filed with the SEC on March 13, 2008.  As of December 31, 2007, Mr. Krause held120,000Class A options and 45,000 Class B options, Mr. Marshall held 120,000 Class A options, and Mr. Akin held 90,000Class A options, as adjusted for the 3-for-2 stock split effected on October 10, 2007.

(2)                                  The amounts reflect (i) for Mr. Krause the incremental cost of his personal use of a Company-owned vehicle during 2007; (ii) for Mr. Rock (A) the incremental cost of his personal use of a Company-owned vehicle during 2007, and (B) the cost of the Company-owned vehicle used by Mr. Rock that was gifted to his spouse upon his passing in November 2007 in appreciation of his service to the Company, totaling $43,532; (iii) for Mr. Marshall (A) the incremental cost of his personal use of a Company-owned vehicle during 2007, and (B) the incremental cost of personal use of Company-owned aircraft by Mr. Marshall and his family members, totaling $44,422; and (iv) for Mr. Akin the incremental cost of his personal use of a Company-owned vehicle during 2007.  Additionally, non-employee directors received automobile insurance under the Company’s fleet insurance policy during 2007.  Because the Company did not incur any incremental costs in providing the insurance, no value is attributed to the non-employee directors for this perquisite in the table.

The incremental cost of personal use of a Company-owned vehicle is equal to the depreciation expense recognized by the Company for the vehicle in 2007.

The cost of the vehicle gifted to Mr. Rock’s spouse is based upon the Company’s depreciated cost.

The amounts reflect stock awards of the Company’s Class A Common Stock granted during 2008 under the Amended and Restated 2006 Non-Employee Director Stock Option Plan. The amounts listed are equal to grant date fair value of the respective stock award and the compensation cost recognized during 2008 for financial statement reporting purposes in accordance with Statement of Financial Accounting Standards No. 123R (“FAS 123R”), except no assumptions for forfeitures were included. Additional information related to the calculation of the compensation cost is set forth in Notes 2 and 12 of the Notes to Consolidated Financial Statements of our 2008 Annual Report on Form 10-K, filed with the SEC on March 13, 2009. As of December 31, 2008, Mr. Krause held 120,000 Class A stock options, Mr. Marshall held 120,000 Class A stock options, and Mr. Akin held 90,000 Class A stock options, as adjusted for the 3-for-2 stock split effected on October 10, 2007.

 

(2)

The amounts reflect (a) for Mr. Krause the incremental cost of his personal use of a Company-owned vehicle during 2008; (b) for Mr. Marshall (i) the incremental cost of his personal use of a Company-owned vehicle during 2008, and (ii) the incremental cost of personal use of Company-owned aircraft by Mr. Marshall and his family members, totaling $45,232; (c) for Mr. Akin the incremental cost of his personal use of a Company-owned vehicle during 2008; and (c) for Mr. Underwood the incremental cost of his personal use of a Company-owned vehicle during 2008. Additionally, non-employee directors received automobile insurance under the Company’s fleet insurance policy during 2008. Because the Company did not incur any incremental costs in providing the insurance, no value is attributed to the non-employee directors for this perquisite in the table.

The incremental cost of personal use of a Company-owned automobile is equal to the depreciation expense recognized by the Company for the automobile in 2008.

See footnote 4 of the 2008 Summary Compensation Table included in this proxy statement for a discussion of the calculation of the incremental cost of personal use of Company-owned aircraft.

19


 

(3)                                  Only non-employee directors are eligible to receive compensation for their service as a director of the Company.  Accordingly, W. Marvin Rush, the Company’s Chairman, and W.M. “Rusty” Rush, the Company’s President and Chief Executive Officer, are not entitled to any director compensation.  See the 2008 Summary Compensation Table for a discussion of W. Marvin Rush’s and W.M. “Rusty” Rush’s 20072008 compensation.

 

(4)John D. Rock passed away on November 16, 2007.

13


PROPOSAL 2: APPROVAL OF THE ADOPTION OF THE

RUSH ENTERPRISES, INC. AMENDED AND RESTATED

2006 NON-EMPLOYEE DIRECTOR STOCK PLAN

Background

The Rush Enterprises, Inc. 2006 Non-Employee Director Stock Option Plan (the “2006 Plan”)Mr. Szczepanski was originally approved by the Company’s shareholders on May 16, 2006.  Under its current terms, the Company may only issue stock options under the 2006 Plan.  When the 2006 Plan was adopted, 1,000,0000 shares of Class A Common Stock were reserved for issuance pursuant to the 2006 Plan.  On October 10, 2007, the Company effected a 3-for-2 stock split of the Class A Common Stock.  Accordingly, 1,500,000 shares of Class A Common Stock are currently reserved for issuance pursuant to the 2006 Plan.  As of April 1, 2008, the Company has granted stock options under the 2006 Plan for 120,000 shares of Class A Common Stock and there remain 1,380,000 shares of the Company’s Class A Common Stock available for future awards under the 2006 Plan.  The closing sale price of the Company’s Class A Common Stock on April 1, 2008 was $16.75.

Subject to shareholder approval at the Annual Meeting, on April 8, 2008, the Company’s Board of Directors approved certain amendments to the 2006 Plan.  The material amendments to the 2006 Plan consisted of the following:

·expanding the type of awards that may be granted under the plan to include Class A Common Stock awards, in the form of an outright grant of shares of Class A Common Stock or in the form of restricted Class A Common Stock;

·removing the requirement that non-employee directors receive a stock option to purchase 20,000 shares of Class A Common Stock upon their election, reelection or appointmentappointed to the Board of Directors;

·subject to the number of shares reserved for issuance under the 2006 Plan, authorizing the Board of Directors or a committee thereof, in its sole and absolute discretion, to determine the amount of stock options, stock awards or a combination thereof that may be granted to non-employee directors under the 2006 Plan.

All of the amendments to the 2006 Plan, including the material amendments summarized above, are reflected in the Rush Enterprises, Inc. Amended and Restated 2006 Non-Employee Director Stock Plan (the “Restated 2006 Plan”) attached as Appendix A to this proxy statement.  None of the amendments to the Restated 2006 Plan relate to increasing the number of shares of Class A Common Stock reserved for issuance under the plan.

Reasons for the Proposal

The Compensation Committee believes that in order to successfully attract and retain qualified non-employee directors, the Company must offer a competitive equity incentive program for non-employees directors.  Accordingly, in response to evolving practices, the Compensation Committee seeks the flexibility to make future grants to the Company’s non-employee directors in the form of stock awards in addition to, or lieu of, stock options.  The Compensation Committee believes that stock awards may be more effective than stock options in achieving the Company’s compensation objectives, as stock awards are subject to less market volatility and, depending on the total number of shares granted, are potentially less dilutive to the Company’s stock.  Thus, in some instances, it may be in the best interests of the Company to make outright grants of shares of the Company’s Class A Common Stock or grants of restricted shares of the Company’s Class A Common Stock.

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In assessing the recommendation of the Board of Directors to approve this Proposal 2, shareholders should consider that non-employee directors of the Company will receive awards under the Restated 2006 Plan and thus may have a substantial interest in the approval of this Proposal 2.

FAILURE OF THE SHAREHOLDERS TO APPROVE THIS PROPOSAL WILL NOT AFFECT THE RIGHTS OF EXISTING HOLDERS OF STOCK OPTIONS PREVIOUSLY GRANTED UNDER THE 2006 PLAN, AND THE COMPANY WILL RETAIN THE RIGHT TO CONTINUE TO GRANT STOCK OPTIONS FOR THE COMPANY’S CLASS A COMMON STOCK IN THE FUTURE UNDER THE 2006 PLAN, SUBJECT TO THE TERMS OF THE 2006 PLAN AS IT CURRENTLY EXISTS.

Plan Summary

A summary of the material provisions of the Restated 2006 Plan is provided below, but is qualified in its entirety by the full text of the Restated 2006 Plan, a copy of which is attached as Appendix A to this Proxy Statement.

Administration

The Restated 2006 Plan will be administered by the Board of Directors or a committee of the Board of Directors consisting solely of two or more directors who are not employees of the Company (the Board acting in such capacity or such committee being referred to as the “Committee”).

Shares Available for Grant

The aggregate number of shares of Class A Common Stock of the Company with respect to which stock options or stock awards may be granted under the Restated 2006 Plan is 1,500,000 shares (as adjusted for the 3-for-2 stock split effected on October 10, 2007). The class and aggregate number of shares of Class A Common Stock with respect to which stock options or stock awards may be granted is subject to adjustment under certain circumstances. Shares available for the grant of stock options and stock awards may be treasury shares or authorized but unissued shares. If any unexercised or unvested stock option or stock award expires, terminates, or is forfeited, the shares of Class A Common Stock which were subject to the unexercised or unvested portion of the stock option or stock award may again be available for grant as a stock option or stock award under the Restated 2006 Plan.

As of April 1, 2008, the Company had fournon-employee directors serving on the Board of Directors.28, 2008.

Stock Options

Grant of Stock Options

Subject to the terms of the Restated 2006 Plan, the Committee may grant stock options to the Company’s non-employee directors in such amounts as the Committee shall determine, in its sole and absolute discretion.

Exercise Price of Stock Options

Stock options granted under the Restated 2006 Plan will have a per share exercise price equal to at least the “fair market value” of a share of Class A Common Stock on the date of grant. For purposes of the Restated 2006 Plan, the fair market value of a share of Class A Common Stock on a particular date generally means:

15


(i) if the respective shares of Class A Common Stock are listed on any established stock exchange or a national market system, including without limitation, the NASDAQ® Global Select Market, NASDAQ® Global Market or NASDAQ® Capital Market, the fair market value will be the closing sales price of such respective shares (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange or system with the greatest volume of trading in the respective shares) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in the Wall Street Journal or such other source as the Committee deems reliable; or

(ii) if the respective shares of Class A Common Stock are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, the fair market value of such respective shares will be the mean between the high bid and high asked prices for such shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in the Wall Street Journal or such other source as the Committee deems reliable; or

(iii) in the absence of an established market for such respective shares of Class A Common Stock of the type described in (i) and (ii), above, the fair market value thereof will be determined by the Committee in good faith.

Duration of Stock Options

Each stock option granted under the Restated 2006 Plan will be exercisable for a term of ten years from the date the stock option was granted, subject to earlier termination as provided in the Restated 2006 Plan.

AmountExercisable

Each stock option granted pursuant to the Restated 2006 Plan will be fully exercisable on the date of the grant.

Exercise of Stock Options

Stock options may be exercised by the delivery of written notice to the Company setting forth the number of shares of Class A Common Stock with respect to which the stock option is to be exercised and the manner of payment for such shares. Payment of the exercise price for the shares of Class A Common Stock subject to a stock option may be made (i) in cash or cash equivalents (including certified check or bank check payable to the order of the Company), (ii) by tendering previously acquired shares of Class A Common Stock (either actually or by attestation, valued at their then “fair market value”), (iii) in shares of Common Stock withheld by the Company from the shares of Common Stock otherwise issuable to the non-employee director as a result of the exercise of the Option, or (iv) by any combination of any the foregoing.

Non-Transferability

Stock options are not transferable by the non-employee director other than by will or under the laws of descent and distribution.  During the non-employee director’s lifetime, the stock options may be exercised only by the non-employee director.

16


Termination

Stock options, to the extent they have not been previously exercised, will normally terminate on the earliest of: (i) the last day of the thirty-day period commencing on the date on which the non-employee director ceases to be a member of the Company’s Board of Directors for any reason other than the non-employee director’s death, permanent disability or resignation from the Board of Directors after at least five years of service on the Board of Directors; (ii) the last day of the one-year period commencing on the date on which the non-employee director ceases to be a member of the Board of Directors due to the non-employee director’s resignation from the Board of Directors after at least five years of service on the Board of Directors, death or permanent disability; or (iii) ten years after the date of grant of the stock option.

No Rights as Shareholder

No non-employee director has any rights as a shareholder with respect to shares of Class A Common Stock covered by a stock option until shares are issued to the non-employee director upon the exercise of such stock option. Except as provided in the Restated 2006 Plan, no adjustment for dividends, or otherwise, will be made if the record date therefor is prior to the date shares are issued to the non-employee director upon the exercise of a stock option.

Stock Awards

Grant of Stock Awards

Subject to the terms of the Restated 2006 Plan, the Committee may grant a stock award in the form of an outright grant of shares of Class A Common Stock or in the form of a restricted stock award to a non-employee director in such amounts as the Committee shall determine, in its sole and absolute discretion.

Award Restrictions

The Committee may impose such terms, conditions, and/or restrictions as the Committee deems appropriate on any stock award. Such terms, conditions, and/or restrictions may include, but not be limited to, the requirement that a non-employee director pay a purchase price for each share of Class A Common Stock subject to the stock award, restrictions on transferability, requirements regarding continued service as a member of the Board of Directors or other time-based restrictions, or the achievement of individual performance goals or attainment of pre-established performance targets.  The period of vesting and the lapsing of any applicable forfeiture restrictions will be established by the Committee at the time of grant.

Transferability

Except as may otherwise be provided by the Committee or the terms of any stock award agreement, shares subject to a stock award will generally not be transferable until all forfeiture restrictions applicable to the stock award have lapsed or, in the sole and absolute discretion of the Committee, are cancelled.  Once the forfeiture restrictions have lapsed or been cancelled, the shares of Class A Common Stock that were subject to the stock award shall, subject to any restrictions under applicable securities laws, become freely transferable.

Rights as Shareholders

During the period in which a non-employee director’s stock award is subject to any forfeiture restrictions, the Committee may, in its sole discretion, grant to the non-employee director all or any of the rights of a shareholder with respect to the shares of Class A Common Stock which are the subject of the stock award, including, but not limited to, the right to vote such shares and to receive dividends.

17


Changes in the Company’s Capital Structure

In the event of any stock dividends, stock splits, recapitalizations, combinations, exchanges of shares, mergers, consolidations, liquidations, split-ups, split-offs, spin-offs, or other similar changes in capitalization, or any distribution to shareholders, including a rights offering, other than regular cash dividends, changes in the outstanding stock of the Company by reason of any increase or decrease in the number of issued shares of Class A Common Stock of the Company resulting from a split-up or consolidation of shares or any similar capital adjustment or the payment of any stock dividend, any share repurchase at a price in excess of the market price of the Class A Common Stock at the time such repurchase is announced or other increase or decrease in the number of such shares, the Committee shall make appropriate adjustment (i) in the aggregate number and kind of shares authorized by the Restated 2006 Plan, (ii) in the number, kind and price, as applicable, of any outstanding stock options or stock awards granted under the Restated 2006 Plan, and (iii) in the annual limitation on the number of shares that may be granted to each non-employee director pursuant to stock option awards and stock awards (or, if deemed appropriate, the Committee may make provision for a payment of cash or property to the holder in cancellation of an outstanding stock option or stock award with respect to which Class A Common Stock has not been previously issued); provided, however, that no such adjustment shall increase the aggregate value of any outstanding stock option or stock award.

In the event of any adjustment in the number of shares of Class A Common Stock covered by any stock option or stock award, any fractional shares resulting from such adjustment shall be disregarded and each such stock option or stock award shall cover only the number of full shares resulting from such adjustment.

Effective Date of Plan

The Restated 2006 Plan shall become effective the first business day following its approval by the shareholders of the Company.  If, however, the Restated 2006 Plan is not approved by the shareholders, the 2006 Plan, as it currently exists, will remain in full force and effect and the Company will retain the right to grant future awards under the 2006 Plan subject to the terms of the 2006 Plan as it currently exists.

Amendment or Termination of Plan

The Board of Directors may at any time and from time to time amend the Restated 2006 Plan in order that the stock options or stock awards granted may conform to any changes in the law or in any other respect that the Board of Directors may deem to be in the best interests of the Company; provided, however, that without shareholder approval, no amendment shall make any change in the Restated 2006 Plan for which shareholder approval is required. All stock options and stock awards granted under the Restated 2006 Plan shall be subject to the terms and provisions of the Restated 2006 Plan and, except as otherwise provided in the Restated 2006 Plan, any amendment, modification or revision of the Restated 2006 Plan shall be deemed to amend, modify or revise all stock options and stock awards outstanding under the Restated 2006 Plan at the time of the amendment.

The Board of Directors may terminate the Restated 2006 Plan at any time.

Written Agreement

Each stock option and stock award granted under the Restated 2006 Plan will, to the extent necessary, be embodied in a written agreement, which will be subject to the terms and conditions of the Restated 2006 Plan and which may contain such other provisions as the Committee in its discretion deems advisable.

18


Federal Income Tax Consequences

Under current federal tax law, the following are the United States federal income tax consequences generally arising with respect to stock options and stock awards granted under the Restated 2006 Plan.  This summary is not intended to be exhaustive and the exact tax consequences to any non-employee director will depend on various factors and the director’s particular circumstances. This summary is based on present laws, regulations and interpretations and is not a complete description of federal tax consequences. This summary of federal tax consequences may change in the event of a change in the Internal Revenue Code or regulations thereunder or interpretations thereof. We urge the non-employee directors in the Restated 2006 Plan to consult their tax advisors with respect to any state, local and foreign tax considerations or particular federal tax implications of awards made under the Restated 2006 Plan prior to taking action with respect to an award. The Restated 2006 Plan is not intended to be a “qualified plan” under Section 401(a) of the Internal Revenue Code.

Stock Options

Income is not recognized by a non-employee director for federal income tax purposes on the grant of a stock option. On exercise of a stock option, the non-employee director will recognize income equal to the excess of the fair market value of the shares of Class A Common Stock received over the exercise price stated in the stock option agreement.  The Company receives a deduction equal to the amount of ordinary income recognized by the non-employee director at the time of the recognition of ordinary income by the non-employee director.

Generally, the non-employee director’s basis in the shares of Common Stock received upon the exercise of a stock option is equal to the exercise price for such shares of Class A Common Stock as stated in the stock option agreement plus any ordinary income recognized by the non-employee director on the exercise of the stock option.  If a non-employee director thereafter sells the shares of Class A Common Stock acquired, any amount realized as a result of the sale over the non-employee director’s basis in such shares of Class A Common Stock will constitute capital gain to the non-employee director for federal income tax purposes.

Stock Award

A holder of a stock award will recognize income for federal income tax purposes when the shares of Class A Common Stock which are the subject of the stock award are either transferable or no longer subject to a substantial risk of forfeiture, whichever occurs first.

Therefore, if a non-employee director receives a grant of shares of Class A Common Stock without any restrictions, the director will immediately recognize ordinary income equal to the excess of the fair market value of the shares of Class A Common Stock received (determined as of the date of the stock award) over the price, if any, paid by the non-employee director for the stock.

If a non-employee director receives a stock award that is subject to certain forfeiture restrictions, the director will not recognize income for federal income tax purposes until the earlier of the first taxable year in which the shares of Class A Common Stock are transferable, or no longer subject to a substantial risk of forfeiture. At that time, the non-employee director will recognize ordinary income equal to the excess of the fair market value of the shares of Class A Common Stock received with respect to which the restrictions have lapsed (with such value determined as of the date the stock became transferable or no longer subject to a substantial risk of forfeiture) over the price, if any, paid by the non-employee director for the stock.

19


A holder of a stock award which is subject to forfeiture restrictions may make an election under Section 83(b) of the Internal Revenue Code, to include in ordinary income in the year the restricted stock is issued the excess of the fair market value of the shares of Class A Common Stock received over the price, if any, paid for the restricted stock. This election must be made within thirty days after the effective date of the stock award to the non-employee director. In the event the election is made and the restricted stock is later forfeited, the holder is not allowed a deduction with respect to the restricted stock forfeited.

Under the terms of the Restated 2006 Plan, the Committee has the discretion to determine if the holder of a stock award which is subject to restrictions will have the rights of a shareholder during the period when the shares of Class A Common Stock are subject to the forfeiture restrictions imposed by the Committee including whether the non-employee director will be entitled to vote such shares of Common Stock and whether the director will be entitled to dividends paid in cash or stock to the same extent as if the shares of Class A Common Stock were not subject to any restrictions. If the non-employee director has a right to receive dividends, any dividends paid will generally constitute ordinary income to the director, however, a non-employee director’s stock award may provide that dividends paid in shares of common stock of the Company are subject to the same restrictions as the underlying stock with respect to which the dividends were issued and are taxed in the same manner as such underlying stock.

Generally, the Company is entitled to a deduction in the year a holder of a stock award recognizes any ordinary income therefrom, and in an amount equal to the amount of any ordinary income recognized by such holder.

Payment of the Exercise Price with Stock

If a non-employee director surrenders common stock that the director already owns as payment for the exercise price of a stock option, the non-employee director will not recognize gain or loss as a result of such surrender.  The number of shares received on exercise of the stock option equal to the number of shares surrendered will have a tax-basis equal to the tax-basis of the shares surrendered.  The holding period for the shares received on the exercise of the stock option which are equal to the number of shares surrendered by the non-employee director will include the holding period for the shares surrendered.  The remaining shares received will have a basis equal to the exercise price stated in the stock option agreement plus the amount of ordinary income the non-employee director recognizes upon receipt of such shares.  The non-employee director’s holding period for such shares will commence on the day after such exercise.

New Plan Benefits

The Committee, in its sole and absolute discretion, determines stock options and stock awards granted under the Restated 2006 Plan and, therefore, the Company is unable to determine the awards that will be granted in the future under the Restated 2006 Plan.  Stock options to purchase an aggregate of 120,000 shares of Class A Common Stock have been granted to non-executive directors as a group under the 2006 Plan.  No other persons or groups have received awards pursuant to the 2006 Plan.

 

20


 

Equity Compensation Plan InformationPROPOSAL 2

The Equity Compensation Plan Information Table provides information as of December 31, 2007 with respect to shares of the Company’s Class A Common Stock and Class B Common Stock that may be issued under our existing equity compensation plans, including the 2006 Non-Employee Director Stock Option Plan and the 2007 Long-Term Incentive Plan.

Class A Common Stock:

Plan Category

 

Number of securities to be
issued upon exercise of
outstanding options as of
December 31, 2007
(a)

 

Weighted-average exercise
price of outstanding options
 as of December 31, 2007
(b)

 

Number of securities remaining
available for issuance under equity
compensation plans as of December
31, 2007 (excluding securities
reflected in column (a))
(c)

 

 

 

 

 

 

 

 

 

Equity compensation plans approved by security holders

 

2,365,334

 

$

10.61

 

3,892,500

(1)

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

Total

 

2,365,334

 

$

10.61

 

3,892,500

 

(1)                                  Includes 2,512,500 shares that may be issued in the form of restricted stock under the 2007 Long-Term Incentive Plan.

Class B Common Stock:

Plan Category

 

Number of securities to be
issued upon exercise of
outstanding options as of
December 31, 2007
(a)

 

Weighted-average exercise
price of outstanding options
 as of December 31, 2007
(b)

 

Number of securities remaining
available for issuance under equity
compensation plans as of December
31, 2007 (excluding securities
reflected in column (a))
(c)

 

 

 

 

 

 

 

 

 

Equity compensation plans approved by security holders

 

211,235

 

$

3.62

 

450,000

(1)

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders (2)

 

30,000

 

1.38

 

—

 

 

 

 

 

 

 

 

 

Total

 

241,235

 

$

3.34

 

450,000

 

(1)                                  Includes 450,000 shares that may be issued in the form of restricted stock under the 2007 Long-Term Incentive Plan.

(2)           Includes one time options granted to Ronald J. Krause.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO APPROVE THE ADOPTION OF THE AMENDED AND RESTATED 2006 NON-EMPLOYEE DIRECTOR STOCK PLAN

21


PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed the firm of Ernst & Young LLP (“E&Y”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008.2009.  Although shareholder ratification is not required, the Board of Directors has directed that such appointment be submitted to the shareholders of the Company for ratification at the Annual Meeting.annual meeting.  E&Y, through the process of reauditing the Company’s 2000 and 2001 consolidated financial statements, has served as the Company’s independent public accounting firm with respect to the Company’s consolidated financial statements for the fiscal years 2000 through 20072008 and is considered by management of the Company to be well qualified.  If the shareholders do not ratify the appointment of E&Y, the Board of DirectorsAudit Committee may reconsider thetheir appointment.

 

Representatives of E&Y will be present at the Annual Meeting.annual meeting.  They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2008.2009.

Audit Committee Report

Notwithstanding anything to the contrary in any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the following report of the Audit Committee shall not be incorporated by reference into any such filings and shall not otherwise be deemed filed under such acts.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors.  Management is primarily responsible for the Company’s financial statements, systems of internal controls and compliance with applicable legal and regulatory requirements.  The Company’s independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles, as well as expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

The Audit Committee’s function is not intended to duplicate or to certify the activities of management and the independent registered public accounting firm, nor can the Audit Committee certify that the Company’s registered public accounting firm is “independent” under applicable rules.  The Audit Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the independent registered public accounting firm on the basis of the information it receives, discussions with management and the independent registered public accounting firm, and the experience of the Audit Committee’s members in business, financial and accounting matters.

21


The Audit Committee has completed the following:

·Reviewed and discussed the audited financial statements with management;

·Discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board (“PCAOB”); and

·Received the written disclosures and the letter from the independent registered public accounting firm required by the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm its independence.

Based on the review and discussions above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 for filing with the SEC.

Audit Committee of the Board of Directors

Thomas A. Akin, Chairperson

Ronald J. Krause

Harold D. Marshall

Audit and Non-Audit Fees

The Audit Committee has a policy that provides for preapproval of audit, audit-related and non-audit services performed by the independent registered public accounting firm to ensure that the provision of non-audit services do not impair the independent registered public accounting firm’s independence.  The Audit Committee will annually review and preapprove services (“General Preapproval”) that may be provided by the independent auditors without specific approval from the Audit Committee at the time such services are actually performed.  Unless a type of service to be provided by the independent auditors receives General Preapproval, it requires specific approval of the Audit Committee before the independent auditors may commence such services.  Any services that would exceed preapproved cost levels under the policy would similarly require specific approval of the Audit Committee before being performed at the higher cost level.

The following table presents fees for professional audit services rendered by E&Y for the audit of the Company’s annual financial statements for the years ended December 31, 2007 and December 31, 2008, and fees billed for other services rendered by E&Y during those periods.  All of the fees presented below were preapproved by the Audit Committee.

 

 

2007

 

2008

 

Audit Fees(1)

 

$

380,000

 

$

380,000

 

Audit-Related Fees(2)

 

16,200

 

—

 

Tax Fees (3)

 

128,500

 

162,750

 

All Other Fees(4)

 

2,500

 

—

 

 

 

 

 

 

 

Total

 

$

527,200

 

$

542,750

 

 

22


(1)                                  Audit fees consisted principally of professional services rendered in connection with the audit of the Company’s financial statements for the years ended December 31, 2007 and 2008, the reviews of the financial statements included in each of the Company’s Quarterly Reports on Form 10-Q during the years ended December 31, 2007 and 2008 and fees related to the audits of the Company’s internal control over financial reporting.

(2)                                  Audit-related fees for 2007 have been increased by $16,200 from those presented in the 2008 proxy statement to reflect additional inventory procedures provided by E&Y during 2007 and billed by E&Y after the mailing of the 2008 proxy statement.  There are no additional audit-related fees for professional services rendered by E&Y in 2007 that are not reported under “Audit Fees.”

 

(3)                                  Tax fees consisted principally of professional services rendered for tax compliance and reporting.

(4)                                  All other fees for 2007 have been increased by $2,500 from those presented in the 2008 proxy statement to reflect other professional services provided by E&Y in 2007 and billed by E&Y after the mailing of the 2008 proxy statement.  These fees related to the preparation of Form S-8 filed in July 2007.

The Audit Committee has considered whether the non-audit services provided by E&Y, including the services rendered in connection with income tax consultation and preparation of the Form S-8, were compatible with maintaining E&Y’s independence and has determined that the nature and substance of the limited non-audit services did not impair the status of E&Y as the Company’s independent registered public accounting firm.

23


FURTHER INFORMATION

 

                Board of Directors, Executive Officers and Nominees for Board of DirectorsBOARD OF DIRECTORS, EXECUTIVE OFFICERS AND NOMINEES FOR BOARD OF DIRECTORS

 

Set forth below is information with respect to each director, executive officer and director nominee of the Company as of March 31, 2008.2009.

 

Name

 

Age

 

Position

W. Marvin Rush

 

6970

 

Chairman and Director

 

 

 

 

 

W.M. “Rusty” Rush

 

4950

 

President, Chief Executive Officer and Director

 

 

 

 

 

J.M. “Spike” Lowe, Jr.

 

6465

 

Senior Vice President — Corporate Development

 

 

 

 

 

David C. Orf

 

5859

 

Senior Vice President — Marketing, Fleets and Specialized Equipment Sales

 

 

 

 

 

Scott Anderson

 

5051

 

Senior Vice President — Finance and Insurance

 

 

 

 

 

Daryl J. Gorup

 

5960

 

Senior Vice President — Dealership Operations

 

 

 

 

 

Martin A. Naegelin, Jr.

 

4445

 

Executive Vice President

 

 

 

 

 

James E. Thor

 

5051

 

Senior Vice President — Retail Sales

 

 

 

 

 

Steven L. Keller

 

3839

 

Vice President — Chief Financial Officer and Treasurer

 

 

 

 

 

Richard “Dick” Hall

 

6970

 

Vice President — Insurance

 

 

 

 

 

Derrek Weaver

 

3536

 

Chief Compliance Officer, and Vice President — Legal Affairs and Secretary

 

 

 

 

 

Ronald J. Krause

 

8081

 

Director

 

 

 

 

 

James C. Underwood

 

6465

 

Director

 

 

 

 

 

Harold D. Marshall

 

7273

 

Director

 

 

 

 

 

Thomas A. Akin

 

5354

Director

Gerald R. Szczepanski

60

 

Director

 

W. Marvin Rush founded the Company in 1965.  He served as President from its inception until November 1995 when he began his service as Chairman of the Board of Directors and Chief Executive Officer of the Company.  In 2006, he resigned his position as Chief Executive Officer, but continues to serve as Chairman of the Board.  He served on the Peterbilt dealer council from 1984 until 1987 and was elected its Chairman in 1987.  He was active on the PacLease Executive Committee from 1989 until 1992 and was Chairman in 1992.  Other honors include the regional Peterbilt Dealer of the Year in 1986, 1987 and 1988, as well as the Midranger Dealer of the Year in 1989.  His highest Peterbilt honor was being named North American Peterbilt Dealer of the Year for 1993, 1994, 2000 and 2001.

 

2324


 

W.M. “Rusty” Rush has served as President of the Company since 1995 and Chief Executive Officer of the Company since 2006.  Mr. W.M. “Rusty” Rush has overseen all day-to-day operations of the Company since 2001, when he was named the Company’s Chief Operating Officer.  Mr. W.M. “Rusty” Rush served as Vice President and Executive Vice President of the Company from 1990 until November 1995 when he began his service as President of the Company.

 

J.M. “Spike” Lowe, Jr. has served as Senior Vice President of Corporate Development of the Company since 1999.  He has been employed by the Company since 1968, holding the position of Vice President of the Company from 1994 to 1999.  Currently Mr. Lowe is responsible for real estate acquisitions, construction projects and all open account and unsecured lending for the Company.

David C. Orf has served as Vice President of Marketing, Fleets and Specialized Equipment Sales of the Company since 1993, and was promoted to Senior Vice President in 1996.  Mr. Orf was the general manager of the Company’s Houston, Texas facilities until January 1996.  Prior to joining the Company, Mr. Orf served as the southeast regional manager of Peterbilt Motors Company, a division of PACCAR.

 

Scott AndersonAudit Committee of the Board of Directors

Thomas A. Akin, Chairperson

Ronald J. Krause

Harold D. Marshall

Audit and Non-Audit Fees

The Audit Committee has serveda policy that provides for preapproval of audit, audit-related and non-audit services performed by the independent registered public accounting firm to ensure that the provision of non-audit services do not impair the independent registered public accounting firm’s independence.  The Audit Committee will annually review and preapprove services (“General Preapproval”) that may be provided by the independent auditors without specific approval from the Audit Committee at the time such services are actually performed.  Unless a type of service to be provided by the independent auditors receives General Preapproval, it requires specific approval of the Audit Committee before the independent auditors may commence such services.  Any services that would exceed preapproved cost levels under the policy would similarly require specific approval of the Audit Committee before being performed at the higher cost level.

The following table presents fees for professional audit services rendered by E&Y for the audit of the Company’s annual financial statements for the years ended December 31, 2007 and December 31, 2008, and fees billed for other services rendered by E&Y during those periods.  All of the fees presented below were preapproved by the Audit Committee.

 

 

2007

 

2008

 

Audit Fees(1)

 

$

380,000

 

$

380,000

 

Audit-Related Fees(2)

 

16,200

 

—

 

Tax Fees (3)

 

128,500

 

162,750

 

All Other Fees(4)

 

2,500

 

—

 

 

 

 

 

 

 

Total

 

$

527,200

 

$

542,750

 

22


(1)                                  Audit fees consisted principally of professional services rendered in connection with the audit of the Company’s financial statements for the years ended December 31, 2007 and 2008, the reviews of the financial statements included in each of the Company’s Quarterly Reports on Form 10-Q during the years ended December 31, 2007 and 2008 and fees related to the audits of the Company’s internal control over financial reporting.

(2)                                  Audit-related fees for 2007 have been increased by $16,200 from those presented in the 2008 proxy statement to reflect additional inventory procedures provided by E&Y during 2007 and billed by E&Y after the mailing of the 2008 proxy statement.  There are no additional audit-related fees for professional services rendered by E&Y in 2007 that are not reported under “Audit Fees.”

(3)                                  Tax fees consisted principally of professional services rendered for tax compliance and reporting.

(4)                                  All other fees for 2007 have been increased by $2,500 from those presented in the 2008 proxy statement to reflect other professional services provided by E&Y in 2007 and billed by E&Y after the mailing of the 2008 proxy statement.  These fees related to the preparation of Form S-8 filed in July 2007.

The Audit Committee has considered whether the non-audit services provided by E&Y, including the services rendered in connection with income tax consultation and preparation of the Form S-8, were compatible with maintaining E&Y’s independence and has determined that the nature and substance of the limited non-audit services did not impair the status of E&Y as Vice President of Financethe Company’s independent registered public accounting firm.

23


FURTHER INFORMATION

BOARD OF DIRECTORS, EXECUTIVE OFFICERS AND NOMINEES FOR BOARD OF DIRECTORS

Set forth below is information with respect to each director, executive officer and Insurancedirector nominee of the Company since 2005 and was promoted to Senior Vice President in February 2006.  Prior to joining the Company, Mr. Anderson served as Manager of Continental European Operations for CIT Group from 2004 to 2005 and was Managing Director of European Commercial Finance for Associates Capital Corp from 1998 to 2004.  He has over 25 years of experience in the commercial equipment finance industry.March 31, 2009.

Name

Age

Position

W. Marvin Rush

70

Chairman and Director

W.M. “Rusty” Rush

50

President, Chief Executive Officer and Director

J.M. “Spike” Lowe, Jr.

65

Senior Vice President — Corporate Development

David C. Orf

59

Senior Vice President — Marketing, Fleets and Specialized Equipment Sales

Scott Anderson

51

Senior Vice President — Finance and Insurance

Daryl J. Gorup

60

Senior Vice President — Dealership Operations

Martin A. Naegelin, Jr.

45

Executive Vice President

James E. Thor

51

Senior Vice President — Retail Sales

Steven L. Keller

39

Vice President — Chief Financial Officer and Treasurer

Richard “Dick” Hall

70

Vice President — Insurance

Derrek Weaver

36

Chief Compliance Officer, Vice President — Legal Affairs and Secretary

Ronald J. Krause

81

Director

James C. Underwood

65

Director

Harold D. Marshall

73

Director

Thomas A. Akin

54

Director

Gerald R. Szczepanski

60

Director

 

Daryl J. GorupW. Marvin Rush has served as Senior Vice President of Dealership Operations offounded the Company since January 1997.  Prior to joining the Company, Mr. Gorup served for 15 years in various executive positions with Peterbilt Motors Company, including General Sales Manager.

Martin A. Naegelin, Jr. has served as Executive Vice President of the Company since March 2007.1965.  He served as Vice President from its inception until November 1995 when he began his service as Chairman of the Board of Directors and Chief FinancialExecutive Officer of the CompanyCompany.  In 2006, he resigned his position as Chief Executive Officer, but continues to serve as Chairman of the Board.  He served on the Peterbilt dealer council from January 1997 to March 2007.  Mr. Naegelin was promoted to Senior Vice President in December 20011984 until 1987 and was named Secretaryelected its Chairman in 1987.  He was active on the PacLease Executive Committee from 1989 until 1992 and Treasurerwas Chairman in 1992.  Other honors include the regional Peterbilt Dealer of the CompanyYear in 1986, 1987 and Executive Vice President of Rush Equipment Centers in March 2003.  Prior to joining the Company, Mr. Naegelin served1988, as Vice President of Investor Relations and Corporate Development of Norwood Promotional Products, Inc.  Mr. Naegelin had seven years of public accounting experience prior to joining Norwood in 1993.

James E. Thor has servedwell as the Senior Vice President of Retail SalesMidranger Dealer of the Company since June 2004. Prior to joining the Company, Mr. Thor served for 14 yearsYear in various executive positions with1989.  His highest Peterbilt Motors Company.  In 1996, Mr. Thorhonor was promoted to Director of U.S. Regional Sales ofbeing named North American Peterbilt prior to which he served as Regional Sales Manager and District Sales Manager.

Steven L. Keller has served as Vice President, Chief Financial Officer and TreasurerDealer of the Company since March 2007.  Mr. Keller has been intimately involved in the Company’s financeYear for 1993, 1994, 2000 and accounting functions since 1997, with responsibility for financial analysis and planning, business acquisitions, Securities and Exchange Commission reporting, investor relations and corporate taxes.  Prior to joining the Company, Mr. Keller, a Certified Public Accountant, worked in the San Antonio office of Ernst & Young LLP and obtained a Bachelor’s of Business Administration in accounting from St. Mary’s University in San Antonio, Texas.

Richard “Dick” Hall has served as Vice President of Associated Acceptance, Inc., the Company’s insurance agency affiliate, since December 1992, when he joined the Company.  Mr. Hall was promoted to Vice President in 2003.  Prior to joining the Company, Mr. Hall worked for eight years as President and Director of Municipal Insurance Company of America, Elgin, Illinois, 15 years as President and Director of Northland Insurance Agency, Inc., a bank holding company in Chicago, Illinois, and he owned and operated an insurance school in San Antonio, Texas for six years.2001.

 

24


 

Derrek WeaverW.M. “Rusty” Rush has served as Chief Compliance Officer and Vice President of Legal Affairs of the Company since February 20051995 and Chief Executive Officer of the Company since 2006.  Mr. W.M. “Rusty” Rush has overseen all day-to-day operations of the Company since 2001, when he was named the Company’s Chief Operating Officer.  Mr. W.M. “Rusty” Rush served as Vice President and Executive Vice President of the Company from 1990 until November 1995 when he began his service as President of the Company.

David C. Orf has served as Vice President of Marketing, Fleets and Specialized Equipment Sales of the Company since 1993, and was named Secretarypromoted to Senior Vice President in February 2006.1996.  Mr. Weaver is responsible for overseeing all legal matters pertaining toOrf was the Company, including general corporate compliance and governance matters, acquisitions and dispute resolution.manager of the Company’s Houston, Texas facilities until January 1996.  Prior to joining the Company, Mr. Weaver was an Associate Attorney at Fulbright & Jaworski L.L.P. in San Antonio, Texas from 2001 until he joinedOrf served as the Company.  Mr. Weaver receivedsoutheast regional manager of Peterbilt Motors Company, a B.S. in Mechanical Engineering from the Universitydivision of Colorado at Boulder and a J.D., summa cum laude, from the Texas Tech University School of Law.PACCAR.

 

Ronald J. Krause has served as a director of the Company since June 1996.  Mr. Krause served as President of Associates Commercial Corp. from 1976 until 1981 and President and Chief Operating Officer of Associates First Capital Corp. from 1981 until his retirement in 1989.  Mr. Krause was Vice Chairman of the Board of Directors of Associates of North America from 1988 until 1989.

James C. Underwood was appointed to the Board on February 21, 2008.  Mr. Underwood is a career veteran of the commercial vehicle industry, having served in managerial and executive positions at GMC Truck & Coach Division, IVECO and American Isuzu Motors.  In September 2000, Mr. Underwood became President and COO of General Motors Isuzu Commercial Truck, LLC, a joint venture to consolidate Isuzu and General Motors medium-duty commercial vehicle sales, service and marketing functions in the United States.  Mr. Underwood served as Vice Chairman of Isuzu Commercial Truck of America, Inc. from 2007 until his retirement on February 29, 2008.

Harold D. Marshall has served as a director of the Company since February 1999.  Mr. Marshall served as President, Chief Operating Officer and a director of Associates First Capital Corp. from May 1996 until his retirement in March 1999.  Mr. Marshall joined Associates First Capital Corp. in 1961 and organized their Transportation Division in 1974.  Mr. Marshall served as Vice Chairman of the American Trucking Association, Trustee of the American Trucking Association Foundation, and as a Trustee on the Board of Trustees of the Dallas Museum of Art.  Mr. Marshall currently serves as Trustee Emeritus of the Hudson Institute Board of Trustees.  Since his retirement in 1999, Mr. Marshall has devoted his time and attention to his personal investments.

Thomas A. Akin has served as a director of the Company since August 2004.  Mr. Akin worked in the audit department of Ernst & Young LLP from 1976 until 1989 and has served as the director of the audit department of Akin, Doherty, Klein & Feuge, P.C., in San Antonio, Texas since 1991.  Throughout his career, Mr. Akin has served as the client service executive responsible for the independent audit of companies registered with the SEC.

W.M. “Rusty” Rush is the son of W. Marvin Rush.  There are no other family relationships among the executive officers and directors of the Company.

All directors of the Company hold office until the next Annual Meeting of Shareholders and the election and qualification of their successors.  Each officer of the Company was chosen by the Board of Directors and serves at the pleasure of the Board of Directors until his successor is appointed and until his earlier resignation or removal in accordance with applicable law.

25


Audit Committee Report

Notwithstanding anything to the contrary in any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the following report of the Audit Committee shall not be incorporated by reference into any such filings and shall not otherwise be deemed filed under such acts.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors.  Management is primarily responsible for the Company’s financial statements, systems of internal controls and compliance with applicable legal and regulatory requirements.  The Company’s independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, as well as expressing an opinion on the effectiveness of internal control over financial reporting.

The Audit Committee’s function is not intended to duplicate or to certify the activities of management and the independent registered public accounting firm, nor can the committee certify that the Company’s registered public accounting firm is “independent” under applicable rules.  The Audit Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the independent registered public accounting firm on the basis of the information it receives, discussions with management and the independent registered public accounting firm, and the experience of the committee’s members in business, financial and accounting matters.

The Audit Committee has completed the following:

·reviewed and discussed the audited financial statements with management;

·discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 114 (The Auditor’s Communication with Those Charged with Governance);

·received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees); and

·discussed with the independent registered public accounting firm its independence.

Based on the review and discussions above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 for filing with the SEC.

Audit Committee of the Board of Directors

Thomas A. Akin, Chairperson

Ronald J. Krause

Harold D. Marshall

 

26


Audit and Non-Audit Fees

 

The Audit Committee has a policy that provides for preapproval of audit, audit-related and non-audit services performed by the independent registered public accounting firm to ensure that the provision of non-audit services do not impair the independent registered public accounting firm’s independence.  The Audit Committee will annually review and preapprove services (“General Preapproval”) that may be provided by the independent auditors without specific approval from the Audit Committee.Committee at the time such services are actually performed.  Unless a type of service to be provided by the independent auditors receives general preapproval under the policy,General Preapproval, it requires specific approval of the Audit Committee before commencing.the independent auditors may commence such services.  Any services that would exceed preapproved cost levels under the policy would similarly require specific approval of the Audit Committee before being performed at the higher cost level.

 

The following table presents fees for professional audit services rendered by E&Y for the audit of the Company’s annual financial statements for the years ended December 31, 20062007 and December 31, 2007,2008, and fees billed for other services rendered by E&Y during those periods.  All of the fees presented below were preapproved by the Audit Committee.

 

 

2006

 

2007

 

 

 

 

 

 

 

2007

 

2008

 

Audit Fees(1)

 

$

365,000

 

$

380,000

 

 

$

380,000

 

$

380,000

 

Audit-Related Fees(2)

 

—

 

—

 

 

16,200

 

—

 

Tax Fees (3)

 

113,000

 

128,500

 

 

128,500

 

162,750

 

All Other Fees(4)

 

—

 

—

 

 

2,500

 

—

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

478,000

 

$

508,500

 

 

$

527,200

 

$

542,750

 

22


 

(1)                                  Audit fees consisted principally of professional services rendered in connection with the audit of the Company’s financial statements for the years ended December 31, 20062007 and 2007,2008, the reviews of the financial statements included in each of the Company’s Quarterly Reports on Form 10-Q during the years ended December 31, 20062007 and 20072008 and fees related to the audits of the Company’s internal control over financial reporting.

 

(2)                                  Audit-related fees for 2007 have been increased by $16,200 from those presented in the 2008 proxy statement to reflect additional inventory procedures provided by E&Y during 2007 and billed by E&Y after the mailing of the 2008 proxy statement.  There wereare no additional audit-related fees for professional services rendered by E&Y in 2006 or 2007 that are not reported under “Audit Fees.”

(3)                                  Tax fees consisted principally of professional services rendered for tax compliance and reporting.

 

(4)                                  There were noAll other fees for 2007 have been increased by $2,500 from those presented in the 2008 proxy statement to reflect other professional services renderedprovided by E&Y in 2006 or2007 and billed by E&Y after the mailing of the 2008 proxy statement.  These fees related to the preparation of Form S-8 filed in July 2007.

 

The Audit Committee has considered whether the non-audit services provided by E&Y, including the services rendered in connection with income tax consultation and preparation of the Form S-8, were compatible with maintaining E&Y’s independence and has determined that the nature and substance of the limited non-audit services did not impair the status of E&Y as the Company’s independent registered public accounting firm.

 

2723


FURTHER INFORMATION

 

BOARD OF DIRECTORS, EXECUTIVE OFFICERS AND NOMINEES FOR BOARD OF DIRECTORS

Set forth below is information with respect to each director, executive officer and director nominee of the Company as of March 31, 2009.

Name

Age

Position

W. Marvin Rush

70

Chairman and Director

W.M. “Rusty” Rush

50

President, Chief Executive Officer and Director

J.M. “Spike” Lowe, Jr.

65

Senior Vice President — Corporate Development

David C. Orf

59

Senior Vice President — Marketing, Fleets and Specialized Equipment Sales

Scott Anderson

51

Senior Vice President — Finance and Insurance

Daryl J. Gorup

60

Senior Vice President — Dealership Operations

Martin A. Naegelin, Jr.

45

Executive Vice President

James E. Thor

51

Senior Vice President — Retail Sales

Steven L. Keller

39

Vice President — Chief Financial Officer and Treasurer

Richard “Dick” Hall

70

Vice President — Insurance

Derrek Weaver

36

Chief Compliance Officer, Vice President — Legal Affairs and Secretary

Ronald J. Krause

81

Director

James C. Underwood

65

Director

Harold D. Marshall

73

Director

Thomas A. Akin

54

Director

Gerald R. Szczepanski

60

Director

W. Marvin Rush founded the Company in 1965.  He served as President from its inception until November 1995 when he began his service as Chairman of the Board of Directors and Chief Executive Officer of the Company.  In 2006, he resigned his position as Chief Executive Officer, but continues to serve as Chairman of the Board.  He served on the Peterbilt dealer council from 1984 until 1987 and was elected its Chairman in 1987.  He was active on the PacLease Executive Committee from 1989 until 1992 and was Chairman in 1992.  Other honors include the regional Peterbilt Dealer of the Year in 1986, 1987 and 1988, as well as the Midranger Dealer of the Year in 1989.  His highest Peterbilt honor was being named North American Peterbilt Dealer of the Year for 1993, 1994, 2000 and 2001.

24


W.M. “Rusty” Rush has served as President of the Company since 1995 and Chief Executive Officer of the Company since 2006.  Mr. W.M. “Rusty” Rush has overseen all day-to-day operations of the Company since 2001, when he was named the Company’s Chief Operating Officer.  Mr. W.M. “Rusty” Rush served as Vice President and Executive Vice President of the Company from 1990 until November 1995 when he began his service as President of the Company.

David C. Orf has served as Vice President of Marketing, Fleets and Specialized Equipment Sales of the Company since 1993, and was promoted to Senior Vice President in 1996.  Mr. Orf was the general manager of the Company’s Houston, Texas facilities until January 1996.  Prior to joining the Company, Mr. Orf served as the southeast regional manager of Peterbilt Motors Company, a division of PACCAR.

Scott Anderson has served as Vice President of Finance and Insurance of the Company since 2005 and was promoted to Senior Vice President in February 2006.  Prior to joining the Company, Mr. Anderson served as Manager of Continental European Operations for CIT Group from 2004 to 2005 and was Managing Director of European Commercial Finance for Associates Capital Corp from 1998 to 2004.  He has over 25 years of experience in the commercial equipment finance industry.

Daryl J. Gorup has served as Senior Vice President of Dealership Operations of the Company since January 1997.  Prior to joining the Company, Mr. Gorup served for 15 years in various executive positions with Peterbilt Motors Company, including General Sales Manager.

Martin A. Naegelin, Jr. has served as Executive Vice President of the Company since March 2007.  He served as Vice President and Chief Financial Officer of the Company from January 1997 to March 2007.  Mr. Naegelin was promoted to Senior Vice President in December 2001 and was named Secretary and Treasurer of the Company and Executive Vice President of Rush Equipment Centers in March 2003.  Prior to joining the Company, Mr. Naegelin served as Vice President of Investor Relations and Corporate Development of Norwood Promotional Products, Inc.  Mr. Naegelin had seven years of public accounting experience prior to joining Norwood in 1993.

James E. Thor has served as the Senior Vice President of Retail Sales of the Company since June 2004. Prior to joining the Company, Mr. Thor served for 14 years in various executive positions with Peterbilt Motors Company.  In 1996, Mr. Thor was promoted to Director of U.S. Regional Sales of Peterbilt, prior to which he served as Regional Sales Manager and District Sales Manager.

Steven L. Keller has served as Vice President, Chief Financial Officer and Treasurer of the Company since March 2007.  Mr. Keller has been intimately involved in the Company’s finance and accounting functions since 1997, with responsibility for financial analysis and planning, business acquisitions, SEC reporting, investor relations and corporate taxes.  Prior to joining the Company, Mr. Keller, a Certified Public Accountant, worked in the San Antonio office of Ernst & Young LLP and obtained a Bachelor’s of Business Administration in accounting from St. Mary’s University in San Antonio, Texas.

Richard “Dick” Hall has served as Vice President of Associated Acceptance, Inc., the Company’s insurance agency affiliate, since December 1992, when he joined the Company.  Mr. Hall was promoted to Vice President in 2003.  Prior to joining the Company, Mr. Hall worked for eight years as President and Director of Municipal Insurance Company of America, Elgin, Illinois, 15 years as President and Director of Northland Insurance Agency, Inc., a bank holding company in Chicago, Illinois, and he owned and operated an insurance school in San Antonio, Texas for six years.

25


Derrek Weaver has served as Chief Compliance Officer and Vice President of Legal Affairs of the Company since February 2005 and was named Secretary in February 2006.   Mr. Weaver is responsible for overseeing all legal matters pertaining to the Company, including general corporate compliance and governance matters, acquisitions and dispute resolution.  Prior to joining the Company, Mr. Weaver was an Associate Attorney at Fulbright & Jaworski L.L.P. in San Antonio, Texas from 2001 until he joined the Company.  Mr. Weaver received a B.S. in Mechanical Engineering from the University of Colorado at Boulder and a J.D., summa cum laude, from the Texas Tech University School of Law.

Ronald J. Krause has served as a director of the Company since June 1996.  Mr. Krause served as President of Associates Commercial Corp. from 1976 until 1981 and President and Chief Operating Officer of Associates First Capital Corp. from 1981 until his retirement in 1989.  Mr. Krause was Vice Chairman of the Board of Directors of Associates of North America from 1988 until 1989.

James C. Underwood was appointed to the Board of Directors on February 21, 2008.  Mr. Underwood is a career veteran of the commercial vehicle industry, having served in managerial and executive positions at GMC Truck & Coach Division, IVECO and American Isuzu Motors.  In September 2000, Mr. Underwood became President and COO of General Motors Isuzu Commercial Truck, LLC, a joint venture to consolidate Isuzu and General Motors medium-duty commercial vehicle sales, service and marketing functions in the United States.  Mr. Underwood served as Vice Chairman of Isuzu Commercial Truck of America, Inc. from 2007 until his retirement on February 29, 2008.

Harold D. Marshall has served as a director of the Company since February 1999.  Mr. Marshall served as President, Chief Operating Officer and a director of Associates First Capital Corp. from May 1996 until his retirement in March 1999.  Mr. Marshall joined Associates First Capital Corp. in 1961 and organized their Transportation Division in 1974.  Mr. Marshall served as Vice Chairman of the American Trucking Association, Trustee of the American Trucking Association Foundation, and as a Trustee on the Board of Trustees of the Dallas Museum of Art.  Mr. Marshall currently serves as Trustee Emeritus of the Hudson Institute Board of Trustees.  Since his retirement in 1999, Mr. Marshall has devoted his time and attention to his personal investments.

Thomas A. Akin has served as a director of the Company since August 2004.  Mr. Akin worked in the audit department of E&Y from 1976 until 1989 and has served as the director of the audit department of Akin, Doherty, Klein & Feuge, P.C., in San Antonio, Texas since 1991.  Throughout his career, Mr. Akin has served as the client service executive responsible for the independent audit of companies registered with the SEC.

Gerald R. Szczepanski was the co-founder, and former Chairman and Chief Executive Officer of Gadzooks, Inc., a publicly traded, specialty retailer of casual clothing and accessories for teenagers.  Mr. Szczepanski is a director, Chair of the Compensation Committee and a member of the Audit Committee and the Nominating and Governance Committee of Game Stop Corp.

W.M. “Rusty” Rush is the son of W. Marvin Rush.  There are no other family relationships among the executive officers and directors of the Company.

All directors of the Company hold office until the next Annual Meeting of Shareholders and the election and qualification of their successors.  Each officer of the Company was chosen by the Board of Directors and serves at the pleasure of the Board of Directors until his successor is appointed and until his earlier resignation or removal in accordance with applicable law.

26


COMPENSATION DISCUSSION AND ANALYSIS

 

Overview of 2008 Executive Compensation Decisions

The Company’s Compensation Committee evaluated and set 2008 executive compensation in the context of the Company’s financial performance and the current global economic recession.  The ongoing weakness in the U.S. economy and deteriorating credit markets continue to negatively impact consumer confidence and spending, and ultimately, the Company’s financial performance.  The Compensation Committee strives to ensure the Company’s executive compensation program remains fair, reasonable and competitive.  The Compensation Committee uses judgment and discretion rather than relying solely on a formula-driven framework and does not use highly leveraged incentives that drive risky short-term behavior.  Instead, the Compensation Committee aims to reward consistent and longer-term performance.  The Company’s equity incentive program, combined with the Company’s new executive officer stock ownership requirements, reward long-term stock performance.

The executive compensation program is designed to align the interests of the Company’s named executive officers with those of its shareholders.  Accordingly, the Company’s 2008 financial performance directly impacted the named executive officers’ compensation.

The most significant compensation decisions made in 2008 included the following:

·Base salaries of the named executive officers remained unchanged;

·Cash performance bonuses for the named executive officers were decreased by 33%, except for the Company’s Chief Financial Officer, whose cash performance bonus was decreased by 20%; and

·Equity awards granted to the named executive officers were increased by approximately 10%, except for the Company’s Chief Financial Officer, whose aggregate equity awards were increased by approximately 100%.

The Compensation Committee believes that the increased level of equity awards will (a) preserve appropriate levels of retention incentives, and (b) further align the named executive officers’ long-term interests with those of the Company’s shareholders by encouraging the creation of long-term stock performance.  See “Compensation Program Components — Equity Incentive Award” for further discussion of the 2008 equity awards.

Compensation Philosophy and Objectives

 

The Company’s executive compensation program is designed to accomplish the following objectives:

 

·                                          toTo attract and retain motivated executives who substantially contribute to the Company’s long-term success and the creation of shareholder value;

·                                          toTo reward executives when the Company performs well financially;financially, while not encouraging executives to take unnecessary risks that could threaten the long-term sustainability of the Company; and

·                                          toTo be competitive with the Company’s peers without establishing compensation targets at specific benchmark percentiles.

 

Within this framework, the Company strives to maintain executive compensation that is fair, reasonable and competitive with its peers.

27


 

Compensation Setting Process

 

The Compensation Committee approves all compensation decisions for the named executive officers, including base salaries, cash performance bonuses and equity incentive awards.  The Compensation Committee aims to structure executive compensation in a manner that achieves the compensation objectives described above.  In approving 2008 executive compensation, the Compensation Committee reviewsreviewed and considers,considered, among other things:

 

·                                          recommendationsRecommendations of the Company’s Chairman and Chief Executive Officer;

·                                          competitiveThe Company’s overall financial and operating performance;

·The responsibilities of the named executive officers;

·Competitive pay information of the Company’s peers and other public survey data;

·the Company’s financial and operating performance;

·the responsibilities of the named executive officers; and

·                                          historicalHistorical compensation levels.levels and the value of equity awards granted in prior years.

 

The Company has entered into employment agreements with eachEach of itsthe named executive officers.  These employment agreements generally set forth information regarding base salary, cash performance bonuses and other employee benefits.officers is a participant in the Company’s Executive Transition Plan.  For a further description of the employment agreements,benefits afforded the named executive officers under the Executive Transition Plan, please refer to the “Employment“Severance and Change of Control Agreements”Arrangements” section ofset forth below in this proxy statement.

 

Role of Compensation Consultant in Compensation Decisions

Periodically, the Compensation Committee will engage a compensation consultant to conduct a full assessment of the Company’s executive compensation program.  In 2007, the Compensation Committee engaged Longnecker & Associates (“Longnecker”), an independent compensation consultant, to review and assess the Company’s executive compensation program.  Longnecker’s objectives were to, among others: (i)(a) gather comparative pay information from the Company’s peers and other published surveys, (ii)and (b) assess the competitiveness of the named executive officers’ individual pay components, as well as their total direct compensation, and (iii) perform a “pay for performance” analysis.compensation.  Please refer to the “Benchmarking of Executive Compensation” section below for further discussion of Longnecker’s 2007 findings with respect to the competitiveness of the Company’s executive compensation program.

 

Longnecker has no other business relationships with the Company and received compensation from the Company only for the services it provided to the Compensation Committee with respect to certain compensation matters.

 

28The Compensation Committee did not engage a compensation consultant in 2008, but instead continued to rely on Longnecker’s 2007 assessment.  The Compensation Committee believed that Longnecker’s 2007 assessment provided it with sufficient information in evaluating and determining 2008 compensation levels.  Notwithstanding, as part of Longnecker’s 2007 engagement, Longnecker reviewed the named executive officers’ 2008 equity incentive awards, which were made in March 2008.  As part of this review, Longnecker advised the Compensation Committee on the form and amount of the equity awards.


Role of Executive Officers in Compensation Decisions

 

The Company’s officers, including the Chairman and the Chief Executive Officer, regularly attend Compensation Committee meetings and, upon the Compensation Committee’s request, provide compensation and other related information to the committeeCompensation Committee such as tally sheets.  W. Marvin Rush and W.M. “Rusty” Rush annually evaluate the performance of the other named executive officers.  Based on those evaluations and the other factors discussed above, they make a joint recommendation to the Compensation Committee regarding base salary levels, the amount of the annual cash performance bonus, and the form and amount of the equity incentive award granted to the named executive officers.  The Compensation Committee has complete discretion to approve, disapprove, or alter W. Marvin Rush’s and W.M. “Rusty” Rush’s compensation recommendations.

28


 

The Compensation Committee conducts an annual evaluation of the performance of W. Marvin Rush and W.M. “Rusty” Rush and makes determinations regarding their base salary, annual cash performance bonus and annual equity incentive award.

 

Benchmarking of Executive Compensation

 

As indicated above, one of the factors that the Compensation Committee considers in setting executive compensation is competitive pay information.  In 2007, Longnecker benchmarked each of the named executive officer’s base salary, total cash compensation (i.e., base salary, plus the annual cash performance bonus), equity incentive award, and total direct compensation (i.e., total cash compensation, plus the equity incentive award) against the Company’s peer group and other published survey data.  Compensation information for the Company’s peers was compiled from publicly available sources, including, in most cases, their most recently available annual proxy statements containing executive compensation information.

 

The peer group consisted of the following 14 companies:

 

·Accuride Corp

Accuride Corp

·

Asbury Automotive Group Inc.

·

Beacon Roofing Supply Inc.

·

Briggs & Stratton

·Brightpoint Inc.

Brightpoint Inc.

·

Commercial Vehicle Group Inc.

·

H&E Equipment Services Inc.

·

Interline Brands Inc.

·

Lithia Motors Inc.

·

Nacco Industries

·

Nash Finch Co

·

Scansource Inc.

·

Sonic Automotive Inc.

·

Wabash National Corp

 

The above peer companies were selected by Longnecker, with the assistance of the Company, based upon their market capitalization, annual revenue and industry focus on distribution or the commercial vehicle market.  The Company elected not to use the peer group utilized in the Company’s performance graph for purposes of benchmarking executive compensation, as the Compensation Committee believes the above companies better represent the Company’s direct competitors for employee talent.

 

In addition to the above, Longnecker analyzed published survey data from the following sources:

 

·                                          Economic Research Institute, ERI Executive Compensation Assessor;

·                                          Watson Wyatt, Top Management Compensation - Industry Report;

·                                          Watson Wyatt, Top Management Compensation - Regression Analysis Report;

·                                          WorldatWork, Total Salary Increase Budget Survey; and

·                                          William Mercer, Executive Compensation Survey.

 

29


Longnecker did not apply a specific weighting to each data source when making compensation comparisons, nor did it favor one data source over the other.  Instead, Longnecker developed a “market consensus” based upon the compensation data derived from the peer group and the published survey data.

 

BasedIn 2007, based upon comparative pay information of the Company’s peer group and the published survey data referred to above, Longnecker and the Compensation Committee determined that the named executive officers’ (a) 2007 base salaries were closely aligned with the market 50th percentile, their(b) 2007 total cash compensation (base salary, plus the annual cash performance bonus) was above the market 50th percentile, but below the market 75th percentile, their(c) 2007 long-term equity awards were below the market 50th percentile, and their(d) 2007 total direct compensation (total cash compensation, plus the equity incentive award) was slightly below the market 50th percentile.  Based upon these 2007 findings, together with the fact that executive compensation for the named executive officers did not increase in 2008, the Compensation Committee believes that the individual pay components and total direct compensation levels of the named executive officers in 2008 was fair, reasonable and aligned with competitive pay practices of the Company’s peer group and the published survey data.

 

In addition, Longnecker performed a “pay for performance” analysis using the following financial metrics to assess the extent to which the Company’s pay and performance correlated to its peer group identified above: (i) “return on equity,” “return on assets,” and “return on capital” for the 2006 fiscal year, and (ii) change in revenue and total shareholder return over the past three years.  The analysis indicated that the Company performed financially above average compared to its peer companies and, therefore, the Company’s pay and performance appears correctly aligned.29


 

Notwithstanding the above, the Compensation Committee does not target executive compensation to specific percentiles.  Instead, the Compensation Committee approves individual pay components and total direct compensation levels using an approach that focuses on the Compensation Committee’s judgment and discretion as to the overall fairness of the named executive officers’ compensation.  The 2007 benchmark analyses provideprovided the Compensation Committee the framework necessary to make these fairness determinations in 2008, as well as to assist them in determining whether such compensation levels will accomplish the objectives of the executive compensation program.

 

Compensation Program Components

The Company’s executive compensation program is comprised of the following four primary components:

 

·                                          baseBase salary;

·                                          cashCash performance bonuses;

·                                          equityEquity incentive awards; and

·                                          employeeEmployee benefits and other perquisites.

 

The Company does not have a specific policy, practice or formula regarding the allocation of total compensation between (i)(a) base salary and equity incentive awards, (ii)(b) cash performance bonus and equity incentive awards or (iii)(c) total cash compensation and equity incentive awards.

 

Base Salary

 

The Compensation Committee believes that competitive levels of base salary are necessary for the motivation and retention of the named executive officers.  Base salaries provide officers with a predictable level of income and help achieve the objectives outlined above.

 

Each named executive officer’s employment agreement sets forth their initial base salary, subject to adjustment byGenerally, the Compensation Committee.  The Compensation Committee reviews the named executive officers’ base salary levels every other year to ensure that they are competitive within a range that the Compensation Committee considers to be necessary or appropriate.  As set forth below, during 2007,In 2008, the Compensation Committee increased the base salary of each ofdid not increase the named executive officers, except forofficers’ base salary.  W. Marvin Rush and W.M. “Rusty” Rush.

30


Named Executive Officer

 

Base Salary
as of 12/31/06 ($)

 

Base Salary
As of 12/31/07 ($)

 

 

 

 

 

 

 

W. Marvin Rush,
Chairman

 

900,000

 

900,000

 

W.M. “Rusty” Rush,
President and Chief Executive Officer

 

584,040

 

584,040

 

Martin A. Naegelin, Jr.,
Executive Vice President and Former Chief
Financial Officer

 

248,200

 

345,000

 

Daryl J. Gorup,
Senior Vice President – Dealership Operations

 

264,000

 

290,400

 

James E. Thor,
Senior Vice President – Retail Sales

 

249,000

 

273,900

 

Steven L. Keller,
Vice President – Chief Financial Officer and
Treasurer

 

113,400

 

200,000

 

Mr. Naegelin received a 39% increase inRush’s base salary primarily in recognition of his growing tenure with the Company and to appropriately reflect his authority and responsibilities relating to his promotion to Executive Vice President in 2007.  In Mr. Naegelin’s new role, he focuses on improving the Company’s organizational processes and systems, as well as continues to oversee the Company’s corporate administrative and finance functions and construction equipment operations.  Mr. Keller received a 76% increase in base salary primarily in recognition of his promotion to Chief Financial Officer in 2007 and to appropriately reflect his increase in responsibilities relating to his new position with the Company, which includes serving as the Company’s principal financial and accounting officer.  Messrs. Gorup and Thor each received a 10% increase in base salary primarily for competitive and retention purposes.  Following a review of Messrs. W. Marvin Rush’shas remained unchanged since 2004, and W.M. “Rusty” Rush’s and tally sheets, the Compensation Committee determined that their total direct compensationbase salary has remained unchanged since he was appointed Chief Executive Officer in line with the objectivesFebruary 2006.

The named executive officers’ rate of the Company’s executive compensation program and did not increase their base salaries in 2007.2007 and 2008 were as follows:

 

Named Executive Officer

Base Salary
as of 12/31/07 and 12/31/08 ($)

W. Marvin Rush,
Chairman

900,000

W.M. “Rusty” Rush,
President and Chief Executive Officer

584,040

Martin A. Naegelin, Jr.,
Executive Vice President

345,000

Daryl J. Gorup,
Senior Vice President – Dealership Operations

290,400

Steven L. Keller,
Vice President – Chief Financial Officer and Treasurer

200,000

Cash Performance Bonus

 

The named executive officers are eligible to earn an annual cash performance bonus based upon the Company’s financial and operational achievements during the prior year and historical compensation levels.  Performance bonuses are used to focus management on achieving key corporate financial and

30


operating objectives and to reward achievement of financial and operating objectives.  Performance bonuses are traditionally paid on March 15th of the year following the year in which they are earned.

 

W. Marvin Rush and W.M. “Rusty” Rush make a joint recommendation to the Compensation Committee regarding the amount of the named executive officers’ performance bonuses.  The Compensation Committee has discretion to approve, disapprove or alter this joint recommendation.  With input from W. Marvin Rush and W.M. “Rusty” Rush, the Compensation Committee evaluates the performance of the Company as a whole.  Based on these evaluations and W. Marvin Rush and W.M. “Rusty” Rush’s joint recommendation with respect to the named executive officers, the Compensation Committee determines the amount of each named executive officer’s performance bonus, if any.bonus.  The entire Board of Directors ratifies W. Marvin Rush’s and W.M. “Rusty” Rush’s annual performance bonus.

 

31


In 20062007 and 2007,2008, the Compensation Committee approved the following cash performance bonuses for the named executive officers:

 

Named Executive Officer

 

2006 Cash Bonus ($)

 

2007 Cash Bonus ($)

 

 

2007
Cash Bonus ($)

 

2008
Cash Bonus ($)

 

Percentage
Change

 

 

 

 

 

 

W. Marvin Rush,
Chairman

 

750,000

 

653,000

 

 

653,000

 

438,000

 

(33

)%

W.M. “Rusty” Rush,
President and Chief Executive Officer

 

1,000,000

 

870,000

 

 

870,000

 

583,000

 

(33

)%

Martin A. Naegelin, Jr.,
Executive Vice President and Former Chief Financial Officer

 

255,000

 

260,000

 

Martin A. Naegelin, Jr.,
Executive Vice President

 

260,000

 

175,000

 

(33

)%

Daryl J. Gorup,
Senior Vice President – Dealership Operations

 

240,000

 

210,000

 

 

210,000

 

141,000

 

(33

)%

James E. Thor, Senior
Vice President – Retail Sales

 

230,000

 

201,000

 

Steven L. Keller,
Vice President – Chief Financial Officer and Treasurer

 

42,000

 

125,000

 

 

125,000

 

100,000

 

(20

)%

 

Except for Messrs. Naegelin and Keller, the 2007The 2008 cash performance bonuses were based upon the Company’s 2007 income2008 “income before taxes.”  The Compensation Committee believes that “income before taxes” provides a direct link between an officer’s compensation and the Company’s financial performance, causing in the officers’ compensation to fluctuate with the Company’s financial performance.  As theThe Company’s income before taxes for the 2008 fiscal year decreased by approximately 13%44% from the 2007 fiscal year, to $28.9 million in 2007, as compared to 2006,2008 from $51.5 million in 2007.

Based on these financial results, the Compensation Committee arbitrarily reduced cash performance bonuses of each of the named executive officer’s,officers, except for Messrs. Naegelin andMr. Keller, performance bonus was also decreased by approximately 13%33% in 2007.

Mr. Naegelin’s performance bonus increased approximately 2% in 2007, as compared to 2006, primarily due to his promotion during the year to the position of Executive Vice President and assuming additional responsibilities.2008.  Mr. Keller’s performance bonus was decreased 20% in 2008.

Traditionally, performance bonuses are increased approximately 198% in 2007, as comparedor decreased by an arbitrary percentage that is less than the actual percentage that “income before taxes” increased or decreased from the prior fiscal year.  The decision to 2006, primarily for retention and competitive purposes as well asreduce Mr. Keller’s performance by a lower percentage than the other named executive officers was due to (a) his significantincreased responsibilities and contributions to the Company in connection with his new role as the Company’s Chief Financial Officer.

In additionOfficer, a position he has held since March 2007, and (b) Mr. Keller’s total cash compensation being below the market 50th percentile, in accordance with the comparative pay information compiled by Longnecker in 2007.  The 2008 cash performance bonuses were not based upon a formula-driven framework or specific benchmark percentiles.  Instead the amount of the bonuses was based upon the Compensation Committee’s judgment and discretion as to the above, Mr. Thor received a one-time retention bonusoverall fairness of $150,000 in 2007.

For further information on the named executive officers’ cash performance bonuses and Mr. Thor’s retention bonus, please refer to the Summary Compensation Table contained in this proxy statement.bonuses.

 

Equity Incentive Award

 

Historically,The Company annually grants equity incentive awards to key employees, including the Company has annually granted stock optionsnamed executive officers, to (i)(a) allow keysuch employees to participate in the Company’s profitability and long-term growth, (ii)(b) maximize retention leverage and (iii)(c) align keysuch employees’ interests with the intereststhose of the

31


Company’s shareholders.  In 2007, all stock optionsEquity awards are typically awarded on March 15th of each year, unless that date falls on a weekend, pursuant to key employees were granted pursuant tothe terms of the Company’s 2007 Long-Term Incentive Plan.  The Compensation Committee administers the 2007 Long-Term Incentive Plan, which includes without limitation, selecting award recipients, determining the type of awards to be granted, fixing the terms and conditions of awards, and interpreting the provisions of the 2007 Long-Term Incentive Plan.

 

32Prior to 2008, the Company granted equity awards only in the form of stock options.  However, as a result of Longnecker’s recommendation, the Compensation Committee began granting equity awards in the form of stock options and time-vested restricted stock awards in 2008.  In light of the retention incentive of time-vested restricted stock, market pressures associated with the general trend toward granting restricted stock in lieu of stock options, and employees’ general perceived value of restricted stock, the Compensation Committee has presently determined granting a combination of restricted stock and stock options will more effectively achieve the Company’s executive compensation objectives.


 

Under the terms of the 2007 Long-Term Incentive Plan, the Compensation Committee may grant equity awards for shares of the Company’s Class A and Class B Common Stock.  Each share of Class B Common Stock is entitled to one vote per share and each share of Class A Common Stock is entitled to 1/20th of one vote per share.  In the future,Since 2007, the Company currently intends to granthas granted equity awards for Class A Common Stock, in lieu of Class B Common Stock.  However, theThe Compensation Committee retains discretion to grant equity awards for Class B Common Stock in the future to ensure select members of management maintain the requisite voting control of the Company’s capital stock as required by the Company’s dealership agreements with Peterbilt Motors Company and other key suppliessuppliers of the Company.  ACompany, as further description of these voting control requirements is set forth below.discussed in our public filings with the SEC.

 

In 2007, all stock options wereEquity awards are granted at fair market value on the date of grant.  Fair market value is internally defined as the closing market price on the grant date of the respective class of the Company’s Common Stock as quoted on the NASDAQ® Global Select Market.  All stock optionequity awards to our directors and employees, including the named executive officers, have been granted and reflected in the Company’s consolidated financial statements in accordance with the applicable accounting guidance contained in FAS 123R.  Generally, stock options vest in one-third increments annually, beginning on the third anniversary of the grant date and have a term of ten years.  Restricted stocks awards issued by the Company generally vest in one-third increments beginning on the first anniversary of the grant date.  The vesting scheduleschedules of the equity awards and term of stock options were strategically chosen to be competitive and enhance the Company’s retention efforts.

 

In determining2007 and 2008, the amount ofCompensation Committee approved the following Class A stock optionoptions and restricted stock awards to the named executive officers:

 

 

2007
Equity Awards

 

2008
Equity Awards

 

 

 

Named Executive Officer

 

Options
(#)

 

Restricted
Stock (#)

 

Aggregate
Grant Date
Fair Value ($)(1)

 

Options
(#)

 

Restricted
Stock (#)

 

Aggregate
Grant Date
Fair Value ($)(1)

 

Percentage
Change(2)

 

W. Marvin Rush,
Chairman

 

60,000

 

—

 

317,580

 

40,000

 

8,000

 

348,800

 

9.8

%

W.M. “Rusty” Rush,
President and Chief Executive Officer

 

75,000

 

—

 

396,975

 

50,000

 

10,000

 

436,000

 

9.8

%

Martin A. Naegelin, Jr.,
Executive Vice President

 

30,000

 

—

 

158,790

 

20,000

 

4,000

 

174,400

 

9.8

%

Daryl J. Gorup,
Senior Vice President – Dealership Operations

 

21,450

 

—

 

113,535

 

14,300

 

2,860

 

124,696

 

9.8

%

Steven L. Keller,
Vice President – Chief Financial Officer and Treasurer

 

4,125

 

—

 

21,834

 

5,100

 

1,020

 

44,472

 

103.7

%

32


(1)The amounts reflect the aggregate grant date fair value of stock options granted in 2007 and stock options and restricted stock awards granted in 2008, computed in accordance with FAS 123R, except no assumptions for forfeitures were included.  A discussion of the assumptions used in calculating the grant date fair value is set forth in Notes 2 and 12 of the Notes to Consolidated Financial Statements of our 2008 Annual Report on Form 10-K filed with the SEC on March 13, 2009.

(2)Amounts reflect the percentage change in the aggregate grant date fair value of the equity awards in 2008, as compared to 2007.

In determining the amount of equity awards to grant the named executive officers in 2007,2008, the Compensation Committee generally considered the following factors:

 

·                                          Longnecker’s recommendations as to the Company’s financialform and operating performance;amount of equity awards;

·                                          competitiveRecommendations of the Company’s Chairman and Chief Executive Officer;

·Competitive pay information of the Company’s peers and other public survey data; and

·                                          historical compensation levels.The value of equity awards granted in prior years.

 

In 2006 and 2007, the Compensation Committee approved the following Class A stock option awards to the named executive officers:

Named Executive Officer

 

2006 Option Awards (#)

 

2007 Option Awards (#)

 

 

 

 

 

 

 

W. Marvin Rush,
Chairman

 

45,000

 

60,000

 

W.M. “Rusty” Rush,
President and Chief Executive Officer

 

45,000

 

75,000

 

Martin A. Naegelin, Jr.,
Executive Vice President and Former Chief Financial Officer

 

16,500

 

30,000

 

Daryl J. Gorup,
Senior Vice President – Dealership Operations

 

19,500

 

21,450

 

James E. Thor,
Senior Vice President – Retail Sales

 

16,500

 

18,150

 

Steven L. Keller,
Vice President – Chief Financial Officer and Treasurer

 

3,750

 

4,125

 

In recognition of the Company’s record financial results for the 2006 fiscal year and the other factors discussed immediately above, the Compensation Committee significantly increased the amount of stock option awards to the named executive officers in 2007.  For the year ended December 31, 2006, the Company’s gross revenues totaled $2.4 billion, a 26% increase compared to gross revenues of $1.9 billion reported in 2005.  Income before taxes was $94.1 million, a 32% increase over income before taxes of $71.1 million in 2005.  However, theThe amount of the 2007 stock option2008 equity awards were not based upon a formula-driven framework or specific benchmark percentiles.  Instead, the amount was based upon the Compensation Committee’s judgment and discretion, after consultation with Longnecker, as to (a) the overall fairness of the named executive

33


officers’ long-term equity award and total direct compensation in 2007.  All share amounts referred to in this section have been adjusted for the three-for-two stock split in October 2007.2008, and (b) appropriate levels of retention incentives.

 

As further indicatedMr. Keller’s 2008 aggregate equity awards were increased significantly more than the other named executive officers as a result of (a) his increased responsibilities and contributions to the Company as Chief Financial Officer, and (b) his 2007 equity awards being below even after significantly increasing the amountmarket 50th percentile, in accordance with the comparative pay information compiled by Longnecker in 2007.  Additionally, in light of awardsthe decline in 2007,retention value of the 2007named executive officers’ outstanding stock option awards as a result of the significant reduction in the Company’s stock price, the Compensation Committee deems the level of equity awards in 2008 to be fair and further align the named executivelong-term interests of such officers were still below the market 50th percentilewith those of the Company’s peer group and the other published survey data referred to above:

 

 

2007 Long-Term
Incentive Awards as a
Percentage of
Base Salary

 

Long-Term Incentive Awards
as a Percentage of Base Salary

 

Named Executive Officer

 

Rush Enterprises

 

Market 50th Percentile

 

Market 75th Percentile

 

W. Marvin Rush

 

39

%

120

%

250

%

W.M. “Rusty” Rush

 

76

%

100

%

175

%

Martin A. Naegelin, Jr.

 

59

%

75

%

150

%

Daryl L. Gorup

 

48

%

65

%

130

%

James E. Thor

 

43

%

65

%

130

%

Steven L. Keller

 

16

%

40

%

80

%

For further information on the stock option awards, see the Summary Compensation Table and the 2007 Grants of Plan-Based Awards Table contained in this proxy statement.shareholders.

 

Generally,As discussed above, the Company typically grants stock optionsequity awards to its employees, including the named executive officers, on March 15th of each year.  However, the Company may grant equity awards at other times during the year for legitimate business purposes, including without limitation, upon employment of new hires.  The Compensation Committee does not have a formal policy on timing equity awards in connection with the release of material non-public information to affect the value of compensation.  Notwithstanding the foregoing, in the event that material non-public information becomes known to the Compensation Committee prior to granting equity awards, the Compensation Committee will take such information under advisement and make an assessment in its business judgment after consultation with Company executives and counsel whether to delay the grant of thesuch equity awardawards in order to avoid any impropriety based on consultation with Company executives and counsel.potential impropriety.

 

In prior years, including 2007,The Board of Directors of the Company issued only stock options to its key employees, including the namedbelieves that executive officers.  As a resultofficers should own and hold Common Stock of Longnecker’s recommendations to the Compensation Committee, the Company intendsto further align their interests and actions with the interests of the Company’s shareholders.  Therefore, the Board of Directors adopted Executive Officer Stock Ownership Guidelines in February 2009.  Pursuant to such guidelines, the futureChairman and the Chief Executive Officer are expected to utilize a combinationown and hold 100,000 shares and the other executive officers of the Company are expected to own and hold 10,000 shares within five years of the adoption of such guidelines or within five years of his or her appointment as an executive officer of the Company.  Until the applicable stock ownership level is achieved, an executive officer is encouraged to retain at least 25 percent of the net shares obtained through the Company’s stock incentive plans.  Net shares are the number of shares realized from the sale of stock options and time-vested restricted stock awards to compensate its key employees, including its named executive officers.  In light ofor the retention incentive of time-vested restricted stock, market pressures associated with the general trend toward granting restricted stock in lieu of stock options, and employees’ general perceived valuevesting of restricted stock, less the Compensation Committeenumber of shares the executive officer sells or has presently determined granting a combination of restricted stockwithheld to cover any exercise price and stock options will be more effective in achieving the Company’s executive compensation objectives.  In determining the relative allocation of such awards, the Compensation Committee plans to weigh the effectiveness and perceived value of such awards against their associated compensation expense.tax withholding obligations.

 

3433


 

The Company has considered adopting stock ownership guidelines for its directors and executive officers, but does not currently require that its directors or executive officers maintain ownership of a certain amount of the Company’s Common Stock.  Nevertheless, agreements with Peterbilt Motors Company and other key suppliers of the Company, require that select members of management beneficially own a minimum percentage of the voting power of the Company’s outstanding capital stock.  The Company strives to ensure these individuals maintain the minimum ownership levels in order to preserve the Company’s continued economic success.  Notwithstanding the foregoing, the Company reserves the right to implement stock ownership guidelines in the future if it determines that doing so will enhance shareholder value.

Employee Benefits and Other Perquisites

 

General

 

The named executive officers are eligible to participate in the Company’s flexible benefits plans that are generally available to all employees.  Under these plans, employees are entitled to medical, dental, vision, short-term and long-term disability, life insurance and other similar benefits.  Additionally, employees are entitled to vacation, sick leave and other paid holidays.  The Compensation Committee believes that the Company’s commitment to provide these benefits recognizes that the health and well-being of its employees contribute directly to a productive and successful work life that enhances results for the Company and its shareholders.

 

401(k) Plan

 

The Company maintains a 401(k) plan for all Company employees, including the named executive officers, as a source of retirement income.  Each employee who has completed 90 days of continuous service is eligible to participate in the 401(k) plan.  Employees may contribute from 1% to 50% of their total gross compensation, up to a maximum dollar amount established in accordance with Section 401(k) of the Internal Revenue Code.  However, certain higher paid employees are limited to a maximum contribution of 15% of their total gross compensation.  ForDuring 2008, for the first 10% of pay contributed under the plan, the Company may contributecontributed to the plan an amount equal to (i) 25% of the employee’s contributions for those employees with less than five years of service, and (ii) 50% of the employee’s contributions for those employees with more than five years of service.  The Company temporarily suspended its policy of matching employee’s 401(k) contributions on March 10, 2009.  For further information on the named executive officers’ participation in the 401(k) plan, please refer to the Summary Compensation Table contained in this proxy statement.

 

Employee Stock Purchase Plan

 

The Company has an Employee Stock Purchase Plan that allows, eligiblegenerally, all employees, including the named executive officers, to contribute up to 10% of their base earnings toward the semi-annual purchase of the Company’s Class A Common Stock.  The employee’s purchase price is 85% of the lesser of the closing price of the Class A Common Stock on the first business day or the last business day of the semi-annual offering period, as reported by The NASDAQ® Global Select Market.  Employees may purchase shares having a fair market value of up to $25,000 (measured as of the first day of each semi-annual offering period) each calendar year.

 

35


Perquisites

 

The named executive officers also receive various perquisites, including:

 

·                                          annualAnnual physical;

·                                          automobileAutomobile and gasoline allowances;

·                                          reservedReserved parking;

·                                          company-paidCompany-paid long-term disability insurance; and

·                                          rewardsRewards points earned from purchases made on Company credit cards.

 

In addition to the above perquisites, W. Marvin Rush and W.M. “Rusty” Rush are (i)(a) provided automobile insurance under the Company’s fleet insurance policy, (ii)(b) allowed personal use of the Company’s ranch when it is not being used for Company business, (iii)(c) permitted to use Company-owned aircraft for personal air travel to the extent it is not otherwise being used for Company business, and (iv)(d) provided term life insurance, the premiums of which are paid by the Company.  The Company also pays the premiums on W. Marvin Rush’s medical, dental and vision insurance, premiums on an umbrella insurance policy, and the monitoring costs of his home security system.  The Company provides W.M. “Rusty” Rush with the use of a Company-owned automobile (in lieu of the above automobile allowance),

34


and pays the premiums on a universal whole life insurance policy on which W.M. “Rusty” Rush is named the sole beneficiary and which covers the life of W. Marvin Rush.  Additionally, certain employees of the Company perform personal services exclusively for W. Marvin Rush.  However, the costs associated with these employees, including salaries and benefits, are deducted from W. Marvin Rush’s after tax income each pay period.  Other named executive officers are also generally permitted to use Company-owned aircraft for personal air travel to the extent it is not otherwise being used for Company business.

 

The Compensation Committee has decided to offer the above benefits in order to attract and retain the named executive officers by offering compensation opportunities consistent with its peers.  The Compensation Committee believes that the above benefits provide a more tangible incentive than an equivalent amount of cash compensation.  In determining the named executive officers’ total direct compensation, the Compensation Committee considers these benefits.  For further discussion of these employee benefits and other perquisites, including the methodology for computing their costs, please refer to the 2008 Summary Compensation Table includedset forth below in this proxy statement.

 

Indemnity Agreements

 

The Company has entered into indemnity agreements with all of its directors and executive officers, including the named executive officers.  These agreements provide that the Company will, to the extent permitted by applicable law, indemnify the officer or director against expenses and liabilities incurred in connection with their service to the Company.  Additionally, the indemnity agreements require the Company to maintain director and officer liability insurance.

 

Tax and Accounting Treatment

 

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation the Company may deduct for federal income tax purposes in any one year with respect to certain senior executives of the Company’s Chief Executive Officer and the next three most highly compensated officers, excluding the Chief Financial Officer.Company.  However, compensation that is “performance-based,” which is compensation that is paid pursuant to pre-established objective performance goals that are based on criteria approved by the shareholders and is determined and administered by the Compensation Committee according to related regulations,performance-based is excluded from this $1,000,000 limitation and is deductible by the Company.

36


 

In formulating the executive compensation program, the Compensation Committee gives consideration to the anticipated tax treatment to the Company and to the named executive officers of various payments and benefits.  However, the Compensation Committee also considers other factors which, depending upon the circumstances, may outweigh tax considerations.  The Compensation Committee reserves the right to approve non-deductible compensation if it deems it to be in the Company’s and its shareholders’ best interest.

 

20082009 Compensation Decisions

 

On March 14, 2008,13, 2009, the following Class A stock options were granted to the named executive officers:

 

Named Executive Officer

 

Option Awards (#)

 

W. Marvin Rush,
Chairman

 

40,00060,000

 

W.M. “Rusty” Rush,
President and Chief Executive Officer

 

50,00075,000

 

Martin A. Naegelin, Jr.,
Executive Vice President and Former Chief Financial Officer

 

20,00030,000

 

Daryl J. Gorup,
Senior Vice President – Dealership Operations

 

14,300

James E. Thor,
Senior Vice President – Retail Sales

12,10021,450

 

Steven L. Keller,
Vice President – Chief Financial Officer and Treasurer

 

5,10012,000

 

35


 

These stock options have an exercise price equal to the closing sale price of the Company’s Class A Common Stock on March 14, 2008,13, 2009, or $15.52$7.67 per share, and vest in three equal annual installments beginning on the third anniversary of their grant date.

 

On March 14, 2008,13, 2009, the following Class A restricted sharesstock awards were granted to the named executive officers:

 

Named Executive Officer

 

Restricted Stock Awards (#)

 

W. Marvin Rush,
Chairman

 

8,00012,000

 

W.M. “Rusty” Rush,
President and Chief Executive Officer

 

10,00015,000

 

Martin A. Naegelin, Jr.,
Executive Vice President and Former Chief Financial Officer

 

4,0006,000

 

Daryl J. Gorup,
Senior Vice President – Dealership Operations

 

2,860

James E. Thor,
Senior Vice President – Retail Sales

2,4204,290

 

Steven L. Keller,
Vice President – Chief Financial Officer and Treasurer

 

1,0202,400

 

 

These restricted stock awards vest in three equal annual installments beginning on the first anniversary of their grant date.

37


 

The Compensation Committee intends to continue its strategy of compensating the named executive officers through programs that emphasize a balance between base salary and performance-based compensation, with the ultimate goal of enhancing shareholder value through attracting and retaining the highest quality executives and aligning the interests of those executives with the Company’s shareholders.  To that end, a significant portion of executive compensation will continue to be tied to Company performance, while maintaining an appropriate balance between cash and non-cash compensation.compensation and not encouraging executives to take unnecessary risks that could threaten the long-term sustainability of the Company.

 

The foregoing discussion described the compensation philosophies, principles and practices the Compensation Committee utilized in setting executive compensation for the 20072008 fiscal year.  In the future, as the Committee continues to review each element of the executive compensation program, these philosophies, principles and practices may change.

 

36


2008 Summary Compensation Table

 

Name and Principal Position

 

Year

 

Salary ($)

 

Bonus ($)(1)

 

Option
Awards ($)(2)

 

All Other
Compensation ($)(3)

 

Total ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Marvin Rush,

Chairman

 

2007

2006

 

900,000

900,000

 

653,000

750,000

 

417,133

379,954

 

254,759
318,171

(4)

2,224,892

2,348,125

 

W.M. “Rusty” Rush, President and Chief Executive Officer

 

2007

2006

 

584,040

550,700

 

870,000

1,000,000

 

199,559

152,769

 

229,928
211,185

(5)

 

1,883,527

1,914,654

 

Martin A. Naegelin, Jr., (6) Executive Vice President and Former Chief Financial Officer

 

2007

2006

 

304,208

248,200

 

260,000

255,000

 

78,442

58,160

 

61,207

47,740

(7)

 

703,857

609,100

 

Daryl J. Gorup, Senior Vice President – Dealership Operations

 

2007

2006

 

272,800

264,000

 

210,000

240,000

 

118,678

80,394

 

24,391

22,122

(8)

 

625,869

606,516

 

James E. Thor, Senior Vice President – Retail Sales

 

2007

2006

 

257,300

—

 

351,000

—

(9)

 

58,118

—

 

18,821

—

(10)

 

685,239

—

 

Steven L. Keller,(6) Vice President – Chief Financial Officer and Treasurer

 

2007

2006

 

159,042

—

 

125,000

—

 

14,886

—

 

23,328

—

(11)

 

322,256

—

 

 

 

 

 

 

 

 

 

Stock

 

Option

 

All Other

 

 

 

 

 

 

 

 

 

 

 

Awards

 

Awards

 

Compensation

 

 

 

Name and Principal Position

 

Year

 

Salary ($)

 

Bonus ($)(1)

 

($)(2)

 

($)(2)

 

($)(3)

 

Total ($)

 

W. Marvin Rush,

 

2008

 

900,000

 

438,000

 

124,160

 

314,607

 

379,194

(4)

2,155,961

 

Chairman

 

2007

 

900,000

 

653,000

 

—

 

417,133

 

254,759

 

2,224,892

 

 

 

2006

 

900,000

 

750,000

 

—

 

379,954

 

318,171

 

2,348,125

 

W.M. “Rusty” Rush,

 

2008

 

584,040

 

583,000

 

43,111

 

254,589

 

226,713

(5)

1,691,453

 

President and Chief

 

2007

 

584,040

 

870,000

 

—

 

199,559

 

229,928

 

1,883,527

 

Executive Officer

 

2006

 

550,700

 

1,000,000

 

—

 

152,769

 

211,185

 

1,914,654

 

Martin A. Naegelin, Jr.,

 

2008

 

345,000

 

175,000

 

17,244

 

95,306

 

30,611

(6)

663,161

 

Executive Vice President

 

2007

 

304,208

 

260,000

 

—

 

78,442

 

61,207

 

703,857

 

 

 

2006

 

248,200

 

255,000

 

—

 

58,160

 

47,740

 

609,100

 

Daryl J. Gorup,

 

2008

 

290,400

 

141,000

 

36,989

 

189,597

 

27,168

(7)

685,154

 

Senior Vice President –

 

2007

 

272,800

 

210,000

 

—

 

118,678

 

24,391

 

625,869

 

Dealership Operations

 

2006

 

264,000

 

240,000

 

—

 

80,394

 

22,122

 

606,516

 

Steven L. Keller,

 

2008

 

200,000

 

100,000

 

4,397

 

18,907

 

26,252

(8)

349,556

 

Vice President – Chief

 

2007

 

159,042

 

125,000

 

—

 

14,886

 

23,328

 

322,256

 

Financial Officer and Treasurer

 

2006

 

—

 

—

 

—

 

—

 

—

 

—

 

 

(1)           Except as provided herein, the (i) 2008 amounts reflect cash performance bonuses paid in 2009, based upon 2008 performance, (ii) 2007 amounts reflect cash performance bonuses paid in 2008, based upon 2007 performance, and (ii) 2006 amounts reflect cash performance bonuses paid in 2007, based upon 2006 performance.

 

(2)           For 2008, these amounts reflect the compensation expense recognized by the Company during 2008 for financial statement reporting purposes in accordance with FAS 123R, except no assumptions for forfeitures were included, and includes stock option awards granted in 2003, 2004, 2005, 2006, 2007 and 2008 and restricted stock awards in 2008.  Additional information regarding the calculation of such compensation expense is set forth in Notes 2 and 12 of the Notes to Consolidated Financial Statements of our 2008 Annual Report on Form 10-K, filed with the SEC on March 13, 2009.  All equity awards were granted under the 2007 Long-Term Incentive Plan.

For 2007, these amounts reflect the compensation expense recognized by the Company during 2007 for financial statement reporting purposes in accordance with FAS 123R, except no assumptions for forfeitures were included, and includes stock option awards granted in 2002, 2003, 2004, 2005, 2006 and 2007.  Additional information regarding the calculation of such compensation expense is set forth in Notes 2 and 12 of the Notes to Consolidated Financial Statements of our 2007 Annual Report on Form 10-K, filed with the SEC on March 13, 2008.  All stock options were granted under the 2007 Long-Term Incentive Plan.

 

For 2006, these amounts reflect the compensation expense recognized by the Company during 2006 for financial statement reporting purposes in accordance with FAS 123R, except no assumptions for forfeitures were included, and includes stock option awards granted in 2001, 2002, 2003, 2004, 2005, and 2006.  Additional information regarding the calculation of such compensation expense is set forth in Notes 2 and 13 of the Notes to Consolidated Financial Statements of our 2006 Annual Report on Form 10-K, filed with the SEC on March 15, 2007.  All stock options were granted under the 1996 Long-Term Incentive Plan.

 

(3)           The value of perquisites and other personal benefits reported in a named executive officer’s W-2 may not necessarily reflect the value reported in this column, due to applicable Internal Revenue Service guidelines.

38

37


 

(4)                                  This amount reflects (i) the cost of term life insurance premiums paid by the Company on behalf of W. Marvin Rush totaling $24,192;$26,157; (ii) the cost of an annual physical; (iii) the cost of medical, dental and vision insurance premiums paid by the Company on behalf of W. Marvin Rush; (iv) the cost of premiums on an umbrella insurance policy paid by the Company on behalf of W. Marvin Rush; (v) the cost of long-term disability insurance premiums paid by the Company on behalf of W. Marvin Rush; (vi) the cost of monitoring a home security system at W. Marvin Rush’s primary residence; (vii) rewards points earned from purchases on Company credit cards;cards totaling $28,762; (viii) matching contributions to the Company’s 401(k) plan totaling $7,750; (ix) an automobile allowance of $40,200; (x) a gas allowance; (xi) the incremental cost of personal use of the Company-owned aircraft totaling $81,801;$202,413; and (xii) the incremental cost of personal use of the Company-ownedCompany’s ranch totaling $43,100.$38,300.  Additionally, Mr. Rush’s personal automobile was covered under the Company’s fleet insurance policy and he received reserved parking at the Company’s offices during 2007.2008.  Because the Company did not incur any incremental costs in connection with these two perquisites there is no value attributed to them in the table.

 

The incremental cost of personal use of the Company-owned aircraft by a named executive officer is calculated based upon the Company’s direct operating cost.  This methodology calculates the incremental costs based on the average weighted cost of fuel, aircraft maintenance, landing fees, trip-related hangar and parking costs, and similar variable costs.  Because the aircraft is used primarily for business travel, the methodology excludes fixed costs that do not change based on usage, such as pilots’ and other employees’ salaries, purchase cost of the aircraft and non-trip related hangar expenses.  On certain occasions, an executive’s spouse or other family members may accompany the executive on a flight.  No additional direct operating cost is incurred in such situations under the foregoing methodology.

 

The incremental cost of personal use of the Company’s ranch by a named executive officer is calculated based upon an estimated nightly room and board charge of $50.00 per person forthe named executive officer and his guests, if any, and the costs assigned to any game killed by the named executive officer or his guests.

 

Rewards points earned by a named executive officer from purchases on Company credit cards is calculated by multiplying the number of points received by eachsuch named executive officer by $.005, which is the rate that participants in American Express’s®Express’s® Membership Rewards Program®Program® may redeem points for cash.travelers cheques.  American Express®Express® will redeem 20,000 points in exchange for $100.a $100 travelers cheque.

 

The value of all other perquisites is based upon the Company’s actual costs.  The Company did not reimburse its named executive officers for income taxes imputed to them for receipt of the above perquisites and other benefits.

 

(5)                                  This amount reflects (i) the cost of term life insurance premiums paid by the Company on behalf of W.M. “Rusty” Rush totaling $3,600; (ii) the cost of long-term disability insurance premiums paid by the Company on behalf of W.M. “Rusty” Rush; (iii) rewards points earned from purchases on Company credit cards; (iv) the cost of a health club membership; (v) matching contributions to the Company’s 401(k) plan totaling $7,750; (vi)(v) the incremental cost of personal use of a Company-owned automobile; (vii)(vi) a gas allowance; (viii)(vii) the incremental cost of personal use of the Company-owned aircraft totaling $95,886; (ix)$111,949; (viii) the incremental cost of personal use of the Company-owned ranch totaling $32,550;Company’s ranch; and (x)(ix) the cost of universal whole life insurance premiums paid by the Company on behalf of W.M. “Rusty” Rush totaling $51,774.  The universal whole life insurance policy is on the life of W. Marvin Rush, and W.M. “Rusty” Rush is the sole beneficiary.  The purpose of this policy is to allow W.M. “Rusty” Rush to pay a portion of the estate taxes on his father’s estate in the event of his father’s death to decrease the risk of W.M. “Rusty” Rush being forced to sell shares of the Company’s Common Stock to pay such estate taxes.  Additionally, W.M. “Rusty” Rush received automobile insurance under the Company’s fleet insurance policy and reserved parking at the Company’s offices during 2007.

38


2008.  Because the Company did not incur any incremental costs in connection with these two perquisites there is no value attributed to them in the table.

 

The incremental cost of personal use of thea Company-owned automobile is equal to the depreciation amount recognized by the Company for the vehicle used by W.M. “Rusty” Rush in 2007.

2008.

 

(6)                                  Effective March 20, 2007, Mr. Naegelin was promoted to Executive Vice President and Mr. Keller was promoted to Chief Financial Officer.

39


(7)                                  This amount reflects (i) the cost of long-term disability insurance premiums paid by the Company on behalf of Mr. Naegelin; (ii) rewards points earned from purchases on Company credit cards; (iii) matching contributions to the Company’s 401(k) plan totaling $7,750; (iv) an automobile allowance; and (v) a gas allowance; and (vi) the incremental cost of personal use of the Company-owned aircraft.allowance.  Mr. Naegelin also received reserved parking at the Company’s offices for which the Company did not incur any incremental cost and, therefore, no value is attributed for this perquisite in the table.

 

(8)(7)                                  This amount reflects (i) the cost of long-term disability insurance premiums paid by the Company on behalf of Mr. Gorup; (ii) matching contributions to the Company’s 401(k) plan totaling $10,250; (iii) an automobile allowance; (iv) a gas allowance; and (v) rewards points earned from purchases on Company credit cards.  Mr. Gorup also received reserved parking at the Company’s offices for which the Company did not incur any incremental cost and, therefore, no value is attributed for this perquisite in the table.

 

(9)                                  Includes a one-time, special retention bonus of $150,000 made in June 2007.

(10)                            This amount reflects (i) the cost of long-term disability insurance premiums paid by the Company on behalf of Mr. Thor; (ii) the cost of an annual physical, (iii) matching contributions to the Company’s 401(k) plan totaling $3,875; (iv) an automobile allowance; (v) a gas allowance, and (vi) rewards points earned from purchases on Company credit cards.  Mr. Thor also received reserved parking at the Company’s offices for which the Company did not incur any incremental cost and, therefore, no value is attributed for this perquisite in the table.

(11)(8)                                  This amount reflects (i) the cost of long-term disability insurance premiums paid by the Company on behalf of Mr. Keller; (ii) matching contributions to the Company’s 401(k) plan totaling $7,750; (iii) an automobile allowance; (iv) a gas allowance, and (v) rewards points earned from purchases on Company credit cards.  Mr. Keller also received reserved parking at the Company’s offices for which the Company did not incur any incremental cost and, therefore, no value is attributed for this perquisite in the table.

40

39


20072008 GRANTS OF PLAN-BASED AWARDS

 

Name

 

Grant Date (1)

 

Date of Compensation
Committee Action (1)

 

All Other Option Awards: Number of Securities Underlying Options (#) (2)

 

Exercise or Base
Price of Option Awards
($ /Sh) (3)

 

Grant Date Fair
Value of
Option Awards
($) (4)

 

 

Grant
Date(1)

 

Date of
Compensation
Committee
Action(1)

 

All Other Stock
Awards:
Number of
Shares of Stock
(#)(2)

 

All Other Option
Awards:
Number
Of Securities
Underlying
Options (#)(2)

 

Exercise or
Base
Price of
Option Awards
($/Sh)(3)

 

Grant Date
Fair Value of
Stock and
Option Awards
($)(4)

 

 

 

 

 

 

 

 

 

 

 

 

W. Marvin Rush

 

3/15/07

 

3/6/07

 

60,000

 

12.77

 

317,580

 

 

3/15/08

 

3/5/08

 

 

 

 

 

 

 

124,160

 

 

 

 

 

 

 

 

 

 

 

 

 

3/15/08

 

3/5/08

 

8,000

 

40,000

 

15.52

 

224,640

 

W.M. “Rusty” Rush

 

3/15/07

 

3/6/07

 

75,000

 

12.77

 

396,975

 

W. M. “Rusty Rush

 

3/15/08

 

3/5/08

 

 

 

 

 

 

 

155,200

 

 

 

 

 

 

 

 

 

 

 

 

 

3/15/08

 

3/5/08

 

10,000

 

50,000

 

15.52

 

280,800

 

Martin A. Naegelin, Jr.

 

3/15/07

 

3/6/07

 

30,000

 

12.77

 

158,790

 

 

3/15/08

 

3/5/08

 

 

 

 

 

 

 

62,080

 

 

 

 

 

 

 

 

 

 

 

 

 

3/15/08

 

3/5/08

 

4,000

 

20,000

 

15.52

 

112,320

 

Daryl J. Gorup

 

3/15/07

 

3/6/07

 

21,450

 

12.77

 

113,535

 

 

3/15/08

 

3/5/08

 

 

 

 

 

 

 

44,387

 

 

 

 

 

 

 

 

 

 

 

 

 

3/15/08

 

3/5/08

 

2,860

 

14,300

 

15.52

 

80,309

 

James E. Thor

 

3/15/07

 

3/6/07

 

18,150

 

12.77

 

96,068

 

Steven L. Keller

 

3/15/08

 

3/5/08

 

 

 

 

 

 

 

15,830

 

 

 

 

 

 

 

 

 

 

 

 

 

3/15/08

 

3/5/08

 

1,020

 

5,100

 

15.52

 

28,642

 

Steven L. Keller

 

3/15/07

 

3/6/07

 

4,125

 

12.77

 

21,834

 

 

(1)           The “Grant Date” is the effective date of the Class A stock optionrespective equity awards and the “Date of Compensation Committee Action” is the date that the Compensation Committee approved the effective grant date and number of securities underlying the stock optionequity awards reported in the table.

 

(2)           The amounts reflect the annual Class A stock option and Class A restricted stock awards, as applicable, to the named executive officers under the 2007 Long-Term Incentive Plan, as adjusted forPlan.  The stock options vest in one-third increments annually, beginning on the 3-for-2 stock split effectedthird anniversary of the grant date and have a term of ten years.  The restricted stocks awards vest in one-third increments beginning on October 10, 2007.the first anniversary of the grant date.

 

(3)           The exercise price of each Class A stock option is equal to the closing salemarket price on the grant date of the Company’s Class A Common Stock as quoted on the NASDAQ®NASDAQ® Global Select Market.

 

(4)           The amounts reflect the aggregate grant date fair value of the stock option and restricted stock awards for 2007,2008, as applicable, computed in accordance with FAS 123R, except no assumptions for forfeitures were included.  A discussion of the assumptions used in calculating the grant date fair value is set forth in Notes 2 and 12 of the Notes to Consolidated Financial Statements of our 20072008 Annual Report on Form 10-K, filed with the SEC on March 13, 2008.2009.

 

4140


 

20072008 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

 

 

Option Awards (1)

 

 

 

 

 

Number of
Securities
Underlying
Unexercised
Options
(#)

 

Number of
Securities
Underlying
Unexercised
Options
(#)

 

 

 

 

 

 

 

 

 

Exercisable

 

Unexercisable

 

 

 

 

 

Name

 

Grant Date (2)

 

Class A
Stock
Options

 

Class B
Stock
Options

 

Class A
Stock
Options

 

Class B
Stock
Options

 

Option Exercise Price($)

 

Option Expiration
Date

 

W. Marvin Rush

 

3/15/2003

 

 

 

 

 

 

 

24,999

 

2.49

 

3/15/2013

 

 

 

3/15/2004

 

 

 

 

 

 

 

23,500

 

7.95

 

3/15/2014

 

 

 

3/15/2005

 

 

 

 

 

45,000

 

 

 

10.51

 

3/15/2015

 

 

 

3/15/2006

 

 

 

 

 

45,000

 

 

 

12.91

 

3/15/2016

 

 

 

3/15/2007

 

 

 

 

 

60,000

 

 

 

12.77

 

3/15/2017

 

W.M. “Rusty” Rush

 

3/15/2000

 

5,025

 

780

 

 

 

 

 

2.33

 

3/15/2010

 

 

 

3/15/2001

 

14,201

 

14,201

 

 

 

 

 

1.38

 

3/15/2011

 

 

 

3/15/2002

 

17,250

 

10,749

 

 

 

 

 

2.35

 

3/15/2012

 

 

 

3/15/2003

 

 

 

21,498

 

 

 

21,498

 

2.49

 

3/15/2013

 

 

 

3/15/2004

 

 

 

10,000

 

 

 

20,000

 

7.95

 

3/15/2014

 

 

 

3/15/2005

 

 

 

 

 

45,000

 

 

 

10.51

 

3/15/2015

 

 

 

3/15/2006

 

 

 

 

 

45,000

 

 

 

12.91

 

3/15/2016

 

 

 

3/15/2007

 

 

 

 

 

75,000

 

 

 

12.77

 

3/15/2017

 

Martin A. Naegelin, Jr.

 

3/15/2002

 

3,502

 

3,502

 

 

 

 

 

2.35

 

3/15/2012

 

 

 

3/15/2003

 

9,000

 

 

 

9,000

 

 

 

2.43

 

3/15/2013

 

 

 

3/15/2004

 

4,500

 

 

 

9,000

 

 

 

7.97

 

3/15/2014

 

 

 

3/15/2005

 

 

 

 

 

16,500

 

 

 

10.51

 

3/15/2015

 

 

 

3/15/2006

 

 

 

 

 

16,500

 

 

 

12.91

 

3/15/2016

 

 

 

3/15/2007

 

 

 

 

 

30,000

 

 

 

12.77

 

3/15/2017

 

Daryl L. Gorup

 

3/15/2003

 

 

 

 

 

10,500

 

 

 

2.43

 

3/15/2013

 

 

 

3/15/2004

 

 

 

 

 

10,500

 

 

 

7.97

 

3/15/2014

 

 

 

3/15/2005

 

 

 

 

 

19,500

 

 

 

10.51

 

3/15/2015

 

 

 

3/15/2006

 

 

 

 

 

19,500

 

 

 

12.91

 

3/15/2016

 

 

 

3/15/2007

 

 

 

 

 

21,450

 

 

 

12.77

 

3/15/2017

 

James E. Thor

 

3/15/2004

 

5,000

 

 

 

10,000

 

 

 

8.40

 

3/15/2014

 

 

 

3/15/2005

 

 

 

 

 

16,500

 

 

 

10.51

 

3/15/2015

 

 

 

3/15/2006

 

 

 

 

 

16,500

 

 

 

12.91

 

3/15/2016

 

 

 

3/15/2007

 

 

 

 

 

18,150

 

 

 

12.77

 

3/15/2017

 

Steven L. Keller

 

3/15/2002

 

877

 

877

 

 

 

 

 

2.35

 

3/15/2012

 

 

 

3/15/2003

 

1,751

 

 

 

1,750

 

 

 

2.43

 

3/15/2013

 

 

 

3/15/2004

 

875

 

 

 

1,750

 

 

 

7.97

 

3/15/2014

 

 

 

3/15/2005

 

 

 

 

 

3,750

 

 

 

10.51

 

3/15/2015

 

 

 

3/15/2006

 

 

 

 

 

3,750

 

 

 

12.91

 

3/15/2016

 

 

 

3/15/2007

 

 

 

 

 

4,125

 

 

 

12.77

 

3/15/2017

 

42


 

 

Option Awards(1)

 

 

 

 

 

 

 

Number of

 

Number of

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities

 

Securities

 

 

 

 

 

Stock Awards

 

 

 

 

 

Underlying

 

Underlying

 

 

 

 

 

 

 

Market

 

 

 

 

 

Unexercised

 

Unexercised

 

 

 

 

 

Number of

 

Value of

 

 

 

 

 

Options(#)

 

Options(#)

 

 

 

 

 

Shares of

 

Shares of

 

 

 

 

 

Exercisable

 

Unexercisable

 

 

 

 

 

Stock That

 

Stock That

 

Name

 

Grant
Date(2)

 

Class A
Stock
Options

 

Class B
Stock
Options

 

Class A
Stock
Options

 

Class B
Stock
Options

 

Option
Exercise
Price($)

 

Option
Expiration
Date

 

Have Not
Vested
(#)(3)

 

Have Not
Vested
($)(4)

 

W. Marvin Rush

 

3/15/2003

 

 

 

24,999

 

 

 

 

 

2.49

 

3/15/2013

 

 

 

 

 

 

 

3/15/2004

 

 

 

11,750

 

 

 

11,750

 

7.95

 

3/15/2014

 

 

 

 

 

 

 

3/15/2005

 

15,000

 

 

 

30,000

 

 

 

10.51

 

3/15/2015

 

 

 

 

 

 

 

3/15/2006

 

 

 

 

 

45,000

 

 

 

12.91

 

3/15/2016

 

 

 

 

 

 

 

3/15/2007

 

 

 

 

 

60,000

 

 

 

12.77

 

3/15/2017

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

40,000

 

 

 

15.52

 

3/15/2018

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

 

 

 

 

 

 

 

 

8,000

 

68,560

 

W.M. “Rusty” Rush

 

3/15/2000

 

5,025

 

780

 

 

 

 

 

2.33

 

3/15/2010

 

 

 

 

 

 

 

3/15/2001

 

14,201

 

14,201

 

 

 

 

 

1.38

 

3/15/2011

 

 

 

 

 

 

 

3/15/2002

 

17,250

 

10,749

 

 

 

 

 

2.35

 

3/15/2012

 

 

 

 

 

 

 

3/15/2003

 

 

 

42,996

 

 

 

 

 

2.49

 

3/15/2013

 

 

 

 

 

 

 

3/15/2004

 

 

 

20,000

 

 

 

10,000

 

7.95

 

3/15/2014

 

 

 

 

 

 

 

3/15/2005

 

15,000

 

 

 

30,000

 

 

 

10.51

 

3/15/2015

 

 

 

 

 

 

 

3/15/2006

 

 

 

 

 

45,000

 

 

 

12.91

 

3/15/2016

 

 

 

 

 

 

 

3/15/2007

 

 

 

 

 

75,000

 

 

 

12.77

 

3/15/2017

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

50,000

 

 

 

15.52

 

3/15/2018

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

85,700

 

Martin A. Naegelin, Jr.

 

3/15/2002

 

3,502

 

3,502

 

 

 

 

 

2.35

 

3/15/2012

 

 

 

 

 

 

 

3/15/2003

 

18,000

 

 

 

 

 

 

 

2.43

 

3/15/2013

 

 

 

 

 

 

 

3/15/2004

 

9,000

 

 

 

4,500

 

 

 

7.97

 

3/15/2014

 

 

 

 

 

 

 

3/15/2005

 

5,500

 

 

 

11,000

 

 

 

10.51

 

3/15/2015

 

 

 

 

 

 

 

3/15/2006

 

 

 

 

 

16,500

 

 

 

12.91

 

3/15/2016

 

 

 

 

 

 

 

3/15/2007

 

 

 

 

 

30,000

 

 

 

12.77

 

3/15/2017

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

20,000

 

 

 

15.52

 

3/15/2018

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

 

 

 

 

 

 

 

 

4,000

 

34,280

 

Daryl L. Gorup

 

3/15/2003

 

10,500

 

 

 

 

 

 

 

2.43

 

3/15/2013

 

 

 

 

 

 

 

3/15/2004

 

5,250

 

 

 

5,250

 

 

 

7.97

 

3/15/2014

 

 

 

 

 

 

 

3/15/2005

 

6,500

 

 

 

13,000

 

 

 

10.51

 

3/15/2015

 

 

 

 

 

 

 

3/15/2006

 

 

 

 

 

19,500

 

 

 

12.91

 

3/15/2016

 

 

 

 

 

 

 

3/15/2007

 

 

 

 

 

21,450

 

 

 

12.77

 

3/15/2017

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

14,300

 

 

 

15.52

 

3/15/2018

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

 

 

 

 

 

 

 

 

2,860

 

24,510

 

Steven L. Keller

 

3/15/2002

 

877

 

877

 

 

 

 

 

2.35

 

3/15/2012

 

 

 

 

 

 

 

3/15/2003

 

3,501

 

 

 

 

 

 

 

2.43

 

3/15/2013

 

 

 

 

 

 

 

3/15/2004

 

1,750

 

 

 

875

 

 

 

7.97

 

3/15/2014

 

 

 

 

 

 

 

3/15/2005

 

1,250

 

 

 

2,500

 

 

 

10.51

 

3/15/2015

 

 

 

 

 

 

 

3/15/2006

 

 

 

 

 

3,750

 

 

 

12.91

 

3/15/2016

 

 

 

 

 

 

 

3/15/2007

 

 

 

 

 

4,125

 

 

 

12.77

 

3/15/2017

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

5,100

 

 

 

15.52

 

3/15/2018

 

 

 

 

 

 

 

3/14/2008

 

 

 

 

 

 

 

 

 

 

 

 

 

1,020

 

8,741

 

 

(1)                                  None ofTo the named executive officers held any shares of restricted stock of the Company as of December 31, 2007.  Allextent applicable, all stock options and exercise prices reported in the table have been adjusted for the 3-for-2 stock split effected on October 10, 2007.

 

(2)                                  For better understanding of the table, an additional column showing the grant date of the stock optionsequity awards has been included.  All of the stock option awardsoptions vest and become exercisable in one-third increments annually, beginning on the third anniversary of the grant date and have a term of ten years.  All restricted stocks awards vest in one-third increments beginning on the first anniversary of the grant date.

2007 Stock Option Exercises

 

 

 

Option Awards

 

 

 

Number of Shares Acquired on Exercise (#)(1)

 

Value Realized on Exercise (2)

 

 

 

Class A Stock Options

 

Class B Stock Options

 

Class A Stock Options

 

Class B Stock Options

 

W. Marvin Rush

 

20,598

 

57,345

 

$

291,462

 

$

656,441

 

 

 

 

 

 

 

 

 

 

 

W.M. “Rusty” Rush

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Martin A. Naegelin, Jr.

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Daryl L. Gorup

 

25,834

 

8,334

 

$

426,072

 

$

136,758

 

 

 

 

 

 

 

 

 

 

 

James E. Thor

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Steven L. Keller

 

—

 

—

 

—

 

—

 

41


(1)(3)           The number of shares reported in the table as acquired upon exercise ofamounts reflect restricted stock options has been adjustedawards for the 3-for-2 stock split effected on October 10, 2007.

(2)                                  The value realized on exercise of stock options is based upon the difference between the market price of the Company’s Class A andCommon Stock.

(4)           The market value of Class BA restricted stock grants is determined using the closing market price of $8.57 per share for our Class A Common Stock as applicable, andon December 31, 2008, the exercise pricelast business day of the Class A2008 fiscal year.  The amounts reflected are not necessarily indicative of the amounts that may be realized by our named executive officers.

2008 Option Exercises and Class BStock Vested

During 2008, none of the named executive officers exercised any stock options as applicable.or had any shares of restricted stock vest.

Employment AgreementsSeverance and Change of Control Arrangements

 

The Company has entered into employment agreements with each of the named executive officers.  Among other things, the employment agreements provide for certain payments upon termination of employment, including in some cases termination following a “change of control” of the Company.  The principal elements of the employment agreements are summarized below.Executive Transition Plan

W. Marvin Rush and W.M. “Rusty” Rush

 

Effective March 1, 2006, the Company entered into oral agreements with W. Marvin Rush and W.M. “Rusty” Rush with respect to their compensation.  Under these oral agreements, W. Marvin Rush and W.M. “Rusty” Rush are entitled to a base salary of $900,000 and $584,000, respectively, and, at the discretion ofOn July 23, 2008, the Board of Directors each are entitled to an annual cash performance bonus.  W. Marvinof the Company, acting on the recommendation of the Company’s Compensation Committee, adopted the Rush and W.M. “Rusty” Rush also have writtenEnterprises, Inc. Executive Transition Plan (the “Transition Plan”).  The Transition Plan replaced all existing employment agreements with the Company entitling themCompany.  As a condition to other benefits, including termination benefits.  Theparticipation in the Transition Plan, each participant agreed to terminate any existing employment agreements were executed in 1996 and had an initial term of four years,agreement with the term being automatically extended each year for a new four-year term.  UnderCompany.  The Company’s named executive officers, as well as other key employees, are all participants in the employment agreements, W. Marvin Rush and W.M. “Rusty” RushTransition Plan.

Participants in the Transition Plan are eachdesignated by the Compensation Committee, in its sole discretion, as Level 1, Level 2, Level 3 or Level 4.  The Company’s named executive officers have been selected to participate in the Transition Plan at the following levels:

Level

W. Marvin Rush

1

W.M. “Rusty” Rush

1

Martin A. Naegelin, Jr.

2

Daryl J. Gorup

2

Steven L. Keller

2

Participants, including the named executive officers, are entitled to an automobile allowance, a country club membership, a lunch or health club membership, life insurance, medical, health and disability insurance and otherseverance benefits generally available to all Company employees (collectively referred to herein asunder the “Other Employee Benefits”).  The employmentTransition Plan in the following two scenarios:

 

43·                                          Involuntary Termination (as defined below) in conjunction with a Change in Control (as defined below) of the Company; and

·                                          Involuntary Termination absent a Change in Control of the Company.

42


 

agreements also contain customaryGenerally, the primary severance benefits payable to the named executive officers under the Transition Plan, based upon whether they are a Level 1 or Level 2 participant, are as follows:

Level 1 participant

Level 2 participant

Severance Benefits (1)

Involuntary
Termination
(in conjunction with a
Change in Control)

Involuntary
Termination
(absent a
Change in Control)

Involuntary
Termination
(in conjunction with a
Change in Control)

Involuntary Termination
(absent a
Change in Control)

Cash payments (2)

4 times base salary

4 times base salary

2 times base salary, plus 2 times highest annual cash bonus received in any of the previous 5 years

1 times base salary, plus ½ times annual cash bonus received in prior year

Acceleration of equity awards

Yes

No

Yes

No

Continuation of life and health insurance(3)

48 months or, if earlier, until eligible for such coverage with a successor employer

48 months or, if earlier, until eligible for such coverage with a successor employer

24 months or, if earlier, until eligible for such coverage with a successor employer

12 months or, if earlier, until eligible for such coverage with a successor employer

Entitled to tax gross-up payments(4)

Yes

Yes

Yes

Yes

(1)           All severance payments under the Transition Plan are subject to the participant’s continuing compliance with non-competition, non-solicitation and confidentiality covenants following his or her termination.  The term of the non-competition and non-competition provisions.  The non-competition restrictions are enforceable duringnon-solicitation covenant is 48 months for a Level 1 participant and up to 24 months for a Level 2 participant following termination, and the term of the employment agreementconfidentiality covenant is forever.  Upon breach of one or more of these covenants, the participant (a) is not entitled to any further severance benefits, and (b) must reimburse the Company for one year thereafter.any severance benefits he or she previously received, or the value thereof.

 

The employment agreements may be terminated (i) by the Company without “cause” (as defined below) upon 30 days prior written notice, (ii) by the employee for “good reason” (as defined below) upon 30 days prior written notice, (iii) by the Company with “cause” subject(2)           All cash payments due to the employee’s right to cure within 30 days, (iv) upon the employee’s death or permanent disability or (v) by the employee without “good reason” upon 30 days prior written notice.

Upon termination by the Company without “cause” or termination by the employee for “good reason,” (i) the employee may elect to (A) continuea Level 1 participant are required to be paid his then-current base salary and receive the Other Employee Benefits through the expiration of the four-year term then in effect (without giving effect to any further extensions thereof), or (B) be paid a single lump sum amount equalas soon as administratively practicable after the Level 1 participant’s Involuntary Termination, but in all cases, no later than two and half months following the fiscal year in which the Level 1 participant is Involuntarily Terminated.  Generally, all cash payments due to his then-current base salary through the expiration of the four-year term then in effect (without giving effect to any further extensions thereof), and (ii) all outstanding equity awards held by the employee become fully vested and exercisable.  Upon termination by the Company with “cause,” death or disability, or termination by the employee without “good reason,” the employee is entitled to his earned, but unpaid, base salary and any payments he is entitled to under applicable employee benefit plans.

Under the employment agreements, “cause” means, as determined by the Board of Directors in its sole judgment:

·conviction of or a plea of nolo contendere to the charge of a felony, which, through the lapse of time or otherwise, is not subject to appeal;

·willful refusal, without proper legal cause, to perform, or gross negligence in performing, the employee’s duties and responsibilities;

·material breach of fiduciary duty to the Company through the misappropriation of Company funds or property; or

·the unauthorized absence of the employee from work, other than for sick leave or disability, for a period of 30 or more working days during any period of 45 working days.

Under the employment agreements, “good reason” means:

·removal from the offices the employee holds on the date of the employment agreement or a material reduction in the employee’s authority or responsibility, including without limitation, involuntary removal from the Board of Directors, but not including termination of employment for “cause;” or

·material breach of the employment agreement by the Company.

The employment agreements further provide that if the employee at any time within one year of a “change of control” (as defined below) is terminated (i) by the Company (or its successor) other than for “cause” (which is generally defined for this purpose as a conviction of or a plea of nolo contendere to the charge of a felony that is not subject to appeal or a material breach of fiduciary duty to the Company through misappropriation of Company funds or property), or (ii) by the employee for “good reason” (which is generally defined for this purpose as removal from the offices the employee holds on the date of the employment agreement, a material reduction in the employee’s authority or responsibility, including without limitation, involuntary removal from the Board of Directors, relocation of the Company’s headquarters, a reduction in employee’s compensation, or the Company otherwise breaches the employment agreement), then (A) the employee may elect to (1) continueLevel 2 participant are required to be paid his then-current base salary throughin equal monthly installments over a one-year period beginning with the expirationfirst month following the month in which the Level 2 participant was Involuntarily Terminated.

(3)           If the continuation of health care coverage is not permitted by the Company’s group health plan or under applicable law, the Company will provide COBRA continuation coverage to such terminated participant and/or any spouse or dependents, at the Company’s sole expense, if and to the extent any of such persons elects and are entitled to receive COBRA continuation coverage.

(4)           If any payment or benefit (collectively, “Severance”) received or to be received by a named executive officer from the Company pursuant to the terms of the four-year term then in effect (without giving effect to any further

44


extensions thereof), or (2)Transition Plan would be paid a lump sum amount equal to his then-current base salary through the expiration of the four-year term then in effect (without giving effect to any further extensions thereof), (B) all outstanding equity awards held by the employee become fully vested and exercisable, (C) the employee is entitled to continue to receive the Other Employee Benefits through the expiration of the four-year term then in effect (without giving effect to any further extensions thereof), and (D) the employee is entitled to an additional payment equal to the maximum amount that could be made to the employee without triggering an excess parachute payment under Section 280G(b) of the Internal Revenue Code and the resulting excise tax under Section 4999 of the Internal Revenue Code.  In the event that any payments made in connection with a “change of control” are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, (together withthe Company shall pay the named executive officer an additional amount (the “Gross-Up Payment”) so that the net amount the named executive officer retains, after deduction of the excise tax on the Severance and any federal, state, and local income tax and the excise tax upon the Gross-Up Payment, and any interest, penalties, and additional amounts), then employeeor additions to tax payable by a named executive officer with respect thereto, shall be equal to the total present value (using the applicable federal rate in such calculation) of the Severance at the time such Severance is entitled to be reimbursed for such excise tax, interest, penalties and additional amounts.  It ispaid.

The Compensation Committee may terminate a participant’s participation in the intent ofTransition Plan upon 60 days prior written notice to the employment agreementsparticipant; provided that no participant’s participation in the employees will receive the maximum payment amount in connection with a “change of control” without creating an excess parachute payment under Section 280G(b).

Under the employment agreements, “change of control” means:

·more than 30% of the combined voting power of the Company’s then outstanding securities is acquired, directly or indirectly, by any person;

·at any time during the 24-month periodTransition Plan may be terminated within two years after a tender offer, merger, consolidation, sale of assets or contested election, or any combination of such transactions, at least a majority of the Board of Directors shall cease to consist of “continuing directors” (meaning directors“Change in Control” of the Company who either were directorswithout the participant’s prior to such transaction or who subsequently became directors and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then still in office who were directors prior to such transaction);

·the Company’s shareholders approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 60% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

·the Company’s shareholders approve a plan of complete liquidation of the Company or an agreement of sale or disposition of all or substantially all of the Company’s assets.

The change of control provisions are structured as “double trigger” arrangements, which means payments are only made in the event of a change in control and subsequent involuntary termination or termination for good reason of W. Marvin Rush or W.M. “Rusty” Rush within one year after a change of control of the Company.written consent.

 

The change of control payments and benefits due to Messrs.participants in the W. Marvin Rush and W.M. “Rusty” RushTransition Plan were set in the Compensation Committee’s judgment and discretion and not upon a formula-driven framework.  These arrangements also provide for a tax gross-up payment in the event Messrs. W. Marvin Rush and W.M. “Rusty” Rush arethat any participant is subject to the excise tax imposed on certain excess parachute payments pursuant to Section 4999 of the Internal Revenue Code.  The Compensation Committee believes that the tax gross-up provisions are appropriate to ensure that W. Marvin Rush and W.M. “Rusty” Rushparticipants receive the full value of the payments and benefits available under these arrangements.

 

4543


 

The Compensation Committee did not consider the payout terms of the change of control arrangements in approving Messrs. W. Marvin Rush’s and W.M. “Rusty” Rush’sthe named executive officers’ individual pay components or total direct compensation levels in 2007.2008.

 

Key definitions used in the Transition Plan include the following:

Martin A. Naegelin, Jr.·              “Involuntary Termination” means termination of a participant’s employment with the Company (a) by the Company for any reason other than Cause (as defined below), Daryl J. Gorup, James E. Thor and Steven L. Kellerdeath, or Disability (as defined below); or (b) by the participant for Good Reason (as defined below).

·

“Cause” means a (a) conviction or plea of guilty or nolo contendre to a felony or other crime involving moral turpitude; (b) commission of fraud or a material act or omission involving dishonesty with respect to the Company, as reasonably determined by the Company’s Board of Directors; (c) willful failure or refusal to carry out the material responsibilities of the participant’s employment, as reasonably determined by the Company’s Board of Directors; or (d) gross negligence, willful misconduct, or engaging in a pattern of behavior that has had or is reasonably likely to have a significant adverse effect on the Company, as reasonably determined by the Company’s Board of Directors.

·“Disability” means the inability of a participant to perform the material duties of his or her employment by reason of a medically determinable physical or mental impairment that can be expected to result in death or that has lasted or is expected to last for a continuous period of at least 12 months, as determined by a duly licensed physician selected by the Compensation Committee.

·“Good Reason” means (a) a diminution in the participant’s position, duties, responsibilities or authority or the assignment to the participant of duties or responsibilities that are materially inconsistent with his or her status or position; (b) a reduction in the participant’s annual base salary; (c) following a Change in Control (as defined below), a reduction in the participant’s target incentive award opportunities; (d) following a Change in Control, the relocation of the participant’s principal place of employment by more than fifty miles from the current location; (e) in connection with a Change in Control, a successor or acquiring company failing to assume the obligations of the Transition Plan; or (f) with respect to a Level 1 or Level 2 participant, following a Change in Control a Level 1 or Level 2 participant disagrees with the philosophy or policies of the successor or acquiring company.  The Company has entered into employment agreements30 days to cure any act or omission that the participant deems to constitute Good Reason.

·“Change in Control” means the occurrence of any of the following: (a) any person (other than W. Marvin Rush, W.M. “Rusty” Rush and certain other exempted persons) becomes the beneficial owner of Company securities representing 40% or more of the combined voting power of the Company’s then outstanding voting securities; (b) Incumbent Directors (as defined below) cease for any reason to constitute a majority of the directors then serving; (c) the consummation of a merger or consolidation of the Company with Martin A. Naegelin, Jr., Daryl J. Gorup, James E. Thor and Steven L. Keller.  The employment agreements provideany other entity; (d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for Messrs. Naegelin, Gorup, Thor, and Keller to receive an initial annual base salarythe sale or disposition by the Company of $248,200, $264,000, $249,000 and $150,000, respectively, whichall or substantially all of the Company’s assets; or (e) any other transaction or event occurs that is subject to periodic review and upward adjustment inresolved by the Board of Directors’ discretion.  All of these named executive officers’ base salary has been increased since entering into their respective employment agreement.  The employees are also eligible to receive a performance bonus, as determined by theCompany’s Board of Directors to be a “Change in its sole discretion, and medical, heath, disability and other benefits generally available to all Company employees.  The employment agreements also contain customary confidentiality, non-competition and non-solicitation provisions.  The non-competition and non-solicitation restrictions are enforceable during the termControl” for purposes of the employment agreement and for one year thereafter.Transition Plan.

 

·“Incumbent Director” means (a) any member of the Company’s Board of Directors on March 31, 2008 or (b) any individual appointed or elected to Company’s Board of Directors after March 31, 2008 if their appointment or election is approved by at least two-thirds of the incumbent directors in office at the time of such approval or recommendation.

Long-Term Incentive Plans

Under the terms of the employment agreements, the employees may be terminated (i) by the Company or the employee without “cause” (as defined below) upon 12 months prior written notice, (ii) by the Company for “cause” or (iii) upon the employee’s death or disability.  Upon termination by the Company or employee without “cause,” the employee is entitled to his earned, but unpaid, base salary though the date of termination.  However, the Company may elect to terminate the employee prior to the expiration of the 12-month notice period in exchange for (i) a lump sum payment equal to the sum of (A) his earned, but unpaid, base salary through the date of early termination, (B) 12 months of the employee’s then-effective base salary, and (C) 50% of the employee’s performance bonus for the fiscal year immediately preceding his termination, (ii) continuing the employee’s health care coverage underCompany’s 2007 Long-Term Incentive Plan, the Company’s group health insurance program for 12 months, with1996 Long-Term Incentive Plan and the Company paying allrelated forms of the premiums associated therewith.  Upon termination by the Company for “cause,” death or disability, the employee is entitledstock option agreements and restricted stock award agreements, as applicable (collectively, “Incentive Plans”), unvested equity awards are subject to his earned, but unpaid, base salary though the date of termination.a

 

Under the employment agreements, “cause” means, as determined by the Board of Directors in its sole judgment:

·employee breaching the terms of the employment agreement;

·employee’s conviction of a felony;

·employee failing, after at least one warning, to perform duties assigned under the employment agreement (other than a failure due to death or physical or mental disability);

·employee intentionally engaging in conduct that is demonstrably and materially injurious to the Company;

·employee committing fraud or theft of personal property or Company property from Company premises;

·employee falsifying Company documents or records;

·employee engaging in acts of gross carelessness or willful negligence to endanger life or property on Company premises;

4644


 

·employee using, distributing

modified vesting schedule upon the “Retirement” (as defined below), death or being under the influencedisability of illegal drugs, alcohol or any other intoxicant on Company premises;

·employee possessing or storing hand guns on Company premises; or

·employee intentionally violating state, federal or local laws and regulations.

The form of stock option agreement used by the Company in connection with all stock option awards to employees,a participant, including theeach named executive officers, provides that upon an employee’s “retirement” (as defined below)officer.  Upon Retirement, a named executive officer’s unvested stock options and for so long as the employee does not become employed by a competitor of the Company subsequent to such retirement, the employee’srestricted stock optionsawards will continue to vest pursuant to their respective vesting schedule but in no event after the expirationfor so long as such officer does not become an employee of a competitor of the Company.  Upon death or disability, a named executive officer’s unvested stock options.  The form ofoptions and restricted stock option agreement defines “retirement” as theawards will immediately vest.

“Retirement” means an employee terminating his or her relationship with the Company following at least 10 years of service and after reaching the age of 60.  Additionally, upon any employee’s death or disability, the employee’s outstanding stock options immediately vest.

 

The table below quantifies the potential payments to the named executive officers upon termination of their employment, including termination following a “change of control” of the Company.Company, pursuant to the terms of the Transition Plan and the Incentive Plans.

 

47


20072008 POTENTIAL PAYMENTS UPON TERMINATION (1)(1)

 

Name

 

Benefit

 

Termination
w/o Cause
($)

 

Termination
w/ Good
Reason
($)

 

Death/
Disability
($)

 

Retirement
($)

 

Termination
upon Change
of 
Control
($) (2)

 

 

Benefit

 

Involuntary 
Termination 
absent a 
Change in 
Control 
($)

 

Involuntary 
Termination 
upon a 
Change of 
Control 
($)

 

Death/ 
Disability 
($)

 

Retirement 
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Marvin Rush

 

Severance

 

3,101,918

(3)

3,101,918

(3)

—

 

—

 

5,160,097

(4)

 

Cash payments

 

3,600,000

(2)

3,600,000

(2)

—

 

—

 

 

Stock option vesting

 

1,521,301

(5)

1,521,301

(5)

1,521,301

(6)

1,521,301

(7)

1,521,301

(5)

 

Acceleration of equity awards

 

—

 

71,415

(3)

71,415

(3)

71,415

(4)

 

Continued personal benefits

 

334,463

(8)

334,463

(8)

—

 

—

 

334,463

(8)

 

Continuation of life and health insurance

 

234,008

(5)

234,008

(5)

—

 

—

 

 

280G Gross-Up (9)

 

—

 

—

 

—

 

—

 

—

 

 

280G Gross-Up (6)

 

—

 

—

 

—

 

—

 

Total

 

 

 

4,957,682

 

4,957,682

 

1,521,301

 

1,521,301

 

7,015,861

 

 

 

 

3,834,008

 

3,905,423

 

71,415

 

71,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W.M. “Rusty” Rush

 

Severance

 

2,012,800

(3)

2,012,800

(3)

—

 

—

 

2,536,294

(10)

 

Cash payments

 

2,336,160

(2)

2,336,160

(2)

—

 

—

 

 

Stock option vesting

 

1,514,374

(5)

1,514,374

(5)

1,514,374

(6)

—

 

1,514,374

(5)

 

Acceleration of equity awards

 

—

 

88,130

(3)

88,130

(3)

—

 

 

Continued personal benefits

 

167,631

(8)

167,631

(8)

—

 

—

 

167,631

(8)

 

Continuation of life and health insurance

 

272,796

(5)

272,796

(5)

—

 

—

 

 

280G Gross-Up (9)

 

—

 

—

 

—

 

—

 

—

 

 

280G Gross-Up (6)

 

—

 

—

 

—

 

—

 

Total

 

 

 

3,694,805

 

3,694,805

 

1,514,374

 

 

 

4,218,299

 

 

 

 

2,608,956

 

2,697,086

 

88,130

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Martin A. Naegelin, Jr.

 

Severance

 

472,500

(11)(13)

—

 

—

 

—

 

—

 

 

Cash payments

 

432,500

(7)

1,210,000

(8)

—

 

—

 

 

Stock option vesting

 

—

 

—

 

609,486

(6)

—

 

—

 

 

Acceleration of equity awards

 

—

 

36,967

(3)

36,967

(3)

—

 

 

Continued health care benefits

 

8,975

(12)(13)

—

 

—

 

—

 

—

 

 

Continuation of life and health insurance

 

9,905

(9)

19,810

(10)

—

 

—

 

 

280G Gross-Up (6)

 

—

 

—

 

—

 

—

 

Total

 

 

 

481,475

 

 

 

609,486

 

 

 

 

 

 

 

 

442,405

 

1,266,777

 

36,967

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daryl J. Gorup

 

Severance

 

410,400

(11)(13)

—

 

—

 

—

 

—

 

 

Cash payments

 

360,900

(7)

1,060,800

(8)

—

 

—

 

 

Stock option vesting

 

—

 

—

 

640,956

(6)

—

 

—

 

 

Acceleration of equity awards

 

—

 

27,644

(3)

27,644

(3)

—

 

 

Continued health care benefits

 

20,313

(12)(13)

—

 

—

 

—

 

—

 

Total

 

 

 

430,713

 

 

 

640,956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James E. Thor

 

Severance

 

388,900

(11)(13)

—

 

—

 

—

 

—

 

 

Stock option vesting

 

—

 

—

 

409,556

(6)

—

 

—

 

 

Continuation of life and health insurance

 

26,420

(9)

52,840

(10)

—

 

—

 

 

Continued health care benefits

 

11,961

(12)(13)

—

 

—

 

—

 

—

 

 

280G Gross-Up (6)

 

—

 

—

 

—

 

—

 

Total

 

 

 

400,861

 

 

 

409,556

 

 

 

 

 

 

 

 

387,320

 

1,141,284

 

27,644

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steven L. Keller

 

Severance

 

221,000

(11)(13)

—

 

 

 

—

 

—

 

 

Cash payments

 

250,000

(7)

650,000

(8)

—

 

—

 

 

Stock option vesting

 

—

 

—

 

116,273

(6)

—

 

—

 

 

Acceleration of equity awards

 

—

 

9,264

(3)

9,264

(3)

—

 

 

Continued health care benefits

 

8,975

(12)(13)

—

 

—

 

—

 

—

 

 

Continuation of life and health insurance

 

9,815

(9)

19,630

(10)

—

 

—

 

 

280G Gross-Up (6)

 

—

 

—

 

—

 

—

 

Total

 

 

 

229,975

 

 

 

116,273

 

 

 

 

 

 

 

 

259,815

 

678,894

 

9,264

 

—

 

 

(1)           Amounts reflected in the table were calculated assuming a December 31, 20072008 termination date, which was the last business day of the 20072008 fiscal year.  Each named executive officer is entitled to receive amounts earned during the term of his employment regardless of the manner in which he is terminated, including termination for “cause.“Cause.”  These amounts include base salary, unused vacation pay and other benefits entitled to under applicable employee benefit plans, and are not reflected in the table.  The table reflects only the additional compensation and benefits (collectively, “Additional Compensation”) the named executive officers are estimated to receive upon termination.  The named executive officers are not entitled to any Additional Compensation in the event they are terminated for “cause.”  The actual amounts to be paid to an officer can only be determined at the time of his actual termination.

(2)                                  W. Marvin Rush and W.M. “Rusty” Rush are entitled to the below severance and other benefits only if their employment is terminated within one year of a “change of control” of the Company, by the Company other than for “cause,” or by themselves with “good reason.”  Except for W. Marvin Rush and W.M. “Rusty” Rush, no other named executive officer is entitled to any payments upon a “change of control” of the Company.

48

45


 

As used in this table and in the Transition Plan, “Involuntary Termination” means termination of the named executive officers employment with the Company (a) by the Company for any reason other than “Cause” (as defined above), death, or “Disability” (as defined above); or (b) by the named executive officer “Good Reason” (as defined above).

(3)(2)           The amount reflects four times the respective named executive officer’s current rate of base salary through the expiration of his employment agreement’s four-year term.salary.

 

(4)                                  The amount reflects (i) W. Marvin Rush’s current base salary through the expiration of his employment agreement’s four-year term ($3,101,918), plus (ii) the additional payment equal to the maximum amount payable without creating an excess parachute payment under Section 280G(b) of the Internal Revenue Code ($2,058,179).

(5)(3)           The amount reflects the value of accelerating the respective officer’s unvested stock optionsequity awards upon termination.  This value is based upon the closing salemarket price of the Company’s Class A and Class B Common Stock, as applicable, on December 31, 20072008 of $18.18$8.57 and $17.80, respectively.$8.19, respectively, but it excludes stock options where the exercise price exceeds the closing market price of our Class A and Class B Common Stock on December 31, 2008.

 

(6)(4)           The amount reflects the value of unvested stock options held by the respective officer on December 31, 2007 that would immediately vest following his death or disability.  This value is based upon the closing sale price of the Company’s Class A and Class B Common Stock, as applicable, on December 31, 2007 of $18.18 and $17.80, respectively.

(7)                                  The amount reflects the value of unvested stock optionsequity awards held by W. Marvin Rush on December 31, 20072008 that would generally continue to vest upon “retirement” in accordance with their original vesting schedule.  This value is based upon the closing sale price of the Company’s Class A and Class B Common Stock, as applicable, on December 31, 20072008 of $18.18$8.57 and $17.80, respectively.$8.19, respectively, but it excludes stock options where the exercise price exceeds the closing market price of our Class A and Class B Common Stock on December 31, 2008.  None of the other named executive officers have met the age limit to qualify for this benefit under the Company’s form of stock option agreement.Incentive Plans.

 

(8)(5)           The amount reflects the Company’s estimated cost to continue the Other Employee Benefits for the expiration of the respective officer’s employment agreement’s four-year term.life and health insurance benefits up to 48 months.  These estimated costs were based upon the Company’s actual costs in providing the benefits in 2007.2008.

 

(9)(6)           It is not anticipated that a Section 280G excise tax gross-up payment would be required assuming termination at December 31 2007.2008.  The Section 280G excise tax gross-up payment on an actual “change of control”termination may differ based on factors such as transaction price, timing of employment termination and payments, methodology for valuing stock options, future stock option exercises, changes in compensation, and reasonable compensation analyses the Company is required to make.

 

(10)                            The amount reflects (i) W.M. “Rusty” Rush’s current base salary through the expiration of his employment agreement’s four-year term ($2,012,800), plus (ii) the additional payment equal to the maximum amount payable without creating an excess parachute payment under Section 280G(b) of the Internal Revenue Code ($523,494).

(11)(7)           The amount reflects the sum of (a) one times the respective named executive officer’s annualcurrent rate of base salary, plus 50% ofand (b) one-half times his 2006 performance bonus.annual cash bonus received for the 2008 calendar year.

 

(12)(8)           The amount reflectsthe sum of (a) two times the respective named executive officer’s current rate of base salary, and (b) two times his highest annual cash bonus received in any of the previous 5 years.

(9)           The amount reflects the Company’s estimated premiums for one year ofcost to continue life and health insurance coverage, which wasbenefits up to 12 months.  These estimated costs were based upon the Company’s health careactual costs at December 31, 2007.in providing the benefits in 2008.

 

(13)(10)         UnderThe amount reflects the terms of Messrs. Naegelin’s, Gorup’s, Thor’s,Company’s estimated cost to continue life and Keller’s employment agreements, they may be terminated byhealth insurance benefits up to 24 months.  These estimated costs were based upon the Company or by themselves without “cause” upon 12 months prior written notice.  Messrs. Naegelin, Gorup, Thor, and Keller are only entitledCompany’s actual costs in providing the severance and continued health care benefits set forth in the table if the Company terminates their employment prior to the expiration of the 12-month notice period.  If Messrs. Naegelin’s, Gorup’s, Thor’s, and Keller’s employment is continued during the 12-month notice period they are not entitled to any severance and continued health care benefits.2008.

49

46


 

Equity Compensation Plan Information

The Equity Compensation Plan Information Table provides information as of December 31, 2008 with respect to shares of the Company’s Class A Common Stock and Class B Common Stock that may be issued under our existing equity compensation plans, including the Amended and Restated 2006 Non-Employee Director Stock Option Plan and the 2007 Long-Term Incentive Plan.

Class A Common Stock:

Plan Category

 

Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights as of
December 31, 2008
(a)

 

Weighted-average exercise
price of outstanding options,
warrants and rights as of
December 31, 2008
(b)

 

Number of securities remaining
available for future issuance under
equity compensation plans as of
December 31, 2008 (excluding
securities reflected in column (a))
(c)

 

Equity compensation plans approved by security holders

 

2,612,144

 

$

11.53

 

3,402,761

(1)

(1)           Includes 3,402,761 shares that may be issued in the form of restricted stock under the Amended and Restated 2006 Non-Employee Director Stock Option Plan and the 2007 Long-Term Incentive Plan.

Class B Common Stock:

Plan Category

 

Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights as of
December 31, 2008
(a)

 

Weighted-average exercise
price of outstanding options,
warrants and rights as of
December 31, 2008
(b)

 

Number of securities remaining
available for future issuance under
equity compensation plans as of
December 31, 2008 (excluding
securities reflected in column (a))
(c)

 

Equity compensation plans approved by security holders

 

180,826

 

$

3.95

 

450,000

(1)

(1)           Includes 450,000 shares that may be issued in the form of restricted stock under the 2007 Long-Term Incentive Plan.

Compensation Committee Report

 

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement.  Based upon this review and these discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

Compensation Committee of the Board of Directors

Harold D. Marshall, Chairperson


Thomas A. Akin
Ronald J. Krause

47


 

Compensation Committee Interlocks and Insider Participation

 

In 2007,2008, the Compensation Committee consisted of the following directors: Harold D. Marshall, Chairperson, Ronald J. Krause and Thomas A. Akin and John D. Rock until his passing on November 16, 2007.Akin.  During the 20072008 fiscal year, none of the Company’s executive officers served on either the Company’s Compensation Committee or the compensation committee (or its equivalent) or board of directors of another entity whose executive officers served on the Company’s Compensation Committee or Board of Directors.  No current or past officer or employee of the Company served on the Compensation Committee during the 20072008 fiscal year.  No Compensation Committee member had any relationship requiring disclosure under Item 404 of Regulation S-KMessrs. Marshall, Krause and Akin each have certain relationships with Texstar National Bank, from whom a subsidiary of the Securities Exchange ActCompany has borrowed money.  For a further description of 1934, as amended.these relationships, see “Certain Relationships and Related Transactions” set forth below in this proxy statement.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires the Company’s directors, officers and persons who own more than 10% of a registered class of the Company’s equity securities to file initial reports of ownership and reports of changes in ownership on Forms 3, 4 and 5 with the SEC.  These reporting persons are required by the SEC regulations to furnish the Company with copies of all Forms 3, 4 and 5 they file.

 

Based solely on review of the Section 16(a) forms received by the Company, or written representations from reporting persons that no such forms were required to be filed, as applicable, the Company believes that the reporting persons complied with all of the Section 16(a) filing requirements during the 20072008 fiscal year.

50


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSCertain Relationships and Related Transactions

 

Until recently, the Texas Insurance Code (the “TIC”), required every officer, director and shareholder of a corporation licensed to act as a local recording agent to be individually licensed to act as an insurance agent.  An insurance agent is required to be a resident of the State of Texas and pass an examination for a local recording insurance agent’s license.  W. Marvin Rush, our Chairman, is licensed to act as an insurance agent in the State of Texas was therefore qualified to act as the shareholder, director and officer of Associated Acceptance, Inc. (“AA”), which is licensed to act as a local recording agent.  The Company has acquired, as a wholly owned subsidiary, a managing general agent (the “MGA”) which was licensed under the TIC to manage all of the operations of AA.  In addition to managing AA, the MGA is qualified to receive any and all commission income that is otherwise payable to AA.  The MGA, W. Marvin Rush and AA each entered into agreements pursuant to which (i) the MGA manages all operations of AA, (ii) all of the income of AA is paid to the MGA, (iii) the Company transfers such funds to AA as necessary for its operation, and (iv) Mr. Rush granted the MGA the right to transfer legal ownership of the shares of capital stock of AA at any time to anyone designated by the MGA.  Due to recent regulatory changes, this structure is no longer required.  On November 12, 2007, Mr. Rush transferred all of his outstanding stock of AA to a subsidiary of the Company and terminated all of the related agreements between himself and MGA and AA.

A subsidiary of the Company has borrowed money from Texstar National Bank (“Texstar”).  W. Marvin Rush, Chairman, W.M. “Rusty” Rush, President and Chief Executive Officer, Daryl J. Gorup, Senior Vice President—Dealership Operations, and non-employee directors, including: Ronald J. Krause, Harold D. Marshall and Thomas A. Akin own 57.47%57.5%, 1.95%1.55%, 0.41%1.87%, 5.00%, 2.05%1.63%, and 0.41%1.96%, respectively, of Texstar’s capital stock.  W. Marvin Rush, W.M. “Rusty” Rush and Thomas A. Akin are also members of Texstar’s Board of Directors.  The Company’s loans with Texstar (i)(a) were made in the ordinary course of business; (ii)(b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender; and (iii)(c) did not involve more than the normal risk of collectability or present other unfavorable features.  During 2008, the largest aggregate amount outstanding on all of the loans was $361,143 and the Company paid $129,343in principal payments and $21,556in interest payments.  The rate of interest payable on the loans ranges from 5.3% to 7.75%.  As of AprilMarch 1, 2008,2009, the total principal outstanding under all of these loans totaled $329,611.$209,499.  In December 2006, Texstar and the Company entered into a five-year lease agreement, pursuant to which Texstar is leasing office space from a subsidiary of the Company on arms-length terms at a monthly rate of $12,153.  Upon termination of the initial five-year term, Texstar has the option to extend the lease agreement for an additional five-year term.  Texstar made lease payments totaling $145,836 in 2007.2008.

The Company owns and operates a jet aircraft in connection with its business.  The Company generally limits personal usage of the aircraft to the Chairman and to the Chief Executive Officer; provided, however, with the prior permission of the Company’s Chairman or Chief Executive Officer, other employees and members of the Board of Directors may also use the Company’s aircraft for personal purposes to the extent it is not being utilized for Company business.  While the Company does not charge for such use of its aircraft for personal purposes, it does report as taxable income to the Internal Revenue Service the value of the transportation services rendered based upon Internal Revenue Service formulas.

Former Executive Vice President and member of the Company’s Board of Directors, Robin M. Rush, left the Company in June 2003.  Robin M. Rush is the son of W. Marvin Rush and brother of W.M. “Rusty” Rush.  Pursuant to his employment agreement, Robin M. Rush elected to receive a continuation of his base salary and benefits available to other employees through the unexpired term of his employment agreement of four years.  Robin M. Rush received severance benefits totaling $112,522 during 2007.

51


 

The Company’s Audit Committee reviews and approves all “related-person transactions” (as defined by the SEC) as required by the NASDAQ® Global Select Market and the applicable rules of the SEC.  The Audit Committee periodically reassesses these transactions to ensure their continued appropriateness.  These responsibilities are set forth in the Audit Committee charter.  All of the above transactions have been previously approved by the Board of Directors.

 

PROPOSALS FOR 2009 ANNUAL MEETING48

The deadline for submission of shareholder proposals pursuant to Rule 14a-8 of the Exchange Act (“Rule 14a-8”) for inclusion in the Company’s proxy statement for its 2009 Annual Meeting of Shareholders is December 16, 2008.  The proposal should be sent to the Secretary of the Company.  For a proper shareholder proposal submitted outside of the process provided by Rule 14a-8 to be eligible for presentation at the 2009 Annual Meeting of Shareholders, timely notice thereof must be received by the Company no earlier than December 16, 2008, and no later than January 15, 2009.


 

HOUSEHOLDING

In an effort to reduce printing costs and postage fees, the Company has adopted a practice approved by the Securities and Exchange Commission called “householding.”  Under this practice, certain stockholders who have the same address and last name will receive only one copy of this Proxy Statement and the Company’s Annual Report on Form 10-K, unless one or more of these stockholders notifies the Company that he or she wishes to continue receiving individual copies.  Stockholders who participate in householding will continue to receive separate proxy cards.

If you share an address with another stockholder and received only one copy of this Proxy Statement and the Company’s Annual Report on Form 10-K, and would like to request a separate copy of these materials, or you do not wish to participate in householding in the future, please (1) mail such request to Rush Enterprises, Inc., Attn: Chief Compliance Officer, 555 IH 35 South, Suite 500, New Braunfels, Texas 78130, or (2) contact our Chief Compliance Officer at (830) 626-5200.  Similarly, you may also contact the Company if you received multiple copies of the Company’s proxy materials and would prefer to receive a single copy in the future.

OTHER MATTERS

Other Business Presented at the Annual Meeting

 

As of the date of this proxy statement, management does not intend to present anythe Board of Directors knows of no other items of business andthat may properly be, or is not aware of any matterslikely to be, presented for action atbrought before the Annual Meeting other than those described above.  However, ifannual meeting. If any other matters should properly come beforearise at the Annual Meeting toannual meeting, shares represented by proxies will be held on May 20, 2008 it isvoted at the intentiondiscretion of the persons named as proxies in the accompanying proxy card to vote in accordance with their best judgment on such matters.holders.

 

52


Where You Can Find More Information

An electronic

The Company files reports, proxy statements and other information with the SEC. You can read and copy of our Annual Reportthese reports, proxy statements and other information concerning the Company at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information on Form 10-K filedthe public reference room. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company. The Company’s Common Stock is quoted on March 13, 2008 is available free of charge on our website at www.rushenterprises.com.  A paperthe NASDAQ® Global Select Market.

You may request a copy of the Annual Report on Form 10-K may be obtained upon written request to:Company’s filings (other than exhibits which are not specifically incorporated by reference therein) at no cost by writing us at the following address:

 

Rush Enterprises, Inc.
555 IH-35 South
New Braunfels, Texas 78130
Attention: Chief Compliance Officer

 

By Order of the Board of Directors,

 

GRAPHIC

 

W. Marvin RushMARVIN RUSH

 

Chairman

 

 

San Antonio, Texas

 

April 9, 20087, 2009

 

 

5349


APPENDIX A

RUSH ENTERPRISES, INC.
AMENDED AND RESTATED
2006 NON-EMPLOYEE DIRECTOR STOCK PLAN

1.             Purpose. This Rush Enterprises, Inc. Amended and Restated 2006 Non-Employee Director Stock Plan (the “Plan”) sponsored by Rush Enterprises, Inc., a Texas corporation (the “Company”), is adopted for the benefit of the directors of the Company who at the time of their service are not employees of the Company or any of its subsidiaries (“Non-Employee Directors”), and is intended to advance the interests of the Company by providing the Non-Employee Directors with additional incentive to serve the Company by increasing their proprietary interest in the success of the Company.

2.             Administration. The Plan shall be administered by the Board of Directors of the Company (the “Board”) or a committee of the Board which shall consist solely of two or more directors appointed by the Board who are not employees of the Company (the Board acting in such capacity or such committee being referred to as the “Committee”).  For the purposes of the Plan, a majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting.  In addition, the Committee may take any action otherwise proper under the Plan by the affirmative vote, taken without a meeting, of a majority of its members. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including but not limited to the exercise of any power or discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct.  Except as otherwise expressly provided for herein, all questions of interpretation and application of the Plan, or as to an option (“Option”) or stock award (“Stock Award”) granted hereunder (an “Option” and “Stock Award” sometimes hereinafter referred to as an “Award” or collectively as “Awards”), shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee.  The Committee may not amend or replace outstanding Options in a transaction that constitutes a repricing without the approval of the shareholders of the Company.  For these purposes, a cancellation, exchange or other modification to an outstanding Option that occurs in connection with a merger, acquisition, spin-off or other corporate transaction, including under Section 12 will not be deemed a repricing.

3.             Shares Available for Awards.

(a)           Aggregate Number of Shares Available for Awards.  The aggregate number of shares of the Company’s Class A Common Stock, $.01 par value (or such other par value as may be designated by act of the Company’s shareholders) (the “Common Stock”), with respect to which Options or Stock Awards may be granted under the Plan shall not exceed 1,500,000 shares (as adjusted pursuant to the 3-for-2 stock split effected by the Company on October 10, 2007); provided, that the class and aggregate number of shares which may be subject to such Options or Stock Awards granted hereunder shall be subject to adjustment in accordance with the provisions of Section 8 hereof. Such shares may be treasury shares or authorized but unissued shares.

A-1


(b)           Expired, Terminated or Forfeited Shares.  In the event that any outstanding Option or Stock Award for any reason shall expire, terminate, or be forfeited by reason of (i) the death of a Non-Employee Director, (ii) the fact that the Non-Employee Director ceases to be a director, (iii) the surrender of any such Award, or (iv) any other cause, the shares of Common Stock allocable to the unexercised or unvested portion of such Option or Stock Award may again be subject to an Award under the Plan.

4.             Options.

(a)           Grant of Options.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Options to a Non-Employee Director in such amounts as the Committee shall determine, in its sole and absolute discretion.

(b)           Exercise Price of Options.  The exercise price per share of Common Stock covered by an Option granted pursuant to the Plan shall be not less than 100% of the fair market value, as defined in paragraph (e) of this Section 4, of a share of Common Stock on the date such Option is granted.

(c)           Duration of Options. Each Option granted under the Plan shall be exercisable for a term of ten years from the date of grant, subject to earlier termination as provided in paragraph (g) of this Section 4.

(d)           Amount Exercisable. Each Option granted pursuant to the Plan shall be fully exercisable on the date of grant.

(e)           Exercise of Options. Payment of the purchase price of the shares of Common Stock subject to an Option granted hereunder may be made (i) in cash or cash equivalents (including certified check or bank check payable to the order of the Company), (ii) by tendering previously acquired shares of Common Stock (either actually or by attestation, valued at their then “fair market value”), (iii) in shares of Common Stock withheld by the Company from the shares of Common Stock otherwise issuable to the optionee as a result of the exercise of the Option, or (iv) by any combination of any the foregoing.  Subject to the terms and conditions of this Plan, an Option may be exercised by written notice to the Company at its principal office, attention of the Secretary.  Such notice shall (i) state the election to exercise such Option, the number of shares in respect of which it is being exercised and the manner of payment for such shares and (ii) be signed by the person or persons so exercising such Option and, in the event such Option is being exercised pursuant to paragraph (f) of this Section 4 by any person or persons other than the optionee, accompanied by appropriate proof of the right of such person or persons to exercise such Option.  If payment of the purchase price of the shares is being paid in cash or by tendering previously acquired shares of Common Stock, such notice shall be accompanied by payment of the full purchase price of such shares.  All cash and Common Stock payments shall, in either case, be delivered to the Company at its principal office, attention of the Secretary.  All shares issued as provided herein will be fully paid and nonassessable.

A-2


For purposes of this paragraph (e), the “fair market value” of a share of Common Stock as of any particular date shall mean:

(i) if the respective shares of Common Stock are listed on any established stock exchange or a national market system, including without limitation, the NASDAQ® Global Select Market, NASDAQ® Global Market or NASDAQ® Capital Market, the fair market value will be the closing sales price of such respective shares (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange or system with the greatest volume of trading in the respective Shares) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

(ii) if the respective shares of Common Stock are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, the fair market value of such respective shares will be the mean between the high bid and high asked prices for such shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

(iii) in the absence of an established market for such respective shares of Common Stock of the type described in (i) and (ii), above, the fair market value thereof will be determined by the Committee in good faith.

(f)            Transferability of Options. Options shall not be transferable by the optionee other than by will or under the laws of descent and distribution, and shall be exercisable, during his lifetime, only by the optionee.

(g)           Termination. Except as may be otherwise expressly provided herein, each Option, to the extent it shall not previously have been exercised, shall terminate on the earliest of the following:

(1)           On the last day of the thirty-day period commencing on the date on which the optionee ceases to be a member of the Board, for any reason other than the death or permanent disability of the optionee or his resignation after five years of service;

(2)           On the last day of the one-year period commencing on the date on which the optionee ceases to be a member of the Board because of permanent disability;

(3)           On the last day of the one-year period commencing on the date of the optionee’s death while serving as a member of the Board (during which period the executor or administrator of the optionee’s estate or the person or persons to whom the optionee’s Option shall have been transferred by will or the laws of

A-3


descent or distribution, shall be entitled to exercise the Option in respect of the number of shares that the optionee would have been entitled to purchase had the optionee exercised the Option on the date of his death);

(4)           On the last day of the one-year period commencing on the date an optionee who has had at least five years of service on the Board resigns from the Board; and

(5)           Ten years after the date of grant of such Option.

Unless otherwise specifically provided in an Award agreement, for purposes of this paragraph (g), “permanent disability” means permanent and total disability within the meaning of section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

 (h)          No Rights as Shareholder. No optionee shall have rights as a shareholder with respect to shares of Common Stock covered by an Option until shares are issued to the optionee upon the exercise of such Option; and, except as otherwise provided in Section 8 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such shares.

5.             Stock Awards.

(a)           Grant of a Stock Award.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant a Stock Award in the form of an outright grant of shares of Common Stock or in the form of restricted stock (“Restricted Stock Awards”) to a Non-Employee Director in such amounts as the Committee shall determine, in its sole and absolute discretion.

(b)           Award Restrictions.  The Committee may impose such terms, conditions, and/or restrictions as the Committee deems appropriate on any Restricted Stock Award. Such terms, conditions, and/or restrictions may include, but not be limited to, the requirement that a Non-Employee Director pay a purchase price for each share of Common Stock subject to the Award, restrictions on transferability, requirements regarding continued service as a member of the Board or other time-based restrictions, or the achievement of individual performance goals or attainment of pre-established performance targets.  The period of vesting and the lapsing of any applicable forfeiture restrictions shall be established by the Committee at the time of grant.

(c)           Transferability.  Except as may otherwise be provided by the Committee or the terms of any Restricted Stock Award agreement, shares subject to a Restricted Stock Award shall generally not be transferable until all forfeiture restrictions applicable to such Restricted Stock Award have lapsed or, in the sole and absolute discretion of the Committee, cancelled.  Once the forfeiture restrictions have lapsed or been cancelled, the shares of Common Stock that were subject to the Restricted Stock Award shall, subject to any restrictions under applicable securities laws, become freely transferable.  Any Restricted Stock Award granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book entry registration or issuance of a stock certificate or certificates.  The Company may retain the certificates, if

A-4


any, representing the shares of Common Stock that are subject to a Restricted Stock Award in the Company’s possession until such time as all conditions and/or restrictions applicable to such shares of Common Stock have been satisfied.

(d)           Rights as Shareholders.  During the period in which any restricted shares of Common Stock are subject to forfeiture restrictions imposed under paragraph (b) of this Section 5, the Committee may, in its sole discretion, grant to the Non-Employee Director to whom such restricted shares have been awarded, all or any of the rights of a shareholder with respect to such shares, including, but not limited to, the right to vote such shares and to receive dividends.

6.             Written Agreement. Each Option or Stock Award granted hereunder shall be, to the extent necessary, embodied in a written Award agreement, which shall be subject to the terms and conditions of this Plan, as applicable, and shall be signed by the Non-Employee Director and by the appropriate officer of the Company for and in the name and on behalf of the Company.  Such an Award agreement shall contain the specific terms applicable to the Non-Employee Director’s Award and shall contain such other provisions as the Committee in its sole discretion shall deem advisable.

7.             Requirements of Law. The Company shall not be required to sell or issue any shares under any Option or Stock Award if the issuance of such shares shall constitute a violation by the Non-Employee Director or the Company of any provisions of any law or regulation of any governmental authority.  Each Option and Stock Award granted under the Plan shall be subject to the requirement that, if at any time the Board or the Committee shall determine that the listing, registration or qualification of the shares subject thereto upon any securities exchange or under any state or federal law of the United States or of any other country or governmental subdivision thereof, or the consent or approval of any governmental regulatory body, or investment or other representations, are necessary or desirable in connection with the issue or purchase of shares subject thereto, no such Option or Stock Award may be exercised in whole or in part unless such listing, registration, qualification, consent, approval or representation shall have been effected or obtained free of any conditions not acceptable to the Board.  If required at any time by the Board or the Committee, an Option may not be exercised and any restrictions applicable to a Stock Award shall not lapse until the Non-Employee Director has delivered an investment letter to the Company.  In addition, specifically in connection with the Securities Act of 1933 (as now in effect or hereafter amended), upon exercise of any Option, or the lapsing of any restrictions applicable to a Stock Award, the Company shall not be required to issue the underlying shares unless the Committee has received evidence satisfactory to it to the effect that the holder of such Award will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Committee to the effect that such registration is not required.  Any determination in this regard by the Committee shall be final, binding and conclusive.  In the event the shares issuable on exercise of an Option or Stock Award are not registered under the Securities Act of 1933, the Company may imprint on the certificate for such shares the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933:

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The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be sold or transferred except upon such registration or upon receipt by Rush Enterprises, Inc., a Texas corporation (the “Corporation”) of an opinion of counsel satisfactory, in form and substance, to the Corporation that registration is not required for such sale or transfer.

The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) and, in the event any shares are so registered, the Company may remove any legend on certificates representing such shares. The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto, or pursuant to the terms of a Stock Award to comply with any law or regulation of any governmental authority.

8.             Changes in the Company’s Capital Structure. In the event of any stock dividends, stock splits, recapitalizations, combinations, exchanges of shares, mergers, consolidation, liquidations, split-ups, split-offs, spin-offs, or other similar changes in capitalization, or any distribution to shareholders, including a rights offering, other than regular cash dividends, changes in the outstanding stock of the Company by reason of any increase or decrease in the number of issued shares of Common Stock resulting from a split-up or consolidation of shares or any similar capital adjustment or the payment of any stock dividend, any share repurchase at a price in excess of the market price of the Common Stock at the time such repurchase is announced or other increase or decrease in the number of such shares, the Committee shall make appropriate adjustment (a) in the aggregate number and kind of shares authorized by the Plan and (b) in the number, kind and price, as applicable, of any outstanding Awards granted under the Plan (or, if deemed appropriate, the Committee may, where applicable, make provision for a payment of cash or property to the holder in cancellation of an outstanding Award with respect to which Common Stock has not been previously issued); provided, however, that no such adjustment shall increase the aggregate value of any outstanding Option or Stock Award.

In the event of any adjustment in the number of shares covered by any Award, any fractional shares resulting from such adjustment shall be disregarded and each such Award shall cover only the number of full shares resulting from such adjustment.

9.             Amendment or Termination of Plan.  The Board may at any time and from time to time modify, revise or amend the Plan in such respects as the Board may deem advisable in order that Options or Stock Awards granted hereunder may conform to any changes in the law or in any other respect that the Board may deem to be in the best interests of the Company; provided, however, that without approval by the shareholders of the Company, no such amendment shall make any change in the Plan for which shareholder approval is required in order to comply with any rules for listed companies promulgated by any national securities exchange on which the Common Stock is traded or any other applicable rule or law.  All Options and Stock Awards granted under the Plan shall be subject to the terms and provisions of the Plan and, except as otherwise provided in the Plan, any amendment, modification or revision of the Plan shall be deemed to amend, modify or revise all Options and Stock Awards outstanding under the Plan at the time of the amendment, modification or revision.  The Board may terminate the Plan at any

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time.  The rights of any Non-Employee Director with respect to any Award granted under the Plan that is outstanding at the time of the termination of the Plan shall not be affected solely by reason of the termination of the Plan and shall continue in accordance with the terms of the Award and of the Plan.

10.           Indemnification of Committee.  The Company shall indemnify each present and future member of the Committee against any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee.  Each member of the Committee shall be entitled, without further act on his part, to indemnity from the Company for all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee, whether or not he continues to be such member of the Committee at the time of incurring such expenses.  Such indemnity, however, shall not include any expenses incurred by any such member of the Committee (i) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as such member of the Committee, or (ii) in respect of any matter in which any settlement is effected, to an amount in excess of the amount approved by the Company on the advice of its legal counsel.  No right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee unless, within sixty (60) days after institution of any such action, suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense.  The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and shall be in addition to all other rights to which such member of the Committee may be entitled to as a matter of law, contract, or otherwise.  Nothing in this Section 10 shall be construed to limit or otherwise affect any right to indemnification, or payment of expense, or any provisions limiting the liability of any officer or director of the Company or any member of the Committee, provided by law, the Articles of Incorporation of the Company or otherwise.

11.           Effective Date of Plan. The Plan as amended and restated shall become effective upon its approval by the shareholders of the Company.

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ANNUAL MEETING OF SHAREHOLDERS OF

RUSH ENTERPRISES, INC.

May 20, 2008

Please date, sign and mail

your proxy card in the

envelope provided as soon

as possible.

Please detach and mail in the envelope provided.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.  PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE   x

(1) ELECTION OF DIRECTORS

NOMINEES:

o

FOR ALL NOMINEES

o W. Marvin Rush

o W.M. “Rusty” Rush

o

WITHHOLD AUTHORITY
FOR ALL NOMINEES

o Ronald J. Krause

o James C. Underwood
o Harold D. Marshall

o

FOR ALL EXCEPT
(See instructions below)

o Thomas A. Akin

INSTRUCTIONS:

To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” ANNUAL MEETING OF SHAREHOLDERS OF RUSH ENTERPRISES, INC. May 19, 2009 Please sign, date and fillmail your proxy card in the circle next to each nominee you wish to withhold,envelope provided as shown here:  x

FOR

AGAINST

ABSTAIN

(2)

PROPOSAL TO APPROVE THE ADOPTION OF THE AMENDED AND RESTATED 2006 NON-EMPLOYEE DIRECTOR STOCK PLAN.

o

o

o

(3)

PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2008.

o

o

o

allsoon as more particularly described in the Proxy Statement dated April 9, 2008, relating to the Annual Meeting, receipt of which is hereby acknowledged. The undersigned shareholder also acknowledges receipt of the Notice of Annual Meeting of Shareholders.

To change the address on your account, please check the box and indicate your new address in the address space above.  Please note that changes to the registered name(s) on the account may not be submitted via this method.  o

possible. Signature of Shareholder

Date:

Signature of Shareholder

Date:

Note:

Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee, guardian or in another representative capacity, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. To change the address on your account, please check the box and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. (1) ELECTION OF DIRECTORS The Board of Directors recommends a vote “FOR” all nominees O W. Marvin Rush O W.M. “Rusty” Rush O Ronald J. Krause O James C. Underwood O Harold D. Marshall O Thomas A. Akin O Gerald R. Szczepanski (2) PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009. The Board of Directors recommends a vote “FOR” Proposal 2. all as more particularly described in the Proxy Statement dated April 7, 2009, relating to the Annual Meeting, receipt of which is hereby acknowledged. The undersigned shareholder also acknowledges receipt of the Notice of Annual Meeting of Shareholders. FOR AGAINST ABSTAIN FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: NOMINEES: PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x Please detach and mail in the envelope provided. ------------------ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ----------------

 


RUSH ENTERPRISES, INC. PROXY – ANNUAL MEETING OF SHAREHOLDERS – MAY 19, 2009 This Proxy is solicited on behalf of the Board of Directors The undersigned shareholder of Rush Enterprises, Inc. (the “Company”) hereby appoints Steven L. Keller and Martin A. Naegelin, Jr., and each of them, with full power of substitution, as proxies of the undersigned to vote at the Annual Meeting of Shareholders of the Company to be held on Tuesday, May 19, 2009, at 10:00 a.m., local time, in the main conference room at Rush Enterprises, Inc.’s executive offices, which are located at 555 IH 35 South, Suite 500, New Braunfels, Texas 78130, and at any adjournments or postponements thereof, the number of votes that the undersigned would be entitled to cast if personally present, and particularly, without limiting the generality of the foregoing, to vote and act on the following matters and in their discretion upon such other business as may properly come before the meeting or any adjournments or postponements thereof. This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this Proxy will be voted FOR the nominees listed in Proposal 1, and FOR ratification of the appointment of Ernst & Young LLP in Proposal 2. (Continued and to be signed on the reverse side) ------------------ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ----------------

 

RUSH ENTERPRISES, INC.

PROXY – ANNUAL MEETING OF SHAREHOLDERS –  MAY 20, 2008
This Proxy is solicited on behalf of the Board of Directors

The undersigned shareholder of Rush Enterprises, Inc. (the “Company”) hereby appoints Steven L. Keller and Martin A. Naegelin, Jr., and each of them, with full power of substitution, proxies of the undersigned to vote at the Annual Meeting of Shareholders of the Company to be held on Tuesday, May 20, 2008, at 10:00 a.m., local time, in the main conference room at Rush Enterprises, Inc.’s executive offices, which are located at 555 IH 35 South, Suite 500, New Braunfels, Texas 78130, and at any adjournments or postponements thereof, the number of votes that the undersigned would be entitled to cast if personally present, and particularly, without limiting the generality of the foregoing, to vote and act on the following matters and in their discretion upon such other business as may properly come before the meeting or any adjournments or postponements thereof.

This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder.  If no direction is made, this Proxy will be voted FOR the nominees listed in Proposal 1, FOR adoption of the Amended and Restated 2006 Non-Employee Director Stock Plan in Proposal 2, and FOR ratification of the appointment of Ernst & Young LLP in Proposal 3.

(Continued and to be signed on the reverse side)