SCHEDULE 14A

Message(Rule 14a-101)

J. B.INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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 [_]

Check the appropriate box:
[_]  Preliminary Proxy Statement                  [_] Soliciting Material Under Rule
[_]  Confidential, For Use of the                        14a-12
       Commission Only (as permitted
       by Rule 14a-6(e)(2))
[x]  Definitive Proxy Statement
[_]  Definitive Additional Materials

J.B. HUNT TRANSPORT SERVICES, INC.
------------------------------------------------------------------------------------------------------------------------------------------------------

(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[x]  No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 pursuantto Exchange Act Rule 0-11 (set forth the
     amount on which the filing fee iscalculated and state how it was determined):
4)  Proposed maximum aggregate value of transaction:
____________________________________________________________________________________
5)  Total fee paid:
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which
      the offsetting fee was paidpreviously. 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) Filing Party:


      4) Date Filed:

J.B. HUNT TRANSPORT SERVICES, INC.
615 J. B.J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
(479) 820-0000
Internet Site: www.jbhunt.com
____________________________________________________________

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS


To Be Held on April 21, 2005May 2, 2007

     The Annual Meeting of Stockholders of J.B. Hunt Transport Services, Inc. (the “Company”) will be held April 21, 2005,on May 2, 2007, at 10:0010 a.m. (CDT) at the Company’s headquarters, located at 615 J. B.J.B. Hunt Corporate Drive, Lowell, Arkansas, for the following purposes:

(1)

(1)

To elect four (4)three (3) Class IIII Directors for a term of three (3) years each and one (1) Class II Director for a term of one (1) year

(2)

(2)

To approve an increase in authorized shares

ratify the appointment of Ernst & Young LLP as the Company’s registered independent public accounting firm for the next fiscal year

(3)

To amend the Company’s Management Incentive Plan

(3)

(4)

To transact such other business as may properly come before the annual meeting or any adjournments thereof

     Only stockholders of record on January 31, 2005,February 23, 2007, will be entitled to vote at the meeting or any adjournments thereof. The stock transfer books will not be closed.

     The 20042006 Annual Report to Stockholders is included in this publication.

By Order of the Board of Directors

JOHNELLE D. HUNT

Secretary


Lowell, Arkansas
March 18, 200530, 2007

YOUR VOTE IS IMPORTANT

PLEASE EXECUTE YOUR PROXY WITHOUT DELAY


HOW TO VOTE IF YOU ARE A STOCKHOLDER OF RECORD

          Your vote is important.  You can save the Company the expense of a second mailing by voting promptly.  Stockholders of record can vote by telephone, on the Internet, by mail or by attending the Meeting and voting by ballot as described below.  (Please note: if you are a beneficial owner, please refer to your proxy card or the information forwarded by your bank, broker or other holder of record to see which options are available to you.)

          The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded.  If you vote by telephone or on the Internet, you do not need to return your proxy card.  Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day, and will close at 11:59 p.m. on April 20, 2005.

Vote by telephone

          You can vote by calling the toll-free telephone number on your proxy card.  Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded.

Vote on the Internet

          You also can choose to vote on the Internet. The website for Internet voting is www.eproxyvote.com/jbht.  As with the telephone voting, you can confirm that your instructions have been properly recorded.  If you vote on the Internet, you can also request electronic delivery of future proxy materials.

Vote by Mail

          If you choose to vote by mail, simply mark your proxy, date and sign it, and return it to EquiServe Trust Company, N.A,. in the postage-paid envelope provided.  If the envelope is missing, please mail your completed proxy card to J.B. Hunt Transport Services, Inc., c/o EquiServe Trust Company, N.A., P. O. Box 8078, Edison, New Jersey 08818-9271.

Voting at the Annual Meeting

          The method by which you vote will not limit your right to vote at the Annual Meeting if you decide to attend in person.  If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the Meeting.

          All shares that have been properly voted and not revoked will be voted at the Annual Meeting.  If you sign and return your proxy card but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board of Directors.

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Message

J. B. HUNT TRANSPORT SERVICES, INC.

615 J. B.J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
(479) 820-0000
Internet Site: www.jbhunt.com
________________________________________________________________

PROXY STATEMENT

    This Proxy Statement and the accompanying proxy card are being mailedis furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of J.B. Hunt Transport Services, Inc. (the “Company”), on behalf of its Board of Directors (the “Board”), for usethe 2007 Annual Meeting of Stockholders. The Proxy Statement and the related proxy card are being distributed on or about March 30, 2007.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND
THE ANNUAL MEETING

When And Where Is The Annual Meeting?
Date: Wednesday, May 2, 2007 
Time: 10 a.m., Central Daylight Time 
Location:        J.B. Hunt Transport Services, Inc. 
Corporate Offices
First Floor Auditorium
615 J.B. Hunt Corporate Drive 
Lowell, Arkansas 72745 

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 nominees Wayne Garrison, Gary Charles George and Bryan Hunt as Class III directors to hold office for a term of three years, expiring at the close of the Annual Meeting of Stockholders.   This Proxy Statement was first mailedStockholders on 2010.

  • Consider and vote upon a proposal to stockholdersratify the appointment of Ernst & Young LLP (“E&Y”) as the Company on March 18, 2005.

              This introduction is a summary of selected information from this Proxy Statement and may not contain all of the information that is important to you.  To better understand the nominees being solicited for Directors and the proposals which are submitted for a vote, you should carefully read this entire document and other documents to which we refer.

              The proxies being solicited hereby are being solicited by the Company. The expense of soliciting proxies, including the cost of preparing, assembling and mailing the material submitted herewith, will be paid by the Company.  The Company will also reimburse brokerage firms, banks, trustees, nominees and other personsCompany’s independent registered public accounting firm for the expense of forwarding proxy material to beneficial owners of shares held by them of record.  Solicitations of proxies2007 calendar year.

  • Transact such other business as may be made personallyproperly come before the annual meeting or by telephone or telegraphic communications, by Directors, officers and regular employees, who will not receive any additional compensation in respect of such solicitations.adjournments thereof.

When and Where Is the Annual Meeting?

Date:

Thursday, April 21, 2005

Time:

10:00 a.m., Central Daylight Time

Location:

J.B. Hunt Transport Services, Inc.

Corporate Offices

1st Floor Auditorium

615 J.B. Hunt Corporate Drive

Lowell, Arkansas   72745

What Is the Purpose of the Annual Meeting?

          At the Company’s Annual Meeting, stockholders will act upon matters outlined in the accompanying Notice of Annual Meeting, including the election of Directors, the approval of an increase in the number of authorized shares of the Company, and the amendment of the Company’s Management Incentive Plan.  In addition, the Company’s management will report on the performance of the Company during calendar year 2004.

3


Who Is Entitled to Vote?

          Only stockholders of record at the close of business on the record date, January 31, 2005, are entitled to receive the Notice of Annual Meeting and to vote the shares of common stock that they held on that date at the Meeting or at any postponement or adjournment of the Meeting.  Each outstanding share entitles its holder to cast one vote on each matter to be voted on.

Who Can Attend the Meeting?

          All stockholders as of the record date, or their duly appointed proxies, may attend the Meeting, and each may be accompanied by one guest.  Seating is limited and will be on a first-come, first-served basis.  Registration will begin at 9:30 a.m. and seating will be available at approximately 9:30 a.m.  

No cameras, electronic devices, large bags, briefcases or packages
will be permitted at the Meeting

          Please note that if you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of the record date and check in at the registration desk at the Meeting.

What Constitutes aA Quorum?

    The presence, at the Meeting,either in person or by proxy, of the holders of at least a majority of the voting power of our issued and outstanding shares of common stock is required to constitute a quorum for the transaction of business at the annual meeting. Abstentions and broker non-votes, which are described in more detail below, are counted as shares present at the annual meeting for purposes of determining whether a quorum exists.

Who Is Entitled To Vote?
    Only stockholders of record of the Company’s common stock at the close of business on Friday, February 23, 2007, which is the “record date,” are entitled to notice of, and to vote at, the annual meeting. Shares that may be voted include shares that are held:

    (1)directly by the stockholder of record, and
    (2)beneficially through a broker, bank, or other nominee.

    Each share of our common stock will be entitled to one vote on all matters submitted for a vote at the annual meeting.

    As of the record date, there were approximately 142,889,538 shares of our common stock issued and outstanding and entitled to be voted at the annual meeting.

What Is The Difference Between Holding Shares As A “Registered Owner” And A “Beneficial Owner”?
Most of the Company’s stockholders 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, Computershare Trust Company N.A., you are, with respect to those shares, the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the annual meeting.
  • Beneficial Owners – If your shares are held in a brokerage account, bank, or by another nominee, you are, with respect to those shares, 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 or to vote in person at the annual meeting. However, since you are not a stockholder 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 the stockholder of record) giving you the right to vote the shares.

What Stockholder Approval Is Necessary For Approval Of The Proposals?

  • Election of Directors

The election of directors requires the affirmative vote of a plurality of the shares on our common stock cast at the annual meeting. This means that the three Class III director nominees receiving the most votes will be elected. For purposes of this vote, a failure to vote, a vote to abstain or withholding your vote (or a direction to your broker to do so) are not counted as votes cast and, therefore, will have no effect on the outcome of the election of directors.

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

    The ratification of the Audit Committee’s appointment of E&Y as the Company’s independent registered public accounting firm requires the affirmative vote of a majority of the shares of our common stock cast at the annual meeting. For purposes of this vote, a failure to vote, a vote to abstain or withholding your vote (or a direction to your broker to do so) are not counted as votes cast and, therefore, will have no effect on the outcome of this vote. Stockholder ratification is not required for the appointment of the Company’s independent registered public accounting firm. However, we are submitting the proposal to solicit the opinion of our stockholders.

    As of record date, directors and executive officers of the Company beneficially owned as an aggregate approximately 44,269,372 shares of common stock representing 30.98% of our common stock issued and outstanding and, therefore, 30.98% of the voting power entitled to vote at the annual meeting. The Company believes that its directors and executive officers currently intend to vote their shares in favor of the election of the Class III director nominees and in favor of the ratification of E&Y as the Company’s independent registered public accounting firm.

May I Vote My Shares In Person At The Annual Meeting?
    If you are the registered owner of shares of the Company’s common stock on the record date, will constitute a quorum, permittingyou have the Companyright to conduct its business.  Asvote your shares in person at the annual meeting.

    If you are the beneficial owner of shares of the Company’s common stock on the record date, 81,029,821you may vote these shares in person at the annual meeting if you have requested a legal proxy from your broker, banker or other nominee (the stockholder of common stock ofrecord) giving you the right to vote the shares at the annual meeting, complete such legal proxy and present it to the Company were outstanding.  Proxies received, but marked as abstentions and broker non-votes,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 included incounted if you later decide not to attend the calculation of the number of shares considered to be present at the Meeting.

Can a Stockholder Nominate a Director?annual meeting.

          The Nominating and Corporate Governance Committee of the Board of Directors will consider a candidate properly and timely recommended for Directorship by a stockholder or group of stockholders of the Company.  The recommendation must be submitted by one or more stockholders that own individually, or as a group beneficially, 2% or more of the outstanding common stock. Stockholder recommendations must be submitted to the Chairman of the Nominating and Corporate Governance Committee in writing via Certified U.S. mail not less than 120 days prior to the first anniversary of the date of the Proxy Statement relating to the Company’s previous Annual Meeting.  Recommendations must be addressed as follows:

J.B. Hunt Transport Services, Inc.
Chairman, Nominating and Corporate Governance Committee
615 J.B. Hunt Corporate Drive
Lowell, Arkansas  72745
DIRECTOR CANDIDATE RECOMMENDATION

Generally, candidates for Director positions should possess:

•

relevant business and financial expertise and experience, including an understanding of fundamental financial statements

•

the highest character and integrity and a reputation for working constructively with others

•

sufficient time to devote to meetings and consultation on Board matters

•

freedom from conflicts of interest that would interfere with performance as a Director

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          The full text of the Company’s “Policy Regarding Director Recommendations by Stockholders” and “Nominating and Corporate Governance Committee Directorship Guidelines and Selection Policy” is published on the Company’s website at www.jbhunt.com and can be found under the caption “Who We Are”/“Investor Relations”/“Corporate Governance.”

How Can I Communicate DirectlyVote My Shares Without Attending The Annual Meeting?
If you are a registered owner, you may instruct the named proxy holders on how to vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided with this Proxy Statement, or by using the Board?Internet voting site or the toll-free telephone number listed on the proxy card. Specific instructions for using the Internet and telephone voting systems are on the proxy card. The Internet and telephone voting systems will be available until 11:59 p.m. Central Daylight Time on Tuesday, May 1, 2007 (the day before the annual meeting).

          Stockholder communications    If you are the beneficial owner of shares held in street name, you may instruct your broker, bank or other nominee on how to vote your 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 your shares. The instructions from your nominee will indicate if Internet or telephone voting is available and, if so, will provide details regarding how to use those systems.

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 the director nominees and ratify the appointment of E&Y as the Company’s independent registered public accounting firm are considered routine matters and, therefore, if beneficial owners fail to give voting instructions, nominees will have the discretionary authority to vote shares of our common stock with respect to these proposals. You should follow the directions provided by your nominee regarding instructions on how to vote your shares.

What Is A Broker Non-Vote?
Generally, a “broker non-vote” occurs when a broker, bank or other nominee that holds shares in “street name” for customers is precluded from exercising voting discretion on a particular proposal because:

    (1)the beneficial owner has not instructed the nominee on how to vote, and
    (2)the nominee lacks discretionary voting power to vote such issues.

    Under the rules of NASDAQ, a nominee does not have discretionary voting power with respect to the Boardapproval of Directors, any Committee“non-routine” matters absent specific voting instructions from the beneficial owners of the Board of Directors, or any individual Director must be sent in writing via Certified U.S. mail to the Corporate Secretary at the following address:

J.B. Hunt Transport Services, Inc.
Attention:  Corporate Secretary
615 J.B. Hunt Corporate Drive
Lowell, Arkansas  72745

          The Company’s “Stockholder Communications Policy” is published on the Company’s website at www.jbhunt.com and can be found under the caption “Who We Are”/“Investor Relations”/“Corporate Governance.”such shares.

How Do I Vote?Will My Proxy Be Voted?

          The enclosedShares represented by a properly executed proxy card indicates the number of shares you own.  There are four ways to vote:

•

By Internet at www.eproxyvote.com/jbht      We encourage you to vote this way

•

By toll-free telephone at the number shown on your proxy card

•

By completing and mailing your proxy card

•

By written ballot at the Meeting

          If you vote(in paper form, by Internet or telephone, your vote must beby telephone) that is timely received, before midnight of the day before the Meeting.  Your sharesand not subsequently revoked, will be voted as you indicate.  If you do not indicate your voting preferences,at the annual meeting or any adjournment or postponement thereof in the manner directed on the proxy. Wayne Garrison and Kirk Thompson willare named as proxies in the proxy form and have been designated by the Board as the directors’ proxies to represent you and vote your shares FOR  Proposals 1, 2 and 3. 

          If you Voteat the annual meeting. All shares represented by Telephone ora properly executed proxy on the Internet, You Do NOT Need to Return Your Proxy Card

          If you complete and properly sign the accompanying proxy card and return it to the Company, or tender your vote via telephone or the Internet, itwhich no choice is specified will be voted as you direct.  If you attend the Meeting, you may deliver your completed proxy card in person.  Proxies duly executed and returned by a stockholder, and not revoked prior to or at the Meeting, will be voted in accordance with the instructions thereon.

          If your shares are held in “street name,” you will need to contact your broker or other nominee to determine whether you will be able to vote by telephone or Internet.

What Are the Board’s Recommendations?voted:

          Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board of Directors.  The Board’s recommendation is set forth together with each proposal in this Proxy Statement.  In summary, the Board recommends a vote:

•

(1)

ForFOR the election of the nominated slate of Directors (see page 8)nominees for director named in this Proxy Statement,

•

(2)

ForFOR the authorization to increaseratification of the numberappointment of authorized shares  (see page 25)E&Y as the Company’s independent registered public accounting firm for the 2007 calendar year, and

•

(3)

For

in accordance with the amendment ofproxy holders’ best judgment as to any other business that properly comes before the Company’s Management Incentive Plan (see page 26)

annual meeting.

5    This Proxy Statement is considered to be voting instructions for the trustees of the J.B. Hunt Transport Services, Inc. Employee Retirement Plan for our common stock allocated to individual accounts under this plan. If account information is the same, participants in the plan (who are stockholders of record) will receive a single proxy representing all of their shares. If a plan participant does not submit a proxy to us, the trustees of the plan in which shares are allocated to his or her individual account will vote such shares in the same proportion as the total shares in such plan for which directions have been received.

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, you may revoke your proxy and change your vote by:

(1)submitting a new proxy bearing a later date (which automatically revokes the earlier proxy),
(2)giving notice of your changed vote to us in writing mailed to the attention of Johnelle Hunt, Corporate Secretary, at our executive offices, or
(3)attending the annual meeting and giving oral notice of your intention to vote 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?
Proxies will be solicited initially by mail. Further solicitation may be made in person or by telephone, electronic mail or facsimile. The Company will bear the expense of preparing, printing and mailing this Proxy Statement and accompanying materials to our stockholders. Upon request, the Company will reimburse brokers, banks and other nominees for reasonable expenses incurred in forwarding copies of the proxy materials relating to the annual meeting to the beneficial owners of our common stock.

    The Company has retained ADP, an independent proxy solicitation firm, to assist in soliciting proxies from stockholders. ADP will receive a fee of approximately $30,000 as compensation for its services and will be reimbursed for its out-of-pocket expenses. The fee amount is not contingent on the number of stockholder votes cast in favor of any proposals, and ADP is prohibited from making any recommendation to our stockholders to either accept or reject any proposal or otherwise express an opinion concerning a proposal.

What Other Business Will Be Presented At The Annual Meeting?
As of the date of this Proxy Statement, the Board knows of no other business that may properly be, or is likely to be, brought before the Annual Meeting.  With respect toannual meeting. If any other matter thatmatters should arise at the annual meeting, the persons named as proxy holders, Wayne Garrison and Kirk Thompson, will have the discretion to vote your shares on any additional matters properly comes beforepresented for a vote at the Meeting,meeting. If, for any unforeseen reason, any of the Class III director nominees are not available to serve as a director, the named proxy holders will vote your proxy for such other director candidate or candidates as recommendedmay be nominated by the BoardBoard.

What Is The Deadline For Stockholder Proposals For The 2008 Annual Meeting?
In order for a stockholder proposal to be eligible to be included in the Company’s Proxy Statement and proxy card for the 2008 Annual Meeting of Directors or, if no recommendation is given, at their own discretion.Stockholders, the proposal:

(1)must be received by the Company at its executive offices, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas 72745, Attention: Corporate Secretary on or before November 9, 2007, and
(2)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”).

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 2007 calendar year.

What Vote Is Required to Approve Each Proposal?Should I Do If I Receive More Than One Set Of Voting Materials?

•

Election of Directors.  The affirmative vote of a plurality of the votes cast at the Meeting is required for the election of Directors.  A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more of the Directors will not be voted with respect to the Director or Directors indicated, although it will be counted for purposes of determining whether there is a quorum.

•

Other Proposals.  For each other proposal, the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the item will be required for approval.  A properly executed proxy marked “ABSTAIN” with respect to any such matter will not be voted, although it will be counted for purposes of determining whether there is a quorum.  Accordingly, an abstention will have the effect of a negative vote.

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 holdare a registered owner and your shares are registered in “street name” throughmore than one name, you will receive more than one proxy card. Please vote each proxy and instruction card that you receive.

What Is Householding?
In an effort to reduce printing costs and postage fees, the Company has adopted a brokerpractice approved by the Securities and Exchange Commission (the “SEC”) 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, unless one or other nominee, your brokermore of these stockholders notifies the Company that he or nominee may not be permittedshe wishes to exercise voting discretioncontinue receiving individual copies. Stockholders who participate in householding will continue to receive separate proxy cards.

    If you share an address with respectanother stockholder and received only one copy of this Proxy Statement and the Company’s annual report and would like to somerequest a separate copy of the matters to be acted upon.  Thus,these materials, or if you do not givewish to participate in householding in the future, please:

(1)mail such request to J.B. Hunt Transport Services, Inc., Attention: Corporate Secretary, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas 72745, or
(2)contact the Corporate Secretary toll-free at 1-800-643-3622.

    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 either executing and returning the proxy card or by voting electronically via the Internet or by telephone. If you are the beneficial owner of shares held in street name, then you should follow the voting instructions of your broker, bank or nominee specific instructions,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 may notwill be voted on those mattersvoted:

    (1)FOR the approval of the director nominees, and
(2)FOR the ratification of E&Y as the Company’s independent registered public accounting firm for the 2007 calendar year.

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 if you need special assistance at the annual meeting, please call the Corporate Secretary toll-free at 1-800-643-3622. In addition, information regarding the annual meeting is available via the Internet at our website www.jbhunt.com.

YOU SHOULD CAREFULLY READ THIS PROXY STATEMENT IN ITS ENTIRETY

    The summary information provided above in the 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 TELEPHONE,
INTERNET OR BY FILLING IN, SIGNING AND DATING
THE ENCLOSED PROXY CARD AND RETURNING IT TO US
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

PROPOSALS TO BE VOTED AT THE ANNUAL MEETING

PROPOSAL NUMBER ONE 
ELECTION OF DIRECTORS 

Our Board nominates Wayne Garrison, Gary Charles George and Bryan Hunt as Class III directors, to hold office for a term of three years, expiring at the close of the 2010 Annual Meeting of Stockholders or until their successors are elected and qualified or until their earlier resignation or removal. The Board believes these incumbent directors standing for re-election are well qualified and experienced to direct and manage the Company’s operations and business affairs and will represent the interests of the stockholders as a whole. Biographical information on each of these nominees is set forth below in “Nominees for Director.”

If any director nominee becomes unavailable for election, which is not be counted in determininganticipated, the named proxies will vote for the election of such other person as the Board may nominate, unless the Board resolves to reduce the number of shares necessary for approval.  Shares represented by such “broker non-votes” will, however,Class III directors to serve on the Board and thereby reduce the number of directors to be counted in determining whether there is a quorum.

Can I Change My Vote After I Return the Proxy Card?

          Yes.  Even after you have submitted your proxy, you may change your vote at any time before the proxy is exercised by filing with the Secretary of the Company either a notice of revocation or a duly executed proxy bearing a later date.  The powers of the proxy holders will be suspended if you attend the Meeting in person and so request, although attendanceelected at the Meeting will not by itself revoke a previously granted proxy.

* * * * * * * * * * * * * *

You Should Carefully Read this Proxy Statement in its Entiretyannual meeting.

* * * * * * * * * * * * *THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
EACH OF THE DIRECTOR NOMINEES LISTED HEREIN

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INFORMATION ABOUT THE BOARD

The Board of Directors is currently divided into three classes, each having three yearthree-year terms that expire in successive years. The term of office of Directors in each class expires at the Annual Meetingannual meeting held on the following dates:

Class

Year Term Expires

Class I 
 2008

Class I

II 

 2009

2005

Class II

2006

Class III

 2007

2007


OTHER INFORMATION YOU NEED TO MAKE AN INFORMED DECISION

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Number of Directors and Term of Directors and Executive Officers
The shares represented by your proxy willCompany’s Bylaws provide that the number of directors shall not be voted atless than three or more than twelve, with the 2005 Annual Meeting for the election of all nominees unless you instruct otherwise.  If any of them should become unavailableexact number to serve as a Director before the election, the Board may designate a substitute nominee.  In that case, the persons named as proxies will vote for the substitute nominee designatedbe fixed by the Board.

RETIRING DIRECTORS

          On December 31, 2004, Mr. J. B. Hunt, founder and Senior Chairman The Company’s Certificate of Incorporation divides the Board submitted his resignation.   Mr. Gene George, an original investorinto three classes of as equal size as possible, with the terms of each class expiring in consecutive years so that only one class is elected in any given year. Currently, there are nine directors, with four directors serving in Class I, two directors serving in Class II and founding Directorthree directors serving in Class III.

The stockholders of the Company also tendered his resignationelect successors for directors whose terms have expired at the Company’s annual meeting. The Board elects members to fill new membership positions and vacancies in unexpired terms on December 31, 2004. The Company wishes to expressthe Board. At its sincere gratitude to these gentlemen forBoard Meeting on January 26, 2006, the many years of service and great vision each has contributed in making J.B. Hunt Transport Services, Inc. the company it is today.

PROPOSAL ONE

ELECTION OF DIRECTORS

          The Board of Directors proposesadopted a retirement policy stating that no director will be eligible to stand for re-election once he or she has reached 72 years of age. Executive officers are elected by the nominees for Class I Directors described below be re-elected for a new term of three yearsBoard and hold office until their successors are duly elected and qualified.  All nomineesqualified or until the earlier of their death, retirement, resignation or removal.

Directors and Executive Officers

    The names of the Company’s directors and executive officers as of February 23, 2007, and their respective ages and positions are currently serving as Class I Directors.follows:

NameAgePosition
Paul R. Bergant  60Executive Vice President, Marketing, Chief Marketing Officer and President of Intermodal 
David N. Chelette  43Vice President and Treasurer 
Donald G. Cope  56Sr. Vice President, Finance, Controller and Chief Accounting Officer 
Wayne Garrison  54Chairman of the Board; Class III Director 
Gary Charles George  56Class III Director 
Craig Harper  49Executive Vice President, Operations and Chief Operations Officer 
Bryan Hunt  48Class III Director 
Johnelle Hunt  75Corporate Secretary; Class I Director 
Terrence D. Matthews  48Sr. Vice President, Marketing 
David G. Mee  46Sr. Vice President, Tax and Risk Management 
Kay J. Palmer  43Executive Vice President and Chief Information Officer 
Coleman H. Peterson  58Class II Director 
Bob D. Ralston  60Executive Vice President, Equipment and Properties 
John N. Roberts III  42Executive Vice President and President, Dedicated Contract Services 
James L. Robo  44Class II Director 
Kirk Thompson  53President and Chief Executive Officer; Class I Director 
Leland Tollett  70Class I Director 
Jerry W. Walton  60Executive Vice President, Finance and Administration and Chief Financial Officer 
John A. White 67Class I Director 

NOMINEES FOR DIRECTOR

CLASS III – TERM EXPIRES 2007
Wayne GarrisonDirector Since 1981
Mr. Garrison, age 54, is Chairman of the Board and has held this title since 1995. Joining the Company in 1976 as Plant Manager, he has also served the Company as Vice President of Finance in 1978, Executive Vice President of Finance in 1979, President in 1982, Chief Executive Officer in 1987 and Vice Chairman of the Board from January 1986 until May 1991.
Gary Charles GeorgeDirector Since 2006
Mr. George, age 56, is President and Chief Executive Officer of George’s, Inc., a private, fully integrated poultry company in Northwest Arkansas. He was appointed by the Company’s Nominating and Corporate Governance Committee and the Board of Directors on August 29, 2006, to assume the positions vacated when director Thomas L. Hardeman passed away on August 20, 2006, and John A. Cooper, Jr. tendered his resignation on August 1, 2006. Mr. George is a graduate of the University of Arkansas with a degree in business administration. He served on the Board of Trustees for the University of Arkansas from 1995 through 2005 and on the Board of Directors for the First National Bank of Springdale until 2003.
Bryan HuntDirector Since 1991
Mr. Hunt, age 48, is President of Best Automotive, Best Automotive of Mississippi, Best Buy Here Pay Here, Progressive Auto Finance Corporation and Bryan Hunt LLC (all private companies with operations in motor vehicle sales, leasing and financing). He served as Assistant Secretary of the Company from October 1988 until May 2000. Until his retirement from the Company in 1997, he served separate terms as the Company’s Treasurer and Chief Operating Officer of the Van Division. Bryan Hunt is the son of Johnelle Hunt.

REMAINING MEMBERS OF THE CURRENT BOARD
    The Board of Directors also recommends the election of Coleman H. Peterson to serve as a Class II Director for a one year term.   Mr. Peterson was appointed in May 2004 to fill a Class II vacancy on the Board.  His term, if elected, will expire at the Annual Meeting held in 2006, at the same time the termsremaining members of the current Class II Directors expire.

          EachBoard, their experience and qualifications as Board members, the class in which they serve, and the expiration of the nominees has consented to serve the term for which he or she is nominated. 

The Board of Directors Recommends that Stockholders Vote
FOR
Each of the Nominees Listed Hereintheir terms are as follows:

7


NOMINEES FOR DIRECTOR

CLASS I – For Term Expiring 2008

CLASS I – TERM EXPIRES 2008

Johnelle D. Hunt

Director Since 1993

Mrs. Hunt, age 73,75, is the Corporate Secretary of the Company. Serving as Credit Manager from 1962 to 1987, she was elected Secretary-Treasurer in 1972 and served in that capacity until October 1988, at which time she was elected Corporate Secretary. Johnelle D. Hunt is the wifewidow of founder and former Senior Chairman of the Board J. B.J.B. Hunt and the mother of Bryan Hunt.

She serves on the Board of Advisors for the University of Arkansas and on the board for the Harvey and Bernice Jones Eye Institute. She also served on the executive committee and as treasurer for the University of Arkansas’ Campaign for the 21st Century.

Kirk Thompson

Director Since 1985

Mr. Thompson, age 51,53, is President and Chief Executive Officer of the Company. Mr. Thompson, a certified public accountant, joined the Company in 1973. He served as Vice President of Finance from 1979 until 1984, Executive Vice President and Chief Financial Officer until 1985, and President and Chief Operating Officer from 1986 until 1987, when he was elected President and Chief Executive Officer.

Leland E. Tollett

Director Since 2001

Mr. Tollett, age 68,70, is a private investor. He served as Chairman of the Board and Chief Executive Officer of Tyson Foods, Inc. from 1995 to 1998, when he retired and became1998. He is currently a consultant to that company. A Tyson Foods employee since 1959, he also served as President and Chief Executive Officer from 1991 to 1995. He first became a board member of Tyson Foods, Inc. in 1984 and continues to serve in that capacity.

John A. White

Director Since 1998

Dr. White, age 65,67, is Chancellor of the University of Arkansas, a position he has held since July 1997. A graduate of the University of Arkansas (BSIE), Virginia Tech (MSIE) and The Ohio State University (PhD), he also holds honorary doctorates from the Katholieke Universitiet of Leuven in Belgium and from George Washington University. Dr. White is a member of the National Academy of Engineering, DirectorEngineering. Locally, he serves as the presiding co-chair of the Malcolm Baldridge National Quality Award Foundation,Northwest Arkansas Council, on the Northwest Arkansas Regional Airport Authority Board, and Director ofon the National Collegiate Athletic Association.Arkansas Science and Technology Authority Board. He also serves on the Board of Directors and the Audit Committees of Logility, Inc., and Motorola, Inc., and Russell Corporation.

CLASS II – For Term Expiring 2006

CLASS II – TERM EXPIRES 2009
Coleman H. Peterson

Director by Appointment Since May 3, 2004

Mr. Peterson, age 56,58, is President and CEO of Hollis Enterprises LLC, a human resources consulting firm founded in 2004 following his retirement from Wal-Mart Stores, Inc. as its Executive Vice President of the People Division. During his 10-year tenure, Mr. Peterson was responsible for recruitment, retention and development of the world’s largest corporate work force. Prior to his experience with Wal-Mart, Mr. Peterson spent 16 years with Venture Stores, with his last position as the Senior Vice President of Human Resources. He holds master’sMaster’s and bachelor’sBachelor’s degrees from Loyola University of Chicago. He serves as a member of the Board of Directors and a member ofchairs the Compensation Committee forCommittees of The Service Master Company.ServiceMaster Company and Build-A-Bear Workshop. He also serves on the Board of Directors for Knockout Holdings Inc. and sits on the Executive Committee of the NAACP, where he serves as Treasurer of the NAACP’s Special Contribution Fund.

8


REMAINING MEMBERS OF THE CURRENT BOARD

          The remaining members of the current Board, their experience and qualifications as Board members, the class in which they serve, and the expiration of their terms are as follows:

CLASS II - Term Expires April 2006

ThomasJames L. HardemanRobo

Director Since 19942002

Mr. Hardeman,Robo, age 67,44, is President and Chief Operating Officer of BTTB Investments, a private investment company.FPL Group. He served as Corporate Vice President of United Parcel Service from 1984 until his retirement in April 1994. He is the former Chairman of the Advisory Board for the Commercial Vehicle Safety Alliance, former board member of the Professional Truck Driver Institute of America, and served on the American Legislative Exchange Council and the State Government Affairs Council.

James L. Robo

Director Since 2002

Mr. Robo, age 42, is President of FPL Energy until December 2006 and Vice President of Corporate Development and Strategy of FPL Group.Group until July 2002. FPL Group is a publicU.S. electric company whose two main subsidiaries are Florida Power & Light and FPL Energy. Prior to joining FPL Group in 2002, Mr. Robo joinedspent ten years at the General Electric Company in 1992 andCompany. He served as President and Chief Executive Officer of GE Mexico from 1997-1999. He1997-1999 and was President and Chief Executive Officer of the GE Capital TIP/Modular Space division from 19921999 until February 2002. From 1984-19921984 through 1992, Mr. Robo worked for Mercer Management Consulting and served as Vice President from 1988-1992.Consulting. He graduated summa cum laudereceived a BA Summa Cum Laude from Harvard College with a BA in European History and subsequently obtained hisan MBA from Harvard Business School, in 1988.

where he was a Baker Scholar.

CLASS III - Term Expires April 2007

John A. Cooper, Jr.

Director Since 1990

Mr. Cooper, age 66, is Chairman of the Board of Cooper Communities, Inc. (a private community development company). From 1997 to July 2003, Mr. Cooper served as Chief Executive Officer and President of Cooper Communities, Inc.

Wayne Garrison

Director Since 1981

Mr. Garrison, age 52, is Chairman of the Board and has held this title since 1995.  Joining the Company in 1976 as Plant Manager, he has also served the Company as Vice President of Finance in 1978, Executive Vice President of Finance in 1979, President in 1982, Chief Executive Officer in 1987 and Vice Chairman of the Board from January 1986 until May 1991.

Bryan Hunt

Director Since 1991

Mr. Bryan Hunt, age 46, is President of Best Motor Company, Best Leasing Corporation and Progressive Finance Corporation (all private companies with operations in motor vehicle sales, leasing and financing).  He served as Assistant Secretary of the Company from October 1988 until May 2000.  Until his retirement from the Company in 1997, he served separate terms as the Company’s Treasurer and Chief Operating Officer of the Van Division.  Bryan Hunt is the son of J.B. Hunt and Johnelle D. Hunt.

9


DIRECTOR COMPENSATION

    The Company pays only independent, non-employee Directorsdirectors for their services. Directors who are also officers of the Company are not eligible to receive any of the compensation described below.

           At its     In calendar year 2006, compensation for independent, non-employee directors, serving on the Board, was as follows:

  • an annual retainer of $62,000 paid in Company stock, cash or any combination thereof
  • $4,500 for each Board meeting on July 22, 2004,attended
  • $1,500 for each Board Committee meeting attended
  • $4,000 to the Chairman of the Audit Committee for each Committee meeting chaired
  • $3,000 to the Chairman of the Executive Compensation Committee reviewed its current compensation package(“Compensation Committee”) and the Nominating and Corporate Governance Committee (“Corporate Governance Committee”) for its independent, non-employee Directors.  The serviceseach Committee meeting chaired
  • reimbursement of an independent consultant were commissionedexpenses to survey board compensation practicesattend Board and Committee meetings

Non-Employee Board of Director Compensation Paid in the industry and general marketplace. Based on the results reviewed by the Committee, it was determined that it would be in the best interestCalendar Year 2006

 Fees  Change in Pension  
 Earned  Value and  
 or Paid  Nonqualified  
 in CashRestricted ShareNon-EquityDeferred  
 or Stockor Stock OptionIncentive PlanCompensationAll Other 
Board Member($)Awards (#)Compensation ($)Earnings ($)Compensation ($)Total ($)
John A. Cooper, Jr. 80,000  – – – – 80,000 
Gary Charles George 48,833  – – – – 48,833 
Thomas L. Hardeman 83,250  – – – – 83,250 
Bryan Hunt 75,500  – – – – 75,500 
Coleman H. Peterson 95,000  – – – – 95,000 
James L. Robo 92,000  – – – – 92,000 
Leland Tollett 92,000  – – – – 92,000 
John A. White 115,000  – – – – 115,000 

     To more closely align their interests with those of the Company and its stockholders, to implement modifications suggested by the consultant and initiate a stock-ownership requirement for its Directors. As such, effective immediately, Directors of the Company will beeach Board member is required to own three times their estimated annual compensation (approximately $74,000) in stock within a three-year period.  AllCompany stock.

     Independent, non-employee members of the Board have satisfied this requirement, with the exception of Coleman H. Peterson, who was newly appointed to the BoardDirectors did not receive any stock options or restricted share units in May 2004.  If elected, Mr. Peterson will have until May 2007 to satisfy the requirement.

          In calendar year 2004, compensation for independent, non-employee Directors, serving on the Board, was as follows:

•

an annual retainer of $50,000 paid in Company stock, cash or any combination thereof

•

$4,500 for each Board meeting attended

•

$1,500 for each Board Committee meeting attended

•

$3,000 to the chairman of each Committee for each Committee meeting attended

•

reimbursement of expenses to attend Board and Committee meetings

CORPORATE GOVERNANCE2006.

Duties     Independent, non-employee members of the Board

          The Board of Directors has the responsibility to serve as the trustee for the stockholders.  It also has the responsibility for establishing broad corporate policies and for the overall performance of the Company.  The Board, however, isdid not involvedparticipate in day-to-day operating details.  Memberseither a pension plan or deferred compensation plan in calendar year 2006.

     Each independent, non-employee member of the Board of Directors had the choice of receiving his or her annual retainer of $62,000 in Company stock, cash or any combination thereof. Gary Charles George’s retainer was prorated at the time of his appointment to the board on August 29, 2006.

     Johnelle Hunt, an employee of the Company and member of the Board of Directors, received a salary of $100,000 for her services as the Company’s Corporate Secretary. The Company also remitted payment of $10,000 on her behalf for professional fees and provided a Company match of $3,000 to her 401(k) account. Remittances for professional fees were also made for Wayne Garrison and Kirk Thompson and are kept informeddisclosed on page 28 of this Proxy Statement in the table titled “Components of Perquisites for Calendar Year 2006.”

Security Ownership of Management
The following table sets forth the beneficial ownership of the Company’s business through discussion withcommon stock as of February 23, 2007, by each of its current directors (including all nominees for director), the Chairman, ChiefNamed Executive OfficerOfficers (the “NEOs”) and all other executive officers, by reviewing analyses and reports sent to them each month, and by participating in Board and Committee meetings.

Corporate Governance Guidelines

          The Board has adopted Corporate Governance Guidelines to assist the Boardall such persons as a group, as of February 23, 2007. Unless otherwise indicated in the exercisefootnotes below, “beneficially owned” means the sole power to vote or direct the voting of its responsibilitiesa security and the sole power to dispose or direct the Company and its stockholders.  The guidelines address, among other items, Director responsibilities, Board committees, and Director compensation.  disposition of a security.

Number of SharesNumber of Shares
Beneficially OwnedBeneficially Owned Percent
OwnerDirectly (1)    Indirectly (2)    of Class (3)
Paul Bergant467,597  0  * 
Wayne Garrison7,264,08512,0005.09
Gary Charles George22,076624,310  (4)*
Craig Harper271,6340*
Bryan Hunt95,3000*
Johnelle Hunt34,400,550  (5)024.07
Coleman H. Peterson8,2310*
James L. Robo22,5530*
Kirk Thompson455,9240*
Leland Tollett42,7550*
Jerry W. Walton357,2400*
John A. White33,4140*
 
All executive officers and Directors
as a group (19 persons)44,269,37230.98


*Less than 1 percent

(1)

Includes shares that are owned by the director or executive officer that are (a) held in a 401(k) or deferred compensation account, (b) options that are currently exercisable, (c) options that will become exercisable within 60 days and (d) shares held as trustee of family trusts in which the trustee has no beneficial ownership. Also includes pledged shares as shown below:
Wayne Garrison450,000
Craig Harper254,398
Bryan Hunt70,877
Johnelle Hunt18,910,184
Kirk Thompson430,210

(2)

Indirect beneficial ownership includes shares owned by the director or executive officer, (a) as beneficiary or trustee of a personal trust, (b) by a spouse or as trustee or beneficiary of a spouse’s trust, or (c) in a spouse’s retirement account.

(3)

Calculated on the basis of 142,889,538 shares of common stock outstanding of the Company on February 23, 2007.

(4)

The reporting person disclaims beneficial ownership of these shares, which are held in limited partnerships. This report shall not be deemed an admission that the reporting person is the beneficial owner of such securities for the purposes of Section 16 or for any other purposes.

(5)

Includes shares owned in family limited liability companies in which Mrs. Hunt is the sole manager. Until the death of Mr. J.B. Hunt on December 7, 2006, she and Mr. Hunt were co-managers of these companies. Includes shares previously held directly by Mr. Hunt that have been transferred into a marital trust in which Johnelle Hunt is the trustee.

CORPORATE GOVERNANCE
We believe that good corporate governance helps to ensure that the Company is managed for the long-term benefit of itsour stockholders. During the past year, we continued toWe continually review and consider our corporate governance policies and practices, the recently adopted and proposedSEC’s corporate governance rules and regulations, of the Securities and Exchange Commission (the “SEC”), and the revisedcorporate governance listing standards of the NASDAQ, the stock exchange on which our common stock is traded.  These documents are published

     You can access and print the Charters of our Audit Committee, Compensation Committee and Corporate Governance Committee as well as our Corporate Governance Guidelines, Corporate Code of Ethics, Whistleblower Policy, and other Company policies and procedures required by applicable law, regulation or NASDAQ corporate governance listing standards on our website at www.jbhunt.com under the caption“Corporate Governance” page of the “Who We Are”/“Investor Relations”/“ section of our website at www.jbhunt.com. Additionally, you can request copies of any of these documents by writing to our Corporate Governance.”Secretary at the following address:

10

J.B. Hunt Transport Services, Inc.
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
Attention: Corporate Secretary

Director Independence
     The Board is composed of a majority of directors who satisfy the criteria for independence under the NASDAQ corporate governance listing standards. In determining independence, each year the Board affirmatively determines, among other items, whether the directors have no material relationship with the Company or any of its subsidiaries pursuant to the NASDAQ corporate listing standards. When assessing the “materiality” of a director’s relationship with the Company, if any, the Board considers all relevant facts and circumstances, not merely from the director’s standpoint, but from that of the persons or organizations with which the director has an affiliation and the frequency or regularity of the services, whether the services are being carried out at arm’s length in the ordinary course of business, and whether the services are being provided substantially on the same terms to the Company as those prevailing at the time from unrelated parties for comparable transactions. Material relationships can include commercial, banking, industrial, consulting, legal, accounting, charitable and familial relationships. The Board also considers any other relationship that could interfere with the exercise of independence or judgment in carrying out the duties of a director.

          The     Applying these independence standards, the Board has determined that no non-employee DirectorGary Charles George, Coleman H. Peterson, James L. Robo, Leland Tollett and John A. White are all independent directors. After due consideration, the Board has determined that none of these non-management directors has a material relationship with the Company or any of its subsidiaries (either directly or indirectly as a partner, stockholder or officer of anany organization that has a relationship with the Company)Company or any of its subsidiaries) and that they all non-employee Directors meet the criteria for independence under the NASDNASDAQ corporate governance listing standards.

Director Recommendations By Stockholders
     In addition to recommendations from Board members, management or professional search firms, the Corporate Governance Committee will consider director candidates properly submitted by stockholders who individually or as a group have beneficially owned at least two percent of the outstanding shares of the Company’s common stock for at least one year from the date the recommendation is submitted. Stockholders must submit director candidate recommendations in writing by Certified Mail to the Company’s Corporate Secretary not less than 120 days prior to the first anniversary of the date of the Proxy Statement relating to the Company’s previous annual meeting. Accordingly, for the 2008 Annual Meeting of Stockholders, director candidates must be submitted to the Company’s Corporate Secretary by November 9, 2007. Director candidates submitted by stockholders must contain at least the following information:

  • the name and address of the recommending stockholder,
  • the number of shares of the Company’s common stock beneficially owned by the recommending stockholder and the dates such shares were purchased,
  • the name, age, business address and residence of the candidate,
  • the principal occupation or employment of the candidate for the past five years,
  • a description of the candidate’s qualifications to serve as a director, including financial expertise and why the candidate does or does not qualify as “independent” under the NASDAQ corporate governance listing standards,
  • the number of shares of the Company’s common stock beneficially owned by the candidate, if any, and,
  • a description of the arrangements or understandings between the recommending stockholder and the candidate, if any, or any other person pursuant to which the recommending stockholder is making the recommendation.

     In addition, the recommending stockholder and the candidate must submit, with the recommendation, a signed statement agreeing and acknowledging that:

  • the candidate consents to being a director candidate and, if nominated and elected, he or she will serve as a director representing all of the Company’s stockholders in accordance with applicable laws and the Company’s Certificate of Incorporation and Bylaws,
  • the candidate, if elected, will comply with the Company’s Corporate Governance Guidelines and any other applicable rule, regulation, policy or standard of conduct applicable to the Board and its individual members,
  • the recommending stockholder will maintain beneficial ownership of at least two percent of the Company’s issued and outstanding common stock through the date of the annual meeting for which the candidate is being
  • recommended for nomination and that, upon the candidate’s nomination and election to the Board, the recommending stockholder intends to maintain such ownership throughout the candidate’s term as director, and,
  • the recommending stockholder and the candidate will promptly provide any additional information requested by the Corporate Governance Committee and/or the Board to assist in the consideration of the candidate, including completed and signed Questionnaire for Directors and Officers on the Company’s standard form and an interview with the Corporate Governance Committee or its representative.

     For a complete list of the information that must be included in director recommendations submitted by stockholders, please see the “Policy Regarding Director Recommendations by Stockholders” on the “Corporate Governance” page of the “Who We Are” section of our website at www.jbhunt.com. The Corporate Governance Committee will consider all director candidates submitted through its established processes and will evaluate each of them, including incumbents, based on the same criteria. However, the Corporate Governance Committee may prefer incumbent directors and director candidates whom they know personally or who have relevant industry experience and in-depth knowledge of the Company’s business and operations.

     The policies and procedures as set forth above are intended to provide flexible guidelines for the effective functioning of the Company’s director nomination process. The Board has also determinedintends to review these policies and procedures periodically and anticipates that no member ofmodifications may be necessary from time to time as the AuditCompany’s needs and circumstances change.

Board Composition and Director Qualifications
The Corporate Governance Committee Compensation Committee or Nominating Committee has any material relationship withperiodically assesses the Company (either directly or indirectly as a partner, stockholder or officer of an organization that has a relationship with the Company)appropriate size and that all members of these committees meet the criteria for independence under the NASD listing standards. 

          The Board has selected John A. White to act as presiding Director of executive sessions to be held on a regular basis by non-employee, independent Directors.  This group of Directors met three times in executive session during calendar year 2004.  Dr. White presided as Chairman in each of these meetings.  It will remain standard practice of the Company to conduct these meetings either before or after each regularly scheduled Board meeting or on an as-needed basis.

BOARD MEETINGS

          All members of the Board are strongly encouraged to attend each meetingcomposition of the Board and whether any vacancies on the Board are expected. In the event that vacancies are anticipated or otherwise arise, the Corporate Governance Committee will review and assess potential director candidates. The Corporate Governance Committee utilizes various methods for identifying and evaluating candidates for director. Candidates may come to the attention of the Corporate Governance Committee through recommendations of Board members, management, stockholders or professional search firms. Generally, director candidates should, at a minimum:

  • possess relevant business and financial expertise and experience, including a basic understanding of fundamental financial statements,
  • have exemplary character and integrity and be willing to work constructively with others,
  • have sufficient time to devote to Board meetings and consultation on Board matters, and
  • be free from conflicts of interest that violate applicable law or interfere with director performance.

     In addition, the Corporate Governance Committee seeks director candidates who possess the following qualities and skills:

  • the capacity and desire to represent the interest of the Company’s stockholders as a whole,
  • occupational experience and perspective that, together with other directors, enhances the quality of the Board,
  • leadership experience and sound business judgment,
  • accomplishments in their respective field, with superior credentials and recognition,
  • the ability to contribute to the mix of skills, core competencies and qualifications of the Board Committees on which they servethrough expertise in one or more of the following areas:
  • accounting and finance
  • mergers and acquisitions
  • investment management
  • law
  • academia
  • strategic planning
  • investor relations
  • executive leadership development
  • executive compensation
  • service as wella senior officer of, or a trusted adviser to senior management of, a publicly held company, and;
  • knowledge of the critical aspects of the Company’s business and operations.

     The director qualifications set forth above are general in nature and may be modified by the Board or the Corporate Governance Committee from time to time as the Annual Meeting.  Please referBoard or the Corporate Governance Committee deems appropriate.

Communications With The Board
     Stockholders and other interested parties may communicate with the Board, Board Committees, the independent or non-management directors, each as a group and individual directors by submitting their communications in writing to the Company’s “Director Attendance Policy,” published onattention of the Company’s website at www.jbhunt.com underCorporate Secretary. All communications must identify the caption “Who We Are”/“Investor Relations”/“Corporate Governance” for further details.

          The businessrecipient, author, state whether the author is a stockholder of the Company is managed underand be forwarded to the directionfollowing address via Certified Mail:

J.B. Hunt Transport Services, Inc.
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
Attention: Corporate Secretary

     The directors of the Company, including the non-management directors, have instructed the Corporate Secretary not to forward to the intended recipient any communications that are reasonably determined in good faith by the Corporate Secretary to relate to improper or irrelevant topics or are substantially incomplete.

Board of Directors, who meet on a regularly scheduled basis during its calendar year to review significant developments affecting the Company and to act on matters which require Board approval.  Special meetings are also held when Board action is required on matters arising between regularly scheduled meetings.  Meetings
The Board of Directors held four regularly scheduled meetings and two telephonic meetings during the 20042006 calendar year. During this period all members of the Board participated inAll directors attended at least 75% of all meetings, including the Annual Meeting. 

BOARD COMMITTEES

          For the calendar year ending December 31, 2004, the Board meetings. The Company has adopted a Director Attendance Policy to stress the importance of Directors hadattendance, director preparedness and active and effective participation at Board and Board committee meetings.

     Additionally, the following committees:

•

Audit, comprised of Chairman, John A. White, James L. Robo and Leland E. Tollett

•

Executive Compensation, comprised of Chairman, John A. Cooper, Jr., Gene George (now retired), Thomas L. Hardeman and Coleman H. Peterson

•

Nominating and Corporate Governance, comprised of Chairman, Thomas L. Hardeman, John A. Cooper, Jr., and James L. Robo

          Membersindependent directors held three executive sessions in 2006. John A. White served as chairman of each of the executive sessions, with the exception of one session that was chaired by Thomas L. Hardeman.

Board Committees
Standing committees of the Board include the Audit, Compensation, and Corporate Governance Committees. Committee members are appointedelected annually by the Board and serve until their successors are appointedelected and qualified or until their earlier death, retirement, resignation or removal.

11     Upon recommendation of the Corporate Governance Committee on January 31, 2007, the Board appointed the following members to serve on the Board’s committees for the 2007 calendar year.

Corporate
AuditCompensationGovernance
Gary Charles George X X 
Coleman H. Peterson Chair X 
James L. Robo X Chair 
Leland Tollett X X 
John A. White Chair X X 

     The following table discloses the Board members who served on each of the Board’s committees during calendar year 2006 and the number of meetings held by each Committee.

   Corporate
 AuditCompensationGovernance
John A. Cooper, Jr.  X X 
Gary Charles George  X X 
Thomas L. Hardeman  X Chair 
Coleman H. Peterson  Chair  
James L. Robo X  Chair 
Leland Tollett X   
John A. White Chair X  
Number of Meetings 8 5 1 

     As a result of the retirement of John A. Cooper, Jr. from the Board of Directors on August 1, 2006, and the death of Thomas L. Hardeman on August 20, 2006, Gary Charles George and John A. White were appointed by the Chairman of the Board to fill vacancies on the Compensation and Corporate Governance Committees. Both Messrs. George and White are independent, non-employee directors and qualified to serve on the designated committees.

AUDIT COMMITTEE


          The Under the terms of its charter, the Audit Committee functions are focused primarily on represents and assists the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, the performance of the Company’s internal audit function and the performance of its independent auditors.

In fulfilling its duties, the Audit Committee, among other things, shall:

  • appoint, terminate, retain, compensate and oversee the work of the independent registered public accounting firm,
  • pre-approve all services provided by the independent registered public accounting firm,
  • oversee the performance of the Company’s internal audit function,
  • evaluate the qualifications, performance and independence of the independent registered public accounting firm,
  • review external and internal audit reports and management’s responses thereto,
  • oversee the integrity of the financial reporting process, system of internal accounting controls, and financial statements and reports of the Company,
  • oversee the Company’s compliance with legal and regulatory requirements,
  • review the Company’s annual and quarterly financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in periodic reports filed with the SEC,
  • discuss with management earnings press releases,
  • meet with management, the internal auditors, the independent auditors and the Board,
  • provide the Board with information and materials as it deems necessary to make the Board aware of significant financial accounting and internal control matters of the Company, and
  • otherwise comply with its responsibilities and duties as set forth in the Company’s Audit Committee Charter.

(1)

the scope and adequacy of the Company’s internal controls and financial reporting processes and the reliability of the Company’s financial statements

(2)

the independence and performance of the Company’s independent auditors

(3)

the Company’s compliance with legal and regulatory requirements related to the filing and disclosure of quarterly and annual financial statements of the Company

          All members of the Audit Committee qualify as “independent” Directors undersatisfy the regulationsindependence and other requirements for audit committee membership of the Sarbanes-Oxley ActNASDAQ corporate governance listing standards and the NASD listing standards.SEC requirements. The Board believes each memberhas also determined that Messrs. White, Robo and Tollett have the attributes of an audit committee financial expert as defined by the SEC. The Board determined that these members acquired such attributes through their experience in preparing, auditing, analyzing or evaluating financial statements, or actively supervising one or more persons engaged in such activities and their experience of overseeing or assessing the performance of companies and public accountants with respect to preparation, auditing or evaluation of financial statements. In 2006, the Audit Committee met eight times. All of the members attended at least 75% of the Audit Committee is knowledgeable and qualified to review financial statements.  In addition,meetings. For additional information concerning the Board has determined that all membersAudit Committee, see “Report of the Audit Committee” set forth below.

EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee qualify as “audit committee financial experts” within the meaningshall:

  • determine and approve base salary compensation of the regulationsCompany’s senior executive officers,
  • determine and approve annual equity-based awards for the Company’s “insiders” as defined in Section 16 of the SEC. The Audit Committee held seven regularly scheduled meetings in calendar year 2004.

    REPORT OF THE AUDIT COMMITTEE

              The Audit Committee reviewsSecurities Exchange Act of 1934, with the Company’s financial reporting process on behalfexception of the Chairman of the Board and the Chief Executive Officer,

  • evaluate and recommend to the independent Board of Directors.  Management has the primary responsibilityDirectors for their approval base salary and annual equity-based awards for the financial statementsChairman of the Board and the reporting process, includingChief Executive Officer,
  • review and approve the system of internal controls.

              In this context, the Committee met seven timesannual performance goals and held discussions with management and the independent auditor regarding the fair and complete presentationobjectives of the Company’s financial results.  The Committee has discussed significant accounting policies applied bysenior executive officers, including the Company in its financial statements.  Management represented toChief Executive Officer,

  • establish and certify the Committee thatachievement of performance goals,
  • oversee the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles,incentive compensation and other equity-based compensation plans,
  • assess the Committee has reviewedadequacy and discussed the consolidated financial statements with management and the independent auditor.  The Committee discussed with the independent auditor matters required to be discussed by Statement of Auditing Standards No. 61 (Communication with Audit Committees).

              Additionally, the Committee has discussed with the independent auditor the auditor’s independence from the Company and its management, including the matters in written disclosures required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). The Committee also has considered whether the independent auditor’s provision of non-audit services to the Company is compatible with the auditor’s independence.  The Committee has concluded that the auditor is independent from the Company and its management.

              The Committee discussed with the Company’s independent auditors the overall scope and plans for their respective audits.  The Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, the evaluationscompetitiveness of the Company’s internal controls,executive and director compensation programs,

  • review and discuss with management the overall quality of the Company’s financial reporting.

              In reliance on the reviewsCompensation Discussion and discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statementsAnalysis (“CD&A”) and recommend whether such analysis should be included in the Company’s Annual Report on Form 10-K foror the year ended December 31, 2004, for filingProxy Statement filed with the SEC.   

    SEC,

  • J.B. Hunt Transport Services, Inc.
    2004 Audit Committee Members
    John A. White, Chairman
    James L. Robo
    Leland E. Tollett

    12


    EXECUTIVE COMPENSATION COMMITTEE

              The Executive Compensation Committee determinesproduce an annual report on executive compensation for inclusion in the compensation of senior managementCompany’s Proxy Statement,

  • review and approve any employment agreements, severance agreements or arrangements, retirement arrangements, change in control agreements/provisions, and any special or supplemental benefits for each officer of the Company. The Executive Compensation Committee reviews annually the stock-incentiveCompany,
  • approve, disapprove, modify or amend any non-equity compensation plans designed and benefit plans of the Company.  It evaluates and recommendsintended to provide compensation primarily for officers,
  • make recommendations to the Board of Directors for their approval, base salariesregarding adoption of equity-based compensation plans,
  • administer, modify or amend equity-based compensation plans, and stock-option grants for
  • otherwise comply with its responsibilities and duties as set forth in the Chairman and Chief Executive Officer and all other “insiders” as defined in Section 16Company’s Compensation Committee Charter.

     None of the Securities & Exchange Actindividuals serving on the Compensation Committee has ever been an officer or employee of 1934. Allthe Company. The Board has determined that all of the members of the Compensation Committee are “outside/disinterested Directors”satisfy the independence requirements of the NASDAQ corporate governance listing standards. All of the members of the Compensation Committee qualify as “non-employee directors” for purposes of SEC requirements, and as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) for the purpose of administering the Company’s performance-based compensation plans.Code.

     The Executive Compensation Committee met twicefive times in calendar year 2004.

Executive Compensation Committee Interlocks and Insider Participation

          Messrs. Cooper, Hardeman and Peterson are non-employee, independent Directors of the Company and Mr. George was a non-employee, independent Director prior to his retirement.  None2006. All of the members of the Executive Compensation Committee was an officer or an employee of the Company during calendar year 2004.  No member of the Committee is a former officer of the Company or had any related-party transactions with the Company in calendar year 2004.

REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE

The Executive Compensation Committee

          Compensation of officers and senior executives of the Company is determined by the Executive Compensation Committee of the Board of Directors (the “Committee”).  The Committee, comprised entirely of non-employee, independent Directors, meets:

1)

to evaluate and approve the annual salary and bonus plan for executives

2)

to review annual goals and reward annual performance of executives

3)

to grant stock options pursuant to the Company’s stock option plan

4)

to establish and certify the achievement of performance goals under the Company’s Management Incentive Plan

5)

to evaluate and recommend to the Board of Directors for their approval, base salary and stock option grants for the Company’s Chairman and Chief Executive Officer and all other “insiders” as defined in Section 16 of the Securities & Exchange Act of 1934

6)

to review any other executive compensation. In 2003, the Committee retained the services of an independent consultant to review its executive compensation policies and practices.

          In 2004, the Committee reviewed the 2003 report and met to discuss current salaries, bonuses and other compensation of the officers and senior executives of the Company, including the Chairman, Chief Executive Officer and the Board of Directors.

General Compensation Policy

          The executive compensation package has three main components:

1)

base salary, which is reviewed annually

2)

performance-based bonuses that are directly tied to the Company’s earnings per share and are earned annually depending on the achievement of pre-established performance-based goals

3)

incentive awards

          This mix of compensation places more of total compensationattended at risk and emphasizes performance.

13


          The Committee believes that competitive levelsleast 75% of cash compensation, together with equity and other incentive programs, are necessary for the attraction, motivation and retention of the highest caliber employees.

Base Salary

          Executives’ base salaries are based on the Company’s performance for the prior calendar year and upon a subjective evaluation of each executive’s contribution to that performance.  In evaluating overall Company performance, the primary focus is on the Company’s earnings per share.

Performance-Based Bonus

          Performance cash bonuses are paid quarterly to executives based on the Company’s earnings per share.  The amount of the bonus paid is a percentage of the executive’s salary.  The bonus increases as a percentage of base salary as the Company’s earnings per share improves.

Incentive Awards

          Incentive awards are made under the Company’s Management Incentive Plan.  As a person’s level of responsibility increases, a greater portion of potential total compensation opportunity is shifted from salary to performance-based incentives and to greater reliance on growing total return to stockholders through stock-based awards. This directly aligns the interest of management with stockholders.

Stock Ownership Guidelines

          To motivate the Company’s officers and senior management to emulate its stockholders, the Company strongly encourages them to own stock in the Company.  Stock ownership is defined as stock owned:

1) directly

2) through the Company’s 401(k) Employee Retirement Plan, and/or

3) through the Company’s Deferred Compensation Plan.

          In 1995, the Company implemented a program that set stock ownership goals for certain categories of officers and senior management, as shown below.

Position

Ownership Multiple of Base Salary

Chief Executive Officer

6 times

Executive Vice Presidents

3.5 times

Senior Vice Presidents and Vice Presidents of Operations

2.75 times

Vice Presidents, Terminal Managers, and Directors of Operations

2 times

          The Committee has determined that as of January 31, 2005, all of the Company’s officers and members of senior management covered by these guidelines have met their ownership goals.

Chairman and Chief Executive Officer Compensation

          The Committee has attempted to set base salary and overall compensation for Messrs. Garrison and Thompson competitively with companies of similar size and aligned with companies in our respective industry.  The goal is to reward these executives for corporate performance in line with the interests of the stockholders.

14


          Cash bonuses paid to Messrs. Garrison and Thompson in calendar year 2004 were determined by the previously mentioned formula relating bonuses to earnings per share.

          In calendar year 2004, in accordance with the Committee’s policy of aligning executive interest with the interests of stockholders, the Committee recommended, and the Board approved, a stock option grant of 50,000 shares to Mr. Thompson.  Mr. Thompson’s options will vest over a 10-year period in increments of 20% in 2012, 40% in 2013 and 40% in 2014.   No stock option grants were awarded to Mr. Garrison in calendar year 2004.

          Messrs. Garrison’s and Thompson’s cash compensation is comparable to other transportation company peers. After evaluating the independent consultant’s review of compensation practices and policies, the Committee recommended, and the Board approved, an increase in base salary for Mr. Thompson of $10,000 effective October 21, 2004.  No increase in base salary for Mr. Garrison occurred in calendar year 2004.  Both Messrs. Garrison and Thompson participate in the Company’s 401(k) Employee Retirement Plan.

2005 Performance-Based Compensation

          For calendar year 2005, the Company has established, and the Compensation Committee has approved, a cash bonus program for the above named executives and its senior management The amount of the bonus earned will be a percentage of the executive’s base salary and will increase by percentage of base salary in direct correlation to the Company’s increase in earnings per share.meetings.

Tax Deductibility 

          The Company’s incentive bonus and stock incentive plans are designed to be performance-based plans as defined in the Internal Revenue Code.  Therefore, under Internal Revenue Code Section 162(m), compensation paid in 2004 under these plans is intended to be fully deductible, and it is our intention to continue to maximize deductibility to the extent practicable.

Our Conclusion 

          We firmly believe that the quality and motivation of all of the Company’s employees, including its managers, make a significant difference in the Company’s long-term performance.  We also believe that stockholders directly benefit from compensation programs that:

•

reward superior performance

•

contain an appropriate downside risk element when performance falls short of clearly-defined standards

•

give appropriate administrative flexibility to achieve their objectives

          We believe that the Company’s management compensation program meets these requirements and will continue to be an important factor in driving the Company’s success.

J.B. Hunt Transport Services, Inc.
2004 Executive Compensation Committee Members
John A. Cooper, Jr., Chairman
Gene George (now retired)
Thomas L. Hardeman
Coleman H. Peterson

15


SUMMARY COMPENSATION

          The following table sets forth information concerning total compensation earned or paid by the Company or any of its subsidiaries to the Chairman (as one of the five highest-paid executives other than the Chief Executive Officer), the Chief Executive Officer, and the three highest-paid executive officers of the Company for such period in all capacities in which they served.

 

 

Annual Compensation

 

 

 

 

 

Long-Term Compensation  Awards

 

 

 

 

 

 

 

 

 

Name and Principal Position

 

Year

 

Salary ($)

 

Bonus
($)  (1)

 

Other
Annual
Compensation
($)  (2)

 

Securities
Underlying
Options/SARs
(#)  (3)

 

All Other
Compensation
($)  (4)

 

 

 

 

 

 

 

 

Wayne Garrison

 

 

2004

 

 

400,000

 

 

492,000

 

 

7,944

 

 

0

 

 

6,000

 

Chairman of the

 

 

2003

 

 

394,231

 

 

234,375

 

 

6,873

 

 

20,000

 

 

6,000

 

Board

 

 

2002

 

 

375,000

 

 

187,500

 

 

32,417

 

 

300,000

 

 

5,500

 

Kirk Thompson

 

 

2004

 

 

551,923

 

 

676,500

 

 

7,783

 

 

50,000

 

 

6,000

 

President and

 

 

2003

 

 

509,748

 

 

296,875

 

 

3,258

 

 

50,000

 

 

6,000

 

CEO

 

 

2002

 

 

453,846

 

 

225,000

 

 

5,395

 

 

80,000

 

 

5,499

 

Jerry Walton

 

 

2004

 

 

336,923

 

 

412,050

 

 

5,225

 

 

20,000

 

 

5,846

 

EVP, Finance/

 

 

2003

 

 

339,423

 

 

203,125

 

 

4,541

 

 

20,000

 

 

6,000

 

Administration and CFO

 

 

2002

 

 

325,000

 

 

162,500

 

 

4,571

 

 

30,000

 

 

6,000

 

Paul Bergant

 

 

2004

 

 

292,885

 

 

356,700

 

 

9,981

 

 

20,000

 

 

6,000

 

EVP, Marketing,

 

 

2003

 

 

292,692

 

 

175,000

 

 

8,049

 

 

20,000

 

 

6,000

 

CMO, President of Intermodal

 

 

2002

 

 

280,000

 

 

140,000

 

 

9,406

 

 

30,000

 

 

6,000

 

Craig Harper

 

 

2004

 

 

277,885

 

 

338,250

 

 

0

 

 

24,000

 

 

6,000

 

EVP, Operations,

 

 

2003

 

 

272,885

 

 

162,500

 

 

0

 

 

24,000

 

 

6,000

 

and COO

 

 

2002

 

 

251,538

 

 

125,000

 

 

0

 

 

40,000

 

 

5,297

 


(1)

All bonuses are reported in the year in which they are earned.  Bonus and salary totals shown above may include amounts transferred into deferred compensation.

(2)

Calendar year 2004 amounts consist of:

•

Wayne Garrison, $7,944 for professional fees.

•

Kirk Thompson, $1,000 for professional fees, $2,289 for club dues, and $4,494 for personal use of the Company plane.

•

Jerry Walton,  $5,225 for club dues.

•

Paul Bergant, $1,100 for professional fees, $7,115 for club dues, and $1,766 for personal use of the Company plane.

Calendar year 2003 amounts consist of:

•

Wayne Garrison, $6,500 for professional fees and $373 for personal use of a Company vehicle.

•

Kirk Thompson, $500 for professional fees, $1,621 for club dues and $1,137 for personal use of the Company plane.

•

Jerry Walton, $4,541 for club dues.

•

Paul Bergant, $765 for professional fees, $6,368 for club dues, and $916 for personal use of the Company plane.

Calendar year 2002 amounts consist of:

•

Wayne Garrison, $10,217 for professional fees, $21,357 for personal use of the Company plane, and $843 for use of a Company car.

•

Kirk Thompson, $350 for professional fees, $1,621 for club dues, and $3,424 for personal use of the Company plane.

•

Jerry Walton, $4,571 for club dues.

•

Paul Bergant, $765 for professional fees, $5,817 for club dues, and $2,824 for personal use of the Company plane.

16


(3)

There were no restricted stock awards or stock appreciation rights (SARs) granted in calendar years 2004, 2003 or 2002.

(4)

Includes matching contributions to the Company’s 401(k) retirement plan on behalf of each of the above named executives.

COMPENSATION UNDER MANAGEMENT INCENTIVE PLAN

          The Board of Directors believes it is in the best long-term interests of the stockholders of the Company to maintain a progressive stock-based incentive program in order to attract and retain officers, key employees and Directors and to encourage their greater financial investment in the Company. 

          The Company’s Management Incentive Plan (the “Plan”) was originally adopted and approved by the Board of Directors on March 17, 1989, and subsequently approved by the stockholders on May 11, 1995.  Amendments to the Plan were approved by the stockholders on April 16, 1998, and April 20, 2000.  The Plan was adopted for the purpose of providing key employees the opportunity to acquire a proprietary interest in the Company through the purchase or awarding of shares of common stock or the awarding of SARs, share units or money credits, thereby more closely aligning management’s interests with that of the Company’s stockholders.  The term “key employee” is defined to include employees, officers, directors, consultants and independent contractors who render services which tend to materially contribute to the success of the Company. 

          The Plan generally provides for the grant of stock options, restricted stock, SARs, share units or money credits which may be granted either alone or simultaneously in any combination.  In order to comply with the Omnibus Budget Reconciliation Act of 1993 and avoid the possible loss of future federal income tax deductions attributable to stock options and SARs granted under the Plan, the Board amended the Plan to set the maximum number of its shares of common stock that may be subject to stock options, restricted stock, SARs, share units or money credits, to an executive officer during any calendar year, as 2% of the total shares authorized for issuance under the Plan or its dollar equivalent at the share’s fair market value at date of grant.

          Under currently applicable provisions of the Internal Revenue Code, an optionee will not be deemed to receive any income for federal income tax purposes upon the grant of any option under the Plan, nor will the Company be entitled to a tax deduction at that time.  Upon the exercise of a non-qualified option, the optionee will be deemed to have received compensation in an amount equal to the difference between the market price and exercise price of the shares received on the exercise date.  The Company will be allowed an income tax deduction equal to the excess of market value on the shares on the date of exercise over the cost of such shares to the optionee.

17


Option Grants During Calendar Year 2004

          This table shows all options to acquire shares of the common stock granted to the Chairman, President and CEO, and three highest-paid executives of the Company during the calendar year ended December 31, 2004.

          

Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
for Option Term ($) (3)

 

 

 

Individual Grants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of
Securities
Underlying
Options
Granted (#) (1)

 

Percent
of Total
Options
Granted (%)

 

Option
Price
($/Sh) (2)

 

Expiration
Date

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

 

5%

 

10%

 

 

 

 

 

 

 

 

Wayne Garrison

 

 

0

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

Kirk Thompson

 

 

50,000

 

 

6.44

 

 

40.73

 

 

10/21/15

 

 

1,446,606

 

 

3,773,872

 

Jerry Walton

 

 

20,000

 

 

2.58

 

 

40.73

 

 

10/21/12

 

 

388,935

 

 

931,567

 

Paul Bergant

 

 

20,000

 

 

2.58

 

 

40.73

 

 

10/21/11

 

 

331,624

 

 

772,825

 

Craig Harper

 

 

24,000

 

 

3.09

 

 

40.73

 

 

10/21/15

 

 

694,371

 

 

1,811,459

 


(1)

The above table reflects options only.  The Company has no SARs or restricted stock at the present time.

(2)

These options were granted at an exercise price of $40.73 per share; which was the fair market value of the underlying shares on the date of grant.

(3)

Caution is recommended in interpreting the financial significance of these figures.  Potential realizable values are required to be based on the assumption that the Company’s common stock will appreciate 5% or 10% each year, compounded annually, from the grant date of the option to the end of the option term.  The figures are not intended to forecast possible future appreciation, if any, of the price of common stock or establish a present value of the options.

18


Aggregated Option Exercises During Calendar Year 2004 and
Option Values on December 31, 2004

          This table shows all stock options exercised by the Chairman, the President and CEO, and the three highest paid executives of the Company during the calendar year ended December 31, 2004, and the number and value of options they held at calendar year end.

Name

 

Shares Acquired
on Exercise  (#)  (1)

 

Value Realized
($) (2)

 

Number of
Securities Underlying
Unexercised
Options at
12/31/04 (#)
Exercisable/
Un-exercisable

 

Value of
Unexercised
In-the-Money
Options at
12/31/04 ($) (3)
Exercisable/
Un-exercisable

 

 

 

 

 

 

Wayne Garrison

 

 

276,000

 

 

6,490,560

 

 

0

E

 

0

E

 

 

 

 

 

 

 

 

 

252,000

U

 

8,301,360

U

Kirk Thompson

 

 

120,424

 

 

3,008,204

 

 

0

E

 

0

E

 

 

 

 

 

 

 

 

 

455,446

U

 

13,918,123

U

Jerry Walton

 

 

206,200

 

 

5,138,415

 

 

0

E

 

0

E

 

 

 

 

 

 

 

 

 

181,000

U

 

5,469,050 

U

Paul Bergant

 

 

81,870

 

 

2,388,871

 

 

0

E

 

0

E

 

 

 

 

 

 

 

 

 

193,670

U

 

5,949,640

U

Craig Harper

 

 

49,886

 

 

1,353,850

 

 

0

E

 

0

E

 

 

 

 

 

 

 

 

 

223,842

U

 

6,863,325

U

The above table reflects options only.  The Company has no SARs or restricted stock at the present time.

(1)

Either all or a portion of the shares acquired on exercise shown in the above table for Messrs. Garrison, Thompson, Walton and Harper were acquired through a cashless exercise.  Shares held by the individual for more than six months (mature shares) are tendered to the Company to pay the option price and tax withholdings.  Such a transaction allows an individual to increase ownership in Company stock without openly selling shares in the marketplace. Shares tendered to the Company are added back to the authorized shares under the Management Incentive Plan approved by the stockholders on April 20, 2000.

Shares tendered from the above transactions were as follows:   Wayne Garrison, 150,929 shares; Kirk Thompson, 59,078 shares; Jerry Walton, 51,348 shares; and Craig Harper, 11,988 shares.

(2)

Values were earned over multiple year periods.  Election to exercise an option in calendar year 2004 should not be interpreted to mean that all value was earned in the year the option was exercised.

(3)

Values are calculated by subtracting the exercise price from the fair market value of the underlying common stock.  For purposes of this table, fair market value is deemed to be $44.85, which is the closing market price reported by NASDAQ on December 31, 2004.

19


NOMINATING AND CORPORATE GOVERNANCE COMMITTEE


          The Nominating and Corporate GovernanceCommittee develops and maintains the corporate governance policies of J.B. Hunt Transport Services, Inc. and assists the Company’s Board of Directors in:

(1)

identifying, screening and recruiting qualified individuals to become Board members

(2)

determining the composition of the Board and its Committees

(3)

assisting the Board in assessing the Board’s effectiveness

          All members of the Committee are qualified as non-employee, independent Directors as determined by the rules of the SEC and NASD listing standards. Further detail regarding qualifications and responsibilities is outlined in the Committee’s charter published on the Company’s website at www.jbhunt.com under the caption of “Who We Are”/ “Investor Relations”/ “Corporate Governance.”   The Committee met three times in 2004. 

The Nominating and Corporate Governance Committee guidelines outlineshall:
lannually review the qualificationCompany’s Corporate Governance Guidelines,
lassist the Committee looks forBoard in a nominee.  Generally, the candidate should possess:

•

relevant business and financial expertise and experience, including an understanding of fundamental financial statements

•

the highest character and integrity and a reputation for working constructively with others

•

sufficient time to devote to meetings and consultation on Board matters

•

freedom from conflicts of interest that would interfere with performance as a Director

•

other desirable qualifications and experience as established by the Committee

          After assessingidentifying, screening and considering prevailing business conditions of the Company, legal and listing standard requirementsrecruiting qualified individuals to become Board members,
lpropose nominations for Board composition,membership and committee membership,
lassess the size and composition of the current Board and its committees,
loversee the skills and experience of current Board members, anyperformance of the Chairman,Board and committees thereof,
loversee the receipt, investigation, resolution and retention of all complaints submitted under the Company’s Whistleblower Policy, and
lotherwise comply with its responsibilities and duties as set forth in the Company’s Corporate Governance Committee or anyCharter.

     The Board member may identify the need to add a Board member to meet specific criteria or to fill a vacancy on the Board.  The Committee identifies qualified Director nominees from among persons known to thehas determined that all members of the Corporate Governance Committee by reputation or otherwise, and through referrals from trusted sources, including senior management, existing Board members, stockholders and independent consultants hired for such purpose.  The Committee may request that senior officerssatisfy the independence requirements of the Company assist theNASDAQ corporate governance listing standards. The Corporate Governance Committee in identifying and assessing prospective candidates who meet the criteria established by the Board.

          Candidates are evaluated based upon their qualifications or other relevant information, including a personal interview.  The Committee convenes a meeting and approves the candidates to be presented to the Board.  The Board considers the recommendationsmet one time during calendar year 2006. All of the members attended the Corporate Governance Committee meeting.

Code of Business Conduct and approves candidates for nomination.

Ethics
CODES OF BUSINESS CONDUCT AND ETHICS

The Board has adopted codesa Corporate Code of business conductEthical and ethicsProfessional Standards for Directors, Officers and Employees that applyapplies to all of the Company’s Directors,directors, officers and employees. The purpose and role of these codesthis Code is to focus our Directorsdirectors, officers and employees on areas of ethical risk, provide guidance to help them recognize and deal with ethical issues, provide mechanisms to report unethical or unlawful conduct, and help enhance and formalize our culture of integrity, honesty and accountability. These codes are published in their entiretyAs required by applicable law, the Company will post on the Company’s website at www.jbhunt.com under“Corporate Governance” page of the caption of “Who We Are”/“Investor Relations”/“Corporate Governance.”  The Company will post on section of its website at www.jbhunt.com any amendment to this code and anyamendments or waivers of any provision of this codeCode made for the benefit of any of our senior executive officers or Directors. 

20


CERTAIN TRANSACTIONS AND RELATIONSHIPSdirectors of the Company.

          To abide by the new directives implemented by the Sarbanes-Oxley Act of 2002,Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines to assist it in exercising its responsibilities to the Company discontinued the funding of annual premium advances for the J.B. and Johnelle D. Hunt Life Insurance Trust in calendar year 2002.  Mr.its stockholders. The guidelines address, among other items, director responsibilities, Board committees and Mrs. J.B. Hunt personally guaranteed the premium advances and accrued interest thereon in the amount of $11,241,033, and on December 29, 2004, the J.B. and Johnelle D. Hunt Life Insurance Trust repaid that amount to the Company.non-employee director compensation.

          Johnelle D. Hunt is the wife of founder and former Senior ChairmanSection 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Board, J. B. Hunt, and Bryan Hunt is the son of J. B. and Johnelle D. Hunt.  There are no other family relationships among the foregoing Directors.

          J.B. and Johnelle D. Hunt were employees of the Company in calendar year 2004. Mr. Hunt received $382,211 in salary, $217,550 for professional services, and $3,054 for personal use of the Company airplane. Mr. Hunt retired from the Company on December 31, 2004, and will receive no compensation in 2005.  Mrs. Hunt received $100,000 in salary for her services as the Company’s Corporate Secretary.  She will continue to serve in 2005.

          A son-in-law of Mr. Thompson, President and Chief Executive Officer of the Company, was employed by the Company in calendar year 2004 and received calendar year 2004 compensation that exceeded $60,000.  He was employed in calendar year 2000, prior to becoming his son-in-law.

          In April 2004, the Company sold its aircraft hanger to Pinnacle Air Facilities LLC (Pinnacle) for $988,000. Mr. Hunt, founder and Senior Chairman of the Company, is a principal and director of Pinnacle.  Pursuant to the Charter of the Company’s Nominating and Corporate Governance Committee, the committee reviewed and approved the transaction and further secured a vote of approval from each independent, non-employee member of the board of directors.  Mr. Hunt retired from the Company on December 31, 2004.

SECTION 16(a) BENEFICIAL OWNERSHIP

          Section 16 of the Securities and Exchange Act of 1934, as amended, requires each Director,director, officer and any individual beneficially owning more than 10% of the Company’s common stock to file reports of holdings and transactions in J.B. Hunt Transport Services, Inc. with the SEC reports of security ownership and NASDAQ within specified time frames.  These specified time frames were shortened by the SEC during 2003 and generally require the reporting ofreports on subsequent changes in ownershipownership. These reports are generally due within two business days of the transaction.transaction giving rise to the reporting obligation.

     To the Company’s knowledge, all required Section 16(a) filings were timely and correctly made by the reporting persons during 2004.calendar year 2006.

21Certain Relationships and Related Transactions
The Corporate Governance Committee is charged with the responsibility of reviewing and pre-approving all related-party transactions (as defined in SEC regulations) and periodically reassessing any related-party transaction entered into by the Company’s Corporate Code of Ethical and Professional Standards for Directors and Employees.


     Johnelle Hunt is the mother of Bryan Hunt and widow of founder J.B. Hunt. Bryan Hunt is the son of J.B. and Johnelle Hunt. There are no other family relationships among the foregoing Directors. As an employee of the Company, Johnelle Hunt received a salary of $100,000 for her services as the Company’s Corporate Secretary. The Company also submitted payment of $10,000 on her behalf for professional fees and provided a Company match of $3,000 to her 401(k) account.

     On October 13, 2005, the Company announced a gift of $10 million to the University of Arkansas to facilitate the construction of the new J.B. Hunt Transport Services, Inc. Center for Academic Excellence. Mrs. Hunt served as Treasurer for the University of Arkansas’ Campaign for the 21st Century, and Dr. John A. White serves as Chancellor of the University of Arkansas. Neither of the aforementioned Board members was instrumental in securing the contribution, nor did either participate in the voting processes related to this transaction.

     The contribution represents an investment by our Company in a growing institution, located only 10 miles from our headquarters, in the pursuit of excellence that has not only provided training and skills for many of our current employees, but also allows us to participate in the education of the next generation of J.B. Hunt Transport Services team members. The J.B. Hunt Transport Services, Inc. Center for Academic Excellence will serve as a focal point and enabling infrastructure for information technology, supply-chain management, computational science and engineering, and technology-enabled education, research and outreach on the University campus to prepare students for the diverse, innovative, collaborative, team-oriented environment prevalent in today’s workspace. The close proximity of the University to our Company is invaluable as we jointly identify transportation and technology issues that require the brightest and best minds to ensure that the American supply chain remains the model for the world.

Compensation Committee Interlocks and Insider Participation
During the 2006 calendar year, none of the Company’s executive officers served on the Board of Directors of any entities whose directors or officers serve on the Company’s Compensation Committee. No current or past executive officers of the Company serve on the Compensation Committee.

PRINCIPAL STOCKHOLDERS OF THE COMPANY

          The authorized common stock of the Company consists of 100,000,000 shares at $.01 par value. As of the close of business on January 31, 2005, there were 81,029,821 shares outstanding held by 1,324 stockholders of record.  There are no other classes of capital stock of the Company authorized.

Holdings of Executive Officers and Directors

The following table lists shares owned as of January 31, 2005, by each Director of the Company, by each named executive officer, by all officers and Directors as a group, and bysets forth all persons known to be the beneficial owner of more than five percent of the Company’s common stock.

Directors and Officers

 

Shares
Owned (1)

 

Right to
Acquire (2)

 

Percent of
Outstanding
 Shares  (3)

 

 

 

 

 

Paul Bergant

 

 

274,810

 

 

0

 

 

*

 

John A. Cooper, Jr.

 

 

29,330

 

 

0

 

 

*

 

Wayne Garrison

 

 

3,419,173

 

 

60,000

 

 

4.29

 

Thomas L. Hardeman

 

 

8,188

 

 

0

 

 

*

 

Craig Harper

 

 

89,675

 

 

0

 

 

*

 

Bryan Hunt

 

 

5,723

 

 

33,200

 

 

*

 

Johnelle D. Hunt

 

 

481,962

(4)

 

0

 

 

*

 

Coleman H. Peterson

 

 

1,384

 

 

0

 

 

*

 

James L. Robo

 

 

6,270

 

 

0

 

 

*

 

Kirk Thompson

 

 

222,887

 

 

0

 

 

*

 

Leland E. Tollett

 

 

6,146

 

 

0

 

 

*

 

Jerry W. Walton

 

 

204,670

(5)

 

0

 

 

*

 

John A. White

 

 

14,268

 

 

0

 

 

*

 

All executive officers and Directors as a group (20 persons)

 

 

5,059,075

 

 

217,280

 

 

6.51

 


*Less than one percent


Other Principal Stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J.B. Hunt, LLC (4) (6)

 

 

16,420,758

 

 

20.27

 

807 W. Bowen

 

 

 

 

 

 

 

Fayetteville, Arkansas  72701

 

 

 

 

 

 

 

Barclay’s Global Investors, N.A. (7)

 

 

7,882,207

 

 

9.72

 

45 Fremont Street

 

 

 

 

 

 

 

San Francisco, California  94105

 

 

 

 

 

 

 

Putnam Investments (7)

 

 

4,161,931

 

 

5.13

 

One Post Office Square

 

 

 

 

 

 

 

Boston, Massachusetts  02109

 

 

 

 

 

 

 

22


(1)

Includes shares for which the named person:

•

has sole voting and investment power

•

has shared voting and investment power with a spouse, or

•

holds shares in the Company’s 401(k) Employee Retirement Plan, and/or Deferred Compensation Plan, unless otherwise indicated in the footnotes

•

Excludes shares that:

•

are restricted stock holdings, or

•

may be acquired through non-vested stock option exercises

(2)

Shares that can be acquired by exercise of stock options exercisable through February 28, 2005.

(3)

The percentages are based on shares that equal the outstanding shares of the Company as of January 31, 2005.

(4)

Includes shares owned by Mr. and Mrs. J. B. Hunt in family limited liability companies in which they are co-managers.

(5)

Includes 66,198 shares held in trusts in which Mr. Walton is designated as the trustee but claims no beneficial interest.

(6)

As reported on Form 4 reports filed with the SEC and on file as of December 31, 2004.  J.B. and Johnelle Hunt are co-managers of this entity.

(7)

Statistics obtained from NASDAQ Corporate Services Network, Source: FactSet Research Systems, Inc. and Form 13Gs filed with the SEC.

23


PERFORMANCE GRAPH

          The following graph presents a five-year comparison of cumulative total returns for the Company, the S&P 500 composite index and NASDAQ Trucking Stocks (CRSP Transportation Index).  The CRSP Transportation Index was prepared by the Center for Research in Security Prices and includes all NASDAQ motor freight and warehousing companies classified under SIC codes 4200-4299.  A listing of the companies included in the CRSP Transportation Index is available upon request from the Company. The values on the graph show the relative performance of an investment of $100 made on December 31, 1999, in Company common stock and in each of the indices.

Comparison of Five-Year Cumulative Total Return

J. B. Hunt Transport Services, Inc.
S&P 500
NASDAQ

Total Return for Index Dollars

Message

 

 

12/31/99

 

12/31/00

 

12/31/01

 

12/31/02

 

12/31/03

 

12/31/04

 

 

 

 

 

 

 

 

 

J. B. Hunt

 

 

100.0

 

 

121.9

 

 

168.3

 

 

212.5

 

 

391.8

 

 

652.2

 

S&P 500

 

 

100.0

 

 

91.2

 

 

80.4

 

 

62.6

 

 

80.6

 

 

89.5

 

NASDAQ

 

 

100.0

 

 

110.3

 

 

152.2

 

 

173.4

 

 

224.3

 

 

314.4

 

24


PROPOSAL TWO

TO INCREASE THE NUMBER OF AUTHORIZED SHARES

          The Board recommends your approval of an amendment to the Fifth Article of the Company’s Amended and Restated Articles of Incorporation to increase the number of total authorized shares5% of the Company’s common stock as of December 31, 2006. Unless otherwise indicated in the footnotes below, “beneficially owned” means the sole power to vote or direct the voting of a security and the sole power to dispose or direct the disposition of a security.

  Number of Percent of  
Name and Address Shares Class  
Impala Asset Management 12,716,150  8.80 
Barclays Global Investors NA 7,240,514  5.01 

     The numbers shown above were taken directly from the NASDAQ Corporate Services Network Ownership Tables and Form 13F reports filed with the SEC.

REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the “Shares”“Committee”) from 100,000,000 to 1,000,000,000.

          Asis composed of January 31, 2005, there were a totalColeman H. Peterson, Chairman, Gary Charles George and John A. White, none of 81,029,821 Shares issued and outstanding. 

          The Board approved a two-for-one stock split with a payable datewhom is an officer or employee of August 29, 2003.  Upon completion of this stock split, a total of 80,026,986 Shares were issued and outstanding.  At January 31, 2005, a total of 18,970,179 Shares were available for future issuance.  The Shares remaining available for issuance would not be adequate for another two-for-one split if the Board thought it was advisable.

          The proposed increase ensures that an adequate supply of authorized unissued Shares are available for general corporate needs, such as future stock dividends, options, or splits, raising additional capital or financing acquisitions.  The additional Shares proposed to be authorized would be available for issuance without further action by the stockholders, unless required by the Company’s Restated and Amended Articles of Incorporation, Bylaws, applicable law or NASD rules.

          The Board has the authority to issue Shares on any terms it deems appropriate, subject to applicable law.  Issuance of additional Shares may, among other things, have a dilutive effect on earnings per share and on the equity and voting power of existing stockholders.  However, until the Board determines the specific use and price for the Shares that may be issued, the actual effect on the holders of the presently issued Shares cannot be ascertained.  Similarly, the tax impact, if any, on the Company and existing stockholders cannot beall of whom have been determined until such actions are taken.

          Under certain circumstances,by the Board of Directors of the Company could use the additional unissued Shares(the “Board”) to create impediments for persons seeking to acquire controlbe independent. Additionally, all members of the Company.  However,Committee qualify as “non-employee directors” for purposes of Rule 16b-3 of the proposed increase inExchange Act, and as “outside directors” for purposes of Section 162(m) of the SharesInternal Revenue Code of 1986, as amended (the “Code”). Mr. Peterson served as the chairman of the Committee during the entire 2006 year. Both Messrs. George and White filled vacancies created when John A. Cooper, Jr. submitted his resignation from the Board on August 1, 2006, and Thomas L. Hardeman passed away on August 20, 2006.

     The Committee operates under a written charter adopted by the Board, a copy of which is not designed to deter or prevent a changeavailable on the “Corporate Governance” page of control.

          The Board has unanimously adopted resolutions setting forth the proposed amendment“Who We Are”/“Investor Relations” section of the Company’s website at www.jbhunt.com. In carrying out its responsibilities, the Committee, among other things:

  • determines and recommends to the Restatedindependent board members, for their approval, the annual salaries and Amended Articlesbonuses of Incorporation, declaring its advisabilitythe Chairman of the Board and directing that the proposed amendment be submittedChief Executive Officer,
  • reviews and approves annual corporate goals and objectives of the Chairman of the Board and the Chief Executive Officer and other Section 16 reporting officers,
  • recommends for approval to the independent board members equity-based compensation awards under the Company’s Management Incentive Plan (the “MIP”), as amended and restated for the Chairman of the Board and the Chief Executive Officer,
  • reviews and approves equity-based compensation awards under the Company’s MIP, as amended and restated for the Section 16 reporting officers,
  • establishes and certifies the achievement of performance goals under the Company’s Bonus Plan,
  • reviews and approves compensation recommendations for the Company’s directors,
  • reviews other Company executive compensation programs,
  • reviews and approves the compensation committee letter to the stockholders and the CD&A report included in the Proxy.

     The Committee may appoint subcommittees for their approvalany purpose the Committee deems appropriate and delegate to such subcommittees power and authority as the Committee deems appropriate; however, the Committee shall not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised by the Committee as a whole. The Committee did not utilize the services of a subcommittee in 2006.

     The Chairman of the Board and the Chief Executive Officer provide recommendations to the Committee regarding the form and amount of compensation paid to executive officers who report directly to them. Additionally, the Chairman of the Board and the Chief Financial Officer regularly attend Committee meetings, except for executive sessions. Traditionally, management has provided to the Committee historical and prospective breakdowns of primary compensation components for each executive officer, as well as tally sheets, wealth accumulation analyses and internal pay equity analyses as described in more detail below.

     In 2005, the Committee engaged Watson Wyatt (“WW”) to review certain of its executive compensation policies and practices. WW is retained by, and reports to, the Committee in order to provide various compensation analyses and consultation at the Annual Meeting.  If approved by the stockholders, the amendment will become effective upon filing an appropriate certificate of amendment with the Arkansas Secretary of State.

Voting on the Amendment

          If a quorum is present at the Annual Meeting, approvalrequest of the amendment requiresCommittee and has served as its compensation consultant since 2003. For 2006, the affirmative vote ofCommittee consulted with WW by telephone. No formal report was written by WW, but the 2005 report was utilized as a majority ofreference. In the shares of common stock present in person or represented by proxy atcurrent year, the Meeting and entitledsecretary to vote with respect to the amendment.  Proxies marked to abstain from voting with respect to the amendment will have the effect of proxies voted against the amendment.

The Board of Directors Recommends a Vote FOR Proposal Two

25


PROPOSAL THREE

TO AMEND THE COMPANY’S MANAGEMENT INCENTIVE PLAN

          The stockholders of the Company are requested to approve an amendment to the Management Incentive Plan (previously defined as the “Plan”) to increase the number of shares reserved for issuance from 17,000,000 to 22,000,000, which has been approved by the Compensation Committee and the Chief Financial Officer of the Company were requested to analyze available market data with respect to the compensation of executive officers of public transportation companies in comparison to the Company’s executive officers, including the NEOs. In prior years, the Committee has also requested similar market data and analysis of non-employee director compensation and completed a thorough review and discussion of such compensation.

     The Committee met four times in 2006 and held one telephonic meeting in 2006 to discuss, among other items, the salaries, bonuses and other compensation of the senior executive officers and other key employees of the Company, including the Chairman of the Board and the Chief Executive Officer. The Committee did not act by unanimous consent at any time in 2006.

Historically, the Committee meets each February to finalize discussion regarding the Company’s performance goals for the previous and current year with respect to performance-based compensation to be paid to executive officers and to approve its letter for the Proxy. These goals are approved within 90 days of the beginning of the year pursuant to the Code. Each year in October, the Committee generally discusses any new compensation issues, the compensation, bonus and MIP award analyses, and the engagement of the compensation consultant for annual executive and director compensation. The Committee also meets in October to:

  • review and discuss information provided by the compensation consultant and the recommendations made by the Chief Executive Officer,
  • review the performance of the Company and the individual officers,
  • review the level to which the Company’s performance goals were attained and approve short-term cash bonus and long-term incentive awards, and
  • determine executives’ base salaries for the following year.

     Management also advises the full Board, including the Committee members, throughout the year of any new issues and developments regarding executive compensation.

     The Company’s MIP was originally adopted and approved by the Board of Directors.Directors on March 17, 1989, and subsequently approved by the stockholders on May 11, 1995. The MIP has been amended since the time of its adoption, and all amendments required to have been approved by the stockholders were so approved.

     The Committee has reviewed and discussed the following CD&A with management and based upon such discussions, the Committee recommended to the Board that the CD&A be included in the Company’s Proxy Statement.

J.B. Hunt Transport Services, Inc.
Executive Compensation Committee
Coleman H. Peterson, Chairman
Gary Charles George
John A. White

COMPENSATION DISCUSSION & ANALYSIS

Compensation Philosophy and Principles
The Committee acknowledges that the transportation industry is highly competitive and that experienced professionals have career mobility. The Company believes it competes for executive talent with a large number of companies, some of which are privately owned and others of which have significantly larger market capitalization than the Company. Retention of key talent remains critical to our success. The Company’s need to focus on retention is compounded by its size, geographic location and lean executive management team. As a consequence, the Company’s compensation program is structured to attract, retain and develop, over the long term, executive talent with the ability to succeed in a broad span of responsibilities over complex business units on a relatively individualized basis. The Committee believes that the ability to attract, retain and provide appropriate incentives for professional personnel, including the senior executive officers and other key employees of the Company, is essential to maintaining the Company’s leading competitive position, thereby providing for the long-term success of the Company. The Committee’s goal is to maintain compensation programs that are competitive with the transportation industry. Each year, the Committee reviews the executive compensation program with respect to the external competitiveness of the program and linkage between executive compensation and the creation of stockholder value and determines what changes, if any, are appropriate.

     The overall compensation philosophy of the Committee and management is guided by the following principles:

  • Compensation levels should be sufficiently competitive to attract and retain key talent. The Company aims to attract, motivate and retain high-performance talent to achieve and maintain a leading position in its industry. Our total compensation package should be strongly competitive with other transportation companies.
  • Compensation should relate directly to performance and responsibility. Total compensation should be tied to and vary with performance and responsibility, both at the Company and individual level, in achieving financial, operational and strategic objectives. Differentiated pay for high performers should be proportional to their contributions to the Company’s success.
  • Short-term incentive compensation should constitute a significant portion of total executive compensation. A large portion of total compensation should be tied to performance, and therefore at risk, as position and responsibility increase. Individuals with greater roles and the ability to directly impact strategic direction and long-term results should bear a greater proportion of the risk.
  • Long-term incentive compensation, the Company’s MIP should be closely aligned with stockholders’ interests. Awards of long-term compensation encourage executive officers to focus on the Company’s long-range growth and development and incent them to manage from the perspective of owners with a meaningful stake in the Company, as well as to focus on long-term career orientation. Participants in the MIP are required to own company stock. The requirements are discussed in this CD&A under the caption “Stock Ownership Guidelines” on page 23.

     The Company’s executive compensation program is designed to reward the achievement of initiatives regarding growth, productivity and people, including:

  • setting, implementing and communicating strategies, goals and objectives to ensure that the Company grows revenue and earnings at rates that are competitive or greater than our peers and that create value for our stockholders,
  • motivating and exhibiting leadership that aligns the interest of our employees with that of our stockholders,
  • developing a grasp of the competitive environment and taking steps to position the Company for growth and as a competitive force in the industry,
  • constantly renewing the Company’s business model and seeking out strategic opportunities which benefit the Company and its stockholders, and
  • implementing a discipline of compliance and focus on the highest standards of professional conduct.

PROCESS OF SETTING COMPENSATION

Benchmarking Against Our Peer Group
     The Committee looks to external market data from the transportation industry in reviewing and establishing individual pay components and total compensation, thus ensuring that our executive compensation is competitive in the marketplace. We benchmark our performance and compensation against a group of ten publicly traded companies in the transportation industry that compete for market share, executive talent and employees. The peer group includes, CH Robinson Worldwide (“CH Robinson”), Covenant Transport (“Covenant”), Heartland Express (“Heartland”), Knight Transportation (“Knight”), Landstar System (“Landstar”), Pacer International (“Pacer”), Ryder System (“Ryder”), Swift Transportation (“Swift”), Werner Enterprises (“Werner”), and US Xpress Enterprises (“US Xpress”).

     We are unique in the transportation industry in that we provide a blend of services. Our Intermodal business is comparable to Pacer. Our DCS segment is comparable to Ryder. We use owner-operators similar to Landstar and Heartland. We provide brokerage services like CH Robinson. Finally, our Truck and DCS segments are comparable to Covenant, Knight, Swift, Werner and US Xpress. While no one of the selected peer group provides the wide spectrum of services we provide, we believe the group as a whole is a good cross-section of competitors.

     Market data is collected from these companies by our financial group on a quarterly basis. The Board is given this information. The Committee reviews and discusses annually our competitive positioning compared to our peers on a relative basis and for individual executive officers, with a particular focus on the positioning of base salary, short-term annual incentives and long-term, equity-based awards. The Committee also annually reviews our overall compensation program compared to our peers.

COMPENSATION ANALYSIS TOOLS

2006 Compensation
     Compensation paid or awarded to executives in 2006, in general, attained our goals. The Company’s performance exceeded that of our peers in most of the metrics that were reviewed. Our EPS did not increase as much in the past few years; therefore, bonuses were reduced from 2005 because we did not achieve our goals for 2006. Our philosophy of tying compensation to stockholder value was attained.

     In addition to the competitive compensation survey information for each officer provided by our financial group, the Committee also reviewed compensation tally sheets, wealth accumulation analyses and internal pay equity analyses. The Committee began reviewing tally sheets in 2005, and the Committee anticipates further developing and enhancing these aids as compensation practices are reviewed and evolve in order to provide the Committee with the most relevant information and analyses practicable.

Wealth Accumulation Analysis
     This analysis illustrated prior long-term incentive awards (options and restricted share units), prior and future vesting schedules and overall value of stock owned plus the value of unvested options and restricted share units.

     We concluded that current-year awards would continue to provide a retirement vehicle for the NEOs, incent the executive officers to continue with the Company, and align their interests with those of our stockholders.

     Our Company has a 401(k) plan which assists participants in providing for retirement. The Company contributes approximately $6,000 to each NEO’s account per year. The equity build-up in unvested equity-based awards and stock owned currently is critical to each executive’s ability to adequately provide for his or her retirement. As previously explained, we have a Company stock ownership policy for our executives, but we do not have a “hold until retirement” restriction. We do not believe such a restriction is prudent for the employee or necessary to protect our Company.

Tally Sheets
     Compensation tally sheets for each of the NEOs were prepared and reviewed by the Committee in 2006. These tally sheets detail dollar amounts for components of the NEO’s total compensation in 2006, including current salary and estimated cash bonus, both current and outstanding equity-based awards, change in control severance payments, personal benefits, if any, and other perquisites. These elements were found to be in line with our compensation goals and philosophies.

     Our objective for executive base pay and total compensation is to provide compensation in the range of the 50th to 75th percentile of our peer group. We arrived at this conclusion because of our size and our performance compared to our peers. We believe that a sizeable portion of overall compensation should be at risk and tied to stockholder value. Our bonuses are tied to EPS. As EPS increases, so do executive bonuses. Long-term incentives are used as tools to reward executives for current and future performance, to encourage an executive to remain with the Company and to make the executive align his or her interests with those of our stockholders. As part of our long-term incentive strategy, executives are expected to maintain stock ownership values as a multiple of their base salary.

PurposeInternal Pay Equity Analyses
The Committee commissioned management to conduct an internal pay equity analysis in 2006. This study involved a review of 2006 total cash compensation for all participants in the Company’s MIP for 2006, as well as certain non-exempt salaried employees. Compensation reviewed included base salary, short-term cash bonus and commissions. In order to provide an “apples to apples” comparison, the Committee reviewed this compensation information for all participants in the 2006 MIP, grouped by officer position, but also reviewed salary comparisons between these individuals and individuals in the Company’s lowest non-exempt, salaried pay grade. The study provided no information that the Company felt should alter executive compensation goals or our compensation philosophy. Executive compensation was determined to be reasonable when consideration was given to performance, seniority and responsibility.

     The Board has determined that all three areas: 

Long-Term Compensation Analyses and Policies
With respect to long-term, equity-based awards, the Company maintains an MIP. Restricted share units and stock options of the AmendmentCompany are granted under the MIP in an effort to link future compensation to the long-term financial success of the Company. These equity-based awards are granted to executive officers, including the NEOs, and other key employees (approximately 250 individuals) and are intended to attract and retain employees who contribute to the Company’s success, to provide incentives to enhance job performance, and to enable those persons to participate in the long-term success and growth through an equity interest in the Company.

     In December 2005, the Committee began granting time-vested restricted share units in lieu of stock options under the MIP. The Committee believes restricted share units are currently more effective than stock options in achieving the Company’s compensation objectives, as these grants are subject to less market volatility and are less dilutive to stockholders. Employees realize immediate value as restricted share units vest, with such value increasing as the Company’s stock performance increases. Cash dividends are not paid and there are no voting rights on unvested restricted share units.

     The Company does not have a formal policy, but has an established practice described below, with respect to the granting of any form of equity compensation. The Company does not have a policy or practice of timing equity-based compensation grants to current or new executive officers, or timing the release of material, non-public information to affect the value of executive compensation. The Committee has approved, and will continue to approve, all grants of equity-based compensation to the NEOs and Section 16 filers in October each year. Final approval of awards for the Company’s Chairman of the Board and Chief Executive Officer is obtained from the Company’s independent board members. Although the Chairman of the Board and the Chief Executive Officer make recommendations regarding individual allocations of equity–based compensation awards to be approved, the Committee reviews the recommendations and makes the final determination of the awards. The Committee does not expect to delegate approval authority to grant awards to management or any subcommittee at this time or in the near future. The grant date is typically set by the Committee. Historically, annual awards of equity compensation have been granted to all awardees, including the NEOs, in October. Grants have been made in months other than October on a very limited basis and did not involve grants to executive officers or an isolated group. For stock options granted prior to October 2005, the Committee typically set grant dates in the fourth quarter of the fiscal year. Limited exceptions to this grant-date practice have included, for example, the hiring of a key employee or the promotion of an employee to an executive office.

     Pursuant to the provision of the MIP, all stock options are granted with an exercise price equal to 100% of the fair market value of the Company’s common stock on the grant date. Stock options are exercisable over five to 10 years from the grant date. The exercise price of stock options may be satisfied with payment of cash or previously owned Company stock, or through a cashless simultaneous exercise and sale program.

     In response to emerging changes in the area of accounting for equity-based compensation and to position ourselves competitively with our peers, beginning in 2005, the Committee began granting restricted share units in lieu of stock options under its MIP. The Committee anticipates granting restricted share units in lieu of stock options for the foreseeable future, but in the event stock options are granted, such stock options will be granted under the terms discussed above. Similar to stock options, the total number of restricted share units that may be awarded to an individual is within the discretion of the Committee but also limited by the MIP and is generally based on the Company’s performance and the individual’s current level of compensation, individual performance, potential for promotion and marketability outside of the Company. The number of restricted share units or stock options previously granted to an individual may be, but is not always, a consideration in determining the amount of awards granted to that individual in the future. Generally, restricted share units vest over five to 10 years.

     The Committee granted stock options in 2002 through 2004 for all awardees, including the NEOs. In 2004 and 2005, the Committee set the annual grant date for all awardees in October. For 2006, the Committee set a grant date of October 16, 2006, for restricted share units.

     The Committee anticipates that it will continue to adhere to these general grant dates for the foreseeable future for administrative ease and consistency. Awards are made in the fourth quarter because the Committee has a good view as to financial and individual performance for the current year.

     As stated above, the Company does not have a policy or practice of timing the grant of equity-based awards and the release of material non-public information in a manner that would affect compensation for new or current executive officers, nor has it deliberately or knowingly done so.

     In the event that material non-public information becomes known to the Committee, the Company or its employees at a time when such information could affect or otherwise impact the imminent grant of equity-based compensation, management and the Committee would take the existence of such information under advisement and determine whether to delay the grant of such equity-based compensation to a later date in order to avoid the appearance of any impropriety.

Deductibility of Compensation and Other Regulatory Considerations
The 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 the Company’s Chief Executive Officer and the next four most highly compensated officers (the “Covered Employees”). There is an exception to this $1,000,000 limitation for performance-based compensation that meets certain requirements. In reviewing the effectiveness of the Company’s compensation program, the Committee considers the anticipated tax treatment to the Company and to its executives of various payments and benefits. Additionally, the deductibility of certain compensation payments depends upon the timing of an executive’s vesting or exercise of previously granted awards, as well as interpretations and changes in the tax laws and other factors beyond the Committee’s control. For these and other reasons, including the need to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee will not necessarily, nor in all circumstances, limit executive compensation to that which is deductible under the Code. The Company has not adopted a policy requiring all compensation to be deductible.

     The Committee will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent reasonably practicable and to the extent consistent with its other compensation objectives. Base salary, bonuses or the vesting of restricted share units do not qualify as performance-based compensation under the Code. In 2006, all compensation paid to the Company’s Covered Employees was deductible by the Company.

Derivative Trading
It is the Company’s policy that officers and directors not engage in any put or call transactions on Company stock. Such transactions create a significant enticement for abusive trading and, in many instances, give the unwelcome appearance of the officer or director betting against the Company. There is no Company policy that would prohibit the Company’s executive officers from entering into a forward-sale or forward-purchase contract.

Stock Ownership Guidelines
To motivate the Company’s officers and senior management to emulate its stockholders, the Company expects its management to own Company stock at levels described in the table shown below.

     Stock ownership is defined as stock owned:

PositionOwnership Multiple of Base Salary
Chief Executive Officer 6 times 
Executive Vice Presidents 3.50 times 
Senior Vice Presidents and Vice Presidents of Operations 2.75 times 
Vice Presidents, Regional Operations Managers, and Directors of Operations 2 times 

     The Committee has determined that as of February 23, 2007, all of the Company’s officers and members of senior management covered by these guidelines have met their ownership goals.

Stock Retention Policy
     Other than indicated above, the Company does not have any other stock retention policy.

Recovery of Awards
The Company does not have a policy requiring replacement of awards or payments as a result of an officer’s illegal transactions or restatements. The Company became a public company in 1983. Since that time, it has had no illegal actions by its officers.

Summary
     The Company intends to continue its practice of compensating its executives through programs that emphasize performance. To that end, executive compensation is tied directly to the performance of the Company and is structured to ensure that, due to the nature of the business and the degree of competitiveness for executive talent, there is an appropriate balance between short-term and long-term compensation, base salary and incentive compensation, and cash and non-cash compensation, all of which are determined and measured by financial, operational and strategic goals, long-term and short-term performance of the Company and individual contributions.

     For 2006, the actual total compensation of the NEOs generally fell between the 29th and 65th percentile of the mean of total compensation paid to executives holding equivalent positions in the transportation industry peer group companies. The Committee believes that payments and awards were consistent with the Company’s financial performance, size and the individual performance of each of the NEOs, and also believes that the compensation was reasonable in its totality.

Elements of Compensation
The Company’s primary compensation components are summarized below. Generally, the Company’s compensation program consists of annual base salary, a short-term cash incentive award, and an annual long-term, equity-based award. Primary benefits for executives include participation in the Company’s 401(k) plan, health, dental and vision plans, and various insurance plans, including disability and life insurance, all of which are available to all employees on a non-discriminatory basis. The Company provides limited perquisites to executive officers and other key employees and is described in more detail on page 26 under the section titled “Other Perquisites.”

     Total compensation for executive officers, including the NEOs, consists of one or more of the following components:

  • base salary
  • annual performance-based incentive cash bonus awards
  • long-term incentive/equity-based compensation
  • health and welfare benefits
  • other benefits

     The Committee, with recommendations from management, works to create what it believes is the best mix of these components in delivering total compensation and in determining annual compensation, reviews all elements of compensation separately and in the aggregate. These compensation components are comparable to the Company’s competitors and peer group.

     In its review of executive compensation, and, in particular, in determining the amount and form of incentive awards discussed below, the Committee generally considers, among other things, market information with respect to cash and long-term compensation for comparable companies in the transportation industry, amounts paid to the executive officer in prior years as salary, annual bonus and other compensation, the officer’s responsibilities and performance during the fiscal year, and the Company’s overall performance during prior fiscal years and its future objectives and challenges.

     At transportation companies, generally the largest elements of compensation are paid in the form of annual short-term incentives and long-term compensation. Compensation mix and industry profitability does vary as the industry faces many risk factors, such as the economy and fuel prices.

     As a result, cash usually comprises a much greater percentage of the total compensation package than long-term equity-based compensation. Our executive officers, including NEOs, receive approximately 48% to 66% of their total compensation in cash. Cash compensation varies as the EPS of the Company changes, thus affecting bonus payouts. Grants of stock options or restricted share units are made annually. Stock options and restricted share units are based on each employee’s level of responsibility and are computed as a multiple of base salary as a maximum.

     It has been the policy of the Company to put a significant portion of the executive’s compensation at risk. This is accomplished by our cash bonus plan, which is directly tied to EPS increases. Equity-based awards from our MIP may also vary in vesting from five to 10 years. These awards are subject to forfeiture if the employee leaves the Company. The Committee and management believe that the proportion of compensation at risk should rise as the employee’s level of responsibility increases.

     The Company has retained WW as its compensation consultant. WW reports directly to the Committee. In 2005, WW prepared a study providing information and an independent analysis of the executive compensation program and practices. WW’s 2005 study was updated by management in 2006 and reviewed by the Committee. The results of the study included observations about the Company’s 2006 executive compensation.

     In general:

  • base salaries are competitive (ranging from 87% to 131% of the mean of the peer group)
  • cash bonuses are competitive (ranging from 38% to 110% of the mean of the peer group)
  • the lump-sum value of the long-term incentive awards is low (ranging from 18% to 53% of the mean of the peer group)
  • total compensation for executive officers is low compared to peers (ranging in the 29th to 65th percentile of the peer group)

Base Salary
     The Committee believes that competitive levels of cash compensation, together with equity-based and other incentive programs, are necessary for the motivation and retention of the Company’s executives. Salaries provide executives with a base level of monthly income and help achieve the objectives outlined above by attracting and retaining strong talent. Base salaries are evaluated annually for all executive officers, including the Chairman of the Board and the Chief Executive Officer. Generally, base salaries are not directly related to specific measures of corporate performance, but are determined by the relevance of experience, the scope and complexity of the position, current job responsibilities, retention and relative salaries of peers in the transportation industry. The Committee may elect not to increase an executive officer’s annual salary, and has so elected in prior years. However, if warranted, the Committee may increase base salary where an executive officer takes on added responsibilities or was promoted.

     For 2006, the Committee reviewed and approved the salaries of all Section 16 reporting persons. The Committee presented to the independent, non-employee board members, for their approval, salary recommendations for Messrs. Garrison and Thompson, the Company’s Chairman of the Board and Chief Executive Officer, respectively. Mr. Garrison received no salary increase in the current year. Mr. Thompson received an increase of $30,000. In October 2006, the Committee approved the salaries for executive officers, including the other NEOs. Executive salaries increased between 0% and 15%.

Annual Bonus Award
     As previously mentioned, the Company has had a bonus plan in place for several years that is tied to EPS. As EPS increases, so do executive bonus payments. All non-commissioned, salaried employees participate in the same plan. Each year the Compensation Committee, with recommendations from the Chairman of the Board and Chief Executive Officer, establishes the EPS targets for the following year. The bonus is computed from a matrix of EPS targets and percentages of the executive’s base salary. If EPS does not reach a base level, no bonus is paid. In October 2005 and October 2006 the Committee approved the bonus plan for 2006 and 2007, respectively. The Committee believes this plan directly aligns current compensation to the stockholder’s interest by providing the executives with incentives to increase the profits of the Company, thereby increasing stockholder value.

     The Committee does not rely solely on predetermined formulas or a limited set of criteria when it evaluates the performance of the Chairman of the Board, the Chief Executive Officer or the other NEOs. In 2006, the Committee considered management’s continuing achievement of its short-term and long-term goals versus its strategic imperatives and general individual performance objectives. The Committee also considers recommendations from the Chief Executive Officer regarding total compensation for those executives reporting directly to him. General individual performance objectives for the NEOs include the following and vary depending on the business function in which the executive works.

  • Financial objectives: Revenues, operating ratio, diluted earnings per share, operating cash flow, cost-savings initiatives and departmental financial measures.
  • Strategic objectives: Increasing customer base, customer service and implementation of short-term and long-term objectives.

     In assessing individual performance against the objectives, the Committee considers actual results against deliverables. The Committee based its compensation decisions for Messrs. Garrison and Thompson on:

  • leadership,
  • the execution of business plans,
  • strategic results,
  • operating results,
  • growth in EPS,
  • size and complexity of the business,
  • experience,
  • strengthening of competitive position,
  • analysis of competitive compensation practices,
  • assessment of the Company’s performance, and
  • the assessment of Messrs. Garrison’s and Thompson’s performance based on the objectives listed above.

     Where possible, the above criteria were compared to the peer group. The compensation decisions for other NEOs were also based on those assessments, as well as the Chief Executive Officer’s recommendations to determine levels of payout.

Long-Term, Equity-Based Award
     Each executive is eligible to receive an incentive award of restricted share units. Restricted share units are intended to help achieve the objectives of the compensation program, including the retention of high-performing and experienced talent, a career orientation and strong alignment with stockholders’ interests. Long-term incentive awards also facilitate the development and retention of strong management through share ownership and recognition of future performance. The restricted share unit is awarded and settled from shares reserved for issuance under the MIP. As previously mentioned, the Committee awards restricted share units based on an executive’s level of responsibility and prior and expected future performance. Awards are set as a multiple of the executive’s base salary, as recommended by the Committee’s consultant, WW. The Committee approves or adjusts the award based on the above criteria for all Section 16 filers who are employees of the Company. The awards for the Company’s Chairman of the Board and Chief Executive Officer are presented for final approval to the Company’s independent board members. The Company also has stock ownership requirements for all participants in the MIP who hold the position of director and above. The Committee believes that restricted share units must be sufficient in size to provide a strong, long-term performance and retention incentive for executives and to increase their vested interest in the Company. Restricted share units have been awarded for the last two years because they are less dilutive to shares outstanding and to profits. Restricted share units vest from five to 10 years.

     For 2006, the Company granted, in aggregate, 126,000 restricted share units to the NEOs participating in the MIP with Messrs. Garrison, Thompson, Walton, Bergant and Harper receiving grants of 17,000,00040,000, 40,000, 14,000, 12,000 and 20,000 units, respectively. These awards represent the Committee’s and the Board’s view of both the Company’s and the individuals’ performance in the marketplace during calendar year 2006.

     In administering our MIP and awarding long-term incentive awards, we are sensitive to the potential for dilution of future earnings per share. The MIP is a broad-based equity compensation program. We focus the program on employees who will have the greatest impact on strategic direction and long-term results of the Company by virtue of their senior roles and responsibilities. A total of 676,720 restricted share units were granted in 2006. Of that number, approximately 30% of the units granted were issued to the executive officer group. Approximately 19% of the total share units were granted to the NEOs. MIP participants who hold the title of director and above have an ownership requirement in Company stock. Our peers all have similar long-term equity-based award plans. Our peers do not disclose any ownership requirements.

Deferred Compensation
The Company administers a Deferred Compensation Plan for certain of its officers. The employee or participant may elect on an annual basis to defer part of his or her salary and/or bonus. This plan assists key employees in planning for retirement. The Company contributes nothing to the plan. Some of our peers have deferred compensation plans that provide for some form of matching.

Health and Welfare Benefits
The Company provides benefits such as medical, vision, life insurance, long-term disability coverage, and 401(k) plan opportunities to all eligible employees, including the NEOs. The Company provides up to $750,000 in life insurance coverage and up to $10,000 per month in long-term disability coverage. The value of these benefits is not required to be included in the Summary Compensation Table since they are available to all employees on a non-discriminatory basis. The Company matches employee contributions to the 401(k) plan. The Company provides no post-retirement medical or retirement benefits to its employees. These benefits are comparable to those offered by our peers.

     The Company also provides vacation, sick leave and other paid holidays to employees, including the NEOs, that are comparable to those provided at other transportation companies. The Company believes that its commitment to provide employee benefits such as these recognizes that the health and well-being of our employees contributes directly to a productive and successful work life that produces better results for the Company and for its employees.

Personal Benefits
The Company provides certain perquisites to management employees, including the NEOs, as summarized below.

Company Aircraft
The Company no longer owns and operates its own aircraft. Since 1998, the Company has actively participated in shared ownership of aircraft services with NetJets. With the approval of the Chairman of the Board or the Chief Executive Officer, the NEOs and other management employees use Company aircraft for business purposes. Personal use of the Company plane is provided to executive officers on a very limited basis and to other management employees in the event of emergency or other urgent situations.

Company Vehicles
The Company does not provide company-owned cars to executives.

Other Perquisites
The Company provides executive officers a taxable allowance of up to $10,000 a year for financial counseling services, which may include legal, financial, estate and/or tax planning and tax return preparation. This benefit is based on actual cost to the Company. The Company also provides country club memberships to certain of its executive officers. These memberships are valued on the actual costs of the membership, including dues, regardless of whether use was personal or business. The Company believes the clubs provide a quiet venue for negotiations and entertainment of clients, bankers, investment bankers, stockholders, etc.

Severance Agreements
The Company does not have employment contracts or personal severance agreements with any of its executives. However, according to the terms of the previously mentioned MIP, all outstanding options and restricted share units would immediately vest upon a “change in control.”

     Generally, a “change in control” per the MIP would be deemed to occur when more than 30% of the outstanding shares of common stock of the Company changes ownership in a transaction that is a merger, reorganization or consolidation or when more than 50% of the outstanding shares change ownership in a transaction that is not a merger, reorganization or consolidation.

     Most of our peers have similar “change in control” language in their stock incentive plans. Some of our peers have employment agreements and severance packages for their executives.

     The Company does not believe severance agreements or employee contracts are necessary in order to be available for optionscompete in the transportation marketplace.

Compensation of the Chairman of the Board and awards under the Plan.  Chief Executive Officer
As of December 31, 2004, approximately 1,000,000 shares2006, Messrs. Garrison and Thompson have a base salary of $500,000 and $630,000, respectively. Mr. Garrison received no increase in salary during 2006. Mr. Thompson received a 5% increase or $30,000 during 2006. Additionally, under the bonus plan, Messrs. Garrison and Thompson received a cash incentive bonus of $225,000 and $270,000, respectively. These bonus payments were remaining for future grants.  Approximately 225 persons are currently participatingless than those paid in the Plan.  Althoughprior year because EPS goals for 2006 were not attained.

     Messrs. Garrison’s and Thompson’s base salaries are not directly related to specific measures of corporate performance, but are determined by their experience, current job responsibilities, the relative salaries of their peers in the transportation industry and, to a lesser extent, upon a subjective evaluation of their contribution to the Company’s corporate and financial goals and objectives. Messrs. Garrison and Thompson each received 40,000 restricted share units from the MIP in 2006. Their awards were approved by the independent, non-employee directors of the board and vest from 2011 to 2016. The Committee exercised its right under the MIP to increase the restricted share units awarded above the salary multiple maximum to both Messrs. Garrison and Thompson. In view of cash versus equity awards, the Committee viewed equity-based awards as a means of more closely aligning their positions with the stockholders’ interests.

     In 2005, the Committee retained WW to review the compensation for Messrs. Garrison and Thompson. As discussed above, the study was updated by management in 2006. WW and management reviewed industry and peer groups they believe are representative of companies that the Company hascompetes with for executive talent and compared Messrs. Garrison’s and Thompson’s compensation to their peers in those groups.

     The Committee believes each element of compensation paid to Messrs. Garrison and Thompson and other senior managers is reasonably appropriate and in the best interests of the stockholders. The Company is one of the largest companies in comparison to the peer group and its financial performance is better than most of its peers. The elements of compensation have generally been consistent over the past few years and have served the stockholders well in receiving outstanding performance from its executives and outstanding performance from the Company.

SUMMARY COMPENSATION

     The following table summarizes the total compensation earned or paid to the Chief Executive Officer, Chief Financial Officer and the three most highly compensated executive officers of the Company who served in such capacities as of December 31, 2006, for services rendered to the Company. These five officers are referred to as the NEOs in this Proxy Statement.

Non-Change in
EquityRestrictedStockValue for
IncentiveShareOption

Deferred

 All Other
PrincipalSalaryAwardsUnitsAwardsCompensationCompensation
and Position     Year     ($) (1)     (1)     ($) (2)     ($) (2)     ($)     ($)     Total ($)
Kirk Thompson 2006  605,769  270,000  96,139  330,135  0  11,652 1,313,695 
   President  
   and CEO
 
Jerry Walton 2006358,269159,75057,737160,971011,467748,194
   EVP, Finance/
   Administration
   and CFO
 
Wayne Garrison2006500,000225,00087,201137,933013,530963,664
   Chairman
   of the Board
 
Paul Bergant 2006317,884141,75053,673166,253013,549693,109
   EVP Marketing,
   CMO, and
   President of
   Intermodal
 
Craig Harper 2006311,365137,25052,929168,88304,233674,660
   EVP, Operations
   and COO 

(1)    ��Non-equity incentive awards (paid as a bonus) and salary amounts shown above are reported as gross earnings. Totals may include amounts transferred into deferred compensation. All non-equity awards are reported in the year in which they are earned.
(2)Amounts reflect totals expensed in the Company’s financial statements in 2006 under SFAS 123R. See Note 5 of the Company’s annual report as reported on Form 10-K for assumptions used in the valuation.

Components of All Other Compensation for Calendar Year 2006

PerquisitesCompany
and OtherContributions
Personal Benefitsto 401(k) PlanTotal
Name      Year      ($)     ($)     ($)     
Kirk Thompson 2006 5,789  5,863 11,652
Jerry Walton 20065,2326,23511,467
Wayne Garrison20069,3154,21513,530
Paul Bergant 20067,5326,01713,549
Craig Harper 200604,233  4,233

Components of Perquisites for Calendar Year 2006

Total
Legal andClubPerquisites
Personal Use ofAccountingDues andand Other
Company PlaneFeesSecurityPersonal
Name     Year     ($)     ($)     ($)     Benefits ($)     
Kirk Thompson20060  3,500   2,289   5,789 
Jerry Walton2006 005,2325,232
Wayne Garrison200609,31509,315
Paul Bergant2006007,5327,532
Craig Harper20060000

Messrs. Thompson and Bergant had family members accompanying them on one business trip each using the Company aircraft. The Company incurred no incremental cost for these family members to utilize available seating on these trips, thus, no value is assigned to the perquisites. Both Messrs. Thompson and Bergant have included the taxable value of this perquisite in their salaries detailed in the Summary Compensation Table above and for income tax reporting purposes.

Grants of Plan-Based Awards
    The following table reflects estimated possible payouts under equity and non-equity incentive plans to the NEOs during 2006. The Company’s equity-based and incentive-based awards are granted to the NEOs based upon pre-established performance goals set annually by the Compensation Committee with a performance period equal to the calendar year for which the performance goals are set.

    The MIP is an annual plan consisting of equity-based awards only. The number of shares awarded are measured based on the executive’s level of responsibility and other matters described on page 25 under “Long-Term Equity-Based Award.” Dividends are not determined who the future recipientspaid on awards of awardsrestricted share units.

    NEOs are eligible to earn cash bonuses under the Plan will be, their positions, ornon-equity incentive award plan based on the numberCompany’s EPS for the calendar year. Please refer to page 24 of options that may be granted, the Company believes thatProxy Statement under “Annual Bonus Award” for further detail.

All OtherAll Other  
StockOptionGrant
                 Awards: Awards:    Date Fair
NumberNumberExerciseValue
Estimated Possible PayoutsEstimated Possible Payoutsofofor Baseof Stock
Under Non-EquityUnder Equity IncentiveSharesSecuritiesPrice ofand
    Incentive Awards (1) Plan Awards (2) of Stock Underlying Option Option
GrantThreshold TargetMaximumThresholdTargetMaximumor UnitsOptionsAwardsAwards
 Name   Date   ($)   ($)   ($) (1)   (#)   (#)   (#)   (#) (3)   (#)   ($/Sh)   ($) (4)
Kirk Thompson 10/26/0630,288454,3271,332,691N/AN/AN/A40,000––19.90
 
Jerry Walton10/16/0617,913268,702788,192N/AN/AN/A14,000––20.78
 
Wayne Garrison10/26/0625,000375,0001,100,000N/AN/AN/A40,000––19.90
 
Paul Bergant10/16/0615,894238,413699,345N/AN/AN/A12,000––20.78
 
Craig Harper10/16/0615,568233,524685,003N/AN/AN/A20,000––20.78

(1)This column reflects the maximum non-equity incentive award each NEO was eligible to receive for 2006 under the percentage assigned to each NEO for the cash bonus pool. The actual awards earned are reported in the Summary Compensation Table shown on page 27 of this Proxy Statement.
(2)The Company has no equity incentive plan awards.
(3)This column reflects the number of restricted share units that were granted to the NEOs in 2006. Grants to Messrs. Thompson and Garrison were made on October 26, 2006. Grants to Messrs. Walton, Bergant and Harper were made on October 16, 2006.
(4)Market value of the share units on the date of grant was $19.90 for grants made to Messrs. Thompson and Garrison and $20.78 for grants made to Messrs. Walton, Bergant and Harper. This market value is an 8.03% discount from the Company’s closing stock price on the date of grant. The discount represents the present value of expected dividends to be paid on the Company’s common stock, using the current dividend rate and the risk-free interest rate, over the vesting period. The Company believes this discount is appropriate to value the restricted share units as the units do not collect or accrue dividends until the awards vest and are settled with Company stock.

Outstanding Equity Awards At Calendar Year-End
    The following table sets forth information concerning stock options and restricted share units held by the NEOs as of December 31, 2006.

 Option Awards RSU Awards
Equity
IncentiveEquity
EquityPlanIncentive
IncentiveAwards:Plan Awards:
PlanNumberNumber ofMarket of
Number ofNumber ofAwards:of SharesMarketUnearnedPayout Value
SecuritiesSecuritiesNumber oforValue ofShares,of Unearned
UnderlyingUnderlyingSecuritiesUnits ofShares orUnits orShares, Units
UnexercisedUnexercisedUnderlyingOptionStock thatUnits ofOtheror Other
OptionsOptionsUnexercisedExerciseOptionHave NotStock ThatRights ThatRights That
ExercisableUnexercisableUnearnedPriceExpirationVestedHave NotHave NotHave Not
Name    (#)    (#) (1)    Options (#)    ($)    Date    (#) (2)    Vested ($)(3)    Vested (#)    Vested ($)
Kirk Thompson–45,600 –3.3711/5/1035,000726,950––
150,000 3.4711/2/1240,000830,800
106,672 7.0810/24/13
100,000 12.2010/23/14
100,000 20.3610/21/15
 
Jerry Walton–16,000 –4.8812/4/0910,000207,700––
30,000 7.0810/24/1014,000290,780
40,000 12.2010/23/10
40,000 20.3610/21/12
 
Wayne Garrison–120,000 –5.862/28/1220,000415,400––
40,000 12.2010/23/1040,000830,800
 
Paul Bergant–16,000 –5.0512/28/0910,000207,700––
30,000 7.0810/24/1012,000249,240
40,000 12.2010/23/10
40,000 20.3610/21/11
 
Craig Harper–8,000 –3.754/15/0817,000353,090––
8,000 7.216/15/0920,000415,400
8,000 3.1210/8/09
100,000 3.4711/2/12
53,336 7.0810/24/13
48,000 12.2010/23/14
48,000 20.3610/21/15


   
(1)   Unvested and unexercisable options. Effective vesting dates are noted. 
 
  Shares Vesting Vesting Date Shares Vesting Vesting Date 
 Kirk Thompson 15,200 6/1/07 17,776 6/1/10 
  15,200 6/1/08 17,776 6/1/11 
  15,200  6/1/09 17,792  6/1/12 
  30,000  6/1/07 20,000 6/1/09 
  30,000 6/1/08 20,000  6/1/10 
  30,000 6/1/09 20,000 6/1/11 
  30,000 6/1/10 20,000 6/1/12 
  30,000 6/1/11 20,000 6/1/13 
  17,776 6/1/07 20,000 6/1/12 
  17,776 6/1/08 40,000 6/1/13 
  17,776  6/1/09 40,000  6/1/14 
 Jerry Walton 8,000 6/1/07 13,332 6/1/07 
  8,000 6/1/08 13,332 6/1/08 
  10,000 6/1/07 13,336 6/1/09 
  10,000 6/1/08 20,000 6/1/10 
  10,000  6/1/09 20,000  6/1/11 
 Wayne Garrison 120,000 2/28/07 20,000 6/1/09 
  20,000  6/1/08    
 Paul Bergant 8,000 6/1/07 13,332 6/1/07 
  8,000 6/1/08 13,332 6/1/08 
  10,000 6/1/07 13,336 6/1/09 
  10,000 6/1/08 40,000 6/1/10 
  10,000  6/1/09    
 Craig Harper 8,000 6/1/07 8,888 6/1/09 
  4,000 6/1/07 8,888 6/1/10 
  4,000 6/1/08 8,888 6/1/11 
  4,000 6/1/07 8,896 6/1/12 
  4,000 6/1/08 9,600 6/1/09 
  20,000 6/1/07 9,600 6/1/10 
  20,000 6/1/08 9,600 6/1/11 
  20,000 6/1/09 9,600 6/1/12 
  20,000 6/1/10 9,600 6/1/13 
  20,000 6/1/11 16,000 6/1/12 
  8,888 6/1/07 16,000 6/1/13 
  8,888  6/1/08 16,000  6/1/14 
   
(2)   Restricted share units are time-vested awards. Effective vesting dates are noted. 
 
    Shares Vesting Vesting Date Shares Vesting Vesting Date 
 Kirk Thompson 8,750 7/15/13 5,000 7/15/13 
  8,750 7/15/14 5,000 7/15/14 
  17,500 7/15/15 10,000 7/15/15 
  5,000 7/15/11 10,000 7/15/16 
  5,000  7/15/12    
 Jerry Walton 5,000 7/15/10 2,996 7/15/09 
  5,000 7/15/11 4,004 7/15/10 
  2,996  7/15/08 4,004  7/15/11 
 Wayne Garrison 5,000 7/15/10 5,000 7/15/13 
  5,000 7/15/11 5,000 7/15/14 
  10,000 7/15/12 10,000 7/15/15 
  5,000 7/15/11 10,000 7/15/16 
  5,000  7/15/12    
 Paul Bergant 2,500 7/15/10 3,000 7/15/09 
  7,500 7/15/11 3,000 7/15/10 
  3,000  7/15/08 3,000  7/15/11 
 Craig Harper 3,400 7/15/12 5,000 7/15/12 
  4,250 7/15/13 4,000 7/15/13 
4,250 7/15/143,000 7/15/14
5,100 7/15/152,000 7/15/15
 6,000  7/15/11   
 
(3)   Values are based on the market closing price of $20.77 on December 31, 2006. 


Options Exercised and Stock Vested   

The following table describes stock options only. No restricted share units vested in calendar year 2006.

 
  Option Awards 
  Number of Shares Value Realized  
  Acquired on Exercise   on Exercise  
Name  (#) ($) (1) (2)  
Kirk Thompson 30,000 594,900  
  15,200 329,232 
 30,000 646,800 
 17,776   319,079  
       Total 92,976 1,890,011  
 
Jerry Walton 4,000 80,930 
 4,000 66,280 
 8,000 164,421 
 8,000 135,120 
 4,000 91,130 
 24,000 527,104 
 24,000 439,200 
 10,000 183,527 
 10,000  146,900  
       Total 96,000 1,834,612 
 
Wayne Garrison 120,000  1,881,600  
       Total 120,000 1,881,600 
 
Paul Bergant 4,000 69,080 
 8,000 162,480 
 8,000 139,360 
 20,000 380,000 
 10,000 182,800 
 10,000  153,900  
       Total 60,000 1,087,620 
 
Craig Harper 6,000 121,380 
 8,000 170,240 
 4,000 71,280 
 4,000 87,360 
 14,284 313,676 
 8,888  158,917  
       Total 45,172 922,853 

(1)Value realized on the exercise of stock options shown above are gross earnings. Values are earned over multiple years. Election to exercise an option in calendar year 2006 should not be interpreted to mean that all value was earned in the year the option was exercised.
Messrs. Garrison and Thompson exercised and purchased all of the shares shown in column number two above.
Mr. Harper exercised and purchased 18,000 shares, which was a portion of the available vested shares.
(2)Values are calculated by subtracting the exercise price from the fair market value on the underlying common stock on the date of exercise.

Components of Non-Qualified Deferred Compensation for Calendar Year 2006

  Executive Registrant  Aggregate  Aggregate  Aggregate 
  Contributions Contributions  Contributions  Withdrawals /  Balance 
Namein 2006 ($) (1) in 2006 ($)  in 2006 ($)  Distributions ($)  at 2005 ($) 
Kirk Thompson 67,514  0 67,514 0 179,302  
Jerry Walton 115,562 0 115,562  1,826  494,776  
Wayne Garrison 0 0 0  0 0 
Paul Bergant 149,908 0 149,908 0 913,611 
Craig Harper 98,819 0 98,819 13,804 416,272 

(1)Amounts of executive contributions are included as part of the NEOs salary in the Summary Compensation Table detailed above.
(2)We have a non-qualified deferred compensation plan that allows eligible employees to defer a portion of their compensation. Participants can elect to defer up to a maximum of 50% of their base salary as well as up to 85% of their bonus for the year. The compensation deferred under this plan is credited with earnings or losses of investments elected by plan participants. Each participant is fully vested in all deferred compensation and earnings; however, these amounts are subject to general creditor claims until actually distributed to the employee. A participant may elect to receive deferred amounts in one payment or, if the balance is greater than $25,000, in quarterly installments payable over a period of 3, 5, 10 or 15 years upon reaching the age of 55, having 15 years of service, or being disabled. Our total liability under this plan was $8.6 million as of December 31, 2006, and $6.7 million as of December 31, 2005. These amounts are included in other long-term liabilities in our Consolidated Balance Sheets. Participant withholdings are held by a trustee and invested in equity securities as directed by participants. These investments are included in other assets in our Consolidated Balance Sheets and totaled $8.6 million as of December 31, 2006, and $6.7 million as of December 31, 2005.

Potential Post-Employment Benefits
    The Company does not have employment contracts or personal severance agreements with any of its executives. However, according to the terms of the previously mentioned MIP, all outstanding options and restricted share units would immediately vest upon a “change in control.”

    Generally, a “change in control” per the MIP would be deemed to occur when more than 30% of the outstanding shares of common stock reservedof the Company changes ownership in a transaction that is a merger, reorganization or consolidation or when more than 50% of the outstanding shares change ownership in a transaction that is not a merger, reorganization or consolidation.

    Potential benefits of the NEOs due to a “change in control” are shown below. The amounts represent the immediate vesting of all outstanding options and restricted share units and are valued using the closing market price of $20.77 on December 31, 2006.

Kirk Thompson $7,304,530 
Jerry Walton $1,522,620 
Wayne Garrison $3,378,200 
Paul Bergant $1,478,360 
Craig Harper $4,045,540 

REPORT OF THE AUDIT COMMITTEE

The Audit Committee
The Audit Committee is composed of Dr. John A. White, Chairman, James L. Robo and Leland Tollett. Messrs. White, Robo and Tollett served as members of the Audit Committee during calendar year 2006. The Company’s Board of Directors has determined that all members of the Audit Committee satisfy the independence and other requirements for audit committee membership and has also made the determination that Messrs. White, Robo and Tollett each have the attributes of an audit committee financial expert as defined by the Plan are not adequate to meet the ongoing purposeregulations of the Plan.SEC.

    The amendment would increaseAudit Committee operates under a written charter adopted by the maximum amountBoard. A copy of shares authorizedthe Audit Committee Charter is available on the “Corporate Governance” page of the Company’s website at “Who We Are”/“Investor Relations” at www.jbhunt.com. In carrying out its responsibilities, the Audit Committee, among other things:

  • monitors the integrity of the financial reporting process, systems of internal controls, and financial statements and reports of the Company;
  • appoints, compensates, retains and oversees the Company’s independent auditors, including reviewing the qualifications, performance and independence of the independent auditors;
  • reviews and pre-approves all audit, attest and review services and permitted non-audit services;
  • oversees the performance of the Company’s internal audit function; and
  • oversees the Company’s compliance with legal and regulatory requirements.

    In 2006, the Audit Committee met eight times. The Audit Committee schedules its meetings with a view to ensure that it devotes appropriate attention to all of its responsibilities and duties. The Audit Committee’s meetings include, whenever appropriate, executive sessions with the Company’s independent auditors and the Company’s internal auditors, in each case outside the presence of the Company’s management.

    In performing its oversight role, the Audit Committee reviewed the audited consolidated financial statements for issuance under the Plan2006 calendar year and met and held discussions with management, the Company’s internal auditors and E&Y, the Company’s independent registered auditors, to 22,000,000.discuss those financial statements and the audit related thereto. Management has represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles.

    The following table provides a summaryAudit Committee discussed with the independent auditors matters required to be discussed by the Statement on Auditing Standards No. 61, as may be modified, supplemented or amended, which includes, among other items, matters related to the conduct of share activitythe audit of the Company’s consolidated financial statements. The independent auditors also provided the Audit Committee with written disclosures and the letter required by Independence Standards Board Standard No. 1, as may be modified, supplemented or amended, which relates to the auditors’ independence from the Company and its related entities, and the Audit Committee discussed with the independent auditors their independence.

    Based on the Audit Committee’s discussions with management, the internal auditors and the independent auditors as described above, and upon its review of the representation of management and the independent auditors and the reports of the independent auditors, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Management Incentive Plan from inception in 1989 to date.

Management Incentive Plan – Historical Share Activity

Transaction

 

Date

 

Number of Shares

 

Cumulative Number of Shares

 

 

 

 

 

Shares approved by the Board of Directors

 

March 17, 1989

 

 

2,000,000

 

 

2,000,000

 

Three-for-two stock split

 

March 13, 1992

 

 

+ 1,000,000

 

 

3,000,000

 

Additional shares approved by stockholders

 

May 11, 1995

 

 

+ 2,000,000

 

 

5,000,000

 

Additional shares approved by stockholders

 

April 16, 1998

 

 

+ 1,500,000

 

 

6,500,000

 

Additional shares approved by stockholders

 

April 20, 2000

 

 

+2,000,000

 

 

8,500,000

 

Two-for-one stock split

 

August 29, 2003

 

 

+ 8,500,000

 

 

17,000,000

 

Request to stockholders for approval of additional shares to the Plan

 

April  21, 2005

 

 

+ 5,000,000

 

 

22,000,000

 

          Reference toAnnual Report on Form 10-K for the Plan’s general terms and purpose are further described on page 17 of this document.

26


Voting oncalendar year ended December 31, 2006, as filed with the AmendmentSEC.

          If a quorum is present atJ.B. Hunt Transport Services, Inc.
2006 Audit Committee Members
John A. White, Chairman
James L. Robo
Leland Tollett

PROPOSAL NUMBER TWO 
RATIFICATION OF INDEPENDENT REGISTERED 
PUBLIC ACCOUNTING FIRM 

    On March 29, 2005, the Annual Meeting, approvalAudit Committee of the amendment requires the affirmative vote of a majority of the shares of common stock outstanding and entitled to vote with respect to the amendment.  Proxies marked to abstain from voting with respect to the amendment will have the effect of proxies voted against the amendment.

The Board of Directors Recommendsconcluded its proposal process for a Vote FOR Proposal Three

INDEPENDENT AUDITORS

          KPMGnew independent registered public accounting firm. The Audit Committee appointed Ernst & Young LLP has served(“E&Y”) as the Company’s independent auditorsregistered public accounting firm. The Audit Committee appointed E&Y as the Company’s independent registered public accounting firm for the calendar year ended December 31, 2005, thereby dismissing KPMG LLP (“KPMG”) effective immediately. The Company filed a Form 8-K dated March 29, 2005, with the SEC announcing this change. As required, a letter to the SEC from KPMG indicating KPMG’s agreement with certain statements made by the Company was also filed with this Form 8-K. These documents are available at www.sec.gov.

    The Audit Committee has selected E&Y as the Company’s independent registered public accounting firm to examine the consolidated financial statements of the Company for the 2007 calendar year. The Board seeks an indication from our stockholders of their approval or disapproval of the Audit Committee’s selection of E&Y as the Company’s independent registered public accounting firm for the 2007 calendar year.

    E&Y has been our independent auditor since its appointment in 1982.2005. No relationships existed other than the usual relationships between auditor and client. Representatives of KPMG LLPE&Y are expected to be present at the Annual Meetingannual meeting to respond to appropriate questions.  The auditorsquestions and will also have the opportunity to make a statement if theythe representatives desire to do so. If our stockholders do not ratify the appointment of E&Y at the annual meeting, the Audit Committee will consider such event in its selection of the Company’s independent registered public accounting firm for the 2008 calendar year. Additionally, even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the 2007 calendar year if it determines that such a change would be in the best interests of the Company and its stockholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE 2007 CALENDAR YEAR

AUDIT AND NON-AUDIT FEES
    The Audit Committee or its Chairman pre-approves the audit and Non-Audit Fees

non-audit services to be rendered to the Company, as well as the fees associated with such services. Generally, management will submit to the Audit Committee a detailed list of services that it recommends the Audit Committee engage the independent auditors to provide for the calendar year. The following table representsAudit Committee pre-approves certain audit and non-audit services and establishes a dollar limit on the amount of fees paidthe Company will pay for professional auditeach category of services. The Audit Committee is informed from time to time on the non-audit services renderedactually provided pursuant to the pre-approval process. During the year, the Audit Committee periodically reviews the types of services and dollar amounts approved and adjusts such amounts, as it deems appropriate. Unless a service to be provided by KPMG LLPthe independent auditors has received general pre-approval, it will require specific pre-approval by the Audit Committee. The Audit Committee also periodically reviews all non-audit services to ensure such services do not impair the independence of the Company’s independent registered public accounting firm. The Audit Committee approved all services provided by E&Y for the 2005 and 2006 calendar years. These services included the audit of the Company’s annual financial statements, audit of the Company’s internal control over financial reporting, review of the Company’s quarterly financial statements, tax consultation services, and consents for and review of registration statements filed with the SEC. See “Report of Audit Committee” set forth earlier for a discussion of auditor independence.

    The following table shows the fees billed by E&Y for audit and other services provided to the Company for the 2006 and 2005 calendar years ended December 31, 2004, and December 31, 2003. respectively:

 

 

 

2004

 

 

2003

 

 

 

 

 

Audit fees (1)

 

$

1,012,440

 

$

410,077

 

Audit-related fees (2)

 

$

27,828

 

$

26,888

 

Tax fees (3)

 

$

346,792

 

$

223,058

 

All other fees (4)

 

 

—  

 

 

—  

 

  2006 ($) 2005 ($)  
 Audit fees (1) 1,037,500 1,000,700 
 Audit-related fees – – 
Tax fees (2) –      26,320 
All other fees – – 

(1)

Audit fees consisted of the audit work performed inof the preparation ofCompany’s annual financial statements, as well as work generally onlyincluding the independent auditor can reasonably be expected to provide, such as statutory audits.

audit of management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, the review of the Company’s quarterly reports on Form 10-Q, and consents for and review of registration statements filed with the SEC.

(2)

Audit related fees consisted principally of audits of employee benefit plans and special procedures related to regulatory filings.

(3)

Tax fees consisted principally of assistance with tax compliance and reporting.

(4)

KPMG LLP did not bill the Company for any non-audit services in calendar years 2004 and 2003.

    The Audit Committee has considered whether the non-audit services provided by E&Y, including the services rendered in connection with income tax consultation, 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. E&Y did not bill the Company for any other services during calendar year 2005 or 2006.

Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Auditor


    The Audit Committee has the responsibility of appointing, setting compensation for and overseeing the work of the independent auditor and has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.

27


    Prior to engagement of the independent auditor for next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.


(1)

(1)

Audit services services include audit work performed in the preparation of financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, including comfort letters, statutory audits, and attestattestation services and consultation regarding financial accounting and/and or reporting standards.

(2)

(2)

Audit-related servicesservices are for assurance and related services that are traditionally performed by the independent auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.

(3)

(3)

Tax services services include all services performed by the independent auditor’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice.

(4)

(4)

Other feesare those associated with services not captured in the other categories. The Company generally doesn’t request such services from the independent auditor.

    Prior to the engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires the independent auditor and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the independent auditor for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requiredrequires specific pre-approval before engaging the independent auditor.

    The Audit Committee may delegate pre-approval authority to one or more of its members. The members to whom such authority is delegated must report, for informational purposes only, the pre-approval decisions to the Audit Committee at its next scheduled meeting.

Expenses Related to Sarbanes-Oxley Compliance

          The Company remains proactive in its approach to implementing and adhering to the regulations imposed by the Sarbanes-Oxley Act of 2002.  As such, the Company incurred a substantial amount of additional expense due to the increase in legal, accounting, insurance, Board and Committee fees. For calendar year 2003, the Company incurred $1.8 million in additional expense. It is estimated that the Company has incurred additional expense of $2.2 million in calendar year 2004.  It is anticipated that at least $1.0 million of these expenses will continue to recur each year.

SUBMISSION OF STOCKHOLDER PROPOSALS

          In order for a proposal by a stockholder to be presented at an Annual Meeting of the Company’s stockholders, the proposal must be included in the related Proxy Statement and proxy form.  For a stockholder proposal to be included in the Proxy Statement and proxy form for the Annual Meeting of Stockholders in 2006, the proposal must: 1) be received by the Company at its home office, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas 72745, Attention: Johnelle D. Hunt, Secretary, on or before November 4, 2005, and 2) concern a matter that may be properly considered and acted upon at the Annual Meeting in accordance with applicable laws, including the Company’s Bylaws and Rule 14a-8 of the Securities Act.

28


WHERE YOU CAN FIND MORE INFORMATION

          The Company files reports, Proxy Statements, and other information with the SEC.  You can read and copy these 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 1-800-SEC-0330 for further information on the 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. 

STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING
ARE URGED
TO VOTE BY TELEPHONE, MAIL OR INTERNET.

IF YOU VOTE BY TELEPHONE OR THE INTERNET,
DO NOTNOT RETURN YOUR PROXY CARD


By Order of the Board of Directors


JOHNELLE D. HUNT


Corporate Secretary

29


PROXY

This Proxy is being solicited on behalf of the Board of Directors of:



J.B. HUNT TRANSPORT SERVICES, INC.
615 J. B. Hunt Corporate DriveC/O COMPUTERSHARE INVESTOR SERVICES
Lowell, Arkansas 72745P.O. BOX 43078
PROVIDENCE, RI 02940-3078


Your vote is important. Please vote immediately.

Vote-by-Internet

OR

Vote-by-Telephone

Log on to the Internet and go to

Call toll-free

http://www.eproxyvote.com/jbht

1-877-PRX-VOTE (1-877-779-8683)

VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the Annual Meeting. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER
COMMUNICATIONS
If you would like to reduce the costs incurred by J.B. Hunt Transport Services, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.

VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the Annual Meeting. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to J.B. Hunt Transport Services, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.

If you vote over the Internet or by telephone, please do not mail your card.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:JBHUN1KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
J.B. HUNT TRANSPORT SERVICES, INC.

xThe Board of Directors recommends a vote FOR Proposals 1 and 2.

Vote on DirectorsFor
All		Withhold
All		For All
Except

PleaseTo withhold authority to vote for any individual nominee(s), mark your vote as in this sample

          The undersigned hereby constitutes and appoints Wayne Garrison and Kirk Thompson or either of them, proxies for the undersigned, with power of substitution, to represent the undersigned and to vote all of the shares of common stock of J.B. Hunt Transport Services, Inc. (the “Company”) which the undersigned is entitled to vote at the Annual Meeting of shareholders of the Company to be held on April 21, 2005, at the offices of the Corporation, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas, and at any adjournment thereof.

          This proxy when properly executed will be voted in the manner directed herein by the undersigned.  IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.

The Board of Directors recommends a vote FOR Proposals 1, 2, and 3.

1.“For All Except” and write the number(s) of the nominee(s) on the line below.

1. 
Election of Directors


Nominee

Vote For

Withhold Authority

Nominees:

Johnelle D. Hunt

o

o

oo

01)  Wayne Garrison
02)  Gary Charles George
03)  Bryan Hunt

Kirk Thompson

o

o

Leland E. Tollett

o

o

John A. White

o

o

Vote on Proposals

Coleman H. Peterson

o

o

ForAgainstAbstain

                    I wish to vote FOR all of the foregoing nomineeso

2.

To approve an amendment toratify the Company’s articlesappointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for calendar year 2007.

FORo

AGAINSTo

ABSTAIN

o

incorporation to increase the number of authorized shares

of common stock

______

______

______

3.

To amend the Company’s Management Incentive Plan

______

______

______

4.

To transact such other business as may properly come before the meeting or any adjournments thereof.

The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof.

NOTE:  Please mark, sign, date and promptly return this proxy card in the enclosed envelope. Please sign exactly as your name(s) appear(s) above. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized persons.

For address changes and/or comments, please check this box and write them on the back where indicated.

oYesNo

The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof.

ooSignature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)Date


Signature_______________________

Date:_________

Signature_______________________

Date_________

______ ChangePROXY
This Proxy is being solicited on behalf of Address/Comments on Reverse Sidethe Board of Directors of:


J.B. HUNT TRANSPORT SERVICES, INC.


615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745

Dear Stockholder:

Stockholders      The undersigned hereby constitutes and appoints Wayne Garrison and Kirk Thompson or either of them, proxies of the undersigned, with power of substitution, to represent the undersigned and to vote all of the common stock of J.B. Hunt Transport Services, Inc. can now take advantage(the “Company”) which the undersigned is entitled to vote at the Annual Meeting of several new services available through our transfer agent, EquiServe Trust Company, N.A.  These services include:

Electronic Delivery of proxy materials

To take advantageStockholders of the opportunityCompany to receive future copiesbe held on May 2, 2007, at the offices of the Annual ReportCorporation, 615 J.B. Hunt Corporate Drive, Lowell, Arkansas, and Proxy Statement via the Internet, please sign-up at www.econsent.com/jbhtany adjournment thereof.

By enrolling in eDelivery, you will receive an e-mail notificationThis proxy when future annual reports and proxy statements become available.  Youproperly executed will be able to view these documents via the Internet and then vote your shares via the Internet.

Vote by Internet

Stockholders may now vote their shares via the Internet by following the directions on the reverse side of this card.  Votes may be cast by Internet up until 11:59 p.m. on the day before the Annual Meeting

Internet Account Access

Stockholders may now access their accounts on-line at www.equiserve.com.
Among the services offered through Account Access, certificates histories can be viewed, address changes requested and tax identification numbers certified.

Transfer Agent Contact Information

EquiServe Trust Company, N.A.

Telephone Domestic:

877-282-1168

Attn: Shareholder Relations

Telephone Foreign:

816-843-4299

PO Box 219045

TDD/TTY for Hearing Impaired:

800-952-9245

Kansas City, MO  64121-9045

HAS YOUR ADDRESS CHANGED?                    DO YOU HAVE ANY COMMENTS?


(If you have writtenvoted in the above space, please markmanner directed herein by the corresponding box on the reverse side of this card)undersigned. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTEDFOR ALL PROPOSALS.

You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. The Proxy Committee cannot vote yourthe shares unless you sign and return this card.

Address Changes/Comments:
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