Security Ownership of Management 

The following table sets forth the number of shares of common stock that each of Spartan Motors' directors and nominees for director, each of the named executive officers (as that term is defined in the Summary Compensation Table on page 17below), and all directors and executive officers (including all named persons) as a group beneficially owned as of March 24, 2014:28, 2016:

*Less than 1%.

Spartan Motors' Board members and executives are expected, but not required, to attain ownership of stock, within 5 years of being named to their position, at least equal to the minimum expectations as follows: Outside Directors – 5 times annual retainer; CEO – 4 times annual salary; all other named executive officers – 2 times annual salary. Shares owned directly by Board members or executives, shares owned through a 401(k) plan or individual retirement account, unvested restricted shares and shares previously owned by executives but placed in irrevocable trusts for family members are counted toward these ownership expectations. Unexercised options or stock appreciation rights are not counted toward the ownership expectations.

Spartan Motors' Board of Directors currently consists of seven directors.nine directors; however, as described below, one director is retiring from the Board as of the 2016 annual meeting. The Board of Directors is divided into three classes, with each class as nearly equal in number as possible. Each class of directors serves a successive three-year term.

Biographical information concerning Spartan Motors' directors (including the persons who are nominated for election to the Board of Directors) and the named executive officers is presented below.

Nominees for Election as Directors with Terms Expiring in 20172019

Richard R. CurrentRonald Harbour (age 69) has been a Director since 2008. From November 1999 to December 2010, Mr. Current, a CPA, served as Vice President and Chief Financial Officer of Neogen Corporation.  Prior to joining Neogen, Mr. Current served as Executive Vice President and Chief Financial Officer of Integral Vision, Inc. from 1994 to 1999 and as Vice President and Chief Financial Officer of The Shane Group, Inc., a privately held company, from 1991 to 1994. Prior to this, Mr. Current practiced with the public accounting firm Ernst & Young LLP for 24 years.  He served as Managing Partner from 1986 to 1991 at its Lansing, Michigan office.  Mr. Current also currently serves on the board of directors of Summit Community Bank in East Lansing, Michigan; Michigan Millers Mutual Insurance Company in Lansing, Michigan; and ASU Group, in Okemos, Michigan.  Mr. Current's 19 years' experience as a Chief Financial Officer of two separate public companies and one private company, in addition to his 24 years as an auditor and experience on several boards of directors, allows him to provide valuable insight and expertise to the Board.  This is particularly true with respect to the Board's oversight of financial reporting, internal controls, and similar issues.  Mr. Current currently serves as the Chairman of the Audit Committee of the Board.

Hugh W. Sloan, Jr. (age 73) has been a Director since 2007 and has served as Chairman of the Board since 2010.  From 1998 to 2008, Mr. Sloan served as the Deputy Chairman of the Board of Directors of Woodbridge Foam Corporation, a leading supplier of urethane technologies to the automotive industry. He continues to serve on Woodbridge's Board of Directors.  For more than 20 years, Mr. Sloan held various management positions with Woodbridge, including President of the company's automotive group.  From 1985 to 2013, Mr. Sloan served as a Director of Manulife Financial Corporation, a leading Canadian-based financial services group whose stock trades on the New York, Toronto, and Pacific Stock Exchanges. From 1998 to March 2013, Mr. Sloan also served as a Director of Wescast Industries, an automotive supplier whose stock traded on the Toronto Stock Exchange.  Mr. Sloan's current and previous roles with companies within the automotive industry, including publicly-held companies, allow him to provide valuable insight and experience to the Board. Mr. Sloan currently serves as the Chairman of the Nominating and Corporate Governance Committee of the Board.

Andrew M. Rooke (age 56) was appointed to the Board of Directors in February of 2012. Mr. Rooke currently serves as President and Chief Operating Officer of Manitex International, Inc., a manufacturer of engineered lifting equipment, a position he has held since 2007.  From 2002 until 2006, Mr. Rooke served as Vice President of Finance for GKN Sinter Metals, a Tier 1 supplier of components to the auto industry, and, from 1999 until 2002, as Finance Director of various GKN off highway and auto components divisions.  Mr. Rooke holds a Bachelor of Arts degree in Economics from the University of York, England, and is a Chartered Accountant.  Mr. Rooke's experience and knowledge in finance, international business, manufacturing, and the automotive industry allow him to provide valuable insight and experience to the Board.

Directors with Terms Expiring in 2016

Ronald Harbour (age 57)59) has been a Director since 2009. Mr. Harbour serves as Senior Partner – Global Automotive Manufacturing for Oliver Wyman, a global management consulting firm. He was the President of Harbour Consulting prior to its acquisition by Oliver Wyman in 2007. Mr. Harbour also serves on the Board of Directors of threetwo privately held automotive companies: US Manufacturing, a manufacturer of truck axles; Techform Products, a manufacturer of body hardware; and Empire Electronics Remanufacturing Company, an automotive wiring manufacturer.components remanufacturer; and Light Guide Systems, a producer of quality assurance process equipment. In addition, Mr. Harbour serves on the Board of Lincoln Educational, a public company providing schooling for automotive repair skills. Over his 30 years of experience as a management consultant, Mr. Harbour has gained a deep and broad knowledge of the automotive industry and particular expertise in the various unique management and operational issues facing participants in the industry. Mr. Harbour currently serves as the Chairman of the Human Resources and Compensation Committee of the Board.

Richard F. Dauch (age 53)55) has been a Director since 2010. In 2011, Mr. Dauch became President and CEO of Accuride Corporation, a manufacturer and supplier of commercial vehicle components. Prior to that, Mr. Dauch served as President and CEO of global mechanical fastener supplier, Acument Global Technologies, Inc. He held prior leadership roles during a 13-year career at American Axle & Manufacturing, a global supplier of driveline, drive train and chassis systems, as well as at United Technologies Carrier Corporation, after concluding an 11-year career in the United States Army. Mr. Dauch is a member of the board of directors of Accuride Corporation, an SEC registrant and is a member of the Heavy Duty Business Forum. He also serves on the board of directors of the Army Football Club at West Point. Mr. Dauch is a graduate of the United States Military Academy at West Point and the MIT "Leaders For Manufacturing" program. Mr. Dauch's 2930-plus years of cumulative leadership experience in a broad range of disciplines allow him to provide valuable insight and experience to the Board. Mr. Dauch currently serves as the Chairman of the Nominating and Corporate Governance Committee of the Board.

Directors with Terms Expiring in 2015

John E. SztykielJames A. Sharman (age 57) has beenwas appointed as a Director since 1988.in January 2016. Since 2014, Mr. SztykielSharman has been Spartan Motors' President since December 1992 and Chief Executive Officer since June 2002.  He was theserved as Chief Operating Officer from December 1992 to June 2002.of Coyote Logistics, a privately held freight broker and logistics services provider. From 2006 through 2014, Mr. Sztykiel joinedSharman served as Managing Partner of Truecast Capital, LLC, an investment firm. His work history includes President and CEO of World Kitchen, Inc. and Rubicon Technology, as well as Vice President and General Manager, Latin America, for the CompanyCase Corporation. He served as Directorthe Commanding Officer of Marketingan Engineering Battalion in 1985, when Spartan Motors had $10 million in sales,the United States Army and has been instrumental in its growth, evolution and diversification    Prior to joiningwas an Assistant Professor at the CompanyUnited States Military Academy, West Point. Mr. Sztykiel was employed in various capacities by Burroughs Corporation (now Unisys) and Eaton Corporation. On November 1, 2012 Mr. Sztykiel was appointed to the Board of Directors of UQM Technologies, a publicly traded developer of alternative energy technologies.  Mr. SztykielSharman also serves on the Board of Directors of Standard Solar, Inc., a privately held solar electric systems company. Mr. Sharman’s extensive business experience, including international management experience, allows him to provide valuable insight to the Lansing Economic Area Partnership,Board.

Directors with Terms Expiring in 2018

Daryl M. Adams (age 54) was appointed President and CEO of Spartan Motors effective February 19, 2015, and was appointed to the Public Relations CommitteeBoard on December 10, 2014. Mr. Adams joined the Company in connection with his appointment as Chief Operating Officer on July 31, 2014. Prior to joining Spartan Motors, Mr. Adams served for seven years as CEO of the Recreation Vehicle Industry Association, theMidway Products Group, a privately-held Tier One automotive supplier. Prior to that, he held a succession of management positions over a 17-year career with Lear Corporation, including senior leadership roles in Lear's North American and European operations. Mr. Adams holds a Master of Business Administration degree from Michigan State University Athletic Director Advisory Council and was past presidenta Bachelor of the Fire Apparatus Manufacturers' Association (FAMA) Board.Science degree in Industrial Management and Manufacturing from Lawrence Institute of Technology. As the current President and CEO of the Company, Mr. Sztykiel'sAdams' participation on the Board is of critical importance in terms of the Board's oversight of the Company's operations and strategic direction.

Kenneth KaczmarekJames C. Orchard (age 74)65) was appointed as a Director of Spartan Motors on February 6, 2015. From 2008 until 2014, Mr. Orchard served as CEO of Dayco, LLC, a privately-held supplier of engine parts and systems to the automotive industry. Mr. Orchard has served in executive and leadership positions in the automotive, truck, and aftermarket parts industries for the past 47 years, and currently serves on the Board of Directors of BBB Industries, a leading supplier and re-manufacturer of rotating electrical, steering gear and caliper products to the North American vehicle aftermarket. Mr. Orchard's vast experience and leadership in the automotive industry allow him to provide valuable insight and expertise to the Board.

Directors with Terms Expiring in 2017

Richard R. Current (age 71) has been a Director since 2003.2008. From November 1999 to December 2010, Mr. Kaczmarek brings nearly four decadesCurrent, a CPA, served as Vice President and Chief Financial Officer of automotive and heavy-truck industry experience to the Board of Directors.Neogen Corporation. Prior to joining the Board of Directors,Neogen, Mr. Kaczmarek was an independent consultant to the automotive industry from 1996 to 2000.  From 1994 to 1996, Mr. Kaczmarek had various executive responsibilities, including serviceCurrent served as Executive Vice President of Volvo Truck Finance during its start-up phase.  From 1981 to 1994, he was theand Chief Financial Officer of Integral Vision, Inc. from 1994 to 1999 and Executiveas Vice President and Chief Financial Officer of FinanceThe Shane Group, Inc., a privately held company, from 1991 to 1994. Prior to this, Mr. Current practiced with the public accounting firm Ernst & Young LLP for 24 years. He served as Managing Partner from 1986 to 1991 at its Lansing, Michigan office. Mr. Current's 19 years' experience as a Chief Financial Officer of Volvo GM Heavy Truck Corporation.  Mr. Kaczmarek's vast experience within the automotive industry,two separate public companies and the heavy truck industryone private company, in particular, is valuableaddition to his participation24 years as an auditor and experience on several boards of directors, allows him to provide valuable insight and expertise to the BoardBoard. This is particularly true with respect to the Board's oversight of Directors.financial reporting, internal controls, and similar issues. Mr. KaczmarekCurrent currently serves as the Chairman of the Human Resources and CompensationAudit Committee of the Board.

Hugh W. Sloan, Jr. (age 75) has been a Director since 2007 and has served as Chairman of the Board since 2010. From 1998 to 2015, Mr. Sloan served on the Board of Directors of Woodbridge Foam Corporation, a leading supplier of urethane technologies to the automotive industry, where he served as Deputy Chairman of the Board from 1998 to 2008. For more than 20 years, Mr. Sloan held various management positions with Woodbridge, including President of the company's automotive group. From 1985 to 2013, Mr. Sloan served as a Director of Manulife Financial Corporation, a leading Canadian-based financial services group whose stock trades on the New York, Toronto, and Pacific Stock Exchanges. From 1998 to March 2013, Mr. Sloan also served as a Director of Wescast Industries, an automotive supplier whose stock traded on the Toronto Stock Exchange. Mr. Sloan's current and previous roles with companies within the automotive industry, including publicly-held companies, allow him to provide valuable insight and experience to the Board.

Andrew M. Rooke (age 58) was appointed to the Board of Directors in February of 2012. Mr. Rooke currently serves as President and Chief Operating Officer of Manitex International, Inc., a manufacturer of engineered lifting equipment, a position he has held since 2007. From 2002 until 2006, Mr. Rooke served as Vice President of Finance for GKN Sinter Metals, a Tier 1 supplier of components to the auto industry, and, from 1999 until 2002, as Finance Director of various GKN off highway and auto components divisions. Mr. Rooke holds a Bachelor of Arts degree in Economics from the University of York, England, and is a Chartered Accountant. Mr. Rooke's experience and knowledge in finance, international business, manufacturing, and the automotive industry allow him to provide valuable insight and experience to the Board.

Retirement of Director

After 13 years of Board service, Mr. Ken Kaczmarek is retiring from the Board effective at the 2016 annual meeting of shareholders.

Pursuant to the Company's Corporate Governance Principles, each director is required to offer his or her resignation as of the first annual meeting of shareholders immediately following the date when he or she reaches age 74. In accordance with these Corporate Governance Principles, Mr. KaczmarekSloan offered his resignation as of the May 21, 20142015 annual meeting of shareholders. In reviewing Mr. Kaczmarek’s resignation offer, theThe Board of Directors has determined thatnot accepted this resignation as the Board believes it is in the best interests of the Company for Mr. Kaczmarek should fulfillSloan to continue serving on the Board through the expiration of his current term of office, which will expire at the 20152017 annual meeting of shareholders.

Executive Officers Who Are Not Directors

Lori L. WadeFrederick J. Sohm(age 50) was appointed Interim Chief Financial Officer and Treasurer in March of 2013 and was appointed46) joined Spartan Motors as its Chief Financial Officer effective February 24, 2014. Prior to that, Ms. Wade served as Executive Director of Finance since joining the Company in February of 2008.September 28, 2015. Prior to joining the Company, Ms. Wade spent more than 21 years at Eaton Corporation where sheMr. Sohm most recently served as Worldwide Sarbanes-Oxley Manager, Logistics Center Controllerthe Treasurer of ALTe Technologies, a start-up company that engineers and produces hybrid electric powertrain systems for the commercial vehicle market. Prior to joining ALTe Technologies in 2015, Mr. Sohm was the CFO of Warrior Sports, Inc., a position he held from 2009 to 2014. Prior to that, he held several executive and leadership positions in finance and accounting at various other financial management positions. In her more than six years with the Company, Ms. Wade has developed a thorough knowledge of the Company’s businessorganizations including ArvinMeritor, Inc., Kmart Corporation and financial operations.DaimlerChrysler Corporation.

John A. Forbes (age 54)56) has been serving as the President of Utilimaster Corporation, a subsidiary of Spartan Motors,our Delivery and Service Vehicles business unit since July 2010. Prior to that, he was the CFO of Utilimaster from May 2009 to July 2010, the CFO of Nautic Global Group LLC from 2007 to 2009, and the CFO of Adorn LLC from 2003 to 2007. Mr. Forbes has over 30 years of experience in serving various manufacturing industries in senior financial leadership roles. Mr. Forbes also has extensive experience with operations management, acquisitions, strategic planning, risk management, and banking relations. He currently serves on the Board of Directors of Patrick Industries, an SEC registrant that is a major manufacturer of component products and distributor of building products and materials to the RV and manufactured housing industries.

Steve Guillaume (age 48) was appointed as President of the Specialty Chassis and Vehicles business unit effective May 11, 2015. Mr. Guillaume joined Spartan Motors in January 2015 as Vice President of New Business Development and Joint Ventures. In this role, Guillaume was responsible for managing Spartan's joint ventures and leading business development initiatives across the organization. Prior to joining the Company, Mr. Guillaume began his career in finance and accounting, before eventually progressing into a plant controller role. Later, he transitioned to business development and general management where he held numerous senior leadership positions with Navistar, a leading manufacturer of commercial trucks, buses, defense vehicles and engines.

John W. Slawson (age 50) was appointed President of the Emergency Response business unit effective November 5, 2015. Prior to joining Spartan, Mr. Slawson served as the President and CEO of Horton Emergency Vehicles, a market-leading manufacturer of ambulances in North America and a member company of Allied Specialty Vehicles (ASV). Prior to joining Horton in 2011, he was the President and an equity partner of U.S. Tanker Fire Apparatus LLC. Mr. Slawson was previously the President of Oshkosh Specialty Vehicles, a manufacturer of command and law enforcement vehicles, and Director of Dealer Development and Distribution for Pierce Manufacturing, the largest fire apparatus manufacturer in North America. His career spans over 25 years, during which he has held executive positions and led teams within many world-class companies.

Arthur D. Ickes (age 68) was appointed70) is our Executive Officer – Special Projects, a position he has held since May 11, 2015. Prior to that role, Mr. Ickes served as the President of the Specialty Chassis and Vehicles segment infrom June of 2013. Prior2013 to that, Mr. Ickes servedMay 2015, as Senior Vice President of Operations of Spartan Motors from 2009 to 2013, and as Vice President of Operations of Spartan Motors from 2007 until 2010. Mr. Ickes has over 40 years of manufacturing and business leadership experience, much of which was with General Motors Corporation. Mr. Ickes also has extensive experience with operations management, acquisitions, strategic planning, manufacturing and product engineering, quality, materials management and product launch management.

Thomas T. Kivell (age 61)63) joined the Company as Vice President and General Counsel in November of 2008. Mr. Kivell joined Spartan from GE Aviation, where he served as general counsel to its Digital Systems business unit, and its predecessor, Smiths Aerospace, since 1996. During his tenure there, he was the senior legal staff member responsible for the Electronic Systems unit of Smiths Aerospace, and served as the sole attorney for Smiths Aerospace in the United States over a four-year period. In 2002, he was a founder of a new legal and compliance department for Smiths Aerospace, unifying several other legal and compliance departments. Prior to his position with GE Aviation and Smiths Aerospace, he was co-owner and CEO of a general design and contracting firm. Mr. Kivell also founded and managed a private law practice. In his career, he has also served in legal counsel and contract management positions for Armored Vehicle Technologies Associated, a joint venture between General Dynamics Land Systems and FMC Corporation, and with General Dynamics Land Systems. Before beginning his legal career, Mr. Kivell was a project engineer for tracked military vehicle programs. Mr. Kivell also serves as a Vice President and as Secretary of Spartan Motors, Inc.

Board Meetings, Annual Meeting, and Committees 

Spartan Motors' Board of Directors held eight meetings during 2013.  With one exception, each2015. Each director who served as a director during 20132015 attended at least 75% of the aggregate of (1) the total number of Board of Directors meetings and (2) the total number of meetings held by all committees of the Board of Directors on which he served (held during the periods that he served on such committees). Mr. Dauch attended 73% ofPursuant to the aggregate ofCompany's Corporate Governance Principles, the total number of Board of Directors meetings andCompany expects all directors to attend the total number of meetings held by all committees on which he served during 2013.Spartan Motors does not have a policy regarding director attendance at annual shareholder meetings.  Typically,meeting, and typically all or most of the directors of Spartan Motorsdo attend the annual shareholder meeting. AllIn 2015, six of the eight board members who were then directors of Spartan Motors who were directors at that time attended the annual meeting of shareholders in 2013.shareholders. Independent directors also meet regularly in executive sessions without the presence of management.

The Board of Directors has determined that Messrs. Current, Kaczmarek, Sloan, Harbour, Dauch, and Rookeall directors, other than Mr. Adams, are "independent," as that term is defined in Rule 4200(a)(15) of the Nasdaq Marketplace Rules.

The Board of Directors has three standing committees: the Audit Committee, the Human Resources and Compensation Committee, and the Corporate Governance and Nominating Committee. Information regarding each of the committees as of the mailing date of this Proxy Statement is as follows:

Audit Committee.  The.The Audit Committee has been established in accordance with the Securities Exchange Act of 1934. Its primary purpose is to provide assistance to the Board of Directors in fulfilling its oversight responsibility relating to: Spartan Motors' financial statements and the accounting and financial reporting process; Spartan Motors' systems of internal accounting and financial controls; the qualification and independence of its independent registered public accounting firm; the annual independent audit of Spartan Motors' financial statements; legal and regulatory compliance; and ethics issues. Among other things, the Audit Committee oversees the integrated audit of the financial statements and internal control over financial reporting and is directly responsible for the selection, appointment, compensation, retention and oversight of the work of the independent registered public accounting firm engaged by Spartan Motors, and exercises direct oversight of the Company's Manager of Business Risk. The Audit Committee operates pursuant to a written charter adopted by the Board of Directors that is available for viewing at the Company's website, www.spartanmotors.com.

The Audit Committee has a Pre-Approval Policy related to the audit and non-audit services performed by the independent registered public accounting firm. All services provided by the independent registered public accounting firm engaged by the Company are within general pre-approval limits; or, up to a certain dollar amount, approved by the Chairman of the Audit Committee, who must communicate the approval to the full Audit Committee; or, above a certain dollar amount, approved by the full Audit Committee. The general pre-approval limits are detailed as to each particular service and are limited by a specific dollar amount for each type of service.

The Audit Committee meets the definitions of an "audit committee" under applicable Nasdaq and SEC rules. Each member of the Audit Committee satisfies the applicable Nasdaq and SEC independence standards for such committee members. Messrs. Current (Chairman), Sloan, Kaczmarek, Dauch, Harbour,Rooke, and RookeSharman are members of the Audit Committee. The Board of Directors has determined that Messrs. Current, Rooke, and Kaczmarek are audit committee "financial experts" as the term is defined in rules of the Securities and Exchange Commission and all sixseven are Independent Directors as defined by Nasdaq. The Audit Committee held nineeight meetings during 2013.2015.

Human Resources & Compensation Committee. The responsibilities of the Human Resources & Compensation Committee include exercising oversight over the development of competitive compensation plans that ensure the attraction, retention and motivation of key associates, as well as recommending the cash and other incentive compensation, if any, to be paid to Spartan Motors' executive officers. In addition, the Human Resources & Compensation Committee is responsible for reviewing and making recommendations to the Board of Directors regarding stock incentives awarded under Spartan Motors' stock incentive plans, reviewing all material proposed stock incentive plan changes and determining the employees to whom stock incentives will be granted, the number of shares covered by stock incentive, and the terms and other matters associated with equity-based compensation awards.

The Human Resources and Compensation Committee also determines the employees to whom stock incentives will be granted, the number of shares covered by stock incentive, and the terms and other matters associated with equity-based compensation awards.

The Human Resources and Compensation Committee operates pursuant to a written charter adopted by the Board of Directors. The Human Resources and Compensation Committee charter is available on our website, www.spartanmotors.com. The Human Resources and Compensation Committee does not delegate to other persons the duties with which it is charged under the charter. For specific information regarding the processes and procedures of the Human Resources and Compensation Committee, see the "Compensation Discussion and Analysis" section of this Proxy Statement.

Messrs. KaczmarekHarbour (Chairman), Sloan, Harbour, Current, Dauch, and RookeOrchard are members of the Human Resources and Compensation Committee. Each member of the Human Resources and Compensation Committee satisfies the applicable Nasdaq and SEC independence standards for such committee members. The Human Resources and Compensation Committee held fivesix meetings during 2013.2015.

The Human Resources and Compensation Committee has reviewed all components of the Chief Executive Officer's compensation and the compensation of the other executive officers who are named in the Summary Compensation Table set forth later in this Proxy Statement, including salary, bonuses, equity and other incentive compensation, accumulated realized and unrealized stock options, stock appreciation rights and restricted stock gains, the dollar value to the executive and the cost to Spartan Motors of all perquisites and other personal benefits.

Based on its review described above, the Human Resources and Compensation Committee found Mr. Sztykiel's and the named executive officers' total compensation in the aggregate to be appropriate and not excessive.  All recommendations of the Human Resources and Compensation Committee with respect to 2013 compensation were unanimous and were approved and adopted by the Board of Directors without modification.  For more information, see the "Compensation Discussion and Analysis" section of this Proxy Statement.

Corporate Governance andNominating Committee.  The Corporate Governance and Nominating Committee develops and recommends to Spartan Motors' Board of Directors criteria for the selection of candidates for director, seeks out and receives suggestions concerning possible candidates, reviews and evaluates the qualifications of possible candidates, and recommends to the Board of Directors candidates for vacancies occurring from time to time and for the slate of directors to be proposed on behalf of the Board of Directors at each annual meeting of shareholders. In addition to its responsibilities regarding director nominations, the Corporate Governance and Nominating Committee assists the Board of Directors in fulfilling its responsibility to the shareholders and in complying with applicable rules and regulations relating to corporate governance. Specifically, the Corporate Governance and Nominating Committee develops and recommends corporate governance principles that address Board independence and leadership, Board size and composition, meetings and committee structure, and other governance matters. In addition, the Committee reviews the Company's adherence to established corporate governance principles and provides reports and recommendations to the Board of Directors.

The Corporate Governance and Nominating Committee operates pursuant to a written charter that is available for viewing at the Company's website, www.spartanmotors.com.

The Corporate Governance and Nominating Committee will consider candidates who display high character and integrity; are free of any conflict of interest that would violate any applicable law or regulation or interfere with the proper performance of the responsibilities of a director; possess substantial and significant experience that would be of particular importance to Spartan Motors in the performance of the duties of a director; have sufficient time available to devote to the affairs of Spartan Motors in order to carry out the responsibilities of a director; and have the capacity and desire to represent the balanced, best interests of the shareholders as a whole.

The Committee believes the foregoing qualities are the most important qualifications for any director or director nominee; however, in identifying candidates for directors, the Board considers other attributes that may make a person a strong director. One such attribute that is considered is the potential diversity of viewpoint that a potential candidate would likely bring to the Board of Directors, which could be the result of the person's background, current occupation, career history, and other factors.

As the need to make changes or additions to the Board arises, the Committee gives consideration to the Board size, experiences, and needs. The Committee may use outside resources, including consultants retained by the Committee, to assist in the process of establishing the criteria for director candidates, establish a process to identify potential candidates, and assist in the introduction of potential candidates to the Committee. Regardless of how they are identified, candidates must understand, accept, and value the culture and history of Spartan Motors, Inc.

Nominations of candidates for election to the Board of Directors of Spartan Motors at any annual meeting of shareholders or at any special meeting of shareholders called for election of directors may be made by the Board of Directors or, pursuant to the process described below, by a shareholder of record of shares of a class entitled to vote at such annual or special meeting of shareholders. The Corporate Governance and Nominating Committee applies the same standards and qualification requirements to all director nominees, regardless of the party making the director nomination.

Each member of the Corporate Governance and Nominating Committee satisfies the applicable Nasdaq and SEC independence standards for such committee members. Messrs. Dauch (Chairman), Sloan, (Chairman),Harbour, Kaczmarek, and Current are the members of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee held foursix meetings during 2013.2015.

Shareholder Nominations of Directors. The Corporate Governance and Nominating Committee will consider nominees for election to the Board of Directors submitted by shareholders. Spartan Motors' bylaws provide that any shareholder entitled to vote generally in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice of the shareholder's intent to make a nomination or nominations has been given to Spartan Motors' Secretary at least 120 days before the one-year anniversary date of the notice of the previous year's annual meeting if the meeting is an annual meeting, and not more than seven days following the date of notice of the meeting if the meeting is a special meeting at which directors will be elected. Each such notice to the Secretary must include:

Board Leadership Structure; Role in Risk Oversight

The Company believes the leadership structure of its Board of Directors is appropriate in light of the size of the Company, its organizational structure, its strategies, and similar factors. Although Mr. Sztykiel,Adams, our President and CEO, serves as a director, the Board of Directors is chaired by Mr. Hugh Sloan, a non-employee director who meets Nasdaq standards for being an independent director. The Company believes this separation of responsibility is appropriate in order to provide independent Board oversight of and direction for the Company's executive management team, led by Mr. Sztykiel.Adams. The Company has maintained this leadership structure (i.e., with separate individuals serving as the President/CEO and Chairman of the Board) since 2002.

The Company believes the Board plays an appropriate role in the risk oversight of the Company and its business. The Board's risk oversight function is largely carried out through the Board's independent oversight of the executive management team and, in particular, its oversight of the various operational, industries, economic, and other risk factors faced by the Company. The Board is an active Board that meets regularly with consistent input from all directors. All directors butexcept for Mr. SztykielAdams have been determined to meet the independence standards of applicable Nasdaq rules. In addition, the Company believes that the strength and experience of its directors is important to their independent oversight of the executive management team.  Those members of the executive management team who have particular risk management responsibilities, including the CEO, the CFO, General Counsel, and the Manager of Business Risk report directly to the Board of Directors on a regular basis. In addition, the Board regularly hold sessions of the independent directors only, without the presence of any employee directors or other executives of the Company.

In addition to the foregoing, the Board of Directors of the Company conducts certain risk oversight activities through its committees with direct oversight over specific functional areas. These functional areas are described in more detail on the preceding pages for each Committee's responsibilities.

Finally, the Board works to ensure that management is properly focused on the appropriate strategic risks and initiatives to grow the business through acquisitions, organic growth and alliances by, among other things, reviewing and discussing the performance of executive management and conducting succession planning for key leadership positions.

Communicating with the Board

Shareholders and interested parties may communicate with members of Spartan Motors' Board of Directors by sending correspondence addressed to the Board as a whole, a specific committee, or a specific Board member c/o Thomas T. Kivell, Secretary, Spartan Motors, Inc., 1541 Reynolds Road, Charlotte, Michigan 48813. All such communications are forwarded to the appropriate recipient(s).

Compensation Discussion and Analysis –

Compensation Philosophy and Objectives

The Company’sCompany's executive compensation philosophy is to provide competitive levels of compensation and incentives to achieve strong financial performance. The Company’sCompany's executive compensation policies are designed to achieve the following five primary objectives:

The Human Resources and Compensation Committee sets management compensation at levels that the Compensation Committee believes are competitive with other companies in Spartan Motors' industry.

The advisory vote on executive compensation was conducted at our annual meeting of shareholders in 2013,2015, based on the disclosure of our executive compensation in the proxy statement for that meeting.  Of the shares of common stock represented at that meeting in person or by proxy, approximately 95%92% of the shares voted to approve the resolution, 3%6% voted against the resolution, and 2% abstained. Our Board considered the results of this vote to be generally supportive of the Company's compensation policies and programs and did not make any changes to such policies and programs as a result of such vote.

Elements of Compensation

Executive compensation consists of both cash and equity and is comprised of the following elements, each of which is described below:

Each component of executive compensation is designed to accomplish one or more of the five compensation objectives described above. The total compensation for executives is structured so that a majority of the total earnings potential is derived from performance-based incentives to encourage management to adopt an ownership mentality and take appropriate risks. The elements of the executive compensation program are described in detail below.

The Human Resources and Compensation Committee believes that the percentage of an executive's total compensation that is "at risk" should increase as the executive's responsibilities and ability to influence profits increase. For this reason, the percentage of executive officers' potential compensation that is based upon bonuses and stock plan awards is larger relative to other employees.

The Spartan Motors, Inc. Leadership Team Compensation Plan (the "LTC Plan") sets forth the framework for compensation of the Company's executive officers and other key employees, including each of the named executive officers shown in the tables below. The LTC Plan is intended to provide management with incentives to choose strategies and investments that maximize shareholder value, utilize a financial measurement consistent with the market's evaluation of Spartan Motors' performance, and communicate Spartan Motors' financial objectives in a clear and quantifiable manner. The Human Resources and Compensation Committee is responsible for annually reviewing the provisions of the LTC Plan and reviewing all payouts under the plan. The LTC Plan was adopted by the Board of Directors April 6, 2015.

Base Salary

Base salary is a fundamental component of the Company's compensation system, and overall competitive salary levels are necessary to attract and retain well-qualified executives. The Company generally setsCompany’s intention is to set base salary levels of its executive officers slightly lower than prevailingat median market rates, with the expectation that cash bonuses and equity based compensation will allow the executive to receive overall compensation that is at or above market rates, providing that certain performance objectives are met. The Human Resources and Compensation Committee determines recommended base salaries for executive officers by evaluating the responsibilities of the position, the experience of the individual, the performance of Spartan Motors, the performance of the individual, the competitive marketplace for similar management talent, and other relevant factors. The Committee does not give specific weight to any particular factor. Using these same factors, the Committee may recommend base salary adjustments on a periodic basis to maintain the desired levels of base salaries for Spartan Motors' executives. As stated above, total compensation for executives is structured so that a majority of the total earnings potential is derived from performance-based incentives to encourage management to adopt an ownership mentality.

Aon HewittIn 2014, Mercer was engaged in 2010 to benchmark the salaries of the executive officers of Spartan Motors. Details regarding thethis benchmarking process appear below under the heading "Human Resources and Compensation Committee Processes and Procedures; Participation of Management; Benchmarking Process." ThisThe Mercer benchmarking process was completed in 2011.  In FebruaryJanuary of 2012,2015. Based on the Boardresults of Directors approved certain adjustments inthis benchmarking process, the annual base salaries forof Mr. Adams (our CEO) and Ms. Wade (our CFO at the executive officerstime) were increased to $480,000 and $242,000, respectively. The base salaries of Messrs. Forbes and Ickes did not change significantly from their 2014 levels. In response to recommendations from the Human Resources and Compensation Committee based on the performanceMercer benchmarking results, the Board approved additional increases in the base salary of Mr. Adams to $572,000 in August, 2015 and to $620,000 in April, 2016.

Prior to this benchmarking process in 2014, the individual executives and theCompany had not engaged a consultant to perform a benchmarking analysis since 2010. That earlier benchmarking process was completed in 2011.2011 and resulted in certain salary adjustments that took effect in 2012.  

The base salary for Ms. Wade was increased in connection with her appointment to Interim CFO in March 2013, as disclosed in the table below. In 2014 her base salary was increased to $220,000 in connection with her appointment to CFO in February 2014. The base salary for Mr. Schneider was increased to $250,000 in connection with his appointment as President of the Emergency Response Vehicles segment in April 2012 and to $255,000 in 2013. Except for these increases, there have been no changes to the base salaries for any of our named executive officers since 2012.

Cash Incentive Bonuses

In 2011,At the Boarddiscretion of Directors adopted the Spartan Motors, Inc. Executive Leadership Team Incentive Compensation Framework (the "ELT Plan") for the Company's executive management team, including each of the named executive officers shown in the tables below.  The ELT Plan is based on an economic value-added ("EVA") model, along with other pre-determined management objectives and business goals.  The ELT Plan is intended to provide management with incentives to choose strategies and investments that maximize shareholder value, utilize a financial measurement consistent with the market's evaluation of Spartan Motors' performance, and communicate Spartan Motors' financial objectives in a clear and quantifiable manner.  The Human Resources and Compensation Committee, is responsible for annually reviewingany bonus payable under the provisionsLTC Plan may be paid in the form of the ELTCompany's common stock.

The LTC Plan settingprovides an opportunity for our named executives to earn an annual cash bonus based upon achievement of the management objectivestop priorities for business performance which can include key metrics. The LTC Plan requires our CEO to annually revise the metrics and weightings based upon current business goals, and approving all payouts under the plan. The Committee has the authority and discretion to modify the ELT Plan, to modify the vesting or terms of any outstanding award,conditions and to setobtain approval of the goals forproposed framework from the ELT Plan each year.Human Resources and Compensation Committee.

Each participant's annual bonus is determined by multiplying (1) his or her target bonus percentage (which is determined separately for different categories of employees) by (2) thea Bonus Multiplier (described below) by (3) the participant's annual salary.

The target bonus percentage is a percentage of the participant's salary. The LTC Plan establishes a target bonus percentage of 80% of base salary and is expected to be between 40%for our CEO and 55% for each of the other named executive officers. For 2014, the Human Resources and Compensation Committee has set the target bonus percentage at 55% forexecutives (other than Mr. Sztykiel and Ms. Wade, and 40% for Mr. Forbes and all other executive officers.both of whom have left their officer positions).

For 2013, theThe Bonus Multiplier was determined based on three bonus multiplier metrics:  an EVA goal, operational objectives (MBOs), and a targeted sales goal.

EVA Metric:  The Human Resources and Compensation Committee set a target EVA for the Company for 2013, based on expected improvements in EVA from the prior year.  The Company defines EVA as net operating profit after tax, less a capital charge based on the assets employed in the business.  The EVA multiple used for the ELT Plan is a fraction or multiple of the target EVA, based on the actual EVA results for the particular year.bonus percentage. For example, if the net operating profit after tax forachievement of bonus metrics at exactly their target amounts would result in a given year, less the capital charge, was exactly 150 percentBonus Multiplier of the target EVA, then the EVA multiple would be 1.5 for that year, and this multiple would be expressed as "1.5X".    The floor for the EVA multiple (0X) will be set at the prior year's actual EVA, with expected improvement targets built from that starting point.  The EVA multiple will have a ceiling of 2X (200 percent of the target EVA).  For the year ended December 31, 2013, the EVA floor (0X) was -$13,850,000 and the goal (1X) was -$6,844,000.  The actual EVA multiple based on 2013 results was 0X.

MBO Metric:  The Human Resources and Compensation Committee established the MBOs the officers were expected to accomplish for 2013.   The MBO multiple had a floor of 0X (0 percent1X, while achievement of the objectives) andbonus metrics at double their target amounts would result in a ceilingBonus Multiplier of 1X (100 percent achievement of all of the objectives).  For the year ended December 31, 2013, the achieved MBO multiplier was 0.418X for all executive officers.

Sales Metric:  For 2013,2X. The threshold Bonus Multiplier is 0.5X. Annually, based on a proposal by our CEO, the Human Resources and Compensation Committee also establishedwill evaluate and establish, based upon the current key metrics, the incremental improvements required to attain an incremental Bonus Multiplier. The final Bonus Multiplier for a year may be a fractional value based upon prorating results within the target matrix.

The LTC Plan prohibits an annual sales target.cash bonus to our named executives for any year in which Spartan Motors incurs a net loss. However, the Board of Directors retains the right to make adjustments that it deems appropriate.

Executives subject to the plan for a partial year are eligible for annual bonuses on a prorated basis.

2015 Annual Incentive Compensation

For 2015, the following metrics were established for our named executives to earn an annual cash bonus pursuant to the LTC Plan:

Corporate Officers (CEO and CFO): The floorBonus Multiplier for the sales multiple (0X) was set at the prior year's actual sales, with expected growth built from that starting point.  The sales multiple had a ceiling of 2X (200 percent of the target sales level). For the year ended December 31, 2013, the achieved sales multiplier for the named executivecorporate-level officers was 0X.

For 2013,determined based on (1) the achievement of goals relating to Company-wide adjusted operating income and cash conversion cycle (the "Earnings Goals") and (2) the achievement of goals relating to pre-determined management objectives and key performance indicators (the "MBO Goals"). The final Bonus Multiplier was calculated by taking a weighted average of the three metrics described above, with the EVA metric, MBO metric and sales metric receivingdetermined using a weighting of 45%, 35%60% for the Earnings Goals and 20%, respectively. (The Human Resources and Compensation Committee retains40% for the right to change the weighting of the three metrics for any plan year.)  MBO Goals.

WhenBusiness Unit Presidents: The Bonus Multiplier for the ELT Plan parameters described above were appliedbusiness unit presidents was determined based on (1) the Earnings Goals; (2) the achievement of goals relating to their respective business units' operating income and cash conversion cycle (the "SBU Goals"); and (3) the awards made for 2013 performance, it resulted in aachievement of goals relating to pre-determined operational and strategic plan objectives (the "Plan Goals"). The final Bonus Multiplier was determined using a weighting of 0.084. However, in light of60% for the Company'sEarnings Goals, 20% for the SBU Goals, and 20% for the Plan Goals.

For 2015, due to the net loss for 2013,reported by the Human Resources and Compensation Committee determined there would beCompany, no bonusincentive bonuses were paid under the ELT PlanLTC plan. However, the Board of Directors awarded discretionary bonuses of $320,320 to any namedMr. Adams, $45,913 to Mr. Sohm, $109,086 to Mr. Forbes, $100,000 to Mr. Guillaume and $77,194 to Mr. Ickes for 2015. These awards were made in order to align the executives’ compensation with benchmarked amounts and recognize the executives’ efforts in implementing a turnaround strategy for the Company, and especially, the Emergency Response Vehicles segment. Such efforts included the construction of a new senior executive officer for 2013.team to focus on the implementation of and execution on new manufacturing, design, quality and marketing strategies. These turnaround efforts are expected to be a two to four year process that will lead to the Company’s return to profitability.

Although this is typically howRetiring CEO (Mr. Sztykiel): For 2015, the ELTCompany committed to pay Mr. Sztykiel a minimum cash bonus pursuant to the LTC Plan bonus is calculated, the Human Resources and Compensation Committee retains the discretion under the ELT Plan to modify the terms of any award and to set the goals for each plan year. For 2014, the current expectation is that the goals will vary from the EVA, MBO and sales metrics utilized for 2013.$50,000.

The ELT Plan generally requires that a portion of

2016 Annual Incentive Compensation

For 2016, the amount that would otherwise be payable to a participantmetrics for a given year be deferred or "banked."  The amounts thatannual cash incentive awards for our corporate officers and business unit presidents are banked accrue interest and may be paid in future years, but they are subject to forfeiture in accordance with the terms of the ELT Plan.  At the discretion of the Human Resources and Compensation Committee, any ELT bonus may be paid in the form of the Company’s common stock. For more details regarding these deferral features of the ELT Plan, see the "Non-Qualified Deferred Compensation" table on page 21 and accompanying narrative. Since no ELT Plan bonuses were paidsame as those for 2013, no amounts were banked pursuant to these deferral features.2015, as summarized above.

Long Term Incentives

Spartan Motors' equity compensation plans are designed to encourage long-term investment in Spartan Motors by participating executives and employees, more closely align executive and shareholder interests, and reward executive officers and other employees for building shareholder value. The Human Resources and Compensation Committee believes stock ownership by management and other employees is beneficial to all Spartan Motors, Inc. stakeholders. See the minimum stock ownership expectations for executive officers under "Security Ownership of Management" above.

Spartan Motors currently has the ability to grant equity-based compensation to its named executive officersexecutives under the Stock Incentive Plan of 2005, the Stock Incentive Plan of 2007 and the Stock Incentive Plan of 2012. The Human Resources and Compensation Committee administers all aspects of the plans and reviews, modifies (to the extent appropriate), and approves management's recommendations for awards.

Until 2005, absent unusual circumstances, the Human Resources and Compensation Committee had historically granted stock options on an annual basis to officers, employees, and directors who were employees of Spartan Motors and on a biannual basis to non-employee directors of Spartan Motors. In 2005, Spartan Motors began the practice of granting shares of restricted stock and stock appreciation rights to officers, key employees and non-employee directors, instead of stock options.

In 2008, the Company discontinued the granting of stock appreciation rights in lieu of restricted stock that vests over time. This was considered a better method to retain key personnel while rewarding them with equity awards that are aligned with longer term shareholder returns. In addition, restricted stock awards can be more effective at retaining key personnel in a volatile or depressed stock market. The Company believes that restricted stock helps the executives focus on creating shareholder value, while the time-based vesting feature provides a strong incentive for the executives to commit themselves to the Company for the long-term. Restricted stock awards also encourage executive officers to manage the Company from the perspective of an owner.

In 2013,connection with the Company granted sharesBoard's adoption of the LTC Plan in April 2015, the Board determined that all long-term equity compensation for 2015 and 2016 would be awarded in the form of time-vested restricted stock to each of the named executive officers, as shown in the compensation tables below.  In general, theor restricted stock awards granted during 2013 vest at a rateunits. The LTC Plan contemplates that, starting in 2017, 60% of 25% per year for a period of four years (as long as the executive remains employed with the Company) for Messrs. Sztykiel and Gorman and at a rate of 33% per year for a period of three years for each of the other named executive officers (other than Mr. Nowicki, who left the Companyan executive's long-term equity compensation would be payable in March 2013 and therefore was not granted any stock awards in 2013).  However, for all named executives, unvestedtime-vested restricted stock awards become immediately and fully vested on the date the executive becomes eligible for retirement if he or she is still employed with the Company at that time.  Under terms of the Company's equity compensation plans, Mr. Gorman became retirement-eligible on February 18, 2014.  As a result, all of his restricted stock awards became fully vested on such date.units and 40% would be payable in performance share units.

Quantity and Mix of Awards

Stock-based compensation for the Company's named executive officersexecutives is currently determined considering long term incentive compensation ("LTIC") targets and multiples. The amount of long term incentive compensationLTIC to be awarded to an executive each year (the "Annual LTIC Amount"“LTIC Award”) is to be determined consideringby multiplying (1) his or her target long term compensation rate ("LTIC Rate")percentage (which is determined separately for different categories of executives and detailed below for the named executive officers), multipliedemployees) by (2) the long term compensation multiple ("a LTIC Multiple")Multiplier (described below) and by (3) the executive'sparticipant's annual salary.

The target percentage is a percentage of the participant's salary. The LTC Plan establishes a target percentage for LTIC Rate is determined by the Human Resources and Compensation Committee and is expected to be 60 to 65 percentequity awards of 75% of base paysalary for our CEO and 60% for the Company's CEO, CFO and COO, and 30 percent of base pay for the Company's other named executive officers.executives (other than Mr. Sztykiel and Ms. Wade, both of whom have left their officer positions).

The LTIC MultipleMultiplier can range from 0% to 100% (0% to 200% for 2016, referred to as "0X" through "2.0X") and is determined consideringcalculated based on the combined performance of twoon three metrics:  a shareholder return metric and a strategic objective metric.

Shareholder ReturnTSR Metric: A portion Up to one half of the Annual LTIC Amount will beMultiplier is based on performance relative to a shareholder returnTSR metric. The TSR metric to be established annually by the Human Resources and Compensation Committee.   The shareholder return metric may consist of a return on invested capital (ROIC) target,is a comparison of Spartan Motors' total shareholder returnMotors’ TSR to a peer group of companies in similar industries or other shareholder returnfor the previous 12 months. The CEO will provide the data, the appropriate analysis, and make a recommendation as to the Company’s performance relative to the peer group. The Human Resources and Compensation Committee will make the final determination as to the appropriate TSR Metric.

The TSR is calculated using the change in share price since the start of the measurement period, along with dividends paid. The calculation assumes that dividends are reinvested and also adjusts for stock splits.

Spartan Motors' Financial Results: Up to one half of the LTIC Multiplier is based on achievement of established financial metrics as(e.g., EPS, operating income, cash conversion cycle, etc.). On an annual basis, the CEO will propose to the Human Resources and Compensation Committee deems appropriate.the financial metrics (and measurement metrics) based upon priorities discussed and derived during the annual planning process. Unless specifically weighted differently by the Board of Directors, each of the objectives will be equally weighted.

Strategic ObjectiveObjectives Metric: Up to one-half of the LTIC Multiplier is based on achievement of established strategic objectives. On an annual basis, the CEO will propose to the Human Resources and Compensation Committee establishes the strategic objectives (and measurement metrics) based upon the officers are expectedpriorities discussed and derived during the annual planning process. Unless specifically weighted differently by the Board of Directors, each of the objectives will be equally weighted.

2015 Long Term Incentive Compensation

For 2015, the following metrics were established for our named executives to accomplishearn LTIC awards pursuant to the LTC Plan:

TSR Metric:

The TSR goal was set as the Company’s TSR percentile rank for the year.period from January 1, 2015 through December 31, 2015 among the companies included in the Dow Jones Commercial Vehicles and Trucks index.

Spartan Motors' Financial Results: 

Spartan Motors' Financial Results for 2015 – comprised of 75% adjusted operating income and 25% Cash Conversion Cycle

Strategic Objectives: 

Company-wide strategic objectives relating to improving quality, reducing manufacturing costs and reducing product complexity, among others, were established in the first quarter of 2015.

The final LTIC Multiplier will generally beLTC multiplier for 2015 was determined considering an average of the two metrics described above, with the TSR and Spartan Motors’ Financial Results metrics each receiving a weighting of 40% and the Strategic Objectives metric receiving a weighting of 20%. Mr. Adams was contractually entitled to a minimum grant of 88,300 shares of restricted stock based on his offer letter at the time of his hire, and received an equal weighting; however,additional discretionary grant of 60,000 shares in response to a recommendation from the Human Resources and Compensation Committee retainsmade based on the right to changeMercer compensation benchmarking results. For the weightings of thesame reasons as set forth under “2015 Annual Incentive Compensation” above, metrics for any plan year.

Equity-based compensation payable to executive officers may be made in a combination of restricted stock grants and options at the discretion of the Human Resources and Compensation Committee.    The number of sharesCommittee made certain discretionary adjustments to the stock awards that would otherwise be granted for restricted share grants will be determined by dividingpayable pursuant the AnnualLTC Plan.

2016 Long Term Incentive Compensation

For 2016 LTIC Amount forawards, targets were established using the proportion of the award that isTSR Metric, Spartan Motors’ Financial Results and Strategic Objectives with weightings similar to be in the form of restricted stock by the average stock price over the preceding three years.  The number of stock options granted will be determined by dividing the Annual LTIC Amount for the proportion of the award that is to be in the form of stock options by the calculated Black-Scholes valuation of the options at the grant date.  For example, if one half of the grant is to be in the form of restricted shares and one half is to be in the form of stock options, the number of restricted shares to be granted will be determined by dividing half of the Annual LTIC amount by the average stock price over the preceding three years, and the number of stock options to be issued will be determined by dividing half of the Annual LTIC amount by the calculated Black-Scholes valuation of the options at the grant date. In 2013, all long term incentive compensation grants were made in the form of restricted stock. This is expected to be the case for 2014 as well.2015.

Chief Executive Officer

The Chief Executive Officer's compensation is based on the policies and objectives outlined above for all executive officers. The Human Resources and Compensation Committee believes that incentive compensation, designed to reward performance, should represent a significant percentage of Mr. Sztykiel'sthe CEO's potential compensation.  

Human Resources and Compensation Committee Processes and Procedures; Participation of Management; Benchmarking Process

The Human Resources and Compensation Committee of the Board of Directors develops and recommends to the Board of Directors Spartan Motors' executive compensation policies. The Human Resources and Compensation Committee also administers Spartan Motors' executive compensation program and recommends for approval to the Board of Directors the compensation to be paid to the Chief Executive Officer and other executive officers. The Human Resources and Compensation Committee consists of sixthree directors, none of whom is a current or former employee of Spartan Motors.

Other than Mr. Sztykielthe CEO and Ms. Wade,the CFO, none of the Company's named executive officersexecutives participate in the discussions with the Human Resources and Compensation Committee. Mr. SztykielThe Company's CEO and Ms. WadeCFO participate only to assist in the process of determining the compensation for executives other than themselves and to provide information to the Human Resources and Compensation Committee regarding Company performance, operations, strategies, and other information requested by the Human Resources and Compensation Committee.

The Human Resources and Compensation Committee's written charter provides that the Committee will review and make recommendations regarding the compensation of executive officers. Executive compensation decisions must be approved by a majority of the independent members of the Board of Directors.

The Human Resources and Compensation Committee periodically engages independent third party consultants to provide data and analysis regarding the compensation of executives at our peer group companies and at companies against whom we must compete for talent. The Human Resources and Compensation Committee uses this data to design and implement competitive compensation programs. Independent consultants engaged by the Human Resources and Compensation Committee do not answer to management. In 2010,2014, the Committee engaged Aon HewittMercer to benchmark officer salaries and other compensation incentives. This engagement was completed in 2011January, 2015, and was a factor utilized in determining the base salary adjustments for 2012 described above. No third party compensation consultants have been engaged sincethe named executive officers for 2015. Prior to this benchmarking process in 2014, the Company had not engaged a consultant to perform a benchmarking analysis since 2010. That earlier benchmarking process was completed.completed in 2011 and resulted in certain salary adjustments that took effect in 2012.

In performing the compensation benchmarking that was completed in 2011, Aon Hewitt2015, Mercer conducted a Total Compensation Measurement study against a custom group of companies.  In determining appropriate peer companies to use as a basis for comparison, Aon Hewitt worked with management under the directionbenchmarking analysis of the Human Resourcesnamed executive officers' compensation, including base salaries, long-and short-term incentives, and Compensation Committeeseverance practices, utilizing information from proxy disclosures and published surveys. A peer group was selected 22 specialty manufacturing and automotive organizations.consisting of durable goods manufacturers with revenues ranging from one-half to double that of Spartan Motors. Market median level salary information in the study reflects the pay for an executive with a median level of experience. All market data comparisons were size adjusted using revenue-based regression analysisaged forward to represent 50th percentile pay levels.  Additional raw statistics were also included in the analysis.February 1, 2015. The list of identified peer companies in this survey include: Alamo Group, Inc.; American Superconductor Corporation; Ameron International Corporation; Brady Corporation; Dorman Products, Inc.; Drew Industries, Incorporated; ESCO Technologies, Inc.; Federal Signal Corporation; GenCorp, Inc.; Graco, Inc.; Herman Miller, Inc.; JB Poindexter & Co., Inc.; Kaydon Corporation; Methode Electronics, Inc.; Sauer-Danfoss, Inc.; Standard Motor Products; Stoneridge,Winnebago Industries; Federal Signal Corp.; Methode Electronics, Inc.; Shiloh Industries, Inc.; Commercial Vehicle Group, Inc.; Altra Industrial Motion Corp.; Alamo Group, Inc.; Esco Technologies, Inc.; Miller Industries, Inc.; Twin Disc, Inc.; and Supreme Industries, Inc.; Thor Industries, Inc.; TriMas Corporation; United Components, Inc.; and Woodward Governor Company.  The Human Resources and Compensation Committee used this information in making its decision for the officers' compensation in early 2012.

Pricing Equity Awards; Disclosure of Information

Spartan Motors has long observed a policy of setting the exercise price for stock options, stock appreciation rights, and other share-based awards equal to the closing market price on the date of the grant (or most recent closing price if the date of the grant is not a trading day). Stock options and stock appreciation rights are not repriced. We do not "backdate" stock options or any other share based payments. As described above, theThe price used to determine the number of restricted shares granted and disclosed inis generally an average of the tables below, wasclosing share price for the average stock price overthirty days prior to the preceding three years.grant date.

The Board of Directors is committed to maintaining the integrity of the compensation philosophy and programs. As part of this commitment, Spartan Motors believes that the disclosure of material nonpublic information should never be manipulated for the purpose of enriching compensation awards. We do not time the release of public information to affect the value of share based awards, and we do not time the grant of share based awards to take advantage of the disclosure of information.

Personal Benefits; Perquisites

We believe that compensation in the form of perquisites and personal benefits do not provide transparency for shareholders or serve our compensation philosophy. Consequently, such benefits play a very minor role in the compensation program.

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code provides that publicly held corporations may not deduct compensation paid to the named executive officers in excess of $1 million annually, with some exceptions.  We have examined the executive compensation policies in light of Section 162(m) and the regulations under that section.  We do not expect that any portion of Spartan Motors' deduction for employee remuneration will be disallowed in 2014 or in future years by reasons of awards granted in 2013.

Other Information

We do not provide a defined benefit pension to our named executive officers. AlthoughOur typical practice when hiring a new executive is to set forth the principal terms of their employment in the past we have adoptedan employment agreements that cover three of our current executive officers, we generally do not enter into any formaloffer letter. These employment agreements with our executive officers; however, in some cases, we have committedletters often commit us to provide certain benefits to these executives.executives, including upon their termination of employment. Those commitments are described in this Proxy Statement.

We maintain a clawback policy that specifies that compensation awarded under our incentive compensation plans may be retracted if a grant was made to an executive as the result of a material misrepresentation.

Compensation Summary 

The following table shows certain information concerning the compensation earned by Daryl Adams, our CEO,current President and CEO; Frederick J. Sohm, our former CFO (who resigned in March 2013), our Interim CFO (who was appointed CFO in February 2014), our COO (who left the Company in March 2014),current CFO; John Forbes, the President of Utilimaster Corp.,our Delivery and Service Vehicles business unit; Steve Guillaume, the former President of ERour Specialty Chassis and Vehicles (who leftbusiness unit; and John Slawson, the CompanyPresident of our Emergency Response Vehicles business unit. The table also reflects the compensation we paid to John Sztykiel, who was our CEO until his retirement on February 19, 2015, and to Lori Wade, who was our CFO until her departure effective September 25, 2015. When used in February 2014).  Thethis Proxy Statement, "named executive officers" and "named executives" refer to the individuals identified in the table may be referred to as the "named executive officers" in this Proxy Statement.table.

Summary Compensation Table