Your vote is important.Even if you plan to attend the meeting,

PLEASE SIGN, DATE,AND RETURN THE ENCLOSED PROXYCARDPROMPTLY.Even if you plan to attend the meeting,

PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD PROMPTLY.

Your vote is important.Even if you plan to attend the meeting,

PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.

Table Of Contents

SPARTAN MOTORS, INC.

ANNUAL MEETING OF SHAREHOLDERS

MAY 24, 201720, 2020

PROXY STATEMENT SUMMARY

UseThis summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of Termsthe information that you should consider, and you should read the entire proxy statement carefully before voting.

In this Proxy Statement, "proxy statement, “we," "” “us," "” “our,"” the "“Company," "” “Spartan Motors,"” and "“Spartan"” refer to Spartan Motors, Inc., and "“you"” and "“your"” refer to shareholders of Spartan Motors.

Time and Place ofFrequently Asked Questions About the Annual Meeting

You What are cordially invited to attendmy voting options and how does the 2017 annual meeting of shareholders of Spartan Motors, Inc. The annual meeting will be held on Wednesday, May 24, 2017, at 10:00 a.m., Eastern Daylight Time, by means of remote communication via the Internet at www.virtualshareholdermeeting.com/SPAR17. If you need help accessing the annual meeting, please contact Maryjane Shance at (517) 543-6400 or at MJShance@SpartanMotors.com.

How to Participate in the Electronic Meeting

In order to participate in this year's annual meeting of shareholders and submit your questions during the meeting, please log on to www.virtualshareholdermeeting.com/SPAR17. You will need to enter the 11-digit control number shown on your proxy card.

Solicitation of Proxies

This Proxy Statement and the enclosed proxy card are being furnished to you in connection with the solicitation of proxies by Spartan Motors' Board of Directors for use at the annual meeting, and any adjournment of the meeting.

Availability Date

This Proxy Statement and the proxy card are being given or made available (via the internet) on and after April 13, 2017 to Spartan Motors' shareholders as of the record date.

Purposes of the Meeting

The purposes of the annual meeting are to:recommend that I vote?

We do not know of any other matters to be presented for consideration at the annual meeting. If any other matters are presented, In the personsabsence of instructions, proxies will be voted in accordance with the recommendation of the Board of Directors of the Company with respect to all proposals and in accordance with the best judgment of the individuals named as proxies on the enclosed proxy card will have discretionary authority to vote on those matters in accordance with their judgment.

Record Date

You may vote at the meeting if you were a shareholder of record of Spartan Motors common stock on March 27, 2017. Each such shareholder is entitled to one vote per share on each matter presented for a shareholder vote at the meeting.

As of March 27, 2017, there were 34,367,241 shares of Spartan Motors common stock outstanding.

How to Vote Your Shares

By Mail: If you are a shareholder of record, that is, your common stock is registered directly in your name with the transfer agent, American Stock Transfer & Trust Co., you may vote by returning the enclosed proxy card. If you properly complete and sign the enclosed proxy card and return it so that we receive it before the meeting, the shares of Spartan Motors common stock represented by your proxy will be voted at the annual meeting and any adjournment of the annual meeting, as long as you do not revoke the proxy before or at the meeting.

By Internet Before the Annual Meeting: If voting by Internet before the annual meeting, go to the website printed on the proxy card or www.proxyvote.com and enter the control number printed on the proxy card. Your control number is the 11-digit number located beneath the Company name and account number on the upper right side of your proxy material. Proceed to follow the instructions provided.

By Internet During the Annual Meeting: Use your computer to access the website printed on the proxy card or www.virtualshareholdermeeting.com/SPAR17 and follow the instructions to vote during the meeting.

Regardless of how you vote, if you specify a choice, your shares will be voted as specified. If you do not specify a choice on your signed, returned proxy, your shares will be voted: (1) for the election of all nominees for director named in this Proxy Statement, (2) for the approval of the proposed amendment to our Articles of Incorporation to increase the number of authorized shares of our common stock, (3) for the ratification of the appointment of BDO USA, LLP as Spartan Motors' independent registered public accounting firm for the current fiscal year, (4) for the approval of the compensation of our executives, (5) for the approval of our Board's recommendation to hold a shareholder advisory vote for the approval of our executive compensation every year, and (6) with respect to any other matters that may comematter properly brought before the meeting or any adjournment of the meeting, in accordance with the discretion of the persons named as proxies on the proxy card.meeting.

"Street Name" Shareholders

If you hold your shares in "street name," that is, your shares are registered in the name of a bank, broker or other nominee, which we will collectively refer to as your "broker," your broker must vote your shares if you provide it with proper and timely voting instructions. Please check the voting forms and instructions provided by your broker or its agent.

What vote is required to approve each proposal? Proposal 1 - Election of Directors. Under Michigan law and our bylaws, directors are elected by a plurality of the shares voting. This means that the nominees who receive the most votes will be elected to the open director positions. However, pursuant to our Corporate Governance Principles, because this is an uncontested election of directors (i.e., the number of persons nominated for election is equal to the number of directors to be elected), any nominee for director who receives a greater number of votes "withheld" for his or her election than votes "for" such election is required to promptly tender his or her offer of resignation to the Chairman of the Board. Our Nominating and Corporate Governance Committee will promptly consider the resignation offer and recommend to the Board whether to accept or reject it. The Board will then make a final decision not later than 90 days following the date of the shareholder meeting at which the election occurred. In counting votes on the election of directors, abstentions and broker non-votes will be counted as not voted and therefore will not affect the outcome of the election. Proposal 2 – Amendment of Articles of Incorporation.The proposal to amend our Articles of Incorporation will be approved if a majority of the shares outstanding as of the record date are voted in favor of the proposal. In counting votes on this proposal, abstentions and broker non-votes will be counted as not voted and therefore will impact the outcome of the election (because of the need to obtain the approval of a majority of the shares outstanding as of the record date). Proposal 3 – Amendment of Stock Incentive Plan. The proposal to amend the Stock Incentive Plan to make an additional 1,500,000 shares of common stock available for issuance under the plan will be approved if a majority of the shares voted at the meeting are voted in favor of the proposal. In counting votes on this proposal, abstentions and broker non-votes will be counted as not voted and therefore will not affect the outcome of the election. Proposal 4 - Ratification of Independent Auditors. The proposal to ratify the appointment of BDO USA, LLP as Spartan Motors' independent registered public accounting firm for the current fiscal year will be approved if a majority of the shares voted at the meeting are voted in favor of the proposal. In counting votes on this proposal, abstentions and broker non-votes will be counted as not voted and therefore will not affect the outcome of the election.

Proposal 5 - Advisory Vote to Approve Executive Compensation. The proposal to approve the compensation of our executives, as described in this proxy statement, is an advisory vote only. The Company will disclose the results of this vote, but is not required to take action based upon the outcome of this vote. However, the Human Resources and Compensation Committee of the Board intends to consider the outcome of the vote when considering future executive compensation arrangements. Who is soliciting this proxy? This proxy statement and the enclosed proxy card are being furnished to you in connection with the solicitation of proxies by the Board of Directors of Spartan Motors for use at the annual meeting and any adjournment of the meeting. Who is paying the expenses of this proxy solicitation? The Company will pay all expenses in connection with the solicitation of proxies by our Board of Directors for use at our annual meeting. We will also pay banks, brokers, or other holders of record their out-of-pocket and reasonable clerical expenses incurred in sending our proxy materials to beneficial owners for the purpose of obtaining their proxies. How will the Company solicit proxies? We will primarily solicit proxies by mail; however, certain of our directors, officers, or employees may solicit by telephone, electronically, or by other means of communication. Our directors, officers, and employees will receive no additional compensation for any such solicitation. We do not expect to engage any paid solicitors to assist us in the solicitation of proxies.

HowCorporate Governance Highlights

The Board of Directors of the Company is responsible for providing guidance and oversight of the strategic and operational direction of the Company and overseeing the Company's executive management. These tasks ensure that the Company operates in ways that support the long-term interest of our stockholders. The follow is a list of governance features that demonstrate the Company's commitment to Revoke Your Proxysuccess, transparency, and accountability:

If you

Executive Compensation Highlights

The Company’s executive compensation philosophy is to provide competitive levels of compensation and incentives to achieve strong financial performance. The Company’s executive compensation policies are a shareholder of record, you may revoke your proxy at any time before it is voted at the meeting by doing any ofdesigned to achieve the following four things:five primary objectives:

Your last vote properly received before the polls are closed at the meeting is the vote that will be counted. Please note that attending the meeting will not by itself revoke your proxy.

If you are a street name holder and have instructed your broker to vote your shares, you must follow directions from your broker to change your vote.

Quorum

In order for business to be conducted at the meeting, a quorum must be present. The presence in person or by properly executed proxy of the holders of at least a majority of all of the issued and outstanding shares of Spartan Motors common stock entitled to vote is necessary for a quorum at the meeting. For purposes of determining whether a quorum is present, we will include shares that are present or represented by proxy, including abstentions and broker non-votes.

Adjournment

The shareholders present at the meeting, in person or represented by proxy, may by a majority vote adjourn the meeting despite the absence of a quorum. If there is not a quorum at the meeting, we expect to adjourn the meeting to solicit additional proxies.

Required Votes

Election of Directors.Key Under Michigan law and our bylaws, directors are elected by a plurality of the shares voting. This means that the nominees who receive the most votes will be elected to the open director positions. However, pursuant to our Corporate Governance Principles, because this is an uncontested election of directors (i.e., the number of persons nominated for election is equal to the number of directors to be elected), any nominee for director who receives a greater number of votes "withheld" for his or her election than votes "for" such election is required to promptly tender his or her offer of resignation to the Chairman of the Board. The Governance Committee will promptly consider the resignation offer and recommend to the Board whether to accept or reject it. The Board will then make a final decision not later than 90 days following the date of the shareholder meeting at which the election occurred. In counting votes on the election of directors, abstentions, broker non-votes, and other shares not voted will be counted as not voted and therefore will not affect the outcome of the election.

Amendment to Articles of Incorporation. The proposal to amend our Articles of Incorporation will be approved only upon an affirmative vote of a majority of the outstanding shares. For the purpose of counting votes on this proposal, abstentions, broker non-votes, and other shares not voted will have the same effect as a vote against the proposal.

Advisory Vote on Executive Compensation.Compensation The proposal to approve the compensation of our executives, as described in this Proxy Statement, is an advisory vote only. The Company will disclose the results of this vote, but is not required to take action based upon the outcome of this vote. However, the Human Resources and Compensation Committee of the Board intends to consider the outcome of the vote when considering future executive compensation arrangements. Practices

Advisory Vote on Frequency of Shareholder Consideration of Executive Compensation.The proposal to determine how frequently our shareholders will be given the opportunity to participate in an advisory vote to approve our executive compensation is an advisory vote only. After the meeting, the Company will disclose both the results of this vote and the Board's decision regarding how frequently the executive compensation advisory vote will take place in the future. However, in making such decision, the Board is not required to abide by the outcome of the shareholder advisory vote. However, the Board of Directors intends to consider the decision made by our shareholders on this matter when determining the frequency of future advisory votes on executive compensation.

Ratification of Independent Auditors. The proposal to ratify the appointment of BDO USA, LLP as Spartan Motors' independent registered public accounting firm for the current fiscal year will be approved if a majority of the shares voted at the meeting are voted in favor of the proposal. In counting votes on this proposal, abstentions and broker non-votes will be counted as not voted and therefore will not affect the outcome of the election.

We do not know of any other matters to be presented for shareholder action at the annual meeting.

Broker Non-Votes.A broker non-vote occurs when a shareholder holds his or her stock through a broker and the broker does not vote those shares. This usually occurs because the broker has not received timely voting instructions from that shareholder and the broker does not have discretionary voting power for the particular item upon which the vote is taken. It is important that you instruct your broker how to vote shares held by you in street name using the vote instruction form provided by your broker. Your broker should vote your shares as you direct if you provide timely instructions on how to vote by following the information provided to you by your broker.

Proposal: Election of Directors

Nominees for Election

The Board of Directors proposes that the following individualindividuals be elected as a directordirectors of Spartan Motors for a three-year termterms expiring at the annual meeting of shareholders to be held in 2020:2023:

Angela K. Freeman

Dominic A. Romeo

Andrew M. Rooke

In addition, the Board of Directors proposes that the following individual be elected as a director of Spartan Motors for a one-year term expiring at the annual meeting of shareholders to be held in 2018:

Richard R. Current

Each nominee is presently a director of Spartan Motors whose term willwill expire at the annual meeting. Mr. Current and Mr. Rooke have been directors since 2008 and 2012, respectively. Biographical information concerning the nominees appears below under the heading "Spartan Motors'“Spartan Motors’ Board of Directors and Executive Officers,"Executives,” beginning on page .

The persons named as proxies in the proxy card intend to vote for the election of each of the nominees. The proposed nominees are willing to be elected and to servecontinue serving as directors of Spartan Motors. However, if any or all of the nominees become unable to serve or otherwise unavailable for election, which we do not anticipate, the incumbent Board of Directors may or may not select a substitute nominee or nominees. If aany substitute nominee or nominees is or are selected, the shares represented by your proxy card will be voted for the election of the substitute nominee(s), unless you give other instructions. If a substitute is not selected, all proxies will be voted for the election of the remaining nominee(s).nominees. Proxies will not be voted for more than twothree nominees.

Your Board of Directors recommends that you vote FOR the election of each nominee.

Ownership of Spartan Motors Stock

Five Percent Shareholders

The following table sets forth information as to each person or other entity (including any group) known to Spartan Motors to have been the beneficial owner of more than 5% of Spartan Motors'Motors’ outstanding shares of common stock as of March 27, 2017:23, 2020:

Security Ownership of Board and Management

The following table sets forth the number of shares of common stock that each of Spartan Motors'Motors’ directors and nominees for director, each of the named executive officers, (asas that term is defined in the Summary Compensation Table below)below (referred to in this proxy statement as our “named executives”), and all directors and executive officers (including all named persons)executives) as a group beneficially owned as of March 27, 2017:23, 2020:

*Less than 1%.

Spartan Motors' Board members and executives are expected, but not required, to attain ownership of stock, within five years of being named to their position, at least equal to the minimum expectations as follows: Outside Directors – five times annual retainer; CEO – four times annual salary; all other named executive officers – two 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.

Our directors and executives are required to maintain certainly minimum levels of ownership of our stock. Please see “Risk Mitigation – Director and Executive Stock Ownership Requirements” below for more information.

Spartan Motors'Motors’ Board of Directors and Executives

Spartan Motors’ Board of Directors currently consists of eight directors; however, as described below, one director is retiring from the Board as of the 2017 annual meeting.nine directors. 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'Motors’ directors (including the persons who are nominated for election to the Board of Directors) and the named executive officersexecutives is presented below. The matrix below highlights the key skills contributed to our Board by each of our directors:

Nominee

Nominees for Election as Directors with Terms Expiring in 2023Director with Term Expiring in 2020 Andrew M. Rooke (age 59) 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. Nominee for Election as Director with Term Expiring in 2018 Richard R. Current (age 72) 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's 19 years of 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. Directors with Terms Expiring in 2019 Ronald Harbour (age 60) 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 two privately held automotive companies: Electronics Remanufacturing Company, an automotive 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-plus 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 56) 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 30-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. James A. Sharman (age 58) was appointed as a Director in January 2016. Beginning with the annual meeting of shareholders on May 24, 2017, Mr. Sharman will begin serving as the Chairman of Spartan's Board of Directors. Since 2014, Mr. Sharman has served as Chief Operating Officer of Coyote Logistics, a freight broker and logistics services provider and a wholly owned subsidiary of United Parcel Service, Inc. From 2006 through 2014, Mr. Sharman 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, Inc. He was Senior Vice President of Global Supply Chain for CNH as well as Vice President and General Manager, Latin America, for the Case Corporation. He served as the Commanding Officer of an Engineering Company in the United States Army and was an Assistant Professor at the United States Military Academy, West Point. Mr. Sharman also serves on the Board of Directors of Standard Solar, Inc., a privately held solar electric systems company. Mr. Sharman is a graduate of the United States Military Academy at West Point and Duke’s Fuqua School of Business. Mr. Sharman’s extensive business experience, including international management experience, allows him to provide valuable insight to the Board.
	Angela K. Freeman (age 52) was appointed to the Board of Directors in August of 2019. Ms. Freeman serves as the Chief Human Resources & ESG Officer at C.H. Robinson (NASDAQ: CHRW), one of the world’s largest third party logistics providers with annual revenues of $15.3 billion. Ms. Freeman leads the company’s global talent, sustainability, and corporate responsibility strategies. She has been with the company for over 20 years and prior to her current role led Investor Relations, Marketing, and Public Affairs. In addition, she serves as the President of the C.H. Robinson Foundation, the company’s philanthropic affiliate. Ms. Freeman also serves on the Board of the University of North Dakota Alumni Association & Foundation. Ms. Freeman holds a Master of Science degree in Comparative Politics from the London School of Economics, in addition to a Bachelor of Arts in Political Science and a Bachelor of Science in Secondary Education from the University of North Dakota. Ms. Freeman’s experience and expertise with leading human resources, including executive compensation, as well as investor relations at a publicly traded company, adds an important element to our Board of Directors, and she is a key member of the Board’s Human Resources and Compensation Committee.
	Dominic A. Romeo (age 60) was appointed to the Board of Directors in October of 2017. Mr. Romeo served as Senior Vice President and Chief Financial Officer of Thor Industries, Inc., a leading publicly-traded manufacturer of recreational vehicles, from February 2013 to October 2013. From 2004 to 2011, Mr. Romeo served as Vice President and Chief Financial Officer of IDEX Corporation, a leading publicly-traded global manufacturer of pump products, dispensing equipment, and other engineered products. Prior to joining IDEX, Mr. Romeo served in several financial leadership positions at Honeywell International, Inc., a diversified technology and manufacturing company that services customers globally, including Vice President and Chief Financial Officer of Honeywell Aerospace from 2001 to 2004; Vice President and Chief Financial Officer of Honeywell International’s Engine Systems and Services divisions from 1999 to 2001; and various other senior finance positions from 1994 to 1999. Mr. Romeo’s prior work history also includes various management positions in finance and accounting with General Electric, AAR Corporation and Price Waterhouse. Mr. Romeo currently serves on the board of Novanta, Inc. a leading publicly-traded technology supplier to medical and advanced industrial equipment manufacturers. Mr. Romeo also serves on the Board of Directors and as a member of the Audit Committee of Loparex, a global manufacturer of release liners. Mr. Romeo served on the Board of Directors and as a member of the Audit Committee of Federal Signal Corporation, a leading publicly-traded global designer and provider of safety and security products and solutions, from 2010 to April 2013. Mr. Romeo has a Bachelor of Arts Degree in both Accounting and Business Administration from Manchester University. Mr. Romeo brings to the Board of Directors significant experience and expertise in finance and accounting.

Directors with Terms Expiring in 2018

Daryl M. Adams (age 55) was appointed President and CEO of Spartan Motors effective February 19, 2015, and was appointed to the Board 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 Midway 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 and international roles in Lear's North American and European operations. Mr. Adams holds a Master of Business Administration degree from Michigan State University and a Bachelor of Science degree in Industrial Management and Manufacturing from Lawrence Institute of Technology and is active in various manufacturing associations including: Business Leaders of Michigan, the Capital Area Manufacturers Council, and Lansing Economic Area Partners where he serves on the executive board. As the current President and CEO of the Company, Mr. Adams' participation on the Board is of critical importance in terms of the Board's oversight of the Company's operations and strategic direction.

James C. Orchard (age 66) 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 48 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.

Retirement of Director

After 10 years of Board service and 7 years as serving as the Chairman of the Board, Mr. Hugh W. Sloan, Jr. is retiring from the Board effective at the 2017 annual meeting of shareholders.

	Andrew M. Rooke (age 62) was appointed to the Board of Directors in February of 2012. From December 2016 to November 2019, Mr. Rooke served as Chairman and Chief Executive Officer of ASV Holdings, Inc., a Minnesota based manufacturer of compact track loader and skid steer loader equipment used in the construction, agricultural and forestry industries. From 2007 through 2016, Mr. Rooke served as President and Chief Operating Officer of Manitex International, Inc., a manufacturer of engineered lifting equipment. 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. 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 2021
	Daryl M. Adams (age 58) joined the Company as the Chief Operating Officer on July 31, 2014, was appointed President and CEO of Spartan Motors effective February 19, 2015, and was appointed to the Board of Directors on December 10, 2014. Prior to joining Spartan Motors, Mr. Adams served for seven years as CEO of Midway 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 and international roles in Lear’s North American and European operations. Mr. Adams holds a Master of Business Administration degree from Michigan State University and a Bachelor of Science degree in Industrial Management and Manufacturing from Lawrence Technological University. He serves on the boards of the Lansing Economic Area Partners and the Detroit Safety Foundation.  Mr. Adams is an active member of various other state leadership and manufacturing associations including: Business Leaders of Michigan, the Capital Area Manufacturers Council, and the Michigan Manufacturers Association. As the current President and CEO of the Company, Mr. Adams’ participation on the Spartan Motors Board of Directors is of critical importance, providing the remaining members a clear perspective into the Company’s operations and strategic direction.
	Thomas R. Clevinger (age 67) was appointed to the Board of Directors on April 6, 2018. Since 2016, Mr. Clevinger has served as the CEO and Managing Partner of Cornerstone Growth Advisors, LLC., a consulting firm that focuses on strategic growth initiative advisory services, namely for the automotive and commercial vehicles industries. From 2010 to 2016, Mr. Clevinger served as Senior Vice President/Managing Director – Global at Navistar, Inc., where he managed all lines of business outside the U.S. and Canada. Prior to his work at Navistar, Mr. Clevinger served from 1995 to 2010 in various senior leadership roles at PACCAR, Inc. where he oversaw global sales and distribution operations for parts and service support. Mr. Clevinger holds a Bachelor of Science in Business and a Master of Arts in Leadership and Organizational Development, both from the City University of Seattle. Mr. Clevinger brings with him a wealth of expertise in global commercial vehicle sales and support, with an emphasis in aftermarket parts and service sales and distribution.

Board Meetings, Annual Meeting, and Committees

Spartan Motors’ Board of Directors held eight meetings during 2019. Each director who served as a director during 2019 attended at least 75% of the aggregate of (1) the total number of Board of Directors meetings (held during the periods that he or she served on the Board) and (2) the total number of meetings held by all committees of the Board of Directors on which he or she served (held during the periods that he or she served on such committees), except for Mr. Dauch, who attended two-thirds of such meetings. Pursuant to the Company’s Corporate Governance Principles, the Company expects all directors to participate in the annual shareholder meeting, and typically all directors do attend the annual shareholder meeting. At the time of our 2019 annual meeting of shareholders, we had eight directors, and six of them attended the annual meeting. Independent directors also meet regularly in executive sessions without the presence of management.

The Board of Directors has three standing committees: Audit Committee, Human Resources and Compensation Committee, and Corporate Governance and Nominating Committee. Membership on each of the committees is as follows:

Director

Audit Committee

Human Resources and Compensation Committee

Corporate Governance and Nominating Committee

Independent Director(1)

James A. Sharman

✓

✓

Daryl M. Adams

Thomas R. Clevinger

✓

✓

Richard F. Dauch

✓

✓

Ronald E. Harbour

✓

✓

Dominic A. Romeo(2)

Chair

✓

✓

Andrew M. Rooke(2)

✓

✓

Paul A. Mascarenas

Chair

Chair

✓

Angela K. Freeman

✓

✓

Number of meetings held in 2019

9

6

4

(1)	The directors to participate in the annual shareholder meeting, and typically all directors do attend the annual shareholder meeting. In 2016, all of the board members who were then directors of Spartan Motors attended the annual meeting of shareholders. Independent directors also meet regularly in executive sessions without the presence of management. The Board of Directors has determined that all directors, other than Mr. Adams,indicated are "independent,"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 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 Internal Audit. 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 Members 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" underalso satisfy applicable Nasdaq and SEC rules. Each member of the Audit Committee satisfies the applicable Nasdaq and SEC independence standards for suchaudit committee members. Messrs. Current (Chairman), Rooke,
(2)	Mr. Romeo and Sharman are members of the Audit Committee. The Board of Directors has determined that Messrs. Current andMr. Rooke are each audit committee "financial experts"financial experts, as thesuch term is defined in rules of the Securities and Exchange Commission and all three are Independent Directors as defined by Nasdaq. The Audit Committee held 10 meetings during 2016. - 11 - 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 and board members based on independent third party benchmarking analyses. 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 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. Harbour (Chairman), Dauch, and Orchard 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 five meetings during 2016.rules. 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.

Audit Committee. The primary purpose of the Audit Committee 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 Internal Audit and/or any other internal audit services provided by consultants or other outside resources to assist in the internal audit process. 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.

Human Resources and Compensation Committee. The responsibilities of the Human Resources and 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 to be paid to Spartan Motors’ executive officers and Board members. In addition, the Human Resources and Compensation Committee is responsible for reviewing and making recommendations to the Board of Directors regarding stock incentives awarded under Spartan Motors’ stock incentive plan, 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 incentives, and the terms and other matters associated with equity-based compensation awards.

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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. 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.

The Human Resources and Compensation Committee has reviewed all components of the Chief Executive Officer’s compensation and the compensation of the named executives, as reflected in the Summary Compensation Table set forth below, including salary, bonuses, equity and other incentive compensation, and the dollar value to the executive and the cost to Spartan Motors of all perquisites and other personal benefits.

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 for nomination to the Board of Directors 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.

In identifying candidates for directors, the Corporate Governance and Nominating Committee and the full Board of Directors also considers the potential diversity of viewpoint that a candidate would likely bring to the Board of Directors, which could be the result of the person’s background, current occupation, career history, ethnicity, gender, and other factors.

As the need to make changes or additions to the Board arises, the Corporate Governance and Nominating 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.

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.

 

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.

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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, Harbour, and Current are the members of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee held four meetings during 2016.

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'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'sshareholder’s intent to make a nomination or nominations has been given to Spartan Motors'Motors’ Secretary by the deadline specified in the bylaws. That deadline is at least 120 days before the one-year anniversary date of the notice of the previous year'syear’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:

 

	●	the name, age, business address and residence of each nominee proposed in the notice;
	●	the principal occupation or employment of each nominee;
	●	the number of shares of capital stock of Spartan Motors that each nominee beneficially owns;
	●	a statement that each nominee is willing to be nominated; and
	●	such other information concerning each nominee as would be required under the rules of the Securities and Exchange Commission in a proxy statement soliciting proxies for the election of such nominees.

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Board Leadership Structure; Role in Risk OversightStructure

 

The CompanyCompany 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. 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. Upon Mr. Sloan’s retirement from the Board at the 2017 annual meeting of shareholders, Mr. James Sharman, will take over the chairman role. Mr. Sharman is also 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'sCompany’s executive management team, led by Mr. Adams. The Company has maintained this leadership structure (i.e.(i.e., with separate individuals serving as the President/CEO and Chairman of the Board) since 2002.

Board’s Role in Oversight of Risk

 

The Company believes the Board plays an appropriate role in the risk oversight of the Company and its business. The Board'sBoard’s risk oversight function is largely carried out through the Board'sBoard’s independent oversight of the executive management team and, in particular, its oversight of the various operational, industry, 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 except for Mr. Adams 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, the CAO, General Counsel, andas well as the Manager of Internal Audit (together with outside resources, including consultants, that may assist in the internal audit process), report directly to the Board of Directors on a regular basis. In addition, the Board regularly holds sessions of the independent directors only, without the presence of any employee directorsthe Company’s CEO or other executives of the Company.executives.

 

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'scommittee’s responsibilities.

 

Finally, the Board works to ensure thatthat management is properly focused on the appropriate strategic risks and initiatives to profitably 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'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,Ryan L. Roney, Secretary, Spartan Motors, Inc., 1541 Reynolds Road, Charlotte,41280 Bridge Street, Novi, Michigan 48813.48375. All such communications are forwarded to the appropriate recipient(s).

 

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Executive Compensation

Executive Compensation

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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:

 

	●	Attract and retain qualified management;
	●	Align the interests of management with those of shareholders to encourage achievement of continuing increases in shareholder value;
	●	Align management'smanagement’s compensation with the achievement of Spartan Motors'Motors’ annual and long-term performance goals;
	●	Reward excellent corporate performance; and
	●	Recognize individual and team initiatives and achievements.

 

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

What We Do		What We Don’t Do
	Link executive pay to Company performance through our annual and long-term incentive plans		No single-trigger change-in-control provisions
	Balance among short- and long-term incentives, cash and equity, and fixed and variable pay		No hedging by executives or directors of equity holdings
	Compare executive compensation and Company performance to relevant peer group companies		No aspect of the pay policies or practices pose material adverse risk to the Company
	Require executives to meet minimum stock ownership requirements
	Maintain a compensation clawback policy to recapture unearned incentive pay
	Provide only limited perquisites

Say-on-Pay Vote and Shareholder Engagement

 

The advisory vote on executive compensation was conducted at our annual meeting of shareholders in 2016,2019, 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%91% of the shares voted to approve the resolution, 3% voted against the resolution, and 2% abstained.resolution. Our Board considered the results of this vote to be supportive of the Company'sCompany’s compensation policies and programs and did not make any changes to such policies and programs as a result of such vote.

 

ElementsThe Company takes meaningful measures to engage with its shareholders, including through attendance at multiple investor conferences throughout the year and regular phone calls, in-person meetings, and other communications with large shareholders. The Company works to be responsive to all shareholder inquiries raised with the Company’s management and/or Board of CompensationDirectors in an effort to fully engage with shareholders and address any shareholder concerns.

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Pay Mix

 

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

 

	●	Base salary;
	●	Annual cashcash incentive (AIC) bonus; and
	●	Long-term equity-based compensation (LTIC).equity-based compensation.

 

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. In 2019, 78% of our CEO’s target pay was performance-based and between 54% and 61% (depending on the executive) of our other named executives’ target pay was performance-based.

Component	Objective
Annual Incentive Compensation	Achievement of financial and nonfinancial objectives for which the named executives have individual and collective responsibility.
Long-Term Incentive Compensation	Achievement, over a multi-year period, of financial and nonfinancial objectives critical to the performance of the Company's business plans and strategies. Achievement, over a three-year period, of the Company's cumulative performance metrics to align executive and shareholder interests.
Base Salary, Retirement Programs, Benefits and Perquisites	Differentiate base salary based on individual responsibility and performance. Provide benefits that reflect the competitive practices of the industry and provide limited and specific perquisites.

Mix of Target Pay Elements for CEO

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The Human Resources and Compensation Committee believes that the percentage of an executive'sexecutive’s total compensation that is "at risk"“at risk” should increase as the executive'sexecutive’s responsibilities and ability to influence profits increase. For this reason, the percentage of executive officers'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"“LTC Plan”) sets forth the framework for compensation of the Company'sCompany’s executive officers and other key employees, including each of the named executive officersexecutives shown in the tables below. The LTC Plan is intended to provide management with incentives to choosedrive strategies and investments that maximize shareholder value, utilize a financial measurementmeasurements consistent with the market'smarket’s evaluation of Spartan Motors'Motors’ performance, and communicate Spartan Motors'Motors’ financial objectives in a clear and quantifiable manner. Total compensation is targeted at the median of comparable market data. 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

In 2019, following a recommendation by the Human Resources and Compensation Committee, the Board of Directors on April 6, 2015modified the LTC Plan. A summary of the primary features of the LTC Plan, as modified in 2019 are as follows:

Compensation Component	LTC Plan - Summary and Changes Made in 2019
Annual cash Incentive	The 2019 annual cash incentive retained the same performance metrics and weightings as in 2018: Corporate Officers: Annual cash incentive metrics for 2019 were weighted as follows:
	1.	Company-wide Adjusted EBITDA: 65%
	2.	Free cash flow: 15%
	3.	MBO Goals: 20%
	Business Unit Presidents: Annual cash incentive metrics for 2019 were weighted as follows:
	1.	Company-wide Adjusted EBITDA: 65%
	2.	Individual business unit Adjusted EBITDA: 20%
	3.	Pre-determined operational and strategic objectives: 15%
Long-term equity-based compensation	To ensure executive pay aligns with performance and facilitates long-term shareholder value creation, performance share units (PSUs) were added as an equity incentive in 2019:
	1.	PSUs providing a target number of shares will be issued at the end of a three-year performance period: 70%
	2.	RSUs with three-year ratable vesting: 30%
	PSUs are capped at 200% of target and are based on achieving the following performance metrics:
	1.	Three-year cumulative GAAP net income: 40%
	2.	Three-year relative TSR: 60%

Benchmarking

The Human Resources and approvedCompensation 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 with whom we compete for talent. The Human Resources and Compensation Committee uses this data to design and implement competitive compensation programs. Independent consultants engaged by shareholders on May 25, 2016.the Human Resources and Compensation Committee do not answer to management.

In 2018, the committee engaged Mercer to benchmark total direct compensation (consisting of base salary, target bonus opportunity, and the value of long-term incentive grants) of the named executives at the median of the peer group, with the intention that the total direct compensation of these named executives would be set at amounts that are in the market median range. In performing this analysis, Mercer conducted benchmarking analysis of the named executives’ compensation, including base salaries, long-and short-term incentives, and severance practices, utilizing information from proxy disclosures and published surveys. A peer group was selected consisting of companies that are:

●

In similar industries in which Spartan Motors competes for executive talent and capital, including auto parts and equipment, automobile manufacturers, construction machinery and heavy trucks, electronic manufacturing services, and industrial machinery; and

●

Of similar size (as primarily measured by annual revenue), within a range of approximately one-third to three times Spartan Motors’ revenue that results in a median revenue close to Spartan Motors’.

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Market median total direct compensation information in the study reflects the pay for an executive with a median level of experience. The list of identified peer companies in this survey include:

●	Alamo Group, Inc.	●	LCI Industries, Inc.
●	Altra Industrial Motion Corp.	●	Methode Electronics, Inc.
●	Blue Bird Corporation	●	Miller Industries, Inc.
●	Columbus McKinnon Corporation	●	Shiloh Industries, Inc.
●	Commercial Vehicle Group, Inc.	●	Standard Motor Products
●	Douglas Dynamics, Inc.	●	The Manitowoc Company, Inc.
●	ESCO Technologies, Inc.	●	Wabash National Corporation
●	Federal Signal Corp.	●	Winnebago Industries

In 2019, the Human Resources and Compensation Committee, after review with its executive compensation consultant, made the following changes to the peer group: Methode Electronics, Inc. was removed from the peer group due to somewhat limited business similarities to Spartan Motors, and Astec Industries, Inc. and REV Group Inc. were added as compensation peers due to similarities to Spartan Motors in terms of size, complexity, and industry. The revised peer group was utilized for compensation benchmarking conducted in late 2019.

The Human Resources and Compensation Committee used this benchmarking data from 2018 to establish the amount and form of compensation for the Company’s named executives effective in 2019. Mercer updated its benchmarking analysis in late 2019, which was used to aid the committee in setting total compensation for the named executives for 2020.

Neither Mercer nor any of its affiliates provided any services to the Company or any of its affiliates during 2019 for which it received fees in excess of $120,000.

 

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Base Salary

 

Base salary is a fundamental component of the Company'sCompany’s compensation system, and overall competitive salary levels are necessary to attract and retain well-qualified executives. The Company’s intention is to set base salary levels of its executive officers at 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 salariescompensation 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 Committeecommittee does not give specific weight to any particular factor. Using these same factors, the Committeecommittee may recommend base salary adjustments on a periodic basis to maintain the desired levels of base salaries for Spartan Motors'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.

 

In 2014 and 2016,As noted above, Mercer was engaged in 2018 to benchmark the salaries of the executive officers of Spartan Motors. Details regarding these benchmarking processes appear below under the heading "HumanThe Human Resources and Compensation Committee Processes and Procedures; Participationmade recommendations for 2019 base salaries consistent with this competitive benchmarking process. For 2019, the Company increased base salaries as shown below. Base salary adjustments are generally implemented in April of Management; Benchmarking Process." The Mercer benchmarking processes were completed in January of 2015 and December of 2016. Based on the results of these benchmarking processes and to align the salaries of our executive officers with median market rates, the annualapplicable year.

Named Executive Officer	Base Salary - April 2018	Base Salary - April 2019	% Change from Prior Year
Daryl M. Adams, President and CEO	$678,300	$700,000	3.2%
Frederick J. Sohm, CFO	$326,400	$375,000	14.9%
Thomas C. Schultz, Chief Administrative Officer	$292,740	$320,000	9.3%
Stephen K. Guillaume, President - Specialty Chassis and Vehicles	$246,477	$305,000	23.7%
Chad M. Heminover, President - Fleet Vehicles and Services	$250,000	$294,000(1)	17.6%

(1)	Mr. Heminover’s base salary was increased again in November 2019 to $330,000, for an aggregate 32.0% increase over his 2018 base salary.

The base salary changes summarized in the table above served to provide greater alignment of Mr. Adams (our CEO) increased from $572,000 to $620,000 in April, 2016, to $645,000 in August, 2016, and to $665,000 in April, 2017. The annual base salary for Mr. Sohm (our CFO) increased from $250,000 to $300,000 in August, 2016, and to $320,000 in April, 2017. The annual base salariesexecutive total compensation levels with Spartan Motors’ stated compensation philosophy of our other three NEOs did not change significantly from their prior levels.targeting a market median range.

 

The Board of Directors may increase the base salaries of our executive officers from time to time, and such increases may be made at any time (i.e., not just in conjunction with the Board'sBoard’s customary annual performance and compensation review)review or as the result of the completion of a benchmarking analysis).

 

Annual Cash Incentive Bonuses

At the discretion of the Human Resources and Compensation Committee, any bonus payable under the LTC Plan may be paid in the form of the Company's common stock.Awards

 

The LTC Plan provides an opportunity for our named executives to earn an annual cash bonus based upon achievement of the top priorities for business performance which can includebased on key metrics. The LTC Plan requires management to annually revisereview the metrics and weightings based upon current business conditions and to obtain approval of the proposed framework from the Human Resources and Compensation Committee.

 

Each participant'sparticipant’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) a Bonus Multiplier (described below) by (3) the participant'sparticipant’s annual salary.

 

The target bonus percentage is a percentage of the participant'sparticipant’s salary. The LTC Plan establishes athe target bonus percentage of 80%at 150% of base salary for our CEO and 60% of base salary for theeach of our other named executives. In February 2017,Although the LTC Plan gives the Human Resources and Compensation Committee setthe discretion to change the target bonus percentage for our CEO at 100% of base salaryany executive for 2017 and beyond in order to better align our CEO’s compensation with median market rates as a result ofany particular year, the Mercer benchmarking analyses described above.committee did not exercise this discretion for 2019.

 

The Bonus MultiplierMultiplier is a fraction or multiple of the target bonus percentage. For example, achievement of bonus metrics at exactly their target amounts would result in a Bonus Multiplier of 1.0X, while achievement of the bonus metrics at double their target amounts would result in a Bonus Multiplier of 2.0X.1.0X. The threshold (minimum) Bonus Multiplier is 0.5X. The0.5X and the maximum Bonus Multiplier is calculated to one decimal place.2.0X. Annually, based on a proposal by management, the Human Resources and Compensation Committee will 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.

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The annual cash incentive award opportunities for our named executives for 2019 were as follows:

Annual Cash Incentive Award Opportunity as a % of Base Salary
Executive	Threshold	Target	Maximum	Actual
Daryl M. Adams, President and CEO	75%	150%	300%	270%
Frederick J. Sohm, CFO	30%	60%	120%	108%
Thomas C. Schultz, Chief Administrative Officer	30%	60%	120%	108%
Stephen K. Guillaume, President - Specialty Chassis and Vehicles	30%	60%	120%	108%
Chad M. Heminover, President - Fleet Vehicles and Services	30%	60%	120%	108%

 

The LTC Plan prohibits an annual 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 or grant discretionary bonuses that it deems appropriate. The Board did not grant any discretionary bonuses for 2019 performance.

At the discretion of the Human Resources and Compensation Committee, any cash bonus payable under the LTC Plan may be paid in the form of the Company’s common stock. All cash incentive bonuses for 2019 were paid in cash.

 

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

 

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20162019 Annual Cash Incentive Compensation

 

For 2016,2019, the followingtables below show the metrics were established for our named executives to earn an annual cash incentive bonus pursuant to the LTC Plan:Plan. The Human Resources and Compensation Committee selected Company-wide adjusted EBITDA as the key metric (65% weighting) for all of our named executives because it is viewed as the primary indicator of the performance and strength of our business on a long-term basis. For similar reasons, the adjusted EBITDA of a business unit is used as a metric for the leader of that business unit. Free cash flow is used as a metric for our corporate officers because of its relationship to the Company’s profitability. For each executive, the annual cash incentive bonus is also based in part on specific objectives established for that executive’s near-term performance. The 2019 performance targets were set for these awards and the payouts were determined prior to the recent events associated with the COVID-19 crisis.

 

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Corporate Officers Officer Incentive Plan Metrics

(CEO, CFOMessrs. Adams, Sohm, and CAO)Schultz): The Bonus Multiplier for the corporate-level officers was determined based on the achievement of goals relating to (1) Company-wide adjusted operating income (adjusted to exclude the impact of restructuring charges), and (2) cash conversion cycle; and (3) pre-determined management objectives and key performance indicators (the "MBO Goals"). The final Bonus Multiplier was determined using a weighting of 55% for Company-wide adjusted operating income, 15% for cash conversion cycle and 30% for the MBO Goals. The actual achievement for each goal for the Corporate Officers for 2016 is as follows (dollar amounts in thousands):

 

Corporate Officers
		Performance Criteria for payouts at:												Actual				Payout Percentage Range												Actual								Weighted
Metric		Min.				Target				Max.				Performance				Min.				Target				Max.				Payout %				Weight				Percentage
Operating Income (1)		$	3,250			$	5,416			$	7,582			$	9,720				50	%			100	%			200	%			200	%			55	%			110	%
Cash Conversion Cycle (days)			70.1				66.8				63.5				58.0				50	%			100	%			200	%			200	%			15	%			30	%
MBO Achievement			0	%			100	%			200	%			200	%			0	%			100	%			200	%			200	%			30	%			60	%
Total Multiplier																																						200		%

		Performance Criteria for Payouts at ($ in 000s):
Metric		Min. (50% payout)				Target (100% payout)				Max. (200% payout)				Actual Performance				Actual Payout %				Weight				Weighted %
Company-wide Adjusted EBITDA(1)		$	31,800			$	39,600			$	47,500			$	64,045				200	%			65	%			130	%
Free Cash Flow (1)		$	5,799			$	7,249			$	8,699			$	24,139				200	%			15	%			30	%
MBO Goals Achievement			0	%			100	%			200	%			100	%			100	%			20	%			20	%
																		Total Multiplier									180	%

 

(1)

Operating Income excludes restructuring charges of $1,095See GAAP reconciliation in Appendix A.

Specialty Chassis and Vehicles Business Unit PresidentsUnit Incentive Plan Metrics

(Mr. Guillaume): The Bonus Multiplier for the Business Unit Presidents was determined based on the achievement of goals relating to (1) Company-wide adjusted operating income (adjusted to exclude the impact of restructuring charges), and (2) the individual business unit adjusted operating income (adjusted to exclude the impact of charges for restructuring, product recalls and certain other items); and (3) pre-determined operation and strategic objectives. The final Bonus Multiplier was determined using a weighting of 55% for Company-wide adjusted operating income, 25% for the individual business unit adjusted operating income and 20% for the operational and strategic objectives. The actual achievement for each goal for the Business Unit Presidents for 2016 is as follows (dollar amounts in thousands):

 

Mr. Forbes
		Performance Criteria for payouts at:												Actual				Payout Percentage Range												Actual								Weighted
Metric		Min.				Target				Max.				Performance				Min.				Target				Max.				Payout %				Weight				Percentage
Consolidated Operating Income (1)		$	3,250			$	5,416			$	7,582			$	9,720				50	%			100	%			200	%			200	%			55	%			110	%
Adjusted Business Unit Operating Income		$	9,334			$	15,556			$	21,778			$	23,189				50	%			100	%			200	%			200	%			25	%			50	%
MBO Achievement			0	%			100	%			200	%			200	%			0	%			100	%			200	%			200	%			20	%			40	%
Total Business Unit Multiplier																																						200		%

		Performance Criteria for Payouts at ($ in 000s):
Metric		Min. (50% payout)				Target (100% payout)				Max. (200% payout)				Actual Performance				Actual Payout %				Weight				Weighted %
Company-wide Adjusted EBITDA(1)		$	31,800			$	39,600			$	47,500			$	64,045				200	%			65	%			130	%
Segment Adjusted EBITDA (1) (2)		$	15,514			$	19,329			$	23,270			$	20,716				140	%			20	%			30	%
Business unit operational and strategic plan			0	%			100	%			200	%			140	%			140	%			15	%			20	%
																		Total Multiplier									180	%

 

(1)

Consolidated Operating Income excludes restructuring charges of $1,095.See GAAP reconciliation in Appendix A.

Mr. Slawson
		Performance Criteria for payouts at:												Actual				Payout Percentage Range												Actual								Weighted
Metric		Min.				Target				Max.				Performance				Min.				Target				Max.				Payout %				Weight				Percentage
Consolidated Operating Income (1)		$	3,250			$	5,416			$	7,582			$	9,720				50	%			100	%			200	%			200	%			55	%			110	%
Adjusted Business Unit Operating Income		$	(10,898	)		$	(7,784	)		$	(4,670	)		$	(4,826	)			50	%			100	%			200	%			200	%			25	%			50	%
MBO Achievement			0	%			100	%			200	%			200	%			0	%			100	%			200	%			200	%			20	%			40	%
Total Business Unit multiplier																																						200		%

(1)(2)	See Note 18, Business Segments in the Notes to Consolidated operating income excludes restructuring chargesFinancial Statements of $1,095.our Annual Report on Form 10-K filed with the SEC on March 16, 2020.

  

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For 2016 the Board of Directors awarded discretionary bonuses of $337,385 for Fleet Vehicles and Services Business Unit Incentive Plan Metrics

(Mr. Adams, $75,000 for Mr. Sohm, $75,000 for Mr. Schultz, and $39,250 for Mr. Slawson. The award for Mr. Adams was made in order to align his incentive compensation with median market amounts based on the benchmark analyses completed in 2015 and 2016. The awards for Mr. Sohm, Mr. Schultz, and Mr. SlawsonHeminover):

		Performance Criteria for Payouts at ($ in 000s):
Metric		Min. (50% payout)				Target (100% payout)				Max. (200% payout)				Actual Performance				Actual Payout %				Weight				Weighted %
Company-wide Adjusted EBITDA(1)		$	31,800			$	39,600			$	47,500			$	64,045				200	%			65	%			130	%
Segment Adjusted EBITDA (1) (2)		$	29,920			$	37,400			$	44,880			$	60,663				200	%			20	%			40	%
Business unit operational and strategic plan			0	%			100	%			200	%			67	%			67	%			15	%			10	%
																		Total Multiplier									180	%

(1)	See GAAP reconciliation in Appendix A.
(2)	See Note 18, Business Segments in the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K filed with the SEC on March 16, 2020.

2020 Annual Cash Incentive Compensation

No changes were made to recognize the executive’s efforts regarding the acquisition of essentially all of the assets and certain liabilities of Smeal Fire Apparatus Co. and its subsidiaries, which was completed January 1, 2017.

2017 Annual Incentive Compensation

Corporate Officers: For 2017, the metrics for annual cash incentive awardscompensation framework described above for our corporate officers include: (1) Company-wide adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) (adjusted to exclude restructuring charges and acquisition related items); (2) free cash flow; and (3) MBO Goals. The final bonus multiplier will be determined using weightings of 60% for Adjusted EBITDA, 15% for free cash flow and 25% for the MBO Goals. Free cash flow is defined as operating cash flow less capital expenditures.

Business Unit Presidents: For 2017, the metrics for annual cash2020. Cash incentive awards for our business unit presidents include: (1) Company-wide Adjusted EBITDA; (2) individual business unit Adjusted EBITDA (adjusted to exclude restructuring charges and acquisition related items); and (3) pre-determined operational and strategic objectives. The final Bonus Multiplier2020 will be determined using a weighting of 60% for Company-wide Adjusted EBITDA, 25%based upon the same key metrics for the individual business unit Adjusted EBITDAnamed executives as were used for 2019, including both financial and 15%non-financial metrics, and weightings for each metric will be the pre-determined operational and strategic objectives.   same as they were for 2019.

 

Long Term IncentivesLong-Term Equity Incentive Awards

 

Spartan Motors'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 expectationsrequirements for executive officers under "Security“Risk Mitigation - Director and Executive Stock Ownership of Management" above.Requirements” below.

 

Spartan Motors currently has the ability to grant equity-based compensation to its named executivesexecutives pursuant to the Stock Incentive Plan of 2016. 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.plan.

 

Since 2008, the Company has utilized grantsStarting in 2019, long-term equity incentives for named executives will include (1) a grant of restricted stock for its equity-based compensation. The Company believes that restricted stock awards can be more effective at retaining key personnel in a volatile or depressed stock market. Additionally, the Company believes that restricted stock helps the executives focus on creating shareholder value and encourages executive officers to manage the Company from the perspective of an owner, while theunits (“RSUs”) with time-based vesting, feature providesand (2) a strong incentive for the executives to commit themselvesgrant of performance share units (“PSUs”), which are payable in shares of Spartan common stock, subject to the Company forachievement of certain performance metrics over a cumulative three-year period. Prior to 2019, the long-term.

In connection with the Board's adoption of the LTC Plan in April 2015, the Board determined thatCompany’s practice was to grant all long-term equity compensation for 2015 and 2016 would be awardedto named executives in the form of time-vested restricted stock or restricted stock units.with the number of shares granted based on the achievement of various metrics established by the Company. In consultation with its executive compensation consultant, the committee determined that utilizing a combination of PSUs and RSUs would further enhance alignment of executive compensation with shareholder value creation and achievement of key business objectives. As such, starting in 2019, 30% of a named executive’s target long-term incentive compensation (“LTIC”) award will be made in RSUs and the other 70% of the LTIC award will be made in the form of PSUs. These awards are described in more detail below.

 

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Stock-based compensation

Each named executive’s target LTIC award for the Company's named executives is currently determined considering long term incentive compensation ("LTIC") targets and multiples. The amounta particular year will be based on a percentage of LTIC to be awarded to an executive each year (the “LTIC Award”) is to be determined by multiplying (1) his or her target percentage (which is determined separately for different categories of employees) by (2) a LTIC Multiplier (described below) by (3) the participant's annual salary.

The target percentage is a percentage of the participant'sbase salary. The LTC Plan establishes athe target percentage for LTIC equity awards of 75%LTIC award at 200% of base salary for our CEO, 100% of base salary for our CFO, 90% of base salary for our CAO, and 60% of base salary for theeach of our other named executives. In February 2017,Although the LTC Plan gives the Human Resources and Compensation Committee setthe discretion to change the target percentageLTIC award for LTIC equity awardsany executive for our CEO at 150% of base salaryany particular year, the committee did not exercise this discretion for 2017 and beyond in order to better align our CEO’s compensation with median market rates as a result of the Mercer benchmarking analyses described above.2019.

Restricted Stock Units (RSUs)

 

The LTC Plan provides that the value of each annual LTIC Multiplier can range from 0%award to 200% (referredbe made in the form of RSUs will be equal to as "0X" through "2.0X") and30% of the executive’s target LTIC award for that year. The award is calculated basedgenerally to be made on March 30 of each year (or, if March 30 is not a business day, on the combinedimmediately preceding business day), with the number of RSUs to be issued determined by using the average stock price over the preceding 30 calendar days. The RSUs vest ratably over a three-year period, subject to any exceptions set forth in the award agreement reflecting the grant of such RSUs.

Performance Share Units (PSUs)

The portion of each annual LTIC award to be made in the form of PSUs is designed to reward the named executives based upon achievement of cumulative financial performance on threeover a three-year period (with cliff vesting to occur at the end of such three-year performance period) starting with the performance year in which the annual LTIC award is granted. This cumulative financial performance is measured by two metrics:

 

●

60% of the value of the PSUs will be dependent on Spartan’s Total Shareholder Return (TSR) over the three-year performance period relative to the Dow Jones U.S. Commercial Vehicles and Truck Index (the “Index”); and

●

Spartan Motors' Financial Results (e.g., operating40% of the value of the PSUs will be dependent on Spartan’s cumulative net income earnings per share, etc.);over the three-year performance period. For this purpose, net income is to be calculated in accordance with GAAP, but subject to such adjustments as may be approved by the Human Resources and Compensation Committee.

The LTC Plan provides that the number of PSUs earned with respect to a three-year performance period is to be determined as follows:

●

Established Strategic Objectives (MBOs).TSR over the performance period relative to the Index (60% weighting):

Percentile Rank Compared to Index	Payout as Percentage of Target
Less than 25th percentile	0%
25th percentile (Threshold)	50% (0X)
50th percentile (Target)	100% (1X)
75th percentile (Maximum)	200% (2X)

 

Each year, the Board will determine the weighting of the individual metrics, which may range from 0% upWith respect to 50% for any of the three metrics.

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TSR Metric: Up to one half of the LTIC Multiplier is based on performance relative to a TSR metric. The TSR metric is a comparison of Spartan Motors’ TSR to a peer group of companies in similar industries for the previous 12 months. Management will provide the data (which is provided by an independent third party), the appropriate analysis, and make a recommendation as toboth the Company’s performance relative tostock and the peer group. The Human Resources and Compensation Committee will makestock of each company in the final determination as toIndex, 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 (e.g., operating income, earnings per share, etc.). On an annual basis, the CEO will propose to the Human Resources and Compensation Committee 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 objectivesperformance will be equally weighted.

Strategic Objectives 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 the strategic objectives (and measurement metrics) based upon the 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.

2016 Long Term Incentive Compensation

For 2016, the following metrics were established for our named executives to earn LTIC awards pursuant to the LTC Plan:

TSR Metric:

The TSR goal was set as the Company’s TSR percentile rank for the period from January 1, 2016 through December 31, 2016 among the companies included in the Dow Jones Commercial Vehicles and Trucks index.

Spartan Motors' Financial Results: 

Spartan Motors' company-wide operating income for 2016.

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 2016.

The final LTIC multiplier for 2016 was determined consideringcalculated (a) using a weighted20-trading day average of the metrics described above, withstock price ending on the TSRfirst day and Spartan Motors’ operating income metrics each receivinglast day of the performance period, and (b) assuming all dividends declared during the performance period are reinvested at the closing price on the applicable ex-dividend date. Achievement between the stated percentages will be interpolated on a weighting of 40% and the Strategic Objectives metric receiving a weighting of 20%. The actual achievement for each goal for the executive officers for 2016 is as follows (dollar amounts in thousands):straight-line basis.

		Performance Criteria for payouts at:																Payout Percentage Range												Actual								Weighted
Metric		Min.				Target				Max.				Actual Performance				Min.				Target				Max.				Payout %				Weight				Percentage
Consolidated Operating Income (1)		$	3,250			$	5,416			$	7,582			$	9,720				50	%			100	%			200	%			200	%			40	%			80	%
Total Shareholder Return (percentile)			20				40				80				96				50	%			100	%			200	%			200	%			40	%			80	%
MBO Goals Achievement			0	%			100	%			200	%			200	%			0	%			100	%			200	%			200	%			20	%			40	%
Total Multiplier																																						200		%

 

(1)●

Consolidated operatingCumulative net income excludes restructuring chargesover the performance period (40% weighting), with cumulative net income amounts for the three-year performance period of $1,095.2019 through 2021 established as follows:

Cumulative Net Income	Payout as Percentage of Target
Less than $47,082,000 (threshold)	0%
$47,082,000 (threshold = 70% of target)	50% (0X)
$67,260,000 (target)	100% (1X)
$80,712,000 (maximum = 120% of target)	200% (2X)

 

Achievement between the stated dollar amounts will be interpolated on a straight-line basis.

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At the end of the three-year performance period, the executive may be issued shares of the Company’s common stock in settlement of the PSUs, with the number of shares calculated based on the Company’s TSR over the three-year performance period relative to the Index and the Company’s cumulative net income over the three-year performance period. The aggregate number of shares actually granted to the executive may be between 0% and 200% of the number of PSUs granted.

2017 Long Term2019 Long-Term Equity Incentive Compensation

 

For 2017,2019, our named executives were granted the following LTIC awards, targetsawards:

Executive	Target LTIC Award for 2019	Number of RSUs Granted (30% of Target LTIC Award)		No. of PSUs Granted (70% of Target LTIC Award)
Daryl M. Adams, President and CEO	$1,400,000 (200% of base salary)	47,836		111,617
Frederick J. Sohm, CFO	$ 375,000 (100% of base salary)	12,813		29,898
Thomas C. Schultz, Chief Administrative Officer	$ 288,000 (90% of base salary)	9,841		22,961
Stephen K. Guillaume, President - Specialty Chassis and Vehicles	$ 183,000 (60% of base salary)	6,253		14,590
Chad M. Heminover, President - Fleet Vehicles and Services	$ 176,400 (60% of base salary)	6,027		14,064

All of these RSUs and PSUs were establishedgranted on April 15, 2019 and were calculated using the TSR Metric, Adjusted EBITDA, and return on invested capital (“ROIC”). The final LTIC multiplieraverage stock price of Spartan Motors’ common stock over the preceding 30 calendar days, which was $8.78 per share.

All of the RSUs granted in 2019 will vest ratably over a three-year period.

All of the PSUs granted in 2019 will be determined using weightings of 30% for the TSR Metric, 40% for Adjusted EBITDA, and 30% for ROIC. ROIC is defined as adjusted net income after tax less dividends divided by invested capital, where invested capital is total equity plus total debt.

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Chief Executive Officer

The Chief Executive Officer's compensation isearned (or forfeited) based on the policies and objectives outlinedCompany’s performance over the three year period from January 1, 2019 through December 31, 2021, based on the metrics described above.

2020 Long -Term Equity Incentive Compensation

No changes were made to the long-term equity incentive compensation framework described above for all executive officers. The Human Resources2020. RSUs and Compensation Committee believes that incentive compensation, designedPSUs were granted to reward performance, should represent a significant percentageeach of the CEO's potential compensation.  named executives on March 30, 2020. The RSUs will vest ratably over a three year period, and the PSUs will be earned based on the same metrics described above (TSR compared to the Index and cumulative net income) over the three-year performance period of 2020 through 2022.

 

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

 

The Human Resources and Compensation Committee of the Board of Directors develops and recommends to the Board of Directors Spartan Motors'Motors’ executive compensation policies. The Human Resources and Compensation Committee also administers Spartan Motors'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 consistsis made up of threeindependent directors, none of whom is a current or former employee of Spartan Motors.

 

The Company’sCompany’s CAO serves as a coordinator of the Human Resources and Compensation Committee meetings, but does not participate in any decisions regarding executive or boardBoard compensation. The Company'sCompany’s CEO and CFO participate only to assist in the process of determining the compensation for executives other than themselves and to provide information to the committee regarding Company performance, operations, strategies, and other information requested by the committee. Other than the CEO, the CAO and the CFO, none of the Company'sCompany’s named executives participate in the discussions with the Human Resources and Compensation Committee.

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The Human Resources and Compensation Committee'sCommittee’s written charter provides that the Committee will review and make recommendations regarding the compensation of executive officers. The Committee’s policy is to conduct benchmarking of officer’s salaries at least once every two years. Executive compensation decisions must be approved by a majority of the independent members of the Board of Directors.

 

Personal Benefits and Perquisites

We believe that compensation in the form of perquisites and personal benefits does not provide transparency for shareholders or serve our compensation philosophy. Consequently, such benefits play a very minor role in our compensation program. The limited perquisites and personal benefits we do provide are disclosed in the Summary Compensation Table below and detailed in footnote 4 to that table.

Severance Benefits

We maintain a Management Severance Plan for the primary purpose of providing certain severance benefits to a select group of our key management employees designated by our Human Resources and Compensation Committee periodically engages independent third party consultantsCommittee. All of our named executives have been designated for participation in this Management Severance Plan.

Pursuant to provide data and analysis regarding the compensationManagement Severance Plan, a participant who is terminated by the Company without cause (as defined in the Management Severance Plan) is entitled to receive the following severance benefits:

●

The participant will be entitled to continue to receive his or her base salary (at the rate in effect immediately prior to qualifying termination or, if greater, the rate in effect at any time within 180 days prior to the qualifying termination) for a period of 18 months following termination for our CEO and a period of 12 months for our other named executives.

●

If the threshold is satisfied for annual incentive cash bonus eligibility under the LTC Plan for the fiscal year in which the qualifying termination occurs, the severance benefit will include a pro rata portion of the target incentive bonus for that year (based on the number of complete calendar months that have elapsed in that year prior to the qualifying termination). Any such pro rata bonus will be calculated and paid following completion of the performance year in question.

●

If the executive enrolls in COBRA, then during the applicable salary continuation period (18 months for our CEO and 12 months for our other named executives), the Company will pay a portion of the executive’s COBRA premiums equal to the portion of such premiums (if any) the Company would have paid with respect to the executive had he or she continued employment with the Company.

●

All outstanding unvested shares of restricted stock and RSUs will be fully vested as of the date of termination. PSUs that are outstanding at the date of termination will generally be settled (i.e., and shares of common stock issued to the executive) at the time the PSU would have otherwise been settled in accordance with its terms, following completion of the relevant performance period and subject to the achievement of the performance conditions for such PSUs, but with the executive only receiving a pro rata portion of the shares he or she would have otherwise received (based on the number of complete calendar months that have elapsed in that year prior to the qualifying termination).

●

The executive will be entitled to receive reasonable outplacement services during the applicable salary continuation period (18 months for our CEO and 12 months for our other named executives), up to a maximum of $10,000 per year.

Notwithstanding the foregoing, if the employment of executives at our peer group companies and at companies against whom we must competea named executive is terminated by the Company for talent. The Human Resources and Compensation Committee uses this data to design and implement competitive compensation programs. Independent consultants engagedcause (as determined by the Human Resources and Compensation CommitteeCommittee) or by the executive for “good reason” following a “change in control” of the Company, as each of those terms is defined in our Stock Incentive Plan, then the severance benefit payable to our CEO is equal to twice his annual salary plus the target annual incentive cash award (without proration), and the severance benefit payable to our other named executives is equal to their annual salary plus the target annual incentive cash award (without proration).

An executive’s receipt of these severance benefits is conditioned on the participant executing a release of claims in favor of the Company and complying with certain non-competition, non-solicitation, confidentiality, and other provisions in favor of the Company for the applicable salary continuation period (18 months for our CEO and 12 months for our other named executives).

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This summary of the Management Severance Plan is subject in its entirety to the actual provisions of the plan.

Retirement and Other Benefits

We do not answerprovide a defined benefit pension to management.our named executives, although we do provide a defined contribution plan (401(k) plan). In 2014,addition, we provide a Supplemental Executive Retirement Plan (SERP), which is a non-qualified defined contribution plan that allows our executives to defer compensation and provides for certain matching contributions by the Committee engaged Mercer to benchmark officer salaries and other compensation incentives. This engagement was completedCompany. The SERP is described in January, 2015, and was a factor utilized in determining the base salary adjustments for the named executive officers for 2016. In 2016, the Committee again engaged Mercer to benchmark officer salaries and other compensation incentives. This engagement was completed in December, 2016 and was a factor utilized in determining the incentive compensation adjustment for Mr. Adams for 2016.more detail under “Non-Qualified Deferred Compensation” below.

 

In performingOur typical practice when hiring a new executive is to set forth the principal terms of their employment in an employment offer letter. These employment letters often commit us to provide certain benefits to these executives, including upon their termination of employment. Those commitments are described in this proxy statement.

Risk Mitigation

We believe our compensation benchmarkingpolicies and programs are designed in a manner such that was completedthey do not create incentives or risks that are reasonably likely to result in 2015a material adverse effect on the Company. These policies and 2016, Mercer conducted benchmarking analyses of the namedprograms are designed to balance our executive officers' compensation including base salaries, long-and short-termamong appropriate short- and longer-term incentives and severancecreate the appropriate mix of fixed compensation as well as compensation that is contingent on the achievement of objectives we believe will enhance shareholder value. In addition, we have several policies and practices utilizing information from proxy disclosures and published surveys. A peer group was selected consisting of durable goods manufacturersin place designed to mitigate risks associated with revenues ranging from one-half to double that of Spartan Motors. Market median level salary information in the study reflects the pay for anour executive with a median level of experience. All market data comparisons were aged forward to February 1, 2015 or January1, 2017. The list of identified peer companies in this survey include: Drew Industries, Inc.; Standard Motor Products; 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. compensation practices, including:

 

Pricing Equity Awards; Disclosure of InformationDirector and Executive Stock Ownership Requirements

 

Spartan Motors has long observed a policyOur Board members and executives are required to attain ownership of setting the exercise price forour common stock, options, stock appreciation rights, and other share-based awardswithin five years of being named to their position, at least equal to the closing market price on the date of the grant (or most recent closing price if the date of the grant is notfollowing minimums:

●	Non-employee directors:	5 times annual cash Board retainer
●	CEO:	5 times annual base salary
●	All other named executives:	3 times annual base salary

Shares owned directly by Board members or executives, shares owned through a trading day). Stock401(k) plan or IRA, unvested restricted shares or restricted share units that are subject to time-based vesting, shares previously owned by executives but placed in irrevocable trusts for family members or in revocable trusts, and shares determined to have actually been earned and issuable pursuant to outstanding performance share units (PSUs) are counted toward these ownership requirements. Unexercised options, andunexercised stock appreciation rights, and shares underlying PSUs (except to the limited extent described in the preceding sentence) are not repriced. counted toward the ownership requirements.

Clawback Provision

Our LTC Plan contains a provision stating that compensation awarded under the plan will be retracted to the extent a grant was made to an executive as the result of a material misrepresentation.

Anti-Hedging Policy

We do not "backdate"consider it inappropriate for any of our directors or executive officers to hedge or monetize transactions to lock in the value of his or her ownership of Spartan stock. These transactions potentially allow the holder to own our stock optionswithout the full risks of ownership. Our Corporate Governance Principles prohibit our directors and executive officers from engaging in any transaction with respect to any of our securities the purpose of which is to hedge against or offset any other share based payments. decrease in the market value of our securities.

28

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Pricing of Equity Awards

The price used to determine the number of restricted shares granted to our executives is generally an average of the closing share price for the thirty30 calendar days prior to the grant date.

We do not “backdate” any equity-based awards. The Board of Directors is committed to maintaining the integrity of theour 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.

 

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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.

Other Information

We do not provide a defined benefit pension to our named executive officers, although we do provide a defined contribution plan. Our typical practice when hiring a new executive is to set forth the principal terms of their employment in an employment offer letter. These employment letters often commit us to provide certain benefits to these 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 President and CEO; Frederick J. Sohm, our CFO; John Forbes, the President of our Delivery and Service Vehicles business unit; John Slawson, the President of our Emergency Response Vehicles business unit; and Thomas Schultz, our Chief Administrative Officer. When used in this Proxy Statement, "named executive officers" and "named executives" refer to the individuals identified in this table.

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Summary Compensation Table

Name and Principal Position		Year		Salary ($)				Bonus (1) ($)				Stock Awards (2) ($)				Non-Equity Incentive Plan Compen- sation (3) ($)				All Other Compen- sation (4) ($)				Total ($)
Daryl M. Adams,		2016		$	620,385			$	337,385			$	1,662,500			$	992,615			$	29,905				3,642,790
President and CEO (5)		2015			520,692				320,320				728,119				-				23,462			$	1,592,593
		2014			173,654				-				-				125,000				496				299,150
Frederick J. Sohm,		2016			269,231				75,000				325,385				325,385				27,796				1,022,797
CFO (6)		2015			67,308				45,913				352,000				-				288				465,509
		2014			-				-				-				-				-				-
John A. Forbes		2016			237,899				-				288,096				288,096				7,376				821,467
President, Delivery and		2015			230,625				109,086				94,095				-				5,792				439,598
Service Vehicles		2014			225,000				-				77,100				175,000				5,150				482,250
Thomas C. Schultz		2016			257,620				75,000				434,190				313,890				9,936				1,090,636
President, Chief		2015			-				-				-				-				-				-
Administrative Officer (7)		2014			-				-				-				-				-				-
John Slawson		2016			250,000				39,250				300,000				300,000				22,378				911,628
President, Emergency		2015			43,269				20,000				352,000				-				-				415,269
Response Vehicles		2014			-				-				-				-				-				-

Name and Principal Position	Year		Salary ($)				Bonus(1) ($)				Stock Awards(2) ($)				Non-Equity Incentive Plan Compen- sation(3) ($)				All Other Compen- sation(4) ($)				Total ($)
Daryl M. Adams	2019		$	703,460	(5)		$	-			$	1,749,581			$	1,890,000			$	52,780			$	4,395,821
President and CEO	2018			674,719				-				915,705				472,303				65,654				2,128,381
	2017			665,000				-				1,197,000				1,064,000				48,030				2,974,030
Frederick J. Sohm	2019			360,981				-				468,644				405,000				25,254				1,259,879
CFO	2018			257,355				-				176,256				85,680				27,830				547,121
	2017			315,000				-				230,400				307,200				21,296				873,896
Thomas C. Schultz	2019			312,136				-				359,918				345,600				32,181				1,049,835
CAO	2018			291,194				-				158,080				122,951				30,220				602,445
	2017			285,250				-				206,640				275,520				106,728				874,138
Stephen K. Guillaume	2019			288,118				-				228,697				329,400				25,808				872,023
President, Specialty	2018			245,426				-				133,098				200,463				21,037				600,024
Chassis and Vehicles	2017			240,057				-				173,984				217,480				8,497				640,018
Chad M. Heminover(6)	2019			286,154				-				220,446				317,520				48,843				872,963
President, Fleet	2018			240,385				-				135,000				101,538				40,766				517,689
Vehicles and Services

 

(1)		Amounts in thisThis column reflectwill disclose any one-time discretionary cash bonuses earned and expensed by the Company in the respective year.
(2)		Amounts shown in this columnfor 2016 stock awards represent the aggregate grant date fair value of stock awards for our named executives, which primarily include awards made pursuant to our LTC Plan in early 2016 that were subject to performance conditions for 2016 performance. The fair values for these awards were determined based on the probable outcome of the performance conditions specifiednoted in the LTC Plan at the time the awards were made. The grant date fair valueGrants of the shares actually issued on March 30, 2017 pursuant to these awards was: $1,802,994 for Mr. Adams; $352,883 for Mr. Sohm; $312,443 for Mr. Forbes; $470,886 for Mr. Schultz; and $325,326 for Mr. Slawson. The grant date fair values of the awards made in early 2016 if the highest level of performance was achieved were $1,802,994 for Mr. Adams, $352,883 for Mr. Sohm, $312,443 for Mr. Forbes, $470,886 for Mr. Schultz and $325,356 for Mr. Slawson.Plan-Based Awards table below. The fair values were determined in accordance with the FASB ASC Topic 718, "Stock“Stock Compensation."” For information regarding valuation assumptions for the 2019 awards, see Note 1215 – Stock Based Compensation to the Consolidated Financial Statements for the year ended December 31, 2016. 2019. Assuming the highest level of performance is achieved for the PSUs granted in 2019, the grant date fair values of all stock awards granted in 2019 would have been $3,069,116 for Mr. Adams, $822,099 for Mr. Sohm, $631,364 for Mr. Schultz, $401,180 for Mr. Guillaume, and $386,708 for Mr. Heminover.
(3)		Consists of performance-based non-equity (cash) compensation earned underAmounts shown in this column represent the annual cash incentive bonuses paid to our named executives pursuant to our LTC Plan, (or its predecessor) for performance during the respective year. Please see the "Compensation Discussion and Analysis" section above for details. as described above.
(4)		The 20162019 amounts reported in this column consist of (i) the Company's matching contributions to the named executive's qualified 401(k) retirement planfollowing:

			401(k) Matching Contri- bution				SERP Matching Contri- bution				Dividends Paid on Restricted Stock				Health, Life, and LTD Insurance				Relocation Payments				Country Club Dues Paid				Total
	Name		($)				($)				($)				($)				($)				($)				($)
	Daryl M. Adams		$	9,500			$	-			$	20,584			$	13,816			$	-			$	8,880			$	52,780
	Frederick J. Sohm			9,481				997				3,574				11,202				-				-				25,254
	Thomas C. Schultz			6,014				-				9,919				16,248				-				-				32,181
	Stephen K. Guillaume			5,817				-				3,186				16,805				-				-				25,808
	Chad M. Heminover			5,279				-				1,347				15,479				26,738				-				48,843

(5)	Mr. Adams’ salary for 2019 includes an additional payment of $11,253.85 made on February 15, 2019 as follows: $2,916base salary for Mr. Adams, $3,931 for Mr. Sohm, $3,952 for Mr. Forbes, $2,947 for Mr. Schultz and $2,526 for Mr. Slawson; (ii) dividends2018, which was inadvertently not paid on restricted stock as follows: $20,042 for Mr. Adams, $8,755 for Mr. Sohm, $3,424 for Mr. Forbes, $6,989 for Mr. Schultz, and $9,069 for Mr. Slawson; (iii) relocation paymentsin 2018 because of $15,110 for Mr. Sohm and $10,783 for Mr. Slawson; and (iv) amounts paid for country club dues of $6,947 for Mr. Adams.a delay in implementing his 2018 salary increase.
(5)	Mr. Adams joined the Company as COO in August 2014. He was appointed as President and CEO effective February 19, 2015.
(6)	Mr. Sohm joined the Company as CFO effective September 28, 2015.
(7)6)	Mr. SchultzHeminover joined the Companycompany as Corporate Vice President of Human ResourcesOperations and Business Development – Fleet Vehicles and Services in July 2014,December 2017, and was promoted to Chief Administrative Officer in July 2016.
(8)	Mr. Slawson joined the company as President of the Emergency ResponseFleet Vehicles businessand Services in November 2015.May 2018.

 

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Grants of Plan-Based Awards During 2016

2019

 

The following table provides information concerning each grant of a plan basedplan-based award made to the named executive officersexecutives in the last completed fiscal year.

 

Grants of Plan-Based Awards

				Date the		Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)												Estimated Possible Payouts Under Equity Incentive Plan Awards(2)												All Other Stock Awards: Number of Shares of Stock or Units (#)(3)				Grant Date Fair Value of Stock and Option Awards(4)
Name		Grant Date		Compensation Committee Took Action		Threshold ($)				Target ($)				Maxi mum ($)				Threshold (#)				Target (#)				Maxi mum (#)
Daryl M.		2/24/16				$	248,154			$	496,308			$	992,616				-				-				-				-			$	-
Adams		3/30/17		2/24/16			-				-				-				28,251				56,501				113,003				-				930,578
Frederick J.		2/24/16					81,346				162,692				325,385				-				-				-				-				-
Sohm		3/30/17		2/24/16			-				-				-				9,878				19,756				39,512				-				325,385
John A.		2/24/16					72,024				144,048				288,096				-				-				-				-				-
Forbes		3/30/17		2/24/16			-				-				-				8,746				17,492				34,984				-				288,096
Thomas C.		2/24/16					78,472				156,945				313,890				-				-				-				-				-
Schultz		3/30/17		2/24/16			-				-				-				9,529				19,058				38,117				-				313,890
John W.		2/24/16					75,000				150,000				300,000				-				-				-				-				-
Slawson		3/30/17		2/24/16			-				-				-				9,107				18,215				36,430				-				300,000

			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)												Estimated Possible Payouts Under Equity Incentive Plan Awards(2)												All Other Stock Awards: Number of Shares of Stock or Units (#)(3)				Grant Date Fair Value of Stock and Option Awards(4)
	Grant		Threshold				Target				Maximum				Threshold				Target				Maximum
Name	Date		($)				($)				($)				(#)				(#)				(#)
Daryl M. Adams	4/15/19		$	525,000			$	1,050,000			$	2,100,000				-				-				-				-			$	-
	4/15/19			-				-				-				55,809				111,617				223,234								1,319,535
	4/15/19			-				-				-																47,836				430,046
Frederick J. Sohm	4/15/19			112,500				225,000				450,000				-				-				-				-				-
	4/15/19			-				-				-				14,949				29,898				59,796				-				353,455
	4/15/19			-				-				-																12,813				115,189
Thomas C. Schultz	4/15/19			96,000				192,000				384,000				-				-				-				-				-
	4/15/19			-				-				-				11,481				22,961				45,922				-				271,447
	4/15/19			-				-				-																9,841				88,471
Stephen K. Guillaume	4/15/19			91,500				183,000				366,000				-				-				-				-				-
	4/15/19			-				-				-				7,295				14,590				29,180				-				172,483
	4/15/19			-				-				-																6,253				56,214
Chad M. Heminover	4/15/19			88,200				176,400				352,800				-				-				-				-				-
	4/15/19			-				-				-				7,032				14,064				28,128				-				166,263
	4/15/19			-				-				-																6,027				54,183

 

	(1)	The amounts reported in these three columns are not actual payouts. They representrelate to the possible threshold, target, and maximum payouts that could have been earned by each named executive officer for fiscal year 2016annual cash incentive awards granted to the executives in April 2019 pursuant to our LTC Plan. These awards were payable based on various objectives to be achieved during 2019, as discussed under the LTC Plan described under "Compensation“Compensation Discussion and Analysis"Analysis – Annual Cash Incentive Awards” above. The thresholdIn March 2020, the actual amounts represent the minimum bonus payable to the named executive underexecutives pursuant to these awards were determined and paid as reflected in the LTC Plan. Generally, there is no guarantee“Non-Equity Incentive Plan Compensation” column of any minimum bonus under the LTC Plan. Each target amount assumes a Bonus Multiple of 1.0X. Each maximum amount represents the maximum annual bonus payable to the named executive under the LTC Plan and is calculated based on a Bonus Multiple of 2.0X. For details, see the "Compensation Discussion and Analysis" sectionSummary Compensation Table above.
(2)
	(2)	TheseThe amounts reported in these three columns represent possible payoutsreflect the grant of common stock under the Company'sPSUs in 2019 pursuant to our LTC Plan. The target amountsPSUs represent shares of the target equity payout forCompany’s common stock and are issuable to executives following the three-year performance period of 2019 - 2021 based on the Company’s TSR relative to the Index and cumulative net income over such performance period, as discussed under “Compensation Discussion and Analysis – Long-Term Equity Incentive Awards” above. Each threshold amount assumes an LTIC multiple of 0.5X; each named executive for 2016 performance. Each target amount assumes an LTIC multiple of 1.0X. Each1.0X; and each maximum amount represents the maximum stock award undernumber of shares issuable pursuant to the LTC plan,PSUs granted, which for 20162019 was a multiple of 2.0X. Estimates of possible payouts were determined using current share price information at the time the plan was approved by the Compensation Committee on February 24, 2016. For details regarding how equity incentive awards under the LTC Plan are determined, see the "Compensation Discussion and Analysis" section above. Shares are granted the following year based on achievements of targets approved for the current fiscal year.
	(3)	The amounts reported in this column reflect the number of shares of common stock issued to the named executive during 2016 other than shares granted under the LTC Plan. Shares granted are generally subject to a 3-year vesting schedule (33% per year beginning on the first anniversary of the grant date). Dividends are paid on shares of restricted stock at the rate dividends are paid on common stock. All shares of restricted stock have voting rights and are subject to cancellation in the event of termination from employment for reasons other than death, disability, or retirement.
(3)	These are the RSUs granted to each executive on April 15, 2019, as discussed under “Compensation Discussion and Analysis – Long-Term Equity Incentive Awards” above. All such RSUs vest ratably over a three-year period.
(4)	Amounts reported in this column represent the aggregate grant date fair value of stock awards. The fair values for plan basedthe equity-based awards (PSUs and RSUs) and were determined based on the probable outcome of the performance conditions specified in the LTC Plan at the time the performance conditions were approved by the Board. The fair values of any discretionary awards made during the year were determinedcomputed in accordance with FASB ASC Topic 718.

 

The Company paid the compensation set forth in the Summary CompensationCompensation Table and the Grants of Plan Based Awards table pursuant to the philosophy, procedures, and practices set forth in the "Compensation“Compensation Discussion and Analysis"Analysis” section above.

 

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Outstanding Equity Awards at December 31, 20162019

 

The following table provides information concerning unexercised options, SARs, and restricted stock that had not vested for each named executivecertain outstanding equity awards as of December 31, 2016.2019.

 

Outstanding Equity Awards at Fiscal Year-End

 

		OPTION AWARDS												STOCK AWARDS								Stock Awards
Name		Number of Securities Underlying Unexercised Options: Exercisable (#)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested(1) (#)				Market Value of Shares or Units of Stock That Have Not Vested(2) ($)				Number of Shares or Units of Stock That Have Not Vested(1) (#)				Market Value of Shares or Units of Stock That Have Not Vested(2) ($)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($)
Daryl M. Adams			-			$	-				-				190,421			$	1,761,394				253,673			$	4,586,408				111,617			$	2,018,035
Frederick J. Sohm			-				-				-				87,550				809,838				48,558				877,929				29,898				540,556
John A. Forbes			-				-				-				34,241				316,729
Thomas C. Schultz			-				-				-				69,886				646,446				57,612				1,041,625				22,961				415,135
John W. Slawson			-				-				-				90,692				838,901
Stephen K. Guillaume																							38,108				688,993				14,590				263,787
Chad M. Heminover																							19,498				352,524				14,064				254,277

(1)(1)

The vesting dates forThis column reports the total number of shares of restricted stock and shares of stock underlying outstanding RSUs that have not vested as of December 31, 20162019. Vesting dates for these outstanding awards are as follows:

 

	Named Executive Executed Officer			Vesting Dates
	Daryl M. Adams	132,416 shares on 3/30/2020 15,946 shares on 4/15/2020 54,365 shares on 3/30/2021	22,07515,945 shares on each of 3/30/2017, 3/30/2018 and 3/30/20194/15/2021 7,76719,056 shares on each of 8/3/2017 and 8/3/201830/2022 12,23315,945 shares on each of 8/3/2017 and 8/3/2018 28,066 shares on each of 3/30/2017, 3/30/2018 and 3/30/20194/15/2022
	Frederick J. Sohm		29,18324,365 shares on each of 3/30/2017,2020 4,271 shares on 4/15/2020 9,088 shares on 3/30/2018 and2021	4,271 shares on 4/15/2021 2,292 shares on 3/30/20192022 4,271 shares on 4/15/2022
	John A. Forbes		3,750 shares on each of 3/31/2017 and 3/31/2018 788 shares on each of 3/30/2017, 3/30/2018 and 3/30/2019 8,126 shares on each of 3/30/2017, 3/30/2018 and 3/30/2019
	Thomas C. Schultz		7,45735,097 shares on 3/30/2017 and 3/30/20182020 18,3243,281 shares on 4/15/2020 9,384 shares on 3/30/2017,2021	3,280 shares on 4/15/2021 3,290 shares on 3/30/2018 and 3/30/20192022 3,280 shares on 4/15/2022
Stephen K. Guillaume	John W. Slawson		30,23121,184 shares on each of 3/30/2017, 3/30/2018 and2020 2,085 shares on 4/15/2020 7,901 shares on 3/30/20192021	2,084 shares on 4/15/2021 2,770 shares on 3/30/2022 2,084 shares on 4/15/2022
Chad M. Heminover	5,384 shares on 3/30/2020 2,009 shares on 4/15/2020 5,385 shares on 3/30/2021	2,009 shares on 4/15/2021 2,702 shares on 3/30/2022 2,009 shares on 4/15/2022

 

(2)2)		The market value of the unvested restricted stockeach equity award is determined by multiplying the closing market price of the Spartan Motors'Motors’ common stock as of December 30, 201631, 2019 ($9.25)18.08) by the number of shares underlying each award.
(3)		This column reports the number of stock.shares underlying unearned PSUs, assuming performance at target levels. The actual number of shares that will be earned can range from 0% to 200% of the target amount, as determined after the end of the performance period based on the level at which the applicable performance goals have been achieved. The vesting date for all unearned PSUs shown in this column is December 31, 2021, the last day of the three-year performance period.

 

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Stock Vested in 20162019

 

The following table provides information concerning the vesting of restricted stock during 20162019 for each of the named executives.

Stock Vested

 

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting (1) ($)
Daryl M. Adams			-			$	-				42,076			$	270,230
Frederick J. Sohm			-				-				-				-
John A. Forbes			-				-				8,537				36,128
Thomas C. Schultz			-				-				7,457				29,903
John W. Slawson			-				-				-				-

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)			Value Realized on Vesting(1) ($)
Daryl M. Adams		163,502			$   1,443,723
Frederick J. Sohm		51,256			452,590
Thomas C. Schultz		50,131			442,657
Stephen K. Guillaume		26,274			231,999
Chad M. Heminover		2,684			23,700

 

(1)(1)

The amounts in this column are determined by multiplying the number of shares of stock vesting by the market value of the underlying shares on the vesting date (or, if the vesting date is not a trading day, the trading day immediately preceding the vesting date).

 

Non-Qualified

Non-Qualified Deferred Compensation

 

The following table provides information concerning non-qualifiednon-qualified deferred compensation for 2016.2019. This table should be read in conjunction with the narrative discussion that follows the table.

 

Non-Qualified Deferred Compensation

Name		Plan				Executive Contributions In Last FY ($)				Registrant Contributions In Last FY(1) ($)				Aggregate Earnings In Last FY(2) ($)				Aggregate Withdrawals/ Distributions In Last FY ($)				Aggregate Balance At Last FYE ($)			Plan		Executive Contributions In Last FY ($)				Registrant Contributions In Last FY(1) ($)				Aggregate Earnings In Last FY(2) ($)				Aggregate Withdrawals/ Distributions In Last FY ($)				Aggregate Balance At Last FYE ($)
Daryl M. Adams		SERP				$	-			$	-			$	-			$	-			$	-		SERP		$	-			$	-			$	-			$	-			$	-
Frederick J. Sohm		SERP					13,680				-				1,380				-				15,061		SERP			32,488				997				19,266				-				110,052
John A. Forbes		SERP					-				-				-				-				-
Thomas C. Schultz		SERP					-				-				-				-				-
John W. Slawson		SERP					-				-				-				-				-
Thomas C. Schultz																									SERP			-				-				-				-				-
Stephen K. Guillaume																									SERP			-				-				-				-				-
Chad M. Heminover																									SERP			-				-				-				-				-

 

(1)(1)	Participant contributions to the SERP are matched by the Company at the discretion of the Board of Directors and included in the "All“All Other Compensation"Compensation” column in the Summary Compensation Table above.
(2)(2)	Earnings on the SERP are determined by investment choices made by the SERP participants from options determined by the Company. The investment choices consist of specified mutual funds (primarily those offered by Fidelity Investments).

 

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The Supplemental Executive Retirement Plan (the "SERP"“SERP”)

The SERP is a non-qualified defined contribution plan administered by the Human Resources and Compensation Committee that allows eligible participants to defer compensation and incentive amounts and providesprovides for discretionary matching and profit-sharing type contributions by the Company. The SERP is operated much like the Company'sCompany’s 401(k) plan, but participation is limited to a select group of employees determined by the Board of Directors. The SERP is a funded plan, however, the participants are merely general creditors of the Company. The SERP'sSERP’s assets are subject to other creditors of the Company in some circumstances.

 

The SERP allows participants to defer up to 25% of their base salary and up to 50%50% of their cash bonuses each year. At the beginning of each plan year, the Human Resources and Compensation Committee may elect to match all or a specified portion of each participant'sparticipant’s contribution for that year. The Human Resources and Compensation Committee will generally provide that each participant will receive a matching contribution equal to the matching contribution that the participant would have received under the Company'sCompany’s 401(k) plan but for limitations imposed by the Internal Revenue Code. In addition, the Human Resources and Compensation Committee may, in its discretion, make an additional matching contribution and/or a profit-sharing type contribution to the SERP each year.

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Contributions to the SERP are transferred to an irrevocable rabbi trust where each participant has a bookkeeping account in his name. Earnings on each participant'sparticipant’s SERP balance are determined by the investment election of the participants. The investment options available to participants consist primarily of mutual funds offered by Fidelity Investments.

 

All participants are always fully vested in their elective deferrals, and such deferrals will be distributed upon termination of employment, death, disability, or a change in control of the Company. Amounts are also distributable upon an unforeseeable emergency. Matching and profit-sharing contributions contributed by the Company will vest at a rate of 20% per year over a five-year period and may be distributed upon the later of attainment of age 60 and termination of employment, or upon earlier death, disability, or change in control of the Company. Any unvested matching or profit-sharing contributions will become fully vested if a participant retires upon reaching age 60, dies, or becomes disabled. Matching contributions and profit-sharing contributions may be forfeited if the participant enters into competition with the Company, divulges confidential information about the Company, or induces Company employees to leave their employment to compete with the Company.

 

DistributionsDistributions from the SERP may be made in a lump sum or in an installment plan not to exceed 10 years (at the election of the participant).

 

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Potential Payments Upon Termination or Change-in-Control

Potential Payments Upon Termination or Change-in-Control

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The following table summarizes the potential payments and benefits payable to the Company'sCompany’s named executives upon termination of employment in connection with each of the triggering events set forth in the table below, assuming, in each situation, that the triggering event took place on December 30, 2016.31, 2019. The closing market price of Spartan Motors common stock was $9.25$18.08 as of December 30, 2016.31, 2019. The benefits listedsummary provided below would be payable in a lump sumis subject to the executive, except for severance, which would be payable ratably over an 18 month period for Daryl M. Adams and over a 12 month period for all other executives, and payments related to the SERP plan which would be payable according to the termsactual provisions of theeach applicable plan.

 

Triggering Event and Payments/Benefits

		Change in Control				Death or Disability				Retirement				Without Cause (5)
Daryl M. Adams
Early vesting of restricted stock (1)		$	1,761,394			$	1,761,394			$	-			$	-
Severance (2)			2,322,000				-				-				645,000
Pro-rated bonus (3)			-				992,616				-				-
SERP Plan (4)			-				-				-				-
Total		$	4,083,394			$	2,754,010			$	-			$	645,000
Frederick J. Sohm
Early vesting of restricted stock (1)		$	809,838			$	809,838			$	-			$	-
Severance (2)			480,000				-				-				300,000
Pro-rated bonus (3)			-				325,385				-				-
SERP Plan (4)			15,061				15,061				15,061				15,061
Total		$	1,304,899			$	1,150,284			$	15,061			$	315,061
John A. Forbes
Early vesting of restricted stock (1)		$	316,729			$	316,729			$	-			$	-
Severance (2)			386,630				-				-				241,644
Pro-rated bonus (3)			-				288,096				-				-
SERP Plan (4)			-				-				-				-
Total		$	703,359			$	604,825			$	-			$	241,644
Thomas C. Schultz
Early vesting of restricted stock (1)		$	646,446			$	646,446			$	-			$	-
Severance (2)			448,000				-				-				280,000
Pro-rated bonus (3)			-				313,890				-				-
SERP Plan (4)			-				-				-				-
Total		$	1,195,753			$	960,336			$	-			$	280,000
John W. Slawson
Early vesting of restricted stock (1)		$	838,901			$	838,901			$	-			$	-
Severance (2)			400,000				-				-				250,000
Pro-rated bonus (3)			-				300,000				-				-
SERP Plan (4)			-				-				-				-
Total		$	1,363,901			$	1,138,901			$	-			$	250,000

		Termination of Employment –  Change in Control				Termination of Employment -  Disability				Termination of Employment - Without Cause
Daryl M. Adams
Early vesting of equity awards(1)		$	5,114,202			$	5,114,202			$	5,114,202
Severance(2)			1,400,000				1,065,000				1,065,000
Annual cash incentive bonus(3)			2,100,000				1,050,000				1,050,000
SERP Plan(4)			-				-				-
Total		$	8,614,202			$	7,229,202			$	7,229,202
Frederick J. Sohm
Early vesting of equity awards(1)		$	1,019,305			$	1,019,305			$	1,019,305
Severance(2)			375,000				385,000				385,000
Annual cash incentive bonus(3)			225,000				225,000				225,000
SERP Plan(4)			110,052				110,052				110,052
Total		$	1,729,357			$	1,739,357			$	1,739,357
Thomas C. Schultz
Early vesting of equity awards(1)		$	1,150,199			$	1,150,199			$	1,150,199
Severance(2)			320,000				330,000				330,000
Annual cash incentive bonus(3)			192,000				192,000				192,000
SERP Plan(4)			-				-				-
Total		$	1,662,199			$	1,672,199			$	1,672,199
Stephen K. Guillaume
Early vesting of equity awards(1)		$	757,983			$	757,983			$	757,983
Severance(2)			305,000				315,000				315,000
Annual cash incentive bonus(3)			183,000				183,000				183,000
SERP Plan(4)			-				-				-
Total		$	1,245,983			$	1,255,983			$	1,255,983
Chad M. Heminover
Early vesting of equity awards(1)		$	419,027			$	419,027			$	419,027
Severance(2)			330,000				340,000				340,000
Annual cash incentive bonus(3)			176,400				176,400				176,400
SERP Plan(4)			-				-				-
Total		$	925,427			$	935,427			$	935,427

 

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(1)	UponUpon a named executive’s termination without cause, our Management Severance Plan generally provides for (a) accelerated vesting of all unvested shares of restricted stock and all unvested RSUs held by the named executive and (b) pro rata vesting (based on full calendar months prior to termination) of PSUs held by the named executive, paid at end of the performance period based on actual performance. See “Severance Benefits” above for more information.
(2)	Pursuant to our Management Severance Plan, upon termination of employment without cause (other than in connection with a change in control of the Company), each named executive would be eligible to receive a severance benefit consisting of a continuation of his base salary, reimbursement for reasonable outplacement services (up to $10,000 per year), and Company-paid COBRA premiums for a period of 18 months for our CEO and 12 months for each other named executive. Upon termination of employment without cause or for good reason in connection with a change in control of the Company, asour LTC Plan provides that term is defined in the plans, allour named executives will generally be eligible to receive severance equal to a multiple of the executive's annual salary (2X for our CEO and 1X for the other named executive officers' outstanding equity awards grantedexecutives), which severance would be payable in 2016 under eitherbi-weekly installments. In addition, the 2012 Stock IncentiveCompany would be required to pay COBRA premiums for a period of 18 months for our CEO and 12 months for each other named executive.
(3)	Pursuant to our Management Severance Plan, or the 2007 Stock Incentive Plan become immediately and fully vested and nonforfeitable only if the awards are not assumed or replaceupon termination of employment without cause (other than in connection with awards having substantially the same value, or if the executive’s employment is terminated following thea change in control of the Company. For grants madeCompany), each named executive’s severance benefit would include a prorated portion (based on the number of full calendar months that have elapsed in the performance year prior to 2016, undertermination) of the 2012 Stock Incentive Plantarget annual cash incentive bonus otherwise payable for that performance year, assuming the threshold performance level is met. Upon termination of employment without cause or the 2007 Stock Incentive Plan, shares of restricted stock will become immediately and fully vested uponfor good reason in connection with a change in control of the Company, asour LTC Plan provides that term is definedour named executives’ severance benefits will include a multiple of the executive's target annual incentive cash bonus for that performance year (2X for our CEO and 1X for the other named executives), which benefit would be payable in bi-weekly installments with the plans. For all grants made under the 2012 Stock Incentive Plan or the 2007 Stock Incentive plan, a participant's shares of restricted stock will also become immediately vested upon death or disability, or upon the participant becoming retirement-eligible.executive’s salary continuation described in footnote (2) above.
(2)(4)	In accordance with the LTC Plan as adopted in February, 2016, in the event of the executive officer’s termination following a change in control (as defined by the LTC Plan), Mr. Adams is entitled to severance payments totaling two years base salary and target bonus and the remaining executive officers are entitled to severance payments totaling 12 months base salary and target bonus.
(3)	In accordance with the LTC Plan adopted in February, 2016, in the event of the executive officer’s death, disability or retirement (upon reaching either age 62 or age 60 with 10 years of service), the executive officers are entitled to a pro-rated portion of their annual incentive bonus for the year in which the event occurs.
(4)	AmountsAmounts reflect accumulated balance, earnings to date on the balance, and registrantCompany contributions for the SERP.

As described under “Severance Benefits” above, an executive’s receipt of severance benefits pursuant to our Management Severance Plan is conditioned on the participant executing a release of claims in favor of the Company and complying with certain non-competition, non-solicitation, confidentiality, and other provisions in favor of the Company for the applicable salary continuation period (18 months for our CEO and 12 months for our other named executives).

In addition to the payments and benefits described above, our LTC Plan provides for a prorated payment of the annual cash incentive bonus actually earned for a performance year if a named executive has a “qualifying retirement” during the performance year, and our form equity award agreements generally provide that unvested equity awards are not forfeited in event of a “qualifying retirement.” However, a “qualifying retirement” can only occur after the named executive has reached age 62 (with at least five years of continuous employment with the Company), and none of our named executives had reached age 62 as of December 31, 2019.

CEO Pay Ratio

Spartan Motors’ policy is to pay our employees competitively with similar positions in the applicable labor market by providing a combination of competitive base pay, incentives, and other benefits. We benchmark our compensation levels by position and adjust compensation to match the applicable labor market. By doing so, we believe we maintain a high quality and stable workforce.

We are disclosing the following pay ratio, which compares the annual total compensation of our employees (including full-time, part-time and contract employees employed directly by Spartan, but excluding contract employees employed through a third party) other than Mr. Adams (our President and CEO) and the annual total compensation of Mr. Adams.

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We identified our median employee using the following methodology, consistent with SEC rules:

We first examined the annual compensation paid to each of our full-time and part-time employees as well as contract employees directly employed by Spartan, that were employed as of December 31, 2019, a total of 2,660 employees (excluding Mr. Adams), all located within the United States. The annual compensation used for this analysis included each element of compensation listed in the Summary Compensation Table below, along with benefits such as health insurance that are available on an equal basis to all employees. We annualized the total compensation for any employee who was not employed for all of 2019. We did not annualize the compensation for contract employees employed directly by Spartan who were not employed for all of 2019. We did not make any other adjustments to any employee’s compensation or exclude any employees for this analysis. We then ranked all of our employees (except for Mr. Adams) in terms of total compensation from highest to lowest, and identified the employee that ranked as the median (1,330 on the list of 2,660 employees).

Following this methodology, the components of our pay ratio disclosure for 2019 were reasonably estimated as follows:

●	The median of the total annual compensation of all of our employees other than Mr. Adams was $54,178.
●	The total compensation of Mr. Adams was $4,084,399 (including benefits available on an equal basis to all employees that are not required to be included in compensation disclosed in the summary compensation table).
(5)●	Amounts reported in this column reflect severance payments the Company would expect to makeThe ratio of Mr. Adams’ compensation to the named executive upon any terminationcompensation of employment without cause. Messrs. Adams, Sohm, Schultz and Slawson are contractually entitled to one year's base salary upon termination of employment without cause, and Mr. Forbes is contractually entitled to six months' base salary upon termination of employment without cause, however, as a matter of practice, the Company generally does make severance payments equal to one year's base salary to executive officers upon termination of employment without cause. median employee was 75:1.

 

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Compensation of Directors

Compensation of Directors

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Compensation for the Board of Directors is established by the full Board based on input from external compensation experts. Decisions regarding Spartan Motors’ non-employee director compensation program are informed by market practice data gathered from the same peer group companies utilized for executive compensation benchmarking. The following table provides information concerning the compensation of directors for Spartan'sSpartan’s last completed fiscal year.

Name(1)		Fees Earned or Paid in Cash ($)				Stock Awards(2) ($)				Total ($)
James A. Sharman		$	100,000			$	280,019			$	380,019
Thomas R. Clevinger			50,000				170,005				220,005
Richard F. Dauch			50,000				170,005				220,005
Angela K. Freeman(3)			25,000				56,915				81,915
Ronald E. Harbour			51,250				170,005				221,255
Paul A. Mascarenas			67,500				170,005				237,505
Dominic A. Romeo			60,000				170,005				230,005
Andrew M. Rooke			50,000				170,005				220,005
Jeri Isbell(4)			13,750				70,007				83,757

 

Director Compensation

Name (1)(2)		Fees Earned or Paid in Cash (3) ($)				Stock Awards (4) ($)				Total ($)
Hugh W. Sloan, Jr.		$	107,000			$	95,574			$	202,574
Richard F. Dauch			69,692				47,787				117,479
Ronald Harbour			72,192				47,787				119,979
Richard R. Current			71,000				47,787				118,787
Andrew M. Rooke			62,192				47,787				109,979
James C. Orchard			61,000				47,787				108,787
James A. Sharman			50,692				47,787				98,479

 _____________________

(1)	Mr. Adams received no additional compensation for his service as a director. All compensation paid to Mr. Adams is reported in the Summary Compensation Table above.
(2)	As of December 31, 2016, each director had outstanding the following aggregate number of (a) unvested stock awards and (b) options to purchase or SAR awards (all of which are vested) with respect to the following number of shares:

Name		Outstanding Stock Awards - # of shares		Outstanding Option/SAR Awards - # of shares
Hugh W. Sloan, Jr.		-		3,900
Richard F. Dauch		11,917		-
Ronald Harbour		11,917		-
Richard R. Current		-		-
Andrew M. Rooke		11,917		-
James C. Orchard		-		-
James A. Sharman		11,917		-

(3)	Includes dividends paid on unvested restricted stock.
(4)	Amounts shown in this column represent the aggregate grant date fair value of the stock awards granted during 2016. The fair values were determined in accordance with the FASB ASC Topic 718, "Stock Compensation." For information regarding valuation assumptions, see Note 12 – Stock Based Compensation to the Consolidated Financial Statements for the year ended2019. As of December 31, 2016.2019, each director had outstanding the following aggregate number of unvested stock awards:

Name		Outstanding Stock Awards - # of shares
James A. Sharman		31,340
Thomas R. Clevinger		19,014
Richard F. Dauch		19,014
Angela K. Freeman		6,345
Ronald E. Harbour		19,014
Paul A. Mascarenas		19,014
Dominic A. Romeo		19,014
Andrew M. Rooke		19,014

(3)	Ms. Freeman joined the Board on August 5, 2019.
(4)	Ms. Isbell resigned from the Board effective April 10, 2019.

 

Cash-Based Compensation

In 2016 each2019, each non-employee director other than the Chairman of the Board received an annual retainer of $46,000.$50,000. The Chairman of the Board receivesreceived an annual retainer of $92,000.$100,000. Each of the chairs of the Human Resources and Compensation Committee, the Audit Committee, and the AuditNominating and Corporate Governance Committee received an additional annual fee of $10,000 while$10,000.

For 2020, the only changes to the cash fees to be paid to our non-employee directors are (1) the additional fee payable to the chair of the Corporate GovernanceAudit Committee has been increased from $10,000 to $15,000, and Nominating Committee received an additional(2) the annual fee of $7,500. For 2016retainer payable to each director has been increased from $50,000 to $60,000. These changes were made to align with the benchmark compensation survey conducted by Mercer. All cash fees paid to our directors are paid quarterly in arrears.

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Equity-Based Compensation

Historically, the Company’s practice was to grant each non-employee director received additional compensationshares of $15,000the Company’s common stock in recognitionMarch of additional time and effort relatedeach year with a value of $70,000, except the Chairman of the Board, who was granted shares with a value of $140,000. These shares were considered to have been granted for past service of the Smeal acquisition. For 2017, eachdirectors (i.e., in arrears).

Effective with the annual shareholder meeting held in 2019, this practice was discontinued. Instead, non-employee director otherdirectors serving on the Board on the date of the annual meeting (other than any directors retiring from the Board on that date) will be awarded restricted stock units (RSUs) with a value of $100,000, except that the value of the RSUs granted to the Chairman of the Board will receive an annual retainerbe $140,000. The number of $50,000, withRSUs to be granted is to be calculated using the Chairman ofstock price on the Board receiving an annual retainer of $100,000.

In 2016, each non-employee director other than the Chairman of the Board received a grant of 11,917 shares of restricted stock on March 30, 2016. The Chairman of the Board received a grant of 23,834 shares of restricted stock on March 30, 2016. Such grants were made under the Stock Incentive Plan of 2012. The restricted stock has a vesting period of one year, except for Messrs. Sloan, Current, and Orchard, whose restricted stock grants on March 30, 2016 weretrading day immediately vested due to their eligibility for retirement onpreceding the grant date. For 2017, eachAll RSUs vest in full on the one-year anniversary of the grant date. These RSUs are considered to be granted for future service of the directors (i.e., in advance). As a result, non-employee directordirectors who join the Board after the annual meeting will receive a prorated grant of RSUs based on the number of weeks served prior to the next annual meeting.

As a result of this change in practice in 2019, non-employee directors received two equity-based grants in 2019: a grant of shares equal in valueMarch pursuant to $75,914 at the grant date, except for the Chairman of the Board who receivedhistorical practice and a grant of shares equalRSUs in valueMay pursuant to $151,829 atthe new practice. In 2020 and future years (until this compensation framework is changed), non-employee directors will only receive the grant date.of RSUs on the date of the annual meeting.

 

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When a non-employee director retires, all restricted stock granted under the 2012Directors’ Stock IncentivePurchase Plan or the 2007 Stock Incentive Plan will vest in accordance with the award terms and the director's ownership of the restricted stock will not be affected by the retirement. Retirement occurs when a director completes a term for which he or she was elected and either (i) the director is not re-elected by shareholders for a subsequent term, or (ii) the director declines to stand for re-election and such director is 62 years of age or 60 years of age with at least 10 years of service with the Company. The Human Resources and Compensation Committee has certain discretion in applying an appropriate retirement age or establishing other factors as may be set forth in the award agreement or other grant document with respect to a director, participant, or a particular incentive award.

 

Directors are also eligible to participate in the Spartan Motors, Inc. Directors'Directors’ Stock Purchase Plan. This plan provides that non-employee directors of Spartan Motors may elect to receive at least 25% and up to 100% of their "director's fees"“director’s fees” in the form of Spartan Motors common stock. The term "director's fees"“director’s fees” means the amount of income payable to a non-employee director for his or her service as a director of Spartan Motors, including payments for attendance at meetings of Spartan Motors'Motors’ Board of Directors or meetings of committees of the Board, and any retainer fee paid to such persons as members of the Board. A non-employee director who elects to receive Spartan Motors common stock in lieu of some or all of his or her director'sdirector’s fees will, on or shortly after each "applicable“applicable date,"” receive a number of shares of common stock (rounded down to the nearest whole share) determined by dividing (1) the dollar amount of the director'sdirector’s fees payable to him or her on the applicable date that he or she has elected to receive in common stock by (2) the market value of common stock on the applicable date. The term "applicable date"“applicable date” means any date on which a director'sdirector’s fee is payable to the participant.To date, no shares have been issued under this plan.

The Board of Directors believes it is important for each Director to acquire and maintain a meaningful ownership position in the Company's stock to directly align the Director's interest with those of the shareholders. Each member of the Company's Board of Directors is expected, over a five year period, to acquire and maintain ownership of the Company's common stock with an aggregate market value of at least five times his or her annual retainer.

 

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Human Resources and Compensation Committee Report

Compensation Committee Report

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The Human Resources and Compensation Committee has reviewed and discussed with management the information provided under the heading "Compensation“Compensation Discussion and Analysis."Analysis” above. Based on this review and discussion, the Human Resources and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Spartan'sSpartan’s annual report on Form 10-K and in this Proxy Statement.proxy statement.

 

Respectfully submitted,

 

Ronald Harbour, Chairman          Paul A. Mascarenas, Chair

Richard F. Dauch

James C. OrchardAngela K. Freeman

Ronald E. Harbour

 

Compensation Committee Interlocks and Insider Participation

Human Resources and Compensation Committee Interlocks and Insider Participation

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Messrs. HarbourPaul Mascarenas (Chair), Richard Dauch, Angela Freeman, Ronald Harbor, and OrchardJeri Isbell served as members of the Human Resources and Compensation Committee during 2016.2019. None of these members of the Human Resources and Compensation Committeeindividuals were, during 2016,2019, an officer or employee of Spartan Motors, or formerly an officer of Spartan Motors. Except for Mr. Forbes, who served as a member ofMotors, or had any relationship requiring disclosure under the Compensation Committee of Patrick Industries, Inc.,standards described in “Transactions with Related Persons” below. During 2019, none of Spartan'sSpartan’s executive officers served as a member of a Compensation Committeecompensation committee (or Board committee performing a similar function) for another entity.entity or as a director of another entity whose executive officer served on the Human Resources and Compensation Committee of Spartan’s Board of Directors.

 

Transactions with Related Persons

Transactions with Related Persons

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The Spartan Motors Code of Ethics and Compliance, available for viewing at the Company'sCompany’s website at www.spartanmotors.com, requires all officers and employees who may have a potential or apparent conflict of interest to immediately notify the Chief Compliance Officer and requires all directors who may have a potential or apparent conflict of interest to immediately notify the remaining members of the Board of Directors. The Company expects its directors, officers and employees to act and make decisions that are in the Company'sCompany’s best interests and encourageencourages them to avoid situations which present a conflict between the Company'sCompany’s interests and their own personal interests. The directors, officers and employees are prohibited from taking any action that makes it difficult to perform his or her Company work objectively and effectively, or that cloud or interfere with that person'sperson’s judgment in the course of his or her job for the Company.

 

Additionally, it is the Company'sCompany’s policy that the Audit Committee of the Board of Directors reviews all material transactions withinvolving the Company and any related person as identified by management.person. Generally speaking, a "related" person“related person” is aany director (or nominee for director) or executive officer or affiliate of the Company, any beneficial owner of more than 5% of the Company’s common stock, or aany immediate family member of a director, executive officer, or affiliateany of the Company.foregoing. To identifyassist in identifying related person transactions, each year the Company requires its directors and executive officers to complete questionnaires identifying any transactions with the Company in which the officer or director or their family members have an interest. Additionally, material undertakings by the Company are reviewed by management, with a view, in part, to identify if a related person is involved. A "related person transaction"Generally speaking, a “material transaction” is any transaction, arrangement, or relationship (or series of similar transactions, arrangements, or relationships) involving more than $120,000 in which the Company participates and a "related" person“related person” has a direct or indirect material interest.interest, as determined pursuant to applicable SEC rules. The Audit Committee intends to approve only those related person transactions that are in the best interests of the Company and its shareholders (or not inconsistent with the best interests of the Company or its shareholders).

Material transactions between the Company and another company for which a related person serves as an officer or director are not disclosed if the transaction is one where the rates or charges involved are determined by competitive bid.

Applying the standards discussed above, there have been no material transactions since the beginning of 2019, nor are there any currently proposed material transactions, between the Company and any related person.

 

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Proposal: Amendment to Articles of Incorporation to Increase Authorized Shares of Common Stock Proposal: Amendment to Articles of Incorporation to Change Name of Spartan Motors, Inc. On February 1, 2020, the Company sold its emergency response (ER) business unit. As part of that sale, the Company sold its rights to the “Spartan Motors” name, subject to a license to use the “Spartan” name in the Company’s RV business, and committed to request that its shareholders approve an amendment to the Company’s Articles of Incorporation to legally change the name of the Company. In light of that commitment, the Board of Directors has approved an amendment to Article I of the Spartan Motors, Inc. Articles of Incorporation (the “Articles”) to change our corporate name from “Spartan Motors, Inc.” to “The Shyft Group, Inc.” The Board of Directors believes it is in the best interests of our Company and its shareholders to approve and adopt this amendment to the Articles to change the name of the Company. The Board of Directors proposes to the shareholders of the Company to amend Article I of the Articles to change the name of the Company to “The Shyft Group, Inc.” If approved, the amendment will become effective upon the filing of the amendment with the State of Michigan, which will occur as soon as reasonably practicable following the annual meeting of shareholders.

 

The Board of Directors proposes to amend Article IIII of the Spartan Motors, Inc. Articles of Incorporation to increase the Company's authorized capital stock from 42,000,000 shares, of which 40,000,000 are shares of common stock, $0.01 par value per share ("Common Stock"), to 82,000,000 shares, of which 80,000,000 would be shares of Common Stock. so that it reads as follows:

“The purposename of the amendment is to provide additional shares of Common Stock for possible future issuance.corporation is: The Shyft Group, Inc.”

 

AsIf the name change becomes effective, the rights of March 27, 2017, there were 34,367,241 shares of Common Stock issued and outstanding and 3,622,229 shares of Common Stock reserved for issuance pursuant to our equity compensation plans.

The Board of Directors believes it is advisable to have additional authorized shares of Common Stock available to give Spartan the ability to react quickly to opportunities. Although the Board has no present plans or commitments for the issuance of any of the additional shares that would be authorized upon approval of this amendment, such shares would be available for equity incentive plans, possible future stock splits and dividends, public or private offerings of Common Stock or securities convertible into Common Stock, equity-based acquisitions, and other corporate purposes that might be proposed. If our authorized capital stock is not increased, as of March 27, 2017, we would have fewer than 2,000,000 shares available for such uses.

All of the additional shares resulting from the increase in our authorized Common Stock would be of the same class with the same dividend, voting, and liquidation rights as the shares of Common Stock presently outstanding. Our authorized capital stock also includes, and will continue to include without increase, 2,000,000 shares of preferred stock, none of which is currently outstanding. Shareholders have no preemptive rights to acquire shares we may issue in the future, and shareholders would not acquire preemptive rights with respect to additionaltheir shares underwill not change. The name change will not affect the proposedvalidity or transferability of any currently outstanding stock. Any new stock issued after the name change will bear the name “The Shyft Group, Inc.” If the shareholders do not approve this amendment, no amendment to our Articles of Incorporation. Under some circumstances,will be made, and the issuance of additional shares of Common Stock could dilute the voting rights, equity, and earnings per share of existing shareholders.Company's name will remain as Spartan Motors, Inc.

 

If the proposed amendment is adopted, the newly authorized shares would be unreserved and available for issuance by us without further shareholder authorization.Required Vote

Although the Board of Directors has no present intention of issuing any additional shares of Common Stock as an anti-takeover measure, the proposed increase in authorized but unissued Common Stock could be considered an anti-takeover measure because the additional authorized shares could be used by the Board of Directors to make a change in control of Spartan more difficult.

The first paragraph of Article III of the Articles of Incorporation, as amended, would read as follows (changed text is underlined):

"The total number of shares of which the corporation shall have the authority to issue is eighty two million (82,000,000), divided into two classes, as follows:

	(1)	Eighty million (80,000,000) shares of common stock of the par value of One Cent ($.01), which shall be called "Common Stock;" and
	(2)	Two million (2,000,000) shares of preferred stock, having no par value, which shall be called "Preferred Stock."

 

The affirmative vote of holders of a majority of outstanding shares entitled to vote at the annual meeting of shareholders is required to approve the proposed amendment to our ArticlesArticles. As a result, in counting votes on this proposal, abstentions and broker non-votes will affect the outcome of Incorporation.the election.

 

Your Board of Directors recommends that you vote FOR the approval of the amendment to our Articles of Incorporation.

 

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Proposal: Amendment to Stock Incentive Plan to Authorize the Issuance of Additional Shares

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In 2016, the Board of Directors adopted, and our shareholders approved, the Spartan Motors, Inc. Stock Incentive Plan. The Stock Incentive Plan, provides for the grant of a variety of equity-based awards, described in more detail below, such as stock options, including incentive stock options as defined in Section 422 of the Internal Revenue Code, as amended (the “Code”), stock appreciation rights, restricted stock, performance shares, and other stock-based awards.

The Stock Incentive Plan is intended to promote the long-term success of the Company for the benefit of our shareholders through stock-based compensation, by aligning the personal interests of plan participants with those of our shareholders. The Stock Incentive Plan is designed to allow selected participants to participate financially in our future, as well as to enable us to attract, retain, and reward those individuals.

As of March 23, 2020, there were 1,356,196 shares of common stock available for the grant of future awards under the Stock Incentive Plan. Our Board of Directors has approved an amendment to the plan, subject to shareholder approval, to make an additional 1,500,000 shares available for issuance under the plan. At the annual meeting of shareholders, our shareholders are being asked to consider and approve this amendment. The following paragraphs summarize the material features of the Stock Incentive Plan. The full text of the plan, as amended by the amendment approved by our Board of Directors and being submitted for approval by the shareholders, is included as Appendix B to this proxy statement.

Description of the Stock Incentive Plan

The Stock Incentive Plan is administered by the Human Resources and Compensation Committee of the Board. The Human Resources and Compensation Committee (the “Committee”) determines, subject to the terms of the plan, the persons receiving incentive awards, the nature and amount of incentive awards granted to each person (subject to the limits specified in the plan), the time of each grant, the terms and duration of each grant, and all other determinations necessary or advisable for administration of the plan. The Committee may amend the terms of incentive awards granted under the plan from time to time in any manner, subject to the limitations specified in the plan.

Awards may be granted under the plan to participants for no cash consideration or for such minimum consideration as determined by the Committee. The Plan is not qualified under Section 401(a) of the Code and is not subject to the Employee Retirement Income Security Act of 1974 (ERISA). The plan is drafted to comply with Section 409A of the Code, which imposes specific rules on the timing and payment of deferred compensation.

Pursuant to the provisions of the plan, no awards may be granted under the plan after its expiration on May 25, 2026.

Authorized Shares

As originally adopted, the Stock Incentive Plan provided that 2,800,000 shares of Spartan Motors common stock would be available for awards under the plan. If the proposed amendment is approved, and subject to certain anti-dilution and other adjustments set forth in the plan, the maximum number of shares that may be issued under the plan would be increased by 1,500,000 shares to 4,300,000 shares. Shares of common stock authorized under the plan could be either unissued shares, shares issued and repurchased by Spartan Motors (including shares purchased on the open market), shares issued and otherwise reacquired by Spartan Motors, or shares otherwise held by Spartan Motors. Shares subject to incentive awards that are canceled, surrendered, modified, exchanged for substitute incentive awards, or that expire or terminate would remain available under the plan.

Eligible Participants

Persons eligible to receive awards pursuant to the Stock Incentive Plan include directors, corporate officers, divisional officers, and key employees of the Company or any of its subsidiaries who the Committee determines are eligible to participate in the plan. We anticipate the persons who will receive awards under the plan, as amended, will be non-employee directors of Spartan Motors (currently eight persons) and executive officers (currently six persons), and other eligible employees (currently approximately 25 additional persons) of Spartan Motors and its subsidiaries. Additional individuals may become directors, officers, or employees in the future and could participate in the plan. Directors, nominees for director, officers, and employees of Spartan Motors and its subsidiaries may be considered to have an interest in the plan because they may receive awards under it.

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Types of Awards

The following types of awards may be granted under the Stock Incentive Plan:

An “Option” is a contractual right to purchase a number of shares at a price determined at the date the option is granted. The exercise price included in both incentive stock options and nonqualified stock options must equal at least 100% of the fair market value of the stock at the date of the grant.

A “Stock Appreciation Right” is an award of the right to receive stock or cash of an equivalent value in an amount equal to the difference between the price specified in the stock appreciation right and the prevailing market price of our common stock at the time of exercise. Stock appreciation rights may be granted in tandem with options.

“Restricted Stock” and “Restricted Stock Units” (RSUs) are awards of common stock granted to a participant for no or nominal consideration. Title to the shares passes to the participant at the time of that grant; however, the ability to sell or otherwise dispose of the shares is subject to restrictions and conditions determined by the Committee.

“Performance Share Units” (PSUs) are an award of the right to receive stock or cash of an equivalent value at the end of the specified performance period upon the attainment of specified performance goals.

Material Federal Income Tax Consequences

The following summarizes the material consequences of the grant and acquisition of awards under the Stock Incentive Plan for federal income tax purposes, based on our understanding of existing federal income tax laws. This summary is necessarily general in nature and does not purport to be complete. Also, state and local income tax consequences are not discussed and may vary from locality to locality.

Incentive Stock Options.Under current federal income tax laws, an option holder does not recognize income and Spartan Motors does not receive a deduction at the time an incentive stock option is granted or at the time the incentive stock option is exercised. However, the difference between the market value of the common stock subject to the incentive stock option and the exercise price is a tax preference item for purposes of calculating alternative minimum tax. Upon the sale or other disposition of the common stock acquired pursuant to an incentive stock option, as long as (i) the option holder held the stock for at least one year after the exercise of the stock option and at least two years after the grant of the stock option, and (ii) the stock option is exercised not later than three months after termination of employment (one year in the event of disability), the option holder's basis equals the exercise price and the option holder pays tax on the difference between the sale proceeds and the exercise price as capital gain. Spartan Motors receives no deduction for federal income tax purposes under these circumstances. Special rules apply when an option holder dies.

If an option holder fails to meet any of the conditions described above relating to holding periods and exercises following termination of employment, he or she generally recognizes compensation taxed as ordinary income equal to the difference between (1) the lesser of (a) the fair market value of the common stock acquired pursuant to the stock option at the time of exercise or (b) the amount realized on the sale or disposition and (2) the exercise price paid for the stock. Spartan Motors then receives a corresponding deduction for federal income tax purposes, except to the extent that the deduction limits of Section 162(m) of the Code apply. Additional gains, if any, recognized by the option holder result in the recognition of short- or long-term capital gain.

Nonqualified Stock Options.Federal income tax laws provide different rules for nonqualified stock options - those options that do not meet the Code's definition of an incentive stock option. Under current federal income tax laws, an option holder does not recognize any income and Spartan Motors does not receive a deduction when a nonqualified stock option is granted. If a nonqualified option is exercised, the option holder recognizes compensation income equal to the difference between the exercise price paid and the market value of the stock acquired upon exercise (on the date of exercise). Spartan Motors receives a corresponding deduction for federal income tax purposes, except to the extent that the deduction limits of Section 162(m) of the Code apply. The option holder's tax basis in the shares acquired is the exercise price paid plus the amount of compensation income recognized. Sale of the stock after exercise results in recognition of short-term or long-term capital gain (or loss).

Stock Appreciation Rights . Upon the grant of a stock appreciation right, the participant realizes no taxable income, and the Company receives no deduction. Upon the exercise of the stock appreciation right, the value of the shares and/or cash received is generally taxable to the participant as ordinary income. The Company receives a deduction of an equal amount in the same year the participant recognized income.

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Restricted Stock and Restricted Stock Units. Generally, under current federal income tax laws a participant does not recognize income upon the award of restricted stock or restricted stock units. However, a participant is required to recognize compensation income at the time the award vests (when the restrictions lapse) equal to the difference between the fair market value of the stock at vesting and the amount paid for the stock (if any). At the time the participant recognizes compensation income, the Company is entitled to a corresponding deduction for federal income tax purposes, except to the extent that the deduction limits of Section 162(m) of the Code apply. If restricted stock or restricted stock units are forfeited by a participant, the participant does not recognize income with respect to the forfeited award and the Company would not receive a corresponding deduction. Prior to the vesting and lapse of restrictions, dividends paid on shares subject to awards of restricted stock and restricted stock units are reported as compensation income to the participant and the Company receives a corresponding deduction, except to the extent that the deduction limits of Section 162(m) of the Code apply.

A participant may, within 30 days after the date of an award of restricted stock (but not an award of restricted stock units), elect to report compensation income for the tax year in which the restricted stock is awarded. If the participant makes this election, the amount of compensation income is equal to the difference between the fair market value of the restricted stock at the time of the award and the amount paid for the stock (if any). Any later appreciation in the value of the restricted stock is treated as capital gain and recognized only upon the sale of the stock subject to the award of restricted stock. Dividends received after such an election are taxable as dividends and not treated as additional compensation income. If, however, restricted stock is forfeited after the participant makes such an election, the participant is not allowed any deduction for the amount that he or she earlier reported as income. Upon the sale of shares subject to the restricted stock award, a participant recognizes capital gain (or loss) in the amount of the difference between the sale price and the participant's basis in the stock.

Performance Shares. Participants are not taxed upon the grant of performance shares. Upon receipt of the underlying shares or cash, a participant is taxed at ordinary income tax rates (subject to withholding) on the amount of cash received and/or the current fair market value of stock received, and the Company is entitled to a corresponding deduction. The participant’s basis in any performance shares received is equal to the amount of ordinary income on which he or she was taxed and, upon subsequent disposition, any gain or loss will be capital gain or loss.

Registration of Shares

The shares currently authorized for issuance under the Stock Incentive Plan have been registered pursuant to the Securities Act of 1933. If the shareholders approve the proposed amendment to increase the number of shares available for issuance pursuant to the plan, the Company intends to also register such additional shares pursuant to the Securities Act of 1933 before any such additional shares are granted or issued pursuant to the plan.

Termination or Amendment of Plan

The Board of Directors may terminate the Stock Incentive Plan at any time and may from time to time amend the plan as it considers proper and in the best interests of Spartan Motors, provided that no amendment may impair any outstanding incentive award without the consent of the participant, except according to the terms of the plan or the incentive award. In addition, no such amendment may be made without the approval of shareholders of Spartan Motors if it would (i) reduce the exercise price of outstanding stock options or the base price of outstanding stock appreciation rights, (ii) increase the individual annual maximum award limit, or (iii) otherwise amend the Stock Incentive Plan in any manner requiring shareholder approval by law or under Nasdaq listing requirements or rules.

Subject to certain limitations, the Committee could amend or modify the terms of any outstanding award in any manner not prohibited by the plan. However, incentive awards issued under the plan could not be repriced, replaced, regranted through cancellation, or modified without shareholder approval if the effect would be to reduce the exercise price or base price of such incentive awards to the same participants.

Effects of a Change in Control of Spartan Motors

Upon the occurrence of a “change in control" of Spartan Motors (as defined in the plan), if the Company or the Company’s successor does not assume the obligations under the plan or replace outstanding awards with awards having substantially the same intrinsic value, all outstanding stock options and stock appreciation rights would become immediately exercisable in full and would remain exercisable in accordance with their terms. All other outstanding incentive awards under the plan would immediately become fully vested, exercisable, and nonforfeitable.

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Equity Compensation Plan Information

The following table provides information about our equity compensation plans regarding the number of securities to be issued under these plans upon the exercise of outstanding options, the weighted-average exercise prices of options outstanding under these plans, and the number of securities available for future issuance as of December 31, 2019. 

Number of securities to be issued upon exercise of outstanding options, warrants, and rights

Weighted-average exercise price of outstanding options, warrants, and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3)

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders(1)

--

N/A

1,356,196

Equity compensation plans not approved by security holders(2)

--

N/A

56,250

Total:

--

N/A

1,412,446

 

Proposal:Advisory Vote(1)	Consists of the Spartan Motors, Inc. Stock Incentive Plan of 2016, as currently in effect.
(2)	Consists of the Spartan Motors, Inc. Directors’ Stock Purchase Plan. This plan provides that non-employee directors of the Company may elect to receive at least 25% and up to 100% of their “director’s fees” in the form of the Company’s common stock. The term “director’s fees” means the amount of income payable to a non-employee director for his or her service as a director of the Company, including payments for attendance at meetings of the Company’s Board of Directors or meetings of committees of the board, and any retainer fee paid to such persons as members of the board. A non-employee director who elects to receive Company common stock in lieu of some or all of his or her director’s fees will, on Executive Compensationor shortly after each “applicable date,” receive a number of shares of common stock (rounded down to the nearest whole share) determined by dividing (1) the dollar amount of the director’s fees payable to him or her on the applicable date that he or she has elected to receive in common stock by (2) the market value of common stock on the applicable date. The term “applicable date” means any date on which a director’s fee is payable to the participant. To date, no shares have been issued under this plan.
(3)	Each of the plans reflected in the above table contains customary anti-dilution provisions that are applicable in the event of a stock split or certain other changes in the Company’s capitalization. In addition, the Stock Incentive Plan provides that if a stock option is canceled, surrendered, modified, expires or is terminated during the term of the plan but before the exercise of the option, the shares subject to the option will be available for other awards under the plan.

 

The numbers of shares reflected in column (c) in the table above with respect to the Stock Incentive Plan of 2016 (1,356,196 shares) represent new shares that may be granted by the Company under the plan, as currently in effect, as of December 31, 2019, and not shares issuable upon the exercise of an existing option, warrant or right nor does it include any additional shares to be added to the plan pursuant to the amendment being proposed for shareholder approval.

Required Vote

The affirmative vote of a majority of the Company’s common stock voted at the annual meeting of shareholders, by person or by proxy, is required to approve the proposed amendment to the Plan. In counting votes on this proposal, abstentions and broker non-votes will be counted as not voted and therefore will not affect the outcome of the election.

Your Board of Directors recommends that you vote FORthe approval of the amendment to our Stock Incentive Plan.

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Proposal: Advisory Vote to Approve Executive Compensation

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Our "Compensation“Compensation Discussion and Analysis"Analysis” above describes, among other things, our executive compensation policies and practices. Federal law requires that our shareholders be given thean opportunity to express their approval of the compensation of our executives, as disclosed in this Proxy Statement. Under the federal law that requires this vote, theproxy statement. The shareholder vote is not binding on our Board of Directors or the Company and may not be construed as overruling any decision made by our Board or the Company or as creating or implying any change in the fiduciary duties owed by our Board. However, our Board of Directors values the views of shareholders and intends to take the outcome of this shareholder advisory vote into consideration when making future executive compensation decisions.

 

Therefore, at the annual meeting of shareholders, our shareholders will be given thean opportunity to vote, on an advisory (non-binding)(non-binding) basis, to approve the compensation of our named executives as disclosed in this Proxy Statementproxy statement under "Executive“Executive Compensation – Compensation Discussion and Analysis,"” the compensation tables, and the narrative discussion following the compensation tables. This vote proposal is commonly known as a "say-on-pay"“say-on-pay” proposal and gives our shareholders the opportunity to endorse or not endorse our executive pay program. This vote is not intended to address any specific item of our executive compensation, but rather the overall compensation of our named executive officersexecutives and the policies and practices described in this Proxy Statement.proxy statement. You are encouraged to read the full details of our executive compensation program, including our primary objectives in setting executive pay, under "Executive Compensation"“Executive Compensation” above.

 

The Company evaluates the compensation of its executives at least once each year to assess whether our compensation policies and programs are achieving their primary objectives and are competitive with otherother companies in our industry. Based on its most recent evaluation, our Board of Directors believes our executive compensation programs achieve these objectives, including aligning the interests of our management with those of our shareholders, and are therefore worthy of shareholder support. In determining how to vote on this proposal, we believe shareholders should consider the following:

 

	●	Independent Compensation Committee. All members of our Human Resources and Compensation Committee are independent directors. Meetings of this committee include executive sessions in which management is not present.
	●	Base SalariesPerformance-Based Compensation. Our Human Resources and Compensation Committee intends to set our executive officers'officers’ base salaries at median market rates for comparable companies. Total compensation for executives is structured so that a majority of the total earnings potential is derived from performance-based incentives. The Company believes that this structure allows its executives the opportunity to receive overall compensation that is above median market rates, provided that performance objectives are met or exceeded.
	●	Restricted Stock Grants Units. A significant percentageportion of our executives'executives’ compensation is paid in the form of restricted stockRSUs that generally vestsvest ratably over a three-year period. We believe these stock awards help align the executives'executives’ interests with longer term shareholder returns and also serve to help retain the services of executives.
●	Performance Share Units. Starting in 2019, a significant percentage (70%) of each named executive’s annual long-term equity incentive award is made in the form of PSUs, which may result in the issuance of Spartan common stock to the executives following a three-year performance period, based on the achievement of certain performance goals, on a cumulative basis, over that three-year period. We believe PSUs better align the executives’ long-term incentives with the interests of our shareholders.

 

For these reasons, our Board of Directors recommends that you vote FOR the adoption of the following resolution:

 

"“RESOLVED, that the shareholders of Spartan Motors, Inc. approve, on an advisory basis, the compensation of the Company'sCompany’s named executive officers, as disclosed pursuant to the rules of the Securities and Exchange Commission, includingin the Compensation Discussion and Analysis, the compensation tables, and the related narrative discussion set forth in the Company's Proxy StatementCompany’s proxy statement for its 20172020 Annual Meeting of Shareholders."”

 

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Proposal: Frequency of Future Shareholder Advisory Votes on Executive Compensation

Audit Committee Report

Under federal law, our shareholders are to be given the opportunity to express their preference for whether the shareholder advisory vote on our executive compensation should take place every year, every two years, or every three years.  This shareholder vote is not binding on our Board of Directors or the Company and may not be construed as overruling any decision made by our Board or the Company or as creating or implying any change in the fiduciary duties owed by our Board. However, our Board of Directors values the views of shareholders and intends to take the outcome of this shareholder advisory vote into consideration when determining how often the shareholder advisory vote on executive compensation will take place.

After careful consideration, our Board of Directors believes that conducting the shareholder advisory vote on executive compensation every year is appropriate for the Company and its shareholders at this time.  In reaching its recommendation, our Board considered that an annual advisory vote allows the most frequent input from our shareholders.  However, you will be given the option to specify a preference that the shareholder advisory vote take place every one, two, or three years. For purposes of determining the preference of our shareholders on this matter, we will consider the choice (either once every one, two, or three years) that receives the most votes as the preference of our shareholders.

After the annual meeting of shareholders, the Company will disclose both the results of this vote and the Board's decision regarding how frequently the shareholder advisory vote on executive compensation will take place in the future.  In making such decision, the Board is not required to abide by the outcome of this shareholder advisory vote. However, the Board of Directors intends to consider the decision made by our shareholders on this matter when determining the frequency of future advisory votes on executive compensation.

Before voting on this issue, we encourage you to read the full details of our executive compensation program, including our primary objectives in setting executive pay, under "Executive Compensation" above.

This shareholder advisory vote on the frequency of future executive compensation votes will be held at least once every six years.

Your Board of Directors recommends that you vote FOR the approval of the Board's recommendation to hold the shareholder advisory vote on executive compensation every year.

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Audit Committee Report

 

The Audit Committee reviews and supervises on behalf of the Spartan Motors Board of Directors Spartan Motors' procedures for recording and reporting the financial results of its operations. Spartan Motors' management has primary responsibility for the financial statements and the reporting process, including the systems of internal controls. As part of its supervisory duties, the Audit Committee has reviewed Spartan Motors'Motors’ audited financial statements for the year ended December 31, 2016,2019, and has discussed those financial statements with Spartan Motors'Motors’ management.

 

The Audit Committee has also discussed with Spartan Motors'Spartan Motors’ independent registered public accounting firm who are responsible for expressing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles,matters required to be discussed by the judgments of the independent registered public accounting firm concerning the quality, not just the acceptability, of Spartan Motors' accounting principles and such other matters that are required under applicable rules, regulations, U.S. generally accepted accounting principles and the standardsrequirements of the Public Company Accounting Standards Oversight Board (United States) (PCAOB). and the SEC.

 

In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and letter required by the applicable requirements of the PCAOB regarding the accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed their independence from Spartan Motors and Spartan Motors' managementthis independence with them, including a consideration of the compatibility of non-audit services with their independence.independent registered public accounting firm.

 

After and in reliance upon the reviews and discussions described above, the Audit CommitteeCommittee recommended to Spartan Motors'Motors’ Board of Directors that the audited financial statements for the year ended December 31, 20162019 be included in Spartan Motors'Motors’ annual report on Form 10-K for the year ended December 31, 2016.2019.

 

Respectfully submitted,

 

RichardDominic A. Romeo, Chair

Thomas R. Current, ChairmanClevinger

Andrew M. Rooke

James A. Sharman

 

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Proposal: Proposal: Ratification of Appointment of Independent Auditors

Proposal to Ratify Appointment of BDO USA, LLP as Spartan Motors'Independent Auditors for the Current Fiscal Year

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Subject to the ratification of shareholders, Spartan Motors'Motors’ Audit Committee has appointed BDO USA, LLP as the Company’s independent registered public accounting firm for its 20172020 fiscal year. Representatives of BDO USA, LLP are expected to participate in the annual meeting of shareholders, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions from shareholders.

 

Your Board of Directors recommends that you vote FOR ratification of the appointment of BDO USA, LLP.

 

BDO USA, LLP'sIndependent Auditor Fees

 

All fees paid to BDO USA, LLP for services performed in 20162019 and 2015,2018, were approved pursuant to Spartan Motors'Motors’ Audit Committee Pre-Approval Policy described above under "Audit Committee" on page 12.“Audit Committee” above. A summary of the fees billed by BDO USA, LLP for each of the last two calendar years follows.

		2016				2015
										2019				2018
Audit Fees(1)		$	379,976			$	374,758
Audit-Related Fees(2)			66,224				76,892
Tax Fees(3)			149,237				112,664
All Other Fees(4)			28,923				192,878
Audit Fees(1)										$	990,912			$	586,450
Audit-Related Fees(2)											-				60,000
Tax Fees(3)											173,377				159,981
All Other Fees(4)											-				-

 

(1)	Represents the aggregate fees billed for professional services rendered by the principal accountant for the audit of the Company'sCompany’s annual financial statements, review of financial statements included in the Company'sCompany’s Form 10-Q, and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
(2)	Represents the aggregate fees billed by the principal accountant for completion of the employee benefit plan audit and general accounting consultations and services that are reasonably related to the annual audit.due diligence (transaction advisory) services.
(3)	Represents the aggregate fees for professional services rendered by the principal accountant for tax compliance.
(4)	Represents the aggregate fees for professional services rendered by the principal accountant for legal entity reorganization in 2015 and 2016.tax compliance.

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