UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (AMENDMENT NO.(Amendment No. )
Filed by the Registrant [X]
☒
Filed by a Party other than the Registrant [ ]
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Check the appropriate box:
| ☒ | Preliminary Proxy Statement | |||||||
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||||
| ☐ | Definitive Proxy Statement | |||||||
| ☐ | Definitive Additional Materials | |||||||
| ☐ | Soliciting Material Pursuant to | |||||||
| FORWARD AIR CORPORATION | ||
| (Name of Registrant as Specified In Its Charter) | ||
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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| (4) | Proposed maximum aggregate value of transaction: | |||||||
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[FORWARD AIR CORPORATION LOGO]
April __, 1999
], 2024
Dear Fellow Shareholder:
On behalf of theyour Board of Directors and management of Forward Air Corporation, you are cordially invited to attendattend the 2024 Annual Meeting of Shareholders (the “Annual Meeting”) on Tuesday, May 18, 1999,[ ], 2024, beginning promptly at 10:8:00 a.m., local time, EDT, at the General Morgan Inn &
Conference Center, 111 North Main Street, Greeneville, Tennessee.
Four Seasons Hotel Atlanta, 75 Fourteenth St., NE, Atlanta, GA 30309.
The attached Notice of 2024 Annual Meeting of Shareholders and Proxy Statement describe the business to be conducted at the Annual Meeting. Also included are a proxy card and postage-paid return envelope.
YOUR VOTE IS IMPORTANT. Therefore, whether Whether or not you plan to attend the meetingAnnual Meeting in person, please complete, sign, datevote and returnsubmit your proxy: (a) by telephone or the Internet following the instructions on the enclosed proxy card or (b) by signing, dating and returning the proxy card in the postage-paid envelope provided as promptly as possible. provided.
If you attend the meeting and desire to vote in person, you may do so even though you have previously sentsubmitted a proxy.
proxy by following the instructions set forth on the enclosed proxy card.
Your vote is extremely important.
I hope you will be able to join us, and we look forward to seeing you in
Greeneville.
at the meeting.
Sincerely yours,
Scott M. Niswonger
Chairman of the Board
and
Michael Hance
Interim Chief Executive Officer, 3
Chief Legal Officer and Secretary
FORWARD AIR CORPORATION
430 Airport
1915 Snapps Ferry Road, Building N
Greeneville, Tennessee 37745
NOTICE OF 2024 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD [ ], 2024
To the Shareholders of Forward Air Corporation:
The 2024 Annual Meeting of Shareholders (the “Annual Meeting”) of Forward Air Corporation (the “Company”) will be held on [ ], 2024, beginning at 8:00 a.m., EDT, at the Four Seasons Hotel Atlanta, 75 Fourteenth St., NE, Atlanta, GA 30309.
The purposes of this meeting are to:
1.Proposal 1 - Approve, in accordance with Nasdaq Listing Rule 5635(a), (i) the issuance of shares of Company Common Stock (as defined in the Proxy Statement) upon the conversion of the outstanding Company Series C Preferred Units that were issued in connection with the Omni Acquisition and (ii) the issuance of fractional units of Company Series B Preferred Stock (as defined in the Proxy Statement) upon the conversion of Opco Series C-2 Preferred Units that were issued in connection with the Omni Acquisition into Opco Class B Units, and the issuance of Company Common Stock upon the exchange of such fractional units of Company Series B Preferred Stock (together with corresponding Opco Class B Units) (in each case, as defined in the Proxy Statement);
2.Proposal 2 - Elect eleven directors as set forth in the Proxy Statement with terms expiring at the 2025 Annual Meeting of Shareholders, or until their respective successors are elected and qualified;
3.Proposal 3 - Approve the amendment to the Company’s 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”) to increase the number of shares of Company Common Stock authorized for issuance thereunder;
4.Proposal 4 - Approve, on a non-binding, advisory basis, the compensation of the named executive officers;
5. Proposal 5 - Ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the 2024 fiscal year; and
6.Transact such other business as may properly come before the Annual Meeting and at any adjournment or postponement thereof.
We will make available a list of shareholders of record as of March 25, 2024, the record date for the Annual Meeting, for inspection by shareholders during normal business hours until [ ], 2024, at the Company’s principal place of business, 1915 Snapps Ferry Road, Building N, Greeneville, Tennessee 37745. The list will also be available to shareholders at the Annual Meeting.
Holders of Company Common Stock, par value $0.01 per share, or fractional units of the Company Series B Preferred Stock, in each case, at the close of business on March 25, 2024 are entitled to notice of and to vote at the Annual Meeting, except that, in accordance with Nasdaq listing rules votes in favor of or against the Conversion Proposal (as defined in the Proxy Statement) that correspond to shares of Company Common Stock or Company Series B Preferred Units issued by the Company as consideration for the Omni Acquisition will not count as votes cast with respect to the Conversation Proposal. Our Board of Directors recommends a vote “FOR” Proposals 1, 3, 4 and 5 and “FOR” each of the director nominees in proposal 2.
It is important that your shares be represented at the Annual Meeting. Whether or not you expect to attend the meeting, please vote and submit your proxy over the Internet, by telephone or by mail. Please refer to the enclosed proxy card for specific voting instructions.
| By Order of the Board of Directors, | |||||
 | |||||
Greeneville, Tennessee [ ], 2024 | Michael L. Hance Interim Chief Executive Officer, Chief Legal Officer and Secretary | ||||
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2024 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 18, 1999
ToON [ ], 2024.
Our Proxy Statement and Annual Report are available online at www.proxyvote.com. The approximate date on which these materials will be first made available or sent to shareholders is [ ], 2024.
| Table of Contents | |||||
FORWARD AIR CORPORATION
1915 Snapps Ferry Road, Building N
Greeneville, Tennessee 37745
(423) 636-7000
PROXY STATEMENT
FOR
2024 ANNUAL MEETING OF SHAREHOLDERS
Questions and Answers about the ShareholdersAnnual Meeting and Voting
1. WHY AM I RECEIVING THESE PROXY MATERIALS?
You are receiving these proxy materials because you held shares of Forward Air Corporation:
TheCompany Common Stock (as defined below) or fractional units of the Company Series B Preferred Stock (as defined below), in each case on March 25, 2024, the record date (the “Record Date”) for the 2024 Annual Meeting of Shareholders of Forward Air Corporation (the "Company"“Annual Meeting”) willto be held on Tuesday, May 18, 1999,[ ], 2024, beginning at 10:8:00 a.m., local time, EDT, at the General Morgan Inn & Conference Center, 111 North Main Street, Greeneville,
Tennessee.
Four Seasons Hotel Atlanta, 75 Fourteenth St., NE, Atlanta, GA 30309. As a shareholder of record as of the Record Date, you are entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof.
The proxy materials include our Notice of 2024 Annual Meeting of Shareholders, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2023. The proxy materials also include the proxy card for the Annual Meeting, which is being solicited on behalf of the Board of Directors of the Company (the “Board”). The proxy materials contain detailed information about the matters to be voted on at the Annual Meeting and provide updated information about the Company to assist you in making an informed decision when voting your shares.
The Company began furnishing the proxy materials to shareholders on or about [ ], 2024 and will bear the cost of soliciting proxies on behalf of the Company for the Annual Meeting.
2. WHAT AM I BEING ASKED TO VOTE ON?
At the Annual Meeting you will be asked to vote on the following five proposals. The Board recommendation for each of these proposals is set forth below.
| Board Recommendation | |||||
Proposal 1: Approve, in accordance with Nasdaq Listing Rule 5635(a), (i) the issuance of shares of Company Common Stock upon the conversion of the outstanding Company Series C Preferred Units that were issued in connection with the Omni Acquisition and (ii) the issuance of fractional units of Company Series B Preferred Stock upon the conversion of Opco Series C-2 Preferred Units that were issued in connection with the Omni Acquisition into Opco Class B Units, and the issuance of Company Common Stock upon the exchange of such fractional units of Company Series B Preferred Stock (together with corresponding Opco Class B Units) (in each case, as defined in the Proxy Statement) (the “Conversion Proposal”). | FOR | ||||
Proposal 2: Elect eleven directors as set forth in the Proxy Statement with terms expiring at the 2025 Annual Meeting of Shareholders, or until their respective successors are elected and qualified. | FOR each director nominee | ||||
Proposal 3: Approve the amendment to the Company’s 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”) to increase the number of shares of Company Common Stock authorized for issuance thereunder (the “2016 Plan Proposal”). | FOR | ||||
Proposal 4: Approve, on a non-binding, advisory basis, the compensation of the named executive officers. | FOR | ||||
Proposal 5: Ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the 2024 fiscal year. | FOR | ||||
We will also consider other business that properly comes before the meeting in accordance with Tennessee law and our Amended and Restated Bylaws (the “Bylaws”).
3. WHO IS PARTICIPATING IN THIS SOLICITATION?
The Company has retained Innisfree M&A Incorporated (“Innisfree”) to act as a proxy solicitor in conjunction with the Annual Meeting. The Company will bear the cost of soliciting proxies for the Annual Meeting. The Company will pay Innisfree a fee of $50,000 as compensation for its services and will reimburse it for its reasonable out-of-pocket expenses. Our officers and certain of our employees may also solicit proxies by mail, telephone, e-mail or facsimile transmission. They will not be paid additional remuneration for their efforts. Upon request, we will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares of Company Common Stock or fractional units of Company Series B Preferred Stock.
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4. WHO IS ENTITLED TO VOTE AT THE MEETING?
Owners of Company Common Stock or fractional units of Company Series B Preferred Stock as of the close of business on the Record Date are entitled to vote at the Annual Meeting. Shares owned by you include shares you held on the Record Date (i) directly in your name as the shareholder of record (registered shareholder) and (ii) in the name of a broker, bank or other holder of record where the shares were held for you as the beneficial owner (in street name). Each share of Company Common Stock and each fractional unit of Company Series B Preferred Stock is entitled to one vote on each matter, except that, in accordance with Nasdaq listing rules, votes in favor of or against the Conversion Proposal that correspond to shares of Company Common Stock or Company Series B Preferred Units issued by the Company as consideration for the Omni Acquisition (as defined herein) will not count as votes cast with respect to the Conversion Proposal. As of the Record Date, there were 26,438,420 shares of Company Common Stock outstanding and entitled to vote and 4,435,301 fractional units of Company Series B Preferred Stock outstanding and entitled to vote. There are no other outstanding voting securities of the Company entitled to vote at the Annual Meeting. A complete list of registered shareholders entitled to vote at the Annual Meeting will be open to the examination of any shareholder during normal business hours from [ ], 2024 until [ ], 2024 at the Company’s principal place of business and at the Annual Meeting.
5. HOW DO I ATTEND THE ANNUAL MEETING?
Attendance at the Annual Meeting will be limited to shareholders, those holding proxies from shareholders and representatives of the pressCompany. To gain admission to the Annual Meeting, you will need to bring identification and financial
community.will need to show that you are a shareholder of the Company. If your shares are registered in your name and you wishplan to attend the meeting butAnnual Meeting, please retain and bring the top portion of the enclosed proxy card as your admission ticket. If your shares are held in the name of ayour broker trust,or bank, or other nominee,you received your proxy materials electronically, you will need to bring evidence of your stock ownership, such as your most recent brokerage account statement.
6. HOW DO I VOTE MY SHARES?
If you are a shareholder of record as of the Record Date, you may vote by any of the following methods:
•Voting by Internet. You may vote via the Internet by signing on to the website identified on your proxy card and following the procedures described on the website. Internet voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on your proxy card. The procedures permit you to give a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote by Internet, you should bring withnot return your proxy card.
• Voting by Telephone. You may vote your shares by telephone by calling the toll-free telephone number provided on your proxy card. Telephone voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on your proxy card. The procedures permit you to give a letter from the broker, trustee, bank or nominee confirmingproxy to vote your beneficial
ownership of the shares.
The purposes of this meeting are:
1. To elect six members of the Board of Directors with terms
expiring at the next Annual Meeting of Shareholders in 2000;
2. To consider and vote upon an amendment to the Company's
Charter to increase the number of authorized shares of the
$0.01 par value Common Stock of the Company from 20,000,000 to
50,000,000 (the "Common Stock");
3. To approve and adopt the Company's 1999 Stock Option and
Incentive Plan;
4. To consider and vote upon a proposal to ratify the appointment
of Ernst & Young LLP as the independent auditors of the
Company; and
5. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
Only shareholders of the Common Stock of record at the close of business on
March 31, 1999 are entitled to notice of and to confirm that your instructions have been properly recorded. If you vote atby telephone, you should not return your proxy card.
• Voting by Mail. If you choose to vote by mail, simply complete the Annual Meeting.
Shareholders are cordially invited to attend the meeting in person.
SHAREHOLDERS ARE URGED TO EXECUTE THE ENCLOSED PROXY AND RETURN IT PROMPTLY,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING. ANY PROXY NOT DELIVERED AT THE
MEETING SHOULD BE MAILED TO REACH THE COMPANY'S PROXY TABULATOR, SUNTRUST BANK,
ATLANTA, STOCK TRANSFER DEPARTMENT, P.O. BOX 4625, ATLANTA, GEORGIA 30302 BY
9:00 A.M. ON MAY 17, 1999. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED.
By Order of the Board of Directors,
Richard H. Roberts
Secretary
Greeneville, Tennessee
April __, 1999
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FORWARD AIR CORPORATION
430 AIRPORT ROAD
GREENEVILLE, TENNESSEE 37745
(423) 636-7100
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to the shareholders of Forward Air Corporation
(the "Company") in connection with the solicitation of proxies by the Board of
Directors (the "Board") for use at the Annual Meeting of Shareholders to be held
on Tuesday, May 18, 1999, beginning at 10:00 a.m., local time at the General
Morgan Inn & Conference Center, 111 North Main Street, Greeneville, Tennesseeenclosed proxy card, date and any adjournment thereof, for the purposes set forthsign it, and return it in the foregoing Notice
of Annual Meeting of Shareholders. This proxy material was first mailed to
shareholders on or about April __, 1999.
If the enclosed form of proxy is executed and returned, itpostage-paid envelope provided. Your shares will be voted in accordance with the instructions given, buton your proxy card.
• Voting at the Meeting. You may vote your shares at the Annual Meeting by completing, signing and dating a ballot in person at the Annual Meeting.
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PLEASE NOTE THAT IF YOU ARE A BENEFICIAL OWNER OF SHARES HELD IN STREET NAME, SINCE YOUR SHARES ARE HELD BY A BANK, BROKER OR OTHER HOLDER OF RECORD, IF YOU WISH TO VOTE IN PERSON AT THE ANNUAL MEETING YOU MUST FIRST OBTAIN A LEGAL PROXY ISSUED IN YOUR NAME FROM THE HOLDER OF RECORD. OTHERWISE, YOU WILL NOT BE PERMITTED TO VOTE IN PERSON AT THE ANNUAL MEETING.
If your shares are held in street name, your broker or other nominee has enclosed a proxy card for you to use to direct it how to vote your shares and may also provide additional voting instructions. Please instruct your broker or other nominee how to vote your shares using the form of proxy card you received from it or otherwise in accordance with the voting instructions they provided. Please return your completed proxy card to your broker or other nominee or contact the person responsible for your account so that your vote can be revokedcounted. If your broker or other nominee permits you to provide voting instructions via the Internet or by telephone, you may vote that way instead. You are also invited to attend the Annual Meeting. However, since you are not the shareholder of record, you may not vote these shares at the meeting unless you follow the instructions below under “How do I obtain admission to the Annual Meeting?”
7. CAN I REVOKE MY PROXY OR CHANGE MY VOTE?
Yes. You may revoke your proxy at any time insofar
as it has not been exercised by notifying the Secretaryprior to completion of the Company in
writingvoting at the principal executive offices of the Company orAnnual Meeting. You may change your vote by duly executing
and deliveringeither: (i) granting a new proxy bearing a later date. Eachdate (which automatically revokes the earlier proxy) whether made via the Internet, by telephone or by mail; (ii) if you are a shareholder of record, notifying the Corporate Secretary in writing at Forward Air Corporation, 1915 Snapps Ferry Road, Building N, Greeneville, Tennessee 37745 that you want to revoke your earlier proxy; or (iii) if you are attending the Annual Meeting, vote by ballot during the meeting. Your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote by ballot during the Annual Meeting.
If you hold your shares in street name, you may change your vote by contacting your broker or other nominee and following their instructions.
8. HOW WILL MY SHARES BE VOTED IF I SUBMIT A PROXY CARD BUT DO NOT SPECIFY HOW I WANT TO VOTE?
If you sign your proxy card and return it without marking any voting instructions, your shares will be voted FORat the Annual Meeting or any adjournment or postponement thereof:
• “FOR” Proposals 1, 2, 3, 4 and 4 if no contrary instruction is indicated in5;
• “FOR” the proxy,election of all director nominees recommended by our Board (Proposal 2); and
• in the discretion of the persons named as proxies on anyall other matter whichmatters that may properly come before the shareholdersAnnual Meeting or any adjournment or postponement thereof in accordance with applicable law.
Despite this, our Board strongly urges you to mark your proxy card in accordance with our Board’s recommendations.
9. WHAT CONSTITUTES A QUORUM AT THE ANNUAL MEETING?
A majority of the outstanding shares of Company Common Stock and Company Series B Preferred Units, taken as a single class, entitled to vote at the Annual Meeting.
On February 24, 1999,Meeting, present in person or by proxy, will constitute a quorum, which is the Board of Directors voted to effect a two-for-one stock
split by distributing one additional share of the $0.01 par value common stock
of the Company (the "Common Stock") for every share of Common Stock outstanding
to shareholders of record on March 12, 1999. The disclosures herein reflect this
two-for-one stock split, which was payable by the transfer agent after market
close on March 19, 1999.
There were 12,678,480 shares of Common Stock issued and outstanding on March 31,
1999. A majorityminimum number of such shares and units that must be present or represented by proxy at the meeting to transact business. Votes “FOR”, “AGAINST”, “ABSTAIN” and “BROKER NONVOTE” will constituteall be counted as present to determine whether a quorum.quorum has been established.
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10. WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
The approval of the Conversion Proposal will be approved by a majority of the votes cast. For the Conversion Proposal, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. Abstentions and broker non-votes in respect of the Conversion Proposal will be counted as present
for purposeshave no effect on the vote. In accordance with Nasdaq listing rules, votes in favor of determining a quorum on all matters. Abstentions and broker
non-votes are not treated as votes for or against the Proposals presentedConversion Proposal that correspond to shares of Company Common Stock or Company Series B Preferred Units issued by the Company as consideration for the Omni Acquisition (as defined herein) will not count as votes cast with respect to the shareholders. BecauseConversion Proposal. To comply with Nasdaq listing rules, we will instruct the inspector of elections to conduct a separate tabulation that subtracts the votes represented by such shares of Company Common Stock and Company Series B Preferred Units from the total number of shares voted on the Conversion Proposal to determine whether the Conversion Proposal has been adopted in accordance with Nasdaq listing rules.
Eleven directors arewill be elected byat the Annual Meeting. The affirmative vote of a plurality of the votes cast abstentions are not consideredby the shareholders entitled to vote at the Annual Meeting is required for the election of directors. Under the plurality voting standard, you may vote “FOR” or “WITHHOLD” authority to vote for each nominee.
In the event any director nominee, in an uncontested election, receives a greater number of votes “WITHHELD” from his or her election than votes “FOR” such election, he or she shall tender his or her resignation for consideration by the election.Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee shall recommend to the Board the action to be taken with respect to the resignation. The Board will publicly disclose its decision within 90 days after the certification of the election results.
The ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2024 fiscal year, the say on pay vote, the approval of the 2016 Plan Proposal and any other matter that properly comes before the Annual Meeting will be approved by a majority of the votes cast. For the ratification of Ernst & Young LLP, the say on pay vote, the approval of the 2016 Plan Proposal and any other matter that properly comes before the Annual Meeting, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. Abstentions and broker non-votes will have no effect on the vote on these proposals.
11. WHAT HAPPENS IF I HOLD SHARES IN STREET NAME AND DO NOT SUBMIT VOTING INSTRUCTIONS? WHAT IS A "broker non-vote"BROKER NON-VOTE?
A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner votes on one proposal, but does not vote on anothera particular proposal because the broker or nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Under applicable rules that govern brokers who are voting with respect to shares held in street name, brokers ordinarily have the discretion to vote on “routine” matters (e.g., ratification of the selection of independent public accountants) but not on non-routine matters (e.g., the Conversion Proposal, election of directors, advisory votes on executive compensation and the 2016 Plan Proposal).
12. WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING MY SHARES, OR IF I NEED ADDITIONAL COPIES OF THE PROXY MATERIALS?
If you have any questions or require any assistance, please contact the Company’s proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders Call Toll-Free: 877-750-5837 Brokers Call Collect: 212-750-5833
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PROPOSAL 1 - NASDAQ CONVERSION PROPOSAL
Summary of the Proposal
The Board is asking shareholders to approve, in accordance with Nasdaq Listing Rule 5635(a), (i) the issuance of Company Common Stock (as defined below) upon the conversion of the outstanding Company Series C Preferred Units (as defined below) that were issued in connection with our acquisition of Omni Newco, LLC (the “Omni Acquisition”) and (ii) the issuance of Company Series B Preferred Units (as defined below) upon the conversion of Opco Series C-2 Preferred Units (as defined below) that were issued in connection with the Omni Acquisition into Opco Class B Units (as defined below) and the issuance of Company Common Stock upon the exchange of such Company Series B Preferred Units (together with corresponding Opco Class B Units).
Overview of the Omni Acquisition
On January 25, 2024, the Company, Omni Newco LLC, a Delaware limited liability company (“Omni”), and certain other parties completed the Omni Acquisition. Pursuant to the Agreement and Plan of Merger, dated as of August 10, 2023 (as amended by Amendment No. 1, dated as of January 22, 2024, the “Merger Agreement”), among the Company, Omni and the other parties thereto, the Company, through a series of transactions involving the Company’s direct and indirect subsidiaries, acquired Omni for a combination of (a) $20 million in cash and (b) (i) Common Equity Consideration (as defined below) representing 5,135,008 shares of the common stock of the Company, par value $0.01 per share (“Company Common Stock”) on an as-converted and as-exchanged basis and (ii) Convertible Preferred Equity Consideration (as defined below) representing, if the Company’s shareholders approve the Conversion Proposal, an additional 8,880,010 shares of Company Common Stock on an as-converted and as-exchanged basis.
As described below, prior to the consummation of the Omni Acquisition and to facilitate the issuance of the consideration in connection therewith, the Company completed a restructuring (the “Restructuring”), pursuant to which, among other things, the Company contributed all of its operating assets to Clue Opco LLC, a newly formed subsidiary of the Company that is a Delaware limited liability company (“Opco”). The limited liability company interests of Opco are represented by units (collectively, the “Opco Units”), comprised of Opco Units designated as: “Class A Units” (“Opco Class A Units”); “Class B Units” (“Opco Class B Units”); “Series C-1 Preferred Units” (“Opco Series C-1 Preferred Units”); and “Series C-2 Preferred Units” (“Opco Series C-2 Preferred Units”).
The “Common Equity Consideration” consists of (i) Company Common Stock and (ii) Opco Class B Units and corresponding fractional units of Company Series B Preferred Stock (as defined below), each representing one one-thousandth of a share of Company Series B Preferred Stock (“Company Series B Preferred Units”) which, together, are exchangeable into Company Common Stock. The “Convertible Preferred Equity Consideration” consists of (i) fractional units of Company Series C Preferred Stock (as defined below) each representing one one-thousandth of a share of Company Series C Preferred Stock (“Company Series C Preferred Units”) that will be converted into Company Common Stock upon receipt of the shareholder approval of the Conversion Proposal and (ii) Opco Series C-2 Preferred Units that will be converted into Opco Class B Units and corresponding Company Series B Preferred Units upon receipt of the shareholder approval of the Conversion Proposal and will then be exchangeable into Company Common Stock.
The Common Equity Consideration represents, as of the closing of the Omni Acquisition (the “Closing”) and before shareholder approval of the Conversion Proposal, approximately 16.5% of Company Common Stock and common stock equivalents, on a fully diluted, as-exchanged basis. If the Company’s shareholders approve the Conversion Proposal, the Convertible Preferred Equity Consideration will (i) in the case of Company Series C Preferred Units, convert into Company Common Stock and (ii) in the case of Opco Series C-2 Preferred Units, convert into Opco Class B Units and corresponding Company Series B Preferred Units (which together are exchangeable into Company Common Stock), which, together and together with the Common Equity Consideration will represent, as of the Closing, 35.0% of Company Common Stock and common stock equivalents on a fully diluted and as-exchanged basis.
Pursuant to the Merger Agreement, the Company is required to use its reasonable best efforts to obtain approval of the Conversion Proposal and to include in this Proxy Statement the Board’s recommendation that the
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Company’s shareholders vote in favor of the Conversion Proposal. At a meeting of the Board held on April 2, 2024, the Board (i) determined that the Conversion Proposal is in the best interests of the Company’s shareholders and (ii) recommended that the Company’s shareholders vote in favor of the Conversion Proposal. Each of Michael B. Hodge, Christopher H. Schmachtenberger, Charles L. Anderson and Robert L. Edwards, Jr. (comprising all of the directors designated by the Major Shareholders pursuant to the Merger Agreement and the Shareholders Agreements, with the Major Shareholders having received substantial Convertible Preferred Equity Consideration subject to this Conversion Proposal in connection with the Omni Acquisition) recused himself from the Board’s consideration of the Conversion Proposal and from the recommendation made by the Board with respect to the Conversion Proposal.
Restructuring of the Company
General
Prior to the consummation of the Omni Acquisition, the Company completed the Restructuring, pursuant to which, among other things, the Company contributed all of its operating assets to Opco. Opco is structured as an umbrella partnership C corporation through which former direct and certain former indirect equityholders of Omni (“Former Omni Holders”) hold a portion of the Common Equity Consideration and Convertible Preferred Equity Consideration in the form of Opco Units that are exchangeable for Company Common Stock and Company Series C Preferred Units.
The portion of the transaction consideration paid to the Former Omni Holders that is Common Equity Consideration consists of (a) shares of Company Common Stock and (b) Opco Class B Units and corresponding Company Series B Preferred Units, which together are exchangeable at the option of the holders thereof into shares of Company Common Stock pursuant to the Opco LLCA (as defined below).
The portion of the transaction consideration paid to the Former Omni Holders that is Convertible Preferred Equity Consideration consists of (a) Company Series C Preferred Units, which will automatically convert into shares of Company Common Stock upon shareholder approval of the Conversion Proposal and (b) Opco Series C-2 Preferred Units, which are economically equivalent to the Company Series C Preferred Units and will automatically convert into Opco Class B Units and corresponding Company Series B Preferred Units upon the receipt of shareholder approval for the Conversion Proposal pursuant to the Opco LLCA. The Opco Class B Units and corresponding Company Series B Preferred Units issued upon the conversion of the Opco Series C-2 Preferred Units will be exchangeable at the option of the holders thereof into shares of Company Common Stock pursuant to the Opco LLCA.
The Company Common Stock issued at Closing and prior to any shareholder approval of the Conversion Proposal represents 19.99% of the voting power of the Company as of immediately prior to the Closing. The Convertible Preferred Equity Consideration has an aggregate liquidation preference of $976,801,100 (based on a liquidation preference per unit of $110.00) that, as described above, will convert if the Company’s shareholders approve the Conversion Proposal into (i) Company Common Stock and (ii) Opco Class B Units and corresponding Company Series B Preferred Units, which are exchangeable into Company Common Stock.
Opco LLCA
Effective as of the Closing, the Company operates its business through Opco, which indirectly holds all the assets and operations of the Company and Omni and is governed by an operating agreement (the “Opco LLCA”). Opco is managed by and under the direction of the Company, as the manager of Opco.
The limited liability company interests of Opco are represented by units (collectively, the “Opco Units”), comprised of Opco Class A Units, Opco Class B Units, Opco Series C-1 Preferred Units and Opco Series C-2 Preferred Units. All Opco Units are non-voting unless otherwise required by law and except for certain amendments and a limited number of other matters.
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As of the date of this Proxy Statement, (a) the Company and Clue Parent Merger Sub LLC, a subsidiary of the Company, hold all of the Opco Class A Units and all of the Opco Series C-1 Preferred Units and (b) the Former Omni Holders hold (i) a portion of the Common Equity Consideration in the form of Opco Class B Units and corresponding Company Series B Preferred Units and (ii) a portion of the Convertible Preferred Equity Consideration in the form of units of Opco designated as Opco Series C-2 Preferred Units.
Subject to certain exceptions permitted under the Opco LLCA, the number of Opco Class A Units outstanding from time to time will equal the number of shares of Company Common Stock outstanding, the number of Opco Class B Units held by the Former Omni Holders from time to time will equal the number of Company Series B Preferred Units outstanding and the number of Opco Series C-1 Preferred Units from time to time will equal the number of Company Series C Preferred Units outstanding. An Opco Class B Unit, together with a corresponding Company Series B Preferred Unit, generally is equivalent economically and in respect of voting power to one share of Company Common Stock. The Opco Series C-2 Preferred Units have substantially the same terms as the Company Series C Preferred Units described below, except Opco Series C-2 Preferred Units will automatically convert upon shareholder approval of the Conversion Proposal into Opco Class B Units and corresponding Company Series B Preferred Units instead of Company Common Stock (but which are then, together, exchangeable for Company Common Stock pursuant to the Opco LLCA as further described herein). In addition, the Opco Series C-1 Preferred Units, which are held solely by Clue Parent Merger Sub, LLC, a subsidiary of the Company, will automatically convert to Opco Class A Units upon receipt of the shareholders’ approval of the Conversion Proposal.
Pursuant to the Opco LLCA, (a) Opco Class A Units are not exchangeable or convertible and (b) a holder of Opco Class B Units (other than the Company or its affiliates) has the right to exchange all or a portion of its Opco Class B Units (together with a corresponding number of Company Series B Preferred Units) for, at the Company’s option (in its capacity as the manager of Opco), an equal number of shares of Company Common Stock or cash. Prior to shareholder approval of the Conversion Proposal, Opco Series C-2 Preferred Units are exchangeable by the holders thereof for an equivalent number of Company Series C Preferred Units. Immediately after shareholder approval of the Conversion Proposal, Opco Series C-2 Preferred Units will automatically convert to Opco Class B Units based on liquidation preference of such units and the same Conversion Price as the Company Series C Preferred Units (as increased by any accrued and unpaid dividends on such Opco Series C-2 Preferred Units) and the Company will issue the holder thereof corresponding Company Series B Preferred Units on a one-for-one basis for each such Opco Class B Unit. As of the date of the Annual Meeting, there will be no such accrued and unpaid dividends.
Description of Company Series B Preferred Units
Issuance and Conversion
Pursuant to the Articles of Amendment to the Restated Charter of the Company filed with the Secretary of State of the State of Tennessee at the Closing (the “Charter Amendment”), at the Closing the Company issued a new series of preferred stock of the Company designated as “Series B Preferred Stock” (the “Company Series B Preferred Stock”), and, also at the Closing, certain Former Omni Holders received Company Series B Preferred Units, each representing one one-thousandth of a share of Company Series B Preferred Stock. Each Company Series B Preferred Unit, together with a corresponding Opco Class B Unit, is exchangeable at the option of the holder thereof into one share of Company Common Stock, or, at the Company’s election, cash.
Voting Rights
Holders of Company Series B Preferred Units and holders of Company Common Stock vote together as a single class on all matters to be voted on by the Company’s shareholders, subject to limited exceptions (as described in the section titled “Shareholder Vote Requirement” below). Each holder of record of Company Series B Preferred Units is entitled to cast one vote for each such unit.
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Dividends
Company Series B Preferred Units are not entitled to receive any dividends independent of their corresponding Opco Class B Units.
Liquidation Preference
Pursuant to the Charter Amendment, the Company Series B Preferred Units have a liquidation preference of $0.01 per unit.
Transfer
A Company Series B Preferred Unit and its corresponding Opco Class B Unit may only be transferred together as a single, combined unit.
Description of Company Series C Preferred Units
Issuance and Conversion
Pursuant to the Charter Amendment, the Company issued convertible preferred stock of the Company designated as “Series C Preferred Stock” (the “Company Series C Preferred Stock”), and, at the Closing, certain Former Omni Holders received Company Series C Preferred Units each representing one one-thousandth of a share of Company Series C Preferred Stock.
If the Conversion Proposal is approved, each Company Series C Preferred Unit will automatically convert into a number of shares of Company Common Stock heldequal to the quotient of recordthe aggregate Liquidation Preference (defined below) of such Company Series C Preferred Unit ($110.00 at Closing) and a conversion price of $110.00 (subject to certain customary anti-dilution adjustments, the “Conversion Price”). If the Conversion Proposal is approved prior to the first anniversary of the Closing, each Company Series C Preferred Unit is expected to automatically convert into one share of Company Common Stock.
The Company Series C Preferred Units are perpetual and rank senior to Company Common Stock with respect to dividend rights and with respect to rights on liquidation, winding-up and dissolution.
Voting Rights
The Company Series C Preferred Units are generally non-voting, except that certain matters adversely affecting the rights and privileges of the Company Series C Preferred Units require the consent of the holders of a majority of the outstanding Company Series C Preferred Units, voting as a separate class.
Dividends
The Company Series C Preferred Units are entitled to receive dividends declared or paid on Company Common Stock on an as-converted basis.
In addition, the Company Series C Preferred Units accrue on each anniversary of issuance a cumulative annual dividend (without any interim accrual) equal to the product of (a) 14.0% multiplied by (b) the Liquidation Preference (the “Series C Annual Coupon”). The Series C Annual Coupon will be paid, at the closeCompany’s option, in cash or in-kind by automatically increasing the Liquidation Preference in an equal amount. For so long as the Company Series C Preferred Units remain outstanding, subject to certain limited exceptions, the Company will not be able to declare, make or pay dividends or distributions unless all accrued and unpaid dividends have been paid in cash or in kind on the Company Series C Preferred Units.
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Liquidation, Dissolution and Call Option
The liquidation preference of business on March 31, 1999.
The costa Company Series C Preferred Unit is equal to $110.00 per unit, subject to adjustment for any in-kind payment of solicitationthe Series C Annual Coupon as described above (the “Liquidation Preference”).
In the event of proxiesany liquidation, dissolution or winding-up of the Company, each holder of Company Series C Preferred Units will be borneentitled to receive an amount equal to the sum of (a) the greater of (i) the aggregate Liquidation Preference attributable to such holder’s Company Series C Preferred Units, and (ii) the product of (x) the amount per share that would have been payable upon such liquidation, dissolution or winding-up to the holders of shares of Company Common Stock or such other class or series of securities into which such holder’s Company Series C Preferred Units is then convertible (assuming the conversion of each Company Series C Preferred Unit), multiplied by (y) the number of shares of Company Common Stock or such other securities into which the Company Series C Preferred Units are then convertible, plus (b) an amount of all declared and unpaid dividends with respect thereto.
Commencing on the sixth anniversary of the Closing (and, thereafter, only during the 60-day period following any anniversary of Closing), the Company Series C Preferred Units will be callable at the Company’s option in whole (and not in part), at a call price per Company Series C Preferred Unit equal to (a) the product of (i) the greater of (A) the outstanding liquidation preference of such Company Series C Preferred Unit and (B) the product of (x) the number of shares of Company Common Stock into which such Company Series C Preferred Unit would be convertible upon receipt of shareholder approval of the Conversion Proposal, and (y) the 20-day volume-weighted average price per share of Company Common Stock during a defined period prior to the call, and (ii) 103%, plus (b) the amount of all declared and unpaid dividends in respect of such Company Series C Preferred Unit.
Why Shareholder Approval is Required for Conversion
The Company Common Stock is listed on Nasdaq, and as a result, we are subject to Nasdaq’s listing rules, including Nasdaq Listing Rule 5635. Pursuant to Nasdaq Listing Rule 5635(a), shareholder approval is required prior to the issuance of common stock of an acquiror (or securities convertible into or exercisable for common stock of an acquiror) in connection with the acquisition of the stock or assets of another company if such securities are not issued in a public offering for cash and (i) have, or will have, voting power equal to or in excess of twenty percent (20%) of the voting power outstanding before the issuance of such common stock (or securities convertible into or exercisable for common stock); or (ii) the number of shares of common stock to be issued is, or will be, equal to or in excess of twenty percent (20%) of the number of shares of common stock outstanding before the issuance of common stock or securities. If the conversion of the Company Series C Preferred Units and Opco Series C-2 Preferred Units is completed, the total number of shares of Company Common Stock (or securities convertible into or exchangeable for Company Common Stock) issued under the Merger Agreement in connection with the Omni Acquisition will (x) constitute more than twenty percent (20%) of the voting power outstanding prior to such issuance and (y) exceed twenty percent (20%) of the total number of shares of Company Common Stock issued and outstanding prior to such issuance.
Effects if the Conversion Proposal is Approved
If the Conversion Proposal is approved, the issuance of shares of Company Common Stock and Company Series B Preferred Units would dilute, and thereby reduce, each existing shareholder’s proportionate voting power in Company Common Stock on an as-converted, as-exchanged basis. In addition, the sale into the public market of the shares of Company Common Stock could materially and adversely affect the market price of Company Common Stock. Such issuances could also dilute the voting power of a person seeking control of us, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by us.
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The Conversion Price is $110 per share of Company Common Stock, which exceeded the closing price of a share of Company Common Stock of [ ] on [ ], 2024.
Effects if the Conversion Proposal is Not Approved
If shareholders do not approve the Conversion Proposal prior to January 25, 2025 (one year after the Closing), then the Company will be required to pay the Series C Annual Coupon, which will continue to accrue on each subsequent anniversary of the Closing, and we will not be able to declare, make or pay dividends or distributions unless all accrued and unpaid dividends have been paid in cash or in kind on the Company Series C Preferred Units.
If the Company does not obtain shareholder approval for the Conversion Proposal at this Annual Meeting, then, so long as any Company Series C Preferred Units or the Opco Series C-2 Preferred Units remain outstanding, the Company will be required to continue to use its reasonable best efforts to obtain shareholder approval for the Conversion Proposal at each annual meeting of shareholders hereafter until the Conversion Proposal is approved, which will be costly and time-consuming and would also divert management’s time and attention away from managing the business.
Beneficial Ownership Limitations
We are not seeking shareholder approval of a potential “change in control” under Nasdaq Listing Rule 5635(b), which generally prohibits Nasdaq-listed companies, without shareholder approval, from issuing Company Common Stock to a shareholder in a transaction that would cause the holder to beneficially own 20% or more of the then-outstanding Company Common Stock or otherwise result in change of control (subject to certain exceptions). At the Closing, the Company entered into the Shareholders Agreements. The Shareholders Agreements provide the Major Shareholders the right to nominate their respective director nominees, subject to terms and conditions related to ongoing ownership of equity securities of the Company by each respective Major Shareholder. Each Shareholders Agreement, among other things, (a) requires the applicable Major Shareholders to vote such Major Shareholders’ voting securities of the Company in favor of directors nominated by the Board and against any other nominees, (b) provides that each of the applicable Major Shareholders is subject to standstill restrictions, subject to certain exceptions, and (c) prohibits the applicable Major Shareholders from transferring equity securities of the Company, subject to certain exceptions, to certain competitors of the Company and to other shareholders of the Company beneficially owning more than 10% of the Company’s voting power. REP and the EVE Related Holders are anticipated to beneficially own, on a fully-diluted basis and assuming the receipt of the Conversion Approval, equity securities following the Closing each representing approximately 13% and 5%, respectively, of the Company’s voting power. Certain other indirect holders of Omni, which will represent approximately 7% of the Company’s voting power assuming receipt of the Conversion Approval, are also subject to the voting obligations, standstill restrictions and transfer restrictions of the EVE Shareholders Agreement until the first anniversary of Closing.
In addition, at the Closing, the Company entered into a separate investor rights agreement (the “Investor Rights Agreement”) with the Major Shareholders and certain other Former Omni Holders, pursuant to which the Major Shareholders and such other Former Omni Holders have customary registration rights, including certain demand and piggyback registration rights, and are subject to a lock-up preventing transfers of the Company’s equity securities, subject to certain exceptions, for up to one year following the Closing. Assuming that shareholders approve the Conversion Proposal, certain transfer restrictions provided in the Shareholders Agreements and the Investor Rights Agreement, including restrictions on transfers made by the Major Shareholders, will continue to apply.
Based on the foregoing, a “change of control” under Nasdaq Listing Rule 5635(b) did not occur by virtue of the Omni Acquisition and, accordingly, we are not seeking shareholder approval for such purpose under Nasdaq Listing Rule 5635(b).
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Shareholder Vote Requirement
The approval of the Conversion Proposal will be approved by a majority of the votes cast. For the Conversion Proposal, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. Abstentions and broker non-votes in respect of the Conversion Proposal will have no effect on the vote. In accordance with Nasdaq listing rules, votes in favor of or against the Conversion Proposal that correspond to shares of Company Common Stock or Company Series B Preferred Units issued by the Company including
expensesas consideration for the Omni Acquisition (as defined herein) will not count as votes cast with respect to the Conversion Proposal. To comply with Nasdaq listing rules, we will instruct the inspector of elections to conduct a separate tabulation that subtracts the votes represented by such shares of Company Common Stock and Company Series B Preferred Units from the total number of shares voted on the Conversion Proposal to determine whether the Conversion Proposal has been adopted in connectionaccordance with preparing, assembling and mailing this Proxy
Statement. Such solicitation will be made by mail, and also may be made byNasdaq listing rules.
Recommendation of the Company's executive officers or employees personally. Board of Directors
The Company does not
anticipate paying any compensation to any other party for this solicitation of
proxies, but may reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to beneficial owners.
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Board recommends a vote “FOR” the Conversion Proposal.
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PROPOSAL 12 - ELECTION OF DIRECTORS
Six
Our Bylaws permit the Board to fix the size of the Board. At the date of this Proxy Statement, our Board is currently comprised of fifteen directors, all of which are non-employee directors. Immediately following the Annual Meeting, the Board’s size will be electedset at eleven directors.
The Board is committed to recruiting and nominating directors for election who will collectively provide the meeting,Board with the necessary diversity of experiences, skills and characteristics to enhance the Board’s ability to manage and direct the affairs and business of the Company and to make fully informed, comprehensive decisions. In recommending candidates for election to the Board, in the context of the perceived needs of the Board at that time, the Corporate Governance and Nominating Committee evaluates a candidate’s knowledge, experience, skills, expertise and diversity, and any other factors that the Corporate Governance and Nominating Committee deems relevant. In particular, the Board and the Corporate Governance and Nominating Committee believe that the Board should be comprised of a well-balanced group of individuals.
In 2024, the Corporate Governance and Nominating Committee has unanimously recommended to the Board, and the Board unanimously approved, the nominations of Ana B. Amicarella, Charles L. Anderson, Valerie A. Bonebrake, Dale W. Boyles, R. Craig Carlock, Robert L. Edwards, Jr., Christine M. Gorjanc, Michael B. Hodge, George S. Mayes, Jr., Javier Polit and Laurie A. Tucker, each to hold office until the next2025 Annual Meeting of Shareholders andor until a successor has been duly elected and qualified. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE SIX
NOMINEES NAMED BELOW. DULY EXECUTED PROXIES WILL BE SO VOTED UNLESS RECORD
HOLDERS SPECIFY A CONTRARY CHOICE ON THEIR PROXIES. If for any reasonEach nominee has consented to serve if elected.
Director Nominees
At the closing of our acquisition of Omni Newco, LLC, the Company entered into (i) a nominee
is unableshareholder agreement (the “REP Shareholders Agreement”) with affiliates of Ridgemont Equity Partners (“REP”) that provides, among other things, that REP has the ongoing right to nominate two directors to the Board and (ii) a shareholders agreement (the “EVE Shareholders Agreement” and, together with the REP Shareholders Agreement, the “Shareholders Agreements”) with certain former indirect equity holders of Omni related to EVE Omni Investor, LLC (the “EVE Related Holders” and, together with REP, the “Major Shareholders”) that provides, among other things, that the EVE Related Holders have the ongoing right to nominate one director to the Board. The Shareholders Agreements provide the Major Shareholders the right to nominate their respective nominees, subject to terms and conditions related to ongoing ownership of equity securities of the Company by each respective Major Shareholder.
Pursuant to the Shareholder Agreements, the Major Shareholders have nominated Charles L. Anderson, Robert L. Edwards and Michael B. Hodge to serve on our Board. Our Board has determined that all of the director nominees are qualified to serve as directors of the Company. In addition to the specified business experience listed below, each of the directors has the background skills and attributes that the Board believes are required to be an effective director of the Company, including experience at senior levels in areas of expertise helpful to the Company, a willingness and commitment to assume the responsibilities required of a director it is intended thatof the proxies solicited
hereby will be voted for such substitute nominee asCompany and the character and integrity the Board may propose. The
Board has no reasonexpects of its directors. In addition, each Shareholders Agreement, among other things, (a) requires the applicable Major Shareholders to expect that the nominees will be unable to serve and,
therefore, at this time it does not have any substitute nominees under
consideration. Proxies cannot be voted for a greater number of persons than the
number named.
The nominees for election shall be elected by a pluralityvote such Major Shareholders’ voting securities of the votes castCompany in favor of directors nominated by the sharesBoard and against any other nominees, (b) provides that each of Common Stock entitledthe applicable Major Shareholders is subject to vote atstandstill restrictions, subject to certain exceptions, and (c) prohibits the Annual Meeting.applicable Major Shareholders have no rightfrom transferring equity securities of the Company, subject to vote cumulatively for directors, but rather each shall have one
vote for each director for each sharecertain exceptions, to certain competitors of Common Stock held by such shareholder.
DIRECTOR NOMINEES
the Company and to other shareholders of the Company beneficially owning more than 10% of the Company’s voting power.
The following persons are theour Board’s nominees for election to serve as directors. All
nominees are presently directors of the Company. There are no family relationships between any of the director nominees. Certain information relating to theour Board’s nominees, which has been furnished to the Company by the individuals
named,nominees, is set forth below. BRUCE A. CAMPBELLThe ages set forth below are accurate as of the date of this Proxy Statement.
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| ANA B. AMICARELLA | Director since 2017 Age 57 | |||||||
Ms. Amicarella is the Chief Executive Officer of EthosEnergy, an independent service provider of rotating equipment services and solutions to the global power, oil and gas and industrial markets. Prior to joining EthosEnergy in December 2019, Ms. Amicarella served as Managing Director for the Latin America business of Aggreko PLC, a rental business of mobile power plants and temperature control solutions, after serving as Vice President of various business units from 2011 to April 2019. Previously, she was general manager of GE Oil & Gas Services for North America. Ms. Amicarella began her career as a field engineer with GE in 1988, and during her tenure, she served in various professional capacities within the areas of services, sales, strategy and P&L leadership. Ms. Amicarella was elected to the board of Warrior Met Coal, Inc. in August 2018 and serves as a member of its audit, nominating and governance, and environmental health and safety committees. Ms. Amicarella received a B.S. in electrical engineering from The Ohio State University and an MBA from Oakland University. She competed in the 1984 Olympics in synchronized swimming for Venezuela and was an All-American while at The Ohio State University.
Qualifications. The Board believes that Ms. Amicarella’s extensive business, prior management experience and diversity, including her Hispanic background, bring sound guidance to our Board. The Board believes that Ms. Amicarella utilizes that experience in her service as a member of both the Audit Committee and the Corporate Governance and Nominating Committee.
| CHARLES L. ANDERSON | Director since 2024 Age 40 | |||||||
Mr. Anderson serves as a Partner at Ridgemont Equity Partners, a private equity firm that provides buyout and growth capital to industry-leading companies, since 1993
Greeneville, Tennessee Age 472019. As part of Mr. CampbellAnderson’s portfolio involvement, he also serves on the boards of several private companies which provide business and tech-enabled services. Prior to joining Ridgemont in 2014, Mr. Anderson was also Vice President and an associate of Crestview Partners from 2012 until 2014 and 2008 until 2010, respectively. Mr. Anderson was also a financial analyst at J.P. Morgan Securities, Inc. from 2006 until 2008. As more fully discussed above, Mr. Anderson was selected as a designee of REP to join our Board pursuant to the REP Shareholders Agreement. Mr. Anderson holds an M.B.A. from Harvard University and a B.A. in Economics from Washington and Lee University.
Qualifications. The Board believes that Mr. Anderson’s board and investment management experience will provide the Board significant insight into the Company’s strategy and investment decisions. Mr. Anderson was nominated to the Board by a security holder.
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| VALERIE A. BONEBRAKE | Director since 2018 Age 72 | |||||||
Ms. Bonebrake retired as a Senior Vice President of Tompkins International, a global supply chain consulting firm, in March 2018 and has more than 30 years of industry experience in logistics services. In her role at Tompkins, she consulted with an array of companies and industries in North America and across the globe. Prior to joining Tompkins in 2009, she was the Executive Vice President, COO North America, and a cofounder of the YRC Worldwide subsidiary, Meridian IQ (now Noatum Logistics), a global third-party logistics company. Ms. Bonebrake spent 19 years at Ryder System, Inc. in various leadership roles of increasing responsibility in the company’s supply chain solutions segment. She also has been recognized by Ingram Magazine as one of the Top Ten Female Executives in Kansas, and was a 2010 recipient of Supply & Demand Chain Executive’s Pros to Know award. She holds a M.S. in International Logistics from the Georgia Institute of Technology. Ms. Bonebrake has served from 2018 to present as a member of the Board for UC San Diego Rady School of Management, Institute for Supply Excellence and Innovation (ISEI). She received her NACD Directorship Certification in 2021.
Qualifications. The Board believes that Ms. Bonebrake contributes strategic insight to our Board based on her extensive experience in the transportation industry. The Board believes that Ms. Bonebrake utilizes that experience in her service as a member of the Compensation Committee.
| DALE W. BOYLES | Director Nominee Age 63 | |||||||
Mr. Boyles has served as the Chief Financial Officer of Warrior Met Coal, Inc., a U.S.-based environmentally and socially minded supplier of metallurgical coal since his appointment in January 2017. From November to December 2016, he provided consulting services to Warrior Met Coal, LLC. Mr. Boyles was the Chief Financial Officer of Noranda Aluminum Holding Corporation (formerly NYSE listed under “NOR”), a primary aluminum and aluminum coil manufacturer, from November 2013 to November 2016. While in that role, he oversaw the voluntary reorganization under Chapter 11 of the Bankruptcy Code of Noranda in 2016. From 2006 to June 2012, Mr. Boyles served in several capacities for Hanesbrands, Inc. (NYSE listed under “HBI”), an apparel company, including Operating Chief Financial Officer from October 2011 to June 2012, Interim Chief Financial Officer from May 2011 to October 2011, and Vice President, Controller and Chief Accounting Officer from 2006 to May 2011. From 1997 to 2006, he served in various capacities for KPMG LLP, most recently as Audit Partner, Consumer & Industrial Markets. Mr. Boyles was Corporate Division Controller for Collins & Aikman Corporation from 1993 to 1996. Mr. Boyles holds a B.S. in Accounting from University of North Carolina - Charlotte. Mr. Boyles is a certified public accountant.
Qualifications. The Board believes that Mr. Boyles is qualified to serve on the Board because of his extensive experience serving in various leadership roles at several companies and his knowledge of accounting principles, financial reporting and internal controls. Mr. Boyles was nominated to the Board by a non-management director.
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| R. CRAIG CARLOCK | Director since 2015 Age 57 | |||||||
Mr. Carlock served as the Company’s Lead Independent Director from May 2019 until February 2024. He serves as the Chief Operating Officer of the Company since April 1990, a
director since April 1993The Carroll Companies and President since August 1998. Mr. Campbellassumed that position in March 2023. Prior to The Carroll Companies, he served as the Chief Executive Vice President of the Company from April 1990 until August 1998.
Prior to joining the Company in 1990, Mr. Campbell served as Vice President of
Ryder-Temperature Controlled Carriage in Nashville, Tennessee from September
1985 until December 1989.
EDWARD W. COOK Director since 1994
Greeneville, Tennessee Age 40
Mr. Cook joined the Company as Chief Financial Officer Senior Vice President
and director in September 1994. Since May 1995, he has also served as Treasurer.
Prior to joining the Company, Mr. Cook was employed by Ernst & Young LLP for
eleven years, most recently as a senior manager in the Nashville, Tennessee
office. From March 1986 to February 1988, Mr. Cook served as Controller and
Assistant Secretary of Ryder-Temperature Controlled Carriage in Nashville,
Tennessee.
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JAMES A. CRONIN, III Director since 1993
Aurora, Colorado Age 44
Since June 1996, Mr. Cronin has served as Chief Operating Officer, Executive
Vice President, Finance and a director of Ascent Entertainment Group,Omega Sports, Inc., and
a director of On Command Corp., both multimedia entertainment companies. From
June 1992 until June 1996, (“Omega”) from April 2017 to March 2023. Prior to Omega, he was a private investor. Mr. Cronin was a partner
in Alfred Checchi Associates, a private investment firm in Los Angeles,
California, from September 1989 to June 1992. Mr. Cronin served as the President and Chief Executive Officer of Tiger International,The Fresh Market from January 2009 to January 2015 and as a member of its board of directors from June 2012 to January 2015. He began his career with The Fresh Market in 1999 and served in various capacities culminating with the position of President and Chief Executive Officer. During his time with The Fresh Market, Mr. Carlock served as its Executive Vice President and Chief Operating Officer as well as its Senior Vice President-Store Operations, Vice President-Merchandising and Marketing, and Director of Merchandising & Marketing Strategy. Prior to joining The Fresh Market, Mr. Carlock was Financial Manager, Fabric Care Category, at Procter & Gamble Company.
Qualifications. The Board believes that Mr. Carlock’s leadership experience is invaluable to management and the Board in, among other things, the areas of strategy, development and corporate governance. The Board believes that Mr. Carlock utilizes that experience in his service as Lead Independent Director and Chair of the Compensation Committee.
| ROBERT L. EDWARDS, JR. | Director since 2024 Age 57 | |||||||
Mr. Edwards co-founded and began serving as a Partner of Ridgemont Equity Partners, a private equity firm that provides buyout and growth capital to industry-leading companies, in 2010 and has served as a Managing Partner since 2021. As part of Mr. Edwards’ portfolio involvement, he also serves on the board of several private companies which provide business and tech-enabled services. Prior to co-founding Ridgemont in 2010, Mr. Edwards was a Managing Director at Banc of America Capital Investors (predecessor to Ridgemont), a Management Consultant at McKinsey & Co., Inc. and served as an investment banker at Allied Capital and Bowles Hollowell Conner & Co, Inc. As more fully discussed above, Mr. Edwards was selected as a designee of REP to join our Board pursuant to the REP Shareholders Agreement. Mr. Edwards holds an M.B.A. from Harvard University and a B.A. in Economics from the University of North Carolina at Chapel Hill.
Qualifications.The Flying Tiger LineBoard believes that Mr. Edwards’ board, investment management and industry experience will provide the Board significant insight into the Company’s management and investment decisions. Mr. Edwards was nominated to the Board by a security holder.
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| CHRISTINE M. GORJANC | Director Nominee Age 67 | |||||||
Ms. Gorjanc currently serves as an independent director for various public companies, including as a member of the board of directors of Shapeway Holdings, Inc., a publicly-traded digital manufacturing platform since April 2023. Since November 2015, Ms. Gorjanc has served on the board of directors of Invitae, Inc., a genetic testing and services company, where she serves as a chairman of the audit committee as well as a member of the compensation committee. Ms. Gorjanc briefly served as the Interim Chief Executive Officer of Invitae, Inc. from July until August 2023. Following her time as Interim Chief Financial Officer, Invitae, Inc. entered into Chapter 11 of the Bankruptcy Code in February 2024. In May 2019, Ms. Gorjanc joined the board of Juniper Networks, Inc., a leader in secure AI driven networks where she is the lead director and serves on the audit committee. From March 2021 to October 2022, Ms. Gorjanc also served on the board of directors of Zymergen, Inc., a biotechnology company, where she served on the compensation committee and audit committee. Ms. Gorjanc served as the Chief Financial Officer of Arlo Technologies, Inc., an intelligent cloud infrastructure and mobile app platform company, from August 2018 to June 2020. She previously served as the Chief Financial Officer of NETGEAR, Inc., a provider of networking products and services from January 2008 to August 2018, where she also served as Chief Accounting Officer from December 2006 to January 2008 and Vice President, Finance from November 2005 through December 2006. Prior to joining NETGEAR, Inc., Ms. Gorjanc served in a number of roles including Vice President, Controller, Treasurer, Tax Director and Assistant Secretary for Aspect Communications Corporation, a provider of workforce and customer management solutions, from September 19871996 through November 2005. Ms. Gorjanc served as the Manager of Tax for Tandem Computers, Inc., a provider of fault-tolerant computer systems from October 1988 through September 1996, Ms. Gorjanc served in management positions at Xidex Corporation, a manufacturer of storage devices, and spent eight years in public accounting. Ms. Gorjanc has also received her director certification from the NACD (National Association of Certified Directors).
Qualifications. The Board believes that Ms. Gorjanc is well qualified to August 1989.
HON. ROBERT KEITH GRAYserve on the board because of her extensive experience in finance and accounting as well as her executive experience serving in positions that she has held at various public companies. Ms. Gorjanc was nominated to the Board by a non-management director.
| MICHAEL B. HODGE | Director since 2024 Age 51 | |||||||
Mr. Hodge has served as a Principal at EVE Partners, a private equity firm focused on logistics, since October 2011 and is the Co-Founder of EVE Atlas, a venture capital firm focused on logistics. Mr. Hodge currently serves as the Chairman of Energy Transport Logistics and Point Dedicated Services and serves as a board member of Integrity Express Logistics and Rothschild Investment Corporation. Prior to joining EVE Partners in 2011, Mr. Hodge was the Founder and Managing Partner of Hilliard Street Capital, a long/short equity hedge fund where he served as its Chief Investment Officer from 2008 until 2011. Mr. Hodge was also the Chief Executive Officer and Chief Financial Officer of Skybus Airlines from 2007 to 2008. From 2002 to 2007, Mr. Hodge was the Co-Head of Tiger Management, a multi-billion-dollar family office managing the assets of Julian H. Robertson, Jr. From 1997 to 2000, he was also a Managing Director since 1993
Miami, Florida Age 73at Tiger Management. From 1994 to 1997, Mr. Gray isHodge was a foreign currency trader at Bankers Trust. As more fully discussed above, Mr. Hodge was selected as a designee of EVE to join our Board pursuant to the EVE Shareholders Agreement. Mr. Hodge graduated magna cum laude from Princeton University in 1994 with an A.B. degree in Economics and a certificate in Politics. Mr. Hodge also holds an M.B.A. from the Harvard Business School.
Qualifications. The Board believes that Mr. Hodge’s industry and investment management experience will provide the Board significant insight into the Company’s management, strategy and investment decisions. Mr. Hodge was nominated to the Board by a security holder.
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| GEORGE S. MAYES, JR. | Director since 2021; Chairman since 2024 Age 65 | |||||||
Mr. Mayes was appointed to the position of independent Chairman of the Board on February 6, 2024. Mr. Mayes also serves as Founder and Chief Executive Officer of Grayfor LeanVue, LLC, which provides strategic analysis for global supply chain design and Company II,strategy development for managing complex global supply webs. From 2013 to 2015, Mr. Mayes was Chief Operating Officer for Diebold, Inc., a public relations company, a position he has held since November 1992. Since
1981, Mr. Gray has also been Chairman of Gray Investment Companiesglobal leader in automated teller machine manufacturing and Powerhouse Leasing Corp. From 1991service. He was selected to 1992, Mr. Gray was Chairman of Hill &
Knowlton Public Affairs Worldwide/USA and was itsserve as interim Chief Executive Officer from
1986in 2013. From 2005 to 1991.2012, Mr. Gray hasMayes held leadership roles in global operations and supply chain management at Diebold. Prior to that role, he was Chief Operating Officer for Tinnerman Palnut Engineered Products, LLC. He also served as Vice President of Manufacturing for Stanley Fastening Systems. Mr. Mayes is currently a board member for Stoneridge, Inc. Mr. Mayes served in various government positions, including
Special Assistantthe United States Army from 1980 to 1985. He holds a bachelor’s degree in Engineering from the United States Military Academy at West Point.
Qualifications. The Company believes that Mr. Mayes provides in-depth knowledge of operations, business acumen and leadership to the SecretaryBoard, which strengthens the Board’s collective qualifications, skills and experience. The Board believes that Mr. Mayes utilizes that experience in his service as a member of the Navy, SecretaryCorporate Governance and Nominating Committee.
| JAVIER POLIT | Director since 2021 Age 59 | |||||||
Mr. Polit is an experienced Fortune 100 Chief Information Officer, with extensive experience across consumer goods, retail and financial services. In December 2023, Mr. Polit was appointed as Executive Vice President, Chief Information Officer - Information Technology of Costco Wholesale Corporation. From 2020 until 2023, Mr. Polit served as Chief Information Officer for Mondelez International (formerly Kraft Foods). From 2017 to 2020, he was Chief Information Officer for Procter & Gamble Company. Prior to that role, he served as Group Chief Information Officer for Coca Cola Bottling from 2007 to 2017 and as Global Director Customer Solutions, Business Intelligence and Distributions for the Coca Cola Company from 2003 to 2007. Mr. Polit was also Vice President, Global Corporate Systems for Office Depot and Vice President Information Technology for NationsBank NA. Mr. Polit is a member of the CabinetUniversity of Miami President’s Advisory Board and Special Assistant to President Eisenhower.the Professional Advisory Board of ALSAC/St. Jude Children’s Research Hospital. Mr. GrayPolit is a graduate of the Advanced Management program at Harvard Business School. He holds a Master of Science from Barry University, Graduate Schoola Masters of International Management from Budapest University of Technology and Economics and a Masters in International Business Management from TiasNimbas Business School. He also holds an MBA from Purdue University and holds three honorary doctorates.
SCOTT M. NISWONGER Director since 1981
Greeneville, Tennessee Age 51a bachelor’s degree in Business Administration from the University of Miami.
Qualifications. The Board believes that Mr. Niswonger isPolit brings deep B2B technology expertise including cybersecurity, data, digitization across multiple industries and complex organizations. He has helped drive digital transformation in large scale and has operated at the highest levels of Fortune 100 global companies where he contributed to technology strategy. The Board believes that Mr. Polit utilizes that experience in his service as a co-foundermember of the Company,Audit Committee.
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| LAURIE A. TUCKER | Director since 2019 Age 67 | |||||||
Ms. Tucker has served as the Founder and Chief Strategy Officer of Calade Partners LLC, a marketing consultancy firm, since January 2014. She previously served as the Senior Vice President, Corporate Marketing of FedEx Services, Inc. (“FedEx”), a subsidiary of FedEx Corporation, from 2000 until she retired in December 2013. She was employed by FedEx in various capacities of increasing experience and responsibilities since 1978. Ms. Tucker has served as a director of publicly traded companies, such as, Bread Financial Holdings, since May 2015 and Iron Mountain Incorporated from May 2007 to May 2014. Ms. Tucker holds a B.B.A. in Accountancy and an M.B.A. in Finance from the University of Memphis.
Qualifications. Ms. Tucker’s 35 years of experience at FedEx provide the Board with valuable insight with respect to corporate marketing strategies and large-scale operations. The Board believes that her experience overseeing finance, pricing, and customer technology will benefit her as the Chair of the Corporate Governance and Nominating Committee.
Shareholder Vote Requirement
The affirmative vote of a plurality of the votes cast by the shareholders entitled to vote at the Annual Meeting is required for the election of directors. Under the plurality voting standard, you may vote “FOR” or “WITHHOLD” authority to vote for each nominee. Votes to “WITHHOLD” with respect to any nominee and broker non-votes are not votes cast and will result in the applicable nominee(s) receiving fewer votes cast “FOR” such nominee(s).
In the event any director nominee receives a greater number of votes “WITHHELD” from his or her election than votes “FOR” such election, he or she shall tender his or her resignation for consideration by the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee shall recommend to the Board the action to be taken with respect to the resignation. The Board will publicly disclose its foundingdecision with respect to such resignation within 90 days of the certification of the election results.
Recommendation of the Board
Our Board recommends that shareholders vote “FOR” the eleven nominees recommended by the Board.
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CORPORATE GOVERNANCE
Independent Directors
The Company Common Stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”). Nasdaq requires that a majority of the Company’s directors be “independent directors,” as defined in October 1981Nasdaq Marketplace Rule 5605. Generally, a director does not qualify as an independent director if, among other reasons, the director (or in some cases, members of the director’s immediate family) has, or in the past three years has had, certain material relationships or affiliations with the Company, its external or internal auditors, or other companies that do business with the Company. The Board has affirmatively determined that all of the Company’s current directors are “independent directors” on the basis of Nasdaq’s standards and a review of each director’s responses to questionnaires asking about any material relationships or affiliations with us.
The current independent directors of the Board include Ronald W. Allen, Ana B. Amicarella, Charles L. Anderson, Valerie A. Bonebrake, C. Robert Campbell, R. Craig Carlock, Robert L. Edwards, Jr., Michael B. Hodge, G. Michael Lynch, Chitra Nayak, George S. Mayes, Jr., Javier Polit, Christopher H. Schmachtenberger, Laurie A. Tucker and W. Gil West. In addition, the Board has affirmatively determined that, if elected, each of Dale W. Boyles and Christine M. Gorjanc would also be considered independent directors under applicable Nasdaq standards.
The Board has adopted Corporate Governance Guidelines that give effect to Nasdaq’s requirements related to corporate governance and various other corporate governance matters. The Company’s Corporate Governance Guidelines reflect the Board’s commitment to monitor the effectiveness of policy and decision making both at the Board and management level, with a view to enhancing long-term shareholder value. The topics addressed in our Corporate Governance Guidelines include:
•Selection of the Chairman;
•Selection and responsibilities of the Lead Independent Director;
•Selection and evaluation of the Chief Executive Officer;
•Independence of the Board;
•Selection of new directors, Board membership criteria and size and role of the Board;
•Committees of the Board and related matters;
•Director orientation and continuing education;
•Independent director stock ownership guidelines;
•Self-evaluation by the Board;
•Director change in status and resignation policy;
•Leadership development and succession planning;
•Board access to management; and
•Shareholder communications with the Board.
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The Company’s Corporate Governance Guidelines are available through the Governance link on the Company’s Investor website, which can be accessed at www.forwardaircorp.com. The Company’s website and the information contained therein or connected thereto are not incorporated into this Proxy Statement.
Independent Director Meetings
Pursuant to the Company’s Corporate Governance Guidelines, the Company’s independent directors meet in executive session without management on a regularly scheduled basis, but not less frequently than quarterly. The Chairman of the Board or Lead Independent Director, if any, presides at such executive sessions or, in his or her absence, an independent director designated by such Chairman of the Board or Lead Independent Director.
Interested parties who wish to communicate with the Chairman of the Board, Lead Independent Director, if any, or the independent directors as a group should follow the procedures found below under “Shareholder Communications.”
Director Nominating Process
Shareholders may nominate directors for election at an annual meeting of shareholders, provided that the shareholder satisfies the advance notice requirements set forth in our bylaws. A shareholder’s notice must be delivered to or mailed and received by the Corporate Secretary at Forward Air Corporation, 1915 Snapps Ferry Road, Building N, Greeneville, Tennessee 37745, at least 90 calendar days but not more than 120 calendar days prior to the one-year anniversary of the prior year’s annual meeting and include all required information to be considered. In the case of the 2025 Annual Meeting of Shareholders, recommendations can be submitted no earlier than January 21, 2025 and the deadline to receive nominations is February 20, 2025. If, however, the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the preceding year’s annual meeting, then notice by the shareholder must be delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made; or if a special meeting of shareholders is called for the purpose of electing directors, then notice must not be received later than the close of business on the 10th day following the day on which notice of the date of the special meeting was mailed or public announcement of the date of the special meeting was made, whichever first occurs.
Among other requirements, all notices must be in writing and set forth the following information: (1) the information required by Regulation 14A of the Exchange Act and the rules and regulations promulgated thereunder; (2) the signed written consent of the nominee to be nominated; and (3) the completed and signed director questionnaire and other documents, as required under our bylaws. Nominations not made in accordance with the procedures set forth in the bylaws will be deemed invalid.
The requirements of the advance notice provision for election of directors as summarized above are qualified in their entirety by our bylaws and Rule 14a-19 (as applicable), which we recommend be read in order to comply with all applicable requirements.
The Corporate Governance and Nominating Committee annually reviews the appropriate experience, skills and characteristics required of Board members in the context of the current membership of the Board. This assessment includes, among other relevant factors in the context of the perceived needs of the Board at that time, the possession of such knowledge, experience, skills, expertise and diversity to enhance the Board’s ability to manage and direct the affairs and business of the Company.
The Board has established the following process for the identification and selection of candidates for director. The Corporate Governance and Nominating Committee, in consultation with the Chairman of the Board and Chief Executive
Officer since February 1988. Mr. Niswonger served as PresidentLead Independent Director, if any, periodically examines the composition of the Board and determines whether the Board would better serve its purposes with the addition of one or more directors. If the Corporate Governance and Nominating Committee determines that adding a new director is advisable, the Corporate
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Governance and Nominating Committee initiates the search, working with other directors and management and, if appropriate or necessary, a third-party search firm that specializes in identifying director candidates.
As discussed in more detail above, in connection with the Omni Acquisition, the Company entered into (i) the REP Shareholders Agreement with affiliates of REP that provides, among other things, that REP has the ongoing right to nominate two directors to the Board and (ii) the EVE Shareholders Agreement with the EVE Related Holders that provides, among other things, that the EVE Related Holders have the ongoing right to nominate one director to the Board. The Shareholders Agreements provide the Major Shareholders the right to nominate their respective director nominees, subject to terms and conditions related to ongoing ownership of equity securities of the Company from October 1981 until August 1998. He also servesby each respective Major Shareholder and all other generally applicable qualifications required for service as a director of Landair
Corporationas set forth in the Company’s governing documents and Corporate Governance Guidelines.
Board Diversity
The Corporate Governance and Nominating Committee will consider all appropriate candidates proposed by management, directors and shareholders. Information regarding potential candidates shall be presented to the Corporate Governance and Nominating Committee, which shall evaluate the candidates based on the needs of the Regional Advisory Board at that time and the candidates’ knowledge, experience, skills, expertise and diversity, as set forth in the Company’s Corporate Governance Guidelines. In particular, the Board and the Corporate Governance and Nominating Committee believe that the Board should be comprised of First Tennessee Bank National
Association.
RICHARD H. ROBERTS Directora well-balanced group of individuals. The Board believes that having diversity of knowledge, experience, skills and expertise among its members enhances the Board’s ability to make fully informed, comprehensive decisions.
Potential candidates will be evaluated according to the same criteria, regardless of whether the candidate was recommended by shareholders, the Corporate Governance and Nominating Committee, another director, Company management, a search firm or another third party, except that in the case of shareholder recommendations, such candidates must be nominated pursuant to the requirements in the Company’s bylaws. The Corporate Governance and Nominating Committee will submit its director candidate(s) recommendation to the Board for approval and recommendation to the shareholders.
The Corporate Governance and Nominating Committee also believes that diversity of race, ethnicity and gender are important factors in evaluating candidates for nominees. Accordingly, the Board is committed to actively seeking out highly qualified diverse candidates, including women and people of color in each candidate pool from which non-management director nominees are selected. To that end, since 1995
Greeneville, Tennessee Age 44
Mr. RobertsJuly 2017, the Board has servedadded highly-qualified and diverse candidates including Ana B. Amicarella (July 2017), who identifies as Senior Vice PresidentTwo or More Races or Ethnicities, Valerie A. Bonebrake (January 2018), Laurie A. Tucker (October 2019), Chitra Nayak, who identifies as Asian (March 2021), George S. Mayes, Jr., who identifies as African American (March 2021), Javier Polit, who identifies as Hispanic (March 2021) and, General Counselif elected, Christine Gorjanc (director nominee).
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*To see the Company’s Board Diversity Matrix as of March 30, 2023, which is posted on our website.
As of April 2, 2024
Annual Performance Evaluations
The Company’s Corporate Governance Guidelines provide that the Board shall conduct an annual evaluation to determine, among other matters, whether the Board and the Board committees are functioning effectively. The Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are also each required to conduct an annual self-evaluation. The Corporate Governance and Nominating Committee is responsible for overseeing this self-evaluation process. The Board also conducts periodic evaluations of the Chairman of the Board and Lead Independent Director, if any, peer evaluations and individual self-evaluations.
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Code of Business Conduct and Ethics
The Board has adopted a Code of Business Conduct and Ethics that applies to all Company since July 1994employees, officers and directors, which is available through the governance link on the Company’s Investor website, which can be accessed at www.forwardaircorp.com. The Company’s website and the information contained therein or connected thereto are not incorporated into this Proxy Statement. The Code of Business Conduct and Ethics complies with Nasdaq and SEC requirements. The Company will also mail the Code of Business Conduct and Ethics to any shareholder who requests a copy. Requests may be made by contacting the Secretary as Secretarydescribed below under “Shareholder Communications.”
Board Attendance
The Company’s Corporate Governance Guidelines provide that all directors are expected to regularly attend meetings of the Board and a director since May 1995. Priorcommittees on which they serve and to joiningspend the Company, Mr. Roberts was a partner withtime needed, and meet as frequently as necessary, to properly discharge their responsibilities. Members of the Baker, Worthington,
Crossley & Stansberry law firm from January 1991 until July 1994. Mr. RobertsBoard are also serves as a directorexpected to attend the Annual Meeting of Landair Corporation and Miller Industries, Inc.
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BOARD OF DIRECTORS AND COMMITTEESShareholders. During the last year,2023, the Board held six26 meetings. All of the incumbent directors who were on the Board during 2023 attended at least
Board Committees
The Board maintains an
Executive Committee,currently has four standing committees: an Audit Committee, a Compensation Committee, a Corporate Governance and a
Nominating Committee and an Executive Committee. These committees do not have a formal meeting schedule,
but
The charters of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are required to meetavailable through the governance link on the Company’s Investor website, which can be accessed at least once each year.
Current membersir.forwardaircorp.com. With the exception of the Executive Committee, are Messrs. Campbell, Cook, Niswonger
and Roberts. The Executive Committee is authorizedeach committee has authority to act on behalf of andengage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities. Additional information regarding the functions of the Board toBoard’s committees, the extent permittednumber of meetings held by laweach committee during 2023 and the
Bylawstheir present membership is set forth below.
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The current composition of the Company.
Current membersBoard and its Committees is as follows:
| Name | Audit | Compensation | Corporate Governance and Nominating | Executive | ||||||||||
| George S. Mayes, Jr., Chairman | X | |||||||||||||
| Ronald W. Allen | X | X | ||||||||||||
| Ana B. Amicarella | X* | X | ||||||||||||
| Valerie A. Bonebrake | X | |||||||||||||
| C. Robert Campbell | X | |||||||||||||
| R. Craig Carlock | Chair | X | ||||||||||||
| G. Michael Lynch | Chair* | |||||||||||||
| Chitra Nayak | X | |||||||||||||
| Javier Polit | X | |||||||||||||
| Laurie A. Tucker | Chair | X | ||||||||||||
| W. Gil West | ||||||||||||||
| Christopher H. Schmachtenberger | ||||||||||||||
| Charles L. Anderson | ||||||||||||||
| Michael B. Hodge | ||||||||||||||
| Robert L. Edwards, Jr. | ||||||||||||||
| Number of Meetings in 2023 | 5 | 5 | 3 | — | ||||||||||
| *Audit Committee Financial Expert | ||||||||||||||
Audit Committee. The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. The Audit Committee is responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm. As part of this responsibility, the Audit Committee are Messrs. Croninconsiders the impact of changing its current firm, is involved in selecting the lead partner, and Gray. The Audit
Committee recommends engagement of the independent auditors, considers the fee arrangement and scope of the audit,audit. The Audit Committee also reviews the financial statements and the independent auditors'registered public accounting firm’s report, considers comments made by the independent
auditorssuch firm with respect to the Company'sCompany’s internal control structure, and reviews the internal audit process, internal accounting procedures and financial controls with the Company'sCompany’s financial and accounting staff. The Audit Committee held two meetings during 1998.
Current membersmay meet in executive session, without management present, on any matter it deems appropriate. In addition, the Audit Committee assists the Board in its oversight of the Company’s legal compliance, ethics and information system controls and security programs. A more detailed description of the Audit Committee’s duties and responsibilities can be found in the Audit Committee Report on pages 92 to 93of this Proxy Statement and in the Audit Committee Charter, which is available on the Company’s website at https://ir.forwardaircorp.com/corporate-governance.
The Board has determined that each member of the Audit Committee meets the independence and financial acumen requirements under Nasdaq listing standards and the enhanced independence standards for audit committee members required by the SEC. In addition, the Board has determined that each of Ana B. Amicarella and G. Michael Lynch of the Audit Committee meet the definition of an “audit committee financial expert,” as that term is defined by the rules and regulations of the SEC.
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Compensation Committee are Messrs. Cronin, Gray and
Niswonger.Committee. The Compensation Committee is responsible for determining the overall compensation levels of certain of the Company'sCompany’s executive officers, reviewing, approving and administering the Company'sCompany’s employee stock option planincentive plans and other employee benefit plans. The Compensation Committee held two meetings during 1998.
Currentapproves the final compensation for all NEOs other than the Chief Executive Officer. The Compensation Committee makes preliminary determinations about the Chief Executive Officer’s base salary, annual short-term incentive compensation, long-term incentive compensation and other awards as appropriate. The Compensation Committee discusses its compensation recommendations for the Chief Executive Officer with the full Board, and the full Board approves the final compensation decisions after this discussion. The Compensation Committee also reviews, approves and makes recommendations, as necessary, to the Board with respect to the Company’s policies and procedures relating to executive officer or director compensation, such as any clawback policy, stock ownership guidelines, or pledging or hedging policy.
Additionally, the Compensation Committee reviews and approves the Compensation Discussion and Analysis for inclusion in the Proxy Statement (see pages 41 to 55 of this Proxy Statement). Furthermore, the Compensation Committee oversees management succession planning along with the Corporate Governance and Nominating Committee and strategically reviews the Company’s human resource strategies and initiatives with respect to the Company’s development and retention of talent. A more detailed description of the Compensation Committee’s duties and responsibilities can be found in the Compensation Committee Charter, which is available at https://ir.forwardaircorp.com/corporate-governance.
In fulfilling its responsibilities, the Compensation Committee may delegate its responsibilities to a subcommittee consisting of members of the Compensation Committee and, to the extent not expressly reserved to the Compensation Committee by the Board or by applicable law, rule or regulation, to any other committee consisting entirely of independent directors. The Company’s Chief Executive Officer may not be present during deliberations or voting regarding his or her compensation. To the extent helpful to the work of the Compensation Committee, however, the Company’s Chief Executive Officer may be invited by the Compensation Committee to participate in discussion relating to his or her compensation that may precede further deliberation or voting.
The Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”), an independent consultant, to assist it during 2023. During the year, the consultant reviewed materials prepared by management and provided the Compensation Committee with information on compensation trends, best practices and changes in the regulatory environment, in addition to providing executive and director compensation benchmarking information. Meridian provided no services to the Company other than those related to executive and director pay and related governance.
The Board has determined that each member of the Compensation Committee is independent pursuant to Nasdaq listing standards and Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Compensation Committee, considering all relevant factors, including those set forth in Rule 10C-l(b)(4)(i) through (vi) under the Exchange Act and the Nasdaq listing standards, is not aware of any conflict of interest that has been raised by the work performed by Meridian.
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Corporate Governance and Nominating Committee are Messrs. Campbell, CroninCommittee. The Corporate Governance and
Niswonger. The Nominating Committee is responsible for establishingidentifying individuals qualified to become Board members and recommending them to the criteriaBoard for consideration. This responsibility includes all potential candidates, whether initially recommended by management, other Board members or shareholders. In addition, the Corporate Governance and Nominating Committee makes recommendations to the Board for Board committee assignments, develops and annually reviews the Company’s Corporate Governance Guidelines, and otherwise oversees corporate governance matters. The Corporate Governance and Nominating Committee is also responsible for overseeing the annual evaluation of the Board and for periodically reviewing and making recommendations to the qualificationsBoard regarding director compensation for the Board’s approval. The Corporate Governance and Nominating Committee also reviews the Company’s environmental, social and governmental policies, as well as manages sustainability-related risks and makes recommendations that it deems appropriate. Furthermore, the Corporate Governance and Nominating Committee oversees management succession planning along with the Compensation Committee. A more detailed description of individuals for electionthe Corporate Governance and Nominating Committee’s duties and responsibilities can be found in the Corporate Governance and Nominating Committee Charter, which is available at https://ir.forwardaircorp.com/corporate-governance.
A description of the Committee’s policy regarding director candidates nominated by shareholders appears in the section titled “Director Nominating Process” above. The Board has determined that each member of the Corporate Governance and Nominating Committee is independent pursuant to Nasdaq listing standards.
Executive Committee. The Executive Committee is authorized, to the extent permitted by law and the Bylaws, to act on behalf of the Board on all matters that may arise between regular meetings of the Board upon which the Board would be authorized to act, subject to certain materiality restrictions established by the Board. The Executive Committee did not act with respect to any matter during 2023.
Compensation Committee Interlocks and Insider Participations
During the fiscal year ended December 31, 2023, R. Craig Carlock, Ronald W. Allen, Valerie A. Bonebrake and C. Robert Campbell served as members of the Compensation Committee. None of these directors was, during 2023, an officer or employee of our Company or was formerly an officer of our Company. There were no transactions in 2023 between us and any directors who served as Compensation Committee members for any part of 2023 that would require disclosure by us under SEC rules requiring disclosure of certain relationships and related party transactions. During 2023, none of our executive officers served as a director of another entity, one of whose executive officers served on our Compensation Committee, and none of our executive officers served as a member of the compensation committee of another entity, whose executive officers served as a member of our Board. WhenAccordingly, there were no interlocks with other companies within the meaning of the SEC’s proxy rules during 2023.
Certain Relationships and Related Person Transactions
Review, Approval or Ratifications of Certain Relationships and Transactions with Related Persons. The Audit Committee of the Board reviews all relationships and transactions in which the Company and its directors and executive officers or their immediate family members are participants to determine whether such persons have a vacancydirect or indirect material interest. Other than as provided in the Audit Committee Charter, the Company does not have a written policy governing related-person transactions. The Company’s legal staff is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related person transactions and for then determining, based on the Board occursfacts and circumstances, whether the Company or a related person has a direct or indirect material interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are required to be disclosed in a company’s proxy statement. In addition, the Audit Committee reviews and approves or ratifies any related person transaction that is anticipated,required to be disclosed.
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In the Committee
presentscourse of its recommendationreview and approval or ratification of a replacementdisclosable related person transaction, the Audit Committee considers:
•the nature of the related person’s interest in the transaction;
•the material terms of the transaction, including, without limitation, the amount and type of transaction;
•the importance of the transaction to the related person; and
•the importance of the transaction to the Company.
Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction, provided, however, that such director may be counted in determining the presence of a quorum at a meeting of the Audit Committee when considering the transaction.
In 2022, the Audit Committee reviewed and approved the compensation paid to Mr. Zachary Ruble, the son of Chris Ruble. Mr. Zachary Ruble serves as the director of operations for the Company’s west district, and in 2023 he earned approximately $206,000 in salary and bonus. Mr. Zachary Ruble’s compensation is comparable to other employees with equivalent qualifications, experience and responsibilities at the Company.
In 2023, the Audit Committee reviewed and approved the compensation paid to Mr. Patrick Creutzinger, the stepson of Scott Niswonger, who served as a director until his resignation in August 2023. Mr. Creutzinger serves as a Director of Sales for the Company, and in 2023 he earned approximately $202,000 in salary and bonus. Mr. Creutzinger’s compensation is comparable to other employees with equivalent qualifications, experience and responsibilities at the Company.
Based on information provided by the directors, director nominees and executive officers, and the Company’s legal department, the Audit Committee determined that there are no other related person transactions to be reported in this Proxy Statement.
Board Leadership Structure
In accordance with our Bylaws and Corporate Governance Guidelines, the Board is responsible for selecting the Chief Executive Officer and the Chairman of the Board; both of these positions may be held by the same person or by two separate individuals. The Company’s Corporate Governance Guidelines require the election, by the Board, of an independent lead director to serve during any period when there is no independent Chairman of the Board. R. Craig Carlock served as the Company’s Lead Independent Director from May 2019 until February 2024, when Thomas Schmitt ceased serving as Chairman, President and Chief Executive Officer of the Company and as a member of the Board. Following the departure of Mr. Schmitt from the Company, George S. Mayes, Director of the Company, was appointed as Chairman of the Board and Michael Hance was appointed as the Company’s Interim CEO but was not appointed to the Board. The Committee also makes recommendations as to exerciseBoard believes separating the positions of Chairman of the Board and CEO while the Company undertakes a search for a permanent CEO allows Mr. Hance to focus on the Company’s day-to-day business and operations and the integration of Director'sthe Omni business, while allowing our Chairman to lead the Board in its fundamental role of providing advice to and oversight of management, particularly in light of the current challenges facing the Company.
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The Chairman of the Board is responsible for (a) chairing Board meetings and the Annual Meeting, (b) setting the agendas for these meetings, (c) attending Board committee meetings, and (d) providing information to Board members in advance of each Board meeting and between Board meetings. The Lead Independent Director is responsible for (i) chairing executive sessions of the independent directors and communicating with management relating to these sessions, and presiding at all meetings of the Board at which the Chairman is not present, (ii) approving agendas and schedules for Board meetings and the information that is provided to directors, and (iii) serving as a liaison between the Chairman and the independent directors. The Lead Independent Director also has the authority to determinecall meetings of the numberindependent directors.
Although we do not have a Lead Independent Director at this time given Mr. Mayes appointment as independent Chairman of the Board, we will appoint a Lead Independent Director in the future if we again combine the roles of Chairman and Chief Executive Officer.
The Board believes that, in addition to fulfilling their lead director responsibilities, the Lead Independent Director makes valuable contributions to the Company, including but not limited to: (a) monitoring the performance of the Board and seeking to develop a high-performing Board, for example, by helping the directors reach consensus, keeping the Board focused on strategic decisions, taking steps to ensure that all the directors are contributing to the work of the Board, and coordinating the work of the four Board Committees, (b) developing a productive relationship with our Chief Executive Officer and ensuring effective communication between the Chief Executive Officer and the Board, and (c) ensuring and supporting effective shareholder communications.
On an annual basis, as part of our review of corporate governance and succession planning, the Board (led by the Corporate Governance and Nominating Committee) evaluates the Board’s leadership structure, to ensure that it remains the optimal structure for the Company and its members,shareholders. The Board recognizes that different board leadership structures may be appropriate for companies with different histories and cultures, as well as companies with varying sizes and performance characteristics. Specifically, when the Board selects a permanent CEO, it will also consider if and when to combine the roles of Chairman and CEO.
Risk Oversight
On at least a quarterly basis, the Company’s Chief Legal Officer provides a comprehensive risk report to the Audit Committee and the Board. While the Audit Committee has primary responsibility for overseeing financial risks and information system controls and security risks, the Board is charged with overseeing the Company’s enterprise risks and ensuring that the Company’s risk oversight processes appropriately align with existing disclosure controls and procedures. Accordingly, on an annual basis, the Board receives a report from the Company’s Chief Legal Officer on the most significant risks that the Company is facing. This report is informed by and includes a discussion of the results of the Company’s annual enterprise risk management survey and reports from various risk management roundtables with individual functional groups within the limits provided byCompany. This report allows the BylawsBoard to adequately assess each risk and develop a strategy and appropriate timeframe to address these risks. The full Board also engages in periodic discussions about enterprise risk management with our Chief Legal Officer, Chief Executive Officer, Chief Financial Officer, Chief Information Officer and other Company officers as the Board may deem appropriate.
The Company also recognizes the critical importance of cybersecurity in protecting our business and our stakeholders’ information. We are committed to maintaining a robust cybersecurity risk management program and implementing a comprehensive strategy to mitigate cybersecurity threats and vulnerabilities. The Board and the Audit Committee are actively involved in oversight of the Company. Shareholders wishing to communicate withCompany’s cybersecurity risk management. The Company addresses cybersecurity risks through a comprehensive, cross-functional approach, focused on protecting the Nominating Committee concerning potential director candidates may do so by
corresponding with the Secretarysecurity of the Company and including the nameinformation that it collects by proactively identifying and biographical datapreventing cybersecurity threats.
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The Board’s ongoing oversight also occurs at the Board committee level on a more focused basis, whereby each committee considers the risks within its area of responsibilities and works to proactively mitigate these risks. The Compensation Committee considers the risks that may be implicated by the Company’s executive compensation programs, for instance, and the Compensation Committee has sole authority to retain compensation consultants and other advisors to provide advice and support on compensation issues. The Corporate Governance and Nominating Committee considers the best governance structure and guidelines for the Company to minimize enterprise risks brought about by weak governance. The Corporate Governance and Nominating Committee also oversees the Company’s environmental, social and governance policies and activities and any associated risks. The Board believes that its leadership structure supports the Board’s effective oversight of the individual being suggested. TheCompany’s enterprise risks.
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Corporate Sustainability and Responsibility
We embrace a comprehensive approach to sustainability that addresses Environmental, Social, and Governance (“ESG”) factors.
Our integrated framework focuses on three pillars: (i) People and Communities, (ii) Customer, and (iii) Environment. After completing an ESG assessment in 2023 utilizing the Sustainable Accounting Standards Board (“SASB”) standards and conducting a third-party stakeholder assessment, we identified eleven ESG priority areas within these three pillars that we believe are relevant to our business and important to our employees, communities, customers, investors, partners and contractors, and which form the foundation for our sustainability strategy:
| • Roadway Health & Safety | ||
| • Workplace Health & Safety | ||
| • Independent Contractor Practices | ||
| • Diversity, Equity, Inclusion, and Belonging (DEI&B) Practices | ||
| • Community Impact & Partnerships | ||
| • Measurement & Disclosure | ||
| • Information Security | ||
| • Responsible Supplier Practices | ||
| • Green House Gas (GHG) Emissions Reduction Practices | ||
| • Air Quality Practices | ||
| • Corporate Ethics | ||
Since 2019, we have deployed meaningful resources to manage sustainability risks and to capitalize on related opportunities for the benefit of our stakeholders. In 2019, our Board amended the Corporate Governance and Nominating Committee held one meeting during 1998.
All directors hold office atCharter to give the pleasureCorporate Governance and Nominating Committee oversight over our ESG-related efforts. At least twice a year, the Corporate Governance and Nominating Committee is updated on each of these topics and provides feedback and direction that it deems appropriate. At least annually, the Chair of the shareholders.Corporate Governance and Nominating Committee will provide a report on these topics to the full Board.
In 2020, Forward’s leadership created the Head of Corporate ESG role to provide oversight of Forward’s ESG vision, strategic planning, performance management, and improvement activities.
In 2021, we published our first ESG Report and created our internal ESG Steering Committee, which oversees our company-wide ESG strategy and meets at least quarterly and on an as-needed basis.
In 2022, we streamlined our internal data collection process, completed our Greenhouse Gas (“GHG”) inventory, set measurable targets and goals, and published our second ESG report through the launch of our new ESG website which we will update annually with our progress. The ESG report and new website are accessible through our investor relations site, https://ir.forwardaircorp.com/esg. The information on our website and our ESG report are not incorporated into, and are not a part of, this report.
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In 2023, we completed our GHG inventory, collected additional data, and published our third ESG report. We also completed our Task Force on Climate-Related Financial Disclosures (“TCFD”) analysis and submitted to CDP, a non-for-profit charity that runs the global disclosure system. Both our CDP report and new TCFD index are included on our website in the 2022 ESG report update.
People and Communities
We are committed to maintaining safe facilities for our employees, independent contractors, customers and partners. As part of this pillar, we focus on Roadway Health & Safety, Workplace Health & Safety, Independent Contractor Practices, and DEI&B Practices.
We employ clear policies and procedures to manage our roadway health and safety practices. We implemented a quarterly safety bonus and annual vehicle giveaway to reward owner-operators and independent fleet owners that lease their equipment to us (“Leased Capacity Providers”) who have zero moving violations or accidents each quarter. The drivers of our Leased Capacity Providers who obtain four quarterly bonuses are eligible to win a new vehicle. In 2023, 172 Leased Capacity Providers as well as Company-employed drivers qualified for the vehicle giveaway.
Policies and procedures exist to investigate accidents and monitor lessons learned, driving continuous improvement in the health and safety practices across our facilities. All of our employees are assigned training courses as part of onboarding and employees may be assigned additional refresher trainings based on corrective action or identified risk.
Additionally, we employ, maintain, and monitor a robust Health and Safety program for all of our workers which establishes procedures and policies to prevent workplace incidents. As part of our assessment, we have identified improvement activities to develop a comprehensive Emergency Preparedness Plan (“EPP”) for all our facilities. The EPP is under development and in compliance with OSHA standards.
We also remain committed to fostering a more diverse, equitable and inclusive work environment. In 2020, we created a Diversity, Equity, Inclusion, and Belonging (“DEI&B”) Council to promote employee inclusion and engagement. Since the incumbent directors attended at least 75%creation of the total numberDEI&B Council, among other initiatives, we have implemented paid parental leave, launched Employee Resource Groups to foster an inclusive environment and celebrated different cultures by commemorating key diversity holidays, observances, celebrations and provided floating paid holidays.
We are committed to supporting and giving back to the communities where we live and work, particularly through the support of meetingsour employee Veterans, and to the community of Veterans in North America. For instance, we continue to support our Veterans through our charitable organization, Operation: Forward Freedom, a manifestation of our ongoing commitment to Veteran-related causes. In 2023, we hosted our second annual Drive for Hope Golf tournament where we raised $525,000 for Hope for the Warriors. Hope for the Warriors is a 501(c)(3) nonprofit whose mission is to care for and empower service members and military families challenged by the physical, moral and psychological effects of war.
We partner with Women in Trucking to encourage and promote the employment of women within our industry. Our team of drivers is currently comprised of 15% women, roughly twice the U.S. industry average, and we continue to seek opportunities to improve upon that percentage. We also partner with non-profit organizations that positively impact our communities and our industry such as Truckers Against Trafficking and Drexel Hamilton.
Customer
We are committed to providing the industry’s highest quality service in delivering on our customers’ expectations. As part of this pillar, we focus on Measurement & Disclosure, Information Security, and Responsible Supplier Practices.
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We remain committed to transparent and sustainable business practices. As part of this ongoing commitment, we have transformed and innovated several of our digital and cloud technologies to create more efficient and integrated processes. We deploy various programs, including Safety and Environmental Management Systems, to collect meaningful data that is communicated with all divisions and management.
We have also employed proactive measures to protect our network, computer systems and data from cyber threats, in part, by creating a robust Information Security program in early 2020. We are continuously deploying infrastructure to meet the National Institute of Standards and Technology (“NIST”) requirements.
As part of our Responsible Supplier program, we work to understand the ESG goals of both our suppliers and customers. We are establishing new data tracking and infrastructure and are exploring opportunities to grow our supplier diversity program and partnerships. We aim to establish supplier diversification goals in the coming years.
Environment
We are committed to promoting a healthier natural and built environment by striving for continuous environmental improvements in all aspects of our business. Environmental leadership requires not only our own action, but transparency and participation in the industry, including conversations about innovations and advancements that make a difference. As part of this pillar, we focus on GHG Emissions Reduction Practices and Air Quality Practices.
As a transportation company, we are conscious of the environmental effects of our operations and are committed to tracking and reducing our GHG emissions and improving our energy efficiency. We have established a preliminary goal to reduce absolute Scope 1 and Scope 2 GHG emissions (combined) by 42% by 2030 from a 2021 base year. As part of this goal, in 2022, we partnered with carbon capture company Remora, reserving ten of its mobile devices for a pilot project expected to launch in the next couple of years. We are also aligning with industry certifications, continuing to be a SmartWay certified company. SmartWay is a certification from the U.S. Environmental Protection Agency (“EPA”) verifying company compliance with EPA regulations, including fuel efficiency ranges and emission standards.
To learn more about our ESG strategy and all our focus areas, visit our ESG website, https://forwardair.metrio.net, also accessible through our investor relations site. We are committed to making our results count and will continue to update our future disclosures accordingly.
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DIRECTOR COMPENSATION
The general policy of the Board and committees on which they served during 1998.
COMPENSATION OF DIRECTORS
Employee directors of the Company do not receive additionalis that compensation for servingnon-employee directors should be a mix of cash and equity-based compensation. The Company does not pay employee directors for Board service in addition to their regular employee compensation.
The Corporate Governance and Nominating Committee, which consists solely of independent non-employee directors, has the primary responsibility for reviewing and considering any revisions to the non-employee director compensation program.
In accordance with the Corporate Governance and Nominating Committee’s recommendations, during 2023, the non-employee directors’ cash compensation program is as members of the Board of Directors or on any committee thereof. In
lieu of follows, which is expected to continue in 2024:
•an annual cash retainer of $85,000 for all non-employee directors;
•an additional annual cash retainer non-employee directors are paid a fee of $1,500$125,000 for each Board meeting and $1,500the Independent Chairman (which was created in 2024);
•an additional annual cash retainer of $50,000 for each committee meeting attended, together with
reasonable traveling expenses. Nothe Lead Independent Director, if any;
•an additional fee is paidannual cash retainer of $20,000 for committee meetings
held on the same day as Board meetings.
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8
In addition, each of the non-employee directorsChairs of the Company was granted
options to purchase 37,500 sharesAudit Committee, Corporate Governance and Nominating Committee and Compensation Committee; and
•an additional annual cash retainer of the Common Stock pursuant to a nonqualified
option agreement at an exercise price equal to the fair market value ($5.60 per
share) at the time of the Company's initial public offering.$10,000 for all non-Chair Audit Committee members, Compensation Committee members and Corporate Governance and Nominating Committee members.
All directors are reimbursed reasonable travel expenses for meetings attended in person. The Company has a
Non-Employee Director Stock Option Plan (the "Director Plan"). The Director Plan
provides thatalso reimburses directors for expenses associated with participation in continuing director education programs.
In addition, on the first business day followingafter each Annual Meeting of Shareholders, each non-employee director beis granted an option foraward (the “Annual Grant”) in such form and size as the purchaseBoard determines from year to year. Unless otherwise determined by the Board, the Annual Grants will become vested and non-forfeitable on the earlier of 18,750 shares of Common Stock at an exercise price equal(a) the day immediately prior to the closing sales
pricefirst Annual Meeting that occurs after the grant date or (b) the first anniversary of the Common Stock ongrant date, so long as the datenon-employee director’s service with the Company does not earlier terminate. Each director may elect to defer receipt of grant.the shares until the director departs from the Board. If a director elects to defer receipt, the Company will issue deferred stock units in which the director does not have voting rights or other incidents of ownership until the shares are issued. Each deferred stock unit is eligible for a dividend equivalent in the form of additional restricted stock units for each cash dividend paid by the Company. In May 1996, May 1997 and August
1998,2023, each non-employee director received an optionrestricted shares valued at $130,000. For 2024, this amount is expected to purchase 18,750 shares at
an exercise price of $6.00, $5.60 and $9.20 per share, respectively. Each
individual who subsequently becomes a non-employeeremain the same.
Finally, the Board believes that directors more effectively represent the Company’s shareholders, whose interests they are charged with advancing, if they are shareholders themselves. Therefore, the Board established certain independent director shall automatically
be granted an optionstock ownership guidelines which are set forth in the Company’s Corporate Governance Guidelines. Specifically, the Company’s independent directors are required to purchase 18,750own shares of Company Common Stock, onwith a value equal to at least five times the first
business day after becoming a director.annual cash retainer for independent directors. Each new independent director has three years from the date he or she joins the Board to accumulate this ownership position. Unvested restricted stock is permitted to count towards the stock ownership guidelines. The foregoing share and per share data have been restated to reflectfollowing table shows the September 1998 spin-off of Landair Corporation and the March 19, 1999
two-for-one stock split of the Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until September 1998,compensation the Company operated its deferred air freight business
and a national truckload carrier business. On September 23, 1998, the Company
spun off its truckload carrier business through the distributionpaid in 2023 to its shareholdersnon-employee directors:
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| Name | Fees Paid in Cash ($) | Stock Awards ($)(1)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||||
| Ronald W. Allen | 105,000 | 130,000 | 7,891 | 242,891 | ||||||||||||||||||||||
| Ana B. Amicarella | 105,000 | 130,000 | 1,268 | 236,268 | ||||||||||||||||||||||
| Valerie A. Bonebrake | 95,000 | 130,000 | 6,991 | 231,991 | ||||||||||||||||||||||
| C. Robert Campbell | 95,000 | 130,000 | 6,548 | 231,548 | ||||||||||||||||||||||
| R. Craig Carlock | 135,000 | 130,000 | 1,268 | 266,268 | ||||||||||||||||||||||
| G. Michael Lynch | 105,000 | 130,000 | 1,268 | 236,268 | ||||||||||||||||||||||
| George S. Mayes, Jr. | 95,000 | 130,000 | 1,268 | 226,268 | ||||||||||||||||||||||
| Chitra Nayak | 95,000 | 130,000 | 1,268 | 226,268 | ||||||||||||||||||||||
| Javier Polit | 95,000 | 130,000 | 1,268 | 226,268 | ||||||||||||||||||||||
| Laurie A. Tucker | 105,000 | 130,000 | 1,268 | 236,268 | ||||||||||||||||||||||
| (1) Represents the aggregate grant date fair value of non-vested restricted shares and deferred stock unit awards. The fair values of these awards were determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation - Stock Compensation” (“ASC 718”). The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. | ||||||||||||||||||||||||||
| (2) As of December 31, 2023, an aggregate of 32,348 deferred stock units, non-vested restricted shares and dividend equivalent rights were outstanding. | ||||||||||||||||||||||||||
| (3) Represents dividend payments on non-vested restricted shares or dividend equivalents credited on deferred stock unit awards. These dividend payments and dividend equivalents are non-forfeitable. | ||||||||||||||||||||||||||
The following table indicates the aggregate number of alldeferred stock units and/or non-vested restricted shares held by each incumbent director at the end of the outstanding common stock of Landair Corporation.
Messrs. Niswonger2023 and Roberts serve as directors and executive officers of
Landair Corporation, and Mr. Cook serves as an executive officer of Landair
Corporation. In addition, Mr. Niswonger beneficially owned approximately 49%
and 50% of the Company and Landair Corporation, respectively, as of March 31,
1999. In connection with the spin-off, the Company and Landair Corporation
entered into various agreements, including the Transition Services Agreement
and the Distribution Agreement.
Under the Transition Services Agreement, the Company provides accounts payable,
payroll, human resources, employee benefit plan administration, owner-operator
settlement, central purchasing, accounting and legal, general administrative,
and information technology services to Landair Corporation. The Company charged
Landair Corporation approximately $800,000 during the period of September 24,
1998 through December 31, 1998 for these services. In addition, Landair
Corporation provides the Company safety, licensing, permitting and fuel tax,
recruiting and retention and driver training center services and charged the
Company approximately $200,000 for these services during the same period. The
Transition Services Agreement has a term ending 18 months from the spin-off,
exceptthose shares or units that information technology services to be provided by the Company have a
36-month term.
Pursuant to the Distribution Agreement between the Company and Landair
Corporation, prior to the spin-off, the Company made a $5.0 million
contribution of capital in the form of cash to Landair Corporation, and Landair
Corporation contributed to the Company approximately $2.4 million of net assets
related to the deferred air freight business.
In connection with the spin-off, the Company also subleased certain of its
facilities to Landair Corporation, including a portion of its terminal facility
in Columbus, Ohio that is leased by the Company from the Director of Development
of the State of Ohio. The Columbus sublease agreement terminates on September
30, 2003 and requires monthly payments from Landair Corporation to the Company
of approximately $25,000. In addition, the Company and Landair Corporation
routinely engage in transactions where Landair Corporation hauls deferred air
freight shipments for the Company which are in excess of the Company's scheduled
capacity. The cost of these shipments to the Company was $4,431,000 during 1998.
The Company incurred $423,000 in rent expense in 1998 for an aircraft leased
from Sky Night, L.L.C., which is owned by Mr. Niswonger.
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9
not yet vested.
| Name | Number of Deferred Stock Units and/or Non-Vested Restricted Shares | ||||
| Ronald W. Allen | 8,626 | ||||
| Ana B. Amicarella | 1,352 | ||||
| Valerie A. Bonebrake | 7,362 | ||||
| C. Robert Campbell | 6,896 | ||||
| R. Craig Carlock | 1,352 | ||||
| G. Michael Lynch | 1,352 | ||||
| George S. Mayes, Jr. | 1,352 | ||||
| Chitra Nayak | 1,352 | ||||
| Javier Polit | 1,352 | ||||
| Laurie A. Tucker | 1,352 | ||||
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the "beneficialbeneficial ownership" of shares of our outstanding Company Common Stock held as that term is
defined in the rules of the Securities and Exchange Commission (the
"Commission") of the Common Stock ofRecord Date by (i) each director;director and director nominee; (ii) theanyone who served as our Chief Executive Officer or Chief Financial Officer during the fiscal year, and the four other highest paidnext three most highly compensated executive officers, ofas required by SEC rules (collectively, the Company (the
"Named Executive Officers"“named executive officers”, or the “NEOs”); and (iii) all directors and executive officers as a group;group. In addition, there are 4,435,301 fractional units of Company Series B Preferred Stock outstanding and (iv) each otherentitled to vote, and which are also exchangeable into shares of Company Common Stock as indicated in the footnotes below.
The table also sets forth information as to any person, entity or group known to the Company to be the beneficial owner of 5% or more of Company Common Stock as of March 25, 2024. The percentage of “Total Voting Power” is calculated taking into account the voting power of these additional classes of voting securities. Under SEC rules, a person is deemed to be a "beneficial owner"“beneficial owner” of more than
five percent of any class of capital stocka security if that person has or shares the power to vote or direct the voting of the Company based on information
availablesecurity, has or shares the power to dispose of or direct the Company on March 31, 1999.disposition of the security, or has the right to acquire the security within 60 days. Except as otherwise indicated, the shareholders listed in the table are deemed to have sole voting and investment powerspower with respect to Company Common Stock and fractional units of Company Series B Preferred Stock, as applicable, owned by them on the dates indicated above. Shareholders of non-vested restricted shares included in the table are entitled to voting and dividend rights.
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Name and Address of Beneficial Owner(1) | Shares Beneficially Owned | Shares That May be Acquired Within 60 Days | Total | Percent of Total Voting Power (2) | ||||||||||||||||||||||
| Directors, Nominees and NEOs | ||||||||||||||||||||||||||
| Ronald W. Allen | 23,392 | (3) | 1,352 | (4) | 24,744 | * | ||||||||||||||||||||
| Ana B. Amicarella | 10,395 | 1,352 | (4) | 11,747 | * | |||||||||||||||||||||
| Charles L. Anderson | 699,707 | (5) | 451 | (6) | 700,158 | 2.6 | % | |||||||||||||||||||
| Valerie A. Bonebrake | 9,046 | (7) | 1,352 | (4) | 10,398 | * | ||||||||||||||||||||
| Dale W. Boyles | — | — | — | * | ||||||||||||||||||||||
| C. Robert Campbell | 28,558 | (8) | 1,352 | (4) | 29,910 | * | ||||||||||||||||||||
| R. Craig Carlock | 15,198 | 1,352 | (4) | 16,550 | * | |||||||||||||||||||||
| Robert L. Edwards, Jr. | 699,707 | (5) | 451 | (6) | 700,158 | 2.6 | % | |||||||||||||||||||
| Christine M. Gorjanc | — | — | — | * | ||||||||||||||||||||||
| Michael B. Hodge | 10,000 | 2,036,751 | (9) | 2,046,751 | 7.2 | % | ||||||||||||||||||||
| G. Michael Lynch | 9,731 | 1,352 | (4) | 11,083 | * | |||||||||||||||||||||
| George S. Mayes, Jr. | 3,904 | 1,352 | (4) | 5,256 | * | |||||||||||||||||||||
| Chitra Nayak | 4,504 | 1,352 | (4) | 5,856 | * | |||||||||||||||||||||
| Javier Polit | 4,991 | 1,352 | (4) | 6,343 | * | |||||||||||||||||||||
| Christopher H. Schmachtenberger | — | 15,040 | (10) | 15,040 | * | |||||||||||||||||||||
| Laurie A. Tucker | 14,221 | 1,352 | (4) | 15,573 | * | |||||||||||||||||||||
| W. Gilbert (Gil) West | — | 338 | (11) | 338 | * | |||||||||||||||||||||
| Michael L. Hance | 45,328 | 9,428 | (12) | 54,756 | * | |||||||||||||||||||||
| Rebecca J. Garbrick | 2,480 | 3,555 | (12) | 6,035 | * | |||||||||||||||||||||
| Chris C. Ruble | 27,638 | 5,068 | (12) | 32,706 | * | |||||||||||||||||||||
| Kyle R. Mitchin | 18,531 | 2,318 | (12) | 20,849 | * | |||||||||||||||||||||
| Thomas Schmitt | 74,182 | 207,802 | (12) | 281,984 | 1.1 | % | ||||||||||||||||||||
All directors and executive officers as a group (21) persons | 1,637,865 | 2,089,658 | 3,727,523 | 13.1 | % | |||||||||||||||||||||
| Other Principal Shareholders | ||||||||||||||||||||||||||
| BlackRock, Inc. | 4,210,909 | (13) | — | 4,210,909 | 15.9 | % | ||||||||||||||||||||
| The Vanguard Group, Inc. | 3,025,510 | (14) | — | 3,025,510 | 11.4 | % | ||||||||||||||||||||
The Ridgemont Group(15) | 699,707 | (16) | 4,395,805 | (17) | 5,095,512 | 16.5 | % | |||||||||||||||||||
| * | Less than one percent. | |||||||||||||||||||||||||
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| (1) | The business address of each listed director and NEO is c/o Forward Air Corporation, 1915 Snapps Ferry Road, Building N, Greeneville, TN 37745. | ||||
| (2) | The percentages shown for directors, nominees, NEOs and other principal shareholders are based on shares of Company Common Stock outstanding on the Record Date. | ||||
| (3) | Includes 281 accrued dividend equivalent rights. | ||||
| (4) | Includes 1,352 shares of restricted stock vesting within 60 days. | ||||
| (5) | Includes (i) 354,957 shares of Company Common Stock held by REP Coinvest III-A Omni, L.P.; (ii) 101,745 shares of Company Common Stock held by REP Coinvest III-B Omni, L.P., (iii) 243,005 shares of Company Common Stock held by REP FAOM III-S, L.P.; (iv) 1,152,846 Company Series B Preferred Units held by REP Omni L.P.; and (v) 14,410 Company Series B Preferred Units held by REP Affiliates. | ||||
| (6) | Includes 451 shares of restricted stock vesting within 60 days. | ||||
| (7) | Includes 244 accrued dividend equivalent rights. | ||||
| (8) | Includes 916 accrued dividend equivalent rights. | ||||
| (9) | Includes (i) 451 shares of restricted stock vesting within 60 days; (ii) 746,086 Company Series B Preferred Units held by EVE Omni Investor, LLC; and (iii) 1,290,214 Opco Series C-2 Preferred Units held by EVE Omni Investor, LLC. | ||||
| (10) | Includes (i) 5,511 Company Series B Preferred Units held by RC94 Partners and (ii) 9,529 Opco Series C-2 Preferred Units held by RC94 Partners. | ||||
| (11) | Includes 338 shares of restricted stock vesting within 60 days. | ||||
| (12) | Includes stock options that are fully exercisable. | ||||
| (13) | BlackRock, Inc. (“BlackRock”), 55 East 52nd Street, New York, New York 10055, reported beneficial ownership of the shares as of December 31, 2023 in Amendment No. 5 to Schedule 13G filed with the SEC on January 22, 2024. BlackRock, a holding company, reported having sole voting and sole dispositive power over 4,100,572 shares. | ||||
| (14) | The Vanguard Group, Inc. (“Vanguard”), 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, reported beneficial ownership of the shares as of December 29, 2023 in Amendment No. 14 to Schedule 13G filed with the SEC on February 13, 2024. Vanguard, an investment adviser, reported having shared voting power over 45,576 shares, sole dispositive power over 2,908,287 shares, shared dispositive power over 74,586 shares, resulting in an aggregate amount of 2,982,873 shares beneficially owned. | ||||
| (15) | Each of Ridgemont Equity Management III, LLC; REP Omni Holdings, L.P.; REP Coinvest III-A Omni, L.P.; REP Coinvest III-B Omni, L.P.; REP FAOM III-S, L.P.; Ridgemont Equity Partners Affiliates III, L.P.; REP Coinvest III Omni GP, LLC; Ridgemont Equity Management III, L.P.; REP Omni Holdings GP, LLC (collectively, the “Ridgemont Group”); Charles Leonard Anderson and Robert Leon Edwards Jr., 101 S Tryon St Ste 3400, Charlotte, NC 28280, reported beneficial ownership of the shares as of January 25, 2024 in a Schedule 13D filed with the SEC on February 5, 2024. Each of Mr. Anderson and Mr. Edwards serve on our board of directors and are designees of one or more members of the Ridgemont Group. See footnote 6 with respect to the 451 shares issuable to each of Mr. Anderson and Mr. Edwards and which are not included in Ridgemont Group’s total reported holdings. Although these shares are issued to Mr. Anderson and Mr. Edwards personally, they each hold these shares solely for the benefit of the Ridgemont Group, which may be deemed an indirect beneficial owner. | ||||
| (16) | The Ridgemont Group reported having beneficial ownership with respect to (i) REP Coinvest III-A Omni, L.P., shared voting power and shared dispositive power over 354,957 shares of Company Common Stock; (ii) REP Coinvest III-B Omni, L.P., shared voting power and shared dispositive power over 101,745 shares of Company Common Stock; (iii) REP FAOM III-S, L.P., shared voting power and shared dispositive power over 243,005 shares of Company Common Stock; (iv) Ridgemont Equity Management III, L.P. shared voting power and shared dispositive power over 243,005 shares of Company Common Stock; (v) REP Coinvest III Omni GP, LLC shared voting power and shared dispositive power over 456,702 shares of Company Common Stock; and (vi) Ridgemont Equity Management III, LLC, shared voting power and shared dispositive power over 699,707 shares of Company Common Stock. | ||||
| (17) | The Ridgemont Group reported having beneficial ownership with respect to: (i) REP Omni Holdings, L.P, shared voting power and shared dispositive power over 1,152,846 Company Series B Preferred Units and 1,993,623 Opco Series C-2 Preferred Units; (ii) REP Coinvest III-A Omni, L.P., shared voting power and shared dispositive power over 613,829 Company Series C Preferred Units; (iii) REP Coinvest III-B Omni, L.P., shared voting power and shared dispositive power over 175,948 Company Series C Preferred Units; (iv) REP FAOM III-S, L.P., shared voting power and shared dispositive power over 420,229 Company Series C Preferred Units; (v) Ridgemont Equity Partners Affiliates III, L.P, shared voting power and shared dispositive power over 14,410 Company Series B Preferred Units and 24,920 Opco Series C-2 Preferred Units; (vi) REP Omni Holdings GP, LLC shared voting power and shared dispositive power over 1,152,846 Company Series B Preferred Units and 1,993,623 Opco Series C-2 Preferred Units; (vii) Ridgemont Equity Management III, L.P. shared voting power and shared dispositive power over 14,410 Company Series B Preferred Units, 24,920 Opco Series C-2 Preferred Units and 420,229 Company Series C Preferred Units; (viii) REP Coinvest III Omni GP, LLC shared voting power and shared dispositive power over 789,777 Company Series C Preferred Units; and (ix) Ridgemont Equity Management III, LLC, shared voting power and shared dispositive power over 1,167,256 Company Series B Preferred Units, 2,018,543 Opco Series C-2 Preferred Units and 1,210,006 Company Series C Preferred Units. | ||||
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Information About our Executive Officers
The table below sets forth information as of March 29, 2024, with respect to each person who is an executive officer of the Company.
| Name | Age | Position | ||||||
| Michael L. Hance | 52 | Interim Chief Executive Officer, Chief Legal Officer and Secretary | ||||||
| Rebecca J. Garbrick | 49 | Chief Financial Officer and Treasurer | ||||||
| Chris C. Ruble | 61 | Chief Operating Officer | ||||||
| Kyle R. Mitchin | 44 | Chief People Officer | ||||||
| Nancee Ronning | 63 | Chief Commercial Officer | ||||||
| Joseph M. Tomasello | 47 | Chief Information Officer | ||||||
There are no family relationships between any of our executive officers. All officers hold office until the earliest to occur of their resignation or removal by the Board of Directors.
Michael L. Hance has served as our Chief Legal Officer and Secretary since May 2014. Following the departure of former Chairman, President and Chief Executive Officer, Thomas Schmitt, in February 2024, Mr. Hance was appointed to the role of Interim Chief Executive Officer in addition to his current positions. From May 2010 until May 2014, Mr. Hance served as Senior Vice President of Human Resources and General Counsel. From January 2008 until May 2010, he served as Senior Vice President and General Counsel, and from August 2006 until January 2008, he served as Vice President and Staff Counsel. Before joining us, Mr. Hance practiced law with the law firms of Baker, Donelson, Bearman, Caldwell and Berkowitz, P.C. from October 2003 until August 2006 and with Bass, Berry & Sims, PLC from September 1999 to September 2003.
Rebecca J. Garbrick has served as our Chief Financial Officer and Treasurer since July 2021. From November 2020 to June 2021, Ms. Garbrick served as our Chief Accounting Officer and Corporate Controller. Prior to joining the Company, Ms. Garbrick served as the Assistant Corporate Controller at Cox Media Group from August 2020 to November 2020. From May 2013 to August 2020, she served as Director of Corporate Accounting and Policy and in other various leadership positions at AGCO Corporation. Ms. Garbrick also held other various leadership positions at KPMG LLP and Arthur Andersen LLP.
Chris C. Ruble has served as our Chief Operating Officer for the Company since May 2019. Following the departure of former Chairman, President and Chief Executive Officer, Thomas Schmitt, in February 2024, Mr. Ruble was appointed to the role of President in addition to his current position. Mr. Ruble was Chief Operating Officer for the Company’s LTL business, including the Final Mile and Pool Distribution segments from June 2018 to May 2019. Prior to this role, Mr. Ruble was President, Expedited Services from January 2016 to June 2018, Executive Vice President, Operations from August 2007 to January 2016, and Senior Vice President, Operations from October 2001 until August 2007. He was a Regional Vice President from September 1997 to October 2001 and a regional manager from February 1997 to September 1997, after starting with the Company as a terminal manager in January 1996. From June 1986 to August 1995, Mr. Ruble served in various management capacities at Roadway Package System, Inc.
Kyle R. Mitchin has served as our Chief People Officer since June 2019. From April 2017 to June 2019, Mr. Mitchin served as our Senior Vice President of Human Resources, and from June 2014 to April 2017 he served as the Vice President of Recruiting & Retention. Prior to joining the Company, Mr. Mitchin was the Director of Recruiting for Panther Premium Logistics from September 2009 to June 2014.
Nancee Ronning has served as our Chief Commercial Officer since September 2022. Prior to joining the Company, Ms. Ronning served as the Chief Operating Officer of BNSF Logistics, a subsidiary of BNSF LLC, from July 2020 to July 2021. From May 2018 to July 2020, she served as Chief Commercial Officer at BNSF Logistics. From December 2014 to April 2018, Ms. Ronning served as President of Print Craft. Prior to Print Craft, Ms. Ronning spent 8 years at C.H. Robinson, serving as T-Chek’s Vice President, Sales & Marketing from 2006-2009 and as Managing Director of Sales at C.H. Robinson corporate from 2009-2014. Ms. Ronning also held other various leadership positions at Merrill Corporation and GE Capital Vendor and Fleet Financial Services.
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Joseph M. Tomasello has served as our Chief Information Officer since June 2019. Prior to joining the Company, Mr. Tomasello served as Vice President, IT of FedEx Supply Chain from October 2016 to June 2019. From April 2013 to September 2016, he served as Director, Enterprise Architecture & Foundational Services at FedEx Services and as Manager, Customer Access Solutions from April 2011 to April 2013. Mr. Tomasello also held other various leadership positions at Verified Person, Inc. Since April 2022, Mr. Tomasello has served on the board of directors for SMC3, Inc.
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) is designed to provide our shareholders with a clear understanding of our compensation philosophy and objectives, compensation-setting process, the compensation elements of our named executive officers, or NEOs, and the compensation decisions and outcomes that occurred during the 2023 performance year. As discussed in Proposal 4, we are conducting our annual Say on Pay vote that requests your approval of the compensation of our NEOs as described in this section and in the tables and accompanying narrative. To assist you with this vote, please review our compensation philosophies, the design of our executive compensation programs and how, we believe, these programs are in line with our compensation philosophies and objectives, particularly ensuring alignment between actual pay outcomes and short- and long-term strategic objectives.
NEOs
For 2023, our NEOs were:
Thomas Schmitt(1) | President and Chief Executive Officer | |||||||
| Rebecca J. Garbrick | Chief Financial Officer and Treasurer | |||||||
| Chris C. Ruble | Chief Operating Officer | |||||||
Michael L. Hance(1) | Chief Legal Officer and Secretary | |||||||
| Kyle R. Mitchin | Chief People Officer | |||||||
| (1) | On February 9, 2024, Mr. Schmitt ceased serving as Chairman, President and Chief Executive Officer of the Company and as a member of the Board. At that time, Mr. Hance was appointed as Interim Chief Executive Officer of the Company in addition to his roles as Chief Legal Officer and Secretary, and Mr. Ruble was appointed as President of the Company in addition to his role as Chief Operating Officer. | ||||
Compensation Philosophy and Objectives
The Compensation Committee (the “Committee” for purposes of this CD&A) has designed our executive compensation program to attract, develop, reward and retain key talent to facilitate achievement of our annual, long-term and strategic goals. One of the Committee’s objectives is to align executives’ interests with shareholders’ interests by creating a pay-for-performance culture at the executive level, with the ultimate goal of increasing shareholder value. Other objectives are to recognize the contributions of individual executives, provide market-competitive pay opportunities, balance short- and long-term compensation elements without encouraging excessive or unnecessary risk taking, and foster retention and executive stock ownership. Thus, while executive compensation should be directly linked to Company performance, the Committee believes it should also be an incentive for executives to continually improve individual performance, thereby contributing to our success in meeting our short- and long-term financial, operational and strategic objectives.
Executive Summary
2023 Performance Highlights
During 2023, Forward faced challenging market conditions, including a softer than expected freight environment and weak demand for intermodal and truckload brokerage services. As a result, the Company’s financial results for 2023 were below the performance targets under its annual incentive compensation plans. Despite these challenges, Forward continued to execute on its revenue growth strategy and related focus on growing its high value freight services and improving its freight quality metrics. In connection with its goal of growing its domestic freight forwarder and direct shipper customers, Forward acquired Omni Logistics LLC in January 2024 which the Company believes will deliver significant long-term value to shareholders through compelling strategic and financial benefits. The Company also disposed of its “final mile” business in December 2023 as part of its continued efforts to maintain corporate clarity and focus on core competencies. Specific notable financial and operational highlights from 2023 are listed below.
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For the year ended December 31, 2023:
◦consolidated operating revenue from continuing operations decreased by 18.4%, to $1.4 billion;
◦consolidated operating income from continuing operations decreased by 64.4%, to $88 million (resulting in no payouts under the operating income component of the annual incentive plan);
◦net income decreased by 13.4%, to $167 million;
◦free cash flow from continuing operations decreased by 19.2% to $172 million;
◦net income per diluted share from continuing operations decreased to $1.64 compared to $6.63 in 2022; and
◦Weight per shipment increased by 5% to 802 pounds.
•Divested of our Final Mile business for approximately $260 million with a gain on sale of $155 million.
•Continued to set the industry standard for safety, with Total Injury Frequency at 1.9 vs a national average of 4.4.
•Improved our LTL operational productivity metrics with pickup and delivery route productivity increasing by 22%, dock productivity increasing by 6% and office productivity increasing 7% over the same period as in the prior year.
•Assessed by a third-party industry expert as being the best in the LTL industry for damage-free, intact, on-time shipment service, with on time service of 98% and a cargo claims ratio of 0.1% in 2023.
•Added one new terminal to better serve customer needs in new markets and acquired five new terminals with the acquisition of Land Air Express, Inc. in January 2023.
•Published an updated ESG Report that included our first Task Force on Climate Related Financial Disclosure index and responses to the CDP’s 2023 questionnaire.
2023 Compensation Highlights
Our pay-for-performance philosophy and the design of our pay programs led to the following Committee actions and plan payouts to our NEOs for 2023:
•Short-term incentive payouts. The amount of short-term incentive compensation paid to our executive officers, including our NEOs, is determined primarily by our performance against our fiscal 2023 operating income targets, which were established at the beginning of the year and were intended to be challenging, yet attainable through disciplined execution of our strategic initiatives. Based on the Company’s operating income for 2023, there was 0% payout on the company performance component of the annual incentive plan. The Committee approved payouts on the individual performance component ranging from 68% to 107% for Mr. Ruble, which represented only 20% of the potential payout under the plan. As a result, the total payout to NEOs under the 2023 short-term incentive plan ranged from $51,300 to $123,080.
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•Long-term performance plan payouts. Based on total shareholder return relative to our peer companies using the four-quarter averaging of the payouts generated from the relative TSR ranking, the approved payout for the January 2021 to December 2023 performance period was 69.4% of target. Our three-year cumulative EBITDA per share relative to a pre-set metric resulted in an approved payout for the January 2021 to December 2023 performance period equal to 200% of target. The strong performance in both 2021 and 2022, which significantly exceeded the maximum, led to cumulative results exceeding the maximum despite the weaker performance in 2023. Based on the Company’s 2023 operating income performance, 33% of Mr. Schmitt’s 2023 options vested.
•CEO Departure. In connection with ceasing to be Chief Executive Officer in February 2024, under the Company’s Severance Plan and subject to Mr. Schmitt’s execution and non-revocation of a general release of claims, Mr. Schmitt was eligible to receive certain payments including a Severance Payment and Healthcare Assistance Payment (in each case, as defined in the Severance Plan and described below under Potential Payments Upon Termination, Change of Control, Death or Disability) and up to $20,000 in outplacement services. In connection with Mr. Schmitt’s departure, Mr. Schmitt entered into a Separation and Release Agreement with the Company. For a description of the Separation and Release Agreement, see Potential Payments Upon Termination, Change of Control, Death or Disability on pages 72 to 75 of this Proxy Statement.
Compensation-Setting Process
Role of Shareholder Say on Pay Vote
The Company provides its shareholders with the opportunity to cast an annual advisory vote on executive compensation (a “say on pay proposal”). At the Company’s annual meeting of shareholders held in May 2023, approximately 92.2% of the votes cast on the say on pay proposal were voted in favor of the proposal. Our shareholders were similarly supportive of our executive compensation programs in 2022 and 2021, approving the say on pay proposal with approximately 99% votes cast in both years. The Committee believes this outcome affirms shareholders’ support of our approach to executive compensation. As a result, we did not change our overall approach to executive compensation in 2023 based upon the results of this advisory vote. The Committee will continue to consider the outcome of say on pay votes when making future compensation decisions for the NEOs.
In 2023, we received feedback from one of our shareholders, on among another things, the structure of our long-term equity incentive awards. After considering this feedback, the Committee approved discontinuing the use of stock options in our long-term equity incentive awards starting in 2024.
Role of the Compensation Committee
The Compensation Committee is responsible for reviewing and approving executive compensation policies, plan designs and the compensation of our senior officers, including our NEOs. The Committee considers various factors in making compensation determinations, including the officer’s responsibilities and performance, the effectiveness of our programs in supporting short-term and long-term financial, operational and strategic objectives, and overall financial performance. The Committee approves the final compensation for all NEOs other than the Chief Executive Officer. The Committee coordinates the full Board’s annual review of the Chief Executive Officer’s performance and makes preliminary determinations about his base salary, annual short-term incentive compensation, long-term incentive compensation and other awards as appropriate. The Committee discusses its compensation recommendations for the Chief Executive Officer with the full Board, and the full Board approves the final compensation decisions after this discussion.
To this end, the Committee conducts an annual review of executive officer pay levels, reviews market data updated periodically by Meridian Compensation Partners, LLC (“Meridian”), the Committee’s independent executive compensation consultant, approves changes to program designs (including post-termination arrangements) based on an assessment of competitive market practice and emerging trends, oversees the development of succession plans, and evaluates the risks associated with our executive compensation programs.
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Role of the Compensation Consultant
The Committee has selected and directly retains the services of Meridian. The Committee periodically seeks input from Meridian on a range of external market factors including evolving compensation trends, appropriate peer companies to compare program designs, practices and performance and survey data for benchmarking pay levels. Meridian also provides general observations on the Company’s compensation programs and policies, but it does not determine or recommend the amount or form of compensation for the NEOs. During 2023, Meridian attended all Committee meetings and participated in discussions regarding the total 2023 target compensation of each NEO approved in February 2023. The Committee determined that Meridian was independent during 2023 per Nasdaq listing standards and had no conflicts of interest to disclose.
Role of Executive Officers in Compensation Decisions
At the request of the Compensation Committee, the acting Chief Executive Officer makes recommendations regarding base salary, annual incentive pay and long-term equity incentive awards for the other NEOs and provides the Committee with justification for such awards. In forming his recommendations, he considers information provided by the Chief People Officer and assessments of individual contributions, achievement of performance objectives and other qualitative factors. While the Committee gives great weight to the recommendations of the Chief Executive Officer, it has full discretion and authority to make the final decision on the salaries, annual incentive awards and long-term equity incentive awards as to all of the NEOs. The Chief Executive Officer does not make recommendations concerning his own compensation and is not present during deliberations and voting regarding his own compensation.
The acting Chief Executive Officer, Chief People Officer, Chief Financial Officer and Chief Legal Officer regularly attend Compensation Committee meetings at the Committee’s request. The Chief People Officer typically presents recommendations for program design changes and individual pay levels for executive officers (except for his own), taking into consideration individual performance of each incumbent, appropriate benchmarking information and issues that may arise from an accounting, legal and tax perspective.
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Compensation Practices
Our executive compensation program is based on the following best practices:
| What We Do | What We Don’t Do | |||||||
■Provide pay opportunities that are appropriate to the size of the Company | ■Allow repricing or backdating of stock options without shareholder approval | |||||||
■Maintain a pay program that is heavily performance-based and uses multiple performance measures | ■Provide excise tax gross-ups | |||||||
■Disclose financial performance metrics and goals used in our incentive plans | ■Allow executive officers to hedge or pledge Company Common Stock | |||||||
■Create alignment between executives and shareholders through a long-term incentive linked to stock price and measurement of stock performance versus peer companies | ■Provide special supplemental executive retirement programs | |||||||
■Maintain meaningful executive stock ownership and retention guidelines | ■Provide tax gross-ups on perquisites | |||||||
■Annually review the risk profile of compensation programs and maintain risk mitigators | ■Provide significant perquisites | |||||||
■Provide market-aligned severance and change-in-control protection | ||||||||
■Require double-trigger vesting on long-term equity awards in the event of a change in control | ||||||||
■Maintain a Dodd-Frank compliant clawback policy requiring the mandatory recovery of erroneously awarded incentive-based compensation paid to an executive officer upon an accounting restatement | ||||||||
■Maintain an additional recoupment policy allowing recovery of cash or equity-based compensation in certain circumstances, including material negative revisions to relevant financial results, material violations of the Code of Business Conduct and reckless supervision under certain circumstances | ||||||||
■Retain an independent compensation consultant engaged by, and reporting directly to, the Committee | ||||||||
Key Elements of Executive Compensation Program
Consistent with our compensation philosophies and objectives, we have structured executive compensation to motivate and reward executives to achieve our business goals.
For the fiscal year ended December 31, 2023, the components of compensation for our NEOs were:
•Base salary;
•Annual incentive compensation;
•LTI compensation; and
•Retirement and other benefits.
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The Committee combines these elements, particularly base salary and short and long-term incentives, to provide a total compensation package designed to attract highly qualified individuals and provide incentives to align efforts and motivate executives to deliver company performance that creates shareholder value. As a result, the total value of the compensation package is weighted more heavily towards variable, performance-based components.
At the beginning of 2023, the Committee established a total target compensation for each NEO comprised of base pay, annual incentives and long-term incentives. The Committee referenced general industry market data from a nationally recognized executive compensation survey (WTW Compensation Survey) as used by Meridan. When utilizing the WTW data, the Committee focused on pay opportunities at the size-adjusted 50th percentile. In addition to the market data for similarly situated positions, the Committee also considered other factors when establishing target total compensation opportunities, including, but not limited to, the experience level of the individual, the value of the individual executive to the Company, the individual’s position within the Company and existing and prior year awards.
The total target compensation for the NEOs in 2023 is set forth in the chart below.
| Target Annual Incentives | |||||||||||||||||
| NEO | Base Salary ($) | Target Annual Incentives ($) | As a Percent of Base Salary | Target Long-Term Incentive ($) | Total Target Compensation ($) | ||||||||||||
| Thomas Schmitt | 905,000 | 905,000 | 100 | % | 3,815,000 | 5,625,000 | |||||||||||
| Rebecca J. Garbrick | 400,000 | 300,000 | 75 | % | 500,000 | 1,200,000 | |||||||||||
| Chris C. Ruble | 606,000 | 454,500 | 75 | % | 700,000 | 1,760,500 | |||||||||||
| Michael L. Hance | 456,000 | 342,000 | 75 | % | 525,000 | 1,323,000 | |||||||||||
| Kyle R. Mitchin | 350,000 | 262,500 | 75 | % | 350,000 | 962,500 | |||||||||||
Our compensation programs are designed to motivate strong annual and long-term performance. We set a majority of NEOs’ total compensation (base salary, annual incentives and long-term incentives) to be “at risk”, meaning that the compensation is earned by meeting annual or long-term performance goals or is influenced by our stock price. The 2023 compensation mix for our NEOs was as follows:
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The compensation that an executive actually receives will differ from that executive’s target compensation for a variety of reasons. Annual incentive payouts are based on Company performance against financial targets and achievement of individual and business objectives. The value of compensation realized from long-term incentive awards is dependent upon stock price performance, relative total shareholder return versus peer companies, and, with respect to Mr. Schmitt’s compensation, from the Company’s financial performance.
Base Salary
The objective of base salary is to reflect the base market value of the executive’s role. It is designed to reward core competence in roles that are complex and demanding. We choose to pay base salary because it is necessary for talent attraction and retention.
Base salaries for 2023 for the NEOs were determined for each executive based on position and responsibility and by reference to market data. The Committee also considers factors such as internal pay equity, level of experience and qualifications of the individual, scope of responsibilities and future potential, succession planning, and objectives established for the executive as well as the executive’s past performance.
| Base Salary | |||||||||||
| NEO | 2023 Base Salary ($) | % Increase from 2022 | Rationale | ||||||||
| Thomas Schmitt | 905,000 | 3.4 | % | •Annual merit increase | |||||||
| Rebecca J. Garbrick | 400,000 | 3.9 | % | •Annual merit increase | |||||||
| Chris C. Ruble | 606,000 | 3.6 | % | •Annual merit increase | |||||||
| Michael L. Hance | 456,000 | 3.6 | % | •Annual merit increase | |||||||
| Kyle R. Mitchin | 350,000 | 12.2 | % | •To better align with the market | |||||||
Annual Incentive Compensation
The objective of our annual cash incentive plan is to focus our executives on attaining specific short-term financial and business goals that we believe will lead to our long-term success and promote retention of our executive talent. The annual cash incentive plan is designed to reward achievement of operating income targets and individual objectives important to the Company’s short-term and long-term success. Payments made under the annual incentive compensation program were made in cash, calculated as a percentage of annual base salary as described in more detail below.
Annual cash incentive plan target opportunity levels (reflected as a percentage of base salary) approved by the Committee for the NEOs in 2023, which remained unchanged from the prior year, were as follows:
| 2023 Target Bonus Opportunity | |||||
| NEO | (as a percent of base salary) | ||||
| Thomas Schmitt | 100% | ||||
| Rebecca J. Garbrick | 75% | ||||
| Chris C. Ruble | 75% | ||||
| Michael L. Hance | 75% | ||||
| Kyle R. Mitchin | 75% | ||||
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The components of the Annual Incentive Plan for all NEOs and their weighting with respect to the Common Stock ownedtotal cash incentive opportunity are reflected in the chart below.
| Annual Cash Incentive Plan | |||||||||||
| Components of Plan | Weighing As a Percent of Target | ||||||||||
| Corporate Performance | 80% | ||||||||||
| Individual Performance | 20% | ||||||||||
In 2023, potential payout under the Corporate Performance component ranged from 0% of target (when threshold performance is not achieved) to 300% of target (when “beyond stretch” performance is achieved); payout under the Individual Performance component ranged from 0% to 120% of target.
Corporate Performance Operating Income Goals. The Committee established corporate operating income goals for 2023 and corresponding incentive payments for achievement of such goals. Like in 2022, goals in 2023 were set to represent six incremental performance levels: downside, low, target, high, stretch and beyond stretch. As in past years, the target level for operating income generally reflects our internal business plan at the time the target is established, subject to adjustment in response to known headwinds or tailwinds or other economic conditions. Downside, low, high, stretch and beyond stretch levels are designed to provide a smaller award for lower levels of acceptable performance (downside and low) and to reward exceptional levels of performance (high, stretch and beyond stretch). The downside and low levels reflect decreases over 2022 actual performance of 10.8% and 5.4%, respectively, given the record performance in 2022, while target reflects a 0.5% increase over 2022 actual performance. The beyond stretch level reflects a 50.7% increase over 2022 actual performance. The Committee retains discretion as to the amount of the ultimate short-term incentive to be paid.
The 2023 operating income goals and corresponding performance levels are noted below. Payout for performance between points is interpolated on a straight-line basis.
| Operating Income (000s) | Downside | Low | Target | High | Stretch | Beyond Stretch | Fiscal Year 2023 Results | % of Target Payout | ||||||||||||||||||
| Corporate | $237,323 | $251,487 | $267,255 | $283,023 | $297,188 | $400,883 | $95,276 | 0% | ||||||||||||||||||
| % of Target Payout | 25% | 50% | 100% | 150% | 200% | 300% | ||||||||||||||||||||
Individual Objectives. Individual personal objectives specific to each executive officer position were set at the start of the fiscal year. At the end of the fiscal year, the Committee evaluated the performance of the NEOs against those personal objectives, taking into account the extent to which the goals were met, unforeseen financial, operational and strategic issues experienced by them.
* Less than one percent.
(1)the Company, and any other information deemed relevant. The business addressCommittee evaluated the performance of the Chief Executive Officer in a similar manner with input from the full Board. Based on the results of this review, the Committee determined the payout, if any, based on executive’s attainment of the executive’s individual objectives.
2023 Annual Incentive Payout.The Committee met in February 2024 to determine whether the Company’s 2023 performance merited payment to the NEOs under the annual cash incentive plan, and, if so, to determine the amount of such payouts.
•Corporate Performance Component: Income from operations was $95.3 million, which resulted in no payout under the Corporate Performance annual incentive opportunity.
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•Individual Performance: The Committee also considered performance against the individual objectives set for the NEOs. In 2023, those objectives encompassed individual contributions to executing the following:
◦Strategic and operational goals;
◦Optimization of the LTL network;
◦Forward Force, an initiative to grow high-value freight;
◦Forward Game Shape, a cost reduction initiative relating to efficiency and effectiveness, including safety standards; and
◦Contributions in connection with the pursuit of accretive acquisitions.
After a performance appraisal of each listed executive officer and director is
c/o Forward Air Corporation, 430 Airport Road, Greeneville, Tennessee
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(2) For the purposea review of determining "beneficial ownership," the rulestheir achievement of the Commission requirepersonal goals that every person who has or shareshad been set for them, the powerCommittee approved an achievement of 93%, 107%, 75% and 104% of target for Ms. Garbrick and Messrs. Ruble, Hance and Mitchin, respectively. The Committee evaluated the performance of Mr. Schmitt in a similar manner. Based on its review, the Committee determined that Mr. Schmitt achieved 68% of target for the Individual Performance component for 2023.
The actual awards made to vote or disposeeach NEO under the Operating Income and Individual Objectives Component of the annual cash incentive plan are shown in the chart below.
| Executive | Corporate Performance Component ($) | Individual Objectives Component ($) | Total Payout Under 2023 Annual Cash Incentive Plan ($) | Total Payout as a % of Total Target Annual Cash Incentive Plan Opportunity | ||||||||||
| Thomas Schmitt | — | 123,080 | 123,080 | 13.6 | % | |||||||||
| Rebecca J. Garbrick | — | 55,800 | 55,800 | 18.6 | % | |||||||||
| Chris C. Ruble | — | 97,263 | 97,263 | 21.4 | % | |||||||||
| Michael L. Hance | — | 51,300 | 51,300 | 15.0 | % | |||||||||
| Kyle R. Mitchin | — | 54,600 | 54,600 | 20.8 | % | |||||||||
Changes to the STI Program for 2024. In March 2024, management proposed, and, after discussion with Meridian, the Committee approved, changing the short-term incentive plan design for awards provided to NEOs in 2024 to remove the 20% individual objective performance component so that 100% of the award is based on Company performance and to eliminate the 300% “beyond stretch” target. The Committee believes these are appropriate changes in that they focus executives on the achievement of the Company performance objectives during this critical time and align executive compensation with the Company’s 2024 budget.
Long-Term Equity Incentive Awards
The objective of providing long-term equity incentives is to attract and retain critical leadership, align executive interests to those of shareholders, enhance long-term thinking in general and focus executives on metrics that lead to increased shareholder value over the long term. Our long-term equity incentives are specifically designed to reward stock price appreciation and outperformance of shareholder return relative to industry peer companies.
The structure of the 2023 LTI Program was unchanged from the structure of the 2022 Program except that in 2023, the target grant date fair value of the LTI awards to all NEOs (other than Mr. Hance) increased by 12% to 33% from the 2022 grant date fair value.
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Accordingly, in 2023, the Committee approved the following target long-term incentive awards for the NEOs:
| Executive | 2023 Restricted Stock Grant ($) | 2023 Target TSR Performance Share Grant ($) | 2023 Stock Options ($) | 2023 Total Long-Term Incentive Award ($) | |||||||||||||
| Thomas Schmitt | 1,271,667 | 1,271,666 | 1,271,667 | 3,815,000 | |||||||||||||
| Rebecca J. Garbrick | 250,000 | 125,000 | 125,000 | 500,000 | |||||||||||||
| Chris C. Ruble | 350,000 | 175,000 | 175,000 | 700,000 | |||||||||||||
| Michael L. Hance | 262,500 | 131,250 | 131,250 | 525,000 | |||||||||||||
| Kyle R. Mitchin | 175,000 | 87,500 | 87,500 | 350,000 | |||||||||||||
The number of shares of restricted stock be reported as a "beneficial owner"
of alland performance shares as to which such power exists. As a consequence, many
persons may be deemed to be the "beneficial owners" of the same
securities. The Commission rules also require that certain shares of
stock that a beneficial owner has the right to acquire within 60 days
of the date set forth above pursuantissued to the exercise of stock options
are deemed to be outstandingNEOs under the 2016 Plan for the purpose of calculating the
percentage of ownership of such owner, but are not deemed outstanding
for the purpose of calculating the percentage of ownership of any other
person.
(3) Includes 600 shares held by Mr. Niswonger as custodian for his grandson
and 600 shares which are held by Mr. Niswonger's spouse as custodian
for one of her children.
(4) Merrill Lynch & Co., Inc. ("ML&Co.") (on behalf of Merrill Lynch Asset
Management Group ("AMG")), World Financial Center, North Tower, 250
Vesey Street, New York, New York 10381 is a parent holding company. AMG
is an operating division of ML&Co. consisting of ML&Co.'s
indirectly-owned asset management subsidiaries. Two of these
subsidiaries, Merrill Lynch Asset Management, L.P. ("MLAM") and Fund
Asset Management, L.P. ("FAM"), hold certain shares of the Common
Stock. As offiscal year ended December 31, 1998, ML&Co. (on behalf of AMG) reported MLAM
and FAM did not have sole voting or dispositive power over the shares
and had shared voting and dispositive power over all of the shares.
Merrill Lynch Special Value Fund, Inc. (MLSVF"), 800 Scudders Mill
Road, Plainsboro, New Jersey 08536, an investment company advised by
FAM, may be deemed to beneficially own 857,000 of the shares as of
December 31, 1998. Of the 857,000 shares, MLSVF did not have sole
voting or dispositive power and had shared voting and dispositive power
over 857,000 shares.
(5) Wellington Management Company, LLP ("WMC"), 75 State Street, Boston,
Massachusetts 02109, is an investment adviser registered with the
Commission under the Investment Advisors Act of 1940, as amended. As of
December 31, 1998, WMC, in its capacity as investment advisor, may be
deemed to have beneficial ownership of 1,046,800 shares that2023 are owned
by numerous investment advisory clients, none of which is known to have
such interest with respect to more than five percent of the class. As
of December 31, 1998, WMC did not have sole voting or
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dispositive power over the shares, had shared voting power over 625,200
shares and shared dispositive power over all of the shares.
(6) Includes 58,340 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(7) Includes 56,250 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(8) Includes 2,370 shares held by Mr. Roberts' spouse and 45,188 shares
which are issuable pursuant to options which are exercisable within 60
days of the date set forth above.
(9) Includes 93,750 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(10) Includes 2,000 shares held by Mr. Cook's spouse and 59,450 shares which
are issuable pursuant to options which are exercisable within 60 days
of the date set forth above.
(11) Includes 45,188 shares which are issuable pursuant to options which are
exercisable within 60 days of the date set forth above.
(12) Includes 467,854 shares which are issuable pursuant to options which
are exercisable within 60 days of the date set forth above.
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COMPENSATION OF EXECUTIVE OFFICERS IN 1998
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation paid or to be
paid by the Company to the Named Executive Officers for the years shown in all
capacities in which they served.
(1) Includes car allowance and employer matching portion of 401(k)
contributions.
(2) Effective January 1, 1998, Mr. Niswonger's annual compensation was
allocated equally to the Company and Landair Corporation pursuant to
the terms of a Transition Services Agreement.
(3) Mr. Traendly joined the Company as Vice President, Information Systems
in March 1998.
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1998 OPTION GRANTS, AGGREGATED OPTION EXERCISES AND OPTION VALUES
During 1998, the Company awarded stock options to one Named Executive Officer as set forth in the following table.
OPTION GRANTS IN LAST YEAR(1)
(1) This table includes only actualGrants of Plan-Based Awards for Fiscal 2023 Table on page 63 of this Proxy Statement.
Equity-based awards. The value to the executive of all three components comprising long-term equity compensation in 2023 (restricted stock, option grants during 1998TSR performance shares and excludes option amounts adjusted pursuant to a formula designed to
preservestock options) is impacted by the fair market value of options, and applied to all
outstanding options held asperformance of the effective dateCompany’s stock.
•Restricted stock becomes more valuable to the executive if our stock price increases, and the executive shares in the downside risk of a decline in our stock price.
•The number of performance shares earned, if any, will depend on how the Company’s stock performs relative to transportation industry peers. Like restricted stock, the value ultimately delivered rises or falls based on the performance of the spin-off of
Landair Corporation.
(2) We recommend caution in interpretingCompany’s stock from grant to settlement date.
•Stock options have value only if the financial significance of
these figures. They are calculated by multiplying the number of options
granted by the difference between a future hypotheticalCompany’s stock price increases after the grant date, and the option exercise price and are shown pursuant to rulesamount of value is dependent upon the amount of the Commission. They assumeincrease.
As it is possible that there will be no payout under the performance shares element, these awards are completely “at risk” compensation. In addition, there will be no value of Common Stock appreciates 5% or 10%
each year, compounded annually, for ten years (the life of each
option). They are not intended to forecast possible future
appreciation, if any, of suchrealized in stock options unless the stock price or to establish a present
value of options. Also, if appreciation does occur at the 5% or 10% per
year rate, the amounts shown would not be realized by the recipients
until the year 2007. Depending on inflation rates, these amounts may be
worth significantly less in 2007, in real terms, than their value
today.
AGGREGATED OPTION EXERCISES IN LAST YEAR
AND YEAR-END OPTION VALUES
The following table sets forth the year-end aggregated option exercises by the
Named Executive Officers and the year-end value of unexercised options held by
the Named Executive Officers.
(1) Mr. Niswonger has not been granted any options for the purchase of
Common Stock. In 1998 the options held by Messrs. Campbell, Queen and
Roberts were adjusted pursuant to a formula designed to preserve the
fair market value of such options, and applied to all outstanding
options held as of the effective date of the spin-off of Landair
Corporation. Additionally, all shareholdings have been adjusted to
reflect the two-for-one stock split effected March 12, 1999.
(2) Represents the adjusted closing price for the Common Stock on December
31, 1998 of $9.38 less the exercise price for all outstanding
exercisable and unexercisable options for which the exercise price is
less than the December 31, 1998 closing price. Exercisable options have
been held at least one yearincreases from the date of grant. 9
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EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTSThis emphasis on at-risk compensation in the LTI awards accomplishes our goal of creating a pay-for-performance culture at the executive level, while striking the appropriate balance among risk, retention and reward. Each element of the LTI is discussed in more detail below.
Restricted Stock. A share of restricted stock is a share of Company Common Stock that is subject to vesting requirements based on continued employment. Restricted stock grant sizes are calculated generally by multiplying the target LTI economic value by the weighting assigned to the restricted stock component and dividing it by the value of a single share of Company Common Stock determined using the estimated grant date fair value. The estimated grant date fair value of the restricted shares awarded to the NEOs in February 2023 was $115.42, which represents the closing price of Company Common Stock on the date of grant.
Shares granted under restricted stock awards are restricted from sale or transfer until vesting occurs, and restrictions lapse in three equal installments beginning one year after the date of grant. Dividends are paid in cash on a current basis throughout the vesting period. To the extent not earlier vested, the shares of restricted stock will vest upon the death or disability of the recipient, as well as upon involuntary termination of employment in connection with or within 24 months after a change in control.
Performance Shares. A performance share is the right to receive a share of Company Common Stock based upon the achievement of certain performance criteria. TSR performance share grant sizes awarded in 2023 were calculated by multiplying the target LTI economic value by the weighting assigned to the TSR performance share component and dividing it by $120.27, the estimated value of a single performance share on the grant date determined using a Monte Carlo valuation model.
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TSR Performance Shares. TSR performance shares are earned on the basis of our Total Shareholder Return (“TSR”) measured over a three-year period, relative to the TSR of a peer group of transportation companies. The TSR peer group used for the 2023 grants consisted of the following 14 companies, which were selected based on the Committee’s assessment that these companies would better align the peer group with the Company from a size and target market perspective:
| ArcBest Corporation | Landstar Systems, Inc. | |||||||
| C.H. Robinson Worldwide, Inc. | Marten Transport, Ltd. | |||||||
| Expeditors International of Washington, Inc. | Old Dominion Freight Line, Inc. | |||||||
| Heartland Express, Inc. | Saia, Inc. | |||||||
| Hub Group, Inc. | Schneider National, Inc. | |||||||
| J.B. Hunt Transport Services, Inc. | Werner Enterprises, Inc. | |||||||
| Knight Transportation, Inc. | XPO Logistics, Inc. | |||||||
For prior awards, the peer group included Echo Global Logistics, Inc. and did not include XPO Logistics, Inc., which was added in 2023.
The actual number of performance shares earned is based on the percentile of our TSR relative to the TSRs of the comparator group companies described above during the three-year performance period. Calculations are conducted at the end of each of the last four quarters of the performance period using the payout/performance scale below, and then averaged to determine the actual payout. Payouts can range from 0% to 200% of the target number of performance shares awarded.
Payout for performance between points is calculated using straight-line interpolation.
| Payout | |||||
| Performance Level | (as a % of Target) | ||||
90th percentile or higher | 200% | ||||
70th percentile | 150% | ||||
50th percentile | 100% | ||||
25th percentile | 50% | ||||
Below 25th percentile | 0 % | ||||
TSR is calculated based on the change in share price plus reinvestment of dividends, with beginning and ending share price calculated as follows:
•Beginning market price equals the closing price on the last trading day immediately preceding the first day of the performance period.
•Ending market price equals the last trading day of each measurement period (i.e., the final four calendar quarters).
The performance shares pay out in shares of Company Common Stock shortly after the close of the three-year performance period. Dividends are not paid on unvested TSR performance shares but rather are paid as and when the underlying performance shares have been earned and vested. TSR performance shares vest upon the death or disability of the recipient at target, as well as upon involuntary termination of employment in connection with or within 24 months after a change in control (as such term is defined in the 2016 Plan).
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2021 Performance Shares.
2021 Relative TSR Performance Shares. The final payout for the January 2021 to December 2023 performance period was 69.4% of target. This payout was a result of the four-quarter averaging of the payouts generated from the relative TSR ranking, which were as follows:
| Measurement Period | Relative TSR Ranking | Percent of Target Payout | Payout Weighting | ||||||||
| January 2021 - March 2023 | 69th percentile | 148% | 25% | ||||||||
| January 2021 - June 2023 | 62nd percentile | 130% | 25% | ||||||||
| January 2021 - September 2023 | 8th percentile | 0% | 25% | ||||||||
| January 2021 - December 2023 | 8th percentile | 0% | 25% | ||||||||
2021 EBITDA Performance Shares. EBITDA performance shares are earned on the basis of our EBITDA Per Share measured over a three-year period. For purposes of determining the achievement of EBITDA Per Share, the Committee may determine to exclude from earnings, non-recurring, non-operational or other items, as deemed appropriate.
The actual number of EBITDA performance shares earned is based on achievement of EBITDA Per Share over a three-year period against pre-set cumulative EBITDA Per Share targets. The performance shares provide an opportunity for shares to be earned at the end of a three-year performance period if pre-established financial goals are met. The EBITDA performance shares pay out in shares of Company Common Stock shortly after the close of the three-year performance period. Payouts can range from 0% to 200% of the target number of performance shares awarded based on performance relative to the targets.
Dividends are not paid on unvested EBITDA performance shares but rather are paid as and when the underlying performance shares have been earned and vested. EBITDA performance shares vest upon the death or disability of the recipient at target, as well as upon involuntary termination of employment in connection with or within 24 months after a change in control (as such term is defined in the 2016 Plan). The cumulative EBITDA per share for the January 2021 to December 2023 performance period was $25.24, which represented performance above target of $17.70 and resulted in a payout at 200% of target. The strong EBITDA performance in both 2021 and 2022, which significantly exceeded the maximum, led to cumulative results exceeding the maximum despite weaker performance in 2023.
Stock Options. A stock option is the right to purchase Company Common Stock at a fixed price for a defined period of time. In 2023, the grant size of the stock options awarded to NEOs was calculated generally by multiplying the target LTI economic value by the weighting assigned to the options component and dividing it by the value of a single option, determined under the Black-Scholes methodology and based on assumptions used for recognizing expense in our financial statements contained in our Annual Report in accordance with U.S. generally accepted accounting principles (“GAAP”). For 2023 option grants, the grant date fair value was $39.75 per share. The stock options granted to NEOs in 2023 have a seven-year term and:
•will vest and become exercisable ratably in annual installments on each anniversary of the grant date over a three-year period; and
•with respect to performance stock options awarded to Mr. Schmitt, will vest and become exercisable upon the Company’s achievement of pre-established annual operating income goals within a three-year period. For each year, target performance would be achieved if the Company’s operating income was at least 75% of the prior year’s operating income.
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2023 Option Vesting.Based on the Company’s 2023 operating income, the operating income performance conditions attached to Mr. Schmitt’s 2023 performance option award were satisfied, and therefore, 33% of Mr. Schmitt’s 2023 performance options vested.
Changes to the LTI Program for 2024. In March 2024, management proposed, and, after discussion with Meridian, the Committee approved, eliminating stock options from the LTI program, so that 50% of the NEO’s LTI award is comprised of time-based restricted stock and 50% of performance shares earned based on relative TSR performance versus peers.
The Committee believes these are appropriate changes in that they continue to promote retention and stock ownership; focus executives on share price appreciation, further aligning our executives’ interests with the interests of our shareholders; and continue to be heavily focused on performance-oriented awards measured by share price appreciation.
Retirement and Other Benefits
Our NEOs receive the same retirement and other benefits as other employees at the Company. We choose to pay these benefits to meet the objective of having a competitive retirement and benefit package in the marketplace. Retirement benefits reward employees for saving for their retirement and for continued employment. Welfare benefits such as medical and life insurance reward continued employment.
All full-time Company employees, including the NEOs, are entitled to participate in the 401(k) retirement savings plan. Under that plan, for each pay period, the Company provides a $0.25 matching contribution for every dollar an employee elects to defer into the 401(k) plan, limited to elective deferrals up to 6% of the employee’s compensation for the pay period. The matching contribution is subject to the rules and regulations on maximum contributions by individuals under such a plan. Matching contributions to the NEOs for the fiscal year ended December 31, 2023 are reflected in the “401(k) Match” column of the All Other Compensation table on page 62 of this Proxy Statement.
Additionally, all full-time employees, including the NEOs, are eligible to participate in the 2005 Employee Stock Purchase Plan (the “ESPP”) upon enrolling in the ESPP during one of the established enrollment periods. Under the terms of the ESPP, eligible employees can purchase shares of Company Common Stock through payroll deduction and lump sum contributions at a discounted price. The purchase price for such shares of Company Common Stock for each option period, as described in the ESPP, will be the lower of: (a) 90% of the closing market price on the first trading day of an option period (there are two option periods each year — January 1 to June 30 and July 1 to December 31); or (b) 90% of the closing market price on the last trading day of the option period. Under the ESPP, no employee is permitted to purchase more than 2,000 shares of Company Common Stock per option period or shares of Company Common Stock having a market value of more than $25,000 per calendar year, as calculated under the ESPP. Mr. Schmitt does not participate in the ESPP.
The NEOs are also eligible to participate in the Company’s health, dental, disability and other insurance plans on the same terms and at the same cost as such plans are available to all full-time employees. The Company has an employment agreement with Bruce A. Campbell,does not have a supplemental executive retirement plan or one that provides for the Company'sdeferral of compensation on a basis that is not tax-qualified.
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Departure of Chairman, President and Chief Executive Officer; Appointment of Interim Chief Executive Officer and President
On February 6, 2024, Mr. Schmitt ceased serving as Chairman, President and Chief Executive Officer of the Company and as a member of the Board, with his last day of employment being February 9, 2024. This event was a termination without cause, which met the definition of an “Involuntary Termination” under the Severance Plan. Under the Severance Plan and subject to Mr. Schmitt’s execution and non-revocation of a general release of claims, Mr. Schmitt is eligible to receive certain payments including a Severance Payment and Healthcare Assistance Payment (in each case, as defined in the Severance Plan and described below under the Section entitled “Potential Payments upon Termination, Change of Control, Death or Disability” on pages 72 to 75 of this Proxy Statement and in the table set forth on pages 74 to 75 of that Section.) and up to $20,000 in outplacement services. The restrictive covenants agreement entered into between Mr. Schmitt and the Company on May 27, 2022 includes a perpetual obligation to keep confidential information and trade secrets, provisions covering obligations with respect to non-competition, non-solicitation of employees and customers and non-disparagement, each of which apply to Mr. Schmitt for 24 months following his separation.
In connection with Mr. Schmitt’s departure, Mr. Schmitt entered into a Separation and Release Agreement with the Company. For a description of the Separation and Release Agreement, see Potential Payments Upon Termination, Change of Control, Death or Disability on pages 72 to 75 of this Proxy Statement.
As a result of Mr. Schmitt’s departure, Mr. Hance was appointed as Interim Chief Executive Officer of the Company in addition to his roles as Chief Legal Officer and Secretary. Accordingly, in March 2024, after discussion with Meridian, the Committee approved paying Mr. Hance $37,500 per month while he serves as Interim Chief Executive Officer to match Mr. Schmitt’s salary as CEO. In addition, Mr. Ruble was appointed as President of the Company in addition to his role as Chief Operating Officer. Pursuant toAccordingly, in March 2024, after discussion with Meridian, the agreement, Mr. Campbell
is to be paidCommittee approved a base salary of $200,000 during 1999, $225,000 during 2000increase from $606,000 to $625,000 which was above the 50th percentile based on his new role as President.
Severance Arrangements
Our NEOs, other than Mr. Schmitt, are, and $250,000 during 2001. Thereafter, Mr. Campbell's base salary will be subjectprior to annual review by the Board, if applicable. Upon certain circumstances, upon
early involuntary termination of Mr. Campbell'sceasing his employment with the Company, the
Company may be obligated to pay Mr. CampbellSchmitt, was, covered by an amount equal to any then
remaining payments under the agreement, including bonus incentivesexecutive severance and health
insurance payments, and all outstanding stock options shall become fully vested
and exercisable. The agreementchange-in-control plan (the “Severance Plan”), which became effective January 1, 19992013, and provides for
a three-year term. In addition to his base salary, Mr. Campbell was granted an
option to purchase 200,000 shares of Common Stock at the Fair Market Valueamended and restated on October 25, 2021. The objectives of the Common Stock (as definedSeverance Plan are to enhance the attraction and retention of executive talent during corporate upheaval, enable management to evaluate and support potential transactions that might be beneficial to shareholders even though the result would be a change in control of the Company, and obtain important corporate protections upon terminations of employment. The plan is designed to reward executives for remaining with the Company when their prospects for continued employment following a change in control or other corporate upheaval may be uncertain. We chose to adopt the plan to protect shareholder value in such events by increasing the probability of retaining an intact management team.
The severance benefits available to our NEOs under the Severance Plan are described in more detail under Potential Payments upon Termination, Change of Control, Death or Disability on pages 72 to 75 of this Proxy Statement and in the Company's Amended and Restated Stock Option
and Incentive Plan (the "Stock Option and Incentive Plan"))table set forth on January 1, 1999,
or $9.38 per share. Mr. Campbell is also eligible for participation in the
Company's cash incentive and other benefit plans. Mr. Campbell is also bound by
the termspages 74 to 75 of a non-competition agreement entered into inthat Section.
In connection with the employment agreement.Omni Acquisition, in March 2024, the Committee amended the Severance Plan to provide enhanced severance protections for NEOs and other executives from March 15, 2024 to December 31, 2025. For additional information, see Potential Payments Upon Termination, Change of Control, Death or Disability.
Tax and Accounting Implications
Accounting for Executive Compensation.The Committee and management consider the occurrenceaccounting and tax effects of various compensation elements when designing our annual incentive and equity compensation plans and making other compensation decisions. Although the Committee designs the Company’s plans and programs to be tax-efficient and to minimize compensation expense, these considerations are secondary to meeting the overall objectives
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of the executive compensation program. We account for share-based compensation in accordance with GAAP. Consequently, share-based compensation cost is measured at the grant date based on the fair value of the award in accordance with ASC 718. We generally recognize share-based compensation expense ratably over the vesting period of each award except as otherwise required by ASC 718.
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Other Compensation and Governance Policies
Risk Management
Our incentive program rewards reasonable risk-taking, accomplished through both program design and Committee processes.
Program design features for NEOs that mitigate risk include the following:
•Balanced mix of pay including base salary (fixed compensation) and a Changebalance of annual (cash) and long-term (equity) incentives;
•Capped short-term incentives;
•Short-term incentive goals tied to financial goals of the corporate-level strategic plan;
•Annual equity-based incentive grants without backdating or repricing;
•Stock ownership guidelines applicable to senior executive officers, as described below;
•Prohibition on hedging and pledging Company Common Stock, as described below; and
•A compensation recoupment or “clawback” policy, as described below.
Committee processes mitigating risk include:
•Overall administration of executive plans by the Committee;
•Reasonable short-term incentive goals;
•Financial performance objectives based upon budget objectives that are reviewed and approved by the Committee and the Board;
•Avoidance of steep payout cliffs;
•Ongoing and active discussion between the Committee and management regarding process on short-term and long-term goals; and
•Committee authority to pay less than the maximum short-term incentive amount after assessing the overall contribution and performance of the executive officers.
Other incentive programs either have similar characteristics or are small in Control or Potential Changepotential payout amount.
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Stock Ownership Guidelines
The Company has adopted executive stock ownership and retention guidelines (the “Ownership Guidelines”). These Ownership Guidelines are applicable to executive officers, including the NEOs. Our Ownership Guidelines are designed to increase executives’ equity stakes in Control (as
such terms are described below) under the Company and to align executives’ interests more closely with shareholders’. The Ownership Guidelines require covered executives to own, and hold during their tenure with the Company, shares of Company Common Stock Option and Incentive Plan, all
outstanding options and any stock appreciation rights that have been outstanding
for at least six months will become fully exercisable and vested, and certain
restrictionssufficient in number to satisfy the relevant amount specified below as a multiple of the executive’s annual base salary. Effective February 6, 2018, these Ownership Guidelines were amended to increase the ownership multiples applicable to the benefits available underNEOs and other executive officers as reflected in the chart below:
| Position | Value of Company Common Stock | ||||
| Chief Executive Officer | 6 times base salary | ||||
| Presidents, COO, CFO, CCO, and CLO | 3 times base salary | ||||
| All other executive officers | 2 times base salary | ||||
Until the executive achieves the applicable ownership level, he or she is required to retain 50% of the net number of shares of Company Common Stock acquired through Company-provided stock-based awards, the vesting of restricted stock awards, the delivery of shares in settlement of stock units or performance share awards, or the delivery of shares to the executive through any other awardincentive compensation arrangement. This retention requirement applies only to stock-based awards that are granted on or after January 1, 2013. No retention requirement applies under the Stock OptionOwnership Guidelines to shares acquired in excess of the requisite ownership level. Shares underlying unexercised stock options and Incentive Plan will lapse, unless otherwise determinedunvested or unearned performance share awards or performance units do not count towards the stock ownership guidelines. The Ownership Guidelines allow unvested restricted stock to count towards the stock ownership guidelines.
Prohibition Against Hedging and Pledging
The Company’s Insider Trading Policy prohibits executive officers from engaging in any form of hedging transaction. In addition, the policy prohibits executive officers from holding Company securities in margin accounts and from pledging Company securities as collateral for loans. The Company believes that these policies further align our executives’ interests with those of our shareholders.
Clawback Policies
We maintain two compensation recoupment, or “clawback,” policies. As required by the Compensation Committee (the "Committee")Dodd-Frank Wall Street Reform and Consumer Protection (Dodd-Frank) Act (Dodd-Frank Act) and related rules and regulations of the SEC and NYSE, the Company adopted an Executive Officer Clawback Policy, effective October 2, 2023, that applies to all of our current and former executive officers in the event of a financial restatement, as further described below. In addition, we continue to maintain a recoupment policy that is applicable to all employees and in circumstances beyond those set forth in the Executive Clawback Policy.
Dodd-Frank Executive Officer Clawback Policy
In 2023, the Board of Directors. Unless
otherwise determined byadopted the Committee atExecutive Officer Clawback Policy pursuant to which the executive officers and certain other non-executive officers are required to repay or after grant but priorreturn to the occurrenceCompany erroneously awarded compensation upon an accounting restatement. The Executive Officer Clawback Policy is in material compliance with all applicable SEC regulations promulgated to comply with Section 954 of any Change in Control, the valueDodd-Frank Wall Street Reform and Consumer Protection Act of all vested options and other
awards granted2010, including Rule 10D-1 promulgated under the Stock Option and Incentive Plan will be cashed out at
the Change in Control Price upon the occurrence of a Change in Control or
Potential Change in Control. Options and other awards granted to executive
officers, directors and other persons who are subject to Section 16 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"),and the rules adopted by Nasdaq.
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The Executive Officer Clawback Policy is triggered if we are required to prepare an accounting restatement of our financial statements due to any material noncompliance with a financial reporting requirement under the securities laws. Once the policy is triggered, the Committee will only be
cashed out if theyrequire recoupment of any erroneously-awarded compensation received by a current or former executive officer during the three completed fiscal years immediately preceding the date we are required to prepare an accounting restatement. The Executive Officer Clawback Policy is a “no-fault” policy and recoupment is required regardless of whether a current or former executive officer contributed to the restatement.
For purposes of the policy, erroneously-awarded compensation is the amount of incentive-based compensation paid to a current or former executive officer that exceeds the incentive-based compensation the executive officer would have been held for at leastpaid had it been based on the restated financial statements. Incentive-based compensation includes any compensation granted, earned or vested based wholly or in part on the attainment of a financial reporting measure (meaning a measure determined and presented in accordance with the accounting principles used in preparing our financial statements and any measure that is derived in whole or in part from such measure).
The Committee will determine the timing and method of recoupment of erroneously-awarded compensation in its sole discretion pursuant to the policy. Recoupment is required unless recovery would be impracticable, as set forth in the policy.
Policy on Recoupment of Executive Compensation
The Company has adopted a discretionary incentive compensation clawback policy (the “Recoupment Policy”) that applies to its executive officers, including the NEOs, and certain other specified employees. This policy allows the Company to seek reimbursement of incentive compensation paid or awarded to executive officers in any of the circumstances listed below.
•A determination is made that the executive officer engaged in fraud, theft, misappropriation or embezzlement.
•A determination is made that the Company is required to file an accounting restatement with the SEC that either resulted from the intentional misconduct of the executive officer or, regardless of the existence of intentional misconduct, results in a material negative revision of a financial or operating measure that was used to determine incentive compensation.
•Any other material negative revision of a financial or operating measure within 36 months after such financial or operating measure served as the basis on which incentive compensation was awarded or paid to the executive officer.
•An error or calculation of the executive officer’s incentive compensation payout within six months after such erroneous amount is paid.
•Material violations of the Company’s Business Code of Conduct and unless otherwiseEthics that could reasonably lead to a material financial or reputational harm to the Company.
•The executive officer is terminated from employment by the Company due to a felony conviction or the failure to contest prosecution for a felony or, in the Committee’s determination, for such executive officer’s gross negligence, willful misconduct or dishonesty, any of which could reasonably lead to material financial or reputational harm to the Company.
The executive officer’s failure to report or reckless failure to supervise his or her direct reports that, in the Committee’s determination, resulted in such executive officer’s failure to detect, in each case, gross negligence, willful misconduct or dishonesty on the part of others, any of which could reasonably lead to material financial or reputational harm to the Company.
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The Recoupment Policy allows the Company to recover incentive compensation awarded to the affected executive officers, including, but not limited to, bonuses, annual, periodic or long-term cash incentive compensation, stock-based awards and the Company Common Stock acquired thereunder, and sale proceeds realized from the sale of Company Common Stock acquired through stock-based awards. All actions taken and decisions made relating to the Recoupment Policy are in the Committee’s sole and absolute discretion.
Key Provisions of Stock Incentive Plan and 2016 Plan
The Company’s Amended and Restated Stock Incentive Plan (the “Stock Incentive Plan”) and 2016 Plan incorporate certain terms and procedures that reflect the current compensation philosophy of the Company’s Compensation Committee. Specifically, both plans prohibit the re-pricing or cash-out of underwater stock options and SARs without prior shareholder approval. They also provide that the taking of certain permitted actions affecting outstanding awards in the event of a change in control of the Company will be conditioned upon the consummation of the transaction giving rise to the change in control and will not be taken with respect to any awards that are subject to the provisions of Section 409A of the Internal Revenue Code (“Section 409A”) if the action would result in a violation of Section 409A. Finally, awards granted under the Stock Incentive Plan and 2016 Plan are made subject to the Recoupment Policy.
For additional information regarding the Company’s 2016 Plan, see Proposal 3 starting on page 76.
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Compensation Committee Report on Executive Compensation
The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that Forward Air Corporation specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act. The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Form 10-K filed with the SEC.
| Submitted By: | ||
| R. Craig Carlock, Chair | ||
| Ronald W. Allen | ||
| Valerie A. Bonebrake | ||
| C. Robert Campbell | ||
| The Compensation Committee of The Board of Directors | ||
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the compensation earned in 2023, 2022 and 2021 by the NEOs.
| Name and | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||
| Principle Position | |||||||||||||||||||||||||||||
| Thomas Schmitt | (5) | 2023 | 902,000 | — | 2,543,333 | 1,271,667 | 123,080 | 26,241 | 4,866,321 | ||||||||||||||||||||
| President and CEO | 2022 | 877,777 | — | 1,916,667 | 958,333 | 2,280,250 | 22,783 | 6,055,810 | |||||||||||||||||||||
| 2021 | 875,000 | — | 2,156,250 | 718,750 | 2,275,000 | 23,000 | 6,048,000 | ||||||||||||||||||||||
| Rebecca J. Garbrick | (6) | 2023 | 400,000 | — | 375,000 | 125,000 | 55,800 | 10,689 | 966,489 | ||||||||||||||||||||
| CFO and | 2022 | 385,000 | — | 326,250 | 108,750 | 743,820 | 10,689 | 1,572,209 | |||||||||||||||||||||
| Treasurer | 2021 | 272,782 | — | 65,000 | — | 373,902 | 3,870 | 715,554 | |||||||||||||||||||||
| Chris C. Ruble | (5) | 2023 | 606,000 | — | 525,000 | 175,000 | 97,263 | 12,955 | 1,416,218 | ||||||||||||||||||||
| Chief Operating | 2022 | 585,000 | — | 468,750 | 156,250 | 1,146,893 | 9,452 | 2,366,345 | |||||||||||||||||||||
| Officer | 2021 | 585,000 | — | 625,000 | — | 1,134,608 | 10,196 | 2,354,804 | |||||||||||||||||||||
| Michael L. Hance | (5) | 2023 | 456,000 | — | 393,750 | 131,250 | 51,300 | 11,712 | 1,044,012 | ||||||||||||||||||||
| Chief Legal Officer | 2022 | 440,000 | — | 393,750 | 131,250 | 853,380 | 10,832 | 1,829,212 | |||||||||||||||||||||
| and Secretary | 2021 | 440,000 | — | 525,000 | — | 854,700 | 9,593 | 1,829,293 | |||||||||||||||||||||
| Kyle R. Mitchin | 2023 | 350,000 | — | 262,500 | 87,500 | 54,600 | 9,699 | 764,299 | |||||||||||||||||||||
| Chief People Officer | 2022 | 312,000 | — | 206,250 | 68,750 | 606,528 | 8,369 | 1,201,897 | |||||||||||||||||||||
| 2021 | 312,000 | — | 275,000 | — | 605,124 | 7,994 | 1,200,118 | ||||||||||||||||||||||
| (1) | Represents the aggregate grant date fair value of restricted share and performance share awards (and assuming achievement at target for such performance share awards). The fair values of these awards were determined in accordance with ASC 718. The awards for which the aggregate grant date fair value is shown in this table include the awards described in the Grants of Plan-Based Awards for Fiscal 2023 Table on page 63 of this Proxy Statement. The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. | |||||||||||||||||||||||||
| (2) | Represents the aggregate grant date fair value of stock option awards. The fair value of these awards were determined in accordance with ASC 718. The awards for which the aggregate grant date fair value is shown in this table include the awards described in the Grants of Plan-Based Awards for Fiscal 2023 Table on page 63 of this Proxy Statement. The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. | |||||||||||||||||||||||||
| (3) | Represents cash incentives earned under the 2023 Annual Cash Incentive Plan. | |||||||||||||||||||||||||
| (4) | See the All Other Compensation Table below for additional information. | |||||||||||||||||||||||||
| (5) | On February 9, 2024, Mr. Schmitt ceased serving as Chairman, President and Chief Executive Officer of the Company and as a member of the Board. At that time, Mr. Hance was appointed as Interim Chief Executive Officer of the Company in addition to his roles as Chief Legal Officer and Secretary, and Mr. Ruble was appointed as President of the Company in addition to his role as Chief Operating Officer. | |||||||||||||||||||||||||
| (6) | Ms. Garbrick was appointed as our Chief Financial Officer and Treasurer in July 2021. Ms. Garbrick’s target annual incentive compensation was adjusted in July 2021 to reflect this change. | |||||||||||||||||||||||||
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All Other Compensation Table
The following table shows the components of “all other compensation” earned in 2023 by the NEOs.
| Name | 401(k) Match ($) | Dividends Earned on Non-Vested Restricted Shares ($)(1) | Long-Term Disability Insurance ($)(2) | Other ($) | Total ($) | ||||||||||||
| Thomas Schmitt | 4,950 | 19,411 | 1,880 | — | 26,241 | ||||||||||||
| Rebecca J. Garbrick | 4,950 | 3,859 | 1,880 | — | 10,689 | ||||||||||||
| Chris C. Ruble | 4,950 | 6,125 | 1,880 | — | 12,955 | ||||||||||||
| Michael L. Hance | 4,950 | 4,882 | 1,880 | — | 11,712 | ||||||||||||
| Kyle R. Mitchin | 4,950 | 2,869 | 1,880 | — | 9,699 | ||||||||||||
| (1) | Represents dividend payments during 2023 on all non-vested restricted shares held by the executive. These dividend payments are nonforteitable. | ||||||||||||||||
| (2) | Represents premiums paid by the Company for long-term disability insurance for officers. | ||||||||||||||||
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Grants of Plan-Based Awards for Fiscal 2023
In this table, we provide information about each grant of awards made to an NEO in the most recently completed year. This includes the awards under the Company’s Annual Cash Incentive Plan, as well as performance share awards, restricted stock awards and stock option awards.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Shares to be Issued Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | |||||||||||||||||||||||||||||||||
| Thres-hold | Target | Maxi-mum | Thres-hold | Target | Maxi-mum | |||||||||||||||||||||||||||||||||
| Name | Award Type | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(2) | (3) | (4) | |||||||||||||||||||||||||||
| Thomas Schmitt | Annual Cash Incentive Plan | 181,000 | 905,000 | 2,389,200 | ||||||||||||||||||||||||||||||||||
Performance Shares(6) | 2/7/2023 | 5,287 | 10,573 | 21,146 | 1,271,666 | |||||||||||||||||||||||||||||||||
| Restricted Stock | 2/7/2023 | 11,018 | 1,271,667 | |||||||||||||||||||||||||||||||||||
| Stock Options | 2/7/2023 | 31,991 | 115.42 | 1,271,667 | ||||||||||||||||||||||||||||||||||
| Rebecca J. Garbrick | Annual Cash Incentive Plan | 60,000 | 300,000 | 792,000 | ||||||||||||||||||||||||||||||||||
Performance Shares(6) | 2/7/2023 | 520 | 1,039 | 2,078 | 125,000 | |||||||||||||||||||||||||||||||||
| Restricted Stock | 2/7/2023 | 2,166 | 250,000 | |||||||||||||||||||||||||||||||||||
| Stock Options | 2/7/2023 | 3,145 | 115.42 | 125,000 | ||||||||||||||||||||||||||||||||||
| Chris C. Ruble | Annul Cash Incentive Plan | 90,900 | 454,500 | 1,199,880 | ||||||||||||||||||||||||||||||||||
Performance Shares(6) | 2/7/2023 | 728 | 1,455 | 2,910 | 175,000 | |||||||||||||||||||||||||||||||||
| Restricted Stock | 2/7/2023 | 3,032 | 350,000 | |||||||||||||||||||||||||||||||||||
| Stock Options | 2/7/2023 | 4,402 | 115.42 | 175,000 | ||||||||||||||||||||||||||||||||||
| Michael L. Hance | Annual Cash Incentive Plan | 68,400 | 342,000 | 902,880 | ||||||||||||||||||||||||||||||||||
Performance Shares(6) | 2/7/2023 | 546 | 1,091 | 2,182 | 131,250 | |||||||||||||||||||||||||||||||||
| Restricted Stock | 2/7/2023 | 2,274 | 262,500 | |||||||||||||||||||||||||||||||||||
| Stock Options | 2/7/2023 | 3,302 | 115.42 | 131,250 | ||||||||||||||||||||||||||||||||||
| Kyle R. Mitchin | Annual Cash Incentive Plan | 52,500 | 262,500 | 693,000 | ||||||||||||||||||||||||||||||||||
Performance Shares(6) | 2/7/2023 | 364 | 728 | 1,456 | 87,500 | |||||||||||||||||||||||||||||||||
| Restricted Stock | 2/7/2023 | 1,516 | 175,000 | |||||||||||||||||||||||||||||||||||
| Stock Options | 2/7/2023 | 2,201 | 115.42 | 87,500 | ||||||||||||||||||||||||||||||||||
| (1) | Amounts included in the table above represent the threshold (which we refer to as “downside”), target and maximum (which we refer to as “beyond stretch”) potential payout levels related to both the corporate and individual objectives for the fiscal year 2023 under the Company’s Annual Cash Plan. The awards also provide for low, high and stretch potential payout levels as described under “Key Elements of Executive Compensation Program – Annual Cash Incentive Awards” in the Compensation Discussion and Analysis. The payments for these awards have already been determined and were paid in March 2024 to the NEOs and disclosed in the Summary Compensation Table. | ||||||||||||||||||||||
| (2) | Each grant vests equally over a three-year period with the first vesting occurring on the one-year anniversary of the grant date. | ||||||||||||||||||||||
| (3) | Stock options vest equally over a three-year period from the date of grant, and options granted to our CEO vest upon the achievement of pre-established annual operating income goals within a three-year period. | ||||||||||||||||||||||
| (4) | In accordance with the provisions of the 2016 Plan, the exercise price of stock option grants is set using the closing price on the day of grant. In the event there is no public trading of Company Common Stock on the date of grant, the exercise price will be the closing price on the most recent, prior date that Company Common Stock was traded. | ||||||||||||||||||||||
| (5) | Represents the aggregate grant date fair value of performance share, restricted stock and stock option awards. The fair value of those awards were determined in accordance with ASC 718. The assumptions used in determining the grant date fair value of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC. | ||||||||||||||||||||||
| (6) | The performance shares vest two-and-a-half months after the last day of the three-year performance period. The number of shares earned are based on the TSR of Company Common Stock compared to the TSR of a peer group. See pages 51 to 52 of this Proxy Statement for additional information. | ||||||||||||||||||||||
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Outstanding Equity Awards at Fiscal Year-End
The following table shows information about outstanding equity awards at December 31, 2023.
| Option Awards | Stock Awards | ||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | Number of Shares of Stock That Have Not Vested (2) | Market Value of Shares of Stock That Have Not Vested (4)($) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (3) | Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested | |||||||||||||||||||||
| Name | (4)($) | ||||||||||||||||||||||||||||
| Thomas Schmitt | 100,000 | — | 64.26 | 9/1/2018 | 9/1/2025 | ||||||||||||||||||||||||
| 35,918 | — | 65.96 | 2/4/2020 | 2/4/2027 | |||||||||||||||||||||||||
| 26,093 | 13,046 | 75.05 | 2/2/2021 | 2/2/2028 | |||||||||||||||||||||||||
| 11,041 | 22,081 | 106.29 | 2/8/2022 | 2/8/2029 | |||||||||||||||||||||||||
| — | 31,991 | 115.42 | 2/7/2023 | 2/7/2030 | |||||||||||||||||||||||||
| 20,220 | 1,271,231 | 34,522 | 2,170,398 | ||||||||||||||||||||||||||
| Rebecca J. Garbrick | 1,253 | 2,506 | 106.29 | 2/8/2022 | 2/8/2029 | ||||||||||||||||||||||||
| — | 3,145 | 115.42 | 2/7/2023 | 2/7/2030 | |||||||||||||||||||||||||
| 3,819 | 240,101 | 1,893 | 119,013 | ||||||||||||||||||||||||||
| Chris C. Ruble | 1,800 | 3,600 | 106.29 | 2/8/2022 | 2/8/2029 | ||||||||||||||||||||||||
| — | 4,402 | 115.42 | 2/7/2023 | 2/7/2030 | |||||||||||||||||||||||||
| 6,380 | 401,111 | 6,253 | 393,126 | ||||||||||||||||||||||||||
| Michael L. Hance | 9,098 | — | 47.82 | 2/6/2017 | 2/6/2024 | ||||||||||||||||||||||||
| 5,303 | — | 58.40 | 2/5/2018 | 2/5/2025 | |||||||||||||||||||||||||
| 1,512 | 3,024 | 106.29 | 2/8/2022 | 2/8/2029 | |||||||||||||||||||||||||
| — | 3,302 | 115.42 | 2/7/2023 | 2/7/2030 | |||||||||||||||||||||||||
| 5,086 | 319,757 | 5,120 | 321,894 | ||||||||||||||||||||||||||
| Kyle R. Mitchin | 792 | 1,584 | 106.29 | 2/8/2022 | 2/8/2029 | ||||||||||||||||||||||||
| — | 2,201 | 115.42 | 2/7/2023 | 2/7/2030 | |||||||||||||||||||||||||
| 2,989 | 187,918 | 2,839 | 178,488 | ||||||||||||||||||||||||||
| (1) | Each grant vests equally over a three-year period from the date of grant. Stock options granted to our CEO vest upon the achievement of pre-established annual operating income goals within a three-year period. | ||||
| (2) | The amounts shown represent restricted stock awards granted under the 2016 Plan. Each grant of restricted stock vests equally over a three-year period with the first vesting occurring on the one-year anniversary of the grant date. | ||||
| (3) | The amounts shown represent performance share awards granted under the 2016 Plan. The performance shares vest two-and-a-half months after the last day of three-year performance periods that end December 31, 2023, December 31, 2024, and December 31, 2025. The number of shares earned is based on either (a) the TSR of Company Common Stock compared to the TSR of a determined peer group or (b) the EBITDA Per Share compared to a pre-determined EBITDA Per Share target. See pages 51 to 52 of this Proxy Statement for additional information. Shares presented represent the award at the target amount. The actual amounts that will be earned are dependent upon the achievement of pre-established performance goals during the respective performance cycles. | ||||
| (4) | The market value of the awards that have not vested is based on the closing price of Company Common Stock on Nasdaq on December 29, 2023, which was $62.87. | ||||
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Option Exercises and Stock Vested
The following table shows information about options exercised or shares acquired on vesting during 2023.
| Option Awards | Stock Awards | |||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1)(2) | ||||||||||
| Thomas Schmitt | — | — | 26,288 | 2,817,069 | ||||||||||
| Rebecca J. Garbrick | — | — | 1,238 | 127,790 | ||||||||||
| Chris C. Ruble | — | — | 7,191 | 780,154 | ||||||||||
| Michael L. Hance | — | — | 5,527 | 600,907 | ||||||||||
| Kyle R. Mitchin | — | — | 3,400 | 368,285 | ||||||||||
| (1) The value realized upon exercise or vesting is based on the market price on the date of exercise or vesting. | ||||||||||||||
| (2) Shares withheld for income tax purposes related to stock vested were as follows: Mr. Hance – 1,487 shares, Ms. Garbrick - 470 shares, Mr. Ruble – 3,243 shares, Mr. Mitchin – 1,009 shares and Mr. Schmitt – 11,857. | ||||||||||||||
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2023 with respect to shares of Company Common Stock that may be issued under the following existing equity compensation plans: the Stock Incentive Plan, the 2016 Plan, the Non-Employee Director Stock Option Plan (the “NED Plan”), the 2000 Non-Employee Director Award (the “2000 NED Award”), the ESPP and the Amended Plan. Our shareholders have approved each of these plans.
| Equity Compensation Plan Information | ||||||||||||||||||||
| Plan Category | Number of Securities to be Issued upon Exercise or Vesting of Outstanding/Unvested Shares, Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (1)($) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (2) | |||||||||||||||||
| Equity Compensation Plans Approved By Shareholders | 576,456 | 76.83 | 930,275 | |||||||||||||||||
| Equity Compensation Plans Not Approved By Shareholders | — | — | — | |||||||||||||||||
| Total | 576,456 | 76.83 | 930,275 | |||||||||||||||||
| (1) | Excludes purchase rights accruing under the ESPP, which has an original shareholder-approved reserve of 500,000 shares. Under the ESPP, each eligible employee may purchase up to 2,000 shares of Company Common Stock at semi-annual intervals each year at a purchase price per share equal to 90% of the lower fair market value of Company Common Stock at the close of the (i) the first closing day of an option period or (ii) the last trading day of an option period. | ||||
| (2) | Includes shares available for future issuance under the ESPP. As of December 31, 2023, an aggregate of 302,480 shares were available for issuance under the ESPP. | ||||
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Employment Agreement with Thomas Schmitt
On June 6, 2018, the Company entered into an employment agreement with Mr. Schmitt (for purposes of this section, the “employment agreement”). Under the employment agreement, Mr. Schmitt’s compensation consisted of an initial base salary of $800,000 and an annual target bonus set at 100% of base salary, with a maximum possible bonus of 200% of base salary. Mr. Schmitt received a signing bonus of $413,000 and 25,000 restricted shares of Company Common Stock, which vested equally on each of the first, second and third anniversaries of the grant date. In addition, the Company granted Mr. Schmitt options to purchase up to 100,000 shares of Company Common Stock which options have an exercise price equal to the closing stock price of Company Common Stock on the grant date and vested on each of the first, second, and third anniversaries of the grant date.
Pursuant to the employment agreement, in February 2020, Mr. Schmitt received an additional equity grant valued at approximately $1.4 million at the time of the grant which was designed similarly to the design used for other executive employees of the Company. Following 2020, Mr. Schmitt has continued to participate in the Company’s employee incentive programs, as administered by the Compensation Committee of the Board.
In addition to the employment agreement, Mr. Schmitt entered into the Company’s Restrictive Covenants Agreement (the “Restrictive Covenants Agreement”) and participates in the Company’s Severance Plan (the “Severance Plan”). Mr. Schmitt’s entitlement to termination benefits, if any, and his continuing obligations to the Company following any termination will be determined by the Severance Plan and the Restrictive Covenants Agreement.
On February 6, 2024, Mr. Schmitt ceased serving as Chairman, President and Chief Executive Officer of the Company and as a member of the Board, with his last day of employment being February 9, 2024. This event was a termination without cause, which meets the definition of an “Involuntary Termination” under the Severance Plan. Under the Severance Plan and subject to Mr. Schmitt’s execution and nonrevocation of a general release of claims, Mr. Schmitt is eligible to receive certain payments including a Severance Payment and Healthcare Assistance Payment (in each case, as defined in the Severance Plan) and up to $20,000 in outplacement services. These severance benefits as well as additional benefits received by Mr. Schmitt are set forth in that certain Separation and Release Agreement, dated March 19, 2023, which is discussed in greater detail on pages 72 to 75 of this Proxy Statement under the Section entitled “Potential Payments upon Termination, Change of Control, Death or Disability.” The Restrictive Covenants Agreement entered into between Mr. Schmitt and the Company on May 27, 2022 includes a perpetual obligation to keep confidential information and trade secrets, provisions covering obligations with respect to non-competition, non-solicitation of employees and customers and non-disparagement, each of which apply to Mr. Schmitt for 24 months following his separation.
The Company does not have employment agreements with any of its other NEOs, but each NEO is a participant in the Severance Plan, which is discussed in greater detail on pages 72 to 75 of this Proxy Statement under the Section entitled “Potential Payments upon Termination, Change of Control, Death or Disability.”
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees to the annual total compensation of Mr. Schmitt, who served as our Chief Executive Officer (our “CEO”) until February 6, 2024. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. There were no changes in our employee population or employee compensation arrangements in 2023 that we reasonably believe would result in a significant change in our pay ratio disclosure. Therefore, we have based our pay ratio calculation for 2023 using compensation for the same median employee identified for 2021, which median employee was identified under the process described in our 2021 pay ratio calculation set forth in our 2022 proxy statement.
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For 2023, our last completed fiscal year:
•The annual total compensation of our median employee was $48,536; and
•Mr. Schmitt’s total annual compensation, as set forth in the Summary Compensation Table, was $4,866,321.
Based on this information, for 2023, the ratio of the annual total compensation of our CEO, to the total compensation of the median employee was 100.3 to 1.
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Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company.
The following table discloses information on “compensation actually paid” (CAP) to our principal executive officer (PEO) and to our other non-PEO NEOs (on average) and certain financial performance measures of the Company. For further information regarding the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with performance, see the Compensation, Discussion and Analysis (CD&A) starting on page 41.
| Year | Summary Compensation Table Total for PEO1 | Compensation Actually Paid to PEO2 | Average Summary Compensation Table Total for Non-PEO NEOs3 | Average Compensation Actually Paid to Non-PEO NEOs4 | Value of Initial Fixed $100 Investment Based On: | Net Income (millions)7 | Relative TSR Performance Percentile8 | |||||||||||||||||||
Total Shareholder Return5 | Peer Group Total Shareholder Return6 | |||||||||||||||||||||||||
| 2023 | $4,866,321 | $(766,293) | $1,047,755 | $320,635 | $94 | $124 | $167.4 | 0th | ||||||||||||||||||
| 2022 | $6,055,810 | $6,356,982 | $1,742,416 | $1,711,824 | $155 | $100 | $193.2 | 64th | ||||||||||||||||||
| 2021 | $6,048,000 | $9,065,745 | $1,525,473 | $1,726,305 | $177 | $125 | $105.9 | 77th | ||||||||||||||||||
| 2020 | $3,200,911 | $2,353,212 | $1,006,555 | $644,923 | $111 | $104 | $23.7 | 42nd | ||||||||||||||||||
1The amounts reported in this column are the amounts of total compensation reported for Mr. Schmitt (our President, Chief Executive Officer and Chairman) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Summary Compensation Table.” | ||||||||||||||||||||||||||
2The amounts reported in this column represent the amount of “compensation actually paid” to Mr. Schmitt, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. Schmitt during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Schmitt’s total compensation for each year to determine the compensation actually paid: | ||||||||||||||||||||||||||
| PEO | 2023 | 2022 | 2021 | 2020 | ||||||||||
| Reported Summary Compensation Table Total for PEO | $4,866,321 | $6,055,810 | $6,048,000 | $3,200,911 | ||||||||||
| - Reported Value of Equity Awards | $(3,815,000) | $(2,875,000) | $(2,875,000) | $(2,125,000) | ||||||||||
| + Year End Fair Value of Equity Awards | $1,499,165 | $3,099,190 | $4,472,901 | $1,238,623 | ||||||||||
| + Year Over Year Change in Fair Value of Outstanding and Unvested Equity Awards | $(3,472,861) | $234,398 | $1,183,652 | $176,287 | ||||||||||
| +/- Year Over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | $156,082 | $(157,416) | $236,192 | $(137,609) | ||||||||||
| +/- Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | $— | $— | $— | $— | ||||||||||
| +/- Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | $— | $— | $— | $— | ||||||||||
| Compensation Actually Paid to PEO | $(766,293) | $6,356,982 | $9,065,745 | $2,353,212 | ||||||||||
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3The amounts reported in this column represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Schmitt, who has served as our CEO since 2018) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Schmitt) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Michael L. Hance, Rebecca J. Garbrick, Chris C. Ruble and Kyle R. Mitchin; (ii) for 2022, Rebecca J. Garbrick, Chris C. Ruble, Michael L. Hance, and Kyle R. Mitchin; (iii) for 2021, Rebecca J. Garbrick, Scott E. Schara, Chris C. Ruble, Michael L. Hance and Michael J. Morris; and (iv) for 2020, Michael J. Morris, Scott E. Schara, Chris C. Ruble, Michael L. Hance and Matthew J. Jewell. | ||
4The amounts reported in this column represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Schmitt), as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Schmitt) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Schmitt) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: | ||
| Average for Non-PEO NEOs | 2023 | 2022 | 2021 | 2020 | ||||||||||
| Average Reported Summary Compensation Table Total for Non-PEO NEOs | $1,047,755 | $1,742,416 | $1,525,473 | $1,006,555 | ||||||||||
| - Average Reported Value of Equity Awards | $(518,750) | $(465,000) | $(448,000) | $(375,000) | ||||||||||
| + Average Year End Fair Value of Equity Awards | $223,513 | $490,666 | $615,596 | $281,071 | ||||||||||
| +/- Year Over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | $(453,197) | $(4,743) | $144,644 | $(19,014) | ||||||||||
| +/- Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | $21,314 | $(51,515) | $12,362 | $(153,176) | ||||||||||
| - Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | $— | $— | $(123,770) | $(95,513) | ||||||||||
| + Average Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | $— | $— | $— | $— | ||||||||||
| Average Compensation Actually Paid to Non-PEO NEOs | $320,635 | $1,711,824 | $1,726,305 | $644,923 | ||||||||||
5Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period. | ||
6Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: Nasdaq Trucking and Transportation Stocks Index, which is the same peer group used for the Stock Return Performance Graph included in our Annual Report. | ||
7The amounts reported represent the net income as reflected in the Company’s audited financial statements for the applicable year. | ||
8Relative TSR Performance Percentile is based on the metric used for our TSR performance shares, as discussed in more detail on pages 51 to 52. Amounts shown in this table for each year reflect the Company’s one year TSR relative to the one year TSR of the peer group used for the TSR performance shares awarded for that year. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Relative TSR Performance Percentile is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. | ||
Financial Performance Measures
As described in greater detail in the CD&A, the Company’s executive compensation program reflects a pay-for-performance philosophy to support the achievement of short- and long-term financial, operational and strategic objectives. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase shareholder value. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
•Operating Income
•Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
•Relative TSR Performance Percentile (the Company’s TSR as compared to a peer group established by the Compensation Committee)
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Description of the Relationship between Pay and Performance
The following graphs illustrate the relationship between the amount of compensation actually paid to Mr. Schmitt and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Schmitt) with the Company’s (i) cumulative TSR, (ii) net income and (iii) relative TSR performance percentile over the four years presented in the table. Compensation actually paid is impacted by numerous factors, including, but not limited to, the timing of new equity awards, vesting of outstanding awards, share price volatility and mix of performance metrics.
A large portion of the compensation actually paid to our NEOs is comprised of equity awards. As described in more detail in CD&A, the Company targets that approximately 68% and 40% of the value of total compensation awarded to Mr. Schmitt and other NEOs, respectively, is comprised of equity awards, including restricted stock, performance shares and stock options. Over the last four years, changes in the Company’s share price have led to changes in the compensation actually paid. The graphs below illustrate:
•From 2020 to 2021, the compensation actually paid to our PEO increased by 285.2% and average compensation actually paid to our Non-PEO NEOs (excluding Mr. Schmitt) increased by 167.7%, cumulative TSR increased from $111 to $177 or 59.5%, net income increased from $23.7 million to $105.9 million or 346.8% and relative TSR performance percentile increased from the 42nd percentile to the 77th percentile.
•From 2021 to 2022, the compensation actually paid to our PEO decreased by 29.9% and average compensation actually paid to our Non-PEO NEOs (excluding Mr. Schmitt) decreased by 0.8%, cumulative TSR decreased from $177 to $155 or 12.4%, net income increased from $105.9 million to $193.2 million or 82.4% and relative TSR performance percentile decreased from the 77 percentile to the 64 percentile.
•From 2022 to 2023, the compensation actually paid to our PEO decreased by 112.1% and average compensation actually paid to our Non-PEO NEOs (excluding Mr. Schmitt) decreased by 81.3%, cumulative TSR decreased from $155 to $94 or 39.4%, net income decreased from $193.2 million to $167.4 million or 13.4% and relative TSR performance percentile decreased from the 64 percentile to the 0 percentile.
For additional information regarding the Company’s executive compensation program, compensation setting process and compensation philosophy, see the CD&A starting on page 41.
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Potential Payments Upon Termination, Change of Control, Death or Disability
Under the Severance Plan, which is applicable to selected employees of the Company, including Mr. Schmitt and the NEOs, each participant would receive severance benefits in the event his or her employment is terminated in certain circumstances. Under the Severance Plan, a participant would receive severance benefits if his or her employment is involuntarily terminated by the Company (other than for cause or upon death or disability, as those terms are defined in the Severance Plan) or in the event the participant voluntarily terminates his or her employment for “good reason” (as defined in the Severance Plan). The circumstances that permit a participant to terminate employment for good reason and receive severance benefits after a change in control differ from the more limited circumstances that permit a termination of employment for good reason prior to or absent a change in control. Generally, eligible participants would be entitled to the severance benefits included in the chart below upon an involuntary termination of their employment, in addition to any accrued obligations (such as unpaid salary through the termination date) and vested amounts to which they may be entitled under the Company’s benefit plans:
| General Severance Upon Involuntary Termination Absent a Change in Control | Severance Upon Involuntary Termination as of or Within Two Years After a Change in Control | |||||||||||||
| ■ | a lump sum severance payment in an amount equal to two years of the CEO’s annualized base salary, one and half years of the C-Suite employee’s annualized base salary and one year for all other participants’ annualized base salary | ■ | an amount equal to two times the sum of the participant’s annual base salary and target annual incentive amount | |||||||||||
| ■ | a pro-rata annual incentive for the fiscal year in which the termination occurs based on actual performance results, reduced by the amount of any annual incentive previously paid to the participant for such fiscal year | ■ | a pro-rata target annual incentive amount for the fiscal year in which the termination occurs, reduced by the amount of any annual incentive previously paid to the participant for such fiscal year | |||||||||||
| ■ | a lump sum healthcare assistance payment in an amount equal to the excess of the monthly COBRA premium to provide the group medical, dental, vision, and/or prescription drug plan benefits the participant had been receiving before the termination above the monthly premium payable by active employees under the Company’s healthcare plan for similar coverage, multiplied by 18 months for all NEOs other than the CEO and by 24 months for the CEO | ■ | a lump sum healthcare assistance payment in an amount equal to the excess of the monthly COBRA premium to provide the group medical, dental, vision, and/or prescription drug plan benefits the participant had been receiving before the termination above the monthly premium payable by active employees under the Company’s healthcare plan for similar coverage, multiplied by 24 months | |||||||||||
| ■ | access to up to $20,000 of employer-paid outplacement services for 12 months following termination | ■ | access to up to $20,000 of employer-paid outplacement services for 12 months following termination | |||||||||||
A condition in the Severance Plan is the execution of the Participation and Restrictive Covenants Agreement, which contains a non-competition and non-solicitation agreement with respect to the Company’s employees and customers. The term of the non-competition and non-solicitation prohibitions for the CEO and all other NEOs is 24 months and 18 months, respectively, following termination of employment. In addition, any severance benefits payable under the Severance Plan are subject to the execution by the participant of a general release of claims against the Company and certain affiliated persons and entities. The Severance Plan does not provide for any tax gross-up payments to participants. Payments and benefits under the Severance Plan are subject to recovery under any clawback, recovery or recoupment policy.
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In connection with the Omni Acquisition, in March 2024, the Compensation Committee amended the Severance Plan to provide enhanced severance protections for participating executives from March 15, 2024 to December 31, 2025. The amendment provides that a participating executive would be eligible to receive the severance benefits set forth above under “Severance Upon Involuntary Termination as of or Within Two Years After a Change in ControlControl” in the event of a termination of employment by the Company “not for cause” that occurs from March 15, 2024 to December 31, 2025.
In connection with the negotiation of Mr. Schmitt’s separation from the Company, the Company and Mr. Schmitt entered into (i) a separation agreement (the “Separation and Release Agreement”), effective March 19, 2024, setting forth the terms of Mr. Schmitt’s separation from the Company and (ii) an amended and restated restrictive covenants agreement originally entered into between Mr. Schmitt and the Company on May 27, 2022 (as amended and restated on March 19, 2024 the “Restrictive Covenants Agreement”). The Separation and Release Agreement provides for (i) compensation owed to Mr. Schmitt equal to $1,981,156, which is consistent with the amounts owed under the Severance Plan and described in the table below, (ii) accelerated vesting of Mr. Schmitt’s 2021 EBITDA and TSR performance share awards based on actual performance (additional detail regarding these awards was set forth in the Company’s 2022 annual proxy filed with the Securities and Exchange Commission on March 28, 2022) and (iii) the continued exercisability of all of Mr. Schmitt’s vested stock options until the earlier of (x) the applicable original expiration date and (y) February 9, 2029. The Restrictive Covenants Agreement clarifies the definition of a competing business and adds a mutual non-disparagement provision.
In addition to the benefits available under the Severance Plan, all of the NEOs are eligible to receive certain other benefits in the event of specific termination of employment, including as a consequence of a change in control. Under the Company’s Annual Incentive Plan, any unpaid incentive amounts previously earned under this plan would be payable to any NEO terminated without cause. Under the Stock Incentive Plan, any non-vested restricted shares, options or Potential Changeother forms of equity-based compensation granted prior to 2016 will vest upon a “Change in Control was outsideControl.” Beginning with long-term incentive grants made in 2016 made pursuant to either the Stock Incentive Plan or 2016 Plan, vesting of such awards upon a change in control is double-trigger (i.e., not accelerated unless the awards are not assumed or converted by the acquirer or in the event there is an involuntary termination of employment in connection with or within 24 months after the change in control).
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The following table shows the estimated benefits payable to each NEO in the event of termination of employment or change of control of the holderCompany. The amounts shown assume that a termination of employment or a change of control occurs on December 31, 2023. The amounts do not include payments or benefits provided under insurance or other plans that are generally available to all full-time employees.
| Name | Involuntary Termination Without Cause ($) | Death and Disability ($) | Change in Control ($) | ||||||||
| Thomas Schmitt | |||||||||||
Severance(1) | 1,810,000 | — | — | ||||||||
Annual Incentive(2) | 123,080 | — | — | ||||||||
Accelerated Vesting of Equity(3) | — | — | — | ||||||||
Insurance Benefits(4) | 27,427 | — | — | ||||||||
Placement Services(5) | 20,000 | — | — | ||||||||
| Total | 1,980,507 | — | — | ||||||||
| Rebecca J. Garbrick | |||||||||||
Severance(1) | 600,000 | — | 1,400,000 | ||||||||
Annual Incentive(2) | 55,800 | 55,800 | 55,800 | ||||||||
Accelerated Vesting of Equity(3) | — | 291,773 | 359,113 | ||||||||
Insurance Benefits(4) | 13,321 | — | 17,761 | ||||||||
Placement Services(5) | 20,000 | — | 20,000 | ||||||||
| Total | 689,121 | 347,573 | 1,852,674 | ||||||||
| Chris C. Ruble | |||||||||||
Severance(1) | 909,000 | — | 2,121,000 | ||||||||
Annual Incentive(2) | 97,263 | 97,263 | 97,263 | ||||||||
Accelerated Vesting of Equity(3) | — | 684,080 | 794,237 | ||||||||
Insurance Benefits(4) | 11,502 | — | 15,336 | ||||||||
Placement Services(5) | 20,000 | — | 20,000 | ||||||||
| Total | 1,037,765 | 781,343 | 3,047,836 | ||||||||
| Michael L. Hance | |||||||||||
Severance(1) | 684,000 | — | 1,596,000 | ||||||||
Annual Incentive(2) | 51,300 | 51,300 | 51,300 | ||||||||
Accelerated Vesting of Equity(3) | — | 555,001 | 641,651 | ||||||||
Insurance Benefits(4) | 27,663 | — | 36,884 | ||||||||
Placement Services(5) | 20,000 | — | 20,000 | ||||||||
| Total | 782,963 | 606,301 | 2,345,835 | ||||||||
| Kyle R. Mitchin | |||||||||||
Severance(1) | 525,000 | — | 1,225,000 | ||||||||
Annual Incentive(2) | 54,600 | 54,600 | 54,600 | ||||||||
Accelerated Vesting of Equity(3) | — | 314,019 | 366,406 | ||||||||
Insurance Benefits(4) | 27,663 | — | 36,884 | ||||||||
Placement Services(5) | 20,000 | — | 20,000 | ||||||||
| Total | 627,263 | 368,619 | 1,702,890 | ||||||||
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| (1) | Severance includes: (a) base salary for two years for the CEO and one and half years for NEO’s if involuntary terminated without cause, or base salary for two years if terminated within two years following a Change in Control, and (b) in the event of termination within two years following a Change in Control, payment in the amount of two times the target annual incentive amount determined as of the termination date. | ||||
| (2) | Annual Incentive includes: (a) target annual incentive if involuntary terminated without cause, death or disability, and (b) target annual incentive if terminated within two years following a Change in Control. | ||||
| (3) | In the event of termination due to death or disability, the amount includes (a) the unvested restricted shares valued at the market price of Company Common Stock on December 29, 2023 ($62.87), (b) the unvested stock option awards multiplied by the excess, if any, of the market price of Company Common Stock on December 29, 2023 ($62.87) over the exercise price, and (c) the unvested performance shares, calculated as the target number of performance shares specified in each grant multiplied by the percentage of months of service completed in the full performance period, multiplied by the market price of Company Common Stock on December 29, 2023 ($62.87). In the event of termination due to a Change in Control, the amount includes (i) the unvested restricted shares valued at the market price of Company Common Stock on December 29, 2023 ($62.87), (ii) the unvested stock option awards multiplied by the excess, if any, of the market price of Company Common Stock on December 29, 2023 ($62.87) over the exercise price, and (iii) the greater of (x) 100% of the target number of unvested performance shares specified on the grant notice or (y) the number of performance shares that otherwise would have become vested as of the vesting date, based on the TSR multiplier or EBITDA Per Share performance factor attained as of the date of termination, shall become vested performance shares valued at the market price of Company Common Stock on December 29, 2023 ($62.87). For purposes of calculating the Change in Control amount, we assume that 100% of the target number of unvested performance shares is greater than the number of shares that would have become vested based on the TSR multiplier or EBITDA Per Share performance factor as of the date of termination. | ||||
| (4) | Participants are entitled to a lump sum healthcare assistance payment in an amount equal to the excess of the monthly COBRA premium to provide the group medical, dental, vision, and/or prescription drug plan benefits the participant had been receiving before termination above the monthly premium payable by active employees under the Company’s healthcare plan for similar coverage, multiplied by 18 months for all NEOs other than the CEO and by 24 months for the CEO if the termination date is prior to or absent a Change in Control, or by 24 months if the termination date is on or within two years following a Change in Control. | ||||
| (5) | Participants are entitled to access up to $20,000 of employer-paid outplacement services for 12 months following termination. | ||||
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PROPOSAL 3 — APPROVAL OF AMENDMENT TO 2016 OMNIBUS INCENTIVE COMPENSATION PLAN
Summary of the option Proposal
The Board recommends approval of an amendment to the 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”) solely to increase the number of shares available for grant under the 2016 Plan, which, if approved by our shareholders, will be effective upon approval by our shareholders. The 2016 Plan was originally approved by our shareholders on May 10, 2016. We are submitting the amendment to the 2016 Plan to our shareholders for approval to increase the current number of shares reserved for issuance under the 2016 Plan by 1.45 million shares.
As of March 25, 2024, there were approximately 143,000 shares available for issuance under new grants under the existing 2016 Plan. The Board believes approval of the amendment of the 2016 Plan is necessary to make available an adequate number of shares to enable us to continue to attract, retain and motivate our officers, employees and directors in a competitive market for talent.
We believe that equity awards are critical incentives to attracting, retaining and motivating our directors, officers and employees and are an important way of ensuring the interests of our talent are aligned with Company goals and shareholder interests. The increase in the share reserve will enable us to continue to be able to grant equity awards authorized by the 2016 Plan to deserving individuals and remain competitive with our industry peers. We believe the granting of equity awards in this way is a common compensation practice. If this proposal is not approved, we believe we would be at a significant disadvantage against our competitors who use this practice to attract, retain and motivate key employees. If we are unable to grant equity awards, we could be forced instead to increase cash compensation at a time when we are seeking to be careful in our uses of cash, reducing resources available to meet our other business needs.
A summary of the principal features of the 2016 Plan is provided below. A copy of the amendment to the 2016 Plan is included as Annex A to this Proxy Statement.
Background
The purpose of the 2016 Plan is to (a) align the interests of our shareholders and the recipients of awards under the 2016 Plan by increasing the proprietary interest of such recipients in our growth and success; (b) advance our interests by attracting and retaining qualified employees and other persons providing services to us and/or our related companies; and (c) motivate such persons to act in the long-term best interests of our shareholders and our Company.
The only change to the 2016 Plan included in the amendment of the 2016 Plan is to authorize an increase in the overall limit on the number of shares that may be issued under the 2016 Plan by an additional 1.45 million shares.
If the amendment to the 2016 Plan is not approved by our shareholders, we will continue to operate the 2016 Plan in accordance with its existing terms.
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Factors Considered in Setting Size of Requested Share Reserve
Equity is Essential to Talent Acquisition and Retention
Our industry is intensely competitive with many well-established companies that compete directly and indirectly with us with respect for talent. The additional shares, if approved, would be used for grants not only to our executive officers, but also to recruit and retain employees throughout our business. We firmly believe that employees with a stake in the future success of our business are highly motivated to achieve long-term growth and are well-aligned with the interests of our other award.
Underequity-holders to increase shareholder value. It is essential that we continue the use of equity compensation to better position us in the market and allow us to retain our skilled employees while attracting talented new employees to help us achieve our objectives, which include increasing shareholder value by growing the business. The use of shares would enable us to reduce cash compensation costs while leveraging equity to retain employees critical to the long-term success of the Company. Without the approval of an addition to our share reserve, we will be very challenged to continue to compete in this highly competitive market. This could ultimately result in the loss of critical talent and inhibit our ability to meet our future growth objectives.
The Size of Our Share Reserve Request is Reasonable
The Compensation Committee thoughtfully evaluated the appropriate number of shares for which to seek shareholder approval. The Compensation Committee considered historical grant and forfeiture levels, recent market prices of the Company’s shares and the anticipated use of stock awards as an incentive and retention tool. The Compensation Committee is committed to being careful stewards of shareholder capital.
If our request to approve the amendment to the 2016 Plan is approved, we will have approximately 1.45 million shares available for grant under new awards after the Annual Meeting. Based on our historical usage and forfeiture, we currently anticipate that this reserve will be a sufficient amount of equity for attracting, motivating and retaining employees, directors and consultants for approximately three years. However, the actual duration of the shares reserve will depend on currently unknown factors, such as the Company's stock price, changes in participation, our hiring and promotion activity, future grant practices, award type mix and levels, competitive market practices, acquisitions and divestitures, and the rate of returned shares due to forfeitures.
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We Have Responsibly Managed Our Annual Burn Rate
Our Compensation Committee takes a thoughtful approach to managing our dilution and annual burn rate usage levels, taking into account business needs, competitive market practices, and our broader human capital management strategy. Our annual burn rates are calculated for each year as the number of shares issuable pursuant to equity awards granted in such year divided by the respective weighted-average common shares outstanding during the applicable years. Our annual burn rates for the applicable years were as follows:
| Year | Burn Rate | ||||
| 2016 | 1.1% | ||||
| 2017 | 1.0% | ||||
| 2018 | 1.5% | ||||
| 2019 | 0.6% | ||||
| 2020 | 0.9% | ||||
| 2021 | 0.8% | ||||
| 2022 | 0.7% | ||||
| 2023 | 0.7% | ||||
As previously disclosed, in January 2024 we completed the Omni acquisition, which added approximately 3,200 new employees to our Company. As a result, we expect our burn rate will increase accordingly beginning in 2025.
Our Current Equity-Pay Mix Aligns Incentives with Shareholder Gains
The 2016 Plan enables the grant of stock options, SARs, stock awards, stock unit awards, performance shares, cash-based performance units and other stock- and cash-based awards, each of which may be granted separately or in tandem with other awards.
Share Information as of March 25, 2024
The information included in this Proxy Statement and our 2023 Annual Report is updated by the following information regarding our unvested awards outstanding and our shares remaining available under all existing equity compensation plans (excluding our Employee Stock OptionPurchase Plan or “ESPP”) as of March 25, 2024 (except as otherwise noted):
| Element of Overhang | As of March 25, 2024 | ||||
Total number of stock options outstanding1 | 286,708 | ||||
| Weighted-average exercise price of stock options outstanding | $77.93 | ||||
| Weighted-average remaining duration of stock options outstanding | 1.06 years | ||||
Total number of full-value awards outstanding full value awards outstanding (includes restricted stock, restricted stock units, performance shares and deferred stock units)2 | 529,447 | ||||
Shares remaining available for grant under the 2016 Plan3 | 142,599 | ||||
Shares remaining available for grant under the NED Plan3 | 45,331 | ||||
| Total shares of common stock outstanding as of the Record Date | 26,438,420 | ||||
1 No stock appreciation rights were outstanding as of March 25, 2024.
2 The number of shares subject to outstanding performance shares assume performance achievement at the maximum performance level.
3 The 2016 Plan and Incentivethe NED Plan are our only active equity plans (aside from out ESPP). The number of shares remaining available for future grant under the 2016 Plan reflects performance share awards at maximum payout.
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Promotion of Good Corporate Governance Practices
The 2016 Plan includes a number of responsible corporate governance provisions. These include, but are not limited to, the following:
| Element | Description | |||||||
| No Evergreen Feature; No Liberal Share Recycling | There is no evergreen feature pursuant to which the shares authorized for issuance under the 2016 Plan can be automatically replenished without shareholder approval. Shares used to pay the exercise price or withholding taxes related to an outstanding award and unissued shares resulting from the net settlement of awards do not become available for issuance as future awards under the 2016 Plan. | |||||||
| Repricing Prohibited | The 2016 Plan prohibits any repricing, exchange or buyout of underwater stock options without shareholder approval. | |||||||
| Reloading Prohibited | Reload grants, or the automatic granting of additional stock options upon delivery of shares to satisfy the exercise price and/or tax withholding obligation under another outstanding stock option, are not permitted. | |||||||
| No Discounted Options or SARs | Stock options and SARs may not be granted with an exercise or grant price lower than the fair market value of the underlying shares on the date of grant. | |||||||
| Minimum Vesting Standards | The 2016 Plan includes minimum vesting standards for awards – no less than a three-year vesting period (in pro rata installments or a single installment, with the initial vesting date not earlier than 12 months after the date of grant) for awards that are not performance based and no shorter than a one-year performance period for performance-based awards. Exceptions to these minimum vesting standards may be made for death, disability, retirement or change in control of the Company and up to 5% of the initial share pool may be granted with less stringent or no vesting conditions. | |||||||
| Per-Participant Limits on Awards | The 2016 Plan limits the size of awards that may be granted during any one year to any one participant. | |||||||
| Performance-Based Awards | The 2016 Plan permits the grant of performance-based stock and cash-incentive awards that are payable only upon the attainment of specified performance goals. | |||||||
| Limitations on Dividends on Performance-Based Awards | The 2016 Plan prohibits the payment of dividends or dividend equivalents on performance-based awards that have not yet met the performance criteria. | |||||||
| No Liberal Definition of Change in Control | The 2016 Plan’s definition of a change in control of the Company provides that any award benefits triggered by such a transaction are contingent upon the actual consummation of the transaction, not merely its approval by our Board or shareholders. | |||||||
| Double Trigger Vesting | Vesting of outstanding awards is not accelerated automatically upon a change in control of the Company unless the awards are not assumed or converted by the acquirer; rather, vesting will accelerate if the employee suffers an involuntary termination of employment in connection with or within 24 months after the change in control. | |||||||
Summary of the 2016 Plan
The following summary describes the most significant features of the 2016 Plan. This summary is not intended to be complete and is qualified in its entirety by reference to the full text of the 2016 Plan, a Changecopy of which is attached as Appendix A to this Proxy Statement.
Eligibility and Participation
The Compensation Committee selects the individuals who will participate in Controlthe 2016 Plan. Eligibility to participate is definedopen to include (i) any Change in Control that would be requiredofficers and employees of, and other individuals who provide bona fide services to be reported in
response to any form or report to the Commission,for, us or any stock exchange on whichof our affiliates. Our non-employee directors may not participate in the Company's shares are listed; (ii)2016 Plan as they participate in the acquisitionAmended and Restated Non-Employee Director Equity Plan. For eligibility purposes, an “affiliate” means any entity, whether previously, now or hereafter existing, that controls, is controlled by, any person (other than
the Company, a subsidiary ofor is under common control with, the Company or any employee benefit plansuccessor to the Company.
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The Compensation Committee may also select as participants prospective officers, employees and service providers who have accepted an offer of employment or another service relationship from us or one of our affiliates. Any awards granted to such a prospect before the individual’s start date may not become vested or exercisable, and no shares may be issued to such individual, before the date the individual first commences performance of services with us.
As of March 25, 2024, all employees of the Company, approximately 6,800 individuals, including six executive officers and approximately 140 other employees, are eligible to be selected as participants in the 2016 Plan.
Shares Available Under the 2016 Plan
The shares of Company Common Stock issuable pursuant to awards under the 2016 Plan are shares authorized for issuance under our charter but unissued, including without limitation shares purchased in the open market or in private transactions.
Initial Share Pool. Under the 2016 Plan, 2,000,000 shares of Company Common Stock were reserved for issuance pursuant to awards to be granted under the 2016 Plan (the “Share Pool”). As discussed above, if the amendment to the 2016 Plan is approved, the Share Pool will be increased to 3,450,000 shares of Company Common Stock.
Adjustments to Share Pool. Following the effective date of the 2016 Plan, the Share Pool was adjusted as follows:
•The Share Pool has been reduced by one share for each share of Company Common Stock made subject to an award granted under the 2016 Plan;
•The Share Pool has been increased by the number of unissued shares of Company Common Stock underlying or used as a reference measure for any award or portion of an award granted under the 2016 Plan or the Prior Plan that is cancelled, forfeited, expired, terminated unearned or settled in cash, in any such case without the issuance of shares; and
•The Share Pool has been increased by the number of shares of Company Common Stock that are forfeited back to us after issuance due to a failure to meet an award contingency or condition with respect to any award or portion of an award granted under the 2016 Plan or the Prior Plan.
•The Share Pool has not been increased, however, by (i) shares of Company Common Stock used as a reference measure for any award that are not issued upon settlement of such award due to a net settlement or (ii) the number of shares of Company Common Stock withheld by or surrendered (either actually or through attestation) to us in payment of the exercise price or any tax withholding obligation that arises in connection with any award granted under the 2016 Plan or the Prior Plan.
In the event of its subsidiaries)a merger, consolidation, stock rights offering, liquidation, statutory share exchange or similar event affecting the Company or a stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of beneficial ownership of securitiescash or other property, share combination or subdivision, or recapitalization or similar event affecting the capital structure of the Company representing 20%that occurs at any time after adoption of the 2016 Plan by the Board (including coincident with or prior to the effective date), our Board will adjust the Share Pool proportionately to reflect the transaction or event. Similar adjustments will be made to the award limitations described below and to the terms of outstanding awards.
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Award Limitations
The following limitations on awards are imposed under the 2016 Plan.
•ISO Award Limit. No more than 2,000,000 shares of Company Common Stock may be issued in connection with awards granted under the 2016 Plan that are intended to qualify as incentive stock options under Section 422 of the Code.
•Code Section 162(m) Individual Limits:
◦Appreciation Awards. The maximum number of shares of Company Common Stock that may be made subject to awards granted under the 2016 Plan during a calendar year to any one person in the form of stock options or SARs is, in the aggregate, 300,000 shares.
◦Stock-Based Performance Awards. The maximum number of shares of Company Common Stock that may be made subject to awards granted under the 2016 Plan during a calendar year to any one person in the form of performance awards is, in the aggregate, 300,000 shares.
◦Cash Settlement of Performance Shares and Other Stock-Based Awards. In connection with awards granted under the 2016 Plan during a calendar year to any one person in the form of performance shares or other stock-based awards, the maximum cash amount payable thereunder is the amount equal to the number of shares made subject to the award, multiplied by the fair market value as determined as of the payment date.
◦Cash-Based Awards. In connection with awards granted under the 2016 Plan during a calendar year to any one person in the form of cash-based performance units or other stock-based or cash awards, the maximum cash amount payable under such awards is $10 million in the aggregate.
◦Adjustments to Limits during Initial Year of Service. Each of the individual limits set forth above (as required by Section 162(m) of the Code) are multiplied by two when applied to awards granted to any individual during the calendar year in which such individual first commences service with us.
◦Adjustments for Multi-year Performance Periods. The individual limits set forth above for stock-based performance awards are multiplied by the number of calendar years over which the applicable performance period spans (in whole or in part), if the performance period is longer than 12 months’ duration.
Minimum Vesting and Performance Periods for Awards. Except as provided below, each award granted under the 2016 Plan is subject to (i) a minimum restriction period of 12 months from the date of grant if vesting of, or lapse of restrictions on, such award is based on the satisfaction of performance goals or (ii) a minimum restriction period of 36 months from the date of grant if vesting of, or lapse of restrictions on, such award is based solely on the participant’s satisfaction of specified service requirements with us or an affiliate, with such restriction period applied in either pro rata installments or a single installment, and with the final vesting or lapse of restrictions occurring no less than 12 months after the date of grant. If the grant of a performance award is conditioned on satisfaction of performance goals, the performance period must not be less than 12 months’ duration, but no additional minimum restriction period need apply to such award. Generally, the administrator does not have discretionary authority to waive the minimum restriction period applicable to an award, except in the case of death, disability, retirement, or a change in control of the Company. The administrator, however, does have discretion to grant awards that do not adhere to these minimum restriction period requirements, or otherwise may waive the requirements, with respect to awards for up to 100,000 shares, in the aggregate, which amount is equal to 5% of the initial Share Pool.
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Treatment of Awards upon Dissolution or Liquidation or a Change in Control
Dissolution or Liquidation. Unless the administrator determines otherwise, all awards outstanding under the 2016 Plan terminate upon the dissolution or liquidation of the Company.
Termination of Awards. If any transaction results in a change in control (as defined in the 2016 Plan) of the Company, outstanding awards under the 2016 Plan terminate when such transaction becomes effective unless provision is made in connection with the transaction by the surviving or successor entity or a parent of such entity for outstanding awards to be continued or assumed or for equivalent awards to be substituted. In the event outstanding awards terminate in this manner, then except as otherwise provided in the applicable award agreement:
•The outstanding awards of stock options and SARs that terminate upon the effective time of the change in control transaction will, immediately before the effective time of the change in control, become fully exercisable, and the holders of such awards will be permitted to exercise the awards immediately prior to the change in control;
•The outstanding shares of restricted stock, the vesting on which depends, as of immediately prior to the effective time of the change in control, solely on the satisfaction of a service obligation by the participant to the Company and are not then subject to performance goals will, immediately before the effective time of the change in control, become fully vested, free of all transfer and lapse restrictions and free of all risks of forfeiture;
•The outstanding shares of restricted stock the vesting or restrictions on which are as of immediately prior to the change in control, subject to and pending achievement of performance goals will, immediately before the effective time of the change in control become vested, free of transfer and lapse restrictions and risks of forfeiture in such amounts as would be determined under the applicable award agreement as though the applicable performance goals for the unexpired performance period are deemed to have been achieved at the target level set forth in the applicable award agreement;
•The outstanding restricted stock units, performance shares, performance units and other stock-based or cash awards, the vesting, earning or settlement of which depends, as of immediately before the effective time of the change in control, solely on the satisfaction of a service obligation by the participant to the Company and which is not subject to or pending achievement of performance goals will, immediately before the effective time of the change in control, become fully earned and vested and will be settled in cash or shares of Company Common Stock (consistent with the terms of the applicable award agreement after taking into account the effect of the change in control transaction on the shares) within 30 days following such change in control, subject to any applicable limitations imposed thereon by Section 409A of the Code; and
•The outstanding restricted stock units, performance shares and performance units and other stock-based or cash awards, the vesting, earning or settlement of which is, as of immediately before the effective time of the change in control, then subject to and pending achievement of performance goals will, immediately before the effective time of the change in control, become vested and earned in such amounts as would be determined under the applicable award agreement as though the applicable performance goals for the unexpired performance period are deemed to have been achieved at the target level set forth in the applicable award agreement, and shall be settled in cash or shares of Company Common Stock (consistent with the terms of the award agreement after taking into account the effect of the change in control transaction on the shares) within 30 days following such change in control, subject to any applicable limitations imposed thereon by Section 409A of the Code.
Implementation of these vesting acceleration provisions is conditioned upon consummation of the change in control, not merely the approval of the transaction by our Board or shareholders.
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Continuation, Assumption or Substitution of Awards. Unless otherwise provided in the applicable award agreement, if a change in control of the Company occurs via a transaction under which provision is made in connection with the transaction by the surviving or successor entity or a parent of such entity for outstanding awards to be continued or assumed or for equivalent awards to be substituted, then such awards will continue and will not accelerate unless double-trigger protections provided to participants holding outstanding awards are triggered. This means that if, coincident with the change in control or during the 24-month period following the change in control, a participant’s service with the surviving or successor entity is terminated involuntarily by the participant’s employer (other than for cause, as defined in the 2016 Plan, disability or death), the following accelerated vesting and payment rules will apply to the participant’s outstanding awards:
•Stock options and SARs will become fully exercisable and vested;
•Shares of restricted stock will become free of all restrictions and become fully vested and transferable;
•All restricted stock units, performance shares, performance units and other stock-based or cash awards will be considered to be vested, earned and payable at target level, any deferral or other restriction thereon will lapse, any restriction period thereon will terminate, and such restricted stock units, performance shares, performance units and other stock-based or cash awards will be settled in cash or shares of Company Common Stock (consistent with the terms of the award agreement after taking into account the effect of the change-in-control transaction on the shares) within 30 days following such termination of service (except to the extent that settlement of such awards or Substitute Awards (as defined below) must be made pursuant to their original schedule in order to comply with Section 409A of the Code); and
•The administrator may also make additional adjustments and/or settlements of outstanding awards as it deems appropriate and consistent with the 2016 Plan’s purposes.
Under the terms of the 2016 Plan, a change in control is generally defined as (i) any acquisition by a person or entity of more than 50% of the total fair market value or the combined voting power of the Company’s then outstanding shares through a tender or exchange offer, merger or other business combination; (ii) any acquisition by a person or entity of more than 40% of the combined voting power of the Company;Company’s then outstanding shares through a tender or exchange offer, merger or other business combination (or an acquisition over the 12 month period ending on the date of the most recent acquisition by such person or persons); (iii) any acquisition (in a change insingle transaction or series of transactions within a 12-month period) by a person or entity of assets from the BoardCompany that have a total gross fair market value equal to or more than 80% of Directorsthe total gross fair market value of all the assets of the Company if, as a resultimmediately before such acquisition or acquisitions; or (iv) the replacement of such
change, the persons who were the members of the Board of Directors two years
prior to such change cease to constitute at least a majority of the Board members during any 12-month period whose appointment or election is not endorsed by two-thirds of the Company’s Board of Directors. Persons who were elected by or onbefore the recommendation or
approval of at least three-quartersdate of the membersappointment.
Types of Awards
The 2016 Plan enables the Boardgrant of Directors who
werestock options, SARs, stock awards, stock unit awards, performance shares, cash-based performance units and other stock- and cash-based awards, each of which may be granted separately or in officetandem with other awards.
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Stock Options and SARs. Stock options represent a right to purchase a specified number of shares of Company Common Stock from us at a specified price during a specified period of time. Stock options may be granted in the beginningform of such periodincentive stock options, which are deemedintended to have been in office
during such two year periodqualify for purposes offavorable treatment for the recipient under U.S. federal tax law, or as nonqualified stock options, which do not qualify for this provision. A Change in Control
is also deemed to occur if a majority of the members of the Committee in office
prior to the happening of any event determines in its sole discretion that as a
result of such event there has been a Change in Control. A Potential Change in
Control is deemed to occur upon (i) the approval by shareholders of any
agreement which, if consummated, would result in a Change in Control, or (ii)
the acquisition by any person (other than the Company, a subsidiaryfavorable tax treatment. Only employees of the Company or any employee benefit planits subsidiaries may receive tax-qualified incentive stock options. The administrator may establish sub-plans under the 2016 Plan through which to grant stock options that qualify for preferred tax treatment for recipients in jurisdictions outside the United States. SARs represent the right to receive an amount in cash, shares of the Company or any of its subsidiaries)
of beneficial ownership of securities of the Company representing five percent
or more of the combined voting power of the Company's securities and the
adoption by the Committee of a resolution to the effect that a Potential Change
in Control of the Company has occurred. The Change in Control Price is defined
as the highest price per share paid for the Common Stock in any transaction
reported on The Nasdaq Stock Market or any other exchange or market that is the
principal trading market for the Common Stock or any other
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bona fide transaction related to such Change in Control or Potential Change in
Control at any time during the 60 day period priorboth equal to the Change in Control or
Potential Change in Control. Infair market value of the caseshares subject to the award on the date of incentiveexercise minus the exercise price of the award. All stock options and SARs must have a term of no longer than ten years’ duration. Stock options and SARs must have an exercise price equal to or above the fair market value of shares of Company Common Stock on the date of grant except as provided under applicable law or with respect to stock appreciation rights related thereto,options and SARs that are granted in substitution of similar types of awards of a company acquired by us or an affiliate or with which we or our affiliate combine (whether in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, or otherwise) to preserve the Change in Control Price is determined
based solely on transactions reportedintrinsic value of such awards. As of April 3, 2024, the closing price of Company Common Stock for the dateregular market session, as reported by Nasdaq, was $27.81.
Prohibition on which the cash-outReload Options. Reload grants, or the automatic granting of additional stock options upon delivery of shares to satisfy the exercise price and/or tax withholding obligation under another outstanding stock option, are not permitted under the 2016 Plan.
Prohibition on Repricing. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of stock options and SARs granted under the 2016 Plan may not be amended, after the date of grant, to reduce the exercise price of such stock options or SARs, nor may outstanding stock options or SARs be canceled in exchange for (i) cash, (ii) stock options or SARs with an exercise price that is less than the exercise price of the original outstanding stock appreciation right occurs.
See also Proposal 3, "Approvaloptions or SARs, or (iii) other awards, unless such action is approved by our shareholders.
Restricted Stock. Awards of restricted stock are actual shares of Company Common Stock that are issued to a participant, but that are subject to forfeiture if the participant does not remain employed by us for a certain period of time and/or if certain performance goals are not met. Except for these restrictions and Adoptionany others imposed by the administrator, the participant will generally have all of the Forward Air Corporation 1999
Stock Option and Incentive Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Committee was comprisedrights of two non-employee directors, Messrs.
Cronin and Gray, and Mr. Niswonger. There were no Compensation Committee
interlocks. See "Transactions with Directors, Executive Officers and Others."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's general compensation policies on executive officer compensation
are administered by the Committee; however, the Committee submits its
determinations to the full Board for its comments and concurrence. A majority of
members of the Committee were non-employee directors during 1998. It is the
responsibility of the Committee to determine whether the executive compensation
policies are reasonable and appropriate to meet their stated objectives and
effectively serve the best interests of the Company and its shareholders.
The three components of executive officer compensation are base salary, annual
bonus incentive awards and stock option grants, except for the Chief Executive
Officer whose compensation includes only base salary and annual bonus incentive
awards. In addition to the Committee's determinations on base salary and bonus
incentive awards, the Committee acting solely through its non-employee directors
administers the Company's Restated Employee Stock Purchase Plan and Stock Option
and Incentive Plan and determines the options to be granted to executive
officers.
The Company believes that its executive compensation policy should be reviewed
annually and should be reviewed in light of the Company's financial performance,
its annual budget, its position within its industry sector and the compensation
policies of similar companies in its business sector. The Committee believes
that in addition to corporate performance, it is appropriate to consider, in
setting and reviewing executive compensation, the level of experience and the
responsibilities of each executive as well as the personal contributions a particular individual may make to the success of the corporate enterprise. Such
qualitative factors are taken into account in considering levels of
compensation. No relative weight is assigned to these qualitative factors, which
are applied subjectively by the Committee.
The Company has an employee cash incentive plan (the "Cash Incentive Plan"),
which provides for annual cash incentive payments to employees based on the
Company's results of operations. The goals of the Cash Incentive Plan are
established based on operating plans for the year, and amounts payable under the
Cash Incentive Plan are determined based on the results of the Company's
operations. The amount of the cash incentives paid under the Cash Incentive Plan
are determined annually by the Board.
In order to be able to increase the equity incentives available to executive
officers and other key employees, and to continue to be able to offer new
options, the Committee recommended, in February 1995, that the Board increase
the number of authorized shares issuable under the Stock Option and Incentive
Plan from 1,200,000 shares to 2,000,000 shares of Common Stock, and this
increase was approved by shareholders at the 1995
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Annual Meeting of Shareholders. No stock options were granted in 1995. In 1996
and 1997, 570,000 and 222,000 stock options were granted, respectively. As a
result of the spin-off of Landair Corporation in 1998, outstanding options
awarded in prior years were adjusted pursuant to a formula designed to preserve
fair market value. In addition to the 150,000 additional options outstanding
after adjustment for the spin-off, the Committee granted 20,000 options in 1998.
In July 1995, the Company adopted the Restated Employee Stock Purchase Plan,
which received shareholder approval at the 1996 Annual Meeting of Shareholders.
All executive officers, other than the Chief Executive Officer, are entitled to
participate in the Restated Employee Stock Purchase Plan.
The Committee's philosophy with respect to the compensationrestricted stock, including the right to vote the restricted stock, but will not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of restricted stock before the risk of forfeiture lapses. Dividends declared payable on shares of restricted stock that are granted subject to risk of forfeiture conditioned solely on continued service over a period of time will be paid either at the dividend payment date or deferred for payment to such later date as determined by the administrator, and may be paid in cash or as unrestricted shares of Company Common Stock or may be reinvested in additional shares of restricted stock. Dividends declared payable on shares of restricted stock that are granted subject to risk of forfeiture conditioned on satisfaction of performance goals will be held by us and made subject to forfeiture at least until the applicable performance goal related to such shares of restricted stock has been satisfied.
Restricted Stock Units. An award of restricted stock units represents a contractual obligation of the Company's
Chief Executive Officer is essentiallyCompany to deliver a number of shares of Company Common Stock, an amount in cash equal to the same as its philosophyfair market value of the specified number of shares subject to the award, or a combination of shares and cash. Until shares of Company Common Stock are issued to the participant in settlement of stock units, the participant will not have any rights of a shareholder of the Company with respect to other executive officers. Because the Chief Executive Officer owns
approximately 49%stock units or the shares issuable pursuant to the stock units. Vesting of restricted stock units may be made subject to performance goals, the continued service of the Common Stock, however, his personal net worth is more
closelyparticipant or both. The administrator may provide that dividend equivalents will be paid or credited with respect to restricted stock units, but such dividend equivalents will be held by us and made subject to forfeiture at least until any applicable performance goal related to the restricted stock units has been satisfied.
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Performance Shares and Performance Units. An award of performance shares, as that term is used in the 2016 Plan, refers to shares of Company Common Stock or stock units that are expressed in terms of Company Common Stock, the issuance, vesting, lapse of restrictions or payment of which is contingent on performance as measured against predetermined objectives over a specified performance period. An award of performance units, as that term is used in the 2016 Plan, refers to dollar-denominated units valued by reference to designated criteria established by the administrator, other than Company Common Stock, whose issuance, vesting, lapse of restrictions or payment is contingent on performance as measured against predetermined objectives over a specified performance period. Performance units also may include cash incentive awards granted in connection with the Company’s annual incentive program. The applicable award agreement will specify whether performance shares and performance units will be settled or paid in cash or shares of Company Common Stock or a combination of both, or will reserve to the administrator or the participant the right to make that determination prior to or at the payment or settlement date.
The administrator will, prior to or at the time of grant, condition the grant, vesting or payment of, or lapse of restrictions on, an award of performance shares or performance units upon (A) the attainment of performance goals during a performance period or (B) the attainment of performance goals and the continued service of the Common Stock than other executive
officers.participant. The Committee has not awarded stock options to the Chief Executive
Officer.
Section 162(m)length of the Internal Revenue Codeperformance period, the performance goals to be achieved during the performance period, and the measure of 1986, as amendedwhether and any
successor thereto (the "Code"), was enacted as partto what degree such performance goals have been attained will be conclusively determined by the administrator in the exercise of its absolute discretion. Performance goals may include minimum, maximum and target levels of performance, with the size of the 1993 Omnibus Budget
Reconciliation Actaward or payout of performance shares or performance units or the vesting or lapse of restrictions with respect thereto based on the level attained. An award of performance shares or performance units will be settled as and generally disallowswhen the award vests or at a corporate deduction for
compensation over $1,000,000 paid tolater time specified in the Company's Chief Executive Officeraward agreement or any otherin accordance with an election of the four most highly compensated officers.participant, if the administrator so permits, that meets the requirements of Section 409A of the Code.
Other Stock-Based or Cash Awards. The Committee continuesadministrator may from time to analyzetime grant to eligible individuals awards in the potential impactform of this limitation. Underother stock-based or cash awards on such terms and conditions as the regulations and
the transition rules, executive compensation pursuant to the Stock Option and
Incentive Plan and the 1999 Stock Option and Incentive Plan, if approved by the
shareholders, is expected to qualify as "performance based" compensation and
therefore be excluded from the $1,000,000 limit. Other forms of compensation
providedadministrator may determine, including, without limitation, cash awards in connection with any short-term or long-term cash incentive program established by the Company however, are not excluded fromor an affiliate. Other stock-based or cash awards in the limit. The Committeeform of dividend equivalents may be (A) awarded on a free-standing basis or in connection with another award other than a stock option or SAR, (B) paid currently anticipates that substantially all compensationor credited to an account for the participant, including the reinvestment of such credited amounts in common stock equivalents, to be paid on a deferred basis, and (C) settled in future
yearscash or Company Common Stock as determined by the administrator; provided, however, that dividend equivalents payable on other stock-based or cash awards that are granted as a performance award, rather than be paid on a current basis, will be deductible under Section 162(m) becauseaccrued and made subject to forfeiture at least until achievement of the spread between
present levelsapplicable performance goal related to such other stock-based or cash awards. Any such settlements, and any such crediting of executive officer compensationdividend equivalents, may be subject to such conditions, restrictions and contingencies as the limitadministrator may establish.
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Adjustments to Awards for Corporate Transactions and Other Events
Mandatory Adjustments. In the event of a merger, consolidation, stock rights offering, liquidation, statutory share exchange or similar event affecting us (any of such events being a “Corporate Event”) or a stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of cash or other property, share combination or subdivision, or recapitalization or similar event affecting the capital structure of the Company, in either case which occurs at any time after adoption of the 2016 Plan by the Board (including coincident with or prior to the effective date), the administrator will make such equitable and appropriate substitutions or proportionate adjustments to:
•the aggregate number and kind of shares of Company Common Stock or other securities on which awards under the regulation. In any event, the Committee believes that performance based
compensation is desirable and can2016 Plan may be structured in a mannergranted to qualify as
performance based compensation under Section 162(m).
James A. Cronin, III
Robert Keith Gray
Scott M. Niswonger
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STOCK PERFORMANCE GRAPH
The following graph compares eligible individuals;
•the percentage change in the Company's cumulative
shareholder return on its Common Stock with the Nasdaq Trucking and
Transportation Stocks Index and The Nasdaq Stock Market Index commencing
December 26, 1993 and ending December 31, 1998. The graph assumes a base
investment of $100 made on December 25, 1993 and the respective returns assume
reinvestment of all dividends, including the Company's distribution to
shareholders of Landair Corporation common stock effected on September 23, 1998.
For the purposes of this graph, the Landair Corporation common stock
distribution is treated as a nontaxable cash dividend that would have been
converted to additional Common Stock at the close of business on September 23,
1998. The comparisons in this graph are required by the Commission and,
therefore, are not intended to forecast or be necessarily indicative of any
future return on the Common Stock.
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PROPOSAL 2 - AMENDMENT TO THE COMPANY'S CHARTER
The Board of Directors has unanimously adopted and recommends that shareholders
consider and approve an amendment to Article 7 of the Company's Restated Charter
which would increase the number of authorized shares of Common Stock from
20,000,000 to 50,000,000.
If the amendment described above is approved by the shareholders and filed by
the Company with the Tennessee Secretary of State, the first paragraph of
Article 7 of the Restated Charter would be replaced in its entirety by the
following:
The maximum number of shares of capital stockCompany Common Stock or other securities with respect to which awards may be granted during any one calendar year to any individual;
•the Corporation
shall have the authority to issue is fifty-five million (55,000,000)maximum number of shares of which fifty million (50,000,000) shares are designatedCompany Common Stock with a par value of one cent ($0.01) per share, and five
million (5,000,000) shares are designated Preferred Stock with a par
value of one cent ($0.01) per share.
As of March 31, 1999, of the currently authorized shares of Common Stock,
12,678,450 were outstanding. The proposed amendment would not increase the
number of authorized preferred stock, which would remain at 5,000,000.
Although currently authorized shares are sufficient to meet all known needs, the
Board considers it desirable that it have the flexibility to authorize and issue
an additional amount of Common Stock without further shareholder action, unless
required by law. This will enhance the Company's flexibility in connection with
possible stock splits, stock dividends, acquisitions, financings andor other
corporate purposes, should the Board deem such actions to be in the best
interests of the Company and its shareholders.
Each share of Common Stock currently has one vote, shares equally on liquidation
and does not have preemptive rights to subscribe to additional securities that may be issued by the Company. No change in these attributes is proposed.
The complete text of the amendment is set forth above. Except as set forth
above, the relative rights of the holders of the Common Stock under the Charter
would remain unchanged. If approved, the amendment will become effective upon
filing with the Tennessee Secretary of State, which is expectedrespect to be
accomplished as promptly as possible after the Annual Meeting.
The amendment will be approved if the votes cast in favor of the amendment
exceed the votes cast against it. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 3 - APPROVAL AND ADOPTION OF THE FORWARD AIR CORPORATION 1999
STOCK OPTION AND INCENTIVE PLAN
The Board of Directors and management of the Company believe it is important to
grantincentive stock options on an annual basis to the management employees and also to
grant options to newly hired employees. The Company believes that its
competitive advantage will be determined, in part, by the knowledge, experience
and commitment of its management employees. The Company's ability to grant
options to purchase Common Stock is an essential element to assure that existing
management employees remain committed to the Company as well as to assure that
the Company can recruit additional management employees.
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Accordingly, on February 5, 1999, the Board of Directors of the Company adopted
a resolution, subject to shareholder approval at the 1999 Annual Meeting, to
approve and adopt the Forward Air Corporation 1999 Stock Option and Incentive
Plan (the "1999 Stock Plan"). If the 1999 Stock Plan is approved, there will be
1,000,000 shares available for issuance under the Plan.
In the following pages we have summarized the principal features of the 1999
Stock Plan. For a copy of the Plan, please write to the Secretary at the address
on the cover of this Proxy Statement. The 1999 Stock Plan can also be accessed
as an exhibit to the Company's Form 10-Q for the period ended March 31, 1999 on
the Commission's website at www.sec.gov.
The 1999 Stock Plan will be approved and adopted if the votes cast in favor of
the 1999 Stock Plan exceed the votes cast against it. Unless contrary
instructions are received, shares of Common Stock represented by duly executed
proxies will be voted in favor of the approval and adoption of the 1999 Stock
Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
SUMMARY OF MATERIAL PROVISIONS OF THE 1999 STOCK PLAN
Under the 1999 Stock Plan, officers and other key employees as well as key
consultants will be eligible to receive awards of stock options, stock
appreciation rights and restricted stock. Options granted under the 1999 Stock
Plan may be "incentive stock options" ("ISOs"), within the meaning of Section
422 of the Code, or nonqualified stock options ("NQSOs"). Stock Appreciation
Rights ("SARs") may be granted simultaneously with the grant of an option or (in
the case of NQSOs) at any time during its term. Restricted stock may be granted
in addition to or in lieu of any other award granted under the 1999 Stock Plan.
The 1999 Stock Plan, as approved by the Board on February 5, 1999, provides that
awards may be granted covering up to 500,000 shares of Common Stock (subject to
antidilution and similar adjustments in the event of a stock split, combination
of shares, recapitalization, or similar changes). As a result of the two-for-one
stock split of the Common Stock on March 19, 1999, awards may currently be
granted under the 1999 Stock Plan covering up to 1,000,000 shares of Common
Stock. The 1999 Stock Plan limits 2016 Plan;
•the number of shares with respectof Company Common Stock or other securities covered by each outstanding award and the exercise price, base price or other price per share, if any, and other relevant terms of each outstanding award; and
•all other numerical limitations relating to awards, whether contained in the 2016 Plan or in award agreements.
Discretionary Adjustments. In addition to the adjustments specified above, in the case of Corporate Events, the administrator may make such other adjustments to outstanding awards as it determines to be appropriate and desirable, which adjustments may include, without limitation, (i) the cancellation of outstanding awards in exchange for payments of cash, securities or other property or a combination thereof having an aggregate value equal to the value of such awards, (ii) the substitution of securities or other property (including, options, SARswithout limitation, cash or other securities of the Company and restricted stock)securities of entities other than the Company) for the shares of Company Common Stock subject to outstanding awards, and (iii) the substitution of equivalent awards, as determined in the sole discretion of the administrator, of the surviving or successor entity or a parent thereof (“Substitute Awards”). The administrator may, in its discretion, adjust the performance goals applicable to any awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations and the cumulative effects of accounting or tax changes.
Amendment and Termination
Our Board or Compensation Committee may terminate, amend or modify the 2016 Plan or any portion of it at any time, subject to such restrictions on amendments and modifications as may apply under applicable laws or listing rules. No such amendment may be grantedmade without the approval of our shareholders, however, to any
individualthe extent such amendment would (i) materially increase the benefits accruing to no more than 100,000participants under the 2016 Plan, (ii) materially increase the number of shares of Company Common Stock which may be issued under the 2016 Plan or to a participant, (iii) materially expand the eligibility for participation in any year. Unless the 1999 Stock2016 Plan, (iv) eliminate or modify the prohibition on repricing of stock options and SARs, (v) lengthen the maximum term or lower the minimum exercise price or base price permitted for stock options and SARs, or (vi) modify the prohibition on the issuance of reload or replenishment options.
The 2016 Plan is terminated earlier byscheduled to expire on February 8, 2026.
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Administration
The Compensation Committee of our Board is the Company'sadministrator of the 2016 Plan. At any time the Board may serve as the administrator in lieu of Directors, awards may be
granted for a period of ten years from February 5, 1999.
The 1999 Stock Plan will be administered by a committee, which will be comprised
solely of "non-employee directors" withinor in addition to the meaning of Rule 16b-3Compensation Committee. Except as provided otherwise under the Exchange Act (any entity administering2016 Plan, the 1999 Stock Plan is hereinafter
referredadministrator has plenary authority to asgrant awards pursuant to the "Committee"). All membersterms of the Committee are "outside
directors" within the meaning of Section 162(m) of the Code. Subject2016 Plan to the
provisions of the 1999 Stock Plan, the Committee willeligible individuals, determine the typetypes of award, when and to whom awards will be granted, and the number of shares covered by the awards, establish the terms and conditions for awards and take all other actions necessary or desirable to carry out the purpose and intent of the 2016 Plan.
With respect to any award to which Section 16 of the Exchange Act applies, the administrator shall consist of either our Board or the Compensation Committee, which committee shall consist of two or more directors, each award. The Committeeof whom is intended to be a “non employee director” as defined in Rule 16b-3 of the Exchange Act and an “independent director” to the extent required by Nasdaq.
Compliance with Listing Rules
While shares are listed for trading on any stock exchange or market, our Board and the administrator agree that they will have sole discretionary authoritynot make any amendments, issue any awards or take any action under the 2016 Plan unless such action complies with the relevant listing rules.
Provisions Applicable to interpretAll Awards
Award Documents. Each award is evidenced by an award document that specifies the 1999 Stock Plan and to adopt rules and regulations related thereto. In
determiningaward terms, including the persons to whom awards shall be granted andtype of the award, the exercise price or grant price, if any, the number of shares covered by eachsubject to the award, the Committee will take into account the contribution to
the management, growth and profitabilityduration of the business of the Company by the
respective personsaward and such other factorsprovisions as the Compensation Committee deems relevant.determines. The Committee will determine, in its sole discretion, the purchase priceaward document for a cash award may consist of a resolution of the sharesadministrator that memorializes the terms and conditions of stock covered by an option andsuch award which are thereafter communicated to the kindparticipant.
Termination of consideration payableEmployment/Other Relationship. Within the discretion of the Compensation Committee, each award document sets forth the extent to which the participant will have any rights with respect to any awards;the award following termination of the participant’s employment or other service relationship with the Company; provided however, that, such terms need not be uniform among all awards and may reflect distinctions based on the reasons for termination.
Nontransferability of Awards. Except as otherwise provided in the case of the ISOs, the
price must notapplicable award document for awards other than incentive stock options, no award may be less than the Fair Market Value (as defined in the 1999 Stock
Plan) on the date of grant, and provided further that the option price must be
110% of the Fair Market Value in the case of the ISOs granted to "Ten Percent
Stockholders" (as defined in the 1999 Stock Plan). The Committee may provide for
the payment of the option price in cash, by delivery of shares of Common Stock
having a Fair Market Value equal to such option price, by a combination thereof
or by any other method in accordance with the terms of the
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option agreements. The 1999 Stock Plan contains special rules governing the time
of exercise in the case of death, disability, or other termination of employment
and also provides for acceleration of the exercisability of options in the event
of a Change in Control (as defined in the 1999 Stock Plan).
Awards granted under the 1999 Stock Plan become immediately exercisablesold, transferred, pledged, assigned, or otherwise nonforfeitable in full in the event of a Change in Control of the
Company, notwithstanding specific terms of the awards providing otherwise.
Furthermore, with respect to stock options granted under the 1999 Stock Plan,
following a Change in Control, the Compensation Committee may, in its
discretion, permit the cancellation of such options in exchange for a cash
payment in an amount per share equal, generally, to the difference between the
highest Fair Market Value per share of Common Stock during the 60 day period
preceding the Change in Control and the exercise price. A Change in Control is
defined in the 1999 Stock Plan to include, amongalienated or hypothecated, other things, (i) the
acquisition of securities representing a majority of the combined voting power
of all classes of capital stock by any person (other than the Company and other
related entities); (ii) the approval by the shareholders of a merger or
consolidation of the Company into or with another entity (with certain
exceptions), the sale or other disposition of all or substantially all of the
Company's assets, or the adoption of a plan of liquidation; or (iii) a change in
the composition of the Board of Directors in any two-year period such that
individuals who were Board members at the beginning of such period cease to
constitute a majority thereof (with certain exceptions).
The 1999 Stock Plan also permits the Committee to grant SARs with respect to all
or any portion of the shares of Common Stock covered by options. Each SAR will
confer a right to receive an amount with respect to each share subject thereto,
upon exercise thereof, equal to the excess of (i) the Fair Market Value of one
share of Common Stock on the date of exercise over (ii) the grant price of the
SAR. The grant price of any SAR granted in tandem with an option will be equal
to the exercise price of the underlying option, and the grant price of any other
SAR will be such price as the Committee determines. The Committee may, in its
sole discretion, condition the exercise of any SAR upon the attainment of
specified Performance Goals (as defined below).
The 1999 Stock Plan also provides for the grant of restricted stock awards,
which are awards of Common Stock that may not be transferred or otherwise
disposed of, except by will, orby the laws of descent and distribution for such
periodor, with the prior written consent of the Administrator, by a participant to a “family member” of the participant as a gift. Under the Committee determines (the "Restricted Period"2016 Plan, “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse (but expressly excluding ex-spouse), sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the participant’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the participant) control the management of assets, and any other entity in which these persons (or the participant) own more than fifty percent (50%) of the voting interests. The 2016 Plan does not permit the transfer of an award pursuant to a domestic relations order in settlement of marital property rights.
Restrictions on Share Transferability. The Compensation Committee may also impose such other conditions and restrictions on theany shares acquired pursuant to an award as it deems
appropriate,may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the satisfactionrequirements of oneany stock exchange or moremarket upon which such shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such shares.
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U.S. Federal Income Tax Consequences
The following discussion is intended only as a general summary of the following
performance criteria: (i) pre-taxmaterial U.S. federal income or after-tax income; (ii) operating
cash flow; (iii) operating profit; (iv) return on equity, assets, capital or
investment; (v) earnings or book value per share; (vi) sales or revenue; (vii)
operating expenses; (viii) Common Stock price appreciation; and (ix)
implementation or completiontax consequences of critical projects or processes (the "Performance
Goals"). The Performance Goals may include a threshold level of performance
below which no payment will be made (or no vesting will occur), levels of
performance at which specified payments will be made (or specified vesting will
occur), and a maximum level of performance above which no additional payment
will be made (or at which full vesting will occur). Eachawards issued under the 2016 Plan, based upon the provisions of the Performance
Goals will be determined, to the extent applicable, in accordance with generally
accepted accounting principles and will be the subject to certification by the
Committee; provided, that the Committee will have the authority to make
equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company. The Committee may provide that such
restrictions will lapse with respect to specified percentagesCode as of the awarded
shares on successive future dates.
Duringdate of this Proxy Statement, for the Restricted Period, the grantee will be entitled to receive dividends
with respect to, andpurposes of shareholders considering how to vote on this proposal. It is not intended as tax guidance to participants in the shares awarded to him2016 Plan. This summary does not take into account certain circumstances that may change the income tax treatment of awards for individual participants, and it does not describe the state income tax consequences of any award or her. If, during the Restricted Period, the grantee's continuous employment with the Company
terminates for any reason, any shares remaining subject to restrictions will be
forfeited, unless otherwise determined by the Committee. The Committee has the
authority to cancel any or all outstanding restrictions prior to the endtaxation of awards in jurisdictions outside of the Restricted Period, including cancellationU.S. As a result of restrictions in connection with
certain typesthe Tax Cuts and Jobs Act of termination of employment.
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The Company's Board of Directors may at any time and from time to time suspend,
amend, modify or terminate the 1999 Stock Plan; provided, however, that no
amendment that requires shareholder approval in order2017 (the “Act”), for the 1999 Stock Plan to
continue to comply withtax years beginning after December 31, 2017, Section 162(m) of the Code or any other applicable law
will be effective unless and until such amendment has received the requisite
approval by the Company's shareholders.
OPTIONS GRANTED UNDER THE 1999 STOCK PLAN
Because awards under the 1999 Stock Plan are at the discretion of the Committee,
the benefits that will be awarded thereunder are not currently determinable. The
following table shows aslimits to each of the Named Executive Officers who have been
granted options under the 1999 Stock Plan, as to all executive officers of the
Company as a group and as to all other employees as a group, the aggregate
number of shares of Common Stock subject to options granted under the 1999 Stock
Plan and the exercise price per share. All options have been granted subject to
approval of the 1999 Stock Plan by shareholders. As of March 31, 1999, the
market value of a share of Common Stock based on the closing price of the Common
Stock on The Nasdaq Stock Market was $13.13.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain U.S. federal income tax aspects of
options awarded under the 1999 Stock Plan based upon$1,000,000 the federal income tax lawsdeduction we can receive for annual individual compensation paid to certain current and former executive officers, subject to a transition rule for written binding contracts in effect on November 2, 2017, and not materially modified after that date. Prior to the date hereof. This summary is not intendedAct, Section 162(m)’s deduction limit included an exception for “performance-based” compensation that permitted qualifying compensation to be exhaustivedeductible even if it exceeded the $1,000,000 limit.exactperformance-based compensation exception is no longer available, the Company will no longer request shareholder approval for this purpose as there is no tax benefit from doing so. The Company will continue to seek shareholder approval of certain compensation plans as may be required by applicable law or regulation.
Stock Options and SARs. The grant of a stock option or SAR generally has no income tax consequences to any grantee will depend upon hisfor a participant or her particular
circumstances and other facts. The plan participants must consult their tax
advisors with respect to
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any state, local and foreign tax considerations or particular federal tax
implications of options granted under the 1999 Stock Plan.
Incentive Stock Options. Neither the grant norCompany. Likewise, the exercise of an ISO willincentive stock option generally does not have income tax consequences for a participant or the Company, except that it may result in taxablean item of adjustment for alternative minimum tax purposes for the participant. A participant usually recognizes ordinary income to the employee. The tax treatment on sales of shares
of Common Stock acquired upon exercise of an ISO depends on whether the holding
period requirement is satisfied. The holding period is met if the disposition of
the employee occurs (i) at least two years after the date of grant of the
option; (ii) at least one year after the date the shares were transferred to the
employee; and (iii) while the employee remains employed by the Company or not
more than three months after his or her termination of employment (or not more
than one year in the cast of a disabled employee). If the holding period
requirement is satisfied, the excess of the amount realized upon sale of the
shares of Common Stock acquired upon the exercise of the ISO over the price paid
for these shares will be treated as a long-term capital gain. If the employee
disposes of the Common Stock acquired upon the exercise of the ISO before the
holding period requirement is met (a "disqualifying disposition"), the excess ofnonqualified stock option or SAR equal to the fair market value of the shares on the date of exercise or if less, the
fair market value on the date of disposition, overcash payable (without regard to income or employment tax withholding) minus the exercise price, will be
taxable as ordinary compensation income to the employee at the time of
disposition, and the Company willif applicable. We should generally be entitled to a corresponding deduction. The
balance of the gain, if any, will be a capital gain for the employee. Any
capital gain recognized by the employee will be a long-term capital gain if the
employee's holding period for the shares of Common Stock at the time of
disposition is more than one year.
Although the exercise of an ISO will not result in taxable income to the
employee, the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price will be included in the employee's "alternative
minimum taxable income" under the Code.
Nonqualified Stock Options. There will be no federal income tax consequences to
the Company or to the grantee upon the grant of a NQSO under the 1999 Stock
Plan. However, upon the exercise of a NQSO under the 1999 Stock Plan, the
grantee will recognize ordinary compensation incomededuction for federal income tax purposes in an amount equal to the excessamount of ordinary income recognized by the participant as a result of the fair market valueexercise of a nonqualified stock option or SAR.
If a participant holds the shares acquired under an incentive stock option for the time specified in the Code (at least two years measured from the grant date and one year measured from the exercise date), any gain or loss arising from a subsequent disposition of the shares of Common Stock purchased over the exercise price. The Company will generally be entitled to a tax deduction at such time and in the same amount that the
employee recognizes ordinary income.taxed as long-term capital gain or loss. If the shares are disposed of Common Stock so acquired
are later sold or exchanged,before the difference betweenholding period is satisfied, the amount realized from
such sale or exchange and the fair market value of such stock on the date of
exercise of the option is generally taxable as long-term or short-term capital
gain or loss depending upon whether the shares of Common Stock have been held
for more than one year after such date.
Exercise with Shares. A grantee who pays the exercise price upon exercise of an
ISO or NQSO, in whole or in part, by delivering shares of Common Stock already
owned by him or herparticipant will recognize no gain or loss for federal income tax
purposes to the extent of the fair market value of the shares surrendered, but
with respect to shares received in excess of such exercise price, a grantee will
recognize ordinary compensation income equal to the fair market valuelesser of such
shares. Shares of Common Stock acquired(1) the amount realized upon exercise that are equal in number
to the shares surrendered will have a tax basis equal to the tax basis of the
shares surrendered,disposition and (except as noted below with respect to disqualifying
dispositions) the holding period of such shares will include the holding period
of shares surrendered. In the case of a NQSO, the basis of additional shares
received upon exercise of the NQSO will be equal to(2) the fair market value of such shares on the date of exercise andminus the exercise price paid for the shares. Any ordinary income recognized by the participant on the disqualifying disposition of the shares generally entitles us to a deduction for federal income tax purposes. Any disposition of shares acquired under a nonqualified stock option or a SAR will generally result only in capital gain or loss for the participant, which may be short- or long-term, depending upon the holding period for such additional
shares will commence on the date the option is exercised. In the case of an ISO,
the tax basis of the additional shares received will be zero, and the holding
period of such shares will commence on the date of exchange. If any of the
shares received upon exercise of the ISO are disposed of within two years of the
date of the grant of the ISO or within one year
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after exercise, the shares with the lowest (i.e., zero) basis will be deemed to
be disposed of first, and such disposition will be a disqualifying disposition
giving rise to ordinary income as previously discussed above.
Stock Appreciation Rights. No income will be realized by a participant in
connection with the grant of a SAR. When the SAR is exercised, the participant
will generally be required to include as taxable ordinary income in the year of
exercise, an amount equal to the amount ofshares.
Full Value Awards. Any cash and the fair market value of any shares received. Theof Company will be entitled toCommon Stock received by a deduction at the time andparticipant under a full value award are generally includible in the participant’s ordinary income. In the case of restricted stock awards, this amount includedis includible in the participant'sparticipant’s income by reason ofwhen the exercise. Ifawards vest, unless the participant receives Common Stock upon exercise of a SAR,has filed an election with the post-exercise
appreciation or depreciation will be treated in the same manner discussed above
under "Nonqualified Stock Options."
Restricted Stock. A participant receiving restricted stock generally will
recognize ordinary income in the amount ofInternal Revenue Service to include the fair market value of the restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock. However, a participant may elect, under
Section 83(b)shares in income as of the Code within 30 daysdate the award was granted. In the case of restricted stock units, performance shares and performance units, generally the grantvalue of the stock, to recognize
taxable ordinary income on the date of grant equal to the excess ofany cash and the fair market value of theany shares of restricted stock (determined without regard to the
restrictions) over the purchase price of the restricted stock. Thereafter, if
the sharesCompany Common Stock received by a participant are forfeited, the participant will be entitled to a deduction,
refund or loss, for tax purposes only,includible in an amount equal to the purchase price
of the forfeited shares regardless of whether she or he made a Section 83(b)
election. With respect to the sale of shares after the forfeiture period has
expired, the holding period to determine whether the participant has long-term
or short-term capital gain or loss generally beginsincome when the restriction period
expires and the tax basis for such shares will generally be basedawards are paid. Any dividends or dividend equivalents paid on the fair
marketunvested full value of such shares on such date. If the participant makes an election
under Section 83(b), however, the holding period will commence on the date of
grant, the tax basis will be equal to the fair market value of shares on such
date (determined without regard to restrictions), and the Company generally will
be entitled to a deduction equal to the amount that is taxable asawards are also ordinary income tofor participants.
Cash-Based Awards/Incentive Awards. Any cash payments an employee receives in connection with cash-based awards, including cash incentive awards, are includable in income by the participant in the year that such income is taxable.
Dividends and Dividend Equivalents. Dividends paid on restricted stock generally
will be treated as compensation that is taxable as ordinary incomereceived or made available to the participant without substantial limitations or restrictions.
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Section 409A. Section 409A of the Code provides special tax rules applicable to programs that provide for a deferral of compensation. Failure to comply with those requirements will result in accelerated recognition of U.S. federal income tax purposes along with an additional tax equal to 20% of the amount included in U.S. federal income, and interest on deemed underpayments in certain circumstances. While certain awards under the 2016 Plan could be subject to Section 409A, the 2016 Plan and awards are intended to comply with the requirements of Section 409A, where applicable.
Shareholder Vote Requirement
This proposal will be deductibleapproved by a majority of the Company. If the participant makes a
Section 83(b) election, however, the dividends will be taxable as ordinary
income to the participant butvotes cast. Abstentions and broker non-votes will not be deductible bycounted as votes “FOR” or “AGAINST” this proposal. Unless otherwise directed therein, the Company.
Other Stock-Based Awards. proxies solicited hereby will be voted for approval of the 2016 Omnibus Incentive Compensation Plan.
Recommendation of the Board of Directors
The federal income tax treatmentBoard recommends a vote “FOR” approval of the amendment to the 2016 Omnibus Incentive Compensation Plan.
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PROPOSAL 4 — ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
Introduction
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), which enacted Section 14A of the Exchange Act, requires us to provide our shareholders with the opportunity to approve, on a non-binding, advisory basis, the compensation of our NEOs.
The Company’s goal with respect to executive compensation is to provide a comprehensive package that is sufficient to attract, motivate and retain executives of outstanding ability, performance and potential. The Compensation Committee seeks to establish and maintain an appropriate relationship between executive compensation and the creation of shareholder value. The Compensation Committee believes that the most effective compensation program is one that provides competitive base pay, rewards the achievement of established annual and long-term goals and objectives, and provides incentives for retention. The Compensation Committee seeks a compensation program that is internally consistent and believes that pay differences among jobs should be commensurate with differences in the levels of responsibility between the Chief Executive Officer and the other stock-based
awards will dependNEOs.
We urge you to read the Compensation Discussion and Analysis section of this Proxy Statement for additional details on our executive compensation, including our compensation philosophy and objectives and the 2023 compensation of our NEOs.
We are asking you to vote on the natureadoption of any such awardthe following resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion above is hereby APPROVED.
As an advisory vote, this proposal is non-binding. Although the vote is non-binding, the Board and the restrictions
applicable to such award. Such an award may, depending onCompensation Committee value the conditions
applicable toopinions of our shareholders, and will consider the award, be taxable as an option, an award of restricted stock,
or in a manner not described herein.
The 1999 Stock Plan is not intended to be a "qualified plan" under Section
401(a)outcome of the Code.
vote when making future compensation decisions for our NEOs.
Shareholder Vote Requirement
This proposal will be approved by a majority of the votes cast. Abstentions and broker non-votes will not be counted as votes “FOR” or “AGAINST” this proposal.
Recommendation of the Board
The Board recommends a vote “FOR” approval, on a non-binding, advisory basis, of the compensation of the NEOs.
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PROPOSAL 4 -5 — RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2024 FISCAL YEAR
The Board, acting upon the recommendation of the Audit Committee has appointed
the independent public accounting firm of Ernst & Young LLP to serve as the Company'sCompany’s independent auditorsregistered public accounting firm for 1999.the 2024 fiscal year. As in the past, the Board has determined that it would be desirableis in the best interest of the Company and its shareholders to request ratification of itsthe appointment by the shareholders of the Company. If the shareholders do not ratify the appointment of Ernst & Young LLP, the Audit Committee will reconsider the appointment of the independent registered public accountants will be reconsidered byaccounting firm for the Board. 2024 fiscal year.
A representative of Ernst & Young LLP is not expected to be present at the Annual Meeting, and thus, is not expected to make a statement or be available to respond to appropriate
questions.
This Proposal will be approved if
Independent Registered Public Accounting Firm
The Audit Committee has appointed Ernst & Young LLP to serve as the votes cast in favorCompany’s independent registered public accounting firm for the 2024 fiscal year, subject to ratification of the Proposal exceedappointment by the votes cast against it. Unless otherwise directed therein,shareholders of the proxies
solicited hereby will be votedCompany. The fees billed by Ernst & Young LLP for services rendered to the Company and its subsidiaries in 2023 and 2022 were as follows:
| 2023 ($) | 2022 ($) | ||||||||||
Audit Fees(1) | 2,836,730 | 2,265,000 | |||||||||
Audit Related Fees(2) | — | — | |||||||||
Tax Fees(2) | 247,118 | 255,047 | |||||||||
All Other Fees(2) | — | — | |||||||||
| (1) | Includes fees and expenses related to the audit and interim reviews of the Company’s consolidated financial statements and the audit of the effectiveness of the Company’s internal controls over financial reporting for the fiscal year notwithstanding when the fees and expenses were billed or when the services were rendered. | |||||||||||||||||||
| (2) | Includes fees and expenses for services rendered from January through December of the fiscal year notwithstanding when the fees and expenses were billed. | |||||||||||||||||||
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services and other services performed by the independent registered public accounting firm. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. The Audit Committee must approve the permitted service before the independent registered public accounting firm is engaged. During 2023 and as of the date of this Proxy Statement, the Audit Committee pre-approved all of these services.
In February 2019, the Audit Committee delegated to the Chair of the Audit Committee the authority to pre-approve all services presented by the independent registered public accounting firm up to $50,000.
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Audit Committee Report
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the 2023 Annual Report with management and the Company’s independent registered public accounting firm, Ernst & Young LLP, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee’s function is more fully described in its charter, which is available through the Investors - Governance link on the Company’s website, www.forwardaircorp.com.
The Audit Committee reviews its charter on an annual basis. The Board annually reviews the definition of independence under Nasdaq’s listing standards for audit committee members and has determined that each member of the Audit Committee meets that standard.
Management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, and applicable laws and regulations. Ernst & Young LLP is responsible for performing an independent audit and reporting on the consolidated financial statements of the Company and its subsidiaries and the effectiveness of the Company’s internal controls over financial reporting.
The Audit Committee has been updated quarterly on management’s process to assess the adequacy of the Company’s system of internal controls over financial reporting, the framework used to make the assessment, and management’s conclusions on the effectiveness of the Company’s internal controls over financial reporting. The Audit Committee has also discussed with representatives of Ernst & Young LLP. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF APPOINTMENT OF
ERNSTLLP the Company’s internal control assessment process and the firm’s audit of the Company’s system of internal controls over financial reporting.
The Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2023 with the Company’s management and has discussed with Ernst & YOUNGYoung LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR 1999.
OTHER MATTERSthe matters required to be discussed by the Statement on Auditing Standard No. 1301, as amended, and as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee also discussed with Ernst & Young LLP its independence from management and the Company and received Ernst & Young LLP’s written disclosures and letter pursuant to applicable requirements of the PCAOB regarding the independent accountant’s communication with the Audit Committee concerning independence. The Audit Committee further considered the compatibility of the non-audit services with maintaining Ernst & Young LLP’s independence. Ernst & Young LLP has served as the Company’s independent registered public accountant since 1991, and Ernst & Young LLP’s current lead audit partner has served in the role since 2022.
In performing all of these functions, the Audit Committee acts in an oversight capacity. The Audit Committee reviews the Company’s quarterly reports on Form 10-Q and annual report on Form 10-K prior to filing with the SEC. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for establishing and maintaining adequate internal controls over financial reporting and for preparing the financial statements, and other reports, and of the independent registered public accountants, who are engaged to audit and report on the consolidated financial statements of the Company and its subsidiaries and the effectiveness of the Company’s internal controls over financial reporting.
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Based on these reviews and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for filing with the SEC.
| G. Michael Lynch, Chair | ||
| Ana B. Amicarella | ||
| Javier Polit | ||
| The Audit Committee of the Board of Directors | ||
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate future filings, including this proxy statement, in whole or in part, the Audit Committee Report and the Compensation Committee Report above shall not be incorporated by reference into this Proxy Statement.
Shareholder Vote Requirement
This proposal will be approved by a majority of the votes cast. Abstentions and broker non-votes will not be counted as votes “FOR” or “AGAINST” this proposal.
Recommendation of the Board
The Board believes the ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2024 fiscal year is in the best interest of the Company’s shareholders and recommends that shareholders vote “FOR” ratification of appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2024 fiscal year.
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OTHER MATTERS
Additional Meeting Matters
The Board knows of no otheradditional matters that may come before the meeting;meeting other than those referred to in this Proxy Statement; however, if any otheradditional matters should properly come before the meeting or any adjournment or postponement thereof, it is the intention of the persons named in the proxy to vote the proxy in accordance with their best judgment.
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23
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act and the disclosure requirements of Item 405 of Regulation S-K require the directors and executive officers of the Company, and any persons holding more than ten percent10% of any class of equity securities of the Company, to report their ownership of such equity securities and any subsequent changes in that ownership to the Commission, TheSEC, Nasdaq Stock Market and the Company. Based solely on a review of the written statements and copiesreports that have been filed by or on behalf of such reports furnished to the Company by its executive officerspersons in this regard and directors, the Company believes that during 1998 all Section 16(a) filing
requirements applicable to its executive officers,written representations from our directors and shareholders
were timely satisfied.
DEADLINE FOR SUBMISSION TO SHAREHOLDERS OF PROPOSALS TO BE PRESENTED AT THE 2000
ANNUAL MEETING OF SHAREHOLDERS
NEOs, we believe that the following persons filed late Section 16 reports during fiscal year 2023:
Ms. Garbrick filed two late Form 4 for one transaction on February 9, 2023 and two transactions on March 17, 2023; Mr. Schmitt filed a late Form 4 for three transactions on March 17, 2023; Mr. Hance filed a late Form 4 for three transactions on March 17, 2023; Mr. Ruble filed a late Form 4 for three transactions on March 17, 2023; Mr. Mitchin filed a late Form 4 for three transactions on March 17, 2023 and one transaction on August 30, 2023; Mr. Tomasello filed a late Form 4 for three transactions on March 17, 2023; Mr. Lynch filed a late Form 4 for one transaction on March 20, 2023; Mr. Niswonger filed a late Form 4 for one transactions on March 20, 2023; Mr. Polit filed a late Form 4 for two transactions on March 17, 2023 and one transaction; and Ms. Ronning filed a late Form 4 for one transaction on August 30, 2023.
Shareholder Proposals for the 2025 Annual Meeting of Shareholders
Any proposal intended to be presented for action at the 20002025 Annual Meeting of Shareholders by any shareholder of the Company must be received by the Secretary of the Company at its principal executive offices not later than December 1, 1999than [ ], 2024 in order for such proposal to be considered for inclusion in the Company'sCompany’s Proxy Statement and form of proxy relating to its 20002025 Annual Meeting of Shareholders. Nothing in this paragraph shall be deemed to require the Company to include any shareholder proposal which does not meet all the requirements for such inclusion established by Rule 14a-8 of the Commission atExchange Act.
Any shareholder proposal must also meet all other requirements contained in our Bylaws, including the time in effect.advance notice provisions. For other shareholder proposals to be timely (but not considered for inclusion in the Proxy Statementproxy statement for the 20002025 Annual Meeting of Shareholders), a shareholder'sshareholder’s notice must be received by the Secretary of the Company not later
than March 3, 2000between [ ] and [ ] and the proposal and the shareholder must comply with Regulation 14ARule 14a-4 under the Exchange Act. In the event that a shareholder proposal intended to be presented for action at the next annual meeting does not comply with the aforementioned requirements, the shareholder proposal will be excluded from the annual meeting.
Any shareholder proposal must also meet all other requirements contained in our Bylaws.
94
Householding of Annual Meeting Materials
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this Notice of 2024 Annual Meeting of Shareholders, Proxy Statement and 2023 Annual Report may have been sent to multiple shareholders in your household, unless the Company has received contrary instructions from one or more shareholders. We will promptly deliver a separate copy of each document to you if you write the Company’s Secretary at Forward Air Corporation, 1915 Snapps Ferry Road, Building N, Greeneville, Tennessee 37745, or call (423) 636-7000. If you want to receive separate copies of the Notice of 2024 Annual Meeting of Shareholders, Proxy Statement and 2023 Annual Report in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or, if the shares are not held in “street name,” you may contact the Company at the above address and phone number.
Shareholder Communications
Shareholders who wish to communicate with the Board, a Board committee or any individual director or directors may do so by sending written communications addressed to the Board, a Board committee or such individual director or directors, c/o Secretary, Forward Air Corporation, 1915 Snapps Ferry Road, Building N, Greeneville, Tennessee 37745. The Company’s Chief Legal Officer will open all shareholder communication for the sole purpose of determining whether the contents represent correspondence to any member of the Board or any group or committee of directors. Any shareholder communication that is not received
priorin the nature of advertising, promotions of product or service, or patently offensive material will be forwarded promptly to March 3, 2000, proxies solicited bythe member(s) of the Board to whom the shareholder communication is addressed. In the case of Directors in
connection with the Annual Meeting will be permitted to use their discretionary
voting authority with respectany shareholder communication to the proposal, whetherBoard or notany group or committee of directors, the proposalChief Legal Officer’s office will make sufficient copies of the contents to send to each director who is discussed ina member of the Proxy Statement forgroup or committee to which the Annual Meeting.
MISCELLANEOUS
envelope is addressed.
Miscellaneous
It is important that proxies be returned promptly to avoid unnecessary expense. Therefore, shareholders who do not expect to attend in personthe Annual Meeting are urged, regardless of the number of shares of Company Common Stock and fractional units of Company Series B Preferred Stock owned, to date, signplease vote and returnsubmit your proxy over the Internet, by telephone or by completing, signing, dating and returning the enclosed proxy promptly.
in the envelope provided as promptly as possible. If you attend the virtual meeting and desire to vote by ballot, you may do so even though you have previously sent a proxy.
95
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORMcopy of the Company’s Annual Report on Form 10-K FOR THE YEAR ENDED DECEMBERfor the year ended December 31, 1998 IS INCLUDED WITHIN THE ANNUAL REPORT PROVIDED WITH THIS PROXY
STATEMENT. SUCH ANNUAL REPORT DOES NOT CONSTITUTE A PART OF THE PROXY
SOLICITATION MATERIAL. COPIES OF EXHIBITS FILED WITH THE FORM2023 is included within the Annual Report provided with this Proxy Statement. The Annual Report does not constitute a part of the proxy solicitation material. Copies of exhibits filed with the Form 10-K ARE AVAILABLE
UPON WRITTEN REQUEST. REQUESTS SHOULD BE MADE IN WRITING TO RICHARD H. ROBERTS,
SECRETARY, FORWARD AIR CORPORATION, P.O. BOX 1058, GREENEVILLE, TENNESSEE
37744-1058.
are available, free of charge, upon written request. Requests should be made in writing to Michael L. Hance, Secretary of the Company, at Forward Air Corporation, 1915 Snapps Ferry Road, Building N, Greeneville, Tennessee 37745. The Company’s filings with the SEC are also available, without charge, through the Investors — SEC Filings link on the Company’s website, www.forwardaircorp.com, as soon as reasonably practical after filing. The Company’s website and the information contained therein or connected thereto are not incorporated into this Proxy Statement.
| By Order of the Board of Directors, | |||||
| |||||
Greeneville, Tennessee [ ], 2024 | Michael L. Hance Interim Chief Executive Officer, Chief Legal Officer and Secretary | ||||
96
ANNEX A
AMENDMENT TO THE 2016 OMNIBUS INCENTIVE COMPENSATION PLAN
WHEREAS, Forward Air Corporation, a Tennessee corporation (the “Company”) maintains the 2016 Omnibus Incentive Compensation Plan (the “Plan”), which was previously approved by the Company’s Board of Directors Richard H. Roberts
Secretary
Greeneville, Tennessee
April __, 1999
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EXHIBIT A
ARTICLES OF AMENDMENT TO THE CHARTER
OF
FORWARD AIR CORPORATION
Pursuant to(the “Board”) on February 9, 2016 and approved by the provisions of Section 48-20-106shareholders of the Tennessee Business
Corporation Act,Company on May 10, 2016;
WHEREAS, the undersigned corporation adoptsBoard believes that the following articlesnumber of amendment (the "Articlesshares of Amendment") to its charter (the "Charter"):
1. Name of Corporation. The namecommon stock remaining available for issuance under the Plan has become insufficient for the Company’s anticipated future needs under the Plan;
WHEREAS, the Board has determined that it is in the best interests of the corporation is Forward Air Corporation.
2. The first paragraphCompany to amend the Plan, subject to shareholder approval, to increase the number shares of Article 7common stock available for issuance in the Share Pool (as defined in the Plan) by 1.45 Million (1,450,000) shares of common stock (the “Amendment”);
WHEREAS, Section 15 of the CharterPlan provides that the Board may amend the Plan from time to time; and
WHEREAS, this Amendment will become effective upon approval by the Company’s shareholders at the Company’s 2024 Annual Meeting of Shareholders and if, for any reason, the Company’s shareholders fail to approve this Amendment, the existing Plan shall continue in full force and effect.
NOW, THEREFORE:
1.Section 5(a) of the Plan is hereby deleted in its entirety and replaced with the following:
The maximum number of shares of capital stock which the Corporation
shall have the authority to issue is fifty-five million (55,000,000) shares,
of which fifty million (50,000,000) shares are designated Common Stock with
a par value of one cent ($0.01) per share, and five million (5,000,000)
shares are designated Preferred Stock with a par value of one cent ($0.01)
per share.
3. Adoption. These Articles of Amendment were duly adopted by the Board of
Directors on April 5, 1999 and the shareholders
a.Initial Share Pool. As of the corporation on May
18, 1999.
4. Effective Date. These Articles of Amendment will be effective when filed
with the Secretary of State.
FORWARD AIR CORPORATION
By:
-------------------------------
Richard H. Roberts
Senior Vice President & Secretary
Dated: May 18, 1999
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APPENDIX A
FORWARD AIR CORPORATION
-----------------------------------------------------------------
1999 STOCK OPTION AND INCENTIVE PLAN
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1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of the Forward Air Corporation Stock OptionDate and Incentive
Plan (the "Plan") is to enable Forward Air Corporation (the "Company") to
attract, retain and reward key employees of, and any consultant or other person
providing key services to, the Company and its Subsidiaries, and strengthen the
mutuality of interests between such persons and the Company's shareholders by
offering such persons performance-based stock incentives and/or other equity
interests or equity-based incentives in the Company.
It is further intended that options granted by the Compensation or
other Committee (the "Committee") of the Board of Directors of the Company (the
"Board") pursuant to Section 8 of the Plan shall constitute "incentive stock
options" ("Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended and any successor thereto (the
"Code"), and options granted by the Committee pursuant to Section 7 of the Plan
shall constitute "nonqualified stock options" ("Nonqualified Stock Options").
The Committee may also grant stock appreciation rights ("Stock Appreciation
Rights" or "SARs") pursuant to Section 9 of the Plan and shares of restricted
stock ("Restricted Stock") pursuant to Section 10 of the Plan.
The provisions of the Plan are intended to satisfy the requirements of
Section 16(b) of the Securities Exchange Act of 1934, and shall be interpreted
in a manner consistent with the requirements thereof, as now or hereafter
construed, interpreted, and applied by regulations, rulings, and cases. The Plan
is also designated so that awards granted hereunder intended to comply with the
requirements for "performance-based" compensation under Section 162(m) of the
Code may comply with such requirements. The creation and implementation of the
Plan shall not diminish or prejudice other compensation plans or programs
approved from time to time by the Board.
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Cause" means a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, or a participant's gross
negligence, willful misconduct or dishonesty, any of which is directly or
materially harmful to the business or reputation of the Company or any
Subsidiary, as determined by the Committee in its sole discretion.
(b) "Common Stock" shall mean shares of Common Stock, par value
$.01 per share, of the Company.
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(c) "Disability" shall mean a disability as determined under procedures
established by the Committee for purposes of this Plan.
(d) "Fair Market Value" per share of Common Stock as of a particular
date shall mean (i) the closing sales price per share of Common Stock on the
national securities exchange on which the Common Stock is principally traded,
for the last preceding date on which there was a sale of such Common Stock on
such exchange, or (ii) if the shares of Common Stock are then traded in an
over-the-counter market, the average of the closing bid and asked prices for the
shares of Common Stock in such over-the-counter market for the last preceding
date on which there was a sale of such Common Stock in such market, or (iii) if
the shares of Common Stock are not then listed on a national securities exchange
or traded in an over-the-counter market, such value as the Committee, in its
sole discretion, shall determine. Notwithstanding any provision of the Plan to
the contrary, no determination made with respect to the Fair Market Value of a
share of Common Stock subject to Incentive Stock Option shall be inconsistent
with Section 422 of the Code or regulation thereunder.
(e) "Immediate Family" shall mean any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.
(f) "Option" or "Options" shall mean a grant to a Grantee of an option
or options to purchase shares of Common Stock. Options granted by the Committee
pursuant to the Plan shall constitute either Incentive Stock Options or
Nonqualified Stock Options.
(g) "Parent" shall mean any company (other than the Company) in an
unbroken chain of companies ending with the Company if, at the time of granting
an Option, each of the companies other than the Company owns stock or equity
interests (including partnership interests) possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock or equity
interests in one of the other companies in such chain.
(h) "Performance Goals" means performance goals based on one or more of
the following criteria: (i) pre-tax income or after-tax income; (ii) operating
cash flow; (iii) operating profit; (iv) return on equity, assets, capital, or
investment; (v) earnings or book value per share; (vi) sales or revenues; (vii)
operating expenses; (viii) Common Stock price appreciation; and (ix)
implementation or completion of critical projects or processes. Where
applicable, the Performance Goals may be expressed in terms of attaining a
specified level of the particular criteria or the attainment of a percentage
increase or decrease in the particular criteria, and may be applied to one or
more of the Company or any Subsidiary, or a division or strategic business unit
of the Company, or may be applied to the performance of the Company relative to
a market index, a group of other companies, or a combination thereof, all as
determined by the Committee. The Performance Goals may include
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27
a threshold level of performance below which no payment will be made (or no
vesting will occur), levels of performance at which specified payments will be
made (or specified vesting will occur), and a maximum level of performance above
which no additional payment will be made (or at which full vesting will occur).
Each of the foregoing Performance Goals shall be determined, to the extent
applicable, in accordance with generally accepted accounting principles and
shall be subject to certification by the Committee; provided, that the Committee
shall have the authority to make equitable adjustments to the Performance Goals
in recognition of unusual or non-recurring events affecting the Company or any
Subsidiary or the financial statements of the Company or any Subsidiary, in
response to changes in applicable laws or regulations, or to account for items
of gain, loss, or expense determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of business or
related to a change in accounting principles.
(i) "Subsidiary" shall mean any company (other than the Company) in an
unbroken chain of companies beginning with the Company if, at the time of
granting an Option, each of the companies other than the last company in the
unbroken chain owns stock or equity interests (including partnership interests)
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock or equity interests in one of the other companies in such
chain.
(j) "Ten Percent Stockholder" shall mean a Grantee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary.
(k) "Retirement" means retirement by an employee from active employment
with the Company or any Subsidiary (i) on or after attaining age 65, or (ii)
with the express consent, for the purposes of this Plan, of the Committee or
such officer of the Company as the Committee may designate from time to time at
or before the time of such retirement, from active employment with the Company
or any Subsidiary after age 55.
3. ADMINISTRATION.
The Plan shall be administered by the Committee, which will be
comprised solely of "Non-Employee Directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act", or
by the Board if for any reason the Committee is not so comprised, in which case
all references herein to the Committee shall refer to the Board.
The Committee shall have the authority in its discretion, subject to
and not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically granted
to it under the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options, SARs, and
Restricted Stock; to determine which Options shall constitute Incentive Stock
Options and which
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Options shall constitute Nonqualified Stock Options and whether such Options
will be accompanied by Stock Appreciation Rights; to determine the purchase
price of the shares of Common Stock covered by each Option (the "Option Price")
and SARs and the kind of consideration payable (if any) with respect to awards;
to determine the period during which Options may be exercised and during which
Restricted Stock shall be subject to restrictions, and whether in whole or in
installments; to determine the persons to whom, and the time or times at which
awards shall be granted (such persons are referred to herein as "Grantees"); to
determine the number of shares to be covered by each award; to determine the
terms, conditions, and restrictions of any Performance Goals and the number of
Options, SARs, or shares of Restricted Stock subject thereto; to interpret the
Plan; to prescribe, amend, and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the agreements (which need not be
identical) entered into in connection with awards granted under the Plan (the
"Agreements"); to cancel or suspend awards, as necessary; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may delegate to one or more of its members or to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. All decisions, determinations,
and interpretations of the Committee shall be final and binding on all persons,
including the Company and Grantees of any awards under this Plan.
The Board shall fill all vacancies, however caused, in the Committee.
The Board may from time to time appoint additional members to the Committee, and
may at any time remove one or more Committee members and substitute others. One
member of the Committee shall be selected by the Board as chairman. The
Committee shall hold its meetings at such times and places as it shall deem
advisable. All determinations of the Committee shall be made by a majority of
its members either present in person or participating by conference telephone at
a meeting or by written consent. The Committee may appoint a secretary and make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings.
No members of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any award
granted hereunder. To the fullest extent permitted by law, the Company shall
indemnify each person made or threatened to be made a party to any civil or
criminal action or proceeding by reason of the fact that such person, or his or
her testator or intestate, is or was a member of the Committee.
4. ELIGIBILITY.
Officers and other key employees of the Company or any Subsidiary, and
any consultant or other person providing key services to the Company or any
Subsidiary shall be eligible to receive
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29
awards hereunder (excluding members of the Committee and any person who serves
only as a director). In determining the persons to whom awards shall be granted
and the number of shares to be covered by each award, the Committee, in its sole
discretion, shall take into account the contribution by the eligible
participants to the management, growth, and profitability of the business of the
Company and such other factors as the Committee shall deem relevant.
Officers and other key employees of the Company or any Subsidiary, and
any consultant or other person providing key services to the Company or any
Subsidiary shall be eligible to receive awards hereunder (excluding members of
the Committee and any person who serves only as a director). In determining the
persons to whom awards shall be granted and the number of shares to be covered
by each award, the Committee, in its sole discretion, shall take into account
the contribution by the eligible participants to the management, growth, and
profitability of the business of the Company and such other factors as the
Committee shall deem relevant.
5. STOCK.
The maximum number of shares of Common Stock reserved for the grant of
awards under the Plan shall be 500,000 subject to adjustment as provided inunder Section 11 hereof. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by10(a) of the Company. No Grantees shall be eligible to receive awards relative to shares of
Common Stock which exceed 100,000 shares in any fiscal year.
If any outstanding award under the Plan, should, for any reason, expire
or be canceled, forfeited, or terminated, without having been exercised in full,
the shares of Common Stock allocable to the unexercised, canceled, forfeited, or
terminated portion of such award shall (unless the Plan shall have been
terminated) become available for subsequent grants of awards under the Plan.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted pursuant to the Plan shall be evidenced by a
written agreement between the Company and the Grantee (the "Option Agreement"),
in such form as the Committee shall from time to time approve, which Option
Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares. Each Option Agreement shall state the number of shares of Common Stock issuable pursuant to which the Option relates.
(b) Type of Option. Each Option Agreement shall specifically state that
the Option constitutes an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options may beAwards granted only to individuals who are employees of
the Company or any Subsidiary.
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(c) Option Price. Each Option Agreement shall state the Option Price,
which, in the case of an Incentive Stock Option, shall not be less than one
hundred percent (100%) of the Fair Market Value of the shares of Common Stock
covered by the Option on the date of grant. The Option Price shall be subject to
adjustment as provided in Section 11 hereof. Unless otherwise stated in the
resolution, the date on which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such Option is granted.
(d) Medium and Time of Payment. The Option Price shall be paid in full,
at the time of exercise, as the Option Agreement may provide, in cash or in
shares of Common Stock having a Fair Market Value equal to such Option Price, or
in a combination of cash and Common Stock, or in such other manner as the
Committee shall determine.
(e) Term and Exercisability of Options. Each Option shall be
exercisable at such times and under such conditions as the Committee, in its
discretion, shall determine; provided, however, that in the case of an Incentive
Stock Option, such exercise period shall not exceed ten (10) years from the date
of grant of such Option. The exercise period shall be subject to earlier
termination as provided in Section 6(f) hereof. An Option may be exercised, as
to any or all full shares of Common Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or its
designated agent.
(f) Termination of Employment
(i) Generally. Except as otherwise provided herein, an Option
may not be exercised unless the Grantee is then in the service or employ of the
Company or a Parent or Subsidiary (or a company or a parent or subsidiary
company of such company issuing or assuming the Option in a transaction to which
Section 424(a) of the Code applies), and unless the Grantee has remained
continuously so employed since the date of grant of the Option. Unless otherwise
determined by the Committee at or after the date of grant, in the event that the
employment of a Grantee terminates (other than by reason of death, Disability,
Retirement, or for Cause) all Options that are exercisable at the time of such
termination may be exercised for a period of 90 days from the date of such
termination or until the expiration of the stated term of the Option, whichever
period is shorter. For purposes of interpreting this Section 6(f) only, the
service of a director as a non-employee member of the Board shall be deemed to
be employment by the Company.
(ii) Death or Disability. If a Grantee dies while employed by
the Company or a Parent or Subsidiary (or within the period of extended
exercisability otherwise provided herein), or if the Grantee's employment
terminates by reason of Disability, all Options theretofore granted to such
Grantee will become fully vested and exercisable (notwithstanding any terms of
the Options providing for delayed exercisability) and may be exercised by the
Grantee, by the legal
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representative of the Grantee's estate, or by the legatee under the Grantee's
will at any time until the expiration of the stated term of the Option. If an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such Option will thereafter
be treated as a Non-Qualified Stock Option. In the event that an Option granted
hereunder is exercised by the legal representative of a deceased or disabled
Grantee, written notice of such exercise must be accompanied by a certified copy
of letters testamentary or equivalent proof of the right of such legal
representative or legatee to exercise such Option.
(iii) Retirement. If a Grantee's employment terminates by
reason of Retirement, any Option held by the Grantee may thereafter be
exercised, to the extent it was exercisable at the time of such Retirement or on
such accelerated basis as the Committee may determine at or after the date of
grant (but before the date of such Retirement), at any time until the expiration
of the stated term of the Option. If an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Option will thereafter be treated as a Non-Qualified Stock
Option.
(iv) Cause. If a Grantee's employment terminates for Cause,
the Option, to the extent not theretofore exercised, shall terminate on the date
of termination of employment.
(v) Committee Discretion. Notwithstanding the provisions of
subsections (i) through (iv) above, the Committee may, in its sole discretion,
at or after the date of grant (but before the date of termination), establish
different terms and conditions pertaining to the effect on any Option of
termination of a Grantee's employment, to the extent permitted by applicable
federal and state law.
(g) Buyout Provisions. The Committee may at any time offer to buy out
for a payment in cash, Common Stock, or Restricted Stock an option previously
granted, based on such terms and conditions as the Committee shall establish and
communicate to the Grantee at the time that such offer is made.
(h) Other Provisions. The Option Agreements evidencing Options under the Plan shall contain such other terms and conditions, not inconsistent with
the Plan, as the Committee may determine.
7. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 6 hereof.
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8. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 8 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
6 hereof.
(a) Value of Shares. The aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of equity
securities of the Company with respect to which Incentive Stock Options granted
under this Plan and all other option plans of any Parent or Subsidiary become
exercisable for the first time by each Grantee during any calendar year shall
not exceed $100,000. To the extent such $100,000 limit has been exceeded with
respect to any Options first becoming exercisable, including acceleration upon a
Change in Control, and notwithstanding any statement in the Option Agreement
that it constitutes an Incentive Stock Option, the portion of such Option(s)
that exceeds such $100,000 limit shall be treated as a Nonqualified Stock
Option.
(b) Ten Percent Stockholder. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the Option Price shall not be less
than one hundred ten percent (110%(the “Share Pool”) of the Fair Market Value of the shares of
Common Stock on the date of grant of such Incentive Stock Option, and (ii) the
exercise period shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
9. STOCK APPRECIATION RIGHTS.
The Committee is authorized to grant SARs to Grantees on the following
terms and conditions:
(a) In General. Unless the Committee determines otherwise, an SAR (i)
granted in tandem with a Nonqualified Stock Option may be granted at the time of
grant of the related Nonqualified Stock Option or at any time thereafter, and
(ii) granted in tandem with an Incentive Stock Option may only be granted at the
time of grant of the related Incentive Stock Option. An SAR granted in tandem
with an Option shall be exercisable only to the extent the underlying Option is
exercisable and shall terminate when the underlying Option terminates.
(b) SARs. An SAR shall confer on the Grantee a right to receive an
amount with respect to each share subject thereto, upon exercise thereof, equal
to the excess of (i) the Fair Market Value of one share of Common Stock on the
date of exercise over (ii) the grant price of the SAR (which in the case of an
SAR granted in tandem with an Option shall be equal to the exercise price3.45 Million (3,450,000) shares.
2.Effective Date of the underlying Option, and which in the case of any other SARAmendment. This Amendment shall be such price as
the Committee may determine).
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(c) Performance Goals. The Committee may condition the exercise of any
SARbecome effective upon the attainment of specified Performance Goals, in its sole discretion.
10. RESTRICTED STOCK.
The Committee may award shares of Restricted Stock to any eligible
person so determineddate that it is approved by the Committee. Each awardCompany’s shareholders in accordance with applicable laws and regulations.
3.Other Provisions. Except as set forth above, all other provisions of Restricted Stock under the Plan shall be evidencedremain unchanged.
IN WITNESS WHEREOF, this Amendment has been adopted by the Board this 2nd day of April, 2024, subject to approval by the Company’s shareholders at the Company’s 2024 Annual Meeting of Shareholders.
97
   FORWARD AIR CORPORATION ATTN: LEGAL DEPARTMENT 1915 SNAPPS FERRY ROAD, BUILDING N GREENEVILLE, TN 37745 SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 20, 2024 for shares held directly and by 11:59 p.m. Eastern Time on May 16, 2024 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an instrument,electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in such form asmailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Committee shall
from timeInternet. To sign up for electronic delivery, please follow the instructions above to timevote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 20, 2024 for shares held directly and by 11:59 p.m. Eastern Time on May 16, 2024 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V44823-Z87463 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY FORWARD AIR CORPORATION For Withhold For All To withhold authority to vote for any individual The Board of Directors recommends you vote FOR ALL on proposal 2. All All Except nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. 2. Election of Directors Nominees: 01) Ana B. Amicarella 02) Charles L. Anderson 03) Valerie A. Bonebrake 04) Dale W. Boyles 05) R. Craig Carlock 06) Robert L. Edwards, Jr.    07) Christine M. Gorjanc 08) Michael B. Hodge 09) George S. Mayes, Jr. 10) Javier Polit 11) Laurie A. Tucker The Board of Directors recommends you vote FOR proposals 1, 3, 4 and 5. For Against Abstain 1. To approve, (the "Restricted Stock Agreement")in accordance with Nasdaq Listing Rule 5635(a), and shall comply(i) the issuance of shares of common stock upon the conversion of the outstanding Series    C Preferred Units that were issued in connection with the following termsOmni Acquisition and conditions (and with such other terms and
conditions not inconsistent with(ii) the termsissuance of this Plan as the Committee, in its
discretion, shall establish including, without limitation, the requirement that
a Grantee provide consideration for Restrictedfractional units of Series B Preferred Stock upon the lapseconversion of restrictions):
(a) The Committee shall determineOpco Series C-2 Preferred Units that were issued in connection with the Omni Acquisition into Opco Class B Units, and the issuance of common stock upon the exchange of such fractional units of Series B Preferred Stock (together with corresponding Opco Class B Units). 3. To approve the amendment to the 2016 Omnibus Incentive Compensation Plan to increase the number of shares of Common Stock
to be issued tocommon stock authorized for issuance thereunder. 4. To approve, on a non-binding, advisory basis, the Grantee pursuant tocompensation of the award.
(b) Sharesnamed executive officers (the "say on pay vote").    5. To ratify the appointment of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution, for such periodErnst & Young LLP as the Committee shall determine from
the date on which the award is granted (the "Restricted Period"). The Committee
may impose such other restrictions and conditions on the shares as it deems
appropriate including the satisfaction of Performance Goals. Certificates for
shares of stock issued pursuant to Restricted Stock awards shall bear an
appropriate legend referring to such restrictions, and any attempt to dispose of
any such shares of stock in contravention of such restrictions shall be null and
void and without effect. During the Restricted Period, such certificates shall
be held in escrow by an escrow agent appointed by the Committee. In determining
the Restricted Period of an award, the Committee may provide that the foregoing
restrictions lapse at such times, under such circumstances, and in such
installments, as the Committee may determine.
(c) Subject to such exceptions as may be determined by the Committee,
if the Grantee's continuous employment with the Company or any Parent or
Subsidiary shall terminate for any reason prior to the expiration of the
Restricted Period of an award, any shares remaining subject to restrictions
(after taking into account the provisions of Subsection (f) of this Section 10)
shall thereupon be forfeited by the Grantee and transferred to, and reacquired
by, the Company or a Parent or Subsidiary at no cost to the Company or such
Parent or Subsidiary.
(d) During the Restricted Period the Grantee shall possess all
incidents of ownership of such shares, subject to Subsection (b) of this Section
10, including the right to receive cash dividends with respect to such shares
and to vote such shares; provided, that shares of Common Stock distributed in
connection with a stock split or stock dividend shall be subject to restriction
and a risk
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of forfeiture to the same extent as the Restricted Stock with respect to which
such shares are distributed.
(e) Upon the occurrence of any of the events described in Section
11(c), all restrictions then outstanding with respect to shares of Restricted
Stock awarded hereunder shall automatically expire and be of no further force or
effect.
(f) The Committee shall have the authority (and the Restricted Stock
Agreement may so provide) to cancel all or any portion of any outstanding
restrictions prior to the expiration of the Restricted Period with respect to
any or all of the shares of Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
(g) If and when the Restricted Period expires without a prior
forfeiture of the Restricted Stock subject to such Restricted Period,
certificates for an appropriate number of unrestricted shares shall be delivered
to the Grantee promptly.
11. EFFECT OF CERTAIN CHANGES.
(a) If there is any change in the shares of Common Stock through the
declaration of extraordinary cash dividends, stock dividends, recapitalization,
stock splits, or combinations or exchanges of such shares, or other similar
transactions, the number of shares of Common Stock available for awards (both
the maximum number of shares issuable under the Plan as a whole and the maximum
number of shares issuable on a per-employee basis, each as set forth in Section
5 hereof), the number of such shares covered by outstanding awards, the
Performance Goals, and the price per share of Options or SARs shall be
proportionately adjusted by the Committee to reflect such change in the issued
shares of Common Stock; provided, that any fractional shares resulting from such
adjustment shall be eliminated; and provided, further, that, with respect to
Incentive Stock Options, such adjustment shall be made in accordance with
Section 424(h) of the Code.
(b) In the event of the dissolution or liquidation of the Company; in
the event of any corporate separation or division, including but not limited to,
split-up, split-off or spin-off; or in the event of other similar transactions,
the Committee may, in its sole discretion, provide that either:
(i) the Grantee of any award hereunder shall have the right
to exercise an Option (at its then Option Price) and receive such property,
cash, securities, or any combination thereof upon such exercise as would have
been received with respect to the number of shares of Common Stock for which
such Option might have been exercised immediately prior to such dissolution,
liquidation, or corporate separation or division; or
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(ii) each Option shall terminate as of a date to be fixed by the
Committee and that not less than thirty (30) days' written notice of the date so
fixed shall be given to each Grantee, who shall have the right, during the
period of thirty (30) days preceding such termination, to exercise all or part
of such Option.
In the event of a proposed sale of all or substantially all of the
assetsindependent registered public accounting firm of the Company or the merger of the Company with or into another
corporation, any award then outstanding shall be assumed or an equivalent award
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless such successor corporation does not agree to
assume the award or to substitute an equivalent award, in which case the
Committee shall, in lieu of such assumption or substitution, provide for the realization of such outstanding awards in2024 fiscal year.    NOTE: Such other business as may properly come before the manner set forth in Section
11(b)(i)meeting or 11(b)(ii) above.
(c) If, while any awards remain outstanding under the Plan, any of the
following events shall occur (which events shall constitute a "Change in
Control" of the Company):
(i) the "beneficial ownership,"adjournment thereof. Please sign exactly as defined in Rule 13d-3 under
the Exchange Act, of securities representing more than a majority of the
combined voting power of the Company are acquired by any "person"your name(s) appear(s) hereon. When signing as defined in
Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B)
any trusteeattorney, executor, administrator, or other fiduciary, holding securities under an employee benefit plan
of the Company, (C) Scott M. Niswongerplease give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or any member of his Immediate Family, or
(D) any corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock of the
Company); or
(ii) the shareholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another company
(other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) a majority of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation), or to sell or otherwise dispose
of all or substantially all of its assets, or adopt a plan of liquidation; or
(iii) during any period of two consecutive years, individuals who
at the beginning of such period were members of the Board cease for any reason
to constitute at least a majority thereof (unless the election, or the
nomination for election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period); then from and after the
date on which any such Change in Control shall have occurred (the "Acceleration
Date" any Option, SAR, and share of Restricted Stock awarded pursuant to this
Plan shall be exercisable or otherwise nonforfeitablepartnership, please sign in full as applicable,
whethercorporate or not otherwise exercisable or forfeitable.
11
36
Followingpartnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Acceleration Date, (i) the Committee shall, in the caseAvailability of a merger, consolidation, or sale or disposition of assets, promptly make an
appropriate adjustment to the number and class of shares of Common Stock
available for awards, and to the amount and kind of shares or other securities
or property receivable upon exercise or other realization of any outstanding
awards after the effective date of such transaction, and, if applicable, the
price thereof, and (ii) the Committee may in its discretion (unless proscribed
with respect to certain Grantees), permit the cancellation of outstanding
Options, SARs, and Restricted Stock in exchange for a cash payment in an amount
equal to the Spread. The term "Spread" as used herein shall mean an amount equal
to the product computed by multiplying (i) the excess of (A) the highest Fair
Market Value per share of Common Stock during the sixty-day period preceding the
Acceleration Date over (B) the Option Price per share of Common Stock at which
such Option, SAR, or Restricted Stock is exercisable, by (ii) the number of
shares of Common Stock with respect to which the Option, SAR, or Restricted
Stock is being exercised.
Notwithstanding the foregoing, (i) with respect to any Incentive Stock
Option (or an SAR relating to an Incentive Stock Option), the Grantee may not
receive a cash payment in excess of the maximum amount that will enable such
option to continue to qualify as an Incentive Stock Option, and (ii) no Grantee
subject to the reporting requirements of Section 16(a) of the Exchange Act shall
be eligible to receive a cash payment in respect of any award held for less than
six months prior to exercise.
(d) In the event of a change in the Common Stock of the Company as
presently constituted that is limited to a change of all of its authorized
shares of Common Stock into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
(e) Except as herein before expressly provided in this Section 11, the
Grantee of an award hereunder shall have no rights by reason of any subdivision
or consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger, or consolidation
or spin-off of assets or stock of another company; and any issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock subject to
an award. The grant of an award pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to merge or
to consolidate or to dissolve, liquidate, or sell, or transfer all or part of
its business or assets or engage in any similar transactions.
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37
12. SURRENDER AND EXCHANGES OF AWARDS.
The Committee may permit the voluntary surrender of all or a portion of
any Option granted under the Plan or any option granted under any other plan,
program, or arrangement of the Company or any Subsidiary ("Surrendered Option"),
to be conditioned upon the granting to the Grantee of a new OptionProxy Materials for the same
number of shares of Common Stock as the Surrendered Option, or may require such
voluntary surrender as a condition precedent to a grant of a new Option to such
Grantee. Subject to the provisions of the Plan, such new Option (1) may be an
Incentive Stock Option or a Nonqualified Stock OptionAnnual Meeting: The Notice and (2) shall be
exercisableProxy Statement and Form 10-K are available at the price, during such period, and on such other terms and
conditions as are specified by the Committee at the time the new Option is
granted. The Committee may also grant Restricted Stock in exchange for
Surrendered Options to any holder of such Surrendered Option.
13. PERIOD DURING WHICH AWARDS MAY BE GRANTED.
Awards may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the effective date of the Plan, provided that
awards granted prior to such tenth anniversary date may be extended beyond such
date.
14. LIMITS ON TRANSFERABILITY OF AWARDS.
Awards of Incentive Stock Options (and any SAR related thereto) shall
not be transferable otherwise than by will or by the laws of descent and
distribution, and all Incentive Stock Options are exercisable during the
Grantee's lifetime only by the Grantee. Awards of Nonqualified Stock Options
(and any SAR related thereto) shall not be transferable, without the prior
written consent of the Committee, other than (i) by will or by the laws of
descent and distribution, (ii) by a Grantee to a member of his or her Immediate
Family, or (iii) to a trust for the benefit of the Grantee or a member of his or
her Immediate Family. Awards of Restricted Stock shall be transferable only to
the extent set forth in the Restricted Stock Agreement.
15. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of February 5, 1999, subject to the
approval of the Plan by the holders of a majority of the shares of Common Stock.
Any grants made under the Plan prior to such approval shall be effective when
made (unless otherwise specified by the Committee at the time of grant), but
shall be conditioned on, and subject to, such approval of the Plan by such
shareholders.
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16. AGREEMENT BY GRANTEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise of an
Option or SAR or other realization of an award, each Grantee shall agree that no
later than the date of exercise or other realization of an award granted
hereunder, the Grantee will pay to the Company or make arrangements satisfactory
to the Committee regarding payment of any federal, state, or local taxes of any
kind required by law to be withheld upon the exercise of an Option or other
realization of an award. Alternatively, the Committee may provide that a Grantee
may elect, to the extent permitted or required by law, to have the Company
deduct federal, state, and local taxes of any kind required by law to be
withheld upon the exercise of an Option or realization of any award from any
payment of any kind due to the Grantee. The Committee may, in its sole
discretion, permit withholding obligations to be satisfied in shares of Common
Stock subject to the award.
17. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate,
modify, or amend the Plan without stockholder approval to the fullest extent
permitted by the Exchange Act and the rules and regulations thereunder;
provided, however, that no suspension, termination, modification, or amendment
of the Plan may adversely affect any award previously granted hereunder, unless
the written consent of the Grantee is obtained.
18. RIGHTS AS A SHAREHOLDER.
Except as provided in Section 10(d) hereof, a Grantee or a transferee
of an award shall have no rights as a shareholder with respect to any shares
covered by the award until the date of the issuance of a stock certificate to
him or her for such shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities, or other property) or
distribution of other rights for which the record date is prior to the date such
stock certificate is issued, except as provided in Section 11 hereof.
19. NO RIGHTS TO EMPLOYMENT.
Nothing in the Plan or in any award granted or Agreement entered into
pursuant hereto shall confer upon any Grantee the right to continue in the
employ of the Company or any subsidiary or to be entitled to any remuneration or
benefits not set forth in the Plan or such Agreement or to interfere with or
limit in any way the right of the Company or any such subsidiary to terminate
such Grantee's employment. Awards granted under the Plan shall not be affected
by any change in duties or position of a Grantee as long as such Grantee
continues in the employ of the Company or any Subsidiary.
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39
20. BENEFICIARY.
A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Grantee, the executor or administrator of the Grantee's estate
shall be deemed to be the Grantee's beneficiary.
21. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a Grantee by
the Company, nothing contained herein shall give any such Grantee any rights
that are greater than those of a general creditor of the Company. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock or payments in lieu of or with respect to awards hereunder; provided,
however, that, unless the Committee otherwise determines with the consent of the
affected participant, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
22. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Tennessee.
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40
Appendix Bwww.proxyvote.com. V44824-Z87463 PROXY FORWARD AIR CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FORWARD AIR CORPORATION The undersigned, having received the Notice of Annual Meeting of Shareholders and Proxy Statement, hereby appoints Scott M. Niswonger, Bruce A. CampbellMichael L. Hance and Richard H.
RobertsGeorge S. Mayes, and each of them, proxies with full power of substitution, for and in the name of the undersigned, to vote all shares of common stock of Forward Air Corporation owned of record by the undersigned on all matters which may come before the 19992024 Annual Meeting of Shareholders to be held at the General Morgan
Inn & Conference Center, 111 North Main Street, Greeneville, Tennessee, on May 18, 1999,21, 2024, at 10:8:00 a.m., local time,EDT, and any adjournments thereof, unless otherwise specified herein. The proxies, in their discretion, are further authorized to vote for the election of a person to the Board of Directors if any nominee named herein becomes unable to serve, or for good cause will not serve, are further authorized to vote on matters which the Board of Directors does not know a reasonable time before making the proxy solicitation, will be presented at the meeting and are further authorized to vote on other matters, which may properly come before the 19992024 Annual Meeting and any adjournments thereof. 1. ElectionYou are encouraged to specify your choice by marking the appropriate box (see reverse side), but you need not mark any box if you wish to vote in accordance with the Board of Directors
Bruce A. Campbell; Edward W. Cook; James A. Cronin, III; Hon. Robert Keith
Gray; Scott M. Niswonger;Directors' recommendations. The proxies cannot vote these shares unless you sign and Richard H. Roberts
For, except vote withheld fromreturn this card. This proxy, when properly executed, will be voted in the following nominee(s):
- --------------------------------------------------------------------------------
2. Amendment to the Company's Charter
[ ] manner directed herein. If no direction is made, this proxy will be voted “FOR [ ] AGAINST [ ] ABSTAIN
3. Approval” Proposals 1, 3, 4 and adoption5 and “FOR” each of the Forward Air Corporation 1999 Stock Optiondirector nominees in Proposal 2. Continued and Incentive Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(seeto be signed on reverse side)
4. Ratification of the appointment of Ernst & Young LLP as independent
auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ALL OF THE
DIRECTOR NOMINEES AND "FOR" PROPOSALS 2, 3 AND 4.
Do you plan to attend the
Annual Meeting?
[ ] Yes [ ] No
PLEASE SIGN AND DATE BELOW AND
RETURN PROMPTLY.
Please sign exactly as name
appears hereon. Joint Owners
should each sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
------------------------------
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Signature(s) Dateside