20002 North 19^th Avenue

To be held on May 31, 2018

The Board of Directors (the “Board”) of Knight-Swift Transportation Holdings Inc. (the “Company”, “we, or “our”) is furnishing you this proxy statement in connection with the solicitation of proxies on its behalf for the 2018 Annual Meeting. The meeting will take place at our corporate offices, which are located at 20002 North 19^th Avenue, Phoenix, Arizona 85027, on Thursday, May 31, 2018, at 8:30 a.m. Local Time. At the meeting, stockholders will vote on: (i) the election of the two Class I directors named in this proxy statement; (ii)  advisory, non-binding approval of our executive compensation; (iii) amendments to our Certificate of Incorporation to eliminate (1) the Company’s authority to re-issue shares of multiple-vote Class B common stock that were previously held by Jerry Moyes, the founder and former Chief Executive Officer of Swift and current director of the Company, and the Moyes Stockholders before the 2017 Merger and (2) the terms and provisions associated with the Class B common stock; (iv) amendments to our Certificate of Incorporation to eliminate legacy provisions that require a majority vote of our stockholders, excluding the Moyes Stockholders, to approve certain corporate actions; (v) amendments to our by-laws to eliminate legacy provisions that require a majority vote of our stockholders, excluding the Moyes Stockholders, to amend certain provisions of our by-laws; (vi) the ratification of GT as our independent registered public accounting firm for fiscal year 2018; and (vii) a stockholder proposal regarding an independent Board chairperson, if properly presented. Stockholders also will consider any other matters that may properly come before the meeting, although we know of no other business to be presented.

By submitting your proxy (either by signing and returning the enclosed proxy card, by voting electronically on the Internet or by telephone), you authorize David Jackson, our President and CEO, and Adam Miller, our Chief Financial Officer (“CFO”) and Treasurer, to represent you and vote your shares at the Annual Meeting in accordance with your instructions. Also, they may vote your shares to adjourn the Annual Meeting and will be authorized to vote your shares at any postponements or adjournments of the Annual Meeting.

A Notice of Internet Availability of Proxy Materials (the “Internet Notice”) will first be mailed on or about April ,20, 2018, to stockholders of record of our Class A common stock at the close of business on April 5, 2018, which is the record date. The Internet Notice will instruct you as to how you may access and review the proxy materials. This proxy statement, the proxy card, and our Annual Report to Stockholders for the fiscal year ended December 31, 2017 (our “2017 Annual Report”), which collectively comprise our “proxy materials,” are first being made available to stockholders on April ,20, 2018.

At the Annual Meeting, you will be asked to:

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

If a quorum is not present at the meeting, the holders of a majority of voting power of the shares entitled to vote at the meeting who are present, in person or represented by proxy, or the chairperson of the meeting, may adjourn the meeting until a quorum is present or represented. The time and place of the adjourned Annual Meeting will be announced at the time the adjournment is taken and no other notice will be given.

 

Each share of our Class A common stock will be entitled to one vote on all matters submitted for a vote at the Annual Meeting. As of the record date, April 5, 2018, there were 178,293,696 shares of our Class A common stock issued and outstanding and entitled to be voted at the Annual Meeting, and no shares of our Class B common stock issued and outstanding.

Most of our Class A stockholders hold their shares through a broker, bank, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between registered shares and those owned beneficially:

Generally, a “broker non-vote” occurs when a broker, bank, or other nominee that holds shares in “street name” for a customer is precluded from exercising voting discretion on a particular proposal because the: (i) beneficial owner has not instructed the nominee on how to vote and (ii) nominee lacks discretionary voting power to vote on such issues.

Under the rules of the New York Stock Exchange (“NYSE”), as discussed below, a nominee does not have discretionary voting power with respect to the approval of “non-routine” matters absent specific voting instructions from the beneficial owners of such shares.

Under the rules of the NYSE, a record holder does not have discretionary voting power with respect to the approval of “non-routine” matters absent specific voting instructions from the beneficial owners of such shares. Other than the proposal to ratify the appointment of GT, all of the proposals are considered non-routine matters. Therefore, your shares will not be voted without your specific instructions. Thus, if you hold your shares in street name and you do not instruct your record holder how to vote in the election of directors (Proposal 1), the advisory, non-binding vote to approve executive compensation (Proposal 2), the vote on amendments to our Certificate of Incorporation to eliminate certain provisions relating to Class B common stock (Proposal 3), the vote on amendments to our a Certificate of Incorporation to eliminate legacy provisions regarding approval of certain corporate actions (Proposal 4), the vote on amendments to our by-laws to eliminate legacy provisions regarding amendment of certain provisions of our by-laws (Proposal 5), or the vote on the stockholder proposal regarding an independent Board chairperson (Proposal 7), no votes will be cast on your behalf. Your record holder will, however, continue to have the ability to vote your shares in its discretion on the ratification of the appointment of GT as our independent registered public accounting firm for fiscal year 2018 (Proposal 6).

Approval of this resolution requires the affirmative vote of a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy at the Annual Meeting. Broker non-votes and abstentions will have no effect on the outcome of this proposal. While this vote is required by law, it is not binding on the Company or the Board. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.

Approval of this proposal requires the affirmative vote of a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy at the Annual Meeting. Broker non-votes and abstentions will have no effect on the outcome of this proposal.

Approval of this proposal requires the affirmative vote of both (i) a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy at the Annual Meeting, excluding the Moyes Stockholders, and (ii) a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy at the Annual Meeting, including the Moyes Stockholders. Broker non-votes and abstentions will have no effect on the outcome of this proposal.

Approval of this proposal requires the affirmative vote of a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy at the Annual Meeting, excluding the Moyes Stockholders. Broker non-votes and abstentions will have no effect on the outcome of this proposal.

The ratification of the Audit Committee’s appointment of GT as our independent registered public accounting firm for fiscal year 2018 requires the affirmative vote of a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy at the Annual Meeting. Broker non-votes and abstentions will have no effect on the outcome of this proposal. Stockholder ratification is not required for the appointment of our independent registered public accounting firm. However, we are submitting the proposal to solicit the opinion of our stockholders.

Approval of this proposal, if properly presented, requires the affirmative vote of a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy at the Annual Meeting. Broker non-votes and abstentions will have no effect on the outcome of this proposal.

 

If you are the registered owner of shares of our Class A common stock on the record date, you have the right to vote your shares in person at the Annual Meeting.

If you are the beneficial owner of shares of our Class A common stock on the record date, you may vote these shares in person at the Annual Meeting if you have requested a legal proxy from your broker, bank, or other nominee (the stockholder of record) giving you the right to vote the shares at the Annual Meeting. You will need to complete such legal proxy and present it to us at the Annual Meeting.

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

If you are a registered owner, you may instruct the named proxy holders on how to vote your shares by completing, signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided with this proxy statement, or by using the internet voting site or the toll-free telephone number listed on the proxy card. Specific instructions for using the internet and telephone voting systems are on the proxy card. The internet and telephone voting systems will be available until 11:59 p.m. Eastern Time on Wednesday, May 30, 2018 (the day before the Annual Meeting).

If you are the beneficial owner of shares held in street name, you should instruct your broker, bank, or other nominee on how to vote your shares. Your broker, bank, or other nominee has enclosed with this proxy statement a voting instruction card for you to use in directing your nominee on how to vote your shares. The instructions from your nominee will indicate whether internet or telephone voting is available and, if so, will provide details regarding how to use those systems.

Shares represented by a proper proxy (in paper form, by Internet, or by telephone) that is received in a timely manner, and not subsequently revoked, will be voted at the Annual Meeting or any adjournment or postponement thereof in the manner directed on the proxy. David Jackson and Adam Miller are named as proxies on the proxy form and have been designated by the Board as proxies to represent you and vote your shares at the Annual Meeting. All shares represented by a proper proxy on which no choice is specified will be voted:

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

If you are the registered owner, you may revoke your proxy and change your vote by:

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

Yes, your vote will be kept confidential and not disclosed to us unless:

We will bear all costs of this proxy solicitation. Proxies may be solicited by mail, e-mail, telephone, or by other electronic means and our directors, officers, and regular employees may solicit proxies personally or by mail, e-mail, telephone, or other electronic means for which solicitation they will not receive any additional compensation. We will reimburse brokerage firms, custodians, fiduciaries, and other nominees for their out-of-pocket expenses in forwarding solicitation materials to beneficial owners upon our request. We have engaged Okapi Partners LLC to assist us in soliciting proxies. We anticipate paying a fee of $10,000 plus expenses for these services.

As of the date of this proxy statement, the Board knows of no other business that may properly be, or is likely to be, brought before the Annual Meeting. If any other matters should arise at the Annual Meeting, the persons named as proxy holders, David Jackson and Adam Miller, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If, for any unforeseen reason, any of the Class I director nominees are not available to serve as a director, the named proxy holders will vote your proxy for such other Class I director candidate or candidates as may be nominated by the Board.

We intend to report voting results of the Annual Meeting on Form 8-K within four business days after the Annual Meeting.

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

If you have questions concerning a proposal, or the Annual Meeting, are requesting copies of this proxy statement, or if you need directions to or special assistance at the Annual Meeting, please call our Secretary at (602) 269-2000 or e-mail the Secretary at tcarlson@knighttrans.com. In addition, information regarding the Annual Meeting is available via the Internet at our website, www.knight-swift.com.

 

In furtherance of its goals of providing effective governance of our business and affairs for the long-term benefit of stockholders, the Board has adopted Corporate Governance Guidelines in addition to charters for each of its Board committees and a Code of Business Conduct and Ethics (the “Code of Conduct”) for our directors, officers, and employees. Each of these documents is free and available for download in the corporate governance section of the Investor Relations page at www.knight-swift.com. You may also obtain a copy by writing to Knight-Swift Transportation Holdings Inc., c/o Secretary, 20002 North 19^th Avenue, Phoenix, Arizona 85027.

We take a company-wide approach to risk management, and our full Board has overall responsibility for and oversees our risk management process on an annual basis. Our full Board: (i) determines the appropriate risk for us as an organization; (ii) assesses the specific risks faced; and (iii) reviews the appropriate steps to be taken by management in order to manage those risks. While the full Board maintains the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas. In particular, our Compensation Committee is responsible for overseeing the management of risks relating to our executive and non-executive compensation policies and practices and the incentives created by our compensation policies and practices. Our Audit Committee oversees assessment and management of enterprise risks, as well as financial risks, and is responsible for overseeing potential conflicts of interests. Our Nominating and Corporate Governance Committee is responsible for overseeing implementation of appropriate corporate governance procedures, monitoring and overseeing the management and mitigation of operating risks, and overseeing the management of risks associated with the independence of our Board. Our Nominating and Corporate Governance Committee also reviews enterprise operating risks, other than financial and internal controls risks. Our Finance Committee monitors and mitigates risks relating to our deployment of financial resources, the management of our balance sheet, and the investment of cash and other assets. Our Merger Integration Committee monitors risks associated with integration efforts in connection with the 2017 Merger. Pursuant to the Board’s instruction, management regularly reports on applicable risks to the relevant committee or the full Board. As appropriate, additional review or reporting on risks are conducted as needed or as requested by our Board and its committees.

If the Chairperson of the Board is not an independent director, our Board’s independent directors will designate one of the independent directors on the Board to serve as lead independent director. Currently, our lead independent director is Kathryn Munro. The duties of the lead independent director include:

 

In the absence or disability of the Chairperson, the duties of the Chairperson (including presiding at all meetings of our Board and the stockholders) shall be performed and the authority of the Chairperson may be exercised by the lead independent director or another independent director designated for this purpose by our Board. The Chairperson of our Board (if he or she is an independent director) or the lead independent director may only be removed from such position with the affirmative vote of a majority of the independent directors and only for the reasons set forth in our by-laws, including a determination by a majority of the independent directors that the Chairperson or lead independent director, as the case may be, is not fulfilling his or her responsibilities in a manner that is in the best interests of the Company and its stockholders.

The Company prefers a mix of background and experience among its members. The Board does not follow any ratio or formula to determine the appropriate mix. Rather, it uses its judgment to identify nominees whose backgrounds, attributes, and experiences, taken as a whole, will contribute to the high standards of Board service to the Company. The effectiveness of this approach is evidenced by the directors’ participation in insightful and robust, yet mutually respectful, deliberation that occurs at Board and committee meetings.

The Board held 12 meetings during the 2017 calendar year. During 2017, all directors attended at least 75% of the aggregate of the Board and committee meetings on which they sit.

All six of Swift’s then-incumbent directors attended Swift’s 2017 Annual Meeting of Stockholders. Directors are invited and encouraged to attend the Company’s annual meetings of stockholders, although we do have a formal policy regarding director attendance at our annual meetings of stockholders.

Our Board has an Audit Committee (AC), Compensation Committee (CC), Nominating and Corporate Governance Committee (NGC), Merger Integration Committee (MIC), Finance Committee (FC), and Executive Committee (EC). Each committee, except our Executive Committee, is composed entirely of independent directors, each of whom is a “non-employee director” as defined in Rule 16b-3(b)(3) under the Exchange Act and, for 2017, an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code.

Members serve on these committees until their respective resignations or until otherwise determined by our Board. Our Board may from time to time establish other committees.

The Audit Committee held 9 meetings in 2017. The Audit Committee performs the following functions:

The Board has determined that each of Messrs. Garnreiter, Synowicki, Dozer, and Vander Ploeg qualify as audit committee financial experts as such term is defined in Item 407(d)(5) of Regulation S-K, promulgated by the Securities and Exchange Commission (“SEC”). The Board has also determined that all members of the Audit Committee satisfy the independence standards of the NYSE listing standards and the SEC requirements and possess the requisite literacy in financial matters to sit as a member of the Audit Committee. Mr. Garnreiter has been designated as the audit committee financial expert.

The Compensation Committee held 6 meetings in 2017. The Compensation Committee performs the following functions:

 

The Board has determined that all members of the Compensation Committee satisfy the independence listing standards of the NYSE and applicable SEC requirements. All members of the Compensation Committee qualify as “non-employee directors” for purposes of Rule 16b-3 of the Exchange Act and “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code. In accordance with its charter, the Compensation Committee may delegate responsibility to subcommittees of the Compensation Committee as necessary or appropriate.

Prior to the 2017 Merger, the Compensation Committee of Swift retained Pearl Meyer & Partners, LLC ("Pearl Meyer") as its independent compensation consultant for 2017. Following the 2017 Merger, the Compensation Committee retained Echelon Compensation Partners ("Echelon") as its independent compensation consultant to provide advice and services such as the following: (i) analysis and recommendations that inform the Compensation Committee's decisions with respect to compensation; (ii) market pay data and competitive-position benchmarking; (iii) analysis and input on performance measures and goals; (iv) analysis and input on compensation program structure; (v) an assessment of the risks under our compensation programs;  and (vi) updates on market trends and the regulatory environment as it relates to executive compensation, including corporate governance aspects.  Echelon served as Knight’s independent compensation consultant prior to the 2017 Merger. The decision to retain Echelon was due to the familiarity of its consultants with Knight and the compensation practices of our industry.

Pursuant to SEC rules and NYSE listing standards, the Compensation Committee of Swift assessed the independence of Pearl Meyer and the Compensation Committee of the Company assessed the independence of Echelon, and concluded that no conflict of interest exists that would prevent Pearl Meyer or Echelon from independently advising the Swift Compensation Committee or the Company’s Compensation Committee, respectively.  In connection with this assessment, the Compensation Committee of Swift and the Compensation Committee of the Company considered, among others, the following factors: (i) the provision of other services to us by the firm that employs the compensation advisor; (ii) the amount of fees received from us by the firm that employs the compensation advisor as a percentage of the total revenue of the firm; (iii) the policies and procedures of the firm that employs the compensation advisor that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the compensation advisor with any member of the Compensation Committee; (v) any stock in our company owned by the compensation advisor or the advisor's immediate family members; and (vi) any business or personal relationship of the compensation advisor or the firm employing the advisor with any of our executive officers. In addition, Pearl Meyer and Echelon reported to the respective Compensation Committees concerning the factors specified in SEC rules and NYSE listing standards regarding potential conflicts of interest arising from their work.  Pearl Meyer did not perform other services for Swift. Echelon does not perform other services for the Company, other than assistance with integration following the 2017 Merger, and will not do so without the prior consent of the Compensation Committee. Pearl Meyer’s and Echelon's roles in establishing the compensation of our named executive officers, to the extent material, are addressed under “Executive Compensation—Compensation Discussion and Analysis.”

 

The Nominating and Corporate Governance Committee held 4 meetings in 2017. The Nominating and Corporate Governance Committee performs the following functions:

The Board has determined that all members of the Nominating and Corporate Governance Committee satisfy the independence listing standards of the NYSE.

The Merger Integration Committee held 1 meeting in 2017. The Merger Integration Committee is responsible for overseeing our plans to integrate the operations of Swift and Knight following the 2017 Merger. The Merger Integration Committee performs the following functions:

The Finance Committee held 1 meeting in 2017. The Finance Committee performs the following functions:

The Executive Committee did not hold any meetings in 2017. The Executive Committee is authorized to act on behalf of the Board when the Board is not in session, with the exception of certain actions. The Executive Committee is currently comprised of Kathryn Munro, Kevin Knight, Gary Knight, and Richard Lehmann.

Our Board has adopted Corporate Governance Guidelines to assist the Board in the exercise of its duties and responsibilities and to serve the best interests of the Company and our stockholders. A copy of these guidelines has been posted on our website at www.knight-swift.com. These guidelines, which provide a framework for the conduct of the Board’s business, provide that:

 

Our by-laws require that we use a majority voting standard in uncontested director elections and we have a resignation requirement under our Corporate Governance Guidelines for directors who fail to receive the required majority vote. Under the majority voting standard, a director nominee must receive more votes cast “for” than “against” for his or her election in order to be elected to the Board. If a director nominee does not receive the required number of votes, such director nominee will, within five days following the certification of the stockholder vote, tender his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will consider such tendered resignation and, within 30 days following the date of the stockholders’ meeting at which the election occurred, make a recommendation to the Board concerning the acceptance or rejection of such resignation. The Board will take formal action on the Nominating and Corporate Governance Committee’s recommendation no later than 60 days following the date of the stockholders’ meeting at which the election occurred, and the Company will disclose the Board’s decision on a Form 8-K filed with the SEC. Directors shall be elected by a plurality of the votes cast at any meeting of stockholders where the number of nominees exceeds the number of directors to be elected.

The Board has adopted a Code of Conduct that applies to all of our directors, officers, and employees. In addition, we maintain a Policy Governing Responsibilities of Financial Managers and Senior Officers (the “Financial Responsibilities Policy”) that applies to our executive officers (Executive Vice President or above), CFO, Chief Accounting Officer (“CAO”), Controller, and any other employee who is responsible for the management of our funds or for the operation and maintenance of our financial accounting and reporting system. The Code of Conduct and Financial Responsibilities Policy include provisions applicable to our CEO, CFO, CAO, Controller, or persons performing similar functions, which constitute a “code of ethics” within the meaning of Item 406(b) of SEC Regulation S-K. Copies of the Code of Conduct and Financial Responsibilities Policy are publicly available free of charge on our website at www.knight-swift.com.

Pursuant to SEC regulations and NYSE listing standards, we will disclose amendments to or waivers of our Code of Conduct or our Financial Responsibilities Policy in a press release, on our website at www.knight-swift.com., or in a Current Report on Form 8-K filed with the SEC, whichever disclosure method is appropriate.  To date, we have not granted any waivers from our Code of Conduct to our directors or executive officers or our Financial Responsibilities Policy to the CEO, CFO, CAO, Controller, or any person performing similar functions.

Independent Board members generally meet without management present at least once per year in executive sessions. The independent chair of the Swift Board presided over meetings of the independent directors prior to the 2017 Merger and the Lead Independent Director presided over such meetings after the 2017 Merger.

 

The Company has a Securities Trading Policy (“STP”) that sets forth terms, conditions, timing, limitations, and prohibitions with respect to trading in the Company’s securities. The STP prohibits all directors, officers, employees, and consultants from trading in the Company’s securities while in possession of material nonpublic information.  Employees are also generally prohibited from engaging in puts, calls, or similar instruments relating to the Company’s securities, or selling the Company’s securities “short.”  The STP also restricts directors, officers subject to Section 16 of the Exchange Act, and certain other specifically designated employees from trading in the Company’s securities during certain periods and only after they have obtained pre-clearance for trades in the Company’s securities from the Company’s General Counsel and CFO.

The Company also has adopted the Anti-Pledging and Hedging Policy to limit the pledging and hedging of the Company’s securities by certain individuals.  The Anti-Pledging and Hedging Policy applies to the Chairperson of the Board, any Vice Chair (if a Company employee), the CEO, the President, the CFO, any other named executive officer, any Company employee who is also a member of the Board, non-employee directors (including Kevin Knight, Gary Knight, and Jerry Moyes), and any other employee designated by the Nominating and Corporate Governance Committee (any such person, a “Designated Person”).  Subject to limited exceptions, Designated Persons are prohibited from engaging in any pledging or hedging transaction (including zero cost collars, forward sales contracts, puts, calls, and other derivative transactions) in the Company’s common stock.  The Anti-Pledging and Hedging Policy permits the Nominating and Corporate Governance Committee to grant a hardship exemption to this restriction in limited circumstances where a Designated Person is the subject of a significant hardship caused by circumstances outside his or her control and the totality of the circumstances mitigate the risks to stockholders generally.  The CEO, any non-employee director, Kevin Knight, Gary Knight, and Jerry Moyes are not eligible for a hardship exemption.

The Anti-Pledging and Hedging Policy permits Kevin Knight and Gary Knight to continue certain existing pledging and hedging transactions, but requires them to reduce the number of shares subject to such transactions by 50% by October 1, 2020.  The Anti-Pledging and Hedging Policy also permits Jerry Moyes to continue certain existing pledging and hedging transactions in accordance with the Moyes Family Stockholders Agreement dated as of April 9, 2017, between the Company, Jerry Moyes, and certain of Mr. Moyes’ family members and controlled entities (the “Moyes Stockholders Agreement”).  The Anti-Pledging and Hedging Policy and the Moyes Stockholders Agreement generally permit Mr. Moyes to renew, modify, extend, or replace existing transactions, provided that no additional shares may be hedged or pledged by Mr. Moyes except to the extent necessary to continue, replace, or renew such transactions.

Finally, the Anti-Pledging and Hedging Policy requires Designated Persons to comply with stock retention guidelines as established from time to time by the Compensation Committee. Our Stock Ownership and Retention Policy (the “Retention Policy”) requires each non-employee director to own Company stock having a value of the lesser of (i) three times the director’s annual cash retainer and (ii) $140,000.  Non-employee directors who, prior to the 2017 Merger, were directors of Swift must own the required amount by five years from September 7, 2017. Except as provided in the foregoing, each non-employee director must own the required amount by the later of five years from (x) the date of adoption of the Retention Policy and (y) the director’s appointment or election to the Board.  Pledged shares are excluded from the calculation of the director retention amounts. Our key officers, as designated under the Retention Policy, also must meet certain minimum stock ownership requirements.  Currently, key officers under the Retention Policy include (i) our CEO and our Executive Chairperson, who must own Company stock having a value of five times their respective base salaries; (ii) our CFO and Vice Chairperson, who must own Company stock having a value of three times their respective base salaries; and (iii) our Division Operations Officer and Executive Vice President of Sales and Marketing, who must own Company stock having a value of two times their respective base salaries.  The Compensation Committee of the Board can designate other key officers who will be subject to the Retention Policy.  Key officers must achieve such ownership by the later of eight years from (x) the adoption of the Retention Policy and (y) their appointment to the applicable office; provided that any key officer who was employed by Swift prior to the 2017 Merger, must achieve such ownership by five years from September 7, 2017.  The Compensation Committee will establish retention amounts for other officers at such time as they are designated as key officers under the Retention Policy.  Pledged and hedged shares are excluded from the calculation of the retention amounts.

Stockholders and other interested parties may communicate directly with any member or committee of the Board by writing to: Knight-Swift Transportation Holdings Inc. Board of Directors, c/o Secretary, 20002 North 19^th Avenue, Phoenix, Arizona 85027. Please specify to whom your letter should be directed. Our Secretary will review all such correspondence and regularly forward to the Board a summary and copies of all such correspondence that, in his or her opinion, deals with the functions of the Board or its committees or that he or she otherwise determines requires the attention of any member, group, or committee of the Board. Board members may at any time review a log of all correspondence received by us that is addressed to Board members and request copies of any such correspondence.

The Nominating and Corporate Governance Committee will consider recommendations for director nominations proposed by stockholders. To recommend a prospective director candidate for the Nominating and Corporate Governance Committee’s consideration, stockholders may submit the candidate’s name, qualifications, and other relevant biographical information in writing to: Knight-Swift Transportation Holdings Inc., Nominating and Corporate Governance Committee, c/o Secretary, 20002 North 19^th Avenue, Phoenix, Arizona 85027. Our by-laws require stockholders to give advance notice of stockholder proposals, including nominations of director candidates. For more information, please see “Stockholder Proposals” in this proxy statement.

The Nominating and Corporate Governance Committee assesses a director nominee’s judgment, integrity, independence, management, and business skills and experience (particularly with public companies and companies in our industry or other industries related to our business), prominence and reputation in his or her profession, concern for the interests of our stockholders, knowledge of corporate governance issues and board functions, commitment to attend and actively participate in meetings and related Board activities, other commitments and responsibilities, and such other factors as the Nominating and Corporate Governance Committee determines are appropriate in light of our needs and the needs of our Board. Exhibit “A” of the Nominating and Corporate Governance Committee Charter and our Corporate Governance Guidelines also set forth additional criteria and guidelines the Nominating and Corporate Governance Committee may consider when selecting director nominees.

Upon identifying and selecting qualified director nominee candidates, the Nominating and Corporate Governance Committee then submits its director nominee selections to our full Board for consideration. We do not pay a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees.

The Board is responsible for recommending director candidates for election by the stockholders and for appointing directors to fill vacancies or newly created directorships. The Board has delegated the screening and evaluation process for director candidates to the Nominating and Corporate Governance Committee, which identifies, evaluates, and recruits qualified director candidates and recommends them to the Board. The Nominating and Corporate Governance Committee considers potential candidates for director, who may come to the attention of the Nominating and Corporate Governance Committee through current directors, management, professional search firms, stockholders, or other persons. The Nominating and Corporate Governance Committee considers and evaluates a director candidate recommended by a stockholder in the same manner as a nominee recommended by a Board member, management, search firm, or other sources.

Our by-laws provide for “proxy access,” which provides a means for our stockholders who have retained and hold a sufficient ownership position in the Company to include stockholder-nominated director candidates in our proxy materials for annual meetings of stockholders. The proxy access provision in our by-laws allows any stockholder (or group of up to 20 stockholders) that has continuously owned at least 3% or more of the Company’s issued and outstanding common stock, for three years preceding the date of submission of the qualified nomination notice (and continues to own at least such amount through the date of the annual meeting), to nominate candidates for election to the Board and require the Company to list such nominees in the Company’s proxy statement for its annual meeting of stockholders, subject to certain procedural and information requirements. Our by-laws also provide procedures for nominations of persons for election to our Board by stockholders who comply with certain timely notice and form procedures set forth therein.

None of the current members of the Compensation Committee have been, or are, one of our officers or employees.  In 2017, no member of our Compensation Committee had any relationship or transaction with the Company that would require disclosure as a “related person transaction” under Item 404 of SEC Regulation S-K.

During 2017, none of our executive officers served as a member of the board of directors or compensation committee (or other board committee performing equivalent functions) of another entity and no executive officers of such other entity served as a member of our Board or Compensation Committee.

In addition, certain members of the Knight family are employed on the same terms and conditions as non-related employees, several of whom are considered related persons due to their familial relationship with one or more of Kevin Knight (our Executive Chairman) and Gary Knight (our Vice Chairman). In addition, we also employed one person who is considered a Related Person due to his familial relationship with David Jackson (our CEO).  These related persons were Larry Knight and Keith Knight (brothers of Kevin Knight), Cory Webster (brother-in-law of Gary Knight), Glen Thomas (brother-in-law of David Jackson), and Tyson Hintz (son-in-law of Kevin Knight). The aggregate total compensation paid to these individuals in 2017 was $2,851,821. This amount includes any equity awards granted to such individuals in 2017, valued as of the grant date in accordance with FASB ASC Topic 718, as well as amounts attributable to any accelerated vesting of equity awards in connection with the 2017 Merger, cash vehicle allowances, or use of company vehicles.  Based on the fact that these individuals are employed on the same terms and conditions as non-related employees, Knight’s Audit Committee ratified these transactions prior to the 2017 Merger, with the exception of Kevin Knight's and Gary Knight’s compensation.  Because Kevin Knight and Gary Knight are our executive officers, their compensation was reviewed and approved by the Compensation Committee. Also, we have a consulting arrangement with Mr. Moyes. See “Director Compensation” for details regarding Mr. Moyes’ consulting arrangement.

The Company’s by-laws provide that the number of directors shall not be less than three, with the exact number to be fixed by the Board. Directors are divided into three classes, with each class serving a three-year term.

Directors are elected by a majority of votes cast with respect to each director, provided that the number of nominees does not exceed the number of directors to be elected, in which case the directors will be elected by the vote of a plurality of the shares represented in person or by proxy at any stockholder meeting.

The stockholders of the Company elect at the annual meeting successors for directors whose terms have expired. The Board appoints members to fill new membership positions and vacancies in unexpired terms on the Board.

Our Board has nominated Kathryn Munro and Gary Knight as directors to hold office for a term of three years, expiring at the close of the 2021 Annual Meeting of Stockholders or until their successors are elected and qualified or until their earlier resignation or removal. The Board believes that these directors are well-qualified and experienced to direct and manage the Company’s operations and business affairs and will represent the interests of the stockholders as a whole, as described in the biographical information for each of these nominees set forth below under the caption “Nominees for Director.” Mr. Glenn Brown is a Class I director and has decided not to stand for re-election to permit time to focus on his investments.

There are no arrangements or understandings between any of the Class I director nominees and any other person pursuant to which any of such director nominees were selected as a nominee. If any director nominee becomes unavailable for election, which is not anticipated, the named proxies will vote for the election of such other person as the Board may nominate, unless the Board resolves to reduce the number of directors to serve on the Board and thereby reduce the number of directors to be elected at the Annual Meeting.

If elected at the Annual Meeting, the term of each Class I director expires at the 2021 Annual Meeting of Stockholders.

Ms. Munro has served as a member of the board of directors of Knight since 2005 and currently serves as our lead independent director. She is a principal of BridgeWest, LLC, a private equity investment company specializing in wireless technology companies, a position she has held since 2003. Prior to BridgeWest, Ms. Munro spent 20 years at Bank of America Corporation where she held a variety of senior executive positions. Ms. Munro has served on the board of directors of Pinnacle West Capital Corporation, an investor owned electric utility holding company, since 2002. Ms. Munro has also served on the board of Premera Blue Cross, a privately held health insurance company, since 2007. From her distinguished career in commercial banking, Ms. Munro brings business acumen and financial knowledge to our Board and provides insightful guidance regarding our business.

Mr. Knight has served as a Vice Chairman of the board of directors of Knight since 2004, and currently serves as the Vice Chairman of the Company. Mr. Knight served as Knight’s President from 1993 to 2004, and has been one of Knight’s officers and a member of Knight’s Board since 1990. From 1975 until 1990, Mr. Knight was employed by Swift, where he was an Executive Vice President. Mr. Knight is the first cousin of Kevin Knight. The selection of Mr. Knight as a director was based upon, among other things, his significant leadership experience and knowledge of the Company. Mr. Knight’s qualifications to serve on our Board also include his extensive knowledge of the transportation industry.

Mr. Knight has served as the Chairman of the board of directors of Knight since 1999 (including as the Executive Chairman since January 2015) and served as the CEO of Knight from 1993 through December 2014, and currently serves as a full time executive officer of the Company in his role as Executive Chairman. He has been one of our officers and directors since 1990. From 1975 to 1984 and again from 1986 to 1990, Mr. Knight was employed by Swift, where he served as Executive Vice President and President of Cooper Motor Lines, Inc., a former Swift subsidiary. Mr. Knight currently serves on the board of directors and Executive Committee of the American Trucking Associations. Mr. Knight is the first cousin of Gary Knight. The selection of Mr. Knight as a director was based, among other things, upon his extensive experience in business operations and exemplary executive leadership since Knight’s founding.  Mr. Knight also has exhibited commendable dedication to our financial and operating performance.

Mr. Garnreiter has served as a member of the board of directors of Knight since 2003. Mr. Garnreiter served as treasurer of Shamrock Foods Company, a privately held manufacturer and distributor of foods and food-related products from 2012 until his retirement in December 2015. From 2010 until 2012, Mr. Garnreiter was a managing director of Fenix Financial Forensics LLC, which provides financial analysis, forensic accounting, litigation support, and other dispute resolution services. Mr. Garnreiter is also the Chairman of the board of directors and chair of the audit committee of Axon International (formerly Taser International, Inc.), a manufacturer of non-lethal protection devices; chair of the audit and governance committees for Amtech Systems, Inc., a supplier of horizontal diffusion furnace systems; and a member of the board of directors of Banner Health Systems, a nonprofit multistate hospital system based in Phoenix, Arizona. Mr. Garnreiter began his career with Arthur Andersen LLP in 1974 after graduating with a Bachelor of Science degree in accounting from California State University at Long Beach, ultimately serving as a senior audit partner. Mr. Garnreiter is a Certified Public Accountant and is a Certified Fraud Examiner. As a member of our Board, Mr. Garnreiter offers financial, accounting, and managerial expertise gained from the various executive and supervisory roles he has held throughout his career.  In addition, the experience acquired through Mr. Garnreiter’s positions as a director of several publicly traded and privately held companies benefit the Company, the Board, and our stockholders.

 

Mr. Jackson has served as the Chief Executive Officer of Knight, and now Knight-Swift, and a member of the board of directors of Knight since January 2015. He has served as the President of Knight, and now Knight-Swift, since February 2011. Mr. Jackson previously served as Knight’s Chief Financial Officer from 2004 until 2012. He has been with Knight since 2000. Mr. Jackson served as Knight’s Treasurer from 2006 to 2011 and Knight’s Secretary from 2007 to 2011. Prior to his appointment as the CFO, Mr. Jackson served in several positions at Knight between 2000 and 2004. The selection of Mr. Jackson as a director was based, among other things, upon his extensive transportation, leadership, and finance experience and his deep understanding of the Knight culture and commitment to maintaining our financial and operating performance.

Mr. Dozer has served on the board of directors of Swift since 2008. Mr. Dozer is the retired Chairman of GenSpring Family Office, a private wealth management firm in Phoenix, Arizona, where he served from 2008 until January 2013. Prior to this role, Mr. Dozer served in various roles at the Arizona Diamondbacks Major League Baseball team (President from 1995 to 2006) and the Phoenix Suns National Basketball Association team (Chief Operating Officer from 1987 to 1995). Early in his career, he was an audit manager with Arthur Andersen LLP. Mr. Dozer currently serves on the boards of directors of: Blue Cross Blue Shield of Arizona, a not-for-profit provider of health insurance and related services in Arizona, where he is Chairman of the Board; Viad Corporation, a publicly traded corporation that specializes in international live-event organizing and travel attractions, where he is Chairman of the Board; and Cole Office & Industrial REIT (CCIT II), Inc., a real estate investment trust. Mr. Dozer previously served on the board of directors of Apollo Education Group, Inc., a private education provider, from 2011 to 2017. Mr. Dozer holds a Bachelor of Science degree in business administration and accounting from the University of Arizona and is a former Certified Public Accountant. The selection of Mr. Dozer as a director was based, among other things, on Mr. Dozer’s audit and financial experience and his long-standing relationships within the business, political, and charitable communities.

Mr. Vander Ploeg has served on the board of directors of Swift since 2009. He currently serves as President of Dutchman Advisors, LLC, a management consulting and private investment company.  Mr. Vander Ploeg is the retired Executive Vice President and CFO of School Specialty, Inc., a distributor of products, and curriculum solutions in the education marketplace, where he served from 2008 until December 2013. In January 2013, School Specialty filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Prior to that role, Mr. Vander Ploeg spent 24 years at Schneider National, Inc., a provider of transportation and logistics services and was Executive Vice President and CFO from 2004 until his departure in 2007. Prior to joining Schneider, Mr. Vander Ploeg was a senior auditor for Arthur Andersen. Mr. Vander Ploeg currently serves on the boards of directors of Energy Bank, Inc., a designer and manufacturer of LED lighting, and Bellin Psychiatric Hospital. Mr. Vander Ploeg holds a Bachelor of Science degree in accounting and a Master’s degree in business administration from the University of Wisconsin–Oshkosh. Mr. Vander Ploeg’s qualifications to serve on our Board include his extensive experience in the transportation and logistics services industry and his past public company and finance and audit experience provide us with valuable insight on public company governance practices.

 

Mr. Lehmann has served as a member of the board of directors of Knight since 2006. Mr. Lehmann has also served on the boards of Grandpoint Capital, Inc., a bank holding company, since December 2013, and Communities SouthWest, a real estate investment and development firm, since October 2015. Mr. Lehmann previously served as the Chairman of Biltmore Bank of Arizona, a commercial bank he founded, from 2003 to 2012, and on the board of directors of Cole Real Estate Income Strategy (Daily Nav), Inc., a company that holds commercial properties, from 2012 to 2015. Until 1999, Mr. Lehmann served as Vice Chairman of Banc One Corporation, when it acquired FCNBC, creating the fifth largest bank in the United States, with responsibility for all consumer banking and credit card operations. Mr. Lehmann’s previous positions include Chairman and CEO of Valley National Bank. Prior to that, Mr. Lehmann spent 20 years with Citigroup. Mr. Lehmann is presently a member of the board of directors of both the TGen Foundation, a non-profit that secures and stewards private support for biomedical discoveries, and Vereit Real Investment Fund, a REIT sponsored by Vereit, Inc. Mr. Lehmann brings to our Board strong leadership, finance, and global experience developed throughout his career in the banking industry.

Mr. Kraemer has served as a member of the board of directors of Knight since 2012. Mr. Kraemer currently serves as President of Chartwell Capital, Inc., a private investment company. From 1975 to 1996, Mr. Kraemer served as an officer of UDC Homes, Inc., a builder of single family homes, becoming a director and President in 1985 and CEO in 1994. Mr. Kraemer currently serves on the board of American Airlines Group as the Chairman of the Compensation and Human Resources Committee and previously served as a director for US Airways Group, Inc. from 2005 until their merger with American Airlines Group in December 2013. The Board believes that Mr. Kraemer is qualified to serve as a director based upon, among other things, his financial acumen, executive insight, and corporate governance, human resources, and labor relations knowledge. 

Mr. Moyes was Swift’s CEO from 2007 until his retirement effective December 31, 2016. Mr. Moyes currently serves as a consultant to the Company with the title of Senior Advisor to the Executive Chairman and the Vice Chairman of the Company.  Between January 2017 and the date of the 2017 Merger, Mr. Moyes served as a consultant to Swift with the title of Founder and Chairman Emeritus. Mr. Moyes has been a director of Swift since 1966, was Chairman of the Board, President, and CEO of Swift from 1986 until 2005, and later became CEO of Swift again in 2007, when he took Swift private. Mr. Moyes holds complete or significant ownership interest in and serves as Chairman of SME Industries, a provider of structural steel fabrication and erection services, Southwest Premier Properties, a real estate holding company, and various commercial and residential real estate properties. Mr. Moyes previously held a majority ownership interest in, and served as Chairman of the Board of, Central Refrigerated and its subsidiaries until these entities were acquired by Swift in August 2013. Mr. Moyes was a member of the board of directors of the Phoenix Coyotes of the National Hockey League (“NHL”), from 2002 until 2009 and was the majority owner of the Phoenix Coyotes from 2006 until 2009, when the assets of the team were purchased by the NHL out of a bankruptcy filed in 2009. In 2010, the NHL filed a complaint against Mr. Moyes alleging, among other things, aiding and abetting breach of fiduciary duty arising out of the bankruptcy filing. Mr. Moyes has a history of leadership and involvement with the transportation and logistics industry, including having served as past Chairman and President of the Arizona Trucking Associations, board member and Vice President of the American Trucking Associations and a board member of the Truckload Carriers Association, and Mr. Moyes’ experience, comprehensive knowledge of the transportation and logistics services industry and extensive perspective of our day-to-day operations provides essential insight and guidance to our Board.

We pay only non-employee directors for their services as directors. Directors who are also officers or employees of the Company are not eligible to receive any of the compensation described below. The compensation for non-employee directors following the 2017 Merger is as follows:

 

Non-employee directors of Swift also received a fee ranging from $500 to $2,500, depending on the length of the meeting, for special meetings of Swift’s Board, and reimbursement of expenses to attend Swift’s Board and committee meetings.

Mr. Miller joined Knight in 2002.  He was appointed as Knight’s CFO in May 2012 and has also served as the Secretary and Treasurer of Knight since 2011. Mr. Miller currently serves as the Company’s CFO and Treasurer. Prior to becoming CFO of Knight, Mr. Miller served as the Senior Vice President of Accounting and Finance from 2011 to May 2012 and as Controller of Knight Refrigerated, LLC, a subsidiary of Knight, from 2006 to 2011.  Prior to his appointment as Controller of Knight Refrigerated, LLC, Mr. Miller served since 2002 in several other accounting and finance positions at Knight. Mr. Miller earned his Bachelor’s degree in Accounting from Arizona State University and is a Certified Public Accountant.

Mr. Guin joined Swift in 1988 and served as Swift’s Executive Vice President of Sales and Marketing since May 2016.  He continues to serve as the Company’s Executive Vice President of Sales and Marketing. Prior to that, he served in several key customer-centric positions within Swift, including Vice-President of National Accounts and Vice-President of Eastern Region Sales. For a brief time away from Swift, Mr. Guin served as Vice President of Business Development in charge of Mergers and Acquisitions for U.S. Xpress Enterprises, Inc. (“U.S. Xpress”), a truckload carrier, from 2006 to 2010.  Mr. Guin later became President of Arnold Transportation, a truckload carrier, in 2010 where he served until 2011.  Mr. Guin earned his Bachelor’s degree in Political Science from Winthrop University.

Mr. Carlson has served as our General Counsel and Secretary since September 2017. Prior to his current position, Mr. Carlson served as the General Counsel of Knight since 2007. Prior to joining Knight, Mr. Carlson was Vice President and Corporate Counsel at Swift from 1991 to 2007. Mr. Carlson received his Bachelor of Science degree in Accounting from the University of Nebraska and earned his Juris Doctor degree from the University of Nebraska College of Law. Mr. Carlson is admitted to practice law in the State of Arizona.

Mr. Flanagan has served as our Chief Accounting Officer since September 2017. Prior to his current position, Mr. Flanagan served as Swift’s Vice President and Corporate Controller from 2008 to September 2017 and as its Director of Financial Reporting at Swift from 2006 to 2008. Prior to joining Swift, Mr. Flanagan served in various accounting positions from 1994 to 2006, including as an Audit Manager with KPMG LLP (“KPMG”) from 2000 to 2004 and an Audit Senior at Perkins & Co. from 1996 to 2000. Mr. Flanagan earned his Bachelor’s degree in Accounting from the University of Puget Sound and is a Certified Public Accountant.

Mr. Quast joined Knight in 1996. He served as Executive Vice President and Chief Operations Officer of Knight from 2011 until the 2017 Merger, and has served as the Chief Operating Officer of Swift since the 2017 Merger. Prior to his service as Executive Vice President and Chief Operations Officer of Knight, Mr. Quast served at Knight as the Business Unit Leader for the Southeast from 2010 to 2011. Prior to his appointment as Business Unit Leader for the Southeast, Mr. Quast served in several senior sales and operations positions at Knight in the Southeast region since 2001 and in various other operating departments since 1996. Mr. Quast earned his Bachelor’s degree in Mandarin Chinese and Asian Studies from Brigham Young University.

Mr. Updike joined Knight in 1996. He has served as Executive Vice President of Sales and Marketing at Knight since 2011. Prior to his appointment as Executive Vice President of Sales and Marketing, Mr. Updike served as Vice President of Sales at Knight Refrigerated, LLC, a subsidiary of Knight, since 2006 and as General Manager beginning in 2008. Prior to joining Knight Refrigerated, LLC, Mr. Updike served in several sales management and operations positions at Knight since 1996. Mr. Updike earned his Bachelor’s degree in Marketing and Finance from Utah State University.

Mr. Runnels currently serves as Swift’s Executive Vice President of Fleet Operations and has served as Executive Vice President, Fleet Operations of Swift Transportation Co. of Arizona, LLC, since 2011. Prior to that, Mr. Runnels served as Executive Vice President of Eastern Region Operations of Swift from 2007 to 2011. Mr. Runnels previously served as Vice President of Fleet Operations, Regional Vice-President and various operations management positions from 1983 to 2006 at Swift. From 2006 to 2007, Mr. Runnels was Vice President of Operations with U.S. Xpress.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on its review and discussions with management, the Compensation Committee recommended to the Board, and the Board approved, that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s Annual Report to Stockholders for the fiscal year ended December 31, 2017.

This report is submitted by the Compensation Committee.

Kathryn Munro — Chairperson

Our Compensation Committee, which is comprised solely of independent directors, oversees our executive compensation program and reviews and approves all compensation decisions relating to our executive officers. The Compensation Committee endeavors to provide a compensation program that attracts, motivates, and retains our executive officers, is competitive within our industry, and focuses executive management on Company performance and building value for our stockholders. Highlights of the executive compensation program following the 2017 Merger include:

On the Merger Date, Knight and Swift combined to create Knight-Swift Transportation Holdings Inc. We refer to this transaction as the “2017 Merger.” Because Swift was the legal acquirer of Knight, the compensation of Swift executives for periods prior to and after the 2017 Merger is discussed and analyzed. The compensation of Knight executives is discussed and analyzed for periods subsequent to the 2017 Merger. Therefore, this CD&A primarily addresses legacy Swift executive compensation programs and the decisions made by the legacy Swift Compensation Committee, and, where necessary, legacy Knight executive compensation programs and the decisions made by the legacy Knight Compensation Committee. We also provide a discussion and analysis of the combined company executive compensation programs going forward, which reflect the decisions made by the combined company’s Compensation Committee.

Our Compensation Committee has the responsibility to:

The Compensation Committee is also responsible for reviewing annually the compensation of our other executive officers and determining whether that compensation is reasonable under existing circumstances. In making these determinations, the Compensation Committee seeks to ensure that the compensation of our executive officers aligns their interests with the interests of our stockholders and the Company. The Compensation Committee reviews and approves all forms of incentive compensation, including cash bonuses, stock option grants, stock grants, restricted stock unit (“RSU”) grants, including performance-based restricted stock unit (“PRSU”) grants, and other forms of incentive compensation granted to our executive officers. The Compensation Committee considers the advice and recommendations of Echelon, our independent compensation consultant. Echelon provides analysis and recommendations regarding market pay data and competitive-position benchmarking, performance measures and goals, program structure, incentive and equity plan design, and the regulatory environment and Company policies as they relate to executive compensation. Echelon also reviews compensation goals and priorities with our CEO, our Executive Chairman, and our CFO as part of providing advice and recommendations for the Compensation Committee.

In November 2017, the Compensation Committee approved grants of RSUs to the named executive officers under the Omnibus Plan. The RSUs vest ratably in three annual installments, beginning on January 31, 2019. In determining to grant time-based equity awards, the Compensation Committee considered, among other things, the important role of RSUs in encouraging long-term retention. Based upon the closing price of our Class A common stock on the grant date of $38.65 per share, each of Messrs. Jackson, Miller, Kevin Knight, Gary Knight, and Guin were granted 15,524, 5,692, 31,048, 4,657, and 2,846 RSUs, respectively. Mr. Kevin Knight’s RSUs will settle in cash upon vesting, while the RSUs granted to the other named executive officers will be settled in shares of Company stock.

The Compensation Committee uses a peer group of companies to assess whether our compensation programs are competitive in structure and amount. Our executive compensation is not determined by any formula or ranking within the peer group. However, our total stockholder return compared to the peer group total stockholder return, does affect the payout percentage under our PRSUs.

The Compensation Committee, with the advice of Echelon, considers several criteria to determine our peer group from time to time, such as whether companies (i) are in the same or similar lines of business, (ii) compete for the same customers with similar products and services, (iii) have comparable financial characteristics that investors view similarly, (iv) consider us a peer, (v) would be considered our peer by proxy advisory services, and (vi) are within a reasonable range in terms of percentile rank with the Company for key financial metrics, such as revenue, EBITDA, total assets, return on assets, return on equity, return on capital, and market capitalization. In determining our peer group following the 2017 Merger, the Compensation Committee and Echelon focused particularly on companies we compete with for business and talent, and identified the following peer group: C.H. Robinson Worldwide, Inc.; Ryder System, Inc.; J.B. Hunt Transport Services, Inc.; Schneider National, Inc.; Hub Group, Inc.; Landstar System, Inc.; Old Dominion Freight Line, Inc.; Werner Enterprises, Inc.; Genesee & Wyoming Inc.; Saia, Inc.; Forward Air Corporation; Heartland Express, Inc.; XPO Logistics, Inc.; and Kansas City Southern.

Following the successful completion of the 2017 Merger, in September 2017, the Compensation Committee awarded special cash acquisition bonuses to select legacy Knight employees, including certain named executive officers, who were particularly instrumental in identifying, negotiating, and consummating the 2017 Merger.   Prior to approving these bonuses, the Compensation Committee requested that Echelon conduct a study to determine the extent and typical magnitude of such bonuses.  Echelon’s research indicated that cash acquisition bonuses were awarded in approximately 25% of material mergers, and that such bonuses typically represented, in the aggregate, approximately 0.1% of the deal value.  Based partly on this information as well as its knowledge of the significant time and effort spent by certain named executive officers (Messrs. Kevin Knight and Gary Knight in particular) in successfully identifying, negotiating, and consummating the 2017 Merger, the Compensation Committee approved special acquisition bonuses for 21 employees, totaling approximately $3.7 million, which represented approximately 0.06% of the deal value of the 2017 Merger.  Of this amount, each of Messrs. Kevin Knight and Gary Knight were awarded $1 million, which together represented approximately 0.03% of deal value, and each of Messrs. Jackson and Miller were awarded $200,000.

In May 2017, Swift’s Compensation Committee approved retention bonuses to each of Mr. Stocking, Ms. Henkels, and Mr. Dragash of $35,000, $35,000, and $5,500, respectively.

In December 2017, the Company paid Mr. Guin a retention bonus of $25,000.

Pursuant to the 2017 Merger, on the Merger Date:

See “Potential Payments upon Termination or Change-in-Control” below for a discussion of payments made to Mr. Stocking, Ms. Henkels, and Mr. Dragash by reason of termination of employment by each such named executive officer as of the Merger Date.

As described above, because Swift was the legal acquirer of Knight, the compensation of Swift executives for periods prior to and after the 2017 Merger is discussed and analyzed. The compensation of Knight executives is discussed and analyzed for periods subsequent to the 2017 Merger. Therefore, this CD&A primarily addresses legacy Swift programs and the decisions made by the legacy Swift Compensation Committee. Where necessary, we have also described legacy Knight programs and the decisions made by the legacy Knight Compensation Committee as well as the Compensation Committee of the combined company following the 2017 Merger.

The principal objectives of Swift’s compensation program in 2017 were to attract and retain talented executives, reward strong business results and performance, remain competitive within the transportation industry, and align the interests of executives with stockholders. Swift’s Compensation Committee annually reviewed its executive compensation program to assess industry competitiveness and alignment with stockholder value. In addition, Swift’s Compensation Committee considered the results of Swift’s annual advisory, non-binding vote on executive compensation. At Swift’s 2017 annual meeting of stockholders, Swift’s stockholders approved, on an advisory, non-binding basis, the compensation of Swift’s named executive officers (approximately 99% of votes cast). Accordingly, Swift’s Compensation Committee determined that its compensation policies and decisions with respect to its named executive officers were appropriate and in the best interests of Swift and its stockholders.

Swift’s Compensation Committee was responsible for reviewing and approving the compensation of Swift’s CEO and its other named executive officers, which was established based upon the scope of their responsibilities, experience, and individual and Swift performance, as well as compensation from recent prior employment, if applicable.

Swift’s CEO and President provided information to Swift’s Compensation Committee on Swift’s financial performance and performance of other named executive officers for consideration in determining the other named executive officers’ total compensation.

The legacy Swift Compensation Committee had retained Pearl Meyer since 2011 as its independent compensation consultant to provide research and consultation around executive compensation. In 2016, Pearl Meyer provided the legacy Swift Compensation Committee with an extensive report that reviewed and evaluated Swift's executive compensation program. Pearl Meyer's study indicated that Swift's target pay structure was generally positioned below the market 50^th percentile and recommended adjustment to all compensation elements to restore competitiveness. The levels for the separate elements of Swift's 2017 compensation program were set based on the advice and recommendations provided by Pearl Meyer in its 2016 review and evaluation report.

In connection with its 2016 review and report, Pearl Meyer completed and prepared a competitive market analysis of the compensation of Swift’s executives to evaluate base salary, annual cash incentive awards, equity awards, and long-term incentives. The assessment involved the selection of a peer group for purposes of pay benchmarking, business performance comparison, and industry practices and trends to determine if relative pay and relative performance were directionally aligned. The peer group selected by Pearl Meyer in its 2016 review and report, which is the same peer group used for determining 2017 compensation for Swift, was: (i) J.B. Hunt Transport Services; (ii) C.H. Robinson Worldwide, Inc.; (iii) ArcBest Corporation; (iv) Old Dominion Freight Line, Inc.; (v) Hub Group, Inc.; (vi) Ryder System, Inc.; (vii) Werner Enterprises, Inc.; (viii) Landstar System, Inc.; (ix) Knight Transportation, Inc. (prior to the 2017 Merger); (x) YRC Worldwide Inc.; and (xi) Heartland Express, Inc.

In general, Swift’s 2017 compensation program consisted of the following elements:

Primary benefits for Swift executives for 2017 included: (i) participation in Swift’s 401(k) and employee stock purchase plans; (ii) health, dental and vision plans; and (iii) various other insurance plans, including life and disability.

Swift’s Compensation Committee, with the assistance of Swift’s then-CEO, annually reviewed the base salary of each named executive officer. Annual salaries were based upon experience, scope and complexity of the position, responsibilities, peer group comparison, Swift’s performance for the fiscal year, and subjective evaluation of each executive’s contribution to Swift’s performance. For 2017, base salaries of named executive officers who were executives of Swift were set as follows: Mr. Guin, $300,000; Mr. Stocking, $650,000; Ms. Henkels, $400,000; and Mr. Dragash, $325,000.

Swift’s compensation structure provided for annual performance incentives linked to Swift’s earnings as well as other financial objectives for the year and was intended to compensate Swift’s executive officers for achievement of key performance measures designed to enhance stockholder value.

For 2017, the target payout level under Swift’s cash-based short-term incentive plan (“STIP”) was expressed as a percentage of the executive’s base salary. An individual cash incentive award was subject to downward adjustment based on overall team performance, department performance, or individual performance. For 2017, target payout levels under the STIP were set as follows: 60% for Mr. Guin; 100% for Mr. Stocking; 75% for Ms. Henkels; and 60% for Mr. Dragash.

Swift’s Compensation Committee, with the assistance and input of management, set company-wide performance goals for the 2017 fiscal year that were approved by Swift’s Compensation Committee and Swift’s Board in February 2017. These goals were set to incentivize management to improve Swift’s profitability, thereby increasing long-term stockholder value. Swift’s attainment of a specified level of Adjusted EPS determined payout to the named executive officers.  Adjusted EPS was the only performance goal for 2017.

Swift selected Adjusted EPS to incentivize improvement in this single metric, which Swift’s Compensation Committee determined most aligned with stockholder interests. If Swift attained its Adjusted EPS goal for the year at target, then each of Swift’s named executive officers would receive a cash payout equal to his or her target payout level.  If Swift failed to attain the Adjusted EPS goal for the year, then each of Swift’s named executive officers would receive less than his or her target payout level or nothing at all, depending upon the level of attainment.  If Swift’s Adjusted EPS was achieved at the maximum level for 2017, then each of Swift’s named executed officers would earn 200% of his or her target payout level.

Adjusted EPS, a non-GAAP measure, was calculated as income (loss) before income taxes, the most comparable GAAP measure, adjusted for: (i) amortization of the intangibles from Swift’s 2007 going-private transactions; (ii) non-cash impairments; (iii) other special non-cash items; (iv) excludable transaction costs; (v) mark-to-market adjustments on Swift’s interest rate swaps, recognized in the income statement; (vi) amortization of previous losses recorded in accumulated other comprehensive income (loss) related to the interest rate swaps Swift terminated upon its IPO and refinancing transactions in December 2010; and (vi) severance expense, including cash and equity award impact, related to departure of certain executive leadership of Swift.  Swift subtracts income taxes at the GAAP effective tax rate as applied to adjusted income before income taxes. The resulted adjusted earnings is then divided by weighted average diluted shares outstanding.

As defined, 2017 actual Adjusted EPS was below threshold level of payout, and accordingly, no bonuses were paid under the 2017 STIP.

In February 2018, in recognition of fourth quarter 2017 performance, the Company awarded a discretionary cash bonus to all bonus eligible employees, including Mr. Guin, who received a bonus payment of $45,000.

Return on net assets was defined as net income, expressed as a percentage of the average of total assets less intangible assets.  Given the challenging economic and freight environments and tight driver market at the date the targets were adopted, Knight’s Compensation Committee viewed the 2017 Performance Targets as reflecting a range of performance that is achievable but uncertain, with the upper end of the range reflecting a significant accomplishment. With input from Echelon, the 2017 Performance Targets were reviewed and approved by Knight’s Compensation Committee after consultation with Messrs. Jackson, Miller, and Kevin Knight.  As with the performance targets established in prior years, Knight’s Compensation Committee also created specific parameters for awarding bonuses within certain incremental ranges of achievement of the 2017 Performance Targets.

The Compensation Committee met in February 2018 to discuss and review the 2017 Performance Targets. The Compensation Committee reviewed the terms of the awards and the financial calculations and certified that both of the 2017 Performance Targets were met at the maximum level, indicating that each participant, including Messrs. Jackson, Miller, Kevin Knight and Gary Knight, earned a cash bonus of 120% of their respective cash bonus potential. After taking into consideration the impact of the new tax legislation passed in late 2017, the Compensation Committee awarded payouts under the Knight 2017 Cash Bonus Plan of $217,500 to Mr. Jackson, $108,000 to Mr. Miller, $270,000 to Mr. Kevin Knight, and $36,000 to Mr. Gary Knight.

For the 2017 LTIP, Swift’s Compensation Committee approved awards of time-based RSUs to Swift’s named executive officers under Swift’s 2014 Omnibus Incentive Plan, to vest in equal installments on each of the first three anniversaries of the May 26, 2017, grant date. Mr. Guin, Mr. Stocking, Ms. Henkels, and Mr. Dragash received awards of 9,072, 33,808, 3,024, and 7,371 RSUs, respectively, after giving effect to the Consolidation Ratio. As a result of the qualifying termination of employment by each of Mr. Stocking, Ms. Henkels, and Mr. Dragrash on the Merger Date, a portion of such RSU awards became vested on the Merger Date, determined by multiplying the number of RSU awards granted by a fraction, the numerator of which was the number of completed days of his or her service following May 26, 2017 prior to his or her termination of employment, and the denominator of which was 1,095. Accordingly, on the Merger Date, 3,242 shares for Mr. Stocking, 290 shares for Ms. Henkels, and 707 shares for Mr. Dragash vested and the remaining shares were forfeited.

The Company maintains DCP, which is a non-qualified deferred compensation plan, for executive officers and certain other employees allowing them the opportunity to defer future salary and/or bonus payments. Participants may elect to defer up to 75% of their future compensation, consisting of base salary and/or bonus. Amounts deferred under the DCP are credited with investment earnings and losses. The amounts are invested in one or more investment options as selected by the participants. The investment options offered currently include money market funds, bond funds, blended funds and stock funds. Participants are fully vested in all amounts deferred under the DCP at all times. Payment options include: (i) a lump sum; or (ii) annual installment payments over a specified period of time not to exceed ten years.  The DCP is intended to comply with Section 409A of the Internal Revenue Code which means, among other things, that payment to certain employees in connection with a separation from service may not be made until six months after separation.

Directors are not eligible to participate in the DCP. The participants’ accounts in the DCP are unfunded obligations of the Company and any life insurance policies, annuity contracts or other property held by the Company to assist it in satisfying its obligations to participants in the DCP will remain part of the general assets of the Company. For all purposes, participants in the DCP shall be treated as general unsecured creditors of the Company.

Mr. Gary Knight did not have any PRSUs granted prior to the 2017 Merger.

In addition, in accordance with the Executive Severance Protection Agreements between each of Mr. Stocking, Ms. Henkels, and Mr. Dragash and Swift (each, a "Severance Agreement", and collectively, the "Severance Agreements"), certain compensation and benefits were paid or became payable to Mr. Stocking, Ms. Henkels, and Mr. Dragash by reason of each such named executive officer’s termination of employment for “good reason” (as defined in each Severance Agreement) on the Merger Date. The Severance Agreement with each of Mr. Stocking, Ms. Henkels, and Mr. Dragash provided for the following severance benefits:

Payment of severance benefits to each of Mr. Stocking, Ms. Henkels, and Mr. Dragash was subject to the named executive officer’s execution and delivery of a customary release and waiver of claims attached to the applicable agreement. The Severance Agreements also provide for customary restrictive covenants, including confidentiality and 12-month non-competition and non-solicitation of employees and customers.

 

We have entered into a severance agreement with Mr. Guin that provides for the following severance benefits in the event of his termination of employment by the Company without “cause” or by him for “good reason” (each as defined in the agreement):

Assuming a termination by the Company without “cause,” or by Mr. Guin for “good reason,” occurred on December 31, 2017, under Mr. Guin’s severance agreement based on the closing market price of our Class A common stock on December 29, 2017 ($43.72 per share), the total value of the severance benefits for Mr. Guin would be approximately $459,786, consisting of cash payments of approximately $327,577 and total value of accelerated equity of $132,209.

Payment of severance benefits to Mr. Guin is subject to his execution and delivery of a customary release and waiver of claims. Mr. Guin’s severance agreement does not subject him to any restrictive covenants.