By Order of the Board of Directors, Todd Carlson, Secretary
| | /s/ Todd Carlson | Todd Carlson, Secretary |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 31, 2018 19, 2020 The Company’s proxy statement for the 20182020 Annual Meeting and its Annual Report to stockholders for the fiscal year ended December 31, 20172019 are available at www.knight-swift.com. |
*The safety of our employees, customers, communities, and stockholders is our first priority. We are closely monitoring statements issued by the World Health Organization and the Centers for Disease Control and Prevention regarding the novel coronavirus disease, COVID-19. As part of our precautions, we reserve the right to reconsider the date, time, and/or means of convening the Annual Meeting, including solely by means of remote communications. If we change the date, time, and/or means of convening the Annual Meeting, we will announce our decision in advance, and details on how to participate will be posted on the Investor page of our website at www.knight-swift.com and filed with the SEC as additional proxy material. We
| | | Letter from our Lead Independent Director |
| | | | | | Dear Fellow Stockholders: | | The responsibilities of our Lead Independent Director include: | On behalf of the Board, I want to thank you for your investment in Knight-Swift. As Knight-Swift’s Lead Independent Director, it has been my privilege to work with a diverse and accomplished group of directors. I take this opportunity to provide you an update on how your board is addressing key areas of stockholder value, corporate governance, and board refreshment. Through these areas, the Board believes Knight-Swift is well-positioned for continued sustainable growth. As directors of the country’s largest truckload company, we view operational excellence as the driver of long-term value creation for our stockholders. Our management team continues to drive outstanding operational execution in a very challenging industry environment while leveraging technology to provide a long-term sustainable future. Our Board guides these efforts through oversight of company strategy and risks, high standards of corporate governance, and a corporate culture that is focused on delivering value to our stockholders and customers while remaining committed to our responsibilities as an industry leader and global citizen.
Independent oversight and diversity remain top priorities for the Board. Approximately two-thirds of our Board members are independent, and we have fully independent Audit, Compensation, Nominating and Corporate Governance, and Finance Committees. As Lead Independent Director, I help to provide independent leadership on the Board, including presiding over all executive sessions of the independent directors, maintaining effective communication between the independent directors and management, and developing materials for Board meetings to ensure our discussions are focused on key risk areas and oversight of our strategic plans.
We are committed to maintaining a diverse Board with an appropriate mix of backgrounds, skills, and experiences that will be important to the Company’s long-term plans. One-quarter of our Board is female, including our Lead Independent Director, and we have been recognized by 2020 Women on Boards for our Board being comprised of at least 20% women. | | | | ● | Presiding at all executive sessions of the Board; | | ● | Coordinating the activities of the independent directors; | | ● | Providing information to the Board for consideration; | | ● | Participating in setting Board meeting agendas, in consultation with the CEO and the Chairperson, and coordinating Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; | | | ● | Participating in the retention of outside advisors and consultants who report directly to the Board; | | ● | Requesting the inclusion of certain materials for Board meetings; | | ● | Consulting with respect to, and where practicable receiving in advance, information sent to the Board; | | ● | Calling meetings of the independent directors; | | ● | Acting as liaison for stockholders between the independent directors and the Chairperson, as appropriate; and | | ● | Responding directly to stockholder and other stakeholder questions that are directed to the Lead Independent Director or the independent directors as a group, as the case may be. |
In furtherance of our commitment to cultivating a Board with the appropriate mix of expertise, diversity, tenure, and experience, we maintain a continued focus on Board effectiveness and refreshment. Last year, former directors Richard Kraemer and Richard Lehmann retired from our Board pursuant to our tenure policy, which we believe lends discipline to our Board refreshment process, and former directors Jerry Moyes and Richard Dozer also stepped down from our Board. We also have a robust Board self-assessment process, involving written questionnaires covering a range of topics, candid and confidential telephonic interviews with outside counsel, and a summary of key feedback, which is the subject of further discussions with the Board and management. As Lead Independent Director, I meet with outside counsel to review in detail the self-assessment comments, facilitate discussion with the Board regarding the results of the self-assessment, and coordinate implementation of feedback with management. Over the last two and one-half years, the Board has provided thoughtful leadership and oversight over the merger of Knight and Swift. We believe the merger of the two companies has resulted in the efficient and effective sharing of best practices between the two brands, while maintaining the distinct identities that made each brand successful. Further, since the 2017 merger, we have returned approximately $110 million to our stockholders in dividends and share repurchases. We value our stockholders’ input and have incorporated those views into our governance practices. Last year, we had a stockholder proposal to declassify our Board, and this year, we are asking our stockholders to vote on amendments to our articles of incorporation to implement that declassification. If approved, our Board will be declassified by 2023. Further, when designing our compensation plans, we have considered the strong stockholder
support for our compensation practices as demonstrated by 97% support in each of our 2019 and 2018 say-on-pay advisory votes. On behalf of the Board, we appreciate your confidence in our leadership and look forward to your support at the 2020 Annual Meeting. Sincerely, Kathryn Munro Lead Independent Director
| | | | Annual Meeting Details | | When | Tuesday, May 19, 2020 8:30 a.m. Local Time | | | Where | 20002 North 19th Ave, Phoenix, AZ 85027 | | | Who Votes | Stockholders of record on March 20, 2020 |
| | | | | | | Voting Matters and Board Recommendations | | Item | Proxy Proposals | Board Vote Recommendation | | Page | | Item 1. | Elect three Class III directors, each such director to serve a term of three years | FOR | | | | | | | | Item 2. | Conduct an advisory, non-binding vote to approve executive compensation | FOR | | | | | | | | Item 3. | Ratify the appointment of Grant Thornton as our independent registered public accounting firm for fiscal year 2020 | FOR | | | | | | | | Item 4. | Vote on amendments to the Certificate of Incorporation to declassify the Board | FOR | | | | | | | | | Item 5. | Vote on the Second Amended and Restated Omnibus Plan | FOR | | | | | | | | | Item 6. | Vote on a stockholder proposal to allow certain stockholder actions by written consent | AGAINST | | |
| | | | 2019 Financial Highlights | | Operating Performance | | ü | Total revenue of $4.8 billion | | ü | Revenue, excluding trucking fuel surcharge of $4.4 billion | | ü | Operating ratio of 91.2% | | ü | Adjusted operating ratio of 88.4% 1 | | Capital Deployment | | ü | Cash flows from operations of $839.6 million | | ü | Free cash flow of $269.8 million 2 | | ü | Lease adjusted leverage ratio decreased by 1.4% compared to year end 2018 3 | | ü | Repurchased $86.9 million of our common stock | | ü | Returned $41.4 million in dividends to our stockholders |
| | | 1 | Adjusted operating ratio is a non-GAAP financial measure defined as operating expenses, net of trucking fuel surcharge revenue and certain non-recurring items, expressed as a percentage of revenue, excluding trucking fuel surcharge revenue. See Part II, Item 7 of our Form 10-K for the year ended December 31, 2019 for a non-GAAP reconciliation. |
| | | 2 | Free cash flow is a non-GAAP financial measure defined as cash flow from operating activities, less net capital expenditures. See non-GAAP reconciliation on page 64. |
| | | 3 | See definition of lease adjusted leverage ratio on page 64. |
Composition of Board 1 Includes tenure on Knight or Swift Board pre-merger
 Proxy Statement SummaryKNIGHT-SWIFT TRANSPORTATION ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CORPORATE RESPONSIBILITY At Knight-Swift Transportation, we are committed to our corporate responsibilities as an industry leader and global citizen. To achieve this, we are engaging in continuous improvement efforts across key areas that impact our employees, our customers, our suppliers, our shareholders and our environment. Our key areas include our people, human rights advocacy programs, our environmental stewardship, and our innovation in technological advancements. OUR PEOPLE Knight-Swift Charities Network, a not-for-profit organization dedicated to making a difference in the communities in which we live and work, provides important fundraising and unlimited volunteer opportunities to our employees. Over a 10 year span, we have provided over employee and community assistance. $10.6MIL in In 2019, we launched a companywide partnership with the Children’s Miracle Network Hospitals, bringing opportunities to support our pillars of giving. Emphasizing employee development has resulted in a culture of continuous learning through our corporate universities. 112,858 employee learning hours completed (2016-2019) 769,196 training course enrollments completed (2016-2019) We hired over 6,000 U.S. veterans, managing a strong program that is increasing year over year. We have created over 11,000 employment opportunities to start a new career in the transportation industry. On-site fitness centers in 14 locations with plans to expand in the future. ENVIRONMENTAL STEWARDSHIP Knight-Swift reduced CO2 emissions (2010-2019) that are equivalent to 3.1BIL pounds of CO2. Knight-Swift emitted 19% less CO2 emissions than the average of all SmartWay trucking partners nationwide (2019). NOx, or air pollutants savings (2010-2019) is equivalent to planting and growing over 248 million trees for 10 years. Our manufacturing company, Strehl, has produced and sold trailer blades that have saved over 100 million gallons of fuel in a 10 year span, or over 2 billion pounds of carbon saved industry wide. 100MIL gallons of fuel saved 2.3BIL pounds of carbon saved Efforts made to reduce our electrical consumption include LED lighting upgrades, solar power utilization, and optimization of HVAC BMS systems, saved 2,710 metric tons of CO2, the equivalent of 575 passenger vehicles for one year. Our water bottle filling stations have saved 462,149 water bottles. Knight-Swift is a founding member of SmartWay, an organization helping improve our environmental performance. 17-time U.S. Environmental Protection Agency SmartWay Award winner. HUMAN RIGHTS We comply with all US and State regulations related to employment law, including child labor laws. Sponsorship with Truckers Against Human Trafficking, we advocate for education and communication out to our mobile workforce. Diversity and Inclusion Initiative launched in 2020 with ongoing efforts in place to support and encourage a diverse and inclusive workplace. Recognized by 2020 Women on Boards as a “W” Winning Company, with at least 20% women represented on our board of directors. SAFETY & INNOVATION Significant investments in technology over the past 10 years, including: Electronic Roll Stability Systems Automated On Board Recording Device Collision Avoidance/Mitigation Systems On Board Forward Facing Cameras Hair Testing Swift’s DOT crash rate has declined 20% each year since the merger. These technical advances resulted in increased operating performance and are driven by our unwavering commitment to safety for our drivers and the motoring public.
 KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC. ATTN: PROXY DEPT.20002 NORTH 19TH AVENUE PHOENIX, AZ 85027 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. 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 Knight-Swift Transportation Holdings Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Knight-Swift Transportation Holdings Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E95514-P33322 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC. For Withhold For All All All Except To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends a vote FOR Proposals 1 through 5 and AGAINST Proposal 6. Proposal No. 1: Elect three Class III directors, each such director to serve a term of three years. NOMINEES: 1. David Jackson 2. Kevin Knight 3. Roberta Roberts Shank For Against Abstain Proposal No. 2: Conduct an advisory, non-binding vote to approve executive compensation Proposal No. 3: Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for fiscal year 2020. Proposal No. 4: Vote on amendments to the Certificate of Incorporation to declassify the Board. Proposal No. 5: Vote on the Second Amended and Restated 2014 Omnibus Plan. Proposal No. 6: Vote on a stockholder proposal to allow certain stockholder actions by written consent. Proposal No. 7: Transact any other business that may properly come before the meeting. For address changes and/or comments, please check this box and write them on the back where indicated. Other Action: In their discretion, the proxies are also authorized to vote upon such other matters as may properly come before the annual meeting or any adjournments thereof.THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. Your signature below should conform to the name in which the shares are held. When shares are held by joint tenants, both must sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date As a Knight-Swift Transportation Holdings Inc. stockholder, you can view the stockholder account on a secured Internet website. By accessing EQ Shareowner Online at www.shareowneronline.com, you can view the account profile, stock detail, and historical stock price information. You can also change your address. In addition, you can use this site to consent to future access to Knight-Swift's annual reports and proxy materials electronically via the Internet. Knight-Swift also provides access to stockholder information, including its annual report and proxy statement, through its website at www.knight-swift.com. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Combined Document is available at www.proxyvote.com.Detach here from proxy card E95515-P33322 Knight-Swift Transportation Holdings Inc.20002 North 19th AvenuePhoenix, Arizona 85027THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORSFOR THE 2020 ANNUAL MEETING OF STOCKHOLDERSTO BE HELDTuesday, May 19, 2020, 8:30 A.M., Local Time By executing this Proxy, the stockholder constitutes and appoints the President and Chief Executive Officer, David Jackson, and the Chief Financial Officer and Treasurer, Adam Miller, and each of them, as proxies for the stockholder (or if only one proxy is present, that one shall have all power granted herein), with full power of substitution, who may, and by a majority of such proxies, represent the stockholder and vote all shares of common stock that the stockholder is entitled to vote at the Annual Meeting of Stockholders of Knight-Swift Transportation Holdings Inc. to be held on May 19, 2020, at 8:30 A.M., Local Time at 20002 North 19th Avenue, Phoenix, Arizona 85027, or at any adjournment thereof, on all matters described in the Notice and Proxy Statement for the Annual Meeting as set forth on the reverse side. The stockholder acknowledges receipt of the Notice and Proxy Statement for the 2020 Annual Meeting of Stockholders, grants authority to any of said proxies, or their substitutes, to act in the absence of others, with all the powers which the stockholder would possess if personally present at such meeting, and ratifies and confirms all that said proxies, or their substitutes, may lawfully do in the stockholder's name, place, and stead.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC., AND THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE CLASS III NOMINEES NAMED
Below are highlights of certain information in this proxy statement. As it is only a summary, it may not contain all of the information that is important to you. For more complete information, please refer to the complete proxy statement and our 20172019 Annual Report before you vote. References to the “Company”, “we,” “us,” or “our” refer to Knight-Swift Transportation Holdings Inc. On September 8, 2017 (the "Merger Date"“Merger Date”), a direct wholly owned subsidiary of Swift Transportation Company merged with and into Knight Transportation, Inc. and we became Knight-Swift Transportation Holdings Inc. (the “2017 Merger”). Unless otherwise indicated or context otherwise requires, “Knight” refers to Knight Transportation, Inc. and its subsidiaries prior to the 2017 Merger and “Swift” refers to Swift Transportation Company and its subsidiaries prior to the 2017 Merger.
2018 ANNUAL MEETING OF STOCKHOLDERS
| | | | 2020 Annual Meeting of Stockholders | | Time and Date: | 8:30 a.m., Local Time, May 31, 201819, 2020 | | | | Place: | 20002 North 19th Avenue, Phoenix, Arizona 85027 | | | | Record Date: | April 5, 2018March 20, 2020 | | | | | Voting: | Stockholders as of the record dateRecord Date are entitled to vote. 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. |
Your vote is important! Please cast your vote and play a part in the future of the Company.
Stockholders of record, who hold shares registered in their names, can vote by: | | | | | | | 8 | ) | * | Internet at www.proxyvote.com | calling 1-800-690-6903 | mail return the signed proxy card |
The deadline for voting online or by telephone is 11:59 p.m. Eastern Time on May 30, 2018.18, 2020. If you vote by mail, your proxy card must be received before the Annual Meeting. Beneficial owners, who own shares through a bank, brokerage firm or similar organization, can vote by returning the voting instruction form or by following the instructions for voting via telephone or the Internet as provided by the bank, broker or other organization. If you own shares in different accounts, or in more than one name, you may receive different voting instructions for each type of ownership. Please vote all of your shares. If you are a stockholder of record or a beneficial owner who has a legal proxy to vote the shares, you may choose to vote in person at the Annual Meeting. Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible. See the “Questions and Answers About the Proxy Materials and Annual Meeting” section for more details.
We are committed to good corporate governance and executive compensation practices that we believe recognize stockholder interests and support the success of our business. Our corporate governance and executive compensation practices, highlighted below, are described in greater detail in this proxy statement.
Corporate Governance Highlights
✓ Two-thirds of Board members are independent
| ✓ Robust lead independent director position with participation in setting agendas for Board meetings, coordinating Board meeting schedules to assure that there is sufficient time for discussion of all agenda items, provide information to the Board, coordinating activities of the independent directors, and authority to lead executive sessions of independent directors and act as liaison for stockholders between independent directors and the Chairperson
| | | | | ✓ Regular executive sessions of independent directors with lead independent director authority to call meetings of the independent directors
Voting Matters and Board Recommendations | ✓ Independent Audit, Compensation, and Nominating and Corporate Governance Committees
Item | Proxy Proposals | Board Vote Recommendation | | Page | ✓ All four members of the Audit Committee qualify as audit committee financial experts
| ✓ Majority voting standard and resignation policy for directors in uncontested elections
| ✓ Proxy access
| ✓ Annual risk oversight by full Board and Committees
| ✓ Stockholder right to call special meetings
| ✓ Robust director and key officer stock ownership guidelines
| ✓ Stock Pledging and Hedging Policy (the “Anti-Pledging and Hedging Policy”) limiting the pledging and hedging of the Company’s securities by certain individuals
| ✓ Clawback policy
| ✓ Overboarding policy
| ✓ New director orientation program
| ✓ Annual Board self-assessment
| ✓ Annual Chief Executive Officer (“CEO”) evaluation
| ✓ Management and executive succession planning strategy
| ✓ Director communication policy
| ✓ Director tenure policy
|
Executive Compensation Highlights
✓ Conservative pay policy with target total named executive officer and director compensation positioned below the median of peer group
| ✓ Peer group designed to reflect companies we compete with for business and talent
| ✓ Direct link between pay and performance that aligns business strategies with stockholder value creation
| ✓ Appropriate balance between short- and long-term compensation that discourages short-term risk taking at the expense of long-term results
| ✓ Independent compensation consultant retained by the Compensation Committee to advise on executive compensation matters
| ✓ No re-pricing or back-dating of stock options
| ✓ No dividends paid on unvested stock awards
| ✓ No tax gross-up payments to cover personal income taxes relating to incentive compensation
|
Voting Matters and Board Recommendations
Voting Matters
| Board’s
Recommendation
| Page Reference
(for more detail)
| | Item 1. | | Elect twothree Class IIII directors, each such director to serve a term of three years | ✓ FOR EACH
NOMINEE
| 25 | | | | | | | | Item 2. | | Advisory,Conduct an advisory, non-binding vote to approve executive compensation | ✓ FOR | 62 | | | | | | | | Item 3. | | Amendments to our Certificate of Incorporation to eliminate legacy provisions relating to Class B common stock | ✓ FOR | 63 | Item 4. | | Amendments to our Certificate of Incorporation to eliminate legacy provisions regarding approval of certain corporate actions | ✓ FOR | 63 | Item 5. | | Amendments to our by-laws to eliminate legacy provisions regarding amendment of certain provisions of our by-laws | ✓ FOR | 64 | Item 6. | | Ratification ofRatify the appointment of GTGrant Thornton as our independent registered public accounting firm for fiscal year 20182020 | ✓ FOR | 67 | | Item 7. | | Stockholder | | | Item 4. | Vote on amendments to the Certificate of Incorporation to declassify the Board | FOR | | | | | | | | | Item 5. | Vote on the Second Amended and Restated Omnibus Plan | FOR | | | | | | | | | Item 6. | Vote on a stockholder proposal regarding independent Board chairperson, if properly presentedto allow certain stockholder actions by written consent | AGAINST | | | 71 |
Director Nominees
Our Board of Directors (“Board”) is currently comprised of thirteeneight members. The directors are currently divided into three classes, with each class serving a three-year term. TwoThree Class IIII directors, David Jackson, Kevin Knight, and Roberta Roberts Shank, are up for election at the Annual Meeting, and each Class IIII director nominee will be elected to serve until the 20212023 Annual Meeting of Stockholders, or until his or her successor shall have been duly elected and qualified or his or her earlier death, resignation, or removal. Mr. Glenn Brown isPursuant to a Class I director and has decided notproposed amendment to stand for re-election to permit time to focus on his investments.our Certificate of Incorporation, the Board may be declassified. In such event, all directors elected, in annual meetings commencing with the 2022 Annual Meeting, will be elected annually. The following table provides summary information about each of the twothree Class IIII director nominees standing for election to the Board for a three-year term expiring in 2021:nominees: | | | | | | | | | | | | | Name | | Age | | Professional Background | | Independent | | Committee Memberships | | Other Current Company Boards | Kathryn MunroClass III | | 69 | | Principal of BridgeWest, LLC, a private equity investment company specializing in wireless technology companies | | Yes | | Lead Independent Director, Compensation (Chair), Executive | | Premera Blue Cross; Pinnacle West Capital | | David Jackson | | 44 | | Chief Executive Officer of Knight and Knight-Swift, and a member of the board of directors of Knight since January 2015, President of Knight and Knight-Swift, since February 2011, Chief Financial Officer from 2004 until 2012, Treasurer from 2006 to 2011 and Knight’s Secretary from 2007 to 2011 | | No | | None | | None | | | | | | | | | | | | | GaryKevin Knight | | 6663 | | Vice Chairman of the Company, Viceboard of directors of Knight since 1999 (including as the Executive Chairman of Knight’s board since 2004, PresidentJanuary 2015), CEO of Knight from 1993 to 2004,through December 2014, currently serves as a full time executive officer of Knightthe Company in his role as Executive Chairman. From 1975 to 1984 and memberagain from 1986 to 1990 was employed by Swift, where he served as Executive Vice President of Knight’s board since 1990Swift, and President of Cooper Motor Lines, Inc., a former Swift subsidiary | | No | | Executive | | None | | | | | | | | | | | | | Roberta Roberts Shank | | 53 | | Appointed to the board of directors of Knight in February 2016. Currently serves as the Chief Executive Officer, President, and director of Chas Roberts A/C and Plumbing, Arizona’s largest residential air conditioning installer, a position she has held since 2000. Also served on the Board of AMERCO, North America’s largest “do-it-yourself” moving and storage operator through its subsidiary, U-Haul International, Inc., since December 2019, previously serving on their Advisory Board. In addition, Ms. Roberts Shank has served in multiple civic and community roles, including Boys and Girls Club of Metro Phoenix and the City of Phoenix planning commission. | | Yes | | Audit, Compensation (Chair) | | Chas Roberts A/C and Plumbing, AMERCO |
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
20002 North 19th Avenue
Phoenix, Arizona 85027
ANNUAL MEETING OF STOCKHOLDERS
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 solicitationAnnual Meeting 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 19th 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. | | | | Annual Meeting Details | | When | Tuesday, May 19, 2020 8:30 a.m. Local Time | | | Where | 20002 North 19th Ave, Phoenix, AZ 85027 | | | Who Votes | Stockholders of record on March 20, 2020 |
| | | | | | | Voting Matters and Board Recommendations | | Item | Proxy Proposals | Board Vote Recommendation | | Page | | Item 1. | Elect three Class III directors, each such director to serve a term of three years | FOR | | | | | | | | Item 2. | Conduct an advisory, non-binding vote to approve executive compensation | FOR | | | | | | | | Item 3. | Ratify the appointment of Grant Thornton as our independent registered public accounting firm for fiscal year 2020 | FOR | | | | | | | | Item 4. | Vote on amendments to the Certificate of Incorporation to declassify the Board | FOR | | | | | | | | | Item 5. | Vote on the Second Amended and Restated Omnibus Plan | FOR | | | | | | | | | Item 6. | Vote on a stockholder proposal to allow certain stockholder actions by written consent | AGAINST | | |
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,Chief Executive Officer (“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 , 2018,2020, to stockholders of record of our Class A common stock at the close of business on April 5, 2018, which is the record date.March 20, 2020 (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, 20172019 (our “2017“2019 Annual Report”), which collectively comprise our “proxy materials,” are first being made available to stockholders on April , 2018.2020.
The information included in this proxy statement should be reviewed in conjunction with the consolidated financial statements, notes to consolidated financial statements, reports of our independent registered accounting firm, and other information included in our 20172019 Annual Report that will first be made available on or about April , 2018,2020, together with this notice of Annual Meeting and proxy statement, to all stockholders of record of our Class A common stock as of the record date, April 5, 2018.Record Date. A copy of our 20172019 Annual Report will be made available free of charge on the Annual Reports section of our corporate website at www.knight-swift.com/www.knight-swift.com. Except to the extent it is incorporated by specific reference, our 20172019 Annual Report is not incorporated into this proxy statement and is not considered to be a part of the proxy-soliciting material. QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETINGWHEN AND WHERE IS THE ANNUAL MEETING?
Date: | | Thursday, May 31, 2018 | | | | Time: | | 8:30 a.m., Local Time | | | | Location: | | 20002 North 19th Avenue
Phoenix, Arizona 85027
|
WHAT MATTERS WILL BE VOTED UPON AT THE ANNUAL MEETING?
At the Annual Meeting, you will be asked to:
· | Vote on a proposal to elect two Class I directors, each director to serve a term of three years; |
· | Vote (on an advisory, non-binding basis) to approve executive compensation; |
· | Vote on amendments to our Certificate of Incorporation to eliminate certain provisions relating to Class B common stock; |
· | Vote on amendments to our Certificate of Incorporation to eliminate legacy provisions regarding approval of certain corporate actions; |
· | Vote on amendments to our by-laws to eliminate legacy provisions regarding amendment of certain provisions of our by-laws; |
· | Vote on a proposal to ratify the appointment of GT as our independent, registered public accounting firm for fiscal year 2018; |
· | Vote on a stockholder proposal regarding an independent Board chairperson, if properly presented; and |
· | Transact such other business as may properly come before the Annual Meeting or any adjournments thereof. |
WHAT CONSTITUTES A QUORUM?
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.
WHAT IF A QUORUM IS NOT PRESENT AT THE ANNUAL MEETING?
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.
WHO IS ENTITLED TO VOTE?
Only stockholders of record of our Class A common stock at the close of business on April 5, 2018, which is the record date, are entitled to notice of, and to vote at, the Annual Meeting. Shares that may be voted include shares that are held:
· | directly by the stockholder of record; and |
· | beneficially through a broker, bank, or other nominee. |
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.
WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A “REGISTERED OWNER” AND A “BENEFICIAL OWNER”?
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:
· | Registered Owners — If your shares are registered directly in your name with our transfer agent, Equiniti, formerly known as Wells Fargo Shareowner Services, you are, with respect to those shares, the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the Annual Meeting. |
· | Beneficial Owners — If your shares are held in a brokerage account, bank, or by another nominee, you are, with respect to those shares, the “beneficial owner” of shares held in street name. As the beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote or to vote in person at the Annual Meeting. However, since you are not a stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a “legal proxy” from your broker, bank, or other nominee (who is the stockholder of record) giving you the right to vote the shares. |
WHAT IS A BROKER NON-VOTE?
Generally, a “broker non-vote” occurs when a broker, bank, or other nominee that holds shares in “street name” for 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.
WHAT IS THE EFFECT OF NOT CASTING YOUR VOTE?
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).
WHAT STOCKHOLDER APPROVAL IS NECESSARY FOR APPROVAL OF THE PROPOSALS?
Election of Directors (Proposal 1)
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. Broker non-votes and abstentions will have no effect on the outcome of this proposal.
Advisory, Non-Binding Vote to Approve Executive Compensation (Proposal 2)
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.
Vote on Amendments to our Certificate of Incorporation to Eliminate Certain Provisions Relating to Class B Common Stock (Proposal 3)
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.
Vote on Amendments to our Certificate of Incorporation to Eliminate Legacy Provisions Regarding Approval of Certain Corporate Actions (Proposal 4)
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.
Vote on Amendments to our By-laws to Eliminate Legacy Provisions Regarding Amendment of Certain Provisions of our By-laws (Proposal 5)
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.
Ratification of the Appointment of GT as our Independent Registered Public Accounting Firm for Fiscal Year 2018 (Proposal 6)
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.
Vote on Stockholder Proposal Regarding an Independent Board Chairperson (Proposal 7)
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.
MAY I VOTE MY SHARES IN PERSON AT THE ANNUAL MEETING?
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.
HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE ANNUAL MEETING?
If you are a registered owner, you may instruct the named proxy holders on how to vote your shares by completing, signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided with this proxy statement, or by using the 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.
HOW WILL MY PROXY BE VOTED?
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:
| (1) | FOR the electionThe Board of two Class I directors, each director to serve a term of three years;
Directors and Corporate Governance |
| (2) | FOR the resolution approving, on an advisory, non-binding basis, executive compensation;
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| (3) | FOR amendments to our Certificate of Incorporation to eliminate certain provisions relating to Class B common stock;
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| (4) | FOR amendments to our Certificate of Incorporation to eliminate legacy provisions regarding approval of certain corporate actions;
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| (5) | FOR amendments to our by-laws to eliminate legacy provisions regarding amendment of certain provisions of our by-laws;
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| (6) | FOR the ratification of the appointment of GT as our independent registered public accounting firm for fiscal year 2018;
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| (7) | AGAINST the stockholder proposal regarding an independent Board chairperson, if properly presented; and
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| (8) | In accordance with the proxy holder’s best judgment, as to any other business that properly comes before the Annual Meeting. |
MAY I REVOKE MY PROXY AND CHANGE MY VOTE?
Yes. You may revoke your proxy and change your vote at any time prior to the vote at the Annual Meeting.
If you are the registered owner, you may revoke your proxy and change your vote by:
· | submitting a new proxy bearing a later date (which automatically revokes the earlier proxy); |
· | giving notice of your changed vote to us in writing mailed to the attention of Todd Carlson, Secretary, at our corporate office specified above; |
· | attending the Annual Meeting and giving oral notice of your intention to vote in person; or |
· | re-voting by telephone or internet. |
You should be aware that simply attending the Annual Meeting will not in and of itself constitute a revocation of your proxy.
WILL MY VOTE BE KEPT CONFIDENTIAL?
Yes, your vote will be kept confidential and not disclosed to us unless:
· | you expressly request disclosure on your proxy; or |
· | there is a proxy contest. |
WHO WILL PAY THE COSTS OF SOLICITING PROXIES?
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.
WHAT OTHER BUSINESS WILL BE PRESENTED AT THE ANNUAL MEETING?
As of the date of this proxy statement, the Board knows of no other business that may properly be, or is likely to be, brought before the Annual Meeting. 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.
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We intend to report voting results of the Annual Meeting on Form 8-K within four business days after the Annual Meeting.
WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
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.
WHO CAN HELP ANSWER MY QUESTIONS?
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.
THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCECORPORATE GOVERNANCE DOCUMENTS
Inn 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 19th Avenue, Phoenix, Arizona 85027. RISK MANAGEMENT AND OVERSIGHTRisk Management and Oversight
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. 12Our Board conducts a rigorous annual self-assessment process, as described below. The Nominating and Governance Committee periodically reviews the format of the self-assessment process to ensure that actionable feedback is solicited.
BoardCOMPOSITION OF BOARD AND BOARD LEADERSHIP STRUCTURE
Our Board currently consists of thirteeneight members, divided into three classes: Kathryn Munro (Class I), Gary Knight (Class I), Glenn Brown (Class I) (not standing for re-election), Kevin Knight (Class II)III), Michael Garnreiter (Class II), David Jackson (Class II)III), Robert Synowicki, Jr. (Class II), Richard Dozer (Class II), David Vander Ploeg (Class II), Richard Lehmann (Class III), Richard Kraemer (Class III),and Roberta Roberts Shank (Class III), and Jerry Moyes (Class III). All Pursuant to a proposed amendment to our Certificate of theseIncorporation, the Board may be declassified. In such event, all directors elected, in annual meetings commencing with the 2022 Annual Meeting, will be elected annually. All directors, other than Messrs. Gary Knight, Kevin Knight, Jackson, and Moyes,Jackson, qualify as independent directors under the corporate governance standards of the NYSENew York Stock Exchange (“NYSE”) and the
independence requirements of Rule 10A-3 of the Securities Exchange Act of 1934 (the “Exchange Act”). ; provided, between June 2018 and May 2019, Mr. Synowicki did not meet the Audit Committee independence requirements due to his consulting assistance to the Company regarding driver recruiting and retention. Mr. Synowicki resigned as a paid consultant to the Company in May 2019. The table below provides information on the qualifications, skills, characteristics, and experience of our proposed nominees and continuing directors. | | | | | | | | | | | | | | | | | | | | | Mr. Garnreiter | | Mr. Jackson | | Mr. Gary Knight | | Mr. Kevin Knight | | Ms. Munro | | Mr. Vander Ploeg | | Ms. Roberts Shank | | Mr. Synowicki | | Experience | | | | | | | | | | | | | | | | | | Public Company Officer | | | | ü | | ü | | ü | | ü | | ü | | | | ü | | Financial Reporting | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | Industry | | | | ü | | ü | | ü | | | | ü | | | | ü | | Environmental | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | Risk Management | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | Demographic/Background | | | | | | | | | | | | | | | | | | Independent | | Yes | | No | | No | | No | | Yes | | Yes | | Yes | | Yes 1 | | Gender | | Male | | Male | | Male | | Male | | Female | | Male | | Female | | Male | | Tenure (years) | | 18 | | 6 | | 30 | | 30 | | 16 | | 12 | | 5 | | 5 | | Age (years) | | 68 | | 44 | | 68 | | 63 | | 71 | | 61 | | 53 | | 61 |
| | | 1 | Mr. Synowicki is independent for all purposes after May 2019. |
The lack of a “ü” for a particular item does not mean that the director does not possess that qualification, characteristic, skill or experience. We look to each director to be knowledgeable in these areas; however, the “ü” indicates that the item is a specific qualification, characteristic, skill or experience that the director brings to the Board. 1 Includes tenure on Knight or Swift Board pre-merger Board Leadership Structure We separate the offices of the Chairperson of our Board and our CEO. Currently, our Executive Chairman of the Board is Kevin Knight. Separating the offices of Chairperson and CEO allows our CEO to dedicate his full efforts to the demands and responsibilities of the CEO position, while also allowing us to benefit from Kevin Knight’s strategic oversight and considerable experience. Our Board will be free to choose the Chairperson in any way that it deems best for us at any given point in time. The duties of the Chairperson include: · | serving on the Executive Committee; |
· | presiding at all meetings of our Board and the stockholders at which the Chairperson is present; |
· | participating in setting Board meeting agendas, in consultation with the CEO and lead independent director, and coordinating Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; |
· | collaborating with the CEO and lead independent director in determining the need for special meetings and calling any such special meeting; |
· | responding directly to stockholder and other stakeholder questions and comments that are directed to the Chairperson of the Board; and |
· | responding directly to stockholder and other stakeholder questions and comments that are directed to the Chairperson of the Board; and performing such other duties as our Board may delegate from time to time. |
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: · | presiding at all executive sessions of the Board; |
· | presiding at all meetings of our Board and the stockholders, where the Chairperson is not present; |
· | performing all duties of the Chairperson in the absence or disability of the Chairperson; |
· | coordinating the activities of the independent directors; |
· | providing information to the Board for consideration; |
· | participating in setting Board meeting agendas, in consultation with the CEO and Chairperson, and coordinating Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; |
· | participating in the retention of outside advisors and consultants who report directly to the Board; |
· | requesting the inclusion of certain materials for Board meetings; |
· | consulting with respect to, and where practicable receiving in advance, information sent to the Board; |
· | collaborating with the CEO and Chairperson in determining the need for special meetings and calling any such special meeting; |
· | calling meetings of the independent directors; |
· | acting as liaison for stockholders between the independent directors and the Chairperson, as appropriate; |
· | communicating to the CEO, together with the Chairperson of the Compensation Committee, the results of the Board’s evaluation of the CEO’s performance; |
· | responding directly to stockholder and other stakeholder questions and comments that are directed to the lead independent director or the independent directors as a group, as the case may be; and |
· | performing such other duties as our Board may delegate from time to time. |
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.
BOARD DIVERSITYBoard Diversity
The Company prefers a mix of background, skills, gender, 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. Our Board consists of 25% females, and we have been recognized by 2020 Women on Boards for our Board being comprised of at least 20% women. BOARD MEETINGSBoard Meetings
The Board held 125 meetings during the 20172019 calendar year. During 2017,2019, all directors attended at least 75% of the aggregate of the Board and committee meetings on which they sit. DIRECTOR ATTENDANCE AT ANNUAL MEETING
Director Attendance at Annual Meeting All six of Swift’sour then-incumbent directors attended Swift’s 2017our 2019 Annual Meeting of Stockholders. Directors are invited and encouraged to attend the Company’s annual meetings of stockholders, although we do not have a formal policy regarding director attendance at our annual meetings of stockholders. BOARD COMMITTEESBoard Committees
OurCurrently, 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 2017,2019, an “outside“independent director” within the meaning of Section 162(m)for purposes of the Internal Revenue Code.rules of the NYSE.
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. Current committee memberships are as follows: * Mr. Brown is not standing for re-election to the Board.
14ü= Member
 = Committee ChairpersonAudit Committee The Audit Committee held 98 meetings in 2017.2019. The Audit Committee performs the following functions: · | reviews the audit plans and findings of our independent registered public accounting firm and our internal audit and risk review staff, as well as the results of regulatory examinations, and tracks management’s corrective action plans where necessary; |
· | reviews our financial statements, including any significant financial items and/or changes in accounting policies, with our management and independent registered public accounting firm; |
· | reviews, with management and our independent registered public accounting firm, our financial risk and control procedures, compliance programs, and significant tax, legal, and regulatory matters; |
· | has the sole discretion to appoint annually, compensate, and oversee our independent registered public accounting firm, evaluate such firm’s independence and performance, set clear policies for our hiring of employees or former employees of the independent registered public accounting firm, and pre-approve all audit services and permitted non-audit services to be performed by our independent registered public accounting firm; |
· | regularly reviews matters and monitors compliance procedures with our internal audit department as well as oversees performance of the internal audit department; |
· | establishes procedures for reviewing and investigating complaints regarding accounting, internal controls, auditing matters, or other illegal or unethical acts; |
· | administers our related party transactions policy and evaluates related party transactions presented for approval; |
· | regularly meets with management, internal auditors, the independent auditors and the Board in executive session; |
· | reviews with management the Audit Committee Report for inclusion in the proxy statement filed with the SEC; and |
· | periodicallyreviews with management the Audit Committee Report for inclusion in the proxy statement filed with the SEC; andannually reviews the Audit Committee Charter for adequacy and compliance with the duties and responsibilities set forth therein. |
The Board has determined that each of Messrs. Garnreiter, Synowicki, Dozer, and Vander Ploegour Audit Committee members 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”). Mr. Garnreiter has been designated as the audit committee financial expert. 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. Compensation Committee The Compensation Committee held 6 meetings in 2017.2019. The Compensation Committee performs the following functions: · | annually evaluates the performance of, determines, approves, and recommends to the Board the base salary, cash incentives, equity awards, and all other compensation for the CEO; |
· | annually reviews corporate goals and objectives relevant to the compensation of our other executive officers and senior management and evaluates performance in light of those goals and objectives; |
· | approves base salary and other compensation of our other executive officers; |
annually reviews and approves the peer group used for competitive pay comparisons;· | approves and recommends to the Board annual cash and equity incentive compensation for theapproves base salary and other compensation of our other executive officers; |
· | adopts, oversees, and periodically reviews and makes recommendations to the Board regarding the operation of all of our equity-based compensation plans and incentive compensation plans, programs, and arrangements, including establishing criteria for the terms of awards granted to participants under such plans. This includes grants of restricted stock, restricted stock units, performance units, and stock options along with other perquisites and fringe benefit arrangements; |
approves and recommends to the Board annual cash and equity incentive compensation for the executive officers;· | annually reviews and makes recommendations to the Board regarding the outside directors’ compensation arrangements to ensure their competitiveness and compliance with applicable laws; |
adopts, oversees, and periodically reviews and makes recommendations to the Board regarding the operation of all of our equity-based compensation plans and incentive compensation plans, programs, and arrangements, including establishing criteria for the terms of awards granted to participants under such plans. This includes grants of restricted stock, restricted stock units, performance units, and stock options along with other perquisites and fringe benefit arrangements;· | annually reviews the Company’s cash and equity incentive performance goals and objectives including whether such goals were met; |
annually reviews and makes recommendations to the Board regarding the outside directors’ compensation arrangements to ensure their competitiveness and compliance with applicable laws;· | reviews with management the Compensation Discussion and Analysis (“CD&A”) for inclusion in the proxy statement filed with the SEC; and |
annually reviews the Company’s cash and equity incentive performance goals and objectives including whether such goals were met;· | annually approve the appointment of our independent compensation consultant; reviews with management the Compensation Discussion and Analysis (“CD&A”) for inclusion in the proxy statement filed with the SEC; and annually reviews the Compensation Committee Charter for compliance with the duties and responsibilities set forth therein. |
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.Act. 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,For 2019, the Compensation Committee retained Echelon Compensation Partners, now owned by Pearl Meyer ("Echelon"Pearl Meyer"), 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 director and executive officer compensation; (ii) market pay data and competitive-position benchmarking; (iii) analysis and input on peer group development; (iv) analysis and input on performance measures and goals; (iv)(v) analysis and input on compensation program structure; (v)(vi) an assessment of the risks under our compensation programs; and (vi)(vii) 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.Committee. 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 CommitteesCommittee 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,in 2019, and willwould not do so without the prior consent of the Compensation Committee. Pearl Meyer’s and Echelon's rolesMeyer's role in establishing the compensation of our named executive officers, to the extent material, are addressed under “Executive Compensation—CompensationCompensation-Compensation Discussion and Analysis.” Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee held 4 meetings in 2017.2019. The Nominating and Corporate Governance Committee performs the following functions: · | considers and recommends the criteria, qualifications, and attributes of candidates for nomination to the Board and its committees; |
· | identifies, screens, and recommends qualified candidates to the Board for Board membership; |
· | periodically reviews and makes recommendations to the Board regarding corporate governance policies and principles; |
· | evaluates the adequacy of Board procedures, such as the frequency of meetings, advance document distribution, content of Board minutes, and meeting attendance by non-directors; |
· | advises the Board with respect to the Board composition, diversity, size, attributes, procedures, and committees; |
· | evaluates director nominee recommendations proposed by stockholders; |
· | oversees the evaluation of the Board and management; |
oversees the evaluation of the Board;· | considers and makes recommendations to prevent, minimize, resolve, or eliminate possible conflicts of interest; |
· | recommends individuals to the Board for election by the stockholders or appointment by the Board; |
· | periodically reviews our Corporate Governance Guidelines and recommends proposed changes to the Board for approval; and |
· | periodicallyannually reviews the Nominating and Corporate Governance Committee Charter to ensure it reflects a commitment to effective corporate governance. |
The Board has determined that all members of the Nominating and Corporate Governance Committee satisfy the independence listing standards of the NYSE. Merger Integration Committee
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:
· | monitors the development and implementation of integration plans, including ensuring that sufficient resources are allocated to the implementation of integration plans; |
· | identifies and adopts measures to mitigate risks associated with integration efforts; |
· | reports to the Board on the status of the integration efforts; and |
· | communicates and effects the implementation of Board recommendations regarding integration plans. |
Finance Committee The Finance Committee held 1 meeting3 meetings in 2017.2019. The Finance Committee performs the following functions: · | reviews and monitors the deployment of our financial resources and policies, the management of our balance sheet, and the investment of cash and other assets; |
· | reviews and makes recommendations to the Board regarding our operating and capital budgets and monitors actual performance against our budgets and projections; |
· | reviews our capital structure, liquidity, financing plans, and other treasury policies, including off-balance sheet financings; |
· | reviews with the Board and management our financial risk exposure relating to financing activities; and |
· | periodically
annually reviews the Finance Committee Charter for adequacy and compliance with the duties and responsibilities set forth therein. |
Executive Committee The Executive Committee did not hold any meetingsheld 1 meeting in 2017.2019. 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.Michael Garnreiter. CORPORATE GOVERNANCE POLICYCorporate Governance Policy
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: · | directors are responsible for attending Board meetings and meetings of committees on which they serve and to review in advance materials distributed for such meetings; |
· | the Board’s principal responsibility is to oversee and direct the management of our business and affairs to promote the best interests of the Company and our stockholders; |
· | at least two-thirds of the Board shall be independent directors; |
· | the lead independent is to preside at all executive sessions of the Board and any third party desiring to contact the independent directors may do so by contacting our lead independent director; |
· | our Nominating and Corporate Governance Committee is responsible for nominating qualified members for election to our Board; |
· | our Board is responsible for selecting an Audit Committee with at least one financial expert and other members who are knowledgeable about financial matters (currently all four members of the Audit Committee qualify as financial experts); |
· | our Nominating and Corporate Governance Committee is responsible for evaluating, reviewing, and planning for director tenure and succession; |
· | our Compensation Committee, in consultation with the Chairperson and the CEO, is responsible for reporting annually to the Board on executive management succession planning along with maintaining at all times an evaluation and recommendation of potential successors to the Executive Chairperson, CEO, President, CFO, and other key members of executive management; |
· | any director who fails to receive the required number of votes for re-election in accordance with our by-laws will tender his or her written resignation for consideration by the Nominating and Corporate Governance Committee; |
· | our Board believes that it is important for our compensation policies for our senior executives and Board to be properly aligned with the interests of the Company and its stockholders and not encourage excessive risk taking; |
· | our Board expects that each member be fully committed to devoting adequate time to his or her duties to the Company and no member of our Board may serve on any more than five public boards (or, in the case of our CEO, three boards), including our Board;
|
· | the independent directors will meet in executive session on a regular basis, but not less than annually; |
· | independent directors will serve on our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee; |
· | new directors should participate in an orientation program and all directors will periodically be provided with materials on subjects that will assist them in discharging their duties as directors, furthering their understanding of our business, and enhancing their performance on our Board; and |
· | the Nominating and Corporate Governance Committee will develop and implement annual self-evaluations to determine whether the Board is functioning effectively. |
18
directors are responsible for attending Board meetings and meetings of committees on which they serve and to review in advance materials distributed for such meetings;our business and affairs to promote the best interests of the Company and our stockholders;MAJORITY VOTING STANDARD FOR DIRECTOR ELECTIONSat least a majority of the Board shall be independent directors;
the lead independent director is to preside at all executive sessions of the Board and any third party desiring to contact the independent directors may do so by contacting our lead independent director; our Nominating and Corporate Governance Committee is responsible for nominating qualified members for election to our Board; our Board is responsible for selecting an Audit Committee with at least one financial expert and other members who are knowledgeable about financial matters (currently all three members of the Audit Committee qualify as financial experts); our Nominating and Corporate Governance Committee is responsible for evaluating, reviewing, and planning for director tenure and succession; our Compensation Committee, in consultation with the Chairperson and the CEO, is responsible for reporting annually to the Board on executive management succession planning along with maintaining at all times an evaluation and recommendation of potential successors to the Executive Chairperson, CEO, President, CFO, and other key members of executive management; any director who fails to receive the required number of votes for reelection in accordance with our by-laws will tender his or her written resignation for consideration by the Nominating and Corporate Governance Committee; our Board believes that it is important for our compensation policies for our senior executives and Board to be properly aligned with the interests of the Company and its stockholders and not encourage excessive risk taking; our Board expects that each member be fully committed to devoting adequate time to his or her duties to the Company and no member of our Board may serve on any more than five public company boards (or, in the case of our CEO, three boards), including our Board; the independent directors will meet in executive session on a regular basis, but not less than annually; independent directors will serve on our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee; new directors should participate in an orientation program and all directors will periodically be provided with materials on subjects that will assist them in discharging their duties as directors, furthering their understanding of our business, and enhancing their performance on our Board; and the Nominating and Corporate Governance Committee will develop and implement annual self-evaluations to determine whether the Board and its committees is functioning effectively.
Majority Voting Standard for Director Elections 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 sucha 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 suchthe 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. CODE OF BUSINESS CONDUCT AND ETHICSCode of Business Conduct and Ethics
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. EXECUTIVE SESSIONS OF INDEPENDENT DIRECTORSExecutive Sessions of Independent Directors
Independent Board members generally meet without management present at least once per year in executive sessions. TheOur lead independent chair of the Swift Board presideddirector presides over meetings of thethose meetings. Our independent directors prior to the 2017 Mergermet 3 times in 2019 without management present. Stock Trading Policy, Anti-Pledging and the Lead Independent Director presided over such meetings after the 2017 Merger. STOCK TRADING POLICY, ANTI-PLEDGING AND HEDGING POLICY, AND RELATED MATTERSHedging Policy, and Related Matters
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 Stock Pledging and Hedging Policy (“Anti-Pledging and Hedging PolicyPolicy") 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 our former director Jerry Moyes), and any other employee designated by the Nominating and Corporate Governance Committee (any such person, a “Designated Person”). SubjectWhile our Anti-Pledging and Hedging Policy continues to limited exceptions,apply to Mr. Moyes, we may be unable to enforce this policy because Mr. Moyes no longer serves as a director. 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 grantdoes not have 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, eachEach non-employee director must own the required amount by the later of five years from (x) the date of adoption of theour Stock Ownership and 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,policy, also must meet certain minimum stock ownership requirements. Currently, key officers under the Retention Policypolicy 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.salary. The Compensation Committee of the Board can designate other key officers who will be subject to the Retention Policy.policy. Key officers must achieve such ownership by the later of eight years from (x) the adoption of theour Stock Ownership and Retention Policy and (y) their appointment to the applicable office; providedoffice. Until an individual complies with the stock ownership guidelines, as outlined above, the individual is required to retain (i) any shares owned or purchased by the individual, including stock purchased through the Company’s stock purchase plan or any deferred compensation or 401(k) plan, but excluding any stock purchased on the open market, and (ii) any net shares that any key officer who was employed by Swift priorremain following the payment of exercise prices and tax obligations related 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 theyexercise of stock options and the payment of tax obligations following the vesting of restricted stock unit and restricted stock grants until the guidelines are designated as key officers undersatisfied (collectively, the Retention Policy.“Covered Shares”). Pledged and hedged shares are excluded from the calculation of the director and officer retention amounts. Vested and unvested stock options are not included in the calculation of the guidelines prior to exercise, and, after exercise, only those retained shares that represent net profit shares, (shares after payment of the exercise price and all taxes) are included. Key officers must retain at least 50% of Covered Shares for two years after the date the Covered Shares are earned. All of our directors and officers are currently in compliance with the Stock Ownership and Retention Policy. COMMUNICATIONS WITH DIRECTORS BY STOCKHOLDERS
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 19th 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. NOMINATION OF DIRECTOR CANDIDATESNomination of Director Candidates
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 19th 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 dohistorically have not paypaid a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees.nominees, but may consider doing so in the future. 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. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | | | Compensation Committee Interlocks and Insider Participation |
None of the current members of the Compensation Committee have been, or are, one of our officers or employees. In 2017,2019, 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 2017,2019, 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 noan executive officersofficer of such other entitywhich served as a member of our Board or Compensation Committee. RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | | | Relationships and Related Party Transactions |
Our Audit Committee has established written policies and procedures relating to the review and approval or ratification of any transaction, or any proposed transaction, in which we were or are to be a participant and the amount involved exceeds $120,000, and in which any “related person” (as that term is defined in Instruction 1 to Item 404(a) of SEC Regulation S-K) had or will have a direct or indirect material interest, referred to as an “interested transaction.” Upon review of the material facts of all interested transactions, the Audit Committee will either approve, ratify, or disapprove the interested transactions, subject to certain exceptions, by taking into account, among other factors it deems appropriate, whether the terms are arm’s length and the extent of the related person’s interest in the transaction. No director may participate in any discussion or approval of an interested transaction for which he or she, or his or her relative, is a related party. If an interested transaction will be ongoing, the Audit Committee may establish guidelines for our management to follow in its ongoing dealings with the related party and then at least annually must review and assess ongoing relationships with the related party. Compensation of executive officers, which may involve an “interested transaction,” is reviewed and approved by the Compensation Committee. The following table presents our “interested transactions” with our related persons in 2017 (in thousands): | | | Provided by the Company | | | Received by the Company | | | Freight Services: | | | | | | | | | Central Freight Lines(1) | | $ | 176 | | | $ | 7 | | SME Industries(1) | | | 699 | | | | — | | | Total | | $ | 875 | | | $ | 7 | | | Facility and Equipment Leases: | | | | | | | | | Central Freight Lines(1) | | $ | 1,102 | | | $ | 370 | | | Total | | $ | 1,102 | | | $ | 370 | | | Other Services: | | | | | | | | | Thermo King(2) | | $ | — | | | $ | 1,222 | | Updike Distribution and Logistics(3) | | | 2,771 | | | | — | | Other Affiliates(1) | | | — | | | | 19 | | | Total | | $ | 2,771 | | | $ | 1,241 | |
2019: 23
| | | | | | | | | | | Provided by the Company | | Received by the Company | | | (in thousands) | | Freight Services: | | | | | Central Freight Lines ¹ | $ | 19,651 |
| | $ | — |
| | SME Industries ¹ | 345 |
| | — |
| | Total | $ | 19,996 |
| | $ | — |
| | Facility and Equipment Leases: | | | | | Central Freight Lines ¹ | $ | 322 |
| | $ | 369 |
| | Other Affiliates ¹ | 18 |
| | — |
| | Total | $ | 340 |
| | $ | 369 |
| | Other Services: | | | | | Central Freight Lines ¹ | $ | 1,834 |
| | $ | — |
| | Updike Distribution and Logistics ² | 4 |
| | — |
| | DPF Mobile ¹ | — |
| | 220 |
| | Other Affiliates ¹ | 35 |
| | 2,432 |
| | Total | $ | 1,873 |
| | $ | 2,652 |
| | | | |
As of December 31, 2017,2019, receivables and payables pertaining to these related party transactions were (in thousands):were: | | | Company Receivable | | Central Freight Lines | | $ | 214 | | SME Industries | | | 78 | | Total | | $ | 292 |
| | | | | | | | | | | Company Receivable | | Company Payable | | | (in thousands) | | Central Freight Lines¹ | $ | 2,872 |
| | $ | — |
| | SME Industries¹ | 17 |
| | — |
| | Other Affiliates¹ | — |
| | 2 |
| | Total | $ | 2,889 |
| | $ | 2 |
| | | | | |
(1) | | | 1 | Entities affiliated with oneJerry Moyes, a former member of our Board, members, Jerry Moyes, include Central Freight Lines, SME Industries, Compensi Services, and Compensi Services.DPF Mobile. Transactions with these entities that are controlled by and/or otherwise affiliated with Mr. Moyes include freight services, facility leases, equipment sales, and other services. |
Freight Services Provided by the Company — -The rates the Company charges for freight services to each of these companies for transportation services are market rates, which are comparable to rates charged to third-party customers. These transportation services provided to affiliates provide the Company with an additional source of operating revenue at its normal freight rates.services. Freight Services Received by the Company — -Transportation services received from Central Freight represent LTL freight services rendered to haul parts and equipment to Company shop locations. Other Services Provided by the Company —- Other services provided by the Company to the identified related parties include equipment sales and miscellaneous services. Other Services Received by the Company —- Consulting fees, and certain third-party payroll and employee benefits administration services, and diesel filter cleaning services from the identified related parties are included in other services received by the Company.
(2) | Thermo King West, Inc. and Thermo King Chesapeake, Inc. are owned by William Riley III, a former member of Swift’s Board, who resigned as a director effective as of the 2017 Merger. Transactions associated with the Thermo King entities primarily consisted of parts and equipment purchases by Swift. |
(3)2 | Knight hashad an arrangement with Updike Distribution and Logistics, LLC, a company that is owned by James Updike, Jr.’sthe father and three brothers pursuant to which Knight allows Updike Distribution and Logistics to purchase fuel from its vendors at cost, plus an administrative fee. James Updike, Jr. serves as theof Executive Vice President of Sales and Marketing of Knight.Knight, James Updike, Jr. The amount disclosed includes transactions with Knight priorarrangement allowed Updike Distribution Logistics, LLC to purchase fuel from Knight's vendors at cost, plus an administrative fee. The arrangement was terminated during the 2017 Merger.second quarter of 2018. Activities in 2019 pertain to sales of various spare parts and tractor accessories. |
In addition, certain members of the Knight familyour officers’ families 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, and David Jackson (our President and 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 20172019 was $2,851,821.$1,877,137. This amount includes any equity awards granted to such individuals in 2017,2019, 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’sthe 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.transactions.
ELECTION OF DIRECTORS
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 currently divided into three classes, with each class serving a three-year term. Pursuant to a proposed amendment to our Certificate of Incorporation, the Board may be declassified. In such event, all directors elected, in annual meetings commencing with the 2022 Annual Meeting, will be elected annually. 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 MunroMessrs. David Jackson and GaryKevin Knight, and Ms. Roberts Shank as Class III directors to hold office for a term of three years, expiring at the close of the 20212023 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, as of the Record Date, set forth below under the captionheading “Nominees for Class III 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 IIII 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. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES LISTED HEREIN NOMINEES FOR DIRECTORNominees for Class III Director
If elected at the Annual Meeting, the term of each Class IIII director expires at the 20212023 Annual Meeting of Stockholders. Kevin Knight (63) 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 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. David Jackson (44) Mr. Jackson has served as the Chief Executive Officer of Knight and Knight-Swift, and a member of the board of directors of Knight since January 2015. He has served as the President of Knight and 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. Jackson holds a Bachelor of Science degree in Global Business and Finance from Arizona State University. Roberta Roberts Shank (53) Ms. Roberts Shank was appointed to the board of directors of Knight in February 2016. Ms. Roberts Shank currently serves as the Chief Executive Officer, President, and director of Chas Roberts A/C and Plumbing, Arizona’s largest residential air conditioning installer, a position she has held since 2000. For her role at Chas Roberts, Ms. Roberts Shank was named the 2014 CEO of the Year by the ACE Awards, in addition to previously being named one of Arizona’s most dynamic women in business, winning the Greater Phoenix Chamber of Commerce Impact Award. Ms. Roberts Shank has also served on the Board of AMERCO, North America’s largest “do-it-yourself” moving and storage operator through its subsidiary, U-Haul International, Inc., since December 2019, previously serving on their Advisory Board. In addition, Ms. Roberts Shank has served in multiple civic and community roles, including the Boys and Girls Club of Metro Phoenix and the City of Phoenix planning commission. The Board believes Ms. Roberts Shank’s extensive executive-level leadership and business experience through a variety of economic environments makes her a valuable asset for the Board and the Company. Continuing Class I Directors Kathryn Munro (69)(71) 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 regardingand independent leadership as our business.lead independent director.
Gary Knight (66)(68) 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. CONTINUING DIRECTORS—CLASSContinuing Class II DIRECTORS
Kevin Knight (61)
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.Directors
Michael Garnreiter (66)(67) 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 memberChairman 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.
David Jackson (42)
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.
Robert Synowicki (59)
Mr. Synowicki has served on the board of directors of Knight since February 2016. Mr. Synowicki served in multiple roles with Werner Enterprises, Inc., a publicly traded national trucking company, for over 25 years, most recently serving as Executive Vice President of Driver Resources from 2010 until December 2015, where he oversaw recruitment and other critical professional driver initiatives. In addition, Mr. Synowicki served as Chief Financial Officer, Chief Operating Officer, and Chief Information Officer at various times during his career with Werner. Mr. Synowicki has also served as a member of the Board of the American Trucking Associations and the Truckload Carriers Association. Mr. Synowicki is a Certified Public Accountant (inactive) and currently serves on the board of directors of Blue Cross Blue Shield — Nebraska, as Finance Committee Chairman and a member of the Audit Committee. The Board believes Mr. Synowicki provides financial and accounting expertise and valuable industry insight and perspective by virtue of his many years of leadership experience in the industry.
Richard Dozer (61)
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.
David Vander Ploeg (59)(61) 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. 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. CONTINUING DIRECTORS—CLASS III DIRECTORS
Richard Lehmann (73)Robert Synowicki (61)
Mr. LehmannSynowicki has served as a member ofon the board of directors of Knight since 2006.February 2016. Mr. LehmannSynowicki served in multiple roles with Werner Enterprises, Inc., a publicly traded national trucking company, for over 25 years, most recently serving as Executive Vice President of Driver Resources from 2010 until December 2015, where he oversaw recruitment and other critical professional driver initiatives. In addition, Mr. Synowicki served as Chief Financial Officer, Chief Operating Officer, and Chief Information Officer at various times during his career with Werner. Mr. Synowicki has also served onas a member of the boardsBoard of Grandpoint Capital, Inc.,the American Trucking Associations and the Truckload Carriers Association. Mr. Synowicki is a bank holding company, since December 2013,Certified Public Accountant (inactive) 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, andcurrently serves 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 servedBlue Cross Blue Shield - Nebraska, as Finance Committee 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 boardAudit Committee. He earned a Bachelor of directorsScience degree in Biology and a Bachelor of bothScience in Business Administration, Accounting from 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. Richard Kraemer (74)
Mr. Kraemer has served as a memberUniversity 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.Nebraska. The Board believes that Mr. Kraemer is qualified to serve as a director based upon, among other things, hisSynowicki provides financial acumen, executiveand accounting expertise and valuable industry insight and corporate governance, human resources, and labor relations knowledge. perspective by virtue of his many years of leadership experience in the industry.
Roberta Roberts Shank (51)
Ms. Roberts Shank was appointed to the board of directors of Knight in February 2016. Ms. Roberts Shank currently serves as the Chief Executive Officer, President, and director of Chas Roberts A/C and Plumbing, Arizona’s largest residential air conditioning installer, a position she has held since 2000. For her role at Chas Roberts, Ms. Roberts Shank was named the 2014 CEO of the Year by the ACE Awards, in addition to previously being named one of Arizona’s most dynamic women in business, winning the Greater Phoenix Chamber of Commerce Impact Award, and being a named a finalist for the Ernst & Young Entrepreneur of the Year award. Ms. Roberts Shank has also served on the Advisory Board of AMERCO, North America’s largest “do-it-yourself” moving and storage operator through its subsidiary, U-Haul International, Inc., since August 2017. In addition, Ms. Roberts Shank has served in multiple civic and community roles, including as the treasurer of the National Charity League for six years and currently serving on the board of directors for the Boys and Girls Club of Metro Phoenix and the City of Phoenix planning commission. The Board believes Ms. Roberts Shank’s extensive executive-level leadership and business experience through a variety of economic environments makes her a valuable asset for the Board and the Company.
Jerry Moyes (74)
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 isfor 2019 and was as follows: | | | | | | | | | | | | | | | | | | | | | | January 1, 2019 - June 30, 20191 | | July 1, 2019 - December 31, 20192 | | | | | Member | | Incremental Lead | | Member | | Incremental Lead | | | Compensation Element | | | | | | | | | | Board Service Cash Retainer | $ | 50,000 |
| | $ | 20,000 |
| | $ | 60,000 |
| * | $ | 22,500 |
| * | Equity Award Annual Equity Grant | $ | 80,000 |
| | | | $ | 95,000 |
| * | | | Committee Service Cash Retainer | | | | | | | | | | Audit | | $ | 5,000 |
| | $ | 15,000 |
| | $ | 10,000 |
| * | $ | 15,000 |
| | | Compensation | | $ | 5,000 |
| | $ | 10,000 |
| | $ | 7,500 |
| * | $ | 12,500 |
| * | | Nominating and Corporate Governance | | $ | 5,000 |
| | $ | 7,500 |
| | $ | 6,000 |
| * | $ | 10,000 |
| * | | Finance | | $ | 5,000 |
| | $ | 6,000 |
| | $ | 5,000 |
| | $ | 6,000 |
| | | Executive | | — |
| | — |
| | — |
| | — |
| | | Meeting Fees | | None | | | | None | | | | | *Indicated Mid-Year Change | | | | | | | | | |
· | an annual | | 1 | Annual retainer to each director of $130,000, payable up to $50,000 in cash and at least $80,000 in Class A common stock.stock |
· | an | | 2 | Annual retainer to each director of $155,000, payable up to $60,000 in cash and at least $95,000 common stock, provided that for 2019, the increase in the annual leadership retainer of $20,000,was paid in all cash to the lead independent director; |
· | an annual retainer of $15,000, paid in cash, to the Audit Committee Chairperson; |
· | an annual retainer of $10,000, paid in cash, to the Compensation Committee Chairperson; |
· | an annual retainer of $7,500, paid in cash, to the Nominating and Corporate Governance Committee Chairperson; |
· | an annual retainer of $6,000, paid in cash, to the Finance Committee Chairperson; |
· | an annual retainer of $5,000, paid in cash, to the Merger Integration Committee Chairperson; |
· | an annual retainer of $5,000, paid in cash, to each member of the Audit Committee; |
· | an annual retainer of $5,000, paid in cash, to each member of the Compensation Committee; |
· | an annual retainer of $5,000, paid in cash, to each member of the Nominating and Corporate Governance Committee; |
· | an annual retainer of $5,000, paid in cash, to each member of the Finance Committee; |
· | an annual retainer of $5,000, paid in cash, to each member of the Merger Integration Committee; and |
· | reimbursement of expenses to attend Board and committee meetings. |
No additional retainers are paid to the members or the Chairperson of the Executive Committee or to the Chairperson of the Merger Integration Committee. No other fees are paid for attendance at Board or committee meetings. Prior to the 2017 Merger, Swift non-employee directors,meetings, except for Mr. Moyes, received an annual cash retainer of $75,000, paid on a quarterly basis, and an annual grant of restricted shares of Class A common stock equal to $100,000 ($125,000 for the Chairperson of Swift’s Board), which vests on the first anniversary of the grant date, subject to certain termination and forfeiture provisions, prorated for the partial year of service if such non-employee director resigned in connection with the 2017 Merger. In addition:
· | the Chairperson of Swift’s Board received an annual cash retainer of $75,000; |
· | the Chairperson of Swift’s Audit Committee received an annual cash retainer of $20,000, and each member of Swift’s Audit Committee received an annual cash retainer of $10,000; |
· | the Chairperson of Swift’s Compensation Committee received an annual cash retainer of $15,000, and each member of Swift’s Compensation Committee received an annual cash retainer of $7,500; and |
· | the Chairperson of Swift’s Nominating and Corporate Governance Committee received an annual cash retainer of $10,000, and each member of Swift’s Nominating and Corporate Governance Committee received an annual cash retainer of $5,000. |
Non-employee directors of Swift also received a fee ranging from $500 to $2,500, depending on the length of the meeting, for special meetings of Swift’s Board, and reimbursement of expenses to attend Swift’s Board and committee meetings.
The following table provides information for the fiscal year ended December 31, 2017,2019, regarding all plan and non-plan compensation awarded to, earned by, or paid to, each person who served as a director for 2017. The table does not include compensation that Knight paid to former Knight directors prior to the 2017 Merger.2019. | Name | Fees Earned or Paid in Cash ($) | | Stock Awards Cash Value ($)(1) | | All Other Compensation ($) | | Total ($) | | Glenn Brown(2) | | 113,806 | | 99,990 | | — | | 213,796 | | | Richard Dozer | | 249,862 | | 124,988 | | — | | 374,850 | | | Michael Garnreiter | | 14,063 | | — | | — | | 14,063 | | David Jackson(3) | | — | | — | | — | | — | | Gary Knight(3) | | — | | — | | — | | — | | Kevin Knight(3) | | — | | — | | — | | — | | | Richard Kraemer | | 7,875 | | — | | — | | 7,875 | | | Richard Lehmann | | 14,625 | | — | | — | | 14,625 | | | Kathryn Munro | | 14,063 | | — | | — | | 14,063 | | | Jerry Moyes | | — | | — | | 2,400,000(4) | | 2,400,000 | | | Roberta Roberts Shank | | 13,125 | | — | | — | | 13,125 | | | Robert Synowicki, Jr. | | 14,063 | | — | | — | | 14,063 | | | David Vander Ploeg | | 117,250 | | 99,990 | | — | | 217,240 | | | Former Directors | | | | | | | | | | José Cárdenas(5) | | 80,667 | | 99,990(5) | | — | | 180,657 | | William Riley, III(5) | | 64,667 | | 99,990(5) | | — | | 164,657 | |
| | | | | | | | | | | | | | | | | Fees Earned or Paid in Cash | | Stock Awards Cash Value 1 | | All Other Compensation | | Total | | Director: | | | | | | | | | Michael Garnreiter 2 | | 80,000 |
| | 79,998 |
| | — |
| | 159,998 |
| David Jackson 3 | | — |
| | — |
| | — |
| | — |
| Gary Knight 3 | | — |
| | — |
| | — |
| | — |
| Kevin Knight 3 | | — |
| | — |
| | — |
| | — |
| Kathryn Munro 2 | | 97,500 |
| | 79,998 |
| | — |
| | 177,498 |
| Roberta Roberts Shank 2 | | 58,750 |
| | 99,983 |
| | — |
| | 158,733 |
| Robert Synowicki, Jr. 2 | | 76,750 |
| | 79,998 |
| | 25,0004 |
| | 181,748 |
| David Vander Ploeg 2 | | 78,500 |
| | 79,998 |
| | — |
| | 158,498 |
| | | | | | | | | | | | Former Directors: | | | | | | | | | Richard Dozer 5 | | 25,000 |
| | 33,328 |
| | — |
| | 58,328 |
| Richard Kraemer 6 | | 15,208 |
| | 44,147 |
| | — |
| | 59,355 |
| Richard Lehmann 7 | | 25,418 |
| | 33,328 |
| | — |
| | 58,746 |
|
(1) | | | 1 | The amounts shown reflect the aggregate grant date fair value of stock awards granted to non-employee directors during 2017,2019, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). The grant date fair value for restrictedcommon stock was measured based on the closing price of our common stock on the date of grant. Does not include equity grants issued by Knight priorMs. Roberts Shank elected to the 2017 Merger.receive her annual retainer as $100,000 of common stock and $30,000 in cash. |
| | | 2 | As of December 31, 2017, Mr. Brown had 3,001 restricted shares and no options outstanding, each of2019, Messrs. DozerGarnreiter, Synowicki, and Vander Ploeg, had 3,001 restricted shares and 2,880 unexercised and vested options, Mr. Moyes had no restricted shares, 43,619 unexercised and vested options, and 24,361 unexercisable and vested options, and Messrs. Garnreiter, Kraemer, Lehmann, Mses. Munro and Roberts Shank and Messrs. Synowicki, Cárdenas, and Riley, had no restricted shares and no options outstanding. |
| | (2) | Mr. Brown is not standing for re-election to the Board. | (3)3 | Employee directors do not receive any additional compensation for service as a director. |
(4) | | | 4 | Represents consulting fees paid to Mr. Moyes pursuantSynowicki. Mr. Synowicki provided consulting services to the Letter Agreement dated April 9, 2017, between Jerry MoyesCompany related to driver recruiting and Swift Transportation Company. retention through May 2019. |
| | | 5 | Mr. Moyes doesDozer did not receive any additional compensationstand for reelection at our 2019 annual meeting, held on May 30, 2019. Mr. Dozer’s cash and equity retainer was prorated for his service as a director ofon the Company. See “Relationships and Related Party Transactions” for details regarding related party transactions with Mr. Moyes.Board through May 30, 2019. |
| | (5)6 | Messrs. CárdenasMr. Kraemer retired from our Board effective as of our 2019 annual meeting, held on May 30, 2019. Mr. Kraemer’s cash and Riley resigned as directors ofequity retainer was prorated for his service on the Board through May 30, 2019. Mr. Kraemer elected to receive his annual retainer as $120,000 of common stock and $10,000 in cash, prorated for his partial year of service. |
| | | 7 | Mr. Lehmann retired from our Board effective upon the 2017 Merger. Of the 3,001 restricted shares granted to eachas of Messrs. Cárdenasour 2019 annual meeting, held on May 30, 2019. Mr. Lehmann’s cash and Riley, representing their equity retainers after giving effect to the Consolidation Ratio (as hereinafter defined), 879 restricted shares vestedretainer was prorated for his service on the Merger Date and the remaining restricted shares were forfeited.Board through May 30, 2019. |
EXECUTIVE OFFICERSExecutive Officers
The following table sets forth the names, ages, and positions of our current executive officers.officers, as of the Record Date. Biographies for our executive officers are also provided below, except for David Jackson and Kevin Knight, whose biographies are given under “Continuing Directors”“Nominees for Class III Director” and Gary Knight, whose biography is given under “Nominees for Director.“Continuing Class I Directors.” | | | | | | | Name | | | Age | | | Position | | David Jackson | | | 42 | 44 | | President and CEO | | Adam Miller | | | 38 | 39 | | CFO and Treasurer | | Kevin Knight | | | 61 | 63 | | Executive Chairman | | Gary Knight | | | 66 | 68 | | Vice Chairman | Tim GuinShannon Breen | | | 5339 | | | ExecutiveSenior Vice President of SalesLogistics and Marketing of SwiftIntermodal | | Todd Carlson | | | 58 | 60 | | General Counsel and Secretary | | James Fitzsimmons | | 48 | | Executive Vice President of Operations of Swift | | Cary Flanagan | | | 4547 | | | Senior Vice President and Chief Accounting Officer | | Timothy Harrington | | 50 | | Executive Vice President of Sales of Swift | | Michael Liu | | 47 | | Executive Vice President of Operations of Knight | | Kevin Quast | | | 52 | 54 | | Chief Operating Officer of Swift | | James Updike, Jr. | | | 45 | 47 | | Executive Vice President of Sales and Marketing of Knight | Kenneth Runnels | | | 53 | | | Executive Vice President of Fleet Operations of Swift |
Adam Miller (38)(39) 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. Tim Guin (53)Shannon Breen (39)
Mr. GuinBreen joined SwiftKnight in 1988 and2012. Mr. Breen has served as Swift’s Executivethe Senior Vice President Logistics and Intermodal since September 2018. Prior to his current position, Mr. Breen served as the Vice President of SalesLogistics of Knight from 2015 to September 2018 and Marketing since May 2016. He continues to serveconcurrently as the Company’s Executive Vice President of Swift Logistics following the 2017 Merger. His prior roles and additional responsibilities have included Director of Sales of Knight from 2012 to 2014 and Marketing. Priorproject leader for a transportation management system upgrade from 2015 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,2017. 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. GuinBreen earned his Bachelor’s degree in Political ScienceFinance from Winthrop University.Arizona State University in 2002. Todd Carlson (58)(60) 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. James Fitzsimmons (48) Mr. Fitzsimmons has served as the Executive Vice President of Operations of Swift since September 2018. Mr. Fitzsimmons joined Swift in 1993 and has held several leadership positions within customer services, sales, and operations. Prior to his current position, Mr. Fitzsimmons served as Regional Vice President of Swift from 2006
to January 2018 and Senior Vice President of Operations beginning in January 2018. He graduated with a bachelor’s degree in Business Management from Arizona State University. Cary Flanagan (45)(47) Mr. Flanagan has served as our Senior Vice President and 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. Timothy Harrington (50) 32Michael Liu (47)
Operations of Knight since 2017. Prior to his current position, Mr. Liu served as the Regional Vice President of Operations for West Dry Van and West Refrigerated at Knight from 2016 to 2017 and Regional Vice President of Operations for West Dry Van from 2010 to 2016. Mr. Lieu earned his Bachelor of Science degree in Business Management form the University of Phoenix.Kevin Quast (52)(54) 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. James Updike, Jr. (45)(47) 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. Kenneth Runnels (53)
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.
COMPENSATION COMMITTEE REPORT | | | Compensation Committee Report |
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, 2017.2019. This report is submitted by the Compensation Committee. Kathryn Munro — Chairperson
Glenn Brown
Richard Kraemer
Roberta Roberts Shank - Chairperson Kathryn Munro Robert Synowicki, Jr.
The foregoing Compensation Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference to any Company filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent the Company specifically incorporates this report. EXECUTIVE COMPENSATIONCompensation Discussion and AnalysisCOMPENSATION DISCUSSION AND ANALYSIS
Executive Summary We are North America's largest and most profitable truckload carrier. Knight has historically been one of the most profitable truckload carriers in North America and Swift has historically been one of the largest truckload carriers in North America. The following represents the results of these efforts in 2019: | | | | 2019 Financial Highlights | | Operating Performance | Total revenue of $4.8 billion | | Revenue, excluding trucking fuel surcharge of $4.4 billion | | Operating ratio of 91.2% | Adjusted operating ratio of 88.4%1 | | | | Capital Deployment | Cash flows from operations of $839.6 million | Free cash flow of $269.8 million 2 | Lease adjusted leverage ratio decreased by 1.4% compared to year end 2018 3 | | Repurchased $86.9 million of our common stock | | Returned $41.4 million in dividends to our stockholders |
| | | 1 | Adjusted operating ratio is a non-GAAP financial measure defined as operating expenses, net of trucking fuel surcharge revenue and certain non-recurring items, expressed as a percentage of revenue, excluding trucking fuel surcharge revenue. See Part II, Item 7 of our Form 10-K for the year ended December 31, 2019 for a non-GAAP reconciliation. |
| | | 2 | Free cash flow is a non-GAAP financial measure defined as cash flow from operating activities, less net capital expenditures. See non-GAAP reconciliation on page 64. |
| | | 3 | See definition of lease adjusted leverage ratio on page 64. |
Our 2019 compensation design appropriately awarded our executive officers for these results and the stockholder value they created through a direct link between pay and performance. The goals of our compensation program going into 2019 were two-fold: (1) incentivize executives to continue the successful integration of Knight and Swift, to improve Swift's margins to a level consistent with Knight's margins, and to grow earnings, which was accomplished through performance-based cash and equity awards; and (2) retain an executive team that we were confident could be the best team in the industry in maximizing stockholder value, which was accomplished through salary and time-based equity awards. Our 2020 compensation design has a similar structure because the Compensation Committee which believes the plan design: is comprised solely of independent directors, overseescompetitive with our executive compensation programpeer group and reviews and approves all compensation decisions relating to our executive officers. The Compensation Committee endeavors to provide a compensation program that primary competitors for talent; attracts motivates, and retains our executive officers, istalented executives that have produced industry-leading results; provides stability through conservative, but competitive withinbase salary; aligns our industry,executives’ interests with our corporate strategies, our business objectives, and focuses executive managementthe long-term interests of our stockholders; and enhances our executives’ focus on Company performance and buildingincentive to take actions that increase our stock price and maximize stockholder value for our stockholders. Highlights of the executive compensation program following the 2017 Merger include:over time, without undue risk.
✓
| | | | 2020 Compensation Plan Highlights | | ● | Conservative pay policy with target total named executive officer and director compensation positioned belowpay targeted to the market median of peer group | ✓ ●
| Peer group designed to reflect companies we compete with for business and talent | ✓ ●
| Direct link between pay and performance that aligns business strategies with stockholder value creation | ✓ ●
| Appropriate balance between short- and long-term compensation that discourages short-term risk taking at the expense of long-term results | ✓ ●
| Independent compensation consultant retained by the Compensation Committee to advise on executive compensation matters | ✓ ●
| Independent Compensation Committee | ✓ ●
| Clawback policy | ✓ ●
| Anti-Pledging and Hedging Policy limiting the pledging and hedging of the Company’s securities by certain individuals with no hardship exemption | ✓ ●
| No re-pricing or back-dating of stock options | ✓ ●
| No dividends paid on unvested stock awards | ✓ ●
| Robust director and key officer stock ownership and retention guidelines | ✓ ●
| No tax gross-up payments to cover personal income taxes relating to incentive compensation or change of control payments |
Introduction
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 executivesNamed Executive Officers 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.2019
The following individuals were our named executive officers for 2017:2019: | | | | | Name | | Position | | David Jackson | | President and CEO | | Adam Miller | | CFO and Treasurer | | Kevin Knight | | Executive Chairman | | Gary Knight | | Vice Chairman | Tim GuinKevin Quast | | Executive Vice President of Sales and Marketing Chief Operating Officer of Swift | Richard Stocking | | Former President and Chief Executive Officer | Virginia Henkels | | Former Executive Vice President and Chief Financial Officer | Mickey Dragash | | Former Executive Vice President, General Counsel, and Secretary |
Knight-Swift Compensation Program for 2018
Overview and Philosophy of Compensation Our Compensation Committee hasis responsible for: reviewing and approving corporate goals and objectives relevant to the responsibility to:compensation of our CEO; · | reviewevaluating the performance of our CEO in light of those goals and objectives; and approve corporate goals and objectives relevant to the compensation of our CEO; |
· | evaluate the performance of our CEO in light of those goals and objectives; and |
· | determine and approvedetermining and approving the compensation level of our CEO based upon that evaluation. |
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,Pearl Meyer, our independent compensation consultant. EchelonPearl Meyer provides analysis and recommendations regarding market pay data and competitive-position benchmarking, peer group development, performance measures and goals, program structure, incentive and equity plan design, and the regulatory environment and Company policies as they relate to executive compensation. EchelonPearl Meyer 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. We believe that the quality, skills, and dedication of our executive officers are critical factors affecting our long-term value and success. Our primary executive compensation goals include attracting, motivating, and retaining qualified executive officers who create long-term value for our stockholders and focusing our executive officers on performance metrics and objectives consistent with sustained value creation. We seek to accomplish these goals by rewarding past performance, incenting future performance, and aligning our executive officers’ long-term interests with those of our stockholders. Our compensation program is designed to reward our executive officers for contributions to our financial success, creation of stockholder value, individual performance, and experience. In this proxy statement, references to “stockholder value” or “stockholder return” generally refer to the percentage increase in the value of our Company shares, together with dividends. Our compensation philosophy is to provide overall compensation that:
· | is competitive with our peer group and primary competitors for talent; |
· | attracts and retains talented executives and motivates those executives to achieve superior results; |
· | aligns our executives’ interests with our corporate strategies, our business objectives, and the long-term interests of our stockholders; and |
· | enhances our executives’ focus on and incentive to take actions that increase our stock price and maximize stockholder value over time without undue risk. |
In addition, we strive to ensure that our compensation, particularly base salary, is consistent with our focus on controlling costs.
Elements of 20182019 Executive Compensation Following the 2017 Merger, with the advice and recommendations of Echelon, the combined company implemented aOur compensation program for 2018 with2019 includes the following components:
| | | | | | | | | Element | | Form | | Time Horizon | | Primary Objectives and Link to Value Creation | | Base Salary | | Cash | | Annual | | Attract and retain our named executive officers with fixed cash compensation to provide stability that allows our named executive officers to focus their attention on business objectives | | | | | | | | | Annual Cash Bonus | | Cash | | Annual | | Focus and motivate our named executive officers to achieve annual corporate financial and operating goals with opportunity for upside based on exceptional performance | | | | | | | | | Performance-Based Long-Term Incentives | | PRSUs | | Three-year performance period | | Focus and motivate our named executive officers to achieve long-term corporate financial and operating goals and superior stockholder returns relative to our peer group Encourage retention through additional time vesting once PRSUs are earned after three-year performance period
PRSUs comprise 60% of our long-term incentives | | | | | | | | | Time-Based Long-Term Incentives | | RSUs | | Ratable three-year vesting | | Encourage long-term retention further incent stockholder alignment, and provide incentive to increase the market value of our Class A common stocknamed executive officers
Time-vested RSUs comprise 40% of our long-term incentives | | | | | | | | | Other Compensation | | Other Benefits | | N/A | | Limited personal benefits such as 401(k) and vehicle allowance that are consistent with our peer companiescompanies. Additionally, we provide an air travel allowance to Mr. Kevin Knight. |
Each element of compensation for 20182019 is discussed below. Base Salary In November 2017, the Compensation Committee approved the followingDuring 2019, our named executive officers’ base salaries for our continuing named executive officers, which remain effective for 2018:were as follows:
| | | | | Name | | 2018 Base Salary | | David Jackson | | $725,000800,000 | | Adam Miller | | $450,000650,000 | | Kevin Knight | | $900,000950,000 | | Gary Knight | | $400,000450,000 | Tim GuinKevin Quast | | $300,000350,000 |
Annual Cash Bonus In February 2018,January 2019, the Compensation Committee approved annualour cash bonus performance targets and potentials underplan for 2019 (the “2019 Cash Bonus Plan”) pursuant to our Amended and Restated 2014 Omnibus Incentive Plan (the “Omnibus Plan”) for Messrs. Jackson, Miller, Kevin Knight, and Gary Knight. The. Under the 2019 Cash Bonus Plan, certain of our employees, including our named executive officers, were eligible to earn incremental cash bonuses upon satisfaction of 2019 performance targets for 2018 relaterelated to adjusted operating income growth and adjusted trucking operating ratio, compared to 2017. Adjusted operating income is defined as consolidated total revenue, net of fuel surcharge, less consolidated total operating expenses, net of fuel surcharge. Adjusted operating income growth is calculated by taking 2018 adjusted operating income less 2017 adjusted operating income, divided by 2017 adjusted operating income. Due to Knight’s treatment as the accounting acquirer in the 2017 Merger, consolidated operating income for 2017 will not include Swift results prior to the Merger Date. The Compensation Committee took this into consideration when setting the adjusted operating income growth targets. Adjusted trucking operating ratio is the adjusted operating ratio (total trucking adjusted operating expenses, net of trucking fuel surcharge, divided by total trucking revenue, net of trucking fuel surcharge and intersegment transactions) for each of the Company’s trucking segments (Knight Trucking, Swift Truckload, Swift Dedicated, and Swift Refrigerated). Both the adjusted operating income growth and adjusted trucking operating ratio goals may be adjusted by the Compensation Committee to omit the effects of extraordinary items, acquisitions or dispositions, unusual, one-time or non-recurring items, amortization of intangibles, cumulative effects of changes in accounting principles, and similar items or transactions.ratio. The Compensation Committee established a target bonus potential, expressed as a percentage of year-end annualized base salary, for each of Messrs. Jackson and Kevin Knight at 100% of his respective year-end base salary, and each of Messrs. Miller and Gary Knight at 75% of his respective year-end base salary, based upon achievement of the performance targets for 2018. The threshold and maximum payout range and related performance goals for the 2018 cash bonus is summarized below:our named executive officers as follows: 2018 Cash Bonus Payout and Performance Target Range | % of Bonus Potential
Earned
| | | | Name | | Adjusted Operating
Income Growth
Target Bonus Potential | | David Jackson | | Adjusted Trucking Operating Ratio100% | 20%Adam Miller | | >0.0%75% | | Kevin Knight | | <96.0%100% | 200%Gary Knight | | >100.0%75% | | Kevin Quast | | <88.0%60% |
Given the uncertainty and difficulty of integration following the 2017 Merger, the Compensation Committee viewed the 2018 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,Pearl Meyer, the 20182019 performance targets were reviewed and approved by the Compensation Committee after consultation with Messrs. Jackson, Miller, and Kevin Knight.
2019 Cash Bonus Payout and Performance Target Range — The 2018threshold and maximum payout range and related 2019 performance targets do not reflect any opinion or projection of management concerning adjusted operating income growth or adjusted trucking operating ratio expectations forunder the year. 2019 Cash Bonus Program are summarized below: | | | | | | % of Bonus Potential Earned 1 | | Adjusted Operating Income Growth 2 3 | | Adjusted Trucking Operating Ratio 3 4 | | 20% | | >(25.0)% | | <93.0% | | 200% | | >5.0% | | <85.0% |
| | | 1 | The Compensation Committee also created specific parameters for awarding bonuses for achievement of performance between the ranges set forth in this table. |
| | | 2 | Adjusted operating income is defined as consolidated total revenue, net of trucking fuel surcharge, less consolidated total operating expenses, net of trucking fuel surcharge. Adjusted operating income growth is calculated by taking 2019 adjusted operating income less 2018 adjusted operating income, divided by 2018 adjusted operating income. |
| | | 3 | Both the adjusted operating income growth and adjusted trucking operating ratio targets could be adjusted by the Compensation Committee to omit the effects of extraordinary items, acquisitions or dispositions, unusual, one-time or non-recurring items, amortization of intangibles, cumulative effects of changes in accounting principles, and similar items or transactions. |
| | | 4 | Adjusted trucking operating ratio is the adjusted operating ratio (total trucking adjusted operating expenses, net of trucking fuel surcharge and intersegment transactions, divided by total trucking revenue, net of trucking fuel surcharge and intersegment transactions) for each of our trucking segments (Knight Trucking, Swift Truckload, Swift Dedicated, and Swift Refrigerated), which were recast in March 2019 into a single trucking reportable segment. |
The Compensation Committee also created specific parameters for awarding bonuses for achievementviewed the 2019 performance targets as reflecting a range of performance betweenthat was achievable but uncertain, with the 2018 ranges set forthupper end of the range reflecting a significant accomplishment. In February 2020, the Compensation Committee assessed performance under the 2019 Cash Bonus Program and determined that the 2019 performance targets were achieved at the 100% level, resulting in the table above.following payouts to our named executive officers after the release of our 10-K for the year ended December 31, 2019: | | | | | Name | | Payout | | David Jackson | | $800,000 | | Adam Miller | | $487,500 | | Kevin Knight | | $950,000 | | Gary Knight | | $337,500 | | Kevin Quast | | $210,000 |
Long-Term Incentives In November 2017,2019, the Compensation Committee approved the following grants of PRSUs and RSUs to the named executive officers under the Omnibus Plan. Plan: | | | | | | | | | | | | | | | Target Performance-Based Long-Term Incentives (60% of Grant) | | Target Time-Based Long-Term Incentives (40% of Grant) | | Total Target Long-Term Incentives (in Dollars) 1 | | Name | | No. of PRSUs | | Target (in Dollars) 1 | | No. of RSUs | | Target (in Dollars) 1 | | | David Jackson | | 48,556 | | $1,800,000 | | 32,371 | | $1,200,000 | | $3,000,000 | | Adam Miller | | 26,706 | | $990,000 | | 17,804 | | $660,000 | | $1,650,000 | | Kevin Knight | | 48,556 | | $1,800,000 | | 32,371 | | $1,200,000 | | $3,000,000 | | Gary Knight | | 12,948 | | $480,000 | | 8,632 | | $320,000 | | $800,000 | | Kevin Quast | | 8,092 | | $300,000 | | 5,395 | | $200,000 | | $500,000 |
| | | 1 | The number of PRSUs and RSUs granted was determined by taking the applicable target (in dollars) divided by the closing price of our common stock on the grant date ($37.07). Please refer to the Summary Compensation Table and the Grants of Plan Based Awards table below for details regarding the fair value of these awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). |
The PRSUs have a three-year performance period commencing January 1, 2018,2020, and ending December 31, 2020. The2022.The performance targets for the one-half of the PRSUs relate to the compound annual growth rate in adjusted earnings per share (“Adjusted EPS CAGR”) and adjusted trucking operating ratio.ratio (the “Company Performance PRSUs”). The threshold and maximum payout range and related performance goalstargets for the other one-half of the PRSUs are summarized below:
2018 PRSU Payout and Performance Range* | %relate to the ranking of 2018 PRSU Grant Earned | | Adjusted EPS CAGR | | Adjusted Trucking Operating Ratio | 20% | | >0.0% | | <95.0% | 200% | | >25.0% | | <87.0% |
* The number of PRSUs earned will be increased by 25% if the Company’s compound annual total stockholder return (“TSR”) exceedsTotal Revenue CAGR and the 75th percentile of theCompany’s Return on Net Tangible Assets compared to a relative peer group overof public truckload carriers selected by the performance period. Conversely, the number of PRSUs earned will be decreased by 25% if the Company’s TSR is below the 40th percentile of theCompensation Committee (the “Relative Performance PRSUs”). The relative peer group for the performance period.
Given the uncertainty and difficulty of integration following the 2017 Merger, the Compensation Committee viewed the 2018 PRSU performance targets as reflecting a range of performance that is achievable but uncertain, with the upper endRelative Performance PRSUs consists of the range reflecting a significant accomplishment. The actual number of restricted shares earned pursuant to this grant, subject tofollowing public truckload carriers: Covenant Transportation Group, Inc., Heartland Express, Inc., Marten Transport, Ltd., Schneider National, Inc., USA Truck Inc., U.S. Xpress Enterprises, Inc., and Werner Enterprises, Inc. (collectively, the level of performance against the performance targets, will be determined following the conclusion of the performance period ending December 31, 2020, and any earned restricted shares will vest in January 2021. The TSR for the Company and for any peer will be determined by the annual compound growth rate between the average stock price of each company considered in the peer group for the 60 trading days prior to the grant date, and the average stock price of each company in the peer group for the final 60 trading days of the performance period, with dividends reinvested at the closing stock price of the applicable stock on the date the dividend is declared.
“Relative Peer Group”). With input from Echelon,Pearl Meyer, the PRSU performance targets were reviewed and approved by the Compensation Committee after consultation with Messrs. Jackson, Miller, and Kevin Knight. The PRSU performance targets do not reflect any opinion or projection of management concerning Adjusted EPS CAGR or adjusted trucking operating ratio expectations for the performance period.
2019 PRSU Payout and Performance Range — The Compensation Committee also created specific parameterspayout range and related performance goals for the Company Performance PRSUs are summarized below:
| | | | | | | | | | | | Adjusted Trucking Operating Ratio | | | | >95.0% | <95.0%-93.0% | <93.0%-91.0% | <91.0%-89.0% | <89.0%-87.0% | <87.0% | | Adjusted EPS CAGR | <-2.0% | 0% | 0% | 0% | 0% | 0% | 0% | | >-2.0% - 0.0% | 0% | 20% | 40% | 60% | 80% | 100% | | >0.0% - 2.0% | 0% | 40% | 60% | 80% | 100% | 120% | | >2.0% - 4.0% | 0% | 60% | 80% | 100% | 120% | 140% | | >4.0% - 6.0% | 0% | 80% | 100% | 120% | 140% | 160% | | >6.0%-8.0% | 0% | 100% | 120% | 140% | 160% | 180% | | >8.0% | 0% | 120% | 140% | 160% | 180% | 200% |
The payout range and related performance goals for the Relative Performance PRSUs are summarized below. | | | | | | | | | | | | | | CAGR Total Revenue Growth (%) | | | Rank | 8 | 7 | 6 | 5 | 4 | 3 | 2 | 1 | | Return on Net Tangible Assets | 8 | 0% | 0% | 0% | 0% | 10% | 20% | 35% | 50% | | 7 | 0% | 0% | 0% | 10% | 20% | 30% | 45% | 60% | | 6 | 0% | 0% | 0% | 25% | 35% | 50% | 60% | 75% | | 5 | 0% | 25% | 35% | 45% | 55% | 70% | 85% | 100% | | 4 | 25% | 40% | 55% | 70% | 85% | 100% | 110% | 125% | | 3 | 40% | 55% | 70% | 85% | 100% | 115% | 130% | 150% | | 2 | 60% | 70% | 80% | 100% | 115% | 130% | 150% | 175% | | 1 | 75% | 85% | 95% | 110% | 125% | 150% | 175% | 200% |
The number of PRSUs earned will be increased by 25% if our compound annual total stockholder return (“TSR”) exceeds the 75th percentile of the Benchmarking Peer Group (as defined below) over the performance period. Conversely, the number of PRSUs toearned will be earneddecreased by 25% if our TSR is below the 40th percentile of the Benchmarking Peer Group for the achievement of performance period. The TSR for the Company and for any peer will be determined by the annual compound growth rate between the ranges set forthaverage stock price of each company considered in the table above. Based uponBenchmarking Peer Group for the 60 trading days prior to the grant date, and the average stock price of each company in the Benchmarking Peer Group for the final 60 trading days of the performance period, with dividends reinvested at the closing stock price of our Class A commonthe applicable stock on the date the dividend is declared.
The actual number of restricted shares earned pursuant to this grant date of $38.65 per share, eachPRSUs will be determined following the conclusion of Messrs. Jackson, Miller, Kevin Knight,the performance period based upon actual performance relative to the performance targets, and Gary Knight were granted 23,286, 8,538, 46,572, and 6,986 PRSUs, respectively.any earned restricted shares will vest on January 31, 2023. Mr. Kevin Knight’s PRSUs will settle in cash upon vesting, while the PRSUs granted to the other named executive officers will be settled in shares of Companyour common stock. Time-Based Long-Term Incentives
In November 2017, the Compensation Committee approved grants of RSUs to the named executive officers under the Omnibus Plan. The time-based RSUs vest ratably in three annual installments beginningas follows: 34% on January 31, 2019.2021, 33% on January 31, 2022, and 33% on January 31, 2023. 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 uponretention of an executive team that has successfully led a merger integration effort and is managing 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.largest truckload carrier in North America. 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 Companyour common stock.
Compensation Decisions for 2020 In February 2020, the Compensation Committee approved our cash bonus plan for 2020 (the “2020 Cash Bonus Plan”) pursuant to our Omnibus Plan. Under the 2020 Cash Bonus Plan, certain of our employees, including our named executive officers, are eligible to earn incremental cash bonuses upon satisfaction of 2020 performance targets related to adjusted operating income growth and adjusted trucking operating ratio. The structure of the 2020 Cash Bonus Plan, including each named executive officer’s target bonus potential, is the same as the 2019 Cash Bonus Plan. The Compensation Committee established the 2020 performance targets in February 2020, without the benefit of being able to consider the recent developments and uncertainty surrounding the outbreak of the novel coronavirus disease, COVID-19. The Compensation Committee may evaluate performance and/or future awards in light of the business environment as it determines appropriate, subject to the terms of the Omnibus Plan.
Tax Deductibility Under Section 162(m) UnderU.S. federal income tax law generally prohibits publicly held companies from deducting compensation paid to certain executive officers that exceeds $1 million during the tax year. Historically, Section 162(m) of the Code (“("Section 162(m)”"), provided an exemption from the Company is generally prohibited from deductingdeductibility limit for certain forms of compensation that was "performance-based" and meet various requirements as set forth under Section 162(m). The 2017 Tax Cuts and Jobs Act repealed this exemption, and now compensation paid to such executive officers in excess of $1 million paid to the CEOin 2018 and the other “covered employees” as defined in Section 162(m). An exception to this $1 million deduction limitation was available with respect to compensation that qualified as “performance-based compensation” under Section 162(m), which required compliance withlater is no longer deductible, even if performance-based, unless it meets certain requirements set forth in Section 162(m) and the applicable regulations. As a result of new tax legislation that went into effect on December 22, 2017, this exception for performance-based compensation will not be available for taxable years beginning after December 31, 2017, subjectlimited transition relief pursuant to a special rule that "grandfathers"“grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017. To date, the Internal Revenue Service has not issued guidance interpreting the new tax legislation. WhileConsequently, while the Compensation Committee intended that certain incentive awards granted to our named executive officers on or prior to November 2, 2017 be deductible as "performance-based“performance-based compensation,"” it cannot assureensure that result. The Compensation Committee took into consideration the potential impact of the new tax legislation when approving payout amounts for performance periods ending on December 31, 2017.
The Compensation Committee has believed that it was generally in the Company’s best interestsresult due to design compensation arrangements that were intended to satisfy the requirements for deductibility under Section 162(m). Accordingly, the Compensation Committee has taken appropriate actions,uncertainties as to the extent feasible, that were designed and intended to preserve the deductibilityapplication of annual incentive and long-term performance awards previously granted to its executive officers who are covered by Section 162(m). However, notwithstanding this general policy, the Compensation Committee also believes there may be circumstances in which the Company’s interests are best served by maintaining flexibility in the way compensation is provided, whether or not compensation is fully deductible under Section 162(m).
As a result of the new tax legislation, compensation paid in excess of $1 million to individuals who, following December 31, 2017, are subject to Section 162(m), is not expected to be deductible under Section 162(m) of the Code unless such compensation qualifies for transitionarytransition relief. Therefore, certain compensation paid under our cash and equity plans originally designed with the intent that such amounts qualify as “performance-based compensation” may not be deductible in the future. Although theThe Compensation Committee will continue to analyze the impact that Section 162(m) and the potential lack of deduction associated with amounts paid in excess of the deduction limitationlimit may have on the Company, theCompany. The Compensation Committee continues to retainretains the flexibilityautonomy to make decisions with respect to the Company’s compensation programs that are based on factors other than Section 162(m) and the tax consequences related tax consequences.thereto. This flexibility may include amending or modifying the design elements of our historical compensation programs to the extent those design elements were principally adopted in an effort to comply with Section 162(m).
Benchmarking Compensation 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.Benchmarking Peer Group. However, our total stockholder return, compared to the peer groupBenchmarking Peer Group’s total stockholder return, does affect the payout percentage under our PRSUs.PRSUs and the vesting Relative Performance PRSUs depends on the Company’s performance relative to the Relative Peer Group. The Compensation Committee, with the advice of Echelon,Pearl Meyer, 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 forin key financial metrics, such as revenue, EBITDA, total assets, return on assets, return on equity, return on capital,asset intensity, 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. The composition of our peer group may change over time based on market events such as mergers or other business combinations. Our independent compensation consultant and our Compensation Committee will periodically review our peer group to confirm it continues to be an appropriate benchmark for our compensation program.
Impact of the 2017 Merger on Compensation
Merger Bonuses
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.
Impact on Stock-Based Compensation
Pursuant to the 2017 Merger, on the Merger Date:
· | each outstanding Swift stock option fully vested and was converted into a stock option to acquire the Company’s shares using a 0.72-for-one share consolidation ratio (the “Consolidation Ratio”); |
· | each outstanding unvested Swift restricted stock award fully vested (except that the restricted stock awards granted to the legacy Swift directors in May 2017 that by their terms only partially vested, in the case of Messrs. Cárdenas and Riley, or did not vest, in the case of Messrs. Brown, Dozer, and Vander Ploeg) and was converted into the Company’s Class A common stock using the Consolidation Ratio; |
· | each outstanding unvested Swift RSU fully vested (except for the awards granted in May 2017 that by their terms only partially vested, in the case of Mr. Stocking, Ms. Henkels, and Mr. Dragash, or did not vest, in the case of Mr. Guin) and was converted into the Company’s Class A common stock using the Consolidation Ratio; |
· | each outstanding unvested Swift PRSU fully vested and was converted into the Company’s Class A common stock using the Consolidation Ratio; |
· | each outstanding vested and unvested Knight stock option was assumed by the Company and automatically converted into a stock option to acquire an equal number of Company shares; |
· | each outstanding vested and unvested Knight RSU was assumed by the Company and automatically converted into a restricted stock unit award of the Company; and |
· | each outstanding and unvested Knight PRSU was assumed by the Company and automatically converted into a performance unit award of the Company. |
Knight performance units granted prior to the 2017 Merger were accelerated on the Merger Date pursuant to the terms of the award agreements. On the Merger Date, Knight performance unit awards granted in 2014, 2015, and 2016 were accelerated, but only the performance measurement period for the 2014 award was complete allowing for the final award to be expensed and paid out. The performance period for the 2015 and 2016 awards ended December 31, 2017. The performance criteria were not met based on the performance period results ended December 31, 2017, and therefore, no expense was recorded, and no payout was made related to the 2015 or 2016 awards.
In connection with the 2017 Merger, the vesting of certain options, RSUs, and PRSUs granted prior to the 2017 Merger was accelerated for Messrs. Guin, Stocking, and Dragash and Ms. Henkels, in accordance with the terms of such awards. See “—Potential Payments upon Termination or Change-in-Control” below.
Separation Agreements
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.
Elements of Compensation for 2017
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 50th 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 purposes2019 (the “Benchmarking Peer Group”) was as follows:
| | | | | C.H. Robinson Worldwide, Inc. | | Landstar System, Inc. | | Forward Air Corporation | | Old Dominion Freight Line, Inc. | | Genesee & Wyoming Inc. | | Ryder System, Inc. | | Heartland Express, Inc. | | Saia, Inc. | | Hub Group, Inc. | | Schneider National, Inc. | | J.B. Hunt Transport Services, Inc. | | Werner Enterprises, Inc. | | Kansas City Southern | | XPO Logistics, Inc. |
Based on publicly-available data as of pay benchmarking, business performance comparison, and industry practices and trends to determine ifyear-end 2019, the Company is positioned 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.;Benchmarking Peer Group as follows: at approximately the 62nd percentile in total revenue, the 80th percentile in total assets, and (xi) Heartland Express, Inc. In general, Swift’s 2017 compensation program consistedcomparable size with a similar business is challenging due to the Company’s position as one of the following elements:
· | performance-based annual cash incentives; and |
· | long-term equity incentives. |
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.
Base Salary
Swift’scountry’s largest trucking firms. During 2020, the Compensation Committee, with the assistance of Swift’s then-CEO, annually reviewedPearl Meyer, will review the base salaryBenchmarking Peer Group again for continued relevancy.
Risk Considerations Regarding Compensation We believe that the structure of each namedour executive officer. Annual salaries were based upon experience, scopecompensation program provides an appropriate mix of cash, equity, and complexityother compensation. We believe that the different time horizons and metrics used in the annual and long-term elements of compensation provide incentives to achieve annual and long-term financial and operating goals and superior stockholder returns relative to our peer group. Each element of compensation has been designed and is administered in a manner intended to minimize potential risks to the position, responsibilities, peer group comparison, Swift’s performance forCompany. We believe that our executive compensation program aligns the fiscal year, and subjective evaluation of each executive’s contribution to Swift’s performance. For 2017, base salariesinterests of named executive officers who were executiveswith those of Swift were setthe Company’s stockholders. Moreover, we have determined that any risks arising from the Company’s compensation policies and practices for all of its employees are not reasonably likely to have a material adverse effect on the Company.
Stock Ownership and Retention Policy Our Stock Ownership and Policy requires our key officers, as follows: Mr. Guin, $300,000; Mr. Stocking, $650,000; Ms. Henkels, $400,000; and Mr. Dragash, $325,000. Annual Cash Incentives
Swift’s compensation structure provided for annual performance incentives linkeddesignated under the policy, to Swift’s earnings as well as other financial objectives for the year and was intended to compensate Swift’smeet certain minimum stock ownership requirements. Currently, our named executive officers have the following ownership requirements under the Stock Ownership and Retention Policy:
| | | | | Name | | Executive Retention Amount | | David Jackson | | 5x Base Salary | | Adam Miller | | 3x Base Salary | | Kevin Knight | | 5x Base Salary | | Gary Knight | | 3x Base Salary | | Kevin Quast | | 2x Base Salary |
Our Stock Ownership and Retention Policy also requires key officers, including our named executive officers, to retain at least 50% of certain shares for achievementtwo years after the date they are earned, as more fully described under the heading “The Board of key performance measures designed to enhance stockholder value.Directors and Corporate Governance-Stock Trading Policy, Anti-Pledging and Hedging Policy, and Related Matters.” All of our named executive officers are currently in compliance with the Stock Ownership and Retention Policy. For 2017,Hedging and Pledging Policy
Our Anti-Pledging and Hedging Policy limits the target payout level under Swift’s cash-based short-term incentive plan (“STIP”) was expressed as a percentagepledging and hedging 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 approvedCompany’s securities 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 thecertain individuals, including our 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 IPOThe Anti-Pledging 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.
Swift’s Adjusted EPS for 2017 determines the level of payout to each of Swift’s named executive officers under the 2017 STIP. For example, if Adjusted EPS was attained at the target level ($1.29), Mr. Stocking would have been entitled to receive a payout under the 2017 STIP at 100% of target, or 100% of his base salary. If Adjusted EPS was attained at the maximum level ($1.40), then Mr. Stocking would have been entitled to receive a payout under the 2017 STIP at 200% of target, or 200% of his base salary.
| Name | | | Base Salary ($) | | | Target Cash Incentive Percentage | | | | Amount of Cash Incentive at 100%Level of Attainment ($) | | | Tim Guin | | | 300,000 | | | 60% | | | | 180,000 | | | Richard Stocking | | | 650,000 | | | 100% | | | | 650,000 | | | Virginia Henkels | | | 400,000 | | | 75% | | | | 300,000 | | | Mickey R. Dragash | | | 325,000 | | | 60% | | | | 195,000 | |
For the 2017 STIP, Swift’s Compensation Committee approved the following Adjusted EPS goal in February 2017:
| | | | | | Threshold | | | Target | | | Maximum | | | Percentage of Target Payout Level | | | | | 30% | | | 100% | | | 200% | | | Adjusted EPS | | | | | $1.20 | | | $1.29 | | | $1.40 | |
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.
In February 2017, Knight’s Compensation Committee approved an annual cash bonus plan (the “Knight 2017 Cash Bonus Plan”) under the Knight Transportation, Inc. Amended and Restated 2015 Omnibus Incentive Plan (the “Knight Omnibus Plan”). Under the Knight 2017 Cash Bonus Plan: (i) Mr. Jackson’s cash bonus potential was 100% of his then-current 2017 base salary of $550,000; (ii) Mr. Miller’s cash bonus potential was 80% of his then-current 2017 base salary of $275,000; (iii) Mr. Kevin Knight cash bonus potential was 100% of his then-current 2017 base salary of $590,000; and (iv) Mr. Gary Knight’s cash bonus potential was 30% of his then-current 2017 base salary of $227,500. Under the Knight 2017 Cash Bonus Plan, threshold was set at 10% of the bonus potential, target was set at 75% of the bonus potential, and maximum was set at 120% of the bonus potential. The performance targets for 2017 related to return on net assets and the growth in net income compared with net income in 2016 (the "2017 Performance Targets"), as summarized in the table below:
2017 Cash Bonus Payout and Performance Target Range | % of Bonus Potential Earned | | Minimum Net Income Growth | | Minimum Return on Net Assets | 10% | | >-20% | | <7% | 120% | | >4% | | >9% |
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,Hedging Policy permits Kevin Knight and Gary Knight earnedto 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 does not have a cash bonushardship exemption. The Anti-Pledging and Hedging Policy is more fully described under the heading “The Board of 120%Directors and Corporate Governance-Stock Trading Policy, Anti-Pledging and Hedging Policy, and Related Matters.”
Clawback Policy In the event of their respective cash bonus potential. After taking into consideration the impacta significant financial restatement (including an event specified in Section 954 of the new tax legislation passed in late 2017,Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), or other applicable law, we may require, to the Compensation Committee awarded payouts underfullest extent permitted by applicable law, that an employee covered by 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. Long-Term Incentive Plan (“LTIP”) for 2017
For the 2017 LTIP, Swift’s Compensation Committee approved awards of time-based RSUs to Swift’spolicy, including our named executive officers, under Swift’s 2014 Omnibus Incentive Plan,forfeit or reimburse us for any incentive-based compensation (including cash- and equity-based incentive compensation) paid or granted to vestsuch employee at any time during the performance period relating to the applicable incentive-based compensation, in equal installments on eachthe sole and absolute discretion of the firstCompensation Committee. The Clawback Policy has a 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.
2017 SUMMARY COMPENSATION TABLESummary Compensation TableThe following table summarizes the compensation earned by our named executive officers in the fiscal years noted. For Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, this information relates only to compensation paid by Knight-Swift during the period on and after the Merger Date (i.e. from September 8, 2017 until December 31, 2017), and does not include compensation that Knight paid prior to the 2017 Merger. | Name and Principal Position | | Year | | | Salary ($) | | | Bonus ($) | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($)(1) | | | All Other Compensation ($)(2) | | | Total ($) | | David Jackson President and CEO | | | 2017 | | | | 186,058 | | | 200,000 | | | 1,482,310(3) | | | | — | | | | 217,500 | | | | 410,231 | | | | 2,496,099 | | Adam Miller CFO | | | 2017 | | | | 101,442 | | | 200,000 | | | 543,501(3) | | | | — | | | | 108,000 | | | | 256,712 | | | | 1,209,655 | | Kevin Knight Executive Chairman | | | 2017 | | | | 211,346 | | | 1,000,000 | | | 2,964,618(3) | | | | — | | | | 270,000 | | | | 3,084,890 | | | | 7,530,854 | | Gary Knight Vice Chairman | | | 2017 | | | | 86,596 | | | 1,000,000 | | | 444,693(3) | | | | — | | | | 36,000 | | | | 3,626 | | | | 1,570,915 | | Tim Guin(4) EVP of Sales and Marketing of Swift | | | 2017 | | | | 293,269 | | | 70,000 | | | 410,009(5) | | | | — | | | | — | | | | 211,316 | | | | 984,594 | | | Former Officers (at fiscal year end) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Former President and CEO | | | 2017 | | | | 462,500 | | | 35,000 | | | 1,118,031(6) | | | | — | | | | — | | | | 4,924,639 | | | | 6,540,170 | | | | | 2016 | | | | 562,754 | | | — | | | 659,842 | | | | 324,840 | | | | — | | | | 7,911 | | | | 1,555,347 | | | | | 2015 | | | | 560,232 | | | — | | | 672,518 | | | | 331,391 | | | | 211,033 | | | | 6,104 | | | | 1,781,278 | | Virginia Henkels Former EVP and CFO | | | 2017 | | | | 278,037 | | | 35,000 | | | 100,004(6) | | | | — | | | | — | | | | 1,864,072 | | | | 2,277,113 | | | | | 2016 | | | | 365,790 | | | — | | | 245,089 | | | | 120,657 | | | | — | | | | 7,911 | | | | 739,447 | | | | | 2015 | | | | 364,151 | | | — | | | 249,791 | | | | 123,084 | | | | 109,737 | | | | 6,104 | | | | 852,867 | | Mickey Dragash(7) Former EVP, General Counsel and Secretary | | | 2017 | | | | 226,442 | | | 5,500 | | | 243,759(6) | | | | — | | | | — | | | | 1,349,100 | | | | 1,824,801 | | | | | 2016 | | | | 300,000 | | | — | | | 150,741 | | | | 74,219 | | | | — | | | | 14,306 | | | | 539,266 | |
| | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) 1 | | All Other Compensation ($) 2 | | Total ($) | David Jackson President and CEO | | 2019 | | 800,000 | | — | | 3,031,0403 | | — | | 800,000 | | 14,740 | | 4,645,780 | | | 2018 | | 749,193 | | — | | 2,823,794 | | — | | 1,600,000 | | 13,600 | | 5,186,587 | | | 2017 4 | | 186,058 | | 200,000 | | 1,482,310 | | — | | 217,500 | | 410,231 | | 2,496,099 | Adam Miller CFO and Treasurer | | 2019 | | 650,000 | | — | | 1,667,078 3 | | — | | 487,500 | | 14,032 | | 2,818,610 | | | 2018 | | 480,565 | | — | | 1,540,273 | | — | | 975,000 | | 10,132 | | 3,005,970 | | | 2017 4 | | 101,442 | | 200,000 | | 543,501 | | — | | 108,000 | | 256,712 | | 1,209,655 | Kevin Knight Executive Chairman | | 2019 | | 950,000 | | — | | 3,031,040 3 | | — | | 950,000 | | 275,560 | | 5,206,600 | | | 2018 | | 919,149 | | — | | 3,080,478 | | — | | 1,900,000 | | 262,931 | | 6,162,558 | | | 2017 4 | | 211,346 | | 1,000,000 | | 2,964,618 | | — | | 270,000 | | 3,084,890 | | 7,530,854 | Gary Knight Vice Chairman | | 2019 | | 450,000 | | — | | 808,257 3 | | — | | 337,500 | | 20,184 | | 1,615,941 | | | 2018 | | 413,617 | | — | | 821,456 | | — | | 675,000 | | 13,384 | | 1,923,457 | | | 2017 4 | | 86,596 | | 1,000,000 | | 444,693 | | — | | 36,000 | | 3,626 | | 1,570,915 | Kevin Quast COO of Swift | | 2019 | | 350,313 | | — | | 505,142 3 | | — | | 210,000 | | 16,223 | | 1,081,678 | | | 2018 | | 300,965 | | — | | 462,065 | | — | | 420,000 | | 9,736 | | 1,192,766 |
(1) | | | 1 | The amounts for a given year represent the amount earned in respect of thatsuch year under Knight’s or Swift’sour short-term cash incentive plan, as applicable, notwithstanding the year in which it was paid. See “Compensation Discussion and Analysis—Analysis - Elements of Compensation—2019 Executive Compensation - Annual Cash Incentives”Bonus” for further information. |
(2) | | | 2 | Refer to the All Other Compensation table for more detailed information about compensation reported in this column. |
(3) | | | 3 | These amounts represent the aggregate grant date fair value of time-vested RSUs and PRSUs granted on November 9, 2017.18, 2019. Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, and Quast received 15,524, 5,692, 31,048,32,371, 17,804, 32,371, 8,632, and 4,6575,395 time-vested RSUs and 23,286, 8,538, 46,572,48,556, 26,706, 48,556, 12,948, and 6,9868,092 PRSUs, respectively. The fair value of the RSUs was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”),718, which was $38.65$37.07 per share, the closing price of our Class A common stock on the grant date. The fair value of the PRSUs was computed in accordance with FASB ASC Topic 718, which was $37.89$37.71 per share. The amounts for the PRSUs reflect our accounting expense to be recognized over the vesting period of the PRSUs awarded, and do not necessarily correspond to the actual value that will be recognized by the named executive officers. The number of shares ultimately issued pursuant to the PRSUs granted in 20172019 varies depending upon the satisfaction of performance conditions and stockholder return conditions relative to our peer group identified in the grant. The $37.89$37.71 per share grant date fair value reflects the probable outcome of the stockholder return conditions pursuant to the Monte Carlo Simulation Valuation model. The stated grant date fair value for the PRSUs further assumes that the performance conditions will be achieved at the target level. Assuming both the performance conditions and stockholder return conditions are achieved at the highest level, and using a per share grant date fair value equal to the closing price of our Class A common stock on the grant date ($38.65)37.07), the grant date fair value of the PRSUs would be $2,250,010, $824,984, $4,500,020,$4,499,927, $2,474,979, $4,499,927, $1,199,956, and $675,022$749,926 for Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, and Quast, respectively. It would not be appropriate to use the $37.89$37.71 per share grant date fair value for purposes of this assumed maximum achievement of the PRSUs granted in 20172019 because the $37.89$37.71 per share grant date fair value already accounts for the probable outcome of the stockholder return conditions under the Monte Carlo Simulation Valuation model. For additional information on the valuation assumptions with respect to the grants, refer to Note 21, Stock-based Compensation, of our consolidated financial statements as provided in our Form 10-K for the year ended December 31, 2017,2019, as filed with the SEC. |
(4) | Although employed | | 4 | For 2017, the information relates only to compensation paid by SwiftKnight-Swift during the period on and after the Merger Date (i.e. from September 8, 2017 until December 31, 2017), and does not include compensation that Knight paid prior to the 2017 Mr. Guin was not a named executive officer prior to 2017.Merger. |
(5) | This amount represents the aggregate grant date fair value of 12,600 time-vested RSUs (9,072 shares after giving effect to the Consolidation Ratio) granted on May 26, 2017 and 2,846 time-vested RSUs granted on November 9, 2017. The fair value of the RSUs was computed in accordance with FASB ASC Topic 718, which was $23.81 per share ($33.07 per share after giving effect to the Consolidation Ratio) for the RSUs granted on May 26, 2017 and $38.65 per share for the RSUs granted on November 9, 2017, the respective closing price of our Class A common stock on each grant date. |
(6) | This amount represents the aggregate grant date fair value of 46,955 time-vested RSUs granted to Mr. Stocking, 4,200 time-vested RSUs granted to Ms. Henkels, and 10,237 time-vested RSUs granted to Mr. Dragash on May 26, 2017 (33,808 shares, 3,024 shares, and 7,371 shares, respectively, after giving effect to the Consolidation Ratio). The fair value of the RSUs was computed accordance with FASB ASC Topic 718, which was $23.81 per share ($33.07 per share after giving effect to the Consolidation Ratio), the closing price of our Class A common stock on the grant date. |
(7) | Although employed by Swift prior to 2016, Mr. Dragash was not a named executive officer prior to 2016. |
All Other Compensation Table | Name | | Year | | | Perquisites and Other Personal Benefits ($)(1) | | | Contributions to 401(k) Plan ($)(2) | | Value of Accelerated Equity Awards ($)(3) | | Severance Benefits ($)(4) | | Total ($) | | | | | 2017 | | | | 3,692(5) | | | | — | | 406,539(6) | | | — | | | | 410,231 | | | Adam Miller | | | 2017 | | | | 2,625(5) | | | | — | | 254,087 | | | — | | | | 256,712 | | | Kevin Knight | | | 2017 | | | | 36,050(7) | | | | — | | 3,048,840(8) | | | — | | | | 3,084,890 | | | Gary Knight | | | 2017 | | | | 3,626(5) | | | | — | | — | | | — | | | | 3,626 | | | Tim Guin | | | 2017 | | | | 11,265(9) | | | | — | | 200,051 | | | — | | | | 211,316 | | | Former Officers (at fiscal year end) | | | | | | | | | | | | | | | | Richard Stocking | | | 2017 | | | | 1,818(10) | | | | 3,877 | | 2,049,616 | | | 2,869,328 | | | | 4,924,639 | | | Virginia Henkels | | | 2017 | | | | 1,818(10) | | | | 3,877 | | 761,287 | | | 1,097,090 | | | | 1,864,072 | | | Mickey Dragash | | | 2017 | | | | 1,818(10) | | | | 7,500 | | 510,110 | | | 829,672 | | | | 1,349,100 | |
| | | | | | | | | | | Name | | Year | | Perquisites and Other Personal Benefits ($) 1 | | Contributions to 401(k) Plan ($) 2 | | Total ($) | | David Jackson | | 2019 | | 11,9903 | | 2,750 | | 14,740 | | Adam Miller | | 2019 | | 8,5323 | | 5,500 | | 14,032 | | Kevin Knight | | 2019 | | 267,1604 | | 8,400 | | 275,560 | | Gary Knight | | 2019 | | 11,7843 | | 8,400 | | 20,184 | | Kevin Quast | | 2019 | | 7,8233 | | 8,400 | | 16,223 |
(1) | | | 1 | This column represents the total amount of perquisites and other personal benefits provided to the named executive officer. Each perquisite and personal benefit is valued on the basis of the aggregate incremental cost to the Company. |
(2) | | | 2 | Represents matching 401(k) plan contributions. |
(3) | Reflects the value of equity awards that vested upon the change in control on the Merger Date. See “—Potential Payments Upon Termination or Change-In-Control—Actual Payments to Named Executive Officers in Connection with the 2017 Merger”. For Mr. Stocking, Ms. Henkels, and Mr. Dragash, this column does not include the acceleration of the equity grants made on May 26, 2017, as the grant date fair value of such awards is included in the “Stock Awards” column of the Summary Compensation Table.
|
(4) | Reflects severance benefits that were paid to or became payable to these named executive officers on the Merger Date. See “—Potential Payments Upon Termination or Change-In-Control—Actual Payments to Named Executive Officers in Connection with the 2017 Merger”. |
(5)3 | For each of these named executive officers, the amount represents compensation for vehicle allowance. |
(6) | Includes compensation of $304,904 that was deferred related to the vesting of 7,464 shares. The deferred shares will be paid in three equal annual installments on each of January 31, 2019, 2020, and 2021. |
(7)4 | Of the total disclosed amount for Kevin Knight, $5,280$17,160 is attributable to his vehicle allowance and $30,770$250,000 is attributable to his air travel allowance. The air travel allowance was computed based on the amount paid by the Company to Kevin Knight for such perquisite. |
(8) | All compensation related to the vesting of these shares was deferred. The deferred shares will be delivered within six months of the date Mr. Kevin Knight’s employment terminates. |
(9) | For Mr. Guin, the amount represents vehicle allowance, executive short-term disability insurance, and executive life insurance. |
(10) | For each of these named executive officers, the amount represents executive short-term disability insurance and executive life insurance. |
GRANTS OF PLAN-BASED AWARDS IN 2017Plan-Based AwardsThe following table provides estimated information about non-equity and equity plan-based awards that were granted to the named executive officers in 2017. Except for awards under the Knight 2017 Cash Bonus Plan, for Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, this information generally relates only to awards by Knight-Swift during the period on and after the Merger Date (i.e. from September 8, 2017 until December 31, 2017), and does not include awards by Knight prior to the 2017 Merger.2019. | Name | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | Grant Date Fair Value of Stock and Option Awards ($) | | | | | | | Threshold ($) | | Target ($) | | Maximum ($) | | | Threshold (#) | | Target (#) | | Maximum (#) | | | | | | | | | David Jackson | | — | | 55,000 | | 412,500 | | | 660,000 | | | — | | — | | — | | | — | | — | | | | | | 11/09/17 | | — | | — | | | — | | | 3,493 | | 23,286 | | 58,215 | | | — | | 882,307(3) | | | | | | 11/09/17 | | — | | — | | | — | | | — | | — | | — | | | 15,524(4) | | 600,003(5) | | | | | | | | | | | | | | | | | | | | | Name | | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards 1 | | Estimated Future Payouts under Equity Incentive Plan Awards 2 | | All Other Stock Awards: Number of Shares of Stock or Units (#) 3 | | Grant Date Fair Value of Stock and Option Awards ($) | | | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | David Jackson | | | — | | 160,000 | | 800,000 | | 1,600,000 | | — | | — | | — | | — | | — | | | 11/18/2019 | | — | | — | | — | | 1,821 | | 48,556 | | 121,390 | | — | | 1,831,0474 | | | 11/18/2019 | | — | | — | | — | | — | | — | | — | | 32,371 | | 1,199,9935 | | Adam Miller | | — | | 22,000 | | 165,000 | | | 264,000 | | | — | | — | | — | | | — | | — | | | — | | 97,500 | | 487,500 | | 975,000 | | — | | — | | — | | — | | — | | | | 11/09/17 | | — | | — | | | — | | | 1,281 | | 8,538 | | 21,345 | | | — | | 323,505(3) | | | | | | 11/09/17 | | — | | — | | | — | | | — | | — | | — | | | 5,692(4) | | 219,996(5) | | | | Adam Miller | | | 11/18/2019 | | — | | — | | — | | 1,001 | | 26,706 | | 66,765 | | — | | 1,007,0834 | | | 11/18/2019 | | — | | — | | — | | — | | — | | — | | 17,804 | | 659,9945 | | | — | | 59,000 | | 442,500 | | | 708,000 | | | — | | — | | — | | | — | | — | | | — | | 190,000 | | 950,000 | | 1,900,000 | | — | | — | | — | | — | | — | | | | 11/09/17 | | — | | — | | | — | | | 6,986 | | 46,572 | | 116,430 | | | — | | 1,764,613(3) | | | | | | 11/09/17 | | — | | — | | | — | | | — | | — | | — | | | 31,048(4) | | 1,200,005(5) | | | | Kevin Knight | | | 11/18/2019 | | — | | — | | — | | 1,821 | | 48,556 | | 121,390 | | — | | 1,831,0474 | | | 11/18/2019 | | — | | — | | — | | — | | — | | — | | 32,371 | | 1,199,9935 | | | — | | 6,825 | | 51,188 | | | 81,900 | | | — | | — | | — | | | — | | — | | | — | | 67,500 | | 337,500 | | 675,000 | | — | | — | | — | | — | | — | | | | 11/09/17 | | — | | — | | | — | | | 1,048 | | 6,986 | | 17,465 | | | — | | 264,700(3) | | | | | | 11/09/17 | | — | | — | | | — | | | — | | — | | — | | | 4,657(4) | | 179,993(5) | | | | Tim Guin | | — | | 54,000 | | 180,000 | | | 360,000 | | | — | | — | | — | | | — | | — | | | | | | 5/26/17 | | — | | — | | | — | | | — | | — | | — | | | 9,072(6) | | 300,011(7) | | | | | | 11/09/17 | | — | | — | | | — | | | — | | — | | — | | | 2,846(4) | | 109,998(5) | | | | Former Officers (at fiscal year end) | | | | | | | | | | | | | | | | | | | | | Richard Stocking | | — | | 195,000 | | 650,000 | | | 1,300,000 | | | — | | — | | — | | | — | | — | | | | | 5/26/17 | | — | | — | | | — | | | — | | — | | — | | | 33,808(6) | | 1,118,031(7) | | | | Virginia Henkels | | — | | 90,000 | | 300,000 | | | 600,000 | | | — | | — | | — | | | — | | — | | | | | 5/26/17 | | — | | — | | | — | | | — | | — | | — | | | 3,024(6) | | 100,004(7) | | | | Mickey Dragash | | — | | 58,500 | | 195,000 | | | 390,000 | | | — | | — | | — | | | — | | — | | | | | 5/26/17 | | — | | — | | | — | | | — | | — | | — | | | 7,371(6) | | 243,759(7) | | | | Gary Knight | | | 11/18/2019 | | — | | — | | — | | 486 | | 12,948 | | 32,370 | | — | | 488,2694 | | | 11/18/2019 | | — | | — | | — | | — | | — | | — | | 8,632 | | 319,9885 | | | — | | 42,000 | | 210,000 | | 420,000 | | — | | — | | — | | — | | — | | Kevin Quast | | | 11/18/2019 | | — | | — | | — | | 303 | | 8,092 | | 20,230 | | — | | 305,1494 | | | 11/18/2019 | | — | | — | | — | | — | | — | | — | | 5,395 | | 199,9935 |
(1) | | | 1 | Represents the range of potential cash payments under the annual performance bonuses that Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, and Quast could have earned under the Knight 20172019 Cash Bonus Plan, and that Mr. Guin, Mr. Stocking, Ms. Henkels, and Mr. Dragash could have earned under the 2017 STIP, as described under the heading “—Compensation“Compensation Discussion and Analysis—Analysis - Elements of 2019 Executive Compensation for 2017—- Annual Cash Incentives.Bonus.” Awards under the Knight 2017 Cash Bonus Plan are included as they were paid by the Company following the 2017 Merger. For awards under the Knight 20172019 Cash Bonus Plan, (i) Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, and Quast had bonus potentials of 100%, 80%75%, 100%, 75%, and 30%60% of year-end annualized base salary, respectively, (ii) threshold was set at 10%20% of the bonus potential, (iii) target was set at 75%100% of the bonus potential, and (iv) maximum was set at 120%200% of the bonus potential. Based on 20172019 performance, Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, and Quast earned a cash bonus of 120%100% 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 awards under the 2017 STIP, (i) Mr. Guin, Mr. Stocking, Ms. Henkels, and Mr. Dragash had bonus targets of 60%, 100%, 75%, and 60%, respectively, (ii) threshold was set at 30% of target, and (iii) maximum was set at 200% of target. Based on 2017 performance, no amount was earned under the 2017 STIP. |
(2) | | | 2 | These columns represent the potential shares issuable in connection with 20172019 PRSUs for each of Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, and Quast under the Omnibus Plan, for which target awards were approved by the Compensation Committee on November 6, 2017,18, 2019, as described under the heading “—Compensation“Compensation Discussion and Analysis—Knight-Swift Compensation Program for 2018—Performance-Based Long-TermAnalysis-Elements of 2019 Executive Compensation-Long-Term Incentives.” The threshold was set at 15%3.75% of target and maximum was set at 250% of target. The PRSUs were granted at target and will not be earned, and the actual number of PRSUs finally earned will not be finally determined, until the expiration of the three-year performance period on December 31, 2020.2022. The number of shares ultimately earned will vest on January 31, 2021,2023, subject to certain conditions set forth in the grant agreement. |
(3) | | | 3 | Represents an award of RSUs under the Omnibus Plan. The RSUs vest in three installments as follows: 34% on January 31, 2021; 33% on January 31, 2022; and 33% on January 31, 2023. |
| | | 4 | The amount disclosed in this column represents the aggregate grant date fair value of the PRSUs granted in 20172019 computed in accordance with FASB ASC Topic 718, which was $37.89$37.71 per share. These amounts reflect our accounting expense to be recognized over the vesting period of the PRSUs granted in 2017,2019, and do not necessarily correspond to the actual value that will be recognized by the named executive officer. The number of shares ultimately issued pursuant to the PRSUs varies depending upon the satisfaction of performance conditions and stockholder return conditions relative to our peer group identified in the grant. The $37.89$37.71 per share grant date fair value reflects the probable outcome of the stockholder return conditions pursuant to the Monte Carlo Simulation Valuation model. The stated grant date fair value for the PRSUs further assumes that the performance conditions will be achieved at the target level. The grant to Mr. Kevin Knight is to be settled in cash. For additional information on the valuation assumptions with respect to the grants, refer to NoteNote 21, Stock-based Compensation, and Employee Benefit Plans, of our consolidated financial statements as provided in our Form 10-K for the year ended December 31, 2017,2019, as filed with the SEC. Dividends accrue on the unvested PRSUs and are paid in cash when and if the underlying award vests. |
(4) | Represents an award of RSUs under the Omnibus Plan. The RSUs vest in three installments as follows: 34% on January 31, 2019; 33% on January 31, 2020; and 33% on January 31, 2021. |
(5)5 | The grant date fair value of the RSUs was computed in accordance with FASB ASC Topic 718, which was $38.65$37.07 per share, the closing price of our Class A common stock on the grant date. The grant to Mr. Kevin Knight is to be settled in cash. |
(6) | Represents an award of RSUs under the Omnibus Plan prior to the 2017 Merger, after giving effect to the Consolidation Ratio. The RSUs were scheduled to vest in three equal annual installments over a three-year period beginning on May 26, 2018. For Mr. Stocking, Ms. Henkels, and Mr. Dragash, in accordance with the terms of their respective awards, 3,242 shares, 290 shares, and 707 shares vested, respectively, and the remaining shares were forfeited Dividends accrue on the Merger Date.unvested RSUs and are paid in cash when and if the underlying award vests. |
(7) | The fair value of the RSUs was computed in accordance with FASB ASC Topic 718, which was $23.81 per share ($33.07 per share after giving effect to the Consolidation Ratio), the closing price of our Class A common stock on the grant date. |
OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR-ENDOutstanding Equity Awards at Fiscal Year-endThe following table provides information on the current equity holdings for each of the named executive officers. This table includes unexercised and unvested options and unvested RSUs and PRSUs as of December 31, 2017.2019. Each equity grant is shown separately for each named executive officer.officer. | | | | | | | | | | | | | Name | Option Awards | Stock Awards | Option Grant Date | Number of Securities Underlying Unexercised Options
(#) Exercisable
| Option Exercise Price
($)
| Option Expiration Date | Stock Award Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1)1 | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)1 | David Jackson
| — | — | — | — | 10/30/2009 | | 21,15013,950 (2)2
| 924,678 | 499,968 | | — | | — | — | 05/31/2017 | | 10,795 3 | | 386,893 | | — | — | — | 02/28/2013 | 2,600(3)
| 113,672 | — | — | — | 11/09/2017 | | 10,246 4 | | 367,217 | | — | — | — | 05/31/2017 | 17,991(4)
| 786,567 | — | — | — | — | — | — | 11/09/2017 | | — | | — | | 15,52423,286 (5)5
| 678,709 | 834,570 | | 11/12/2018 | | 33,465 6 | | 1,199,386 | | — | | — | — | 11/12/2018 | | — | — | — | | 50,198 7 | | 1,799,096 | | 11/09/201718/2019 | | 32,371 8 | | 1,160,177 | | — | | — | | 11/18/2019 | | — | | — | | 23,28648,556 (6)9
| 1,018,064 | 1,740,247 | | Adam Miller | — | — | — | — | 10/30/2009 | | 9,4006,200 (2)2
| 410,968 | 222,208 | | — | | — | — | 05/31/2017 | | 5,398 3 | | 193,464 | | — | — | — | 02/28/2013 | 1,600(3)
| 69,952 | — | — | — | 11/09/2017 | | 3,757 4 | | 134,651 | | — | — | — | 05/31/2017 | 8,996(4)
| 393,305 | — | — | — | — | — | — | 11/09/2017 | | — | | — | | 5,6928,538 (5)5
| 248,854 | 306,002 | | 11/12/2018 | | 18,254 6 | | 654,223 | | — | | — | — | 11/12/2018 | | — | — | — | | 27,381 7 | | 981,335 | | 11/09/201718/2019 | | 17,804 8 | | 638,095 | | — | | — | | 11/18/2019 | | — | | — | | 8,53826,706 (6)9
| 373,281 | 957,143 | Kevin Knight
| 05/22/2008 | 10/30/2009 | | 69,21715,500 (7)2
| 17.29 | 05/21/2018555,520 | | — | — | — | — | — | — | 05/31/2017 | | 6,747 3 | | 241,812 | | — | — | — | 10/30/2009 | 23,500(2)
| 1,027,420 | — | — | — | 11/09/2017 | | 20,492 4 | | 734,433 | | — | — | — | 05/31/2017 | 11,244(4)
| 491,588 | — | — | — | — | — | — | 11/09/2017 | | — | | — | | 31,04846,572 (5)5
| 1,357,419 | 1,669,140 | | 11/12/2018 | | 36,507 6 | | 1,308,411 | | — | | — | — | 11/12/2018 | | — | — | — | | 54,761 7 | | 1,962,634 | | 11/09/201718/2019 | | 32,371 8 | | 1,160,177 | | — | | — | | 11/18/2019 | | — | | — | | 46,57248,556 (6)9
| 2,036,128 | 1,740,247 | | Gary Knight | 05/22/2008 | 10/30/2009 | | 15,0009,300 (7)2
| 17.29 | 05/21/2018333,312 | | — | — | — | — | — | — | 05/31/2017 | | 1,800 3 | | 64,512 | | — | | — | | 11/09/2017 | | 3,074 4 | | 110,172 | | — | | — | | 11/09/2017 | | — | | — | | 6,986 5 | | 250,378 | | 11/12/2018 | | 9,735 6 | | 348,902 | | — | | — | | 11/12/2018 | | — | | — | | 14,603 7 | | 523,372 | | 11/18/2019 | | 8,632 8 | | 309,371 | | — | | — | | 11/18/2019 | | — | | — | | 12,948 9 | | 464,056 | | Kevin Quast | | 10/30/2009 | | 14,10012,400 (2)2
| 616,452 | 444,416 | | — | | — | — | — | — | — | 05/31/2017 | | 2,9992,699 (4)3
| 131,116 | 96,732 | | — | | — | — | — | — | — | 11/09/2017 | | 4,6571,367 (5)4
| 203,604 | 48,993 | | — | | — | — | — | — | — | 11/09/2017 | — | — | 6,986(6)
| 305,428 | Tim Guin | 05/21/2013 | 1,782(8)
| 23.85(8)
| 05/21/2023 | — | — | 3,105 5 | | 111,283 | | 11/12/2018 | | 5,476 6 | | 196,260 | | — | — | — | 05/24/2016 | 4,102(8)(9)
11/12/2018 | 21.55(8)
| 05/24/2026 | — | — | — | | 8,214 7 | | 294,390 | | 11/18/2019 | | 5,395 8 | | 193,357 | | — | | — | — | 11/18/2019 | | — | — | — | 05/26/2017 | 9,0728,092 (10)9
| 396,628 | — | — | — | — | — | — | 11/09/2017 | 2,846(5)
| 124,427 | — | — | Former Officers (at fiscal year end) | | 290,017 |
| | | | | | Richard Stocking | — | — | — | — | — | — | — | — | — | Virginia Henkels | 05/20/2015 | 3,931(8)(9)
| 34.50(8)
| 09/08/2018 | — | — | — | — | — | 05/24/2016 | 8,003(8)(9)
| 21.55(8)
| 09/08/2018 | — | — | — | — | — | Mickey Dragash | 05/24/2016 | 7,384(8)(9)
| 21.55(8)
| 09/08/2018 | — | — | — | — | — |
(1)1 | Market value of RSUs and PRSUs is calculated by multiplying the number of restricted shares that have not vested by the closing market price of our Class A common stock on December 29, 2017,31, 2019, which was $43.72$35.84 per share. |
(2) | The RSUs were granted by Knight prior to the 2017 Merger. Pursuant to the 2017 Merger, the Company assumed the RSUs. | | 2 | Of the unvested RSUs, approximately 17%22.6% vested on January 31, 2018, approximately 17% will vest on January 31, 2019, approximately 15% will vest on January 31, 2020, and approximately 17%25.8% will vest on each of January 31, 2021, 2022, and 2023. |
(3) | The | | 3 | Of the unvested RSUs, were granted by Knight prior toapproximately 33% of the 2017 Merger. Pursuant tounvested RSUs will vest on each of May 31, 2020, 2021, and 2022. |
| | | 4 | Of the 2017 Merger, the Company assumed the RSUs. Theunvested RSUs, were subject to time-based vesting andapproximately 50% vested on January 31, 2018. |
(4)
| The RSUs were granted by Knight prior to the 2017 Merger. Pursuant to the 2017 Merger, the Company assumed the RSUs. The RSUs2020 and approximately 50% will vest 20% each year, commencing on May 31, 2018, until fully vested on May 31, 2022. |
(5)
| The RSUs vest in three installments as follows: 34% on January 31, 2019; 33% on January 31, 2020; and 33% on January 31, 2021. The grant to Mr. Kevin Knight is to be settled in cash. |
(6) | | | 5 | The number of unvested PRSUs under the awards granted in 2017 reflects the target shares payable with respect to such awards in the event that certain performance targets and stockholder return conditions are met, which is based upon our performance for the three-year period starting January 1, 2018 and ending December 31, 2020 and SEC guidance, and does not reflect any opinion or projection of management concerning the ultimate level of satisfaction of such performance targets or stockholder return conditions for the performance period ending December 31, 2020. The number of shares ultimately issued pursuant to the PRSUs granted in 2017 varies depending upon the satisfaction of performance conditions and stockholder return conditions relative to our peer group. The actual number of PRSUs finally earned will not be determined until the expiration of the performance period on December 31, 2020. The shares ultimately earned will vest on January 31, 2021, subject to certain conditions set forth in the grant agreement. The grant to Mr. Kevin Knight is to be settled in cash. |
(7) | | | 6 | Of the unvested RSUs, approximately 34% vested on January 31, 2020 and 33% will vest on each of January 31, 2021 and 2022. The stock options were granted bygrant to Mr. Kevin Knight prioris to the 2017 Merger. Pursuant to the 2017 Merger, the Company assumed the stock options.be settled in cash. |
(8) | | | 7 | The number of unvested PRSUs under the awards granted in 2018 reflects the target shares payable with respect to such awards in the event that certain performance targets and exercise price have been adjusted to give effect tostockholder return conditions are met, which is based upon our performance for the Consolidation Ratio. |
(9) | Onthree-year period starting January 1, 2019 and ending December 31, 2021 and SEC guidance, and does not reflect any opinion or projection of management concerning the Merger Date,ultimate level of satisfaction of such performance targets or stockholder return conditions for the unvested Swift options vested, in accordance with the terms of the grants. For Ms. Henkels and Mr. Dragash, the option expiration date was shortened to September 8, 2018. |
(10) | performance period ending December 31, 2021. The number of RSUs has been adjusted to give effectshares ultimately issued pursuant to the Consolidation Ratio. PRSUs granted in 2018 varies depending upon the satisfaction of performance conditions and stockholder return conditions relative to our peer group. The actual number of PRSUs finally earned will not be determined until the expiration of the performance period on December 31, 2021. The shares ultimately earned will vest on January 31, 2022, subject to certain conditions set forth in the grant agreement. The grant to Mr. Kevin Knight is to be settled in cash. |
| | | 8 | The RSUs vest in three equal installments over aas follows: 34% on January 31, 2021; 33% on January 31, 2022; and 33% on January 31, 2023. The grant to Mr. Kevin Knight is to be settled in cash. |
| | | 9 | The number of unvested PRSUs under the awards granted in 2019 reflects the target shares payable with respect to such awards in the event that certain performance targets and stockholder return conditions are met, which is based upon our performance for the three-year period beginningstarting January 1, 2020 and ending December 31, 2022 and SEC guidance, and does not reflect any opinion or projection of management concerning the ultimate level of satisfaction of such performance targets or stockholder return conditions for the performance period ending December 31, 2022. The number of shares ultimately issued pursuant to the PRSUs granted in 2019 varies depending upon the satisfaction of performance conditions and stockholder return conditions relative to our peer group. The actual number of PRSUs finally earned will not be determined until the expiration of the performance period on May 26, 2018.December 31, 2022. The shares ultimately earned will vest on January 31, 2023, subject to certain conditions set forth in the grant agreement. The grant to Mr. Kevin Knight is to be settled in cash. |
OPTION EXERCISES AND STOCK VESTED IN 2017Option Exercises and Stock Vested in 2019The following table sets forth information regarding the values realized by our named executive officers upon the exercising of stock options and vesting of RSUs during 2017,2019, and such values reflect the total pre-tax value realized by each named executive officer. Share amounts for transactions prior to September 8, 2017 have been adjusted to give effect to the Consolidation Ratio. For Messrs. Jackson, Miller, Kevin Knight, and Gary Knight, this information relates only to PRSUs vested on and after the Merger Date (i.e. from September 8, 2017 until December 31, 2017), and does not include options exercised and RSUs and PRSUs vested prior to the 2017 Merger. | | | Option Awards | | | Stock Awards | | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Acquired on Vesting ($)(2) | | | David Jackson | | | — | | | | — | | | | 9,952(3) | | | | 406,539(3) | | | Adam Miller | | | — | | | | — | | | | 6,220 | | | | 254,087 | | | Kevin Knight | | | — | | | | — | | | | 74,635(4) | | | | 3,048,840(4) | | | Gary Knight | | | — | | | | — | | | | — | | | | — | | | Tim Guin | | | — | | | | — | | | | 5,049 | | | | 194,769 | | | Former Officers (at fiscal year end) | | | | | | | | | | | | | | | | | | Richard Stocking | | | 237,287 | | | | 4,157,391 | | | | 57,334 | | | | 2,205,580 | | | Virginia Henkels | | | 108,992 | | | | 1,749,554 | | | | 20,380 | | | | 781,860 | | | Mickey Dragash | | | — | | | | — | | | | 12,052 | | | | 483,397 | |
| | | | | | | | | | | | | Option Awards | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Acquired on Vesting ($) 1 | | David Jackson | | — | | — | | 12,476 | | 381,325 | | Adam Miller | | — | | — | | 5,334 | | 161,961 | | Kevin Knight | | — | | — | | 16,805 | | 524,315 | | Gary Knight | | — | | — | | 4,583 | | 143,044 | | Kevin Quast | | — | | — | | 4,803 | | 148,796 |
(1) | Calculated by subtracting the aggregate exercise price of the exercised options from the aggregate market value of the shares of Class A common stock acquired on the exercise dates. Market value was determined by using the actual sale prices of shares sold in open market transactions on the dates of the exercises. |
(2)1 | Calculated by multiplying the aggregate number of shares vested by the closing market price of our Class A common stock on the dates the shares vested. |
Nonqualified Deferred Compensation | | | | | | | | | | | | | Name | | Executive Contributions in Last FY ($) | | Registrant Contributions in Last FY ($) | | Aggregate Earnings in Last FY ($) 1 | | Aggregate Withdrawals/ Distributions in Last FY ($)2 | | Aggregate Balance at Last FYE ($)3 | | David Jackson | | — | | — | | 71,406 | | 79,740 | | 181,027 | | Adam Miller | | — | | — | | — | | — | | — | | Kevin Knight | | — | | — | | 821,731 | | — | | 2,715,221 | | Gary Knight | | — | | — | | — | | — | | — | | Kevin Quast | | — | | — | | — | | — | | — |
(3) | Includes compensation of $304,904 that was | | 1 | These amounts do not include any above-market or preferential earnings. Accordingly, these amounts are not reported in the Summary Compensation Table. For Mr. Jackson, who deferred related to the vestingreceipt of 7,464 shares. The deferred shares will be delivered in three equal annual installments on January 31, 2019, 2020, and 2021, respectively. |
(4) | All compensation related to the vesting of these shares was deferred. The deferred shares will be delivered within six months of the date of Mr. Kevin Knight’s employment terminates. |
NONQUALIFIED DEFERRED COMPENSATION| Name | | Executive Contributions in Last FY ($)(1) | | | Registrant Contributions in Last FY ($)(2) | | | Aggregate Earnings in Last FY ($)(3) | | | Aggregate Withdrawals/ Distributions in Last FY ($) | | | Aggregate Balance at Last FYE ($)(1) | | | David Jackson | | | 304,904 | | | | — | | | | 21,870 | | | | — | | | | 326,326 | | | Adam Miller | | | — | | | | — | | | | — | | | | — | | | | — | | | Kevin Knight | | | 3,048,840 | | | | — | | | | 218,681 | | | | — | | | | 3,263,042 | | | Gary Knight | | | — | | | | — | | | | — | | | | — | | | | — | | | Tim Guin | | | — | | | | — | | | | — | | | | — | | | | — | | | Former Officers (at fiscal year end) | | | | | | | | | | | | | | | | | | | | | | Richard Stocking | | | — | | | | — | | | | — | | | | — | | | | — | | | Virginia Henkels | | | 71,723 | | | | — | | | | 122,796 | | | | — | | | | 665,352 | | | Mickey Dragash | | | 22,119 | | | | — | | | | 13,124 | | | | — | | | | 89,231 | |
(1) | These amounts reflect compensation the named executive officers earnedPRSUs in our 2017 fiscal year, the gains include the change in the closing price per share of our common stock from December 31, 2018 ($25.07) and January 31, 2019 ($31.75), with respect to 2,488 PRSUs that they have voluntarily deferred. were delivered on January 31, 2019, and the change in the closing price per share of our common stock from December 31, 2018 ($25.07) and December 31, 2019 ($35.84), plus $0.06 of cash dividends per share declared for each quarter in fiscal year 2019, with respect to 4,976 PRSUs. For Mr. Kevin Knight, who deferred the receipt of 74,635 PRSUs in our 2017 fiscal year, the gains include the change in the closing price per share of our common stock from December 31, 2018 ($25.07) and December 31, 2019 ($35.84), plus $0.06 of cash dividends per share declared for each quarter in fiscal year 2019
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| | | 2 | Represents the delivery of 2,488 PRSUs on January 31, 2019, including the payment of accrued dividends with respect to such PRSUs. |
| | | 3 | For Mr. Jackson, the amount deferred represents deferral of 7,464 PRSUs during our 2017 fiscal year that vested on the Knight-Swift Merger Date, to beof which 2,488 were delivered in three equal annual installments on January 31, 2019, 2,488 were delivered on January 31, 2020, and 2,488 will be delivered on January 31, 2021. For Mr. Kevin Knight, the amount deferred represents deferral of 74,635 PRSUs during our 2017 fiscal year that vested on the Knight-Swift Merger Date, to be delivered within six months of the date of his employment terminates. All amounts deferred for Messrs. Jackson and Kevin Knight were included in the Option Exercises and Stock Vested table. The Company accrues for cash dividends on the deferred PRSUs in an amount equal to the amount of cash dividend each of Messrs. Jackson and Knight would have received had the deferred PRSUs been actual shares of our Class A common stock on the date of the cash dividend payment to stockholders. The accrued cash dividends will be paid to each of Messrs. Jackson and Kevin Knight when the underlying shares of our Class A common stock are distributed to each of Messrs. Jackson and Kevin Knight. For each of Ms. Henkels and Mr. Dragash, the amount deferred represents compensation deferred pursuant to the Company’s Deferred Compensation Plan (“DCP”) and all amounts reported as contributions in the last fiscal year are included as compensation in the “Salary” column of the Summary Compensation Table. In addition, for Ms. Henkels and Mr. Dragash, all of the amounts, exclusive of cumulative earnings/losses, reported in the aggregate balance at fiscal year end were reported as compensation to the named executive officer in Swift’s Summary Compensation Table in 2016 and prior years. |
Potential Payments Upon Termination or Change of Control (2) | The Company does not provide matching contributions. |
(3) | These amounts do not include any above-market or preferential earnings. Accordingly, these amounts are not reported in the Summary Compensation Table. For Messrs. Jackson and Kevin Knight, who deferred the receipt of 7,464 and 74,635 PRSUs, respectively, the earnings include the change in the closing price per share of our Class A common stock from the Merger Date ($40.85) and December 29, 2017 ($43.72), plus $0.06 of cash dividends per share declared in the fourth quarter of 2017. For Ms. Henkels and Mr. Dragash, the earnings are based upon the performance of the investment options within the DCP each of Ms. Henkels and Mr. Dragash selected. |
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.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROLActual Payments to Named Executive Officers in Connection with the 2017 Merger
In connection with the 2017 Merger, the vesting of PRSUs granted prior to the 2017 Merger was accelerated for Messrs. Jackson, Miller, and Kevin Knight, in accordance with the terms of such awards. The table below reflects the acceleration of such PRSUs:
| Name | PRSUs (#)(1) | | | PRSUs ($) | | | David Jackson | | 9,952 | | | | 406,539 | | | Adam Miller | | 6,220 | | | | 254,087 | | | Kevin Knight | | 74,635 | | | | 3,048,840 | |
(1) | Does not include PRSUs granted in 2015 and 2016 for which the time-based vesting requirement was satisfied on the Merger Date but were ultimately forfeited based upon failure to meet performance goals for the performance period ended December 31, 2017. |
Mr. Gary Knight did not have any PRSUs granted prior to the 2017 Merger.
In connection with the 2017 Merger, the vesting of certain options,Outstanding RSUs and PRSUs granted prior to the 2017 Merger was accelerated for Messrs. Guin and Stocking, Ms. Henkels, and Mr. Dragash, in accordance with the terms of such awards. The table below reflects the acceleration of such awards:
| | | Option Awards | | | RSU Awards | | | PRSU Awards | | | | Total Value of Accelerated Equity Awards | | | Name | | (#)(1) | | | ($)(2) | | | (#)(1) | | | ($)(3) | | | (#)(1) | | | ($)(3) | | | ($) | | | Tim Guin | | | 2,735 | | | | 52,786 | | | | 1,690 | | | | 69,037 | | | | 1,915 | | | | 78,228 | | | | 200,051 | | | Richard Stocking | | | 32,132 | | | | 483,059 | | | | 16,903 | | | | 690,488 | | | | 24,688 | | | | 1,008,505 | | | | 2,182,052 | | | Virginia Henkels | | | 11,934 | | | | 179,420 | | | | 5,364 | | | | 219,119 | | | | 9,170 | | | | 374,595 | | | | 773,134 | | | Mickey Dragash | | | 4,924 | | | | 95,033 | | | | 7,421 | | | | 303,148 | | | | 3,447 | | | | 140,810 | | | | 538,991 | |
(1) | The number of shares has been adjusted to give effect to the Consolidation Ratio.
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(2) | Calculatedheld by subtracting the aggregate exercise price of the accelerated options from the aggregate market value of the shares of Class A common stock on the Merger Date, based on the closing market price of our Class A common stock on the Merger Date ($40.85).
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(3) | Calculated by multiplying the aggregate number of shares vested by the closing market price of our Class A common stock on the Merger Date ($40.85). |
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:
· | a cash payment, payable in equal installments on each payroll date for 18 months (24 months in the case of Mr. Stocking) following the Merger Date, in an aggregate amount equal to 1.5 times (2.0 times in the case of Mr. Stocking) the sum of the named executive officer’s (x) annual rate of base salary (“Base Salary Severance”) and (y) target bonus opportunity under the 2017 STIP (“Annual Cash Bonus Severance”); |
· | a bonus payable under the 2017 STIP to the extent an incentive award would have been payable to the executive under the terms of the 2017 STIP but for the named executive officer’s separation of employment, prorated based on the number of days the named executive officer was employed during the performance period compared to the total days in the performance period (“Pro Rata Bonus”); |
· | earned and accrued, but unused paid time off and sick days (“PTO and Sick Pay”); and |
· | a lump sum payment equal to (x) the difference between the monthly COBRA premium payable by the named executive officer (and his or her dependents, if applicable) and the monthly premium payable by active employees for similar coverage under Swift’s group medical and dental plans, multiplied by (y) 18 (“COBRA Benefits”). |
The table below reflects the compensation and benefits that were paid or became payable to each of Mr. Stocking, Ms. Henkels, and Mr. Dragash in accordance with his or her respective Severance Agreement:
| Name | | Base Salary Severance ($) | | | Annual Cash Bonus Severance ($) | | | Pro Rata Bonus ($) | | | PTO and Sick Pay ($) | | | COBRA Benefits ($) | | Total Severance Benefits ($) | | | Richard Stocking | | | 1,300,000 | | | | 1,300,000 | | | | — | | | | 250,000 | | | | 19,328 | | | | 2,869,328 | | | Virginia Henkels | | | 600,000 | | | | 450,000 | | | | — | | | | 36,923 | | | | 10,167 | | | | 1,097,090 | | | Mickey Dragash | | | 487,500 | | | | 292,500 | | | | — | | | | 42,916 | | | | 6,756 | | | | 829,672 | |
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.
Potential Payments to Continuing Named Executive Officers Upon Termination or Change-In-Control
Certain outstanding RSUs and PRSUs that remain outstanding after the 2017 Merger granted to Messrs. Jackson, Miller, Kevin Knight, Gary Knight, and Guin mayofficers will become subject to immediate vesting upon the occurrence of certain circumstances in which there is a "Change of Control," or the recipient dies or becomes disabled, notwithstanding that such RSUs and PRSUs may not have otherwise been fully vested. Additionally, outstanding PRSUs held by our named executive officers will become subject to immediate vesting in the event of a “Change of Control” (or for performance awards granted in November 2018 and later, a change of control together with termination for convenience (as defined in the award agreement) or a termination for Good Reason (as defined in the award agreement)) notwithstanding that such PRSUs may not have otherwise been fully vested. The estimated value of RSUs and PRSUs that would have vested for Messrs. Jackson, Miller, Kevin Knight, Gary Knight, and GuinQuast as of December 31, 2017,2019, under the acceleration scenarios described above is set forth in the table below. The value was calculated by multiplying the closing market price of our Class A common stock on December 29, 201731, 2019 ($43.7235.84 per share), by the number of shares underlying accelerated awards. For additional information on the number of currently unvested RSUs and PRSUs that may immediately vest in the event of a change inof control, please refer to “Outstanding Equity Awards at Year-End.”
| Name/Event | | Value of Accelerated RSUs ($) | | | Value of Accelerated PRSUs ($) | | | Total ($) | | | David Jackson | | | | | | | | | | | | | | Change of Control | | | — | | | | 1,018,064 | | | | 1,018,064 | | | Death/Disability | | | 2,503,626 | | | | 1,018,064 | | | | 3,521,690 | | | Adam Miller | | | | | | | | | | | | | | Change of Control | | | — | | | | 373,281 | | | | 373,281 | | | Death/Disability | | | 1,123,079 | | | | 373,281 | | | | 1,496,360 | | | Kevin Knight | | | | | | | | | | | | | | Change of Control | | | — | | | | 2,036,128 | | | | 2,036,128 | | | Death/Disability | | | 2,876,427 | | | | 2,036,128 | | | | 4,912,555 | | | Gary Knight | | | | | | | | | | | | | | Change of Control | | | — | | | | 305,428 | | | | 305,428 | | | Death/Disability | | | 951,172 | | | | 305,428 | | | | 1,256,600 | | | Tim Guin | | | | | | | | | | | | | | Change of Control | | | 396,628 | | | | — | | | | 396,628 | | | Death/Disability | | | 124,472 | | | | — | | | | 124,472 | |
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| | | | | | | | | Name/Event | | Value of Accelerated RSUs ($) | | Value of Accelerated PRSUs ($) | | Total ($) | | David Jackson | | | | | | | | Change of Control without Qualifying Change of Control Termination | | — | | 834,570 | | 834,570 | | Change of Control with Qualifying Change of Control Termination | | — | | 4,373,913 | | 4,373,913 | | Death/Disability | | 3,613,641 | | 4,373,913 | | 7,987,554 | | Adam Miller | | | | | | | | Change of Control without Qualifying Change of Control Termination | | — | | 306,002 | | 306,002 | | Change of Control with Qualifying Change of Control Termination | | — | | 2,244,480 | | 2,244,480 | | Death/Disability | | 1,842,641 | | 2,244,480 | | 4,087,121 | | Kevin Knight | | | | | | | | Change of Control without Qualifying Change of Control Termination | | — | | 1,669,140 | | 1,669,140 | | Change of Control with Qualifying Change of Control Termination | | — | | 5,372,021 | | 5,372,021 | | Death/Disability | | 4,000,353 | | 5,372,021 | | 9,372,374 | | Gary Knight | | | | | | | | Change of Control without Qualifying Change of Control Termination | | — | | 250,378 | | 250,378 | | Change of Control with Qualifying Change of Control Termination | | — | | 1,237,806 | | 1,237,806 | | Death/Disability | | 1,166,269 | | 1,237,806 | | 2,404,075 | | Kevin Quast | | | | | | | | Change of Control without Qualifying Change of Control Termination | | — | | 111,283 | | 111,283 | | Change of Control with Qualifying Change of Control Termination | | — | | 695,690 | | 695,690 | | Death/Disability | | 979,758 | | 695,690 | | 1,675,448 |
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):
· | a cash payment, payable in equal installments on each payroll date for 12 months following the separation date, in an aggregate amount equal to his annual rate of base salary; |
· | earned and accrued, but unused paid time off and sick days; |
· | a lump sum payment equal to (x) the difference between the monthly COBRA premium payable by him (and his dependents, if applicable) and the monthly premium payable by active employees for similar coverage under the Company’s group medical and dental plans, multiplied by (y) 12; and |
· | any outstanding RSUs held by him on the separation date that are scheduled to vest during the 12-month period following the separation date will immediately vest. |
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.
PAY RATIO DISCLOSUREPay Ratio Disclosure
We provide fair and equitable compensation to our employees through a combination of competitive base pay, incentives, retirement plans, and other benefits. We are disclosing the following pay ratio and supporting information, which compares the annual total compensation of our median employee and the annual total compensation of Mr. Jackson, our CEO, as required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. To determineThe median employee was originally determined as of December 31, 2017. For 2019, we used the same median employee, as there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact the pay ratio we took the following steps:
· | We determined that as of December 31, 2017 (the “Determination Date”), our employee population consisted of approximately 24,222 individuals, all located in the United States (the “Employee Population”). We selected the Determination Date because it was a recent date for which employee census information is readily available. The Employee Population consists of our full-time, part-time, temporary, and seasonal employees.
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· | In accordance with the "de minimis" exemption provided in Item 402(u) of Regulation S-K, we excluded from the Employee Population all 1,178 of our non-U.S. employees (one employee in Canada and 1,177 employees in Mexico) working for us on December 31, 2017, representing approximately 4.6% of our total U.S. and non-U.S. workforce. We employed approximately 25,400 employees as of December 31, 2017, including U.S. and non-U.S. employees.
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· | To identify the median employee, we started with the salary paid to each employee in the Employee Population during calendar year 2017. We annualized the salary for each permanent full-time and part-time employee in the Employee Population that worked less than the full year. We then added in incentive payments, the grant date fair value of equity awards, the value of accelerated equity awards, and company matching benefits to our 401(k) plan, as applicable for each employee in the Employee Population.
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Once we identifieddisclosure. We calculated our median employee, we calculated such employee’s annual total compensation for 20172019 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in that employee’s annual total compensation of $46,718.$46,648. The median employee’s annual total compensation includes salary, as well as incentive payments.payments. The median employee did not receive equity awards,, company matching contributions to our 401(k) plan, or health or other fringe benefits.benefits. Median employee compensation reflects that, as of December 31, 2017, 2019, approximately 5.7%4.9% of our employees were student drivers, which had the effect of lowering our median employee compensation.
We had two individuals in the role of CEO during 2017. We elected to use the compensation of Mr. Jackson, the active CEO as of December 31, 2017, for purposes of determining the CEO pay ratio. Mr. Jackson became CEO on the Merger Date. In determining Mr. Jackson’s compensation, we adjusted the compensation reported in the Summary Compensation Table to reflect his compensation as if he were CEO for the full calendar year, by (i) increasing his salary and perquisites and other personal benefits as if he were CEO effective January 1, 2017 ($417,783), (ii) including the grant date fair value of a time-based equity award Mr. Jackson received for Knight prior to the 2017 Merger ($600,000), and (iii) including 401(k) contibutions and accrued dividends paid on vested RSUs prior to the 2017 Merger ($13,451). For purposes of calculating the CEO Pay Ratio, this resulted in total annual compensation of $3,527,333 for the CEO, as opposed to the amount shown in the Summary Compensation Table of $2,496,099. The 2017 Merger had the effect of raising our CEO compensation due to, among other things, accelerated vesting of certain equity awards and a special bonus in respect of the 2017 Merger.
For 2017,2019, our last completed fiscal year: · | The annual total compensation of our median employee was $46,648; and The annual total compensation of our median employee was $46,718; and |
· | The annual total compensation of our CEO, as reported in the Summary Compensation Table included in this proxy statement, was $2,496,099. The annualized annual total compensation for our CEO was $3,527,333.
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Based on this information, the ratio of the annualized annual total compensation of our CEO, toas reported in the annual total compensation of our median employeeSummary Compensation Table included in this proxy statement, was 76 to 1. Excluding the impact of the accelerated vesting of certain equity awards and a special bonus, in each case, in connection with the 2017 Merger,$4,645,780.
Based on this information, the ratio of the annualized annual total compensation of our CEO to the annual total compensation of our median employee would have been 63was 100 to 1, which we believe is more representative of a typical CEO pay year.1.
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| | | Security Ownership of Certain Beneficial Owners and Management |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth, as of March 27, 2018,the Record Date, the number and percentage of outstanding shares of our Class A common stock beneficially owned by each person known by us to beneficially own more than 5% of such stock, by our named executive officers and our directors, and by all of our directors and executive officers as a group. Share information for BlackRock, Inc., Wellington ManagementThe Vanguard Group, LLPand FMR LLC (and related entities), and The Vanguard Grouppersons) is based on Schedule 13Gs and 13G/As filed by these entities, as further described in the applicable footnotes. We had outstanding 178,289,925169,774,814 shares of Class A common stock as of March 27, 2018. Name and Address of Beneficial Owner(1) | | Amount and Nature of Beneficial Ownership(2) | | Percent of Class(2) | | Named executive officers and directors | | | | | David Jackson(3) | | 26,977 | | * | Adam Miller(4) | | 22,876 | | * | Kevin Knight(5) | | 2,831,409 | | 1.6% | Gary Knight(6) | | 4,863,937 | | 2.7% | Tim Guin(7) | | 14,580 | | * | Glenn Brown(8)(9) | | 36,616 | | * | Richard Dozer(10) | | 17,843 | | * | Michael Garnreiter(11) | | 9,498 | | * | Richard Kraemer(12) | | 17,061 | | * | Richard Lehmann(13) | | 18,255 | | * | Jerry Moyes(14) | | 40,981,888 | | 23.0% | Kathryn Munro(15) | | 18,082 | | * | Roberta Roberts Shank(16) | | 3,598 | | * | Robert Synowicki, Jr.(17) | | 6,512 | | * | David Vander Ploeg(18) | | 21,496 | | * | Richard Stocking**(19) | | 62,582 | | * | Virginia Henkels**(20) | | 17,231 | | * | Mickey Dragash**(21) | | 17,467 | | * | All current directors and executive officers as a group (20 persons)(22) | | 49,049,168 | | 27.5% | | Other 5% stockholders – Moyes affiliated holdings | | | | | Moyes Parties to Stockholders Agreement(23) | | 41,773,888 | | 23.4% | M Capital Group Investors II, LLC(24) | | 18,873,395 | | 10.6% | | Other unaffiliated third-party holdings | | | | | BlackRock, Inc.(25) | | 14,341,294 | | 8.0% | Wellington Management Group LLP(26) Wellington Group Holdings LLP(26) Wellington Investment Advisors Holdings LLP(26) Wellington Management Company LLP(26) | | 17,916,334 | | 10.0% | The Vanguard Group(27) | | 11,202,077 | | 6.3% | * Represents less than 1.0% of the outstanding Class A common stock. | | | | |
**the Record DateThe individual was a named executive officer in 2017; however, his or her employment was terminated before March 27, 2018..
| | | | | | Name and Address of Beneficial Owner 1 | | Amount and Nature of Beneficial Ownership 2 | | Percent of Class 2 | | Named executive officers and directors: | | | | | David Jackson 3 | | 41,692 | | * | Adam Miller 4 | | 32,304 | | * | Kevin Knight 5 | | 2,339,238 | | 1.4% | Gary Knight 6 | | 3,008,539 | | 1.8% | Kevin Quast 7 | | 77,525 | | * | Michael Garnreiter 8 | | 14,431 | | * | Kathryn Munro 9 | | 17,834 | | * | Roberta Roberts Shank 10 | | 13,530 | | * | Robert Synowicki, Jr. 11 | | 12,332 | | * | David Vander Ploeg 12 | | 24,047 | | * | | All current directors and executive officers as a group (17 persons) | | 5,646,462 | | 3.3% | | Other 5% stockholders - Moyes and affiliated holdings: | | | | | Moyes Parties to Stockholders Agreement 13 | | 39,619,025 | | 23.3% | Cactus Holding Company, LLC 14 | | 10,751,311 | | 6.3% | M Capital Group Investors II, LLC 15 | | 18,873,395 | | 11.1% | | Other unaffiliated third-party holdings: | | | | | BlackRock, Inc. 16 | | 12,305,825 | | 7.2% | FMR LLC 17 Abigail P. Johnson 17 | | 25,596,624 | | 15.1% | The Vanguard Group 18 | | 10,945,049 | | 6.4% |
(1) | | | * | Represents less than 1.0% of the outstanding common stock. |
| | | 1 | The address of each named executive officer, executive officer, and director, is 20002 North 19th Avenue, Phoenix, Arizona 85027. The address for the Moyes Parties to the Moyes Stockholders Agreement and M Capital Group Investors II, LLC is 2710 E. Old Tower Road, Phoenix, Arizona 85034. The address for BlackRock is 55 East 52nd Street, New York, New York 10055. The address for Wellington Management Group LLP, Wellington Group Holdings LLP,FMR LLC and Wellington Investment Advisors Holdings LLPAbigail P. Johnson is 280 Congress245 Summer Street, Boston, Massachusetts 02210. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. |
(2) | | | 2 | In accordance with applicable rules under the Exchange Act, the number of shares indicated as beneficially owned by a person includes shares of Class A common stock and (a) underlying options that are currently exercisable or will be exercisable within 60 days from March 27, 2018,the Record Date, and (b) unvested RSUs that are scheduled to vest within 60 days from March 27, 2018.the Record Date. Shares of Class A common stock underlying stock options that are currently exercisable or will be exercisable within 60 days from March 27, 2018the Record Date and unvested RSUs that are scheduled to vest within 60 days of March 27, 2018,the Record Date, are deemed to be outstanding for purposes of computing the percentage ownership of the person holding such options and/or unvested RSUs, and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for purposes of computing the percentage ownership of any other person. |
(3) | Comprised of 26,977 | | 3 | Includes 41,692 shares held directly by David Jackson. |
(4) | Comprised of 22,876 | | 4 | Includes 32,304 shares held directly by Adam Miller. |
(5) | Includes: | | 5 | Includes (a) 2,759,8782,337,215 shares beneficially owned by Kevin Knight over which he and his wife, Sydney Knight, exercise sole voting and investment power pursuant to a revocable living trust; and (b) 2,3142,023 shares beneficially ownedheld directly by Kevin Knight; and (c) 69,217 shares covered by stock options granted to Kevin Knight that are currently exercisable or that will become exercisable within 60 days.Knight. Kevin Knight has pledged as security 1,500,0001,250,000 of the shares that he beneficially owns. |
(6) | Includes: (a) 4,508,825 | | 6 | Includes 3,008,539 shares beneficially owned by Gary Knight over which he exercises sole voting and investment power as a trustee under a revocable trust agreement; (b) 340,112 shares beneficially owned by Gary Knight; and (c) 15,000 shares covered by a stock option granted to Gary Knight that is currently exercisable or that will become exercisable within 60 days.agreement. Gary Knight has pledged as security 1,509,4761,400,000 of the shares that he beneficially owns. |
(7) | Includes: | | 7 | Includes (a) 5,67214,570 shares held directly by Tim Guin,Kevin Quast; and (b) 5,88462,955 shares coveredbeneficially by stock options granted to Tim Guin that are currently exercisable or that will become exercisable within 60 days,Kevin Quast over which he and (c) 3,024 shares underlying unvested RSUs granted to Tim Guin that are scheduled to vest within 60 days.his spouse exercise voting and investment power as trustee under a revocable trust agreement. |
| | (8)8 | Comprised of 36,616 shares held directly by Glenn Brown. | (9) | Mr. Brown is not standing for re-election to the Board. | (10) | Includes: (a) 14,963 shares held directly by Richard Dozer and (b) 2,880 shares covered by stock options granted to Richard Dozer that are currently exercisable or that will become exercisable within 60 days. | (11) | Comprised of 9,498Includes 14,431 shares held directly by Michael Garnreiter. |
(12) | Includes: | | 9 | Includes 17,834 shares beneficially owned by Kathryn Munro over which she and her spouse exercise voting and investment power as a trustee under a revocable trust agreement. |
| | | 10 | Includes (a) 12,0613,661 shares beneficially owned by Roberta Roberts Shank over which she and her spouse exercise voting and investment power as a trustee under a revocable trust agreement; and (b) 9,869 shares held directly by Richard Kraemer and (b) 5,000 shares beneficially owned by Richard Kraemer over which he exercises sole voting and dispositive power as the sole director of the general partner of a partnership holding the shares.Roberta Roberts Shank. |
| | (13)11 | Comprised of 18,255Includes 12,332 shares held directly by Richard Lehmann.Robert Synowicki, Jr. |
| | (14)12 | Includes 24,047 shares owned by David Vander Ploeg over which he and his spouse exercise voting and investment power as trustee under a revocable trust agreement. |
| | | 13 | Includes (a) 22,654 shares held by Mr.Jerry Moyes and his wife, Vickie Moyes, as community property under the laws of the State of Arizona and over which they share voting and dipositivedispositive power; (b) 67,980 shares underlying unexercised stock options that are exercisable within 60 days of March 27, 2018; (c) 7,420,30810,751,311 shares held by Cactus Holding Company, LLC (“Cactus I”), over which Mr.Jerry and Mrs.Vickie Moyes have sole voting and dispositive power, and all of which have been pledged as security; (d) 3,072,469(c) 758,791 shares held by Cactus Holding Company II, LLC (“Cactus II”), over which Mr.Jerry and Mrs.Vickie Moyes have sole voting and dispositive power, andall of which 2,973,678 have been pledged as security; (e) 4,868,208 shares which Cactus II has the right to acquire within 60 days of March 27, 2018 pursuant to a sale and repurchase agreement; (f) 6,656,874(d) 3,721,950 shares held by M Capital Group Investors, LLC (“M Capital I”), over which Mr.Michael Moyes and Mrs.LynDee Moyes have soleNester share voting and dispositive power; and (g)(e) 18,873,395 shares held by M Capital Group Investors II, LLC (“M Capital II”), over which Mr.Jerry and Mrs.Vickie Moyes have sole voting and dispositive power, and of which 18,715,69218,715,691 have been pledged as security.security; (f) 2,475,000 shares held by M Six Investors, LLC (“M Six”), over which Michael Moyes and LynDee Moyes Nester share voting and dispositive power and of which 1,668,300 have been pledged as security; (g) 2,583,924 shares held by M Dynasty Capital, LLC (“M Dynasty”), over which LynDee Moyes Nester has sole voting and dispositive power; (h) 144,000 shares held by five trusts for the benefit of Jerry and Vickie Moyes’ children, over which Michael Moyes has sole voting and dispositive power; and (i) 288,000 shares held by a trust for the benefit of one of Jerry and Vickie Moyes’ children, over which LynDee Moyes Nester has sole voting and dispositive power. The Company, Jerry Moyes, Vickie Moyes, Michael Moyes, LynDee Moyes Nester, Cactus I, Cactus II, M Capital I, M Capital II, and M Six, are party to that certain Moyes Stockholders Agreement dated as of April 9, 2017 (the “Moyes Stockholders Agreement”). As a result, these persons may be deemed to be a “group” under Section 13 of the Exchange Act. Mr. and Mrs. Moyes disclaim beneficial ownership of the shares held by M Capital I and M Capital II except to the extent of their pecuniary interest therein. |
(15) | Comprised of 18,082 | | 14 | Includes shares held directly by Kathryn Munro. | (16) | Comprised of 3,598 shares held directly by Roberta Roberts Shanks. | (17) | Comprised of 6,512 shares held directly by Robert Synowicki, Jr. | (18) | Includes: (a) 18,616 shares held directly by David Vander PloegCactus I. Jerry and (b) 2,880 shares covered by stock options granted to David Vander Ploeg that are currently exercisable or that will become exercisable within 60 days. | (19) | Comprised of 62,582 shares held directly by Richard Stocking. | (20) | Comprised of 17,231 shares held directly by Virginia Henkels. | (21) | Includes: (a) 10,083 shares held directly by Mickey Dragash and (b) 7,384 shares covered by stock options granted to Mickey Dragash that are currently exercisable or that will become exercisable within 60 days. | (22) | Includes 14,180 shares pledged as security by one of our executive officers. | (23) | Includes (a) shares held by Mr. and Mrs. Moyes, Cactus I, Cactus II, M Capital I, M Capital II, (b) 396,000 shares held by Michael Moyes, of which 360,000 have been pledged as security, and (c) 396,000 shares held by Lyndee Moyes, of which 360,000 have been pledged as security. These persons and the Company are party to that certain Moyes Stockholders Agreement dated as of April 9, 2017. As a result, these persons may deemed to be a “group” under Section 13 of the Exchange Act. These shares include 40,981,888 shares listed as beneficially owned by Mr. Moyes above. |
(24) | Mr. and Mrs.Vickie Moyes have sole voting and dispositive power over these shares. These shares are also included in the aggregate beneficial ownership of Mr.the parties to the Moyes Stockholders Agreement above. All of these shares have been pledged as security. |
| | | 15 | Includes shares held directly by M Capital II. Jerry and Vickie Moyes have sole voting and dispositive power over these shares. These shares are also included in the aggregate beneficial ownership of the parties to the Moyes Stockholders Agreement above. Mr. and Mrs. Moyes disclaim beneficial ownership of these shares except to the extent of their pecuniary interest therein. 18,715,69218,715,691 of these shares have been pledged as security. |
(25) | | | 16 | As reported on Schedule 13G13G/A filed with the SEC on January 25, 2018,February 5, 2020, which indicates that BlackRock, Inc. has sole voting power over 13,682,91011,574,577 shares and sole dispositive power over 14,341,29412,305,825 shares. It has shared voting power and shared dispositive power over no shares. |
(26) | | | 17 | As reported on Schedule 13G/A filed with the SEC on February 8, 2018,7, 2020, which indicates that (a) Wellington Management Group LLP, Wellington Group Holdings LLP, and Wellington Investment Advisors Holdings LLP have sharedFMR LLC has sole voting power over 11,932,4871,147,197 shares, sharedsole dispositive power over 17,916,33425,596,624 shares, and soleshared voting and soleshared dispositive power over no shares; and (b) Wellington Management Company LLPAbigail P. Johnson has shared voting power over 9,364,289 shares, sharedsole dispositive power over 13,747,59725,596,624 shares, and sole voting power, shared voting power, and soleshared dispositive power over no shares. |
(27) | | | 18 | As reported on Schedule 13G/A filed with the SEC on February 9, 2018,12, 2020, which indicates that The Vanguard Group has sole voting power over 275,76089,571 shares and sole dispositive power over 10,905,70110,832,951 shares. It has shared voting power over 25,21632,767 shares and shared dispositive power over 296,376112,098 shares. |
ADVISORY, NON-BINDING VOTE TO APPROVE EXECUTIVE COMPENSATIONAdvisory, Non-Binding Vote to Approve Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (“Dodd-Frank Act”) enables our stockholders to approve, on an advisory and non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. Accordingly, we are providing a vote on the resolution set forth below as required by the Dodd-Frank Act and Section 14A of the Securities Exchange Act of 1934.Act. As discussed in our CD&A, the principal objectives of our executive compensation program isare to attract, retain, and motivate talented executives by rewarding strong business results and performance. This is done through the alignment of the executive’s interests with stockholder interests. The objectives are based on the certain core principles that we explain in greater detail in the CD&A section of this proxy statement. We are asking our stockholders to indicate their support for our named executive officers’ compensation as described in this proxy statement. This proposal, commonly known as a “say on pay” proposal, gives you as a stockholder the opportunity to express your views regarding our 20172019 executive compensation policies and practices for named executive officers. At the upcoming 20192021 annual meeting of stockholders, we will again hold an advisory, non-binding vote to approve the compensation of our named executive officers. The vote is not intended to address any specific item of compensation but rather the overall compensation of our named executive officers and the policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting: RESOLVED, that the stockholders of Knight-Swift Transportation Holdings Inc. approve, on an advisory and non-binding basis, the compensation paid to the named executive officers as disclosed pursuant to Item 402 of SEC Regulation S-K in the Compensation Discussion and Analysis, compensation tables and related narrative discussion in the Company’s proxy statement for the 20182020 Annual Meeting of Stockholders. Although this is an advisory vote that will not be binding on the Compensation Committee, or the Board, the Compensation Committee will carefully review the results of the vote. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL TWO
PROPOSALS NO. 3, 4, and 5:PROPOSED AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BY-LAWS
Background and Summary
The Board has approved, and is asking our stockholders to approve, amendments to our Certificate of Incorporation and by-laws:
· | | Proposal 3—to eliminate from our Certificate of Incorporation (i) the Company’s authority to re-issue shares of multiple-vote Class B common stock that were previously held by the Moyes Stockholders before the 2017 Merger and (ii) the terms and provisions associated with the Class B common stock (Annex A);No. 3: |
· | Proposal 4—to eliminate from our Certificate of Incorporation legacy provisions that require a majority vote of our stockholders, excluding the Moyes Stockholders, to approve certain corporate actions (Annex B); and
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· | Proposal 5—to eliminate from our by-laws legacy provisions that require a majority vote of our stockholders, excluding the Moyes Stockholders, to amend certain provisions of our by-laws (Annex C).
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Proposal No. 3: Amendments to Our CertificateRatification of Incorporation to Eliminate Certain Provisions Relating to Class B Common StockAt Swift’s 2010 IPO its certificate of incorporation was amended to authorize Swift to issue two classes of common stock: Class A common stock, which entitled its holders to one vote per share, and Class B common stock that could be held only by the Moyes Stockholders and entitled them to two votes per share. Immediately after the IPO, the Moyes Stockholders owned approximately 47.2% of Swift’s outstanding shares but, because they held multiple-vote Class B shares, held approximately 64.1% of Swift’s voting power.
As a result of the 2017 Merger, the Company’s name was changed from Swift to Knight-Swift Transportation Holdings Inc. and all outstanding Class B shares of Swift were reclassified as single-vote Class A shares of the Company, eliminating the Company’s dual-class stock structure. In addition, the Class A shares were the subject of a reverse stock-split under which each Class A share was consolidated into 0.72 Class A shares.
The Board has approved, and recommends that stockholders approve, amendments to the Company’s Certificate of Incorporation to eliminate the Company’s authority to re-issue the Class B shares and the provisions of the Certificate of Incorporation associated with the Class B shares. Proposal 3 seeks stockholder approvalIndependent Registered Public Accounting Firm for these amendments, which are set forth on Annex A hereto.
Proposal No. 4: Amendments to Our Certificate of Incorporation to Eliminate Legacy Provisions Regarding Approval of Certain Corporate ActionsUnder the Moyes Stockholders Agreement between the Company and certain of the Moyes Stockholders entered into in connection with the 2017 Merger, the Company agreed to use its reasonable best efforts to submit to our stockholders, at the first annual meeting after the closing of the 2017 Merger, amendments to its Certificate of Incorporation and by-laws to eliminate provisions that require the majority vote of our stockholders, other than the Moyes Stockholders, in order to approve certain corporate acts and to solicit proxies in favor of the approval of those amendments by our stockholders. The provisions to be eliminated are legacy provisions that were intended to protect Swift minority stockholders from the Moyes Stockholders’ former super-majority voting power.
Due to the 2017 Merger (including the reclassification of the Moyes Stockholders’ multi-vote Class B shares into single-vote Class A shares), the Moyes Stockholders beneficially own approximately 23.4% of the outstanding shares of the Company as of March 27, 2018.
The Moyes Stockholders Agreement between the Company and certain of the Moyes Stockholders limits the voting power of such Moyes Stockholders. Among other things, such Moyes Stockholders have agreed that if their collective voting power exceeds 12.5%, the shares representing the excess will be voted (other than with respect to any stockholder vote taken to approve a sale of the Company), as directed by a majority vote of a committee initially consisting of Jerry Moyes, Kevin Knight, Executive Chairman of the Company, and Gary Knight, Vice Chairman of the Company, with each committee member entitled to appoint his respective successor, subject to the approval of certain directors of the Company. For any stockholder vote taken to approve a sale of the Company, the Moyes Stockholders may vote all of their shares in their discretion. In addition, under, and subject to the Moyes Stockholders Agreement, Mr. Moyes has the right to designate up to two individuals (one of whom must be an independent director and both of whom must be approved by the Board) for election or appointment as a director. The number of designees Mr. Moyes may designate is reduced to one when the applicable Moyes Stockholders’ beneficial ownership of Company shares falls below 12.5%. Mr. Moyes is not entitled to designate any individuals as directors if the applicable Moyes Stockholders’ beneficial ownership falls below 5%.
The Moyes Stockholders Agreement also contains a standstill provision that provides for so long as the applicable Moyes Stockholders’ beneficial ownership of Company shares is equal to or exceeds 5%, such Moyes Stockholders may not, among other things, (i) increase the percentage of the shares of the Company they beneficially own by more than two percentage points above their ownership level, as of the completion of the 2017 Merger, which at the time was approximately 24%, (ii) effect or seek any merger, takeover, consolidation, business combination, recapitalization, restructuring, liquidation, dissolution, or other extraordinary transaction with or involving the Company or any of our subsidiaries, (iii) make, or in any way participate in, any solicitation of proxies to vote any Company shares or to take stockholder action by written consent, (iv) commence litigation against the Company or any of our subsidiaries (other than with respect to contracts and director and officer indemnification rights), or (v) publicly disparage the Company. See “Security Ownership of Certain Beneficial Owners and Management,” including footnote 23 to the table appearing in such section, for a description of the Moyes Stockholders who are parties to the Moyes Stockholders Agreement.
In light of the foregoing, the Board has approved, and recommends that stockholders approve, the amendments to our Certificate of Incorporation to eliminate the following legacy provisions:
1. | A provision requiring a majority vote of our stockholders, excluding the Moyes Stockholders, for any merger or consolidation or sale of substantially all of our assets to any of the Moyes Stockholders (Article Fourth, (c)(2)c. of our Certificate of Incorporation);
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2. | A provision mandating that, so long as the Moyes Stockholders hold in excess of 20% of the total voting power, the Company may not enter into any contract or transaction with any Moyes Stockholder that is not approved by either (i) at least 75% of the independent directors, including the Chairman of the Board, if independent, or otherwise our lead independent director, or (ii) a majority vote of our stockholders, excluding the Moyes Stockholders (Article Sixth of our Certificate of Incorporation); and
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3. | A provision requiring a majority vote of our stockholders, excluding the Moyes Stockholders, to amend certain provisions of the Certificate of Incorporation, including the provisions described in paragraphs 1. and 2. immediately above (Article Fourth, (c)(2)c. of our Certificate of Incorporation).
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Proposal 4 seeks stockholder approval of these amendments to our Certificate of Incorporation, which are set forth on Annex B hereto.
Proposal No. 5: Amendments to Our By-Laws to Eliminate Legacy Provisions Regarding Amendment of Certain Provisions of Our By-LawsThe Board has also approved, and recommends that stockholders approve an amendment to Article IX, Section 1 of our by-laws eliminating a legacy provision requiring a majority vote of our stockholders, excluding the Moyes Stockholders, in order to permit the Board to amend the following provisions of our by-laws:
i. | A provision requiring that (x) at least two-thirds of our directors shall consist of persons who are not employees of the Company, or of any subsidiary of the Company, (y) provided that there shall not be at any time more than two directors who are employees of the Company (Article III, Section 1(d) of our by-laws); A provision requiring that if the director serving as Chairman of the Board is an independent director (a director who is both independent under the governance standards of the New York Stock Exchange and is not a Moyes Stockholder) then such director, or if the Chairman of the Board is not an independent director (as so defined), then the director serving as the Company’s lead independent director, may only be removed as a director with a majority vote of our stockholders, excluding the Moyes Stockholders (Article III, Section 6 of our by-laws);
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ii. | A provision requiring that any contract or transaction with any Moyes Stockholder shall be subject to the provisions of the Certificate of Incorporation described in Proposal 3, paragraph 2. above (the last sentence of Article III, Section 12 of our by-laws);
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iii. | A provision prohibiting the Chairman of the Board from serving as the Chief Executive Officer or other employee of the Company; if the CEO is a Moyes Stockholder, the Chairman of the Board must be an independent director (as described above); and the Chairman of the Board, if an independent director, may be removed from his office as Chairman only with the affirmative vote of a majority of the independent directors and only for the following reasons: gross negligence or willful misconduct with respect to the Company, breach of a fiduciary duty to the Company and its stockholders, or a determination by a majority of the independent directors that the Chairman is not fulfilling his or her responsibilities in a manner that is in the best interests of the Company and its stockholder (Article III, Section 13 of our by-laws); |
iv. | A provision requiring that (x) if the Board appoints as Chairman a director who is not an independent director, then the Board must appoint an independent director to be the lead independent director; and (y) the lead independent director may be removed from his office as lead independent director only with the affirmative vote of a majority of the independent directors and only for the following reasons: gross negligence or willful misconduct with respect to the Company, breach of a fiduciary duty to the Company and its stockholders, or a determination by a majority of the independent directors that the lead independent director is not fulfilling his or her responsibilities in a manner that is in the best interests of the Company and its stockholders (Article III, Section 14 of our by-laws); |
v. | A provision setting out the officers of the Company (Article IV, Section 1 of our by-laws); |
vi. | A provision (x) setting out the duties of the CEO and (y) mandating that if the Chairman is a Moyes Stockholder, the CEO may not be a Moyes Stockholder (Article IV, Section 4 of our by-laws); and |
vii. | The amendment provision (Article IX, Section 1 of our by-laws). |
Proposal 5 seeks stockholder approval to amend Article IX, Section 1 of our by-laws to eliminate the legacy provision requiring a majority vote of our stockholders, excluding the Moyes Stockholders, to amend any of the foregoing provisions. Annex C hereto indicates the proviso in Article IX, Section 1, proposed to be amended, as well as the foregoing provisions. The proposed deletion to Article IX, Section 1 is shown in strikethrough in Annex C. The other provisions noted above are shaded grey in Annex C.
If Proposal 5 is approved by stockholders, under our Certificate of Incorporation, the Board will have the ability, without stockholder approval, to amend each of the foregoing provisions. In that regard, it is the intention of the Board to amend the by-laws to eliminate the provisions described above under Proposal 4 i.(y), ii., iii., iv.(y), v., vi.(y), and vii. The Board has no intention to eliminate the provisions in the by-laws described above under i.(x), iv.(x), or vi.(x) (other than the elimination of the proviso described in this Proposal 5). Particularly, the Board intends to retain the provisions requiring that at least two-thirds of the directors shall consist of persons who are not employees of the Company or of any subsidiary of the Company and that if the Board appoints as Chairman a director who is not an independent director, then the Board must appoint an independent director to be the lead independent director.
This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the full texts of the proposed amendments attached as Annexes A, B, and C, in which we have shown the proposed amendments with deletions indicated by strikeouts and additions indicated by underlining.
Required Votes and Board Recommendation
Proposal 3
The approval of Proposal 3 requires the affirmative vote of the holders of a majority of Class A common stock. Shares of common stock represented by proper, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon. In the absence of specific instructions, proper, timely received, and unrevoked proxies will be voted “FOR” the proposal. Abstentions, “broker non-votes” and shares not present in person or by proxy at the Annual Meeting will have the same effect as votes against the proposal.
Proposal 4
The approval of Proposal 4 requires both (i) the affirmative vote of the holders of a majority of Class A common stock, excluding the Moyes Stockholders, as required by our Certificate of Incorporation, and (ii) the affirmative vote of the holders of a majority of Class A common stock (including the Moyes Stockholders), as required by law. Shares of Class A common stock represented by proper, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon. In the absence of specific instructions, proper, timely received, and unrevoked proxies will be voted “FOR” the proposal. Abstentions, “broker non-votes” and shares not present in person or by proxy at the Annual Meeting will have the same effect as votes against the proposal.
Proposal 5
The approval of Proposal 5 requires the affirmative vote of the holders of a majority of Class A common stock, excluding the Moyes Stockholders. Shares of Class A common stock represented by proper, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon. In the absence of specific instructions, proper, timely received, and unrevoked proxies will be voted “FOR” the proposal. Abstentions, “broker non-votes,” and shares not present in person or by proxy at the Annual Meeting will have the same effect as votes against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE
FOR
PROPOSALS THREE, FOUR, AND FIVE
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2018Fiscal Year 2020
Appointment of Independent Registered Public Accounting Firm GTGrant Thornton audited the Company’s annual financial statements for the fiscal year ended December 31, 2017.2019. The Audit Committee has appointed GTGrant Thornton to be our independent registered public accounting firm for the fiscal year ending December 31, 2018.2020. The stockholders are asked to ratify this appointment at the Annual Meeting. Representatives of GTGrant Thornton will be present at the meeting to respond to appropriate questions and will be given the opportunity to make a statement if they so desire.
Change in Independent Registered Public Accounting Firm
Prior to the 2017 Merger, GT was the independent registered public accounting firm of Knight and KPMG was the independent registered accounting firm of Swift.
As previously reported on our Current Report on Form 8-K filed with the SEC on September 11, 2017, KPMG was dismissed on September 8, 2017, and Grant Thornton was engaged by the Company as principal accountants. The decision to change accountants was approved by the Audit Committee.
During Swift’s fiscal years ended December 31, 2016 and 2015, and the subsequent interim period through September 8, 2017, there were no (i) disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure, which disagreements, if not resolved to KPMG’s satisfaction, would have caused KPMG to make reference in connection with their opinion to the subject matter of the disagreement, or (ii) reportable events.
The audit reports of KPMG on the consolidated financial statements of Swift as of and for each of the two fiscal years ended December 31, 2016 and 2015 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. The audit reports of KPMG on the effectiveness of internal control over financial reporting of Swift as of December 31, 2016 and 2015 did not contain adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
The Company provided KPMG with a copy of the foregoing disclosures, as set forth in the Company’ Current Report on Form 8-K filed with the SEC on September 11, 2017. A copy of KPMG’s letter, dated September 11, 2017, regarding its agreement with the foregoing statements, was attached as Exhibit 16.1 to such Form 8-K.
During Swift’s fiscal years ended December 31, 2016 and 2015, and the subsequent interim period through September 8, 2017, Swift did not consult with GT regarding any of the matters or events set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Policies Regarding Independent Auditor The Audit Committee is directly responsible for the appointment, compensation, and oversight of the independent registered public accounting firm. The Audit Committee pre-approves all audit services and non-audit services to be provided to Swiftthe Company by its independent registered public accounting firm. The Audit Committee may delegate pre-approval authority to one or more of its members. The member(s) to whom such authority is delegated must report, for informational purposes only, the pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee may pre-approve for up to one year in advance the provision of particular types of permissible routine and recurring audit-related, tax, and other non-audit services. The Audit Committee must be informed about each such service that is actually provided, with reasonable detail, so that it may approve any expenses. In cases where a service is not covered by one of those approvals, the service must be specifically preapproved by the Audit Committee or a delegated member thereof. Each audit or non-audit service that is approved by the Audit Committee will be reflected in a written engagement letter specifying the services to be performed and the cost of such services. This approval will be signed by either a member of the Audit Committee or by an officer of the Company authorized by the Audit Committee to sign on behalf of the Company. The Audit Committee will not approve any prohibited, non-audit service or any non-audit service that individually, or in the aggregate, may impair the independence of the independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee, in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders. Vote Required For Ratification The Audit Committee is responsible for selecting our independent registered public accounting firm. Accordingly, stockholder approval is not required to appoint GTGrant Thornton as our independent registered public accounting firm for fiscal year 2018.2020. However, the Board believes that submitting the appointment of GTGrant Thornton to the stockholders for ratification is a matter of good corporate governance. If the stockholders do not ratify the appointment, the Audit Committee will review its future selection of the independent registered public accounting firm. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL SIX
THREE
The Audit Committee assists the Board in its oversight of our financial reporting process. The Audit Committee’s responsibilities are more fully described in its charter available at www.knight-swift.com. Management has the primary responsibility for the financial statements and the financial reporting process, including internal control over financial reporting. Our independent registered public accounting firm is responsible for performing an audit of our consolidated financial statements and expressing an opinion on the fair presentation of those financial statements in conformity with United States generally accepted accounting principles. The independent registered public accounting firm also is responsible for performing an audit of, and expressing an opinion on, the effectiveness of our internal control over financial reporting. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited consolidated financial statements for the fiscal year ended December 31, 2017,2019, including a discussion of, among other things: · | the acceptability and quality of the accounting principles; |
· | the reasonableness of significant accounting judgments and critical accounting policies and estimates; |
· | the clarity of disclosures in the financial statements; and |
· | the adequacy and effectiveness of our financial reporting procedures, disclosure controls and procedures, and internal control over financial reporting. |
The Audit Committee discussed with the independent registered public accounting firm: (i) the audited consolidated financial statements for the fiscal year ended December 31, 2017;2019 and our internal control over financial reporting as of December 31, 2019; (ii) the firm’s judgments as to the acceptability and quality of our accounting principles; and (iii) other matters as are required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board (the “PCAOB”), including those matters required to be discussed by Accounting Standards No. 1301. In addition, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence and discussed with the independent registered public accounting firm the firm’s independence. The Audit Committee discussed with our internal audit department and the Company’s independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditor and the independent registered public accounting firm, with and without management present, to discuss:discuss the results of their examinations;examinations, their evaluations of our internal controls;controls, and the overall quality of our financial reporting. In reliance on the reviews and discussions referred to above, and the receipt of an unqualified opinion from GTGrant Thornton dated March 1, 2018,February 27, 2020, with respect to the consolidated financial statements of the Company as of and for the fiscal year ended December 31, 2017,2019, the Audit Committee recommended to the Board, and the Board approved, that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2019. The Audit Committee regularly reviews with the General Counsel and internal audit any complaints received pursuant to the Company’s Code of Business Conduct and Ethics (the “Code of Conduct”) and the Audit Committee Complaint Review Policy and Procedure (the “Complaint Review Policy”) and is responsible for: (i) overseeing compliance with the Code of Conduct and Complaint Review Policy; and (ii) reviewing any investigations that were conducted with respect to the Code of Conduct and the Complaint Review Policy. This report is submitted by the Audit Committee. Michael Garnreiter —- Chairperson Richard Dozer
David Vander Ploeg Robert SynowickiRoberta Roberts Shank
The foregoing report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this report.
The following table sets forth, the fees for fiscal years 20172019 and 20162018, the fees billed by the Company’s independent registered public accounting firm, Grant Thornton, after the 2017 Merger, and Swift’s independent registered public accounting firm, KPMG, prior to the 2017 Merger.firm. | | | | | | | | | | | | | | Grant Thornton | | KPMG | | | | 2017 | | 2017(5) | | 2016 | Audit Fees(1) | | $ | 1,671,953 | | $ | 492,400 | | $ | 1,779,000 | Audit-Related Fees(2) | | | — | | | 673,005 | | | — | Tax Fees(3) | | | 48,474 | | | 207,836 | | | 119,495 | All Other Fees(4) | | | — | | | — | | | — | | Total | | $ | 1,720,427 | | $ | 1,373,241 | | $ | 1,898,495 |
| | | | | | | | | | | Grant Thornton | | | 2019 | | 2018 | Audit Fees 1 | $ | 2,245,000 |
| | $ | 1,884,429 |
| | Audit-Related Fees | | | — |
| Tax Fees 2 | 5,000 |
| | 465 |
| All Other Fees 3 | 4,900 |
| | 4,900 |
| | Total | $ | 2,254,900 |
| | $ | 1,889,794 |
| | | | | |
(1) | | | 1 | The aggregate fees billed for professional services rendered to the Company after the 2017 Mergerduring 2019 and Swift prior to the 2017 Merger2018 for the audit of annual financial statements, reviews of the financial statements included in quarterly reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings.filings |
(2) | The aggregate fees billed for professional services rendered to Swift prior to the 2017 Merger that were reasonably related to the performance of the audit or review of Swift’s financial statements. This category includes fees related to assistance in financial due diligence related to the 2017 Merger and general assistance with implementation of SEC requirements. |
(3)2 | The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning. |
(4) | Neither GT nor KPMG | | 3 | The aggregate fees billed for any productsaccess to Grant Thornton’s research tools and services provided other than the services reported above.subscription services. |
(5) | Represents fees billed by KPMG through September 8, 2017. |
PRE-APPROVAL POLICY FOR AUDIT AND NON-AUDIT FEESPre-Approval Policy for Audit and Non-Audit Fees
All audit and non-audit services performed by our independent auditors are pre-approved by the Audit Committee. The respective approving parties concluded that the provision of such services by GTGrant Thornton was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee may delegate pre-approval authority to one or more of its members. The member(s) to whom such authority is delegated must report, for informational purposes only, the pre-approval decisions to the Audit Committee at its next scheduled meeting. No audit-related, tax, or other non-audit services were approved by the Audit Committee pursuant to the de minimis exception to the pre-approval requirement under Rule 2-01(c)(7)(i)(C), of SEC Regulation S-X during the year ended December 31, 2019. Approval of the First Amended and Restated Certificate of Incorporation to the Board of Directors Our Restated Certificate of Incorporation currently provides for a classified Board divided into three classes of directors, with each class elected for staggered three-year terms. Our Nominating and Corporate Governance Committee periodically reviews and makes recommendations to the Board regarding corporate governance policies and principles, including the procedure for electing directors. At the 2019 Annual Meeting, our stockholders approved a non-binding stockholder proposal calling for the Company to take the steps necessary to declassify our Board. Following this vote, our Nominating and Corporate Governance Committee, along with our Board, reviewed the arguments in favor of, and in opposition to, a classified board structure. Supporters of a classified board structure contend that a classified board structure (i) allows directors to focus on the long-term best interest of the company and its stockholders by strengthening the independence of non-employee directors against the short-term focus of some investors and special interest, (ii) provides a stable and continuous board, allowing for the development of institutional knowledge, and (iii) reduces vulnerability to abusive takeover tactics and threats by activist investors. Opponents of a classified board structure contend that a classified board structure (i) diminishes directors’ accountability to stockholders and (ii) gives stockholders less influence over a company’s corporate governance policies. Our Nominating and Corporate Governance Committee and our Board also recognize that there is a growing consensus among stockholders and the investment community in favor of annual elections and the number of companies with classified boards continues to decline. As a result of its review, our Nominating and Corporate Governance Committee recommended to our Board that our stockholders be afforded the opportunity to vote on amending our Restated Certificate of Incorporation to declassify our Board. While our Board recognizes there are important benefits to a classified board structure, it has determined that it is in the best interests of the Company and our stockholders to amend our Restated Certificate of Incorporation to declassify our Board and unanimously recommends that stockholders approve the proposed amendment.
If the proposed amendment is approved by our stockholders, our classified board structure will be phased-out over a three-year period beginning at the 2021 Annual Meeting, as follows: At the 2020 Annual Meeting, the three Class III director nominees will be elected to three-year terms expiring at the 2023 Annual Meeting; The three Class I directors whose terms expire at the 2021 Annual Meeting will continue to serve until the 2021 Annual Meeting and any director nominees at the 2021 Annual Meeting will stand for election to two-year terms expiring at the 2023 Annual Meeting; The three Class II directors whose terms expire at the 2022 Annual Meeting will continue to serve until the 2022 Annual Meeting and any director nominees at the 2022 Annual Meeting will stand for election to one-year terms expiring at the 2023 Annual Meeting; and Beginning with the 2023 Annual Meeting, our board will no longer be classified and all director nominees will stand for election annually. The proposed amendment would not affect the present number of directors or our Board’s authority to change that number and to fill any vacancies or newly created directorships. If this proposed amendment is approved, our Board intends to make conforming changes to our By-laws and our Corporate Governance Guidelines. Furthermore, our Board intends that the amended By-laws will provide that any director chosen by our Board to fill a vacancy on our Board and designated to a class elected prior to the 2023 Annual Meeting will continue to hold office until the next election of the class for which such director shall have been chosen, and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation or removal. Under Delaware law, directors of companies that have a classified board of directors may be removed only for cause, unless the Certificate of Incorporation provides otherwise. Delaware law provides that directors of companies that do not have a classified board of directors may be removed with or without cause. If the proposed amendment is approved, until the 2023 Annual Meeting, our directors may be removed from office only for cause by the affirmative vote of the holders of at least a majority in voting power of our issued and outstanding common stock entitled to vote in the election of directors. From and after the 2023 Annual Meeting, our directors may be removed from office with or without cause by the affirmative vote of the holders of at least a majority in voting power of our issued and outstanding common stock entitled to vote in the election of directors. Vote Required For Approval Approval of this proposed amendment to our Restated Certificate of Incorporation requires the affirmative vote of the holders of a majority of our outstanding shares of common stock entitled to vote as of the Record Date. If this proposed amendment is approved, we intend to file a First Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, reflecting the declassification of our board. This description of the proposed amendment to our Restated Certificate of Incorporation is qualified in its entirety by reference to, and should be read in conjunction with, the full text, as proposed to be amended, attached hereto as Appendix A. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL FOUR
PROPOSAL 5: APPROVAL OF THE SECOND AMENDED AND RESTATED 2014 OMNIBUS PLAN Summary | | | | • | The Board is asking for stockholder approval of our Second Amended and Restated 2014 Omnibus Incentive Plan to increase by [ ] the number of shares of common stock available for issuance thereunder. Equity compensation is critical for the Company to attract, motivate and retain qualified executive officers and other key personnel through competitive compensation packages, and it aligns our executives’ and stockholders’ short- and long-term interests by creating a strong and direct link between executive pay and stockholder return. | | • | The Board believes the shares remaining under the Amended and Restated 2014 Omnibus Plan (the “Omnibus Plan”) are insufficient to fulfill the Company’s objectives. If stockholders do not approve the Second Amended and Restated Omnibus Plan, the Company will have approximately 1,826,906 remaining shares under the Omnibus Plan for future awards and may need to resort to greater cash compensation to remain competitive. | | • | The Board is also asking for stockholder approval of the Second Amended and Restated Omnibus Plan to extend the term for a ten-year period set to expire on May 19, 2030, and to make such other miscellaneous, administrative and conforming changes as are necessary. | | • | In addition, the Board is asking for stockholder approval of the Second Amended and Restated Omnibus Plan to comply with certain stockholder advisory group guidelines and best practices, including an amendment that adds a double-trigger vesting requirement upon a change of control and amendments that disallow: |
| | | | | (i) | vesting periods of less than twelve months for most future awards; | | (ii) | payment of dividends on unvested future awards; | | (iii) | the power to vote shares underlying future awards prior to the vesting of such shares; and | | (iv) | share recycling related to exercise of stock options, shares reserved for issuance upon the grant of stock appreciation rights (“SARs”) to the extent the number of reserved shares exceeds the number of shares actually issues upon the exercise of the SARs, and shares forfeited for tax withholding obligations. |
Introduction At the Annual Meeting, our stockholders are being asked to approve the proposed Second Amended and Restated Omnibus Plan to (i) increase the number of shares of common stock available for issuance thereunder by an additional [ ] shares, (ii) extend the term for a ten-year period set to expire on May 19, 2030, (iii) implement additional changes designed to comply with certain stockholder advisory group guidelines and best practices, and (iv) make such other miscellaneous, administrative and conforming changes as are necessary. As of the Record Date, there were approximately 1,826,906 shares available for issuance under the Omnibus Plan; therefore, the Second Amended and Restated Omnibus Plan would result in approximately [ ] shares being available for future awards, subject to adjustment for certain future forfeitures and to reflect the occurrence of certain events (described under “Proposal 5: Approval of the Second Amended and Restated Omnibus Plan - Description of the Omnibus Plan and the Second Amended and Restated Omnibus Plan - Adjustments Upon Certain Events” below). The Compensation Committee has approved the Second Amended and Restated Omnibus Plan and the Board has directed that it be submitted for stockholder approval at the Annual Meeting. If approval of the Second Amended and Restated Omnibus Plan is not obtained at the Annual Meeting from our stockholders, the Omnibus Plan will remain in full force and effect, and our ability to grant equity awards to attract, motivate and retain new and existing key employees, directors, officers and eligible participants (collectively, “Participants”) would be limited. In that event, to remain competitive, the Company may be required to adopt additional cash or equity related compensation programs. Before approving the Second Amended and Restated Omnibus Plan, the Compensation Committee considered a number of factors, including share usage over the last three years, shares expected to be required in the future based upon historical practices, and shares expected to be required as the Company continues to retain and complement our leadership team. The Compensation Committee believes additional shares are needed to (i) recruit talent to fill open positions on our management team as they arise and (ii) continue to make equity-based
awards to Participants, which tie a significant portion of total compensation to equity awards and align with stockholder interests. Furthermore, a significant portion of our executives’ total annual compensation is in the form of equity awards. The majority of performance-based restricted shares granted in 2019 have a performance period that extends beyond 2019. If performance targets are met, it benefits both our stockholders and our equity recipients. If performance targets are not met, the restricted shares are forfeited and our effective burn rate reduced. In deciding to increase the number of shares available for issuance by [ ] shares, the Compensation Committee considered, among other factors:
| | | | • | the approximately 1,826,906 shares currently available for issuance under the Omnibus Plan; | | • | the number of shares necessary to attract, motivate and retain qualified executive officers and other key personnel; | | • | the Board’s desire to have sufficient availability to grant awards for at least the next three years; | | • | our current three-year average burn rate of approximately 0.89%, calculated based upon the number of options granted plus the number of full value shares awarded times a stock volatility multiplier of 2.5, divided by our weighted average common shares outstanding; | | • | the number of shares of common stock outstanding, the dilutive effects of awards, and our projected burn rate; and | | • | the effect of the price of our common stock on the number of shares needed to maintain the significant percentage of our compensation packages for key employees that is currently granted in the form of equity. |
In addition to the factors above, the Compensation Committee also considered the following factors, among others, when determining whether to approve the Second Amended and Restated Omnibus Plan: | | | | • | the Board’s belief that equity-based grants to employees are a highly effective recruiting and retention tool that allows key employees to share in the ownership of our Company and contribute to our revenue and earnings growth by aligning the long-term interests of our management and key employees with those of our stockholders; | | • | the Board’s belief that if additional shares are not available for future awards, we would be required to discontinue or significantly curtail our current equity incentive program and increase the use of cash awards, which could have an adverse impact on our ability to attract, motivate and retain key employees and our results of operations; and | | • | the provisions in the Second Amended and Restated Omnibus Plan designed to protect stockholders’ interests, including adding a double-trigger vesting requirement upon a change of control and provisions that disallow (i) vesting periods of less than twelve months for most future awards, (ii) payment of dividends on unvested future awards, (iii) the power to vote shares underlying future awards prior to the vesting of such shares, and (iv) share recycling related to exercise of stock options, shares available for issuance upon the grant of SARs and shares forfeited for tax withholding obligations. |
Provisions Designed to Protect Stockholders The Second Amended and Restated Omnibus Plan and our governance and compensation policies contain a number of provisions that we believe are designed to protect stockholder interests, including:
| | | | • | prohibition of share recycling related to exercise of stock options, shares available for issuance upon the grant of SARs and shares forfeited for tax withholding obligations; | | • | prohibition of the repricing of stock options without stockholder approval; | | • | prohibition of the issuance of stock options with an exercise price less than the fair market value of the common stock on the grant date; | | • | limiting the maximum term of a stock option to ten years; | | • | prohibition of (i) payment of dividends on unvested future awards, (ii) the power to vote shares underlying awards prior to the vesting of such, and (iii) vesting periods less than twelve months for most future awards; | | • | double-trigger vesting requirement upon a change of control; | | • | administration of the Second Amended and Restated Omnibus Plan by the Compensation Committee, which is comprised entirely of independent directors; | | • | the Compensation Committees’ ability to exercise negative discretion to eliminate or reduce the size of an award if appropriate; | | • | awards to Participants are subject to limits as to the number of shares or cash received; and | | • | our Stock Ownership and Retention Policy and Anti-Hedging and Pledging Policy, which, among other things, (i) require certain of our executive officers and non-employee directors to build certain stock ownership over time through equity grants, expressed as multiples of annual base salary or cash retainer, as applicable, (ii) require certain executive officers to retain post-tax shares from each award on exercise, vesting or earn-out, until such individual complies with the stock ownership levels required by the Stock Ownership and Retention Policy, and (iii) prohibit hedging transactions in our common stock and pledging our common stock as collateral for loans (except for certain pre-existing transactions for certain individuals, subject to reductions in amounts pledged by October 2020) or purchasing our common stock on margin, as further provided in our Anti-Hedging and Pledging Policy. |
Description of the Second Amended and Restated Omnibus Plan In May 2014, Swift’s stockholders approved the 2014 Omnibus Incentive Plan, which replaced the Swift Transportation Company 2007 Omnibus Incentive Plan. The 2014 Omnibus Plan was subsequently amended and restated to rename the plan and make other administrative changes following the 2017 merger of Swift and Knight. If approved by our stockholders at the Annual Meeting, the Second Amended and Restated Omnibus Plan will be effective as of May 19, 2020, its approval date. The principal provisions of the Second Amended and Restated Omnibus Plan are summarized below. This summary is qualified in its entirety by reference to the text of the Second Amended and Restated Omnibus Plan as currently in effect. The Second Amended and Restated Omnibus Plan is attached as Appendix B to this Proxy Statement. You are urged to read the actual text of the Second Amended and Restated Omnibus Plan in its entirety. The purposes of the Second Amended and Restated Omnibus Plan are to: (i) provide our employees with an opportunity to acquire common stock in a manner that reinforces our performance goals and provides an incentive to continue employment with us and work toward our long-term growth, development and financial success; (ii) attract, motivate and retain qualified executive officers and other key personnel by providing them with long-term incentives and reward such Participants by the issuance of equity grants so that these employees and directors will contribute to and participate in our long-term performance; and (iii) align our executives’ and stockholders’ short- and long-term interests by creating a strong and direct link between executive pay and stockholder return. In furtherance of these purposes, the Second Amended and Restated Omnibus Plan authorizes the grant of stock options and restricted stock, subject to applicable law, to our Participants. The Second Amended and Restated Omnibus Plan allows the Compensation Committee to link compensation to performance over a period of time by granting Awards (as defined in the Second Amended and Restated Omnibus Plan) that have multiple-year vesting schedules. Awards with multiple-year vesting schedules, such as restricted stock grants, provide balance to the other elements of our compensation program that otherwise link compensation to our short-term performance. Awards with multiple-year vesting schedules create an incentive for executive officers to increase stockholder value over an extended period of time because the value received from such Awards is based upon the growth of the stock price. Furthermore, the Second Amended and Restated Omnibus Plan provides that most future Awards granted on or after the date on which the Second Amended and Restated Omnibus Plan is approved by our stockholders subject to vesting over a period of time will not vest in periods of less than twelve months from the grant date of such Award (except for certain Awards granted to our non-employee directors and certain Awards to participants representing no more than 5% of the shares authorized for grant under the Second Amended and Restated Omnibus Plan). Such Awards also incentivize executives to
remain with us over an extended period of time. Thus, we believe the Second Amended and Restated Omnibus Plan is an effective way of aligning the interests of our executive officers with those of our stockholders. The Second Amended and Restated Omnibus Plan increases the number of shares of common stock available for issuance under the Omnibus Plan by an additional [ ] shares. As of the Record Date, there were approximately 1,826,906 shares available for issuance under the Omnibus Plan; therefore, the Second Amended and Restated Omnibus Plan would result in approximately [ ] shares being available for future Awards, subject to adjustment for future forfeitures (except for tax withholding and cashless exercise forfeitures) and to reflect the occurrence of certain events (described under “Proposal 5: Approval of the Second Amended and Restated Omnibus Plan - Description of the Second Amended and Restated Omnibus Plan - Adjustments Upon Certain Events” below). In addition, the Second Amended and Restated Omnibus Plan will (i) extend the term of the Omnibus Plan for a ten-year period set to expire on May 19, 2030, (ii) implement additional changes designed to comply with certain stockholder advisory group guidelines and best practices, and (iii) make such other miscellaneous, administrative and conforming changes as are necessary. Burn Rate Our current three-year average adjusted burn rate is approximately 0.89%, calculated based upon the number of options granted plus the number of full value shares awarded times a stock volatility multiplier of 2.5, divided by our weighted average common shares outstanding. Types of Awards A description of the Awards that may be made pursuant to the Second Amended and Restated Omnibus Plan follows. Such descriptions are qualified in their entirety by reference to the text of the Second Amended and Restated Omnibus Plan. 70Stock Options. Pursuant to the Second Amended and Restated Omnibus Plan, the Compensation Committee may grant Awards in the form of stock options to purchase shares of common stock, which stock options may be non-qualified or incentive stock options for federal income tax purposes. Stock options granted under the Second Amended and Restated Omnibus Plan vest and become exercisable at such times and upon such terms and conditions as may be determined by the Compensation Committee. Any stock option granted in the form of an incentive stock option must satisfy the requirements of Section 422 of the IRC. The exercise price per share of common stock for any stock option cannot be less than 100% of the fair market value of a share of common stock on the day that the stock option is granted. In addition, the term of the stock option may not exceed ten years. In the case of an incentive stock option granted to a Participant who owns, directly or indirectly (as determined by reference to Section 424(d) of the IRC), at the time the option is granted, stock possessing more than 10 percent of the total combined voting power of all classes of our stock, the exercise price per share of common stock for any stock option will not be less than 110% of the fair market value of a share of common stock on the day that the stock option is granted, and the term of the stock option may not exceed five (5) years. The exercise price of any stock option granted pursuant to the Second Amended and Restated Omnibus Plan may not be subsequently reduced by amendment or cancellation and substitution of such stock option or any other action of the Compensation Committee without stockholder approval, subject to the Compensation Committee’s authority to adjust Awards upon certain events as set forth in the Second Amended and Restated Omnibus Plan. The type (incentive or non-qualified), vesting, exercise price, and other terms of each stock option are set forth in the award notice for such stock option.
A stock option may be exercised by paying the exercise price in cash or its equivalent and/or, to the extent permitted by the Compensation Committee and applicable law, shares of common stock, a combination of cash and shares of common stock, or through the delivery of irrevocable instruments to a broker to sell the shares obtained upon the exercise of the stock option and to deliver to us an amount equal to the exercise price.
Stock Appreciation Rights. Awards may be granted in the form of SARs. SARs entitle the recipient to receive, in cash or shares of stock, value equal to the excess of (a) the fair market value of a number of shares of stock at the time of exercise over (b) an exercise price established by the Compensation Committee. The Compensation Committee may grant Awards in the form of stock appreciation rights, either in tandem with a stock option ("Tandem SARs") or independent of a stock option ("Freestanding SARs"). The exercise price of a stock
appreciation right is an amount determined by the Compensation Committee, but in no event is such amount less than 100% of the fair market value of a share of common stock on the date that the stock appreciation right is granted or, in the case of a Tandem SAR, the exercise price of the related stock option. A Tandem SAR may be granted either at the time of grant of the related stock option or at any time thereafter during the term of the related stock option. A Tandem SAR is exercisable only to the extent its related stock option is exercisable.
The type (Tandem SAR or Freestanding SAR), exercise price, vesting, and other terms of each stock appreciation right is set forth in the award notice for such SARs. Payment of SARs may be made in shares of common stock or in cash, or partly in shares of common stock and partly in cash, as determined by the Compensation Committee. Other Stock-Based Awards. The Compensation Committee may grant Awards in the form of stock awards (for either unrestricted or restricted shares of common stock), restricted stock unit awards, and other awards that are valued in whole or in part by reference to, or are otherwise based on the fair market value of, common stock. Such other stock-based awards are in such form, and dependent on such conditions, as the Compensation Committee determines, including, without limitation, the right to receive, or vest with respect to, one or more shares of common stock (or the equivalent cash value of such shares of common stock) upon the completion of a specified period of service, the occurrence of an event, and/or the attainment of performance objectives. In addition, the Compensation Committee may choose, at the time of grant of a stock-based award, or any time thereafter up to the time of the payment of such award, to include as part of such award an entitlement to receive dividends or dividend equivalents on the shares of common stock underlying such award, subject to such terms, conditions, restrictions, and/or limitations, if any, as the Compensation Committee may establish. Performance Units. Awards may be granted in the form of performance units. Performance units shall be contingent on the attainment during a performance period of certain performance goals. Performance units shall be subject to restrictions on transferability and other restrictions (including, continued employment or service) as may be prescribed by the Compensation Committee. The Compensation Committee shall establish the performance criteria, the length of the performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained.
Cash Incentive Awards. The Second Amended and Restated Omnibus Plan permits the granting of cash incentive awards which shall be awarded in such amounts and at such times as the Compensation Committee shall determine. A cash incentive award grants the Participant the right to receive a cash payment if the Participant achieves the performance goals specified by the Compensation Committee. Cash incentive awards shall be subject to the attainment during the performance period of certain performance goals. The attainment of the performance goals will determine the ultimate value of the cash incentive award. The length of the performance period, the performance goals to be achieved, and the measure of whether and to what degree such performance goals have been attained shall be determined by the Compensation Committee. Performance Awards. Performance Awards are designed to reward executive officers for their contributions to our financial and operating performance and are based primarily upon our financial results and certain operating statistics that the Compensation Committee identifies each year as being important to our success. Performance Awards are Awards structured to qualify as deductible “performance-based compensation” for purposes of Section 162(m) of the Code (to the extent that such Awards remain eligible to qualify as “performance-based compensation” for purposes of Section 162(m) under applicable “grandfathering” rules relating thereto). Performance Awards may take the form of cash, stock awards, restricted stock unit awards, or performance units that are conditioned upon the satisfaction of enumerated performance criteria during a stated performance period, which awards, in addition to satisfying the requirements otherwise applicable to that type of award generally, also satisfy the requirements of Performance Awards under the Second Amended and Restated Omnibus Plan.
Performance Awards must be based upon one or more of the following performance criteria: revenues (including, without limitation, measures such as revenue per mile (loaded or total) or revenue per tractor), net revenues, fuel surcharges, accounts receivable collection or days sales outstanding, cost reductions and savings (or limits on cost increases), safety and claims (including, without limitation, measures such as accidents per million miles and number of significant accidents), operating income, adjusted operating income, operating ratio, adjusted operating ratio, income before taxes, net income, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted net income, earnings per share, adjusted
earnings per share, stock price, working capital measures, return on assets, return on revenues, debt-to-equity or debt-to-capitalization (in each case with or without lease adjustment), productivity and efficiency measures (including, without limitation, measures such as driver turnover, trailer to tractor ratio, and tractor to non-driver ratio), cash position, return on stockholders’ equity, return on invested capital, cash flow measures (including, without limitation, free cash flow), market share, stockholder return, economic value added, or completion of acquisitions (either with or without specified size). Any of the performance criteria may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group, indices, or any other basket of companies. Financial performance criteria may, but need not, be calculated in accordance with generally accepted accounting principles (“GAAP”) or any successor method to GAAP, including International Financial Reporting Standards. The Compensation Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the performance criteria it selects to use for a particular performance period for a particular participant. Each of the performance criteria may be expressed on an absolute and/or relative basis or as compared to results of one or more peer group companies or indices, and may include comparisons with past performance of the Company (including one or more divisions thereof, if any) and/or the current or past performance of other companies.
For each performance period, the Compensation Committee designates, in its sole discretion, which persons are eligible for Performance Awards for such period, the length of the performance period, the types of Performance Awards to be issued, the performance criteria that are to be used to establish performance goals, the kind or level of performance goals, and other relevant matters.
After the close of each performance period, the Compensation Committee determines whether the performance goals for the performance period have been achieved. In determining the actual award to be paid to a Participant, the Compensation Committee has the authority to reduce or eliminate any Performance Award earned by the Participant, based upon any objective or subjective criteria it deems appropriate. The award notice for each Performance Award sets forth or makes reference to the performance period, performance criteria, performance goals, performance formula, performance pool, and other terms applicable to such Performance Award.
Administration The Second Amended and Restated Omnibus Plan is administered by the Compensation Committee, or such other committee as may be designated by the Board, which consists of at least two individuals who are intended to qualify both as "non-employee directors" within the meaning of Rule 16b-3 under the Exchange Act, and as “independent directors” for purposes of the rules of the principal national securities exchange on which the common stock is then listed or admitted to trading, to the extent required by such rules.
The Compensation Committee may allocate all or any portion of its responsibilities and powers under the Second Amended and Restated Omnibus Plan to any one or more of its members, our CEO, or other senior members of management as the Compensation Committee deems appropriate; however, only the Compensation Committee (or another committee consisting of two or more individuals who qualify both as "non-employee directors" and as "independent directors") may select and grant Awards to Participants who are subject to Section 16 of the Exchange Act. The Compensation Committee may revoke any such allocation or delegation at any time for any reason with or without prior notice.
The Compensation Committee has broad authority in its administration of the Second Amended and Restated Omnibus Plan, including, but not limited to, the authority to interpret the Second Amended and Restated Omnibus Plan; to establish rules and regulations for the operation and administration of the Second Amended and Restated Omnibus Plan; to select the persons to receive Awards; to determine the form, size, terms, conditions, limitations, and restrictions of Awards, including, without limitation, terms regarding vesting, exercisability, assignability, expiration, and the effect of certain events, such as a Participant’s death, disability, retirement, or termination as a result of breach of agreement; to create additional forms of Awards consistent with the terms of the Second Amended and Restated Omnibus Plan; to allow for the deferral of Awards; and to take all other action it deems necessary or advisable to administer the Second Amended and Restated Omnibus Plan.
To facilitate the granting of Awards to Participants who are employed or retained outside of the United States, the Compensation Committee is authorized to modify and amend the terms and conditions of an Award to accommodate differences in local law, policy, or custom.
Shares Available and Maximum Awards As of the Record Date, 1,826,906 shares remained available for future Awards. In February 2020, subject to approval by our stockholders at the Annual Meeting, the Compensation Committee adopted the Second Amended and Restated Omnibus Plan to increase by [ ] the number of shares of the Company’s common stock available for issuance of stock grants, options and other equity awards to the Company’s employees, directors and consultants, which would result in approximately [ ] shares being currently available for future Awards following such increase, subject to approval by our stockholders at the Annual Meeting. Any shares subject to outstanding option or restricted stock grants are counted against the shares reserved and available for issuance as one share for every share subject thereto. If an option expires or is terminated without having been exercised in full, or if a restricted stock grant is forfeited, the unexercised or forfeited shares become available for future grant under the Omnibus Plan, provided that the following shares shall not be available for future grant: (i) shares tendered by Participants upon the exercise of stock options; (ii) shares reserved for issuance upon the grant of SARs to the extent the number of reserved shares exceeds the number of shares actually issued upon the exercise of the SARs; and (iii) shares forfeited for tax withholdings obligations.
The number of shares of common stock available under the Second Amended and Restated Omnibus Plan shall be adjusted to reflect the occurrence of certain events described under Proposal 5 - Approval of the Second Amended and Restated Omnibus Plan - Adjustments Upon Certain Events below. The total number of shares reserved and available for issuance under the Second Amended and Restated Omnibus Plan is automatically adjusted, without further action by the Board or stockholders, to reflect stock dividends, stock splits, reverse stock splits, subdivisions, reorganizations, reclassifications, or any similar recapitalizations that affect or modify the number of shares of outstanding common stock.
The maximum Award granted or payable to any one Participant, other than a director or consultant, under the Second Amended and Restated Omnibus Plan for a calendar year is 800,000 shares of common stock or the equivalent cash value, and in the case of a director or consultant, the maximum Award is 100,000 shares of common stock or the equivalent cash value, in each case, subject to the Compensation Committee’s authority to adjust Awards upon certain events described under “Proposal 5 - Description of the Second Amended and Restated Omnibus Plan - Adjustments Upon Certain Events” below, or in the event the Award is a cash incentive award, the maximum amount payable to any one Participant for a calendar year is $5,000,000. Payment Terms Awards may be paid in cash, shares of common stock, a combination of cash and shares of common stock, or in any other permissible form, as the Compensation Committee determines. Payment of Awards may include such terms, conditions, restrictions, and/or limitations, if any, as the Compensation Committee deems appropriate, including, in the case of Awards paid in shares of common stock, restrictions on transfer of such shares and provisions regarding the forfeiture of such shares under certain circumstances provided such terms, conditions, restrictions, and/or limitations are not inconsistent with the Second Amended and Restated Omnibus Plan.
The Company is entitled to deduct from any payment to a Participant under the Second Amended and Restated Omnibus Plan the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the Participant to pay us such tax prior to and as a condition of the making of such payment. Subject to certain limitations, the Compensation Committee may allow a Participant to pay the amount of taxes required by law to be withheld from an Award by withholding any shares of common stock to be paid under such Award or by permitting the Participant to deliver to us shares of common stock having a fair market value equal to the amount of such taxes. Repricing Prohibited Except for certain adjustments that the Second Amended and Restated Omnibus Plan contemplates, we may not, without obtaining stockholder approval, (i) amend the terms of outstanding options or stock appreciation rights to reduce the exercise price of such outstanding options or stock appreciation rights or (ii) cancel or substitute outstanding options or stock appreciation rights in exchange for options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights.
Effect of Change of Control Our recent equity award agreements relating to performance awards contain double-trigger, rather than single-trigger, vesting of equity-based awards upon a change of control, as defined therein. A double-trigger provision provides for the payment, or acceleration of payment, of compensation following a change of control only when the recipient is terminated without “cause” or is subject to a “constructive termination” during the twelve months following a change of control. Subject to the approval of our stockholders, the Second Amended and Restated Omnibus Plan prohibits granting an Award without a double-trigger provision (for Awards granted on or after the date on which the Second Amended and Restated Omnibus Plan is approved by our stockholders). Adjustments Upon Certain Events In the event that there is a stock dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination, or transaction or exchange of common stock or other corporate exchange, or any distribution to stockholders of common stock or other property or securities (other than regular cash dividends) or any transaction similar to the foregoing or other transaction that results in a change to our capital structure, the Compensation Committee shall make substitutions and/or adjustments to the maximum number of shares available for issuance under the Second Amended and Restated Omnibus Plan, the maximum Award payable, the number of shares to be issued pursuant to outstanding Awards, the option prices, exercise prices, or purchase prices of outstanding Awards, and/or any other affected terms of an Award or the Second Amended and Restated Omnibus Plan as the Compensation Committee, in its sole discretion, deems equitable or appropriate. Unless the Compensation Committee determines otherwise, in no event shall an Award that is intended to qualify as "performance-based compensation" for purposes of Section 162(m) of the IRC (to the extent that such Award remains eligible to qualify as “performance-based compensation” for purposes of Section 162(m) under applicable “grandfathering” rules relating thereto) be adjusted to the extent such adjustment would cause such Award to fail to qualify as "performance-based compensation" under Section 162(m) of the IRC (to the extent that such Award remains eligible to qualify as “performance-based compensation” for purposes of Section 162(m) under applicable “grandfathering” rules relating thereto). With the exception of the foregoing, the Compensation Committee shall not reprice any stock options and/or stock appreciation rights unless such action is approved by the Company's stockholders. Termination and Amendment The Compensation Committee may suspend or terminate the Second Amended and Restated Omnibus Plan at any time for any reason with or without prior notice. In addition, the Compensation Committee may amend the Second Amended and Restated Omnibus Plan, provided that it may not, without stockholder approval, adopt any amendment if stockholder approval is required, necessary, or deemed advisable with respect to tax, securities, or other applicable laws or regulations, including, but not limited to, the listing requirements of the stock exchanges on which the securities of the Company are listed. Except as otherwise provided in the Second Amended and Restated Omnibus Plan, no amendment of the Second Amended and Restated Omnibus Plan may materially and adversely affect the rights of a Participant under any outstanding Award without the consent of that Participant. No Awards may be made under the Second Amended and Restated Omnibus Plan after May 19, 2030 if the Second Amended and Restated Omnibus Plan is passed. Securities Act Registration The registration with the SEC on Form S-8 of the shares of common stock issuable under the Second Amended and Restated Omnibus Plan will be effected as soon as practicable, subject to the stockholders' approval of the Second Amended and Restated Omnibus Plan. Eligible Participants Participants in the Second Amended and Restated Omnibus Plan will be selected by the Compensation Committee from our directors and consultants. Participants may be selected and Awards may be made at any time until the Second Amended and Restated Omnibus Plan expires pursuant to the provisions of the IRC and Treasury Regulations promulgated thereunder. As of February 29, 2020, approximately 24,000 employees, which includes 12 executive officers, and 5 non-employee directors were eligible to participate in our current equity compensation plans. The Second Amended and Restated Omnibus Plan also permits the granting of our current equity awards to eligible consultants. The number of active engagements with consultants varies from time to time, and the Compensation Committee has not historically made grants to these individuals under the Omnibus Plan.
The selection of those persons within a particular class who will receive Awards is entirely within the discretion of the Compensation Committee. Only employees, however, are eligible to receive "incentive stock options" within the meaning of Section 422 of the IRC. The Compensation Committee has not determined how many people are likely to participate in the Second Amended and Restated Omnibus Plan over time. The Compensation Committee intends, however, to grant most of the Awards to those persons who are in a position to have a significant direct impact on our growth, profitability, and success, which would include a portion of the Participants in our current equity compensation plans. Federal Income Tax Status of Second Amended and Restated Omnibus Plan Awards The following is only a summary of the effect of federal income taxation upon us and the Participants under theSecond Amended and RestatedOmnibusPlan. It does not purport to be complete and does not discuss all of the tax consequences of a Participant’s death or the provisions of the income tax laws of any state, municipality or foreign country in which the Participants may reside. Incentive Stock Options. A Participant is not treated as receiving taxable income upon either the grant of an incentive stock option (an “ISO”) or upon the exercise of an ISO. However, the difference between the exercise price and the fair market value on the date of exercise is an item of tax preference at the time of exercise in determining liability for the alternative minimum tax, assuming that the common stock is either transferable or is not subject to a substantial risk of forfeiture under Section 83 of the Code. If at the time of exercise, the common stock is both nontransferable and is subject to a substantial risk of forfeiture, the difference between the exercise price and the fair market value of the common stock (determined at the time the common stock becomes either transferable or not subject to a substantial risk of forfeiture) will be a tax preference item in the year in which the common stock becomes either transferable or not subject to a substantial risk of forfeiture. If common stock acquired by the exercise of an ISO is not sold or otherwise disposed of within two years from the date of its grant and is held for at least one year after the date such common stock is transferred to the Participant upon exercise, any gain or loss resulting from its disposition is treated as long-term capital gain or loss. If such common stock is disposed of before the expiration of the above-mentioned holding periods, a “disqualifying disposition” occurs. If a disqualifying disposition occurs, the Participant realizes ordinary income in the year of the disposition in an amount equal to the difference between the fair market value of the common stock on the date of exercise and the exercise price, or the selling price of the common stock and the exercise price, whichever is less. The balance of the Participant’s gain on a disqualifying disposition, if any, is taxed as capital gain. We are not entitled to any tax deduction as a result of the grant or exercise of an ISO, or on a later disposition of the common stock received, except that in the event of a disqualifying disposition, we are entitled to a deduction equal to the amount of ordinary income realized by the Participant. Non-Qualified Stock Options. A Participant does not recognize any taxable income upon the grant of a non-qualified stock option (a “NSO”), and we are not entitled to a tax deduction by reason of such grant. Upon exercise of a NSO, the Participant recognizes ordinary income generally measured by the excess of the then fair market value of the shares over the exercise price, and we are entitled to a corresponding tax deduction. Upon a disposition of shares acquired upon exercise of a NSO by the Participant, any difference between the sale price and the exercise price, to the extent not recognized as ordinary income as provided above, is treated as long-term or short-term capital gain or loss, depending on the holding period. Such subsequent disposition by the Participant has no tax consequence to us. Stock Appreciation Rights. No income is realized by a Participant at the time a stock appreciation right is awarded, and no deduction is available to us at such time. A Participant realizes ordinary income upon the exercise of the stock appreciation right in an amount equal to the fair market value of the shares of common stock received by the Participant from such exercise. Unrestricted Stock-Based Award. Upon the grant of an unrestricted stock-based Award, a Participant will realize taxable income equal to the fair market value at such time of the shares of common stock received by the Participant under such Award (less the purchase price therefor, if any).
Restricted Stock-Based Award. Upon the grant of a restricted stock-based Award, no income will be realized by a Participant (unless a Participant timely makes an election to accelerate the recognition of the income to the date of the grant), and we will not be allowed a deduction at that time. When the Award vests and is no longer subject to a substantial risk of forfeiture for income tax purposes, the Participant will realize taxable ordinary income in an amount equal to the fair market value at such time of the shares of common stock received by the Participant under such Award (less the purchase price therefor, if any), and we will be entitled to a corresponding deduction at such time, subject to limitations under Sections 280G and 162(m) of the IRC (to the extent such limitations remain relevant under any applicable “grandfathering” rules relating thereto). If a Participant does make a timely election to accelerate the recognition of income, then the Participant will recognize taxable ordinary income in an amount equal to the cash and the fair market value at the time of grant of the shares of common stock to be received by the Participant under such Award (less the purchase price therefor, if any), and we will be entitled to a corresponding deduction at such time, subject to limitations under Sections 280G and 162(m) of the IRC (to the extent such limitations remain relevant under any applicable “grandfathering” rules relating thereto). Participants will only be eligible to make such an election on restricted stock-based Awards that constitute an Award of “property” within the meaning of Section 83 of the Code (e.g., shares of restricted stock) as of the grant date. Performance Units and Performance Awards. A Participant receiving a performance unit or a Performance Award will not recognize income, and we will not be allowed a deduction, at the time such Award is granted. When a Participant receives payment of a performance unit or Performance Award, the amount of the fair market value of any shares of common stock received will be ordinary income to the Participant. Effect of Deferral on Taxation of Awards. If the Compensation Committee permits a Participant to defer the receipt of payment of an Award and such Participant makes an effective election to defer the payment of the Award in accordance with the administrative guidelines established by the Compensation Committee, the Participant will not realize taxable income until the date the Participant becomes entitled to receive such payment pursuant to the terms of the deferral election, and we will not be entitled to a deduction until such time, subject to limitations under Sections 280G and 162(m) of the Code (to the extent such limitations remain relevant under any applicable “grandfathering” rules relating thereto), assuming the deferral arrangement complies with Section 409A of the Code. Any interest or dividends paid on, or capital gains resulting from, the investment by us of the amount deferred during the deferral period will be taxable to us in the year recognized. At the time the Participant becomes entitled to receive the deferred payment, the Participant will recognize taxable income in an amount equal to the actual payment to be received, including any interest or earnings credited on the amount deferred during the deferral period. Section 409A of the Code generally establishes rules that must be followed with respect to covered deferred compensation arrangements in order to avoid the imposition of an additional 20% penalty tax (plus interest) on the employee or other service provider who is entitled to receive the deferred compensation.
Limitation on Income Tax Deduction U.S. federal income tax law generally prohibits publicly held companies from deducting compensation paid to certain executive officers that exceeds $1 million during the tax year. Historically Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)"), provided an exemption from the deductibility limit for certain compensation that was "performance-based" and meet various requirements as set forth under Section 162(m). The 2017 Tax Cuts and Jobs Act repealed this exemption, and now compensation paid to such executive officers in excess of $1 million in 2018 and later is no longer deductible, even if performance-based, unless it meets certain limited transition relief. While guidance has been issued on the scope of this transition relief, its application is based on interpretation and no assurance can be given as to whether Awards that are intended to qualify for the Section 162(m) exemption (as such exemption existed prior to January 1, 2018) will be deductible under the applicable transition relief guidance. We retain the ability to pay compensation that exceeds deductibility limits and believe that having flexibility to recruit, retain and motivate our employees with a compensation program that promotes long-term value creation, even though some compensation awards may not be tax-deductible, is in the best interests of our stockholders.
No person connected with the Second Amended and Restated Omnibus Plan in any capacity, including, but not limited to, the Company and its directors, officers, agents, and employees, makes any representation, commitment, or guaranty that any tax treatment, including, but not limited to, federal, state, and local income, estate, and gift tax treatment, will be applicable with respect to the tax treatment of any Award, any amounts deferred under the Second Amended and Restated Omnibus Plan, or paid to or for the benefit of a Participant
under the Second Amended and Restated Omnibus Plan, or that such tax treatment will apply to or be available to a Participant on account of participation in the Second Amended and Restated Omnibus Plan. Omnibus Plan Benefits The following table sets forth certain information regarding grants of equity awards made under the Omnibus Plan during 2019 to (i) each of the Named Executive Officers; (ii) all current executive officers of the Company as a group; (iii) all current directors who are not executive officers as a group; and (iv) all employees, including all current officers who are not executive officers, as a group. Future Awards, if any, that will be made to eligible Participants under the Second Amended and Restated Omnibus Plan are subject to the discretion of the Compensation Committee. Accordingly, future grants of Awards under the Second Amended and Restated Omnibus Plan are not determinable. | | | | | | | | | | 2019 1 | | Name and Principal Position | Dollar Value 2 | | Number of
Equity Awards | | David Jackson | $ | 3,031,040 |
| | 80,927 |
| | President and CEO | | | | | Adam Miller | $ | 1,667,078 |
| | 44,510 |
| | CFO and Treasurer | | | | | Kevin Knight | $ | 3,031,040 |
| | 80,9273 |
| | Executive Chairman | | | | | Gary Knight | $ | 808,257 |
| | 21,580 |
| | Vice Chairman | | | | | Kevin Quast | $ | 505,142 |
| | 13,487 |
| | Chief Operating Officer of Swift | | | | | Executive Group | $ | 1,556,307 |
| | 49,880 |
| | Non-Executive Director Group | $ | 530,776 |
| | 18,936 |
| | Employee Group | $ | 13,343,011 |
| | 481,211 |
| | | | |
| | | 1 | Represents the 2019 grants that were granted at various dates during the year. |
| | | 2 | This column represents the grant date fair value of the stock awards under FASB ASC Topic 718 granted to the recipients during 2019. The fair value of the equity awards is accounted for in accordance with FASB ASC Topic 718. |
| | | 3 | Mr. Kevin Knight’s PRSUs and RSUs will settle in cash upon vesting, while the PRSUs and RSUs granted to the other named executive officers will be settled in shares of our common stock. |
Equity Compensation Plan Information The following table provides certain information, as of ContentsDecember 31, 2019, with respect to our compensation plans and other arrangements under which shares of our common stock are authorized for issuance. The number of shares of common stock reflected in column (c) of the following table is comprised entirely of shares available for future grant under the Omnibus Plan as of December 31, 2019. | | | | | | | | | | | | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining eligible for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | | (a) | | (b) | | (c) | | Equity compensation plans approved by security holders | 2,552,562 |
| | $ | 30.34 |
| | 2,860,077 |
| | Equity compensation plans not approved by security holders | — |
| | — |
| | — |
| | Total | 2,552,562 |
| | $ | 30.34 |
| | 2,860,077 |
| | | | | | | |
Column (a) includes 1,851,889 shares of common stock underlying outstanding restricted stock units and performance units. Because there is no exercise price associated with such awards, such equity awards are not included in the weighted-average exercise price calculation in column (b).
Columns (a) and (b) pertain to the Omnibus Plan. No amounts related to the 2012 employee stock purchase plan are included in columns (a) or (b). Column (c) includes 1,783,569 shares available for issuance under the Omnibus Plan and 1,076,508 shares available for issuance under the 2012 employee stock purchase plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE STOCKHOLDER PROPOSAL REGARDING INDEPENDENT BOARD CHAIRPERSONFIVE
Stockholder Proposal Regarding Written Consent Proposal 76 below has been submitted for inclusion in our proxy statement by Mr. John Chevedden, 2215 Nelson Ave., No. 205 Redondo Beach, Calif. 90278, a stockholder of the Company. The Company will provide to any stockholder of the Company, promptly upon receiving an oral or written request from the stockholder, the name and address, as well as the number of the company's voting securities held by, the stockholder proponent who owns 252 shares of our Class A common stock.Proposal 6. The proponent has informed us that he or his representatives will appear at the Annual Meeting to present his proposal. The proposal and supporting statement below (collectively, the “Chevedden“Stockholder Proposal”) are presented in this proxy statement as received from the proponent in accordance with the rules of the SEC; we and our Board disclaim any responsibility for their content. Any references in the CheveddenStockholder Proposal statement to “we,” “our,” or similar words are references to the proponent of the proposal and not to the Company, our other stockholders, or our Board. We have also included a statement of our Board opposingin response to the CheveddenStockholder Proposal. The Board disagrees with the Chevedden Proposal and believes it shouldhas determined to oppose the proposal in fulfilling the Board’s obligations to represent and safeguard the best interests of our stockholders as a whole. The Board is recommending a vote against the CheveddenStockholder Proposal. The text of the CheveddenStockholder Proposal is as follows: “Proposal 7 — Independent Board Chairman6 - Adopt a Mainstream Shareholder Right - Written Consent Shareholders request that our Boardboard of Directors to adopt as policy, and amend our governing documents asdirectors take the steps necessary to require henceforthpermit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the Chairaction at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to give shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent. Hundreds of the Board of Directors, whenever possible, to be an independent member of the Board. The Board would have the discretion to phase in this policy for the next CEO transition, implemented so it does not violate any existing agreement. If the Board determines that a Chairman who was independent when selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chairman. This proposal requests that all the necessary steps be taken to accomplish the above.
Caterpillar is an example of a company recently changing course and naming an independent board chairman. Caterpillar had strongly opposed amajor companies enable shareholder proposal for an independent board chairman as recently as its 2016 annual meeting. Wells Fargo also changed course and named an independent board chairman in 2016.
It was reported that 53% of the Standard & Poors 1,500 firms separate these 2 positions (2015 report): Chairman and CEO.action by written consent. This proposal topic won 50%-plusmajority shareholder support at 5 major U.S.13 large companies in 2013 including 73%a single year. This included 67%-support at Netflix.both Allstate and Sprint. This proposal topic also won 63%-support at Cigna Corp. (CI) in 2019. This proposal topic would have received higher votes than 63% to 67% at these companies if more shareholders had access to independent proxy voting advice.
Having a board chairman who is independent of managementTaking action by written consent is a practice that will promote greater management accountabilitymeans shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director.
This proposal is important to Knight-Swift Transportation shareholders and leadbecause Knight-Swift has a higher than necessary 20% stock ownership threshold for shareholders to call a special meeting. The right for shareholders to act by written consent is gaining acceptance as a more objective evaluationimportant right than the right to call a special meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However Intel shareholders responded with greater support for written consent in 2019 compared to 2018. Following a 45%-vote for a written consent shareholder proposal The Bank of management.New York Mellon Corporation (BK) said it adopted written consent in 2019. A number of institutional investors saidPerhaps BK is starting a new trend in recognizing that a strong, objective board leader can best provide45%-vote represents a majority vote from the necessary oversightshares that have access to independent proxy voting advice.
And a proxy advisor set certain minimum requirements for a company adopting written consent in case the directors of management. Thus,a company are tempted to adopt a “fig leaf” version of written consent. This proposal is directed toward improving the California Public Employees’ Retirement System’s Global Principlescorporate governance of Accountable Corporate Governance recommends thatKnight-Swift in a company’s board should be chaired by an independentmanner similar to the shareholder proposal for annual election of each director as doeswhich received 58%-support at the Council of Institutional Investors (whose members have $3 Billion invested in stocks). An independent director serving as chairman can help ensure the functioning of an effective board.
2019 Knight-Swift annual meeting.
Please vote to enhance the oversight of our CEO.yes: Independent Board Chairman —Adopt a Mainstream Shareholder Right - Written Consent - Proposal 76”
THE BOARD OF DIRECTORS’ STATEMENT IN OPPOSITIONRESPONSE TO THE STOCKHOLDER PROPOSAL The Board has considered this proposal and has concluded that its adoption is unnecessary and not in the best interests of our stockholders. In conducting its review, the Board considered the following: The proposal is not necessary to improve corporate governance because we are committed to strong and evolving corporate governance practices that promote accountability and protect the rights of all stockholders. Our Board has a fiduciary dutycontinually demonstrated its commitment to act as it believesstrong corporate governance principles that promote stockholders’ rights and our Board’s accountability. By responding to be inemerging governance best practices over the best interests ofyears, the Company and its stockholders, and should retain the flexibility to determine the leadership structure that will best serve those interests.maintains leading governing policies, including: The Board believes its responsibility to stockholders requires that it retain the flexibility to determine the best leadership structure for any particular set of circumstances and personnel. The adoption of a policy requiring whenever possible that the Chairperson of the Board be an independent director could limit the Board’s ability to choose the person best suited for the role at a particular time. We believe that our leadership structure has served the Company and its stockholders very well. We review our leadership structure regularly, and are not opposed, in principle, to having an independent director serve as Chairperson. However, the Board believes that adopting this proposal is unnecessary at this point in time and would unduly restrict the Board’s flexibility to put in place the optimal leadership structure for the needs of the company by applying a “one size fits all” approach to structuring the Board rather than permitting the Board to organize its functions and manage its operations in the manner it determines to be most productive and efficient.
The Board’s belief in the importance of retaining the flexibility to determine the best leadership structure is consistent with the policies and practices at other large companies.According to Shearman & Sterling’s 2017 Corporate Governance & Executive Compensation Survey, of the top 100 U.S. public companies, 76 give the board flexibility to separate or combine the CEO and chair roles depending on which leadership structure is in the company’s best interest at the time, and 20 have policies dictating the leadership structure. These statistics support the Board’s strongly held view that a Board can conclude it is in the best interest of stockholders to maintain flexibility.
Our robust lead independent director role promotes active and independent oversight of management by the Board
Pursuant to our by-laws and our Corporate Governance Guidelines, if the Board appoints as Chairperson a director who is not an independent director, then the Board shall appoint a lead independent director. Under our by-laws, the lead independent director’s duties include, but are not limited to:
· | | presiding | | ● | Annual of election of directors commencing at all executive sessionsthe 2022 Annual Meeting (assuming passage of the Board;Proposal 4) |
·● | presiding at all meetingsApproximately two-thirds of theour Board and the stockholders where the Chairperson is not present;members are independent |
·● | performing all of the duties of the Chairperson in the absence or disability of the Chairperson; |
· | coordinating the activities of theRobust lead independent directors; |
· | acting as liaison for stockholders between the independent directors and the Chairperson, as appropriate; |
· | providing information to the Board for consideration; |
· | participatingdirector position with participation in setting agendas for Board meeting agendas, in consultation with the CEO and Chairperson, andmeetings, coordinating Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; |
· | collaborating with the CEO and Chairperson in determining the need for special meetings and the authority to call any such special meeting; |
· | calling meetings of the independent directors; |
· | responding directly to stockholder and other stakeholder questions and comments that are directeditems, providing information to the lead independent director or the independent directors as a group; and |
· | performing such other duties as our Board, may delegate from time to time. |
The proposal is not necessary to ensure effective oversight of management and accountability to stockholders because the company has implemented protective measures and adheres to them.
We believe that the composition of the Board, the roles of our independent committees of the Board of Directors and our lead independent director, and our overall corporate governance practices and policies all work together to maintain effective oversight of management and ensure accountability to stockholders. We have a number of key corporate governance measures in place to ensure that our Board acts independently and to maintain accountability to our stockholders, including the following:
· | one-half of the members of our Board standing for re-election are independent; |
· | our lead independent director regularly presides over executive sessionscoordinating activities of the independent directors, and has authority to call meetingslead executive sessions of the independent directors; |
· | our lead independent director is designated solely by the independent directors of the Board; |
· | our lead independent director actsand act as a liaison for stockholders between independent directors and the Chairperson as appropriate, and has the authority to respond directly to stockholder and other stakeholder questions and comments that are directed to the | | ● | Regular executive sessions of independent directors with lead independent director orauthority to call meetings of the independent directors as a group; |
·● | our lead independent director provides information to the Board for consideration; |
· | our lead independent director participates in setting Board meeting agendas, in consultation with the CEO and Chairperson, and coordinates Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; |
· | ourIndependent Audit, Committee,Compensation, Nominating and Corporate Governance, and Finance Committees | | ● | All three members of the Audit Committee Compensation Committee, Finance Committee, and Merger Integration Committee are all composed solely of independent directors so that independent directors oversee such critical mattersqualify as the integrity of ouraudit committee financial statements, compensation of our executive management, the selection and evaluation of directors, the monitoring of specific key areas of risk, and the development of corporate governance programs;experts |
·● | we conduct annual Board and committee assessments; |
· | we have a new director orientation program in place; |
· | we provide for proxy access; |
· | we provide for stockholder right to call special meetings; |
· | we have significant stock ownership requirements for our directors and key officers; |
· | we have a majorityMajority voting standard and resignation policy for directors in uncontested elections;elections |
·● | our policies provide for annualProxy access | | ● | Annual risk oversight by our full Board and Committees | | ● | Stockholder right to call special meetings | | ● | Robust director and key officer stock ownership guidelines, along with a key officer stock retention policy | | ● | Anti-Pledging and Hedging Policy limiting the committeespledging and hedging of the Board;Company’s securities by certain individuals with no hardship exemption |
·● | we have implemented an overboarding policy;Clawback policy |
·● | we have aOverboarding policy | | ● | New director communication policy;orientation program |
·● | we have a director tenure policy; andRigorous annual Board self-assessment |
·● | we have implemented a managementAnnual CEO evaluation | | ● | Management and executive succession planning strategy.strategy | | ● | Director communication policy | | ● | Director tenure policy |
We believe
Our stockholders have the ability to raise matters and act outside the annual meeting cycle. Active stockholder engagement and responsiveness to stockholder feedback are important to both our Board and management. Our stockholders’ interests are better served under the existing special meeting right. In addition to our ongoing engagement program and ability to present matters at the annual stockholder meeting, stockholders have other meaningful opportunities to share their views with the Company throughout the year. Significantly, stockholders that adoptingown at least 20% of the outstanding shares of the Company’s common stock have the ability to request that a policyspecial meeting be held outside the annual meeting. The Company’s special meeting requirements strike an appropriate balance between providing stockholders with a meaningful ability to restrictcall a special meeting while protecting against a small minority of stockholders using this mechanism for their own special interests. The transparency and fairness of our annual and special meeting processes support all stockholders’ interests and offer important protections and advantages that are absent from the Board’s discretionproposed written consent process. Specifically, the Company provides advance notice of the date, time and agenda for an annual or special meeting so that all stockholders have a meaningful and structured opportunity to consider proposed actions and express their views. Given that stockholders currently have significant year-round opportunities to bring matters to the attention of the Company, our Board and stockholders, our Board believes the ability to act by written consent is neither necessary nor in selectingstockholders’ best interest. Our current governance structure is efficient and protects all stockholders. The transparency of the best Chairperson would depriveannual and special meeting process offers important protections and advantages for stockholders that are absent from the written consent process. Stockholder meetings and votes take place transparently on a specified date and with a specified agenda that is publicly announced well in advance, giving all interested stockholders an opportunity to consider proposed actions and express their views. Accurate and complete information about proposed actions is widely distributed in a proxy statement before the meeting, which promotes a well-informed consideration on the merits of the proposed actions. Stockholder meetings provide stockholders with a forum for discussion and consideration of the proposed action. In addition, the Board is able to analyze and provide a recommendation with respect to actions proposed to be taken at a stockholder meeting. In contrast, adoption of valuable flexibilitythis written consent proposal would make it possible for the holders of a simple majority of outstanding shares of the Company’s common stock to exercise its business judgment in selecting the most qualified and appropriate individual to lead the Board. We further believe that adopting such a policy now would not providetake significant corporate action without any benefitprior notice to the Company, or itsand without giving all stockholders particularly givenan opportunity to consider, deliberate, and vote on stockholder actions that may have important ramifications for both the Company and all stockholders. The proposed written consent process would effectively disenfranchise all stockholders who do not have (or are not given) the opportunity to participate in the written consent.
In summary, the Board continues to believe that the strong lead independent director position held by Ms. Munro,corporate governance practices already in place, including the fact thatstockholders’ ability to call a special meeting, the position is designated only byrobust set of rights and demonstrated responsiveness to stockholders, provide the independent directorsappropriate means to advance stockholders’ interests without potentially disenfranchising some stockholders. These rights and practices allow the Board to oversee the business and affairs of the BoardCompany for the benefit of Directors, andall stockholders while avoiding the fact that the lead independent director can only be removed from such positiongovernance risk associated with the affirmative vote of a majority ofright to act by written consent. For these reasons, we believe the independent directors and only forability to act by written consent is neither necessary nor in the reasons set forth in our by-laws. 73
stockholders’ best interests.The discussion above is qualified in its entirety by reference to the actual provisions of the CheveddenStockholder Proposal, which is contained in this proxy statement. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL REGARDING INDEPENDENT BOARD CHAIRPERSONSIX
74
| | | Delinquent Section 16(a) Reports |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEExecutive officers, directors, and “beneficial owners” of more than ten percent of our Class A common stock must file initial reports of ownership and changes in ownership with the SEC under Section 16(a) of the Exchange Act. SEC regulations require these reporting persons to furnish us with copies of all Forms 3, 4, and 5, and amendments thereto, that they file with the SEC. Based solely on our review of the copies of such forms furnished to us, or representations that no forms were required, we believe that during 20172019 and through the date of this filing all of our officers, directors, and greater than ten percent beneficial owners complied with all filing requirements of Section 16(a) of the Exchange Act, with the exception of one inadvertent late report regarding a sale of shares for Michael Liu, one inadvertent late report for Gary Knight regarding the sale of a membership interest in an awardentity that held the Company’s common stock, and one inadvertent late report regarding holdings of restricted stockhistorical Swift shares for Mr. Chad Killebrew.Kevin Knight.
| | | Questions and Answers About the Proxy Materials and the Annual Meeting |
When and where is the Annual Meeting? | | | | 2020 Annual Meeting of Stockholders | | Date: | Tuesday, May 19, 2020 | | | Time: | 8:30 a.m., Local Time | | | Place: | 20002 North 19th Avenue, Phoenix, Arizona 85027 |
The safety of our employees, customers, communities, and stockholders is our first priority. We are closely monitoring statements issued by the World Health Organization and the Centers for Disease Control and Prevention regarding the novel coronavirus disease, COVID-19. As part of our precautions, we reserve the right to reconsider the date, time, and/or means of convening the Annual Meeting, including solely by means of remote communications. If we change the date, time, and/or means of convening the Annual Meeting, we will announce our decision in advance, and details on how to participate will be posted on the Investor page of our website at www.knight-swift.com and filed with the SEC as additional proxy material. We encourage attendees to review guidance from public health authorities on this issue, and to check our website prior to the Annual Meeting if you plan to attend. What matters will be voted upon at the Annual Meeting? At the Annual Meeting, you will be asked to: Vote on a proposal to elect three Class III directors, each such director to serve a term of three years; Vote (on an advisory, non-binding basis) to approve executive compensation; Vote on a proposal to ratify the appointment of Grant Thornton as our independent, registered public accounting firm for fiscal year 2020; Vote on amendments to the Certificate of Incorporation to declassify the Board; Vote on the Second Amended and Restated Omnibus Plan; Vote on a stockholder proposal to allow certain stockholder actions by written consent; and Transact such other business as may properly come before the Annual Meeting or any adjournments thereof. What constitutes a quorum? The presence, either in person or by proxy, of the holders of shares of our common stock representing at least a majority of the voting power of our 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. What if a quorum is not present at the Annual Meeting? 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. Who is entitled to vote? Only stockholders of record of our common stock at the close of business on the Record Date, are entitled to notice of, and to vote at, the Annual Meeting. Shares that may be voted include shares that are held: directly by the stockholder of record; and beneficially through a broker, bank, or other nominee. Each share of our common stock will be entitled to one vote on all matters submitted for a vote at the Annual Meeting. As of the Record Date, there were 169,774,814 shares of our common stock issued and outstanding and entitled to be voted at the Annual Meeting.
What is the difference between holding shares as a "registered owner" and a "beneficial owner"? Most of our stockholders hold their shares through a broker, bank, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between registered shares and those owned beneficially: Registered Owners - If your shares are registered directly in your name with our transfer agent, Equiniti, you are, with respect to those shares, the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the Annual Meeting. Beneficial Owners - If your shares are held in a brokerage account, bank, or by another nominee, you are, with respect to those shares, the “beneficial owner” of shares held in street name. As the beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote or to vote in person at the Annual Meeting. However, since you are not a stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a “legal proxy” from your broker, bank, or other nominee (who is the stockholder of record) giving you the right to vote the shares. What is a broker non-vote? Generally, a “broker non-vote” occurs when a broker, bank, or other nominee that holds shares in “street name” for 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 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. What is the effect of not casting your vote? 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 Grant Thornton, 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 the Certificate of Incorporation to declassify the Board (Proposal 4), the vote on the Second Amended and Restated Omnibus Plan (Proposal 5), or the vote on a stockholder proposal to allow certain stockholder actions by written consents (Proposal 6), 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 Grant Thornton as our independent registered public accounting firm for fiscal year 2020 (Proposal 3). What stockholder approval is necessary for approval of the proposals? Election of Directors (Proposal 1) 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. Broker non-votes and abstentions will have no effect on the outcome of this proposal. Advisory, Non-Binding Vote to Approve Executive Compensation (Proposal 2) 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.
Ratification of the Appointment of Grant Thornton as our Independent Registered Public Accounting Firm for Fiscal Year 2020 (Proposal 3) The ratification of the Audit Committee’s appointment of Grant Thornton as our independent registered public accounting firm for fiscal year 2020 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. Vote on Amendments to the Certificate of Incorporation to Declassify the Board (Proposal 4) 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. Vote on the Second Amended and Restated Omnibus Plan (Proposal 5) 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. Vote on a Stockholder Proposal to Allow Certain Stockholder Actions by Written Consent (Proposal 6) 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. May I vote my shares in person at the Annual Meeting? If you are the registered owner of shares of our 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 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. How can I vote my shares without attending the Annual Meeting? If you are a registered owner, you may instruct the named proxy holders on how to vote your shares by completing, signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided with this proxy statement, or by using the 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 Monday, May 18, 2020 (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. How will my proxy be voted? 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: | | | (1) | FOR the election of three Class III directors, each such director to serve a term of three years; |
| | | (2) | FOR the resolution approving, on an advisory, non-binding basis, executive compensation; |
| | | (3) | FOR the ratification of the appointment of Grant Thornton as our independent registered public accounting firm for fiscal year 2020; |
| | | (4) | FOR the amendments to the Certificate of Incorporation to declassify the Board; |
| | | (5) | FOR the Second Amended and Restated Omnibus Plan; |
(6) AGAINST the stockholder proposal to allow certain stockholder actions by written consent; and | | | (7) | In accordance with the proxy holder’s best judgment, as to any other business that properly comes before the Annual Meeting. |
May I revoke my proxy and change my vote? Yes. You may revoke your proxy and change your vote at any time prior to the vote at the Annual Meeting. If you are the registered owner, you may revoke your proxy and change your vote by: submitting a new proxy bearing a later date (which automatically revokes the earlier proxy); giving notice of your changed vote to us in writing mailed to the attention of Todd Carlson, Secretary, at our corporate office specified above; attending the Annual Meeting and giving oral notice of your intention to vote in person; or re-voting by telephone or internet. You should be aware that simply attending the Annual Meeting will not in and of itself constitute a revocation of your proxy. Will my vote be kept confidential? Yes, your vote will be kept confidential and not disclosed to us unless: required by law; you expressly request disclosure on your proxy; or there is a proxy contest. Who will pay the costs of soliciting proxies? 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. What other business will be presented at the Annual Meeting? As of the date of this proxy statement, the Board knows of no other business that may properly be, or is likely to be, brought before the Annual Meeting. 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 director nominees are not available to serve as a director, the named proxy holders will vote your proxy for such other director candidate or candidates as may be nominated by the Board. Where can I find the voting results of the Annual Meeting? We intend to report voting results of the Annual Meeting on Form 8-K within four business days after the Annual Meeting. What should I do if I receive more than one set of voting materials? 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.
Who can help answer my questions? 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) 606-6684 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. We are not aware of any other matters to be conducted at the meeting. The Company’s by-laws require stockholders to give advance notice of any proposal intended to be presented at the Annual Meeting. The deadline for this notice has passed and we did not receive any such notices. If any other matter properly comes before the stockholders for a vote at the meeting, the proxy holders will vote your shares in accordance with their best judgment. Upon request, the Company will provide by first class mail, to each stockholder of record on the record date,Record Date, without charge, a copy of this proxy statement, the proxy card, and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2019, including the required financial statements and financial statement schedules. Written requests for this information should be directed to: Secretary, Knight-Swift Transportation Holdings Inc., 20002 North 19th Avenue, Phoenix, Arizona 85027. To be eligible for inclusion in our proxy materials relating to the 20192021 Annual Meeting of Stockholders, stockholder proposals intended to be presented at that meeting (other than proxy access nominations) must be received in writing by us on or before December , 2018.2020. However, if the date of the 20192021 Annual Meeting of Stockholders is more than thirty days before or after May 31, 2019,19, 2021, then the deadline for submitting any such stockholder proposal for inclusion in the proxy materials relating to the 20192021 Annual Meeting of Stockholders shall be a reasonable time before we begin to print or mail such proxy materials. If, pursuant to our by-laws, any stockholder intends to present a proposal at the 2019 annual meeting2021 Annual Meeting of stockholdersStockholders without inclusion of such proposal in our proxy materials, we must receive notice of such proposal no earlier than January 31, 2019,19, 2021, and no later than March 2, 2019.February 18, 2021. Any notice received prior to January 31, 2019,19, 2021, or after March 2, 2019February 18, 2021 is untimely. However, if the date of the 20192021 Annual Meeting of Stockholders is more than thirty days before or after May 31, 2019,19, 2021, notice by the stockholder in order to be timely must be received not later than the close of business on the tenth day following the first day on which the notice of the date of the 2019 annual meeting2021 Annual Meeting was mailed or public disclosure of the date of the annual meeting was otherwise made, whichever occurs first. Pursuant to Rule 14(a)-4(c)(1) under the Exchange Act, the proxy holders designated by an executed proxy in the form accompanying our proxy statement for our next annual meeting will have discretionary authority to vote on any such untimely stockholder proposal that is considered at the next annual meeting. Proposals (other than proxy access nominations) must concern a matter that may be properly considered and acted upon at the annual meeting in accordance with applicable laws and regulations and our by-laws, committee charters, and policies, and must otherwise comply with Rule 14a-8 of the Exchange Act and we reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these requirements. Under the proxy access provisions of our by-laws, stockholder who meet the requirements set forth in our by-laws may submit director nominations for inclusion in the proxy materials. Proxy access nominations for the 20192021 Annual Meeting of Stockholders must be received by the Company no earlier than November , 2018,2020, and no later than December , 2018,2020, assuming the date of the 20182021 Annual Meeting of Stockholders is not more than thirty days before or after May 31, 2019,19, 2021, and must meet all requirements set forth in our by-laws. All stockholder proposals (including proxy access nominations) should be sent via certified mail, return receipt requested, addressed to the attention of Todd Carlson, Secretary, and mailed to Knight Transportation, Inc.; c/o Todd Carlson, Secretary, 20002 North 19th Avenue, Phoenix, Arizona 85027. FORWARD-LOOKIN
| | | Non-GAAP Reconciliation and Definitions |
Free Cash Flow | | | | | | | 2019 | | | (in millions) | | GAAP: Cash flows from operations | $ | 839.6 |
| | Adjusted for: | | | Proceeds from sale of property and equipment, including assets held for sale | 260.1 |
| | Purchases of property and equipment | (829.9 | ) | | Non-GAAP: Free cash flow | $ | 269.8 |
| | | |
Lease Adjusted Leverage Ratio Lease adjusted leverage ratio represents Leverage Ratio adjusted to include the Lease Adjustment in Net Leverage while also adding back the corresponding rent expense into Adjusted EBITDA. Leverage Ratio is calculated in accordance with the provisions of Knight-Swift's senior credit facility. The Lease Adjustment is management's estimated value of off-balance sheet operating leases as if they were finance leases. The Lease Adjustment is used by management for analysis purposes only and does not purport to be calculated in the same manner or intended for the same purpose as the right-of-use asset and lease liability calculations prescribed under US GAAP. Net Leverage is on-balance sheet debt net of unrestricted cash and cash equivalents at the balance sheet date and is calculated in accordance with the provisions of Knight-Swift's senior credit facility. Adjusted EBITDA is earnings before interest, taxes, depreciation, and amortization, less certain adjustments pursuant to Knight-Swift's senior credit facility. | | | Forward-looking Statements |
This proxy statement contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995, as amended. These statements are based on management’s current expectations and involve substantial risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include, but are not limited to, statements made in the Compensation Discussion and Analysis section of this proxy statement regarding future actions and benefits relating to our executive compensation programs. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned under the heading “Risk Factors” in our annual report on Form 10-K, and in the periodic reports that we file with the SEC on Form 10-Q and Form 8-K. 76
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
ANNEX AFIRST AMENDED ANDRESTATEDCERTIFICATE OF INCORPORATION OF KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC. Article FOURTH Section (b) would be amendedKnight-Swift Transportation Holdings Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:
| | | 1. | The name of the Corporation is Knight-Swift Transportation Holdings Inc. The Corporation was originally incorporated under the name Swift Holdings Corp. |
| | | 2. | The Corporation filed its original Certification of Incorporation (as amended or restated to date, the “Certificate”) under the name Swift Holdings Corp. with the Secretary of State of the State of Delaware on May 20, 2010. |
| | | 3. | The Corporation filed its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on September 8, 2017(the “Prior Charter Amendment Effective Time. The Corporation filed its Restated Certificate of Incorporation with the State of Delaware on November 13, 2018 (the “Restated Certificate of Incorporation”). |
| | | 4. | This First Amended andRestated Certificate of Incorporation (this “First Amended and Restated Certificate of Incorporation”), which restates, integrates and further amends the Restated Certificate of Incorporationwas duly adopted by the Board of Directors of the Corporation without a vote ofand the Corporation’s stockholders in accordance with SectionSections 242 and245 of the General Corporation Law of the State of Delaware (the “DGCL”). |
| | | 5. | This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Corporation’s SecondThe date of filing of this FirstAmended and Restated Certificate of Incorporation, as amended and supplemented, and thereis no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation[•], 2020. |
| | | 6. | This newFirst Amended andRestated Certificate of Incorporation shall read in its entirety as follows: |
FIRST: The name of the corporation is KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC. (the “Corporation”). SECOND: The address of the registered office of the Corporation in the State of Delaware is 160 Greentree Drive, Suite 101, in the City of Dover, County of Kent. The name of its registered agent at that address is National Registered Agents, Inc. (b) THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the DGCL, as set forth in Title 8 of the Delaware Code.
FOURTH: (a)Authorized Capital Stock. From and after the Charter Amendment Effective Time, theThe total number of shares of stock which the Corporation shall have authority to issue is 760,000,000 Class A Common Stock”), and (ii)250,000,000shares of Class B common stock, par value $0.01 per share (“Class B Common Stock” and, together with Class A Common Stock “Common Stock”(iii) (ii) 10,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”Stock”). Without the approval of the holders of a majority of the outstanding shares of Class B (b) voting as a separate class, the number of authorized shares of Class A Common Stock may not be decreased below (1) the number of shares thereof then outstanding plus (2) the number of shares of Class A Common Stock issuable upon the conversion of Class B Common Stock and the exercise of outstanding options, warrants, exchange rights, conversion rights or similar rights for Common Stock.
Article FOURTH Section (c) would be amended as follows:
(c) Common Stock. The powers, preferences and rights, and the qualifications, limitations and restrictions of each class of the Common Stock are as follows:
(1)RankingVoting. Except as otherwise expressly provided in this Restated Certificate of Incorporation, the powers, preferences and rights of the shares of Class A CommonStock and shares of Class B Common Stock, and the qualifications, limitations and restrictions thereof, shall be in all respects identical.
(1)(2) Voting.
a. Except as otherwise required by the DGCL or as provided by or pursuant to the provisions of this First Amended andRestated Certificate of Incorporation, each holder ofClass AClass A holder and each holder of Class B Common Stock shall be entitled to two (2)votes for each share of Class B Common Stock held of record by such holder, and, except as otherwise required by the DGCL or provided by this Restated Certificate of Incorporation or the By-Laws as in effect as of the date hereof, the Class A Common Stock and Class B Common Stock shall vote together on all matters submitted to a vote of stockholders.b.In addition to any other vote required by law or this Restated Certificate of Incorporation, each of the Class A Common Stock and the Class B Common Stock shall be entitled to vote separately as a class with respect to (i) any merger or consolidation of the Corporation with or into any entity in which merger or consolidation holders of Class A Common Stock and holders of Class B Common Stock are not entitled to receive the same per share consideration (provided that if such consideration includes shares of stock, then no separate class vote shall be required pursuant to this clause if the consideration is the same but for the fact that holders of Class B Common Stock receive shares that have two (2) times the voting power of the shares of stock received by holders of Class A Common Stock but are otherwise identical in their rights and preferences), (ii) any increase in the authorized number of shares of Class B Common Stock or the issuance of shares of Class B Common Stock, other than such increase or issuance required
to effect a stock split, stock dividend or recapitalization pro rata with any increase or issuance of shares of Class A Common Stock or (iii) any amendment of this Restated Certificate of Incorporation that would affect the relative rights or preferences of the Class A Common Stock and the Class B Common Stock as set forth in this Article FOURTH.
b.(2)c. In addition to any other vote required by law or this Restated Certificate of Incorporation, the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock held by persons other than Permitted Holders and Affiliated Persons shall be required to approve (i) any merger or consolidation of the Corporation with or into, or any sale of all or substantially the assets of the Corporation to, any Permitted Holder or Affiliated Person or (ii) any amendment to Article SIXTH, TWELFTH or FOURTEENTH of this Restated Certificate of Incorporation or to this sentence, or to the definition of “Affiliated Person” or “Permitted Holder” set forth in the Article FOURTH Section (c)(21)c.b “Permitted Holder” means (i) Jerry Moyes, Vickie Moyes and their respective estates, executors and conservators, (ii) any trust (including the trustee thereof) established for the benefit of Jerry Moyes, Vickie Moyes or any children (including adopted children) thereof, (iii) any such children upon transfer from Jerry Moyes or Vickie Moyes, or upon distribution from any such trust or from the estates of Jerry Moyes or Vickie Moyes and (iv) any corporation, limited liability company or partnership the sole stockholders, members or partners of which are Permitted Holders. “Affiliated Person” means any entity (other than the Corporation or any subsidiary of the Corporation) of which more than 10% of the capital stock or other equity interests or voting power of which is held by one or more Permitted Holders, and any director, officer or employee thereof.
(2)(3) Neither theClass A Common Stock nor the holders of shares of Class B
(4) Restrictions on Issuance and Transfer of Class B Common Stock. Shares of Class B Common Stock may only be issued to, or held by, Permitted Holders. No Class B Holder may transfer, and the Company shall not register the transfer of, any shares of Class B Common Stock, whether by sale, assignment, gift, bequest or otherwise, except to a Permitted Holder.
(5) Conversion of Class B Common Stock. Effective upon the Charter Amendment Effective Time, by virtue of this Restated Certificate of Incorporation without any further action on the part of the Corporation, any stockholder of the Corporation or any other person, each share of Class B Common Stock outstanding as of the Charter Amendment Effective Time shall automatically be converted into one share of Class A Common Stock. Thereafter, the Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of issuance upon conversion of the outstanding shares of Class B Common Stock, such number of shares of Class A Common Stock that shall be issuable upon the conversion of all such outstanding shares of Class B Common Stock. Each share of Class B Common Stock shall be convertible by the holder thereof, at such holder’s option, into one share of Class A Common Stock at any time by written notice to the Corporation specifying the number of shares to be converted and the date for conversion. Upon transfer or purported transfer to any person other than a Permitted Holder,
shares of Class B Common Stock shall automatically be converted into and become shares of Class A Common Stock. Shares of Class B Common Stock that are converted into shares of Class A Common Stock as provided herein shall be retired and restored to the status of authorized but unissued shares of Class B Common Stock and be available for reissue by the Corporation to Permitted Holders in compliance with Article FOURTH Section (c)(2)b.
Upon conversion of shares of Class B Common Stock into shares of Class A Common Stock, the certificate previously representing shares of Class B Common Stock shall represent shares of Class A Common Stock until a new certificate is issued pursuant hereto. As promptly as practicable after delivery of certificates previously representing shares of Class B Common Stock converted to shares of Class A Common Stock, the Corporation shall issue and deliver at such office or agency, to or upon the written order of the holder thereof, certificates for the number of shares of Class A Common Stock issuable upon such conversion. In the event anycertificate representing shares of Class B Common Stock shall be surrendered for conversion of a part only of the shares represented thereby, the Corporation shall deliver at such office or agency, to or upon the written order of the holder thereof, a certificate or certificates for the number of shares of Class B Common Stock represented by such surrendered certificate which are not being converted. The issuance of certificates representing shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock by the registered holder thereof shall be made without charge to the converting holder for any tax imposed on the Corporation in respect of the issue thereof. The Corporation shall not, however, be required to pay any tax which may be payable with respect to any transfer involved in the issue and delivery of any certificate in a name other than that of the registered holder of the shares being converted, and the Corporation shall not be required to issue or deliver any such certificate unless and until the person requesting the issue thereof shall have paid to the Corporation the amount of such tax or has established to the satisfaction of the Corporation that such tax has been paid.
(3)(6)Dividends. Subject to the rights of the holdersof any one or more seriesof Preferred Stock, and subject to any other provisions of this First Amended andRestated Certificate of Incorporation, holders of shares of Class A Common Stock and shares of Class B If, at any time, a dividend or other distribution in cash or other property (other than dividends or other distributions payable in shares of Common Stock or other voting securities of the Corporation, or rights, options or warrants to purchase shares of Common Stock or other voting securities of the Corporation or securities convertible into or exchangeable for shares of Common Stock or other voting securities of the Corporation) is declared or paid on the shares of Class A Common Stock or shares of Class B Common Stock, a like dividend or other distribution in cash or other property shall also be declared or paid, as the case may be, on shares of Class B Common Stock or shares of Class A Common Stock, as the case may be, in an equal amount per share. If, at any time, a dividend or other distribution payable in shares of Common Stock or other voting securities of the Corporation, or rights, optionsor warrants to purchase shares of Common Stock or other voting securities of the Corporation, or securities convertible into or exchangeable for shares of Common Stock or other voting securities of the Corporation is paid or declared on shares of Class A Common Stock or Class B Common Stock, a like dividend or other distribution shall also be paid or declared, as the case may be, on shares of Class B Common Stock or Class A Common Stock, as the case
may be, in an equal amount per share; provided, that, for this purpose, if shares of Class A Common Stock or other voting securities of the Corporation, or rights, options or warrants to purchaseshares of Class A Common Stock or other voting securities of the Corporation or securities convertible into or exchangeable for shares of Class A Common Stock or other voting securities of the Corporation, are paid on shares of Class A Common Stock, and shares of Class B Common Stock or voting securities identical to the other voting securities paid on the shares of Class A Common Stock (except that the voting securities paid on the Class B Common Stock shall have two times the number of votes per share as the other voting securities to be received by the holders of the Class A Common Stock) or rights, options or warrants to purchase shares of Class B Common Stock or such other voting securities or securities convertible into or exchangeable for shares of Class B Common Stock or such other voting securities, are paid on shares of Class B Common Stock, in an equal amount per share of Class A Common Stock and Class B Common Stock, such dividend or other distribution shall be deemed to be a like dividend or other distribution.
(7) Reclassification, etc. In the case of any split, subdivision, combination or reclassification of shares of Class A Common Stock or Class B Common Stock, the shares of Class B Common Stock or Class A Common Stock, as the case may be, shall also be split, subdivided, combined or reclassified so that the number of shares of Class A Common Stock and Class B Common Stock outstanding immediately following such split, subdivision, combination or reclassification shall bear the same relationship to each other as did the number of shares of Class A Common Stock and Class B Common Stock outstanding immediately prior to such split, subdivision, combination or reclassification.
(4)(8) Class A Common Stock and the holders of shares of Class B respectively, without regard to class. respectively. (5)(9)Class A Common Stock or Class B
Article TENTH would be amended as follows:
(d) TENTHPreferred Stock. The Board of Directors is hereby expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions. FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders. (a)The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. (b)The size of the Board of Directors shall be fixed from time to time by resolution of the Board of Directors. Election of directors need not be by written ballot unless the ByLaws so provide. (c)The directors, other than those who may be elected by the holders of any one or more series of Preferred Stockthen outstanding, shall, until the 2023 annual meeting of stockholders,be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, designated Class I, Class II and Class III. TheBeginning with the 2021 annual meeting of stockholders, other than those who may be elected by holders of any one or more series of Preferred Stock then outstanding, the terms of thedirectors in Class Ishall serve for an initial term expiringbe as follows: (i)at the Corporation’s first2021 annual meeting of stockholdersheld after the Prior Charter Amendment Effective Time, the directors inwhose terms expire at that meeting (the Class I directors), or such directors’ successors, shall be elected to hold office for a one-year term expiring at the 2023 annual meeting of stockholders; (ii) at the 2022 annual meeting of stockholders, the directors whose terms expire at that meeting (theClass II shall servedirectors), or such directors’ successors, shall be elected to hold office for an initiala two-year term expiring at the Corporation’s second2023 annual meeting of stockholdersheld after the Prior Charter Amendment Effective Time,; and (iii) atthe 2023 annual meeting of stockholders and at each annual meeting of stockholders thereafter, alldirectors in Class IIIshall servebe electedfor an initiala one-yearterm expiring at the Corporation’s thirdnext annual meeting of stockholders heldafter the Prior Charter Amendment Effective Timetheir election, with each director in a classto hold office until his or hersuccessor is elected and qualified, or until such director’s earlier death, resignation or removal. At the Corporation’s thirdThe division of directors into classes shall terminate at the 2023annual meeting of thestockholdersof the Corporation, and at each subsequentall directors elected at the 2023annual meeting of thestockholders of the Corporation held after the Charter Amendment Effective Time, the members (or successors) of the class of directors whose term expires at that meetingand thereaftershall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election,in accordancewith eachclause (c)(iii) above. Subject to the rights, if any, of the holders of any one or more series of Preferred Stock then outstanding, until the 2023 annual meeting of stockholders,director in a class to hold office until his successor is elected and qualified, or until such director’s earlier death, resignationmay be removed from officeorremovalonly for cause, by the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors. Advance notice of stockholder nominations for the election of directors shall be given in the manner provided in the By-Laws of the Corporation. (d)Subject to the terms of any one or more series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Notwithstanding the foregoing provisions of this Article FIFTH, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this First Amended andRestated Certificate of Incorporation applicable thereto. (e)Subject to the requirements of applicable law, the Corporation shall have the power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, regardless of whether greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law. Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, regardless of whether less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law. (f)In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the provisions of the DGCL and this First Amended andRestated Certificate of Incorporation. SIXTH: Any action required to be taken at a meeting of the stockholders of the Corporation, or any action that may be taken at a meeting of the stockholders, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the stockholders entitled to vote with respect to the subject matter thereof. This consent shall have the same effect as a unanimous vote of stockholders and may be stated as such in any document. SEVENTH: No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended. If the DGCL is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the DGCL, as so amended. Any repeal or modification of this Article SEVENTH shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. EIGHTH: The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The right to indemnification conferred by this Article EIGHTH shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article EIGHTH to directors and officers of the Corporation. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation against any liability asserted against him or her and incurred by him or her or on his or her behalf in such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability. The rights to indemnification and to the advance of expenses conferred in this Article EIGHTH shall not be exclusive of any other right any person may have or hereafter acquire under this First Amended andRestated Certificate of Incorporation, the ByLaws of the Corporation, any statute, agreement, vote of stockholders or disinterested directors, or otherwise. Any repeal or modification of this Article EIGHTH shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification. NINTH: Subject to the rights of the holders of anyone or moreseries of Preferred Stock, special meetings of the stockholders, unless otherwise prescribed by statute, may be called at any time by (i) the Board of Directors or (ii) the Chairman of the Board of Directors, the Chief Executive Officer of the Corporation or the Lead Independent Directorlead independent director (if any). The Board of Directors shall call a special meeting upon written notice to the Secretary of the Corporation by stockholders representing, as of the close of business on the day immediately preceding the date of delivery of such notice to the Corporation, or if applicable, as of any record date set by the Board of Directors in connection with a solicitation by a stockholder seeking to request the Board of Directors to call such a meeting, at least (1) 20% of all of the votes entitled to be cast by holders of Class A Common Stock or (2)
all of the outstanding shares of Common Stock, in either case “Requisite Percentage”“Requisite Percentage”). Any special meeting so requested by stockholders shall be held at such place, date and time as may be fixed from time to time by resolution of the Board of Directors, provided such special meeting shall be held not later than the 90th day after receipt by the Secretary of the Corporation of the requisite notice for such meeting, and provided further that the Board of Directors shall not be required to call a special meeting upon stockholder request if the Board of Directors calls an annual or special meeting of stockholders to be held not later than ninety (90) days after the date on which valid stockholder requests for a special meeting submitted by the Requisite Percentage of stockholders in accordance with this Article TENTHNINTH have been delivered to the Secretary of the Corporation (the “Delivery Date”“Delivery Date”) and the purpose(s) of such meeting include the purpose(s) specified by the Requisite Percentage of stockholders in their request for a special meeting, which included the purpose(s) specified by the Requisite Percentage of stockholders in their request for a special meeting, with such determination being made in good faith by the Board of Directors. For business or a proposal to be properly brought before a special meeting of stockholders by stockholders, the stockholders must have given notice thereof in writing to the Secretary of the Corporation, setting forth, as to each matter the stockholders propose to bring before a special meeting of stockholders, evidence that such stockholders owned such shares representing, and are entitled to cast, not less than 20% of the votes entitled to be cast on such issue or business to be considered at such meeting, and shall otherwise comply with any notice and other requirements set forth in the By-Laws. Only such business shall be conducted as shall have been properly brought before the special meeting as provided in this Article TENTH,NINTH, and set forth in the notice of meeting. Article FOURTH Section (c)(2) would be amended as follows:
(2) TENTHVoting.
a. Except as otherwise required by the DGCL or as provided by or pursuant to the provisions of this Restated Certificate of Incorporation, each holder of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held of record by such holder and each holder of Class B Common Stock shall be entitled to two (2) votes for each share of Class B Common Stock held of record by such holder, and, except as otherwise required by the DGCL or provided by this Restated Certificate of Incorporation or the By-Laws as in effect as of the date hereof, the Class A Common Stock and Class B Common Stock shall vote together on all matters submitted to a vote of stockholders.
b. In addition to any other vote required by law or this Restated Certificate of Incorporation, each of the Class A Common Stock and the Class B Common Stock shall be entitled to vote separately as a class with respect to (i) any merger or consolidation of the Corporation with or into any entity in which merger or consolidation holders of Class A Common Stock and holders of Class B Common Stock are not entitled to receive the same per share consideration (provided that if such consideration includes shares of stock, then no separate class vote shall be required pursuant to this clause if the consideration is the same but for the fact that holders of Class B Common Stock receive shares that have two (2) times the voting power of the shares of stock received by holders of Class A Common Stock but are otherwise identical in their rights and preferences), (ii) any increase in the authorized number of shares of Class B Common Stock or the issuance of shares of Class B Common Stock, other than such increase or issuance required to effect a stock split, stock dividend or recapitalization pro rata with any increase or issuance of shares of Class A Common Stock or (iii) any amendment of this Restated Certificate of Incorporation that would affect the relative rights or preferences of the Class A Common Stock and the Class B Common Stock as set forth in this Article FOURTH.
c. In addition to any other vote required by law or this Restated Certificate of Incorporation, the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock held by persons other than Permitted Holders and Affiliated Persons shall be required to approve (i) any merger or consolidation of the Corporation with or into, or any sale of all or substantially the assets of the Corporation to, any Permitted Holder or Affiliated Person or (ii) any amendment to Article SIXTH, TWELFTH or FOURTEENTH of this Restated Certificate of Incorporation or to this sentence, or to the definition of “Affiliated Person” or “Permitted Holder” set forth in the Article FOURTH Section (c)(2) c. “Permitted Holder” means (i) Jerry Moyes, Vickie Moyes and their respective estates, executors and conservators, (ii) any trust (including the trustee thereof) established for the benefit of Jerry Moyes, Vickie Moyes or any children (including adopted children) thereof, (iii) any such children upon transfer from Jerry Moyes or Vickie Moyes, or upon distribution from any such trust or from the estates of Jerry Moyes or Vickie Moyes and (iv) any corporation, limited liability company or partnership the sole stockholders, members or partners of which are Permitted Holders. “Affiliated Person” means any entity (other than the Corporation or any subsidiary of the Corporation) of which more than 10% of the capital stock or other equity interests or voting power of which is held by one or more Permitted Holders, and any director, officer or employee thereof.
Article SIXTH would be eliminated:
SIXTH: So long as Permitted Holders and their Affiliated Persons hold in excess of 20% of the voting power of the Corporation, the Corporation shall not enter into any contract or transaction with any Permitted Holder or Affiliated Person unless such contract or transaction shall have been approved by either (i) at least 75% of the Independent Directors, including the affirmative vote of the Chairman of the Board of Directors if the Chairman is an Independent Director, or the Lead Independent Director if the Chairman is not an Independent Director or (ii) the holders of a majority of the outstanding shares of Class A Common Stock held by persons other than Permitted Holders or Affiliated Persons. “Independent Director” means a director who is not a Permitted Holder or a director, officer or employee of an Affiliated Person and is “Independent,” as that term is defined in the governance standards of the New York Stock Exchange (the “NYSE”) applicable to directors (but not applicable to directors by virtue of such director being a member of a committee of the Board of Directors), or if the Company is not an NYSE listed company, such other exchange or trading system on which the Company is primarily listed.
BY-LAWS
OF
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
(HEREINAFTER CALLED THE “CORPORATION”)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation shall be in the City of Dover, County of Kent, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shallmay be held at such time and place, either within or without the State of Delaware, as shallthe ByLaws may provide. The books of the Corporation may be kept (subject to any provision contained in the DGCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors.
Section 2. Annual Meetings. The Annual Meeting of Stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting of Stockholders.
Section 3. Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended from time to time (the “Certificate of Incorporation”), Special Meetings of Stockholders, for any purpose or purposes, may be called by (i) the Board of Directors or (ii) the Chairman of the Board of Directors, the Chief Executive Officer of the Corporation or the Lead Independent Director (if any); and shall be called by the Board of Directors at the request of stockholders as provided in the Certificate of Incorporation. Such request shall state the purpose or purposes of the proposed Special Meeting. At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto).
Section 4. Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a Special Meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting.
Section 5. Nature of Business at Meetings of Stockholders. Only such business (other than nominations for election to the Board of Directors, which must comply with the provisions of Section 6 of this Article II) may be transacted at an Annual Meeting of Stockholders as is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 5 of this Article II and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 5 of this Article II.
In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such business must be a proper subject for stockholder action under the laws of the State of Delaware and such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting; provided, however, subject to the last sentence of this paragraph, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each matter such stockholder proposes to bring before the Annual Meeting, a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, and (b) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (i) the name and address of such person, (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or
associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person, (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting to bring such business before the Annual Meeting; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with a contested solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.
A stockholder providing notice of business proposed to be brought before an Annual Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 5 of this Article II shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of the Annual Meeting.
No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 5 of this Article II; provided, however that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 5 of this Article II shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the Annual Meeting and such business shall not be transacted.
Nothing contained in this Section 5 of this Article II shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of law).
Section 6. Nomination of Directors.
(a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided with respect to the right of holders of any series of Preferred Stock (as defined in the Certificate of Incorporation) in the Certificate of Incorporation or in the resolution or resolutions adopted by the Board providing for the issuance of such stock to nominate and elect a specified number of
directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors, (x) by or at the directionByLaws of the Board of Directors (or any duly authorized committee thereof) or (y) by any stockholder of the Corporation who complies with the notice procedures set forth in this Section 6 of this Article II.
(b) In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
(c) To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation (x) in the case of an Annual Meeting, not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, subject to the last sentence of this paragraph, that in the event that the Annual Meeting of Stockholders is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; and (y) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting or a Special Meeting called for the purpose of electing directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(d) To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (x) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of such person, the principal occupation or employment of such person, (iii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; and (iv) any other information relating to such person
that would be required to be disclosed in a proxy statement or other filings required to be made in connection with a contested solicitation of proxies for the election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (y) as to the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (i) the name and record address of such person; (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any proposed nominee or any other person or persons (including their names) pursuant to which the nominations) are being made by such person, and any material interest of such person, or any affiliates or associates of such person, in such nomination, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting or Special Meeting to nominate the persons named in its notice; and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with a contested solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
(e) A stockholder providing notice of any nomination proposed to be made at an Annual Meeting or Special Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 6 of this Article II shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting or Special Meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of such Annual Meeting or Special Meeting.
(f) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 6 of this Article II. If the Chairman of the meeting determines that a nomination was not made in accordance with the
foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
(g) Nothing contained in this Section 6 of this Article II shall be deemed to affect any rights of stockholders to request inclusion of nominees for director in the Corporation’s proxy statement pursuant to Section 17 of this Article II.
Section 7. Adjournments. Any meeting of the stockholders may be adjourned from time to time by the stockholders entitled to vote thereat, present in person or represented by proxy, or the Chairman of the meeting to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 4 hereof shall be given to each stockholder of record entitled to notice of and to vote at the meeting.
Section 8. Quorum. Unless otherwise required by applicable law or the Certificate of Incorporation, the holders of shares of capital stock of the Corporation representing a majority of the voting power of the shares of the Corporation’s capital stock issued and outstanding and entitled to vote with respect to the particular matter, present in person or represented by proxy, shall constitute a quorum of the stockholders for the transaction of business with respect to such matter. A quorum, once established, shall not be broken by the withdrawal of holders of enough voting power to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, or the Chairman of the meeting shall have power to adjourn the meeting from time to time, in the manner provided in Section 7 hereof, until a quorum shall be present or represented.
Section 9. Voting. Unless otherwise required by law, the Certificate of Incorporation or these By-Laws, or the rules of any stock exchange on which the Corporation’s shares are listed and traded, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by a majority of the votes cast by the stockholders entitled to vote thereon who are present in person or represented by proxy, and where a separate vote by class or series is required, a majority of the votes cast by the stockholders of such class or series who are present in person or represented by proxy shall be the act of such class or series. Except as otherwise provided by law, each stockholder of record of any series of Preferred Stock shall be entitled at each meeting of the stockholders to such number of votes, if any, for each share of such stock as may be fixed in the Certificate of Incorporation or in the resolution or resolutions adopted by the Board providing for the issuance of such stock, each stockholder of record of Class B Common Stock (as defined in the Certificate of Incorporation) shall be entitled at each meeting of the stockholders to two votes for each such share of such stock and each stockholder of record of Class A Common Stock (as defined in the Certificate of Incorporation) shall be entitled at each meeting of the stockholders to one vote for each share of such stock, in each case, registered in such stockholder’s name on the books of the Corporation on the date fixed pursuant
to Section 13 of Article II of these By-Laws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of the stockholders, may require that any votes cast at such meeting shall be cast by written ballot.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of the stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after three years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:
(a) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.
(b) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied.
Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
Section 11. Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at a meeting of the stockholders of the Corporation, or any action that may be taken at a meeting of the stockholders, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the stockholders entitled to vote with respect to the subject matter thereof. This consent shall have the same effect as a unanimous vote of stockholders and may be stated as such in any document.
Section 12. List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
Section 13. Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting or request that the Board of Directors call a Special Meeting of Stockholders pursuant to Section 3 of Article II, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent or request that the Board of Directors call a Special Meeting pursuant to Section 3 of Article II shall, by written notice to the Secretary of the Corporation, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for
determining stockholders entitled to consent to corporate action in writing without a meeting or request that the Board of Directors call a Special Meeting pursuant to Section 3 of Article II, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken or on which a signed request by a stockholder to call a Special Meeting pursuant to Section 3 of Article II (as applicable) is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded, to the attention of the Secretary of the Corporation. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.
Section 14. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 12 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders.
Section 15. Conduct of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of any meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the Chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such Chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the Chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the Chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants.
Section 16. Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman or the President shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law.
Section 17. Stockholder Nominations Included in the Corporation’s Proxy Materials.
(a) Definitions. For purposes of this Section 17 of this Article II, the following terms shall have the meanings set forth below, except as otherwise provided herein.
“Eligible Holder” is a person who has either (i) been a record holder of the shares of Common Stock used to satisfy the eligibility requirements of Section 17(d) of this Article II continuously for the three (3) year period as described in Section 17(d) of this Article II, or (ii) provides to the Secretary of the Corporation, within the time period specified in Section 17(e) of this Article II, evidence of continuous ownership of such shares for such three (3)-year period from one or more securities intermediaries in a form that the Board of Directors, or its designee, acting in good faith, determines would be acceptable for purposes of a stockholder proposal under Rule 14a-8(b)(2) under the Exchange Act (or any successor rule).
“Maximum Number” with respect to any Annual Meeting, means that number of nominees for election to the Board of Directors that constitutes no more than 20% of the total number of directors of the Corporation as of the last day on which a Nomination Notice may be submitted pursuant to Section 17(e) of this Article II (rounded down to the nearest whole number), but not less than two (2). The Maximum Number shall be subject to the adjustments described in Section 17(c) of this Article II.
“Minimum Number” means 3% of the Corporation’s issued and outstanding shares of Common Stock as of the most recent date for which such amount is given in any filing made by the Corporation with the SEC prior to the submission of the Qualified Nomination Notice.
“Qualified Nomination Notice” means a notice given by a Nominating Stockholder that complies with the requirements of Section 17(e) of this Article II and names a Nominee.
“Nominating Stockholder” means an Eligible Holder or group of up to 20 Eligible Holders who nominate a nominee for election to the Board of Directors.
“Nominee” means any person nominated for election to the Board of Directors by a Nominating Stockholder that, individually and collectively, in the case of a group, satisfy all applicable procedures set forth in Section 17(d) and 17(e) of this Article II.
(b) Inclusion of Nominee in Proxy Statement. Subject to the provisions of this Section 17 of this Article II, if expressly requested in a Qualified Nomination Notice delivered by a Nominating Stockholder, the Corporation shall include in its proxy statement for any Annual Meeting:
(i) the name of the Nominee, which shall also be included on the Corporation’s form of proxy and ballot;
(ii) disclosures about the Nominee and the Nominating Stockholder required under the rules of the SEC or other applicable law to be included in the proxy statement;
(iii) any statement included by the Nominating Stockholder in the Qualified Nomination Notice for inclusion in the proxy statement in support of the Nominee’s election to the Board of Directors (subject, without limitation, to Section 17(e)(ii) of this Article II), if such statement does not exceed 500 words; and
(iv) any other information that the Corporation or the Board of Directors determines, in its discretion, to include in the proxy statement relating to the nomination of the Nominee, including, without limitation, any statement in opposition to the nomination and any of the information provided pursuant to this Section 17 of this Article II.
(c) | Maximum Number of Nominees.
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(i) The Corporation shall not be required to include in the proxy statement for an Annual Meeting more Nominees than the Maximum Number for such Annual Meeting. The Maximum Number for a particular Annual Meeting shall be reduced by: (1) Nominees who are subsequently withdrawn or that the Board of Directors itself decides to nominate for election at such Annual Meeting, and (2) the number of incumbent directors who were Nominees with respect to any of the preceding two Annual Meetings and whose reelection at the upcoming Annual Meeting is being recommended by the Board of Directors. If one or more vacancies for any reason occurs on the Board of Directors after the deadline set forth in Section 17(e) of this Article II, but before the date of the Annual Meeting, and the Board of Directors resolves to reduce the size of the Board in connection therewith, the Maximum Number shall be calculated based on the number of directors in office as so reduced.
(ii) If the number of Nominees pursuant to this Section 17 of this Article II for any Annual Meeting exceeds the Maximum Number then, promptly upon notice from the Corporation, each Nominating Stockholder will select one Nominee for inclusion in the proxy statement until the Maximum Number is reached, going in order of the amount (largest to smallest) of the ownership position as disclosed in each Nominating Stockholder’s Qualified Nomination Notice, with the process repeated if the Maximum Number is not reached after each Nominating Stockholder has selected one Nominee. If, after the deadline for submitting a Qualified Nomination Notice as set forth in Section 17(e) of this Article II, a Nominating Stockholder becomes ineligible or withdraws its nomination, or a Nominee becomes unwilling to serve on the Board of Directors, whether before or after the mailing of the definitive proxy statement, then the nomination shall be disregarded, and the Corporation: (1) shall not be required to include in its proxy statement or on any ballot or form of proxy the disregarded Nominee or any successor or replacement Nominee proposed by the Nominating Stockholder or by any other Nominating Stockholder, and (2) may otherwise communicate to its stockholders, including, without limitation, by amending or supplementing its proxy statement or ballot or form of proxy, that the Nominee will not be included as a Nominee in the proxy statement or on any ballot or form of proxy and will not be voted on at the Annual Meeting.
(d) | Eligibility of Nominating Stockholder.
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(i) An Eligible Holder or group of up to twenty (20) Eligible Holders may submit a nomination in accordance with this Section 17 of this Article II only if the person or group (in the aggregate) has continuously owned at least the Minimum Number of shares of
the Common Stock (as adjusted for any stock splits, stock dividends or similar events) throughout the three (3)-year period preceding, including the date of submission of, the Qualified Nomination Notice, and continues to own at least the Minimum Number through the date of the Annual Meeting. A group of funds under common management and investment control shall be treated as one Eligible Holder if such Eligible Holder shall provide, together with the Qualified Nomination Notice, documentation reasonably satisfactory to the Corporation that demonstrates that the funds are under common management and investment control. For the avoidance of doubt, in the event of a nomination by a group of Eligible Holders, any and all requirements and obligations for an individual Eligible Holder that are set forth in this Section 17 of this Article II, including the minimum holding period, shall apply to each member of such group; provided, however, that the Minimum Number shall apply to the ownership of the group in the aggregate. If any stockholder withdraws from a group of Eligible Holders acting together as a Nominating Stockholder at any time prior to the Annual Meeting, the group of Eligible Holders shall only be treated as owning the shares held by the remaining members of the group.
(ii) For purposes of this Section 17(d) of this Article II, an Eligible Holder “owns” only those outstanding shares of Common Stock as to which the Eligible Holder possesses both: (A) the full voting and investment rights pertaining to the shares; and (B) the full economic interest in (including the opportunity for profit and risk of loss on) such shares. The number of shares calculated in accordance with clauses (A) and (B) shall not include any shares: sold by such Eligible Holder or any of its affiliates in any transaction that has not been settled or closed, (2) borrowed by such Eligible Holder or any of its affiliates for any purpose or purchased by such Eligible Holder or any of its affiliates pursuant to an agreement to resell, or (3) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such Eligible Holder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of Common Stock, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of: (x) reducing in any manner, to any extent or at any time in the future, such Eligible Holder’s or any of its affiliates’ full right to vote or direct the voting of any such shares, and/or (y) hedging, offsetting, or altering to any degree, gain or loss arising from the full economic ownership of such shares by such Eligible Holder or any of its affiliates.
An Eligible Holder “owns” shares held in the name of a Nominee or other intermediary, so long as the Eligible Holder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest (including the opportunity for profit and risk of loss on) in the shares. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has delegated any voting power by means of a proxy, power of attorney, or other similar instrument or arrangement that is revocable at any time by the Eligible Holder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of Common Stock are “owned” for these purposes shall be determined by the Board of Directors, acting in good faith.
(iii) No person shall be permitted to be in more than one group constituting a Nominating Stockholder, and if any person appears as a member of more than one group, it shall be deemed to be a member of the group that has the largest ownership position as reflected in the Qualified Nomination Notice.
(e) Qualified Nomination Notice. To nominate a Nominee, the Nominating Stockholder must, no earlier than one hundred fifty (150) days and no later than one hundred twenty (120) days before the anniversary of the date that the Corporation mailed its proxy statement for the prior year’s Annual Meeting, submit to the Secretary of the Corporation at the principal executive office of the Corporation all of the following information and documents (collectively, the “Qualified Nomination Notice”); provided, however, that if (and only if) the Annual Meeting is not scheduled to be held within a period that commences thirty (30) days before the anniversary date of the prior year’s Annual Meeting of stockholders and ends thirty (30) days after such anniversary date (an Annual Meeting date outside such period being referred to herein as an “Other Meeting Date”), the Qualified Nomination Notice shall be given in the manner provided herein by the later of the close of business on the date that is one hundred eighty (180) days prior to such Other Meeting Date or the tenth (10th) day following the date such Other Meeting Date is first publicly announced or disclosed:
(i) A Schedule 14N (or any successor form) relating to the Nominee, completed and filed with the SEC by the Nominating Stockholder as applicable, in accordance with SEC rules;
(ii) A written notice of the nomination of such Nominee that includes the following additional information, agreements, representations and warranties by the Nominating Stockholder (including each group member): (A) the details of any relationship that existed within the past three (3)-years and that would have been described pursuant to Item 6(e) of Schedule 14N (or any successor item) if it existed on the date of submission of the Schedule 14N; (B) a representation and warranty that the Nominating Stockholder did not acquire, and is not holding, securities of the Corporation for the purpose or with the effect of influencing or changing control of the Corporation; (C) a representation and warranty that the Nominee’s candidacy or, if elected, Board of Directors membership would not violate applicable state or federal law or the rules of any stock exchange on which the Corporation’s securities are traded; (D) a representation and warranty that the Nominee: (1) does not have any direct or indirect relationship with the Corporation other than those relationships that have been deemed categorically immaterial pursuant to the Corporation’s corporate governance guidelines as most recently published on its website and otherwise qualifies as independent under the rules of the primary stock exchange on which the Corporation’s securities are traded; (2) meets the Audit Committee independence requirements under the rules of any stock exchange on which the Corporation’s securities are traded; (3) is a “non-employee director” for the purposes of Rule 16b-3 under the Exchange Act (or any successor rule); (4) is an “outside director” for the purposes of Section 162(m) of the Internal Revenue Code, as amended (or any successor provision); and (5) is not and has not been subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933, as amended (the “Securities Act”) or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of the Nominee; (E) a representation and warranty that the Nominating Stockholder satisfies the eligibility requirements set forth in Section 17(d) of this Article II and has provided evidence of ownership to the extent required by Section 17(d) of this Article II; (F) a representation and warranty that the Nominating Stockholder intends to continue to satisfy the share ownership eligibility requirements described in Section 17(d) of this Article II through the date of the Annual Meeting; (G) details of any position of the Nominee as an officer or director of any
competitor (that is, any entity that produces products or provides services that compete with or are alternatives to the principal products produced or services provided by the Corporation or its affiliates) of the Corporation, within the five (5) years preceding the submission of the Qualified Nomination Notice; (H) a representation and warranty that the Nominating Stockholder will not engage in a “solicitation” within the meaning of Rule 14a-1(l) of the Exchange Act (without reference to the exception in Rule 14a-1(l)(2)(iv) of the Exchange Act) (or any successor rules) with respect to the Annual Meeting, other than with respect to the Nominee or any nominee of the Board; (I) a representation and warranty that the Nominating Stockholder will not use any proxy card other than the Corporation’s proxy card in soliciting stockholders in connection with the election of a Nominee at the Annual Meeting; (J) if desired, a statement for inclusion in the proxy statement in support of the Nominee’s election to the Board of Directors, provided that such statement shall not exceed 500 words and shall fully comply with Section 14 of the Exchange Act and the rules and regulations thereunder, including Rule 14a-9; (K) in the case of a nomination by a group, the designation by all group members of one group member who is authorized to act on behalf of all group members with respect to all matters relating to the nomination, including withdrawal of the nomination; and (L) the information required to be included in a stockholder’s notice referenced in Section 6(d) of Article II;
(iii) An executed agreement, which must be submitted within seven (7)days of the Nominating Stockholder’s first submission of any information required by this Section 17 of this Article II, in a form deemed satisfactory by the Board of Directors or its designee, acting in good faith, pursuant to which the Nominating Stockholder (including each group member) agrees: (A) to comply with all applicable laws, rules and regulations in connection with the nomination, solicitation and election; (B) to file any written solicitation or other communication with the Corporation’s stockholders relating to one or more of the Corporation’s directors or director nominees or any Nominee with the SEC, regardless of whether any such filing is required under rule or regulation or whether any exemption from filing is available for such materials under any rule or regulation; (C) to assume all liability stemming from an action, suit or proceeding concerning any actual or alleged legal or regulatory violation arising out of any communication by the Nominating Stockholder with the Corporation, its stockholders or any other person in connection with the nomination or election of directors, including, without limitation, the Qualified Nomination Notice; (D) to indemnify and hold harmless (jointly with all other group members, in the case of a group member) the Corporation and each of its directors, officers and employees individually against any liability, loss, damages, expenses or other costs (including attorneys’ fees) incurred in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of or relating to a failure or alleged failure of the Nominating Stockholder to comply with, or any breach or alleged breach of, its obligations, agreements or representations under this Section 17 of this Article II, or otherwise arising out of any nomination, solicitation or other activity by any Nominating Stockholder in connection with its efforts under this Section 17 of this Article II; (E) if any information included in the Qualified Nomination Notice, or any other communication by the Nominating Stockholder (including with respect to any group member), with the Corporation, its stockholders or any other person in connection with the nomination or election ceases to be true and accurate in all material respects (or due to a subsequent development omits a material fact necessary to make the statements made not misleading), or the Nominating Stockholder (including any group member) fails to continue to satisfy the eligibility requirements described in Section 17(d) of this Article
II, to promptly (and in any event within 48 hours of discovering such misstatement or omission) notify the Corporation and any other recipient of such communication of the misstatement or omission in such previously provided information and of the information that is required to correct the misstatement or omission; and
(iv) An executed agreement, which must be submitted within seven (7) days of the Nominating Stockholder’s first submission of any information required by this Section 17 of this Article II, in a form determined to be satisfactory by the Board of Directors, or its designee, acting in good faith, by the Nominee: (A) to provide to the Corporation such other information, including completion of the Corporation’s director questionnaire, as it may reasonably request; (B) that the Nominee has read and agrees, if elected, to serve as a member of the Board of Directors, to adhere to the Corporation’s corporate governance guidelines and code of ethical conduct and any other Corporation policies and guidelines applicable to directors as adopted from time to time; and (C) covenant that the Nominee will promptly and fully disclose to the Corporation if the Nominee is or becomes a party to (1) any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity in connection with service or action as a director of the Corporation, (2) any agreement, arrangement or understanding with any person or entity as to how the Nominee would vote or act on any issue or question as a director (a “Voting Commitment”) that has not been disclosed to the Corporation, or (3) any Voting Commitment that could limit or interfere with the Nominee’s ability to comply, if elected as a director of the Corporation, with its fiduciary duties under applicable law.
The information and documents required by this Section 17(e) of this Article II shall be: (i) provided with respect to and executed by each group member, in the case of information applicable to group members; and (ii) provided with respect to the persons specified in Instruction 1 to Items 6(c) and (d) of Schedule 14N (or any successor items) in the case of a Nominating Stockholder or group member that is an entity. The Qualified Nomination Notice shall be deemed submitted on the date on which all the information and documents referred to in this Section 17(e) of this Article II (other than such information and documents contemplated to be provided after the date the Qualified Nomination Notice is provided) have been delivered to or, if sent by mail, received by the Secretary of the Corporation.
(i) Notwithstanding anything to the contrary contained in Section 17of this Article II, the Corporation may omit from its proxy statement any Nominee and any information concerning such Nominee (including a Nominating Stockholder’s statement in support) and no vote on such Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), and the Nominating Stockholder may not, after the last day on which a Qualified Nomination Notice would be timely, cure in any way any defect preventing the nomination of the Nominee, if: (A) the Nominating Stockholder or the designated lead group member, as applicable, or any qualified representative thereof, does not appear at the meeting of stockholders to present the nomination submitted pursuant to this Section 17 of this Article II or the Nominating Stockholder withdraws its nomination; (B) the Board of Directors, acting in good faith, determines that such Nominee’s nomination or election to the Board of Directors would result in the Corporation violating or failing to be in compliance with the By-Laws or Certificate of Incorporation or any applicable law, rule or regulation to which the
Corporation is subject, including any rules or regulations of any stock exchange on which the Corporation’s securities are traded; (C) the Nominee was nominated for election to the Board of Directors pursuant to this Section 17 of this Article II at one of the Corporation’s two (2) preceding Annual Meetings of stockholders and either withdrew or became ineligible or received a vote of less than 25% of the shares of Common Stock entitled to vote for such Nominee; (D) the Nominee has been, within the past three (3)-years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended; or (E) the Corporation is notified, or the Board of Directors acting in good faith determines, that a Nominating Stockholder has failed to continue to satisfy the eligibility requirements described in Section 17(d) of this Article II, any of the representations and warranties made in the Qualified Nomination Notice ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statement not misleading), the Nominee becomes unwilling or unable to serve on the Board of Directors or any material violation or breach occurs of the obligations, agreements, representations or warranties of the Nominating Stockholder or the Nominee under this Section 17 of this Article II.
(ii) Notwithstanding anything to the contrary contained in this Section 17 of this Article II, the Corporation may omit from its proxy statement, or may supplement or correct, any information, including all or any portion of the statement in support of the Nominee included in the Nomination Notice, if the Board of Directors in good faith determines that: (A) such information is not true in all material respects or omits a material statement necessary to make the statements made not misleading; (B) such information directly or indirectly impugns character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation, with respect to, any person; or (C) the inclusion of such information in the proxy statement would otherwise violate the SEC proxy rules or any other applicable law, rule or regulation.
(iii) The Corporation may solicit against, and include in the proxy statement its own statement relating to, any Nominee.
ARTICLE III
DIRECTORS
Section 1. Number; Classification and Election of Directors.
(a) The Board of Directors shall consist of not less than three (3) members, the exact number of which shall be fixed from time to time by the Board of Directors. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be classified, with respect to the time for which they severally hold office, into three (3) classes, as nearly equal in number as possible, designated Class I, Class II and Class III. The directors in Class I shall serve for an initial term expiring at the Corporation’s first Annual Meeting held after the Charter Amendment Effective Time (as defined in the Certificate of Incorporation), the directors in Class II shall serve for an initial term expiring at the Corporation’s second Annual Meeting held after the Charter Amendment Effective Time, and the directors in Class III shall serve for an initial term expiring at the Corporation’s third Annual Meeting held after the Charter Amendment Effective Time, with each director in a class to hold office until his successor is elected and qualified, or until such director’s earlier death,
resignation or removal. At the Corporation’s third Annual Meeting held after the Charter Amendment Effective Time and at each subsequent Annual Meeting of Stockholders of the Corporation, the directors (or successors) of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the Annual Meeting of Stockholders held in the third year following the year of their election, with each director in a class to hold office until his successor is elected and qualified, or until such director’s earlier death, resignation or removal.
(b) Except as otherwise provided as to any series of Preferred Stock in the Certificate of Incorporation or in the resolution or resolutions adopted by the Board providing for the issuance of such stock, newly created directorships resulting from an increase in the number of authorized directors, and directorships eliminated as a result of a decrease in the number of authorized directors, shall be apportioned by the Board of Directors among Class I, Class II and Class III so that the number of directorships in Class I, Class II and Class III shall be as nearly equal as reasonably possible. No decrease in the number of authorized directors shall shorten the term of any incumbent director.
(c) Except as provided in Section 2 of this Article III, a nominee for director shall be elected to the Board of Directors if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which the Secretary of the Corporation determines that the number of nominees exceeds the number of directors to be elected as of the record date of such meeting.
(d) At least two-thirds of the directors shall consist of persons who are not employees of the Corporation or of any subsidiary of the Corporation, provided that there shall not be at any time more than two directors who are employees of the Corporation. Should the death, resignation or other removal of any nonemployee director result in the failure of the requirement set forth in the preceding sentence to be met, such requirement shall not apply during the time of the vacancy caused by the death, resignation or removal of any such non-employee director, and the remaining directors of the Corporation shall cause any such vacancy to be filled in accordance with these By-Laws within a reasonable period of time. At the Annual Meeting or a Special Meeting at which directors are to be elected in accordance with the Corporation’s notice of meeting, directors shall be elected in accordance with the requirements of these By-Laws and the Certificate of Incorporation.
(e) To be eligible for election or reelection and to be seated as a director of the Corporation, a person must agree in advance to abide by (i) the Corporation’s director resignation policy applicable to any director who fails to receive the required number of votes for reelection in connection with the Company’s majority voting requirements and (ii) the applicable corporate governance, trading, conflict of interest and confidentiality policies and guidelines of the Corporation applicable to directors.
Section 2. Vacancies. Except as otherwise provided as to any series of Preferred Stock in the Certificate of Incorporation or in the resolution or resolutions adopted by the Board providing for the issuance of such stock, vacancies on the Board of Directors arising from a director’s death, resignation or removal and newly created directorships resulting from an
increase in the number of authorized directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. Any director chosen in accordance with the preceding sentence shall hold office until the next election of the class for which such director shall have been chosen, and until his or her successor shall be elected and qualified. Unless otherwise required by law or the Certificate of Incorporation, vacancies on any committee of the Board of Directors arising from the death, resignation or removal of a member of the committee and newly created committee memberships resulting from an increase in the number of authorized members of the committee shall be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining director and any member of a committee of the Board of Directors so chosen shall hold office until his or her successor is duly appointed by the Board of Directors or until his or her earlier death, resignation or removal.
Section 3. Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors and any committee thereof may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors or any committee thereof may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors or such committee, respectively. Special Meetings of the Board of Directors may be called by the Chairman or by a majority of the directors. Special Meetings of any committee of the Board of Directors may be called by the Chairman of such committee, if there be one, or a majority of the directors serving on such committee. Notice thereof stating the place, date and hour of the meeting shall be given to each director (or, in the case of a committee, to each member of such committee) either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, telegram or electronic means on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.
Section 5. Organization. At each meeting of the Board of Directors or any committee thereof, the Chairman of the Board of Directors or the Chairman of such committee, as the case may be, or, in his or her absence or if there be none, the Vice Chairman of the Board of Directors or the Vice Chairman of such committee, if there be one, or another director chosen by a majority of the directors present, shall act as chairman of the meeting. Except as provided below, the Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors and of each committee thereof. In case the Secretary shall be absent from any meeting of the Board of Directors or of any committee thereof, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting. Notwithstanding the foregoing, the members of each committee of the Board of Directors may appoint any person to act as secretary of any meeting of such committee and the Secretary or any Assistant Secretary of the Corporation may, but need not if such committee so elects, serve in such capacity.
Section 6. Resignations and Removals of Directors. Any Section 6. director of the Corporation may resign from the Board of Directors or any committee thereof at any time, by giving notice in writing or by electronic transmission to the Chairman of the Board of Directors, the Chief Executive Officer or the Secretary of the Corporation and, in the case of a committee, to the Chairman of such committee, if there be one. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise required by applicable law and subject to the rights, if any, of the holders of shares of preferred stock then outstanding, any director or the entire Board of Directors may be removed from office at any time by the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors; provided that if the director serving as Chairman of the Board of Directors is an Independent Director (as defined in the Corporation’s Certificate of Incorporation) then such director, or if the Chairman of the Board of Directors is not an Independent Director then the director serving as Lead Independent Director, may only be removed as a director with the affirmative vote of the holders of a majority of the shares of Class A Common Stock excluding Permitted Holders and Affiliated Persons. Any director serving on a committee of the Board of Directors may be removed from such committee at any time by the Board of Directors. “Permitted Holder” shall mean (i) Jerry Moyes, Vickie Moyes and their respective estates, executors and conservators, (ii) any trust (including the trustee thereof) established for the benefit of Jerry Moyes, Vickie Moyes or any children (including adopted children) thereof, (iii) any such children upon transfer from Jerry Moyes or Vickie Moyes, or upon distribution from any such trust or from the estates of Jerry Moyes or Vickie Moyes and (iv) any corporation, limited liability company or partnership the sole stockholders, members or partners of which are Permitted Holders. “Affiliated Person” means any entity (other than the Corporation or any subsidiary of the Corporation) of which more than 10% of the capital stock or other equity interests or voting power of which is held by one or more Permitted Holders, and any director, officer or employee hereof.
Section 7. Quorum. Except as otherwise required by law, the Certificate of Incorporation, these By-Laws or the rules and regulations of any securities exchange or quotation system on which the Corporation’s securities are listed or quoted for trading, at all meetings of the Board of Directors or any committee thereof, a majority of the entire Board of Directors or a majority of the directors constituting such committee, as the case may be, shall constitute a quorum for the transaction of business and the act of a majority of the directors or committee members present at any meeting at which there is a quorum shall be the act of the Board of Directors or such committee, as applicable. If a quorum shall not be present at any meeting of the Board of Directors or any committee thereof, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.
Section 8. Actions of the Board by Written Consent. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors
or such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 9. Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 9 shall constitute presence in person at such meeting.
Section 10. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. Subject to the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading, in the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another qualified member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors when required. Notwithstanding anything to the contrary contained in this Article III, the resolution of the Board of Directors establishing any committee of the Board of Directors and/or the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these By-Laws and, to the extent that there is any inconsistency between these By-Laws and any such resolution or charter, the terms of such resolution or charter shall be controlling.
The following shall be standing committees of the Board of Directors:
(a) Executive Committee. The Executive Committee shall consist of the Chairman of the Board of Directors and at least one director who is not an officer of the Corporation, who shall be appointed annually by the Board of Directors, and who shall continue to serve until his successor is appointed. The Committee shall act as an Executive Committee of the Board of Directors, except when the Board of Directors is in session, and shall have and exercise all powers that the Board of Directors may exercise or lawfully delegate. A quorum of the Committee for the transaction of business shall be a majority of its members, including not less than one director who is not an officer of the Corporation. The powers of the Executive Committee shall not include the power:
(i) to authorize distributions;
(ii) to the extent permitted by the General Corporation Law of the State of Delaware (the “DGCL”), to approve or submit to stockholders any action that requires stockholders approval under the DGCL, the Certificate of Incorporation or these By-Laws;
(iii) to fill vacancies on the Board of Directors or any committee;
(iv) to amend the Certificate of Incorporation (except that the Executive Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series);
(v) to approve an agreement and plan of merger or consolidation not requiring stockholder approval;
(vi) to the extent permitted by the DGCL, to recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets;
(vii) to the extent permitted by the DGCL, to recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution;
(viii) | to adopt, amend or repeal these By-laws; and |
(ix) to fix the compensation of directors serving on the Board or on any committee.
(b) Audit Committee. The Audit Committee shall consist of not less than three (3) directors, none of whom are employees, officers, or stockholders holding 10% or more of all of the votes entitled to be cast by holders of all of the outstanding shares of Common Stock. All members of the Audit Committee shall be determined by the Board of Directors to be independent, as that standard is defined in Rule 303A.02 under the NYSE Listed Company Manual, as such rule may be amended, supplemented or replaced from time to time. The Board of Directors shall adopt and maintain a written charter specifying the Audit Committee’s duties, which shall include assisting the Corporation to ensure the fairness and accuracy of the Corporation’s financial statements and the existence of adequate internal financial controls, and the independence of the independent public accountants engaged to audit the Corporation’s financial statements and books and records and to render financial reports concerning the Corporation and its subsidiaries. The Audit Committee shall prepare a report, as required by the United States Securities and Exchange Commission (“SEC”) for inclusion in the Corporation’s annual proxy statement. Each member of the Audit Committee shall have a general familiarity with the requirements of financial reporting and accountability, and at least one member of the
Audit Committee shall be a “financial expert,” as defined in Section 303A of the NYSE Listed Company Manual, as such section may be amended, supplemented or replaced from time to time.
(c) Nominating and Corporate Governance Committee. The Nominating Committee shall consist of not less than two directors, none of whom are employees, officers, or stockholders holding 10% or more of all of the votes entitled to be cast by holders of all of the outstanding shares of Common Stock. All members of the Nominating Committee shall be determined by the Board to be independent, as that standard is defined in Rule 303A.02 under the NYSE Listed Company Manual, as such rule may be amended, supplemented or replaced from time to time. The Board of Directors shall adopt a written charter specifying the Nominating Committee’s duties, which will include, at minimum, that the Nominating Committee shall (i) identify individuals qualified to become directors and assist the Board of Directors in selecting nominees for the Annual Meeting of Stockholders and (ii) recommend to the Board of Directors measures for appropriate corporation governance that comply with all corporate governance rules and standards applied by the NYSE and the SEC.
(d) Compensation Committee. The Compensation Committee shall consist of not less than two directors who are not employees, officers, or stockholders holding 10% or more of all of the votes entitled to be cast by holders of all of the outstanding shares of Common Stock. All members of the Compensation Committee shall be determined by the Board to be independent, as that standard is defined in Rule 303A.02 under the NYSE Listed Company Manual, as such rule may be amended, supplemented or replaced from time to time. The Board of Directors shall adopt and maintain a written charter specifying the Compensation Committee’s duties, which will include, at minimum, that the Compensation Committee shall review and approve corporate goals and objectives relevant to compensation of the Chief Executive Officer (“CEO”), evaluate the CEO’s performance in light of those goals and objectives, and, either as a committee or together with the other independent directors (as directed by the Board of Directors), determine and approve the CEO’s compensation level based on the evaluation; make recommendations to the Board of Directors with respect to non-CEO compensation; assist in the development and implementation of a management succession plan, and produce a Compensation Committee report on executive compensation as required by the SEC to be included in the Corporation’s annual proxy statement or annual report.
Section 11. Compensation. Any officer or employee of the Corporation serving as a director or any member of any committee shall serve without compensation; however, they shall be reimbursed for the necessary expenses incurred in the execution of their duties. Independent directors who are not employees of the Corporation may receive such compensation as the Board of Directors, from time to time, determines appropriate. Nothing in these By-Laws shall preclude the paying by the Corporation of a salary or other compensation to an officer or employee who is also a director.
Section 12. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or
solely because any such director’s or officer’s vote is counted for such purpose if: (i) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. In addition to the foregoing, any contract or transaction with a Permitted Holder or Affiliated Person shall be subject to the provisions of Article SIXTH of the Certificate of Incorporation.
Section 13. Chairman of the Board of Directors. The Chairman of the Board of Directors shall be elected by the Board of Directors from among its members, and shall not be the Chief Executive Officer or other employee of the Corporation. In addition, so long as the CEO (or if there is no CEO then the person performing the duties of the CEO) is a Permitted Holder or Affiliated Person (as such terms are defined in the Company’s Certificate of Incorporation), the Chairman shall be an Independent Director (as defined in the Company’s Certificate of Incorporation). The Chairman of the Board of Directors shall preside at all meetings of the stockholders and of the Board of Directors at which he is present. In the absence or disability of the Chairman of the Board, the duties of the Chairman of the Board (including presiding at meetings of the Board of Directors and at meetings of the stockholders of the Corporation) shall be performed and the authority of the Chairman of the Board may be exercised by the Lead Independent Director, if there be one, or another independent director designated for this purpose by the Board of Directors. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as may from time to time be assigned by these By-Laws or by the Board of Directors, and shall have the authority to sign such contracts, certificates and other instruments of the Corporation as may be authorized by the Board of Directors. The Chairman of the Board of Directors, if an Independent Director, may be removed from his office as Chairman only with the affirmative vote of a majority of the Independent Directors and only for the following reasons: (1) gross negligence or willful misconduct with respect to the Corporation, (2) breach of a fiduciary duty to the Corporation and its stockholders or (3) a determination by a majority of the Independent Directors that the Chairman is not fulfilling his or her responsibilities in a manner that is in the best interests of the Corporation and its stockholders.
Section 14. Lead Independent Director. If the Board of Directors appoints as Chairman a director who is not an Independent Director, then at the same time as such appointment, the Board of Directors shall appoint an Independent Director to be the “Lead Independent Director”. The Lead Independent Director shall perform such duties and may exercise such powers as may from time to time be assigned by these By-Laws or by the Board of Directors, and shall have the authority to sign such contracts, certificates and other instruments of the Corporation as may be authorized by the Board of Directors. The Lead Independent DirectorELEVENTH
may be removed from his office as Lead Independent Director only with the affirmative vote of a majority of the Independent Directors and only for the following reasons: (1) gross negligence or willful misconduct with respect to the Corporation, (2) breach of a fiduciary duty to the Corporation and its stockholders or (3) a determination by a majority of the Independent Directors that the Lead Independent Director is not fulfilling his or her responsibilities in a manner that is in the best interests of the Corporation and its stockholders.
Section 15. Vice Chairman. The Board of Directors may elect from its members a Vice Chairman of the Board of Directors, to serve as Chairman of the Board in the absence or unavailability of the Chairman, or for any other reason.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a CEO, a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose a Chief Administrative Officer (“CAO”), a Chief Financial Officer (“CFO”) and one or more Assistant CAOs, Assistant CFOs, Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers as may be determined by the Board of Directors. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation.
Section 2. Election. The Board of Directors, at its first meeting held after each Annual Meeting of Stockholders (or action by written consent of stockholders in lieu of the Annual Meeting of Stockholders), shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and each officer of the Corporation shall hold office until such officer’s successor is elected and qualified, or until such officer’s earlier death, resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
Section 4. Chief Executive Officer. The CEO shall, subject to the control of the Board of Directors and the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The CEO shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-Laws, the Board of Directors or the CEO. The CEO shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these By-Laws or by the Board of Directors, subject to the provisions of the Certificate of Incorporation and these By-Laws. If and so long as the Chairman is a Permitted Holder or an Affiliated Person, the CEO (or if there is no CEO, then the person performing the duties of the CEO) shall not be a Permitted Holder or an Affiliated Person.
Section 5. President. The President shall do and perform such duties and have such powers as from time to time may be assigned to such officer by these By-Laws or by the Board of Directors or the Chief Executive Officer, subject to the provisions of the Certificate of Incorporation and these By-Laws. The President may sign and execute all authorized contracts, checks, and other instruments or obligations in the name of the Corporation. The President, in the event of the absence or inability of the Chairman (or Vice Chairman, if any) and Chief Executive Officer to act, shall have all the powers of both officers.
Section 6. Vice Presidents. The Board of Directors may, at its option, elect one or more Vice-Presidents, who shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors or the Chief Executive Officer.
Section 7. Chief Administrative Officer. The Board of Directors may, at its option, elect a CAO. Subject to the authority of the Board of Directors, the CEO, and the President, the CAO shall have general oversight and review powers over the conduct of the business and affairs of all departments, divisions, and regions of the Corporation and its subsidiaries, if any. The CAO shall periodically report to the CEO, President, and the Board of Directors, as requested. The CAO shall perform such other duties as from time to time may be assigned to him by the CEO, the President, or the Board of Directors.
Section 8. Chief Financial Officer; Treasurer. The office of Chief Financial Officer, and the office of Treasurer, if any, may be occupied by the same person or by different persons. The Chief Financial Officer and the Treasurer shall have custody of all the funds and securities of the Corporation, subject to all applicable internal controls. The Chief Financial Officer and the Treasurer may endorse on behalf of the Corporation for collection, checks, notes and other obligations, and shall deposit the same to the credit of the Corporation in such bank or banks or depositories as the Board of Directors may designate. The Chief Financial Officer and the Treasurer may (i) sign receipts and vouchers for payments made to the Corporation and (ii) sign checks made by the Corporation and pay out and dispose of the same under the direction of the Board, the Chief Executive Officer or the President. The Chief Financial Officer and the Treasurer shall perform other duties and have such powers as from time to time may be assigned to them by the Board of Directors or the Chief Executive Officer.
Section 10. Secretary. The Secretary shall keep the minutes of all proceedings of the Board and the minutes of all meetings of stockholders. The Secretary may hold any other position to which he has been appointed. The Secretary may sign with the President, in the name of the Corporation, all contracts authorized by the Board, and shall have authority to attest to the authority of the Corporation to act and, if necessary, affix the seal (or other mark) of the Corporation thereto. He shall have charge of all certificate books and such other books and papers as the Board may direct. The Secretary shall perform such duties and have such powers as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. In general, the Secretary shall perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the CEO or the Board of Directors.
Section 14. Combination of Offices. Any two of the offices hereinabove enumerated may be held by one and the same person, if such person is so elected or appointed.
Section 15. Other Officers. Such other officers as the Board of Directors or the CEO may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors or the CEO. The Board of Directors or the CEO may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Shares of Stock. The shares of capital stock of the Corporation may be represented by a certificate or may be uncertificated. Notwithstanding the foregoing, every holder of capital stock of the Corporation theretofore represented by certificates and, upon request, every holder of uncertificated shares, shall be entitled to have a certificate for shares of capital stock of the Corporation signed by, or in the name of the Corporation by, (a) the Chairman of the Board, the Vice Chairman of the Board, the Chief Executive Officer, the President or any Executive Vice President, and (b) the Chief Financial Officer, the Secretary or an Assistant Secretary, certifying the number of shares owned by such stockholder in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new certificate or uncertificated shares be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issuance of a new certificate or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate or uncertificated shares.
Section 4. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation, and in the case of certificated shares of stock, only by the person named in the certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; or, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney lawfully constituted in writing, and upon payment of all necessary transfer taxes and compliance with appropriate procedures for transferring shares in uncertificated form; provided, however, that such surrender and endorsement, compliance or payment of taxes shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement. With respect to certificated shares of stock, every certificate exchanged, returned or surrendered to the Corporation shall be marked “Cancelled,” with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.
Section 5. Dividend Record Date. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 6. Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.
Section 7. Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person’s address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these By-Laws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. Notice to directors or committee members may be given personally or by telegram, telex, cable or by means of electronic transmission.
Section 2. Waivers of Notice. Whenever any notice is required by applicable law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to notice, or a waiver by electronic transmission by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any Annual or Special Meeting of Stockholders or any regular or Special Meeting of the directors or members of a committee of directors need be specified in any written waiver of notice unless so required by law, the Certificate of Incorporation or these By-Laws.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the DGCL and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or Special Meeting of the Board of Directors
(or any action by written consent in lieu thereof in accordance with Section 8 of Article III hereof), and may be paid in cash, in property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall be in the form determined by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or
was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any determination under Section 3 of this Article VIII, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 3 of this Article VIII, and notwithstanding the absence of any
determination thereunder, any director or officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Section 1 or Section 2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Neither a contrary determination in the specific case under Section 3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses (including attorneys’ fees) incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.
Section 7. Non-exclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Section 1 and Section 2 of this Article VIII shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 1 or Section 2 of this Article VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. The term “another enterprise” as used in this Article VIII shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. For purposes of this Article VIII, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 5 of this Article VIII), the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments.: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation’s By-Laws.ByLaws, except as otherwise stated in the ByLaws.
TWELFTH: Unless the Corporation otherwise consents to an alternative forum in writing, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL or the Corporation’s Certificate of Incorporation or ByLaws or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article TWELFTH. THIRTEENTH: The affirmativeCorporation reserves the right to amend, alter, change, or repeal any provision contained in this First Amended andRestated Certificate of Incorporation but only in the manner now or hereafter prescribed in this First Amended andRestated Certificate of Incorporation the Corporation’s ByLaws or the DGCL, and all rights herein conferred upon stockholders are granted subject to such reservation.
IN WITNESS WHEREOF, the Corporation has caused this First Amended andRestated Certificate of Incorporation to be executed as of the first date set forth above.
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
By: /s/ David A. Jackson Name:David A. Jackson[•] Title:President and Chief Executive Officer[•]
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC. SECOND AMENDED AND RESTATED2014 OMNIBUS INCENTIVE PLAN ARTICLE 1 PURPOSE AND EFFECTIVE DATE Section 1.1 Purpose. The purpose of the Second Amended and Restated Knight-Swift Transportation Holdings Inc. 2014 Omnibus Incentive Plan (the “Plan”) is to provide incentives to certain Employees, Directors, and Consultants of the Company in a manner designed to reinforce the Company’s performance goals; to link a significant portion of Participants’ compensation to the achievement of such goals; and to continue to attract, motivate, and retain key personnel on a competitive basis. Section 1.2 Effective Date and Supersession. The Plan was approved by the Company’s Board of Directors (the “Board”) on February 6, 2020, but will be effective as of the date it is approved by the stockholders at the Company’s 2020 annual meeting (the “Effective Date”). If approved by the Company’s stockholders, the Plan shall amend and restate the Knight-Swift Transportation Holdings Inc. Amended and Restated 2014 Omnibus Incentive Plan, previously referred to as the Swift Transportation Company 2014 Omnibus Incentive Plan, prior to the merger transaction with Knight Transportation, Inc. as in effect prior to the Effective Date (the “2014 Plan”) and shall change the name of the Plan, as provided herein; provided, however, that the terms of the 2014 Plan as in effect immediately prior to the Effective Date shall continue to govern all awards granted under the 2014 Plan until such awards have been exercised, forfeited, cancelled, or have otherwise expired or terminated. The 2014 Plan superseded and replaced the Company’s 2007 Omnibus Incentive Plan, as previously amended and restated on December 15, 2010 (the “2007 Plan”). The 2007 Plan will continue to govern all awards granted under the 2007 Plan until those awards are exercised, forfeited, terminated, cancelled or otherwise expire. If the Company’s stockholders do not approve this Plan, the 2014 Plan will continue in full force and effect on its terms and conditions as in effect immediately prior to the Effective Date. ARTICLE 2 DEFINITIONS AND CONSTRUCTION Section 2.1 Certain Defined Terms. As used in this Plan, unless the context otherwise requires, the following terms shall have the following meanings: (a)“Award” means any stock option, Stock Appreciation Right, Stock Award, Restricted Stock Unit Award, Performance Unit, or Cash Incentive Award granted under the Plan, whether singly, in combination, or in tandem, to a Participant by the Committee pursuant to such terms, conditions, restrictions, and/or limitations, if any, as the Committee may establish by the Award Notice or otherwise. (b)“Award Notice” means the document (which may be in paper or electronic medium) establishing the terms, conditions, restrictions, and/or limitations of an Award in addition to those established by this Plan and by the Committee’s exercise of its administrative powers. The Committee will establish the form of the document in the exercise of its sole and absolute discretion, provided the terms of such document are not inconsistent with or contradictory to this Plan. (c)“Board” has the meaning stated in Section 1.2 of this Plan. (d)“Business Combination” has the meaning stated in Section 2.1(g)(iii) of this Plan. (e)“Cash Incentive Award” means an Award granted to a Participant pursuant to Article 13 (and which is not a Stock Award). A Cash Incentive Award grants the Participant the right to receive a cash payment if the Participant achieves the Performance Goals specified by the Committee during a Performance Period specified by the Committee. (f)“CEO” means the Chief Executive Officer of the Company. (g)“Change in Control” means any one or more of the following events: (i)a transaction or series of transactions in which any “person” within the meaning of Section 13(d)(3) and Section 14(d)(2) of the Exchange Act is or becomes the “beneficial owner” within the meaning of Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the outstanding securities of the Company having the right to vote in the election of directors; provided, however, that the following events will not constitute a “Change in Control” for purposes of the Plan: (1) any acquisition by any person
or entity if, immediately following such acquisition, more than 75% of the outstanding securities of the acquirer having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of the Company having the right to vote in the election of directors; (2) any acquisition directly from the Company; (3) any acquisition of voting securities by the Company, including any acquisition that, by reducing the number of shares outstanding, is the sole cause for increasing the percentage of shares beneficially owned by any such person to more than the percentage set forth above; (4) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; (5) any acquisition by any person pursuant to a transaction that complies with clauses (1), (2) and (3) of paragraph (ii) below; or (6) any transaction, acquisition, or other event that the Board (as constituted immediately prior to such person becoming such a beneficial owner) determines, in its sole discretion, does not constitute a “Change in Control” in such a situation; (ii)consummation by the Company of a Business Combination (as defined below) unless, following such Business Combination, (1) more than 75% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors or managers of the entity resulting from such Business Combination (including without limitation, an entity that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) is represented by voting securities of the Company that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by voting securities into which such previously outstanding voting securities of the Company were converted pursuant to such Business Combination) and such ownership of voting power among the holders thereof is in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Company’s voting securities; (2) no person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of the then-outstanding voting securities of the entity resulting from such Business Combination except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority vote of the members of the board of directors present at any meetingor managers of the entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination. For purposes of this paragraph (ii), “Business Combination” means a reorganization, merger or consolidation of the Company with another person or sale or other disposition of all or substantially all of the assets of the Company to any person other than to a Subsidiary or the acquisition of assets of another corporation; or (iii)upon the approval by the Company’s stockholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Subsidiary. Notwithstanding the foregoing, except as otherwise provided in an Award Notice, a Change in Control shall not occur for purposes of this Plan in the case of Awards that are subject to the requirements of Section 409A of the Code, unless the Change in Control constitutes a “change in control event” as defined in Section 409A of the Code. (h)“Code” means the Internal Revenue Code of 1986, as amended from time to time, including the regulations thereunder and any successor provisions and the regulations thereto. (i)“Committee” means the Compensation Committee of the Board, or such other Board committee as may be designated by the Board to administer the Plan; provided, however, that at all times the Committee shall consist of two or more Directors, atall of whom are: (i) “Non-Employee Directors” within the meaning of Rule 16b-3 under the Exchange Act; (ii) “outside directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3); and (iii) “independent directors” within the meaning of the NYSE Listing Standards or rules of any securities exchange or automated quotation system on which a quorum is presentthe shares of Stock are then listed, quoted or traded. All references in the Plan to the “Committee” shall be, requiredas applicable, to adopt, amend, alterthe Compensation Committee or repeal the Corporation’s By-Laws. The Corporation’s By-Laws also may be adopted, amended, altered or repealedcommittee designated by the affirmative vote ofBoard.
(j)“Company” means Knight-Swift Transportation Holdings Inc. (f/k/a Swift Transportation Company), a Delaware corporation, and its Subsidiaries. (k)“Consultant” means any consultant, adviser, or independent contractor who provides services to the holders of at least two-thirds ofCompany or a Subsidiary as an independent contractor and not as an Employee; provided, however, that a Consultant may become Participant in this Plan only if he or she: (i) is a natural person; (ii) provides bona fide services to the voting power of the shares entitled to voteCompany; and (iii) provides services that are not in connection with the election of directorsoffer or sale of the CorporationCompany's securities in a capital-raising transaction and do not promote or maintain a market for the Company's securities. (l)“Covered Employee” means an Employee who is or could be a “covered employee” within the meaning of Section 162(m) of the Code. (m)“Director” or “Non-Employee Director” means a member of the Board who is not an Employee. (n)“Disability,” “Disabled,” or any variant thereof, means a “disability” within the meaning of Section 22(e)(3) of the Code unless a different definition is provided in the Award Notice. (o)“Effective Date” has the meaning ascribed to it in Section 1.2 of this Plan. (p)“Employee” means any person employed by the Company on a full or part-time basis.
(q)“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, including the regulations thereunder and any successor provisions and regulations thereto. (r)“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including the rules thereunder and any successor provisions and the rules thereto. (s)“Fair Market Value” means the closing sale price of one share of Stock as reported on the NYSE (or other securities exchange or automated quotation system on which the shares of Stock are then listed, quoted, or traded) on the date such value is determined or, if Stock is not traded on such date, on the first immediately preceding business day on which Stock was so traded. (t)“Family Member” means a Participant’s spouse and any parent, stepparent, grandparent, child, stepchild, or grandchild, including adoptive relationships or a trust or any other entity in which these persons (or the Participant) have more than 50% of the beneficial interest. (u)“Freestanding SARs” has the meaning stated in Section 9.1 of this Plan. (v)“GAAP” has the meaning stated in Section 2.1(aa) of this Plan. (w)“NYSE” means the New York Stock Exchange. (x)“Participant” means an Employee, Director, or Consultant to whom an Award has been granted under the Plan. (y)“Parties” has the meaning stated in Section 16.15 of this Plan. (z)“Performance Awards” means an Award granted pursuant to Article 7 of this Plan that is intended to satisfy the requirements of the “Performance Based Compensation” paid to Covered Employees. (aa) “Performance Based Compensation” means compensation provided by an Award made under this Plan that satisfies the exceptions described in Treas. Reg. § 1.162-27(e), for performance based compensation under Section 162(m) of the Code (as defined below) and the regulations thereunder, without regard to whether such compensation is deductible to the Company. (bb) “Performance Criteria” means the one or more criteria that the Committee selects to establish the Performance Goal(s) for a Participant for a Performance Period. The Performance Criteria that will be used to establish such Performance Goal(s) for a Performance Award shall be expressed in terms of the attainment of specified levels of one or any variation or combination of the following and, are limited to the following: revenues (including, without limitation, measures such as revenue per mile (loaded or total) or revenue per tractor), net revenues, fuel surcharges, accounts receivable collection or days sales outstanding, cost reductions and savings (or limits on cost increases), safety and claims (including, without limitation, measures such as accidents per million miles and number of significant accidents), operating income, adjusted operating income, operating ratio, adjusted operating ratio, income before taxes, net income, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted net income, earnings per share, adjusted earnings per share, stock price, working capital measures, return on assets, return on revenues, debt-to-equity or debt-to-capitalization (in each case with or without lease adjustment), productivity and efficiency measures (including, without limitation, measures such as driver turnover, trailer to tractor ratio, and tractor to non-driver ratio), cash position, return on stockholders’ equity, return on invested capital, cash flow measures (including, without limitation, free cash flow), market share, stockholder return, economic value added, or completion of acquisitions (either with or without specified size). The Performance Criteria that will be used to establish Performance Goals with respect to any Award other than a Performance Award that is subject to Article 7 of the Plan will include the above listed Performance Criteria and such other criteria as may be set forth by the Committee in the applicable Award Notice. Financial Performance Criteria may, but need not, be calculated in accordance with generally accepted accounting principles (“GAAP”) or any successor method to GAAP, including International Financial Reporting Standards. The Committee shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for a particular Performance Period for a particular Participant. Such Performance Criteria must be established not later than 90 days after the commencement of the Performance Period to which the Performance Criteria is related. In addition, with respect to any Award other than a Performance Award that is subject to Article 7 of the Plan, the Committee may establish, as additional Performance Criteria, the attainment by a Participant of one or more personal objectives or goals that the Committee deems appropriate, including, but not limited to, implementation of Company policies, negotiation of significant corporate transactions, development of long-term business goals or strategic plans for the Company, or the exercise of specific areas of managerial responsibility. Any of the Performance Criteria may be measured either in absolute terms or may be compared to any incremental increase or compared to the results of a peer group, indices, or other basket of companies and may include comparisons with past performance of the Company (including one or more divisions thereof, if any) and/or the current or past performance of other companies.
(cc) “Performance Formula” means, for a Performance Period, the one or more objective formulas (expressed as a percentage or otherwise) applied against the relevant Performance Goal(s) to determine whether all, some portion but less than all, or none of the Award has been earned for the Performance Period. For this purpose, the Performance Formula will be considered to be objective only if a third party having knowledge of the relevant performance results could
calculate the amount to be paid pursuant to the Award. The Performance Formula must preclude discretion to increase the amount of compensation payable that would otherwise be due upon the attainment of any Performance Goal. (dd) “Performance Goals” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, plant or an individual. The Performance Goals may be stated in terms of absolute levels and/or relative levels or as compared to results of one or more peer group companies or indices, and may include comparisons with past performance of the Company (including one or more divisions thereof if any ) and/or the current or past performance of other companies. (ee) “Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of, an Award, including a Performance Award. (ff) “Performance Unit” means an Award granted to a Participant pursuant to Article 12 of the Plan. A Performance Unit Award grants the Participant the right to receive Stock, a cash payment, or a combination of Stock and cash, if the Participant achieves the Performance Goals set by the Committee during a Performance Period specified by the Committee. (gg) “Plan” has the meaning stated in Section 1.1. (hh) “Predecessor Plan(s)” means the 2007 Plan and the 2014 Plan as in effect prior to this Second Amendment and Restatement, or either of them. (ii) “Restricted Stock Unit” means an Award granted to a Participant pursuant to Article 11 of the Plan. The Award of a Restricted Stock Unit grants the Participant the right to receive shares of Stock in the future. Stock will not be issued pursuant to a Restricted Stock Unit Award until the restrictions specified by the Committee lapse or if the Committee otherwise determines in its discretion that such Stock should not be issued. (jj) “Section 162(m) of the Code” means that section of the Code as in effect immediately prior to the effective date of the Tax Cuts and Jobs Act (Pub.L. 115-97) (2017). (kk) “Securities Act” means the Securities Act of 1933, as amended from time to time, including the rules thereunder and any successor provisions and the rules thereto. (ll) “Separation from Service” is a term that applies only in the context of an Award that the Company concludes is subject to Section 409A of the Code. In that limited context, the term “Separation from Service” means either: (i) the termination of a Participant’s employment with the Company and all Subsidiaries due to death, retirement, or other reasons; or (ii) a permanent reduction in the level of bona fide services the Participant provides to the Company and all Subsidiaries to an amount that is less than 50% of the average level of bona fide services the Participant provided to the Company and all Subsidiaries in the immediately preceding 36 months, with the level of bona fide service calculated in accordance with Treasury Regulation Section 1.409A-1(h)(1)(ii). Solely for purposes of determining whether a Participant has a “Separation from Service,” a Participant’s employment relationship is treated as continuing while the Participant is on military leave, medical or sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six months, or if longer, so long as the Participant’s right to reemployment with the Company or a Subsidiary is provided either by statute or contract). If the Participant’s period of leave exceeds six months and the Participant’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six-month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with Section 409A of the Code. In the case of a Director, Separation from Service means that notwithstandingthe person has ceased to be a member of the Board. Whether a Consultant has incurred a Separation from Service will be determined in accordance with Treasury Regulation Section 1.409A-1(h). (mm) “Share Reserve” has the meaning stated in Section 6.1(a) of this Plan. (nn) “Special Terms” has the meaning stated in Section 5.2(a) of this Plan. (oo) “Specified Employee” means a “specified employee” within the meaning of Section 409A of the Code. (pp) “Stock” means the Company’s Class A Common Stock, par value $0.01 per share. (qq) “Stock Appreciation Right” or “SAR” means an Award granted to a Participant pursuant to Article 9 of the Plan. The Award of a SAR gives a Participant a right to receive, in cash or in shares Stock, value equal to (or
otherwise based on) the excess of: (i) the Fair Market Value of a specified number of shares of Stock at the time of exercise; over (ii) an exercise price established by the Committee. (rr) “Stock Award” means an Award granted to a Participant pursuant to Article 10. A Stock Award grants the Participant the right to receive Stock, subject to restrictions specified by the Committee. (ss) “Subsidiary” means a corporation or other business entity in which the Company directly or indirectly has an ownership interest of 20% or more, provided with respect to incentive stock options, Subsidiary means “subsidiary corporation” as defined in Section 424(f) of the Code, and provided, further, with respect to Awards that are subject to Section 409A of the Code, Subsidiary shall have the meaning ascribed to it in Treasury Regulation Section 1.409A-1(h)(3) (which generally requires 50% common ownership). (tt) “Tandem SARs” has the meaning stated in Section 9.1 of this Plan. (uu) “Terminated Shares” has the meaning stated in Section 6.1(c) of this Plan. (vv) “2007 Plan” has the meaning stated in Section 1.2 of this Plan. (ww) “2014 Plan” has the meaning stated in Section 1.2 of this Plan. Section 2.2 Other Defined Terms. Unless the context otherwise requires, all other capitalized terms shall have the meanings set forth in the other Articles and Sections of this Plan. Section 2.3 Construction. In any necessary construction of a provision of this Plan, the masculine gender may include the feminine, and the singular may include the plural, and vice versa. ARTICLE 3 ELIGIBILITY Section 3.1 In General. All Employees, Directors, and Consultants are eligible to participate in the Plan. The Committee may select, from time to time, from those Employees, Directors, and Consultants, the individuals (i.e., the Participants) to receive Awards. ARTICLE 4 PLAN ADMINISTRATION Section 4.1 Responsibility. The Committee shall have total and exclusive responsibility to control, operate, manage and administer the Plan in accordance with its terms. Section 4.2 Authority of the Committee. The Committee shall have all the authority that may be necessary or helpful to enable it to discharge its responsibilities with respect to the Plan. Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to: (a)determine eligibility for participation in the Plan; (b)select the Participants and determine the type of Awards to be made to Participants, the number of shares subject to Awards and the terms, conditions, restrictions, and limitations of the Awards, including, but not by way of limitation, restrictions on the transferability of Awards and conditions with respect to continued employment, Performance Criteria, confidentiality, and non-competition; (c)interpret the Plan; (d)construe any ambiguous provision, correct any fault, supply any omission and reconcile any inconsistency of the Plan; (e)issue administrative guidelines as an aid to administer the Plan and make changes in such guidelines as it from time to time deems proper (including, but not limited to, extending the ability to exercise options that otherwise would have expired during any relevant blackout period); (f)make regulations for carrying out the Plan and make changes in such regulations as it from time to time deems proper; (g)to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions, and limitations;
(h)promulgate rules and regulations regarding treatment of Awards of a Participant under the Plan in the event of such Participant’s death, Disability, retirement, termination from the Company, or breach of agreement by the Participant, or in the event of a Change in Control; (i)accelerate the vesting, exercise, or payment of an Award or the Performance Period of an Award when such action or actions would be in the best interest of the Company (including, but not limited to, situations where the Committee concludes that the amendment is appropriate despite the deduction limitations imposed by Section 162(m) of the Code); (j)grant Awards in replacement of Awards previously granted under this Plan or any other executive compensation plan of the Company; (k)establish and administer the Performance Goals and certify whether, and to what extent, they have been attained; (l)determine the terms and provisions of any agreements entered into hereunder; (m)take any and all other action it deems necessary or advisable for the proper operation or administration of the Plan; and (n)make all other determinations it deems necessary or advisable for the administration of the Plan, including factual determinations. The decisions of the Committee and its actions with respect to the Plan shall be final, binding, and conclusive upon all persons having or claiming to have any right or interest in or under the Plan. Section 4.3 Option and SAR Repricing. Except for adjustments pursuant to Section 6.2 of the Plan, the Committee shall not reprice any stock options and/or SARs unless such action is approved by the Company’s stockholders. For purposes of the Plan, the term “reprice” shall mean the reduction, directly or indirectly, in the per-share exercise price of an outstanding stock option(s) and/or SARs by amendment, cancellation, or substitution or any other action that would be treated as a repricing under GAAP or the NYSE (or other securities exchange or automated quotation system on which the shares of Stock are then listed, quoted, or traded). Section 4.4 Section 162(m) of the Code. In this Plan, certain references are made to Section 162(m) of the Code. With regard to Performance Awards issued to Covered Employees that are intended to qualify as Performance Based Compensation this Plan and applicable Award Notice shall, for all purposes, be interpreted and construed with respect to such Awards in the manner that would result in such interpretation or construction satisfying the standards set forth in Section 162(m) of the Code and the regulations thereunder, without regard to whether such compensation is deductible by the Company. Section 4.5 Action by the Committee. Except as otherwise provided by Section 4.6, the Committee may act only by a majority of its members. Any determination of the Committee may be made, without a meeting, by a writing or writings signed by all of the members of the Committee. Section 4.6 Allocation and Delegation of Authority. Except to the extent prohibited by applicable law or the NYSE (or other securities exchange or quotation system on which the shares of Stock are then listed, quoted or traded), the Committee may allocate all or any portion of its responsibilities and powers under the Plan to any one or more of its members, the CEO, or other senior members of management as the Committee deems appropriate, and may delegate all or any part of its responsibilities and powers to any such person or persons to the extent such delegation is permitted by applicable law; provided, that any such allocation or delegation be in writing; and provided, further, that only the Committee, may select and grant Awards to Participants who are subject to Section 16 of the Exchange Act or who are Covered Employees. The Committee may revoke any such allocation or delegation at any time for any reason with or without prior notice. Section 4.7 Limitation of Liability. No member of the Committee nor any person to whom the Committee delegates authority pursuant to Section 4.6 of the Plan shall be liable for any action, omission or determination relating to the Plan, and the Company shall indemnify and hold harmless each member of the Committee and each other person to whom any duty or power relating to the administration or interpretation of the Plan has been delegated from and against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission or determination relating to the Plan unless, in either case, such action, omission or determination was taken or made by such Committee member or other person in bad faith and without reasonable belief that it was in the best interests of the Company.
ARTICLE 5 FORM OF AWARDS Section 5.1 In General. Each Award shall be evidenced by a written or electronic Award Notice and shall be subject to the terms, conditions, restrictions, and limitations of the Plan and such other terms and conditions prescribed by the Committee in the Award Notice. The terms of an Award Notice may vary depending on the type of Award and any combination of Awards may be granted at one time and on more than one occasion to the same Participant. Section 5.2 Foreign Jurisdictions. (a)Special Terms. In order to facilitate the making of any Award to Participants who are employed or retained by the Company outside the United States as Employees, Directors, or Consultants (or who are foreign nationals temporarily within the United States), the Committee may provide for such modifications and additional terms and conditions (“Special Terms”) in Awards as the Committee may consider necessary or appropriate to accommodate differences between United States federal or state laws, rules, and regulations and the local laws, policies, or customs that are applicable to such Participants or to facilitate administration of the Plan. The Special Terms may provide that the grant of an Award is subject to (i) applicable governmental or regulatory approval or other compliance with local laws, policies or customs that are applicable to such Participants and/or (ii) the execution by the Participant of a written instrument in the form specified by the Committee, and that in the event such conditions are not satisfied, the grant shall be void. The Special Terms may also provide that an Award shall become exercisable or redeemable, as the case may be, if an Employee’s employment or Director or Consultant’s relationship with the Company ends as a result of workforce reduction, realignment, or similar measure and the Committee may designate a person or persons to make such determination for a location. The Committee may adopt or approve sub-plans, appendices, or supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for purposes of implementing any Special Terms, without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such sub-plans, appendices or supplements to, or amendments, restatements, or alternative versions of, the Plan shall: (u) increase the numeric limitations contained in Sections 6.1, 6.3, or any similar numeric limitation set forth in the Plan; (v) result in a repricing as described in Section 4.3, (w) extend the exercise period for a stock option or SAR beyond 10 years from the date of grant; (x) expand the types of Awards available for grant under the Plan; (y) expand the class of individuals eligible to participate in the Plan; or (z) cause the Plan to cease to satisfy any applicable legal requirement. (b)Currency Effects. Unless otherwise specifically determined by the Committee, all Awards and payments pursuant to such Awards shall be determined in United States currency. The Committee shall determine, in its discretion, whether and to the extent any payments made pursuant to an Award shall be made in the Participant’s local currency, as opposed to United States dollars. In the event payments are made in the Participant’s local currency, the Committee may determine, in its discretion and without liability to any Participant, the method and rate of converting the payment into such local currency. ARTICLE 6 SHARES SUBJECT TO PLAN Section 6.1 Available Shares. (a)Share Reserve. The maximum aggregate number of shares of Stock which shall be reserved and available for the grant of Awards under the Plan as of the Effective Date is (i) the remaining 1,826,906, authorized but unissued Stock available for grant under the 2014 Plan, plus (ii) [ ] additional shares of Stock authorized for issuance under this Plan, as of the Effective Date, for a total of [ ] shares of Stock (the “Share Reserve”). The Share Reserve shall be subject to adjustment as provided in paragraph (c) below, and Section 6.2. (b)Source of Shares. Subject to Section 6.1(a), the shares of Stock available for issuance under the Plan may be authorized and unissued shares or shares purchased in open market or private transactions. For the purpose of computing the total number of shares of Stock granted under the Plan, where one or more types of Awards, both of which are payable in shares of Stock, are granted in tandem with each other so that the exercise of one type of Award with respect to a number of shares cancels an equal number of shares of the other Award, the number of shares granted under both Awards shall be deemed to be equivalent to the number of shares under one of the Awards. (c)Effect of Expiration; Cancellation. Any shares of Stock related to Awards made under the Plan that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of Stock, are settled in cash in lieu of Stock, or are exchanged with the Committee’s permission for Awards not involving Stock (collectively, “Terminated Shares”) shall again be available for grant under the Plan to the extent such Terminated Shares relate to Awards granted on or after the Effective Date. Notwithstanding anything contained in this Plan to the contrary, the following shares of Stock shall not become available again for issuance under the Plan: (i) shares tendered by Participants as full or partial payment to the Company upon exercise of Stock options granted under this Plan; (ii) shares reserved for issuance upon the grant of SARs, to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the SARs; (iii)
shares withheld by, or otherwise remitted to, the Company to satisfy a Participant’s tax withholding obligations upon the lapse of restrictions on restricted stock or the exercise of stock options or SARs granted under the Plan or upon any other payment or issuance of shares under the Plan; (iv) shares that were reserved for issuance under Predecessor Plans, other than the 2014 Plan, which this Plan amends and restates; and (v) shares that are related to Awards granted under a Predecessor Plan, other than the 2014 Plan, that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such shares, are settled in cash in lieu of Stock, or are exchanged with the Committee’s permission for Awards not involving Stock. (d)Directors’ Awards. If Awards of Stock are made to Directors, the Share Reserve shall be used for such Awards. Awards made to Directors may include automatic Awards to Directors made as part of the Directors’ annual fee compensation. Section 6.2 Adjustment Upon Certain Events. In the event that there is, with respect to the Company, a stock dividend or split, reorganization, recapitalization, merger, consolidation, spinoff, combination, or transaction or exchange of Stock or other corporate exchange, or any distribution to stockholders of Stock or other property or securities (other than regular cash dividends), or any transaction similar to the foregoing or other transaction that results in a change to the Company’s capital structure, then the Committee shall make substitutions and/or adjustments to the maximum number of shares available for issuance under Section 6.1, the maximum Award payable under Section 6.3 of this Plan and any other similar numeric limit set forth in the CertificatePlan, the number of Incorporationshares to be issued pursuant to outstanding Awards, the exercise prices or purchase prices of outstanding Awards and/or any other affected terms of an Award or the Plan as the Committee, in its sole discretion and without liability to any person, deems equitable or appropriate. Unless the Committee determines otherwise, in no event shall a Performance Award be adjusted in a manner that would cause such Award to fail to qualify as Performance Based Compensation. Any adjustments made pursuant to this Section 6.2 shall be made in a manner consistent with the requirements of Section 409A of the Code and, in the case of “incentive stock options,” in a manner consistent with Section 424(a) of the Code. Section 6.3 Maximum Award Payable in Shares. Subject to Section 6.2, and notwithstanding any provision contained in the Plan to the contrary, the maximum number of shares of Stock payable (or granted, if applicable) (a) to any one Participant, other than a Director or Consultant, with respect to all Awards granted to such Participant during any one calendar year, is 800,000 shares of Stock or the equivalent cash value, and (b) to any one Participant, in the case of a Director or Consultant, with respect to all Awards granted to such Participant during any one calendar year, is 100,000 shares of Stock or the equivalent cash value. ARTICLE 7 PERFORMANCE AWARDS Section 7.1 Purpose. The purpose of this Article 7 is to enable the Committee to qualify all or some of the Awards granted to Covered Employees pursuant to Articles 10, 11, 12 and 13 as Performance Based Compensation. If the Committee decides that a particular Award to a Covered Employee should qualify as Performance Based Compensation, the Committee will provide in the Award Notice or otherwise that the Award is intended to be a Performance Award. This Article 7 only applies to Performance Awards and if this Article 7 applies, its provisions shall control over any contrary provision contained in the Plan or any Award Notice. Section 7.2 Discretion of Committee with Respect to Performance Awards. With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of Performance Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s), and whether the Performance Goal(s) is (are) to apply to the overall Company or to the performance of a division, business unit, plan or individual, any one or more subunits thereof and the Performance Formula used to determine the amount payable pursuant to the Award. Depending on the Performance Criteria used, to establish the Performance Goals, the Performance Goals may be stated in terms of absolute levels or relative to another company or index or indices. Section 7.3 Additional Requirements that Apply to Performance Awards. (a)Establishment of Performance Goals. A Performance Award shall provide for payment only upon the attainment of one or more pre-established, objective Performance Goals. The Performance Goals and the process by which they are established shall satisfy all of the requirements of Section 162(m) of the Code. By way of illustration, but not limitation, the following requirements must be satisfied: (i) the Performance Goals shall be based solely on the Performance Criteria specifically identified in Article 2 of the Plan; (ii) the Performance Goals shall be considered to be pre-established only if the Performance Goals are established by the Committee in writing not later than 90 days after the commencement of the Performance Period for such Award; provided that (1) the outcome must be substantially uncertain at the time the Committee establishes the Performance Goals, and (2) in no event may the Committee establish the Performance Goals for any Performance Award after 25% of the Performance Period for such Award has elapsed; (iii) a Performance Goal will be considered to be objective only if a third party having knowledge of the relevant facts could determine whether the Performance Goal has been met; and (iv) the amount of compensation payable to a Covered Employee if the Performance Goal is attained is based on an objective Performance Formula.
(b)Performance Evaluation; Adjustment of Goals. At the time that a Performance Award is first issued, the Committee, in the Award document, or in another written document, may specify whether performance will be evaluated including or excluding the effect of any of the following events that occur during the Performance Period, as the Committee deems appropriate: (i) judgments entered or settlements reached in litigation or other regulatory proceedings; (ii) the write down or sale of assets; (iii) the impact of discontinued operations, any reorganization, liquidation, or restructuring; (iv) the impact of changes in tax laws, accounting principles, regulatory actions or other laws affecting reported results; (v) extraordinary, non- recurring, or other items that are not indicative of on-going operations; (vi) the impact of any mergers, acquisitions, spin-offs or other divestitures; and (vii) foreign exchange gains and losses. The inclusion or exclusion of these By-Lawsitems shall be addressed in the Award Notice in a manner that satisfies the requirements of Performance Based Compensation. In the Award Notice, the Committee also may include or exclude other items in the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants: (1) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development; or (2) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions. (c)Continued Employment. Unless otherwise provided in the relevant Award Notice, a Participant must be employed by the Company on the last day of a Performance Period to be eligible to receive payment for the Performance Award at the conclusion of a Performance Period. (d)Certification. Following the completion of a Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to also calculate and certify in writing the amount of the Performance Awards earned and payable for the period based upon the Performance Formula. Committee certification is not required for compensation that is attributable solely due to the increase in value of the Company’s Stock. (e)Negative Discretion. In determining the actual amount payable pursuant to a Performance Award for a Performance Period, the Committee may use its discretion to reduce (but not to increase) or eliminate the amount of the Performance Award earned under the Performance Formula for the Performance Period, if in its sole judgment, such reduction or elimination is appropriate. (f)Miscellaneous. The designation of a Covered Employee as a Participant for any Performance Period shall not in any manner entitle the Participant to receive a Performance Award for such Performance Period. Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such Covered Employee as a Participant for any subsequent Performance Period. (g)Timing of Award Payments. The Performance Awards granted for a particular Performance Period shall be paid to Participants promptly following the completion of the certifications required by Section 7.3(d), but in no event shall payment be made later than March 15th of the calendar year following the calendar year in which the Performance Period ended unless the deferral of an Award is permitted and made in accordance with Section 409A of the Code, including, without limitation, the deferrals contemplated by Treas. Reg. § 1.409A-2(a)(8). (h)Maximum Award Payable. In accordance with Section 6.3, but subject to adjustment as provided in Section 6.2: (i) the maximum Performance Award (other than a Cash Incentive Award) payable to any one Covered Employee during any one calendar year is 800,000 shares of Stock or the equivalent cash value; and (ii) the maximum Performance Award that is a Cash Incentive Award payable to any one Covered Employee during any one calendar year is $5,000,000. ARTICLE 8 STOCK OPTIONS Section 8.1 Grants. Awards may be granted as stock options. Stock options shall be awarded in such numbers and at such times as the Committee shall determine. These stock options may be “incentive stock options” within the meaning of Section 422 of the Code or non-qualified stock options, or a combination thereof. Section 8.2 Terms and Conditions of Stock Options. A stock option shall be exercisable in accordance with such terms and conditions and at such times and during such periods as may be determined by the Committee. The price at which Stock may be purchased upon exercise of a stock option shall be not less than 100% of the Fair Market Value of the Stock, on the date of grant. In addition, the term of a stock option may not exceed 10 years from the date of grant. Section 8.3 Exercise. Upon exercise, the exercise price of a stock option may be paid in full (a) in cash; (b) by tendering, by either actual delivery of shares or by attestation, shares of previously acquired Stock; (c) by any net issuance arrangement (including any broker assisted “cashless” exercise arrangement); (d) a combination of the foregoing; or (e) such other consideration as the Committee may deem appropriate. Notwithstanding the foregoing or the provision of any Award Notice, a Participant may not pay the exercise price of a stock option using shares of previously acquired Stock if, in the opinion of counsel to the Company there is a substantial likelihood that the use of such form of payment or the timing of such
form of payment would subject the Participant to a substantial risk of liability under Section 16 of the Exchange Act or there is a substantial likelihood that the use of such form of payment would result in adverse accounting treatment to the Company. Section 8.4 Restrictions Relating to Incentive Stock Options. The following additional rules shall apply to stock options that are intended to be “incentive stock options” within the meaning of Section 422 of the Code: (a) incentive stock options shall be granted only to Employees; (b) the aggregate Fair Market Value of the Stock (determined at the time the option was granted) with respect to which incentive stock options are exercisable for the first time by a Participant during any calendar year shall not exceed $100,000, or such other limit as may be required by Section 422 of the Code (to the extent that incentive stock options are first exercisable in excess of such limitation, the excess shall be considered non-qualified stock options); (c) an incentive stock option may be granted to any individual who, at the date of grant, owns stock possessing more than 10% of the total combined voting power of all classes of Stock of the Company only if such option is granted at a price that is not less than 110% of Fair Market Value on the date of grant and the option is exercisable for no more than five years from the date of grant; (d) no incentive stock option may be made pursuant to the Plan after the tenth anniversary of the Effective Date, unless the Company’s stockholders vote to approve an extension of the Plan; (e) except in the case of Disability, during a Participant’s lifetime, an incentive stock option may be exercised only by the Participant; and (f) the maximum aggregate number of shares of Stock which shall be available for grant under the Plan as incentive stock options is the same numeric limit set forth in Section 6.1. ARTICLE 9 STOCK APPRECIATION RIGHTS Section 9.1 Grants. Awards may be granted as SARs. SARs shall be awarded in such numbers and at such times as the Committee shall determine. An SAR entitles the Participant to receive a payment equal to (or otherwise based on) the excess of: (i) the Fair Market Value of a specified number of shares of Stock on the date of exercise; over (ii) a price established by the Committee in the Award Notice on the date of grant, which shall not be less than 100% of the Fair Market Value of the Stock. A SAR may be granted in tandem with all or a portion of a related stock option (“Tandem SARs”), or may be granted separately (“Freestanding SARs”). A Tandem SAR may be granted either on the date of grant of the related stock option or at any time thereafter during the term of the stock option. Section 9.2 Terms and Conditions of Tandem SARs. A Tandem SAR shall be exercisable to the extent, and only to the extent, that the related stock option is exercisable, and the “exercise price” of such a SAR shall be the exercise price of the related stock option; provided, however, that at no time shall a Tandem SAR be issued if the exercise price of its related stock option is less than 100% of the Fair Market Value of the Stock on the date of grant. If a related stock option is exercised as to some or all of the shares covered by the Award, the related Tandem SAR, if any, shall be canceled automatically to the extent of the number of shares covered by the stock option exercise. Upon exercise of a Tandem SAR as to some or all of the Stock covered by the Award, the related stock option shall be canceled automatically to the extent of the number of shares covered by such exercise. Moreover, all Tandem SARs shall expire not later than the expiration date of the related stock options. Section 9.3 Terms and Conditions of Freestanding SARs. Freestanding SARs shall be exercisable or automatically mature in accordance with such terms and conditions and at such times and during such periods as may be determined by the Committee. The exercise price of a Freestanding SAR shall be not less than 100% of the Fair Market Value of the Stock on the date of grant. Moreover, all Freestanding SARs shall expire not later than 10 years from the date of grant. Section 9.4 Deemed Exercise. The Committee may provide that a SAR shall be deemed to be exercised at the close of business on the scheduled expiration date of such SAR, if at such time the SAR by its terms remains exercisable and, if so exercised, would result in a payment to the holder of such SAR. Section 9.5 Payment. Unless otherwise provided in an Award Notice, an exercised SAR will be paid as provided in Article 14. ARTICLE 10 STOCK AWARDS Section 10.1 Grants. Awards may be granted as Stock Awards. Stock Awards shall be awarded in such numbers and at such times as the Committee shall determine. Stock Awards may be granted subject to transfer, performance and other restrictions imposed by the Committee. Section 10.2 Restrictions; Performance Restrictions. Stock Awards may be subject to restrictions on transferability and other restrictions (including, continued employment or service) as may be prescribed by the Committee. For Stock Awards subject to performance restrictions, the Committee shall establish the Performance Criteria, the length of the Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether
and to what degree such Performance Goals have been attained. The Performance Criteria applicable to any Stock Award shall be based on the Performance Criteria selected by the Committee; provided, however, that the Performance Criteria applicable to any Stock Award granted to a Covered Employee that is designated as a Performance Award pursuant to Article 7 shall be limited to the Performance Criteria listed in Article 2. The Performance Criteria applicable to any other Stock Award shall include the Performance Criteria listed in Article 2 and such other factors as may be determined by the Committee. Section 10.3 Rights as Stockholders. During the period in which any Stock Award (or portion of a Stock Award) is subject to a condition, including, but not limited to, vesting provisions, the Participant shall not have all or any of the rights of a stockholder with respect to the portion of the Stock Award that is subject to conditions, including, but not by way of limitation, the right to vote such shares or the right to receive dividends on such shares. Section 10.4 Evidence of Award. Any Stock Award granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates, with such restrictive legends and/or stop transfer instructions as the Committee deems appropriate. ARTICLE 11 RESTRICTED STOCK UNIT AWARDS Section 11.1 Grants. Awards may be granted as Restricted Stock Units. Restricted Stock Units may be awarded in such numbers and at such times as the Committee shall determine. An Award of a Restricted Stock Unit Award grants the Participant the right to receive shares of Stock in the future. Stock will not be issued pursuant to a Restricted Stock Unit Award until the restrictions specified by the Committee lapse or are satisfied. Section 11.2 Restrictions; Performance Restrictions. Restricted Stock Units shall be subject to restrictions on transferability and other restrictions (including, continued employment or service) as may be prescribed by the Committee. For Restricted Stock Units subject to performance restrictions, the Committee shall establish the Performance Criteria, the length of the Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained. The Performance Criteria applicable to any Restricted Stock Unit Award shall be based on the Performance Criteria selected by the Committee; provided, however, that the Performance Criteria applicable to any Restricted Stock Unit Award granted to a Covered Employee that is designated as a Performance Award pursuant to Article 7 shall be limited to the Performance Criteria listed in Article 2 of this Plan. The Performance Criteria applicable to any other Restricted Stock Unit Award shall include the Performance Criteria listed in Article 2 and such other factors as may be determined by the Committee. Section 11.3 Rights as Stockholders. Until the shares of Stock to be received upon the vesting of a Restricted Stock Unit Award are actually received by a Participant, the Participant shall have no rights as a stockholder with respect to such Stock. Section 11.4 Payment. Payment for any vested Restricted Stock Unit Award shall be paid in a single lump sum payment of Stock, as provided in Article 14, promptly following the date on which the Award vests, but in no event shall payment be made later than March 15th of the year following the year in which the Restricted Stock Unit Award vests, unless the deferral of an Award is permitted and made in accordance with Section 409A of the Code, including, without limitation, the deferrals contemplated by Treas. Reg. § 1.409A-2(a)(8). ARTICLE 12 PERFORMANCE UNITS Section 12.1 Grants. Awards may be granted as Performance Units. Performance Units shall be awarded in such numbers and at such times as the Committee shall determine. An Award of Performance Units grants the Participant the right to receive Stock, a cash payment, or a combination of Stock and cash, if the Participant achieves the Performance Goals specified by the Committee during a Performance Period specified by the Committee Section 12.2 Performance Criteria. Performance Units shall be subject to the attainment during a Performance Period of certain Performance Goals. The attainment of the Performance Goals for a Performance Period will determine the ultimate value of the Performance Unit Award. The length of the Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained shall be determined by the Committee. The Performance Criteria applicable to any Performance Unit shall be based on the Performance Criteria selected by the Committee; provided, however, that the Performance Criteria applicable to any Performance Unit granted to a Covered Employee that is designated as a Performance Award pursuant to Article 7 shall be limited to the Performance Criteria listed in Article 2. The Performance Criteria applicable to any other Performance Unit shall include the Performance Criteria listed in Article 2 and such other criteria or factors as may be determined by the Committee.
Section 12.3 Payment. Payment for any vested Performance Unit Award shall be paid as provided in Article 14, promptly following the date on which the Award vests, but in no event shall payment be made later than March 15th of the year following the year in which the Performance Unit Award was earned, unless the deferral of an Award is permitted and made in accordance with Section 409A of the Code, including, without limitation, the deferrals contemplated by Treas. Reg. § 1.409A-2(a)(8). ARTICLE 13 CASH INCENTIVE AWARDS Section 13.1 Grants. Awards may be granted as Cash Incentive Awards. Cash Incentive Awards shall be awarded in such amounts and at such times as the Committee shall determine. A Cash Incentive Award grants the Participant the right to receive a cash payment if the Participant achieves the Performance Goals specified by the Committee during a Performance Period specified by the Committee. Section 13.2 Performance Criteria. Cash Incentive Awards shall be subject to the attainment during a Performance Period of certain Performance Goals. The attainment of the Performance Goals for a Performance Period will determine the ultimate value of the Cash Incentive Award. The length of the Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained shall be determined by the Committee. The Performance Criteria applicable to any Cash Incentive Award shall be based on the Performance Criteria selected by the Committee; provided, however, that the Performance Criteria applicable to any Cash Incentive Award granted to a Covered Employee that is designated as a Performance Award pursuant to Article 7 shall be limited to the Performance Criteria listed in Article 2. The Performance Criteria applicable to any other Cash Incentive Award shall include the Performance Criteria listed in Article 2 and such other criteria or factors as may be determined by the Committee. Section 13.3 Maximum Cash Incentive Awards. The maximum Cash Incentive Award payable to any one Participant during any one calendar year is $5,000,000. Section 13.4 Payment. Payment for any vested Cash Incentive Award shall be made promptly following the date on which the Award vests, but in no event shall payment be made later than March 15th of the year following the year in which the Cash Incentive Award was earned, unless the deferral of an Award is permitted and made in accordance with Section 409A of the Code, including, without limitation, the deferrals contemplated by Treas. Reg. § 1.409A-2(a)(8). ARTICLE 14 PAYMENT; WITHHOLDING Section 14.1 Payment. Absent a Plan or Award Notice provision to the contrary, payment of Awards may, at the discretion of the Committee, be made in cash, Stock, a combination of cash and Stock, or any other form of property as the Committee shall determine. In addition, payment of Awards may include such terms, conditions, restrictions, and/or limitations, if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture provisions; provided, however, such terms, conditions, restrictions, and/or limitations are not inconsistent with the Plan. Section 14.2 Withholding Taxes. The Company shall deduct from any payment under the Plan, regardless of the form of such payment, the minimum amount necessary to satisfy of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the Participant to pay to it the amount of such tax prior to and as a condition of the making of such payment. To the extent permitted by applicable tax, securities, and other laws, the Committee may allow a Participant to satisfy a tax withholding requirement by withholding from any payment of Stock due as a result of such Award, or by permitting the Participant to deliver to the Company previously acquired, shares of Stock having a Fair Market Value equal to the minimum amount of such required withholding obligation. Notwithstanding the foregoing or the provision of any Award Notice, a Participant may not pay the amount of taxes required by law to be withheld using shares of Stock if, in the opinion of counsel to the Company there is a substantial likelihood that the use of such form of payment or the timing of such form of payment would subject the Participant to a substantial risk of liability under Section 16 of the Exchange Act, or there is a substantial likelihood that the use of such form of payment would result in adverse accounting treatment to the Company. ARTICLE 15 DIVIDEND AND DIVIDEND EQUIVALENTS In the Award Notice for any Award payable or granted in the form of Stock, the Committee may include as part of such Award the right to receive dividends or dividend equivalents, subject to such terms, conditions, restrictions, and/or limitations, if any, as the Committee may establish. Dividends and dividend equivalents shall be payable in accordance with
the related Award Notice, which shall comply with the requirements of Section 409A or an exception thereto. With respect to any Award that vests based on the achievement of Performance Goals, in no event may a dividend or dividend equivalent vest or be paid prior to the vesting of the corresponding Award and shall only be paid to the Participant if and to the extent that the Performance Goals related to the corresponding Award are satisfied. ARTICLE 16 MISCELLANEOUS Section 16.1 Nonassignability. Except as otherwise provided in an Award Notice, no Awards or any other payment under the Plan shall be subject in any manner to alienation, anticipation, sale, transfer, assignment, or pledge (except by will or the laws of descent and distribution or pursuant to a domestic relations order in favor of a spouse that would otherwise qualify as a qualified domestic relations order as defined in the Code or Title I of ERISA, but for the fact that the order pertains to an Award), nor shall any Award be payable to or exercisable by anyone other than the Participant to whom it was granted. The Committee shall have the authority to adopt a policy that is applicable to existing Awards, new Awards, or both, which permits a Participant to transfer Awards during his or her lifetime to any Family Member. If an Award is transferred as permitted by such policy, such transferred Award may not be subsequently transferred by the transferee (other than another transfer meeting the conditions set forth in the policy) except by will or the laws of descent and distribution. A transferred Award shall continue to be governed by and subject to the terms and limitations of the Plan and relevant Award Notice, and the transferee shall be entitled to the same rights as the Participant, as if the transfer had not taken place. Notwithstanding the foregoing, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death or Disability. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Notice applicable to the Participant, except to the extent the Plan and Award Notice otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the Participant’s spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is provided to the Company. Section 16.2 Regulatory Approvals and Listings. Notwithstanding anything contained in this Plan to the contrary, the Company shall have no obligation to issue or deliver certificates of Stock evidencing Awards prior to (a) obtaining any required approval from any governmental agency which the Company shall, in its sole discretion, determine to be necessary or advisable, (b) the admission of such shares to listing on the stock exchange or quotation system on which the Stock may be listed, and (c) the completion of any registration or other qualification of such shares under any state or federal law or ruling of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable. Section 16.3 No Right to Continued Employment, Service or Grants. Participation in the Plan shall not give any Participant the right to remain in the employ or other service of the Company. The Company reserves the right to terminate the employment or other service of a Participant at any time. Further, the adoption of this Plan shall not be deemed to give any Employee, Director, Consultant or any other individual any right to be selected as a Participant or to be granted an Award. In addition, no Employee, Director, Consultant or any other individual having been selected for an Award, shall have at any time the right to receive any additional Awards. Section 16.4 Expiration Date; Amendment; Termination. (a)Plan Termination. The Plan shall terminate and expire on the tenth anniversary of the Effective Date and no Awards may be granted after the tenth anniversary of the Effective Date; provided, however, the Committee may suspend or terminate the Plan at any time for any reason with or without prior notice. (b)Plan Amendment. The Committee may, from time to time for any reason and with or without prior notice, amend the Plan in any manner, provided, however, that without stockholder approval no such amendment shall: (i) reduce the purchase price or exercise price of any outstanding option or SAR or take any action that would result in a repricing as described in Section 4.3; (ii) increase the numeric limits expressed in Sections 6.1, 6.3 or any similar numeric limit in the Plan; (iii) grant options or SARs with an exercise price that is below 100% of the Fair Market Value of one share of Stock on the date of grant; (iv) extend the term of any option or SAR beyond 10 years from the date of grant; (v) expand the types of Awards available for grant under the Plan; or (vi) expand the class of individuals eligible to participate in the Plan. Except as other provided in the Plan, no amendment, modification or termination shall in any manner adversely affect any Award previously granted without the consent of the Participant. Such consent is not required if the change (x) is necessary or appropriate to conform the Award to, or otherwise satisfy legal requirements (including, without limitation, the provisions of any stock exchange or quotation system on which the Stock may be listed and Sections 162(m) or 409A of the Code); (y) does not adversely affect in any material way the rights of the Participant; or (z) is made pursuant to an adjustment as provided in Section 6.2. The Committee shall not take any other action that would cause a Performance Award to fail to satisfy the
requirements of Section 162(m) of the Code unless the Committee concludes that the deduction limitations will not become applicable or that the amendment is appropriate despite the deduction limitation imposed by Section 162(m) of the Code. Section 16.5 Effect of Change in Control. No Award granted under this Plan shall become immediately exercisable or fully vested solely due to the occurrence of a Change in Control; provided that following a Change in Control an Award may become exercisable and fully vested if the Award Notice so provides and the Participant is terminated. Nothing in this Section 16.5 or any other provision of this Article IX,Plan is intended to provide any Participant with any right to consent to or object to any transaction that might result in a Change in Control and each provision of this Plan shall be interpreted in a manner consistent with this intent. Similarly, nothing in this Section 1), Article III16.5 or any other provision of this Plan is intended to provide any Participant with any right to consent to or object to any action taken by the Board pursuant to this Section 1(d), Article III 16.5 Section 6,16.6 Governing Law. The Plan shall be governed by and construed in accordance with the last sentencelaws of Article III the State of Delaware, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions. Section 12, Article III 16.7 No Right, Title, or Interest in Company Assets. No Participant shall have any rights as a stockholder as a result of participation in the Plan, until the date of issuance of a stock certificate in his or her name. To the extent any person acquires a right to receive payments from the Company under the Plan, such rights shall be no greater than the rights of an unsecured creditor of the Company and the Participant shall not have any rights in or against any specific assets of the Company. Section 13, Article III 16.8 No Guarantee of Tax Consequences. No person connected with the Plan in any capacity, including, but not limited to, the Company and its directors, officers, agents, and employees, makes any representation, commitment, or guaranty that any tax treatment, including, but not limited to, federal, state, and local income, estate, and gift tax treatment, will be applicable with respect to the tax treatment of any Award, any amounts deferred under the Plan, or paid to or for the benefit of a Participant under the Plan, or that such tax treatment will apply to or be available to a Participant on account of participation in the Plan. Section 14, Article IV 16.9 Successors. All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, reincorporation, or otherwise, of all or substantially all of the business and/or assets of the Company. Section 1, Article IV16.10 Code Section 4409A. Some of the Awards that may be granted pursuant to the Plan (including, but not necessarily limited to, Restricted Stock Unit Awards, Performance Unit Awards, and Cash Incentive Awards) may be considered to be “non-qualified deferred compensation” subject to the requirements of Section 409A of the Code. If an Award is subject to the requirements of Section 409A of the Code, the Company intends (but cannot and does not guarantee) that the Award Notice and this sentence can only be amended, altered or repealedPlan comply fully with the affirmative voteand meet all of the holdersrequirements of Section 409A of the Code or an exception thereto and the Award Notice shall include such provisions, in addition to the provisions of this Plan, as may be necessary to assure compliance with Section 409A of the Code or an exception thereto. If, at the time of a majorityParticipant’s Separation from Service, the Company has any Stock which is publicly traded on an established securities market or otherwise, and if the Participant is considered to be a Specified Employee, to the extent any payment for any Award is subject to the requirements of Class A Common Stock excluding Permitted HoldersSection 409A of the Code and is payable upon the Participant’s Separation from Service, such payment shall not commence prior to the first business day following the date which is six months after the Participant’s Separation from Service (or the date of the Participant’s death if earlier than the end of the six month period). Any amounts that would have been distributed during such six month period will be distributed on the day following the expiration of the six month period. Under no circumstances may the time or Affiliated Personsschedule of any payment for any Award that is subject to the requirements of Section 409A of the Code be accelerated or subject to further deferral except as otherwise permitted or required by Section 409A of the Code. If the Company fails to make any payment pursuant to the payment provisions applicable to an Award that is subject to Section 409A of the Code, either intentionally or unintentionally, within the time period specified in such provisions, but the payment is made within the same calendar year, such payment will be treated as made within the specified time period. In addition, in the event of a dispute with respect to any payment, such payment may be delayed in accordance with Section 409A of the Code. Section 16.11 Plan Not Exclusive. This Plan is not intended to be the exclusive means by which the Company may issue options, warrants, or other rights to acquire shares of Stock. Section 16.12 Unfunded Plan. This Plan is intended to be an unfunded plan for incentive compensation. Although bookkeeping accounts may be established with respect to Participants under this Plan, any such accounts shall be used merely as a bookkeeping convenience, including bookkeeping accounts established by a third party administrator retained by the Company to administer the Plan. The Company shall not be required to segregate any assets for purposes of this Plan or Awards made hereunder, nor shall the Company, the Board or the Committee be deemed to be a trustee of any benefit to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Notice, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on
any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan. Section 2. Entire16.13 Clawback of Payments. In an Award Notice, the Compensation Committee may include provisions calling for the recapture or clawback of all or any portion of an Award to the extent necessary to comply with Company policy or applicable law in effect on the date of the award notice, including, but not limited to the final rules issued by the SEC and the NYSE pursuant to Section 954 of the Dodd-Frank Act. All Awards are subject to mandatory repayment if the Participant becomes subject to any clawback or recoupment provision under applicable law or Company policy. Section 16.14 Vesting of Awards; Termination of Award. (a)Minimum Vesting. The minimum vesting period for all Awards to the Company’s executive officers and employees shall be one year. In no event, will more than five percent of all Awards made to Participants be fully vested in less than one year. Awards made to Non-Employee Directors in lieu of cash for current Board fee compensation shall be fully vested on the date of grant. (b)Vesting Schedule. Except as otherwise provided in this Plan or any Award Notice, if a Participant has been granted an Award and the Award is subject to a vesting schedule, and the Participant dies or becomes Disabled, the Participant’s Award shall become fully vested and non-forfeitable. (c)Termination of Award. Except as provided in Article 8 of the Plan and in this Section 16.14(c), or as otherwise provided by this Plan, or any Award Notice, any Award made pursuant to this Plan shall immediately terminate upon a Participant's termination of employment by, or association with, the Company, unless such termination occurs by reason of the Participant’s Disability or death, if termination occurs due to Disability, the Participant or the Participant’s guardian as conservator may exercise any Award within one (1) year after the Participant’s Separation from Service. If a Participant dies while employed by, or associated with, the Company, the Participant's personal representative, or other person who acquires the right to exercise such Award by bequest, inheritance, or by reason of the death of the Participant, may, subject to Article 8 of the Plan or any contrary provision of the Award Notice, exercise the Award in full within one (1) year after the date of the Participant's death; provided that if such exercise period would disqualify a stock option as an incentive stock option under Section 422 of the Code, the stock option shall be treated as an non-qualified stock option. Section 16.15 Arbitration of Disputes. Award Notices may provide that any disputes between or among the Company (including its subsidiaries, affiliates, or successors) and any Participant with respect to the terms of the Plan and any Award Notice shall be subject to arbitration. Section 16.16 Application of Funds. The proceeds received by the Company from the sale of shares of Stock pursuant to the exercise of Stock Awards may be used for general corporate purposes.
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC. ATTN: PROXY DEPT.20002 NORTH 19TH AVENUE PHOENIX, AZ 85027 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. 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 Knight-Swift Transportation Holdings Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Knight-Swift Transportation Holdings Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E95514-P33322 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC. For Withhold For All All All Except To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors. As used recommends a vote FOR Proposals 1 through 5 and AGAINST Proposal 6. Proposal No. 1: Elect three Class III directors, each such director to serve a term of three years. NOMINEES: 1. David Jackson 2. Kevin Knight 3. Roberta Roberts Shank For Against Abstain Proposal No. 2: Conduct an advisory, non-binding vote to approve executive compensation Proposal No. 3: Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for fiscal year 2020. Proposal No. 4: Vote on amendments to the Certificate of Incorporation to declassify the Board. Proposal No. 5: Vote on the Second Amended and Restated 2014 Omnibus Plan. Proposal No. 6: Vote on a stockholder proposal to allow certain stockholder actions by written consent. Proposal No. 7: Transact any other business that may properly come before the meeting. For address changes and/or comments, please check this box and write them on the back where indicated. Other Action: In their discretion, the proxies are also authorized to vote upon such other matters as may properly come before the annual meeting or any adjournments thereof.THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. Your signature below should conform to the name in this Article IX and in these By-Laws generally, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies. shares are held. When shares are held by joint tenants, both must sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date As a Knight-Swift Transportation Holdings Inc. stockholder, you can view the stockholder account on a secured Internet website. By accessing EQ Shareowner Online at C-33www.shareowneronline.com
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
ATTN: PROXY DEPT.
20002 NORTH 19TH AVENUE
PHOENIX, AZ 85027
| | VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. 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 Knight-Swift Transportation Holdings Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by Knight-Swift Transportation Holdings Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| E41849-P07012
| KEEP THIS PORTION FOR YOUR RECORDS | | | | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | KNIGHT- SWIFT TRANSPORTATION HOLDINGS INC. | | | | | | | | The Board of Directors recommends a vote FOR Proposals 1 through 6. | For
All
| Withhold
All
| For All
Except
| | To withhold authority to vote for any individual Class I Nominee(s), mark “For All Except” and write the number(s) of the Class I Nominee(s) on the line below.
| | | | | | Proposal No. 1:
| Election of Class I Directors, each director to serve a term of three years.
NOMINEES:
01 – Gary Knight
02 – Kathryn Munro
| ☐ | ☐ | ☐ | | | | | | | | | | | | For | Against | Abstain | | | | For | Against | Abstain | | | | | | | | | | | | Proposal No. 2: Advisory, non-binding vote to approve executive compensation.
| ☐ | ☐ | ☐ | | Proposal No. 5, you can view the account profile, stock detail, and historical stock price information. You can also change your address. In addition, you can use this site to consent to future access to Knight-Swift's annual reports and proxy materials electronically via the Internet. Knight-Swift also provides access to stockholder information, including its annual report and proxy statement, through its website at www.knight-swift.com. : 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.
| ☐ | ☐ | ☐ | | Proposal No. 3: Amendments to our second amended and restated certificate of incorporation (the "Certificate of Incorporation") to eliminate (i) 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 Transportation Company and current director of the Company, and his family and their respective affiliates (collectively, the "Moyes Stockholders") before the 2017 Merger of Knight Transportation, Inc. and Swift Transportation Company, and (ii) the terms and provisions associated with the Class B common stock.
| ☐ | ☐ | ☐ | | | | | | | | | Proposal No. 6: Ratification of the appointment of Grant Thornton LLP as the Company's independent registered public accounting firm for fiscal year 2018.
| ☐ | ☐ | ☐ | | | | | | The Board of Directors recommends a vote AGAINST Proposal 7. | | | | | | | | | | | | | | Proposal No. 4: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.
| ☐ | ☐ | ☐ | | Proposal No. 7:Stockholder proposal regarding independent Board chairperson, if properly presented.
| ☐ | ☐ | ☐ | | | | | | | | | | | | | | | | | | | | | | For address changes and/or comments, please check this box and write them on the back where indicated. | | ☐ | | | | | | | | | | | | Other Action: In their discretion, the proxies are also authorized to vote upon such other matters as may properly come before the annual meeting or any adjournments thereof.
| | | | | | | | | | | | | | | | | | | | | | | | | | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. Your signature below should conform to the name in which the shares are held. When shares are held by joint tenants, both must sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | | | Signature (Joint Owners) | | Date | | | | | | | | | | | | | |
As a Knight-Swift Transportation Holdings Inc. stockholder, you can view the stockholder account on a secured Internet website. | | By accessing EQ Shareowner Online atwww.shareowneronline.com, you can view the account profile, stock detail, and historical stock price information. You can also change your address.
| | In addition, you can use this site to consent to future access to Knight-Swift's annual reports and proxy materials electronically via the Internet. | | Knight-Swift also provides access to stockholder information, including its annual report and proxy statement, through its website at www.knight-swift.com.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Combined Document is available at www.proxyvote.com.
.Detach here from proxy card E95515-P33322 Knight-Swift Transportation Holdings Inc.20002 North 19th AvenuePhoenix, Arizona 85027THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORSFOR THE 2020 ANNUAL MEETING OF STOCKHOLDERSTO BE HELDTuesday, May 19, 2020, 8:30 A.M., Local Time By executing this Proxy, the stockholder constitutes and appoints the President and Chief Executive Officer, David Jackson, and the Chief Financial Officer and Treasurer, Adam Miller, and each of them, as proxies for the stockholder (or if only one proxy is present, that one shall have all power granted herein), with full power of substitution, who may, and by a majority of such proxies, represent the stockholder and vote all shares of common stock that the stockholder is entitled to vote at the Annual Meeting of Stockholders of Knight-Swift Transportation Holdings Inc. to be held on May 19, 2020, at 8:30 A.M., Local Time at 20002 North 19th Avenue, Phoenix, Arizona 85027, or at any adjournment thereof, on all matters described in the Notice and Proxy Statement for the
| Detach here from proxy card | E41850-P07012
|
Annual Meeting as set forth on the reverse side. The stockholder acknowledges receipt of the Notice and Proxy Statement for the 2020 Annual Meeting of Stockholders, grants authority to any of said proxies, or their substitutes, to act in the absence of others, with all the powers which the stockholder would possess if personally present at such meeting, and ratifies and confirms all that said proxies, or their substitutes, may lawfully do in the stockholder's name, place, and stead.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC., AND THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE CLASS III NOMINEES NAMED IN PROPOSAL NO. 1, EACH CLASS III DIRECTOR TO SERVE A TERM OF THREE YEARS, "FOR" PROPOSALS NO. 2 THROUGH 5, AND "AGAINST" PROPOSAL 6. IF NO CHOICE IS SPECIFIED BY YOU, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE CLASS III NOMINEES NAMED IN PROPOSAL NO. 1, EACH CLASS III DIRECTOR TO SERVE A TERM OF THREE YEARS, "FOR" PROPOSALS NO. 2 THROUGH 5, AND "AGAINST" PROPOSAL 6. THE PROXIES, IN THEIR DISCRETION, ARE ALSO AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.ADDRESS CHANGES/COMMENTSSEE REVERSE SIDE TO BE SIGNED ON THE REVERSE SIDESEE REVERSE SIDE
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Knight-Swift Transportation Holdings Inc.
20002 North 19th Avenue
Phoenix, Arizona 85027
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
Thursday, May 31, 2018, 8:30 A.M., Local Time
By executing this Proxy, the stockholder constitutes and appoints the President and Chief Executive Officer, David Jackson, and the Chief Financial Officer and Treasurer, Adam Miller, and each of them, as proxies for the stockholder (or if only one proxy is present, that one shall have all power granted herein), with full power of substitution, who may, and by a majority of such proxies, represent the stockholder and vote all shares of Class A common stock that the stockholder is entitled to vote at the Annual Meeting of Stockholders of Knight-Swift Transportation Holdings Inc. to be held on May 31, 2018, at 8:30 A.M., Local Time at 20002 North 19th Avenue, Phoenix, Arizona 85027, or at any adjournment thereof, on all matters described in the Notice and Proxy Statement for the Annual Meeting as set forth on the reverse side.
The stockholder acknowledges receipt of the Notice and Proxy Statement for the 2018 Annual Meeting of Stockholders, grants authority to any of said proxies, or their substitutes, to act in the absence of others, with all the powers which the stockholder would possess if personally present at such meeting, and ratifies and confirms all that said proxies, or their substitutes, may lawfully do in the stockholder's name, place, and stead.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC., AND THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE CLASS I NOMINEES NAMED IN PROPOSAL NO. 1, EACH DIRECTOR TO SERVE A TERM OF THREE YEARS, "FOR" PROPOSALS NO. 2, 3, 4, 5, AND 6, AND "AGAINST" PROPOSAL NO. 7. IF NO CHOICE IS SPECIFIED BY YOU, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE CLASS I NOMINEES NAMED IN PROPOSAL NO. 1, EACH DIRECTOR TO SERVE A TERM OF THREE YEARS, "FOR" PROPOSALS NO. 2, 3, 4, 5, AND 6, AND "AGAINST" PROPOSAL NO. 7. THE PROXIES, IN THEIR DISCRETION, ARE ALSO AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
| | | | | | | | | | | | | | | ADDRESS CHANGES/COMMENTS | | | | | | | | | | | | | | | SEE
REVERSE
| | | | SEE
REVERSE
| | | SIDE | | TO BE SIGNED ON THE REVERSE SIDE | | SIDE | |
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