SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.      )

 

 

 

 

 

 

 

 

 

P.A.M. Transportation Services, Inc.

297 West Henri DeTontiDe Tonti Boulevard

Tontitown, Arkansas 72770

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Notice of Annual Meeting of Stockholders

To Be Held on May 28, 2009June 3, 2010

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To our Stockholders:

All stockholders of record as of the close of business on April 7, 200913, 2010, will be entitled to notice of and to vote at the meeting or any adjournment or postponement of the meeting.

April 20, 200929, 2010

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Proxy Statement

For the Annual Meeting of Stockholders

To Be Held on May 28, 2009June 3, 2010

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Table of Contents

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Annual Meeting of Stockholders

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS’ MEETING TO BE HELD ON MAY 28, 2009JUNE 3, 2010

Our combined Proxy Statement and 20082009 Annual Report to Stockholders, which includes our Annual Report on Form 10-K, are available at www.edocumentview.com/www.envisionreports.com/PTSI.

At our annual meeting, stockholders will act upon the matters outlined in the accompanying notice of the meeting, including the election of directors and ratification of appointment of our independent public accounting firm, and consideration of such other business as may properly come before the meeting.

Only stockholders of record at the close of business on the record date, April 7, 2009,13, 2010, are entitled to receive notice of the annual meeting and to vote their shares at the meeting. Holders of our common stock are entitled to one vote per share.

These terms describe how your shares are held. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are a “stockholder of record.” If your shares are held in the name of a broker, bank, trust or other nominee as a custodian, you are a “street name” holder.

All stockholders as of the record date, or their duly appointed proxies, may attend the meeting.  Stockholders who are “street name” holders will need to bring a copy of a brokerage statement reflecting their ownership as of the record date in order to attend the meeting.

A proxy is your legal designation of another person, the “proxy,” to vote on your behalf. By completing and returning the enclosed proxy card, you are giving the persons appointed as proxies by our Board of Directors (the “Board”) the authority to vote your shares as indicated on the proxy card.

The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of our common stock outstanding and entitled to vote on the record date will constitute a quorum, permitting business to be conducted at the meeting. As of the record date, 9,409,6079,414,607 shares of our common stock were outstanding and entitled to vote. Proxies that are received and marked as withholding authority, abstentions, and broker non-votes (where a bank, broker or nominee does not exercise discretionary authority to vote on a matter) will be included in the calculation of the number of shares considered to be represented at the meeting.

You may vote by mail or follow the alternative voting procedures described on the accompanying proxy card. If you complete, sign and return the proxy card, it will be voted as you direct. If no choice is specified on a signed proxy card, the persons named as proxies will vote (1) in favor of the election of all of the nominees for director and (2) in the discretion of the persons named as proxies as to all other matters that may be properly presented at the annual meeting.

If, as of the record date, you are a stockholder of record and you attend the meeting, you may vote in person at the meeting.  The authorized capital stock of PTSI consists of 40,000,000 shares of common stock, par value $0.01 per share and 10,000,000 shares of preferred stock, par value $0.01 per share.  As of the close of business on April 13, 2010, there were 9,414,607 shares eligible to vote.

Yes. Any proxy may be revoked by a stockholder at any time before it is exercised at the annual meeting by delivering to our Secretary a written notice of revocation or a duly executed proxy bearing a later date, or by voting in person at the meeting.

All costs of soliciting proxies will be paid by us. Our directors, officers, and other employees may, without compensation other than their regular compensation, solicit proxies by further mailings or personal conversation, or by telephone, facsimile or electronic means. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their out-of-pocket expenses for forwarding soliciting material to the beneficial owners of our common stock.

Our Board of Directors currently consists of nine directors. Members of our Board are elected annually to serve until the next annual meeting of stockholders or until their successors are elected and qualified. Our Board of Directors has nominated for re-election each of the nine current members of our Board. Information about these individuals, who have been nominated for re-election toThe biography of each of the nominees below contains information regarding the person’s service as director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Board is set forth below.to determine that the person should serve as a director.

Unless otherwise instructed, the persons named as proxies intend to vote all proxies received for the re-election of the nine director nominees. All of the nominees have indicated their willingness to continue to serve on the Board of Directors. If any nominee should become unwilling or unavailable to serve, our Board of Directors may select a substitute nominee, and in that event the proxies intend to vote all proxies for the person selected. If a substitute nominee is not selected, the proxies intend to vote for the election of the remaining nominees. Our Board of Directors has no reason to believe that any of the nominees will become unavailable.unavailable to serve.

Applicable NASDAQ listing standards require that a majority of our Board of Directors be independent. In March of 2009,Recently, our Board of Directors reviewed the independence of our directors and determined that five of our directors, Messrs. Conner, Davis, Ellis, Sullivan and Wilkins are independent as definedmeet the standards for independence required by applicable NASDAQ rules.listing standards. In making this determination, our Board of Directors has concluded that none of the independent directors has a relationship that, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

During 2008,2009, our Board of Directors held foursix meetings. During 2008,2009, each director attended at least 75%83% of the total number of meetings of our Board and its committees on which he then served.

Our Board of Directors has, and appoints members to, three standing committees: the Audit Committee, the Compensation and Stock Option Committee, and the Executive Committee. The membership of these committees, as of April 15, 2009,2010, was as follows:

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Each of the members of the Audit Committee and the Compensation and Stock Option Committee is an independent director as defined by applicable NASDAQ listing standards. Each of these two committees has a charter that has been approved by our Board of Directors and is available on our website, www.pamt.com.www.pamtransport.com.

If a member of a committee of our Board of Directors is absent from a meeting, our bylaws give Board committees authority to unanimously appoint another member of our Board of Directors to act at the meeting in place of the absent committee member. While the Compensation and Stock Option Committee could use this authority, it has no plans to do so. The Compensation and Stock Option Committee has the authority to retain compensation consultants but does not currently use compensation consultants. Compensation for directors is determined by our Board of Directors.

At least a majority of our independent directors participate in the initial consideration of director nominees. These directors are independent, as independence for nominating committee members is defined in the NASDAQ listing standards. After these independent directors discuss and evaluate potential nominees, they recommend director nominees to the full Board of Directors for selection.

Our Board of Directors will consider as potential nominees persons recommended by stockholders. Recommendations should be submitted to our Board of Directors in care of our Secretary, Larry J. Goddard, at our principal executive office, P.O. Box 188, Tontitown, Arkansas 72770. Each recommendation should include a personal biography of the suggested nominee, a description of the background or experience that qualifies the person for consideration, and a statement that the person has agreed to serve if nominated and elected.

Our Board of Directors has used an informal process to identify potential candidates for nomination as directors. Candidates for nomination have been recommended by an executive officer or director, and considered by our Board of Directors. Generally, candidates have been known to one or more of our Board members. Our Board of Directors has not adopted specific minimum qualifications that it believes must be met by a person it recommends for nomination as a director. The Board has determined that the Board as a whole must have the right diversity, mix of characteristics and skills for the optimal functioning of the Board in its oversight of the Company. In evaluating candidates for nomination, our Board of Directors will consider the factors it believes to be appropriate, which would generally include the candidate's independence, personalper sonal and professional integrity, business judgment, relevant experience and skills, including those related to transportation services, and potential to be an effective director in conjunction with the rest of our Board of Directors in collectively serving the long-term interests of our stockholders. Although our Board of Directors has the authority to retain a search firm to assist it in identifying director candidates, there has to date been no need to employ a search firm. Our Board of Directors does not evaluate potential nominees for director differently based on whether they are recommended to our Board of Directors by a stockholder.

Stockholders may communicate directly with our Board of Directors as a group by writing to our Board of Directors, care of the Secretary of PTSI, P.O. Box 188, Tontitown, Arkansas 72770. Our Secretary will review all of the correspondence and regularly forward to our Board of Directors a summary of the correspondence, and copies of all of the correspondence that, in his opinion, deals with the functions of our Board of Directors or any of its

committees or that our Secretary otherwise determines requires the attention of our Board of Directors. Directors may at any time review a log of all of the correspondence that is addressed to our Board of Directors, and request copies of any and all of the correspondence.

Our Board of Directors has a policy of encouraging our directors to attend the annual meetings of the stockholders. All of our directors attended last year's annual meeting.

We have adopted a written code of ethics that applies to all our directors, officers and employees, including our chief executive officerCEO and our chief financial and accounting officer. We have posted a copy of the code on our website, www.pamt.com.www.pamtransport.com. In addition, we intend to post on our website all disclosures that are required by law or NASDAQ listing standards concerning any amendments to, or waivers from, any provision of the code.

During 2008,2009, Messrs. Davis, Sullivan and Wilkins served as members of the Compensation and Stock Option Committee for all of the year.  No member of the Compensation and Stock Option Committee is, or was during or prior to 2008,2009, an officer or employee of PTSI or any of its subsidiaries.  None of our executive officers serves or served as a director or member of the Compensation Committeecompensation committee of another entity in a case where an executive officer of such other entity serves or served as a director or member of our Compensation and Stock Option Committee.

Each member of the Audit Committee is independent, as independence for audit committee members is defined in the NASDAQ listing standards and the rules of the SEC. The Audit Committee's primary purpose is to assist the Board of Directors in overseeing:

In carrying out its responsibilities, the Audit Committee supervises the relationship between us and our independent auditor, including having direct responsibility for the auditor's appointment, compensation and retention, reviewing the scope of its audit services, and approving audit and permissible non-audit services. The Audit Committee reviews and discusses the annual and quarterly financial statements, and reviews the activities of our internal audit function.

Management is responsible for the preparation, presentation and integrity of our financial statements and for the appropriateness of the accounting principles and reporting policies that are used. Management is also responsible for testing the system of internal controls and reporting to the Audit Committee on any significant deficiencies or material weaknesses that are found.

The Audit Committee discussed with PTSI's independent registered public accounting firm, Grant Thornton LLP (“Grant Thornton”), who is responsible for expressing an opinion on the conformity of our audited financial statements with generally accepted accounting principles, its judgments as to the quality and the acceptability of our financial reporting and such other matters as are required to be discussed with the Audit Committee under standards of the Public Company Accounting Oversight Board (United States), including the matters required to be discussed pursuant to Statement on Auditing Standards No. 61 (Communications with Audit Committees). The Audit Committee also reviewed with Grant Thornton management's assessment included in management's report on internal control over financial reporting, and Grant Thornton'sThornton 's opinion on the effectiveness of the company's internal control over financial reporting.reporting as of December 31, 2009.

The Audit Committee has discussed with Grant Thornton that firm's independence from management and us, and has received from Grant Thornton the written disclosures and letter required by the Independence Standards

Board Standard No. 1 (Independence Discussions with Audit Committees). The Audit Committee has considered the compatibility of the provision of non-audit services with maintaining Grant Thornton's independence.

In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 20082009, with both management and our independent registered public accounting firm. The Audit Committee's review included a discussion of the quality and integrity of the accounting principles, the reasonableness of significant estimates and judgments, and the clarity of disclosures in the financial statements.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 20082009, for filing with the SEC.

Audit Committee Members

Frank L. Conner

The Compensation and Stock Option Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management. Based on the review and discussion, the committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for filing with the SEC.

Compensation and Stock Option Committee Members

W. Scott Davis, Chairman

Daniel C. Sullivan

Charles F. Wilkins

Overview

Our primary goal for the compensation of our three executive officers Messrs. Weaver, Lawson and Goddard, is to create long-term value for our stockholders. Our compensation program is intended to attract, motivate, reward and retain the management talent required to achieve our corporate objectives and create long-term value for our stockholders, while at the same time making efficient use of our resources. The compensation of our executive officers is designed to reward financial and operating performance, to align their interests with those of our stockholders, and to encourage them to remain with us.

Elements of Compensation

We have three key elements of compensation: annual base salary, cash incentive compensation, and stock options. Annual base salary is intended to attract and retain talented executives, and reward them for annual achievement. Cash incentive compensation is intended to motivate our executive officers to achieve specified financial results or superior performance. Stock options are intended to align the interests of our executive officers with those of our stockholders by linking compensation to stock price appreciation. In addition, when the criteria for vesting of options includes achieving specified financial results, stock options also serve the purpose of motivating our executive officers to achieve those results.

Determining Compensation

Compensation for our executive officers is primarily based upon the judgment of the Compensation and Stock Option Committee of our Board of Directors. The committee considers competitive market compensation paid by other companies, including truckload dry van carriers and other trucking companies, but it does not attempt to maintain a specified target percentile within a peer group or otherwise rely on compensation paid by other companies to determine our executive compensation.

In determining compensation for our executive officers, the committee reviews and evaluates many factors, including:

The committee generally does not adhere to rigid formulas or react to short-term changes in business performance in determining the amount and mix of compensation elements. The committee strives to achieve an appropriate mix between annual base salary, cash incentive compensation and stock options to meet our objectives.

Employment Agreements Include Annual Base Compensation

We have a multi-year employment agreement with each of our executive officers. The current agreements wereOn June 1, 2006, we entered into agreements with Messrs. Goddard and Lawson.  On June 29, 2009, we entered into an agreement with our executive officers on July 26, 2006.CEO and President, Mr. Cushman. We believe that it is useful to have employment agreements because they set forth the terms under which the executive officers are employed, include annual base salary and severance arrangements, and provide us with one year of protection from competition by our executive officers following termination of their employment with us. The employment agreements also require our executive officers to provide us with three months advance notice if they wish to resign. The annual base compensation for our executive officers set forth in the employment agreements was determined by the CompensationCompensa tion and Stock Option Committee and recommended to, and approved by, our Board of Directors.

Cash Incentive Compensation

The committeeCompensation and Stock Option Committee did not establish a cash incentive compensation plan for our executive officers for 2008.2009. The Compensation and Stock Option Committeecommittee determined to evaluate whether to pay our executive officers a bonus for 2008,2009, and the amount of any bonus, after reviewing our business and financial performance for 2008.bonus. After reviewing our business and financial performance for 2008,2009, the committee determined not to pay a bonus related to performance to any of our executive officers for 2008. 2009. However, Mr. Cushman was paid a hiring bonus when he agreed to serve as President and CEO. This bonus is included in the Summary Compensation Table and is further explained in the accompanying footnote.

As of April 15, 2009,2010, the Compensation and Stock Option Committee had not established a cash incentive compensation plan for our executive officersMr. Goddard and Mr. Lawson for 20092010 and the committee intends to give the matter further

consideration at a later date.  Mr. Cushman is eligible to earn a bonus incentive award based on the Company’s audited results of operations for January 1, 2010, through December 31, 2010.  The bonus will be a percentage of Mr. Cushman’s annual salary based on the Company’s consolidated operating ratio for the 2010 calendar year determined according to the table provided in Exhibit A to the P.A.M. Transportation Services, Inc. Incentive Compensation Plan for Calendar year 2010.  In the event that a bonus is earned in accordance with this plan, 50% will be paid before March 31, 2011, 25% will be paid before March 31, 2012, and the remaining 25% will be paid prior to March 31, 2013.

Stock Options

In March of 2006, the Board of Directors adopted a new stock option plan, the 2006 Stock Option Plan. The plan provides for the issuance of stock options for up to 750,000 shares of our common stock, subject to adjustments. Our officers, directors, key employees and consultants are eligible to receive options under the plan. The plan was approved by our stockholders at their May 24, 2006 annual meeting. We did not issue any options to our executive officers or other employees under the plan during 2006, 2007, 2008 or 2008.2009.

Our most recent grant of stock options to our executive officers was on August 28, 2002. Those options were granted under our 1995 Stock Option Plan that expired in 2005. The options covered 120,000 shares of our common stock for Mr. Weaver, and 90,000 shares of our common stock for each of Mr. Lawson and Mr. Goddard. The options were scheduled to vest in installments. The first installment vested immediately on grant for 20% of the shares covered by each option. The remaining shares covered by the options were scheduled to vest in equal installments, on March 15 of each year, from March 15, 2003, through March 15, 2008, depending for each annual installment on whether the performance criteria for that installment was met. The primary performance criteria for each installment to vest has been whether our consolidated net income for the most recent year exceededexceed ed the consolidated net income for the immediately priorpreceding year by at least 5%. The exercise price for all of the shares was established at the market price of our stock on the date the options were granted, $23.22. The performance criteria for the 2006 installment of the options was met, and the options for those shares vested on March 15, 2007. The performance criteria for the 2007 installment was not met, so the final installment of the options, which could have vested for the executive officers on March 15, 2008, did not vest.

Other Compensation

We sponsor a retirement savings plan for all of our eligible employees, including our executive officers. The plan qualifies under section 401(k) of the Internal Revenue Code, as amended. This plan allows eligible employees to make tax deductible contributions to the plan. We make employer matching contributions to the plan for each eligible employee. The matching contributions are 50% of each participating employee's voluntary contribution, up to 3% of the participant's compensation. These matching contributions vest at the rate of 20% each year until fully vested after five years.

We offer health, vision and dental insurance to Messrs. Lawson and Goddard and pay the insurance premiums for them. While we make similar insurance available to Mr. Weaver and our other employees, we do not pay their insurance premiums.

We allow each of our executive officers to use a company owned automobile. With the exception of this perquisite, our policy is to provide minimal, if any, perquisites to our executive officers. This helps set an example for all employees that personal expenses are not payable from company funds and helps to control expenses.

Post-Employment Compensation

We do not provide a defined benefit pension plan or post retirement health insurance coverage for our executive officers or any of our other employees. We do not offer deferred compensation plans, and do not have agreements that provide compensation to our executive officers based upon the occurrence of a change in control of PTSI.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company's chief executive officer or certain of the company's other most highly compensated executive officers. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based” compensation (compensation paid only if the individual's or the company's performance meets pre-established objective goals based on performance criteria approved by the stockholders). We periodically review the potential consequences of Section 162(m) and may structure some or all of the compensation for our executive officers so that it will not be subject to the

deduction limitations of Section 162(m). None of the compensation paid to our executive officers for 20082009 was structured to be “qualifying performance-based” compensation. For 2008,2009, we were not precluded by Section 162(m) from deducting any compensation that we paid to any of our executive officers.

Share Ownership Guidelines

We do not have stock ownership requirements for our executive officers. However, each of our executive officers owns shares of our common stock, and options to acquire additional shares.

Overview of the Compensation Process

The elements of executive compensation are discussed at meetings of the Compensation and Stock Option Committee, with significant input from our Chairman of the Board and other directors. Annual base salary is generally determined for a multi-year period at the time that employment agreements are negotiated with our executive officers. Cash incentive compensation and other bonuses, and forms of stock-based compensation are discussed from time to time, but there is no set schedule for making determinations regarding these types of compensation, and the committee retains considerable flexibility in deciding when to address these matters. In making its compensation decisions, the committee will usually seek input from our PresidentCEO and Chief Executive OfficerPresident regarding elements of his compensation, and that of the other executive officers. However, the committeecomm ittee makes the final decision on executive officer compensation, or recommends compensation of our executive officer compensationofficers to our Board of Directors for approval. The committee is authorized to utilize compensation consultants, but does not presently confer with compensation consultants regarding executive compensation.

The following table provides information regarding the compensation earned by the named executive officers for the three years ended December 31, 2008.2009.

Employment Agreements

As discussed above, we have entered into employment agreements with each of our executive officers, Messrs. Weaver, Lawson and Goddard.officers. The initial term of our agreement with Mr. Weaver is fromCushman began on July 10, 2006 to July 10, 2009. We have an option to extend the agreement13, 2009, and extends for two additional years, one year at a time.36 months.  The agreement provides Mr. WeaverCushman with an annual base salary of $500,000$400,000.  In addition, he is entitled to a bonus of $55,000 to be used at his discretion toward expenses for eachhis relocation to Tontitown, Arkansas, and the sale of his home. In the first two years, andevent of $550,000an earlier separation from PTSI, Mr. Cushman will be obligated to repay the bonus. PTSI has also agreed to reimburse Mr. Cushman for up to $1,800 per month for up to eighteen months for temporary living expenses. Mr. Cushman is eligible to earn a bonus incentive award based on the Company’s audited results of operations for January 1, 2010, through December 31, 20 10.  The bonus will be a percentage of Mr. Cushman’s annual salary based on the Company’s consolidated operating ratio for the third year. If we exercise our option2010 calendar year determined according to extend the agreement,table provided in Exhibit A to the agreement provides Mr. WeaverP.A.M. Transportation Services, Inc. Incentive Compensation Plan for Calendar year 2010.  In the event that a bonus is earned in accordance with an annual base salary of $550,000 forthis plan, 50% will be paid before March 31, 2011, 25% will be paid before March 31, 2012 and the first year of the extension, and of $600,000 for the second year of the extension.remaining 25% will be paid prior to March 31, 2013.

The initial terms of ourOur employment agreements with Messrs. Lawson and Goddard are from June 1, 2006 through June 1, 2010. We have an option to extend each of the agreements for one additional year. Our agreement with Mr. Lawson began on June 1, 2006, and will expire on June 1, 2010.  Upon expiration of this agreement, Mr. Lawson has agreed to be available for consultation for a period of six months.  Our agreement provides himMr. Lawson with an annual base salary of $300,000 for the first year, of the agreement, and of $310,000, $335,000 and $355,000 for the second, third and fourth years of the agreement. If we exercise

The initial term of our option to extend our agreement with Mr. Lawson for an additional year, the agreement provides Mr. Lawson with an annual base salary of $370,000 for the additional year. Ouremployment agreement with Mr. Goddard is from June 1, 2006, through June 1, 2010.  We have an option to extend this agreement for one additional year.  The agreement provides himMr. Goddard with an annual base salary of $225,000 for the first year, of the agreement, and of $235,000, $250,000 and $265,000 for the second, third and fourth years of the agreement. If we exercise our option to extend our agreement with Mr. Goddard for an additional year, the agreement provides Mr. Goddard with an annual base salary of $280,000 for the additional year.

The following table provides information as of  December 31, 20082009, regarding equity awards, including unexercised stock options, for each of the named executive officers.

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The employment agreements that we have entered into with our executive officers provide for payments that may be made to our executive officers following termination of their employment. These payments are discussed below and quantified in the table that follows. We do not have any agreements or plans that provide for payments to our executive officers based on the occurrence of a change in control of PTSI.

No Payments If There Were a Termination for Just Cause

In the event that one of our executive officers were terminated for just cause, including conviction of a crime, moral turpitude, gross negligence in the performance of duties, intentional failure to perform duties, insubordination, or dishonesty, we would have no obligation to pay base salary or benefits beyond the last day worked.

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Compensation Arrangements for Non-employee Directors

Director compensation is determined by our Board of Directors. For 2008,2009, we paid our non-employee directors an annual retainer of $10,000, and a fee of $1,800 for each meeting of the Board or its committees that they attended in person, and $600 for each meeting that they attended by telephone. The Chairman of the Board, which is a non-officer position, is paid an annual retainer of $100,000; and the Chairman of the Audit Committee is paid an additional annual retainer of $4,000. We reimburse our directors for expenses that they incur in attending Board and committee meetings, including expenses for food, lodging and transportation. Our directors are currently paid the same amounts for retainer and meeting fees as they were paid in 2008.2009.

Our 2006 Stock Option Plan provides for an annual grant of a stock option to each of our non-employee directors through 2016. Each option entitles the director to purchase 2,000 shares of our common stock at an

exercise price equal to the fair market value of our common stock on the date of grant. Each option is exercisable from its date of grant through the fifth anniversary of that date, unless terminated earlier in accordance with the plan. The exercise prices for the options granted to our non-employee directors in 2007, 2008, and 2009 were $22.92, $14.98, and $3.84 per share respectively.

The table below shows the number of our shares of common stock beneficially owned as of March 31, 20092010 by:

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The Audit Committee pre-approves audit services and non-audit services that are to be performed for us by our independent auditor. The Audit Committee has delegated authority to its chairman, or any two of its other members acting together, to approve, between meetings of the Audit Committee, audit services and permissible non-audit services. Approvals between meetings are required to be reported to the Audit Committee at its next meeting. In addition to there being engagement letters for audit services, the Audit Committee has determined that there should be an engagement letter for any non-audit services that are to be performed by the independent auditor. All of the services described in the table above were pre-approved by the Audit Committee, and the authority delegated to members of the Audit Committee was not used.

We have a written policy requiring that our Audit Committee review and approve related person transactions that involve us and are of the type that are required to be disclosed in our proxy statement by SEC rules. A transaction may be a related person transaction if any of our directors, executive officers, owners of more than 5% of our common stock, or their immediate family have a material interest in the transaction and the amount involved exceeds $120,000. The policy authorizes the Audit Committee to approve a related person transaction if it determines that the transaction is at least as favorable to us as could have been obtained if the transaction had been with a person who is not related to us, or is in our best interest.

During 2008,2009, certain subsidiaries of CenTra and other companies owned or controlled by our directors, Mr. Manuel Moroun and Mr. Matthew Moroun, paid us a total of $578,620.$1,519,063. These payments represent freight transportation charges of $550,166,$1,329,171, maintenance services performed in our maintenance facilities and maintenanceof $151,379, charges paid by us to third parties on behalf of the subsidiaries and affiliates of CenTra and charged back at the amount paid of $28,454.$22,600, and real estate rent and upkeep of $15,913.

During 2008,2009, we made payments to certain subsidiaries of CenTra and other companies owned or controlled by our directors, Mr. Manuel Moroun and Mr. Matthew Moroun, in the aggregate amount of $8,615,010.$6,457,743. These payments are described below.

Payments were made to a subsidiary of CenTra in the amount of $321,052$252,733 was paid for real estate leases. Properties leased from the subsidiary include office and maintenance facilities in two states, and trailer drop yards in nineeleven states. The leases are generally month to month leases with automatic monthly renewal provisions.

We purchased a terminal in Laredo, Texas from an affiliate of CenTra for $5,920,969, of which $4,500,000 was paid as of December 31, 2008.  The remaining $1,420,969 was paid in February 2009, subsequent to the completion of an independent appraisal.

Payments in the amount of $248,102$57,719 were made to a subsidiary of CenTra during 2008.2009. These payments were for parts and labor charges incurred to repair our equipment.

We made payments to subsidiaries of Oakland Financial Corporation during 20082009 in the amount of $23,857$20,908 for insurance premiums paid pursuant to agreements to provide insurance coverage to certain of our independent contractors. The underlying agreements are made directly with the independent contractors. The full amount of these payments to the subsidiaries of Oakland Financial Corporation is recouped by us from the independent contractors.

We purchase physical damage insurance coverage on our tractors and trailers through an unaffiliated insurance broker, which is written by a subsidiary of Oakland Financial Corporation. In 2008,2009, we made payments related tofor these policies in the amount of $2,272,098,$1,745,453, and received $1,596,939$1,076,514 in payment for claims filed under these policies.filed.

We purchasePrior to September 2009, we purchased commercial auto and general liability insurance issued through an unaffiliated insurance company. A subsidiary of Oakland Financial Corporation servesserved as third-party administrator for this insurance. In 2008,2009, the subsidiary received $50,000 from the unaffiliated insurance company for handling the claims under this program. Under the commercial auto liability policy, the subsidiary adjusts the claims (which are subject to a $2,500 deductible) and remits the full amounts of the settlements to the claimants. The subsidiary invoicesinvoiced us for the $2,500 deductible amount, for which we paid a total of $1,173,615$627,412 in 2008.2009.

We believe that substantially all of the above transactions were entered into on terms at least as favorable to us as could have been obtained from persons who were not related to us, and each of the transactions was in our best interest. We expect to continue transactions with subsidiaries of CenTra and other companies owned or controlled by our directors, Mr. Manuel Moroun and Mr. Matthew Moroun, in 20092010 that are similar to those described above.

Additional information concerning us, including our financial statements, is provided in our 20082009 Annual Report to Stockholders that accompanies this proxy statement. Our Annual Report on Form 10-K for the year ended December 31, 2008,2009, as filed with the SEC, is available to stockholders who make a written request for it to our Secretary, Larry J. Goddard, at our principal executive office, P.O. Box 188, Tontitown, Arkansas 72770. Copies of exhibits filed with that report or referenced in it will be furnished to stockholders of record upon request and payment of our expenses in furnishing such documents.

In order for a proposal by a stockholder to be presented at an annual meeting of our stockholders, the proposal must be included in the related proxy statement and proxy form.  Any proposal to be presented at the 20102011 annual meeting of stockholders must be received at our principal executive office not later than December 21, 2009,2010, directed to the attention of the Secretary, for consideration for inclusion in our proxy statement and form of proxy relating to that meeting. Any such proposals must comply in all respects with the rules and regulations of the SEC.

In connection with our annual meeting of stockholders to be held in 2010,2011, if we do not receive notice of a matter or proposal to be considered by March 6, 2010,11, 2011, then the persons appointed by our Board of Directors to act as the proxies for such annual meeting (named in the form of proxy) will be allowed to use their discretionary voting authority with respect to any such matter or proposal at the annual meeting, if such matter or proposal is properly raised at the annual meeting and put to a vote.

We do not know of any matters to be brought before the meeting other than those described in this proxy statement. If any other matter properly comes before the meeting, the persons designated as proxies will vote on each such matter in accordance with their best judgment.

 

April 20, 2009

 

1. Election of Directors

 

This Proxy should be marked, dated and signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both should sign.

YOUR VOTE IS IMPORTANT

The undersigned stockholder(s) of P.A.M. Transportation Services, Inc., a Delaware corporation, hereby appoints Robert W. WeaverDaniel H. Cushman and Larry J. Goddard, and each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 20092010 Annual Meeting of Stockholders of P.A.M. Transportation Services, Inc. to be held on Thursday, May 28, 2009,June 3, 2010, and at any or all adjournments or postponements of the meeting, and to vote all shares of common stock that the undersigned would be entitled to vote if then and there personally present at the meeting.