P.A.M. TRANSPORTATION SERVICES, INC.
INCENTIVE COMPENSATION PLAN - 2000C
CALENDAR YEARS 2000 - 2002
THIS IS THE INCENTIVE COMPENSATION PLAN of P.A.M. Transportation Services, Inc.,
a Delaware corporation (the "Company"), under which bonuses may be granted to
certain employees of the Company and it subsidiaries subject to the limitations,
provisions and requirements hereinafter stated. The Plan is as follows:
1. PURPOSES
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The purposes of the P.A.M. Transportation Services, Inc. Incentive Compensation
Plan 2000C (the "Plan") are as follows:
(a) To encourage each participant in the Plan to make exceptional
contributions to further the growth, success and profits of the
Company.
(b) To foster teamwork and personal involvement in the Company's success.
(c) To provide the Company with an objective method of recognizing and
rewarding certain employees who have been or will be given substantial
responsibility for the direction and management of the Company.
(d) The pronouns "he" and "his" are used throughout this document. These
pronouns shall be used to describe male and female employees without
without discrimination.
2. ADMINISTRATION OF PLAN
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This Plan shall be administered by the Compensation and Stock Option Committee
of the Company's Board of Directors (the "Committee"). This Committee shall
interpret the Plan in a manner consistent with its purposes; and, subject to the
terms of the Plan, will have discretion to determine who shall participate in
the Plan and the amounts of any incentive compensation to be awarded pursuant to
the Plan. All actions and determinations of the Committee taken in connection
with the Plan, including the awarding of any incentive compensation, shall be
final and conclusive. The Committee may adopt rules from time to time for
carrying out the Plan.
3. ELIGIBLE EMPLOYEES
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(a) Upon the adoption of the Plan and at or near the start of each
succeeding calendar year, eligible employees shall include:
(i) all full-time employees of the Company and its subsidiaries that are
individually selected by the Compensation Committee, in its
discretion, and
(ii) additionally, the Committee may, in its discretion, allow a
recently promoted or hired officer or employee to participate in the
Plan commencing with the date of his promotion or his employment, as
the case may be.
(b) Eligible employees shall be paid the Incentive Compensation as provided
in this Plan only if:
(i) the eligible employee was employed without interruption during the
applicable calendar year from January 1 through December 31, except
as provided in Sections 3(a)(ii) and 4(d) herein, and
(ii) the eligible employee must be employed at the time that the bonus
is actually paid pursuant to Section 4(c). In the event that the
participant's employment is terminated, by reason of (x) discharge
with or without cause or (y) voluntary termination by the
participant, at any time during the calendar year or before the
actual payment date in Section 4(c), such terminated participant
shall not be entitled to any bonus for such calendar year, unless
specifically authorized by the Committee.
(c) Any eligible employee that participates in this Plan is not eligible to
participate in Incentive Bonus Plan 2000A or Plan 2000B.
4. MECHANICS OF THE PLAN
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The Plan will award participants for above-average profitability and revenue
growth, as measured by the Company's operating ratio and year over year increase
in operating revenues:
(a) Annual Plan. This Plan is an "annual plan" and incentive awards shall
be based on audited results of operations for each respective fiscal
year ending December 31.
(b) Incentive Awards. The Board of Directors or Committee shall establish
the targeted operating ratios and corresponding Effective Bonus
Percentages for each calendar year at or near the completion of the
audit of the Company's financial statements for the previous calendar
year; provided, however, that the targeted operating ratios and
effective bonus percentages for the 2000-2002 calendar years shall be
established by the Board of Directors upon the adoption of this Plan.
Upon adoption by the Board of Directors or Committee, the targeted
operating ratio and bonus percentages for the current calendar year
shall be set forth on a schedule and attached hereto as an exhibit.
Under the Plan, each participant shall be awarded a bonus not to exceed
the sum of the following calculations:
(i) Annual base compensation multiplied by the product of the effective
bonus percentage times 95%. However, no bonus shall be payable under
this subpart (i) if the Company's Consolidated Operating Ratio
exceeds 93.5%; and
(ii) Annual compensation multiplied by the product of the effective
bonus percentage times 5%. However, no bonus shall be payable under
this subpart (ii) unless the Consolidated Operating Revenues for the
bonus calculation year are 110% or more of the Consolidated
Operating Revenues reported by the Company for the immediately
preceding bonus calculation year, and
(iii) The subpart (i) and subpart (ii) bonus calculations are
independent of each other and entitlement to a bonus under either
subpart is not dependent on whether a bonus is due under the other
subpart, and
(iv) The Company's Board of Directors recognizes that the long term
well being of the Company may require actions which adversely affect
the Consolidated Operating Ratio or Consolidated Operating Revenues
over the short term. Accordingly, upon recommendation by the
Committee, the Company's Board of Directors may in its sole
discretion waive the Consolidated Operating Ratio and/or the
Consolidated Operating Revenue thresholds set forth in subpart (i)
and subpart (ii), respectively.
(c) Payment of Awards. Any bonus awarded hereunder shall be paid by the
Company upon the determination of the bonus as defined in this Plan by
the Company's independent accountants. The payments of the bonuses
shall be as follows:
(i) Any bonus that is awarded for the 2000 calendar year shall be made
as follows:
(x) fifty percent (50%) of the bonus shall be paid on or before
March 31, 2001:
(y) twenty five percent (25%) of the bonus shall be paid on or
before March 31, 2002; and
(z) twenty five percent (25%) of the bonus shall be paid on or
before March 31, 2003.
(ii) Any bonus that is awarded for the 2001 calendar year shall be made
as follows:
(x) fifty percent (50%) of the bonus shall be paid on or before
March 31, 2002;
(y) twenty five percent (25%) of the bonus shall be paid on or
before March 31, 2003; and
(z) twenty five percent (25%) of the bonus shall be paid on or
before March 31, 2004.
(iii) Any bonus that is awarded for the 2002 calendar year shall be
made as follows:
(x) fifty percent (50%) of the bonus shall be paid on or before
March 31, 2003;
(y) twenty five (25%) of the bonus shall be paid on or before
March 31, 2004; and
(z) twenty five (25%) of the bonus shall be paid on or before
March 31, 2005.
(d) Death or Disability. Notwithstanding anything contained herein to the
contrary, if a participant's employment ceases on account of death or
total disability, as defined in 105 (d)(4) of the Internal Revenue
Code, such participant shall be entitled to receive a pro-rata portion
of any bonus he otherwise would be awarded. In either event, the
participant shall be entitled to an amount equal to a normal bonus
award under Section 4(b) multiplied by a fraction the numerator of
which shall be the number of days in a year during which the
participant was participating in the Plan and the denominator of which
shall be 365 days. For example, a participant with annual base
compensation of $50,000 dies on July 1 of a calendar year. The Company
has a Effective Bonus Percentage of 20% for that calendar year which
otherwise would entitle the participant to a bonus of 20% of his annual
base compensation or $10,000. Such participant would be entitled to a
bonus equal to $10,000 x 182/365 or $4,986. All bonus amounts payable
to a deceased or disabled participant shall be paid to such participant
or his personal representative, as the case may be.
(e) Recently Promoted or Hired Employees. In the event the Committee allows
a recently promoted or hired employee to participate in the Plan,
pursuant to Section 3(a)(ii) such participant shall be entitled to
receive a pro-rata portion of any bonus he otherwise would be awarded.
Such pro-rata bonus shall be the amount equal to a normal bonus award
under Section 4(b) multiplied by a fraction the numerator of which
shall be the number of days in the year during which the participant
was participating in the Plan and denominator of which shall be 365
days. For example, a participant commences participation in the Plan on
July 1 of a calendar year at annual base compensation of $50,000. The
Company has a Effective Bonus Percentage for that calendar year which
otherwise would entitle the participant to a bonus of 20% of his annual
base compensation or $5,000. Such participant would be entitled to a
bonus equal to $5,000 x 183/365 or $4,986.
(f) Applicable Base Annual Compensation: For purposes of calculating all
bonus awards hereunder, whenever the term "annual base compensation" of
a participant is referred in this Plan it shall mean the following:
(i) With respect to any eligible employee who is compensated on the
basis of a fixed salary, annual base compensation shall be the
amount of such base salary determined at December 31 of each
calendar year.
(ii) With respect to any eligible employee who is compensated on the
basis of hourly wages, the annual base compensation shall be equal
to the base wage of such eligible employee at December 31 of each
calendar year and then annualized.
(iii) In the event an eligible employee is terminated prior to the end
of the plan year and the Committee specifically authorizes the
payment of the Incentive Bonus pursuant to section 3(b)(iii), then
the annual base compensation shall be determined as of the date of
termination.
5. NOTICES
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The Board of Directors or the Committee shall notify all employees selected to
participate in the Plan as soon as practicable after such determination has been
made. The participants shall be notified of the targeted operating ratios and
corresponding effective bonus percentages for each calendar year, and any
subsequent modifications thereto, as soon as practicable after such
determinations have been made by the Committee.
6. OTHER BENEFITS
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This Plan is employees for exceptional contributions made by such employees and
any awards hereunder are intended to be in addition to any other benefits which
the Company provides to the participants.
The Board of Directors or the Committee may, but is not obligated to, award one
or more of the participants additional bonuses in such amounts and at such times
as the Board of Directors or the Committee, in its sole discretion, shall
determine.
7. AMENDMENTS TO PLAN
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The Board of Directors or the Committee may from time to time make such
amendments to the Plan as the Board or the Committee, in its sole discretion,
shall deem desirable, including modifying the targeted operating ratios and
corresponding bonus percentages established pursuant to Section 4(b) at any time
during a calendar year.
8. TERMINATION OF THE PLAN
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The Board of Directors may at any time terminate the Plan. In the event the Plan
is terminated, the Company shall not have any obligation to the participants
under the Plan unless the Board of Directors states that the Company has assumed
an obligation. For example, assume the Plan is terminated on December 15 of a
calendar year. No participant shall have a right to receive, and the Company
shall not have any obligation to pay, any bonus amount under the Plan for that
calendar year unless the Board of Directors expressly states the Company shall
pay such bonus amount.
9. NONASSIGNABILITY
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No participant shall have the right to assign or transfer any of his benefits or
expected benefits under the Plan except by will or by the laws of descent and
distribution.
10. GLOSSARY OF TERMS
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The following definitions apply to the terms as used in this Plan.
Eligible Salaries of Plan Participants: The salaries of each Plan Participant,
as of December 31 of each calendar year, shall be added together. The sum of
these salaries shall be the Eligible Salaries of Plan Participants.
Company Annual Consolidated Revenue: The calendar year revenues of the following
subsidiaries shall be added together. The sum of the revenues of the
subsidiaries listed herein, shall be the Company Annual Consolidated Revenue.
For purposes of this Plan, operating revenue shall not include interest income,
other non-operating income or extraordinary items, and operating expenses shall
not include any incentive compensation awarded hereunder, interest expense or
income taxes but shall include loss (gain) on sale of equipment. For purposes of
this Plan, the operating ratio shall be determined to the nearest one-hundredth
of one percent (.01%). The revenue of the following subsidiaries shall include:
P.A.M. Transport, Inc., P.A.M. Dedicated Services, Inc., Choctaw Express, Inc.,
Allen Freight Services, Inc., and Decker Transport Co., Inc. With respect to the
revenues of Decker Transport Co., Inc., the revenue generated by the brokerage
division of Decker Transport Co., Inc., shall not apply toward the revenue of
Decker Transport Co., Inc., for the purposes of this Plan. With respect to Allen
Freight Services, Inc., the annual revenues and expenses shall be divided into
Allen Freight Services, Inc., and Bill's Dollar Store. Allen Freight Services,
Inc., and Bill's Dollar Stores shall be treated as two separate Company
subsidiaries for this Plan. In the event, the Company acquires a new subsidiary
during any calendar year under this Plan, the subsidiary's revenue shall not
apply toward the Company's Annual Consolidated Revenue.
Subsidiary Annual Revenue and Expenses: The calendar year revenues and expenses
generated by each individual subsidiary of the Company, to-wit: P.A.M.
Transport, Inc., P.A.M. Dedicated Services, Inc., Choctaw Express, Inc., Allen
Freight Services, Inc., and Decker Transport Co., Inc. With respect to the
revenues of Decker Transport Co., Inc., the revenue generated and the expenses
incurred by the brokerage division of Decker Transport Co., Inc., shall not
apply toward the Subsidiary Annual Revenue of Decker Transport Co., Inc., for
the purposes of this Plan. With respect to Allen Freight Services, Inc., the
annual revenues and expenses shall be divided into Allen Freight Services, Inc.,
and Bill's Dollar Store. Allen Freight Services, Inc., and Bill's Dollar Stores
shall be treated as two separate Company subsidiaries for this Plan. Any amount
of money accrued during the calendar year for bonus payment expense shall not
apply toward the Annual Expenses for the Subsidiary.
Subsidiary Percent of Revenue: The Subsidiary Percent of Revenue is calculated
by dividing the Subsidiary Annual Revenue by the Company Annual Consolidated
Revenue expressed as a percentage.
Subsidiary Bonus Eligible Salaries: The Subsidiary Bonus Eligible Salaries is
calculated by multiplying the Subsidiary Percent of Revenue times the Eligible
Salaries of Plan Participants.
Operating Ratio of Subsidiary: This term shall mean the operating ratio of each
individual subsidiary of P.A.M. Transportation Services, Inc. The operating
ratio shall be determined to the nearest one-hundredth of one percent (.01%).
Subsidiary Bonus Factor: Determine the Bonus Percentage from the Bonus
Percentage Table found in Attachment One by using the Annual Operating Ratio of
the Subsidiary. Multiply the Subsidiary Bonus Eligible Salaries by the Bonus
Percentage. The product of these two numbers in the Subsidiary Bonus Factor.
Consolidated Bonus Factor: The Consolidated Bonus Factor is the sum of the
Subsidiary Bonus Factors.
Effective Bonus Percentage: The Effective Bonus Percentage is calculated by
dividing the Consolidated Bonus Factor by the Eligible Salaries of Plan
Participants as expressed in a percentage.
Percentage: All percentages shall be determined to the nearest 1/100th.
This Plan has been adopted and approved at a meeting of the Board of Directors
of the Company on the 15th day of June, 2000 and shall be effective for calendar
years 2000 through 2002 inclusive, unless otherwise amended by the Board of
Directors.
EXHIBIT A
P.A.M. TRANSPORTATION SERVICES, INC.
INCENTIVE COMPENSATION PLAN 2000C
TARGETED CONSOLIDATED OPERATING RATIOS AND
CORRESPONDING BONUS PERCENTAGES
FOR 2000 - 2002 CALENDAR YEARS
Subsidiary Bonus
Operating Ratio Percentage
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90.0% and above 0.0%
89.0% to 89.9% 20.0%
88.0% to 88.9% 30.0%
87.0% to 87.9% 40.0%
86.0% to 86.9% 50.0%
85.0% to 85.9% 60.0%
84.0% to 84.9% 70.0%
83.0% to 83.9% 80.0%
82.0% to 82.9% 90.0%
81.0% to 81.9% 100.0%
80.0% to 80.9% 110.0%
Under 80% 120.0%
EXCERPTS OF RESOLUTIONS OF THE
COMPENSATION AND STOCK OPTION COMMITTEE
OF THE BOARD OF DIRECTORS OF P.A.M. TRANSPORTATION SERVICES, INC. ADOPTED
FEBRUARY 17, 2004
AMENDING INCENTIVE COMPENSATION PLAN 2000C WHICH IS APPLICABLE TO EXECUTIVE
OFFICERS AND CERTAIN OTHER EMPLOYEES
INCENTIVE COMPENSATION PLANS - EXTENSION THROUGH 2004
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The Committee discussed the Company's Incentive Compensation Plan - 2000A,
Incentive Compensation Plan 2000B, and Incentive Compensation Plan 2000C, which
are currently in effect for employees of the Company and its subsidiaries.
These plans originally applied to the years 2000, 2001 and 2002, and were
previously extended to also apply to 2003. The Committee discussed the purposes
of these plans. The Committee also discussed their continued appropriateness,
and the extent to which they are likely to meet the Company's objectives for
compensating and motivating its employees, and increasing the return for the
shareholders of the Company. [text omitted] The Committee also considered a
Schedule provided by the Company's executive officers recommending the employees
who should participate in Incentive Compensation Plan 2000B and 2000C. After
further discussion, upon motion duly made and seconded, the following
resolutions were unanimously adopted.
RESOLVED, that the Committee has determined that Incentive Compensation Plan -
2000A ("Plan A"), Incentive Compensation Plan 2000B ("Plan B"), and Incentive
Compensation Plan 2000C ("Plan C"), which are presently in effect (collectively
the "Plans"), should be extended for an additional year so they will also apply
to the calendar year 2004, and the Plans are extended to apply to 2004.
RESOLVED FURTHER, that the provisions of Exhibit A to each of the three Plans,
respectively, which establish the targeted consolidated operating ratios and
corresponding bonus percentages for 2000-2002 calendar years, and which were
also applied for calendar year 2003, shall, subject to the provisions of the
Plans, also apply to 2004.
RESOLVED FURTHER, that the employees who should participate in each of Plan B
and Plan C are those listed for those plans in the schedule presented to this
meeting, and subject to the provisions of the Plans, such employees are
designated to participate in Plan B and Plan C as set forth in the schedule.
[text omitted]
RESOLVED FURTHER, that pursuant to Section 7 of Plan B and Plan C, respectively,
Sections 4(c) (Payments of Awards) of each of such Plans are amended by adding
new clauses (iv) and (v) to each that follow the timing patterns of awards for
prior years, while making specific provision for corresponding timing for 2003
and 2004 awards, and provide as follows:
(iv) Any bonus that is awarded for the 2003 calendar year shall be made as
follows:
(x) fifty percent (50%) of the bonus shall be paid on or before March
31, 2004;
(y) twenty-five percent (25%) of the bonus shall be paid on or before
March 31, 2005; and
(z) twenty-five percent (25%) of the bonus shall be paid on or before
March 31, 2006.
(iv) Any bonus that is awarded for the 2004 calendar year shall be made as
follows:
(x) fifty percent (50%) of the bonus shall be paid on or before March
31, 2005;
(y) twenty-five percent (25%) of the bonus shall be paid on or before
March 31, 2006; and
(z) twenty-five percent (25%) of the bonus shall be paid on or before
March 31, 2007. [text omitted]