1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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2
ARKANSAS BEST CORPORATION
(Logo)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 2001
TO THE STOCKHOLDERS OF ARKANSAS BEST CORPORATION:
You are cordially invited to attend the Annual Meeting of Stockholders of
Arkansas Best Corporation on Wednesday, April 25, 2001 at 9:00 a.m. at 3801 Old
Greenwood Road, Fort Smith, Arkansas 72903. In addition to this notice, enclosed
are a proxy card/ballot and a proxy statement containing information about the
following matters to be acted upon at the meeting.
I. To elect two Class III directors for terms to expire at the 2004 Annual
Meeting of Stockholders;
II. To ratify the appointment of Ernst & Young LLP as independent auditors
for fiscal year 2001;
III. To act upon such other matters as may properly be brought before the
meeting affecting the business and affairs of the Company.
Only stockholders of record at the close of business on February 26, 2001 will
be entitled to notice of and to vote at the meeting or any adjournment thereof.
It is important that your shares be represented at the meeting. We look forward
to the Annual Meeting of Stockholders and hope you will attend the meeting or be
represented by proxy.
WE URGE YOU TO SIGN AND DATE YOUR ENCLOSED PROXY CARD/BALLOT AND PROMPTLY RETURN
IT IN THE ENCLOSED PRE-ADDRESSED, POSTAGE-PAID ENVELOPE EVEN IF YOU ARE PLANNING
TO ATTEND THE MEETING.
By Order of the Board of Directors, March 16, 2001.
/s/ William A. Marquard /s/ Robert A. Young III
William A. Marquard Robert A. Young III
Chairman of the Board President-Chief Executive Officer
ARKANSAS BEST CORPORATION, POST OFFICE BOX 10048
FORT SMITH, ARKANSAS 72917-0048
3
ARKANSAS BEST CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Arkansas Best
Corporation ("ABC" or the "Company"), in connection with the solicitation of
proxies on behalf of the ABC Board of Directors (the "Board") to be voted at the
Annual Meeting of Stockholders on April 25, 2001 ("2001 Annual Meeting") for the
purposes set forth in the accompanying Notice of Meeting. This Proxy Statement
and Notice of Meeting, the related proxy card/ballot and the 2000 Annual Report
to Stockholders are being mailed to stockholders beginning on or about March 16,
2001. ABC's principal place of business is 3801 Old Greenwood Road, Fort Smith,
Arkansas 72903, and its telephone number is 501/785-6000.
RECORD DATE
The Board has fixed the close of business on February 26, 2001 as the record
date for the 2001 Annual Meeting. Only stockholders of record on that date will
be entitled to vote at the meeting in person or by proxy.
PROXIES
The proxy named on the enclosed proxy card/ballot was appointed by the Board to
vote the shares represented by the proxy card/ballot. Upon receipt by the
Company of a properly signed and dated proxy card/ballot, the shares represented
thereby will be voted in accordance with the instructions on the proxy
card/ballot. If a stockholder does not return a signed proxy card/ballot, his or
her shares cannot be voted by proxy. Stockholders are urged to mark the ovals on
the proxy card/ballot to show how their shares are to be voted. If a stockholder
returns a signed proxy card/ballot without marking the ovals, the shares
represented by the proxy card/ballot will be voted as recommended by the Board
herein and in the proxy card/ballot. The proxy card/ballot also confers
discretionary authority to the proxy to vote on any other matter not presently
known to management that may properly come before the meeting. Any proxy
delivered pursuant to this solicitation is revocable at the option of the
person(s) executing the same (i) upon receipt by the Company before the proxy is
voted of a duly executed proxy bearing a later date, (ii) by written notice of
revocation to the Secretary of the Company received before the proxy is voted or
(iii) by such person(s) voting in person at the 2001 Annual Meeting.
VOTING SHARES
On the record date, there were 20,369,570 shares of common stock outstanding and
entitled to vote ("Common Stock"). Each share of Common Stock is entitled to one
vote. The holders in person or by proxy of a majority of the total number of the
shares of Common Stock shall constitute a quorum for purposes of the 2001 Annual
Meeting.
4
PROPOSAL I. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL I.
The Board is divided into three classes of directorships, with directors in each
class serving staggered three-year terms. At each annual meeting of
stockholders, the terms of directors in one of the three classes expire. At that
annual meeting of stockholders, directors are elected in a class to succeed the
directors whose terms expire, the terms of the directors so elected to expire at
the third annual meeting of stockholders thereafter. Pursuant to the Company's
Certificate of Incorporation, the Board has fixed the number of directorships at
six: two in the class to be elected at the 2001 Annual Meeting of Stockholders
whose members' terms will expire at the 2004 Annual Meeting of Stockholders, two
in the class whose members' terms will expire at the 2002 Annual Meeting of
Stockholders, and two in the class whose members' terms will expire at the 2003
Annual Meeting of Stockholders.
It is intended that the shares represented by the accompanying proxy will be
voted at the 2001 Annual Meeting for the election of nominees Frank Edelstein
and Robert A. Young III as the two directors in the class of directorships whose
members' terms will expire in 2004, unless the proxy specifies otherwise. Each
nominee has indicated his willingness to serve as a member of the Board, if
elected.
If, for any reason not presently known, either Messrs. Edelstein or Young will
not be available for election at the time of the 2001 Annual Meeting, the shares
represented by the accompanying proxy may be voted for the election in his/their
stead of substitute nominee(s) designated by the Board or a committee thereof,
unless the proxy withholds authority to vote for all nominees.
Assuming the presence of a quorum, to be elected a nominee must receive the
affirmative vote of the holders of a plurality of the Common Stock present, in
person or by proxy, at the 2001 Annual Meeting.
DIRECTORS OF THE COMPANY
The following information relates to the nominees named above and to the other
persons whose terms as directors will continue after the 2001 Annual Meeting.
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NAME DATE OF BIRTH BUSINESS EXPERIENCE
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CLASS III -- TERM EXPIRES AT THE ANNUAL MEETING 2001
Frank Edelstein ................. 12/18/25 Mr. Edelstein has been a Director of the Company since November
1988. Mr. Edelstein currently provides consulting services to
StoneCreek Capital and Kelso & Company, Inc. Mr. Edelstein
served as a Vice President of Kelso & Company, Inc. from 1986 to
March 1992. Prior to 1986, he served as Chairman and President
of International Central Bank & Trust Company and CPI Pension
Services, Inc., as well as Senior Vice President, Financial
Services Group, at Continental Insurance Corporation. He also
has held positions as Corporate Vice President, Automatic Data
Processing, Inc. and Executive Vice President of Olivetti
Corporation of America. Mr. Edelstein also is a Director of
Ceradyne, Inc., and IHOP Corp.
Robert A. Young III ............. 09/23/40 Mr. Young has been a Director of the Company since 1970 and
Chief Executive Officer of the Company since August 1988,
President since 1973 and was Chief Operating Officer from 1973
to 1988. Mr. Young was a Director of Treadco, Inc. from June,
1991 to June 1999. Mr. Young also is a Director of Mosler, Inc.
(2)
5
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NAME DATE OF BIRTH BUSINESS EXPERIENCE
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CLASS I -- TERM EXPIRES AT THE ANNUAL MEETING 2002
William A. Marquard ............. 03/06/20 Mr. Marquard has been Chairman of the Board and a Director of
the Company since November 1988. He served as a Director of
Treadco, Inc. from June 1991 to June 1999. In April 1992, Mr.
Marquard was elected as a Director of the Board of Kelso &
Company, Inc. From 1971 to 1983, Mr. Marquard was President and
Chief Executive Officer of American Standard Inc. and from 1979 to
1985, he was Chairman of the Board of American Standard Inc. Mr.
Marquard resumed his position as Chairman of the Board of American
Standard Inc. in February 1989 until March 31, 1992, when he was
named Chairman Emeritus. Mr. Marquard also became Chairman of the
Board of ASI Holding Corporation in February 1989 until March 31,
1992, when he was named Chairman Emeritus. Mr. Marquard is
Chairman of the Board of Mosler, Inc., and a Director of Earle M.
Jorgensen Co., and InfraReDx, Inc.
Alan J. Zakon, Ph.D. ............ 12/26/35 Dr. Zakon has been a Director of the Company since February 1993.
Dr. Zakon was a Managing Director of Bankers Trust Company through
March 1995, for which he previously served as Chairman, Strategic
Policy Committee from 1989 to 1990. From 1980 to 1986, Dr. Zakon
was President of Boston Consulting Group before being named its
Chairman in 1986, having previously served as Consultant from 1967
to 1969 and Vice President from 1969 to 1980. Dr. Zakon is
currently serving as a member of the Board of Directors of several
companies, including Micro-Financial, and Chairman of the
Executive Committee of the Board of Autotote Corporation, and is a
former member of the Advisory Committee to the Stanford University
Graduate School of Business.
CLASS II -- TERM EXPIRES AT THE ANNUAL MEETING 2003
Arthur J. Fritz, Jr. ............ 08/13/40 Mr. Fritz has been a Director of the Company since April 1989.
From 1971 to 1986, Mr. Fritz was President of Fritz Companies,
Inc. and its Chairman from 1986 to 1988. Mr. Fritz has served as
Chairman of JABAR Enterprises since October 1988. Mr. Fritz is
former President and Chairman of the National Association of
Customs Brokers and Freight Forwarders of America.
John H. Morris .................. 01/25/44 Mr. Morris has been a Director of the Company since July 1988 and
was a Director of Treadco, Inc. from June 1991 to June 1999. Mr.
Morris currently serves as Co-Chairman of StoneCreek Capital. Mr.
Morris is a Director of Outsourcing Services Group and a Director
of Steelhorse Holdings, Inc. Mr. Morris served as a Managing
Director of Kelso & Company, Inc. from March 1989 to March 1992,
was a General Partner from 1987 to March 1989, and prior to 1987
was a Vice President. Prior to 1985, Mr. Morris was President of
LBO Capital Corp.
(3)
6
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis five times a year to
review significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings when an important
matter requires Board action between scheduled meetings. The Board met seven
times during 2000. During 2000, each member of the Board participated in at
least 75% of all Board and applicable committee meetings held during the period
for which he was a Director.
The Board has established Audit, Executive Compensation and Development, and
Stock Option committees to devote attention to specific subjects and to assist
it in the discharge of its responsibilities. The functions of those committees,
their current members and the number of meetings held during 2000 are described
below. The Board does not have a committee for nomination of directors. The
Board nominates candidates for director.
Audit Committee. Among the responsibilities of the Audit Committee contained in
its charter, it recommends to the Board the appointment of the firm selected to
be independent public accountants for the Company and monitors the performance
of such firm; reviews and approves the scope of the annual audit and quarterly
reviews and evaluates with the independent public accountants the Company's
annual audit and annual consolidated financial statements; reviews with
management the status of internal accounting controls; and evaluates problem
areas having a potential financial impact on the Company which may be brought to
its attention by management, the independent public accountants or the Board. A
copy of the Audit Committee Charter is attached as Appendix A. Messrs.
Edelstein, Fritz, Morris, and Zakon currently are members of the Audit
Committee. The Audit Committee met six times during 2000.
Executive Compensation and Development Committee. The Executive Compensation and
Development Committee is responsible for reviewing executive management's
performance and for determining appropriate compensation. Messrs. Marquard,
Morris and Zakon currently are members of the Executive Compensation and
Development Committee. The Executive Compensation and Development Committee met
twice during 2000.
Stock Option Committee. The Stock Option Committee administers the Company's
1992 Stock Option Plan and 2000 Nonqualified Stock Option Plan. The Stock Option
Committee has the power to determine from time to time the individuals to whom
options shall be granted, the number of shares to be covered by each option, and
the time or times at which options shall be granted. Messrs. Fritz, Edelstein,
and Zakon currently are members of the Stock Option Committee. The Stock Option
Committee met twice during 2000.
Director Compensation. Mr. Young, as an officer of the Company, receives no
compensation for services as a director. Mr. Marquard, as Chairman, receives a
$75,000 annual retainer and other non-employee directors receive a $35,000
annual retainer. Each non-employee director receives $1,000 for each Board
meeting attended and for each meeting of a committee of the Board attended, if
the committee meeting is held other than in conjunction with a Board meeting.
Directors of ABC are entitled to reimbursement of their reasonable out-of-pocket
expenses in connection with their travel to and attendance at meetings of the
Board or its committees.
Messrs. Edelstein, Fritz and Zakon, as members of the Stock Option Committee,
each received automatic stock option grants under the Company's 1992 Stock
Option Plan on January 19, 2000, for 7,500 shares of the Company's Common Stock
at a fair market value exercise price of $13.438 per share. Messrs. Marquard and
Morris, non-employee Directors, each received stock options under the Company's
1992 Stock Option Plan on April 19, 2000 for 7,500 shares of the Company's
Common Stock at a fair market value of $13.625 per share. Beginning January 1,
2001, and on each subsequent January 1 for four years, 20% of the options vest
and thereafter can be exercised through the tenth year after the grant date.
(4)
7
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock as of February 26, 2001, by (i) each
person who is known by the Company to own beneficially more than five percent
(5%) of the outstanding shares of Common Stock, (ii) each director and named
executive officer of the Company and (iii) all directors and executive officers
as a group.
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SHARES PERCENTAGE
BENEFICIALLY OF SHARES
OWNED OUTSTANDING (10)
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(i) NAME / ADDRESS
Dimensional Fund Advisors, Inc. (1).................................... 1,199,400 5.74%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
DKR Management Company, Inc. (2)....................................... 1,197,481 5.73%
1281 East Main Street
Stamford, CT 06902
(ii) NAME POSITION
Robert A. Young III (3) (7) (9).......... Director, President - CEO 2,144,151 10.25%
William A. Marquard (3).................. Director 206,048 *
John H. Morris (3)(4).................... Director 154,015 *
Arthur J. Fritz, Jr. (3)(5).............. Director 107,971 *
Frank Edelstein (3)(6)................... Director 49,823 *
Alan J. Zakon (3)........................ Director 50,000 *
Lary R. Scott (3)........................ Executive Vice President 54,800 *
David E. Stubblefield (3) (8) (9)........ President-CEO, ABF 123,642 *
David Loeffler (3) ...................... Vice President-CFO 78,115 *
Jerry A. Yarbrough (3) (9) .............. Senior Vice President 164,187 *
(iii) All Directors and Executive Officers as a Group (13 total).......... 3,252,006 15.55%
*Less than 1%
(1) According to the most recent Schedule 13G it has provided to the
Company, Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 1,199,400
shares of the Company's Common Stock as of December 31, 2000, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional Fund
Advisors, Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(2) DKR Management Company, Inc. ("DKRMCI") has provided the Company with
Schedule 13G's for DKRMCI and on behalf of Basso Securities, Ltd.
According to these filings, DKRMCI, a registered investment advisor,
has entered into an advisory services agreement with Basso Securities,
Ltd., to act as the portfolio manager to certain funds managed by
DKRMCI, including 471,505 shares of the Company's $2.875 Series A
Cumulative Convertible Exchangeable Preferred Stock $0.01 par
("ABFSP"). The 471,505 shares of ABFSP are convertible into 1,197,481
shares of common stock over which DKRMCI
(5)
8
and Basso Securities, Ltd., have the following voting and investment
powers: (a) sole voting power, 1,197,481; (b) shared voting power, 0;
(c) sole dispositive power, 1,197,481; (d) shared dispositive power, 0.
(3) Includes stock option shares of Common Stock which are vested and will
vest within 60 days of the record date as follows: each of Messrs.
Marquard, Morris, Edelstein, Fritz and Zakon have a total of 45,000 -
all vested; Young has a total of 125,600 - 121,600 vested and 4,000
that will vest within 60 days; Scott has a total of 44,800 - 42,300
vested and 2,500 that will vest within 60 days; Stubblefield has a
total of 12,600 - 9,000 vested and 3,600 that will vest within 60 days;
Loeffler has a total of 16,329 - 13,829 vested and 2,500 that will vest
within 60 days; and Yarbrough has a total of 52,800 - 50,300 vested and
2,500 that will vest within 60 days.
(4) Mr. Morris indirectly owns 109,015 shares as co-trustee of the John
H. Morris and Sharon L. Morris Family Trust.
(5) Includes 11,993 shares held by Trayjen, L.P., which are indirectly
owned by Mr. Fritz by virtue of his status as general partner.
(6) Mr. Edelstein indirectly owns 4,823 shares as joint trustee of the
Edelstein Living Trust.
(7) Mr. Young indirectly owns and retains sole voting and investment power
of the 1,805,639 shares of ABC Common Stock in the R. A. Young III
Investments Limited Partnership.
(8) Mr. Stubblefield indirectly owns 35,000 shares as joint trustee of the
David E. Stubblefield and Suzanne Stubblefield Irrevocable Trust.
(9) Includes Arkansas Best 401(k) Savings Plan amounts invested in shares
of the Plan's ABC Stock Fund, which equal the following common stock
shares: Young, 912 shares; Stubblefield, 542 shares; and Yarbrough,
25,477 shares.
(10) The denominator for all percentages includes the number of beneficially
owned stock options of the Director and Executive Officer Group.
(6)
9
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, date of birth, principal occupation and
business experience during the last five years of each of the current executive
officers of the Company and its largest subsidiary. The executive officers serve
at the pleasure of the Board. For information regarding ownership of the Common
Stock by the executive officers of the Company, see "PRINCIPAL STOCKHOLDERS AND
MANAGEMENT OWNERSHIP." There are no family relationships among directors and
executive officers of the Company or its subsidiaries.
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NAME DATE OF BIRTH BUSINESS EXPERIENCE
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Robert A. Young III............ 09/23/40 See previous description.
President-Chief
Executive Officer
Lary R. Scott.................. 04/05/36 Mr. Scott was appointed ABC's Executive Vice President in
Executive Vice President December 1995. Prior to its June 1997 merger into ABC, he was
Chairman of the Board of WorldWay Corporation commencing in May
1994 and Vice Chairman and Chief Executive Officer of WorldWay
commencing in 1993. WorldWay became a wholly owned subsidiary of
ABC in August 1995; prior to that, it was a publicly traded
company. For approximately two years prior to joining WorldWay,
Mr. Scott served as a transportation consultant. Prior to that
time, he was President and Chief Executive Officer of Consolidated
Freightways, Inc. Mr. Scott serves on the board of directors of
The Clorox Company.
David E. Stubblefield.......... 05/26/37 Mr. Stubblefield has been President and Chief Executive Officer
ABF President- of ABF Freight System, Inc. ("ABF"), ABC's largest subsidiary,
Chief Executive Officer since January 1, 1995, and a Director of ABF since 1985. From 1979
through 1994, Mr. Stubblefield was Senior Vice President-Marketing
of ABF.
Jerry A. Yarbrough ............ 10/05/38 Mr. Yarbrough has been ABC's Senior Vice President - Corporate
Senior Vice President- Development since April 1998. From January 1995 through March
Corporate Development 1998, Mr. Yarbrough was Chairman of Integrated Distribution, Inc.
and Best Logistics, Inc. From 1979 through 1994, Mr. Yarbrough was
ABF's Senior Vice President - Operations and President of
Data-Tronics Corp., an ABC subsidiary.
David E. Loeffler.............. 08/25/46 Mr. Loeffler was appointed ABC's Vice President-Chief Financial
Vice President- Officer and Treasurer in April 1997. From December 1995 to April
and Treasurer Chief Financial Officer 1997, he was ABC's Vice President-Treasurer.
Richard F. Cooper.............. 12/28/51 Mr. Cooper has been ABC's Vice President-Administration since
Vice President-Administration 1995, ABC's Vice President-Risk Management from April 1991 to
General Counsel and 1995 and Vice President-General Counsel since 1986. Mr. Cooper
Secretary has been Secretary since 1987.
J. Lavon Morton ............... 09/25/50 Mr. Morton was appointed ABC's Vice President-Chief Internal
Vice President- Auditor in January 2000. From May 1997 to December 1999,
Chief Internal Auditor Mr. Morton was Vice President-Financial Reporting. Mr. Morton
joined ABC as Assistant Treasurer in December 1996. From October
1984 until November 1996, Mr. Morton was a Partner in Ernst &
Young LLP. From 1972 until 1984, Mr. Morton was employed by Ernst
& Young LLP. Mr. Morton is a Certified Public Accountant.
(7)
10
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NAME DATE OF BIRTH BUSINESS EXPERIENCE
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Judy R. McReynolds ............ 05/24/62 Ms. McReynolds was appointed Vice President-Controller of ABC in
Vice President-Controller January 2000. She previously served as the Controller of the
Company from July 1998 until December 1999. Ms. McReynolds joined
the Company as Director of Corporate Accounting in June 1997.
During the period of June 1995 through May 1997, Ms. McReynolds
was employed as Director of Financial Reporting and Taxation with
P.A.M. Transportation Services, Inc. From December 1990 until June
1995, Ms. McReynolds was a senior manager employed with Ernst &
Young LLP. Ms. McReynolds is a Certified Public Accountant.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid during
each of the Company's last three fiscal years to the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers, based on salary and bonus earned during 2000.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------- --------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------------------------------------------------------ --------------------- ----------------------
NAME OTHER RESTRICTED
AND ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(1) ($) ($) (#)(2) ($) ($)(3)
- ------------------------------------------------------------------------------------------------------------------------
Robert A. Young III...... 2000 $ 503,600 $1,117,992 -- -- 24,000 - $ 940,991
President-CEO 1999 503,600 844,235 -- -- 12,000 - 626,499
1998 375,000 240,750 -- -- -- - 127,272
David E. Stubblefield.... 2000 303,600 -- -- 18,000 - 918,999
ABF President-CEO 1999 303,600 1,112,239 -- -- 9,000 - 493,082
1998 275,000 793,914 -- -- -- - 64,145
335,912
Lary R. Scott............ 2000 253,600 469,160 -- -- 12,000 - 181,750
Executive Vice President 1999 253,600 354,279 -- -- 6,000 - 136,618
1998 250,000 133,750 -- -- -- - 1,600
Jerry A. Yarbrough (4) .. 2000 243,600 450,660 -- -- 12,000 - 390,069
Senior Vice President- 1999 243,600 340,309 -- -- 6,000 - 246,029
Corporate Development 1998 226,412 121,130 -- -- -- - 50,938
David E. Loeffler ....... 2000 196,100 362,785 -- -- 12,000 - 64,520
Vice President-CFO 1999 196,100 273,952 -- -- 6,000 - 51,221
1998 174,996 93,623 -- -- -- - 4,861
- ------------------------------------------------------------------------------------------------------------------------
(1) Reflects bonus earned during the fiscal year. Bonuses are normally paid
during the next fiscal year.
(2) Options granted to acquire shares of Common Stock.
(8)
11
(3) "All Other Compensation" for 2000 includes the following for Messrs. Young,
Stubblefield, Scott, Yarbrough and Loeffler: (i) Company matching
contributions to the Company's 401(k) Savings Plan were $5,100; $5,100;
$5,100; $5,100; and $5,100 for each named executive, respectively; (ii)
Amounts expensed under the Company's Supplemental Benefit Plan were
$829,744; $753,006; $176,650; $301,310; and $46,965 for each named
executive, respectively. The amount of expense charged under the
Supplemental Benefit Plan was determined by consulting actuaries based on
the terms of the plan. (iii) Amounts expensed under Deferred Salary
Agreements were $91,147; $145,893; $0; $68,659; and $12,455 for each named
executive, respectively. The Deferred Salary Agreements are not
performance-based incentive plans. (iv) Company matching contributions for
the Voluntary Savings Plan of $15,000 for Young; $15,000 for Stubblefield;
and $15,000 for Yarbrough.
(4) During the period of 1996 through April 1, 1998, Mr. Yarbrough's salary was
paid by the Company's wholly owned subsidiaries, Integrated Distribution,
Inc. and Best Logistics, Inc.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
The following table provides information related to options exercised by the
named executive officers during the 2000 fiscal year and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
SHARES SARS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ACQUIRED VALUE ----------------- --------------- -------------- -------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- ------------- ----------------- --------------- -------------- -------------
Robert A. Young III -- -- 105,320 50,680 $992,476 $379,109
David E. Stubblefield 57,500 $441,060 0 36,000 0 299,268
Lary R. Scott -- -- 32,700 27,800 398,248 245,126
Jerry A. Yarbrough -- -- 44,700 23,800 401,441 197,374
David E. Loeffler 9,565 109,998 13,535 25,400 169,456 216,475
(1) The closing price for the Company's Common Stock as reported by the Nasdaq
Stock Market on December 29, 2000 was $18.313. Value is calculated on the
basis of the difference between the option exercise price and $18.313
multiplied by the number of shares of Common Stock underlying the option.
(9)
12
OPTIONS/SAR GRANTS TABLE
The following table provides information related to options granted to the named
executive officers during 2000.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- -------------------------------------------------------------------------------------- -----------------------
(a) (b) (c) (d) (e) (f) (g)
PERCENT OF TOTAL
OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#)(2)(3)(4) FISCAL YEAR ($/SH)(5) DATE 5%($) 10%($)
- -------------------------------------------------------------------------------------- -----------------------
Robert A. Young III 24,000 3.5% $14.9875 04/18/10 $258,912 $606,000
President/CEO
David E. Stubblefield 18,000 2.6% $13.6250 04/18/10 154,242 390,870
ABF President/CEO
Lary R. Scott 12,000 1.7% $13.6250 04/18/10 102,828 260,580
Executive Vice President
Jerry A. Yarbrough 12,000 1.7% $13.6250 04/18/10 102,828 260,580
Senior Vice President
Corporate Development
David E. Loeffler 12,000 1.7% $13.6250 04/18/10 102,828 260,580
Vice President/CFO
(1) The potential realizable value portion of the foregoing table
illustrates value that might be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation on the Company's Common
Stock over the term of the options. These numbers do not take into
account provisions of certain options providing for termination of the
options following termination of employment, nontransferability or
vesting over periods of up to five years.
(2) Options granted in 2000 are exercisable starting January 1, 2001, with
20% of the shares covered thereby becoming exercisable at that time and
with an additional 20% of the option shares becoming exercisable on
each successive January 1. Full vesting occurs on January 1, 2005.
(3) The options were granted for a term of 10 years, subject to earlier
termination in certain events related to termination of employment.
(4) In the event of a change in control, the options will vest immediately
and the Stock Option Committee may allow an employee to "put" the
excess of the fair market value over the exercise price of the options
to the Company.
(5) The Option Plan permits the exercise of options by delivery of shares
of Common Stock owned by the optionee in lieu of or in addition to
cash.
(10)
13
REPORT ON EXECUTIVE COMPENSATION BY THE EXECUTIVE
COMPENSATION AND DEVELOPMENT COMMITTEE
AND STOCK OPTION COMMITTEE
The Company is engaged in the highly competitive and evolving freight
transportation industry. To be able to continue its growth and succeed in the
future, the Company believes it must be able to retain its executive management
team and to attract additional qualified executives when needed.
The Board's philosophy, that compensation of the executive management team
should be materially linked to both operating and stock price performance with
the goal of enhancing the value of the Company, is administered by its Executive
Compensation and Development Committee ("Compensation Committee") and its Stock
Option Committee.
The Compensation Committee is comprised of Messrs. Marquard, Zakon and Morris
and the Stock Option Committee is comprised of Messrs. Edelstein, Fritz, and
Zakon. All Committee Members are non-employee directors. The Compensation
Committee, at its discretion, reviews and grants all forms of executive
compensation except stock options and performance award units. The Stock Option
Committee, at its discretion, grants stock options and performance award units
to the executive group pursuant to the Company's stock option plan and
performance award program, respectively.
In furtherance of the Company's philosophy, the executive management team's
compensation is primarily composed of the following blend of short-term and
long-term items, all designed to motivate daily, annual and multi-year executive
performance that results in increased value of the Company for its stockholders:
(i) Base Salary. The Compensation Committee reviews and sets the base
salaries of the Company's executive officers, normally on an annual
basis. In setting salary levels, the Compensation Committee considers a
variety of subjective and objective criteria such as: variety of
experience and years of service with the Company and in the
transportation industry; special expertise and talents of the
individual; recent and historical operating results of the Company;
industry and general economic conditions which may affect the Company's
performance; and the Compensation Committee members' knowledge and
experience and, from time-to-time, independent consultants' analysis in
determining appropriate salary levels and total compensation programs
for executives.
(ii) Executive Officer Annual Incentive Compensation Plan ("Annual Incentive
Plan"). In 2000 and in 2001, the Compensation Committee based an
Executive Officer's Final Award on Return on Capital Employed ("ROCE")
for his company. The Final Award for each Executive Officer is
determined by a matrix relating to a Percent of Target to ROCE
achieved. The resulting percent is multiplied by the Target Incentive
Salary Percent for the participant. The resulting percent is multiplied
by the participant's annual salary. The Company's Annual Incentive Plan
was approved by the ABC stockholders and is designed to be compliant
with IRS Code Section 162(m).
(iii) Stock Option Plan. The Stock Option Committee is responsible for the
granting of stock options to the executive group under the Company's
1992 Stock Option Plan ("1992 Plan"). Under current stock option
agreements with the named executives, the option's exercise price is
equal to the closing public trading price of the Company's Common Stock
on the date of the grant. For 2000 grants, the optionee vests in 20% of
the total granted shares on January 1, 2001 and on the four subsequent
January 1 dates thereafter. For grants awarded between 1992 and 1999,
the optionee vests in 20% of the total granted shares on each of the
five subsequent grant date anniversaries thereafter. Grants for all
years provide that optionee has up to 10 years from the date of the
grant to exercise part or all of his grant. The Company believes that
this combination of 20% annual vesting with a 10-year exercise period
blends its desire to tie the optionee's motivation under the stock
option grant to both short-term and long-term performance of the
Company's stock.
(11)
14
Under the 1992 Plan, the Stock Option Committee generally has
discretion regarding size, recipients and other non-exercise-price
terms and conditions of grants. Such discretion allows, but does not
require, the Stock Option Committee to consider prior stock option
grants to executives when considering new grants.
Stock option grants made to the executive group have been based on the
judgement of the Stock Option Committee members and on advice from time
to time from independent consultants. The 1992 Plan is designed to be
compliant with IRS Code Section 162(m).
(iv) Deferred Salary Agreements. The Company has Deferred Salary Agreements
with certain Company and subsidiaries' executives. The Company believes
these Deferred Salary Agreements have aided it in retaining these
individuals who average over 25 years of employment with it or its
subsidiaries or in the transportation industry and have acquired
experience, knowledge and contacts of considerable value to it. See
"EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS" section for additional information.
The Board believes that the Chief Executive Officer ("CEO") is the leader of the
executive management team, and therefore the Compensation Committee and Stock
Option Committee apply the same philosophy as discussed above to the CEO's
compensation package.
The Board believes its philosophy has built an experienced, motivated executive
management team whose compensation package and stock ownership, both personal
and through stock option grants, are closely linked to the interest of the
Company's stockholders. The Board's policy is to take reasonable steps to avoid
having any compensation not be deductible to the Company under Section 162(m) of
the Internal Revenue Code of 1986, as amended.
EXECUTIVE COMPENSATION AND
DEVELOPMENT COMMITTEE STOCK OPTION COMMITTEE
William A. Marquard Arthur J. Fritz, Jr.
John H. Morris Frank Edelstein
Alan J. Zakon Alan J. Zakon
This Report will not be deemed to be incorporated by reference in any filing by
the Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
Report by reference.
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Pursuant to the terms of a Stockholders' Agreement, the Company has agreed that
it will offer Mr. Young the right to include shares of the Company's Common
Stock he owns in certain registration statements filed by the Company (the
"Piggy-back Rights"). The Company will indemnify Mr. Young for securities law
liabilities in connection with any such offering, other than liabilities
resulting from information furnished in writing by Mr. Young. The Company is
obligated to pay all expenses incurred in connection with the registration of
shares of Company Common Stock in connection with the Piggy-back Rights,
excluding underwriters' discounts and commissions.
(12)
15
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of 5-year cumulative total return for the
Company, the Nasdaq Market Index, and an index of peer companies selected by the
Company.
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
Arkansas Best Corp 100.00 55.65 124.03 74.34 152.65 232.96
Customer Selected Stock List 100.00 116.16 170.46 138.35 128.78 130.16
NASDAQ Market Index 100.00 124.27 152.00 214.39 378.12 237.66
The above comparisons assume $100 was invested on January 1, 1996, in the
Company's Common Stock and each of the foregoing indices and assumes
reinvestment of dividends. All calculations have been prepared by Media General
Financial Services. The stockholder return shown on the graph above is not
necessarily indicative of future performance.
The Company considers itself a transportation holding company with an emphasis
on long-haul, less-than-truckload ("LTL") motor carrier of general commodities.
Accordingly, the Company believes it is important that its performance be
compared to that of other transportation companies with similar operations.
Therefore, companies in the peer group are as follows: Roadway Express, Inc.,
Consolidated Freightways, Inc., and Yellow Corp. of Delaware.
(13)
16
RETIREMENT AND SAVINGS PLANS
Non-union employees of the Company who fulfill a minimum age and service
requirement are eligible to participate in the Company's Retirement Plan which
generally provides fixed benefits payable in a lump-sum form upon retirement at
age 65. Benefits also may be paid in the form of an annuity at the participant's
election. Credited years of service for each of the individuals named in the
EXECUTIVE COMPENSATION - SUMMARY COMPENSATION TABLE ("Executive Compensation
Table") are: Robert A. Young III, 36 years; Lary R. Scott, 5 years; David E.
Stubblefield, 41 years; Jerry A. Yarbrough 33 years; and David E. Loeffler, 5
years. Benefits are based upon a participant's years of service with the Company
and average total monthly earnings (exclusive of extraordinary remuneration and
expense allowances and subject to the annual Code limitation after 1988 of
$150,000 as adjusted to reflect cost of living increases) during any sixty (60)
consecutive calendar months during the participant's employment with the Company
since 1980 which will give the participant the highest average monthly earnings.
Benefits also are subject to certain other limitations in the Code.
The following table illustrates the total estimated annual benefits payable from
the Retirement Plan and, if applicable, the Company's Supplemental Benefit Plan
(see below) upon retirement at age 65, in the form of a single life annuity, to
persons in the specified compensation and years-of-service classifications.
- -------------------------------------------------------------------------------------------------------------------
HIGHEST
FIVE YEARS
AVERAGE YEARS OF SERVICE
COMPENSATION 15 20 25 30 35
- -------------------------------------------------------------------------------------------------------------------
$ 125,000 .......................... $ 45,315 $ 60,940 $ 61,300 $ 73,560 $ 85,820
150,000 .......................... 54,690 73,440 73,800 88,560 103,320
175,000 .......................... 64,065 85,940 86,300 103,560 120,820
200,000 .......................... 73,440 98,440 98,800 118,560 138,320
225,000 .......................... 82,815 110,940 111,300 133,560 155,820
250,000 .......................... 92,190 123,440 123,800 148,560 173,320
300,000 .......................... 110,940 148,440 148,800 178,560 208,320
400,000 .......................... 148,440 198,440 198,800 238,560 278,320
450,000 .......................... 167,190 223,440 223,800 268,560 313,320
500,000 .......................... 185,940 248,440 248,800 298,560 348,320
550,000 .......................... 204,690 273,440 273,800 328,560 383,320
600,000 .......................... 223,440 298,440 298,800 358,560 418,320
650,000 .......................... 242,190 323,440 323,800 388,560 453,320
700,000 .......................... 260,940 348,440 348,800 418,560 488,320
750,000 .......................... 279,690 373,440 373,800 448,560 523,320
- -------------------------------------------------------------------------------------------------------------------
In December 1987, the Company also established the Arkansas Best Corporation
Supplemental Benefit Plan for the purpose of supplementing benefits under the
Company's Retirement Plan. The Code places limits on the amount of income
participants may receive under the Company's Retirement Plan. In order to
compensate for those limitations and for reductions in the rate of benefit
accruals from the 1985 formula under the Company's Retirement Plan, the
Supplemental Benefit Plan will pay sums in addition to amounts payable under the
Retirement Plan to eligible participants. Participation in the Supplemental
Benefit Plan is limited to employees of the Company who are participants in the
Company's Retirement Plan and who are also either officers at or above the rank
of vice president of the Company and are designated as participants in the
Supplemental Benefit Plan by the Company's Board. The amount due to each
participant in the Supplemental Benefit Plan is the actuarial equivalent of the
excess of (1) the payment due under the Company's Retirement Plan as in effect
on January 1, 1985, as amended, but without regard to any amendments that
decrease the rate of benefit accruals and without regard to any Code
limitations, or the current Retirement Plan without regard to any Code
limitations if more; over (2) the actual benefit received from the Retirement
Plan. This payment will be made in a lump-sum form or in annual installments
over a period of not more than 15 years at the participant's election. Amounts
attributable to the Supplemental Benefit Plan are included in the pension table
set forth above.
(14)
17
The Company has agreed to provide reimbursement for otherwise unreimbursed
medical expenses to certain employees of the Company and its subsidiaries who
meet certain age and years-of-service requirements, including the individuals
named in the Executive Compensation Table. These benefits are presently covered
by an insurance program and commence at retirement and continue for the life of
the employee (and spouse or other eligible dependents).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
The Company does not have any Employment Contracts with the Chief Executive
Officer or any of the named executive officers.
The Company's Stock Option Agreements provide that in the event of a change in
control of the Company, as defined in the Agreement, all non-vested options
immediately vest. See "REPORT ON EXECUTIVE COMPENSATION BY THE EXECUTIVE
COMPENSATION AND DEVELOPMENT COMMITTEE AND STOCK OPTION COMMITTEE" section for
additional general information about the Stock Option Plan.
The Company's Supplemental Benefit Plan provides that in the event of a Change
in Control of the Company, as defined in the Plan, accrued benefits will be
distributed and paid in the form of a lump sum as soon as administratively
feasible. See "RETIREMENT AND SAVINGS PLANS" section for additional general
information about the Supplemental Benefit Plan.
The Company has a Voluntary Savings Plan ("VSP") with certain management
employees of the Company and its subsidiaries, including the named executives.
The VSP is a nonqualified plan created to offset the IRS Code limitations on
their contributions as highly compensated employees to the Company's 401(k)
Savings Plan. The VSP allows eligible executives to annually defer 1% to 75% of
each of their base salary and incentive compensation. The Company will match 15%
of the employees VSP contributions, up to an annual maximum of $15,000. The VSP
provides that in the event of a Change in Control of the Company, as defined in
the VSP, that all contributions, Company match and earnings on each, will be
distributed as a lump sum as soon as administratively possible.
The Company has Deferred Salary Agreements with certain management employees of
the Company and its subsidiaries, including the named executives, due to their
tenure, experience, knowledge and contacts which are of considerable value to
the Company. The amount of the deferred salary is equal to 35% of the
individual's final monthly base salary times 120 monthly payments commencing at
age 65 retirement, death or disability, provided this amount is subject to
reduction based on the age and other circumstances resulting in the individual's
termination of employment. The Deferred Salary Agreement provides that in the
event of a change in control of the Company, as defined in the Agreement, all
benefits immediately vest, and if the individual's employment terminates within
three years after the change in control event occurs, then the individual may
elect to receive his benefit in a lump sum payable within thirty days. The
amounts payable under the Deferred Salary Agreements are subject to forfeiture
under certain circumstances. The Executive Compensation Table includes the
amount accrued annually for each named executive under these Agreements.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
STOCKHOLDERS' AGREEMENT. Pursuant to the terms of a Stockholders' Agreement, the
Company has agreed that it will offer Robert A. Young III the right to include
shares of the Company's Common Stock he owns in certain registration statements
filed by the Company (the "Piggy-back Rights").
The Company will indemnify Mr. Young for securities law liabilities in
connection with any such offering, other than liabilities resulting from
information furnished in writing by Mr. Young. The Company is obligated to pay
all expenses incurred in connection with the registration of shares of Company
Common Stock in connection with the Piggy-back Rights, excluding underwriters'
discounts and commissions.
(15)
18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors, and persons who own more than 10%
of a registered class of the Company's equity securities are required to file,
under the Securities Exchange Act of 1934, reports of ownership and changes of
ownership with the Securities and Exchange Commission.
Based solely on information provided to the Company, the Company believes that
during the preceding year its executive officers, directors, and 10%
stockholders have complied with all applicable filing requirements.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors has reviewed and discussed the
audited financial statements of the Company for the year ended December 31,
2000, with management of the Company.
The Audit Committee has discussed with the independent auditors, Ernst & Young
LLP, the matters required to be discussed by Statement on Auditing Standards No.
61, Communication with Audit Committees, as modified or supplemented.
The Audit Committee has received the written disclosures and the letter from the
independent auditors, Ernst & Young LLP, required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, as
modified or supplemented, and has discussed Ernst & Young LLP's independence
with Ernst & Young LLP. In addition, the Audit Committee considered the
compatibility of nonaudit services with the auditor's independence.
Based on the review and discussions referred to above, the Audit Committee has
recommended to the Board of Directors that the audited financial statements for
the year ended December 31, 2000 be included in the Company's Annual Report on
Form 10-K for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Frank Edelstein, Chairman
Arthur J. Fritz, Jr.
John H. Morris
Alan J. Zakon
This Report will not be deemed to be incorporated by reference in any filing by
the Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
Report by reference.
The Audit Committee has adopted a written charter, a copy of which is included
in Appendix A.
(16)
19
Appendix A
ARKANSAS BEST CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee of Arkansas Best
Corporation is to assist the Board of Directors in fulfilling its oversight
responsibilities by reviewing: the financial reports and related financial
information provided by the Corporation to the public and the Securities and
Exchange Commission; the Corporation's systems of internal controls regarding
finance, accounting and compliance with policies that management and the Board
have established; and the Corporation's auditing, accounting and financial
reporting functions generally. In performing its oversight functions, the
Committee recognizes that the Corporation's management is responsible for
preparing the Corporation's financial statements and that the independent
auditors are responsible for auditing those financial statements. Additionally,
the Committee recognizes that the financial management (including the internal
audit staff), as well as the independent auditors, have more time, knowledge and
more detailed information on the Corporation than do Committee members;
consequently, in carrying out its oversight responsibilities, the Committee is
not providing any expert or special assurance as to the Corporation's financial
statements or any professional certification as to the independent auditors'
work.
Consistent with this function, the Audit Committee should encourage
continuous improvement of, and should foster adherence to, the Corporation's
policies, procedures and practices at all levels. The Audit Committee's primary
duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting and internal control system.
o Review and appraise the audit efforts of the Corporation's
independent auditors and internal auditing department.
o Provide an open avenue of communication among the independent
auditors, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
Determination of independence shall be based on the definition of "Independent
director" contained in the Rules issued by the exchange on which the Company's
stock is listed. All members of the Committee shall be able to read and
understand fundamental financial statements, including a company's balance
sheet, income statement, and cash flow statement or will become able to do so
within a reasonable period of time after his or her appointment to the Audit
Committee. Additionally, at least one member of the Committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
(17)
20
Appendix A
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least three times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee should meet at least annually with management, the
chief internal auditor and the independent auditors in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed privately. In addition, the Committee, or at least
its Chair, should meet (either in person or by telephone) with the independent
auditors, the chief internal auditor and management on a quarterly basis
consistent with IV.4. below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
1. Review this Charter periodically, at least annually, and update as
conditions dictate.
2. Review the organization's annual financial statements and related
financial information submitted to the Securities and Exchange
Commission, including any certification, report, opinion, or review
rendered by the independent auditors, and any changes in accounting
principles or the application thereof.
3. Review quarterly reports prepared by the internal auditing department
regarding results of internal audit activities and recommendations
resulting therefrom, and management's response.
4. Review with financial management, the chief internal auditor and the
independent auditors the results of internal audit activities and the
independent auditors' review of the financial statements for each
quarter prior to the filing of Form 10-Q. This requirement will be
satisfied if such review takes place prior to the public release of
quarterly and/or year-end financial results. The Chair of the Committee
may represent the entire Committee for purposes of this review.
5. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission for inclusion in the Company's annual proxy
statement.
6. Recommend to the Board of Directors the selection of the independent
auditors, considering independence and effectiveness. On an annual
basis, the Committee should review and discuss with the auditors all
significant relationships the auditors have with the Corporation to
determine the auditors' independence. The annual independence review
should include a review of all non-audit-related consulting fees for
nature of services and effect on independence; a review of any and all
relationships between members of the audit firm and employees of the
Corporation; the obtaining of a formal written statement from the
auditors as to their compliance with SEC and professional guidelines
relating to independence; and discussion with the auditors regarding
the audit firm's own internal controls over monitoring independence.
7. Review the performance of the independent auditors. Annually clarify
with the independent auditors that the auditors are ultimately
accountable to the Board of Directors and the Audit Committee and that
the Board of Directors and the Audit Committee have ultimate power in
the appointment or removal of the independent auditors.
8. Review and discuss with the independent auditors the scope of the
annual audit with particular attention to changes in audit scope and
the reasons for such changes.
9. Consult with the independent auditors, outside the presence of
management, regarding internal controls and the completeness and
accuracy of the organization's financial statements and related
disclosures.
(18)
21
Appendix A
10. Review with financial and accounting personnel, the independent
auditors, and the chief internal auditor the adequacy and effectiveness
of the accounting and financial controls of the Corporation, including
controls over data-processing activities and functions, and elicit any
recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures
are desirable.
11. Make inquiry of the independent auditors as to their view of the
quality and appropriateness of the Corporation's accounting principles
applied in its accounting, financial reporting and related disclosures.
12. Establish reporting to the Audit Committee by each of management and
the independent auditors regarding any significant judgments made in
management's preparation of the financial statements and the view of
each as to appropriateness of such judgments.
13. Following completion of the annual audit, review separately with each
of management, the independent auditors and the chief internal auditor
any significant difficulties encountered during the course of the
audit, including any changes in the audit scope or restrictions on the
scope of work or access to required information.
14. Review any significant disagreement among management, the chief
internal auditor and the independent auditors relating to the financial
statements or related disclosures.
15. Review activities, organizational structure and charter, objectivity,
and qualifications of the internal audit department.
16. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
17. Perform any other activities consistent with this Charter, the
Corporation's By-Laws and governing law, as the Committee or the Board
deems necessary or appropriate.
Adopted as of April 19, 2000.
(19)
22
PROPOSAL II. RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL II.
The firm of Ernst & Young LLP served as independent auditors for the Company for
the fiscal year ended December 31, 2000. Pursuant to the recommendation of the
Audit Committee, the Board has appointed that firm to continue in that capacity
for the fiscal year 2001, and recommends that a resolution be presented to
stockholders at the 2001 Annual Meeting to ratify that appointment. Fees for the
last fiscal year were: Annual audit - $ 317,500, audit-related services -
$207,355, and all other nonaudit services - $ 168,809.
In the event the stockholders fail to ratify the appointment of Ernst & Young
LLP, the Board will appoint other independent public accountants as auditors.
Representatives of Ernst & Young LLP will attend the 2001 Annual Meeting. They
will have the opportunity to make a statement and respond to appropriate
questions from stockholders.
OTHER MATTERS
The Board does not know of any matters that will be presented for action at the
2001 Annual Meeting other than those described above and matters incident to the
conduct of the meeting. If, however, any other matters not presently known to
management should come before the 2001 Annual Meeting, it is intended that the
shares represented by the accompanying proxy will be voted on such matters in
accordance with the discretion of the holders of such proxy.
COST OF SOLICITATION
Proxies may be solicited by directors, officers, or regular employees of the
Company in person, by telephone, telegram, or other means. The cost of
preparing, assembling, and mailing the proxy material and of reimbursing
brokers, nominees, and fiduciaries for the out-of-pocket and clerical expenses
of transmitting copies of the proxy material to the beneficial owners of shares
held by record by such persons will be borne by the Company.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Pursuant to Securities and Exchange Commission regulations, stockholder
proposals submitted for next year's proxy statement must be received by the
Company no later than the close of business on November 16, 2001 to be
considered. Proposals should be addressed to Richard F. Cooper, Secretary,
Arkansas Best Corporation, 3801 Old Greenwood Road, Fort Smith, AR 72903. In
order to prevent controversy about the date of receipt of a proposal, the
Company strongly recommends that any stockholder wishing to present a proposal
submit the proposal by certified mail, return receipt requested.
GENERAL
Upon written request, the Company will provide stockholders with a copy of its
Annual Report on Form 10-K to the Securities and Exchange Commission (including
financial statements and schedules thereto) for the fiscal year ended December
31, 2000, without charge. Direct written requests to: David Humphrey, Director -
Investor Relations, Arkansas Best Corporation, 3801 Old Greenwood Road, Fort
Smith, AR 72903.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD/BALLOT PROMPTLY
/s/ Richard F. Cooper
Fort Smith, Arkansas RICHARD F. COOPER
Date: March 16, 2001 Secretary
(20)
23
ARKANSAS BEST CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
[ ]
WITHHELD
FOR all from all FOR all nominees, except vote withheld
I. ELECTION OF DIRECTORS: nominees nominees from the following nominee(s):
Nominees:
-------------------------
01 - Robert A. Young III and 02 - Frank Edelstein
FOR AGAINST ABSTAIN
II. To ratify the appointment of
Ernst & Young LLP as the Company's
independent certified public accountants.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT
OWNERS SHOULD EACH SIGN. WHERE APPLICABLE,
INDICATE OFFICIAL POSITION OR REPRESENTATIVE
CAPACITY.
DATE:
--------------------------------------------
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SIGNATURE
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SIGNATURE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSALS.
o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THE ABOVE PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
24
PROXY/BALLOT PROXY/BALLOT
ARKANSAS BEST CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS -- APRIL 25, 2001
Richard F. Cooper, with the power of substitution and revocation, is hereby
authorized to represent the undersigned, with all powers which the undersigned
would possess if personally present, to vote all shares the undersigned is
entitled to vote at the Annual Meeting of Stockholders of Arkansas Best
Corporation to be held at 3801 Old Greenwood Road, Fort Smith, Arkansas 72903,
at 9:00 a.m. CDT on Wednesday, April 25, 2001, and at any postponements or
adjournments of that meeting, as set forth below, and in their discretion upon
any other business that may properly come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED,
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED AND FOR EACH OF THE
OTHER PROPOSALS SPECIFIED HEREIN.
* * CONTINUED AND TO BE SIGNED ON REVERSE SIDE * *