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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</Table>
ARKANSAS BEST CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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ARKANSAS BEST CORPORATION
(Logo)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 2002
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 24, 2002 at 9:00 a.m. (CDT) 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 three Class I directors for terms to expire at the 2005
Annual Meeting of Stockholders;
II. Approval of the 2002 Stock Option Plan;
III. To ratify the appointment of Ernst & Young LLP as independent auditors
for fiscal year 2002;
IV. 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 25, 2002 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 15, 2002.
/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
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 ("Annual Meeting") on April 24, 2002 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 2001 Annual Report
to Stockholders are being mailed to stockholders beginning on or about March 15,
2002. ABC's principal place of business is 3801 Old Greenwood Road, Fort Smith,
Arkansas 72903, and its telephone number is 479/785-6000.
RECORD DATE
The Board has fixed the close of business on February 25, 2002 as the record
date for the 2002 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 2002 Annual Meeting.
VOTING SHARES
On the record date, there were 24,594,115 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 2002 Annual
Meeting.
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, the terms of
directors in one of the three classes expire. At that Annual Meeting, 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 thereafter.
Pursuant to the Company's Certificate of Incorporation and Bylaws, the Board has
fixed the number of directorships at seven: three in the class to be elected at
the 2002 Annual Meeting whose members' terms will expire at the 2005 Annual
Meeting, two in the class whose members' terms will expire at the 2003 Annual
Meeting, and two in the class whose members' terms will expire at the 2004
Annual Meeting.
It is intended that the shares represented by the accompanying proxy will be
voted at the 2002 Annual Meeting for the election of nominees William A.
Marquard, Alan J. Zakon and William M. Legg as the three directors in the class
of directorships whose members' terms will expire in 2005, 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. Marquard, Zakon or Legg
will not be available for election at the time of the 2002 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 2002 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 2002 Annual Meeting.
<Table>
<Caption>
NAME DATE OF BIRTH BUSINESS EXPERIENCE
---- ------------- -------------------
CLASS I - NOMINEES FOR ELECTION AT THE ANNUAL MEETING 2002, TERMS WILL EXPIRE 2005
William M. Legg......... 09/21/44 Mr. Legg retired from Deutsche Banc Alex.Brown as Managing Director and
assumed the position of General Partner of Springhill Ventures on March
31, 2002. During his 31 years, he served as Head of Alex.Brown's
Transportation Group and subsequently as Co-Head of Transportation and
Aerospace Group at Deutsche Banc Alex.Brown and Co-Head of Alex.Brown and
Sons, Inc.'s Corporate Finance Department. Mr. Legg and his group
executed initial public offerings for many logistics companies including:
Viking Freight, MS Carriers, Werner Enterprises, J. B. Hunt, Swift, Old
Dominion, CH Robinson, and Hub Group. Mr. Legg worked on transportation
mergers for Deutsche Post, PepsiCo, Union Pacific, ARA Services,
Transport Development Group and Arkansas Best Corporation. Mr. Legg
earned a BA from Trinity College and an MBA from Loyola College. Prior to
joining Alex.Brown in 1971, he served as an officer in the United States
Navy.
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. He is currently Director of Earle M. Jorgensen
Co. and InfraReDx, Inc.
</Table>
(2)
<Table>
<Caption>
NAME DATE OF BIRTH BUSINESS EXPERIENCE
---- ------------- -------------------
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
Scientific Games 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 is
currently associated with StoneCreek Capital. 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.
CLASS III -- TERM EXPIRES AT THE ANNUAL MEETING 2004
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.
</Table>
(3)
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 six times
during 2001. During 2001, 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 2001 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.
Messrs. Edelstein, Fritz, Morris, and Zakon, each an independent director,
currently are members of the Audit Committee. The Audit Committee met four times
during 2001, and the Chairman had four Quarterly Financial Information Review
meetings.
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 are members of the Executive Compensation and Development
Committee. The Executive Compensation and Development Committee met once during
2001.
Stock Option Committee. The Stock Option Committee administers the Company's
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 are members
of the Stock Option Committee. The Stock Option Committee met twice during 2001.
Director Compensation. Mr. Young, as an officer of the Company, receives no
compensation for services as a Director. In 2001, Mr. Marquard, as Chairman,
received a $75,000 annual retainer and other non-employee Directors received a
$35,000 annual retainer. Each non-employee Director received $1,000 for each
Board meeting attended and for each meeting of a committee of the Board
attended, if the committee meeting is not held 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 18, 2001, for 7,500 shares of the Company's Common Stock
at a fair market value exercise price of $24.375 per share. Messrs. Marquard and
Morris, non-employee Directors, each received stock options under the Company's
1992 Stock Option Plan on January 18, 2001 for 7,500 shares of the Company's
Common Stock at a fair market value of $24.375 per share. Additionally, Messrs.
Edelstein, Fritz, Zakon, Marquard, and Morris each received stock option grants
under the Company's 1992 Stock Option Plan on December 19, 2001, for 7,500
shares of the Company's Common Stock at a fair market value exercise price of
$28.05 per share. On each anniversary date of the grants, 20% of the options
vest and thereafter can be exercised through the tenth year after the grant
date.
(4)
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock as of February 25, 2002, 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, named
executive officer of the Company, and director nominee (iii) all directors,
director nominee, and executive officers as a group.
<Table>
<Caption>
SHARES PERCENTAGE
BENEFICIALLY OF SHARES
OWNED OUTSTANDING (8)
------------ ---------------
(i) NAME / ADDRESS
None
(ii) NAME POSITION
Robert A. Young III (1) (5) (7).......... Director, President - CEO 2,159,338 8.6%
William A. Marquard (1).................. Director 179,048 *
John H. Morris (1)(2).................... Director 107,525 *
Arthur J. Fritz, Jr. (1)(3).............. Director 77,971 *
Frank Edelstein (1)(4)................... Director 57,323 *
Alan J. Zakon (1)........................ Director 42,500 *
William M. Legg.......................... Director Nominee 0 *
Lary R. Scott (1)........................ Executive Vice President 70,500 *
David E. Stubblefield (1) (6) (7)........ President-CEO, ABF 135,934 *
David Loeffler (1) ...................... Vice President-CFO 86,215 *
Jerry A. Yarbrough (1) (7) .............. Senior Vice President 165,619 *
(iii) All Directors and Executive Officers as a Group (15 total).......... 3,222,454 12.8%
</Table>
*Less than 1%
(1) Includes stock option shares of Common Stock which are vested and will
vest within 60 days of the record date as follows: Messr. Marquard has
a total of 18,000 - all vested; Morris has a total of 7,500 - all
vested; Edelstein has 52,500 - all vested; Fritz has a total of 15,000
- all vested; Zakon has 37,500 - all vested; Young has a total of
86,200 - 82,200 vested and 4,000 that will vest in 60 days; Scott has a
total of 70,500 - all vested; Stubblefield has a total of 24,900 -
21,300 vested and 3,600 that will vest in 60 days; Loeffler has a total
of 24,429 - 21,929 vested and 2,500 that will vest in 60 days;
Yarbrough has a total of 22,900 - 20,400 vested and 2,500 that will
vest in 60 days.
(2) Mr. Morris indirectly owns 100,025 shares as co-trustee of the John H.
Morris and Sharon L. Morris Family Trust.
(3) Includes 11,993 shares held by Trayjen, L.P., which are indirectly
owned by Mr. Fritz by virtue of his status as general partner.
(4) Mr. Edelstein indirectly owns 4,823 shares as joint trustee of the
Edelstein Living Trust.
(5) 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.
(6) Mr. Stubblefield indirectly owns 43,000 shares as joint trustee of the
David E. Stubblefield and Suzanne Stubblefield Irrevocable Trust.
(7) 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, 899 shares; Stubblefield, 534 shares; and Yarbrough,
25,130 shares.
(8) The denominator for all percentages includes the number of beneficially
owned stock options of the Director and Executive Officer Group.
(5)
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 and one individual who served
as executive officer of the Company through January 31, 2002. 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.
<Table>
<Caption>
NAME DATE OF BIRTH BUSINESS EXPERIENCE
---- ------------- -------------------
Robert A. Young III............ 09/23/40 See previous description.
President-Chief
Executive Officer
Lary R. Scott.................. 04/05/36 Mr. Scott served as ABC's Executive Vice President from December
Executive Vice President 1995 until his retirement on January 31, 2002. Prior to its June
(Retired 1/31/02) 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. 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 of
ABF President- ABF Freight System, Inc. ("ABF"), ABC's largest subsidiary, since
Chief Executive Officer 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 1998,
Corporate Development 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
Chief Financial Officer 1997, he was ABC's Vice President-Treasurer.
and Treasurer
Richard F. Cooper.............. 12/28/51 Mr. Cooper has been ABC's Vice President-Administration since 1995,
Vice President-Administration ABC's Vice President-Risk Management from April 1991 to 1995 and
General Counsel and Vice President-General Counsel since 1986. Mr. Cooper has been
Secretary Secretary since 1987.
J. Lavon Morton ............... 09/25/50 Mr. Morton was appointed ABC's Vice President-Chief Internal
Vice President-Tax and Auditor in January 2000. From May 1997 to December 1999, Mr. Morton
Chief Internal Auditor was Vice President-Financial Reporting. Mr. Morton joined ABC as
Assistant Treasurer in December 1996. Mr. Morton has overseen the
Company's tax reporting since 1996. From 1972 through November
1996, Mr. Morton was employed by Ernst & Young LLP. Mr. Morton was
a partner in Ernst & Young LLP from October 1984 through November
1996. Mr. Morton is a Certified Public Accountant.
</Table>
(6)
<Table>
<Caption>
NAME DATE OF BIRTH BUSINESS EXPERIENCE
---- ------------- -------------------
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.
John R. Meyers................. 12/10/47 Mr. Meyers has been Vice President of the Company since October
Vice President 2001. He served as Chairman and CEO of Wingfoot Commercial Tire
Systems, LLC from October 2000 to September 2001 and as President
and CEO of Treadco, Inc. from October 1995 to October 2000. Mr.
Meyers was Vice President-Treasurer of Arkansas Best Corporation
from 1979 to 1995 and Treasurer of Treadco, Inc. from June 1991 to
1995.
</Table>
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 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
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...... 2001 $ 503,600 $ 374,678 - - 31,554 - $1,145,976
President-CEO 2000 503,600 1,117,992 - - 24,000 - 940,991
1999 503,600 844,235 - - 12,000 - 626,499
David E. Stubblefield.... 2001 303,600 399,082 - - 22,500 - 1,012,568
ABF President-CEO 2000 303,600 1,112,239 - - 18,000 - 918,999
1999 303,600 793,914 - - 9,000 - 493,082
Lary R. Scott............ 2001 253,600 157,232 - - 10,000 - 81,778
Executive Vice President 2000 253,600 469,160 - - 12,000 - 181,750
1999 253,600 354,279 - - 6,000 - 136,618
Jerry A. Yarbrough....... 2001 243,600 151,032 - - 15,778 - 418,341
Senior Vice President- 2000 243,600 450,660 - - 12,000 - 390,069
Corporate Development 1999 243,600 340,309 - - 6,000 - 246,029
David E. Loeffler........ 2001 196,100 121,582 - - 15,778 - 86,858
Vice President-CFO 2000 196,100 362,785 - - 12,000 - 64,520
1999 196,100 273,952 - - 6,000 - 51,221
</Table>
(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.
(7)
(3) "All Other Compensation" for 2001 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
$1,020,690; $778,821; $61,678; $305,448; and $64,351 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 $120,186; $213,647; $0; $92,793; and $17,407 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 Stubblefield; $15,000 for Scott;
and $15,000 for Yarbrough.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
The following table provides information related to options exercised by the
named executive officers during the 2001 fiscal year and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
SHARES SARS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ACQUIRED VALUE ------------------------------ ---------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
Robert A. Young III 48,044 $ 590,701 77,556 61,954 $ 1,643,100 $ 554,475
David E. Stubblefield -- -- 12,600 45,900 258,957 496,526
Lary R. Scott -- -- 44,800 25,700 997,636 325,862
Jerry A. Yarbrough 20,500 $ 321,338 32,300 31,478 669,261 330,311
David E. Loeffler 6,906 $ 119,991 16,329 31,478 356,016 330,311
</Table>
(1) The closing price for the Company's Common Stock as reported by the Nasdaq
Stock Market on December 31, 2001 was $28.82. Value is calculated on the
basis of the difference between the option exercise price and $28.82
multiplied by the number of shares of Common Stock underlying the option.
(8)
OPTIONS/SAR GRANTS TABLE
The following table provides information related to options granted to the named
executive officers during 2001.
<Table>
<Caption>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- ------------------------------------------------------------------------------------- ---------------------
(a) (b ) (c) (d) (e) (f) (g)
PERCENT OF TOTAL
OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#)(2)(3)(4) FISCAL YEAR ($/SH)(5) DATE 5%($) 10%($)
- ---- ------------ ---------------- --------- ---------- ----- ------
Robert A. Young III 20,000 3.85% $ 26.8100 01/17/11 $ 474,330 $ 1,168,286
President/CEO 11,554 $ 28.0500 12/18/11
David E. Stubblefield 16,500 2.75% $ 24.3750 01/17/11 314,526 774,692
ABF President/CEO 6,000 $ 28.0500 12/18/11
Lary R. Scott 10,000 1.22% $ 24.3750 01/17/11 134,386 331,000
Executive Vice President
Jerry A. Yarbrough 10,000 1.93% $ 24.3750 01/17/11 223,742 551,086
Senior Vice President 5,778 $ 28.0500 12/18/11
Corporate Development
David E. Loeffler 10,000 1.93% $ 24.3750 01/17/11 223,742 551,086
Vice President/CFO 5,778 $ 28.0500 12/18/11
</Table>
(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) There were two grants in 2001. The first grant was on January 18, 2001 and
the second was December 19, 2001. Options granted in 2001 are exercisable
beginning on the first anniversary of the grant, 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 anniversary.
Full vesting for the January grant occurs on January 18, 2006. Full vesting
for the December grant occurs on December 19, 2006.
(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.
(9)
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"). The Compensation Committee bases 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
stock option plans. 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. The optionee generally 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.
Under the plans, 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 Company's 1992 Stock Option
Plan is designed to be compliant with IRS Code Section 162(m).
(10)
(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.
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,
2001, 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, 2001 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; and 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 Board of Directors adopted a written charter for the Audit Committee on
April 19, 2000.
(11)
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.
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of five-year cumulative total return for
the Company, the Nasdaq Market Index, and an index of peer companies selected by
the Company.
<Table>
<Caption>
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01
Arkansas Best Corp 100.00 222.86 133.57 274.29 418.58 658.74
Customer Selected Stock List 100.00 146.87 119.28 110.84 112.03 161.26
NASDAQ Market Index 100.00 122.32 172.52 304.29 191.25 152.46
</Table>
The above comparisons assume $100 was invested on January 1, 1997, in the
Company's Common Stock and each of the foregoing indices and assume 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.
(12)
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, 37 years; Lary R. Scott, 6 years; David E.
Stubblefield, 42 years; Jerry A. Yarbrough, 34 years; and David E. Loeffler, 6
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.
<Table>
<Caption>
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
</Table>
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.
(13)
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, 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.
(14)
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.
PROPOSAL II. APPROVAL OF THE
2002 ARKANSAS BEST CORPORATION STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL II.
The Board has adopted the 2002 Arkansas Best Corporation Stock Option Plan (the
"Plan"), subject to stockholder approval. The Board believes that the Plan will
be a useful stock-related benefit program for attracting and retaining key
employees and providing additional incentive for such key employees to promote
the success of the Company. The Company intends to register the issuance of
shares of Common Stock underlying the stock options granted under the Plan under
the Securities Act of 1933, as amended, assuming the stockholders approve the
Plan. Shares purchased pursuant to the Plan after the effective date of
registration could be sold immediately in the open market by persons who are not
affiliates (as defined in Rule 144 under the Securities Act) of the Company
without compliance with the provisions of Rule 144. Shares purchased by the
Company's affiliates pursuant to the options granted under the Plan could be
sold immediately in the open market, subject, in the case of affiliates, to
compliance with the provisions of Rule 144.
Stockholder approval of the Plan is sought to comply with the terms of the Plan
and the Internal Revenue Code of 1986, as amended.
DESCRIPTION OF THE 2002 ARKANSAS BEST CORPORATION STOCK OPTION PLAN
GENERAL
The Plan authorizes the issuance or use of 1,000,000 shares of Common Stock for
the grant of options and stock appreciation rights which are paid in shares of
Common Stock. People who are granted options or stock appreciation rights under
the Plan are participants in the Plan.
Options. Options granted under the Plan may be either stock options:
o intended to qualify as "incentive stock options" under Section 422 of
the Internal Revenue Code of 1986, as amended; or
o not intended to qualify for incentive stock option treatment, or
non-qualified stock options.
The aggregate fair market value (determined at the time of grant) of shares
issuable pursuant to incentive stock options that are exercisable for the first
time by a participant in the Plan in any calendar year may not exceed $100,000,
or any other amount that is provided in Section 422(d) of the Internal Revenue
Code of 1986, as amended. If this limit is exceeded, the excess options will be
considered non-qualified stock options.
The options granted under the Plan permit the participants to purchase shares of
Common Stock at a price determined by the committee administering the Plan;
provided, however,
o the exercise price for any option may not be less than the fair market
value of Common Stock at the date of the grant of the option; and
(15)
o if the participant in the Plan owns more than 10% of the total combined
voting power of all classes of stock of the Company or its parent or
any of its subsidiaries, then the exercise price for any incentive
stock option may not be less than 110% of the fair market value of
Common Stock on the date of the grant of the option.
Stock Appreciation Rights. Stock appreciation rights are rights granted to a
participant that require the Company to pay the participant the product of:
o the excess of the fair market value per share on the date of exercise
over (1) if the stock appreciation right is granted in conjunction with
an option, the exercise price per share of the related option, or (2)
if the stock appreciation right is granted by itself with respect to a
designated number of shares of Common Stock, the fair market value per
share of the designated shares of Common Stock on the date of the grant
of the right; in each case multiplied by
o the number of shares of Common Stock with respect to which the stock
appreciation right is being exercised
The Company may pay these amounts in cash, or at the sole discretion of the
committee in the case of stock appreciation rights granted in conjunction with a
stock option that entitles the committee to determine at the time of exercise
whether to allow the participant to exercise the stock option or the stock
appreciation right, in Common Stock that has a fair market value on the date of
exercise equal to these amounts.
Stock appreciation rights may be granted either independent of or in conjunction
with options granted to the same participant. Stock appreciation rights granted
in conjunction with options may be granted simultaneously with or, in the case
of non-qualified stock options, subsequent to, the grant to the participant of
the related options.
The Plan is not required to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended, nor is it subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
SHARES AUTHORIZED AND AWARD LIMITS
The Plan authorizes 1,000,000 shares of Common Stock to be issued under the
Plan. No participant shall be granted awards with respect to, and (in the case
of a stock appreciation right granted by itself) designated in, an aggregate of
more than 500,000 shares of Common Stock during the term of the Plan.
The Plan provides that the Common Stock issued under the Plan may be authorized
and previously unissued Common Stock or previously issued Common Stock that the
Company has reacquired. Any of Common Stock subject to unexercised portions of
options granted under the Plan that are terminated, cancelled or expired,
including by reason of the exercise of a related stock appreciation right, may
also be utilized again for subsequent options or stock appreciation rights
granted under the Plan.
ADMINISTRATION
The Plan will be administered by a committee of two or more directors appointed
by the Board of the Company who are (1) not current employees of the Company,
(2) not former employees of the Company who receive compensation for prior
services during the taxable year, (3) have not been an officer of the Company,
(4) do not receive remuneration from the Company, either directly or indirectly,
in a capacity other than as a Director, and (5) do not otherwise have an
interest or business relationship with that must be disclosed pursuant to the
securities laws. The committee has authority to determine all terms and
conditions of the options and stock appreciation rights granted that are not
inconsistent with the Plan, and also to do the following:
o grant stock options with or without stock appreciation rights;
o grant stock appreciation rights with or without stock options;
o construe, interpret and administer the provisions of the Plan;
(16)
o prescribe, amend and rescind rules and regulations pertaining to the
Plan; and
o make all other determinations necessary or advisable to administer the
Plan.
ELIGIBILITY AND PARTICIPATION
Under the Plan, incentive stock options, non-qualified stock options and stock
appreciation rights may be granted to key employees, including directors who are
employees of the Company or a subsidiary. Non-qualified stock options and stock
appreciation rights may also be granted to directors, including members of the
committee, who are not key employees of the Company or a subsidiary. The number
of persons who currently are considered key employees is approximately 75.
Determination of key employee status, selection of participants and the
determination of extent and timing of their participation will be determined by
the committee, in its discretion. No awards will be made under the Plan until
and unless it is approved.
TERM OF OPTIONS AND STOCK APPRECIATION RIGHTS AND LIMITATIONS ON EXERCISE
The Company may not grant incentive stock options that are exercisable more than
(1) five years after the date of the grant with respect to a participant who
owns more than 10% of the total combined voting power of all classes of the
stock of the Company or any parent or subsidiaries of the Company, and (2) more
than ten years after the date of the grant of the options with respect to all
other participants. Nor may the Company grant non-qualified stock options or
stock appreciation rights that are exercisable more than ten years after the
date of grant of the options or rights.
Unless otherwise provided in a participant's option or stock appreciation right
agreement, an option or stock appreciation right granted under the Plan will be
exercisable only by the participant to whom the right or option was granted or
by a person to whom the participant's rights have passed by will, the laws of
descent and distribution, between spouses or incident to divorce within the
meaning of Section 1041 of the Internal Revenue Code of 1986, as amended. The
committee shall have the discretion to permit a gift, transfer or sale of some
or all of a participant's nonqualified stock options or stock appreciation
rights, or a deferral of stock appreciation right income, by including such
right in the option or stock appreciation right agreement.
TERMINATION OF EMPLOYMENT; DEATH
The committee will determine at the date of grant what conditions will apply to
the exercise of an option or stock appreciation right if the participant granted
the option or right ceases to be an employee of the Company or any subsidiaries
for any reason. In the event of the death of a participant while the person is
employed or serving as a director of the Company or any subsidiaries, the option
or stock appreciation right granted to the participant will be exercisable by
the executor or administrator of the participant's estate or by the person or
persons to whom the participant's right has passed under the participant's will
or the laws of descent and distribution. That option or stock appreciation right
will be exercisable within one year after the date of death of the participant
or any other period indicated in the participant's option or stock appreciation
rights agreement, but in no case later than the expiration date of the option or
stock appreciation right, and then only to the extent that the participant was
entitled to exercise the option or stock appreciation right at the date of his
or her death.
ADJUSTMENTS
The committee or the Board may make any adjustments in stock appreciation rights
and options granted under the Plan as it deems appropriate to prevent dilution
or enlargement of stock appreciation or option rights when there is a change in
the Common Stock subject to the Plan as the result of (1) any stock dividend on,
dividend of or stock split or stock combination of, or any similar change in,
stock of the same class, or (2) any change in the Company's capital structure.
EXPIRATION AND TERMINATION
The committee may grant options at any time prior to the ten-year anniversary of
the date on which the Plan is approved by the stockholders. The Board may
abandon, suspend or terminate the Plan at any time, except with respect to
options or stock appreciation rights then outstanding.
(17)
AMENDMENT
The Plan provides that the Board may amend the Plan and any award from time to
time (1) in any respect the Board deems advisable in its sole discretion, (2) in
order for the options or stock appreciation rights granted under the Plan to
conform to any change in applicable laws, or (3) in order for options granted or
stock acquired upon exercise of the options to qualify for simplified
registration under applicable laws; provided that no amendment may, without
prior stockholder approval;
o increase the number of securities that may be issued under the Plan,
other than the adjustments discussed above in the "Adjustments"
section;
o modify the requirements as to eligibility for participation in the
Plan; or
o make any change for which applicable law or regulatory authority would
require stockholder approval or for which stockholder approval would be
required to secure all deductibility of compensation received under the
Plan under the Internal Revenue Code of 1986, as amended.
Additionally, no amendment, suspension or termination of the Plan or any option
or stock appreciation right granted under the Plan may, except as specifically
permitted in the Plan or the terms of the option or stock appreciation right
agreement, substantially impair any option or stock appreciation right
previously granted to a participant, without the consent of the participant.
PAYMENT UPON EXERCISE
Upon exercise of any option granted under the Plan, the Company may make
financing available to the participant for the purchase of the Common Stock that
may be acquired upon exercise of the option on terms that the committee may
specify. A participant may pay the exercise price of an option with cash, a
certified cashier's check, a broker's check if exercise is through a
broker-dealer, or by delivery of shares of Common Stock or by a combination of
those methods. To the extent a participant chooses to pay the exercise price of
the participant's option with Common Stock, that Common Stock must have been
owned by the participant for a period of at least six months prior to the date
of exercise and must have a fair market value on the date of exercise equal to
the portion of the exercise price being paid in Common Stock.
On or immediately prior to the date on which a payment is made to a participant
pursuant to the Plan, the participant must pay the Company, in cash, or, in the
case of the exercise of an option, in Common Stock if expressly permitted in the
option, the amount that the Company reasonably determines to be the minimum
necessary in order for the Company to comply with applicable federal or state
tax withholding requirements and the collection of employment taxes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of participation
in the Plan for a typical participant is only a summary and does not purport to
be complete, and differences in individual participants' financial situations
may cause federal, state and local income tax consequences of participation in
the Plan to vary. This summary is based upon current federal tax law.
Non-Qualified Stock Options. A participant will not recognize any income upon
the grant of a non-qualified stock option. Under Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended, the short-swing profit
liability rules under Section 16(b) of the Securities Exchange Act should
ordinarily not apply to the exercise of a non-qualified stock option under the
Plan. As a result, ordinarily upon exercise of the non-qualified stock option,
the amount by which the fair market value of the shares transferred at the time
of exercise exceeds the exercise price must be treated as ordinary income
received by the participant. See "Exercise of Options with Common Stock" below
for a description of the tax consequences of using previously acquired stock to
exercise an option. However, if a participant is subject to these short-swing
profit rules, then the amount by which the fair market value of the
non-qualified stock option at the time the participant could sell the shares at
a profit without
(18)
creating liability under Section 16(b) of the Securities Exchange Act exceeds
the exercise price must be treated as ordinary income received by the
participant. Such a participant may elect, pursuant to Section 83(b) of the
Internal Revenue Code, to be taxed on the difference between the fair market
value of the non-qualified stock option on the date of exercise of the option
and the exercise price.
The Company generally will be entitled to deduct the amount that the participant
is required to treat as ordinary income in the taxable year that ends with or
within the taxable year in which the participant recognizes the income, to the
extent that amount constitutes an ordinary and necessary business expense and is
not disallowed under Section 162(m) of the Internal Revenue Code. The Company
believes that the options and stock appreciation rights, as discussed below, to
be granted under the Plan meet the requirements for deductible compensation.
Upon a taxable disposition of shares acquired upon exercise of a non-qualified
stock option, any amount received by the participant in excess of the sum of the
exercise price and any amount includable in income with respect to the exercise
of the non-qualified stock option will generally be treated as long-term or
short-term capital gain, depending upon the holding period of the shares
acquired upon exercise of the non-qualified stock option. To qualify for
long-term capital gain or loss treatment, the shares acquired upon exercise of
the non-qualified stock option must have been held for more than 12 months as a
capital asset. The maximum federal income tax rate applicable to individuals for
long-term capital gain is currently 20%. If, upon disposition, the sum of the
exercise price and any amount includable in income with respect to the exercise
of the non-qualified stock option exceeds the amount that is received by the
participant, the excess will generally be treated as long-term or short-term
capital loss, depending upon the holding period of the shares acquired upon
exercise of the non-qualified stock option. A capital loss may be deducted
against capital gains plus $3,000 of other income. Any unused capital loss may
be carried forward indefinitely.
Incentive Stock Options. A participant will not recognize any income upon the
grant or exercise of an incentive stock option, nor will the Company be allowed
a corresponding deduction. See "Exercise of Options with Common Stock" below for
a description of the tax consequences of using previously acquired stock to
exercise an incentive stock option. See "Alternative Minimum Tax" below for the
application of the alternative minimum tax to the exercise of an incentive stock
option.
When shares acquired through the exercise of an incentive stock option are sold
or exchanged in a taxable disposition, any amount received by the participant in
excess of the exercise price of the incentive stock option will be treated as
long-term capital gain, and any loss realized will be treated as a long-term
capital loss, assuming that the prescribed incentive stock option requirements
described below are met.
To obtain favorable tax treatment for incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended, a participant must not dispose
of shares acquired through the exercise of the incentive stock option within two
years of the grant date and within one year from the date of exercise of the
incentive stock option.
If the holding period requirements referred to above are not met, the
disposition of the shares acquired upon exercise of the incentive stock option
will be treated as a "disqualifying disposition." Upon a disqualifying
disposition, the amount by which the lesser of (1) the fair market value of the
shares acquired upon exercise of the incentive stock option on the date of
exercise, or (2) the amount realized on the sale exceeds the exercise price will
be treated as ordinary income, and any gain in excess of that amount will be
long-term or short-term capital gain, depending on the holding period of the
shares acquired upon exercise of the incentive stock option. To qualify for
long-term capital gain or loss treatment, the shares acquired upon exercise of
the incentive stock option must have been held for more than 12 months as a
capital asset. If the shares acquired upon exercise of the incentive stock
option are sold for an amount less than the exercise price, the loss will be
treated as a long-term or short-term capital loss, depending on the holding
period of the shares. In the event of a disqualifying disposition, the Company
will be allowed a deduction in an amount equal to the amount that the
participant is required to treat as ordinary income in the taxable year that
ends with or within the taxable year in which the participant is required to
recognize the ordinary income.
(19)
Stock Appreciation Rights. A participant will not recognize income upon the
grant of a stock appreciation right. However, upon exercise, they will recognize
compensation, taxable at ordinary income tax rates, equal to the amount of cash
and/or the then fair market value of any shares of Common Stock received.
Subject to the terms of the stock appreciation right agreement and the provision
of the Arkansas Best Corporation Voluntary Savings Plan ("VSP"), participants
may defer receipt, and taxation, of some or all of the income due to the
exercise of a stock appreciation right that is paid in cash in exchange for a
corresponding amount being credited under the VSP. Subject to being an ordinary
and necessary business expense and not being disallowed under Section 162(m) of
the Internal Revenue Code of 1986, as amended, the Company will be entitled to a
tax deduction in an amount equal to the amount that the participant is required
to include in ordinary income at the time of the inclusion and will be required
to withhold taxes on the ordinary income.
Alternative Minimum Tax. For purposes of computing the alternative minimum tax,
a participant must include in alternative minimum taxable income the amount by
which the fair market value of shares acquired upon exercise of an incentive
stock option (at the time of exercise or, if later, at the time the shares are
no longer subject to a substantial risk of forfeiture or are freely
transferable) exceeds the exercise price. If a participant exercises an
incentive stock option and disposes of the shares acquired upon exercise of the
incentive stock option in the same year and the amount realized is less than the
fair market value of the shares at the time of exercise, the amount of income
that must be included in alternative minimum taxable income may not exceed the
excess, if any, of the amount realized from the disposition over the
participant's adjusted basis in the shares acquired upon exercise of the
incentive stock option.
EXERCISE OF OPTIONS WITH COMMON STOCK
Non-Qualified Stock Options. If a participant exercises a non-qualified stock
option by paying the exercise price with shares of Common Stock, the participant
will be treated as having made a nontaxable exchange of the number of shares
transferred for an equal number of shares received. The basis and holding period
of the exchanged stock will be the same as the basis and holding period of the
stock transferred. The fair market value of all shares received in excess of the
exchanged stock are treated as compensation income to the participant, and the
Company generally will have a corresponding deduction to the extent the amount
constitutes an ordinary and necessary business expense and is not disallowed by
Section 162(m) of the Internal Revenue Code. That excess stock will have a basis
equal to the amount included in the participant's compensation income and a
holding period that begins on the date the non-qualified stock option is
exercised. A participant who is subject to the short-swing profit rules of
Section 16(b) of the Securities Exchange Act should see the discussion under
"Certain Federal Income Tax Consequences - Non-Qualified Stock Options" above.
If a participant exercises a non-qualified stock option by paying the exercise
price with shares acquired upon exercise of an incentive stock option, the
exchange of the incentive stock option shares will not be a "disqualifying
disposition" regardless of the period the participant held the incentive stock
option shares.
Incentive Stock Options. If a participant exercises an incentive stock option by
paying the exercise price with shares of Common Stock other than incentive
option shares, the participant will be treated as having received exchanged
stock (the number of shares received equal to the number of shares surrendered)
and excess stock (the remaining number of shares received). The exchanged stock
will have a basis and holding period that are the same as the basis and holding
period of the shares surrendered. The excess stock will have a basis of zero and
its holding period will begin on the date after the incentive stock option is
exercised.
RECOMMENDATION OF THE BOARD OF DIRECTORS AS TO THE ADOPTION OF THE PLAN
After careful consideration, the Board has determined that it is in the
Company's best interests and those of our stockholders to adopt the Plan as
described above. As a result, the Board has unanimously approved the Plan and
recommends that stockholders vote for approval of the Plan.
(20)
PROPOSAL III. RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL III.
The firm of Ernst & Young LLP served as independent auditors for the Company for
the fiscal year ended December 31, 2001. Pursuant to the recommendation of the
Audit Committee, the Board has appointed that firm to continue in that capacity
for the fiscal year 2002, and recommends that a resolution be presented to
stockholders at the 2002 Annual Meeting to ratify that appointment. Fees for the
last fiscal year were: Annual audit - $282,035, audit-related services -
$237,234, and all other nonaudit services - $117,190.
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 2002 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
2002 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 2002 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. The Company has
retained Georgeson Shareholder to assist in the solicitation and sending of
proxy material. The Company will pay approximately $5,000 for these services.
STOCKHOLDER PROPOSALS FOR 2003 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 15, 2002 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, 2001, 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 15, 2002 Secretary
(21)
Appendix A
2002 ARKANSAS BEST CORPORATION
STOCK OPTION PLAN
*****
1. PURPOSE
The purpose of the 2002 Arkansas Best Corporation Stock Option Plan
(hereinafter called the "Plan") is to advance the interests of Arkansas Best
Corporation (hereinafter called the "Company") by strengthening the ability of
the Company to attract and retain key personnel through stock ownership.
Certain options granted under this Plan are intended to qualify as
"incentive stock options" pursuant to Section 422 of the Internal Revenue Code
of 1986 (the "Code"), while certain other options granted under the Plan will
constitute nonqualified options.
2. DEFINITIONS
As used in this Plan, and in any option agreement, as hereinafter
defined, the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "COMMON STOCK" shall mean the Common Stock of the Company, par
value $.01 per share.
(b) "DATE OF GRANT" shall mean the date on which a stock option or SAR
is granted pursuant to this Plan.
(c) "EMPLOYEE SAR" shall mean a stock appreciation right granted in
conjunction with a stock option, that entitles the Holder to determine at the
time of exercise whether to exercise the stock option or the stock appreciation
right.
(d) "EMPLOYER SAR" shall mean a stock appreciation right granted in
conjunction with a stock option, that entitles the Committee to determine at the
time of exercise whether to allow the Holder to exercise the stock option or the
stock appreciation right. The Committee shall make this determination before the
close of the business day following receipt of the Holder's notice to exercise
the stock option associated with such Employer SAR. Failure of the Committee to
respond by the close of the business day following receipt of the notice to
exercise shall constitute approval of exercise of the stock option. The
Committee may delegate its approval authority to any Company officer or
officers. In the event the Committee requires the Holder to exercise the stock
appreciation right in lieu of the option, the Committee has the discretion to
pay the Holder in cash or issue Common Stock having a Fair Market Value on the
date of exercise equal to the SAR Spread.
(e) "FAIR MARKET VALUE" shall mean the closing sale price (or average
of the quoted closing bid and asked prices if there is no closing sale price
reported) of the Common Stock on the date specified as reported by NASDAQ
National Market System or by the principal national stock exchange on which the
Common Stock is then listed. If there is no reported price information for such
date, the Fair Market Value will be determined by the reported price information
for the Common Stock on the day nearest preceding such date. In the event the
Company's Common Stock is not listed on the NASDAQ National Market System or any
principal national stock exchange, the Committee will make a good faith
determination of the Common Stock's Fair Market Value.
(f) "HOLDER" shall mean the person to whom an option or SAR is granted
under the Plan or who has obtained the right to exercise an option or SAR in
accordance with the provisions of the Plan.
(g) "OUTSIDE DIRECTOR" shall mean a director who is (i) not a current
employee of the Company, (ii) not a former employee who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year, (iii) has not been an officer of the Company, (iv) does
not receive remuneration from the Company, either directly or indirectly, in a
capacity other than as a director, and (v) does not otherwise have an interest
or business relationship with the Company that must be disclosed pursuant to
Item 404 of Regulation S-K. For this purpose, "remuneration" includes any
payment in exchange for goods or services. For this purpose "Company" includes
any Subsidiary.
(h) "PLAN ADOPTION DATE" shall mean the date on which the plan is
approved by the shareholders of the Company.
(i) "SAR" shall mean a stock appreciation right granted under this Plan
that shall require the Company to pay to the Holder (i) cash equal to the SAR
spread, or (ii) at the sole discretion of the Committee in the case of an
Employer SAR, Common Stock having a Fair Market Value on the date of exercise
equal to the SAR Spread. The term "SAR" shall include, but is not limited to,
Employer SARs and Employee SARs.
(22)
Appendix A
(j) "SAR SPREAD" shall mean with respect to each SAR an amount equal to
the product of (1) the excess of (A) the Fair Market Value per share on the date
of exercise over (B) (x) if the SAR is granted in conjunction with an option,
then the exercise price per share of the related option, or (y) if the SAR is
granted by itself with respect to a designated number of shares of Common Stock,
then the Fair Market Value per share of the designated shares of Common Stock on
the Date of Grant, in each case multiplied by (2) the number of shares of Common
Stock with respect to which such SAR is being exercised; provided, however, that
with respect to any SAR granted in conjunction with an incentive stock option,
in no event shall the SAR Spread exceed the amount permitted to be treated as
the SAR Spread under applicable Treasury Regulations or other legal authority
without disqualifying the option as an incentive stock option.
(k) "Subsidiary" shall mean any now existing or hereinafter organized
or acquired corporation of which more than fifty percent (50%) of the issued and
outstanding voting stock is owned or controlled directly or indirectly by the
Company or through one or more Subsidiaries of the Company.
3. COMMON STOCK SUBJECT TO THE PLAN
The aggregate amount of Common Stock for which options may be granted
or used to satisfy the SAR Spread of SARs settled with Common Stock shall not
exceed 1,000,000 shares of Common Stock. Such Common Stock may be authorized and
previously unissued Common Stock or previously issued Common Stock that has been
reacquired by the Company. Any Common Stock subject to unexercised portions of
options granted under this Plan which shall have terminated, been cancelled or
expired (including, without limitation, by reason of the exercise of related
SAR, or Common Stock designated as subject to a SAR which is exercised and paid
in cash), are again available for all purposes of this Plan.
4. ADMINISTRATION AND GRANTS
The Plan shall be administered by a committee of two or more Outside
Directors appointed by the Board of Directors of the Company (the group
responsible for administering the Plan is referred to herein as the
"Committee"). SARs and options may be granted under this Section 4 only by the
majority agreement of the members of the Committee. SAR agreements ("SAR
Agreements") and option agreements ("Option Agreements") shall be in the form as
approved by the Committee, and contain such terms and conditions determined by
the Committee as are not inconsistent with the provisions of this Plan. The
Option Agreement or SAR Agreement may be executed on behalf of the Company by
the Chairman of the Board, the President or any Vice President of the Company.
The Committee shall have complete authority to grant stock options with or
without SARs, SARs with or without stock options, construe, interpret and
administer the provisions of the Plan, determine the provisions of the SAR
Agreements granted thereunder, and the provisions of the Option Agreements
relating to options granted thereunder; to prescribe, amend and rescind rules
and regulations pertaining to the Plan; and to make all other determinations
necessary or deemed advisable in the administration of the plan. The
determinations, interpretations and constructions made by the Committee shall be
final and conclusive.
5. ELIGIBILITY
Incentive stock options to purchase Common Stock may be granted under
Section 4 of the Plan to such key employees of the Company or its Subsidiaries
(including any director who is also a key employee of the Company or one or more
of its Subsidiaries) as shall be determined by the Committee. Nonqualified stock
options to purchase Common Stock and SARs may be granted under Section 4 of the
Plan to such key employees or directors (including, without limitation, members
of the Committee) of the Company or its Subsidiaries as shall be determined by
the Committee. The Committee shall determine which persons are to be granted
stock options and which persons are to be granted SARs (including, without
limitation, Employee SARs and Employer SARs), whether an option will be granted
independently or in conjunction with a SAR, the number of options, the number of
SARs, the number of shares of Common Stock subject to each option, the number of
designated shares of Common Stock subject to each SAR, the exercise price or
prices of each option, the vesting and exercise period of each option and SAR,
whether an option may be exercised as to less than all of the Common Stock
subject thereto, and such other terms and conditions of each option or SAR, if
any, as are not inconsistent with the provisions of this Plan.
The maximum number of shares of Common Stock a Holder can be granted
during the life of the Plan is 500,000 shares of Common Stock. In connection
with the granting of incentive stock options, the aggregate Fair Market Value
(determined at the Date of Grant of an incentive stock option) of Common Stock
with respect to which incentive stock options are exercisable for the first time
by a Holder during any calendar year (under all such
(23)
Appendix A
plans of the Holder's employer corporation and its parent and subsidiary
corporations as defined in Section 424 of the Code) shall not exceed $100,000 or
such other amount as from time to time provided in Section 422(d) of the Code or
any successor provision and, to the extent, if any, that such $100,000 limit
shall be exceeded, the excess shall be considered nonqualified stock options.
6. EXERCISE PRICE
The purchase price or prices for Common Stock subject to an option (the
"Exercise Price") granted pursuant to Section 4 of the Plan shall be determined
by the Committee at the Date of Grant; provided, however, that (a) the Exercise
Price for any option shall not be less than 100% of the Fair Market Value of the
Common Stock at the Date of Grant, and (b) if the Holder owns more then 10
percent of the total combined voting power of all classes of stock of the
Company or its parent or any of its subsidiaries, as more fully described in
Section 422(b)(5) of the Code or any successor provision (such stockholder is
referred to herein as a "10-Percent Stockholder"), the Exercise Price for any
incentive stock option granted to such Holder shall not be less then 110% of the
Fair Market Value of the Common Stock at the Date of Grant.
7. TERM OF STOCK OPTIONS AND SARS AND LIMITATIONS ON RIGHT TO EXERCISE
No incentive stock option granted pursuant to Section 4 of this Plan
shall be exercisable (a) more than five years after the Date of Grant with
respect to a 10-Percent Stockholder, and (b) more than ten years after the Date
of Grant with respect to all persons other than 10-Percent Stockholders. No
nonqualified stock option or SAR granted pursuant to Section 4 of this Plan
shall be exercisable more than ten years after the Date of Grant.
The Company shall not be required to issue any fractional shares of
Common Stock upon the exercise of any options granted under this Plan. No Holder
nor his legal representatives, legatees or distributees, as the case may be,
will be, or will be deemed to be, the recipient of any Common Stock subject to
an option unless and until said option has been exercised and the purchase price
of the Common Stock in respect of which the option has been exercised has been
paid. Unless otherwise provided in the SAR or Option Agreement, neither an
option nor an SAR shall be exercisable except by the Holder or by a person who
has obtained the Holder's rights under the option by, will or under the laws of
descent and distribution or between spouses or incident to divorce within the
meaning of Section 1041 of the Code or any successor provision. The Committee
shall have the discretion to permit a gift, transfer or sale of some or all of a
Holder's nonqualified stock options or SARs, or a deferral of SAR income, by
including such right in the Option or SAR Agreement.
8. TERMINATION OF EMPLOYMENT
The Committee shall determine at the Date of Grant what conditions
shall apply to the exercise of an option or a SAR granted under Section 4 in the
event a Holder shall cease to be employed by the Company or a Subsidiary for any
reason. In the event of the death of a Holder while in the employ or while
serving as a director of the Company or a Subsidiary, the SAR or option
theretofore granted to him shall be exercisable by the executor or administrator
of the Holder's estate, or if the Holder's estate is not in administration, by
the person or persons to whom the Holder's right shall have passed under the
Holder's will or under the laws of descent and distribution, within the year
next succeeding the date of death or such other period as may be specified in
the SAR or option agreement, but in no case later than the expiration date of
such option, and then only to the extent that the Holder was entitled to
exercise such option at the date of his death. Neither this Plan nor any option
granted hereunder is intended to confer upon any Holder any rights with respect
to continuance of employment or other utilization of his services by the Company
or by a Subsidiary, nor to interfere in any way with his right or that of his
employer to terminate his employment or other services at any time (subject to
the terms of any applicable contract).
9. DILUTION OR OTHER ADJUSTMENTS
In the event that there is any change in the Common Stock subject to
this Plan or subject to SARs or options granted hereunder as the result of any
stock dividend on, dividend of or stock split or stock combination of, or any
like change in, stock of the same class or in the event of any change in the
capital structure of the Company, the Board of Directors or the Committee shall
make such adjustments with respect to SARs, options, or any provisions of the
Plan, as it deems appropriate to prevent dilution or enlargement of SAR and
option rights.
(24)
Appendix A
10. EXPIRATION AND TERMINATION OF THE PLAN
Options may be granted at any time under Section 4 of the Plan prior to
the ten year anniversary of the Plan Adoption Date, as long as the total number
of shares of Common Stock which may be issued pursuant to options granted under
this Plan do not (except as provided in Section 9 above) exceed the limitations
of Section 3 above. This Plan may be abandoned, suspended or terminated at any
time by the Board of Directors of the Company except with respect to any options
or SARs then outstanding under the Plan.
11. RESTRICTIONS ON THE ISSUANCE OF COMMON STOCK
(a) The Company shall not be obligated to sell or issue any Common
Stock upon the exercise of any option or SAR granted under this Plan unless:
(i) the shares of Common Stock with respect to which such option
is being exercised have been registered under applicable federal
securities laws or are exempt from such registration;
(ii) the prior approval of such sale or issuance has been obtained
from any state regulatory body having jurisdiction; and
(iii) in the event the Common Stock has been listed on any
exchange, the shares of Common Stock with respect to which such option
is being exercised have been duly listed on such exchange in accordance
with the procedure specified therefor.
If the shares of Common Stock to be issued upon the exercise of any
option granted under the Plan are intended to be issued by the Company in
reliance upon the exemptions from the registration requirements of applicable
federal securities laws, the Holder, if so requested by the Company, shall
furnish to the Company such evidence and representations, including an opinion
of counsel, satisfactory to it, as the Company may reasonably request.
(b) No incentive stock option granted pursuant to the Plan shall be
transferable by the Holder other than by, will or the laws of descent and
distribution or between spouses or incident to divorce within the meaning of
Section 1041 of the Code or any successor provision.
(c) The Board of Directors or Committee may impose such other
restrictions on the ownership and transfer of Common Stock issued pursuant to
this Plan as it deems desirable; any such restrictions shall be set forth in any
option agreement entered into hereunder.
12. STOCK APPRECIATION RIGHTS
(a) The Committee shall have authority to grant SARs individually or in
conjunction with some or all of the options granted under this Plan. An SAR
granted with an incentive stock option must be granted on the Date of Grant of
such related option. An SAR granted with respect to a nonqualified stock options
may be granted on or after the Date of Grant of such related option.
(b) Each SAR shall be on such terms and conditions not inconsistent
with this Plan as the Committee may determine and shall be evidenced by a
written agreement.
(c) The Holder has no rights as a stockholder with respect to the
related or designated Common Stock as a result of the grant of an option or SAR.
13. PROCEEDS
The proceeds to be received by the Company upon exercise of any option
granted under this Plan may be used for any purpose by the Company.
14. AMENDMENT OF THE PLAN
The Board of Directors may amend the Plan from time to time in such
respects as it may deem advisable in its sole discretion or in order that the
options or SARs granted hereunder shall conform to any change in applicable
laws, including tax laws, or in regulations or rulings of administrative
agencies or in order that options granted or stock acquired upon exercise of
such options may qualify for simplified registration under applicable securities
or other laws; provided, however, that no amendment may be made without the
consent of stockholders which would materially (a) increase the benefits
accruing to Holders under the Plan, (b) increase the number of securities which
(25)
Appendix A
may be issued under the Plan, other than in accordance with Section 9 hereof, or
(c) modify the requirements as to eligibility for participation in the Plan, or
(d) make any change for which applicable law or regulatory authority (including
the regulatory authority of the NASDAQ or any other market or exchange on which
the Common Stock is traded) would require shareholder approval or for which
shareholder approval would be required to secure all deductibility of
compensation received under the Plan under Section 162(m) of the Code; and
provided, further, without limitation, that no amendment, suspension or
termination of the Plan or any option or SAR issued hereunder shall, except as
specifically permitted in this Plan or under the terms of such Option Agreement
or SAR Agreement, substantially impair any option or SAR previously granted to
any Holder without the consent of such Holder.
15. PAYMENT UPON EXERCISE
Upon the exercise of any option granted under the Plan, the Company may
make financing available to the Holder for the purchase of the Common Stock that
may be acquired pursuant to the exercise of such option on such terms as the
Committee shall specify, unless otherwise expressly provided in the Option
Agreement. Holder may pay the Exercise Price of the Common Stock as to which an
option is being exercised by the delivery of cash, a certified cashier's check,
a broker's check if exercise is through a broker dealer as described below, or
by the delivery of Common Stock which has been owned by the Holder for a period
of at least six (6) months prior to the date of exercise having a Fair Market
Value on the date of exercise equal to the Exercise Price, or by a combination
of those methods. On or immediately prior to the date on which a payment is made
to a Holder hereunder, the Holder shall be required to pay to the Company, in
cash or Common Stock (including, but not limited to, the reservation to the
Company of the requisite number of shares otherwise payable to such Holder with
respect to such option or SAR), but in Common Stock only if expressly provided
in the option, and otherwise only upon approval by the Committee, the amount
which the Company reasonably determines to be the minimum necessary in order for
the Company to comply with applicable federal or state tax withholding
requirements, and the collection of employment taxes, if applicable; however,
unless expressly provided to the contrary in the option, the Committee may
require that such payment be made in cash.
Any option granted under the Plan may be exercised by a broker-dealer
acting on behalf of a Holder if (a) the broker-dealer has received from the
Holder or the Company a fully- and duly-endorsed agreement evidencing such
option, together with instructions signed by the Holder requesting the Company
to deliver the Common Stock subject to such option to the broker-dealer on
behalf of the Holder and specifying the account into which such Common Stock
should be deposited, (b) adequate provision has been made with respect to the
payment of any withholding taxes due upon such exercise, and (c) the
broker-dealer and the Holder have otherwise complied with Section 220.3(e)(4) of
Regulation T, 12 CFR Part 220, or any successor provision, and (d) the shares of
Common Stock subject to such option are being sold by the broker-dealer on
behalf of the shareholder pursuant to (i) an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), covering
such sale or (ii) an exemption from registration under the Securities Act with
respect to such sale.
16. STOCKHOLDERS' APPROVAL
In order for the Plan to be effective, the Plan must be approved by the
affirmative vote of the holders of the majority of the shares of Common Stock
voting at a meeting of the shareholders of the Company at which proxies are
solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934, as
amended.
17. LIABILITY OF THE COMPANY
Neither the Company, its directors, officers or employees nor any of
the Company's Subsidiaries which are in existence or hereafter come into
existence shall be liable to any Holder or other person if it is determined for
any reason by the Internal Revenue Service or any court having jurisdiction that
any incentive stock options granted hereunder do not qualify for tax treatment
as incentive stock options under Section 422 of the Code or that the transfer of
an option or SAR resulted in taxable income to Holder.
(26)
ARKANSAS BEST CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
[ ]
<Table>
WITHHELD
FOR all from all FOR all nominees, except vote withheld
I. ELECTION OF DIRECTORS: nominees nominees from the following nominee(s):
--------------------------------
Nominees: [ ] [ ] [ ]
01 - William A. Marquard and 02 -Alan J. Zakon
and 03 - William M. Legg
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
II. To approve the 2002 Stock Option Plan [ ] [ ] [ ] III. 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:
-------------------------------------------------------
------------------------------------------------------------
SIGNATURE
------------------------------------------------------------
SIGNATURE
</Table>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSALS.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THE ABOVE PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
PROXY/BALLOT PROXY/BALLOT
ARKANSAS BEST CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS -- APRIL 24, 2002
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 24, 2002, 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 * *