SCHEDULE 14A
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:
[ ] 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 Section 240.14a-12
Arkansas Best Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ARKANSAS BEST CORPORATION
(Logo)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 2003
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 23, 2003 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 one Class II director for a term to expire at the
2006 Annual Meeting of Stockholders;
II. To ratify the appointment of Ernst & Young LLP as independent
auditors for fiscal year 2003;
III. To act upon such other matters as may properly be brought
before the meeting affecting the business and affairs of the
Company.
Only stockholders of record at the close of business on February 24, 2003 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 14, 2003.
/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 23, 2003 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 2002 Annual Report
to Stockholders are being mailed to stockholders beginning on or about March 14,
2003. 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 24, 2003 as the record
date for the 2003 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 2003 Annual Meeting.
VOTING SHARES
On the record date, there were 24,923,924 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 2003 Annual
Meeting.
Directors are elected by a plurality of the affirmative votes cast. To approve
any other matter, the vote required is the affirmative vote by the holders of a
majority of the total number of shares of Common Stock present in person and
entitled to vote on the matter, except as otherwise provided by law or the
Company's Certificate of Incorporation. The shareholder vote is determined by
counting the number of votes for or against each proposal.
In the election of directors, broker non-votes, if any, will be disregarded and
have no effect on the outcome of the vote. With respect to the ratification of
the appointment of auditors, abstentions from voting will have the same effect
as voting against such matter and broker non-votes, if any, will be disregarded
and have no effect on the outcome of such vote.
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. The Board currently consists of
seven members: two in the class whose members' term will expire at the 2003
Annual Meeting, two in the class whose members' terms will expire at the 2004
Annual Meeting, and three in the class whose members' terms will expire at the
2005 Annual Meeting. Mr. Arthur J. Fritz, Jr., one of the two directors whose
term expires at the 2003 Annual Meeting, has advised the Board that he does not
wish to stand for reelection. Since Mr. Fritz has decided not to stand for
reelection, the Board has determined to reduce the number of directors to six
and to nominate only John H. Morris as a director. Accordingly, effective as of
the commencement of the 2003 Annual Meeting, pursuant to the Company's
Certificate of Incorporation and Bylaws, the Board has fixed the number of
directorships at six. The Board intends to increase the size of the Board to
seven directors prior to the 2004 Annual Meeting by appointing an additional
director to the Board whose term will expire in 2006 and who the Board believes
qualifies as an "Audit Committee financial expert" pursuant to the regulations
adopted by the Securities and Exchange Commission and The NASDAQ Stock Market.
It is intended that the shares represented by the accompanying proxy will be
voted at the 2003 Annual Meeting for the election of nominee John H. Morris as
the director whose term will expire in 2006, unless the proxy specifies
otherwise. The nominee has indicated his willingness to serve as a member of the
Board, if elected.
If, for any reason not presently known, Mr. Morris will not be available for
election at the time of the 2003 Annual Meeting, the shares represented by the
accompanying proxy may be voted for the election in his stead of a substitute
nominee designated by the Board or a committee thereof, unless the proxy
withholds authority to vote for the nominee.
Assuming the presence of a quorum, to be elected the nominee must receive the
affirmative vote of the holders of a plurality of the Common Stock present, in
person or by proxy, at the 2003 Annual Meeting.
DIRECTORS OF THE COMPANY
The following information relates to the nominee named above and to the other
persons whose terms as directors will continue after the 2003 Annual Meeting.
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NAME DATE OF BIRTH BUSINESS EXPERIENCE
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CLASS II - NOMINEE FOR ELECTION AT THE ANNUAL MEETING 2003, TERM WILL EXPIRE
2006
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 affiliated
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.
(2)
<Table>
<Caption>
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NAME DATE OF BIRTH BUSINESS EXPERIENCE
- -------------------------------------------------------------------------------------------------------------------
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.
CLASS I -TERM EXPIRES AT THE ANNUAL MEETING 2005
William M. Legg ......... 09/21/44 Mr. Legg retired from Deutsche Banc Alex.Brown ("Alex.Brown") as
Managing Director and assumed the position of General Partner of
Springhill Ventures on March 31, 2002. During his 31 years at
Alex.Brown, 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.
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.
</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 2002. During 2002, 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 2002 are described
below. The Board does not have a committee for nomination of directors.
Independent Board members nominate 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 independent auditors, and the internal auditors the status of
internal accounting controls; reviews periodic reports of planned and completed
internal audit activities and recommendations and management's response; 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 internal auditors, or the Board. Messrs. Edelstein, Fritz,
Morris, and Zakon, each an independent director, currently are members of the
Audit Committee. The Audit Committee met five times during 2002, and the
Chairman of the Audit Committee 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, Zakon and Legg are members of the Executive Compensation and Development
Committee. The Executive Compensation and Development Committee met twice during
2002.
Stock Option Committee. The Stock Option Committee administers the Company's
1992 Incentive Stock Option Plan, 2000 Nonqualified Stock Option Plan, and 2002
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, Zakon and Legg are members of the
Stock Option Committee. The Stock Option Committee met twice during 2002.
Director Compensation. Mr. Young, as an officer of the Company, receives no
compensation for services as a Director. In 2002, the Chairman received an
$80,833.40 annual retainer and other non-employee Directors received a
$39,166.73 annual retainer. After joining the Board of Directors on April 24,
2002, Mr. Legg received a $26,666.72 retainer for the remainder of 2002. Each
non-employee Director receives $1,500 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.
Directors have received stock option grants in certain years, beginning in 1992
under the 1992 Stock Option Plan. Mr. Legg received a stock option/Employer SAR
(stock appreciation right) grant under the 2002 Stock Option Plan on April 24,
2002 for 7,500 shares of the Company's Common Stock at a fair market value
exercise price of $23.53 per share. On each anniversary of the grant, 20% of the
options vest and thereafter can be exercised through the tenth year after the
grant date. Mr. Legg's grant included an Employer SAR that entitles the Stock
Option Committee to determine at the time of exercise whether to allow Mr. Legg
to exercise the grant as a stock option or SAR.
(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 24, 2003, 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, and (iii) all directors,
director nominee, and executive officers as a group.
<Table>
<Caption>
-------------- ----------------
SHARES PERCENTAGE
BENEFICIALLY OF SHARES
OWNED OUTSTANDING (8)
-------------- ----------------
(i) NAME / ADDRESS
FMR Corp. (1).............................................................. 3,706,603 14.9%
82 Devonshire Street
Boston, MA 02109
(ii) NAME POSITION
Robert A. Young III (2) (5) (7).......... Director, President-CEO 2,171,372 8.7%
William A. Marquard (2).................. Director 186,548 *
John H. Morris (2)(3).................... Director Nominee 95,025 *
Arthur J. Fritz, Jr. (2)................. Director 22,500 *
Frank Edelstein (2)(4)................... Director 64,823 *
Alan J. Zakon (2)........................ Director 50,000 *
William M. Legg (2)...................... Director 1,500 *
John R. Meyers (2)....................... Vice President 25,555 *
David E. Stubblefield (2) (6) (7)........ President-CEO, ABF 169,548 *
David Loeffler (2)....................... Vice President-CFO 92,970 *
Jerry A. Yarbrough (2) (7)............... Senior Vice President 147,122 *
(III) All Directors and Executive Officers as a Group (15 total).......... 3,183,916 12.6%
</Table>
*Less than 1%
(1) According to the most recent Schedule 13G it has provided to the
Company, FMR Corp. beneficially owns 3,706,603 shares of the Company's
Common Stock and has the following voting and investment powers with
respect to such shares: (a) sole voting power, 694,376 shares; (b)
shared voting power, not applicable; (c) sole investment power;
3,706,603 shares; (d) shared investment power, not applicable.
(2) Includes stock option shares of Common Stock which are vested and will
vest within 60 days of the record date as follows:
<Table>
<Caption>
Will Vest
Vested in 60 Days
------ ----------
Marquard.................. 25,500 --
Morris.................... 15,000 --
Edelstein................. 60,000 --
Fritz..................... 22,500 --
Zakon..................... 45,000 --
Legg...................... -- 1,500
Young..................... 99,710 --
Meyers.................... 5,867 --
Stubblefield.............. 22,807 --
Loeffler.................. 31,184 --
Yarbrough................. 5,155 --
(3) Mr. Morris indirectly owns 70,025 shares as co-trustee of the John H.
Morris and Sharon L. Morris Family Trust and 10,000 shares as
co-trustee of the Morris C.R.T. Charitable Remainder Trust.
(4) Mr. Edelstein indirectly owns 4,823 shares as joint trustee of the
Edelstein Living Trust.
</Table>
(5)
(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 51,500 shares as joint trustee of the
David E. Stubblefield and Suzanne S. Stubblefield Irrevocable Trust.
(7) Includes Arkansas Best 401(k) Savings Plan amounts invested in ABC
Stock which equals the following common stock shares: Young, 923
shares; Stubblefield, 548 shares; and Yarbrough, 25,778 shares.
(8) The numerator and denominator for percentages includes the number of
beneficially owned stock options of the individual or the Director and
Executive Officer Group as applicable.
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 the President-CEO of its largest subsidiary, and one
individual who served as President-CEO of its largest subsidiary through January
31, 2003. 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
Robert A. Davidson............. 12/31/47 Mr. Davidson became President and Chief Executive Officer of ABF
ABF President- Freight System, Inc. ("ABF"), ABC's largest subsidiary, on
Chief Executive Officer February 1, 2003. Mr. Davidson had served as Vice President of
(Effective 2/01/03) Marketing and Pricing for ABF since August 1997. Mr. Davidson was
Vice President of Pricing for ABF from April 1983 to August 1997.
David E. Stubblefield.......... 05/26/37 Mr. Stubblefield served as President and Chief Executive Officer
ABF President- of ABF Freight System, Inc. ("ABF"), ABC's largest subsidiary,
Chief Executive Officer from January 1, 1995, until his retirement on January 31, 2003.
(Retired 1/31/03) He served as a Director of ABF from 1985 until January 31, 2003.
From 1979 through 1994, Mr. Stubblefield was Senior Vice
President-Marketing of ABF.
Jerry A. Yarbrough ............ 10/05/38 Mr. Yarbrough has been ABC's Senior Vice President - Corporate
Senior Vice President- Development since April 1998. From January 1995 through March
Corporate Development 1998, Mr. Yarbrough was Chairman of Integrated Distribution, Inc.
and Best Logistics, Inc., which were subsidiaries of the Company.
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
</Table>
(6)
<Table>
<Caption>
NAME DATE OF BIRTH BUSINESS EXPERIENCE
- ------------------------------- --------------- ---------------------------------------------------------------------
Richard F. Cooper.............. 12/28/51 Mr. Cooper has been ABC's Vice President-Administration since
Vice President-Administration 1995, ABC's Vice President-Risk Management from April 1991
General Counsel and to 1995 and Vice President-General Counsel since 1986. Mr. Cooper
Secretary has been Secretary since 1987.
J. Morton ............... 09/25/50 Mr. Morton was appointed ABC's Vice President-Tax and Chief
Vice President-Tax and Internal Auditor in January 2000. From May 1997 to December 1999,
Chief Internal Auditor Mr. Morton was Vice President-Financial Reporting. Mr. Morton
joined ABC as Assistant Treasurer in December 1996. 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. In January 2003, Mr. Morton became a member of the
Board of Directors of BEI Technologies, Inc.
Judy R. McReynolds ............ 05/24/62 Ms. McReynolds was appointed Vice President-Controller of
Vice President-Controller ABC in 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>
(7)
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 2002.
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...... 2002 $ 583,933 $ 341,280 -- -- -- -- $10,810(4)
President-CEO 2001 503,600 374,678 -- -- 31,554 -- 10,176
2000 503,600 1,117,992 -- -- 24,000 -- 25,010
David E. Stubblefield.... 2002 342,267 296,275 -- -- -- -- 21,100
ABF President-CEO 2001 303,600 399,082 -- -- 22,500 -- 20,700
2000 303,600 1,112,239 -- -- 18,000 -- 20,700
John R. Meyers (5)....... 2002 258,000 97,834 -- -- -- -- 21,100
Vice President 2001 47,161 23,490 -- -- 5,778 -- 1,565
2000 254,400 -- -- -- 12,000 -- 4,850
Jerry A. Yarbrough....... 2002 243,600 115,466 -- -- -- -- 21,100
Senior Vice President- 2001 243,600 151,032 -- -- 15,778 -- 20,700
Corporate Development 2000 243,600 450,660 -- -- 12,000 -- 20,700
David E. Loeffler........ 2002 211,850 101,910 -- -- -- -- 6,100
Vice President-CFO 2001 196,100 121,582 -- -- 15,778 -- 5,700
2000 196,100 362,785 -- -- 12,000 -- 5,700
---- --------- --------- ------- ------- ------- ------ ----------
</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.
(3) "All Other Compensation" for 2002 includes the following:
<Table>
<Caption>
Young Stubblefield Meyers Yarbrough Loeffler
-------- ------------ ------- --------- --------
401(k) Company Match ............... $ 5,500 $ 5,500 $ 5,500 $ 5,500 $ 5,500
Voluntary Savings Plan Company Match -- 15,000 15,000 15,000 --
24-Hour Accidental Death Premiums .. 600 600 600 600 600
Split Dollar Term Life Premiums .... 4,710 -- -- -- --
-------- ------------ ------- --------- --------
Total All Other Annual Compensation $ 10,810 $ 21,100 $21,100 $ 21,100 $ 6,100
</Table>
Amounts attributable to the Supplemental Benefit Plans and to Deferred
Salary Agreements are reported in the "RETIREMENT AND SAVINGS PLANS"
section.
(4) The Company owns and pays premiums on two $1 million life insurance
policies that were taken out in 1966 on Mr. Young. As owner of the
policies, the Company is entitled to either the cash surrender value of
each or the total of premiums paid, whichever amount is greater. The
death value in excess of this amount is payable to Mr. Young's
beneficiary and is not determinable at this time. For each of 2000,
2001 and 2002, the premiums on these policies were $32,438. The portion
of the premiums attributable to term life insurance was $4,310 in 2000;
$4,476 in 2001; and $4,710 in 2002.
(5) For Mr. Meyers, during the period of January, 1996 through October 31,
2000, his salary was paid by the Company's controlled subsidiary,
Treadco, Inc.
(8)
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
The following table provides information related to options exercised by the
named executive officers during the 2002 fiscal year and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights for named executive officers as of December 31, 2002.
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
SHARES SARS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ACQUIRED VALUE --------------------------------- ----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ---------------- ------------- ----------------- --------------- ------------- --------------
Robert A. Young III 6,556 102,438 88,510 44,444 $ 1,500,251 $ 242,755
David E. Stubblefield 21,477 387,991 4,622 32,401 6,807 220,738
Jerry A. Yarbrough 38,400 685,204 3,155 22,223 3,212 145,866
John R. Meyers 15,700 209,218 3,467 11,823 28,567 88,963
David E. Loeffler 0 0 25,584 22,223 416,691 145,866
</Table>
(1) The closing price for the Company's Common Stock as reported by the Nasdaq
Stock Market on December 31, 2002 was $25.98. Value is calculated on the
basis of the difference between the option exercise price and $25.98
multiplied by the number of shares of Common Stock underlying the option.
STOCK OPTION/SAR GRANTS
The Company did not grant any stock options or stock appreciation rights to
employees during the fiscal year ended December 31, 2002.
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, Morris, and
Legg and the Stock Option Committee is comprised of Messrs. Edelstein, Fritz,
Zakon, and Legg. All Committee Members are independent Directors. The
Compensation Committee, at its discretion, reviews and grants all forms of
executive compensation except stock options, stock appreciation rights, and
performance award units. The Stock Option Committee, at its discretion, grants
stock options, stock appreciation rights, and performance award units to the
executive group pursuant to the Company's stock option plans and performance
award program, respectively.
(9)
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 Internal Revenue
Service Code Section 162(m).
(iii) Stock Option/SAR Plan. The Stock Option Committee is responsible for
the granting of stock options and stock appreciation rights 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. Grants for all years provide that optionee
has up to 10 years from the date of the grant to exercise part or all
of their 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 and 2002 Stock Option Plan were approved by the shareholders and
are designed to be compliant with Internal Revenue Service Code Section
162(m).
(iv) Deferred Salary Agreements. The Company has Deferred Salary Agreements
with certain Company and subsidiaries' executives. The Company believes
these Deferred Salary Agreements have aided it in retaining these
individuals who average over 25 years of employment with it or its
subsidiaries or in the transportation industry and have acquired
experience, knowledge and contacts of considerable value to it. See
"RETIREMENT AND SAVINGS PLANS" 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.
(10)
EXECUTIVE COMPENSATION AND
DEVELOPMENT COMMITTEE STOCK OPTION COMMITTEE
William A. Marquard Arthur J. Fritz, Jr.
William M. Legg Frank Edelstein
John H. Morris William M. Legg
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,
2002, 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, 2002 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. The charter was appended to the Company's 2001 Proxy Statement.
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.
(11)
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of five-year cumulative total return for
the Company, the Russell 2000 Market Index, the NASDAQ Market Index, and an
index of peer companies selected by the Company.
<Table>
<Caption>
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01 12/31/02
Arkansas Best Corp 100.00 59.94 123.08 187.83 295.59 266.47
Customer Selected Stock List 100.00 72.17 79.77 87.94 128.16 128.98
NASDAQ Market Index 100.00 141.04 248.76 156.35 124.64 86.94
Russell 2000 Index 100.00 97.20 116.24 111.22 112.36 88.11
</Table>
The above comparisons assume $100 was invested on January 1, 1998, 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 current peer group are as follows: Roadway Express,
Inc., and Yellow Corp. of Delaware. The previous year's peer group was Roadway
Express, Inc., Yellow Corp. of Delaware, and Consolidated Freightways, Inc.
Consolidated Freightways, Inc. is excluded in this graph due to its filing
bankruptcy and ceasing operations in September 2002.
The broad equity market index was changed from the NASDAQ Market Index to the
Russell 2000 Index in this graph due to the Company's belief that the Russell
2000 Index better represents companies that are similar to Arkansas Best
Corporation.
(12)
RETIREMENT AND SAVINGS PLANS
Non-union employees of the Company and ABF who fulfill a minimum age and service
requirement are eligible to participate in either the Company's Retirement Plan
or ABF's Retirement Plan, as applicable, which generally provide 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, 38 years; David E. Stubblefield, 43 years; Jerry A. Yarbrough, 35 years;
John R. Meyers, 29 years; and David E. Loeffler, 7 years. Benefits are based
upon a participant's years of service and average total monthly earnings
(exclusive of extraordinary remuneration and expense allowances and subject to
the annual Code limitation after December 31, 2001 of $200,000 as adjusted to
reflect cost of living increases) during any sixty (60) consecutive calendar
months during the participant's employment since 1980 which will give the
participant the highest average monthly earnings ("Retirement Plan
Compensation"). Benefits also are subject to certain other limitations in the
Code.
The following table illustrates the total estimated annual benefits payable from
the Retirement Plans and the Company's and ABF's Supplemental Benefit Plans (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. The
benefits listed in the table are not subject to any deduction for Social
Security or other offset amounts.
<Table>
<Caption>
60-MONTH
AVERAGE ANNUAL YEARS OF SERVICE
COMPENSATION 5 10 15 20 25 30 35 40 45
- -------------------------------------------------------------------------------------------------------------------------------
$ 300,000 $ 29,760 $ 59,520 $ 89,280 $ 119,040 $ 148,800 $ 178,560 $ 208,320 $ 238,080 $ 267,840
350,000 34,760 69,520 104,280 139,040 173,800 208,560 243,320 278,080 312,840
400,000 39,760 79,520 119,280 159,040 198,800 238,560 278,320 318,080 357,840
450,000 44,760 89,520 134,280 179,040 223,800 268,560 313,320 358,080 402,840
500,000 49,760 99,520 149,280 199,040 248,800 298,560 348,320 398,080 447,840
550,000 54,760 109,520 164,280 219,040 273,800 328,560 383,320 438,080 492,840
600,000 59,760 119,520 179,280 239,040 298,800 358,560 418,320 478,080 537,840
650,000 64,760 129,520 194,280 259,040 323,800 388,560 453,320 518,080 582,840
700,000 69,760 139,520 209,280 279,040 348,800 418,560 488,320 558,080 627,840
750,000 74,760 149,520 224,280 299,040 373,800 448,560 523,320 598,080 672,840
800,000 79,760 159,520 239,280 319,040 398,800 478,560 558,320 638,080 717,840
900,000 89,760 179,520 269,280 359,040 448,800 538,560 628,320 718,080 807,840
1,000,000 99,760 199,520 299,280 399,040 498,800 598,560 698,320 798,080 897,840
1,100,000 109,760 219,520 329,280 439,040 548,800 658,560 768,320 878,080 987,840
1,200,000 119,760 239,520 359,280 479,040 598,800 718,560 838,320 958,080 1,077,840
1,300,000 129,760 259,520 389,280 519,040 648,800 778,560 908,320 1,038,080 1,167,840
1,400,000 139,760 279,520 419,280 559,040 698,800 838,560 978,320 1,118,080 1,257,840
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
In December 1987, the Company also established the Arkansas Best Corporation
Supplemental Benefit Plan and ABF established the ABF Freight System, Inc.
Supplemental Benefit Plan. Both Supplemental Benefit Plans are designed to
supplement benefits under the defined benefit Retirement Plans. The Code places
limits on the amount of income participants may receive under the Retirement
Plans. In order to compensate for those limitations and for reductions in the
rate of benefit accruals from the 1985 formula under the Retirement Plans, the
Supplemental Benefit Plans will pay sums in addition to amounts payable under
the Retirement Plans to eligible participants. Participation in the Supplemental
Benefit Plans is generally limited to employees of the Company or ABF who are at
or above the rank of vice president and are designated as participants in a
Supplemental Benefit Plan by the Company's Board. The amount due to each
participant in the Supplemental Benefit Plans is the actuarial equivalent of the
excess of (1) the payment due under the Retirement Plans 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 Plans without regard to any Code limitations if more; over (2) the
actual benefit received from the Retirement Plans. This payment will be made in
a lump sum or in annual installments over
(13)
a period of not more than 15 years at the participant's election. Amounts
attributable to the Supplemental Benefit Plans are included in the pension table
set forth above. The Supplemental Benefit Plans take into account all Retirement
Plan Compensation without regard to Code limitations ("Covered Compensation").
Covered compensation for the named executives equals: Mr. Young, $1,117,631; Mr.
Stubblefield, $905,247; Mr. Yarbrough, $452,789; Mr. Loeffler, $403,271 and Mr.
Meyers, $329,684.
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 projected annual compensation from this plan
based on current base salary plus 20% is Mr. Stubblefield, $122,501; Mr. Young,
$252,000; Mr. Yarbrough, $102,312; Mr. Loeffler, $90,300; and Mr. Meyers,
$108,360. No increase was included for Mr. Stubblefield due to his retirement on
January 31, 2003.
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 Plans provide 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 Plans.
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 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. See
"RETIREMENT AND SAVINGS PLANS" section for additional general information about
Deferred Salary Agreements.
The Annual Incentive Compensation Plan provides that in the event of a Change in
Control of the Company, each participant shall receive a pro rata payment of the
greater of his or her Target Incentive Award or Final Award for the Plan Year
during which the Change of Control occurs. See "REPORT ON EXECUTIVE COMPENSATION
BY THE EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE AND STOCK OPTION
COMMITTEE" for additional information on the Annual Incentive Compensation Plan.
(14)
The Company has agreed to provide a Post-Employment Medical Plan that covers
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 insured program and commence at retirement.
If the employee leaves the company with at least 10 years of service and is
between ages 55 and 60, the employee pays the Company at the then current COBRA
rates which are offset against the full premium paid by the Company. The Company
pays the full amount for insurance premiums from age 60 until age 65 and covers
premiums for Medipak, prescription drug, and dental after reaching 65 for the
life of the employee (and spouse or other eligible dependents).
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.
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. However,
Director Arthur J. Fritz, Jr. filed a late Form 4 on May 7, 2002, reporting two
purchases of Arkansas Best Corporation Common Stock transacted on September 24,
1998. Mr. Fritz is retiring from the Board effective April 23, 2003.
PROPOSAL II. RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL II.
The firm of Ernst & Young LLP served as independent auditors for the Company for
the fiscal year ended December 31, 2002. Pursuant to the recommendation of the
Audit Committee, the Board has appointed that firm to continue in that capacity
for the fiscal year 2003, and recommends that a resolution be presented to
stockholders at the 2003 Annual Meeting to ratify that appointment.
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 2003 Annual Meeting. They
will have the opportunity to make a statement and respond to appropriate
questions from stockholders.
(15)
OTHER AUDITOR RELATED MATTERS
During 2002, the Company retained its independent auditors, Ernst & Young LLP,
to provide services in the following categories and amounts:
<Table>
Annual Audit Fees ........................... $361,580
Financial Information Systems Design
and Implementation Fees .................. 0
All Other Fees
Audit-related services .................. 116,064
Tax services ............................ 149,490
</Table>
The Audit Committee has considered the compatibility of nonaudit services with
maintaining the auditor's independence.
OTHER MATTERS
The Board does not know of any matters that will be presented for action at the
2003 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 2003 Annual Meeting, it is intended that the
shares represented by the accompanying proxy will be voted on such matters in
accordance with the discretion of the holders of such proxy.
COST OF SOLICITATION
Proxies may be solicited by directors, officers, or regular employees of the
Company in person, by telephone, telegram, or other means. The cost of
preparing, assembling, and mailing the proxy material and of reimbursing
brokers, nominees, and fiduciaries for the out-of-pocket and clerical expenses
of transmitting copies of the proxy material to the beneficial owners of shares
held by record by such persons will be borne by the Company.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Pursuant to Securities and Exchange Commission Rule 14a-8, stockholder proposals
submitted for next year's proxy statement must be received by the Company no
later than the close of business on November 14, 2003 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.
Any stockholder, entitled to vote at the 2004 Annual Meeting and intending to
nominate candidate(s) for director at the 2004 Annual Meeting, or to introduce
any other matter (aside from a stockholder proposal under SEC Rule 14a-8), must
submit a written notice to the Corporation. Such notice must be received by the
Secretary of the Corporation at the address above not less than 90 days nor more
than 120 days prior to the first anniversary of the preceding year's Annual
Meeting. Such notices nominating candidates for director must include (1) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act, as
amended (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); (2) as to the
stockholder giving the notice (a) the name and address of the beneficial owner,
if any, on whose behalf the notice is given, (b) the class and number of shares
of the corporation which are owned beneficially and of record by such
stockholder of record and the beneficial owner, if any, on whose behalf the
notice is given, and (c) any material interest of such stockholder of record and
the beneficial owner, if any, on whose behalf the notice is given. Such notices
introducing other matters must set forth as to each matter the stockholder
proposes to bring before the
(16)
Annual Meeting: (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, and the name
and address of the beneficial owner, if any, on whose behalf the proposal is
made, (c) the class and number of shares of the corporation which are owned
beneficially and of record by such stockholder of record and the beneficial
owner, if any, on whose behalf the proposal is made, and (d) any material
interest of such stockholder of record and the beneficial owner, if any, on
whose behalf the proposal is made.
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, 2002, without charge. Direct written requests to: David Humphrey, Director -
Investor Relations, Arkansas Best Corporation, 3801 Old Greenwood Road, Fort
Smith, AR 72903.
In some cases, where there are multiple stockholders at one address, only one
annual report and proxy statement will be delivered, a procedure referred to as
"householding." Each stockholder will continue to receive a separate proxy card.
Stockholders who hold positions in street name through a broker or other nominee
should either call ADP Investor Communication Services at 800-542-1061 or
contact their broker or nominee if they have questions, require additional
copies of the proxy statement or annual report, or wish either to give
instructions to household or to revoke their decision to household.
Registered shareholders who own stock in their own name through certificate and
have questions about householding, can contact the Company's stock transfer
agent, LaSalle Bank National Association, by phone at 800-246-5761 or by
Internet www.lasallebank.com.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD/BALLOT PROMPTLY
/s/ Richard F. Cooper
Fort Smith, Arkansas RICHARD F. COOPER
Date: March 14, 2003 Secretary
(17)
ARKANSAS BEST CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
<Table>
[ ]
FOR WITHHELD FOR AGAINST ABSTAIN
I. ELECTION OF DIRECTOR: II. To ratify the appointment of
Nominee: Ernst & Young LLP as the Company's
01 - John H. Morris [ ] [ ] independent certified public accountants. [ ] [ ] [ ]
</Table>
<Table>
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.
---
o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THE ABOVE PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
PROXY/BALLOT PROXY/BALLOT
ARKANSAS BEST CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
- -- APRIL 23, 2003
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 23, 2003, 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 NOMINEE NAMED AND FOR THE OTHER PROPOSAL SPECIFIED
HEREIN.
* * CONTINUED AND TO BE SIGNED ON REVERSE SIDE * *