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:
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(2) Aggregate number 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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(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 27, 2004
TO THE STOCKHOLDERS OF ARKANSAS BEST CORPORATION:
You are cordially invited to attend the Annual Meeting of Stockholders of
Arkansas Best Corporation on Tuesday, April 27, 2004 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 two Class III directors for a term to expire at the 2007
Annual Meeting of Stockholders;
II. To ratify the appointment of Ernst & Young LLP as independent auditors
for fiscal year 2004;
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 27, 2004 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 19, 2004.
/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 27, 2004 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 2003 Annual Report
to Stockholders are being mailed to stockholders beginning on or about March 19,
2004. 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 27, 2004 as the record
date for the 2004 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 2004 Annual Meeting.
VOTING SHARES
On the record date, there were 24,961,367 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 2004 Annual
Meeting. The stockholder vote is determined by counting the number of votes for
or against each proposal. Votes are tabulated by LaSalle Bank N.A.
Election of Directors. Directors are elected by a plurality of the affirmative
votes cast. Neither abstentions nor broker nonvotes affect the outcome of the
voting. They are neither a vote for nor against the proposal.
Other Matters. The required vote to approve any matter other than the election
of directors is the affirmative vote by the holders of a majority of the total
number of shares of Common Stock present in person or by proxy and entitled to
vote on the matter, except as otherwise provided by law or the Company's
Certificate of Incorporation. Abstentions have the same effect as a vote against
the proposal. Broker nonvotes are treated as unvoted for the purposes of
determining approval of the proposal and have the effect of neither a vote for
nor a vote against the proposal.
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 2004
Annual Meeting, three in the class whose members' terms will expire at the 2005
Annual Meeting, and two in the class whose members' terms will expire at the
2006 Annual Meeting. Mr. Fred A. Allardyce was recently appointed to the Board
as its designated audit committee financial expert, pursuant to regulations
adopted by the Securities and Exchange Commission ("SEC") and The NASDAQ Stock
Market. With the addition of Mr. Allardyce to Class II directorships, the Board
increased the number of directors to seven.
It is intended that the shares represented by the accompanying proxy will be
voted at the 2004 Annual Meeting for the election of the Board's nominees, Frank
Edelstein and Robert A. Young III, directors whose terms will expire in 2007,
unless the proxy specifies otherwise. Each nominee has indicated his willingness
to serve as a member of the Board, if elected.
If, for any reason not presently known, either Messrs. Edelstein or Young will
not be available for election at the time of the 2004 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 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 2004 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 2004 Annual Meeting.
<Table>
<Caption>
NAME AGE BUSINESS EXPERIENCE
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CLASS III - NOMINEES FOR ELECTION AT THE ANNUAL MEETING 2004, TERM WILL EXPIRE 2007
Frank Edelstein ........ 78 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 .... 63 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>
(2)
<Table>
<Caption>
NAME AGE BUSINESS EXPERIENCE
- ------------------------ ----- -------------------------------------------------------------------------------
CLASS I -TERM EXPIRES AT THE ANNUAL MEETING 2005
William M. Legg............ 59 Mr. Legg has been a Director of the Company since April 2002. He retired from
Deutsche Banc Alex.Brown ("Alex.Brown") as Managing Director and assumed the
position of Managing Director of Springhill Ventures in 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-related transactions 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 ....... 84 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. ...... 68 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 2006
John H. Morris ............ 60 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.
</Table>
(3)
<Table>
<Caption>
NAME AGE BUSINESS EXPERIENCE
- ------------------------ ----- -------------------------------------------------------------------------------
CLASS II - TERM EXPIRES AT THE ANNUAL MEETING 2006
Fred A. Allardyce.......... 62 In February 2004, the Board appointed Mr. Allardyce a member of the Board and
its Audit Committee and also designated him as the Board's Audit Committee
Financial Expert. Mr. Allardyce has been Chairman and Chief Executive Officer of
Advanced Breath Diagnostics since March 2000 and Chairman of Monitor Instruments
since September 2000. From 1977 through 1999, he was employed by American
Standard Inc., a publicly traded company, where he served in the following
positions: Senior Vice President-Medical Products from January 1999 to December
2000; Chief Financial Officer from 1993 to 1998; Controller from 1984 to 1993;
and Assistant Controller from 1977 to 1984. He also served in various
financial-related capacities for Joseph E. Seagram & Sons from 1972 to 1977 and
at Continental Oil Company from 1965 to 1972. Mr. Allardyce earned a BA in
Economics from Yale University and an MBA from the University of Chicago
Graduate School of Business, where he was the recipient of the Institute of
Professional Accountants Fellowship. Mr. Allardyce was chairman in fiscal
1999-2000 of Financial Executives International, a 15,000-member organization of
financial leaders.
</Table>
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 Board action is
required between scheduled meetings. The Board met six times during 2003. During
2003, 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. A majority of the members of the Company's Board of Directors are
independent pursuant to applicable NASDAQ independence standards. Independent
Directors include Messrs. Marquard, Allardyce, Edelstein, Legg, Morris, and
Zakon.
It is Arkansas Best Corporation's policy that all members of its Board of
Directors attend each annual meeting of its stockholders, except when illness or
other personal matters prevent such attendance. Five of the six Directors of the
Company's Board attended the annual meeting in 2003.
The Board has established Audit, Compensation, Nominating, and Qualified Legal
Compliance 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 2003 are described
below.
Audit Committee. Among the responsibilities of the Audit Committee contained in
its charter, it assists the Board in overseeing matters involving the
accounting, auditing, financial reporting, and internal control functions of the
Company, is directly responsible for the appointment, termination and oversight
of the independent auditors for the Company, and is responsible for establishing
procedures for the receipt, retention and treatment of complaints received by
the Company regarding accounting, internal accounting controls or auditing
matters and the confidential anonymous submission by employees of concerns
regarding questionable accounting or auditing matters. Messrs. Edelstein,
Allardyce, Morris and Zakon currently are members of the Audit Committee. Each
member of the committee meets all applicable SEC and NASDAQ independence
standards for audit committee members. The Board designated Mr. Fred A.
Allardyce as its "audit committee financial expert." The Audit Committee met
five times during 2003, and the Chairman of the Audit Committee had four
Quarterly Financial Information Review meetings. The Audit Committee Charter is
posted in the Corporate Governance section of the Company Web site,
www.arkbest.com, and is in Appendix A of this Proxy Statement. The written
charter was adopted on April 19, 2000, and revised on October 22, 2003.
(4)
Compensation Committee. The Compensation Committee is responsible for reviewing
executive management's performance and for determining appropriate compensation.
Messrs. Marquard, Morris, Zakon and Legg are members of the Compensation
Committee. Each member of the committee meets applicable NASDAQ independence
standards. The Compensation Committee met twice during 2003. The Compensation
Committee Charter is posted in the Corporate Governance section of the Company
Web site, www.arkbest.com.
The Board has designated the Compensation Committee to also serve as the Stock
Option Committee for the Company's stock option plans. 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 sole authority 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.
Nominating Committee. The Nominating Committee is responsible for identifying
individuals believed to be qualified to become Board members and to select and
recommend to the Board for its approval, the nominees to stand for election as
directors by the stockholders, or if applicable, to be appointed to fill
vacancies on the Board. The members of the Nominating Committee, Messrs.
Marquard and Edelstein, are independent, as independence is defined in
applicable NASDAQ independence standards. The committee was formed in 2004 and
did not hold any meetings in 2003. A current copy of the Nominating Committee
Charter is posted in the Corporate Governance section of the Company's Web site,
www.arkbest.com.
In recommending nominees, the Nominating Committee considers any specific
criteria the Board may approve and such other factors as it deems appropriate.
These factors may include any special training or skill, experience with
businesses and other organizations of comparable size and type, experience or
knowledge with businesses or organizations that are of particular relevance to
the Company's current or future business plans, financial expertise, the
interplay of the candidate's experience with the experience of the other Board
members, sufficient time to devote to the responsibilities of a director,
freedom from conflicts of interest or legal issues, and the extent to which, in
the Nominating Committee's opinion, the candidate would be a desirable addition
to the Board.
The Nominating Committee may draw upon individuals known by members of the
Board, and at the Nominating Committee's discretion, candidates recommended by
management or third parties engaged by the Nominating Committee to assist it in
identifying appropriate candidates.
The Nominating Committee shall consider any candidate for director recommended
by a stockholder if submitted in accordance with the Stockholder Director
Nomination Procedure set forth below. The Nominating Committee shall consider
the same factors when considering a stockholder-recommended candidate as it does
when considering other candidates.
The Nominating Committee considers Board Candidates submitted by security
holders that follow the procedure set forth in the following Stockholder
Director Nomination Procedure:
Any stockholder, entitled to vote at an annual meeting of stockholders
and intending to nominate candidate(s) for director at that meeting,
must submit a written notice to Arkansas Best Corporation. Such notice
must be received by the Corporate Secretary at 3801 Old Greenwood Road,
Fort Smith, Arkansas 72903 not less than 90 days nor more than 120 days
prior to the first anniversary of the preceding year's annual meeting
of stockholders. Such notices nominating candidates for the Board of
Directors must include the following information: (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 elections of directors, or
is otherwise required pursuant to Regulation 14A of the Exchange Act,
as amended (including such proposed candidate's written consent to
being named in the proxy statement 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 Arkansas Best 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.
(5)
Qualified Legal Compliance Committee. The Audit Committee is designated by the
Board to serve as the Company's Qualified Legal Compliance Committee. The
Qualified Legal Compliance Committee charter is posted in the Corporate
Governance section of the Company's Web site, www.arkbest.com.
Director Compensation. Mr. Young, as an officer of the Company, receives no
compensation for services as a Director. In 2003, the Chairman received an
$82,000 annual retainer and other non-employee Directors received a $40,000
annual retainer. 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 1993
under the 1992 Stock Option Plan. Messrs. Edelstein, Legg, Marquard, Morris and
Zakon, all non-employee Directors, received stock option/Employer SAR (stock
appreciation right) grants under the Company's 2002 Stock Option Plan on January
22, 2003 for 7,500 shares of the Company's Common Stock at a fair market value
exercise price of $24.59 per share. On each anniversary of the grant, 20% of the
options vest after the grant date. The grants awarded in 2003 included an
Employer SAR that entitles the Stock Option Committee to determine at the time
of exercise whether to allow the grants to be exercised as stock options or
SARs.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock as of February 27, 2004, 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 nominees, and executive officers as a group.
<Table>
<Caption>
SHARES PERCENTAGE
BENEFICIALLY OF SHARES
OWNED OUTSTANDING (10)
------------ ----------------
(i) NAME / ADDRESS
FMR Corp. (1).................................................................... 3,675,784 14.7%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company, LLP ("WMC")(2).................................... 2,198,470 8.8%
75 State Street
Boston, MA 02109
Barclays Global Investors NA (3)................................................. 1,375,918 5.5%
45 Fremont Street
San Francisco, CA 94105
(ii) NAME POSITION
Robert A. Young III (4)(7)(8)............ Director Nominee, President-CEO 2,187,895 8.7%
William A. Marquard (4)(9)............... Director 192,848 *
John H. Morris (4)(5).................... Director 63,062 *
Frank Edelstein (4)(6)................... Director Nominee 62,902 *
Alan J. Zakon (4)........................ Director 57,500 *
William M. Legg (4)...................... Director 4,500 *
Fred A. Allardyce........................ Director 0 *
John R. Meyers (4)....................... Vice President 30,611 *
Robert A. Davidson (4)................... President-CEO, ABF 32,700 *
David Loeffler (4)....................... Senior Vice President-CFO & Treasurer 82,795 *
Jerry A. Yarbrough (4)(8)................ Senior Vice President 170,583 *
(iii) All Directors and Executive Officers as a Group (14 total)................ 2,985,629 11.8%
</Table>
- ----------
* Less than 1%
(6)
(1) According to the most recent Schedule 13G it has provided the Company,
FMR Corp. beneficially owns 3,675,784 shares of the Company's Common
Stock and has the following voting and dispositive powers with respect
to such shares: (a) sole voting power, 461,837 shares; (b) shared
voting power, 0 shares; (c) sole dispositive power, 3,675,784 shares;
(d) shared dispositive power, 0 shares.
(2) According to the most recent Schedule 13G it has provided the Company,
WMC beneficially owns 2,198,470 shares of the Company's Common Stock
and has the following voting and dispositive powers with respect to
such shares: (a) sole voting power, 0 shares; (b) shared voting power,
1,723,460 shares; (c) sole dispositive power; 0 shares; (d) shared
dispositive power, 2,198,470 shares.
(3) Barclays Global Investors NA recently provided the Company with a
Schedule 13G, reporting that the 1,375,918 shares of Company Common
Stock are held as follows: (a) shares held, (b) percentage of
Company's outstanding Common Stock, and number of shares in these
categories, (c) sole voting power, (d) shared voting power, (e) sole
dispositive power, (f) shared dispositive power for each of the
following three companies:
<Table>
<Caption>
(a) (b) (c) (d) (e) (f)
---------- ---------- ---------- ---------- ---------- ----------
Barclays Global Investors NA ... 944,411 3.81% 857,038 0 857,038 0
Barclays Global Fund Advisors .. 412,307 1.66% 412,307 0 412,307 0
Barclays Bank PLC .............. 19,200 .08% 19,200 0 19,200 0
</Table>
(4) 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..................... 3,000 --
Morris....................... 22,500 --
Edelstein.................... 55,402 --
Zakon........................ 52,500 --
Legg......................... 3,000 1,500
Young........................ 116,221 --
Meyers....................... 10,923 --
Davidson..................... 25,200 --
Loeffler..................... 20,611 --
Yarbrough.................... 9,513 --
</Table>
(5) Mr. Morris indirectly owns the following shares of ABC Common Stock
and is co-trustee in the following: 31,562 shares in the John H.
Morris and Sharon L. Morris Family Trust; 6,000 shares in the Morris
C.R.T. Charitable Remainder Trust; and 3,000 shares in the John and
Cherie Morris Family Foundation.
(6) Mr. Edelstein indirectly owns 7,500 shares as joint trustee of the
Edelstein Living Trust.
(7) Mr. Young indirectly owns and retains sole voting and investment power
of the 1,805,639 shares of ABC Common Stock in the R. A. Young III
Investments Limited Partnership.
(8) Includes Arkansas Best 401(k) Savings Plan amounts invested in ABC
Stock which equals the following common stock shares: Young, 935
shares; and Yarbrough, 26,116 shares.
(9) Mr. Marquard indirectly owns and retains sole voting and investment
power of the 161,048 shares of ABC Common Stock in the Marquard Family
Partnership, LTD.
(10) The numerator and denominator for percentages include 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, age, 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 Senior Vice President-Corporate Development through
January 31, 2004. 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.
(7)
EXECUTIVE OFFICERS OF THE COMPANY
<Table>
<Caption>
NAME AGE BUSINESS EXPERIENCE
- ----------------------------------------- ----- ---------------------------------------------------------------------
Robert A. Young III.................... 63 See previous description.
President-Chief Executive Officer
Robert A. Davidson..................... 56 Mr. Davidson became President and Chief Executive Officer of ABF
ABF President-Chief Executive Officer Freight System, Inc. ("ABF"), ABC's largest subsidiary, on February
1, 2003. Mr. Davidson had served as Vice President of Marketing and
Pricing for ABF since August 1997. Mr. Davidson was Vice President
of Pricing for ABF from April 1983 to August 1997.
Jerry A. Yarbrough .................... 65 Mr. Yarbrough served as ABC's Senior Vice President-Corporate
Senior Vice President- Development from April 1998 through his retirement date. From
Corporate Development January 1995 through March 1998, Mr. Yarbrough was Chairman of
(Retired 1/31/04) 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...................... 57 Mr. Loeffler was appointed Senior Vice President-Chief Financial
Senior Vice President- Officer and Treasurer in January 2004. He had been ABC's Vice
Chief Financial Officer President-Chief Financial Officer and Treasurer from April 1997 to
and Treasurer January 2004. From December 1995 to April 1997, he was ABC's Vice
President-Treasurer.
Richard F. Cooper...................... 52 Mr. Cooper was appointed Senior Vice President-Administration in
Senior Vice President-Administration January 2004. He was ABC's Vice President-Administration from 1995
General Counsel and Secretary to 2004. Mr. Cooper has been Vice President-General Counsel since
1986 and Secretary since 1987. Mr. Cooper was Vice President-Risk
Management from April 1991 to 1995.
J. Lavon Morton ....................... 53 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 .................... 41 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......................... 56 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>
(8)
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation earned during
each of the Company's last three fiscal years by 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 2003.
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 .... 2003 $ 600,000 $ 622,440 -- -- 15,000 -- $ 26,791(4)
President-CEO 2002 583,933 341,280 -- -- -- -- 10,810
2001 503,600 374,678 -- -- 31,554 -- 10,176
Robert A. Davidson ..... 2003 267,500 228,558 -- -- 10,000 -- 20,695
ABF President-CEO 2002 182,270 125,285 -- -- -- -- 21,100
2001 168,600 177,300 -- -- 14,000 -- 20,700
John R. Meyers(5) ...... 2003 258,000 178,433 -- -- 7,500 -- 21,600
Vice President 2002 258,000 97,834 -- -- -- -- 21,100
2001 47,161 23,490 -- -- 5,778 -- 1,565
Jerry A. Yarbrough ..... 2003 243,600 210,592 -- -- 7,500 -- 21,600
Senior Vice President- 2002 243,600 115,466 -- -- -- -- 21,100
Corporate Development 2001 243,600 151,032 -- -- 15,778 -- 20,700
David E. Loeffler ...... 2003 215,000 185,868 -- -- 7,500 -- 6,600
Senior Vice President-CFO 2002 211,850 101,910 -- -- -- -- 6,100
2001 196,100 121,582 -- -- 15,778 -- 5,700
</Table>
(1) Reflects bonus earned during the fiscal year. Bonuses are normally paid
during the next fiscal year.
(2) The 2003 grant included both stock options and an Employer SAR that
entitles the Stock Option Committee to determine at the time of exercise
whether to require the Optionee to exercise the grant as an SAR or allow
the Optionee to exercise the stock options.
(3) "All Other Compensation" for 2003 includes the following:
<Table>
<Caption>
Young Davidson Meyers Yarbrough Loeffler
----------- ----------- ----------- ----------- -----------
401(k) Company Match ........................ $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000
Voluntary Savings Plan Company Match ........ 15,000 14,095 15,000 15,000 --
24-Hour Accidental Death Premiums ........... 600 600 600 600 600
Split Dollar Term Life Premiums ............. 5,191 -- -- -- --
----------- ----------- ----------- ----------- -----------
Total All Other Annual Compensation ......... $ 26,791 $ 20,695 $ 21,600 $ 21,600 $ 6,600
=========== =========== =========== =========== ===========
</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 2001, 2002 and 2003, the
premiums on these policies were $32,438. The portion of the premiums
attributable to term life insurance was $4,476 in 2001; $4,710 in 2002; and
$5,191 in 2003.
(5) For 2001, Mr. Meyers was employed by Arkansas Best Corporation during
November and December.
(9)
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
The following table provides information related to options exercised by the
named executive officers during the 2003 fiscal year and the number and value of
options held at fiscal year end. No stock appreciation rights for named
executive officers had been exercised as of December 31, 2003.
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
SHARES VALUE SARS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ACQUIRED REALIZED --------------------------------- --------------- ---------------
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- --------------- --------------- --------------- --------------- --------------- ---------------
Robert A. Young III 0 $ 0 102,021 45,933 $ 2,138,004 $ 395,972
Robert A. Davidson 27,500 772,563 17,600 24,400 276,616 233,604
John R. Meyers 0 0 7,023 15,767 91,919 148,955
Jerry A. Yarbrough 7,600 56,606 2,311 22,967 7,881 220,067
David E. Loeffler 18,829 498,944 13,511 22,967 164,633 220,067
</Table>
(1) The closing price for the Company's Common Stock as reported by The NASDAQ
Stock Market on December 31, 2003 was $31.46. Value is calculated on the
basis of the difference between the option exercise price and $31.46
multiplied by the number of shares of Common Stock underlying the option.
STOCK OPTION/SAR GRANTS
The following table provides information relating to options/SARs granted to the
named Executive Officers in 2003.
<Table>
<Caption>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL ANNUAL RATE OF STOCK
GRANTS FOR OPTION TERM(1)
(a) (b) (c) (d) (e) (f) (g)
- ------------------------ --------------- ----------------- --------------- --------------- ----------- -----------
PERCENT OF TOTAL
OPTIONS/SARS OPTIONS/SARS EXERCISE
GRANTED GRANTED TO OR BASE
(#)(2)(3)(4) EMPLOYEES IN PRICE EXPIRATION
NAME (5) FISCAL YEAR ($/SH)(6) DATE 5%($) 10%($)
- ------------------------ --------------- ----------------- --------------- --------------- ----------- -----------
Robert A. Young III 15,000 4.60% $ 24.59 01/21/2013 $ 231,968 $ 587,852
President-CEO
Robert A. Davidson 10,000 3.07% $ 24.59 01/21/2013 $ 154,645 $ 391,901
ABF President-CEO
John R. Meyers 7,500 2.30% $ 24.59 01/21/2013 $ 115,984 $ 293,926
Vice President
Jerry A. Yarbrough 7,500 2.30% $ 24.59 01/21/2013 $ 115,984 $ 293,926
Senior Vice President,
Corporate Development
David E. Loeffler 7,500 2.30% $ 24.59 01/21/2013 $ 115,984 $ 293,926
Senior Vice President-CFO
</Table>
(10)
(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/SARs. 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) These were stock option/Employer SAR (stock appreciation right) grants
under the 2002 Stock Option Plan and were granted for a term of 10 years.
The Employer SAR provision entitles the Stock Option Committee to determine
at the time of exercise whether to require the Optionee to exercise the
grant as an SAR or allow the Optionee to exercise the stock options.
(3) The options/SARs were granted on January 22, 2003 and are exercisable
beginning on the first anniversary of the grant, with 20% of the shares
covered becoming exercisable at that time and with an additional 20% of the
option shares becoming exercisable on each successive anniversary. Full
vesting for the grant occurs on January 22, 2008. The options/SARs 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 option/SARs shall become
immediately exercisable in full.
(5) The options/SARs are only transferable: (a) by will or by the laws of
descent and distribution, (b) between spouses incident to divorce, or (c)
pursuant to a Permitted Transfer. A Permitted Transfer shall mean a
transfer of a vested option/SAR (i) to one or more members of the
optionee's immediate family or to an estate-planning entity established
exclusively for Optionee or one or more members of Optionee's immediate
family, or (ii) with the consent of the Compensation Committee, to a
charitable organization that is tax exempt under Internal Revenue Code
Section 501(c)(3).
(6) Payment for the options may be made with a certified check, wire transfer,
shares of ABFS common stock owned by the Optionee for at least six months
or a combination of certified check, wire transfer and ABFS Common Stock.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2003 with respect
to the Company's compensation plans under which equity securities of the Company
are authorized for issuance.
<Table>
<Caption>
(a) (b) (c)
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
ISSUED UPON EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))
- -------------------------- -------------------------- -------------------- ------------------------
Equity Compensation
Plans Approved by
Security Holders (1) 1,016,206 $ 17.63 817,500
Equity Compensation
Plans Not Approved
By Security Holders (2) 698,441 22.24 36,102
--------------- --------------- ---------------
Total 1,714,647 $ 19.51 853,602
=============== =============== ===============
</Table>
(1) Amount includes the 2002 Arkansas Best Corporation Stock Option Plan, which
allows for the issuance of stock options, stock appreciation rights (SARs)
and tandem stock appreciation/SAR grants.
(2) On April 19, 2000 the Company adopted its Nonqualified Stock Option Plan
("2000 Nonqualified Plan"), as a broad based plan with 1.0 million option
shares authorized for awards. Options may be awarded under the 2000
Nonqualified Plan through April 18, 2010. All options granted: (i) have an
exercise price equal to the closing price of the Company's Common Stock on
the grant date, (ii) are exercisable at 20% per year, generally starting on
the first anniversary of the grant date, and (iii) are granted for a term
of 10 years. The Board's Compensation Committee administers the 2000
Nonqualified Plan.
(11)
REPORT ON EXECUTIVE COMPENSATION BY THE
COMPENSATION 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 Compensation
Committee.
The Compensation Committee is comprised of Messrs. Marquard, Zakon, Morris, and
Legg. The Board has designated the Compensation Committee to also serve as the
Stock Option Committee under the Company's stock option plans. All Committee
Members are independent Directors, as independence is defined in NASDAQ
independence standards. The Compensation Committee, at its discretion, reviews
and determines all forms of executive compensation including stock options,
stock appreciation rights, and performance award units, based on the members'
knowledge and experience, general market compensation survey information and
from time to time, independent consultants' analysis in determining appropriate
salary levels and total compensation programs for executives.
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; and industry and general economic conditions which may
affect the Company's performance.
(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 Compensation Committee is responsible
for the granting of stock options and stock appreciation rights
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 Compensation 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 Compensation 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 judgment of the Compensation 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).
(12)
(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 the Company. See "RETIREMENT AND SAVINGS
PLANS" section for additional information.
The Compensation Committee believes that the Chief Executive Officer ("CEO") is
the leader of the executive management team, and therefore it applies the same
philosophy as discussed above to the CEO's compensation package.
The Compensation Committee 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. It is the Company's policy to take
reasonable steps to avoid having any compensation not be deductible to the
Company under Section 162(m) of the Internal Revenue Code.
COMPENSATION COMMITTEE
William A. Marquard, Chairman
William M. Legg
John H. Morris
Alan J. Zakon
This Report will not be deemed to be incorporated by reference in any filing by
the Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
Report by reference.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is comprised of Messrs. Edelstein,
Allardyce, Morris and Zakon, all independent as independence is defined in SEC
and NASDAQ independence standards for Audit Committee members. The Audit
Committee has reviewed and discussed the audited financial statements of the
Company for the year ended December 31, 2003 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, 2003 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
Fred A. Allardyce
John H. Morris
Alan J. Zakon
(13)
This Report will not be deemed to be incorporated by reference in any filing by
the Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
Report by reference.
The Audit Committee Charter, adopted by the Board of Directors for the Audit
Committee on April 19, 2000 and revised on October 22, 2003, is attached in
Appendix A. A copy of the charter is posted in the Corporate Governance section
of the Company's Web site, www.arkbest.com.
COMPENSATION 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 Russell 2000 Market Index, and old and new peer group indices
selected by the Company.
<Table>
<Caption>
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 12/31/1998 12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003
- -------------------- ---------- ---------- ---------- ---------- ---------- ----------
Arkansas Best Corp 100.00 205.35 313.37 493.17 444.59 544.69
Old Peer Group 100.00 110.95 122.14 178.46 179.61 259.85
Russell 2000 Index 100.00 119.59 114.43 115.60 90.65 131.78
New Peer Group 100.00 113.12 101.68 116.74 119.17 150.58
</Table>
The above comparisons assume $100 was invested on December 31, 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") transportation 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 the less-than-truckload
("LTL") freight carriers contained in the NASDAQ Trucking and Transportation
Index (Old Dominion Freight Line, Overnite Corporation, SCS Transportation,
Inc., USF Corporation, and Yellow Roadway Corporation) plus CNF, Inc. Since
Central Freight Lines, Inc. began public trading in December 2003, it was not
included in this year's peer group. Historically, the Company used the other
less-than-truckload, long-haul unionized transportation companies as its peer
group. In December 2003, the only other such companies, Yellow Corporation and
Roadway Corporation, merged. As a result of this merger, the Company believes it
is appropriate to use a broader based group of less-than-truckload
transportation companies as its peer group.
(14)
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 the Company's Pension 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, 39 years; Robert A. Davidson, 32 years; Jerry
A. Yarbrough, 36 years; John R. Meyers, 30 years; and David E. Loeffler, 8
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, 2003 of
$205,000 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 ("Pension
Plan Compensation"). Benefits also are subject to certain other limitations in
the Code.
The following table illustrates the ABC total estimated annual benefits payable
from the Company's Pension Plan and the ABC 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. The
ABF total estimated annual benefit from the Company's Pension Plan and the ABF
Supplemental Benefit Plan can be obtained by reducing the ABC benefit listed in
the table below by 12.5%. 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 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 Pension Plan. The Code places
limits on the amount of income participants may receive under the Pension Plan.
In order to compensate for those limitations and for reductions in the rate of
benefit accruals from the 1985 formula under the Pension Plans, the Supplemental
Benefit Plans will pay sums in addition to amounts payable under the Pension
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 Pension 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 Pension Plan without
regard to any Code limitations if more; over (2) the actual benefit received
from the Pension Plan. This payment will be made in a lump sum or in annual
installments over a period of not more than 15 years at
(15)
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 Pension Plan Compensation without regard to
Code limitations ("Covered Compensation"). Covered compensation for the named
executives equals: Mr. Young, $1,122,734; Mr. Davidson, $450,316; Mr. Yarbrough,
$479,319; Mr. Loeffler, $403,271 and Mr. Meyers, $360,851.
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. The deferred salary amount is subject to
reduction based on years of service if the executive's employment terminates
prior to age 65 and certain other circumstances resulting in the individual's
termination of employment. The projected annual compensation from this plan
based on December 2003 base salary plus 20% is Mr. Young, $252,000; Mr.
Davidson, $115,500; Mr. Yarbrough, $85,260; Mr. Loeffler, $90,300; and Mr.
Meyers, $108,360. No increase was included for Mr. Yarbrough due to his
retirement on January 31, 2004.
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 COMPENSATION
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") for certain management
employees of the Company and its subsidiaries, including the named executives.
The VSP is a nonqualified plan created to offset the Internal Revenue Service
Code limitations on contributions by 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 match 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 COMPENSATION COMMITTEE" for additional information on the Annual
Incentive Compensation Plan.
(16)
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 pays
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.
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, 2003. The Audit Committee has appointed that
firm to continue in that capacity for the fiscal year 2004, and recommends that
a resolution be presented to stockholders at the 2004 Annual Meeting to ratify
that appointment.
In the event the stockholders fail to ratify the appointment of Ernst & Young
LLP, the Audit Committee will appoint other independent public accountants as
auditors. Representatives of Ernst & Young LLP will attend the 2004 Annual
Meeting. They will have the opportunity to make a statement and respond to
appropriate questions from stockholders.
(17)
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of the fees billed to Arkansas Best Corporation by
Ernst & Young LLP for professional services rendered for the fiscal years ended
December 31, 2003 and December 31, 2002:
<Table>
<Caption>
FEE CATEGORY 2003 FEES 2002 FEES
- ------------ ---------- ----------
Audit Fees $ 365,738 $ 382,421
Audit-Related Fees 93,264 116,738
Tax Fees 65,058 149,490
All Other Fees 2,500 2,500
---------- ----------
Total Fees $ 526,560 $ 651,149
========== ==========
</Table>
Audit Fees. Consists of fees billed for professional services rendered for the
audit of Arkansas Best Corporation's consolidated financial statements and
review of the interim consolidated financial statements included in quarterly
reports and services that are normally provided by Ernst & Young LLP in
connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of
Arkansas Best Corporation's consolidated financial statements and are not
reported under "Audit Fees." These services include employee benefit plan
audits, accounting consultations in connection with dispositions, internal
control reviews, attest services that are not required by statute or regulation,
and consultations concerning financial accounting and reporting standards.
Tax Fees. Consists of fees billed for professional services for tax compliance,
tax advice and tax planning. These services include assistance regarding
federal, state and international tax compliance, assistance with Internal
Revenue Service interest calculations on tax assessments and international tax
planning.
All Other Fees. Consists of fees for online technical support information and
services.
POLICY AND AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND
PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT AUDITORS
The Audit Committee, under the responsibilities and duties outlined in its
charter, is to pre-approve all audit and non-audit services provided by the
independent auditors. These services may include audit services, audit-related
services, tax services and other services as allowed by law or regulation.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specifically approved amount. The independent auditors and
management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent auditors in accordance with
this pre-approval and the fees incurred to date. The Audit Committee may also
pre-approve particular services on a case-by-case basis.
The Audit Committee pre-approved 100% of the Company's 2003 audit fees,
audit-related fees, tax fees, and all other fees to the extent the services
occurred after May 6, 2003, the effective date of the Securities and Exchange
Commission's final pre-approval rules.
(18)
OTHER MATTERS
The Board does not know of any matters that will be presented for action at the
2004 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 2004 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 COMMUNICATION WITH THE BOARD
The Company has a process for stockholders to communicate with its Board of
Directors.
Arkansas Best Corporation stockholders may communicate with its Board of
Directors, or any individual member of the Board, by sending the communication
as follows:
Board of Directors/(or Individual Member's Name)
c/o Richard F. Cooper
Corporate Secretary
P.O. Box 10048
Fort Smith, AR 72917-0048
Communications addressed to the Board will be sent to the Chairman of the Board
of Directors.
All communications to the Board, or an individual member, will be opened and
reviewed by the Corporate Secretary prior to forwarding to the Board or
individual member of the Board. This review will facilitate a timely review of
any matters contained in the communication if, for any reason, the Board member
is unavailable to timely review the communication.
STOCKHOLDER PROPOSALS FOR 2005 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 19, 2004 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 2005 Annual Meeting and intending to
introduce at the 2005 Annual Meeting any business (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 introducing
business must set forth as to each matter the stockholder proposes to bring
before the 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
(19)
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 MATTERS
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, 2003, without charge. Direct written requests to: David Humphrey, Director -
Investor Relations, Arkansas Best Corporation, 3801 Old Greenwood Road, Fort
Smith, AR 72903.
The Company has adopted a Code of Conduct that applies to all of its directors,
officers (including its chief executive officer, chief financial officer,
controller and any person performing similar functions) and employees. The
Company has made the Code of Conduct available in the Corporate Governance
Section of its Web site at www.arkbest.com.
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 19, 2004 Secretary
(20)
Appendix A
ARKANSAS BEST CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The purpose of the Audit Committee of Arkansas Best Corporation is to
assist the Board of Directors by fulfilling oversight responsibilities relating
to: the integrity of financial reports and related financial information
provided by the Company to the public and the Securities and Exchange Commission
(SEC); the Company's systems of internal controls regarding finance, accounting
and compliance with policies, including ethics policies, that management and the
Board have established; the performance of Company's internal audit function and
the accounting and financial reporting functions generally. Included in the
Audit Committee's responsibilities are the appointment, compensation and
retention of the independent auditors, including the independent auditor's
qualifications and independence. The function of the Audit Committee is
oversight in accordance with the responsibilities and powers set forth in this
Charter, and management and the independent auditors for the Company are
accountable to the Audit Committee. Management of the Company, not the Audit
Committee, is responsible for the preparation, presentation and integrity of the
Company's financial statements. Management is responsible for maintaining
appropriate accounting and financial reporting principles and policies and
internal controls, including disclosure controls, and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
The independent auditors, not the Audit Committee, are responsible for planning
and carrying out a proper audit of the Company's annual financial statements,
reviews of the Company's quarterly financial statements prior to the filing of
each quarterly report on Form 10-Q, and other procedures. In fulfilling their
responsibilities hereunder, it is recognized that members of the Audit Committee
are not full-time employees of the Company and, although they meet the
applicable membership requirements set forth below, are not, and do not
represent themselves to be, accountants or auditors by profession or experts in
the fields of accounting or auditing, including in respect of auditor
independence. As such, it is not the duty or responsibility of the Audit
Committee or its members to conduct "field work" or other types of auditing or
accounting reviews or procedures or to set auditor independence standards, and
each member of the Audit Committee shall be entitled to rely on (i) the
integrity of those persons and organizations within and outside the Company from
which it receives information and (ii) the accuracy of the financial and other
information provided to the Audit Committee by persons or organizations absent
actual knowledge to the contrary (which shall be promptly reported to the
Board).
The Audit Committee's primary duties and responsibilities are to:
o Oversee the accounting and financial reporting processes of
the Company and the audits of the Company's financial
statements.
o Be directly responsible and have sole authority for the
appointment and termination, compensation and oversight of
the work of the independent auditors, including resolution
of disagreements between management and the auditor
regarding financial reporting.
o Pre-approve all audit and non-audit services provided by
the independent auditors.
(21)
Appendix A
o Set clear hiring policies for employees or former employees
of the independent auditors that meet the SEC Regulations
and the Rules issued by the exchange on which the Company's
stock is listed.
o Serve as an independent and objective party to monitor the
integrity of the Corporation's financial reporting and
internal control system.
o Review and appraise the audit efforts of the Corporation's
independent auditors and internal auditing department.
o Provide an open avenue of communication among the
independent auditors, financial and senior management, the
internal auditing department, and the Board of Directors.
o Establish procedures for the receipt, retention and
treatment of complaints received by the Corporation
regarding accounting, internal accounting controls or
auditing matters and the confidential, anonymous submission
by employees of the Corporation of concerns regarding
questionable accounting or auditing matters.
o Receive the Corporation's General Counsel's reports of
evidence of a material violation of securities laws or
breaches of fiduciary duty.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV. of this Charter. The Audit
Committee shall have the authority to take any and all actions that it deems
necessary to carry out its functions.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship including the acceptance of consulting, advisory or other
compensatory fee from the Company, other than in the members capacity as a
member of the Board or the Audit Committee. Determination of independence shall
be based on the definition of "Independent director" contained in the Rules
issued by the exchange on which the Company's stock is listed and the SEC's
regulations. All members of the Committee shall meet the applicable requirements
under SEC regulations and of the Rules issued by the exchange on which the
Company's stock is listed. Additionally, at least one member of the Committee
shall, based on the determination of the Board, qualify as an "audit committee
financial expert" as defined by SEC regulations and as meet the related
experience requirements of the Rules issued by the exchange on which the
Company's stock is listed.
An audit committee financial expert shall not be deemed an "expert" for
any purpose, including for purposes of Section 11 of the Securities Act of 1933.
The designation of an Audit Committee member as an audit committee financial
expert does not impose any duties, obligations or liability on the audit
committee financial expert that are greater than those imposed on other Audit
Committee members, nor does it affect the duties, obligations or liability of
any other Audit Committee member.
The members of the Committee shall be appointed by the Board. Unless a
Chair is appointed by the full Board, the members of the Committee may designate
a Chair by majority vote of the full Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee should meet at least annually with management, the
chief internal auditor and the independent auditors in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed privately. In addition, the Committee or at least
its Chair should meet (either in person or by telephone) with the independent
auditors, the chief internal auditor and management on a quarterly basis
consistent with IV.4. below.
(22)
Appendix A
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
1. Review this Charter periodically, at least annually, and update as
conditions dictate.
2. Review the Company's Annual Report on Form 10-K and related financial
information and disclosures included in Management's Discussion and
Analysis of Financial Condition and Results of Operations to be
submitted to the Securities and Exchange Commission, including any
certification, report, opinion, or review rendered by the independent
auditors, and any changes in accounting principles or the application
thereof. The Audit Committee shall review any matters required to be
communicated to the Audit Committee by the independent auditors under
generally accepted auditing standards.
3. Review quarterly reports prepared by the internal auditing department
regarding results of internal audit activities and recommendations
resulting therefrom, and management's response.
4. Review with financial management, the chief internal auditor and the
independent auditors the results of internal audit activities and the
independent auditors' review of the financial statements for each
quarter prior to the filing of Form 10-Q. This requirement will be
satisfied if such review takes place prior to the public release of
quarterly and/or year-end financial results. The Chair of the Committee
may represent the entire Committee for purposes of this review. The
Audit Committee shall review any matters required to be communicated to
the Audit Committee by the independent auditors under generally
accepted auditing standards.
5. Annually prepare a report to shareholders as required by the SEC for
inclusion in the Company's annual proxy statement.
6. On an annual basis, the Committee should review and discuss with the
auditors all significant relationships the auditors have with the
Company to determine the auditors' independence. The annual
independence review should include a review of all non-audit services
for nature of services and effect on independence; a review of any and
all relationships between members of the audit firm and employees of
the Company; the obtaining of a formal written statement from the
auditors as to their compliance with SEC and professional guidelines
relating to independence; and a discussion with the auditors regarding
the audit firm's own internal controls over monitoring independence.
7. Review the performance of the independent auditors. Annually, clarify
with the independent auditors that they report directly to the Audit
Committee, in its capacity as a committee of the Board of Directors,
and that the Audit Committee is directly responsible and has the sole
authority for the appointment, compensation, retention and oversight of
the auditor including resolution of disagreements between management
and the auditor regarding financial reporting and that the Audit
Committee has ultimate authority to approve all audit engagement fees
and terms. The Company shall provide for appropriate funding, as
determined by the Audit Committee, for payment of compensation to the
auditor.
8. Review and discuss with the independent auditors the scope of the
annual audit with particular attention to changes in audit scope and
the reasons for such changes.
9. The Audit Committee shall pre-approve all audit and non-audit services
provided by the independent auditors and shall not engage the
independent auditors to perform the specific non-audit services
prohibited by law or regulation. The Audit Committee may delegate
pre-approval authority to a member of the Audit Committee. The
decisions of any Audit Committee member to whom pre-approval authority
is delegated must be presented to the full Audit Committee at its next
scheduled meeting.
10. Consult with the independent auditors, outside the presence of
management, regarding internal controls and the completeness and
accuracy of the organization's financial statements and related
disclosures.
(23)
Appendix A
11. Review with the independent auditors, and the chief internal auditor
and financial and accounting personnel the adequacy and effectiveness
of the accounting, financial and disclosure controls of the Company,
including controls over data processing activities and functions. The
Audit Committee will review with the independent auditors, the chief
internal auditor, financial and accounting personnel and the General
Counsel policies and procedures to assess, monitor and manage legal and
ethical compliance programs (e.g. the Corporation's Code of Business
Conduct and Ethics). The Audit Committee shall, as a part of these
reviews, elicit any recommendations for the improvement of internal
control procedures or particular areas where new or more detailed
controls or procedures are desirable.
12. Review management's assertion of the effectiveness of internal controls
as of the end of the most recent fiscal year and the independent
auditor's report on management's assertion.
13. Make inquiry of the independent auditors as to their view of the
quality and appropriateness of the Company's accounting principles
applied in its accounting, financial reporting and related disclosures.
14. Seek and obtain regular, timely communication from the independent
auditor about the critical accounting estimates, policies and practices
of the Company, and all alternative treatments of financial information
within generally accepted accounting principles that have been
discussed with management, including the ramifications of the use of
such alternative treatments and the treatment preferred by the auditor.
15. The Audit Committee shall obtain from the independent auditor any
material written communications with management including the
management representation letter, the engagement letter, the
independence letter, reports and recommendations on internal control, a
summary of audit differences and any other relevant communications that
relate to the audit, internal controls or financial statement amounts
or disclosures.
16. Establish quarterly reporting to the Audit Committee by each of
management and the independent auditors regarding any significant
judgments made in management's preparation of the financial statements
and the view of each as to appropriateness of such judgments.
17. Following completion of the annual audit, review separately with each
of management, the independent auditors and the chief internal auditor
any significant difficulties encountered during the course of the
audit, including any changes in the audit scope or restrictions on the
scope of work or access to required information.
18. Review the activities, organizational structure, charter, objectivity,
and qualifications of the internal audit department.
19. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements
and, any reports of evidence of a material violation of securities laws
or breaches of fiduciary duty.
20. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and the confidential anonymous
submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
21. Have the authority to engage independent counsel and other advisors, as
it determines necessary to carry out its duties with appropriate
funding, as determined by the Audit Committee, provided by the Company.
22. Review and approve any "related party transaction". For purposes of
this review, "related party transaction" is defined as any related
party transaction required to be disclosed pursuant to SEC Regulation
S-K, Item 404.
23. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
Revised as of October 22, 2003
(24)
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 from the following nominee(s):
I. ELECTION OF DIRECTORS: nominees nominees
----------------------------------------------------------------------
Nominees:
01 - Robert A. Young III
and 02 - Frank Edelstein [ ] [ ] [ ]
FOR AGAINST ABSTAIN
II. To ratify the appointment
of Ernst & Young LLP as
the Company's independent
certified public
accountants. [ ] [ ] [ ]
</Table>
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
JOINT OWNERS SHOULD EACH SIGN. WHERE
APPLICABLE, INDICATE OFFICIAL POSITION OR
REPRESENTATIVE CAPACITY.
DATE:
-------------------------------------
--------------------------------------------
SIGNATURE
--------------------------------------------
SIGNATURE
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 27, 2004
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 Tuesday, April 27, 2004, 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 THE OTHER
PROPOSALS SPECIFIED HEREIN.
* * CONTINUED AND TO BE SIGNED ON REVERSE SIDE * *