Simon Transportation Services Inc.
5175 West 2100 South
West Valley City, Utah 84120
----------------------------
INFORMATION STATEMENT
Pursuant to Section 14(f) of
the Securities Exchange Act of 1934 and
Rule 14f-1 Thereunder
----------------------------
This Information Statement relates to the appointment of persons
designated by Jerry Moyes (the "Moyes Designees") to a majority of the seats on
the Board of Directors (the "Board") of Simon Transportation Services Inc., a
Nevada corporation (the "Company"). This Information Statement is being mailed
on or about September 7, 2000, to the holders of the outstanding shares of the
Class A Common Shares (the "Class A Common Shares") of the Company pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended, and Rule 14f-1
promulgated thereunder. The information set forth herein related to Mr. Moyes
and the Moyes Designees has been provided by Mr. Moyes. You are urged to read
this Information Statement carefully. No action on the part of the Company's
stockholders, however, is sought or required in connection with such
appointment.
We are not asking you for a proxy, and
you are requested not to send us a proxy.
On August 10, 2000, Richard D. Simon and Mr. Moyes entered into a
Letter Agreement (the "Letter Agreement") pursuant to which they agreed, subject
to the satisfaction of certain conditions, that they will use good faith efforts
to consummate, not later than September 30, 2000, the transfer by Mr. Simon to
Mr. Moyes of 913,751 shares (the "Simon Shares") of the Class B Common Stock of
the Company (the "Class B Common Shares"), constituting all of the issued and
outstanding shares of the Class B Common Stock, in exchange for payment by Mr.
Moyes of $9.00 per Class B Common Share (the "Transfer"). One of the conditions
to the consummation of the Transfer is that the Company and Mr. Simon take
actions such that the Moyes Designees constitute a majority of the Board. Upon
the consummation of the Transfer, the Simon Shares will be converted to Class A
Common Shares, the Class A Common Shares will be the only class of capital stock
of the Company that is issued and outstanding, and Mr. Moyes will have sole
and/or shared beneficial ownership of approximately 45.4% of the issued and
outstanding Class A Common Shares.
The Company will bear all costs and expenses related to preparing,
printing and mailing to stockholders this Information Statement and accompanying
materials. Arrangements will be made with brokerage firms and other custodians,
nominees and fiduciaries representing beneficial owners, and the Company will
reimburse such brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in doing so.
Other than duly authorized officers of the Company, no person is
authorized to give any information or to make any representation other than
those contained herein and, if given or made, such information or representation
should not be relied upon as having been authorized by the Company. The delivery
of this Information Statement shall not under any circumstance create any
implication that there has been no change in the affairs of the Company since
the date hereof, or that the information contained or incorporated herein is
correct as of any time subsequent to its date. This Information Statement does
not constitute an offer to sell or a solicitation of an offer to buy any
securities of the Company.
This Information Statement is dated as of September 7, 2000.
GENERAL
On August 10, 2000, Messrs. Simon and Moyes entered into the Letter
Agreement, pursuant to which they have agreed, subject to the satisfaction of
certain conditions, that they will use good faith efforts to consummate the
Transfer on the closing date of the Transfer (the "Closing Date"), which will
not be later than September 30, 2000. Upon the consummation of the Transfer, the
Simon Shares will be converted into Class A Common Shares and Mr. Moyes will
have sole and/or shared beneficial ownership of approximately 45.4% of the
issued and outstanding Class A Common Shares.
The conditions to the parties' obligations to consummate the Transfer
include the following (the "Conditions"):
(i) Mr. Simon and the Company having taken such action as will
result in the Moyes Designees comprising a majority of the
Board;
(ii) The Company having granted to Mr. Moyes warrants to purchase
300,000 Class A Common Shares at $7.00 per share, which
warrants shall become exercisable at the rate of 100,000 per
year on each anniversary of the date on which such warrants
were granted (the "Warrants");
(iii) The Company and Mr. Moyes having released each other from all
claims and liabilities arising prior to the Closing Date and
the Company having waived any conflict of interest involving
Scudder Law Firm, P.C., L.L.O., Mr. Moyes' attorneys;
(iv) Mr. Simon and the Company having entered into a Consulting and
Noncompetition Agreement pursuant to which Mr. Simon will
consult with the Company for a period of three years at an
annual retainer of $259,000 and will not compete with the
Company during such three-year period and for three years
thereafter;
(v) Other executive officers of the Company, consisting of Kelle
Simon, Lyn Simon, Sherry L. Bokovoy, Richard D. Simon, Jr. and
Alban Lang (the "Managers"), and the Company having entered
into Employment and Noncompetition Agreements pursuant to
which each of the Managers (a) will be employed by the Company
on an at-will basis at an annual salary of $156,000, (b) will
not compete with the Company during the period of his or her
employment and (1) for one year thereafter if such Manager is
terminated for cause or voluntarily terminates his or her
employment with the Company or (2) for three years thereafter
if such Manager is involuntarily terminated without cause, and
(c) will be eligible for bonus compensation based on the
Company's financial performance;
(vi) The continuation of options currently held by the Managers
to purchase up to 125,000 Class A Common Shares that have been
granted to each of the Managers under the Company's Stock
Incentive Plan and the award of options to purchase an
additional 75,000 Class A Common Shares at $7.00 per share
pursuant to the Company's 1995 Incentive Stock Plan, which
additional options will vest at the rate of 40% on the Closing
Date and 20% on September 30 of each year following the
Closing Date (beginning on September 30, 2000) or to the
extent not vested, be subject to forfeiture upon the first to
occur of (a) the tenth anniversary of the date such options
are granted, (b) the date 90 days after voluntary termination
of employment by a Manager or involuntary termination of such
Manager's employment for "cause," or (c) the date 18 months
after the involuntary termination of such Manager's employment
without cause;
(vii) The Board having determined that the following individuals
will continue to serve in or be appointed to the following
offices:
Officer Office
Jon Isaacson Chief Executive Officer and
Chief Operating Officer
Kelle A. Simon President
Alban Lang Secretary, Treasurer and
Chief Financial Officer
Lyn Simon Vice President
Sherry L. Bokovoy Vice President
Richard D. Simon, Jr. Vice President
(viii) The absence of material litigation relating to the Transfer or
any materially adverse development affecting the business or
the matter filed in the United States District Court for
the District of Utah and styled as Caprin v. Simon
Transportation Services Inc., et al., No. 2:98CV 863K (filed
December 3, 1998);
(ix) Mr. Moyes' having completed to his satisfaction a due
diligence examination of the Company;
(x) The Board having waived the application of all anti-takeover
statutes with regard to all purchases of the Class A Common
Shares by Mr. Moyes and his affiliates; and
(xi) All related party transactions, if any, having been settled
and terminated unless approved by Mr. Moyes.
RESIGNATION OF DIRECTORS AND APPOINTMENT OF DESIGNEES
Pursuant to the terms of the Letter Agreement, the obligation of Mr.
Moyes to purchase the Simon Shares is subject to the condition that Mr. Simon
and the Company have taken such action as will result in the Moyes Designees
comprising a majority of the Board. The Company currently contemplates that in
connection with the closing of the Transfer, the Moyes Designees will be
appointed to the Board in the following manner. On or before the Closing Date,
all of the existing directors of the Company other than Richard D. Simon and
Kelle Simon will resign as directors of the Company, leaving seven vacancies on
the Board. Immediately upon the Company's receipt of such resignations, Richard
D. Simon and Kelle A. Simon, pursuant to the provisions of the Company's Bylaws,
will appoint Mr. Moyes, Lou Edwards, Earl H. Scudder, Gordon K. Holladay and Jon
Isaacson to serve as directors of the Company in the classes identified below
until the annual meeting of the Company's stockholders relating to the fiscal
year in which the applicable director's term expires. The term of Class I
directors expires at the annual meeting of stockholders following the fiscal
year ended September 30, 2001, the term of Class II directors expires at the
annual meeting of stockholders following the fiscal year ended September 30,
2002, and the term of Class III directors expires at the annual meeting of
stockholders following the fiscal year ended September 30, 2000. Richard D.
Simon and Kelle A. Simon currently serve as Class III directors. Of the Moyes
Designees, Lou Edwards and Earl H. Scudder have been designated to serve as
Class I directors, Jon Isaacson and Gordon H. Holladay have been designated to
serve as Class II directors, and Jerry Moyes has been designated to serve as a
Class III director.
This Information Statement is being provided to the Company's
stockholders prior to and in anticipation of the resignations and appointments
described above. The Board has fixed the close of business on September 5, 2000
as the record date for determination of stockholders entitled to receive this
Information Statement. The approximate date of mailing of this Information
Statement to the Company's shareholders is September 7, 2000. Pursuant to the
rules of the Securities and Exchange Commission, this Information Statement will
be provided to the stockholders of the Company not less than ten days prior to
the effective date of the resignations and appointments described above.
Accordingly, the Company currently anticipates that on or subsequent to
September 18, 2000, the resignations and appointments described above will be
effected. In such event and upon the satisfaction or waiver of the other
Conditions, the Company currently anticipates that Messrs. Simon and Moyes will
consummate the Transfer.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS, NOMINEES AND OFFICERS OF THE COMPANY
The Class A Common Shares and the Class B Common Shares are the two
classes of equity securities of the Company entitled to be voted at a meeting
for the purpose of electing directors of the Company. On August 31, 2000,
5,196,358 Class A Common Shares were issued and outstanding and each holder
thereof was entitled to one vote per share. On August 31, 2000, 913,751 Class B
Common Shares were issued and outstanding and each holder thereof was entitled
to two votes per share.
The following table sets forth the number of shares of each class of
stock of the Company beneficially owned as of August 31, 2000 by each director,
each of the Moyes Designees, the Chief Executive Officer, each of the four most
highly compensated executive officers other than the Chief Executive Officer who
were serving as executive officers at the end of fiscal 1999, each person known
by the Company to be the beneficial owner of more than 5% of the Company's
outstanding Class A Common Shares, each person known by the Company to be the
beneficial owner of more than 5% of the Company's outstanding Class B Common
Shares, and all current directors and executive officers of the Company as a
group.
Amount & Nature Percent of
Name of Beneficial of Beneficial Total
Owner (1) Ownership (2) Title of Class Percent of Class Shares (3)
- ---------------------------- -- ------------------- -- ----------------------- -- -------------------- -- ------------
Richard D. Simon 10,000 Class A Common * *
Richard D. Simon (4) 913,751 Class B Common 100.0% 15.0%
Alban B. Lang 122,837 Class A Common 2.4% 2.0%
Kelle A. Simon 137,777 Class A Common 2.7% 2.3%
Lyn Simon 132,248 Class A Common 2.6% 2.2%
Richard D. Simon, Jr. 130,995 Class A Common 2.5% 2.1%
Sherry L. Bokovoy 123,338 Class A Common 2.4% 2.0%
Gus E. Paulos -- -- --
Don L. Skaggs 55,000 Class A Common 1.1 *
Irene Warr 4,700 Class A Common * *
Jerry Moyes (5) 1,861,298 Class A Common 35.8% 30.5%
Earl H. Scudder (6) 29,500 Class A Common * *
Lou Edwards -- -- --
Gordon K. Holladay -- -- --
Jon Isaacson -- -- --
The Jerry and Vickie 1,213,298 Class A Common 23.4% 19.9%
Moyes Family Trust
Dated 12/11/87 (5)
Vickie L. Moyes (7) 1,213,298 Class A Common 23.4% 19.9%
SME Steel 300,000 Class A Common 5.8% 4.9%
Contractors, Inc. (5)
Dimensional Fund 337,600 Class A Common 6.5% 5.5%
Advisors Inc.
Wynnefield Capital 300,000 Class A Common 5.8% 4.9%
Management
Capital Research and 300,000 Class A Common 5.8% 4.9%
Management Company
All directors and 1,630,646 Class A & Class B N/A 26.7%
executive officers Common
as a group (10 persons)
(8)
All Moyes Designees 1,890,798 Class A Common 36.4% 31.0%
as a group
- ------------------------------------------------------------------------------------------------------------------------------------
* Less than one percent.
(1) The business address of Richard D. Simon, Kelle A. Simon, Lyn Simon,
Sherry L. Bokovoy, and Richard D. Simon, Jr. is P.O. Box 26297, Salt Lake
City, Utah 84126-0297. The business address of Jerry Moyes, Vickie Moyes,
and The Jerry and Vickie Moyes Family Trust Dated 12/11/87 is 2200 South
75th Avenue, Phoenix, Arizona 85043. The address of SME Steel Contractors,
Inc. is 5955 West Wells Park Road, West Jordan, Utah 84088. The address of
Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401-1038. The address of Wynnefield Capital Management
is One Penn Plaza, Suite 4720, New York, New York 10119. The address of
Capital Research and Management Company is 333 South Hope Street, Los
Angeles, California 90071.
(2) In accordance with applicable rules under the Securities Exchange Act of
1934, as amended, the number of shares beneficially owned includes 69,200
Class A Common Shares underlying stock options granted to each of Alban B.
Lang, Kelle A. Simon, Lyn Simon, Richard D. Simon, Jr., and Sherry L.
Bokovoy (the "Optionees") that were, at August 31, 2000, either currently
exercisable or were scheduled to become exercisable within 60 days of
August 31, 2000. The 55,800 remaining shares underlying options granted to
the Optionees that were not scheduled to become exercisable within 60 days
of August 31, 2000 are excluded. The options have exercise prices ranging
from $9.00 to $23.38 per share. The shares owned also include an aggregate
of 23,156 of Class A Common Shares held in the Company's 401(k) Plan on
behalf of Alban B. Lang (9,378 shares), Lyn Simon (11,205 shares), and
Sherry L. Bokovoy (2,573 shares). The total shares include 3,000 Class A
Common Shares underlying stock options granted to Irene Warr that are
currently exercisable or were scheduled to become exercisable within 60
days of August 31, 2000. Unless otherwise indicated all shares are owned
directly.
(3) Percentage based on 5,196,358 Class A and 913,751 Class B Common Shares
outstanding and includes with respect to each stockholder, for purposes of
this chart only, the options for the purchase of capital stock of the
Company held by such stockholder which are scheduled to become exercisable
within 60 days of August 31, 2000.
(4) All shares are held by Richard D. Simon, Trustee of the Richard D. Simon
Revocable Trust, UTAD 2/12/93, of which the four children of Richard D.
Simon are the beneficiaries, subject to a life estate in favor of Valene
Simon, wife of Richard D. Simon. Because the Class B Common Shares are
entitled to two votes per share, Mr. Simon, as Trustee, controls 26.2% of
the combined voting power of the Class A and Class B Common Shares.
(5) Includes 348,000 Class A Common Shares held by Jerry Moyes; 1,213,298 Class
A Common Shares held by The Jerry & Vickie Moyes Family Trust Dated
12/11/87, of which Jerry Moyes and his wife, Vickie L. Moyes, are
co-trustees; and 300,000 Class A Common Shares held by SME Steel
Contractors, Inc., the beneficial ownership of which may be attributable to
Mr. Moyes under applicable rules of the Securities and Exchange Commission.
Mr. Moyes owns approximately 75% of the outstanding voting stock of the
parent corporation of SME Steel Contractors, Inc.
(6) Includes 29,500 Class A Common Shares held in an IRA account.
(7) Includes 1,213,298 Class A Common Shares held by The Jerry & Vickie Moyes
Family Trust Dated 12/11/87.
(8) Includes approximately 349,000 shares underlying exercisable stock options
with exercise prices ranging from $9.00 to $23.38 per share.
Richard D. Simon and Jerry Moyes are parties to the Letter Agreement.
The Letter Agreement provides for, among other things, the Transfer. Currently,
Mr. Moyes beneficially owns 1,861,298 Class A Common Shares (such shares
consisting of 348,000 Class A Common Shares owned by Mr. Moyes, individually,
1,213,298 Class A Common Shares held by The Jerry & Vickie Moyes Family Trust
Dated 12/11/87 and 300,000 Class A Common Shares held by SME Steel Contractors,
Inc. ("SME"), the beneficial ownership of which may be attributable to Mr. Moyes
under applicable rules of the Securities and Exchange Commission. Mr. Moyes owns
approximately 75% of the outstanding voting capital stock of the parent
corporation of SME. Mr. Moyes beneficially owns 30.5% of the capital stock of
the Company. Upon consummation of the Transfer, Mr. Moyes, will beneficially own
45.4% of the outstanding capital stock of the Company.
One of the Conditions is that Mr. Simon and the Company will have taken
such action as will result in the Moyes Designees comprising a majority of the
Board. The Transfer, the election of the Moyes Designees or both may constitute
a change in control of the Company.
INFORMATION ABOUT THE BOARD OF DIRECTORS, DESIGNEES AND
EXECUTIVE OFFICERS OF SIMON
Information concerning the names, ages, positions with the Company,
tenure as director, and business experience of the Company's executive officers,
directors and the Moyes Designees is set forth below. All references to
experience with the Company include positions with the Company's operating
subsidiary, Dick Simon Trucking, Inc., a Utah corporation. Richard D. Simon
is the father of Kelle A. Simon, Lyn Simon, Sherry L. Bokovoy, and Richard D.
Simon, Jr.
Name Age Position(s) with Simon Tenure as Director
- ----------------------------- ------- ------------------------------- ---------------------------------
Richard D. Simon(1) 64 Chairman of the Board, Chief 1972-Present
Executive Officer and Director
Kelle A. Simon 39 President and Director 1997-Present
Alban B. Lang 54 Chief Financial Officer, 1988-Present
Treasurer, Secretary and
Director
Lyn Simon 36 Vice President of Sales and 1997-Present
Marketing and Director
Richard D. Simon, Jr. 29 Vice President of Operations 1997-Present
and Director
Sherry L. Bokovoy 31 Vice President of Human 1997-Present
Resources and Director
Gus E. Paulos(1) (2) 58 Director 1999-Present
Don L. Skaggs(2) 44 Director February 4, 2000-Present
Irene Warr(2) 68 Director 1995-Present
Jerry Moyes 56 Director Nominee (Class III) N/A
Lou Edwards 86 Director Nominee (Class I) N/A
Earl H. Scudder 58 Director Nominee (Class I) N/A
Jon Isaacson 37 Director Nominee (Class II) N/A
Gordon K. Holladay 45 Director Nominee (Class II) N/A
- --------------------------------------
<FN>
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
</FN>
Richard D. Simon. Richard D. Simon founded the Company in 1955 and has served
as its Chairman of the Board and Chief Executive Officer since its incorporation
in 1972. Mr. Simon served as the Company's President from 1972 until April 2000.
Kelle A. Simon. Kelle A. Simon has served as the Company's President since
April 2000. From 1992 until April 2000, he served as Vice President of
Maintenance and Fleet Purchasing. He served as Maintenance Director from 1986
to 1992.
Alban B. Lang. Alban B. Lang has served as Chief Financial Officer, Treasurer,
and Secretary since 1992. He served as Chief Operating Officer from March 1999
to April 2000. From 1987 to 1992, he served as controller. Mr. Lang is a
certified public accountant and holds two Bachelor of Science degrees, one in
chemistry and the other in accounting, a Masters of Business Administration
degree, and a Masters degree in fuel engineering, all from the University of
Utah.
Lyn Simon. Lyn Simon has served as Vice President of Sales and Marketing since
1986. From July 1998 to February 1999, he also served as Vice President of
Operations. Prior to this, Mr. Simon served in numerous operating positions with
the Company, including implementing computer and telecommunications systems, and
managing the accounts receivable, accounts payable, public relations and fuel
tax and licensing departments after joining the Company in 1984.
Richard D. Simon, Jr. Richard D. Simon, Jr. was re-appointed Vice President of
Operations in February 1999. He previously served in this position from 1992
until July 1998. From July 1998 to February 1999, Mr. Simon served as the
Company's Vice President of Driver Relations. He served as a dispatcher and
customer service representative after joining the Company in 1990.
Sherry L. Bokovoy. Sherry L. Bokovoy was appointed Vice President of Human
Resources on April 2000. She also continues to serve as Assistant
Secretary/Treasurer, as she has done since 1994. Since joining the Company in
1987, she has held numerous positions within the Company, including supervising
administrative and maintenance payrolls, the employee stock purchase program,
and the Company store.
Gus E. Paulos. Gus E. Paulos has served as the President of Gus Paulos
Chevrolet since 1980. Mr. Paulos has served as President of the Western Region
Advertising Association for Chevrolet Motor Corporation for the past six years.
Don L. Skaggs. Don L. Skaggs has served as the President of Skaggs Co. Inc.
since 1997. Prior to this time, Mr. Skaggs served as President of Skaggs
Telecommunication Service, a subsidiary of American Stores Co. from 1980
through 1997. Skaggs Co. Inc. is a privately-held manufacturer and distributor
of law enforcement communication equipment and clothing.
Irene Warr. Irene Warr has been engaged in the private practice of law in Salt
Lake City since 1957 and has represented the Company in numerous matters since
1962. Ms. Warr represents many trucking companies and has specialized in motor
carrier transportation law for over 30 years.
Jerry Moyes. Jerry Moyes has served as the Chairman of the Board, President,
and Chief Executive Officer of Swift Transportation Co., Inc. ("Swift") since
1984 and Chairman of the Board of Central Freight Lines, Inc. ("Central") since
1997. If the Transfer is completed, the Moyes Nominees are expected to vote to
appoint Mr. Moyes as Chairman of the Board of the Company.
Jon Isaacson. Jon Isaacson is, and for more than the past five years has been,
the Vice President of East Coast Operations of Swift. If the Transfer is
completed, the Moyes Nominees are expected to vote to appoint Mr. Isaacson as
Chief Executive Officer and Chief Operating Officer of the Company.
Gordon K. Holladay. Gordon Holladay is, and for more than the past five
years has been, the Chief Financial Officer of SME Industries, Inc., the
parent company of SME Steel Contractors, Inc., a steel erection and fabrication
company located in West Jordan, Utah (together referred to as "SME"). SME is
controlled by Mr. Moyes.
Earl H. Scudder. Earl Scudder has served as a director of Swift since May 1993
and as a director of Central since 1997. Mr. Scudder has been since February
1990 President of Scudder Law Firm, P.C., L.L.O., in Lincoln, Nebraska,
which serves as legal counsel to Swift, Central, and SME in Lincoln, Nebraska,
and has engaged in the private practice of law since 1966.
Lou Edwards. Lou Edwards was, until 1999, and for more than five years previous
thereto, the President and sole stockholder of Sundance Truck Center
Incorporated, Phoenix, Arizona, which is the Freightliner tractor dealer in that
city. Mr. Edwards has 40 years of experience in the trucking industry and has
been, since 1990, a director of Swift.
BOARD MEETINGS AND COMPENSATION
Board of Directors. During the fiscal year ended September 30, 1999, the Board
of Directors of the Company met on four occasions. All directors attended the
meetings of the Board of Directors and all of the meetings held by committees of
the Board on which they served. Directors who are not employees of the Company
receive an annual retainer of $5,000 plus $1,000 per meeting of the Board of
Directors or a committee thereof attended by the director (if such committee
meeting is held other than on the day of a Board meeting), plus reimbursement of
expenses incurred in attending such Board or committee meetings. Non-employee
directors also receive an annual option to purchase 1,000 Class A Common Shares.
Compensation Committee. The Compensation Committee of the Board of Directors met
once during fiscal year 1999, and all members were present at such meeting. This
committee reviews all aspects of compensation of the Company's executive
officers and makes recommendations on such matters to the full Board of
Directors. The Report of the Compensation Committee for fiscal year 1999 is set
forth below. See "Compensation Committee Report on Executive Compensation." The
members of the Compensation Committee during fiscal year 1999 were Richard D.
Simon and Irene Warr.
Audit Committee. The Audit Committee met once during fiscal year 1999, and all
members were present at such meeting. The Audit Committee makes recommendations
to the Board concerning the selection of outside auditors, reviews the Company's
financial statements, reviews and discusses audit plans, audit work, internal
controls, and the report and recommendations of the Company's independent
auditors, and considers such other matters in relation to the external audit of
the financial affairs of the Company as may be necessary or appropriate in order
to facilitate accurate and timely financial reporting.
Nominating Committee. The Board does not maintain a standing nominating
committee or other committee performing similar functions.
Compensation Committee Interlocks and Insider Participation. Ms. Warr served
on the Compensation Committee from the Company's initial public offering
on November 17, 1995 until the most recent Annual Meeting. She is not an
officer or employee of the Company. During the 1999 fiscal year, the Company
paid Ms. Warr $30,000 annually ($2,500 per month), provided her health
insurance coverage at a cost to the Company of $130 per month, and provided an
office at the Company's headquarters as compensation for legal services. Ms.
Warr has served as counsel to Richard D. Simon since 1962 and the Company since
its incorporation in 1972. Richard D. Simon serves on the Compensation
Committee, and he is the father of Kelle A. Simon, Lyn Simon, Sherry L. Bokovoy,
and Richard D. Simon, Jr. The Board of Directors elected Mr. Paulos to
replace Ms. Warr on the Compensation Committee following the Annual Meeting.
During the 1999 fiscal year, the Company purchased $93,257 of vehicles
from Gus Paulos Chevrolet in arms'-length transactions.
EXECUTIVE COMPENSATION
The following table sets forth, for the three most recent fiscal years
of the Company, the compensation paid to the chief executive officer and the
four other named executive officers of the company (the "Named Officers").
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
-------------------------------------- ----------------------- ----------
Securities
Restricted Underlying
Name and Principal Other Annual Stock Options/ LTIP All Other
Position Year Salary($) Bonus($) Compensation($) Awards ($) SARs (#) Payouts $) Compensation ($)(1)
- ------------------------------------------------- ---------------- --------------------------------------------------------
Richard D. Simon, 1999 $348,400 0 0 0 0 0 2,803
Chairman and CEO 1998 $348,400 0 0 0 0 0 2,803
1997 $348,400 $163,750 0 0 0 0 2,803
Kelle A. Simon, 1999 $156,000 0 0 0 0 0 2,803
President 1998 $156,000 0 0 0 75,000 0 2,803
1997 $156,000 $98,250 0 0 27,000 0 2,803
Alban B. Lang, 1999 $156,000 0 0 0 0 0 2,803
CFO, Treasurer, and 1998 $156,000 0 0 0 75,000 0 2,803
Secretary 1997 $156,000 $98,250 0 0 27,000 0 2,803
Lyn Simon, Vice 1999 $156,000 0 0 0 0 0 2,803
President of Sales 1998 $156,000 0 0 0 75,000 0 2,803
and Marketing 1997 $156,000 $98,250 0 0 27,000 0 2,803
Richard D. Simon, 1999 $156,000 0 0 0 0 0 2,803
Jr., Vice President 1998 $156,000 0 0 0 75,000 0 2,803
of Operations 1997 $156,000 $98,250 0 0 27,000 0 2,803
<FN>
(1) Represents the amount of Company-paid health benefits.
</FN>
Option Grants in Last Fiscal Year. The Company did not grant options to purchase
Class A Common Shares to any of the Named Officers during the fiscal year ended
September 30, 1999.
Aggregated Option Exercises in the Last Fiscal Year and Year End Option Values.
The following table sets forth the number of unexercised options to acquire
Class A Common Shares held on September 30, 1999 and the aggregate value of such
options held by the Named Officers. The Named Officers did not exercise options
to acquire Class A Common Shares during fiscal year 1999. As of September 30,
1999, the Company had not granted any stock appreciation rights to any of the
Named Officers.
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options at September
at September 30, 1999 30, 1999
----------------------------------- -----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------- -------------- ---------------- -------------- -----------------
Richard D. Simon -- -- -- --
Kelle A. Simon 44,200 80,800 $0 $0
Alban B. Lang 44,200 80,800 $0 $0
Lyn Simon 44,200 80,800 $0 $0
Richard D. Simon, Jr. 44,200 80,800 $0 $0
Executive Employment Arrangements.
- ----------------------------------
Existing Employment Agreements. In July 2000, the Board entered into Employment
Agreements with each of the Managers, which provide certain benefits in the
event of a change of control of the Company, as well as payments and benefits in
the event of termination of employment under certain circumstances (the
"Existing Employment Agreements").
The Employment Agreements provide for the continued employment of the
Managers for one year following a change in control (the "Employment Period") in
essentially the position held prior to the change in control and at an annual
base salary and average annual bonus which is based on the salary paid during
the last fiscal year and the average of the bonuses paid during the three fiscal
years prior to the change of control. In addition, during the Employment Period,
the Managers would be entitled to participate in all retirement plans, benefit
plans and other employee benefits in effect prior to the change in control or,
if more favorable, in those benefit programs provided to employees after the
change of control.
Upon termination of employment following a change of control, other
than for death, disability or cause, or if the Manager terminates employment for
good reason, the Manager would be entitled to receive the sum of (i) his or her
base salary and bonus through the date of termination, (ii) any accrued or
deferred compensation or benefits, (iii) an amount equal to the Manager's annual
base salary and average annual bonus multiplied by the number of whole or
fractional years remaining in the Employment Period, and (iv) continued coverage
during the remainder of the Employment Period under the Company's benefit plans,
programs, practices or policies. The Employment Agreements provide that the
Managers may voluntarily terminate employment during a 30-day window period
following the first 12 months of the Employment Period and that such a
termination will be deemed for good reason.
If termination of employment of a Manger occurs by reason of death or
disability, he or she , or his or her estate or beneficiary, as applicable,
shall be entitled to payment of base salary and bonus through the date of
termination, any deferred or accrued benefits, and such other death or
disability benefits equal to the most favorable benefits provided by the Company
to other peer executives and their families or beneficiaries, as applicable. If
the Manager is terminated for cause during the Employment Period, the Company
shall be obligated to pay to the Manager his or her annual base salary through
the date of termination, the amount of any compensation previously deferred, and
any other benefits due through the date of termination, in each case to the
extent not previously paid.
Proposed Employment and Noncompetition Agreements. As of the Closing Date, the
Company and the Managers will enter into Employment and Noncompetition
Agreements pursuant to which each of the Managers (a) will be employed by the
Company on an at-will basis at an annual salary of $156,000, (b) will not
compete with the Company during the period of his or her employment and (1) for
one year thereafter if such Manager is terminated for cause or voluntarily
terminates his or her employment with the Company or (2) for three years
thereafter if such Manager is involuntarily terminated without cause, and (c)
will be eligible for bonus compensation based on the Company's financial
performance. Under certain circumstances in which there is a change of control,
executive officers holding outstanding stock options granted under certain
option plans are entitled to exercise such options notwithstanding that such
options may otherwise not have been fully exercisable. Upon the execution of the
Employment and Noncompetition Agreements described above, the Company and the
Managers will terminate the Existing Employment Agreements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee believes that the Company's executive
officers, including the Chief Executive Officer, should be compensated at a
level comparable to persons holding similar positions at peer companies, taking
into account the relative size of the companies, responsibilities of the
officers, experience, geographical location, and the relative performance of the
Company and its peers, measured by stock performance, profit margin, and revenue
and net income growth rates. In addition, the Compensation Committee will
consider the attainment of specific goals that may be established for such
officers from time-to-time. Corporate performance, measured by stock
appreciation, is an important aspect of the executive officers' compensation, as
reflected by net awards as of September 30, 1999 of stock options covering
986,700 Class A Common Shares to the executive officers and certain other key
employees. The base salaries of all executive officers, including the Chief
Executive Officer, were established prior to the Company's initial public
offering and prior to any meeting of the Compensation Committee. The
Compensation Committee believes that the base salaries paid to the Chief
Executive Officer and other executive officers are reasonable in comparison with
other salaries in the industry. In addition to base salaries, in the past the
Chief Executive Officer and other executive officers participated in a bonus
pool equal to 5 percent of earnings before provision for income taxes, subject
to the achievement of financial performance goals. As of the Closing Date, the
bonus pool will be terminated for the 2000 and subsequent fiscal years and the
Managers will be eligible for a bonus based entirely on the Company's financial
performance, measured by operating ratio (operating expenses as a percentage of
revenue). The Company did not meet its goal in fiscal year 1999, and the
executive officers did not receive bonuses. The Chief Executive Officer owns
approximately 14.1% of the Company's outstanding capital stock. Therefore, his
net worth is directly affected by the market value of the Company's capital
stock.
Compensation Committee:
Gus E. Paulos
Richard D. Simon
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors, and greater than 10% stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely upon a review of the copies of such forms furnished to
the Company, or written representations that no Forms 5 were required, the
Company believes that its officers, directors and greater than 10% beneficial
owners complied with all Section 16(a) filing requirements applicable to them
during the Company's preceding fiscal year.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of
the Company's Class A Common Shares with the cumulative total stockholder return
of the NASDAQ Stock Market (U.S. Companies) and the NASDAQ Trucking &
Transportation Stocks commencing November 17, 1995, and ending September 30,
1999.
GRAPH WAS CENTERED HERE IN PRINTED FORM
Legend
Symbol Index Description 11/17/95 9/30/96 9/30/97 9/30/98 9/30/99
- ------ ----------------- -------- ------- ------- ------- -------
___________ SIMON TRANSPORTATION SERVICES INC. $100.0 $156.0 $266.2 $ 57.7 $ 53.5
- - . . - . . NASDAQ Stock Market (US Companies) $100.0 $118.3 $162.5 $165.2 $268.3
- - . - . - . CRSP Index for NASDAQ Trucking & $100.0 $101.8 $143.5 $106.9 $124.4
Transportation Stock
The stock performance graph assumes $100 was invested on November 17,
1995, the date of the Company's initial public offering. There can be no
assurance that the Company's stock performance will continue into the future
with the same or similar trends depicted in the graph above. The Company will
not make or endorse predictions as to future stock performance. The CRSP Index
for NASDAQ Trucking & Transportation Stocks includes all publicly held truckload
motor carriers traded on the NASDAQ Stock Market, as well as all NASDAQ
companies within the Standard Industrial Code Classifications 3700-3799,
4200-4299, 4400-4599, and 4700-4799.
LEGAL PROCEEDINGS
The Company and certain of its officers and directors have been named
as defendants in a securities class action filed in the United States District
Court for the District of Utah, Caprin v. Simon Transportation Services Inc., et
al., No. 2:98CV 863K (filed December 3, 1998). Plaintiffs in this action allege
that defendants made material misrepresentations and omissions during the period
February 13, 1997 through April 2, 1998 in violation of Sections 11, 12(2) and
15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Company is
vigorously defending this action. The Company filed a motion to dismiss the
action, which was heard by the Court on July 19, 2000. As of the date of this
Information Statement, the Court had not ruled on the Company's motion to
dismiss the action. No officer, director, affiliate of the Company or holder of
more than 5% of any class of voting securities of the Company, or any associate
of the foregoing, has been named as an adverse party to the Company; however,
this action is a class action and purports to be brought on behalf of all
stockholders of the Company. Eight of the Company's directors are also
stockholders of the Company.
FORWARD-LOOKING STATEMENTS
This Information Statement, as well as information contained in written
material, press releases and oral statements issued by or on behalf of the
Company, contains, or may contain, certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such forward-looking statements relate
to the Company's future prospects, developments and business strategies for its
operations. These forward-looking statements are identified by the use of terms
and phrases such as "expect", "estimate", "project", "believe", and similar
terms and phrases. Such forward-looking statements are contained in various
sections of this Information Statement. These statements are based upon certain
assumptions and analyses made by the Company in light of its experience and
perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate under the
circumstances, and involve risks and uncertainties that may cause actual future
activities and results of operations to be materially different from that
suggested or described in this Information Statement. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary from those expected, estimated or projected.
CERTAIN TRANSACTIONS
Sherry L. Bokovoy and Jon Bokovoy are the daughter and son-in-law
of Richard D. Simon. Ms. Bokovoy is employed by the Company as the Vice
President of Human Resources and as an assistant treasurer and assistant
secretary, and Mr. Bokovoy is employed by the Company as a dispatch supervisor.
Ms. Bokovoy was paid an aggregate of $93,600 during the 1999 fiscal year. Mr.
Bokovoy was paid an aggregate of $94,600 during fiscal year 1999.
During the 1999 fiscal year, the Company purchased $93,257 of vehicles
from Gus Paulos Chevrolet and $65,487 of electronic video and security equipment
from Skaggs Telecommunications. Prices were established through arms-length
negotiations between the parties.
One of the Conditions, as specified in the Letter Agreement, the
Company having granted the Warrants to Jerry Moyes as compensation for services
he is anticipated to render as Chairman of the Board of Directors of the
Company.
Scudder Law Firm, P.C., L.L.O., the law firm of which Earl H. Scudder
is president, was counsel to the Company until January 5, 2000. During the
Company's fiscal year ended September 30, 1999, the law firm received
approximately $112,200 from the Company, and between October 1, 1999, and
January 5, 2000, the law firm received approximately $15,300 in compensation
for its services to the Company. The Company has consented to the representation
of Mr. Moyes by Scudder Law Firm, P.C., L.L.O. and has waived any conflict of
interest relating to such representation.