SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act of
1934
Filed by 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 Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SMITHWAY MOTOR XPRESS CORP.
(Name of Registrant as Specified in its Charter)
THE SMITHWAY MOTOR XPRESS CORP. BOARD OF DIRECTORS
(Name of Person(s) Filing Proxy Statement)
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: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Price per unit or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total Fee paid: N/A
[ ] Fee paid previously with preliminary materials. N/A
[ ] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
SMITHWAY MOTOR XPRESS CORP.
2031 Quail Avenue
Fort Dodge, Iowa 50501
----------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 2002
----------------------------------
To Our Stockholders:
The 2002 Annual Meeting of Stockholders (the "Annual Meeting") of Smithway
Motor Xpress Corp., a Nevada corporation (the "Company"), will be held at the
Company's headquarters located at 2031 Quail Avenue, Fort Dodge, Iowa 50501, at
10:00 a.m. Central Time, on Friday, May 10, 2002, for the following purposes:
1. To consider and act upon a proposal to elect six (6) directors of the
Company;
2. To consider and act upon a proposal to ratify the selection of KPMG
LLP as independent auditors for the Company for the fiscal year ending
December 31, 2002;
3. To consider and act upon a proposal to approve the Smithway Motor
Xpress Corp. New Employee Incentive Stock Plan (the "Plan") for the
purpose of qualifying options granted under the Plan as incentive
stock options for tax purposes; and
4. To consider and act upon such other matters as may properly come
before the meeting and any adjournment thereof.
The foregoing matters are more fully described in the accompanying Proxy
Statement.
The Board of Directors has fixed the close of business on March 15, 2002,
as the record date for the determination of Stockholders entitled to receive
notice of and to vote at the Annual Meeting or any adjournment thereof. Shares
of Common Stock may be voted at the Annual Meeting only if the holder is present
at the Annual Meeting in person or by valid proxy. YOUR VOTE IS IMPORTANT. TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE REQUESTED TO PROMPTLY
DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
Returning your proxy now will not interfere with your right to attend the Annual
Meeting or to vote your shares personally at the Annual Meeting, if you wish to
do so. The prompt return of your proxy may save the Company additional expenses
of solicitation.
All Stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
/s/ William G. Smith
William G. Smith
Chairman of the Board
Fort Dodge, Iowa 50501
April 10, 2002
SMITHWAY MOTOR XPRESS CORP.
2031 Quail Avenue
Fort Dodge, Iowa 50501
----------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2002
----------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Smithway Motor Xpress Corp., a Nevada
corporation (the "Company"), to be used at the 2002 Annual Meeting of
Stockholders of the Company (the "Annual Meeting"), which will be held at the
Company's headquarters located at 2031 Quail Avenue, Fort Dodge, Iowa 50501, on
Friday, May 10, 2002, at 10:00 a.m. Central Time, and any adjournment thereof.
All costs of the solicitation will be borne by the Company. The Company does not
intend to solicit proxies other than by this mailing; provided, that directors,
officers, and employees may solicit proxies by use of the mails or telephone
without compensation other than their regular compensation. The approximate date
of mailing this Proxy Statement and the enclosed form of proxy is April 10,
2002.
The enclosed copy of the Company's annual report for the fiscal year ended
December 31, 2001, is not incorporated into this Proxy Statement and is not to
be deemed a part of the proxy solicitation material.
PROXIES AND VOTING
Only stockholders of record at the close of business on March 15, 2002
("Stockholders"), are entitled to vote, either in person or by valid proxy, at
the Annual Meeting. Holders of Class A Common Stock are entitled to one vote for
each share held. Holders of Class B Common Stock are entitled to two votes for
each share held. On March 15, 2002, there were issued and outstanding 3,846,821
shares of Class A Common Stock, par value one cent ($.01), entitled to cast an
aggregate 3,846,821 votes on all matters subject to a vote at the Annual
Meeting, and 1,000,000 shares of Class B Common Stock, par value one cent
($.01), entitled to cast an aggregate 2,000,000 votes on all matters subject to
a vote at the Annual Meeting. As of March 15, 2002, the Company had a total of
4,846,821 shares of Common Stock outstanding, entitled to cast an aggregate
5,846,821 votes on all matters subject to a vote at the Annual Meeting. The
number of issued and outstanding shares excludes approximately 925,000 shares of
Class A Common Stock reserved for issuance under the Company's incentive stock
plans and other arrangements. Holders of unexercised options are not entitled to
vote at the Annual Meeting. The Company has no other class of stock outstanding.
Stockholders are not entitled to cumulative voting in the election of directors.
Any Stockholder may be represented and may vote at the Annual Meeting by a
proxy or proxies appointed by an instrument in writing. If any such instrument
in writing designates two (2) or more persons to act as proxies, a majority of
such persons present at the meeting, or, if only one is present, then that one
may exercise all of the powers conferred by such written instrument unless the
instrument shall otherwise provide. No such proxy shall be valid after the
expiration of six (6) months from the date of its execution, unless coupled with
an interest or unless the person executing it specifies therein the length of
time for which it is to continue in force, which in no case shall exceed seven
(7) years from the date of its execution. Any Stockholder giving a proxy may
revoke it at any time prior to its use at the Annual Meeting by filing with the
Secretary of the Company a revocation of the proxy, by delivering to the Company
a duly executed proxy bearing a later date, or by attending the meeting and
voting in person. Subject to the above, any proxy duly executed is not revoked
and continues in full force and effect until an instrument revoking it or a duly
executed proxy bearing a later date is filed with the Secretary of the Company.
Other than the election of directors, which requires a plurality of the
votes cast, each matter to be submitted to the Stockholders requires the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter,
proxies cast "For" or "Against" are included. If no direction is given to the
proxy holder, the proxy will be voted "For" the proposals as specified in this
Proxy Statement, and, at the discretion of the proxy holder, upon such other
matters as may properly come before the meeting or any adjournment thereof.
Proxies marked "Abstain" and broker non-votes are counted only for purposes of
determining whether a quorum is present at the meeting.
2
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting the Stockholders will elect six (6) directors to
serve as the Board of Directors until the 2003 Annual Meeting of Stockholders of
the Company or until their successors are elected and qualified. In the absence
of contrary instructions, each proxy will be voted for the election of William
G. Smith, G. Larry Owens, Donald A. Orr, Herbert D. Ihle, Robert E. Rich, and
Terry G. Christenberry. William G. Smith, Marlys L. Smith, and G. Larry Owens,
who together are entitled to cast over 50% of the eligible votes at the Annual
Meeting, have indicated that they will vote for the named nominees, and assuming
that they do, such nominees will be elected.
Information Concerning Directors and Executive Officers
Information concerning the names, ages, positions with the Company, tenure
as a director, and business experience of the Company's current directors and
other executive officers is set forth below. All references to experience with
the Company include positions with the Company's operating subsidiary, Smithway
Motor Xpress, Inc., an Iowa corporation.
Director
Name Age Position Since
William G. Smith 62 Chairman of the Board, President, Chief Executive Officer, and 1972
Secretary
G. Larry Owens 64 Executive Vice President, Chief Administrative Officer, Chief 1996
Financial Officer, and Director
Donald A. Orr 53 Executive Vice President, Chief Operating Officer, and Director 2001
Douglas C. Sandvig 37 Chief Accounting Officer and Controller -
Michael E. Oleson 51 Treasurer -
Herbert D. Ihle 62 Director 1996
Robert E. Rich 70 Director 1996
Terry G. Christenberry 55 Director 1996
William G. Smith has been employed by the Company since 1958, served as
President and Secretary since 1984, and as Chairman of the Board and Chief
Executive Officer since January 1995. Prior to 1984, Mr. Smith served in various
other executive management capacities. Mr. Smith is a past Chairman of the Iowa
Motor Truck Association and currently serves on its policy committee. In
addition, Mr. Smith serves on the Board of Regents of Waldorf College in Forest
City, Iowa.
G. Larry Owens has served as Executive Vice President and Chief Financial
Officer since joining Smithway in January 1993 and was appointed to also serve
as Chief Administrative Officer in August 2001. Mr. Owens served as Chief
Operating Officer from May 1998 to August 2001. Prior to joining Smithway, Mr.
Owens spent twenty-five years in the banking industry, most recently from 1982
through 1992 as President of Boatmen's Bancshares' regional banks in Spencer and
Fort Dodge, Iowa.
Donald A. Orr joined the Company during August of 2001 as Executive Vice
President and Chief Operating Officer and was appointed to also serve on the
Board of Directors. Mr. Orr has almost 30 years of management experience in the
trucking industry. From 1985 to 1999, Mr. Orr served in several senior
management positions, including President and Chief Executive Officer for the
Roberson Transport Companies, an operator of both flatbed and dry van divisions.
Mr. Orr is past Chairman of the Truckload Carriers Association and the Illinois
Trucking Association.
Douglas C. Sandvig has served as Controller since joining Smithway in July
1997 and was appointed to also serve as Chief Accounting Officer in May 2000.
Prior to joining Smithway, Mr. Sandvig was employed as a Tax Manager with
Schnurr & Company LLP, a regional public accounting firm, from 1990 to 1997. Mr.
Sandvig is a certified public accountant.
3
Michael E. Oleson served as Smithway's Controller upon joining the Company
in 1980 and in January 1995 was named Treasurer. Mr. Oleson also served as Chief
Accounting Officer between January 1995 and May 2000. Prior to joining Smithway,
Mr. Oleson was employed as an accountant with Mallinger Truck Line, Inc., in
Fort Dodge, Iowa, from 1974 to 1980.
Herbert D. Ihle has been President and owner of Diversified Financial
Services, a Naples, Florida, management and financial services consulting firm,
since 1989. From 1990 to 1992, Mr. Ihle served as Senior Vice President -
Finance and Controller for Northwest Airlines, and from 1963 to 1989 served in
various positions, including Executive Vice President - Finance, for Pillsbury
Co. Mr. Ihle also serves as Chairman of the Board of Regents of Waldorf College
in Forest City, Iowa and is a past director of Lutheran Brotherhood Insurance
Company.
Robert E. Rich is a private investor and has been involved in the
management of several privately owned farming and manufacturing companies since
1978. From 1967 through 1978, Mr. Rich served as Executive Vice President and
Treasurer and a member of the Board of Directors of Iowa Southern Utilities. Mr.
Rich is a certified public accountant.
Terry G. Christenberry has been the President and a director of
Christenberry, Collet & Company, Inc., an investment banking firm located in
Kansas City, Missouri, since its incorporation in June 1994. From September 1986
to June 1994, Mr. Christenberry was Executive Vice President and a director of
H.B. Oppenheimer & Company, Inc., also an investment banking firm located in
Kansas City, Missouri.
Meetings and Compensation
Board of Directors. During the fiscal year ended December 31, 2001, the
Board of Directors of the Company met on nine occasions. All directors attended
in person or participated by telephone in 100% of the total number of 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 a $2,500 annual retainer paid every year at the annual meeting, $1,000
for each meeting of the Board of Directors attended by such director, and $250
per committee or telephonic meeting attended by the director. Non-employee
directors also receive the annual option to purchase 1,000 shares of the
Company's Class A Common Stock at 85% of the market price on the date of the
annual meeting and are reimbursed for their expenses incurred in attending the
meetings.
Compensation Committee. The Compensation Committee of the Board of
Directors met twice during the fiscal year ended December 31, 2001, and all
members were present at such meetings. Messrs. Ihle, Rich, and Christenberry
serve on the Compensation Committee, with Mr. Ihle serving as Chairman. 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 2001 is set forth below.
See "Compensation Committee Report on Executive Compensation."
Audit Committee and Audit Committee Report. The Audit Committee for 2001 is
comprised of Messrs. Rich, Ihle, and Christenberry, with Mr. Rich serving as
Chairman. The Audit Committee met four times during the fiscal year ended
December 31, 2001. The responsibilities of the Audit Committee are set forth in
the Audit Committee Report, which appears below. All of the members of the Audit
Committee are independent directors, as defined in the NASDAQ Stock Market's
Listing Rule 4200. Since 1997, the Audit Committee has been operated pursuant to
a written charter detailing its duties. The written charter was last filed with
the Company's proxy statement for the 2001 Annual Meeting of Stockholders. In
performing its duties, the Audit Committee, as required by applicable Securities
and Exchange Commission rules, issues a report recommending to the Board of
Directors that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K. The 2001 Report of the Audit Committee is
set forth below.
4
The Audit Committee Report shall not be deemed to be incorporated by
reference into any filing made by the Company under the Securities Act of 1933
or the Securities Exchange Act of 1934, notwithstanding any general statement
contained in any such filings incorporating this Proxy Statement by reference,
except to the extent the Company incorporates such report by specific reference.
Audit Committee Report for 2001
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities relating to the quality
and integrity of the Company's financial reports and financial reporting
processes and systems of internal controls. Management of the Company has
primary responsibility for the Company's financial statements and the overall
reporting process, including maintenance of the Company's system of internal
controls. The Company retains independent auditors who are responsible for
conducting an independent audit of the Company's financial statements, in
accordance with accounting principles generally accepted in the United States of
America, and issuing a report thereon. In performing its duties, the Audit
Committee has discussed the Company's financial statements with management and
the Company's independent auditors and, in issuing this report, has relied upon
the responses and information provided to the Audit Committee by management and
the independent auditors. For the fiscal year ended December 31, 2001, the Audit
Committee (1) reviewed and discussed the audited financial statements with
management and KPMG LLP, the Company's independent auditors; (2) discussed with
the auditors the matters required to be disclosed by Statement on Auditing
Standards No. 61, as amended, "Communication with Audit Committees"; and (3)
received and discussed with the independent auditors the written disclosures and
the letter from the independent auditors required by Independence Standards
Board Statement No. 1. The Audit Committee discussed with the auditors any
relationships that may have an impact on their objectivity and independence and
satisfied itself as to the auditors' independence. Based on the foregoing
reviews and meetings, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2001, for filing with the Securities and
Exchange Commission. The Audit Committee also recommended the appointment of
KPMG LLP as the Company's independent auditors for the fiscal year ending
December 31, 2002.
Audit Committee:
Robert E. Rich
Herbert D. Ihle
Terry G. Christenberry
Nominating Committee. The Board does not maintain a standing nominating
committee or other committee performing similar functions.
Compensation Committee Interlocks, Insider Participation, and Related Party
Transactions. Messrs. Ihle, Rich, and Christenberry serve on the Compensation
Committee. None of such individuals has been an officer or employee of the
Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
5
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation paid to the chief executive officer and the other named
executive officers of the Company (the "Named Officers"), for services in all
capacities to the Company for the fiscal years ended December 31, 2001, 2000,
and 1999.
Summary Compensation Table
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
----------------------------------------
Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
Restricted Securities
Name and Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus Compensation(2) Award(s)(3) Options (#) Payouts Compensation(4)
- ------------------------------------------------------------------------------------------------------------------------------------
William G. Smith, 2001 $300,000 - - - - - $ 935
Chairman, President, 2000 $300,000 - - - - - $3,400
CEO, and Secretary 1999 $300,000 - - 8,975 - - $3,600
- ------------------------------------------------------------------------------------------------------------------------------------
G. Larry Owens, 2001 $157,500 - - - 35,000 - $ 561
Executive Vice 2000 $157,500 - - - 50,000 - $3,138
President, CAO, and CFO 1999 $157,500 - - 4,426 - - $3,150
- ------------------------------------------------------------------------------------------------------------------------------------
Donald A. Orr, Executive 2001 $76,731(1) - - - 210,000 - -
Vice President, COO 2000 - - - - - - -
1999 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Orr joined the Company in August 2001. If Mr. Orr had been employed by
the Company for all of 2001, his annual salary would have been $190,000.
(2) Other annual compensation did not exceed 10% of the Named Officer's total
salary for any reported year.
(3) Stock bonuses of Class A Common Stock granted by the Board of Directors for
1999 performance, effective January 28, 2000. No stock bonus was awarded
for 2000 or 2001 performance. Amount presented for Mr. Owens is net amount
reflecting 1,557 shares of the 1999 grant withheld to satisfy tax
withholding obligations.
(4) Amounts presented represent Company contributions to the Smithway Motor
Xpress Inc. 401(k) Plan, including forfeitures re-allocated to
participants.
6
The following table lists stock options granted to the Named Officers
during the fiscal year ended December 31, 2001. The Company has not granted any
stock appreciation rights ("SARs").
Option/SAR Grants in Last Fiscal Year
- -----------------------------------------------------------------------------------------------------------------------
Potential realizable value
at assumed annual rates
of stock price
appreciation for option
Individual Grants term
- -----------------------------------------------------------------------------------------------------------------------
Number of
securities Percent of total Exercise
underlying options/SARs granted or base
options to employees in fiscal price Expiration
Name granted (#) year ($/Sh) Date 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------
William G. Smith - - - - - -
- -----------------------------------------------------------------------------------------------------------------------
G. Larry Owens 35,000 12.7% $2.415 05/11/2011 53,157 134,711
- -----------------------------------------------------------------------------------------------------------------------
Donald A. Orr 210,000 76.4% $2.85 08/06/2011 376,393 953,855
- -----------------------------------------------------------------------------------------------------------------------
The following table demonstrates that no options under the Plan were
exercised during the fiscal year ended December 31, 2001, by the Named Officers.
Aggregated Option Exercises in Last Fiscal Year and FY-End Options
- -----------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Unexercised
Acquired Options Value of Unexercised
on Value at Fiscal Year End In-the-Money
Exercise Realized (#) Options at Fiscal Year End(1)($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
William G. Smith - - - - - -
- -----------------------------------------------------------------------------------------------------------------------
G. Larry Owens - - 110,000 - 1,713 -
- -----------------------------------------------------------------------------------------------------------------------
Donald A. Orr - - - 210,000 - 0
- -----------------------------------------------------------------------------------------------------------------------
- -------------------------------
(1) Based on the December 31, 2001, closing price of $1.85, which was below the
exercise prices of $8.875 (for 25,000 options); $3.469 (for 25,000
options); and $2.415 (for 35,000 options), but above the exercise price of
$1.7815 (for 25,000 options).
The Company does not have a long-term incentive plan or a defined benefit
or actuarial plan.
7
Employment Agreements
Except for the letter agreement with Mr. Orr as described below, the
Company currently does not have any employment contracts, severance, or
change-in-control agreements with any of its executive officers. However, under
certain circumstances in which there is a change of control, holders of
outstanding stock options granted under the Plan may be entitled to exercise
such options notwithstanding that such options may otherwise not have been fully
exercisable. Similar rights could be extended to holders of additional awards
under the Plan if any such awards were granted.
In connection with the hiring of Mr. Orr as Executive Vice President and
Chief Operating Officer, Mr. Orr and the Company entered into a letter agreement
dated August 6, 2001, which sets forth the terms and conditions of Mr. Orr's
employment. The letter agreement provides for the following:
o a salary at an annualized rate of $190,000 for 2001, with annual
increases;
o an annual bonus equal to 1% of Smithway's net earnings each year;
o an option to purchase 210,000 shares of Smithway's Class A Common
Stock, vesting in increments of 35,000 shares on each of the first
through the sixth anniversaries of the grant date, or immediately in
the event of a change-in-control of Smithway;
o the execution of a Noncompetition Agreement limiting Mr. Orr's
ability to compete with Smithway after his employment is terminated,
provided certain payments are made by Smithway; and
o a lump sum payment equal to Mr. Orr's annual salary as of the date of
a change-in-control of Smithway if, following such change-in-control,
Mr. Orr's duties are substantially changed, his compensation is
materially reduced, or Smithway fails to obtain the assumption of its
obligations to perform the letter agreement by any successor.
Mr. Orr's employment relationship with the Company is "at-will" and the
letter agreement does not create any specific duration of employment or a right
to continuing employment with the Company.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors prepared the following
report on executive compensation.
Under the Compensation Committee's supervision, the Company has adopted
compensation policies that seek to attract and retain excellent management
personnel and align the interests of senior management with the interests of
stockholders. The three main components of senior management's compensation are
salary, bonus, and stock-based compensation. The terms of Mr. Orr's compensation
are set forth above under the heading "Employment Agreements."
Base Salary. For 2001, the Company did not increase the base salaries of
Mr. Smith or Mr. Owens. Other members of senior management received modest
increases in base salary mainly to reflect a cost-of-living increase. In
approving the base salaries of the Company's senior management team for 2001,
the Compensation Committee reviewed individual performance and the compensation
of persons holding similar positions at other publicly traded truckload
carriers. The Compensation Committee took into account the relative size of
comparable companies, growth rates, geographic considerations, and operating
performance. The Compensation Committee believes that the base salaries of
senior management, other than the salary of the Chief Executive Officer that is
discussed below, are at or below the average levels paid by comparable, publicly
traded truckload carriers.
Annual Bonus. Most of the senior management personnel other than Mr. Smith
and Mr. Owens received small bonuses for their performance in 2001. The
Compensation Committee reviews bonuses for senior management, other than Mr.
Smith and Mr. Owens, after considering whether a Company performance component
was met and whether members of management met their individual goals that had
been established at the beginning of the year. For 2001, members of management
received bonuses based solely upon individual goals as the Company performance
component was not met. Mr. Smith and Mr. Owens participate in a separate
incentive compensation plan that allocates a bonus amount equal to a percentage
of corporate profits. Mr. Smith and Mr. Owens did not receive a bonus in 2001.
8
Stock-Based Compensation. The Compensation Committee believes that the use
of stock-based compensation as a component of potential compensation can align
the interests of management and stockholders and encourage senior management to
focus on long-term, profitable growth. From time-to-time the Compensation
Committee has made or recommended stock option grants and other stock awards to
members of senior management. In 2001, the Company made stock option grants to
senior management covering 30,000 shares of Class A Common Stock, excluding
grants to Mr. Owens and Mr. Orr. The Company granted Mr. Owens an option to
purchase 35,000 shares on May 11, 2001, in lieu of a salary increase.
Chief Executive Officer. Mr. Smith's base salary has not been changed since
the Company's initial public offering. The Compensation Committee believes it is
reasonable in relation to the base salaries of CEOs of comparable companies. Mr.
Smith participated in the Profit Incentive Plan, as explained above. In view of
his large stockholdings, Mr. Smith has not received stock option grants to date.
As the Company's largest stockholder, Mr. Smith's net worth is directly affected
by the Company's performance and stock price.
Compensation Committee:
Herbert D. Ihle
Robert E. Rich
Terry G. Christenberry
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. Officers, directors, and
greater than 10% stockholders are required by Securities and Exchange Commission
regulations 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, except that a Form 5 for Mr. Owens with
respect to a grant of stock options that occurred in June 2000 was filed
February 16, 2001.
9
Stock Price Performance Graph
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR SMITHWAY MOTOR XPRESS CORP.
The following graph compares the cumulative total stockholder return of the
Company's Class A Common Stock with the cumulative total stockholder return of
the Nasdaq Stock Market (U.S. Companies) and the Nasdaq Trucking &
Transportation Stocks commencing June 27, 1996, and ending December 31, 2001.
GRAPH WAS CENTERED HERE
IN PRINTED FORM
Prepared by CRSP (www.crsp.uchicago.edu), Center for Research in Security
Prices, Graduate School of Business, The University of Chicago. Used with
permission. All rights reserved.
The stock performance graph assumes $100 was invested on June 27, 1996, 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
U.S. and Foreign.
10
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of March 15, 2002, the number and
percentage of outstanding shares of Common Stock beneficially owned by each
person known by the Company to beneficially own more than 5% of such stock, by
each director, by each Named Officer of the Company, and by all directors and
executive officers of the Company as a group. Share numbers are as of January
30, 2002, for Dimensional Fund Advisors Inc. based upon Schedule 13G filings
with the Securities and Exchange Commission. According to the Company's transfer
agent, the Company has outstanding 3,846,821 shares of Class A Common Stock as
of March 15, 2002.
- -----------------------------------------------------------------------------------------------------------------------
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
- -----------------------------------------------------------------------------------------------------------------------
Amount & Nature
of Beneficial
Title of Class Name of Beneficial Owner(2) Ownership (3) Percent of(1)
-----------------------------------
Class A Class B Total
- -----------------------------------------------------------------------------------------------------------------------
Class A Common 1,139,546
Class B Common William G. and Marlys L. Smith(4) 1,000,000 29.7% 100% 44.2%
- -----------------------------------------------------------------------------------------------------------------------
Class A Common G. Larry Owens(5) 275,632 7.0% 0 5.6%
- -----------------------------------------------------------------------------------------------------------------------
Class A Common Donald A. Orr 8,000 * 0 *
- -----------------------------------------------------------------------------------------------------------------------
Class A Common Herbert D. Ihle(3) 13,000 * 0 *
- -----------------------------------------------------------------------------------------------------------------------
Class A Common Robert E. Rich(3) 14,000 * 0 *
- -----------------------------------------------------------------------------------------------------------------------
Class A Common Terry G. Christenberry(3) (6) 22,500 * 0 *
- -----------------------------------------------------------------------------------------------------------------------
Class A Common Dimensional Fund Advisors Inc. 286,900 7.5% 0 5.9%
- -----------------------------------------------------------------------------------------------------------------------
Class A & Class B All directors and executive
Common officers as a group (7 persons) (7) 2,507,643 37.5% 100% 50.0%
- -----------------------------------------------------------------------------------------------------------------------
- ----------------------
* Less than one percent (1%).
(1) The Class A Common Stock is entitled to one vote per share. The Class B
Common Stock is entitled to two votes per share so long as it is
beneficially owned by William G. Smith or certain members of his immediate
family. The Smiths beneficially own shares of Class A and Class B Common
Stock with 53.7% of the voting power of all outstanding voting shares.
(2) The business address of William G. and Marlys L. Smith is 2031 Quail
Avenue, Fort Dodge, Iowa 50501. The business address of Dimensional Fund
Advisors Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, California
90401.
(3) In accordance with applicable rules under the Securities Exchange Act of
1934, as amended, the number of shares beneficially owned includes 10,000
shares of Class A Common Stock underlying options to purchase granted under
the Outside Director Stock Plan and other arrangements to each of Messrs.
Rich, Ihle, and Christenberry that are currently exercisable or will be
exercisable within 60 days. Unless otherwise indicated all shares are owned
directly.
(4) All shares held as joint tenants with right of survivorship except (a)
190,000 shares of Class A Common Stock held in the name of Melissa Turner
as voting trustee for the benefit of the Smith Family Limited Partnership,
(b) 91,022 shares of Class A Common Stock held for the Smiths under the
Company's 401(k) Plan, and (c) 10,126 shares of Class A Common Stock held
individually by Marlys L. Smith. Melissa Turner is the daughter of William
G. and Marlys L. Smith.
(5) Includes 200 shares held as custodian for minor children under the Uniform
Gifts to Minors Act, as to which beneficial ownership is disclaimed, 15,432
shares of Class A Common Stock held under the Company's 401(k) Plan, and
options to purchase 110,000 shares granted to Mr. Owens under the Company's
Incentive Stock Plan, which options are fully vested.
(6) Includes 2,500 shares held under the Christenberry, Collett & Company, Inc.
401(k) Plan, a unitized plan that, as of January 4, 2002, had allocated
approximately 30% of the Plan assets to Mr. Christenberry. Beneficial
ownership of Plan assets not allocated to Mr. Christenberry is disclaimed.
(7) The only executive officer, other than Named Officers William G. Smith, G.
Larry Owens, and Donald A. Orr, is Michael E. Oleson. Mr. Oleson has
beneficial ownership of 4,965 shares of Class A Common Stock under the
Company's 401(k) Plan and an option to purchase 30,000 shares of Class A
Common Stock that is currently exercisable or will become exercisable
within 60 days. Such amounts are included in the calculation of the
security ownership of all directors and executive offices as a group, which
includes options held by G. Larry Owens and each of Messrs. Rich, Ihle, and
Christenberry to purchase shares of Class A Common Stock that are currently
exercisable or will become exercisable within 60 days (as referenced in
footnotes 3 and 5 above).
11
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT
AUDITORS
The Board of Directors has selected KPMG LLP as independent auditors for
the Company for the fiscal year ending December 31, 2002. KPMG LLP has served as
independent auditors for the Company since December 1994. Representatives of
KPMG LLP are expected to be present at the Annual Meeting with an opportunity to
make a statement, if they desire to do so, and to respond to appropriate
questions.
Fiscal Year 2001 Audit Fee Summary
During fiscal year 2001, KPMG LLP provided services in the following
categories to the Company, and the Company paid the following amounts to KPMG
LLP:
Audit fees, excluding audit related $56,809
======
Financial information system design & implementation fees $ 0
======
All other fees:
Audit related fees $ 0
Other non-audit services $10,622
-------
Total all other fees $10,622
=======
The non-audit fees paid to KPMG were primarily for tax compliance services.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
PROPOSAL 2 TO RATIFY THE SELECTION OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE
COMPANY FOR THE FISCAL YEAR.
12
PROPOSAL 3
APPROVAL OF NEW EMPLOYEE INCENTIVE STOCK PLAN FOR PURPOSE OF QUALIFYING
OPTIONS GRANTED UNDER THE PLAN AS INCENTIVE STOCK OPTIONS
Description of Plan
In August 2001, the Company's Board of Directors adopted a New Employee
Incentive Stock Plan (the "Plan") and reserved 400,000 shares of the Company's
Class A Common Stock for issuance under the Plan. The Plan is included as
Appendix A to this Proxy Statement. The Board of Directors adopted the Plan as
an inducement essential to Mr. Orr's accepting employment with the Company, and
to provide an inducement for the future employment of other individuals not
previously employed by the Company. Mr. Orr's option to purchase 210,000 shares
of the Company's Class A Common Stock was granted under the Plan. The Board of
Directors has recommended that the Stockholders of the Company approve the Plan
for the purpose of qualifying options granted under the Plan, including Mr.
Orr's option, as incentive stock options. If the Plan is not approved by the
Stockholders for this purpose, the Plan shall remain in effect but the options
granted thereunder shall not constitute incentive stock options.
Awards under the Plan may be in the form of incentive stock options,
assuming the Plan is approved by the Stockholders, non-qualified stock options,
restricted stock awards, or any other awards of stock consistent with the Plan's
purpose. The Plan is administered by the Board of Directors or a committee that
may be appointed by the Board of Directors. Awards may be granted only to
individuals not previously employed by the Company or any parent or subsidiary
of the Company as an inducement essential to the individual entering into an
employment relationship with the Company or any parent or subsidiary of the
Company. The administrator may substitute new stock options for previously
granted options. No awards of incentive stock options may be made after the
period specified under applicable provisions of the Internal Revenue Code. To
date, 190,000 shares remain reserved for stock issuance pursuant to the Plan.
The Board of Directors has unanimously recommended approval of Proposal 3
and believes that the ability to offer additional equity incentives is important
to providing compensation that aligns the interest of employees and
stockholders. The market price of the stock as of December 31, 2001, was $1.85,
which results in the stock underlying the shares covered by the Plan having a
market value of $740,000 at such date.
Federal Income Tax Consequences for Incentive Stock Options
Options granted as an incentive stock option ("ISO") are intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") for special tax treatment. Neither the grant of the ISO nor the exercise
of the ISO by a participant ("Optionee") will result in the recognition of
taxable income to the Optionee. However, the exercise of an ISO will result in
an item of tax preference to an Optionee potentially subject to the alternative
minimum tax. The ultimate sale or other disposition by the Optionee of the
shares obtained upon exercise of the ISO will result in capital gain or loss
equal to the difference between the fair market value on the date of sale and
the exercise price. The Company will not have a deduction with regard to the ISO
at the time of the grant, the exercise, or the ultimate sale of the shares.
Notwithstanding the foregoing, if an Optionee sells or disposes of the shares
prior to two years after the date of the grant of the ISO or one year after the
date of the exercise, the Optionee will recognize compensation income on the
sale to the extent the value on the date of exercise exceeded the exercise
price. The excess of the amount received on the sale over the value on the date
of exercise will be capital gain. In the case of such a disqualifying
disposition of shares, the Company may deduct the amount of income recognized as
compensation income. A person entitled to exercise the ISO after the death of an
Optionee may sell the stock obtained on the exercise of an option at any time
without regard to the normal holding requirements. In addition to the foregoing
federal tax considerations, the exercise of an ISO and the ultimate sale or
other disposition of the shares acquired thereby will in most cases be subject
to state income taxation.
Federal Income Tax Consequences for Nonstatutory Stock Options
An Optionee does not realize any compensation income upon the grant of a
Nonstatutory Stock Option ("NSO"). Additionally, the Company may not take a tax
deduction at the time of the grant. Upon exercise of an NSO, an Optionee
realizes and must report as compensation income an amount equal to the
difference between the
13
fair market value of the securities on the date of exercise and the exercise
price. The Company is entitled to take a deduction at the same time and in the
same amount as the Optionee reports as compensation income, provided the Company
withholds federal income tax in accordance with the Code and applicable Treasury
regulations. In addition to the foregoing federal tax considerations, the
exercise of an Option and the ultimate sale or other disposition of the shares
of Common Stock acquired thereby will in most cases be subject to state income
taxation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
PROPOSAL 3 TO APPROVE THE NEW EMPLOYEE INCENTIVE STOCK PLAN FOR THE PURPOSE OF
QUALIFYING OPTIONS GRANTED UNDER THE PLAN AS INCENTIVE STOCK OPTIONS.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2003 Annual Meeting
of the Stockholders of the Company must be received by the Corporate Secretary
of the Company at the Company's principal executive offices on or before
December 10, 2002, to be eligible for inclusion in the Company's proxy material
related to that meeting. The inclusion of any such proposals in such proxy
material shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
The Board of Directors does not intend to present at the Annual Meeting any
matters other than those described herein and does not presently know of any
matters that will be presented by other parties.
Smithway Motor Xpress Corp.
/s/ William G. Smith
William G. Smith
Chairman of the Board
April 10, 2002
14
APPENDIX A
SMITHWAY MOTOR XPRESS CORP.
NEW EMPLOYEE
INCENTIVE STOCK PLAN
1. Purpose and Scope of the Plan. The purpose of this incentive stock plan
is to attract the best available new employees for positions of substantial
responsibility and to promote the success of the Company's business. Awards
granted under the Plan may be Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock Awards, Reload Options, Other Stock Based Awards, or
Other Benefits at the discretion of the Board. The Plan shall not confer upon
any Participant any right with respect to continuation of an employment
relationship with the Company or any Subsidiary, nor shall it interfere in any
way with the right of any Participant or of the Company or any Parent or
Subsidiary to terminate the employment relationship at any time.
2. Definitions. As used in this Plan, the following definitions shall
apply:
(a) "Award" shall mean Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock Awards, Reload Options, Other Stock Based Awards,
or Other Benefits granted pursuant to the Plan.
(b) "Board" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean the Class A Common Stock of the Company,
par value $0.01 per share.
(e) "Company" shall mean Smithway Motor Xpress Corp., a Nevada
corporation, or any permitted successor that assumes the obligations under
this Plan by agreement or operation of law.
(f) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan, if one is appointed.
(g) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an employee of the Company or any
Parent or Subsidiary of the Company. Continuous Status as an Employee shall
not be considered interrupted in the case of sick leave, military leave, or
any other leave of absence approved by the Board; provided that such leave
is for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
(h) "Director" shall mean a member of the Board of Directors of the
Company, Parent, or any Subsidiary.
(i) "Eligible Person" shall mean any person not previously employed by
the Company or any Parent or Subsidiary of the Company that is offered
employment.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
(k) "Fair Market Value" shall mean the closing price of the Common
Stock on the date the Award is granted, as such price is reported by The
Nasdaq Stock Market, other over-the-counter market, or stock exchange, as
applicable. If no reported quotation or sale of Common Stock takes place on
the date in question, the last reported closing price of the Common Stock
shall be determinative.
(l) "Incentive Stock Option" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(m) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(n) "Option" shall mean a stock option granted pursuant to the Plan.
2
(o) "Optioned Stock" shall mean the Common Stock subject to an Option.
(p) "Other Benefits" shall mean types of Awards granted under this
Plan as determined by the Board in addition to those specifically provided.
(q) "Other Stock Based Awards" shall mean awards valued in whole or in
part by reference to, or otherwise based on, the Company's Common Stock.
(r) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(s) "Participant" shall mean an Eligible Person who receives an Award.
(t) "Plan" shall mean this New Employee Incentive Stock Plan.
(u) "Reload Option" shall mean an Option to purchase for cash or
Shares a number of shares of Common Stock up to (i) the number of shares of
Common Stock used to exercise the underlying option, and (ii) the number of
shares of Common Stock used to satisfy any tax withholding requirement
incident to the exercise of the underlying option, in either case through
the use of shares of Common Stock or vested options.
(v) "Restricted Stock" shall mean shares of Common Stock that are
subject to the restrictions described in this Plan and such other terms and
conditions as the Board may prescribe.
(w) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(x) "Share" or "Shares" shall mean a share or shares of Common Stock,
as adjusted in accordance with Section 12 of the Plan.
(y) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares that may be optioned, sold, or
granted through Awards under the Plan is four hundred thousand (400,000). The
Shares may be authorized, but unissued, or reacquired Common Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares that were subject to the Option shall
become available for future grant under the Plan, unless the Plan shall have
been terminated. Any Shares of Restricted Stock that are forfeited shall again
be available for Awards under the Plan. Fractional Shares shall not be issued.
The Board will determine the manner in which fractional Share values will be
treated. Each Award shall state the total number of Shares subject to such
Award. Shares issued under the Plan and later repurchased by the Company shall
become available for future grant or sale under the Plan.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by the Board of
Directors of the Company or a committee appointed by the Board in
accordance with this Section 4. The Board of Directors may appoint a
committee consisting of not less than two members of the Board of Directors
to administer the Plan on behalf of the Board of Directors, subject to such
terms and conditions as the Board of Directors may prescribe. Once
appointed, the committee shall continue to serve until otherwise directed
by the Board of Directors. From time to time the Board of Directors may
increase the size of the Committee and appoint additional members of the
Board, remove members (with or without cause), appoint new members, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
3
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive
Stock Options, Nonstatutory Stock Options, Restricted Stock Awards, Reload
Options concurrently with the grant of any Award of Incentive Stock Options
or Nonstatutory Stock Options, Other Stock Based Awards, and Other
Benefits; (ii) to determine, upon review of relevant information and in
accordance with Section 2.(k) of the Plan, the Fair Market Value of the
Common Stock; (iii) to determine the exercise price per Share of Options to
be granted, which exercise price shall be determined in accordance with
Section 8.(a) of the Plan; (iv) to determine Eligible Persons to whom, and
the time or times at which, Awards shall be granted and the number of
Shares to be represented by each Award; (v) to interpret the Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating to the Plan;
(vii) to determine the terms and provisions of each Award granted (which
need not be identical) and, with the consent of the holder of the Award,
modify or amend each Award; (viii) to accelerate or defer (with the consent
of the Participant) the exercise or vesting date of any Award, consistent
with the provisions of Section 7 of the Plan; (ix) to authorize any person
to execute on behalf of the Company any instrument required to effectuate
the grant of an Award previously granted by the Board; and (x) to make all
other determinations deemed necessary or advisable for the administration
of the Plan.
(c) Effect of Board's Decision. All decisions, determinations, and
interpretations of the Board shall be final and binding on all Participants
and any other holders of any Awards granted under the Plan.
5. Eligibility.
(a) Generally. Awards may be granted only to Eligible Persons as an
inducement essential to the individual's entering into an employment
relationship with the Company or any Parent or Subsidiary of the Company.
(b) Limitations on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the date of grant) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company,
Parent, or any Subsidiary) shall not exceed $100,000. If the Fair Market
Value (determined as of the date of grant) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Common Stock to become exercisable in such
calendar year shall be Incentive Stock Options and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year
shall be Nonstatutory Stock Options. In the event that the Code or the
regulations promulgated thereunder are amended after the date of the Plan
to provide for a different limit on the Fair Market Value of Common Stock
permitted to be subject to Incentive Stock Options, such different limit
shall be automatically incorporated in this Section 5.(b) and shall apply
to any Incentive Stock Options granted after the effective date of such
amendment.
(c) Other Stock Based Awards. The Board shall have the right to grant
Other Stock Based Awards that may include, without limitation, the grant of
Common Stock based on certain conditions, including the issuance of Common
Stock in lieu of cash under other incentive or deferred compensation
programs of the Company.
(d) Other Benefits. The Board shall have the right to provide Other
Benefits, if the Board believes that such Awards would further the purposes
for which this Plan was established.
6. Term of Plan. The Plan shall become effective upon adoption by the Board
of Directors. It shall continue in effect until terminated under Section 14 of
the Plan. No Awards of Incentive Stock Options shall be made hereunder after
August 6, 2011.
7. Term of Awards. The maximum term of each Incentive Stock Option shall be
ten (10) years from the date of grant or such shorter term as may be provided in
any notice or agreement evidencing such Award; provided, however, in the case of
an Incentive Stock Option granted to a Participant who, at the time the
Incentive
4
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the maximum term of the Incentive Stock Option shall be five (5)
years from the date of grant or such shorter time as may be provided in the
Incentive Stock Option agreement. The foregoing notwithstanding, if the Code or
regulations promulgated thereunder are subsequently amended to provide for a
different percentage of voting power or maximum option term for Incentive Stock
Options, such new limits shall be automatically incorporated in this Section 7
and shall apply to any Incentive Stock Options granted after the effective date
of such amendment. The term of each Reload Option shall be equal to the
remaining option term of the underlying Option. The term of each Award, if
applicable, that is not an Incentive Stock Option or Reload Option shall be
determined by the Board and set forth in the agreement or notification relating
to Nonstatutory Stock Options, Restricted Stock, Other Stock Based Awards, or
Other Benefits.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is
determined by the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option, any restrictions
imposed by the Code at the time of grant, which restrictions currently
are as follows:
(A) grants to an Eligible Person who, at the time of the
grant of such Incentive Stock Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, shall have a
per Share exercise price no less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of grant;
or
(B) grants to any other Eligible Person shall have a per
Share exercise price no less than one hundred percent (100%) of
the Fair Market Value per Share on the date of grant.
(ii) In the case of Nonstatutory Stock Options, at any price per
Share determined by the Board.
(iii) In the case of Reload Options, unless otherwise established
by the Board, the exercise price per share of Common Stock deliverable
upon the exercise of a Reload Option shall be the Fair Market Value of
a share of Common Stock on the date the grant of the Reload Option
becomes effective.
(b) Consideration for Restricted Stock, Other Stock Based Awards, and
Other Benefits. In the case of Restricted Stock, an award of Restricted
Stock may provide that the Participant be required to furnish such
consideration for the Award as the Board shall determine, or may be issued
in exchange for past services or other legal consideration. An Award of
Restricted Stock may provide that such Restricted Stock may be exchanged
during the Restricted Period for other Restricted Stock upon such terms and
conditions as the Board may permit or shall require. Payment under or a
settlement of any Other Stock Based Awards and Other Benefits shall be made
in such manner and at such times as the Board may determine.
(c) Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option or grant of an Award, including the
method of payment, shall be determined by the Board and may consist
entirely of (i) cash, (ii) check, (iii) other shares of Common Stock having
a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option shall be exercised,
(iv) vested and exercisable (but unexercised) Options valued at the
difference between the exercise price and Fair Market Value of the Shares,
or (v) any combination of such methods of payment, or other consideration
and method of payment for the issuance of Shares to the extent permitted
under the Nevada General Corporation Law.
5
9. Exercise of Option.
(a) Generally. Any Option granted under the Plan shall be exercisable
at such times and under such conditions as determined by the Board,
including performance criteria with respect to the Company and/or the
Participant, and as shall be permissible under the terms of the Plan. An
Option may not be exercised for a fraction of a Share. Anything to the
contrary notwithstanding, each Reload Option is fully exercisable two (2)
years from the effective date of grant (or if fewer than two (2) years
remain until the termination of this Plan, then such Reload Option shall be
exercisable within ninety (90) days prior to termination of the Plan).
(b) Procedure. An Option shall be deemed to be exercised when written
notice of exercise in accordance with Section 22.(c) and (d) hereof (if
applicable, in the form required by the Nonstatutory or Incentive Stock
Option agreement or notice) has been given to the Company in accordance
with the terms of the Option by the person entitled to exercise the Option
and full payment for the Shares with respect to which the Option is
exercised has been received by the Company. Full payment may, as authorized
by the Board, consist of any consideration and method of payment allowable
under Section 8 of the Plan. The Company shall issue (or cause to be
issued) the stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except as
provided in Section 12 of the Plan. Exercise of an Option in any manner
shall result in a decrease in the number of Shares that may be available,
both for purposes of the Plan and for purchase under the Option, by the
number of Shares as to which the Option is exercised.
10. Conditions and Restrictions Affecting Awards.
(a) Certain Events Affecting Exercisability of Incentive Stock
Options. Notwithstanding anything in the Plan to the contrary, all
Incentive Stock Options to the extent not already exercised shall terminate
upon expiration of a term equal to ten (10) years from the date of grant,
subject to adjustment under Section 7.
(b) Certain Conditions Affecting Restricted Stock Awards.
(i) Restriction. Except as provided in Section 10.(b)(iii), at
the time of an Award of Restricted Stock, the Board may establish in
its discretion, for each Participant a vesting schedule and a period
of time ("Restricted Period") during which Restricted Stock may not be
sold, assigned, transferred, pledged, or otherwise encumbered, except
as hereinafter provided. Except for such restrictions as may be
provided in the Restricted Stock agreement or notice and subject to
this Section 10.(b), the Participant shall have all rights of a
stockholder with respect to such Restricted Stock. The Board, in its
discretion, may accelerate the time at which any or all of the
restrictions shall lapse with respect to any Shares of Restricted
Stock prior to the expiration of the Restricted Period or remove any
or all of such restrictions, as it deems appropriate.
(ii) Registration and Redelivery of Restricted Stock. Each
certificate of Restricted Stock shall be registered in the name of the
Participant and deposited by the Participant, together with a stock
power endorsed in blank, with the Company. During the Restricted
Period, the Restricted Stock shall remain in the possession of the
Company. At the end of the Restricted Period, the Company shall
redeliver to the Participant (or the Participant's legal
representative or personal representative) the certificates of Common
Stock deposited pursuant to this Section 10.(b)(ii). The Common Stock
so delivered to the Participant shall no longer be subject to the
provisions of this Section 10.(b).
(iii) Termination of Employment. Unless the Restricted Stock
agreement or notice otherwise provides, in the event the Participant's
employment with the Company and/or its Subsidiaries or Parent is
terminated for reasons other than death, total and permanent
disability (as defined in Section 22(e)(3) of the Code), or retirement
after the age of sixty-five (65), all Restricted Stock awarded to such
Participant which is still subject to restriction shall be forfeited.
For the
6
purposes of this Section 10.(b)(iii), the forfeiture period for each
Award of Restricted Stock shall be separately calculated from the date
of the Award. Unless the Restricted Stock agreement or notice
otherwise provides, the restrictions contained in Section 10.(b)(i)
shall terminate on the Participant's death, total and permanent
disability (as defined in Section 22(e)(3) of the Code), or attainment
of age sixty-five (65).
(c) Certain Conditions Affecting Reload Options.
(i) Non-Qualification as Incentive Stock Option. Notwithstanding
the fact that the underlying Option may be an Incentive Stock Option,
a Reload Option is not intended to qualify as an Incentive Stock
Option.
(ii) Reload Option Amendment. Each Incentive Stock Option and
Nonstatutory Stock Option agreement or notice shall state whether the
Board has authorized Reload Options with respect to the underlying
options. Upon the exercise of an underlying option, any additional
Reload Option must be evidenced by an amendment to the underlying
agreement or notice or by a new notice from the Board.
(iii) Termination of Employment. No additional Reload Options
shall be granted to Participants when Options are exercised pursuant
to the terms of this Plan following termination of the Participant's
employment.
(iv) Application Sections. Applicable sections of the Plan or
written notice or agreement regarding the manner of payment,
restrictions, death, retirement, total or permanent disability (as
defined in Section 22(e)(3) of the Code) of the Participant, and
similar provisions relating to the underlying Option, are incorporated
by reference in this Section 10(c) as though fully set forth herein.
(d) Certain Conditions Affecting Other Stock Based Awards and Other
Benefits. Unless the agreement or notice relating to the Other Stock Based
Awards or Other Benefits otherwise provides, except in the event of the
Participant's death, total or permanent disability (as defined in Section
22(e)(3) of the Code), or retirement after attaining age sixty-five (65),
in the event that the Participant terminates employment with the Company
and/or its Subsidiaries or Parent prior to the time benefits become payable
pursuant to Awards of Other Stock Based Awards or Other Benefits, such
Awards shall be immediately forfeited. Unless the agreement or notice
relating to the Other Stock Based Awards or Other Benefits otherwise
provides, in the event of the Participant's death, total or permanent
disability (as defined in Section 22(e)(3) of the Code), or retirement
after attaining age sixty-five (65), the Company shall pay to the
Participant (or the Participant's legal representative or personal
representative) the amount that would have been payable to the Participant
had the Participant satisfied all of the requirements contained in the
agreement relating to such Award calculated as of the date of the
occurrence of an event described in this sentence.
(e) Right to Repurchase; Refund of Benefit. Agreements evidencing the
grant of an Award may provide the Company a right to repurchase any Shares,
whether issued upon grant, exercise, or otherwise, and/or, if the
Participant has already disposed of all or some of the Shares, a right to
the refund of any benefit conferred upon the Participant.
11. Transferability of Options. Except with Board approval and otherwise in
accordance with applicable provisions of the Code and SEC rules and regulations,
all Awards may not be transferred in any manner other than by will or by the
laws of descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. Following transfer, the Awards shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that the term "Participant" shall be
deemed to refer to the transferee.
7
12. Adjustments Upon Certain Changes. Unless the agreement or notice
relating to the Award provides otherwise,
(a) In the event of any change in the outstanding Common Stock by
reason of a stock split, stock dividend, combination, reclassification,
exchange, recapitalization, merger, consolidation, or other similar event,
the Shares authorized hereunder and outstanding Awards, as applicable,
shall be proportionately adjusted by the Board in its sole discretion and
any such judgment shall be binding and conclusive on all persons. Provided,
however, in the case of Incentive Stock Options, no such adjustment shall
be made if the result thereof would be that the excess of (i) the aggregate
Fair Market Value of the new or substituted Shares over (ii) the aggregate
exercise price of such Shares is more than (x) the excess of the aggregate
Fair Market Value of all Shares subject to the Option immediately before
such substitutions or assumption over (y) the aggregate exercise price of
such Shares, or that the new Option or the assumption of the old Option
gives the Participant additional benefits which the Participant did not
have under the old Option.
(b) In the event of any sale of all or substantially all of the assets
of the Company and its Subsidiaries taken as a whole or if any person,
corporation, or other entity or group thereof other than William and Marlys
Smith (the "Acquiror"), acquires (an "Acquisition"), other than by merger,
consolidation, recapitalization, reorganization, or other similar
transaction or series of transactions, the beneficial ownership (as that
term is used in Section 13(d)(1) of the Exchange Act and the rules and
regulations promulgated thereunder) of Shares which, when added to any
other Shares the beneficial ownership of which is held by the Acquiror,
shall have more than fifty percent (50%) of the votes that are entitled to
be cast at meetings of stockholders, any portion of an Award that was not
currently exercisable or vested prior to the date of the Acquisition shall
become fully vested and exercisable or deliverable immediately.
(c) In the event of a proposed dissolution or liquidation of the
Company, all Awards will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. In the event
of a merger, consolidation, recapitalization, reorganization, or other
similar transaction or series of transactions (a "Transaction"), (i) the
unexercised portion of Option shall be assumed, or an equivalent option
shall be substituted, by the successor corporation, and (ii) the Board, at
the time of grant or later may, in its discretion, determine that any
portion of an Award that was not currently exercisable or vested prior to
the date of the Transaction shall become fully vested and exercisable or
deliverable immediately.
13. Time of Granting Awards. The date of grant of an Award, for all
purposes, shall be the date on which the Board makes the determination granting
that Award or such other effective date as the Board may specify in its grant of
the Award. Notice of the determination shall be given to each Eligible Person to
whom an Award is so granted within a reasonable time after the date of such
grant and such notice or the Award agreement shall be effective as of the date
of the grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable,
unless otherwise required by any applicable laws.
(b) Effect of Amendment or Termination. Any amendment or termination
of the Plan shall not affect Awards already granted and those Awards shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Participant and
the Board, which agreement must be in writing and signed by the Participant
and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise or grant of an Award unless the exercise or grant of such Award
and the issuance and delivery of Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities Act and the
Exchange Act, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed, and shall be
8
further subject to the approval of counsel for the Company with respect to such
compliance. The Board may require any person receiving Common Stock hereunder to
acknowledge that such Common Stock is being acquired for investment purposes and
not with a view for resale or distribution and such Common Stock shall not be
sold or transferred unless in accordance with applicable law and regulations. If
the Company, as part of an offering of securities or otherwise, finds it
desirable because of legal or regulatory requirements to reduce the period
during which Options may be exercised, the Board may, in its discretion and
without the holders' consent, so reduce such period on not less than fifteen
(15) days' written notice to the holders thereof.
16. Reservation of Shares. The Company, during the term of this Plan, shall
at all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance or sale of any Shares under the Plan, shall relieve the Company of any
liability in respect of the failure to issue or sell the Shares as to which the
requisite authority shall not have been obtained.
17. Award Agreement. Awards shall be evidenced by written agreements or
notices in form as the Board shall approve.
18. Tax Withholding.
(a) The Board shall have sole discretion whether to withhold stock
sufficient to satisfy any withholding or other tax due with respect the
exercise of an Option, the vesting of Restricted Stock, or any similar
transaction under the Plan, or to demand such amounts in cash. Any tax
withholding effected in shares of Common Stock must comply with all
applicable laws.
(b) Notwithstanding anything in the Plan to the contrary, the
Participant acknowledges that under certain circumstances, including but
not limited to a "disqualifying disposition" of an Incentive Stock Option
under Section 422(a)(i) of the Code, the Participant may recognize ordinary
income that, for tax purposes, is considered payment of wages for services.
As a result, the Company may have certain tax withholding and reporting
obligations. The Company shall not be obligated to issue any stock
certificate upon the exercise of the right to purchase, or the transfer of,
Shares until the Participant has delivered sufficient funds to cover all
income, FICA, FUTA, and other applicable tax withholding. The Participant
shall notify the Company of any disqualifying disposition of Shares
underlying the Option (currently, any disposition within two (2) years of
the date of grant or one year of the exercise date or cashless exercise
with Shares underlying the Option tendered in payment) and take all actions
necessary for the Company to obtain a tax deduction if compensation income
is deemed to result from any exercise or disposition. The Participant shall
indemnify and hold the Company harmless against any loss it may experience
as a result of the Participant's failure to comply with this Section. At
the Board's sole discretion, to satisfy the Company's withholding
obligations, the Company may retain such number of shares of Common Stock
subject to the exercised Option which have an aggregate Fair Market Value
on the date of exercise equal to the Company's aggregate federal, state,
local, and foreign tax withholding obligations as a result of the exercise
of the Option by the Participant. The Board may consider the Participant's
preference in making such determination, but the Participant acknowledges
that the Board is under no obligation to follow or even consider the
Participant's preference.
19. Non-Uniform Determinations. The Board's determinations, including
without limitation, (a) the Participants' right to receive Awards, (b) the form,
amount, and timing of Awards, (c) the terms, conditions, and provisions of
Awards (including vesting and forfeiture provisions), and (d) the agreements or
notices evidencing the same, need not be uniform and may be made by it
selectively among Participants who receive, or who are eligible to receive,
Awards under the Plan, whether or not such Participants are similarly situated.
20. Indemnification. Directors shall be indemnified and held harmless by
the Company from any loss, liability, or expense that may be imposed upon or
incurred by such present or past Director in connection with or resulting from
any claim, action, or proceeding in which the Director is involved by reason of
any action taken or failure to act under the Plan; provided such Director shall
give the Company an opportunity, at its own expense, to
9
defend the same. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter or law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
21. Requirements of Law. Awards, agreements, notices, and the issuance of
shares of Common Stock shall be subject to applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or securities
exchanges or quotation systems as may be required.
22. Miscellaneous.
(a) Participant Not a Stockholder. The Participant shall not be deemed
for any purposes to be a stockholder of the Company with respect to an
Award except to the extent that a stock certificate has been issued (as
evidenced by the appropriate entry on the books of the Company) or of a
duly authorized transfer agent of the Company and, if applicable, the
Option exercised and payment made.
(b) Disputes or Disagreements. The Participant agrees, for himself and
his personal representatives, that any disputes or disagreements which
arise under or as a result of this Plan or any agreement hereunder shall be
determined by the Board in its sole discretion, and any interpretation by
the Board of the terms of this Plan or any Agreement shall be final,
binding, and conclusive.
(c) Notices. Any notice to be given hereunder shall be addressed to
the Company in care of its Chief Executive Officer at 2031 Quail Avenue,
Fort Dodge, Iowa 50501, or at its then current corporate headquarters.
Notice to be given to the Participant shall be addressed to him or her by
hand delivery or at his or her then current residential address as
appearing on the payroll records. Notice shall be deemed duly given when
enclosed in a properly sealed envelope and deposited by certified mail,
return receipt requested, in a post office or branch post office regularly
maintained by the United States Government.
(d) Exercise of Incentive Stock Option. Subject to the terms and
conditions of the Plan and any agreement reflecting the grant of Incentive
Stock Option, such Option may be exercised only by completing and signing a
written notice in substantially the following form:
I hereby exercise [all/part of] the Option granted to me by
Smithway Motor Xpress Corp. on ____________ (date of grant),
and elect to purchase ____________ (______) shares of Common
Stock for $_______ per share, representing the Fair Market
Value on the date of grant.
10
PROXY
SMITHWAY MOTOR XPRESS CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 10, 2002
Solicited on Behalf of the Board of Directors of the Company
The undersigned holder(s) of Class A and/or Class B Common Stock
(individually or together referred to as "Common Stock") of Smithway Motor
Xpress Corp., a Nevada corporation (the "Company"), hereby appoint(s) William G.
Smith, G. Larry Owens, and Donald A. Orr and each or any of them, attorneys and
proxies of the undersigned, with power of substitution, to vote all of the
Common Stock which the undersigned is (are) entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Company's Headquarters,
2031 Quail Avenue, Fort Dodge, Iowa 50501, on Friday, May 10, 2002, 10:00 a.m.
Central Time, and at any adjournment thereof, as follows:
1. Election of Directors [ ] FOR all nominees [ ] WITHHOLD AUTHORITY to
listed below vote for all nominees
(except as marked listed below
to the contrary
below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name below.
William G. Smith Donald A. Orr Herbert D. Ihle
G. Larry Owens Terry G. Christenberry Robert E. Rich
2. Approval of the appointment of KPMG LLP as independent auditors of the
Company for the fiscal year ending December 31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the Company's New Employee Incentive Stock Plan for the purpose
of qualifying options granted under the Plan as incentive stock options for tax
purposes.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the attorneys and proxies are authorized to vote upon
such other matters as may properly come before the meeting or any adjournment
thereof.
[ ] GRANT AUTHORITY [ ] WITHHOLD AUTHORITY
to vote to vote
(Continued and to be signed on reverse side)
(Continued from other side)
A vote FOR Proposals 1, 2, and 3, and granting the proxies discretionary
authority is recommended by the Board of Directors of the Company. When properly
executed, this proxy will be voted in the manner directed by the undersigned
stockholder(s). If no direction is given, the proxy will be voted "For"
proposals 1, 2, and 3, and, at the discretion of the proxy holder, upon such
other matters as may properly come before the meeting or any adjournment
thereof. Proxies marked "Abstain" and broker non-votes are counted only for
purposes of determining whether a quorum is present at the meeting.
The undersigned acknowledges receipt of the Notice and Proxy Statement for
the 2002 Annual Meeting of Stockholders and the Annual Report to Stockholders
for the fiscal year ended December 31, 2001.
Dated _______________________, 2002
____________________________________________
____________________________________________
Signature(s)
Stockholders should date this proxy and sign here exactly as
name appears at left. If proxy is held jointly, both owners
should sign this proxy. Executors, administrators, trustees,
guardians, and others signing in a representative capacity
should indicate the capacity in which they sign.