UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934
Filed by the Registrant [X}
Filed by a Party other than the Registrant [ }
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-12
SMITHWAY MOTOR XPRESS CORP.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid: 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 OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2004
__________________________________________
To Our Stockholders:
The 2004 Annual Meeting of Stockholders (the "Annual Meeting") of Smithway
Motor Xpress Corp., a Nevada corporation (the "Company," "we," "us," or "our"),
will be held at our headquarters located at 2031 Quail Avenue, Fort Dodge, Iowa
50501, at 10:00 a.m. Central Time, on Friday, May 14, 2004, for the following
purposes:
1. To consider and act upon a proposal to elect four (4) directors;
2. To consider and act upon a proposal to ratify the selection of KPMG
LLP as independent auditors for our fiscal year ending December 31,
2004; and
3. 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, 2004,
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 Class A and Class B 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 us
additional expenses of solicitation.
All stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors,
/s/ G. Larry Owens
G. Larry Owens
Chairman of the Board, Chief Executive Officer,
President, and Secretary
Fort Dodge, Iowa 50501
April 15, 2004
SMITHWAY MOTOR XPRESS CORP.
2031 Quail Avenue
Fort Dodge, Iowa 50501
____________________________________
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 2004
____________________________________
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," "we," "us," or "our"), to be used at the 2004 Annual
Meeting of Stockholders of the Company (the "Annual Meeting"), which will be
held at our headquarters located at 2031 Quail Avenue, Fort Dodge, Iowa 50501 on
Friday, May 14, 2004, at 10:00 a.m. Central Time, and any adjournment thereof.
All costs of the solicitation will be borne by us. The approximate date on which
this Proxy Statement and the enclosed form of proxy are first being mailed to
stockholders is April 15, 2004.
The enclosed copy of our annual report for the fiscal year ended December
31, 2003, 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, 2004, 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, 2004, 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. We have 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 937,000 shares of Class A Common Stock reserved for issuance under
our incentive stock plans and other arrangements. Holders of unexercised options
are not entitled to vote at the Annual Meeting. We have no other class of stock
outstanding. Stockholders are not entitled to cumulative voting in the election
of directors.
All proxies that are properly executed and received by us prior to the
Annual Meeting will be voted in accordance with the choices indicated. Any
stockholder may be represented and may vote at the Annual Meeting by a proxy or
proxies appointed by an instrument in writing. In the event that any such
instrument in writing shall designate two (2) or more persons to act as proxies,
a majority of such persons present at the meeting, or, if only one such person
shall be present, then that one person, shall have and may exercise all of the
powers conferred by such written instrument upon all of the persons so
designated unless the instrument provides otherwise. No such proxy shall be
valid after the expiration of six (6) months from the date of its execution,
unless it is coupled with an interest or unless the stockholder 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 our Secretary a revocation of the proxy, by
delivering to us a duly executed proxy bearing a later date, or by attending the
meeting and voting in person.
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, only
those cast "For" or "Against" are included. Proxies marked "Abstain" and broker
non-votes are counted only for purposes of determining whether a quorum is
present at the meeting. If no direction is specified by the stockholder, the
proxy will be voted "For" the proposals as specified in this notice and, at the
discretion of the proxy holder or holders, upon such other matters as may
properly come before the meeting or any adjournment thereof.
1
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect four directors to serve
as our Board of Directors. Each of the elected directors will serve until the
2005 annual meeting of the stockholders of the Company or until his or her
successor is duly elected or until his or her earlier death or resignation or
removal in accordance with our Bylaws.
Upon recommendation of a majority of independent directors, our Board of
Directors has nominated Marlys L. Smith, G. Larry Owens, Herbert D. Ihle, and
Terry G. Christenberry for election as directors. Mrs. Smith was elected to the
Board on March 5, 2004, to fill the vacancy created by the death of her husband
William G. Smith, our past Chairman, Chief Executive Officer, and President. Mr.
Smith died of leukemia on March 3, 2004, after 46 years of service with us,
including twenty years under his leadership. Mr. Rich will retire and not stand
for re-election at the Annual Meeting. He will continue to serve on the Board,
the Audit Committee, and the Compensation Committee until such time. The Board
of Directors expects to start a search for a new director to fill the vacancy
created by the retirement of Mr. Rich.
In the absence of contrary instructions, each proxy will be voted for the
election of each of the above named nominees. Marlys L. Smith and G. Larry
Owens, who together are entitled to cast more than 50% of the votes entitled to
be cast at the Annual Meeting, have indicated that they will vote for the
election of each of the nominees, and assuming that they do, the nominees will
be elected.
Each of the nominees has consented to serve a one-year term. If any of them
should become unavailable to serve as a director, the Board of Directors may
designate a substitute nominee. In that case, the person or persons appointed as
proxies will vote for the substitute nominee designated by the Board of
Directors.
Information Concerning Continuing Directors and Executive Officers
Information concerning the names, ages, positions with us, tenure as a
director, and business experience of our continuing directors and other
executive officers is set forth below. All references to experience with us
include positions with our operating subsidiary, Smithway Motor Xpress, Inc., an
Iowa corporation.
Name Age Position Director Since
------------------------ ----- ----------------------------------------------- ----------------
G. Larry Owens 66 Chairman of the Board, Chief Executive Officer, 1996
President, Secretary, and Director
Marlys L. Smith 64 Director 2004
Herbert D. Ihle 64 Director 1996
Terry G. Christenberry 57 Director 1996
Thomas J. Witt 43 Senior Vice President of Sales and Operations --
Douglas C. Sandvig 39 Senior Vice President, Chief Financial Officer, --
and Treasurer
Chad Johnson 38 Vice President - Vehicle Operations --
G. Larry Owens was appointed as Chief Executive Officer, President, and
Secretary on March 5, 2004, and Chairman of the Board on April 2, 2004. Mr.
Owens had served prior to that time as Executive Vice President and Chief
Financial Officer since joining us in January 1993 and Chief Administrative
Officer since August 2001. Mr. Owens served as Chief Operating Officer from May
1998 to August 2001. Prior to joining us, 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.
Marlys L. Smith served in various non-executive capacities for us between
March 1990 and March 1995, and has been one of our controlling stockholders
since 1995.
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.
2
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.
Thomas J. Witt served as Vice President of Sales and Marketing upon joining
us in November 2001 and was appointed to serve as Senior Vice President of Sales
and Operations in February 2003. Prior to joining us, Mr. Witt worked as an
Account Manager in sales for i2 Technologies, a software company serving motor
carriers and third party logistics companies, from November 2000. From 1998
through November 2000, Mr. Witt served as Vice President-Sales for truckload
carrier Roehl Transport, Inc. Mr. Witt has over twenty years of experience in
sales and marketing, primarily in the transportation industry.
Douglas C. Sandvig was appointed Chief Financial Officer on March 5, 2004,
and has held the title of Senior Vice President since February 2003 and
Treasurer since October 2003. Mr. Sandvig served as Controller from when he
joined us in July 1997 to March 2004 and Chief Accounting Officer from May 2000
to March 2004. Mr. Sandvig served as Vice President from September 2002 to
February 2003. Prior to joining us, Mr. Sandvig was employed as a Tax Manager
with Schnurr and Company LLP, a regional public accounting firm, from 1990 to
1997. Mr. Sandvig is a certified public accountant.
Chad Johnson has served as Vice President - Vehicle Operations since
joining us in August 2003. Prior to joining us, Mr. Johnson was employed by Ruan
Transportation Management Systems, a privately owned transportation management
company. Mr. Johnson was employed by Ruan for approximately 19 years during
which time he worked in many different capacities including most recently, from
January 2001 until August 2003, as Vice President - Vehicle Maintenance, from
July 2000 through December 2000 as Director of Operations - Vehicle Services,
from June 1999 through June 2000 as Director of Vehicle Maintenance, and from
January 1997 through May 1999 as Corporate Operations Manager.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
3
CORPORATE GOVERNANCE
The Board of Directors and Its Committees
Board of Directors
Meetings of the Board of Directors. During the year ended December 31,
2003, our Board of Directors met on seven occasions. Each of the directors
except Mr. Smith attended 75% or more of the meetings of the Board of Directors
and the meetings held by all of the committees of the Board on which he served.
Mr. Smith did not attend Board of Directors' meetings held October 24th and
December 15th, for health reasons. We encourage the members of our Board of
Directors to attend our annual meetings of stockholders. With the exception of
Mr. Smith, who was undergoing chemotherapy treatment at the time for leukemia,
all of our then-current directors attended the 2003 annual meeting of
stockholders.
Director Compensation. Directors who are not employed by us receive a
$5,000 annual retainer paid every year at the annual meeting, $1,000 for each
meeting of the Board of Directors attended by such director ($500 if attended
telephonically), and $250 per committee meeting attended by the director
(whether in person or telephonically). Non-employee directors also receive the
annual option to purchase 1,000 shares of our 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. The options granted to non-employee
directors fully vest on the one-year anniversary of the date of grant, and
expire on the six-year anniversary of the date of grant. In addition to the
compensation received by non-employee directors generally, the Chairman of our
Audit Committee receives every year at the annual meeting a $10,000 annual
retainer paid in advance.
Director Independence. Our Class A Common Stock is listed on the Nasdaq
Small Cap Market, and therefore it is subject to the listing standards,
including standards relating to corporate governance, embodied in applicable
rules promulgated by the National Association of Securities Dealers, Inc. (the
"NASD"). Pursuant to NASD Rule 4350(c)(1), the Board of Directors has determined
that the following directors and nominees are "independent" under NASD Rule
4200(a)(15): Herbert D. Ihle, Robert E. Rich, and Terry G. Christenberry. We
expect to add an additional independent director following the Annual Meeting to
fill the seat for which Mr. Rich is not standing for re-election. In accordance
with NASD Rule 4350(c)(2), our independent directors will hold regularly
scheduled meetings, referred to as "executive sessions," at which only the
independent directors are present. We anticipate that beginning in 2004 the
independent directors will meet in executive session at least twice per year.
Stockholder Communications. Our Board of Directors provides a process for
stockholders to send written communications to the entire Board or individual
directors. If you wish to send a communication to the entire Board of Directors,
your communication should be sent via certified mail, return receipt requested,
and addressed as follows: The Board of Directors, Smithway Motor Xpress Corp.,
c/o G. Larry Owens - Chief Executive Officer, 2031 Quail Avenue, Fort Dodge,
Iowa 50501. Written communications addressed in this manner will be copied and
distributed to each director at or prior to the next Board meeting. If you wish
to communicate with an individual director, your communication should be sent
via certified mail, return receipt requested, and addressed as follows: Name -
Director, Smithway Motor Xpress Corp., c/o G. Larry Owens - Chief Executive
Officer, 2031 Quail Avenue, Fort Dodge, Iowa 50501. Written communications
received in this manner will not be opened, but rather delivered unopened to the
director to whom they are addressed at or prior to the next Board meeting. Any
communication addressed to an individual director may be disclosed by that
director, in his sole discretion, to other members of the Board or management,
if that director believes such disclosure is appropriate under the
circumstances.
Committees of the Board of Directors
The Board of Directors has standing Audit and Compensation Committees.
Messrs. Ihle, Rich, and Christenberry are the current members of both the Audit
and Compensation Committees.
The Audit Committee
Purpose, Functions, Composition, and Meetings of the Audit Committee. The
Audit Committee is responsible for the appointment, compensation, retention, and
oversight of the work of any independent public auditors engaged by us for the
purpose of preparing or issuing an audit report or performing other audit or
similar services for us. The Audit Committee meets with our independent public
auditors to discuss our financial statements and matters relating to their
independence, as well as to ensure that the scope of their activities has not
been restricted and that adequate responses to their recommendations and
inquiries have been
4
received. The Audit Committee also periodically meets with management to discuss
our financial statements and the adequacy of our internal financial controls. In
addition, the Audit Committee reviews and approves our transactions with related
parties, in the absence of the appointment of a special committee for that
purpose.
The Audit Committee currently is comprised of Robert E. Rich, Herbert D.
Ihle, and Terry G. Christenberry. Mr. Rich serves as the Chairman of the Audit
Committee, and will continue to serve as such until the Annual Meeting. Each
member of the audit committee satisfies the independence and audit committee
membership criteria set forth in NASD Rule 4350(d)(2). Specifically, each member
of the Audit Committee:
o is independent under NASD Rule 4200(a)(15);
o meets the criteria for independence set forth in Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934, as amended;
o did not participate in the preparation of our financial statements or
the financial statements of any of our current subsidiaries at any
time during the past three years; and
o is able to read and understand fundamental financial statements,
including our balance sheet, statement of operations, statement of
stockholders' equity, and statement of cash flows.
The Audit Committee met four times during 2003. Each member of the Audit
Committee attended at least 75% of the Audit Committee meetings during 2003.
Audit Committee Financial Expert. The Board of Directors has determined
that at least two "audit committee financial experts," as defined under Item
401(h) of Regulation S-K, currently serve on the Audit Committee. The Board of
Directors has identified Robert E. Rich and Herbert D. Ihle as audit committee
financial experts, based upon education and work experience.
Audit Committee Charter. Since 1997, the Audit Committee has operated
pursuant to a written charter detailing its powers and duties. In 2003, the
Audit Committee amended and restated its charter to comply with certain
requirements of the Sarbanes-Oxley Act of 2002. In February 2004, the Audit
Committee again amended and restated its charter to comply with the requirements
of NASD Rule 4350(d)(1). A copy of the Audit Committee's current Amended and
Restated Charter is attached to this proxy statement as Appendix A.
Report of the Audit Committee. In performing its duties, the Audit
Committee, as required by applicable rules and regulations promulgated by the
Securities and Exchange Commission (the "SEC"), issues a report recommending to
the Board of Directors that our audited financial statements be included in our
Annual Report on Form 10-K, and certain other matters, including the
independence of our outside public auditors. The Audit Committee Report for 2003
is set forth below.
The Report of the Audit Committee shall not be deemed to be incorporated by
reference into any filing made by us under the Securities Act of 1933 or the
Securities Exchange Act of 1934, as amended, notwithstanding any general
statement contained in any such filings incorporating this Proxy Statement by
reference, except to the extent we incorporate such report by specific
reference.
Audit Committee Report for 2003
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 our financial reports and financial reporting processes and
systems of internal controls. Our management has primary responsibility for our
financial statements and the overall reporting process, including maintenance of
our system of internal controls. We retain independent auditors who are
responsible for conducting an independent audit of our financial statements, in
accordance with generally accepted auditing standards, and issuing a report
thereon. In performing its duties, the Audit Committee has discussed our
financial statements with management and our 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, 2003, the Audit Committee has
reviewed and discussed the audited financial statements with management and KPMG
LLP, our independent auditors. Specifically, the Audit Committee has discussed
with the
5
independent auditors the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380, Communication
with Audit Committees or Others with Equivalent Authority and Responsibility),
which include, among other things:
o methods used to account for significant unusual transactions;
o the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
o the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditor's conclusions
regarding the reasonableness of those estimates; and
o disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and the
disclosures in the financial statements.
The Audit Committee has received the written disclosures and the letter
from the independent auditors required by Independence Standards Board Statement
No. 1 (Independence Discussions with Audit Committees) and discussed with the
independent auditors the independent auditors' independence.
Based on the foregoing reviews and meetings, the Audit Committee
recommended to our Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2003,
for filing with the SEC. The Audit Committee also approved the appointment of
KPMG LLP as our independent auditors for the fiscal year ending December 31,
2004.
Audit Committee:
Robert E. Rich (Chairman)
Herbert D. Ihle
Terry G. Christenberry
The Compensation Committee
The Compensation Committee of the Board of Directors met once during 2003.
Herbert D. Ihle, Robert E. Rich, and Terry G. Christenberry currently serve on
the Compensation Committee, with Mr. Ihle serving as Chairman. This committee
reviews all aspects of compensation of our executive officers and makes
recommendations on such matters to the full Board of Directors. Additional
information concerning the Compensation Committee, Compensation Committee
Interlocks, and the Compensation Committee's Report on Executive Compensation
for 2003 is set forth under "Executive Compensation" below.
Other Committees
With the exception of the Audit Committee and the Compensation Committee,
the Board does not maintain any other standing committees. However, certain
procedures have been adopted by the Board of Directors regarding director
nominees and candidates.
Process for Identifying and Evaluating Director Nominees. We believe that
it is appropriate for us not to have a standing nominating committee or a
committee performing similar functions because a majority of our independent
directors recommend director nominees for our Board's selection in accordance
with the Nasdaq Stock Market Marketplace rules, and we believe such a process
provides the protections of a full committee at a reduced cost. Because we do
not maintain a standing nominating committee, we have no written nominating
committee charter; however, we have adopted the nomination procedure described
in this section by Board resolution.
With regard to qualities and skills, our independent directors believe it
is necessary that: (i) at least a majority of the members of the Board of
Directors qualify as "independent" under NASD Rule 4200(a)(15); (ii) at least
three members of the Board of Directors satisfy the audit committee membership
criteria specified in NASD Rule 4350(d)(2); and (iii) at least one member of the
Board of Directors eligible to serve on the Audit Committee has sufficient
knowledge, experience, and training concerning accounting and financial matters
so as to qualify as an "audit committee financial expert" within the meaning of
Item
6
401(h) of Regulation S-K. In addition to these specific requirements, the
independent directors take into account all factors they consider appropriate,
which may include experience, accomplishments, education, understanding of our
business and the industry in which we operate, specific skills, general business
acumen, and the highest personal and professional integrity. Generally, the
independent directors will first consider current Board members because they
meet the criteria listed above and possess knowledge of our history, strengths,
weaknesses, goals, and objectives. We do not pay a fee to any third party to
identify or evaluate or assist in identifying or evaluating potential nominees.
Consideration of Director Candidates Recommended by Stockholders. Our
independent directors will consider director candidates recommended by
stockholders, provided that the following procedural requirements are satisfied.
Candidate recommendations should be mailed via certified mail, return receipt
requested, and addressed to the "Independent Directors", Smithway Motor Xpress
Corp., c/o G. Larry Owens - Chief Executive Officer, 2031 Quail Avenue, Fort
Dodge, Iowa 50501. In order to be considered for inclusion in the proxy
statement, a stockholder recommendation must: (i) be received at least 120 days
prior to the first anniversary of the date of the proxy statement for the prior
year's annual meeting (by December 16, 2004, for director candidates to be
considered for nomination for election at the 2005 annual meeting of
stockholders); (ii) contain sufficient background information, such as a resume
and references, to enable the committee to make a proper judgment regarding his
or her qualifications; (iii) be accompanied by a signed consent of the proposed
nominee to serve as a director if elected, and a representation that such
proposed nominee qualifies as "independent" under NASD Rule 4200(a)(15) or, if
the proposed nominee does not qualify, a description of the reason(s) he or she
is not "independent"; (iv) state the name and address of the person submitting
the recommendation and the number of shares of our Class A or Class B Common
Stock owned of record or beneficially by such person; and (v) if submitted by a
beneficial stockholder, be accompanied by evidence that the person making the
recommendation beneficially owns shares of our Class A or Class B Common Stock.
Stockholders always may attend the meeting in person or by valid proxy to
nominate and vote in favor of a person.
Code of Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics
that applies to all of our directors, officers, and employees. The Code of
Business and Ethics includes provisions applicable to our principal executive
officer, principal financial officer, principal accounting officer and
controller, or persons performing similar functions, and constitutes a "code of
ethics" within the meaning of Item 406(b) of Regulation S-K.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers and directors and persons who own more than 10% of a registered
class of our equity securities to file reports of ownership and changes in
ownership with the SEC. Officers, directors, and greater than 10% stockholders
are required by SEC regulations to furnish us with copies of all Section 16(a)
forms they file. Based solely upon a review of the copies of such forms
furnished to us, or written representations that no Forms 5 were required, we
believe that our officers, directors, and greater than 10% beneficial owners
complied with all Section 16(a) filing requirements applicable to them during
our preceding fiscal year, except that due to an administrative error Messrs.
Ihle, Rich, and Christenberry each failed to timely report October 2003 option
grants covering 1,000 shares of Class A Common Stock. All such transactions were
described in our 2003 proxy statement and were reported in subsequent filings
pursuant to Section 16(a). You may view copies of Section 16(a) forms our
directors and executive officers file with the SEC through our website at
http://www.smxc.com.
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the annual and
long-term compensation paid to our chief executive officer and our other named
executive officers (the "Named Officers"), for services in all capacities to us
for the fiscal years ended December 31, 2003, 2002, and 2001.
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
--------------------------------------------- ---------------------- ----------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation(1) Award(s) Options/ Payouts Compensation(2)
Principal Position Year ($) ($) ($) ($) SARs (#) ($) ($)
- -------------------- ------ ----------- ------- --------------- ---------- ---------- ---------- ---------------
William G. Smith, 2003 $250,000 -- -- -- -- -- $ 451
Former Chairman, 2002 $300,000 -- -- -- -- -- $2,743
Chief Executive 2001 $300,000 -- -- -- -- -- $ 935
Officer, President,
and Secretary
G. Larry Owens, 2003 $157,500 -- -- -- -- -- $ 361
Current Chairman, 2002 $157,500 -- -- -- -- -- $2,160
Chief Executive 2001 $157,500 -- -- -- 35,000 -- $ 561
Officer, President,
and Secretary
Thomas J. Witt, 2003 $135,000 -- -- -- 37,500 -- $ 675
Senior Vice 2002 $126,000 -- -- -- -- -- $2,184
President of Sales 2001 $ 12,115(3) -- -- -- 15,000 -- --
and Operations
Douglas C. 2003 $102,068 -- -- -- -- -- $ 243
Sandvig, 2002 $ 80,000 -- -- -- 2,350 -- $1,094
Senior Vice 2001 $ 77,000 $6,700 -- -- -- -- $1,481
President, Chief
Financial Officer,
and Treasurer
Chad Johnson, 2003 $ 42,548(4) -- -- -- 25,000 -- --
Vice President of 2002 -- -- -- -- -- -- --
Vehicle Operations 2001 -- -- -- -- -- -- --
- ----------------------
(1) Other annual compensation did not exceed 10% of any Named Officer's total
salary for any reported year.
(2) Amounts in 2001 represent our contributions to the Smithway Motor Xpress,
Inc. 401(k) Plan, including forfeitures re-allocated to participants. In
2002 and 2003, we did not make matching contributions to the 401(k) Plan.
As a result, amounts for 2002 and 2003 are comprised solely of forfeitures
re-allocated pursuant to the terms of the 401(k) Plan to the accounts of
the Named Officers.
(3) Mr. Witt joined us in November 2001.
(4) Mr. Johnson joined us in August 2003.
8
Options/SAR Grants in Last Fiscal Year
The following table lists stock options granted to the Named Officers
during the fiscal year ended December 31, 2003. We have not granted any stock
appreciation rights ("SARs").
Individual Grants
---------------------------------------------------------- Potential realizable value at
Number of Percent of total assumed annual rates of stock
securities options/SARs Exercise price appreciation for option
underlying granted to or base term
options employees in price Expiration -------------------------------
Name granted (#) fiscal year ($/Sh) Date 5%($) 10%($)
- --------------------- ------------- ----------------- ---------- ----------- ------------- -------------
William G. Smith -- -- -- -- -- --
G. Larry Owens -- -- -- -- -- --
Thomas J. Witt 37,500 60.0% $0.82 02/13/2014 $16,875 $66,375
Douglas C. Sandvig -- -- -- -- -- --
Chad Johnson 25,000 40.0% $1.25 10/24/2013 $ 9,500 $47,250
Aggregated Options/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Value Table
As indicated in the following table, no options were exercised by the Named
Officers during the fiscal year ended December 31, 2003.
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options/SARs Money Options/SARs
Shares at Fiscal Year-End at Fiscal Year-End ($)(1)
Acquired on Value ------------------------------ ------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ------------- ------------- ------------- --------------- ------------- ----------------
William G. Smith -- -- -- -- -- --
G. Larry Owens(2) -- -- 110,000 -- $ 4,212 --
Thomas J. Witt(3) -- -- 13,500 39,000 $10,875 $ 7,500
Douglas C. Sandvig(4) -- -- 32,350 5,000 $ 3,370 $ 842
Chad Johnson(5) -- -- 5,000 20,000 $ 3,500 $14,000
- ----------------------
(1) Based on the $1.95 closing price of our Class A Common Stock on December
31, 2003.
(2) Mr. Owens was granted options on January 23, 1997, May 12, 2000, June 23,
2000, and May 11, 2001, covering 25,000, 25,000, 25,000, and 35,000 shares
of our Class A Common Stock, respectively. The exercise prices for such
options are $8.875, $3.469, $1.7815, and $2.415 per share, respectively.
All of Mr. Owens' options were fully vested on the date of grant, except
for the options granted on January 23, 1997, which vested 50% on the date
of grant and 50% on January 1, 1998. All of Mr. Owens options terminate on
the ten-year anniversary of the date of grant.
(3) Mr. Witt was granted options on December 14, 2001, and February 14, 2003,
covering 15,000 and 37,500 shares of our Class A Common Stock,
respectively. The exercise prices for such options are $1.550 and $0.820
per share, respectively. The options granted to Mr. Witt on December 14,
2001 (i) vest in equal annual increments of 3,000 shares per year over five
years beginning on the first anniversary of the date of grant, and (ii)
terminate on the ten-year anniversary of the date of grant. The options
granted to Mr. Witt on February 14, 2003 (i) vest in equal annual
increments of 7,500 shares per year over five years beginning on December
14, 2003, and (ii) terminate on the ten-year anniversary of the date of
grant.
(4) Mr. Sandvig was granted options on January 30, 1998, June 23, 2000, and
February 1, 2002, covering 10,000, 25,000, and 2,350 shares of our Class A
Common Stock, respectively. The exercise prices for such options are
$11.8125, $1.7815, and $2.41 per share, respectively. The options granted
to Mr. Sandvig on January 30, 1998 (i) vest in equal annual increments of
2,000 shares per year over five years beginning on the first anniversary of
the date of grant, and (ii) terminate on the ten-year anniversary of the
date of grant. The options granted to Mr. Sandvig on June 23, 2000 (i) vest
in equal annual increments of 5,000 shares per year over five years
beginning on the date of grant, and (ii) terminate on the ten-year
anniversary of the date of grant. The options granted to Mr. Sandvig on
February 1, 2002 (i) were fully vested on the date of grant, and (ii)
terminate on the ten-year anniversary of the date of grant.
9
(5) Mr. Johnson was granted options on October 24, 2003, covering 25,000 shares
of our Class A Common Stock. The exercise price for such options was $1.250
per share. Mr. Johnson's options (i) vest in equal annual increments of
5,000 shares per year over five years beginning on the date of grant, and
(ii) terminate on the ten-year anniversary of the date of grant.
We do not have a long-term incentive plan or a defined benefit or actuarial
plan.
Change-In-Control Arrangements and Other Rights Triggered Upon a
Change-In-Control
We have entered into Change-In-Control Agreements with each of the
following Named Officers: G. Larry Owens, Thomas J. Witt, Douglas C. Sandvig,
and Chad Johnson. The Change-In-Control Agreements in general provide that if
the Named Officer is involuntarily terminated in connection with the occurrence
of certain change-in-control events, then the Named Officer will be entitled to
a severance payment in an amount intended to compensate him for any salary that
he would have otherwise been entitled to receive during the 24 month period
following the occurrence of the change-in-control event (such 24 month period
being referred to as the "Transition Period"). During the Transition Period, the
Named Officer also would be entitled to participate in any health, disability,
and life insurance plans in which he participated prior to his termination, and
to be compensated for any legal fees he incurs in connection with the
enforcement of his rights under the Change-In-Control Agreement. The
change-in-control events giving rise to the Named Officer's rights under the
Change-In-Control Agreement include, in general terms, (i) the acquisition by
certain persons of beneficial ownership, whether directly or indirectly, of
securities representing 35% or more of the combined voting power of our then
outstanding securities, (ii) a failure of the continuing directors to constitute
a majority of the board of directors, (iii) our consummation of a
reorganization, merger or consolidation, or a statutory exchange of our
outstanding voting securities, and (iv) a complete liquidation or dissolution or
sale or other disposition of all or substantially all of our assets.
In addition, under certain circumstances in which there is a change of
control, holders of outstanding stock options granted under our Incentive Stock
Plan, New Employee Incentive Stock Plan, and Outside Director Stock Option Plan
(collectively, the "Plans") 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 Plans
if any such awards are granted.
Compensation Committee Interlocks, Insider Participation, and Related Party
Transactions
Compensation Committee Interlocks, Insider Participation. Messrs. Ihle,
Rich, and Christenberry served as the Compensation Committee in 2003. None of
such individuals has been our officer or employee.
Related Party Transactions. In August 2003, we generated approximately
$213,000 of cash and avoided future premium payments by selling one of our two
life insurance policies covering William G. Smith, our former Chief Executive
Officer, to Mr. Smith for the cash surrender value. The transferred policy had a
death benefit of $1 million and the policy retained by the Company had a death
benefit of $750,000. The transaction was approved by all disinterested members
of our Board of Directors.
The Compensation Committee Report on executive compensation, and the
performance graph appearing later in this Proxy Statement shall not be deemed to
be incorporated by reference into any filing made by us under the Securities Act
of 1933 or the Securities Exchange Act of 1934, notwithstanding any general
statement contained in any filing incorporating this proxy statement by
reference, except to the extent we incorporate this report or such graph by
specific reference.
10
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors prepared the following
report on executive compensation for the fiscal year ended December 31, 2003.
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 executive officers with the interests of
stockholders. The three primary components of executive officer compensation are
base salary, bonus, and stock-based compensation.
Base Salary. For 2003, Mr. Smith proposed, and the Compensation Committee
accepted, a $50,000 reduction in his base salary. The Company did not increase
the base salary of Mr. Owens for 2003. Mr. Witt received a modest increase in
base salary in 2003 primarily to reflect a cost-of-living increase. Mr. Sandvig
received a significant increase in base salary in 2003 to recognize his
increased responsibilities on our senior management team and better align his
compensation with persons in similar positions at other publicly traded
truckload carriers. Mr. Johnson's base salary was based upon his professional
experience, expected benefits to us of an improved maintenance program,
geographic considerations, and the compensation of persons holding similar
positions at other publicly traded truckload carriers.
In approving the base salaries of the Company's executive officers for
2003, 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 its executive officers, other than the base salary of the Chief
Executive Officer that is discussed separately below, are, primarily due to
operating performance and geographic considerations, at or below the average
levels paid by comparable, publicly traded truckload carriers.
Annual Bonus. The Compensation Committee reviewed bonuses for executive
officers, other than Mr. Smith and Mr. Owens, after considering whether a
Company performance component was met and whether the executive officers met
individual goals established prior to the beginning of the year. In 2003, Mr.
Smith and Mr. Owens participated in a separate incentive compensation plan that
allocated a bonus amount equal to a percentage of the Company's net earnings.
None of the Named Officers or other executive officers of the Company received a
bonus for 2003.
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 executive officers and stockholders and encourage executive
officers 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 executive officers. In 2003, the Company made stock option
grants to Messrs. Witt and Johnson covering 37,500 and 25,000 shares of Class A
Common Stock, respectively. No stock option grants or other stock awards were
made to any other Named Officer in 2003.
Chief Executive Officer. From the Company's initial public offering in 1996
to 2002, the amount of Mr. Smith's base salary was not changed. As previously
mentioned, Mr. Smith proposed, and the Compensation Committee accepted, a
$50,000 reduction in his base salary for 2003. The Compensation Committee
believes that Mr. Smith's base salary was reasonable in relation to the base
salaries of CEOs of comparable companies. As noted above, in 2003 Mr. Smith
participated in an incentive compensation plan pursuant to which he was eligible
to earn a bonus equal to a percentage of the Company's net earnings. In view of
the large number of shares owned by Mr. Smith, he did not receive any stock
option grants or other stock awards. As the Company's largest stockholder, Mr.
Smith's net worth was directly affected by the Company's performance and stock
price.
Compensation Committee:
Herbert D. Ihle (Chairman)
Robert E. Rich
Terry G. Christenberry
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2004, the number and
percentage of outstanding shares of Class A and Class B Common Stock
beneficially owned by each person known by us to beneficially own more than 5%
of such stock, by each director, by each Named Officer, and by all of our
directors and executive officers as a group. Share numbers and other information
for Dimensional Fund Advisors Inc. are as of December 31, 2003, and solely based
upon a Schedule 13G/A filed with the SEC. According to our transfer agent, we
had outstanding 3,846,821 shares of Class A Common Stock and 1,000,000 shares of
Class B Common Stock as of March 31, 2004.
Percent of(2)
Amount and Nature of ---------------------------------
Name of Beneficial Owner(1) Title of Class Beneficial Ownership(2) Class A Class B Total(3)
- ------------------------------------ ------------------ ------------------------ ----------- ---------- ---------
Class A Common 1,098,152
Marlys L. Smith(4) Class B Common 1,000,000 28.5% 100% 43.3%
G. Larry Owens(5) Class A Common 283,986 7.2% 0% 5.7%
Thomas J. Witt(6) Class A Common 13,500 * 0% *
Herbert D. Ihle(7) Class A Common 12,000 * 0% *
Robert E. Rich(7) Class A Common 13,000 * 0% *
Terry G. Christenberry(7) (8) Class A Common 21,500 * 0% *
Douglas C. Sandvig(9) Class A Common 35,100 * 0% *
Chad Johnson(10) Class A Common 5,000 * 0% *
Dimensional Fund Advisors Inc. Class A Common 239,400 6.2% 0% 4.9%
All directors and executive officers Class A Common 1,482,238
as a group (8 persons) Class B Common 1,000,000 37.2% 100% 49.8%
- ----------------------
* Less than one percent (1%).
(1) The business address of Marlys L. Smith is 1129 Colonial Drive, Fort Dodge,
Iowa 50501, and the business address of G. Larry Owens 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.
(2) In accordance with applicable rules under the Securities Exchange Act of
1934, as amended, the number of shares indicated as beneficially owned by a
person includes shares of Class A Common Stock underlying options that are
currently exercisable or will be exercisable within 60 days from March 31,
2004. Shares of Class A Common Stock underlying stock options that are
currently exercisable or will be exercisable within 60 days from March 31,
2004, are deemed to be outstanding for purposes of computing the percentage
ownership of the person holding such options and the percentage ownership
of any group of which the holder is a member, but are not deemed
outstanding for purposes of computing the percentage ownership of any other
person. Unless otherwise indicated all shares are owned directly.
(3) 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 Marlys L. Smith or certain members of her immediate
family. As a result of this two-class structure, Mrs. Smith beneficially
owns shares of Class A and Class B Common Stock representing 53.0% of the
voting power of all outstanding voting shares.
(4) All shares held by Mrs. Smith 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) 49,628 shares of Class A
Common Stock held pending probate in Mr. Smith's 401(k) Plan account, and
(c) 10,126 shares of Class A Common Stock held individually by Mrs. Smith.
Melissa Turner is the daughter of Mrs. Smith.
(5) Includes (a) 200 shares held as custodian for minor children under the
Uniform Gifts to Minors Act, as to which beneficial ownership is
disclaimed, (b) 23,786 shares of Class A Common Stock held under our 401(k)
Plan, and (c) options to purchase 110,000 shares of Class A Common Stock
granted to Mr. Owens under our Incentive Stock Plan, which options are
fully vested.
(6) Includes options to purchase 13,500 shares of Class A Common Stock granted
to Mr. Witt under our New Employee Incentive Stock Plan that are currently
exercisable or will become exercisable within 60 days from March 31, 2004.
12
(7) Includes options to purchase 9,000 shares of Class A Common Stock granted
to each of Messrs. Ihle, Rich, and Christenberry under our Outside Director
Plan and other arrangements that are currently exercisable or will become
exercisable within 60 days from March 31, 2004.
(8) Includes 2,500 shares held under the Christenberry, Collett & Company, Inc.
401(k) Plan, a unitized plan that had allocated approximately 25% of the
Plan assets to Mr. Christenberry. Beneficial ownership of Plan assets not
allocated to Mr. Christenberry is disclaimed.
(9) Includes options to purchase 32,350 shares of Class A Common Stock granted
to Mr. Sandvig under our Incentive Stock Plan that are currently
exercisable or will become exercisable within 60 days of March 31, 2004.
(10) Includes options to purchase 5,000 shares of Class A Common Stock granted
to Mr. Johnson under our New Employee Incentive Stock Plan that are
currently exercisable or will become exercisable within 60 days from March
31, 2004.
13
STOCK 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
our 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 December 31, 1998, and ending December 31, 2003.
GRAPH IS CENTERED HERE
IN PRINTED FORM
- -------------------------------------------------------------------------------------------------------------------------
Legend
Symbol CRSP Total Returns Index for: 12/1998 12/1999 12/2000 12/2001 12/2002 12/2003
- ------ ----------------------------- ------- ------- ------- ------- ------- -------
_____________ Smithway Motor Xpress Corp. 100.0 55.0 22.5 24.7 10.3 26.0
- - - - - - - Nasdaq Stock Market (U.S. Companies) 100.0 185.4 111.8 88.7 61.3 91.7
- ------------- Nasdaq Trucking & Transportation Stocks 100.0 95.3 86.6 102.4 104.3 149.4
SIC 3700-3799, 4200-4299, 4400-4599, 4700-4799 U.S. and Foreign
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/1998.
- -------------------------------------------------------------------------------------------------------------------------
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 December 31, 1998.
There can be no assurance that our stock performance will continue into the
future with the same or similar trends depicted in the graph above. We will not
make or endorse any 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 US & Foreign.
14
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of our Board of Directors approved the selection of
KPMG LLP ("KPMG") as our independent auditors for the fiscal year ending
December 31, 2004. KPMG has served as our independent auditors since December
1994. Representatives of KPMG are expected to be present at the Annual Meeting
and will have an opportunity to make a statement, if they desire to do so, and
to respond to appropriate questions.
Principal Accounting Fees and Services
The following table shows the fees for professional services provided by
KPMG for the audit of our annual financial statements for both of the fiscal
years ended December 31, 2002 and 2003, and the review of financial statements
included in our quarterly reports on Form 10-Q during those periods, as well as
fees billed by KPMG for other services rendered during those periods:
Aggregate Amount Billed by
KPMG
-------------------------------------
Services Rendered 2003 2002
----------------- ----------------- -----------------
Audit Fees(1) $ 94,000 $ 59,750
Audit-Related Fees(2) $ 6,525 $ 12,915
Tax Fees(3) $ 9,530 $ 24,295
- ------------------------
(1) Audit Fees represent fees billed for professional services rendered by the
principal independent public auditors for the audit of our annual financial
statements and review of financial statements included in our quarterly
reports on Form 10-Q, or services that are normally provided by such
auditors in connection with statutory or regulatory filings or engagements
for those fiscal years.
(2) Audit-Related Fees represent fees billed for assurance and related services
by the principal independent public auditors that are reasonably related to
the performance of the audit or review of financial statements. For fiscal
2003 and 2002, Audit-Related Fees were comprised of fees related to the
benefit plan.
(3) Tax Fees represent fees billed for professional services rendered by the
principal independent auditors for tax compliance.
Our Audit Committee maintains a policy pursuant to which it pre-approves
all audit, audit-related, tax, and other permissible non-audit services provided
by our principal independent auditors in order to assure that the provision of
such services is compatible with maintaining the auditors' independence. Under
this policy, the Audit Committee pre-approves, on an annual basis, specific
types or categories of engagements constituting audit, audit-related, tax, or
other permissible non-audit services to be provided by the principal independent
public auditors. Pre-approval of an engagement for a specific type or category
of services generally is provided for up to one year and typically is subject to
a budget comprised of a range of anticipated fee amounts for the engagement.
Management and the independent public auditors are required to periodically
report to the Audit Committee regarding the extent of services provided by the
principal independent auditors in accordance with the annual pre-approval, and
the fees for the services performed to date. To the extent that management
believes that a new service or the expansion of a current service provided by
the principal independent auditors is necessary or desirable, such new or
expanded services are presented to the Audit Committee for its review and
approval prior to the engagement of the principal independent auditors to render
such services. No audit-related, tax, or other non-audit services were approved
by the Audit Committee pursuant to the de minimus exception to the pre-approval
requirement under Rule 2-01, paragraph (c)(7)(i)(C), of Regulation S-X during
the fiscal year ended December 31, 2003.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL
2 TO RATIFY THE SELECTION OF KPMG AS OUR INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2004.
15
STOCKHOLDER PROPOSALS
To be eligible for inclusion in our proxy materials relating to the 2005
annual meeting of stockholders, stockholder proposals intended to be presented
at that meeting must be received by us in writing on or before December 16,
2004. However, if the date of the 2005 annual meeting of stockholders is more
than thirty days before or after May 14, 2005, then the deadline for submitting
any such stockholder proposal for inclusion in the proxy materials relating to
the 2005 annual meeting of stockholders will be a reasonable time before we
begin to print or mail such proxy materials. The inclusion of any such
stockholder proposals in such proxy materials will be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act of
1934, as amended, including Rule 14a-8.
We must receive in writing any stockholder proposals to be considered at
our 2005 annual meeting of stockholders, but not included in our proxy materials
relating to that meeting, by March 1, 2005. However, if the date of the 2005
annual meeting of stockholders is more than thirty days before or after May 14,
2005, then the deadline for submitting any such stockholder proposal will be a
reasonable time before we mail the proxy materials relating to such meeting.
Under Rule 14(a)-4(c)(1) of the Securities Exchange Act of 1934, as amended, the
proxy holders designated by an executed proxy in the form accompanying our 2005
proxy statement will have discretionary authority to vote on any stockholder
proposal that is not received on or prior to the deadline described above.
Written copies of all stockholder proposals should be sent to our principal
executive offices at 2031 Quail Avenue, Fort Dodge, Iowa 50501 to the attention
of G. Larry Owens, our Secretary.
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. If any other matters are
properly brought before the Annual Meeting or any adjournment thereof, the proxy
holders named in the accompanying form of proxy will have discretionary
authority to vote proxies in accordance with their judgment with respect to such
matters, unless the person executing any such proxy indicates that such
authority is withheld.
Smithway Motor Xpress Corp.
/s/ G. Larry Owens
G. Larry Owens
Chairman of the Board, Chief Executive Officer,
President, and Secretary
April 15, 2004
16
APPENDIX A
SMITHWAY MOTOR XPRESS CORP.
AUDIT COMMITTEE CHARTER
As approved by the Board of Directors
On February 13, 2004
ROLE
The Audit Committee of the Board of Directors assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting and reporting practices of the Company, the qualifications and
independence of the public accounting firm engaged to prepare or issue an audit
report on the financial statements of the Company (the "Independent auditor"),
and such other duties as directed by the Board. The Committee's role includes
discussing with management the Company's processes to manage financial risk, and
for compliance with significant applicable legal, ethical, and regulatory
requirements. The Committee has sole authority over the appointment and
replacement of the independent auditor and is directly responsible for
compensation, and oversight of the independent auditor.
MEMBERSHIP
The membership of the Committee consists of three directors. Each member shall
meet the experience requirements of the listing standards of The Nasdaq Stock
Market and applicable laws and regulations. Each member will be free of any
relationship that, in the opinion of the Board, would interfere with his or her
individual exercise of independent judgment. Applicable laws and regulations
will be followed in evaluating a member's independence. The Board appoints the
chairperson.
OPERATIONS
The Committee meets at least once each quarter. Additional meetings may
occur as the Committee or its chair deems advisable. The Committee will cause to
be kept adequate minutes of all its proceedings, and will report its actions to
the next meeting of the Board. Committee members will be furnished with copies
of the minutes of each meeting and any action taken by unanimous consent. The
Committee will be governed by the same rules regarding meetings (including
meetings by conference telephone or similar communications equipment), action
without meetings, notice, waiver of notice, and quorum and voting requirements
as are applicable to the Board. The Committee is authorized and empowered to
adopt its own rules of procedure not inconsistent with (a) any provision hereof,
(b) any provision of the Bylaws of the Corporation, or (c) the laws of the State
of Nevada.
COMMUNICATIONS/REPORTING
The independent auditor reports directly to the Committee. The Committee is
expected to maintain free and open communication with the independent auditor
and the Company's management. This communication will include periodic separate
executive sessions with each of these parties.
EDUCATION
The Company and Committee Chairman is responsible for providing the Committee
with educational resources related to accounting principles and procedures,
current accounting topics pertinent to the Company and other material as may be
requested by the Committee. The Company will assist the Committee in maintaining
appropriate financial literacy.
A-1
AUTHORITY
The Committee will have the resources and authority necessary to discharge its
duties and responsibilities, including the authority to retain outside counsel
or other experts or consultants, as it deems appropriate. Any communications
between the Committee and legal counsel in the course of obtaining legal advice
will be considered privileged communications of the Company, and the Committee
will take all necessary steps to preserve the privileged nature of those
communications.
RESPONSIBILITIES
The Committee's specific responsibilities in carrying out its oversight
role are delineated in the Audit Committee Responsibilities Calendar. As the
compendium of Committee responsibilities, the most recently updated
Responsibilities Calendar will be considered to be an addendum to this Charter.
The Committee will review and reassess the adequacy of this Charter annually to
reflect changes in regulatory requirements, authoritative guidance, and evolving
oversight practices and recommends any proposed changes to the Board.
The Committee relies on the expertise and knowledge of management and the
independent auditor in carrying out its oversight responsibilities. Management
of the Company is responsible for determining the Company's financial statements
are complete, accurate and in accordance with generally accepted accounting
principles. The independent auditor is responsible for auditing the Company's
financial statements. It is not the duty of the Committee to plan or conduct
audits, to determine that the financial statements are complete and accurate and
are in accordance with generally accepted accounting principles, to conduct
investigations, or to assure compliance with the laws and regulations or the
Company's internal policies, procedures and controls.
A-2
PROXY
SMITHWAY MOTOR XPRESS CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 14, 2004
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) G. Larry
Owens and Douglas C. Sandvig, and each or either of them, attorneys and proxies
of the undersigned, with power of substitution, to vote all of the Common Stock
that 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 14, 2004, 10:00 a.m. Central
Time, and at any adjournment thereof, as follows:
1. Election of Directors [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees listed below
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a line through the nominee's name
below.
Marlys L. Smith G. Larry Owens Herbert D. Ihle Terry G. Christenberry
2. Approval of the proposal to ratify the selection of KPMG LLP as independent auditors of the Company for the fiscal year
ending December 31, 2004.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 to vote [ ] WITHHOLD AUTHORITY to vote
(Continued and to be signed on reverse side)
(Continued from the other side)
A vote FOR Proposals 1 and 2, 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 and 2, 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 2004 Annual Meeting of Stockholders and the
Annual Report to Stockholders for the fiscal year ended December 31, 2003.
Dated __________________________________, 2004
________________________________________________________
________________________________________________________
Signature(s)
Please date and sign exactly as name(s) appear(s) on your Common Stock
certificate(s). If shares are held jointly, each owner should sign this
proxy. If acting as an executor, administrator, trustee, custodian,
guardian, etc., you should so indicate in signing. If the tockholder is
a corporation or other business entity, the proxy should indicate the
full legal name of the corporation or entity, and be signed by a duly
authorized officer (indicating his or her position).