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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
P.A.M. TRANSPORTATION SERVICES, INC.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
P.A.M. TRANSPORTATION SERVICES, INC.
297 WEST HENRI DETONTI BOULEVARD
TONTITOWN, ARKANSAS 72770
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
To our Stockholders:
The 2005 annual meeting of stockholders of P.A.M. Transportation Services,
Inc., a Delaware corporation, will be held at The Ritz-Carlton, Naples, 280
Vanderbilt Beach Road, Naples, Florida 34108, on Thursday, May 26, 2005 at 9:00
a.m. local time, for the following purposes:
(1) To elect eight directors to serve until the next annual meeting of
stockholders and until their successors have been elected and qualified;
and
(2) To conduct such other business as may properly come before the
meeting or any adjournment or postponement of the meeting.
Only stockholders of record as of the close of business on April 7, 2005
will be entitled to notice of and to vote at the meeting or any adjournment or
postponement of the meeting.
By Order of the Board of Directors
/s/ Robert W. Weaver
ROBERT W. WEAVER
President and Chief Executive Officer
April 21, 2005
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING RETURN
ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED WITHIN THE UNITED STATES.
P.A.M. TRANSPORTATION SERVICES, INC.
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ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 2005
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement and form of proxy, which are first being mailed to
stockholders on or about April 21, 2005, are furnished in connection with the
solicitation of proxies on behalf of our Board of Directors, for use at our
annual meeting of stockholders to be held at The Ritz-Carlton, Naples, 280
Vanderbilt Beach Road, Naples, Florida 34108, at 9:00 a.m., local time, and at
any or all adjournments or postponements of the meeting. The address of our
principal executive offices is 297 West Henri DeTonti Boulevard, Tontitown,
Arkansas 72770 and our telephone number is (479) 361-9111.
We are paying the costs of this solicitation. In addition to the mails,
proxies may be solicited by our officers and regular employees, without
remuneration, in person or by telephone, email or facsimile. It is anticipated
that banks, brokerage houses and other custodians, nominees and fiduciaries will
forward soliciting material to beneficial owners of stock entitled to vote at
the meeting, and such persons will be reimbursed for the out-of-pocket expenses
incurred by them for forwarding the material.
Any proxy given pursuant to this solicitation may be revoked by any
stockholder who attends the meeting and gives oral notice of his or her election
to vote in person, without compliance with any other formalities. In addition,
any proxy given pursuant to this solicitation may be revoked prior to the
meeting by delivering to the Secretary of PTSI an instrument revoking it or a
duly executed proxy for the same shares bearing a later date. Proxies that are
returned properly executed and not revoked will be voted in accordance with the
stockholder's directions specified in the proxy. Where no direction is
specified, proxies will be voted FOR the approval of the election of each of the
nominees for director listed in this proxy statement. Abstentions and broker
non-votes will not be counted as votes either in favor of or against the
election of any nominee.
Only stockholders of record at the close of business on the record date of
April 7, 2005 will be entitled to notice of and to vote at the annual meeting
and any adjournments or postponements of the annual meeting. As of April 7,
2005, there were 11,310,207 shares of our common stock outstanding. Each share
of common stock issued and outstanding on the record date is entitled to one
vote.
ELECTION OF DIRECTORS
Members of the Board of Directors of the company are elected annually to
serve until the next annual meeting of stockholders or until their successors
are elected and qualified. Directors are elected by a plurality of the votes of
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Our Bylaws provide that the number of members
of the Board of Directors shall be established from time to time by our
stockholders. The number of members of the Board is presently set by the
stockholders at eight.
The following eight individuals have been nominated by the Board of
Directors for re-election to the Board of Directors:
Frederick P. Calderone, age 54, has served as a Vice President of CenTra,
Inc. for the past 15 years. CenTra is a transportation holding company
headquartered in Warren, Michigan. Prior to joining CenTra, Mr. Calderone was a
partner with Deloitte, Haskins, & Sells, Certified Public Accountants (now
Deloitte & Touche LLP). Mr. Calderone is a certified public accountant and an
attorney. Mr. Calderone has served as a director of PTSI since May 1998.
Frank L. Conner, age 55, has served as Executive Vice President, Finance
and Accounting and Chief Financial Officer of FedEx Freight East (formerly
American Freightways, Inc.) since February 2001.
Mr. Conner previously served as a Director of American Freightways from 1989 to
February 2001 and held various positions with American Freightways, including
serving as Executive Vice President-Finance and Accounting and Chief Financial
Officer from November 1995 to February 2001. Mr. Conner previously served
thirteen years with McKesson Service Merchandise in various positions including
General Manager and Chief Financial Officer. Mr. Conner served seven years in
public accounting with Peat, Marwick & Mitchell prior to joining McKesson. Mr.
Conner has served as a director of PTSI since July 2002. Mr. Conner has also
served as a member of the Board of Directors of First Federal Bancshares of
Arkansas, Inc. since September 2003.
Thomas H. Cooke, age 70, was employed by Ford Motor Company for 33 years
and has been retired since 1996. While at Ford, he served in various managerial
capacities, primarily finance and controller executive positions responsible for
financial analysis, financial controls, business plans, budget development,
accounting, and auditing in Ford's Product Development Group, several
manufacturing divisions, an overseas affiliate, and Finance Staff. During his
last three years at Ford, Mr. Cooke served as Global Manager of Customs
Compliance and Analysis in the Transportation and Logistics Office. He holds an
MBA in Finance from the University of California at Berkeley. Mr. Cooke has
served as a director of PTSI since July 2002.
Manuel J. ("Matty") Moroun, 77, is the President and Chief Executive
Officer of CenTra, Inc., a transportation holding company headquartered in
Warren, Michigan. Mr. Moroun has been a principal stockholder and officer of
CenTra and its predecessor companies since 1954, and its Chief Executive Officer
since 1970. CenTra is one of the largest privately held transportation holding
companies in the United States. Mr. Moroun has served as a director of PTSI
since May 2002. Mr. Moroun is the father of Matthew T. Moroun, a director of
PTSI who has been nominated for re-election at the annual meeting. Mr. Moroun
has also served as a member of the Board of Directors of Universal Truckload
Services, Inc. since November 2004.
Matthew T. Moroun, age 32, has served as Vice Chairman and as a director of
CenTra, Inc., a transportation holding company based in Warren, Michigan, since
1993. Since 1996, Mr. Moroun has served as Chairman of insurance holding
company, Oakland Financial Corporation, and its subsidiaries, which are based in
Sterling Heights, Michigan. Since 1995, Mr. Moroun has served as Chairman of the
Board of Durarock Reinsurance, Ltd., a reinsurance company. Mr. Moroun has
served as a director of PTSI since May 1992. Mr. Moroun is the son of Manuel J.
Moroun, a director of PTSI who has been nominated for reelection at the annual
meeting. Mr. Moroun has also served as a member of the Board of Directors of
Universal Truckload Services, Inc. since November 2004.
Daniel C. Sullivan, age 64, has been a practicing attorney, specializing in
transportation law for more than 35 years. Mr. Sullivan has been a principal
with the firm of Sullivan, Hincks & Conway, or its predecessor, presently
located in Oak Brook, Illinois, since 1972. Mr. Sullivan has served as a
director of PTSI since June 1986. Mr. Sullivan has also served as a member of
the Board of Directors of Universal Truckload Services, Inc. since November
2004.
Robert W. Weaver, age 55, is one of our co-founders. He has over 20 years
of experience with our company and has served as our President and Chief
Executive Officer since 1990. Mr. Weaver has served as a director of PTSI since
1990.
Charles F. Wilkins, age 66, retired in January 1995 after 34 years of
employment with Ford Motor Company, and from January 1995 to January 2005 was
self-employed as a logistics consultant. He served in various positions with
Ford Motor Company in transportation management, including three years of
service as Traffic Manager in Europe. Mr. Wilkins retired from the position of
Director, Transportation and Traffic Office, in which he had served since 1990.
Mr. Wilkins has been a member of the National Motor Carrier Advisory Committee
of the Federal Highway Administration and was previously active in the National
Industrial Transportation League as Chairman of the Audit Committee and Third
Vice Chairman. Mr. Wilkins has served as a director of PTSI since June 1995.
Proxies received will be voted for the director nominees named above,
unless authority to do so is withheld. In the event any nominee is unable or
declines to serve as a director at the time of the meeting, the persons named as
proxies will have discretionary authority to vote the proxies for the election
of such person or
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persons as may be nominated in substitution by the Board of Directors. We are
not aware of any current circumstances which would render any nominee named
above unable to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF THE NOMINEES NAMED ABOVE.
INDEPENDENCE OF DIRECTORS
Rules of the Nasdaq Stock Market require that a majority of the Board of
Directors be independent directors, as defined in Nasdaq Rule 4200(a)(15). In
March of 2004, we reviewed the independence of our directors. During this
review, the Board of Directors considered transactions and relationships between
each director or any member of his or her family, and PTSI and its subsidiaries.
As a result of this review, the Board of Directors has determined that each of
the directors, including those nominated for election at the annual meeting, are
independent under Nasdaq Rule 4200(a)(15), except Mr. Weaver who is not
considered independent because of his employment as an executive officer of
PTSI.
COMMUNICATIONS WITH DIRECTORS AND ATTENDANCE AT ANNUAL MEETINGS
Stockholders may communicate directly with the Board of Directors as a
group, by writing to the Board of Directors, care of the Secretary of PTSI, 297
West Henri DeTonti Boulevard, Tontitown, Arkansas 72770. The Secretary will
review all of the correspondence and regularly forward to the Board of Directors
a summary of the correspondence, and copies of all of the correspondence that,
in his opinion, deals with the functions of the Board of Directors or any of its
committees or that the Secretary otherwise determines requires the attention of
the Board of Directors. Directors may at any time review a log of all of the
correspondence that is addressed to the Board of Directors, and request copies
of any and all of the correspondence.
The Board of Directors has a policy of encouraging members of the Board of
Directors to attend the annual meetings of the stockholders. Seven of our eight
directors attended last year's annual meeting.
COMMITTEES OF THE BOARD AND MEETINGS
Our Board of Directors has the following standing committees:
Audit Committee. The members of the Audit Committee consist of Thomas H.
Cooke (committee chairman), Frank L. Conner and Charles F. Wilkins. The
functions of the Audit Committee are described below under the heading "Audit
Committee Report." The Board of Directors has determined that Mr. Conner and Mr.
Cooke, who are members of the Audit Committee, are each qualified as an audit
committee financial expert as that term is defined in the rules of the
Securities and Exchange Commission. Mr. Conner and Mr. Cooke are independent, as
independence for audit committee members is defined in the listing standards of
the Nasdaq Stock Market and the rules of the Securities and Exchange Commission.
The Audit Committee held nine meetings during 2004.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee consists of Matthew T. Moroun (committee chairman), Frederick P.
Calderone and Daniel C. Sullivan. Each member of the Compensation and Stock
Option Committee is independent, as independence for compensation committee
members is defined in the listing standards of the Nasdaq Stock Market. The
Compensation and Stock Option Committee reviews and makes recommendations to the
Board of Directors with respect to compensation of our executive officers and
assists the Board of Directors in the administration of our stock option and
incentive compensation plans. The Compensation and Stock Option Committee held
one meeting during 2004.
Executive Committee. The Executive Committee is composed of Matthew T.
Moroun and Robert W. Weaver. It exercises the authority of the Board of
Directors in accordance with our Bylaws between regular meetings of the Board.
The Executive Committee met once during 2004.
The Board of Directors does not have a nominating committee that nominates
candidates for election to the Board of Directors. That function is performed by
the Board of Directors. Each member of the Board
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participates in the consideration of director nominees. The Board of Directors
believes that it can adequately fulfill the functions of a nominating committee
without having to appoint an additional committee to perform that function. The
Board of Directors believes that not having a separate nominating committee
saves the administrative expense that would be incurred in maintaining such a
committee, and saves time for directors who would serve on a nominating
committee if it were established. As there is no nominating committee, we do not
have a nominating committee charter.
At least a majority of our independent directors participate in the initial
consideration of director nominees. These directors are independent, as
independence for nominating committee members is defined in the listing
standards of the Nasdaq Stock Market. After these independent directors discuss
and evaluate potential nominees, they recommend director nominees to the full
Board of Directors for selection.
The Board of Directors will consider as potential nominees persons
recommended by stockholders. Recommendations should be submitted to the Board of
Directors in care of our Secretary, Larry J. Goddard, at our principal executive
office, 297 West Henri DeTonti Boulevard, Tontitown, Arkansas 72770. Each
recommendation should include a personal biography of the suggested nominee, an
indication of the background or experience that qualifies the person for
consideration, and a statement that the person has agreed to serve if nominated
and elected.
The Board of Directors has used an informal process to identify potential
candidates for nomination as directors. Candidates for nomination have been
recommended by an executive officer or director, and considered by the Board of
Directors. Generally, candidates have been known to one or more of the Board
members. The Board of Directors has not adopted specific minimum qualifications
that it believes must be met by a person it recommends for nomination as a
director. In evaluating candidates for nomination, the Board of Directors will
consider the factors it believes to be appropriate, which would generally
include the candidate's independence, personal and professional integrity,
business judgment, relevant experience and skills, including those related to
transportation services, and potential to be an effective director in
conjunction with the rest of the Board of Directors in collectively serving the
long-term interests of our stockholders. Although the Board of Directors has the
authority to retain a search firm to assist it in identifying director
candidates, there has to date been no need to employ a search firm. The Board of
Directors does not evaluate potential nominees for director differently based on
whether they are recommended to the Board of Directors by a stockholder.
During 2004, the Board of Directors held four meetings. Each director
attended at least 75% of the aggregate of all meetings held by the Board of
Directors and by committees of the Board on which the director served during
2004.
AUDIT COMMITTEE REPORT
Each member of the Audit Committee is independent, as independence for
audit committee members is defined in the listing standards of the Nasdaq Stock
Market and the rules of the Securities and Exchange Commission. The Audit
Committee's primary purpose is to assist the Board of Directors in overseeing:
- the accounting and financial reporting process;
- audits of financial statements; and
- internal control and audit functions.
In carrying out its responsibilities, the Audit Committee supervises the
relationship between us and our independent auditors, including having direct
responsibility for their appointment, compensation and retention, reviewing the
scope of their audit services, and approving audit and permissible non-audit
services. The Audit Committee reviews and discusses the annual and quarterly
financial statements, and reviews the activities of our internal audit function.
The Board of Directors has adopted a charter for the Audit Committee. A
copy of the charter is available on our website (www.pamt.com).
4
Management has the primary responsibility for the financial statements and
the reporting process, including our systems of internal controls. In fulfilling
its oversight responsibilities, the Audit Committee reviewed the audited
financial statements for the year ended December 31, 2004 with management,
including a discussion of the quality and the acceptability of our internal
controls over financial reporting.
The Audit Committee reviewed with the company's Independent Registered
Public Accounting Firm, Deloitte & Touche LLP ("Deloitte & Touche"), who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality and the acceptability of our financial reporting and
such other matters as are required to be discussed with the Audit Committee
under standards of the Public Company Accounting Oversight Board (United
States), including the matters required to be discussed pursuant to Statement on
Auditing Standards No. 61 (Communications with Audit Committees). The Audit
Committee also reviewed with Deloitte & Touche its opinion on management's
assessment included in management's report on internal control over financial
reporting, and its opinion on the effectiveness of the company's internal
control over financial reporting. In addition, the Audit Committee has discussed
with Deloitte & Touche the auditors' independence from management and us,
including the matters in the auditors' written disclosures required by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). The Audit Committee has considered the compatibility of the
provision of non-audit services with maintaining the auditors' independence.
The Audit Committee also discussed with our internal and external auditors
the overall scope and plans for their respective audits. The Audit Committee
meets periodically with the internal and external auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of our internal controls, and the overall quality of our financial
reporting.
In reliance on the reviews and discussions referred to above, 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, 2004 for filing with the Securities and Exchange Commission.
Audit Committee
Thomas H. Cooke -- Chairman
Frank L. Conner
Charles F. Wilkins
The information in the Audit Committee Report shall not be deemed to be
soliciting material, or be filed with the Securities and Exchange Commission or
subject to Regulation 14A or 14C or to liabilities of Section 18 of the
Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that we specifically incorporate
these paragraphs by reference.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers and persons who own more than 10% of our outstanding
common stock to file with the Securities and Exchange Commission reports of
changes in ownership of our common stock held by such persons. Executive
officers, directors and greater than 10% stockholders are also required to
furnish us with copies of all forms they file under this regulation. To our
knowledge, based solely on a review of the copies of such reports furnished to
us and representations received from our directors and officers, we believe that
all reports required to be filed under Section 16(a) for 2004 were timely filed,
except that our director and major stockholder, Matthew Moroun, did not file
approximately four reports on Form 4, relating to approximately five purchases
of stock, in February and March of 2004.
5
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid to or accrued on behalf of each of the named executive
officers for the years ended December 31, 2004, 2003 and 2002.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
--------------------------- ---- -------- -------- ------------ ---------------
Robert W. Weaver.................... 2004 $447,500 $ 0 0 $ 0
President and Chief Executive 2003 422,500 29,117 0 3,000
Officer, Director 2002 407,500 182,310 120,000 0
W. Clif Lawson...................... 2004 239,000 0 0 2,700
Executive Vice President and 2003 229,000 15,845 0 2,600
Chief Operating Officer 2002 219,000 98,413 90,000 2,600
Larry J. Goddard.................... 2004 195,000 0 0 3,055
Vice President of Finance, 2003 185,000 13,204 0 2,787
Chief Financial Officer, Secretary 2002 175,000 81,278 90,000 2,636
and Treasurer
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(1) Represents amounts contributed by PTSI pursuant to its 401(k) Plan.
EMPLOYMENT AGREEMENTS
Robert W. Weaver. On January 19, 2005, we entered into a new employment
agreement with Mr. Weaver, our President and Chief Executive Officer. The new
employment agreement replaced the employment agreement between us and Mr. Weaver
dated February 26, 2002 that provided for an employment term of July 1, 2002
through June 30, 2005. The new employment agreement provides for a term of
employment for Mr. Weaver from July 1, 2004 through June 30, 2006. Mr. Weaver's
new employment agreement provides him with an annual base salary of $450,000,
which is a $5,000 increase in annual base salary from the amount provided for in
Mr. Weaver's prior employment agreement. The employment agreement gives us the
option to extend the term of Mr. Weaver's employment for two additional years,
one year at a time; and provides for annual base compensation of $500,000 during
any extension. The employment agreement provides for payment to Mr. Weaver of
compensation for 12 months in the event that we terminate his employment because
of disability, or without just cause (as defined in the employment agreement).
In the event that we terminate Mr. Weaver's employment for just cause, or Mr.
Weaver terminates his employment, we are not obligated to make any severance
payments. The employment agreement precludes Mr. Weaver from competing with, or
soliciting or retaining business competitive with, our business or that of our
affiliates, for one year after his employment ends with us. He is also precluded
from soliciting employees to leave our employment. The employment agreement
contains provisions providing for the reimbursement of Mr. Weaver's reasonable
and necessary expenses that he incurs in the performance of his duties, and with
fringe benefits that we provide for employees in the normal course of our
business. The employment agreement contains provisions requiring Mr. Weaver to
maintain the confidentiality of our proprietary information.
W. Clif Lawson and Larry J. Goddard. Effective January 1, 2002, we entered
into employment agreements with W. Clif Lawson, our Executive Vice President and
Chief Operating Officer, and Larry J. Goddard, our Vice President of Finance,
Chief Financial Officer, Secretary and Treasurer. The term of Mr. Lawson's
employment under his agreement was originally from January 1, 2002 through June
30, 2004. Effective June 2, 2004, we exercised our option under the agreement to
extend the term of Mr. Lawson's employment through June 30, 2005. The term of
Mr. Goddard's employment under his agreement was originally from January 1, 2002
through December 31, 2004. Effective March 15, 2005, we exercised our option
under the agreement to extend the term of Mr. Goddard's employment through
December 31, 2005.
6
The employment agreements provide annual base salaries that increase throughout
their term. Mr. Lawson's annual base salary under his agreement started at
$214,000 and is now $244,000. Mr. Goddard's base salary started at $175,000 and
is now $205,000. The base salaries may be increased at any time in the sole
discretion of the Board of Directors. The executives are also entitled to
receive discretionary bonuses from time to time as may be determined by the
Board, and fringe benefits that are available to executive officers. Each
agreement provides that if the executive is terminated due to medical
disability, he will continue to receive his then current base salary for a
period of twelve months, and if the executive is terminated without cause, he
will be entitled to receive all compensation due under the respective agreement
for the remainder of the term of the agreement. In some circumstances, following
termination of employment, the executive is entitled to 75 percent of his annual
base salary until he obtains other employment, for up to a year. Each agreement
contains a three-year confidentiality provision and a one-year non-competition
provision.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2004, Messrs. Calderone, Matthew Moroun and Sullivan served as
members of the Compensation and Stock Option Committee. Matthew Moroun, a member
of the Compensation and Stock Option Committee and the Executive Committee of
the Board of Directors, and our largest stockholder, is the controlling
stockholder, Vice Chairman and a director of CenTra, Inc., a transportation
holding company based in Warren, Michigan. He is also the Chairman and
controlling stockholder of Oakland Financial Corporation, an insurance holding
company, and its subsidiaries, based in Sterling Heights, Michigan. Our
director, Manuel Moroun, is the President and Chief Executive Officer of CenTra,
and controls a trust that is the other major stockholder of CenTra. He is also a
stockholder of Oakland Financial Corporation.
During 2004, certain subsidiaries of CenTra paid us a total of $2,614,819.
These payments represent freight transportation charges of $119,298, maintenance
services performed in our maintenance facilities and maintenance charges paid by
us to third parties on behalf of the subsidiaries and affiliates of CenTra and
charged back at the amount paid of $2,060,693, insurance casualty payments of
$409,836, and miscellaneous chargeable items of $24,992.
During 2004, we made payments to certain subsidiaries of CenTra and other
companies owned or controlled by our directors, Manuel Moroun and Matthew
Moroun, in the aggregate amount of $3,729,125. These payments are described
below.
Payments were made to a subsidiary of CenTra in the amount of $194,365 for
real estate leases. Properties leased from the subsidiary include office and
maintenance facilities in two states, and trailer drop yards in ten states. The
leases are generally month to month leases with automatic monthly renewal
provisions.
Property is also leased from an affiliate of CenTra that is used for
trailer drop yards. Payments were made to the affiliate in the amount of $4,500
during 2004 and represent lease payments made in accordance with lease
agreements that contain automatic monthly renewal provisions.
Payments in the amount of $1,477,519 were made to a subsidiary of CenTra
during 2004. These payments to the subsidiary were for parts and labor charges
incurred to repair our equipment.
We made payments to subsidiaries of Oakland Financial Corporation during
2004 in the amount of $186,906 for insurance premiums paid pursuant to
agreements to provide insurance coverage to certain of our independent
contractors. Underlying agreements are made directly with the independent
contractors. The full amount of these payments to the subsidiaries are recouped
by us from the independent contractors.
We purchase physical damage coverage on our tractors and trailers through
an unaffiliated insurance broker which is written by a subsidiary of Oakland
Financial Corporation. In 2004, we made payments related to these policies in
the amount of $1,273,254.
We purchase commercial auto and general liability insurance issued by an
unaffiliated insurance company. A subsidiary of Oakland Financial Corporation
serves as third-party administrator for this insurance. In 2004, the subsidiary
received $300,000 from the unaffiliated insurance company for handling the
claims under this program. Under the commercial auto liability policy, the
subsidiary adjusts the claims
7
(which are subject to a $2,500 deductible) and remits the full amounts of the
settlements to the claimants. The subsidiary invoices us for the $2,500
deductible amount, for which we paid a total of $592,581 in 2004.
We believe that each of the above transactions was entered into on terms as
favorable to us as could have been obtained from unaffiliated third parties at
the time such transactions were negotiated. We expect to continue transactions
with subsidiaries of CenTra and other companies owned or controlled by our
directors, Manuel Moroun and Matthew Moroun, in 2005 that are similar to those
described above.
OPTION GRANTS IN 2004
No options were granted to any of our executive officers named in the
Summary Compensation Table during the year ended December 31, 2004.
AGGREGATED STOCK OPTION EXERCISES IN 2004 AND YEAR-END OPTION VALUES
The following table provides information on the exercise of stock options
during the year ended December 31, 2004 by the named executive officers and the
value of unexercised options at December 31, 2004:
NUMBER OF SHARES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON VALUE OPTIONS AT 12/31/04 MONEY OPTIONS AT 12/31/04
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- -------- ------------------------- ----------------------------
Robert W. Weaver............ 0 N/A 54,000/96,000 $0/$0
W. Clif Lawson.............. 0 N/A 18,000/72,000 0/ 0
Larry J. Goddard............ 0 N/A 18,000/72,000 0/ 0
---------------
(1) As of December 31, 2004, none of the options were "in-the-money" as the
exercise price for each of the options exceeded the market value of the
common stock underlying the option.
COMPENSATION OF DIRECTORS
We currently pay our non-employee directors an annual fee of $8,000 per
year. In addition, such directors are paid a fee of $1,500 per Board of
Directors or committee meeting that they attend in person, and $500 per Board of
Directors or committee meeting that they attend by telephone. When a director
attends more than one meeting on the same day, the director is generally paid
only one meeting fee for the day. We reimburse directors for their expenses in
attending such meetings. A director who is also one of our employees, is not
additionally compensated for service as a member of the Board of Directors.
Pursuant to automatic grant provisions under our 1995 Stock Option Plan, on
March 2 of each year, each non-employee director is granted an option to
purchase 2,000 shares of our common stock at an exercise price equal to the fair
market value of our stock on the date of grant. During 2004, options were
granted for 2,000 shares of common stock to each of Messrs. Calderone, Conner,
Cooke, Manuel Moroun, Matthew Moroun, Sullivan and Wilkins, who are our
non-employee directors. The exercise price under these options is $16.99 per
share.
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934
that might incorporate future filings, including this proxy statement, in whole
or in part, the following Report of the Compensation and Stock Option Committee
on Executive Compensation and the Stockholder Return Performance Graph shall not
be incorporated by reference into any such filings.
8
REPORT OF THE COMPENSATION AND STOCK OPTION
COMMITTEE ON EXECUTIVE COMPENSATION
In accordance with the proxy statement rules of the Securities and Exchange
Commission, the Compensation and Stock Option Committee of the Board of the
Directors offers the following report regarding compensation policies for our
executive officers and Chief Executive Officer with respect to compensation paid
to such officers during the last fiscal year.
During 2004, Messrs. Calderone, Matthew Moroun and Sullivan served as
members of the Compensation and Stock Option Committee. Each of them is a
non-employee director of PTSI. It is the Committee's responsibility to review
and make recommendations to the Board of Directors with respect to compensation
of PTSI's officers. In formulating its compensation policies and decisions, the
Committee endeavors to provide a competitive compensation package that enables
PTSI to attract and retain key executives and to integrate compensation programs
with PTSI's annual and long-term business strategies and objectives and focus
executive actions on the fulfillment of the objectives.
PTSI's executive compensation program generally consists of base salary and
annual incentive compensation through a cash bonus plan. Stock options are
utilized in order to align executives' interests more closely with the interests
of stockholders. The amount of such awards, if any, may be determined from time
to time by the Compensation and Stock Option Committee or the Board of
Directors.
Robert W. Weaver, PTSI's President and Chief Executive Officer, is
presently employed pursuant to an employment agreement that was entered into as
of September 10, 2004 and covers the period of July 1, 2004 through June 30,
2006. The company has also entered into employment agreements with its two other
executive officers, W. Clif Lawson, Executive Vice President and Chief Operating
Officer, and Larry J. Goddard, Vice President of Finance, Chief Financial
Officer, Secretary and Treasurer. Mr. Lawson's employment agreement extends
through June 30, 2005, and Mr. Goddard's employment agreement extends through
December 31, 2005. The terms of these agreements are described above under the
caption "Employment Agreements."
The Board of Directors has adopted an Incentive Compensation Plan covering
substantially all of our office and shop employees, including executive
officers, which allows employees to earn annual bonuses, payable over a
three-year period, based on the operating ratio and revenues of the company. The
Board of Directors believes this program serves as an incentive to all
participating employees (currently approximately 300 employees) to give greater
effort on behalf of the company. During 2004, for Messrs. Weaver, Lawson and
Goddard, no bonuses were accrued pursuant to the company's Incentive
Compensation Plan.
The Committee believes that the total compensation of the company's
executive officers has been competitive within the industry.
PTSI's future compensation policies will be developed in light of PTSI's
profitability and with the goal of rewarding members of management for their
contributions to the company's success. It is PTSI's intention that the
compensation to be paid to its executive officers will not exceed the present
maximum allowable amount for purposes of deductibility set forth in the Internal
Revenue Code.
Compensation and Stock Option
Committee
Frederick P. Calderone
Matthew T. Moroun
Daniel C. Sullivan
9
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on our common stock against the
cumulative total return of the CRSP Total Return Index for the Nasdaq Stock
Market (U.S. companies) and the CRSP Total Return Index for the Nasdaq Trucking
and Transportation Stocks for the period of five years commencing December 31,
1999 and ending December 31, 2004. The graph assumes that the value of the
investment in our common stock and each index was $100 on December 31, 1999.
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------------
PTSI $100.00 $72.19 $113.98 $226.61 $192.23 $167.28
Nasdaq Stock Market
U.S. $100.00 $60.31 $47.84 $33.07 $49.45 $ 53.81
Nasdaq Trucking &
Transportation
Stocks $100.00 $90.89 $107.47 $109.40 $156.67 $200.81
10
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 1, 2005, information concerning
ownership of our common stock by our directors and executive officers, both
individually and as a group, and by each stockholder known by us to be the
beneficial owner of more than 5% of our outstanding common stock.
As of March 1, 2005, there were 11,307,207 shares of our common stock
outstanding. Unless otherwise indicated, each person has sole voting and
investment power with respect to shares shown as beneficially owned by such
person. The number of shares of our common stock beneficially owned by a person
includes shares of common stock issuable with respect to options held by the
person that are exercisable within 60 days of March 1, 2005. The percentage of
our common stock beneficially owned by a person has been calculated as if the
person had exercised all such options the person holds and that no other persons
exercised any options.
SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
Matthew T. Moroun........................................... 4,544,301(1) 40.2%
Robert W. Weaver............................................ 314,428(2) 2.8%
Daniel C. Sullivan.......................................... 26,000(3) *
Charles F. Wilkins.......................................... 8,000(3) *
Frederick P. Calderone...................................... 8,000(3) *
Manuel J. Moroun............................................ 4,000(4) *
Thomas H. Cooke............................................. 4,000(4) *
Frank L. Conner............................................. 5,000(4) *
W. Clif Lawson.............................................. 84,000(5) *
Larry J. Goddard............................................ 72,313(6) *
FMR Corp. .................................................. 1,095,087(7) 9.7%
Neil Gagnon................................................. 700,182(8) 6.2%
Lord, Abbett & Co. LLC...................................... 917,399(9) 8.1%
Directors and executive officers as a group (10 persons).... 5,070,042(10) 44.2%
---------------
* Less than 1%.
(1) Includes 1,444,301 shares owned directly, 8,000 shares subject to options
exercisable within 60 days of March 1, 2005, and 3,092,000 shares held in a
trust of which Matthew Moroun is a co-trustee and a beneficiary (the
"Moroun Trust"). Norman E. Harned is co-trustee with Matthew Moroun of the
Moroun Trust and may therefore be deemed to beneficially own the shares
held by the Moroun Trust. The business address of each of Messrs. Moroun
and Harned is 12225 Stephens Road, Warren, Michigan 48091.
(2) Includes 70,000 shares subject to options that are exercisable within 60
days of March 1, 2005.
(3) Includes 8,000 shares subject to options that are exercisable within 60
days of March 1, 2005.
(4) Includes 4,000 shares subject to options that are exercisable within 60
days of March 1, 2005. Regarding Manuel Moroun, does not include the
4,544,301 shares shown in the table as being beneficially owned by Manuel
Moroun's son, Matthew Moroun.
(5) Includes 1,500 shares held in a trust of which Mr. Lawson is trustee and
his sister is the trust beneficiary, and 1,500 shares held by Mr. Lawson's
son. Also includes 30,000 shares subject to options that are exercisable
within 60 days of March 1, 2005.
(6) Includes 30,000 shares subject to options that are exercisable within 60
days of March 1, 2005.
(7) Based upon a Schedule 13G dated February 14, 2005 filed by FMR Corp., and
related parties, which indicates that as of December 31, 2004, they had the
sole power to dispose of 1,095,087 shares, and sole
11
power to vote 0 of the shares. The Schedule 13G indicates that 1,095,087 of
the shares are held by the Fidelity Low Price Stock Fund, a registered
investment company, for which one of FMR Corp.'s subsidiaries acts as
investment adviser. We make no representation as to the accuracy or
completeness of the information reported. The address of FMR Corp. is 82
Devonshire Street, Boston, Massachusetts 02109.
(8) Based upon a Schedule 13G dated January 25, 2005 filed by Neil Gagnon,
which indicates that as of December 31, 2004, he had sole power to vote
231,368 of the shares, shared power to vote 130,875 of the shares, sole
power to dispose of 230,454 of the shares, and shared power to dispose of
469,728 of the shares. We make no representation as to the accuracy or
completeness of the information reported. The address of Neil Gagnon is
1370 Avenue of the Americas, Suite 2002, New York, New York 10019.
(9) Based upon a Schedule 13G dated February 2, 2005 filed by Lord, Abbett &
Co. LLC, which indicates that it has sole power to vote and dispose of the
shares. We make no representation as to the accuracy or completeness of
information reported. The address of Lord, Abbett & Co. LLC is 90 Hudson
Street, Jersey City, New Jersey 07302.
(10) Includes 174,000 shares subject to options that are exercisable within 60
days of March 1, 2005.
INDEPENDENT PUBLIC ACCOUNTANTS
SELECTION OF INDEPENDENT AUDITORS
Deloitte & Touche served as our principal independent auditors for the year
ending December 31, 2004. Our Audit Committee has retained Deloitte & Touche as
our principal independent auditors for the first quarter of 2005, but has not
yet selected independent auditors for calendar year 2005. We are not presently
expecting that representatives of Deloitte & Touche will attend the annual
meeting of stockholders.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the fees for professional services of Deloitte &
Touche for audit and other services they provided to us for 2004 and 2003.
2004 2003
-------- --------
Audit Fees(1)............................................... $438,797 $122,381
Audit-Related Fees(2)....................................... 0 14,066
Tax Fees(3)................................................. 4,500 7,950
All other fees.............................................. 0 0
---------------
(1) Includes the aggregate fees billed for professional services rendered by
Deloitte & Touche for 2004 and 2003 for the audit of our annual financial
statements and review of financial statements included in our quarterly
reports on Form 10-Q. Of the amount shown for 2004, approximately $313,108
related to the audit of internal controls.
(2) Principally consisted of fees associated with the audit of the financial
statements of certain employee benefit plans.
(3) Principally consisted of tax consultation and tax compliance services with
respect to Federal and state taxes and certain employee benefit plans.
The Audit Committee pre-approves audit services and non-audit services that
are to be performed for us by our independent auditors. The Audit Committee has
delegated authority to its chairman, or any two of its other members acting
together, to approve, between meetings of the Audit Committee, audit services
and permissible non-audit services. Approvals between meetings are required to
be reported to the Audit Committee at its next meeting. In addition to there
being engagement letters for audit services, the Audit Committee has determined
that there should be an engagement letter for any non-audit services that are to
be performed by the independent auditors. All of the services described in the
table above were pre-approved by the Audit Committee, and the authority
delegated to members of the Audit Committee was not used.
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain transactions between us and companies owned or controlled by Manuel
Moroun, who is a member of our Board of Directors, and his son, Matthew Moroun,
who is our largest stockholder and a member of our Board of Directors, are
described above under the caption "Compensation Committee Interlocks and Insider
Participation."
ANNUAL REPORT TO STOCKHOLDERS AND REPORT ON FORM 10-K
Additional information concerning us, including our financial statements,
is provided in our 2004 Annual Report to Stockholders that accompanies this
proxy statement. Our Annual Report on Form 10-K for the year ended December 31,
2004, as filed with the Securities and Exchange Commission, is available to
stockholders who make a written request for it to our Secretary, Larry J.
Goddard, at our principal executive office, 297 West Henri DeTonti Boulevard,
Tontitown, Arkansas 72770. Copies of exhibits filed with that report or
referenced in it will be furnished to stockholders of record upon request and
payment of our expenses in furnishing such documents.
STOCKHOLDER PROPOSALS
Any proposal to be presented at the 2006 annual meeting of stockholders
must be received at our principal executive office not later than December 22,
2005, directed to the attention of the Secretary, for consideration for
inclusion in our proxy statement and form of proxy relating to that meeting. Any
such proposals must comply in all respects with the rules and regulations of the
Securities and Exchange Commission.
In connection with our annual meeting of stockholders to be held in 2006,
if we do not receive notice of a matter or proposal to be considered by March 7,
2006, then the persons appointed by the Board of Directors to act as the proxies
for such annual meeting (named in the form of proxy) will be allowed to use
their discretionary voting authority with respect to any such matter or proposal
at the annual meeting, if such matter or proposal is properly raised at the
annual meeting and put to a vote.
OTHER MATTERS
We do not know of any matters to be brought before the meeting other than
those described in this proxy statement. If any other matter properly comes
before the meeting, the persons designated as proxies will vote on each such
matter in accordance with their best judgment.
By Order of the Board of Directors
/s/ Robert W. Weaver
ROBERT W. WEAVER
President and Chief Executive Officer
April 21, 2005
13
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
P.A.M. TRANSPORTATION SERVICES, INC.
The undersigned stockholder(s) of P.A.M. Transportation Services, Inc., a
Delaware corporation, hereby appoints Robert W. Weaver and Larry J. Goddard, and
each of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 2005 Annual Meeting of Stockholders of P.A.M. Transportation
Services, Inc. to be held on Thursday, May 26, 2005, and at any or all
adjournments or postponements of the meeting, and to vote all shares of common
stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below:
(1) To elect eight directors to serve until the next annual meeting of
stockholders and until their successors are elected and qualified:
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to
below (except as vote for all nominees
otherwise indicated
below)
Frederick P. Calderone; Frank L. Conner; Thomas H. Cooke; Manuel J. Moroun;
Matthew T. Moroun; Daniel C. Sullivan; Robert W. Weaver; and Charles F. Wilkins
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) ON THE LINE BELOW:
--------------------------------------------------------------------------------
(2) In their discretion, upon such other matter or matters which may
properly come before the meeting or any adjournment or postponement of
the meeting.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This proxy, when
properly executed, will be voted in accordance with directions given by the
undersigned stockholder(s). If no direction is made, it will be voted FOR the
election of the nominees for director named above, and as the proxies deem
advisable on such other matters as may come before the meeting.
Dated: , 2005
---------------------
--------------------------------------------
Signature
--------------------------------------------
Signature
This Proxy should be marked, dated,
and signed by the stockholder(s)
exactly as his or her name appears
hereon, and returned promptly in the
enclosed envelope. Persons signing in
a fiduciary capacity should so
indicate. If shares are held by joint
tenants or as community property, both
should sign.