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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 þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12 |
ROADRUNNER TRANSPORTATION SYSTEMS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, of Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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and identify the filing for which the offsetting fee was paid previously. Identify the
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April 21, 2011
Dear Stockholder:
We are pleased to announce that the 2011 annual meeting of stockholders of Roadrunner
Transportation Systems, Inc. will be held on May 17, 2011, at 1:00 p.m., Central Time at the Hilton
Garden Inn, 5890 S. Howell Avenue, Milwaukee, Wisconsin 53207.
The agenda for the annual meeting includes the following items:
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Board Recommendation |
Election of directors
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For
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Advisory vote on executive compensation
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Advisory vote on frequency of future advisory votes
on executive compensation
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Every Three Years |
Ratification of Deloitte & Touche LLP as our
independent registered public accounting firm
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For |
Please refer to the proxy statement for detailed information on each of the proposals and the
annual meeting. Your vote is important. Please vote as soon as possible even if you plan to
attend the annual meeting. The notice and the proxy statement contain instructions on how you can
vote your shares over the Internet, by telephone, or by mail.
This year, because it is our first annual meeting as a public company, we are mailing to our
stockholders full sets of proxy materials and our 2010 annual report. Next year we plan to use the
Securities and Exchange Commission rule that allows us to furnish our proxy materials to
stockholders over the Internet. By delivering proxy materials electronically to our stockholders,
we can reduce the consumption of natural resources and the costs of printing and mailing our proxy
materials. To receive proxy materials electronically in the future, follow the instructions
described in the proxy statement.
Thank you for your interest in Roadrunner.
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Sincerely,
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Mark A. DiBlasi |
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President, Chief Executive Officer, and Director |
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TIME AND DATE:
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1:00 p.m. Central Time on Tuesday, May 17, 2011 |
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PLACE:
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Hilton Garden Inn, 5890 S. Howell Avenue, Milwaukee, Wisconsin 53207 |
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ITEMS OF BUSINESS:
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1. Elect three class I directors to serve for a term expiring in 2014; |
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2. Hold an advisory, non-binding vote on the compensation of our executive
officers; |
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3. Hold an advisory, non-binding vote on the frequency (every one, two, or
three years) of future advisory votes on the compensation of our executive
officers; |
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4. Ratify the appointment of Deloitte & Touche LLP as our independent
registered public accountant firm for the fiscal year ending December 31,
2011; and |
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5. Consider any other matters that properly come before the meeting. |
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RECORD DATE:
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April 15, 2011 |
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WHO CAN VOTE:
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Stockholders of record as of the close of business on April 15, 2011 are
entitled to notice of, and to vote at, the annual meeting. |
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VOTING:
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Whether or not you expect to be present at the meeting, please vote your
shares using the Internet or telephone by following the instructions in
this proxy statement. Of course, you may also vote by signing, dating, and
returning the enclosed proxy card in the enclosed pre-addressed envelope.
No postage is required if mailed in the United States. All stockholders
are invited to attend the annual meeting in person. Stockholders who vote
their proxy using the Internet, by telephone, or by executing a proxy card
may nevertheless attend the meeting, revoke their proxy, and vote their
shares in person. |
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By Order of the Board of Directors
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Cudahy, Wisconsin |
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April 21, 2011 |
Peter R. Armbruster, Secretary |
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TABLE OF CONTENTS
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ROADRUNNER TRANSPORTATION SYSTEMS, INC.
2011 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement contains information related to our annual meeting of stockholders to be
held on Tuesday, May 17, 2011, beginning at 1:00 p.m. Central Time, at the Hilton Garden Inn, 5890
S. Howell Avenue, Milwaukee, Wisconsin 53207, and at any adjournments or postponements of the
meeting. The purpose of this proxy statement is to solicit proxies from the holders of our common
stock for use at the meeting. On or about April 26, 2010, we began mailing a full set of proxy
materials to our stockholders. For information on how to vote your shares, see the instructions
included on the proxy card and under How do I vote? on page 2.
In this proxy statement, we, our, or us all refer to Roadrunner Transportation Systems,
Inc. and its subsidiaries.
ABOUT THE MEETING
What
is the purpose of the annual meeting?
At the annual meeting, stockholders will be asked to vote on the following items of business:
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The election of three class I directors to serve for a term expiring in 2014; |
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An advisory, non-binding vote on the compensation of our executive officers; |
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An advisory, non-binding vote on the frequency (every one, two, or three years)
of future advisory votes on the compensation of our executive officers; and |
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The ratification the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2011. |
In addition, our management will report on our performance during 2010 and respond to
questions from our stockholders.
What are the recommendations of our board of directors?
For the reasons set forth in more detail in this proxy statement, our board of directors
recommends a vote:
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for the election of each of its nominees for class I director; |
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for approval of the compensation of our executive officers; |
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in favor of an advisory vote on the compensation of our executive officers
every three years; and |
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for the ratification of the appointment of Deloitte & Touche LLP as our
independent registered public accounting firm for the fiscal year ending December 31,
2011. |
What is a proxy?
The board of directors is asking you to give us your proxy. Giving your proxy means that
you authorize another person or persons to vote your shares of our common stock at the annual
meeting in the manner you direct.
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The written document you complete to designate someone as your
proxy is usually called a proxy card or a voting instruction form depending on how the
ownership of your shares is reflected in our records. If you are the record holder of your shares
(that is, the shares are held in your name), a proxy card is the document used to designate your
proxy to vote your shares. If you hold your shares in street name (that is, your shares are held
in the name of a bank, broker, or other holder of record), a voting instruction form is the
document used to designate your proxy to vote your shares. In this proxy statement, the term
proxy card means the proxy card and voting instruction form unless otherwise indicated.
If you sign and return your proxy card but do not specify how you want your shares voted, the
persons named as proxy holders on the proxy card will vote in accordance with the recommendations
of our board of directors. Our board of directors does not know of any matters that may be brought
before the meeting other than those described in this proxy statement, nor does it foresee or have
reason to believe that the proxy holders will have to vote for a substitute or alternate board
nominee for director. In the event that any other matter should properly come before the meeting
or any nominee for director is not available for election, the proxy holders will vote as
recommended by the board of directors or, if no recommendation is given, in accordance with their
best judgment.
Who is entitled to vote at the meeting?
Only stockholders of record at the close of business on April 15, 2011, the record date for
the annual meeting, are entitled to receive notice of the meeting and to vote the shares of our
common stock that they held on that date at the meeting, and any postponements or adjournments of
the meeting. Each outstanding share of common stock entitles its holder to cast one vote on each
matter to be voted upon at the meeting.
Who may attend the meeting?
All stockholders as of the record date, or their duly appointed proxies, may attend the
meeting. Please note that if you hold shares in street name (that is, through a bank, broker, or
other holder of record), you will need to bring to the meeting a copy of a brokerage statement
reflecting your stock ownership as of the record date.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority of all of the
shares of our common stock outstanding on the record date will constitute a quorum, permitting the
conduct of business at the meeting. As of the record date, 30,188,167 shares of our common stock
were outstanding. Abstentions and broker non-votes (discussed below) will be included in the
calculation of the number of shares considered to be present at the meeting.
If less than a majority of the outstanding shares of common stock entitled to vote are
represented at the meeting, a majority of the shares present at the meeting may adjourn the meeting
to another date, time, or place, and notice need not be given of the new date, time, or place if
the new date, time, or place is announced at the meeting before an adjournment is taken.
How do I vote?
If you are the stockholder of record (that is, the shares are held in your name), you may vote
your proxy in one of three convenient ways:
Via the Internet
Go to www.proxyvote.com and follow the instructions. You will need the control number that
appears on your proxy card included with this proxy statement. This method of voting will be
available until 11:59 p.m., Eastern Time, on May 16, 2011.
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By telephone
On a touch-tone telephone, call toll-free 1-800-690-6903 and follow the instructions. You will
need the control number that appears on your proxy card included with this proxy statement. This
method of voting will be available until 11:59 p.m., Eastern Time, on May 16, 2011.
By mail
If you wish to vote by traditional proxy card, mark your selections on the proxy card, date
the card, and sign your name exactly as it appears on the card, then mail it in the postage-paid
envelope enclosed with the materials. You should mail the proxy card in plenty of time to allow
delivery to our transfer agent prior to the meeting.
If you are a stockholder of record and attend the meeting, you may deliver your completed
proxy card in person. If you are not the stockholder of record (that is, your shares are held in
the name of a bank, broker, or other holder of record) then you will receive instructions from the
holder of record that you must follow to ensure that your shares are voted as you wish (a voting
instruction form). You will not be able to vote those shares at the meeting unless you have
received, in advance, a proxy card from the record holder (that is, the bank, broker, or other
holder of record).
If you complete and properly sign and return a proxy card to us, vote by telephone, or
complete your proxy online, your shares will be voted as you direct.
Can I revoke my proxy and change my vote?
Yes. You may revoke your proxy and change your vote at any time before the annual meeting by
submitting to our corporate secretary at our corporate offices a notice of revocation or a duly
executed proxy bearing a later date (or voting via the Internet or by telephone). The powers of
the proxy holders will be suspended if you attend the meeting in person and so request, although
attendance at the meeting will not by itself revoke a previously granted proxy.
How can I receive my proxy materials electronically in the future?
Although we are delivering paper copies of the proxy materials this year, we would prefer to
send proxy materials to stockholders electronically going forward. Stockholders who sign up to
receive proxy materials electronically will receive an e-mail prior to next years annual meeting
with links to the proxy materials, which may give them faster delivery of the materials and will
help us save printing and mailing costs and conserve natural resources. Your election to receive
proxy materials by e-mail will remain in effect until you terminate your election. To receive proxy
materials electronically by e-mail in the future, follow the instructions described below.
If you would like to sign up to receive proxy materials electronically in the future, please
have your proxy card available and register using one of the following choices:
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Record Holders: |
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If you are the record holder of your shares, please go to
www.proxyvote.com and follow the instructions for requesting meeting materials. |
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Street Name Holders: |
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If you hold your shares in street name, you may either go to
www.proxyvote.com and follow the instructions to enroll for electronic delivery or
contact your brokerage firm, bank, or other similar entity that holds your shares. |
What does it mean if I receive more than one notice?
This means that your shares are registered differently and are held in more than one account.
To ensure that all shares are voted, please either vote each account over the Internet or by
telephone or sign and return by mail all proxy cards. We encourage you to register all of your
shares in the same name and address by contacting the
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Shareholder Services Department at our transfer agent, American Stock Transfer & Trust
Company, at (800) 937-5449. If you hold your shares through an account with a bank or broker, you
should contact your bank or broker and request consolidation of your accounts.
What vote is required to approve each item?
Item One Election of Directors. Assuming that a quorum is present, the three persons
receiving the largest number of for votes of our common stock present in person or by proxy at
the meeting and entitled to vote (a plurality) will be elected directors. Stockholders do not have
the right to cumulate their votes for directors.
Item Two Advisory Vote on Executive Officer Compensation. The advisory resolution to
approve the compensation of our executive officers will be approved if a majority of the shares of
our common stock present in person or represented by proxy at the meeting and entitled to vote on
this item vote for this item. Because this vote is advisory, it will not be binding upon our
board of directors. However, the compensation committee and our board of directors will take into
account the outcome of the vote when considering future executive compensation arrangements.
Item Three Advisory Vote on Frequency of Future Advisory Votes on Executive Officer
Compensation. Our stockholders will have four options to choose from when voting on the advisory
vote on the frequency of future advisory votes regarding executive officer compensation: every
year, every two years, every three years, or abstain. The option of one year, two years, or
three years that receives a majority of votes cast will be the frequency of future advisory votes
on the compensation of our executive officers. Because this vote is advisory, it will not be
binding upon our board of directors. However, the compensation committee and our board of
directors will take into account the outcome of the vote when considering the frequency of future
advisory votes on executive officer compensation.
Item Four Ratification of the Appointment of Independent Registered Public Accounting Firm.
The ratification of the appointment of Deloitte & Touche LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2011 will be approved if a majority of the
shares of our common stock present in person or represented by proxy at the meeting and entitled to
vote on this item vote for this item.
Other Items. For any other item that properly comes before the meeting, the affirmative vote
of a majority of the shares of our common stock present in person or represented by proxy at the
meeting and entitled to vote will be required for approval.
What are the effects of broker non-votes?
If you do not provide your broker or other nominee with instructions on how to vote your
street name shares, your broker or nominee will not be permitted to vote them on non-routine
matters (this is referred to as a broker non-vote). The election of directors (Item One), the
advisory vote on executive compensation (Item Two), and the advisory vote on the frequency of
future advisory votes on executive compensation (Item Three) are matters considered non-routine
under applicable rules. Shares subject to a broker non-vote will not be considered entitled to
vote with respect to Items One, Two, and Three, and will not affect the outcome on those items.
Please note that brokers may not vote your shares on these items in the absence of your specific
instructions as to how to vote. We encourage you to provide instructions to your broker regarding
the voting of your shares.
The ratification of the appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for 2011 (Item Four) is a matter considered routine under applicable rules.
A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes
are expected to exist in connection with Item Four.
How are abstentions treated?
Abstentions will have no effect on Item One. Abstentions will be treated as being present and
entitled to vote on Items Two, Three, and Four, and therefore, will have the effect of votes
against such Items.
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Who will pay for the solicitation of proxies?
We will pay the cost of soliciting proxies. In addition to the use of mail, our employees may
solicit proxies personally, by e-mail, facsimile, and by telephone. Our employees will receive no
compensation for soliciting proxies other than their regular salaries. We may request banks,
brokers, and other custodians, nominees, and fiduciaries to forward copies of the proxy materials
to the beneficial owners of our common stock and to request authority for the execution of proxies,
and we may reimburse such persons for their expenses incurred in connection with these activities.
Our principal executive offices are located at 4900 S. Pennsylvania Ave., Cudahy, Wisconsin
53110, and our telephone number is (414) 615-1500. A list of stockholders entitled to vote at the
annual meeting will be available at our offices for a period of ten days prior to the meeting and
at the meeting itself for examination by any stockholder.
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ITEM ONE ELECTION OF DIRECTORS
Directors and Nominees
Our board of directors is currently comprised of nine directors and is divided into three
classes, with each class of directors serving for a three-year term or until successors of that
class have been elected and qualified.
Our class I directors are Messrs. Christopher L. Doerr, Ivor J. Evans, and James D. Staley,
and their terms will expire at the annual meeting. Our board of directors has nominated Messrs.
Doerr, Evans, and Staley to stand for re-election as class I directors at the annual meeting. If
the nominees for class I director are re-elected, they will serve three-year terms expiring at the
annual meeting of stockholders in 2014, or until a successor has been duly elected and qualified.
Our class II directors are Ms. Judith A. Vijums and Messrs. William S. Urkiel and Chad M.
Utrup, and their terms will expire at the annual meeting of stockholders in 2012. Our class III
directors are Messrs. Mark A. DiBlasi, Scott D. Rued, and James L. Welch, and their terms will
expire at the annual meeting of stockholders in 2013.
Our board of directors has no reason to believe that any of its nominees will refuse or be
unable to accept election. However, if any nominee is unable to accept election or if any other
unforeseen contingencies should arise, our board of directors may designate a substitute nominee.
If our board of directors designates a substitute nominee, the persons named as proxies will vote
for the substitute nominee designated by our board of directors.
Our board of directors recommends a vote for the nominees for class I director.
The following provides information regarding each of our directors, including their age and
the year in which they first became a director of our company, their business experience for at
least the past five years, the names of other publicly held companies where they currently serve as
a director or served as a director during the past five years, and additional information about the
specific experience, qualifications, attributes, or skills that led to our board of directors
conclusion that such person should serve as a director for our company.
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Scott D. Rued |
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Chairman of the Board |
Mark A. DiBlasi |
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President, Chief Executive Officer, and Director |
Christopher L. Doerr |
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61 |
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Director |
Ivor J. Evans |
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68 |
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Director |
James D. Staley |
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61 |
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Director |
William S. Urkiel |
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65 |
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Director |
Chad M. Utrup |
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Director |
Judith A. Vijums |
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Director |
James L. Welch |
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Director |
Scott D. Rued has served as our Chairman of the Board since March 2010 and has been a director
of our company since March 2005. Mr. Rued also served as our Chairman of the Board from March 2005
to July 2008. Mr. Rued has been a Managing Partner of Thayer | Hidden Creek Partners, L.P.
(referred to as Thayer | Hidden Creek) since 2003. From 1989 to 2003, Mr. Rued held various
executive positions at Hidden Creek Industries.
Mr. Rued was nominated to the board of directors because of his experience with operations
management and his expertise in corporate strategy, development, and mergers and acquisitions.
Further, his demonstrated business acumen and knowledge of our companys industry allows him to
contribute a broad perspective to discussions about our future activities and our place in the
current competitive landscape.
Mark A. DiBlasi has served as our President and Chief Executive Officer since January 2006.
Mr. DiBlasi has served as a director of our company since July 2006. Prior to joining our company,
Mr. DiBlasi served as Vice President Southern Division for FedEx Ground, a division of FedEx
Corporation, from July 2002 to January 2006.
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Mr. DiBlasi was responsible for all operational matters of the $1.2 billion-revenue Southern
Division, which represented one-fourth of FedEx Grounds total operations. From February 1995 to
June 2002, Mr. DiBlasi served as the Managing Director of two different regions within the FedEx
Ground operation network. From August 1979 to January 1995, Mr. DiBlasi held various positions in
operations, sales, and terminal management at Roadway Express before culminating as the Chicago
Breakbulk Manager.
Mr. DiBlasi was nominated to the board of directors because of his role as our chief executive
officer, which enables him to provide the board with insight based on his day-to-day interactions
with our company, and because of his extensive operational expertise. As a management
representative on our board of directors, he provides an insiders perspective in board discussions
about the business and strategic direction of our company and has experience in all aspects of our
business.
Christopher L. Doerr has served as a director of our company since October 2010. Mr. Doerr
has served as Executive Chairman and Chief Executive Officer of Karls Rental, Inc., a global
manufacturer and supplier of portable event structures and related equipment, since 2009; Co-Chief
Executive Officer of Sterling Aviation Holdings, Inc., an aircraft management and charter company,
since 2004; and Co-Chief Executive Officer of Passage Partners, LLC, a private investment company,
since 2001. Prior to that, Mr. Doerr served as President and Co-Chief Executive Officer of Leeson
Electric Corporation from 1986 to 2001. Mr. Doerr currently serves as a director of Regal Beloit
Corporation (NYSE: RBC), a publicly traded manufacturer of commercial, industrial, and HVAC
electric motors, electric generators and controls, and mechanical motion control products.
Mr. Doerr was nominated to the board of directors because of his proven business acumen and
executive and operational experience, having served as the chief executive officer of several
companies, and because of his experience on other public company boards of directors.
Ivor J. Evans has served as a director of our company since March 2005 and served as our
Chairman of the Board from July 2008 to March 2010. Mr. Evans has served as Operating Partner of
Thayer | Hidden Creek since March 2005. Mr. Evans served as a director of both Union Pacific
Corporation (NYSE: UNP) and Union Pacific Railroad from 1999 until February 2005, and as Vice
Chairman of Union Pacific Railroad from January 2004 until his retirement in February 2005. From
1998 until his election as Vice Chairman, Mr. Evans served as the President and Chief Operating
Officer of Union Pacific Railroad. From 1990 to 1998, Mr. Evans served in various executive
positions at Emerson Electric Company. Mr. Evans also serves on the board of directors of Arvin
Meritor, Inc., Textron Inc., Cooper Industries, Ltd., and Spirit AeroSystems Holdings, Inc. (NYSE:
SPR).
Mr. Evans was nominated to the board of directors because of his operational experience, his
prior leadership role with Union Pacific Railroad, and his proven knowledge of corporate governance
evidenced by his service on multiple boards of directors.
James D. Staley has served as a director of our company since October 2010. Mr. Staley is
presently retired. From 2004 through December 2007, Mr. Staley served in various capacities for
YRC Worldwide, Inc. (NasdaqGS: YRCW) or its subsidiaries, one of the worlds largest transportation
services providers, including as President and Chief Executive Officer of Roadway Group and YRC
Regional Transportation. Prior to that, Mr. Staley served for over 30 years in various capacities
for Roadway Express, including President and Chief Operating Officer. Mr. Staley currently serves
as a director of Douglas Dynamics, Inc. (NYSE: PLOW), a designer, manufacturer and seller of snow
and ice control equipment for light trucks.
Mr. Staley was nominated to the board of directors because of his executive and operational
experience with a public company in the transportation industry, and his experience on other public
company boards of directors.
William S. Urkiel has served as a director of our company since May 2010. Since August 2006,
Mr. Urkiel has served as a director of Suntron Corporation. Mr. Urkiel has been a member of the
board of directors of Crown Holdings, Inc. since December 2004. From May 1999 until January 2005,
Mr. Urkiel served as Senior Vice President and Chief Financial Officer of IKON Office Solutions.
From February 1995 until April 1999, Mr. Urkiel served as the Corporate Controller and Chief
Financial Officer at AMP Incorporated. Prior to 1999, Mr. Urkiel held various financial management
positions at IBM Corporation.
7
Mr. Urkiel was nominated to the board of directors because of his financial and accounting
expertise evidenced by his position as chief financial officer of multiple companies, his knowledge
of corporate finance, accounting principles, and audit procedures, and his corporate governance
experience.
Chad M. Utrup has served as a director of our company since May 2010. Since January 2003, Mr.
Utrup has served as the Chief Financial Officer of Commercial Vehicle Group, Inc. (NASDAQ: CVGI)
and as an Executive Vice President since January 2009. Mr. Utrup served as the Vice President of
Finance at Trim Systems from 2000 to 2002. Prior to joining Commercial Vehicle Group, Inc., Mr.
Utrup served as a project management group member at Electronic Data Systems. While with
Electronic Data Systems, Mr. Utrups responsibilities included financial support and implementing
cost recovery and efficiency programs at various Delphi Automotive Systems locations.
Mr. Utrup was nominated to our board of directors because of his expertise with accounting and
audit matters for publicly traded companies, his deep understanding of financial reporting rules
and regulations, and his experience with investor relations and executive functions as the chief
financial officer of a public company.
Judith A. Vijums has served as a director of our company since March 2005. Ms. Vijums has
served as a Managing Director of Thayer | Hidden Creek since 2003. From 1993 to 2003, Ms. Vijums
held various leadership positions at Hidden Creek Industries and actively participated in the
management of several Hidden Creek Industries portfolio companies, including Commercial Vehicle
Group, Inc., Dura Automotive Systems, Inc., Tower Automotive, Inc. and Automotive Industries
Holdings, Inc.
Ms. Vijums was nominated to the board of directors because of her expertise in the management
and corporate development of multiple transportation companies, her knowledge of public and
financial accounting matters, and her extensive experience in mergers and acquisitions.
James L. Welch has served as a director of our company since May 2010. Since November 2008,
Mr. Welch has served as the President, Chief Executive Officer, and a director of Dynamex Inc., a
leading provider of transportation and logistics services. Mr. Welch was a consultant working in
Interim Chief Executive Officer roles for private equity companies from August 2007 until October
2008. Mr. Welch served as President and Chief Executive Officer of Yellow Transportation, Inc.
from June 2000 until his retirement in February 2007. During his 29 years at Yellow
Transportation, Inc., Mr. Welch held positions of increasing responsibility in operations, sales,
and general management. Mr. Welch is also a member of the board of directors of SkyWest, Inc.
(NASDAQ: SKYW) and Spirit AeroSystems Holdings, Inc. (NYSE: SPR).
Mr. Welch was nominated to our board of directors because of his extensive executive and
operational experience in the transportation industry, and his experience with corporate governance
matters as a director of other public companies.
There are no family relationships among any of our directors, director nominees, or executive
officers.
Independence of Directors
Our board of directors has determined, after considering all the relevant facts and
circumstances, that Messrs. Doerr, Staley, Urkiel, Utrup, and Welch are independent directors, as
independence is defined by the listing standards of the New York Stock Exchange (referred to as
the NYSE) and by the Securities and Exchange Commission (referred to as the SEC). Accordingly, a
majority of the members of our board of directors are independent. Mr. DiBlasi is not considered
an independent director as a result of his position as an executive officer of our company. Mr.
Evans, Mr. Rued, and Ms. Vijums are not considered independent directors as a result of their
relationships with Thayer | Hidden Creek, which is affiliated with investment funds that hold a
large amount of our stock.
8
Committees of the Board of Directors
Our board of directors has established three standing committees: an audit committee, a
compensation committee, and a nominating/corporate governance committee. Each of our committees is
comprised entirely of independent directors, as independence is defined by the listing standards
of the NYSE and by the SEC.
Audit Committee. The audit committee assists our board of directors with oversight of matters
relating to accounting, internal control, auditing, financial reporting, risk, and legal and
regulatory compliance. The committee oversees the audit and other services provided by our
independent registered public accounting firm and is directly responsible for the appointment,
independence, qualifications, compensation, and oversight of our independent registered public
accounting firm, which reports directly to the committee. The committee also oversees our internal
audit function. The Audit Committee Report for 2010 is included in this proxy statement under
Audit Committee Report.
The current members of our audit committee are Messrs. Utrup (chairman), Urkiel, and Welch,
each of whom is an independent director under NYSE listing standards as well as under SEC rules.
The board of directors has determined that Mr. Utrup qualifies as an audit committee financial
expert in accordance with applicable rules and regulations of the SEC. From its formation in May
2010 through December 31, 2010 the audit committee held six meetings.
Compensation Committee. The compensation committee approves the compensation of our chief
executive officer and our other executive officers, administers our executive benefit plans,
including the granting of restricted stock units and other awards under our incentive compensation
plan, and advises our board of directors on director compensation. Pursuant to its charter, the
committee may delegate any of its responsibilities to a subcommittee comprised of one or more
members of the committee. However, the committee has not delegated any such responsibilities.
Information concerning the processes and procedures for the consideration and determination of
executive officer compensation is included in the Compensation Discussion and Analysis section of
this proxy statement. The Compensation Committee Report for 2010 is included under Compensation
Committee Report in this proxy statement.
The current members of our compensation committee are Messrs. Urkiel (chairman), Doerr, and
Staley, each of whom is an independent director under NYSE listing standards as well as under SEC
rules. From its formation in May 2010 through December 31, 2010 the compensation committee held
one meeting.
Nominating/Corporate Governance Committee. The nominating/corporate governance committee
identifies individuals qualified to become members of our board of directors, recommends candidates
for election or reelection to our board of directors, oversees the evaluation of our board of
directors, and advises our board of directors regarding committee composition and structure and
other corporate governance matters.
The current members of our nominating/corporate governance committee are Messrs. Welch
(chairman), Urkiel, and Utrup, each of whom is an independent director under NYSE listing standards
as well as under SEC rules. From its formation in May 2010 through December 31, 2010 the
nominating/corporate governance committee did not meet but acted by unanimous written consent.
Identifying and Evaluating Director Candidates
The nominating/corporate governance committee identifies and evaluates nominees for our board
of directors, including nominees recommended by stockholders, based on numerous factors it
considers appropriate, some of which may include strength of character, mature judgment, career
specialization, relevant technical skills, diversity, and the extent to which the nominee would
fill a present need on our board of directors. The nominating/corporate governance committee
evaluates nominees for director in the same manner, regardless of whether the nominee is
recommended by a stockholder or other person or entity.
In making its selection of director candidates, our nominating/corporate governance committee
bears in mind that the foremost responsibility of a director is to represent the interests of our
stockholders as a whole.
9
Directors are expected to exemplify the highest standards of personal and professional
integrity and to constructively challenge management through their active participation and
questioning. In consideration of these expectations, the nominating/corporate governance committee
seeks directors with established strong professional reputations and expertise in areas relevant to
the strategy and operations of our company. The activities and associations of candidates are
reviewed for any legal impediment, conflict of interest, or other consideration that might prevent
service on our board of directors.
The charter of our nominating/corporate governance committee provides that the value of
diversity on our board of directors should be considered, and the nominating/corporate governance
committee includes diversity as one of its criteria for board composition. While we do not have a
formal policy outlining the diversity standards to be considered when evaluating director
candidates, our objective is to foster diversity of thought on our board of directors. To
accomplish that objective, the nominating/corporate governance committee considers ethnic and
gender diversity, as well as differences in perspective, professional experience, education, skill,
and other qualities in the context of the needs of our board of directors. The
nominating/corporate governance committee evaluates its effectiveness in achieving diversity on the
board of directors through its annual review of board member composition.
The nominating/corporate governance committee will consider persons recommended by
stockholders for inclusion as nominees for election to our board of directors if the information
required by our bylaws is submitted in writing in a timely manner addressed and delivered to our
companys secretary at 4900 S. Pennsylvania Ave., Cudahy, Wisconsin 53110. A stockholder who
intends to recommend a nominee to our board of directors must provide (a) all information relating
to the individual subject to the nomination that is required to be disclosed in opposition proxy
statements for election of directors filed by stockholders, at their own expense, in a contested
election, or is otherwise required under Regulation 14A under the Securities Exchange Act of 1934,
as amended (referred to as the Exchange Act), and (b) the individuals written consent to being
named in a proxy statement as a nominee and to serving as a director if elected. The stockholder
making the nomination must also provide the information required by our bylaws relating to such
stockholder, including information pertaining to ownership of our capital stock, and must make
certain representations relating to voting intent and delivery of proxies.
Availability of Corporate Governance Information
Our board of directors has adopted charters for the audit, compensation, and
nominating/corporate governance committees describing the authority and responsibilities delegated
to the committee by the board of directors. Our board of directors has also adopted corporate
governance guidelines, a whistle blower policy, a code of business conduct and ethics, and a code
of ethics for our chief executive officer and senior financial officers. We post on our website,
at www.rrts.com, the charters of our audit, compensation, and nominating/corporate governance
committees; our corporate governance guidelines; our whistle blower policy; our code of business
conduct and ethics; our code of ethics for our chief executive officer and senior financial
officers, and any amendments or waivers thereto. These documents are also available in print to
any stockholder requesting a copy in writing from our corporate secretary at 4900 S. Pennsylvania
Ave., Cudahy, Wisconsin 53110.
Communication with Directors
Interested parties may communicate with our board of directors or specific members of our
board of directors, including the members of our various board committees, by submitting a letter
addressed to the board of directors of Roadrunner Transportation Systems, Inc., c/o any specified
individual director or directors, at 4900 S. Pennsylvania Ave., Cudahy, Wisconsin 53110. We will
forward any such letters to the indicated directors.
Meeting Attendance Information for the Board of Directors and Committees
Our board of directors held five meetings during the year ended December 31, 2010. All of our
directors attended more than 75% of the aggregate of (i) total number of meetings of the board of
directors held during 2010, and (ii) the total number of meetings held by all committees of our
board of directors on which such person served during 2010. While we do not have a specific policy
requiring our directors to attend annual meetings of stockholders, we encourage our directors to
attend such meetings and, in furtherance of this, we schedule a meeting of the board of directors
on the same day as the annual meeting of stockholders.
10
Board Leadership Structure
We separate the roles of chief executive officer and chairman of the board in recognition of
the differences between the two roles. Our chief executive officer, with guidance from our
chairman of the board, develops the business strategy for our company and is responsible for the
day-to-day leadership and performance of our company. The chairman of the board helps determine
our companys strategic direction and provides leadership for our board of directors. The board believes
that separating these roles is in the best interests of our stockholders because it provides the
appropriate balance between strategy development, flow of information between management and the
board of directors, and oversight of management. By segregating the role of the chairman, we
reduce any duplication of effort between the chief executive officer and the chairman. We believe
this provides guidance for our board of directors, while also positioning our chief executive
officer as the leader of the company in the eyes of our customers, employees, and other
stakeholders. By having another director serve as chairman of the board, Mr. DiBlasi is better
able to focus his attention on running our company. Our board of directors believes that Mr. Rued
is the most appropriate individual to serve as chairman because of his experience in our industry,
his deep knowledge of our business and strategy, his experience with corporate governance matters,
and his demonstrated skill and commitment to performing effectively as chairman of our board of
directors.
Our board of directors has five independent members and four non-independent members. A
number of our independent board members are currently serving or have served as members of senior
management of other public companies, including companies within our industry, and have served as
directors of other public companies. We believe that the number of independent, experienced
directors that make up our board benefits our company and our stockholders.
We believe that we have a strong corporate governance structure that ensures independent
discussion and evaluation of, communication with, and access to senior management. All of our
board committees are composed solely of independent directors, which provides independent oversight
of management. Also, our corporate governance guidelines provide that our independent directors
will meet in regularly scheduled executive sessions, generally in connection with regularly
scheduled board meetings.
Role of the Board of Directors in Risk Management and Oversight
While our management is primarily responsible for managing risk, our board of directors and
each of its committees plays a role in overseeing our risk management practices. The role of our
board of directors in our companys risk oversight process includes receiving reports from members
of senior management on areas of material risk to our company, including operational, financial,
legal and regulatory, and strategic and reputational risks. Our board of directors receives these
reports from the appropriate executive within our organization to enable it to understand our risk
identification, risk management, and risk mitigation strategies. This direct communication from
management enables our board of directors to coordinate its risk oversight role, particularly with
respect to risk interrelationships within our organization. Our board of directors believes that
its leadership structure has the effect of enhancing its risk oversight function because of the
chairmans direct involvement in risk oversight matters and his strong efforts to increase open
communication regarding risk issues among directors and the committees of the board of directors.
Our board of directors also believes that Mr. Rueds knowledge of our companys business, industry,
and risks significantly contributes to our board of directors understanding and appreciation of
risk issues.
Our board of directors allocates responsibility for overseeing risk management for our company
among the full board and each of its committees. Specifically, the full board oversees significant
risks primarily relating to operations, strategy, and finance. In addition, each of our committees
considers risks within its area of responsibilities, as follows:
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|
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Our audit committee is primarily responsible for overseeing matters involving major
financial risk exposures and actions management is taking to monitor such risk exposures.
This includes risks relating to financial reporting and internal controls; litigation; tax
matters; liability insurance programs; and compliance with legal and regulatory
requirements and our code of ethics. In addition, the audit committee |
11
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|
|
reviews our quarterly and annual financial reports, including any disclosure in those
reports, of risk factors affecting our company and business. |
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|
Our compensation committee is primarily responsible for overseeing risks that may be
implicated by our executive compensation programs and risks relating to the administration
of those programs. In setting compensation, the compensation committee strives to create
incentives that encourage appropriate risk taking behavior consistent with our business
strategy. In making compensation determinations, the compensation committee considers the
overall mix of compensation for employees as well as the various risk control and
mitigation features of our compensation plans, including appropriate performance measures
and targets and incentive plan payout maximums. To assist in satisfying these oversight
responsibilities, the compensation committee has retained an outside compensation
consultant and meets regularly with management to understand the financial, human
resources, and stockholder implications of compensation decisions being made.
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Our nominating/corporate governance committee is primarily responsible for risks that
may be mitigated by the continued effective functioning of our board of directors and our
corporate governance practices. Under its charter, the nominating/corporate governance
committee is responsible for, among other things, developing and recommending to our board
of directors a set of effective corporate governance guidelines designed to assure
compliance with applicable standards. |
Through the activities of our audit, compensation, and nominating/corporate governance
committees, as well as the full board of directors interactions with management concerning our
business and the material risks that may impact our company, our board of directors is able to
monitor our risk management process and offer critical insights to our management.
Related Party Transaction Policies and Procedures
It is the responsibility of our full board of directors, with the assistance of our audit
committee, to review and approve related party transactions. It is our managements responsibility
to bring such related party transactions to the attention of our board of directors. From time to
time our nominating/corporate governance committee, in accordance with its charter, will also
review potential conflict of interest transactions involving members of our board of directors and
our executive officers.
DIRECTOR COMPENSATION
We use a combination of cash and stock-based incentive compensation to attract and retain
qualified candidates to serve on our board of directors. In setting director compensation, we
consider the amount of time that directors spend fulfilling their duties as a director, including
committee assignments.
We seek to provide director compensation packages that are customary for boards of directors
for similarly situated companies. We pay each independent director an annual retainer fee of
$30,000, payable quarterly. In addition, the chairman of the audit committee and the chairman of
the compensation committee each receives an annual cash retainer of $5,000, and the chairman of the
nominating/corporate governance committee receives an annual cash retainer of $3,000.
No equity-based awards were granted to directors in 2010. In March 2011, the compensation
committee of our board of directors approved grants of restricted stock units (RSUs) to our
independent directors. The RSU grants are part of our previously disclosed plan to make
equity-based awards to our independent directors in order to adjust director compensation levels to
those customary for boards of directors for comparable public companies. In March 2011, we granted
$30,000 of RSUs to each of our independent directors. Based upon the 20-day trailing average
closing sales price for our common stock as of the grant date, each of our independent directors
received 2,149 RSUs.
12
Each RSU is equal in value to one share of our common stock, and the RSUs vest 25% each year
over four years. Each director receiving RSU awards generally must remain a member of our board of
directors through the end of the relevant vesting period in order to receive any amount of the RSUs
covered by that award, except that recipients may be entitled to accelerated delivery of a portion
of unvested RSUs in the case of the recipients death or disability, or upon a change in control.
We also reimburse each director for travel and related expenses incurred in connection with
attendance at board and committee meetings.
Our non-independent directors are not compensated for service as directors. Mr. DiBlasis
compensation as our chief executive officer is described below under Executive Compensation.
Director Summary Compensation Table for Fiscal 2010
The following table sets forth the compensation earned by our independent directors in respect
of their services as a director or committee chair during fiscal year 2010.
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|
|
|
|
Name |
|
Fees Earned or Paid in Cash(1) |
Christopher L. Doerr(2) |
|
$ |
7,500 |
|
James D. Staley(2) |
|
$ |
7,500 |
|
William S. Urkiel(3) |
|
$ |
21,875 |
|
Chad M. Utrup(4) |
|
$ |
21,875 |
|
James L. Welch(5) |
|
$ |
20,625 |
|
|
|
|
(1) |
|
Amounts represent annual retainer fees payable for service as a director or committee chair as
described in the narrative accompanying this table. None of our directors received any
equity-based awards or any other compensation in 2010 for service as directors. |
|
(2) |
|
Amount represents an annual retainer fee of $30,000 for board service prorated from the time
Messrs. Doerr and Staley joined our board of directors on October 1, 2010 through December 31,
2010. |
|
(3) |
|
Amount represents an annual retainer fee of $30,000 for board service and an annual retainer
fee of $5,000 for service as chairman of our compensation committee, prorated for from the time Mr.
Urkiel joined our board of directors on May 15, 2010 through December 31, 2010. |
|
(4) |
|
Amount represents an annual retainer fee of $30,000 for board service and an annual retainer
fee of $5,000 for service as chairman of our audit committee, prorated for from the time Mr. Utrup
joined our board of directors on May 15, 2010 through December 31, 2010. |
|
(5) |
|
Amount represents an annual retainer fee of $30,000 for board service and an annual retainer
fee of $3,000 for service as chairman of our nominating/corporate governance committee, prorated
for from the time Mr. Welch joined our board of directors on May 15, 2010 through December 31,
2010. |
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of each class of common stock beneficially owned as of
April 15, 2011, by (a) each of our directors and executive officers; (b) all of our directors and
executive officers as a group; and (c) each person known by us to own beneficially more than five
percent of our outstanding common stock.
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|
|
|
Shares Beneficially Owned |
Name of Beneficial Owner(1) |
|
Number |
|
Percent(2) |
Directors and Executive officers: |
|
|
|
|
|
|
|
|
Mark A. DiBlasi(3) |
|
|
436,743 |
|
|
|
1.4 |
% |
Peter R. Armbruster(4) |
|
|
238,379 |
|
|
|
* |
|
Brian J. van Helden(5) |
|
|
189,702 |
|
|
|
* |
|
Scott L. Dobak(6) |
|
|
189,702 |
|
|
|
* |
|
Christopher L. Doerr(7) |
|
|
3,000 |
|
|
|
* |
|
Ivor J. Evans(8) |
|
|
35,835 |
|
|
|
* |
|
Scott D. Rued(9) |
|
|
16,657,820 |
|
|
|
51.2 |
% |
James D. Staley(10) |
|
|
500 |
|
|
|
|
|
William S. Urkiel(11) |
|
|
|
|
|
|
|
|
Chad M. Utrup(12) |
|
|
1,000 |
|
|
|
|
|
Judith A. Vijums |
|
|
|
|
|
|
|
|
James L. Welch(13) |
|
|
|
|
|
|
|
|
All directors and executive officers as a group (12 persons) |
|
|
17,752,681 |
|
|
|
52.8 |
% |
|
|
|
|
|
|
|
|
|
5% Stockholders: |
|
|
|
|
|
|
|
|
Thayer | Hidden Creek Entities(14) |
|
|
16,581,985 |
|
|
|
51.0 |
% |
Eos Funds(15) |
|
|
3,913,289 |
|
|
|
12.7 |
% |
Newland Capital Management, LLC(16) |
|
|
1,705,216 |
|
|
|
5.6 |
% |
|
|
|
* |
|
Represents less than 1% of our outstanding common stock. |
|
(1) |
|
Except as otherwise indicated, the address of each person listed on the table is 4900 S.
Pennsylvania Ave., Cudahy, Wisconsin 53110. |
|
(2) |
|
We have determined beneficial ownership in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a person and the percentage ownership of
that person, unless otherwise indicated, we have included the shares of common stock subject
to options and warrants held by that person that are currently exercisable or will become
exercisable within 60 days after April 15, 2011, but we have not included those shares for
purposes of computing percentage ownership of any other person. We have assumed unless
otherwise indicated that the persons and entities named in the table have sole voting and
investment power with respect to all shares beneficially owned, subject to community property
laws where applicable. Beneficial ownership is based on 30,188,167 shares of our common stock
outstanding as of April 15, 2011. |
|
(3) |
|
Includes 3,732 shares of common stock and 433,011 shares of common stock issuable upon
exercise of vested stock options. Does not include 15,759 shares issuable upon delivery of
shares underlying unvested RSUs. |
|
(4) |
|
Includes 48,527 shares of common stock and 189,852 shares of common stock issuable upon
exercise of vested stock options. Does not include 6,447 shares issuable upon delivery of
shares underlying unvested RSUs. |
|
(5) |
|
Includes 189,702 shares of common stock issuable upon exercise of vested stock options. Does
not include 6,447 shares issuable upon delivery of shares underlying unvested RSUs. |
|
(6) |
|
Includes 189,702 shares of common stock issuable upon exercise of vested stock options. Does
not include 7,163 shares issuable upon delivery of shares underlying unvested RSUs. |
|
(7) |
|
Does not include 2,149 shares of common stock issuable upon delivery of shares underlying
unvested RSUs. |
|
(8) |
|
Represents shares of common stock issuable upon the exercise of outstanding warrants. |
|
(9) |
|
Amount includes (i) 40,000 shares of common stock held by Mr. Rued; (ii) 35,835 shares of common stock
issuable upon exercise of outstanding warrants held by Mr. Rued;
and (iii) 14,246,625 shares of common stock and warrants to
purchase 2,335,360 shares of common stock held
by the Thayer | Hidden Creek Entities, as described in note 14 below. Mr. Rued is a Managing
Partner of Thayer | Hidden Creek Partners, L.P., which is an affiliate of the Thayer | Hidden
Creek Entities. Accordingly, Mr. Rued may be deemed to |
14
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|
beneficially own the shares owned by the Thayer | Hidden Creek Entities. Mr. Rued disclaims
beneficial ownership of any such shares in which he does not have a pecuniary interest. The
address of Mr. Rued is c/o Thayer | Hidden Creek is 1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, D.C. 20004. |
|
(10) |
|
Does not include 2,149 shares issuable upon delivery of shares underlying unvested RSUs. |
|
(11) |
|
Does not include 2,149 shares issuable upon delivery of shares underlying unvested RSUs. |
|
(12) |
|
Does not include 2,149 shares issuable upon delivery of shares underlying unvested RSUs. |
|
(13) |
|
Does not include 2,149 shares issuable upon delivery of shares underlying unvested RSUs. |
|
(14) |
|
Represents shares held by Thayer Equity Investors V, L.P.; TC Roadrunner-Dawes Holdings,
L.L.C.; TC Sargent Holdings, L.L.C.; Thayer | Hidden Creek Partners II, L.P.; and THC
Co-investors II, L.P., all of which are affiliates and referred to collectively as the Thayer
| Hidden Creek Entities. The amount presented includes 2,335,360 shares issuable upon
exercise of outstanding warrants. Mr. Rued exercises shared voting and dispositive power over
all shares held by the Thayer | Hidden Creek Entities. The address of each of the Thayer |
Hidden Creek Entities is 1455 Pennsylvania Avenue, N.W., Suite 350, Washington, D.C. 20004. |
|
(15) |
|
Represents shares held by Eos Capital Partners III, L.P. and Eos Partners, L.P., which are
affiliates and referred to as the Eos Funds. The amount presented includes 559,928 shares
issuable upon exercise of outstanding warrants. The address of each of the Eos Funds is 320
Park Avenue, New York, NY 10022. |
|
(16) |
|
Represents shares held by Newland Capital Management, LLC, which shares voting and
dispositive power over such shares with Newland Master Fund, Ltd., Ken Brodkowitz, and Michael
Vermut. The address of Newland Capital Management, LLC, Ken Brodkowitz, and Michael Vermut is
c/o Newland Capital Management, LLC, 350 Madison Avenue, 11th Floor, New York, NY
10017. The address of Newland Master Fund, Ltd. is c/o Goldman Sachs (CAYMAN) Trust, Limited,
P.O. Box 896, Gardenia Court, Suite 3307, 45 Market Street, Camana Bay, Cayman Islands KYI
1103. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, officers, and persons who own more
than 10% of a registered class of our securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Directors, officers, 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 our review of the copies of such forms that we received during the year
ended December 31, 2010, and written representations that no other reports were required, we
believe that each person who at any time during such year was a director, officer, or beneficial
owner of more than 10% of our common stock complied with all Section 16(a) filing requirements
during 2010.
15
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section of the proxy statement contains a discussion and analysis of our compensation
policies and decisions regarding (1) the 2010 compensation for our executive officers named in the
compensation tables in this proxy statement, which reflects our executive officer compensation
policies established prior to our becoming a public company in May 2010, and (2) our compensation
philosophy, practices, and policies for executive officer compensation as a public company in 2011
and beyond.
Summary
Our 2010 executive officer compensation program was comprised primarily of two components:
base salary and performance-based cash incentive awards. In prior years, our executive
compensation program included an equity component comprised of stock options granted upon hire,
which our board of directors believed would provide longer-term retention value.
As discussed in more detail below, for 2010:
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our executive officers did not receive any cash incentive awards under our 2010 cash
incentive plan because we did not meet our financial targets; |
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we did not grant any equity-based awards to our executive officers; |
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no executive officer participated in a pension or supplemental retirement plan; |
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we did not provide any perquisites or other benefits exclusively to our executives,
although executives participated in our employee benefits plans on the same basis as
all of our full-time employees; |
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we did not maintain employment contracts with any of our executive officers; |
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we provided the severance protections described under Payments Upon Termination of
Employment or Change in Control below; and |
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we granted a discretionary bonus to each executive officer equal to 10% of his 2010
base salary. |
As is typical for privately held companies, prior to our May 2010 initial public offering our
board of directors determined and administered the compensation of our chief executive officer.
Our chief executive officer, subject to the approval of our board of directors, determined the
compensation of our other executive officers. In connection with our initial public offering, our
board of directors established a compensation committee comprised entirely of independent directors
that is primarily responsible for our executive compensation plans and structures.
Beginning in late 2010, our compensation committee, with the assistance of an independent
compensation consultant, compared our executive pay levels against a peer group of
transportation/logistics companies and reviewed executive compensation market practices and trends
in general. As a result, in March 2011 our compensation committee made significant changes to the
compensation packages provided to our executive officers.
2011 Compensation Changes
In November 2010, our compensation committee engaged Compensia, Inc. (referred to as
Compensia) as its independent compensation consultant. Compensia developed a peer group for
competitive analysis purposes, and also provided comparative analyses relative to a composite of
general industry survey data. As discussed below, our compensation committee determined to take
the following actions with respect to our 2011 compensation structure:
16
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use both our peer group and composite compensation survey data to better understand
the competitive market for executive compensation; |
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increase the base salaries of our executive officers in light of market competition
and to reflect their responsibilities as executives of a public company of our size; |
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remove the individual performance component from the annual incentive bonus program
in order to emphasize more objective pay-for-performance criteria; |
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continue to strengthen pay-for-performance through the use of company-wide revenue
and earnings before interest, tax, depreciation and amortization expense (referred to
as EBITDA), to reflect our unified corporate structure; |
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increase the annual incentive bonus target levels for each of our executive officers
to levels generally below those of our peer companies taking into account the
possibility of the receipt by our executives of performance-based incentive bonuses;
and |
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implement an equity component in our compensation program through the grant of
time-vest restricted stock units (referred to as RSUs) in order to focus on retention
while reducing cash expenses. |
Role of the Compensation Committee
Our compensation committee, which is discussed in greater detail under Committees of the
Board of Directors above, is responsible for, among other things,
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the review and approval of our compensation philosophy; |
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the review of all executive compensation plans and structures, including that of our
executive officers and other members of management; |
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the approval (or recommendation to our board of directors) of individual
compensation for our executive officers and other members of management, including our
chief executive officer; |
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the approval of annual and long-term incentive performance metrics, as well as
payouts thereunder; and |
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the review of other executive benefit plans, including perquisites. |
While our chief executive officer and other executive officers may attend meetings of the
compensation committee from time to time, the ultimate decisions regarding executive officer
compensation are made solely by the members of our compensation committee. These decisions are
based not only on our compensation committees deliberations, but also from input requested from
outside advisors, including our compensation committees independent compensation consultant, with
respect to, among other things, market data analyses. In addition, Mr. Rued, the chairman of our
board of directors, has played and continues to play an integral role in providing recommendations
and input to our compensation committee regarding executive compensation, and in assisting the
compensation committee in fulfilling its responsibilities.
Role of Compensation Consultant
In November 2010, following discussions with Mr. Rued and Mr. Urkiel, chairman of our
compensation committee, our compensation committee engaged Compensia to provide the committee with
an executive compensation assessment for 2011. Compensia has not been retained to perform any
consulting or advisory services for our management team. The chairman of our compensation
committee, in consultation with other committee members, defines the scope of Compensias
engagement and related responsibilities. These responsibilities may
17
include, among other things, advising on issues of executive compensation and equity
compensation structure and assisting in the preparation of compensation disclosure for inclusion in
our SEC filings.
Compensia provided analyses and recommendations that informed the committees decisions in
2011, but it did not decide or approve any compensation decisions. For 2011, Compensia developed
criteria used to identify peer companies for executive compensation and performance comparisons,
analyzed peer proxy data, evaluated long-term incentive vehicles, conducted a high-level assessment
of annual and long-term performance measures, and developed and recommended changes to remuneration
levels and design. Compensia also provided updates on market trends and the regulatory environment
as it related to executive compensation.
Role of Management Role in Setting Compensation
Our vice president of human resources and members of our finance department work with our
chief executive officer to recommend changes to our compensation plans and programs, to recommend
financial and other targets to be achieved under those programs, to prepare analyses of financial
data and other briefing materials to assist the compensation committee in making its decisions and,
ultimately, to implement the decisions of our compensation committee.
Our chief executive officer is actively engaged in setting compensation for other executives
through a variety of means, including recommending for committee approval the financial goals and
the annual variable pay amounts for his executive team. He works closely with other members of
executive management in analyzing relevant market data to determine base salary and annual target
bonus opportunities for senior management and to develop targets for our short- and long-term
incentive plans. Our chief executive officer is subject to the same financial performance goals as
our other executive officers, all of which are ultimately determined and approved by our
compensation committee.
Compensation Philosophy and Objectives
Our compensation philosophy is to pay base salaries to executives at levels that enable us to
attract, motivate, and retain highly qualified executives. While we seek to provide executive
compensation packages that are competitive with comparable public companies and reward the
achievement of short-term and long-term performance goals, our base salaries are generally set at
levels below those of our peer companies taking into account the possibility of the receipt by our
executives of performance-based incentive bonuses
Incentive bonuses are designed to reward individuals for performance based on certain aspects
of our companys financial results as well as the achievement of personal and corporate objectives
that contribute to our long-term success in building stockholder value. Grants of equity-based
awards are intended to result in limited rewards if the price of our common stock does not
appreciate, but may provide substantial rewards to executives as our stockholders in general
benefit from stock price appreciation. Grants of equity-based awards also are intended to align
compensation with the price performance of our common stock. Total compensation levels reflect
corporate positions, responsibilities, and achievement of goals. As a result of our
performance-based philosophy to compensation, compensation levels may vary significantly from year
to year and among our various executive officers. In general, we expect the compensation level of
our chief executive officer will be higher than that of our other executive officers assuming
relatively equal achievement of performance targets.
2010 Compensation
Base Salary. Base salaries for our employees as a whole were frozen in 2009 as part of our
cost-saving initiatives implemented during the economic downturn. Effective February 1, 2010, base
salaries for Messrs. DiBlasi, Dobak, Armbruster, and van Helden were increased to the amounts
reflected in the table below from $314,000, $281,750, $200,735, and $195,250, respectively. In
setting 2010 base salaries, our board of directors considered a variety of factors, including the
nature and responsibility of each executives position; the impact, contribution, length of
service, expertise, and experience of the executive; competitive market information regarding
salaries to the extent available and relevant; the importance of retaining the individual along
with the
18
competitiveness of the market for the individual executives talent and services; and
recommendations of our chief executive officer (except in the case of his own compensation).
The 2010 base salaries for our executive officers were as follows:
|
|
|
|
|
Name |
|
2010 Base Salary |
Mark A. DiBlasi |
|
$ |
345,400 |
|
Scott L. Dobak |
|
$ |
309,925 |
|
Peter R. Armbruster |
|
$ |
220,800 |
|
Brian J. van Helden |
|
$ |
214,775 |
|
Incentive Compensation. We did not pay incentive compensation pursuant our 2010 cash bonus
plan. Our 2010 cash bonus plan was intended to align the interests of senior management with
stockholders by tying a portion of officer compensation to company and, for executive officers
other than our chief executive officer, individual performance goals. Prior to our initial public
offering and the integration of our TMS business segment, our LTL business segment represented a
significant portion of our companys EBITDA, which was the financial performance metric used in our
cash incentive plan. As a result, the financial target component of our 2010 cash incentive plan
was comprised solely of the EBITDA for our LTL segment.
The maximum incentive compensation payable to our chief executive officer under our 2010 cash
incentive plan was 100% of his base salary. The maximum incentive compensation payable to our
other executive officers under our 2010 cash incentive plan was 75% of their base salary. Our 2010
cash incentive plan for our other executive officers included the EBITDA financial performance
targets and an additional individual performance component. Ninety percent of the maximum
incentive compensation payable to our other executive officers (i.e., 67% of base salary) was based
on achieving the targeted EBITDA levels, and the remaining 10% (i.e., 7.5% of base salary) was
based on achieving individual performance objectives. Bonuses under our 2010 cash incentive plan
were payable only if our LTL segment achieved 100% of the 2010 EBITDA target. Our minimum 2010
EBITDA target was not reached and therefore, no incentive compensation was paid pursuant to the
2010 cash incentive plan.
Discretionary Bonus. In the first quarter of 2011, the compensation committee of our board of
directors approved a discretionary cash bonus payable to our executive officers equal to
approximately 10% of each officers 2010 base salary. In making its determination, the
compensation committee:
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reviewed the 2010 EBITDA target with management and determined that the target
had been set too high in light of the difficult economic environment; |
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recognized that despite being below the target, our actual 2010 EBITDA was the
highest in our companys history; |
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considered the lack of bonus paid to management in recent years; |
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reviewed the effort and leadership of our executive officers in integrating the
merger of our TMS business segment and transitioning our company from a privately
held company to a publicly traded company; and |
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weighed the importance of our executive officers to our continued overall
success. |
The discretionary bonuses awarded in recognition of individual and company 2010 performance
are as follows:
|
|
|
|
|
Name |
|
Discretionary Bonus |
Mark A. DiBlasi |
|
$ |
34,540 |
|
Scott L. Dobak |
|
$ |
30,992 |
|
Peter R. Armbruster |
|
$ |
22,080 |
|
Brian J. van Helden |
|
$ |
21,477 |
|
19
Equity. No equity awards were granted in 2010.
2011 Compensation
As discussed above, in March 2011 the compensation committee of our board of directors
redesigned our executive officer compensation program in order to improve our ability to attract,
motivate, and retain executives and key employees and reward the creation of stockholder value.
Like most companies, we use a combination of fixed and variable compensation programs to
reward and incentivize strong performance, as well as to align the interests of our executives with
our stockholders. Our compensation committee believes that the overall compensation of our
executive officers should be competitive with comparable public companies. We believe that this
will enable us to remain competitive in attracting and retaining qualified executive officers while
avoiding paying amounts in excess of what we believe is necessary to attract and retain such
executive officers. However, our compensation committees decisions on target compensation for
specific individuals are also influenced by a variety of additional factors, including company and
individual performance. Our current executive compensation program is described in detail below.
Compensation Structure
Although the final structure may vary from year to year and officer to officer, our
compensation committee utilizes three main components for executive officer compensation:
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Base Salary fixed pay that takes into account an individuals duties and
responsibilities, experience, expertise, and individual potential and performance; |
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|
Annual Incentive Bonus variable cash compensation that takes into account our
company-wide financial performance during a particular year; and |
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Long-Term Incentives stock-based awards, including time-vest RSUs that encourage
retention and align executive officer and stockholder interests. |
We do not provide any perquisites or other benefits exclusively to our executives. The
executives participate in our employee benefits plans on the same basis as all of our full-time
employees.
Pay Mix
In determining the allocation among base salary, annual incentive bonus, and long-term equity
incentive compensation, our compensation committee considers the following factors: our short- and
long-term business objectives, competitive trends within our industry, and the importance of
creating a performance-based environment that ties a significant portion of each executive
officers compensation to the achievement of performance targets and corporate objectives. When
considering a proposed compensation package for an executive officer, our compensation committee
considers the compensation package as a whole, including each element of total compensation. For
example, before determining officer compensation for 2011, our compensation committee reviewed, for
each executive, each element of compensation paid in 2010, including base salary and incentive
bonus, as well as information regarding equity awards made in prior periods.
For 2011, compensation for our four executive officers has been structured so that
approximately 60% of compensation is performance-based and dependent on our financial results or
consists of equity awards, with the remaining 40% comprising base salary. This allocation is
consistent with our compensation committees overall pay-for-performance philosophy with respect to
our executive officers. Within the portion of compensation representing equity awards and
performance-based pay, approximately 70% is tied to achievement of 2011 financial goals and
approximately 30% is comprised of equity awards that are delivered over a four-year period. Our
compensation committee believes that this mix of short- and long-term incentives provides
sufficient rewards in the short-term to motivate near-term performance, while at the same time
providing significant incentives to keep our executives focused on longer-term goals that drive
stockholder value. This also mitigates the risk of executive
20
officers focusing solely on short-term or solely on long-term goals, and offers retention
value as the compensation is received over an extended term.
While the annual incentive program for our executive officers is based on our company-wide
performance, our compensation programs are also designed to provide payments to managers in our
three business segments based on a combination of consolidated company, segment, and/or terminal
results. This type of program design motivates business segments to work together to achieve
greater returns for our stockholders. In any one year, because we are comprised of different
business segments, managers in high-performing business units may receive significantly more
compensation than managers in business units that do not perform well.
Compensation Levels
Overall compensation levels for executive officers are determined based on one or more of the
following factors: the individuals duties and responsibilities within our company; the
individuals experience and expertise; compensation levels for similar positions in our industry;
performance of the individual and our company as a whole; and the levels of compensation necessary
to recruit new executive officers. For 2011, our compensation committee reviewed the compensation
of our executive officers and compared it with that of a peer group of companies and broader,
composite market survey data provided by Compensia. This process started with the selection of an
appropriate group of peer companies for comparison purposes. We use peer group information as a
point of reference, but do not benchmark or target our compensation levels against our peer group.
For its executive compensation assessment, Compensia developed a peer group designed to
reflect our size, projected growth, and industry, as well as the relevant market for executive
talent. Under this approach, the peer group companies were determined using three screening
levels: (1) U.S. publicly traded companies; (2) inclusion in the transportation industry; and (3)
annual revenue between approximately $150 million and $1.5 billion (which resulted in median
revenues of approximately $490 million). Our compensation committee believes that the use of this
methodology produced an appropriate peer group for comparison, as well as a peer group that is
large and diverse enough so that the addition or elimination of a limited number of companies would
not materially alter the overall analysis. Compensia ultimately selected the following 12 peer
companies: Air Transport Services Group, Dynamex, Echo Global Logistics, Express-1 Expedited
Solutions, Forward Air, Marten Transport, Pacer International, Quality Distribution, RailAmerica,
Saia, Universal Truckload Services, and USA Truck. Such peer group is used for purposes of
comparing compensation levels and programs only, and not for any other purposes. Such peer group
does not represent an established peer group that our management uses for financial or other
measurement purposes.
Compensia also provided our compensation committee with broader market compensation data for
our four executive officers. The composite survey data consisted of a blend between Mercers
Global Premium Executive Remuneration Suite, and Towers Watson (formerly Watson Wyatts) Survey
Report on Top Management, adjusted using a median revenue scope of approximately $1 billion or
less.
The peer groups proxy statements provide detailed pay data for their top five officers.
Survey data provides compensation information from a broader group of companies of similar size to
ours across a variety of industries (surveys covering multiple industries were used because there
is no published transportation/logistics industry subset). Our compensation committee used this
data as a framework for making compensation decisions for each executive officers position.
Individual Executive Officer Compensation
Base Salary. Base salaries for our executive officers are set with regard to the
level of the position within our company, the individuals performance in recent periods,
competitive salary levels for comparable positions at other companies, and the executives
experience. Our compensation committee also considers factors such as the overall performance of
our company, new roles and responsibilities assumed by the executive, the performance of the
executive officers area of responsibility, the executive officers impact on strategic goals, or
the length of service with our company. However, there is no specific weighting applied to any one
factor in setting the level of base salary, and the process ultimately relies on the subjective
exercise of our compensation committees judgment.
21
In accordance with our pay-for-performance philosophy, our base compensation levels for fiscal
2011 are generally lower than those of our peer companies.
Base salary deliberations for the 2011 fiscal year were conducted from November 2010 to March
2011. Mr. DiBlasi, our chief executive officer, met with Mr. Rued, our chairman of the board of
directors, regarding the compensation for each of our executive officers (other than himself).
Following these consultations, Mr. Rued met with our compensation committee to present
recommendations for each of our executive officers. In considering these recommendations, the
compensation committee reviewed the composite market survey data provided by Compensia, peer group
data and individual performance evaluations for each executive officer. All of our executive
officers received base salary increases in 2011 due primarily to their new and greater scope of
responsibilities associated with the transformative addition of our TMS business and their duties
in a publicly traded company. After its review and determinations, our compensation committee
approved the base salaries recommended by Mr. DiBlasi for our other executive officers.
In determining the base salary for our chief executive officer, our compensation committee
similarly reviewed and considered the chief executive officer compensation survey data, peer group
data, and performance evaluations for Mr. DiBlasi from Mr. Rued, Mr. DiBlasis direct reports, and
members of our board of directors. The compensation committee ultimately approved increasing the
base salary for Mr. DiBlasi to $385,000. The increases in base pay for our executive officers
became effective March 1, 2011.
A summary of base salary increases made for fiscal year 2011 is outlined below for each of our
executive officers:
|
|
|
|
|
|
|
|
|
|
|
Base Salary |
Name |
|
2010 |
|
2011 |
Mark A. DiBlasi |
|
$ |
345,400 |
|
|
$ |
385,000 |
|
Scott L. Dobak |
|
$ |
309,925 |
|
|
$ |
330,000 |
|
Peter R. Armbruster |
|
$ |
220,800 |
|
|
$ |
240,000 |
|
Brian J. van Helden |
|
$ |
214,775 |
|
|
$ |
240,000 |
|
Annual Incentive Bonus. In addition to base salary, our compensation committee
believes that annual performance-based cash bonuses play an important role in providing incentives
to our executive officers to achieve near-term performance goals. For 2011, to reflect our unified
corporate structure, our compensation committee determined to reward our executive officers for
company-wide performance by tying bonus awards solely to our company-wide EBITDA performance. The
EBITDA financial measurement is familiar to our management team because EBITDA is one of the
criteria used by management to evaluate the financial performance of our business.
When determining the EBITDA target for our annual cash bonus program, management makes the
initial recommendation for the financial target based upon our companys annual board-approved
budget, as well as the bonus opportunity for each officer, and these recommendations are reviewed
and discussed by the committee. The major factors used in setting one or more targets for a
particular year are the results for the most recently-completed year and the budget for the current
year; other factors taken into account may include general economic and market conditions. Our
compensation committee seeks to set the final corporate performance goal during our first quarter,
typically at a level our compensation committee believes is challenging, but reasonable, for
management to achieve.
At the end of each year, our compensation committee determines the level of achievement for
the specified financial goal (after making any appropriate adjustments to such goal for the effects
of corporate and economic factors that were not anticipated in establishing the performance
measure) and awards credit for the achievement of the goal as a percentage of the target bonus.
Final determinations as to bonus levels are then based on that percentage. If earned, bonuses are
paid to the executives in the subsequent fiscal year.
Each executive officer has a target annual incentive bonus opportunity, expressed as a
percentage of base salary, with the ability to earn above or below that target based on our
companys actual performance. Our compensation committee increased the 2011 maximum bonus award
for Mr. DiBlasi from 100% to 135% taking into account that his base salary is generally below those
of our peer companies. The maximum percentages for our other executive officers were increased
from 90% to 95%. The individual performance component for our other
22
executive officers was discontinued. The fiscal 2011 EBITDA target was recommended by
management and approved by our compensation committee in March 2011. The 2011 target was based on
and is consistent with the annual budget previously approved by our board of directors. Actual
incentive bonus payouts for 2011 performance will be determined by our compensation committee and
paid in early 2012, and may be above or below target bonus levels.
The table below lists the 2011 base salaries and bonus levels for each of our named executive
officers.
|
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|
2011 |
|
Annual Incentive Bonus Levels as % of Base Salary |
|
|
Base |
|
80% |
|
90% |
|
100% |
|
150% |
Name |
|
Salary |
|
of Target(1) |
|
of Target |
|
of Target |
|
of Target(2) |
Mark A. DiBlasi |
|
$ |
385,000 |
|
|
|
20 |
% |
|
|
40 |
% |
|
|
60 |
% |
|
|
135 |
% |
Scott L. Dobak |
|
$ |
330,000 |
|
|
|
15 |
% |
|
|
30 |
% |
|
|
45 |
% |
|
|
95 |
% |
Peter R. Armbruster |
|
$ |
240,000 |
|
|
|
15 |
% |
|
|
30 |
% |
|
|
45 |
% |
|
|
95 |
% |
Brian J. van Helden |
|
$ |
240,000 |
|
|
|
15 |
% |
|
|
30 |
% |
|
|
45 |
% |
|
|
95 |
% |
|
|
|
(1) |
|
Represents the percentage of 2011 base salary that the executive is eligible to receive if we
achieve 80% of the EBITDA target established by our board of directors. Bonuses will not be
earned if EBITDA is less than 80% of target. |
|
(2) |
|
Represents maximum potential bonus payout. |
Long-Term Incentives. We believe that providing a significant portion of our
executive officers total compensation package in equity awards aligns the incentives of our
executives with the interests of our stockholders and with our long-term success. By compensating
our executives with our equity, our executives receive a stake in our companys financial future,
and the gains realized in the long term depend on the executives ability to drive our financial
performance. Equity incentive awards are also a useful vehicle for attracting and retaining
executive talent in a competitive market.
Our compensation committee develops its equity award determinations based on its judgment as
to whether the total compensation packages provided to our executive officers, including prior
equity awards and the level of vested and unvested equity awards then held by each participating
officer, are sufficient to retain, motivate, and adequately reward the executive officers. In
addition, our compensation committee considers the accounting costs that will be reflected in our
financial statements when establishing the form of equity to be granted and the size of the grants
as well as the potential dilution associated with the equity awards.
We grant equity awards through our 2010 Incentive Compensation Plan (referred to as the 2010
Plan), which was adopted by our board of directors and approved by our stockholders and permits the
grant of stock options, stock appreciation rights, restricted shares, RSUs, performance shares, and
other stock-based awards to our officers, directors, and employees. The material terms of the 2010
Plan are described below under Equity Compensation Plan Information.
We did not make any equity awards in 2008, 2009, or 2010. On March 1, 2011, we granted RSUs
under our 2010 Plan to certain of our employees, including our executive officers. RSUs represent
the right to receive one share of our common stock for each RSU. Shares of our stock are issued to
RSU holders as the awards vest. The vesting schedule for RSUs granted to our executive officers
and other employees provides that each award vests in four equal annual installments. Recipients
of RSU awards generally must remain employed by us on a continuous basis through the end of the
relevant vesting period in order to receive any amount of the RSUs covered by that award, except
that recipients may be entitled to accelerated delivery of a portion of unvested RSUs in the case
of the recipients death or disability, or upon a change in control.
For 2011, our compensation committee determined that the total annual long-term equity target
amount for each executive officer should approximate between 30% and 60% of his base salary. In
determining target amounts, the committee considered peer group and survey data, potential
dilution, share burn rate relative to our companys outstanding stock, and compensation expense
attributable to the awards. Our compensation committee awarded our
23
chief executive officer RSUs totaling approximately 60% of his base salary, our chief
financial officer RSUs totaling approximately 40% of his base salary, our vice president of sales
and marketing RSUs totaling approximately 30% of his base salary, and our vice president of
operations approximately 40% of his base salary. In 2011, we granted RSUs for an aggregate of
68,042 shares of our common stock to a total of 32 employees, of which RSUs for 35,816 shares were
issued to our executive officers.
The following table sets forth the estimated value of our 2011 equity awards and the number of
RSUs awarded to our executive officers for 2011.
|
|
|
|
|
|
|
|
|
Name |
|
Dollar Value of RSUs |
|
Number of RSUs(1) |
Mark A. DiBlasi |
|
$ |
220,000 |
|
|
|
15,759 |
|
Scott L. Dobak |
|
$ |
100,000 |
|
|
|
7,163 |
|
Peter R. Armbruster |
|
$ |
90,000 |
|
|
|
6,447 |
|
Brian J. van Helden |
|
$ |
90,000 |
|
|
|
6,447 |
|
|
|
|
(1) |
|
The number of RSUs awarded was calculated using a dollar value per share of $13.96, which was
the twenty-day trailing average closing price of our common stock as of March 1, 2011, the
grant date. On March 1, 2011, the closing sales price for our common stock was $14.02. |
Other Compensation Elements
Pension and Nonqualified Deferred Compensation. None of our executive officers
participate in or have account balances in nonqualified defined contribution plans or other
nonqualified deferred compensation plans maintained by us.
Other Compensation. All of our executive officers are eligible to participate in our
employee benefit plans, including medical, dental, life insurance, and 401(k) plans. These plans
are available to all of our employees and do not discriminate in favor of executive officers. It
is generally our policy to not extend significant perquisites to executives that are not broadly
available to our other employees.
Employment Agreements. We do not maintain employment contracts with our employees.
We provided employment letter agreements to our executive officers upon joining our company, which
are described under Employment Agreements with Named Executive Officers.
Severance Payments due Upon Termination and/or a Change in Control. We believe
severance benefits are an essential element of our compensation package for executive officers and
assist us in recruiting and retaining talented individuals. In addition, we believe that it is
more equitable to offer severance benefits based on base pay because severance often serves as a
bridge when employment is involuntarily terminated, and should therefore not be affected by other,
longer-term compensation arrangements. As a result, and consistent with the practice of most of
our peer companies, other compensation decisions are not generally based on the existence of
severance protection. See Potential Payments upon Termination or Change in Control for a
description of the severance benefits provided to our executive officers.
Impact of Tax and Accounting
As a general matter, our compensation committee takes into account the various tax and
accounting implications of the compensation vehicles employed by us. While structuring
compensation programs that result in more favorable tax and financial reporting treatment is a
general principle, our compensation committee balances these goals with other business needs that
may be inconsistent with obtaining the most favorable tax and accounting treatment for each
component of compensation.
Deductibility. Section 162(m) of the Internal Revenue Code (referred to as the Code)
does not permit publicly traded companies to take income tax deductions for compensation paid to
our chief executive officer and certain other executive officers to the extent that compensation
exceeds $1 million per officer in any taxable year and does not otherwise qualify as
performance-based compensation. None of our compensation arrangements with
24
our executive officers exceeded the limits on deductibility under Section 162(m) during 2010
and we do not expect such arrangements to exceed such limits in 2011. Our time-vest RSUs are not
considered performance-based under the Section 162(m) rules because they vest over time rather than
based on the achievement of performance goals. Accordingly, amounts of compensation related to
those RSUs held by our executive officers may not be fully deductible (depending on the value of
our stock and the amount of other nonperformance-based compensation an officer has during the year
in which any portion of the RSU vests).
The compensation committee will continue to consider steps that might be in our best interests
to comply with Section 162(m) of the Code. However, in establishing the cash and equity incentive
compensation programs for our executive officers, our compensation committee believes that the
potential deductibility of the compensation payable under those programs should be only one of a
number of relevant factors taken into consideration, and not the sole or primary factor. The
compensation committee believes that cash and equity incentive compensation must be maintained at
the requisite level to attract and retain the executive officers essential to our financial
success, even if all or part of that compensation may not be deductible by reason of the
limitations of Section 162(m) of the Code.
Accounting Considerations. When determining amounts of long-term incentive grants to
executives and employees, our compensation committee examines the accounting cost associated with
the grants. Under Financial Accounting Standards Board Accounting Standards Codification (ASC)
Topic 718, Compensation Stock Compensation, grants of stock options and RSUs result in an
accounting charge for us equal to the grant date fair value of those securities. For time-vest
RSUs, the accounting cost is generally equal to the fair market value of the underlying shares of
common stock on the date of the award. The cost is then amortized over the requisite service
period.
Financial Restatements. Our compensation committee does not currently have an
established practice regarding the adjustment or recovery of awards or payments if the relevant
performance measures upon which they are based are restated or otherwise adjusted in a manner that
would reduce the size of an award or payment. However, in connection with the implementation of
rules under the Dodd-Frank Act, the committee expects that in the future it will establish
mechanisms to recover incentive compensation in the event of a financial restatement or similar
event.
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Our compensation committee has reviewed and discussed with management the Compensation Discussion
and Analysis included in this proxy statement. Based on such review and discussion, the
compensation committee recommended to our board of directors, and our board of directors approved,
that the Compensation Discussion and Analysis be included in this proxy statement and incorporated
by reference into our Annual Report on Form 10-K for the year ended December 31, 2010 for filing
with the SEC.
William S. Urkiel, Chairman
Christopher L. Doerr
James D. Staley
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 2010, our compensation committee consisted of
Messrs. Urkiel (chairman), Doerr, and Staley. None of these individuals had any contractual or
other relationships with us during such fiscal year except as directors. No interlocking
relationship exists between any member of our compensation committee and any member of any other
companys board of directors or compensation committee.
25
FISCAL YEAR 2010 SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for our executive officers.
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Name and |
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All Other |
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Principal Position |
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Year |
|
Salary(1) |
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Bonus(2) |
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Compensation(3) |
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Total |
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Mark A. DiBlasi |
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2010 |
|
|
$ |
339,362 |
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|
$ |
34,500 |
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|
$ |
414 |
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|
$ |
374,316 |
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President, Chief Executive |
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2009 |
|
|
$ |
302,169 |
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|
$ |
30,700 |
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$ |
26,215 |
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$ |
359,084 |
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Officer, and Director |
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Scott L. Dobak |
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2010 |
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$ |
304,507 |
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$ |
30,992 |
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|
$ |
270 |
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$ |
335,769 |
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Vice President Sales and |
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2009 |
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|
$ |
270,915 |
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$ |
27,525 |
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$ |
26,907 |
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$ |
325,347 |
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Marketing |
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Peter R. Armbruster |
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2010 |
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$ |
217,298 |
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$ |
22,080 |
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$ |
414 |
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$ |
239,792 |
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Executive Vice President |
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2009 |
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|
$ |
191,397 |
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$ |
19,449 |
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$ |
24,581 |
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$ |
235,427 |
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Finance and Chief Financial |
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Officer |
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Brian J. van Helden |
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2010 |
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$ |
211,020 |
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$ |
21,477 |
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$ |
180 |
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$ |
232,677 |
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Vice President Operations |
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2009 |
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$ |
185,996 |
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$ |
18,900 |
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$ |
22,895 |
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$ |
227,791 |
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(1) |
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Beginning in January 2010, the base salary for each of Messrs. DiBlasi, Dobak, Armbruster,
and van Helden was $314,000, $281,750, $200,735, and $195,250, respectively. Such amounts
were increased effective February 1, 2010 to $345,400, $309,925, $220,800, and $214,775,
respectively. |
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(2) |
|
Amounts shown for 2010 reflect discretionary bonuses awarded in recognition of our companys
2010 performance, but not paid until 2011. |
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(3) |
|
Amounts for 2010 represent gross-up tax reimbursements to cover taxes on term life insurance
premiums computed in accordance with Internal Revenue Service guidelines. Our executive
officers participate in our medical and disability insurance plans in the same manner as our
other employees and do not receive any perquisites. |
Employment and Other Agreements
We have no written employment contracts with any of our executive officers. We have, however,
provided employment letter agreements to our executive officers, which provide them with the right
to participate in our incentive compensation plans, the right to participate in all insurance,
retirement, and other fringe benefit plans as may from time to time be provided to our executives,
and severance benefits. For a discussion of the severance benefits provided to our executive
officers, see Potential Payments Upon Termination or Change of Control in this proxy statement.
26
Fiscal Year 2010 Grants of Plan-Based Awards and Option Exercises
During 2010, no plan-based incentive awards were granted to our executive officers and none of
our executive officers exercised any stock options.
Outstanding Equity Awards at Fiscal Year-End 2010
The following table sets forth the outstanding equity awards held by our executive officers as
of December 31, 2010.
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Option Awards |
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Number of Securities Underlying |
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Unexercised Options |
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Option Exercise |
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Option Expiration |
Name |
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Exercisable |
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Unexercisable(1) |
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Price |
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Date |
Mark A. DiBlasi |
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119,451 |
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$ |
6.70 |
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1/16/2016 |
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119,451 |
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$ |
13.39 |
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1/16/2016 |
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74,657 |
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$ |
20.09 |
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1/16/2016 |
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55,993 |
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3,733 |
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$ |
6.70 |
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3/15/2017 |
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55,993 |
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3,733 |
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$ |
13.39 |
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3/15/2017 |
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Scott L. Dobak |
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59,282 |
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3,952 |
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$ |
6.70 |
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1/29/2017 |
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59,282 |
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3,952 |
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$ |
13.39 |
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1/29/2017 |
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59,282 |
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3,952 |
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$ |
20.09 |
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1/29/2017 |
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Peter R. Armbruster |
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63,234 |
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$ |
6.70 |
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3/31/2015 |
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63,309 |
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$ |
13.39 |
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3/31/2015 |
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63,309 |
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$ |
20.09 |
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3/31/2015 |
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Brian J. van Helden |
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55,330 |
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7,904 |
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$ |
6.70 |
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4/9/2017 |
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55,330 |
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7,904 |
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$ |
13.39 |
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4/9/2017 |
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55,330 |
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7,904 |
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$ |
20.09 |
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4/9/2017 |
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(1) |
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All of the stock options held by executive officers vest over a four-year period, with 25%
vesting on the first anniversary of the grant date and 6.25% at the end of each subsequent
three-month period thereafter. |
Pension Benefits
We do not offer any defined benefit pension plans for any of our employees. We do have a
401(k) plan in which our employees may participate. In 2010, no discretionary contributions to our
401(k) plan were made on behalf of our executive officers.
Potential Payments Upon Termination or Change in Control
The employment letter agreements with our executive officers provide for severance benefits
upon termination and change of control. The arrangements reflected in these letter agreements are
designed to encourage the officers full attention and dedication to our company currently and, in
the event of termination following a change of control, provide these officers with individual
financial security.
Pursuant to the employment letters, if the executive (i) is terminated for any reason other
than for cause, (ii) terminates his employment voluntarily for good reason, or (iii) is terminated
without cause during the one-year period following a change of control, he is entitled to receive
his current base salary for a period of 12 months in accordance with our normal payroll practices
and will be eligible to receive all benefits under all benefit plans and programs provided by us
(including medical and group life plans and programs) for the same period.
27
The definitions of change of control, cause, and good reason and descriptions of the
payments and benefits can be found in the employment letter agreements, which have been filed with
the SEC. Other than as set forth below, no amounts will be paid to our executive officers in the
event of termination.
The table below provides estimates of the payments and benefits that would be paid to our
executive officers in connection with any termination of employment for cause or good reason or for
cause following a change of control of our company. The payments are quantified assuming the
termination of employment or change in control occurred on December 31, 2010.
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Name |
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Salary |
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Benefits |
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Total |
|
Mark A. DiBlasi |
|
$ |
345,400 |
|
|
$ |
11,122 |
|
|
$ |
356,522 |
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Scott L. Dobak |
|
$ |
309,925 |
|
|
$ |
10,977 |
|
|
$ |
320,902 |
|
Peter R. Armbruster |
|
$ |
220,808 |
|
|
$ |
11,122 |
|
|
$ |
231,930 |
|
Brian J. van Helden |
|
$ |
214,775 |
|
|
$ |
10,888 |
|
|
$ |
225,663 |
|
Nonqualified Deferred Compensation and Retirement Plans
We do not offer any deferred compensation plans, defined benefit pension plans, or
supplemental retirement plans for our executive officers.
401(k) Plan
We sponsor a defined contribution profit sharing plan for our full-time employees, which is
intended to qualify as a tax qualified plan under Section 401 of the Internal Revenue Code. The
plan provides that each participant may contribute up to 100% of his or her pre-tax compensation,
up to the statutory limit. The plan permits us to make discretionary contributions of up to an
additional 50% of each participants contributions not to exceed 4% of his or her pre-tax
compensation, up to the statutory limit, which generally vest over three years. We do not match
employee contributions.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information with respect to our common stock that may be issued
upon the exercise of stock options, warrants, and rights under our incentive compensation plans as
of December 31, 2010.
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(c) |
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(a) |
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Number of Securities |
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Number of |
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|
(b) |
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|
Remaining Available |
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Securities to be |
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|
Weighted |
|
|
for Future Issuance |
|
|
|
Issued Upon |
|
|
Average |
|
|
Under Equity |
|
|
|
Exercise of |
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|
Exercise Price |
|
|
Compensation Plans |
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|
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Outstanding |
|
|
of Outstanding |
|
|
(Excluding |
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|
|
Options, |
|
|
Options, |
|
|
Securities |
|
|
|
Warrants, |
|
|
Warrants, |
|
|
Reflected in |
|
Plan Category |
|
and Rights(1) |
|
|
and Rights(2) |
|
|
Column (a)) |
|
Equity Compensation Plans Approved by Stockholders |
|
|
1,943,485 |
|
|
$ |
11.16 |
|
|
|
2,500,000 |
|
Equity Compensation Plans Not Approved by Stockholders |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
Total |
|
|
1,943,485 |
|
|
$ |
11.16 |
|
|
|
|
|
|
|
|
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|
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|
|
All of the securities to be issued upon exercise of outstanding options, warrants, and
rights issued under equity compensation plans approved by stockholders are issuable pursuant to
option awards granted under our previously maintained key employee equity plan, which we have
discontinued. The number of securities remaining available for future issuance represents all
2,500,000 shares of common stock reserved for issuance under our 2010 incentive compensation plan.
As of December 31, 2010, no awards were granted under the 2010 incentive compensation plan.
Certain of the material features of the 2010 incentive compensation plan are described below.
28
2010 Incentive Compensation Plan
Our 2010 incentive compensation plan provides for the grant of nonstatutory stock options,
restricted stock awards, stock appreciation rights, phantom stock, dividend equivalents, other
stock-related awards and performance awards. Awards may be granted to employees, including
executive officers, and non-employee directors.
Share Reserve
An aggregate of 2,500,000 shares of common stock have been reserved for issuance under the
incentive compensation plan. Certain types of shares issued under the incentive compensation plan
may again become available for the grant of awards under the incentive compensation plan, including
restricted stock that is repurchased or forfeited prior to it becoming fully vested; shares
withheld for taxes; shares that are not issued in connection with an award, such as upon the
exercise of a stock appreciation right; and shares used to pay the exercise price of an option in a
net exercise. In addition, shares subject to stock awards that have expired or otherwise
terminated without having been exercised in full may be subject to new equity awards. Shares
issued under the incentive compensation plan may be previously unissued shares or reacquired shares
bought on the market or otherwise.
Administration
Our board of directors has the authority to administer the incentive compensation plan as the
plan administrator. However, our board of directors has the authority to delegate its authority as
plan administrator to one or more committees, including its compensation committee. Subject to the
terms of the incentive compensation plan, the plan administrator determines recipients, grant
dates, the numbers and types of equity awards to be granted, and the terms and conditions of the
equity awards, including the period of their exercisability and vesting. Subject to the
limitations set forth below, the plan administrator also determines the exercise price of options
granted, the purchase price for rights to purchase restricted stock and, if applicable, phantom
stock and the strike price for stock appreciation rights.
Grant Limits
To the extent that Section 162(m) applies to the incentive compensation plan, no participant
will receive an award for more than 2,000,000 shares in any calendar year. In addition, no
participant will receive a performance bonus for more than $5,000,000 per twelve-month period (as
adjusted on a straight-line basis for the actual length of the performance period).
Stock Options
Each stock option granted pursuant to the incentive compensation plan must be set forth in a
stock option agreement. The plan administrator determines the terms of the stock options granted
under the incentive compensation plan, including the exercise price, vesting schedule, the maximum
term of the option and the period of time the option remains exercisable after the optionees
termination of service. The exercise price of a stock option, however, may not be less than the
fair market value of the stock on its grant date and the maximum term of a stock option may not be
more than ten years. All options granted under the incentive compensation plan will be
nonstatutory stock options.
Restricted Stock Awards
Restricted stock awards must be granted pursuant to a restricted stock award agreement. The
plan administrator determines the terms of the restricted stock award, including the purchase
price, if any, for the restricted stock, and the vesting schedule, if any, for the restricted stock
award. The plan administrator may grant shares fully vested as a bonus for the recipients past
services performed for us. The purchase price for a restricted stock award may be payable in cash,
the recipients past services performed for us, or any other form of legal consideration acceptable
to our board of directors.
29
Stock Units
Stock unit awards must be granted pursuant to stock unit award agreements. The plan
administrator determines the terms of the stock unit award, including any performance or service
requirements. A stock unit award may require the payment of at least par value. Payment of any
purchase price may be made in cash, the recipients past services performed for us, or any other
form of legal consideration acceptable to the board of directors.
Performance Awards
The right of a participant to exercise or receive a grant or settlement of an award, and the
timing thereof, may be subject to such performance conditions, including subjective individual
goals, as may be specified by the plan administrator. Subject to the requirements of the incentive
compensation plan, our compensation committee will determine performance award terms, including the
required levels of performance with respect to specified business criteria, the corresponding
amounts payable upon achievement of such levels of performance, termination and forfeiture
provisions, and the form of settlement.
30
ITEM TWO ADVISORY VOTE APPROVING
EXECUTIVE OFFICER COMPENSATION
SEC rules require all publicly traded companies to hold an advisory, non-binding stockholder
vote to approve executive officer compensation. This proposal, commonly known as a say-on-pay
proposal, gives our stockholders the opportunity to express their views on the compensation of our
executive officers by voting on the non-binding resolution below.
As described in detail in the Compensation Discussion and Analysis section of this proxy
statement, our executive compensation program, which is established by our compensation committee
and board of directors, is intended to attract, motivate, and retain executives and key employees
and reward the creation of stockholder value. We seek to provide executive compensation packages
that are competitive with other similarly situated companies in our industry and reward the
achievement of short-term and long-term performance goals.
We are asking our stockholders to indicate their support for our executive officer
compensation. We believe that the information we have provided in this proxy statement
demonstrates that our executive compensation program was designed appropriately and is working to
ensure that managements interests are aligned with our stockholders interests to support
long-term value creation.
Stockholders are urged to read the Compensation Discussion and Analysis section of this
proxy statement and the tabular disclosure regarding executive officer compensation in this proxy
statement, which discusses how our compensation policies and procedures demonstrate our
compensation philosophy. Our compensation committee and board of directors believe that these
policies and procedures are effective in implementing our compensation philosophy and in achieving
its goals.
Our board of directors believes that the compensation of our executive officers is appropriate
and recommends a vote for the following advisory resolution, which will be submitted for a
stockholder vote at the annual meeting:
RESOLVED, that the stockholders approve, on an advisory basis, the compensation of
the Companys executive officers, as disclosed pursuant to the compensation
disclosure rules of the SEC, including the Compensation Discussion and
Analysis, the compensation tables, narrative discussion and related matters.
You may vote for or against the foregoing resolution, or you may abstain. This vote is
not intended to address any specific item of compensation, but rather the overall compensation of
our executive officers and our compensation philosophy, policies, and procedures described in this
proxy statement.
While the advisory vote is non-binding, the compensation committee and our board of directors
will review the results of the vote and take the concerns of our stockholders into account in
future determinations concerning our executive compensation program. Our board of directors
therefore recommends that you indicate your support for the compensation policies and procedures
for our executive officers, as outlined in the above resolution.
31
ITEM THREE
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES
ON EXECUTIVE OFFICER COMPENSATION
In addition to providing our stockholders with the opportunity to cast an advisory vote on
executive officer compensation, we are also seeking an advisory, non-binding vote on how frequently
the advisory vote on executive officer compensation should be presented to stockholders, as
required by SEC rules. Stockholders may vote to have the advisory vote on executive officer
compensation held every year, every two years, or every three years, or stockholders may abstain
from voting on this proposal. Accordingly, the following resolution will be submitted for a
stockholder vote at the annual meeting:
RESOLVED, that the stockholders wish the Company to include an advisory vote on
the compensation of the executive officers every one, two, or three years,
whichever receives a majority of votes cast with respect to this resolution.
After careful consideration of this proposal, our board of directors recommends that you vote
to hold an advisory vote on the compensation of our executive officers every three years.
Our board of directors has determined that holding an advisory vote on the compensation of our
executive officers every three years is the best approach for us based on a number of
considerations, including the following:
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|
|
Our compensation program is designed to reward the achievement of short-term and
long-term performance goals and the creation of stockholder value, and a three-year cycle
will provide stockholders sufficient time to evaluate the effectiveness of our short- and
long-term compensation strategies and the related business outcome of our company; |
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|
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|
We believe holding a say-on-pay vote every three years, rather than annually, provides
our stockholders and their proxy advisory firms with greater ability to conduct detailed
and thorough analyses of say-on-pay votes for other public companies and to make
recommendations to our stockholders; |
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|
|
|
A three-year vote cycle gives our board of directors and our compensation committee
sufficient time to thoughtfully respond to stockholders sentiments and to implement any
necessary changes to our executive compensation policies and procedures; and |
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|
|
|
Stockholders who have concerns about executive compensation during the period between
stockholder votes may bring their specific concerns to the attention of our board of
directors. As discussed elsewhere in this proxy statement, we provide stockholders an
opportunity to communicate directly with members of our board of directors, including on
issues of executive compensation. |
While the advisory vote is non-binding, our board of directors will review the results of the
vote and consider our stockholders concerns and take them into account when determining how often
to include a say-on-pay proposal in our proxy materials. We currently intend to provide a
say-on-pay proposal at least once every three years.
32
ITEM FOUR
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee is responsible for the appointment of our independent registered public
accounting firm. Our audit committee has appointed Deloitte & Touche LLP (referred to as D&T) as
our independent registered public accounting firm to audit our consolidated financial statements
and our internal control over financial reporting for the year ending December 31, 2011. D&T has
served as our independent auditors since 2005. The services provided to us by D&T, along with the
corresponding fees for 2010 and 2009, are described below.
Stockholder ratification of the appointment of our independent registered public accounting
firm is not required. We are doing so because we believe it is a sound corporate governance
practice. If our stockholders do not ratify the selection, our audit committee will consider
whether or not to retain D&T, but may still retain them.
We anticipate that representatives of D&T will be present at the meeting, will have the
opportunity to make a statement if they desire, and will be available to respond to appropriate
questions.
Our board of directors recommends a vote for the ratification of D&T as our independent
registered public accounting firm.
Independent Registered Public Accounting Firm Fees
The following is a summary of fees for audit and other professional services performed by D&T
during the fiscal years ended December 31, 2010 and 2009:
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2010 |
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Audit fees |
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473,000 |
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$ |
347,260 |
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Audit-related fees |
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413,867 |
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169,475 |
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Tax fees |
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127,972 |
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91,711 |
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All other fees |
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1,014,839 |
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608,446 |
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Audit Fees
This category includes fees for the audit of our annual consolidated financial statements, for
reviews of our quarterly financial statements, and for services that are normally provided by the
independent registered public accounting firm in connection with statutory and regulatory filings
or engagements.
Audit-Related Fees
This category consists of fees for assurance and related services provided by the independent
registered public accounting firm that are reasonably related to the performance of the audit or
review of our consolidated financial statements and are not included under Audit Fees above. For
2010, audit-related fees consisted of accounting and regulatory filing advisory services in
connection with our initial public offering and in connection with acquisition transactions. For
2009, such fees consisted of advisory services in connection with acquisition transactions.
Tax
Fees
This category consists of tax services provided by the independent registered public
accounting firm with respect to tax compliance and tax preparation.
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All Other Fees
This category consists of fees paid for services that would not otherwise be included in any
of the categories listed above. We did not pay any such fees in the periods presented.
Pre-Approval Policies and Procedures for Independent Registered Public Accounting Firm Fees
As set forth in its charter, the audit committee is responsible for pre-approving all audit,
audit related, tax, and other services to be performed by the independent registered public
accounting firm. Any pre-approved services that involve fees or costs exceeding pre-approved
levels will also require specific pre-approval by the audit committee. Unless otherwise specified
by the audit committee in pre-approving a service, the pre-approval will be effective for the
12-month period following pre-approval. The audit committee will not approve any non-audit
services prohibited by applicable SEC regulations or any services in connection with a transaction
initially recommended by the independent registered public accounting firm. The audit committee
may delegate to the audit committee chair or any one or more members of the audit committee the
authority to grant pre-approvals of permissible audit and non-audit services, provided that such
pre-approvals by a member who has exercised such delegation must be reported to the full audit
committee at the next scheduled meeting. All of the audit services provided by D&T described in
the table above for 2010 were approved by our audit committee pursuant to our audit committees
pre-approval policies. Prior to the formation of our audit committee in May 2010, the fees of our
independent registered public accounting firm were approved by our full board of directors.
34
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Our board of directors has appointed an audit committee consisting of three independent
directors. All members of our audit committee are able to read and understand fundamental
financial statements, including our balance sheet, statement of operations, statement of
stockholders investment, and statement of cash flows. Most members of our audit committee have
past employment experience in finance or accounting, requisite professional certification in
accounting, or other comparable experience or background which results in each individuals
financial sophistication, including being or having been a chief executive officer, chief financial
officer, or other senior officer with financial oversight responsibility. Our board of directors
has determined that Messrs. Urkiel, Utrup, and Welch are independent directors, as defined by
Section 303A of the New York Stock Exchange Listed Company Manual, and that Mr. Utrup, chairman,
qualifies as an audit committee financial expert.
The primary responsibility of our audit committee is to assist our board of directors in
fulfilling its responsibility to oversee managements conduct of our financial reporting process,
including overseeing the financial reports and other financial information provided by us to
governmental or regulatory bodies (such as the SEC), the public, and other users thereof; our
systems of internal accounting and financial controls; and the annual independent audit of our
consolidated financial statements.
Management has the responsibility for our consolidated financial statements and the reporting
process, including the systems of internal controls. Our independent registered public accounting
firm engaged to conduct the audit of our 2010 financial statements, Deloitte & Touche LLP, is
responsible for auditing our consolidated financial statements and expressing an opinion on the
conformity of those audited consolidated financial statements with generally accepted accounting
principles.
In fulfilling its oversight responsibilities, our audit committee reviewed our consolidated
audited financial statements with management and the independent registered public accounting firm.
Our audit committee discussed with the independent registered public accounting firm the matters
required to be discussed by Statement of Auditing Standards No. 61, Communication with Audit
Committees. This included a discussion of the independent registered public accounting firms
judgments as to the quality, not just the acceptability, of our accounting principles and such
other matters as are required to be discussed with our audit committee under generally accepted
auditing standards. In addition, our audit committee received from the independent registered
public accounting firm written disclosures and the letter required by applicable requirements of
the Public Company Accounting Oversight Board regarding the independent registered public
accounting firms independence. Our audit committee also discussed with the independent registered
public accounting firm their independence from management and our company, including the matters
covered by the written disclosures and letter provided by the independent registered public
accounting firm. Our audit committee has concluded that Deloitte & Touche LLP is independent from
our company and management.
Our audit committee discussed with the independent registered public accounting firm the
overall scope and plans for their audits. Our audit committee met with the independent registered
public accounting firm, with and without management present, to discuss the results of their
examinations, their evaluations of our company, the internal controls, and the overall quality of
our financial reporting. Our audit committee held six meetings during the fiscal year ended
December 31, 2010.
Based on the reviews and discussions referred to above, our audit committee recommended to our
board of directors, and our board of directors approved, that our audited consolidated financial
statements be included in the Annual Report on Form 10-K for the year ended December 31, 2010 for
filing with the SEC.
Our board of directors has adopted a written charter for our audit committee that reflects,
among other things, requirements of the Sarbanes-Oxley Act of 2002, rules adopted by the SEC, and
rules of the New York Stock Exchange.
This report has been furnished by our audit committee to our board of directors.
Chad M. Utrup, Chairman
William S. Urkiel
James L. Welch
35
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as set forth below, there were no transactions or series of similar transactions
during 2010 to which we were or are a party that involved an amount exceeding $120,000 and in which
any of our directors, executive officers, holders of more than 5% of any class of our voting
securities, or any member of the immediate family of any of the foregoing persons, had or will have
a direct or indirect material interest.
GTS Merger
As previously disclosed in our SEC filings relating to our initial public offering,
simultaneous with the consummation of our May 2010 initial public offering, Group Transportation
Services Holdings, Inc. (referred to as GTS) became our wholly owned subsidiary by way of merger.
As a result of the GTS merger, the stockholders of GTS became stockholders of our company. Upon
consummation of the GTS merger, each issued and outstanding share of GTS common stock was converted
into 141.848 shares of our common stock, for a total of 3,230,324 shares. Prior to the GTS Merger,
Thayer | Hidden Creek was the beneficial owner of approximately 17,829 of GTS outstanding common
stock. Upon consummation of the GTS merger, such shares were converted into 2,528,947 shares of
our common stock pursuant to the terms of the merger agreement.
Management and Consulting Agreements
Prior to the consummation of our May 2010 initial public offering, as a private company we
were a party to a management and consulting agreement with Thayer | Hidden Creek Management, L.P.,
an affiliate of Thayer | Hidden Creek, and Eos Management, Inc., an affiliate of Eos, pursuant to
which Thayer | Hidden Creek Management and Eos provided financial, management, and operations
consulting services to our company. In exchange for such services, Thayer | Hidden Creek
Management and Eos Management were each paid an annual management fee and were each reimbursed for
its expenses. In addition, prior to the consummation of our initial public offering, GTS was a
party to a management and consulting agreement with Thayer | Hidden Creek Management, which we
assumed in connection with the GTS merger. This management agreement was similar to the management
agreement in place between our company and Thayer | Hidden Creek Management, in that Thayer |
Hidden Creek Management provided financial, management, and operations consulting services to GTS
in exchange for an annual fee and expense reimbursement. Upon consummation of our initial public
offering, we paid Thayer | Hidden Creek Management and Eos Management aggregate fees of $3.5
million and terminated both management and consulting agreements.
Upon consummation of our May 2010 initial public offering, we entered into an advisory
agreement with Thayer | Hidden Creek Management, pursuant to which Thayer | Hidden Creek Management
continues to provide advisory services to us. These services include identification, support,
negotiation, and analysis of acquisitions and dispositions and support, negotiation, and analysis
of financing alternatives. In exchange for such services, Thayer | Hidden Creek Management is
reimbursed for its expenses and can be paid a transaction fee in connection with the consummation
of each acquisition or divestiture by us or our subsidiaries, excluding certain specified
transactions, and in connection with any public or private debt offering by us or our subsidiaries
negotiated by Thayer | Hidden Creek Management. The amount of any such fee will be determined
through good faith negotiations between our board of directors and Thayer | Hidden Creek
Management. We made no payments to Thayer | Hidden Creek Management under the advisory agreement
in 2010.
Junior Subordinated Notes
In December 2009, we issued an aggregate face amount at maturity of approximately $19.5
million of our junior subordinated notes in connection with our acquisition of Bullet Freight
Systems, Inc. The purchasers of junior subordinated notes and the accompanying warrants to
purchase an aggregate of 1,746,974 shares of our common stock at a per share exercise price of
$8.37 included Eos, and several officers of an affiliate of Thayer | Hidden Creek (including
Messrs. Rued and Evans, directors of our company). Each of Messrs. Rued and Evans purchased, for
an aggregate purchase price of $400,000, (i) $400,000 aggregate face amount of our junior
subordinated notes, and (ii) warrants to purchase 35,835 shares of our common stock at a per share
purchase price of $8.37. In May 2010, we used certain proceeds from our initial public offering to
repay all of our outstanding junior subordinated notes, including those held by Eos, Mr. Rued, and
Mr. Evans.
36
2010 ANNUAL REPORT ON FORM 10-K
We have mailed with this proxy statement a copy of our Annual Report on Form 10-K to each
stockholder of record as of April 15, 2011 and it is also available on our website at www.rrts.com.
Our Annual Report on Form 10-K contains financial and other information about our company, but is
not incorporated into this proxy statement and is not to be considered a part of these proxy
soliciting materials or subject to Regulations 14A or 14C or to the liabilities of Section 18 of
the Securities Exchange Act of 1934, as amended. The information contained in the Report of the
Compensation Committee of the Board of Directors and Report of the Audit Committee of the Board
of Directors shall not be deemed filed with the SEC or subject to Regulations 14A or 14C or to
the liabilities of Section 18 of the Securities Exchange Act. If a stockholder requires an
additional copy of our Annual Report on Form 10-K, we will provide one, without charge, on the
written request of any such stockholder addressed to our corporate secretary at 4900 S.
Pennsylvania Ave., Cudahy, Wisconsin 53110.
STOCKHOLDER PROPOSALS FOR OUR 2012 ANNUAL MEETING
If any stockholder intends to present a proposal to be considered for inclusion in our proxy
material for the 2012 annual meeting of stockholders, the proposal must comply with the
requirements of Rule 14a-8 of Regulation 14A of the Exchange Act and must be submitted in writing
by notice delivered to our corporate secretary at 4900 S. Pennsylvania Ave., Cudahy, Wisconsin
53110. Any such proposal must be received at least 120 days before the anniversary of the prior
years proxy statement (by December 23, 2011), unless the date of our 2012 annual meeting is
changed by more than 30 days from May 17, 2012, in which case, the proposal must be received a
reasonable time before we begin to print and mail our proxy materials.
In addition, our bylaws establish certain requirements for proposals a stockholder wishes to
make from the floor of the 2012 annual meeting of stockholders. If the proposal is for a matter
other than the nomination of a director for election at the meeting, the proposal must be written
and delivered to our corporate secretary at the address set forth above between December 19, 2011
and January 18, 2012, which is 150 to 120 days prior to the first anniversary of the preceding
years annual meeting; provided, however, that in the event that the date of the annual meeting is
more than 30 days before or more than 70 days after such anniversary date, notice by the
stockholder must be so delivered not earlier than 150 days prior to such annual meeting and not
later than the later of (a) 120 days prior to such annual meeting or (b) ten days following the day
on which public announcement of the date of such meeting is first made by our company. Our bylaws
provide that a stockholders notice of a proposal of business must set forth certain information
relating to the proposed business desired to be brought before the meeting and the proposal itself,
and information relating to the stockholder making the proposal.
If the proposal is for the nomination of a director for election at the meeting, the
nomination must be delivered to our corporate secretary at the address listed above between
December 19, 2011 and January 18, 2012, which is 150 to 120 days prior to the first anniversary of
the preceding years annual meeting; provided, however, that in the event that the date of the 2012
annual meeting is more than 30 days before or 70 days after such anniversary date, notice by the
stockholder must be so delivered not earlier than 150 days prior to such annual meeting and not
later than the later of (a) 120 days prior to such annual meeting or (b) ten days following the day
on which we make the first public announcement of the date of such meeting. However, in the event
that the number of directors to be elected to our board of directors at an annual meeting of
stockholders is increased and there is no public announcement by us naming the nominees for the
additional directorships at least 100 days prior to the first anniversary of the date of the
preceding years annual meeting, the stockholders notice will also be considered timely, but only
with respect to nominees for the additional directorships, if it is delivered to our corporate
secretary at the address listed above not later than ten days following the day on which we first
make a public announcement of additional directorships. Our bylaws set forth specific information
that must be provided to our corporate secretary in connection with the nomination of a director
for election at the annual meeting.
37
OTHER MATTERS
As of the date of this proxy statement, we know of no matter that will be presented for
consideration at the annual meeting other than the election of directors, the advisory vote on
executive compensation, the advisory vote on the frequency of future advisory votes on executive
compensation, and the ratification of our independent registered public accounting firm. If,
however, any other matter should properly come before the annual meeting for action by
stockholders, the persons named as proxy holders will vote in accordance with the recommendation of
the board of directors or, in the absence of such a recommendation, in accordance with the best
judgment of the proxy holder.
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By Order of the Board of Directors
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Cudahy, Wisconsin
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April 21, 2011 |
Peter R. Armbruster, Secretary |
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38
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The
Annual Report, Notice & Proxy Statement is/are available at www.proxyvote.com.
ROADRUNNER TRANSPORTATION SYSTEMS, INC.
4900 S. Pennsylvania Avenue
Cudahy, Wisconsin 53110
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mark A. DiBlasi and Peter R. Armbruster as proxies, each with
full power of substitution, to represent and vote as designated on the reverse side, all the shares
of Common Stock of Roadrunner Transportation Systems, Inc. held of record by the undersigned on
April 15, 2011, at the Annual Meeting of Stockholders to be held at the Hilton Garden Inn, 5890 S.
Howell Avenue, Milwaukee, Wisconsin 53207, at 1:00 p.m., Central Time on May 17, 2011, or any
adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
ROADRUNNER TRANSPORTATION
SYSTEMS, INC.
May 17, 2011
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you
can consent to receiving all future proxy statements, proxy cards and annual reports electronically
via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that you agree to receive or access
proxy materials electronically in future years.
VOTE BY PHONE 800-690-6903
Use any touch-tone telephone to transmit your voting instructions up to 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided
or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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1. To elect Christopher L. Doerr, Ivor J. Evans, and James D. Staley
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Advisory vote on the
compensation of the Companys
executive officers |
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FOR o |
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AGAINST o |
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FOR ALL NOMINEES |
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NOMINEES: |
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WITHHOLD AUTHORITY
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Christopher L. Doerr
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3. |
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Advisory vote on the frequency
of future advisory votes on the
compensation of the Companys
executive officers
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1 YEAR o |
2 YEARS o
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3 YEARS o
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ABSTAIN o |
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FOR ALL NOMINEES
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Ivor J. Evans
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FOR ALL EXCEPT |
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James D. Staley
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4. |
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The ratification of the
appointment of Deloitte & Touche
LLP as the Companys independent
registered public accounting firm
for the fiscal year ending December
31, 2011 |
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark FOR ALL
EXCEPT and write the number(s) of the nominee(s) on the line below: |
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THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF THE
DIRECTORS, FOR PROPOSALS 2 and 4, AND 3 YEARS ON PROPOSAL 3. |
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. |
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Signature
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Signature
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person. |