SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant X
Filed by a Party other than the Registrant
Check the Appropriate Box:
Preliminary Proxy Statement
- ------
Confidential, for Use of the Commission Only (as permitted by Rule
- ------ 14a-6(e)(2))
X Definitive Proxy Statement
- ------
Definitive Additional Materials
- ------
Soliciting Materials Pursuant to ss.240.14a-11(c) or ss.240.14a-12
- ------
SIMON TRANSPORTATION SERVICES INC.
(Name of Registrant as Specified in its Charter)
The Simon Transportation Services Inc. Board of Directors
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the Appropriate Box):
X No fee required
- ------
- ------ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to
which transaction applies: N/A
---------
(2) Aggregate number of securities to which
transaction applies: N/A
---------
(3) Price per unit or other underlying value
of transaction computed pursuant to
Exchange Act Rule 0-11: N/A
---------
(4) Proposed maximum aggregate value of transaction: N/A
---------
(5) Total fee paid: N/A
---------
$ N/A ---------------------------------------------------------------
= Amount on which filing fee is calculated
- ------ Fee paid previously with preliminary materials
- ------ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount previously paid: N/A
-------------
(2) Form, Schedule or Registration Statement No.: N/A
-------------
(3) Filing Party: N/A
-------------
(4) Date Filed: N/A
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<PAGE>
Simon Transportation Service Inc.
P.O. Box 26297
Salt Lake City, Utah 84126-0297
--------------------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 19, 1997
- --------------------------------------------------------------------------------
To Our Stockholders:
The 1997 Annual Meeting of Stockholders (the "Annual Meeting") of Simon
Transportation Services Inc., a Nevada corporation (the "Company"), will be held
at Simon Transportation Services Inc. corporate headquarters, 5175 South 2100
West, West Valley City, Utah 84120, at 10:00 a.m., Mountain Standard Time, on
December 19, 1997, for the following purposes:
1. To consider and act upon a proposal to elect eight (8)
directors of the Company;
2. To consider and act upon a proposal to ratify the
selection of Arthur Andersen LLP, as independent public
accountants for the Company for the 1997 fiscal year;
3. To consider and act upon a proposal to amend the Incentive
Stock Plan to reserve an additional 600,000 shares of Class A
Common Stock for issuance to participants and approve the
issuance of options to purchase 375,000 of such shares to
Company officers; and
4. To consider and act upon such other matters as may
properly come before the meeting and any adjournment
thereof.
The foregoing matters are more fully described in the accompanying
Proxy Statement.
The Board of Directors has fixed the close of business on November 3,
1997, as the record date for the determination of Stockholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournment thereof.
Shares of Common Stock may be voted at the Annual Meeting only if the holder is
present at the Annual Meeting in person or by valid proxy. YOUR VOTE IS
IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
REQUESTED TO PROMPTLY DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE. Returning your proxy now will not interfere with your right
to attend the Annual Meeting or to vote your shares personally at the Annual
Meeting, if you wish to do so. The prompt return of your proxy may save the
Company additional expenses of solicitation. All Stockholders are cordially
invited to attend the Annual Meeting.
By Order of the Board of Directors
/s/ Richard D. Simon
Richard D. Simon
Chairman of the Board
Salt Lake City, Utah
November 14, 1997
<PAGE>
SIMON TRANSPORTATION SERVICES INC.
Post Office Box 26297
Salt Lake City, UT 84126-0297
--------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 19, 1997
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Simon Transportation Services Inc., a
Nevada corporation (the "Company"), to be used at the 1997 Annual Meeting of
Stockholders of the Company ("Annual Meeting"), which will be held at Simon
Transportation Services Inc. corporate headquarters, 5175 West 2100 South, West
Valley City, Utah 84120, on December 19, 1997, at 10:00 a.m. Mountain Standard
Time, and any adjournment thereof. All costs of the solicitation will be borne
by the Company. The approximate date of mailing this proxy statement and the
enclosed form of proxy is November 14, 1997.
The enclosed copy of the Company's annual report for the fiscal year
ended September 30, 1997, is not incorporated into this Proxy Statement and is
not to be deemed a part of the proxy solicitation material.
PROXIES AND VOTING
Only stockholders of record at the close of business on November 3,
1997 ("Stockholders"), are entitled to vote, either in person or by valid proxy,
at the Annual Meeting. Holders of Class A Common Stock are entitled to one vote
for each share held. Holders of Class B Common Stock are entitled to two votes
for each share held. On November 12, 1997, there were issued and outstanding
5,320,713 shares of Class A Common Stock, par value one cent ($.01), entitled to
cast an aggregate 5,320,713 votes on all matters subject to a vote at the Annual
Meeting, and 962,661 shares of Class B Common Stock, par value one cent ($.01),
entitled to cast an aggregate 1,925,322 votes on all matters subject to a vote
at the Annual Meeting. The Company has a total of 6,283,374 shares of Common
Stock outstanding, entitled to cast an aggregate 7,246,035 votes on all matters
subject to a vote at the Annual Meeting. The number of issued and outstanding
shares excludes 400,000 shares of Class A Common Stock reserved for issuance to
employees under the Company's incentive stock plan of which approximately
355,000 such shares have been granted, 4,806 have been exercised of which
approximately 80,000 shares were at October 31, 1997 subject to vested but
unexercised options, and 25,000 shares of Class A Common Stock reserved for
issuance under the Company's Outside Director Stock Plan, of which 5,000 have
been granted, 1,600 have been exercised, and 1,400 are subject to vested but
unexercised options. Holders of unexercised options are not entitled to vote at
the Annual Meeting. The Company has no other class of stock outstanding.
Stockholders are not entitled to cumulative voting in the election of directors.
Any Stockholder may be represented and may vote at the Annual Meeting
by a proxy or proxies appointed by an instrument in writing. In the event that
any such instrument in writing shall designate two (2) or more persons to act as
proxies, a majority of such persons present at the meeting, or, if only one
shall be present, then that one shall have and may exercise all of the powers
conferred by such written instrument upon all of the persons so designated
unless the instrument shall otherwise provide. No such proxy shall be valid
after the expiration of six (6) months from the date of its execution, unless
coupled with an interest or unless the person executing it specifies therein the
length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution. Any Stockholder giving a
proxy may revoke it at any time prior to its use at the Annual Meeting by filing
with the Secretary of the Company a revocation of the proxy, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
meeting and voting in person. Subject to the above, any proxy duly executed is
not revoked and continues in full force and effect until an instrument revoking
it or a duly executed proxy bearing a later date is filed with the Secretary of
the Company.
Other than the election of directors, which requires a plurality of the
votes cast, each matter to be submitted to the Stockholders requires the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter, only
those cast "For" or "Against" are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the
meeting.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Classified Board of Directors
The Company's Bylaws permit the Board of Directors to establish the
number of directors that comprise the Board. From the last annual meeting until
May 9, 1997, the Company had four directors - Richard D. Simon, Alban B. Lang,
H.J. Frazier, and Irene Warr. On May 9, 1997, the Board expanded the number of
directors to eight and elected Kelle A. Simon, Lyn Simon, Sherry L. Bokovoy, and
Richard D. Simon, Jr. to serve as additional directors. Subsequently, the Board
of Directors unanimously amended the Bylaws to create a classified board with
staggered, three-year terms. The amended Bylaws provide that the number of
directors will be between three and twelve, with each class to have as nearly
one-third as possible, but no fewer than one-fourth of all of directors. The
number of directors constituting the entire Board of Directors was maintained at
eight. The classified Board of Directors is intended to promote continuity of
management and policies by preventing the entire Board from being replaced in a
single year.
Under the amended Bylaws, the Company has three classes of directors -
Class I, Class II, and Class III. Following their election at the Annual
Meeting, the term of Class I directors will expire at the 1998 annual meeting of
stockholders, the term of Class II directors will expire at the 1999 annual
meeting of stockholders, and the term of Class III directors will expire at the
2000 annual meeting of stockholders. At each election after the 1997 annual
meeting, the members of each class being voted upon will be elected to
three-year terms. Persons elected to vacancies resulting from an increase in the
number of directors serve until the next annual meeting, while persons elected
to fill vacancies not resulting from an increase in the number of directors
serve the remaining term of each vacant seat.
The Bylaw section concerning the classified board can be amended only
by a vote of two-thirds of the "continuing directors" or holders of shares with
two-thirds of the voting power of all outstanding voting stock. Continuing
directors are directors in office prior to any person or group acquiring control
of shares with the power to cast 25% or more of the votes in the election of
directors (excluding any persons currently holding such power). Current
directors own shares entitled to cast over 34% of the total votes of all
outstanding stock. Accordingly, any amendment to this section is likely to
require the support of some or all of the current directors.
Possible Antitakeover Effect
The Board of Directors implemented the classified board to promote
continuity of management and not in response to any takeover offer, share
accumulation, proxy solicitation, or other similar event. The Board has no
reason to believe any such event is threatened. Nevertheless, the overall effect
of the classified board may be to render it more difficult to remove incumbent
management, assume control of the Company, or complete a merger or tender offer
without the existing Board's approval. The staggered terms necessitate that at
least two annual meetings occur before a majority of directors come up for
election. This may discourage certain persons who would require immediate
control from proposing or proceeding with a transaction. The staggered terms
also may make it more difficult for the stockholders to replace incumbent
management even if they believe such action would be in their best interest. Any
discouraging effect on takeover attempts (including takeovers which certain
stockholders might deem in their or the Company's best interest) could
potentially depress the market price of Class A Common Stock or inhibit
temporary fluctuations in the market price of Class A Common Stock that
otherwise could result from actual or rumored takeover attempts.
THE CLASSIFICATION OF DIRECTORS AND IMPLEMENTATION OF STAGGERED
TERMS HAS ALREADY TAKEN PLACE. STOCKHOLDERS ARE NOT BEING ASKED TO VOTE TO
APPROVE THE CLASSIFIED BOARD OF DIRECTORS.
Directors Nominated for Election
Alban B. Lang, Lyn Simon, and Richard D. Simon, Jr. have been
designated Class I directors. Irene Warr and Sherry L. Bokovoy have been
designated Class II directors. Richard D. Simon, H. J. Frazier, and Kelle A.
Simon have been designated Class III directors. In the absence of contrary
<PAGE>
instructions, each proxy will be voted for the re-election of such individuals
to the indicated director classes.
Information Concerning Executive Officers and Directors
Information concerning the names, ages, positions with the Company,
tenure as a director, and business experience of the Company's executive
officers and directors is set forth below. All references to experience with the
Company include positions with the Company's operating subsidiary, Dick Simon
Trucking, Inc., a Utah corporation. Richard D. Simon is the father of Kelle A.
Simon, Lyn Simon, Sherry L. Bokovoy, and Richard D. Simon, Jr.
<TABLE>
<S> <C> <C> <C> <C>
NAME AGE POSITION DIRECTOR SINCE CLASS
- ---- --- -------- -------------- -----
Richard D. Simon (1) 61 Chairman of the Board, President, and 1972 III
Chief Executive Officer
Alban B. Lang 51 Chief Financial Officer, Treasurer, and 1988 I
Secretary; Director
Kelle A. Simon 36 Vice President of Maintenance, Director 1997 III
Lyn Simon 33 Vice President of Sales, Director 1997 I
Sherry L. Bokovoy 29 Assistant Secretary/Treasurer, Director 1997 II
Richard D. Simon, Jr. 26 Vice President of Operations, Director 1997 I
Irene Warr (1)(2) 66 Director 1995 II
H. J. Frazier (2) 62 Director 1995 III
<FN>
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
</FN>
</TABLE>
Richard D. Simon founded the Company in 1955 and has served as its
Chairman of the Board, President, and Chief Executive Officer since its
incorporation in 1972.
Alban B. Lang has served as Chief Financial Officer, Treasurer, and
Secretary since 1992, prior to which he served as controller since 1987. Mr.
Lang is a certified public accountant and holds two Bachelor of Science degrees,
one in chemistry and the other in accounting, a Masters of Business
Administration degree, and a Masters degree in fuel engineering, all from the
University of Utah.
Kelle A. Simon has served as the Company's Vice President of
Maintenance since 1992, prior to which he served as Maintenance Director from
1986 to 1992.
Lyn Simon has served as Vice President of Sales since 1986. From 1984
to 1986, Mr. Simon served in numerous operating positions with the Company,
including implementing computer and telecommunications systems, and managing the
accounts receivable, accounts payable, public relations, and fuel tax and
licensing departments.
Sherry L. Bokovoy has served as Assistant Secretary/Treasurer to the
Chief Financial Officer since 1994, and has held numerous positions within the
Company including supervising the human resource department, administrative and
maintenance payrolls, the employee stock purchase program, and the Company store
since joining the Company in 1987.
Richard D. Simon, Jr. has served as the Company's Vice President of
Operations since 1992, prior to which he served as a dispatcher and customer
service representative after joining the Company in 1990.
Irene Warr has been engaged in the private practice of law in Salt Lake
City since 1957 and has represented the Company in numerous matters since 1962.
Ms. Warr represents many trucking companies and has specialized in motor carrier
transportation law for over 30 years.
<PAGE>
H. J. Frazier held various management positions with Westinghouse
Electric, Inc. from 1973 until his retirement in 1993, including serving as
President of Westinghouse Communities, a residential real estate development
subsidiary. Prior to joining Westinghouse, Mr. Frazier practiced as an attorney.
He currently serves as a director of Full House Resort, Inc., a publicly held
resort and gaming properties enterprise.
Meetings and Compensation
Board of Directors. During the fiscal year ended September 30, 1997,
the Board of Directors of the Company met on three occasions. All directors
attended the meetings of the Board of Directors and all of the meetings held by
committees of the Board on which they served. Directors who are not employees of
the Company receive an annual retainer of $5,000 plus $1,000 per meeting of the
Board of Directors or a committee thereof attended by the director (if such
committee meeting is held other than on the day of a Board meeting), plus
reimbursement of expenses incurred in attending such Board or committee
meetings. Non-employee directors also receive the annual option to purchase
1,000 shares of the Company's Class A Common Stock.
Compensation Committee. The Compensation Committee of the Board of
Directors met once during fiscal year 1997, and all members were present at
such meeting. This committee reviews all aspects of compensation of the
Company's executive officers and makes recommendations on such matters to the
full Board of Directors. The Report of the Compensation Committee for fiscal
1997 is set forth below. See "Compensation Committee Report on Executive
Compensation."
Audit Committee. The Audit Committee, which was formed shortly after
the initial public offering, did not meet during fiscal year 1997. The Audit
Committee makes recommendations to the Board concerning the selection of outside
auditors, reviews the Company's financial statements, reviews and discusses
audit plans, audit work, internal controls, and the report and recommendations
of the Company's independent auditors, and considers such other matters in
relation to the external audit of the financial affairs of the Company as may be
necessary or appropriate in order to facilitate accurate and timely financial
reporting.
Nominating Committee. The Board does not maintain a standing
nominating committee or other committee performing similar functions.
Compensation Committee Interlocks and Insider Participation. Ms. Warr
has served on the Compensation Committee since the Company's initial public
offering on November 17, 1995. She is not an officer or employee of the Company.
On May 3, 1996, Richard D. Simon was appointed to serve on the Compensation
Committee. The Company pays Ms. Warr $30,000 annually ($2,500 per month),
provides her health insurance coverage at a cost to the Company of $130 per
month, and provides an office at the Company's headquarters. Ms. Warr has served
as counsel to Richard D. Simon since 1962 and the Company since its
incorporation in 1972. See "Certain Transactions" for additional disclosure of
transactions between the Company and its directors and executive officers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
CERTAIN TRANSACTIONS
Sherry L. Bokovoy and Jon Bokovoy are the daughter and son-in-law
of Richard D. Simon. Ms. Bokovoy is employed by the Company as assistant
treasurer and assistant secretary, and Mr. Bokovoy is employed by the Company
as a training and development supervisor. Ms. Bokovoy was paid an aggregate
$191,850 ($93,600 in salary and $98,250 in bonus) during the 1997 fiscal year.
Mr. Bokovoy was paid an aggregate $62,400 during fiscal 1997.
For additional information concerning certain transactions involving
the Company's officers and directors, see "Compensation Committee Interlocks and
Insider Participation."
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation paid to the chief executive officer and the four other
named executive officers of the Company (the "Named Officers"), for services in
all capacities to the Company for the fiscal years ended September 30, 1997,
1996, and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted
Other Annual Stock Option/ LTIP All Other
Salary Bonus Compensation(1) Award(s) SAR Payouts Compensation(2)
Name and Principal Position Year ($) ($) ($) (#) ($) ($)
- ----------------------------------- ------ -------- -------- ------------- ---------- -------- -------- -------------
Richard D. Simon, 1997 348,400 163,750 - - - - 2,803
Chairman, President, and 1996 348,400 - - - - - 2,803
Chief Executive Officer 1995 210,000 - 61,936 (3) - - - 2,803
Alban B. Lang, 1997 156,000 98,250 27,000 - 2,803
Chief Financial Officer, 1996 156,000 - - - - - 2,803
Treasurer, and Secretary 1995 156,000 - 33,762 - 23,000 - 2,803
Kelle A. Simon, 1997 156,000 98,250 - - 27,000 - 2,803
Vice President of Maintenance 1996 156,000 - - - - - 2,803
1995 156,000 - 52,628 - 23,000 - 2,803
Lyn Simon, 1997 156,000 98,250 - - 27,000 - 2,803
Vice President of Sales 1996 156,000 - - - - - 2,803
1995 156,000 - 42,768 - 23,000 - 2,803
Richard D. Simon, Jr., 1997 156,000 98,250 - - 27,000 - 2,803
Vice President of Operations 1996 156,000 - - - - - 2,803
1995 156,000 - 65,689 - 23,000 - 2,803
<FN>
(1)Represents the value of premiums and taxes due with respect to life insurance
policies that the Company has discontinued. Excludes $1,198,672 for Richard D.
Simon, $74,325 for Alban B. Lang, and $80,154 for each of Kelle A. Simon, Lyn
Simon, and Richard D. Simon, Jr., in S corporation distributions prior to the
Company's initial public offering. Excludes $21,772 paid to Kelle A. Simon,
which represents the excess of the August 1995 sale price over the April 1995
valuation of certain real estate acquired by the Company in a related company
merger.
(2)Represents the amount of Company-paid health benefits.
(3) During the fiscal year ended September 30, 1995, Mr. Simon also received
$532,000 in rental payments relating to certain real estate and revenue
equipment leased to the Company by R. D. Simon Trucking, a company owned by Mr.
Simon. Mr. Simon contributed the R. D. Simon Trucking assets, subject to related
liabilities, to the Company effective April 19, 1995, and no longer leases any
assets to the Company. Contemporaneously with the contribution of such assets,
Mr. Simon's salary was adjusted to $348,400 annually.
</FN>
</TABLE>
<PAGE>
The Company granted options to purchase 108,000 shares of Class A
Common Stock to the Named Officers during the fiscal year ended September 30,
1997. The following table sets forth information with respect to the Named
Officers concerning the exercise and ownership of options held at September 30,
1997:
AGGREGATED OPTION EXERCISES AND HOLDINGS
<TABLE>
<S> <C> <C> <C> <C>
Number of Options at 9/30/97 Value of Options at 9/30/97(1)
Name Shares Value Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------ ---------------- ----------------------------- -----------------------------
Richard D. Simon - - - -
Alban B. Lang - - 9,200/40,800 $134,550/407,700
Kelle A. Simon - - 9,200/40,800 $134,550/407,700
Lyn Simon - - 9,200/40,800 $134,550/407,700
Richard D. Simon, Jr. - - 9,200/40,800 $134,550/407,700
<FN>
(1) Based on the $23.625 closing price of the Company's Class A Common Stock
on September 30, 1997.
</FN>
</TABLE>
The Company does not have a long-term incentive plan or a defined
benefit or actuarial plan and has never issued any stock appreciation rights.
Employment Agreements
The Company currently does not have any employment contracts,
severance, or change-in-control agreements with any of its executive officers.
However, under certain circumstances in which there is a change of control,
executive officers holding outstanding stock options granted under the Plan are
entitled to exercise such options notwithstanding that such options may
otherwise not have been fully exercisable. The stock option grants to executive
officers that would be approved under Proposal 3 also would vest in the event of
a change in control, and similar rights could be extended to holders of
additional awards under the Plan. See "Proposal 3 - Approval of Amendment to
Incentive Stock Plan and Ratification of Stock Option Grants."
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee believes that the Company's executive
officers, including the Named Officers and the Chief Executive Officer, should
be compensated at a level comparable to persons holding similar positions at
peer companies, taking into account the relative size of the companies,
responsibilities of the officers, experience, geographical location, and the
relative performance of the Company and its peers, measured by stock
performance, profit margin, and revenue and net income growth rates. In
addition, the Compensation Committee will consider the attainment of specific
goals that may be established for such officers from time-to-time. Corporate
performance, measured by stock appreciation, is an important aspect of the
executive officers' compensation, as reflected by awards to date of stock
options covering 321,100 shares of Class A Common Stock to the executive
officers and certain other key employees. The base salaries of all executive
officers, including the Chief Executive Officer, were established prior to the
Company's initial public offering and prior to any meeting of the Compensation
Committee. The Compensation Committee believes that the base salaries paid to
the Chief Executive Officer and other Named Officers are reasonable in
comparison with other salaries in the industry. In addition to base salaries,
the Chief Executive Officer and Named Officers participate in a bonus pool equal
to 5 percent of earnings before provision for income taxes, subject to the
achievement of financial performance goals. Accordingly, the participants'
compensation is directly affected by the Company's profitability. The Named
Officers other than the Chief Executive Officer have received stock option
grants to link their compensation to the Company's stock price performance. The
Chief Executive Officer owns approximately 15.6% of the Company's outstanding
Common Stock. Therefore, his net worth is directly affected by the market value
of the Company's stock.
Compensation Committee:
Irene Warr
Richard D. Simon
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors, and greater than 10% stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely upon a review of the copies of such forms furnished to
the Company, or written representations that no Forms 5 were required, the
Company believes that its officers, directors and greater than 10% beneficial
owners complied with all Section 16(a) filing requirements applicable to them
during the Company's preceding fiscal year.
<PAGE>
Stock Price Performance Graph
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR SIMON TRANSPORTATION SERVICES INC.
The following graph compares the cumulative total stockholder return of
the Company's Class A Common Stock with the cumulative total stockholder return
of the NASDAQ Stock Market (U.S. Companies) and the NASDAQ Trucking &
Transportation Stocks commencing November 17, 1995, and ending September 30,
1997.
GRAPH WAS CENTERED HERE IN PRINTED FORM
<TABLE>
Legend
<S> <C> <C> <C> <C> <C> <C>
Symbol Index Description 11/17/95 3/29/96 9/30/96 3/31/97 9/30/97
- ------ ----------------- -------- ------- ------- ------- -------
__________ SIMON TRANSPORTATION SERVICES INC. $100.0 $123.9 $156.0 $191.5 $266.2
. . . . -- NASDAQ Stock Market (US Companies) $100.0 $105.6 $118.3 $117.4 $162.4
- - - - - - CRSP Index for NASDAQ Trucking & $100.0 $107.1 $101.7 $106.5 $143.5
Transportation Stock
</TABLE>
The stock performance graph assumes $100 was invested on November 17,
1995, the date of the Company's initial public offering. There can be no
assurance that the Company's stock performance will continue into the future
with the same or similar trends depicted in the graph above. The Company will
not make or endorse predictions as to future stock performance. The CRSP Index
for NASDAQ Trucking & Transportation Stocks includes all publicly held truckload
motor carriers traded on the NASDAQ Stock Market, as well as all NASDAQ
companies within the Standard Industrial Code Classifications 3700-3799,
4200-4299, 4400-4599, and 4700-4799.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth, as of October 31, 1997, the number and
percentage of outstanding shares of Common Stock beneficially owned by each
person known by the Company to beneficially own more than 5% of such stock, by
each director, by each Named Officer of the Company, and by all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount & Nature of
Beneficial
Title of Class Name of Beneficial Owner (1) Ownership (2) Percent of Class (3)
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Richard D. Simon 27,578 Class A - *
Class B Common Richard D. Simon (4) 962,661 Class B - 100%
Total - 15.6%
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Alban B. Lang 85,970 1.4%
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Kelle A. Simon 93,032 1.5%
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Lyn Simon 88,774 1.4%
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Sherry L. Bokovoy 88,581 1.4%
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Richard D. Simon, Jr. 86,829 1.4%
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Irene Warr 2,400 *
- ----------------------------------------------------------------------------------------------------------------------
Class A Common H. J. Frazier 7,000 *
- ----------------------------------------------------------------------------------------------------------------------
Class A Common Gardner Lewis Asset Management 338,000 5.3%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Class A & Class B All directors, executive officers and other 5% 1,780,825 28.0%
Common stockholders as a group (9 persons)
- ----------------------------------------------------------------------------------------------------------------------
<FN>
* Less than one percent.
(1) The business address of Richard D. Simon, Alban B. Lang, Kelle A. Simon, Lyn
Simon, Sherry L. Bokovoy, Richard D. Simon, Jr., and Irene Warr is P.O. Box
26297, Salt Lake City, Utah 84126-0297. The address of H.J. Frazier is 2700 West
Sackett Drive, Park City, Utah 84098. The address of Gardner Lewis Asset
Management is 285 Wilmington West Chest Pike, Chadds Ford, Pennsylvania 19317.
(2) In accordance with applicable rules under the Securities Exchange Act of
1934, as amended, the number of shares beneficially owned includes 14,600 shares
of Class A Common Stock underlying options to purchase granted to each of Alban
B. Lang, Kelle A. Simon, Lyn Simon, Sherry L. Bokovoy, and Richard D. Simon, Jr.
(the "Optionees") that are either currently exercisable or will become
exercisable within 60 days. The 35,400 remaining shares underlying options
granted to the Optionees that are not exercisable within 60 days are excluded.
The shares owned also include an aggregate 47,434 shares of Class A Common Stock
held in the Company's ss.401(k) Plan on behalf of Richard D. Simon (27,578
shares), Alban B. Lang (6,447 shares), Kelle A. Simon (4,990 shares), Lyn Simon
(6,667 shares), and Sherry L. Bokovoy (1,752 shares). The total shares include
1,400 shares underlying stock options granted to Irene Warr and 2.000 shares
underlying stock options granted to H.J. Frazier that are currently exercisable
or will be exercisable within 60 days. Unless otherwise indicated all shares are
owned directly.
(3) Percentage based on both Class A and Class B Common Stock and includes for
purposes of this chart only the vested portion of options granted under the
Company's Incentive Stock Plan and Outside Director Stock Plan.
(4) All shares are held by Richard D. Simon, Trustee of the Richard D. Simon
Revocable Trust, UTAD 2/12/93, of which the four children of Richard D. Simon
are the beneficiaries, subject to a life estate in favor of Valene Simon, wife
of Richard D. Simon. Because the Class B Common Stock is entitled to two votes
per share, Mr. Simon, as Trustee, controls 27.0% of the combined voting power of
the Common Stock.
</FN>
</TABLE>
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as independent
public accountants for the Company for the 1998 fiscal year. Arthur Andersen LLP
has served as independent public accountants for the Company since 1988.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting with an opportunity to make a statement, if they desire to do so, and to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" PROPOSAL 2 TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE COMPANY.
PROPOSAL 3
APPROVAL OF AMENDMENT TO INCENTIVE STOCK PLAN
AND RATIFICATION OF STOCK OPTION GRANTS
Description of Plan
In May 1995, the Company's Board of Directors and stockholders adopted
the Incentive Stock Plan (the "Plan") to attract and retain employees and
motivate them through incentives that are aligned with the Company's goals of
increased profitability and stockholder value. Awards may be in the form of
incentive stock options, non-qualified stock options, restricted stock awards,
or any other awards of stock consistent with the Plan's purpose. The Plan is
administered by the Board of Directors. All employees are eligible for
participation, and actual participants in the Plan are selected from
time-to-time by the administrator. The administrator may substitute new stock
options for previously granted options. No awards of incentive stock options may
be made after the period under applicable provisions of the Internal Revenue
Code. The Company originally reserved 400,000 shares of Class A Common Stock for
issuance pursuant to the Plan, and to date has awarded options covering
approximately 355,000 of such shares, including 250,000 shares to its officers
other than Richard D. Simon, at prices ranging from $9.00 per share to $23.50
per share.
Plan Amendment
The proposed Amendment to the Plan (the "Amendment") would reserve an
additional 600,000 shares of Class A Common Stock for issuance, bringing the
total number of shares subject to the Plan to 1,000,000. The Board of Directors
has unanimously recommended approval of Proposal 3 and believes that the ability
to offer additional equity incentives is important to providing compensation
that aligns the interests of employees and stockholders. The Board of Directors
has already voted to award options to purchase 300,000 shares to the executive
officers other than Richard D. Simon. Each of the following executive officers
would receive an option to purchase 75,000 shares: Alban B. Lang, Chief
Financial Officer; Kelle A. Simon, Vice President of Maintenance; Lyn Simon,
Vice President of Sales; and Richard D. Simon, Jr., Vice President of
Operations. The Board also awarded an option to purchase 75,000 shares to Sherry
L. Bokovoy, a key employee. The proposed option grants to the executive officers
and Ms. Bokovoy are granted at an exercise price equal to market value on the
date of the Annual Meeting and become exercisable 20% per year on each
anniversary of the Annual Meeting. The options expire if not exercised within
ten years of the grant date. All of the options are contingent upon Stockholder
approval of the Amendment. Therefore, if Proposal 3 is approved, current
executive officers as a group will receive options to purchase 300,000 shares of
Class A Common Stock. All employees, including current officers who are not
executive officers, as a group, which includes Sherry L. Bokovoy only, will
receive an option to purchase 75,000 shares of Class A Common Stock. The market
price of the stock as of October 31, 1997, was $22.25, which results in the
stock underlying the entire 600,000 shares covered by the Amendment having a
market value of $13.35 million at such date and the stock underlying the options
granted to the executive officers and Ms. Bokovoy having a market value of
approximately $8.3 million.
<PAGE>
Interest of Certain Persons in Matters to be Acted Upon in Proposal 3
Alban B. Lang, Kelle A. Simon, Lyn Simon, Sherry L. Bokovoy, and
Richard D. Simon, Jr. are directors of the Company and all except Ms. Bokovoy
are executive officers. As directors they participated in the solicitation of
proxies in favor of the proposals in this proxy statement. If the Stockholders
approve Proposal 3, the Amendment would reserve an additional 600,000 shares of
Class A Common Stock for issuance under the Plan and each of such individuals
would receive a ten-year option to purchase 75,000 shares of Class A Common
Stock at an exercise price per share equal to the market value on the date of
the Annual Meeting. Accordingly, each of the named individuals has direct,
material interest in the outcome of Proposal 3. The Company's Chairman,
President and Chief Executive Officer, Richard D. Simon, is the father of all of
the named individuals except Alban B. Lang and may be deemed to have an
indirect, material interest in the outcome of Proposal 3.
Federal Income Tax Consequences for Incentive Stock Options.
Awards may be in the form of incentive stock options, non-qualified
stock options, restricted stock awards, or any other awards of stock consistent
with the Plan's purpose. Options granted as incentive stock options ("ISOs") are
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") for special tax treatment. Neither the grant of the ISO nor
the exercise of the ISO by a participant ("Optionee") will result in the
recognition of taxable income to the Optionee. However, the exercise of an ISO
will result in an item of tax preference to an Optionee potentially subject to
the alternative minimum tax. The ultimate sale or other disposition by the
Optionee of the shares obtained upon exercise of the ISO will result in capital
gain or loss equal to the difference between the fair market value on the date
of sale and the exercise price. The Company will not have a deduction with
regard to the ISO at the time of the grant, the exercise or the ultimate sale of
the shares. Notwithstanding the foregoing, if an Optionee sells or disposes of
the shares prior to two years after the date of the grant of the ISO or one year
after the date of the exercise, the Optionee will recognize compensation income
on the sale to the extent the value on the date of exercise exceeded the
exercise price. The excess of the amount received on the sale over the value on
the date of exercise will be capital gain. In the case of such a disqualifying
disposition of shares, the Company may deduct the amount of income recognized as
compensation income. A person entitled to exercise the ISO after the death of an
Optionee may sell the stock obtained on the exercise of an option at any time
without regard to the normal holding requirements. In addition to the foregoing
federal tax considerations, the exercise of an ISO and the ultimate sale or
other disposition of the shares acquired thereby will in most cases be subject
to state income taxation.
Federal Income Tax Consequences for Nonstatutory Stock Options.
An Optionee does not realize any compensation income upon the grant of
a Nonstatutory Stock Option ("NSO"). Additionally, the Company may not take a
tax deduction at the time of the grant. Upon exercise of an NSO, an Optionee
realizes and must report as compensation income an amount equal to the
difference between the fair market value of the securities on the date of
exercise and the exercise price. The Company is entitled to take a deduction at
the same time and in the same amount as the Optionee reports as compensation
income, provided the Company withholds federal income tax in accordance with the
Code and applicable Treasury regulations. In addition to the foregoing federal
tax considerations, the exercise of an Option and the ultimate sale or other
disposition of the shares of Common Stock acquired thereby will in most cases be
subject to state income taxation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" PROPOSAL 3 TO AMEND THE INCENTIVE STOCK PLAN TO RESERVE AN ADDITIONAL
600,000 SHARES OF CLASS A COMMON STOCK FOR ISSUANCE TO PARTICIPANTS, FOR A TOTAL
OF 1,000,000 SHARES, AND TO RATIFY THE GRANT OF OPTIONS COVERING 375,000 OF SUCH
SHARES TO COMPANY OFFICERS.
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual
Meeting of the Stockholders of the Company must be received by the Corporate
Secretary of the Company at the Company's principal executive offices on or
before July 17, 1998, to be eligible for inclusion in the Company's proxy
material related to that meeting. The inclusion of any such proposals in such
proxy material shall be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
The Board of Directors does not intend to present at the Annual Meeting
any matters other than those described herein and does not presently know of any
matters that will be presented by other parties.
Simon Transportation Services Inc.
/s/ Richard D. Simon
Richard D. Simon
Chairman of the Board
November 14, 1997
AMENDMENT NO. 2
TO THE
SIMON TRANSPORTATION SERVICES INC.
INCENTIVE STOCK PLAN
This Amendment No. 2 to the Simon Transportation Services Inc.
Incentive Stock Plan (the "Amendment"), pursuant to Section 6.4 of the Plan, is
made as of October 21, 1997. All terms in this Amendment shall have the meaning
ascribed in the Plan, unless otherwise defined herein.
Background. On August 16, 1995, all voting stockholders and all
directors of Simon Transportation Services Inc., a Nevada corporation (the
"Company"), adopted an Incentive Stock Plan (the "Plan"). On August 16, 1996,
the Company adopted Amendment No. 1 to the Plan. The Board of Directors desires
to further amend the Plan to increase the number of shares subject to the Plan,
expand the definition of "Fair Market Value" to conform to proposed NASDAQ
standards, conform the ISO issuance period to IRS guidelines with respect to the
additional shares reserved under this Amendment, and define the restrictions
placed upon transfer of awards issued under the Plan.
In accordance with the foregoing, the Plan is hereby amended as set
forth below:
1. Article I is amended by deleting the second and third
sentences of Section 1.6 and replacing them with a single
sentence which shall read as follows:
The maximum number of shares of Common Stock which may be
issued for all purposes under the Plan shall be One Million
(1,000,000).
2. Article II is amended by adding the following sentence to the
end of Section 2.3:
"Fair Market Value" also may be determined by the closing
price of the Common Stock on the date in question to the
extent consistent with applicable laws and regulations.
3. Article II is further amended by deleting existing Section
2.5.b. and replacing it with new Section 2.5.b., which shall
read in its entirety as follows:
All ISOs must be granted within the time period
then-prescribed by applicable provisions of the Code and the
regulations and interpretations thereunder.
4. Article VI is amended by deleting existing Section 6.1 and
replacing it with new Section 6.1, which shall read in its
entirety as follows:
6.1 Transferability of Awards.
(a) Incentive Stock Options. ISOs may not be
sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant.
(b) Awards Other than Incentive Stock Options. All
Awards other than ISOs may be transferred by the Participant
to (i) the spouse, children, or grandchildren of the
Participant ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of the Participant and/or
Immediate Family Members ("Approved Trusts"), (iii) a
partnership, limited liability company, or corporation in
which Immediate Family Members or Approved Trusts are the only
partners, members, or stockholders, or (iv) if specifically
permitted in a Nonstatutory Stock Option agreement, other
persons or entities, provided that subsequent transfers of
transferred Options shall be prohibited except for transfers
to the Participant or transfers by will or the laws of descent
and distribution. Following transfer, the Options shall
continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that
the term "Participant" shall be deemed to refer to the
transferee.
5. Article VI is further amended to delete the second sentence of
Section 6.12.
This Amendment was duly adopted and approved by the Company's Board of
Directors by unanimous written consent as of October 21, 1997.
