<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
P.A.M. TRANSPORTATION SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
(4) Proposed maximum aggregate value of transaction:
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
P.A.M. TRANSPORTATION SERVICES, INC.
HIGHWAY 412 WEST
TONTITOWN, ARKANSAS 72770
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Holders of Common Stock of
P.A.M. Transportation Services, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of P.A.M.
Transportation Services, Inc., a Delaware corporation (the "Company"), will be
held at the Holiday Inn, 1500 South 48th Street, Springdale, Arkansas 72762, on
Thursday, May 23, 1996 at 10:00 a.m., local time, for the following purposes:
(1) To set the number of directors for the ensuing year at four and to
elect four directors to serve for a term of one year and until their
successors have been elected and qualified;
(2) To approve an amendment to the Company's Bylaws to permit the
Board of Directors to set the number of directors and to eliminate a
supermajority requirement to remove directors, as described in Agenda Item
Two to the Proxy Statement;
(3) To approve and adopt the Company's 1995 Stock Option Plan; and
(4) To conduct such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record as of the close of business on April 9, 1996
will be entitled to notice of and to vote at said meeting or any adjournment
thereof.
By Order of the Board of Directors
Robert W. Weaver
President and Chief Executive Officer
April 23, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU
ARE URGED TO COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
ACCOMPANYING RETURN ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED BY THE SENDER
IF MAILED WITHIN THE UNITED STATES.
PRELIMINARY FILING -- FOR SEC USE ONLY
<PAGE> 3
P.A.M. TRANSPORTATION SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1996
PROXY STATEMENT
This proxy statement and form of proxy, which are first being mailed to
stockholders on or about April 23, 1996, are furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of P.A.M.
Transportation Services, Inc., for use at the Annual Meeting of Stockholders of
the Company to be held at the Holiday Inn, 1500 South 48th Street, Springdale,
Arkansas on Thursday, May 23, 1996, at 10:00 a.m. local time and at any or all
adjournments thereof. The address of the principal executive offices of the
Company is Highway 412 West, Tontitown, Arkansas 72770 and the Company's
telephone number is (501) 361-9111.
The cost of this solicitation will be borne by the Company. In addition to
the mails, proxies may be solicited by officers and regular employees of the
Company, without remuneration, by personal interviews, telephone and telegraph.
It is anticipated that banks, brokerage houses and other custodians, nominees
and fiduciaries will forward soliciting material to beneficial owners of stock
entitled to vote at the meeting, and such persons will be reimbursed for the
out-of-pocket expenses incurred by them in this connection.
Any proxy given pursuant to this solicitation may be revoked by any
stockholder who attends the meeting and gives oral notice of his election to
vote in person, without compliance with any other formalities. In addition, any
proxy given pursuant to this solicitation may be revoked prior to the meeting by
delivering to the Secretary of the Company an instrument revoking it or a duly
executed proxy for the same shares bearing a later date. Proxies which are
returned properly executed and not revoked will be voted in accordance with the
stockholder's directions specified thereon. Where no direction is specified,
proxies will be voted FOR each of the matters set forth in the Notice
accompanying this proxy statement. Abstentions and broker non-votes will not be
counted as votes either in favor of or against the matter with respect to which
the abstention or broker non-vote relates; however, with respect to any proposal
other than the election of directors, abstentions and broker non-votes would
have the effect of a vote against such proposal.
Only stockholders of record at the close of business on April 9, 1996 will
be entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. As of April 9, 1996, the Company had outstanding 5,008,357 shares of
common stock. Each share of common stock issued and outstanding on such record
date is entitled to one vote.
PRELIMINARY FILING -- FOR SEC USE ONLY
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 9, 1996 with
respect to ownership of the outstanding common stock by (i) all persons known to
the Company to own beneficially more than five percent (5%) of any class of
outstanding stock of the Company, (ii) each director of the Company and each
nominee for director, (iii) each of the "Named Executive Officers" of the
Company as shown in "Executive Compensation" herein, and (iv) all directors and
executive officers of the Company as a group. Unless otherwise indicated, the
named person has sole voting and investment powers with respect to all shares.
<TABLE>
<CAPTION>
SHARES OF PERCENT
COMMON STOCK OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
------------------------------------------------------------- ------------------ -------
<S> <C> <C>
MJM First Limited Partnership................................ 5,602,713(1) 74.65%
c/o Properties Management, Inc.
12225 Stephens Road
Warren, Michigan 48091
Robert W. Weaver............................................. 612,428(2) 12.20%
4470 Bridgewater Lane
Fayetteville, Arkansas 72701
Daniel C. Sullivan........................................... 12,000(3) *
William E. Morrissey......................................... 5,000(4) *
Beryl L. Shroyer............................................. 5,000(5) *
Charles F. Wilkins........................................... 1,000(6) *
Matthew T. Moroun............................................ 5,000(5) *
W. Clif Lawson............................................... 62,600(7) 1.24%
Larry J. Goddard............................................. 60,813(7) 1.21%
Directors and Executive Officers as a Group (8 persons)...... 763,841(8) 14.87%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes presently exercisable warrants to purchase 3,092,000 shares of
common stock of the Company. The percentage shown assumes such warrants
have been exercised in full. MJM First Limited Partnership may be deemed to
be under common control with Central Transport, Inc., with whom the Company
has certain business relationships. See "Certain Relationships and Related
Transactions."
(2) Includes 25,000 shares subject to presently exercisable incentive stock
options.
(3) Includes 12,000 shares subject to presently exercisable non-qualified stock
options.
(4) Includes 3,000 shares subject to presently exercisable non-qualified stock
options.
(5) Includes 5,000 shares subject to presently exercisable non-qualified stock
options.
(6) Includes 1,000 shares subject to presently exercisable non-qualified stock
options.
(7) Includes 46,000 shares subject to presently exercisable incentive stock
options.
(8) Includes 117,000 shares subject to presently exercisable incentive stock
options and 26,000 shares subject to non-qualified stock options.
There are no arrangements known to the Company, the operation of which may,
at a subsequent date, result in a change in control of the Company.
AGENDA ITEM ONE
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Company, the number of members of the Board
of Directors to be set by resolution of the stockholders is proposed to be four,
all of whom are to be elected at the Annual Meeting. Proxies received will be
voted for the nominees named below, unless authority to do so is withheld. In
the
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2
<PAGE> 5
event any nominee is unable or declines to serve as a director at the time of
the meeting, the persons named as proxies therein will have discretionary
authority to vote the proxies for the election of such person or persons as may
be nominated in substitution by the present Board of Directors. Management knows
of no current circumstances which would render any nominee named herein unable
to accept nomination or to serve if elected.
Members of the Board of Directors are elected annually to serve until the
next annual meeting of stockholders or until their successors are elected and
qualified. The affirmative vote of a majority of all votes cast at the meeting
by the holders of the common stock is required for the election of the four
nominees standing for election.
The terms of William E. Morrissey and Beryl L. Shroyer will expire on the
date of the Annual Meeting.
The following persons have been nominated by management for election to the
Board of Directors:
ROBERT W. WEAVER, age 46, is a co-founder of the Company and served as its
Vice President and a director from March 1980 to June 1986. He was President and
Chief Operating Officer and a director from June 1986 until he resigned in
February 1987. Between February 1987 and September 1989, he was self-employed as
a transportation consultant. In September 1989, Mr. Weaver returned to the
Company as President and Chief Operating Officer and a director. On February 22,
1990, he was appointed Chief Executive Officer.
DANIEL C. SULLIVAN, age 55, has been a practicing attorney, specializing in
transportation law, for more than ten years. Mr. Sullivan is currently a member
of the firm of Sullivan & Hincks, Oak Brook, Illinois. Mr. Sullivan has served
as a director of the Company since June 1986.
MATTHEW T. MOROUN, age 23, is a stockholder and director of CenTra, Inc., a
transportation holding company based in Warren, Michigan, and since January
1995, has been a director, stockholder and employee of Liberty Bell Agency, an
insurance claims adjustment company based in Sterling Heights, Michigan. Prior
to 1995, Mr. Moroun attended Dickinson College, Carlisle, Pennsylvania, where he
earned his bachelors degree in December 1994. Mr. Moroun has served as a
director of the Company since May 1992.
CHARLES F. WILKINS, age 57, recently retired, in January 1995, after 34
years of employment with Ford Motor Company. He served in various positions with
Ford Motor Company in transportation management, including three years of
service as Traffic Manager in Europe. Mr. Wilkins retired from the position of
Director, Transportation and Traffic Office, in which he had served since 1990.
Mr. Wilkins has been a member of the National Motor Carrier Advisory Committee
of the Federal Highway Administration and was previously active in the National
Industrial Transportation League as Chairman of the Audit Committee and Third
Vice Chairman. Mr. Wilkins is currently an associate member of the American
Society of Transportation and Logistics and a member of the Council of Logistics
Management. Mr. Wilkins has served as a director of the Company since June 1995.
The Company has had certain business relationships with Universal Am-Can,
Ltd. and Central Transport, Inc., wholly-owned subsidiaries of CenTra, Inc., and
Liberty Bell Agency. See "Certain Relationships and Related Transactions."
COMMITTEES OF THE BOARD AND MEETINGS
The Company's Board of Directors has the following standing committees:
(A) The Executive Committee, currently comprised of Messrs. Weaver and
Moroun whose function is to exercise the authority of the Board of Directors in
accordance with the Bylaws of the Company between regular meetings of the Board.
The Executive Committee held no meetings during 1995.
(B) The Audit Committee, currently comprised of Messrs. Sullivan, Shroyer,
Morrissey and Moroun, whose function is to review and make recommendations to
the Board of Directors on the Company's audit
PRELIMINARY FILING -- FOR SEC USE ONLY
3
<PAGE> 6
procedures and independent auditors' report to management and to recommend to
the Board of Directors the appointment of independent auditors for the Company.
The Audit Committee held one meeting during 1995.
(C) The Compensation and Stock Option Committee, currently comprised of
Messrs. Morrissey and Moroun, whose function is to review and make
recommendations to the Board of Directors with respect to compensation of
officers of the Company as well as to administer the Company's Incentive and
Non-Qualified Stock Option Plans. The Compensation and Stock Option Committee
took action once by unanimous written consent during 1995.
The Company does not have a Directors Nominating Committee, that function
being reserved to the entire Board of Directors. The Company does not have any
formal procedure for considering stockholders' suggestions for director nominees
prior to the solicitation of proxies. At the Annual Meeting, the Chair will
entertain nominations for directors in accordance with the Company's Bylaws and
Robert's Rules of Order.
During 1995, the Board of Directors held a total of eight meetings and
acted three times by unanimous written consent. Each incumbent director attended
at least 75% of the aggregate of all meetings held by the Board of Directors and
by committees of the Board on which the director served during the director's
period of service.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain officers and persons who own more than 10% of the outstanding
common stock of the Company, to file with the Securities and Exchange Commission
reports of changes in ownership of the common stock of the Company held by such
persons. Officers, directors and greater than 10% stockholders are also required
to furnish the Company with copies of all forms they file under this regulation.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended December 31, 1995, the Company's
officers, directors and 10% stockholders complied with all Section 16(a) filing
requirements applicable to them, except as follows: Charles F. Wilkins filed his
Initial Statement of Beneficial Ownership of Securities on Form 3 late, and
Robert W. Weaver filed one report on Form 4 late reporting a gift transaction.
PRELIMINARY FILING -- FOR SEC USE ONLY
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each other executive officer whose salary and bonus
exceeded $100,000 (the "Named Executive Officers") for the years ended December
31, 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------
ALL
SECURITIES OTHER
UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) SATION(A)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert W. Weaver...................... 1995 $245,875 $49,000 50,000 $ --
President and Chief Executive 1994 225,000 33,750 25,000 400
Officer; Director 1993 219,252 -- -- 400
W. Clif Lawson........................ 1995 $123,757 $24,335 95,000 $ 400
Executive Vice President and Chief 1994 111,050 17,138 45,000 --
Operating Officer 1993 98,707 -- -- --
Larry J. Goddard...................... 1995 $ 94,439 $20,000
Vice President of Finance, Chief 1994 85,981 13,350 95,000 $ 400
Financial Officer and 1993 73,098 -- 45,000 400
Secretary/Treasurer -- 400
</TABLE>
- ---------------
(a) Represents amounts contributed by the Company pursuant to the Company's
401(k) Plan.
STOCK OPTION PLANS
During 1995, stock options were granted to the following named Executive
Officers:
OPTIONS GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------ POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OPTION TERM (1)
OPTIONS IN FISCAL EXERCISE EXPIRATION ------------------------
NAME GRANTED(2) YEAR PRICE DATE 5% 10%
- ------------------------------- --------- ---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Weaver............... 25,000 9.62% $ 6.32 6/29/00 $25,468.13 $ 73,509.38
W. Clif Lawson................. 50,000 19.23% $ 5.75 6/29/01 $97,778.75 $221,835.00
Larry J. Goddard............... 50,000 19.23% $ 5.75 6/29/01 $97,778.75 $221,835.00
</TABLE>
- ---------------
(1) The dollar amounts under these columns represent the potential realizable
value of each option assuming that the market price of the common stock
appreciates in value from the date of grant at the 5% and 10% annualized
rates prescribed by regulation and therefore are not intended to forecast
possible future appreciation, if any, of the price of the common stock.
(2) Options vest in increments of 20% per year, with 20% vesting at the date of
grant and the remaining 80% vesting over the next succeeding four years.
PRELIMINARY FILING -- FOR SEC USE ONLY
5
<PAGE> 8
The following table shows the fiscal year-end values of unexercised options
held by each Named Executive Officer. No stock options were exercised by any
Named Executive Officer during 1995.
FISCAL YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(A)
--------------------------- ---------------------------
NAME EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- ---------------------- --------------------------- ---------------------------
<S> <C> <C>
Robert W. Weaver...... 25,000/25,000 $111,525/$ 52,350
W. Clif Lawson........ 46,000/49,000 $207,750/$122,250
Larry J. Goddard...... 46,000/49,000 $207,750/$122,250
</TABLE>
- ---------------
(a) Dollar values were calculated by determining the difference between the fair
market value of the underlying securities at year end and the exercise
price of the options.
COMPENSATION OF DIRECTORS
Non-employee directors are currently paid $3,000 per year and $1,000 per
Board or committee meeting attended, plus their expenses in attending such
meetings. Directors who are also Company employees are not additionally
compensated for their services as members of the Board of Directors.
Pursuant to automatic grant provisions under the Company's Non-Qualified
Stock Option Plan, on March 2 of each year, each non-employee is granted an
option to purchase 1,000 shares of common stock, at an exercise price equal to
100% of the fair market value of such stock on the date of grant. During 1995
options were granted to the then five non-employee directors of the Company
covering an aggregate of 5,000 shares of common stock at a per share exercise
price of $6.75.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS
Ronald W. Lech served as a member of the Company's Compensation and Stock
Option Committee until June 2, 1995, when Mr. Lech resigned as a director of the
Company. During 1995, Mr. Lech served as a director and executive officer of
both CenTra, Inc. ("CenTra") and its subsidiary, Central Transport, Inc.
("Central"). The Company has had certain business relationships with Central and
other subsidiaries of CenTra, as described more fully below. William E.
Morrissey served as a member of the Compensation and Stock Option Committee
during 1995, and during 1995 served as the President of Universal Am-Can, Ltd.,
with whom the Company has had a business relationship, as described more fully
below. In addition, Matthew T. Moroun served as a member of the Compensation and
Stock Option Committee during 1995. Mr. Moroun is a stockholder and director of
CenTra, Inc. and is a stockholder, director and employee of Liberty Bell Agency,
with whom the Company has had business relationships as described more fully
below.
During 1995, Central made payments to the Company in the aggregate amount
of $4,915,612. The principal components of these payments included freight
transported for Central ($3,952,684), equipment lease payments ($789,134) and
miscellaneous services or expenses ($173,793).
During 1995, the Company made payments to Central in the aggregate amount
of $4,988,297. The principal components of these payments included fuel
($4,817,649), with the balance comprised of miscellaneous services or expenses
($170,648). Also during 1995, the Company made payments to two other
transportation subsidiaries of CenTra in the aggregate amount of $270,809 for
tires and road service, and made equipment lease payments of $77,125 to a
division of Universal Am-Can, Ltd.
During 1995, the Company made liability insurance premium payments of
$194,751 to Liberty Bell Agency, of which Matthew T. Moroun is a stockholder,
director and employee.
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6
<PAGE> 9
In May 1993, the Company negotiated a financing arrangement with Central
pursuant to which the Company purchased certain revenue equipment previously
leased under an operating lease with Central. The Company executed a $2.4
million promissory note to Central, which was payable in monthly installments of
$59,724 with interest at the rate of 9% per annum. During 1995, the Company
retired the noted and paid Central $1,156,426.
Management believes that each of the above transactions was entered into on
terms as favorable to the Company as could have been obtained from unaffiliated
third parties, at the time such transactions were negotiated.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Additional Information with Respect to Compensation Committee
Interlocks and Insider Participation in Compensation Decisions" which describes
certain business relationships between the Company and certain of its directors.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this proxy statement, in whole or in part, the following Report of the
Board of Directors on Executive Compensation and the Stockholder Return
Performance Graph shall not be incorporated by reference into any such filings.
REPORT OF BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Company reported net income of $5.01 million or $.65 per share for the
year ended December 31, 1995, and has been profitable since 1992. Prior to 1992,
the Company experienced losses in each of the three years ended December 31,
1991, 1990 and 1989. The compensation paid to the executive officers of the
Company, including the Chief Executive Officer, has been conservative in light
of the financial performance of the Company prior to 1992 and as a part of its
efforts to return to and increase profitability. To reward the executive
officers of the Company for the Company's significantly improved performance in
recent years, the executive officers were paid a cash bonus for fiscal 1994 and
1995 under an Incentive Compensation Plan adopted by the Board of Directors
(described below). The Company has a Compensation and Stock Option Committee,
which acted once by unanimous written consent during 1995 for the purpose of
granting stock options to certain employees and executive officers of the
Company.
For fiscal 1994, 1995 and 1996, the Board of Directors has adopted an
Incentive Compensation Plan covering all employees (except employees who are
participating in an existing cash bonus plan), including the executive officers,
which provides for the payment of a cash bonus for any calendar year in which
the Company achieves certain specified operating ratios. For each targeted
operating ratio goal, participating employees will earn a specified percentage
of their base compensation as a cash bonus. The Board of Directors believes this
program will serve as an incentive to all participating employees (currently
approximately 200 employees) to give greater effort on behalf of the Company.
With respect to the Chief Executive Officer of the Company, from January
1995 through December 31, 1995, Robert W. Weaver was compensated pursuant to an
Employment Agreement negotiated between certain of the Company's directors and
Mr. Weaver, pursuant to which his annual base salary for 1995 was $245,000.
During 1995, pursuant to the Company's Incentive Compensation Plan, Mr. Weaver
was also paid a bonus of $49,000. The Board of Directors believes that Mr.
Weaver's compensation level compares favorably with other chief executive
officers of public transportation companies similarly situated.
With respect to the other executive officers of the Company, including (i)
the Executive Vice President and Chief Operating Officer and (ii) the Vice
President-Finance, Chief Financial Officer and Secretary/ Treasurer, the Board
of Directors believes that compensation of these individuals has been modest.
Prior to
PRELIMINARY FILING -- FOR SEC USE ONLY
7
<PAGE> 10
1995, salary and bonus for each of these individuals amounted to less than
$100,000 per year. These officers received a cash bonus during 1994 in the
amounts of $17,138 and $13,350, respectively, and during 1995 in the amounts of
$24,335 and $20,000, respectively, under the Company's Incentive Compensation
Plan, reflecting the Company's improved performance in recent years.
The Company maintains an Incentive Stock Option Plan and a Non-Qualified
Stock Option Plan for the purpose of awarding options to its executive officers
and other key employees in the discretion of the Compensation and Stock Option
Committee. During 1995, incentive stock options were granted to Robert W.
Weaver, W. Clif Lawson and Larry J. Goddard in the amounts of 25,000, 50,000 and
50,000, respectively.
The Board of Directors expects that as the Company's performance continues
to improve, the Compensation and Stock Option Committee may take action in the
future, based upon guidelines provided by the Board of Directors, to provide
additional incentive compensation to the Company's executive officers. The
Company's future compensation policies will be developed in light of the
Company's profitability and with the goal of rewarding members of management for
their contributions to the Company's success.
It is the Company's intention that the compensation to be paid to its
executive officers will not exceed the present maximum allowable amount for
purposes of deductibility set forth in the Internal Revenue Code.
<TABLE>
<S> <C>
Robert W. Weaver Daniel C. Sullivan
William E. Morrissey Beryl L. Shroyer
Charles F. Wilkins Matthew T. Moroun
</TABLE>
PRELIMINARY FILING -- FOR SEC USE ONLY
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<PAGE> 11
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's common stock against
the cumulative total return of the CRSP Total Return Index for the NASDAQ Stock
Market (U.S. Companies) and the CRSP Total Return Index for the NASDAQ Trucking
and Transportation Stocks for the period of five years commencing December 31,
1990 and ending December 31, 1995. The graph assumes that the value of the
investment in the Company's common stock and each index was $100 on December 31,
1990.
P.A.M. TRANSPORTATION SERVICES, INC.
STOCKHOLDER RETURN PERFORMANCE GRAPH
1995
[GRAPH]
<TABLE>
<CAPTION>
NASDAQ
TRUCKING &
MEASUREMENT PERIOD NASDAQ STOCK TRANSPORTA-
(FISCAL YEAR COVERED) PTSI MARKET U.S. TION STOCKS
<S> <C> <C> <C>
1990 100 100 100
1991 82.35 160.56 145.37
1992 235.29 186.87 177.90
1993 1,176.47 214.51 216.13
1994 1,129.41 209.69 196.16
1995 1,552.94 296.30 223.11
</TABLE>
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<PAGE> 12
AGENDA ITEM TWO
PROPOSAL TO AMEND BYLAWS
SUMMARY OF PROPOSED AMENDMENT
On April 4, 1996, the Board of Directors unanimously approved an amendment
to the Company's Bylaws designed to permit the Board of Directors to set the
number of directors by Board resolution from time to time and to eliminate a
supermajority voting requirement to remove directors.
Article II, entitled "Directors," Section 2, regarding the number, tenure,
qualifications and removal of directors, presently provides that the Board of
Directors shall consist of not less than three (3) nor more than fifteen (15)
members, the precise number to be fixed by resolution of the stockholders from
time to time. Section 2 of Article II also provides that a director may be
removed by the affirmative vote of the holders of 75% of the outstanding shares
of stock of the Company entitled to elect directors. By its terms, Section 2 of
Article II may not be amended, altered or repealed except by the affirmative
vote of the holders of at least 75% of the outstanding shares of stock of the
Company entitled to elect directors.
The Board of Directors has approved a proposed amendment to Section 2,
Article II of the Bylaws to permit the number of directors to be fixed by
resolution of the Board of Directors, as opposed to the stockholders. The
purpose of the new provision is to permit the Board of Directors to increase the
number of directors to allow the election of a new director between annual
meetings of stockholders in the event that the Company identifies a qualified
candidate for director who the Board of Directors believes would be a valuable
and contributing member. As the Bylaws now stand, the Board of Directors would
be unable to increase the number of directors to permit the addition of a new
director without stockholders approving the increase. The Board of Directors
believes that it is in the best interests of the Company and its stockholders to
allow for greater flexibility in the addition of new members to the Board of
Directors between annual meetings of stockholders.
In addition, Section 2 of the existing Article II requires a 75%
supermajority vote in order to remove a director. The proposed new Bylaw
provision would permit removal of directors in accordance with the General
Corporation Law of Delaware, which generally provides that any director may be
removed with or without cause by the holders of a majority of the shares then
entitled to vote at an election of directors.
The existing provisions of Section 2, Article II, are intended to provide
anti-takeover protection to the Company and its Board of Directors, and to make
it more difficult for a person to effect a change in the number or composition
of the Board of Directors. The current Board of Directors of the Company
believes the existing Bylaw provision is unnecessarily restrictive and
recommends that a new Bylaw provision be adopted to provide more flexibility in
determining the number of members of the Board of Directors and to remove the
supermajority voting requirement for the removal of a director.
The new Bylaw provision would also eliminate the requirement for a
supermajority affirmative vote of 75% of the outstanding shares in order to
amend such Section 2 of Article II of the Bylaws in the future. This
supermajority voting requirement is also in the nature of an anti-takeover
provision, and the Board of Directors believes that it is in the best interests
of the Company and its stockholders to remove such voting requirement. If the
new Bylaw provision is adopted, then such Section 2 may be amended in the future
by a majority vote of the Board of Directors or the stockholders of the Company.
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EXISTING BYLAW PROVISION
The exact language of the existing Section 2, Article II, currently reads
as follows:
"ARTICLE II.
DIRECTORS
Section 2. NUMBER, TENURE, QUALIFICATIONS, REMOVAL. The Board of
Directors shall consist of not less than three (3) nor more than fifteen (15)
members, the precise number to be fixed by resolution of the shareholders from
time to time. Each director shall hold office until the annual meeting of
shareholders held next after his election and until his successor has been duly
elected and has qualified, or until his earlier resignation, removal from
office, or death. Directors need not be shareholders. Any director may be
removed at any time, with or without cause, by the affirmative vote of the
holders of seventy-five percent (75%) of the outstanding shares of the stock of
the Corporation entitled to elect directors, either at the annual meeting or at
a special meeting called for that purpose. This Section shall be amended,
altered, changed or repealed only with the affirmative vote or consent of the
holders of at least seventy-five percent (75%) of the outstanding shares of
stock of the Corporation entitled to elect directors, in addition to any
approval of the Board of Directors or any shareholder vote or consent required
by law or any provision of the Amended and Restated Certificate of Incorporation
of the Corporation or otherwise."
PROPOSED NEW BYLAW PROVISION
The following resolution shall be introduced at the Annual Meeting of
Stockholders for approval:
"RESOLVED, that the existing Article II, entitled "Directors," Section
2, of the Bylaws of P.A.M. Transportation Services, Inc. is hereby deleted
and repealed in its entirety and the following new Article II, Section 2,
is hereby adopted:
Section 2. NUMBER, TENURE, QUALIFICATIONS, REMOVAL. The business
and affairs of the Corporation shall be managed by or under the
direction of a Board of Directors, which shall consist of not less than
three (3) nor more than fifteen (15) members, the precise number to be
fixed by resolution of the Board of Directors from time to time.
Directors shall be elected at each Annual Meeting of Stockholders. Each
director shall hold office until the next Annual Meeting of Stockholders
and thereafter until his successor shall have been elected and
qualified, or until his earlier resignation or removal. Directors need
not be residents of Delaware or stockholders of the Company. Directors
shall be removable in the manner provided by the General Corporation Law
of Delaware. Directors shall be elected by plurality vote."
The affirmative vote of the holders of at least 75% of the outstanding
shares of common stock of the Company entitled to elect directors is required to
approve the foregoing resolution adopting a new Article II, Section 2, of the
Company's Bylaws. THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE FOR THE RESOLUTION ADOPTING THE NEW BYLAW PROVISION.
AGENDA ITEM THREE
PROPOSAL TO APPROVE AND ADOPT THE 1995 STOCK OPTION PLAN
On June 29, 1995, the Board of Directors of the Company adopted a 1995
Stock Option Plan (the "1995 Plan") for eligible officers, directors and key
employees of the Company and its subsidiaries and recommends that the
stockholders vote for approval of the 1995 Plan, which provides for the grant of
both incentive and non-qualified stock options. The Company estimates that there
are currently approximately ten (10) officers and employees and six (6)
directors eligible for participation in the 1995 Plan.
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The purpose of the 1995 Plan is to provide motivation for participating
directors, officers and key employees to remain in the employ of and to give a
greater effort on behalf of the Company. A copy of the 1995 Plan is attached
hereto as Exhibit A. The 1995 Plan will replace the Company's Non-Qualified
Stock Option Plan which was adopted in 1987 and is scheduled to expire in 1997
and will replace the Company's Incentive Stock Option Plan which was adopted in
1986 and is scheduled to expire in September 1996. Stock options currently
outstanding under each of these plans will remain outstanding in accordance with
the terms of such plans and the respective stock option agreements thereunder.
DESCRIPTION OF 1995 PLAN
Effective Date. The effective date of the 1995 Plan is June 29, 1995. The
1995 Plan shall remain in effect until all shares subject to or which may become
subject to the 1995 Plan shall have been purchased pursuant to options granted
under the 1995 Plan, provided that options under the 1995 Plan must be granted
within ten (10) years from the effective date.
Shares Subject to the 1995 Plan. The shares of the Company's common stock
available for issuance under the 1995 Plan may, at the election of the Board of
Directors, be either treasury shares or shares originally issued for such
purpose. The maximum number of shares which shall be reserved and made available
for sale under the 1995 Plan shall be 600,000. Any shares subject to an option
which for any reason expires or is terminated unexercised may again be subject
to an option under the 1995 Plan.
Persons Eligible to Participate in the 1995 Plan. Under the 1995 Plan,
options may be granted only to officers, directors, key employees and
consultants of the Company and its subsidiaries.
Administration of the 1995 Plan. The 1995 Plan shall be administered by
the Board of Directors or by a committee comprised of no fewer than two (2)
members appointed by the Board of Directors of the Company from among its
members (the "Committee"). Members of the Committee shall be "disinterested
persons" as such term is defined under Rule 16b-3 under the Securities Exchange
Act of 1934, as amended. Subject to the provisions of the 1995 Plan, the Board
of Directors or the Committee has the authority to determine the individuals to
whom options shall be granted and to determine exercise prices, the number of
shares covered by each option, vesting requirements, and the terms and
conditions of each option granted under the plan.
Exercise Price, Terms of Exercise and Payment for Shares. Each option
granted under the 1995 Plan will be represented by an Option Agreement which
shall set forth the terms particular to that option, including the number of
shares covered by the option, the exercise price, the term of the option and any
vesting requirements.
The exercise price of options granted under the 1995 Plan will be
determined by the Committee, but in no event shall be less than 100% of the
Market Price of the common stock on the date of the grant of the option;
provided, however, that any non-qualified option may be granted at a purchase
price equal to not less than 75% of the Market Price of the common stock on the
date of the grant of the option. The term Market Price is defined in the 1995
Plan to be the fair market value of the Company's common stock as determined by
the Board of Directors or the Committee, acting in good faith, under any method
consistent with the Internal Revenue Code of 1986, as amended (the "Code"), or
Treasury Regulations thereunder, as the Board or the Committee shall in its
discretion apply at the time of the grant of the option concerned.
Options may be exercised in whole or in part by the optionee, but in no
event later than ten (10) years from the date of the grant. Any incentive stock
option granted under the 1995 Plan to an individual who owns more than 10% of
the total combined voting power of all classes of stock of the Company or a
subsidiary may not be purchased at a price less than 110% of the Market Price on
the day the option is granted, and no such option may be exercised more than
five (5) years from the date of grant. The purchase price for the shares shall
be paid in cash or shares of common stock of the Company, or a combination of
both. Upon payment, the Company will deliver stock certificates for such shares
to the optionee.
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Automatic Grant of Options to Non-Employee Directors. The 1995 Plan grants
to non-employee directors of the Company, without necessity of action by the
Board of Directors or any committee thereof, an annual option to purchase 1,000
shares of common stock on March 2 of each year at an exercise price equal to the
Market Price of such stock on the date of grant. Such options are exercisable
from the date of grant until the date which is the fifth anniversary of the date
of grant, unless earlier terminated in accordance with the provisions of the
1995 Plan. Options granted to non-employee directors under the 1995 Plan conform
in all respects to the terms of the 1995 Plan.
Termination of Service. In the event that a holder of an option granted
under the 1995 Plan ceases to be a director or employee of the Company or any
subsidiary of the Company for any reason other than death or total and permanent
disability, any option or unexercised portion thereof, which is otherwise
exercisable on the date of such termination, shall expire three (3) months from
the date of such termination, but in no event after the term provided in the
option agreement. Any options which are not exercisable on the date of such
termination shall immediately terminate.
Upon the death or total and permanent disability of the holder of an
option, any option or unexercised portion thereof which is otherwise exercisable
shall expire within one year of the date of such death or disability. Any
options which were not exercisable on the date of such death or disability shall
be immediately exercisable for a period of one year.
Options granted under the 1995 Plan are exercisable during the lifetime of
the optionee only by the optionee. All options granted under the 1995 Plan are
non-transferable except by will or under the laws of descent and distribution.
Reorganization and Recapitalization. In case the Company is merged or
consolidated with another corporation and the Company is not the survivor, or in
case the property or stock of the Company is acquired by another corporation, or
in case of a separation, reorganization, recapitalization or liquidation of the
Company, the Board of Directors of the Company, or the Board of Directors of any
corporation assuming the obligations of the Company, shall either make
appropriate provision for the protection of any outstanding options, including
without limitation the substitution of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect of the shares of the common stock of the Company, or upon
written notice to the optionee, provide that the option must be exercised within
60 days or it will be terminated.
In the event that dividends are payable in common stock of the Company or
in the event there are splits, subdivisions or combinations of shares of common
stock of the Company, the number of shares available under the 1995 Plan will be
increased or decreased proportionately, as the case may be, and the number and
option exercise price of shares deliverable upon the exercise thereafter of any
option theretofore granted will be increased or decreased proportionately, as
the case may be.
Limitation on Number of Shares that may be Purchased. For options granted
under the 1995 Plan, the aggregate fair market value (determined at the time the
option was granted) of the shares with respect to which incentive stock options
are exercisable for the first time by an optionee during any calendar year shall
not exceed $100,000.
Amendment and Termination of the 1995 Plan. With respect to any shares of
stock at the time not subject to options, the Board of Directors may at any time
and from time to time modify or amend the 1995 Plan in any respect, except that
no such modification or amendment shall be made absent the approval of the
stockholders of the Company to: (i) increase the maximum number of shares for
which options may be granted under the 1995 Plan; (ii) reduce the option price
or waiting period; (iii) extend the period during which options may be granted
or exercised; (iv) change the class of persons eligible for incentive stock
options; (v) otherwise materially modify the requirements as to eligibility for
participation in the 1995 Plan; or (vi) otherwise materially increase the
benefits accruing to participants under the 1995 Plan. The Company's Board of
Directors may also suspend the granting of options pursuant to the 1995 Plan at
any time and may terminate the 1995 Plan at any time; provided, however, no such
suspension or termination shall modify or
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amend any option granted before such suspension or termination unless the
affected participant consents in writing, to such modification or amendment or
there is a dissolution or liquidation of the Company.
With the consent of the affected optionee, the Board of Directors or the
Committee may amend outstanding option agreements in a manner consistent with
the 1995 Plan. Without employee consent, the Board of Directors may at any time
and from time to time modify or amend option agreements in such respects as it
deems necessary in order that incentive options granted under the 1995 Plan
shall comply with the appropriate provisions of the Code and regulations
thereunder which are in effect from time to time respecting "Qualified Incentive
Options."
OPTIONS GRANTED SUBJECT TO SHAREHOLDER APPROVAL
On June 29, 1995, options were granted pursuant to the 1995 Plan, subject
to stockholder approval of such plan at this meeting, to purchase an aggregate
of 169,000 shares of common stock. On March 21, 1996 the market value of the
Company's common stock was $7.75 per share and the aggregate market value of the
common stock underlying such options was $1,309,750. The following table
indicates the amount of options received by the (i) Named Executive Officers;
(ii) all current executive officers as a group; (iii) all current directors who
are not executive officers as a group; (iv) each nominee for election as
director; and (v) all employees, including all current officers who are not
executive officers, as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME POSITION UNDERLYING OPTION(1)
--------------------------------- --------------------------------- --------------------
<S> <C> <C>
Robert W. Weaver................. President, Chief Executive 25,000(2)
Officer and Director/Director
Nominee
W. Clif Lawson................... Executive Vice President and 40,000(3)
Chief Operating Officer
Larry J. Goddard................. Vice President of Finance, Chief 40,000(3)
Financial Officer and
Secretary/Treasurer
Daniel C. Sullivan............... Director/Director Nominee --
Matthew T. Moroun................ Director/Director Nominee --
Charles Wilkins.................. Director/Director Nominee --
All current directors who are not
executive officers as a --
group..........................
All executive officers as a 105,000
group..........................
All employees, including all
current officers who are not 64,000
executive officers, as a
group..........................
</TABLE>
- ---------------
(1) These options are subject to stockholder approval at the 1996 Annual Meeting
of Stockholders and are subject to vesting restrictions placed on the
options by the Compensation and Stock Option Committee of the Board of
Directors on the date the options were granted.
(2) This option was granted at an exercise price of $6.32 per share, 110% of the
fair market value of the common stock at the date of grant, and will expire
on June 29, 2000.
(3) This option was granted at an exercise price of $5.75 per share, 100% of the
fair market value of the common stock at the date of grant, and will expire
on June 29, 2001.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. All incentive stock options granted or to be
granted under the 1995 Plan which are designated as incentive stock options are
intended to be incentive stock options as defined in Section 422 Code.
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Under the provisions of Section 422 of the Code, neither the holder of an
incentive stock option nor the Company will recognize income, gain, deduction or
loss upon the grant or exercise of an incentive stock option. An optionee will
be taxed only when the stock acquired upon exercise of his incentive stock
option is sold or otherwise disposed of in a taxable transaction. If at the time
of such sale or disposition the optionee has held the shares for the required
holding period (two years from the date the option was granted and one year from
the date of the transfer of the shares to the optionee), the optionee will
recognize long-term capital gain or loss, as the case may be, based upon the
difference between his exercise price and the net proceeds of the sale. However,
if the optionee disposes of the shares before the end of such holding period,
the optionee will recognize ordinary income on such disposition in an amount
equal to the lesser of:
(a) gain on the sale or other disposition; or
(b) the amount by which the fair market value of the shares on the
date of exercise exceeded the option exercise price, with any excess gain
being capital gain, long-term or short-term, depending on whether or not
the shares had previously been held for more than one year on the date of
sale or other taxable disposition.
The foregoing discussion and the reference to capital gain or loss
treatment therein assume that the option shares are a capital asset in the hands
of the optionee. A sale or other disposition which results in the recognition of
ordinary income to the optionee will also result in a corresponding income tax
deduction for the Company.
The 1995 Plan permits an optionee to pay all or part of the purchase price
for shares acquired pursuant to exercise of an incentive stock option by
transferring to the Company other shares of the Company's common stock owned by
the optionee. Section 422 of the Code provides that an option will continue to
be treated as an incentive stock option even if an optionee exercises such
incentive stock option with previously acquired stock of the corporation
granting the option. Accordingly, except as noted below with respect to certain
"statutory option stock," an optionee who exercises an incentive stock option in
whole or in part by transferring to the Company shares of the Company's common
stock will recognize no gain or loss upon such exercise. The optionee's basis in
the shares so acquired will be equal to the optionee's cost basis in the shares
surrendered (plus, in the case of payment of the purchase price in a combination
of cash and surrendered shares, the amount of any cash paid).
Section 424(c)(3) of the Code provides that if "statutory option stock" is
transferred in connection with the exercise of an incentive stock option, and if
the holding period requirements under Section 422(a)(1) of the Code are not met
with respect to such statutory option stock before such transfer, then ordinary
income will be recognized as a result of the transfer of statutory option stock.
However, the incentive stock option stock acquired through the exchange of
statutory option stock will still qualify for favorable tax treatment under
Section 422 of the Code.
Incentive stock options offer two principal tax benefits: (1) the
possibility of converting ordinary income into capital gain to the extent of the
excess of fair market value over option price at the time of exercise, and (2)
the deferral of recognition of gain until disposition of the stock acquired upon
the exercise of the option.
At present, the maximum tax rate on capital gains is 28%, while the maximum
tax rate on ordinary income is 39.6%. Thus, the conversion of ordinary income
into capital gain produces some tax benefit for certain taxpayers. However, the
benefit of income deferral generally provided by incentive stock options is
reduced for some taxpayers since the excess of the fair market value of shares
acquired through the exercise of an incentive stock option over the exercise
price is taken into account in computing an individual taxpayer's alternative
minimum taxable income. Thus, the exercise of an incentive stock option could
result in the imposition of an alternative minimum tax liability.
In general, an option granted under the 1995 Plan which is designated as an
incentive stock option will be taxed as described above. However, in some
circumstances an option which is designated as an incentive stock option will be
treated as a non-qualified stock option and the holder taxed accordingly. For
example, a change
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in the terms of an option which gives the employee additional benefits may be
treated as the grant of a new option. Unless all the criteria for treatment as
an incentive stock option are met on the date the "new option" is considered
granted (such as the requirement that the exercise price of the option be not
less than the fair market value of the stock as of the date of the grant), the
option will be treated and taxed as a non-qualified stock option.
Non-Qualified Stock Options. All options granted or to be granted under
the 1995 Plan which do not qualify as incentive stock options are non-statutory
options not entitled to special tax treatment under Section 422 of the Code.
A participant in the 1995 Plan will recognize taxable income upon the grant
of a non-qualified stock option only if such option has a readily ascertainable
fair market value as of the date of the grant. In such a case, the recipient
will recognize taxable ordinary income in an amount equal to the excess of the
fair market value of the option as of such date over the price, if any, paid for
such option. No income would then be recognized on the exercise of the option,
and when the shares obtained through the exercise of the option are disposed of
in a taxable transaction, the resulting gain or loss would be capital gain or
loss (assuming the shares are a capital asset in the hands of the optionee).
However, under the applicable Treasury Regulations, the non-qualified stock
options issued under the 1995 Plan will not have a readily ascertainable fair
market value unless at the time such options are granted similar options of the
Company are actively traded on an established market. The Company presently has
no such actively traded options.
Upon the exercise of a non-statutory option not having a readily
ascertainable fair market value, the optionee recognizes ordinary income in an
amount equal to the excess of the fair market value of the shares on the date of
exercise over the option exercise price for those shares. The Company is not
entitled to an income tax deduction with respect to the grant of a non-statutory
stock option or the sale of stock acquired pursuant thereto. The Company
generally is permitted a deduction equal to the amount of ordinary income the
optionee is required to recognize as a result of the exercise of a non-statutory
stock option.
The 1995 Plan permits the Committee to allow an optionee to pay all or part
of the purchase price for shares acquired pursuant to an exercise of a
non-statutory option by transferring to the Company other shares of the
Company's common stock owned by the optionee. If an optionee exchanges
previously acquired common stock pursuant to the exercise of a non-qualified
stock option, the Internal Revenue Service has ruled that the optionee will not
be taxed on the unrealized appreciation of the shares surrendered in the
exchange. In other words, the optionee is not taxed on the difference between
his or her cost basis for the old shares and their fair market value on the date
of the exchange, even though the previously acquired shares are valued at the
current market price for purposes of paying all or part of the option price.
General. The 1995 Plan is not qualified under Section 401(a) of the Code
and is not subject to the provisions of the Employee Retirement Income Security
Act of 1974.
The preceding discussion is based upon federal tax laws and regulations in
effect on the date of this proxy statement, which are subject to change, and
upon an interpretation of the statutory provisions of the Code, its legislative
history and related income tax regulations. Furthermore, the foregoing is only a
general discussion of the federal income tax consequences of the 1995 Plan and
does not purport to be a complete description of all federal income tax aspects
of the 1995 Plan. Option holders may also be subject to state and local taxes in
connection with the grant or exercise of options granted under the 1995 Plan and
the sale or other disposition of shares acquired upon exercise of the options.
Each employee receiving a grant of options should consult with his or her
personal tax advisor regarding federal, state and local consequences of
participating in the 1995 Plan.
The approval of the holders of a majority of the shares of the Company's
common stock present and voting at the Annual Meeting of Stockholders is
necessary to approve the 1995 Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS APPROVE THE 1995 PLAN.
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INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP served as the independent auditors of the Company for the
fiscal year ended December 31, 1995. No auditors have yet been selected as the
independent auditors for the Company for the fiscal year ending December 31,
1996. Such selection will be made by the Board of Directors upon the
recommendation of the Audit Committee. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting and will be available to respond to
appropriate questions from stockholders.
ANNUAL REPORT TO STOCKHOLDERS AND REPORT ON FORM 10-K
Additional information concerning the Company, including financial
statements of the Company, is provided in the Company's 1995 Annual Report to
Stockholders that accompanies this proxy statement. The Company's Annual Report
on Form 10-K for the year ended December 31, 1995, as filed with the Securities
and Exchange Commission, is available to stockholders who make a written request
therefor to the Secretary of the Company, Larry J. Goddard, at the offices of
the Company, Highway 412 West, P.O. Box 188, Tontitown, Arkansas 72770. Copies
of exhibits filed with that report or referenced therein will be furnished to
stockholders of record upon request and payment of the Company's expenses in
furnishing such documents.
STOCKHOLDER PROPOSALS
Any proposal to be presented at next year's Annual Meeting of Stockholders
must be received at the principal executive offices of the Company not later
than December 24, 1996, directed to the attention of the Secretary, for
consideration for inclusion in the Company's proxy statement and form of proxy
relating to that meeting. Any such proposals must comply in all respects with
the rules and regulations of the Securities and Exchange Commission.
OTHER MATTERS
Management does not know of any matters to be brought before the meeting
other than those referred to above. If any other matter properly comes before
the meeting, the persons designated as proxies will vote on each such matter in
accordance with their best judgment.
By Order of the Board of Directors
Robert W. Weaver
President and Chief Executive Officer
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EXHIBIT A
P.A.M. TRANSPORTATION SERVICES, INC.
1995 STOCK OPTION PLAN
EFFECTIVE AS OF JUNE 29, 1995
1. PURPOSE
The purpose of the P.A.M. Transportation Services, Inc. 1995 Stock Option
Plan (the "Plan") is to encourage and enable eligible directors, officers and
key employees of P.A.M. Transportation Services, Inc. (the "Company") and its
subsidiaries to acquire proprietary interests in the Company through the
ownership of Common Stock of the Company. The Company believes that directors,
officers and key employees who participate in the Plan will have a closer
identification with the Company by virtue of their ability as shareholders to
participate in the Company's growth and earnings. The Plan also is designed to
provide motivation for participating directors, officers and key employees to
remain in the employ of and to give greater effort on behalf of the Company. It
is the intention of the Company that the Plan provide for the award of
"incentive stock options" qualified under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations promulgated
thereunder, as well as the award of non-qualified stock options. Accordingly,
the provisions of the Plan related to incentive stock options shall be construed
so as to extend and limit participation in a manner consistent with the
requirements of Section 422 of the Code.
2. DEFINITIONS
The following words or terms shall have the following meanings:
(a) "Agreement" shall mean a stock option agreement between the
Company and an Eligible Employee, Eligible Participant or Non-Employee
Director pursuant to the terms of this Plan.
(b) "Board of Directors" shall mean the Board of Directors of the
Company or the Executive Committee of such Board.
(c) "Committee" shall mean the committee appointed by the Board of
Directors to administer the Plan.
(d) "Company" shall mean P.A.M. Transportation Services, Inc., a
Delaware corporation.
(e) "Eligible Employee(s)" shall mean key employees regularly employed
by the Company or a Subsidiary (including officers, whether or not they are
directors) as the Board of Directors or the Committee shall select from
time to time.
(f) "Eligible Participant(s)" shall mean directors, officers, key
employees of the Company and its Subsidiaries, consultants and other
persons who are not otherwise eligible to receive Qualified Incentive
Options pursuant to Section 8 of the Plan.
(g) "Market Price" shall mean the fair market value of the Company's
Common Stock as determined by the Board of Directors or the Committee,
acting in good faith, under any method consistent with the Code, or
Treasury Regulations thereunder, as the Board of Directors or the Committee
shall in its discretion select and apply at the time of the grant of the
option concerned. Subject to the foregoing, the Board of Directors or the
Committee, in fixing the market price, shall have full authority and
discretion and be fully protected in doing so.
(h) "Non-Employee Director(s)" shall mean a director of the Company
who is not a regular salaried employee of the Company or one of its
Subsidiaries.
(i) "Optionee" shall mean an Eligible Employee, Eligible Participant
or Non-Employee Director having a right to purchase Common Stock under an
Agreement.
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<PAGE> 21
(j) "Option(s)" shall mean the right or rights granted to Eligible
Employees, Eligible Participants or Non-Employee Directors to purchase
Common Stock under the Plan.
(k) "Plan" shall mean this P.A.M. Transportation Services, Inc. 1995
Stock Option Plan.
(l) "Shares," "Stock" or "Common Stock" shall mean shares of the $.01
par value common stock of the Company.
(m) "Subsidiary" shall mean any corporation, if the Company owns or
controls, directly or indirectly, more than a majority of the voting stock
of such corporation.
(n) "Ten Percent Owner" shall mean an individual who, at the time an
Option is granted, owns directly or indirectly more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company
or a Subsidiary.
3. EFFECTIVE DATE
The effective date of the Plan (the "Effective Date") shall be the date the
Plan is adopted by the Board of Directors or the date the Plan is approved by
the shareholders of the Company, whichever is earlier. The Plan must be approved
by the affirmative vote of not less than a majority of the shares present and
voting at a meeting at which a quorum is present, which shareholder vote must be
taken within twelve (12) months after the date the Plan is adopted by the Board
of Directors. Such shareholder vote shall not alter the Effective Date of the
Plan. In the event shareholder approval of the adoption of the Plan is not
obtained within the aforesaid twelve (12) month period, then any Options granted
in the intervening period shall be void.
4. SHARES RESERVED FOR PLAN
The shares of the Company's Common Stock to be sold to Eligible Employees,
Eligible Participants and Non-Employee Directors under the Plan may at the
election of the Board of Directors be either treasury shares or Shares
originally issued for such purpose. The maximum number of Shares which shall be
reserved and made available for sale under the Plan shall be 600,000; provided,
however, that such Shares shall be subject to the adjustments provided in
Section 8(h). Any Shares subject to an Option which for any reason expires or is
terminated unexercised may again be subject to an Option under the Plan.
5. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the Company if
each member is a disinterested person (as defined herein), or the Committee. The
Committee shall be comprised of not less than two (2) members appointed by the
Board of Directors of the Company from among its members. No member of the Board
of Directors shall be appointed or serve as a member of the Committee, and any
such appointment or service immediately and automatically shall terminate, in
the event that such person is not a disinterested person. As used herein, the
term "disinterested person" means a director who is not, during the one year
prior to service as an administrator of the Plan, or during such service,
granted or awarded equity securities pursuant to the Plan or any other plan of
the Company or any of its affiliates (as such term is defined in the General
Rules and Regulations of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), except for such grants or awards which would not disqualify
the director as a "disinterested person" under Rule 16b-3 under the Exchange
Act.
Within the limitations described herein, the Board of Directors of the
Company or the Committee shall administer the Plan, select the Eligible
Employees and Eligible Participants to whom Options will be granted, determine
the number of shares to be optioned to each Eligible Employee and Eligible
Participant and interpret, construe and implement the provisions of the Plan.
The Board of Directors or the Committee shall also determine the price to be
paid for the Shares upon exercise of each Option, the period within which each
Option may be exercised, and the terms and conditions of each Option granted to
the Plan. The Board of
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Directors and Committee members shall be reimbursed for out-of-pocket expenses
reasonably incurred in the administration of the Plan.
If the Plan is administered by the Board of Directors, a majority of the
members of the Board of Directors shall constitute a quorum, and the act of a
majority of the members of the Board of Directors present at any meeting at
which a quorum is present, or acts approved in writing by all members of the
Board of Directors shall be the acts of the Board of Directors. If the Plan is
administered by the Committee, a majority of the members of the Committee shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all of the
members of the Committee shall be the acts of the Committee.
6. ELIGIBILITY
Options granted pursuant to Section 8 shall be granted only to Eligible
Employees. Options granted pursuant to Section 9 may be granted to Eligible
Employees and to Eligible Participants. Options granted pursuant to Section 10
shall be granted only to Non-Employee Directors.
7. DURATION OF THE PLAN
The Plan shall remain in effect until all Shares subject to or which may
become subject to the Plan shall have been purchased pursuant to Options granted
under the Plan; provided that Options under the Plan must be granted within ten
(10) years from the Effective Date. The Plan shall expire on the tenth
anniversary of the Effective Date.
8. QUALIFIED INCENTIVE OPTIONS
It is intended that Options granted under this Section 8 shall be qualified
incentive stock options under the provisions of Section 422 of the Code and the
regulations thereunder or corresponding provisions of subsequent revenue laws
and regulations in effect at the time such Options are granted. Such Options
shall be evidenced by stock option agreements in such form and not inconsistent
with this Plan as the Committee or the Board of Directors shall approve from
time to time, which Agreements shall contain in substance the following terms
and conditions:
(a) Price. The purchase price for shares purchased upon exercise will be
equal to 100% of the Market Price on the day the Option is granted, as
determined by the Board of Directors or the Committee; provided that the
purchase price of stock deliverable upon the exercise of a qualified incentive
option granted to a Ten Percent Owner shall be not less than one hundred ten
percent (110%) of the Market Price on the day the Option is granted, as
determined by the Board of Directors or the Committee, but in no case less than
the par value of such stock.
(b) Number of Shares. The Agreement shall specify the number of Shares
which the Optionee may purchase under such Option.
(c) Exercise of Options. The shares subject to the Option may be purchased
in whole or in part by the Optionee in accordance with the terms of the
Agreement, from time to time after shareholder approval of the Plan, but in no
event later than ten (10) years from the date of grant of the Option.
Notwithstanding the foregoing, Shares subject to an Option granted to a Ten
Percent Owner shall be exercisable no later than five (5) years from the date of
grant of the Option.
(d) Medium and Time of Payment. Stock purchased pursuant to an Agreement
shall be paid for in full at the time of purchase. Payment of the purchase price
shall be in cash or shares of the Common Stock of the Company, or a combination
of cash and shares of the Common Stock of the Company, in the discretion of, and
as authorized by, the Committee. Upon receipt of payment, the Company shall,
without transfer or issue
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tax, deliver to the Optionee (or other person entitled to exercise the Option) a
certificate or certificates for such Shares.
(e) Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any Shares covered by an Option until the date of
issuance of the stock certificate to the Optionee for such Shares. Except as
otherwise expressly provided in the Plan, no adjustments shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued.
(f) Nonassignability of Option. No Option shall be assignable or
transferable by the Optionee except by will or by the laws of descent and
distribution. During the lifetime of the Optionee, the Option shall be
exercisable only by him or her.
(g) Effect of Termination of Employment or Death. In the event that an
Optionee during his or her lifetime ceases to be an employee of the Company or
of any subsidiary of the Company for any reason (including retirement) other
than death or permanent and total disability, any Option or unexercised portion
thereof which was otherwise exercisable on the date of termination of employment
shall expire unless exercised within a period of three (3) months from the date
on which the Optionee ceased to be an employee, but in no event after the term
provided in the Optionee's Agreement. In the event that an Optionee ceases to be
an employee of the Company or of any subsidiary of the Company for any reason
(including retirement) other than death or permanent and total disability prior
to the time that an Option or portion thereof becomes exercisable, such Option
or portion thereof which is not then exercisable shall terminate and be null and
void. Whether authorized leave of absence for military or government service
shall constitute termination of employment for the purpose of this Plan shall be
determined by the Board of Directors or the Committee, which determination shall
be final and conclusive.
In the event that an Optionee during his or her lifetime ceases to be an
employee of the Company or any subsidiary of the Company by reason of death or
permanent and total disability, any Option or unexercised portion thereof which
was otherwise exercisable on the date such Optionee ceased employment shall
expire unless exercised within a period of one (1) year from the date on which
the Optionee ceased to be an employee, but in no event after the term provided
in the Optionee's Agreement. In the event that an Optionee during his or her
lifetime ceases to be an employee of the Company or any subsidiary of the
Company by reason of death or permanent and total disability, any Option or
portion thereof which was not exercisable on the date such Optionee ceased
employment shall become immediately exercisable for a period of one (1) year
from the date on which the Optionee ceased to be an employee, but in no event
after the term provided in the Optionee's Agreement.
"Permanent and total disability" as used in this Plan shall be as defined
in Section 22(e)(3) of the Code.
In the event of the death of an Optionee, the Option shall be exercisable
by his or her personal representatives, heirs or legatees, as provided herein.
(h) Recapitalization. In the event that dividends are payable in Common
Stock of the Company or in the event there are splits, subdivisions or
combinations of shares of Common Stock of the Company, the number of Shares
available under the Plan shall be increased or decreased proportionately, as the
case may be, and the number and Option exercise price of Shares deliverable upon
the exercise thereafter of any Option theretofore granted shall be increased or
decreased proportionately, as the case may be, as determined to be proper and
appropriate by the Board of Directors or the Committee.
(i) Reorganization. In case the Company is merged or consolidated with
another corporation and the Company is not the surviving corporation, or in case
the property or stock of the Company is acquired by another corporation, or in
case of a separation, reorganization, recapitalization or liquidation of the
Company, the Board of Directors of the Company, or the Board of Directors of any
corporation assuming the obligations of the Company hereunder, shall either (i)
make appropriate provision for the protection of any outstanding Options by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged,
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consolidated or otherwise reorganized corporation which will be issuable in
respect to the shares of Common Stock of the Company, provided only that the
excess of the aggregate fair market value of the Shares subject to option
immediately after such substitution over the purchase price thereof is not more
than the excess of the aggregate fair market value of the Shares subject to
option immediately before such substitution over the purchase price thereof, or
(ii) upon written notice to the Optionee provide that the Option (including, in
the discretion of the Board of Directors, any portion of such Option which is
not then exercisable) must be exercised within sixty (60) days of the date of
such notice or it will be terminated. If any adjustment under this Section 8(i)
would create a fractional share of Stock or a right to acquire a fractional
share, such shall be disregarded and the number of shares of Stock available
under the Plan and the number of Shares covered under any Options previously
granted pursuant to the Plan shall be the next lower number of shares of Stock,
rounding all fractions downward. An adjustment made under this Section 8(i) by
the Board of Directors shall be conclusive and binding on all affected persons.
Except as otherwise expressly provided in this Plan, the Optionee shall
have no rights by reason of any subdivision or consolidation of shares of stock
of any class, or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, or by reason of any
dissolution, liquidation, merger, or consolidation or spin-off of assets or
stock of another corporation; and any issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or prices of shares of Common Stock subject to an Option.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(j) Annual Limitation. The aggregate fair market value (determined at the
time the Option is granted) of the shares with respect to which incentive stock
options are exercisable for the first time by an Optionee during any calendar
year (under all incentive stock option plans of the Company) shall not exceed
$100,000. Any excess over such amount shall be deemed to be related to and part
of a non-qualified stock option granted pursuant to Section 9.
(k) General Restriction. Each Option shall be subject to the requirement
that if at any time the Board of Directors shall determine, in its discretion,
that the listing, registration or qualification of the Shares subject to such
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of such Option or the
issue or purchase of Shares thereunder, such Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors. Alternatively, such Options shall be
issued and exercisable only upon such terms and conditions and with such
restrictions as shall be necessary or appropriate to effect exemption from such
listing, registration, or other qualification requirement.
9. NON-QUALIFIED OPTIONS
The Board of Directors or the Committee may grant to Eligible Employees or
Eligible Participants Options under the Plan which are not qualified incentive
stock options under the provisions of Section 422 of the Code. Such
non-qualified options shall be evidenced by Agreements in such form and not
inconsistent with this Plan as the Committee shall approve from time to time,
which Agreements shall contain in substance the same terms and conditions as set
forth in Section 8 hereof with respect to qualified incentive options; provided,
however, that the limitations set forth in Sections 8(a) and 8(c) with respect
to Ten Percent Owners shall not be applicable to non-qualified options granted
to any Ten Percent Owner, and the limitation set forth in Section 8(j) with
respect to the annual limitation of incentive stock options shall not be
applicable to non-qualified option grants; provided further, that non-qualified
options may be granted at a purchase price equal to not less than 75% of the
Market Price on the day the Option is granted.
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10. OPTIONS TO NON-EMPLOYEE DIRECTORS
Notwithstanding any provisions of the Plan to the contrary, the
participation and eligibility of a Non-Employee Director in the Plan shall be
limited exclusively to the following:
(a) On March 2, 1997 and on March 2 of each year thereafter during the
term of this Plan, each then Non-Employee Director of the Company shall be
granted, without the necessity of action by the Board of Directors or any
committee thereof, an Option to purchase 1,000 shares of Common Stock at an
option exercise or purchase price equal to the Market Price of such Stock
on the date of grant; provided, that in the event that the date of grant
falls on a weekend or holiday, then the option exercise price shall be
determined by reference to the Market Price of the Common Stock on the
business day next preceding the grant date.
(b) Options granted under this Section 10 shall be exercisable
commencing on the date of grant or, with respect to any Option granted
prior to stockholder approval of this Plan, upon the date of such
stockholder approval, and thereafter until the earlier to occur of the
following: the close of business on (i) the date which is the fifth
anniversary of the date of grant; (ii) the date which is the 90th day
following the date upon which such Non-Employee Director ceases to be a
director of the Company for any reason other than death or permanent and
total disability; or (iii) the date which is the first anniversary of the
date on which such Non-Employee Director ceases to be a director of the
Company as a result of death or permanent and total disability.
(c) In all other respects, Options granted to Non-Employee Directors
hereunder shall contain in substance the same terms and conditions as set
forth in Section 9 hereof with respect to non-qualified options. No
Non-Employee Director shall be eligible to receive Options hereunder except
as provided in this Section 10. This Section may not be amended more than
once every six months.
11. AMENDMENT OF THE PLAN
The Plan may at any time or from time to time be terminated, modified or
amended by the affirmative vote of not less than a majority of the shares
present and voting thereon by the Company's shareholders at a meeting of the
shareholders at which a quorum is present. The Board of Directors may at any
time and from time to time modify or amend the Plan in any respect, except that
without shareholder approval the Board of Directors may not (1) increase the
maximum number of Shares for which Options may be granted under the Plan (other
than increases due to changes in capitalization as referred to in Section 8(h)
hereof), or (2) reduce the option exercise price or waiting period (except as
otherwise expressly provided in Sections 8(h) and 8(i) hereof), or (3) extend
the maximum period during which Options may be granted or exercised, or (4)
change the class of persons eligible for Options under Section 6 hereof, or (5)
otherwise materially modify (within the meaning of Rule 16b-3 of the Exchange
Act) the requirements as to eligibility for participation in the Plan, or (6)
otherwise materially increase (within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934, as amended) the benefits accruing to
participants under the Plan. The termination or any modification or amendment of
the Plan shall not, without the written consent of an Optionee, affect his or
her rights under an Option or right previously granted to him or her. With the
written consent of the Optionee affected, the Board of Directors or the
Committee may amend outstanding option agreements in a manner not inconsistent
with the Plan. Without employee consent, the Board of Directors may at any time
and from time to time modify or amend outstanding option agreements in such
respects as it shall deem necessary in order that incentive options granted
hereunder shall comply with the appropriate provisions of the Code and
regulations thereunder which are in effect from time to time respecting
"Qualified Incentive Options." The Company's Board of Directors may also suspend
the granting of Options pursuant to the Plan at any time and may terminate the
Plan at any time; provided, however, no such suspension or termination shall
modify or amend any Option granted before such suspension or termination unless
(1) the affected participant consents in writing to such modification or
amendment or (2) there is a dissolution or liquidation of the Company.
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12. BINDING EFFECT
All decisions of the Board of Directors or the Committee involving the
implementation, administration or operation of the Plan or any offering under
the Plan shall be binding on the Company and on all persons eligible or who
become eligible to participate in the Plan.
13. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Common Stock pursuant
to Options exercised hereunder will be used for general corporate purposes.
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EXHIBIT B
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
P.A.M. TRANSPORTATION SERVICES, INC.
The undersigned stockholder(s) of P.A.M. Transportation Services, Inc., a
Delaware corporation, hereby appoints Robert W. Weaver and Larry J. Goddard, and
each of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 1996 Annual Meeting of Stockholders of P.A.M. Transportation
Services, Inc. to be held on Thursday, May 23, 1996 at 10:00 a.m. local time at
the Holiday Inn, 1500 South 48th Street, Springdale, Arkansas 72762, and to vote
all shares of Common Stock which the undersigned would be entitled to vote if
then and there personally present, on the matters set forth below:
(1) To set the number of directors for the ensuing year at four, and to elect
four directors for a term of one year and until their successors are elected
and qualified:
<TABLE>
<S> <C>
/ / FOR all nominees listed below (except as / / WITHHOLD AUTHORITY to vote for all nominees
otherwise indicated below)
</TABLE>
Robert W. Weaver; Daniel C. Sullivan;
Matthew T. Moroun; Charles F. Wilkins
If you wish to withhold authority to vote for any individual nominee(s), write
the name(s) on the line below:
- --------------------------------------------------------------------------------
(2) To approve an amendment to the Bylaws to permit the Board of Directors to
set the number of directors and to eliminate a supermajority voting
requirement to remove directors, as described in Agenda Item Two to the
Proxy Statement.
/ / FOR / / AGAINST / / ABSTAIN
(3) To approve and adopt the Company's 1995 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
(4) In their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This proxy, when
properly executed, will be voted in accordance with directions given by the
undersigned stockholder. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE ABOVE
PROPOSALS AND AS PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE
THE MEETING.
Dated: 1996
-------------------,
------------------------------
Signature
------------------------------
Signature
(This Proxy should be marked,
dated, and signed by the
stockholder(s) exactly as his
or her name appears hereon,
and returned promptly in the
enclosed envelope. Persons
signing in a fiduciary
capacity should so indicate.
If shares are held by joint
tenants or as community
property, both should sign.)
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