SWIFT TRANSPORTATION CO., INC.
2200 SOUTH 75TH AVENUE
PHOENIX, ARIZONA 85043
---------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1998
---------------------------------
To Our Stockholders:
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of Swift
Transportation Co., Inc. (the "Company") will be held at 10:00 a.m., Arizona
Time, on Thursday, May 28, 1998, at the Company's headquarters facility at 2200
South 75th Avenue, Phoenix, Arizona 85043, for the following purposes:
1. To elect two Class II directors to serve for three-year terms;
2. To amend the Swift Transportation Co., Inc. 1990 Employee
Stock Option Plan to increase the number of shares authorized
for issuance thereunder from 3,825,000 to 4,200,000; and
3. To transact such other business as may properly come before
the Annual Meeting. Management is presently aware of no other
business to come before the meeting.
Each outstanding share of the Company's Common Stock entitles the
holder of record at the close of business on March 31, 1998, to receive notice
of and to vote at the Annual Meeting or any adjournment thereof. Shares of
Common Stock can be voted at the Annual Meeting only if the holder is present in
person or by valid proxy. A copy of the Company's 1997 Annual Report to
Stockholders, which includes certified financial statements, is enclosed.
Management cordially invites you to attend the Annual Meeting.
By Order of the Board of Directors
Phoenix, Arizona Jerry C. Moyes
April 13, 1998 Chairman of the Board, President
and Chief Executive Officer
IMPORTANT
STOCKHOLDERS ARE REQUESTED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY. A
POSTAGE-PAID ENVELOPE IS PROVIDED FOR MAILING IN THE UNITED STATES.
<PAGE>
SWIFT TRANSPORTATION CO., INC.
2200 SOUTH 75TH AVENUE
PHOENIX, ARIZONA 85043
---------------------------
PROXY STATEMENT
---------------------------
This Proxy Statement is furnished to the stockholders of Swift
Transportation Co., Inc. (the "Company") in connection with the solicitation of
proxies to be used in voting at the Annual Meeting of Stockholders to be held on
May 28, 1998. The enclosed proxy is solicited by the Board of Directors of the
Company. The proxy materials relating to the Annual Meeting are first being
mailed on or about April 17, 1998, to stockholders of record at the close of
business on March 31, 1998 (the "Record Date"). A person giving the enclosed
proxy has the power to revoke it at any time before it is exercised by: (i)
attending the Annual Meeting and voting in person; (ii) duly executing and
delivering a proxy bearing a later date; or (iii) sending written notice of
revocation to the Secretary of the Company at P.O. Box 29243, Phoenix, Arizona,
85038-9243.
The Company will bear the cost of solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of the outstanding Common Stock of
the Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone or telegraph.
VOTING SECURITIES OUTSTANDING
As of the Record Date, there were 42,636,660 shares of the Company's
Common Stock outstanding. Stockholders are entitled to one vote for each share
held of record on each matter of business to be considered at the Annual
Meeting. Only holders of record of Common Stock at the close of business on the
Record Date will be entitled to vote at the Annual Meeting, either in person or
by valid proxy. Ballots cast at the Annual Meeting will be counted by the
Inspector of Elections and determinations of whether a quorum exists and whether
the proposals are approved will be announced at the Annual Meeting. The
Inspector of Elections will treat abstentions and broker non-votes received as
shares that are present and entitled to vote for purposes of determining a
quorum, but as unvoted for purposes of determining the approval of any matter.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
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ACTION TO BE TAKEN UNDER THE PROXIES
A properly executed proxy in the enclosed form will be voted in
accordance with the instructions thereon. If no instructions are given with
respect to the matters to be acted on, the persons acting under the proxies will
vote the shares represented thereby in favor of the election of the nominees for
directors named herein and at their discretion as to such other business as may
come before the meeting or any adjournment thereof. The Board of Directors is
not aware of any other business to be brought before the meeting. If other
proper matters or matters of which the Board is not aware a reasonable time
prior to the meeting are introduced, then, to the extent permissible by law, the
persons named in the enclosed proxy will vote the shares they represent in
accordance with their judgment.
The information included herein should be reviewed in conjunction with
the consolidated financial statements, notes to consolidated financial
statements, independent auditors' report and other information included in the
Company's 1997 Annual Report to Stockholders that was mailed with this Proxy
Statement to all stockholders of record on the Record Date.
ELECTION OF DIRECTORS
(Proposal No. 1)
The Articles of Incorporation of the Company divides the Board of
Directors into three classes serving staggered terms. One class of directors is
elected each year for a term of three years. The term of office of directors in
Class II will expire at the Annual Meeting. At the Annual Meeting, stockholders
will be asked to elect two directors to Class II for terms that will expire at
the close of the Annual Meeting of Stockholders held in 2001. The Board of
Directors has nominated Jerry C. Moyes, currently a Class III director with a
term expiring in 1999, and Alphonse E. Frei as nominees for election to Class
II. Mr Frei is the incumbent Class II director. The remaining Class II
directorship has been vacant since prior to the 1997 Annual Meeting of
Stockholders. The Board of Directors has taken action to reduce the size of the
Board from seven to six members, with two directors serving in each Class.
Unless otherwise noted thereon, the shares represented by the enclosed proxy
will be voted for the election of Messrs. Moyes and Frei as directors of the
Company. If either of them becomes unavailable for any reason or if a vacancy
should occur before election (which events are not anticipated), the shares
represented by the enclosed proxy may be voted for such other person or persons
as may be determined by the holders of such proxy. Election of the director
nominees will require the affirmative vote of a majority of the outstanding
Common Stock represented at the Annual Meeting. Each director elected will serve
for three years and until his successor is duly elected and qualified.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF
THE CLASS II DIRECTOR NOMINEES.
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INFORMATION CONCERNING DIRECTORS, NOMINEES AND OFFICERS
Information concerning the names, ages, terms, positions with the
Company and business experience of the Company's current directors, director
nominees and executive officers is set forth below.
<TABLE>
<CAPTION>
TERM AS
DIRECTOR
NAME AGE POSITION EXPIRES
---- --- -------- -------
<S> <C> <C> <C>
Jerry C. Moyes(1)(2) 54 Chairman of the Board, Class III - 1999
President and Chief
Executive Officer
William F. Riley, III 51 Executive Vice President, Class III - 1999
Chief Financial Officer,
Secretary and Director
Rodney K. Sartor 43 Executive Vice President Class I - 2000
and Director
Alphonse E. Frei(1)(2) 59 Director Class II - 1998
Lou A. Edwards(2) 84 Director Class III - 1999
Earl H. Scudder, Jr.(1) 55 Director Class I - 2000
Patrick J. Farley 53 Executive Vice President
Kevin H. Jensen 43 Executive Vice President
- ------------------------------------
</TABLE>
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Jerry C. Moyes has served as the Chairman of the Board, President and
Chief Executive Officer of the Company since 1984. Mr. Moyes joined the Company
in 1966 as a Vice President and served in that capacity until 1984. Mr. Moyes
was President of the Arizona Motor Transport Association from 1987 to 1988.
William F. Riley, III has served as an Executive Vice President, Chief
Financial Officer, Secretary and a Director of the Company since March 1990 and
as a Vice President of Cooper Motor Lines and Swift Leasing Co., Inc. since
April 1988 and May 1986, respectively. Prior to joining Swift in February 1986,
Mr. Riley was employed by Armour Food Co. from 1978 to January 1986, serving in
various transportation and distribution assignments, principally Manager of
Business Planning of Armour Food Express, its truckload motor carrier.
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<PAGE>
Rodney K. Sartor has served as an Executive Vice President and a
Director of the Company since May 1990. Mr. Sartor joined Swift in May 1979. He
served as Director of Operations from May 1982 until August 1988 and as a
Regional Vice President from August 1988 until May 1990.
Alphonse E. Frei has served as a Director of the Company since May
1990. Mr. Frei served in various capacities, including Chief Financial Officer,
with America West Airlines from 1983 to 1994 and served as a director of America
West Airlines from 1986 to September 1993. Mr. Frei has served in various
executive capacities or as a consultant to a number of business organizations.
Lou A. Edwards has served as a Director of the Company since May 1990.
Mr. Edwards was the President of Sundance Truck Centers, a truck dealership,
which he founded in 1975 and sold in December 1997, and has 40 years of
experience in the trucking industry.
Earl H. Scudder, Jr. has served as a Director of the Company since May
1993. Mr. Scudder has been President of the Scudder Law Firm, P.C. in Lincoln,
Nebraska since February 1990, and has engaged in the private practice of law
since 1966. Mr. Scudder also served as a director of Heartland Express, Inc., a
publicly-held trucking company, until 1996, and serves as a director of Transcom
Technologies, Inc., a telecommunications company.
Patrick J. Farley was named an executive officer of the Company in May
1997, and has served as an Executive Vice President of the Company since May,
1997. Mr. Farley joined the Company in October 1989 and served as Vice President
of Western Sales prior to his promotion to Executive Vice President in May 1997.
Kevin H. Jensen was named an executive officer of the Company in
October 1996, and has served as an Executive Vice President of the Company since
December 1994. Mr. Jensen joined the Company in December 1986 and served the
Company in various capacities, including Director of Operations - Eastern
Division and Vice President - Eastern Division, prior to his promotion to
Executive Vice President in December 1994.
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MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors. During the year ended December 31, 1997, the Board
of Directors of the Company met on three occasions. Each of the directors
attended all of the meetings of the Board of Directors and all of the meetings
held by committees of the Board on which he served.
Compensation Committee. The Compensation Committee of the Board of
Directors, which met once during 1997, reviews all aspects of compensation of
executive officers of the Company and makes recommendations on such matters to
the full Board of Directors. The Report of the Compensation Committee for 1997
is set forth below.
Audit Committee. The Audit Committee, which met once during 1997, makes
recommendations to the Board concerning the selection of outside auditors,
reviews the financial statements of the Company 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. The Audit Committee also reviews proposals for major transactions.
Other Committees. The Company does not maintain a standing nominating
committee or other committee performing similar functions.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors consists of Jerry C. Moyes,
Alphonse E. Frei and Lou A. Edwards. Mr. Moyes also serves as the President and
Chief Executive Officer of the Company.
The Company leases various properties from entities owned by or
affiliated with Jerry C. Moyes. For the year ended December 31, 1997, the
Company expended an aggregate of $700,000 in rental payments on such leases.
Interstate Equipment Leasing, Inc., a corporation wholly-owned by Jerry
C. Moyes ("Interstate Leasing"), leases tractors to some of the Company's owner
operators. In connection with this program, during 1997 the Company acquired
$22,800,000 of new revenue equipment on behalf of Interstate Leasing, for which
the Company recognized fee income of $1,400,000. During 1997, the Company also
sold used revenue equipment to Interstate Leasing totaling $238,000 and
recognized gains of $36,000.
Interstate Leasing also provides air transportation services to the
Company. The Company paid Interstate Leasing $590,000 for air transportation
services for the year ended December 31, 1997. At December 31, 1997, $69,000 was
owed to Interstate Leasing for air transportation services.
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<PAGE>
In 1995, Interstate Leasing invested in a regional less-than-truckload
carrier Jaguar Fast Freight. The Company provides repair and maintenance
services to Jaguar equipment and bills Interstate Leasing for such services. In
1997, such services totaled $37,000.
During 1997, the Company provided transportation services to various
entities owned by Jerry C. Moyes. For the year ended December 31, 1997, the
Company recognized $318,000 in operating revenue from those entities.
During 1997, the Company acquired a substantial amount of revenue
equipment from Freightliner Corporation. Although the Company negotiated
directly with Freightliner, pursuant to Freightliner's marketing policy of
selling only through dealers, the transactions are invoiced through Sundance
Truck Centers ("Sundance"), of which Lou A. Edwards, a director of the Company,
was the President and sole stockholder until its sale in December 1997. In
consideration therefor, Freightliner permits Sundance to retain a fee of less
than one percent of the acquisition price for the equipment. In 1997, the
Company acquired $89,000,000 of Freightliner equipment that was delivered
through Sundance and Sundance received approximately $628,000 in connection with
such acquisitions. In 1997, the Company purchased parts and services from
Sundance totaling $3,217,000.
Jerry C. Moyes acquired a significant ownership interest in Central
Freight Lines, Inc. during 1997. The Company provides transportation services to
this carrier and recognized $1.5 million in operating revenue therefrom in 1997.
At December 31, 1997, $277,000 was owed to the Company for these services. In
addition, the Company paid $80,000 to the carrier for facilities rental.
Interstate Leasing owns approximately 200 tractors which operates as a
fleet operator for the Company. During 1997, the Company paid $5,251,000 to this
fleet operator for purchased transportation services. At December 31, 1997,
$90,000 was owed for these purchased transportation services. Also, the Company
was paid $264,000 by this fleet operator and paid $117,000 to this fleet
operator for various services including training and repairs. At December 31,
1997, $65,000 was owed to the Company and $110,000 was owed by the Company for
these services.
All of the foregoing arrangements were approved by the independent
members of the Board of Directors.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive an annual
retainer of $3,000, plus $500 per meeting of the Board of Directors attended by
the director. Pursuant to the Company's Non-Employee Director's Stock Option
Plan, non-employee directors also receive an annual grant of an option to
purchase 1,000 shares of the Company's Common Stock at an
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exercise price equal to 85% of the fair market value of such stock on the date
of grant and which vest immediately upon the date of grant. These options are
granted to the non-employee directors on the last trading day in May.
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<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years ended December 31, 1997, 1996 and 1995, of those persons who were,
at December 31, 1997 (i) the Chief Executive Officer and (ii) the four most
highly compensated executive officers of the Company (collectively, the "Named
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
==============================================================================================
Long Term
Annual Compensation Compensation
----------------------------------------------------------------------------------------------
All Other
Name and Principal Position Year Salary Bonus Compensation(1)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jerry C. Moyes 1997 $270,371 $376,560 $163,219
Chairman of the Board & President 1996 270,371 366,161 160,376
1995 310,370 329,026 161,907
----------------------------------------------------------------------------------------------
William F. Riley III 1997 $162,225 $337,764 $ 22,615
Executive Vice President & 1996 162,225 366,161 19,553
Chief Financial Officer 1995 162,225 329,026 20,519
----------------------------------------------------------------------------------------------
Rodney K. Sartor 1997 $162,225 $137,775 $ 18,025
Executive Vice President 1996 162,225 366,161 14,953
1995 162,225 329,026 15,581
----------------------------------------------------------------------------------------------
Kevin H. Jensen 1997 $162,225 $337,764 $ 15,000
Executive Vice President(2) 1996 162,225 187,775 11,928
----------------------------------------------------------------------------------------------
Patrick J. Farley 1997 $141,026 $102,048 $ 15,000
Executive Vice President(3)
==============================================================================================
- ------------------------------
</TABLE>
(1) "All Other Compensation" for each of the Named Officers included
Company contributions in the amount of $15,000 for 1997, $11,928 for
1996 and $13,276 for 1995, pursuant to the Swift Transportation Co.,
Inc. Retirement Plan, a 401(k) profit sharing plan (the "401(k) Plan").
The balance of compensation included in "All Other Compensation" for
each of the Named Officers during each of the identified periods
represents Company payments of term life and disability insurance
premiums on behalf of the respective Named Officers. The amount of such
insurance premiums paid on behalf of Mr. Riley during 1997, 1996 and
1995 was $7,615, $7,625 and $7,243, respectively. The amount of such
insurance premiums paid on behalf of Mr. Sartor during 1997, 1996 and
1995 was $3,025, $3,025 and $2,305, respectively. The Company does not
pay such premiums for Mr. Jensen or Mr. Farley. The Company procured
two term life insurance policies with a combined face amount of $20
million for the benefit of Jerry C. Moyes and his spouse. The aggregate
annual premiums paid by the Company for these polices were $148,219,
$148,448 and $148,631 in 1997, 1996 and 1995, respectively. The
Company's purpose in maintaining these policies is to ensure that, in
the event of the Moyes' deaths, their estate would be able to satisfy
estate taxes without having to sell a large block of the Company's
Common Stock, which might adversely affect the market for the Common
Stock.
(2) Mr. Jensen was named an executive officer of the Company in October
1996.
(3) Mr. Farley was named an executive officer of the Company in May 1997.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The number of options and the option exercise price reflect a 3-for-2 stock
split treated as a dividend, effected on November 18, 1993, of one share of
Common Stock for every two shares of Common Stock outstanding, a 2-for-1 stock
split treated as a dividend of one share of Common Stock outstanding effected on
November 18, 1994 and a 3-for-2 stock split treated as a dividend, effected on
March 12, 1998, of one share of Common Stock for every two shares of Common
Stock outstanding.
<TABLE>
<CAPTION>
====================================================================================================================================
Individual Grants
- -------------------------------------------------------------------------------------------
Potential Realizable Value At
Percent of Market Assumed Annual Rates of Stock Price
Number of Total Price At Appreciation For Option Term
Securities Options/SARs Exercise Dates ---------------------------------------
Underlying Granted To Or Base Of
Option/SARs Employees In Price Grant Expiration
Name Granted (#) Fiscal Year ($/Sh) ($/Sh) Date 0% ($) 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerry C. Moyes -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
William F. Riley III 75,000 (1) 11.25% $15.02 $17.67 04/01/07 $198,750 $1,032,035 $2,310,459
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick J. Farley 15,000 (2) 2.25% $15.02 $17.67 04/01/07 $39,750 $206,407 $462,092
15,000 (2) 2.25% $16.75 $19.71 07/01/07 $44,344 $230,261 $515,494
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin H. Jensen 30,000 (2) 4.50% $15.02 $17.67 04/01/07 $79,500 $412,814 $924,183
30,000 (2) 4.50% $15.58 $18.33 12/01/07 $82,500 $428,392 $959,058
- ------------------------------------------------------------------------------------------------------------------------------------
Rodney K. Sartor -- -- -- -- -- -- -- --
====================================================================================================================================
</TABLE>
(1) One-third of options are exercisable on third anniversary of grant and
one-third on each successive year.
(2) One-fifth of options are exercisable on fifth anniversary of grant and
one-fifth on each successive year.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUE AS OF DECEMBER 31, 1997
The table below sets forth information with respect to the exercise of
stock options during the fiscal year ended December 31, 1997, by the Named
Officers. The Company does not have a long-term incentive plan and has never
issued any stock appreciation rights.
The number of options and the option exercise price reflect a 3-for-2
stock split treated as a dividend, effected on November 18, 1993, of one share
of Common Stock for every two shares of Common Stock outstanding, a 2-for-1
stock split treated as a dividend of one share of Common Stock outstanding
effected on November 18, 1994 and a 3-for-2 stock split treated as a dividend,
effected on March 12, 1998, of one share of Common Stock for every two shares of
Common Stock outstanding.
<TABLE>
<CAPTION>
====================================================================================================================================
Value of Unexercised In-the-
Number of Unexercised Options Money Options at Fiscal Year End
at Fiscal Year End (#) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares
Acquired on
Name Exercise (#)(1) Value Realized ($)(2) Exercisable Unexercisable(3) Exercisable(4) Unexercisable(4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry C. Moyes -- -- -- -- -- --
President & Chief Executive
Officer(5)
- ------------------------------------------------------------------------------------------------------------------------------------
William F. Riley III 54,000 817,500 -- 183,000 -- 2,622,500
Executive Vice President &
Chief Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Rodney K. Sartor 54,000 817,500 -- 108,000 -- 2,130,000
Executive Vice President
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin H. Jensen -- -- 9,000 126,000 151,750 1,412,625
Executive Vice President(6)
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick J. Farley 13,500 210,987 9,000 67,500 173,425 844,841
Executive Vice President(7)
====================================================================================================================================
</TABLE>
- ----------------------
(1) Represents shares of Common Stock acquired pursuant to exercise of
options under the Company's Stock Option Plan. The exercise price for
such shares was $1.86 per share for Messrs. Riley and Sartor, and $2.31
per share for 9,000 shares and $1.86 per share for 4,500 shares
exercised by Mr. Farley.
(2) Based on the $17.00 last reported sale price of the Company's Common
Stock on March 31, 1997, for Messrs. Riley and Sartor, and the $17.29
last reported sale price for 11,250 shares exercised on February 17,
1997, and the $20.29 last reported sale price for 2,250 shares
exercised on May 7, 1997, for Mr. Farley.
(3) Mr. Sartor's options and Mr. Riley's options (excepting the 75,000
options granted to Mr. Riley in 1997) were granted in 1990 and
one-fifth of the shares underlying such options first became
exercisable in March 1995. Thereafter, one-fifth of such options become
exercisable in each successive year. The exercise price of such options
is $1.86 per share. Such options will terminate in September 2000. In
1997 Mr. Riley was
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granted options to purchase 75,000 shares at $15.02 per share.
One-third of the shares underlying such options first become
exercisable in April 2000. Thereafter, one-third of the options become
exercisable in each successive year. These options will terminate in
April 2007.
(4) Based on the $21.58 last reported sales price of the Company's Common
Stock on December 31, 1997.
(5) Mr. Moyes has not been awarded any stock options and is not eligible to
participate in the Company's Stock Option Plan or Employee Stock
Purchase Plan. See "Compensation Committee Report on Executive
Compensation" below.
(6) Mr. Jensen was granted options in 1992, 1994 and 1997 covering 45,000,
30,000 and 60,000 shares of the Company's Common Stock, respectively.
The exercise price for each of Mr. Jensen's options is $4.72, $7.30,
$15.02 (as to 30,000 shares subject to options granted in April 1997)
and $15.58 (as to 30,000 shares subject to options granted in December
1997), respectively. One-fifth of the shares underlying Mr. Jensen's
1992 options became exercisable in December 1997, one-fifth of the
shares underlying Mr. Jensen's 1994 and 1997 options will become
exercisable in February 1999, April 2002 (as to 30,000 shares) and
December 2002 (as to 30,000 shares), respectively, with one-fifth of
the shares underlying such options becoming exercisable each successive
year thereafter.
(7) Mr. Farley was granted options in 1990 (as to 11,250 shares), December
1991 (as to 45,000 shares), January 1995 (as to 3,750 shares), December
1995 (as to 2,250 shares), April 1997 (as to 15,000 shares) and July
1997 (as to 15,000 shares). The respective exercise prices for such
grants are $1.86, $2.31, $12.18, $8.43, $15.02 and $16.75. One-fifth of
each such option grant becomes exercisable on the fifth anniversary of
the grant and one-fifth of each such grant becomes exercisable in each
successive year thereafter. All of Mr. Farley's options terminate on
the ten year anniversary of the date of grant.
EMPLOYMENT AGREEMENTS
The Company currently does not have any employment contracts or
severance agreements with any of its executive officers.
CHANGE OF CONTROL ARRANGEMENTS
In the event the Company sells all or substantially all of its assets,
or merges with or into another corporation, stock options outstanding are
required to be assumed or equivalent options are required to be substituted by
such successor corporation or a parent or subsidiary of such successor
corporation, unless the Company's Board of Directors determines, in the exercise
of its sole discretion and in lieu of such assumption or substitution, that the
option holder shall have the right to exercise his or her option, including
shares as to which such option would not otherwise be exercisable. If the Board
makes options fully exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board must notify the option holder
that the option is fully exercisable for a period of thirty (30) days from the
date of such notice (but not later than the expiration of the term of the
option) and the option will terminate upon the expiration of such period.
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<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies and
programs that seek to enhance the profitability of the Company and thus
shareholder value by aligning the interests of senior management with those of
its shareholders. The Company compensates senior management through a mix of
short-term and long-term compensation programs. The three principal components
of executive compensation are base salary, annual bonus awards and stock
options. Jerry C. Moyes does not participate in the Compensation Committee's
deliberations concerning his compensation.
Base Salary. In setting base salaries of senior management for 1997,
including the salary of Jerry C. Moyes, the Company's Chief Executive Officer,
the Compensation Committee reviewed and considered (i) compensation information
disclosed by similar publicly held truckload motor carriers (all of which
carriers are included in the Nasdaq Trucking and Transportation Stocks Index);
(ii) the financial performance of the Company, as well as the role and
contribution of the particular executive with respect to such performance; and
(iii) nonfinancial performance related to the individual executive's
contributions. The Compensation Committee believes that the annual salaries of
the Company's Chief Executive Officer and its Executive Vice Presidents are at
or slightly below median levels paid by other publicly held truckload motor
carriers of comparable size. However, the Committee believes that, when the base
salary and annual bonus for the Company's executives are aggregated, its
compensation package is competitive with those provided to similarly situated
executives in the truckload motor carrier industry. The Committee has taken
particular note of management's success in assimilating the operations of
acquired carriers into the Company's operations, growing the Company in terms of
revenue, net earnings and earnings per share, and managing the growth
experienced by the Company during the last fiscal year.
Annual Bonus. The Compensation Committee annually considers the award
of bonus compensation to executive officers as additional compensation based
upon individual and Company financial performance. Company financial performance
is measured by review of a variety of factors, including earnings per share,
operating ratios, revenue growth, and size and performance relative to similarly
situated trucking industry competitors. The Compensation Committee evaluates
individual performance based upon contribution to financial performance goals
and review of other qualitative and quantitative factors. Accordingly, in years
in which the Company's performance goals are exceeded, bonus compensation will
tend to be higher. The Compensation Committee believes that this policy properly
motivates the executive officers to perform to the greatest extent of their
abilities to generate the highest attainable profits for the Company and to
achieve increased shareholder value.
Stock Options. The Company believes that it is important for executives
to have an equity stake in the Company in order to encourage them to focus on
long-term prospects. Toward this
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end, the Company makes option grants to the Executive Vice Presidents from time
to time pursuant to the Company's Stock Option Plan. In making option grants to
the Executive Vice Presidents, the Compensation Committee evaluates the
individual officer's past and expected future contributions to the Company's
achievement of its long-term performance goals. Because Jerry Moyes is the
largest beneficial stockholder of the Company, the Compensation Committee has
not awarded any stock options to Mr. Moyes, and Mr. Moyes is not eligible to
participate in the Company's Stock Option Plan or Employee Stock Purchase Plan.
Chief Executive Officer. The two members of the Compensation Committee
other than Mr. Moyes evaluate the Chief Executive Officer's performance and
recommend his salary and bonus to the Board of Directors. As noted above, due to
Mr. Moyes' substantial stock ownership of the Company, the Committee has not
included stock options as a component of Mr. Moyes' overall compensation. Due in
part to this omission of option grants, and primarily due to his significant
contributions to the Company and the Company's dependence on Mr. Moyes, Mr.
Moyes' base salary is set significantly above the base salaries for the other
executive officers. The Committee believes that Mr. Moyes' total compensation is
appropriate compared to the total compensation paid to CEOs of comparable
publicly held truckload motor carriers, especially in light of the Company's
operating results and the increase in stockholder value in 1997.
COMPENSATION COMMITTEE
Jerry C. Moyes Alphonse E. Frei Lou A. Edwards
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the
Nasdaq Stock Market (U.S.) Index and the Nasdaq Trucking and Transportation
Stocks Index from December 31, 1992 to December 31, 1997. The graph assumes that
$100 was invested on December 31, 1992, and any dividends were reinvested.
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Stock Market (US) 100.000 114.796 112.214 158.699 195.192 239.527
Trucking & Transportation Index 100.000 121.492 110.167 128.465 141.779 181.592
Swift Transportation Co, Inc. 100.000 128.358 244.776 182.090 280.597 386.567
</TABLE>
15
<PAGE>
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 during the Company's preceding fiscal year all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with, except (i) Messers. Riley, Farley,
Jensen and Lyding did not timely report awards of options on a Form 4 but did
report the award on a subsequent Form 4 and (ii) Mr. Moyes did not timely report
the purchase of 14,000 shares but did report the transaction on a Form 5 .
16
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth, as of March 17, 1998, 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 and Named Officer of the Company and by all Directors and Named
Officers of the Company as a group.
The number of shares reflect a 3-for-2 stock split treated as a
dividend, effected on November 18, 1993, of one share of Common Stock for every
two shares of Common Stock outstanding, a 2-for-1 stock split treated as a
dividend of one share of Common Stock outstanding effected on November 18, 1994
and a 3-for-2 stock split treated as a dividend, effected on March 12, 1998, of
one share of Common Stock for every two shares of Common Stock outstanding.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner(1) Shares Beneficially Owned Percent Owned
- --------------------------------------- ------------------------- -------------
<S> <C> <C>
Jerry C. Moyes 12,110,478(2) 28.49%
Ronald G. Moyes 6,012,235(2) 14.14%
Lou A. Edwards 263,250 *
William F. Riley III 175,910(3) *
Rodney K. Sartor 117,264(4) *
Alphonse E. Frei 12,000(5) *
Earl H. Scudder, Jr 1,500(6) *
Patrick J. Farley 2,343(7) *
Kevin H. Jensen 6,495 *
FMR Corporation 5,502,600 12.95%
Dresdner RCM Global Investors LLC 2,255,400 5.31%
All Directors and Named 12,689,240 29.77%
Officers as a group
(8 persons)
- ---------------------------------------
</TABLE>
* Represents less than 1% of the Company's outstanding Common Stock.
(1) The address of each officer, director and Ronald G. Moyes is 2200 South
75th Avenue, Phoenix, Arizona 85043. The address of FMR Corporation is 82
Devonshire Street, Boston, Massachusetts 02109. The address of Dresdner
RCM Global Investors LLC is Four Embarcadero Center, San Francisco,
California 94111. Information with respect to FMR Corporation and Dresdner
RCM Global Investors LLC is based upon a Schedule 13G filed by FMR
Corporation and Dresdner RCM Global Investors LLC with the Securities and
Exchange Commission.
(2) The shares beneficially owned by Jerry C. Moyes are held by him, as
follows: (i) 11,772,978 shares are held as a co-trustee of the Jerry and
Vickie Moyes Family Trust, (ii) 22,500 shares are held by a limited
liability company of which Mr. Moyes has controlling interest, and (iii)
315,000 shares are held by SME Industries, Inc. of which Jerry C. Moyes is
the majority shareholder. The shares shown for Jerry C. Moyes do not
include the 6,012,235 shares held by seven irrevocable trusts for the
benefit of six children of Jerry and Vickie Moyes and by an irrevocable
trust for the benefit of Jerry and Vickie Moyes and six of their children,
the sole trustee of each of which is Ronald Moyes, who has sole investment
and voting power over the trusts. The shares shown
17
<PAGE>
for Jerry C. Moyes also do not include 240,000 shares held by an
irrevocable trust for the children of Jerry and Vickie Moyes, the sole
trustee of which is Gerald F. Ehrlich, who has sole investment and voting
power. Of the shares held by the Jerry and Vickie Moyes Family Trust,
11,511,940 shares have been pledged to secure loans with lending
institutions.
(3) Includes options to purchase 54,000 shares exercisable within 60 days.
(4) Includes options to purchase 54,000 shares exercisable within 60 days.
(5) Includes options to purchase 4,500 shares exercisable within 60 days.
(6) Includes options to purchase 1,500 shares exercisable within 60 days.
(7) Includes options to purchase 2,250 shares exercisable within 60 days.
18
<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS
During 1997, the Company incurred fees for legal services to the
Scudder Law Firm in the amount of $60,000. Mr. Earl H. Scudder, Jr., a director
of the Company, is a member of the Scudder Law Firm. The Company believes that
the terms of the foregoing transactions were as favorable to the Company as
those which would have been available from an independent third party. See
"Compensation Committee Interlocks and Insider Participation" above for a
description of certain transactions between the Company and members of the
Compensation Committee.
AMENDMENT TO SWIFT TRANSPORTATION CO., INC. STOCK OPTION PLAN
(Proposal No. 2)
General
At the Annual Meeting, the Company will seek stockholder approval of an
amendment (the "Amendment") to the Swift Transportation Co., Inc. Stock Option
Plan (the "Plan") to increase the number of shares authorized for issuance
thereunder from 3,825,000 to 4,200,000. The Plan provides employees with an
incentive to actively direct and contribute to the Company's growth by enabling
them to acquire a proprietary interest in the Company. The Company's Board of
Directors has approved the Amendment to the Plan and has directed that the
Amendment be submitted as a proposal for stockholder approval at the Annual
Meeting. The Plan was originally adopted in 1990.
Current Plan Provisions
The Plan authorizes grants of incentive stock options ("ISOs") and
non-qualified stock options ("NQSOs") to employees of the Company. All of the
Company's employees, except Jerry C. Moyes, are eligible to participate in the
Plan.
The Board of Directors believes that use of stock options authorized
under the Plan is beneficial to the Company as a means of promoting the success
and enhancing the value of the Company by linking the personal interests of its
employees and others to those of its stockholders and by providing employees and
others with an incentive for outstanding performance. These incentives also
provide the Company flexibility in its ability to attract and retain the
services of employees and others upon whose judgment, interest and special
effort the successful conduct of the Company's operation is largely dependent.
The Plan is administered by a committee appointed by the Board
consisting of at least two (2) non-employee directors (the "Committee"). The
Committee has the exclusive authority to administer the Plan, including the
power to determine eligibility, the types and sizes of options and the timing of
options.
19
<PAGE>
Generally, options issued under the Plan have been subject to vesting
over a nine-year period, with 20% of the options becoming exercisable by the
holder thereof on the fifth anniversary of the date of grant and 20% becoming
exercisable on each successive anniversary date of the grant. To date, the
exercise price of options granted under the Plan has generally been equal to 85%
of the fair market value of the Common Stock on the date of the grant. On March
17, 1998, the last reported sale price of the Common Stock on the Nasdaq
National Market was $24.25 per share.
Incentive Stock Options. An ISO is a stock option that satisfies the
requirements specified in Section 422 of the Internal Revenue Code (the "Code").
Under the Code, ISOs may only be granted to employees. In order for an option to
qualify as an ISO, the price payable to exercise the option must equal or exceed
the fair market value of the stock at the date of the grant, the option must
lapse no later than 10 years from the date of the grant, and the stock subject
to ISOs that are first exercisable by an employee in any calendar year must not
have a value of more than $100,000 as of the date of grant. Certain other
requirements must also be met. The Committee determines the consideration to be
paid to the Company upon exercise of any options. The form of payment may
include cash, Common Stock, or other property.
An optionee is not treated as receiving taxable income upon either the
grant of an ISO or upon the exercise of an ISO. However, the difference between
the exercise price and the fair market value on the date of exercise is an item
of tax preference at the time of exercise in determining liability for the
alternative minimum tax, assuming that the Common Stock is either transferable
or is not subject to a substantial risk of forfeiture under Section 83 of the
Code. If at the time of exercise, the Common Stock is both nontransferable and
is subject to a substantial risk of forfeiture, the difference between the
exercise price and the fair market value of the Common Stock (determined at the
time the Common Stock becomes either transferable or not subject to a
substantial risk of forfeiture) will be a tax preference item in the year in
which the Common Stock becomes either transferable or not subject to a
substantial risk of forfeiture.
If Common Stock acquired by the exercise of an ISO is not sold or
otherwise disposed of within two years from the date of its grant and is held
for at least one year after the date such Common Stock is transferred to the
optionee upon exercise, any gain or loss resulting from its disposition is
treated as long-term capital gain or loss. If such Common Stock is disposed of
before the expiration of the above-mentioned holding periods, a "disqualifying
disposition" occurs. If a disqualifying disposition occurs, the optionee
realizes ordinary income in the year of the disposition in an amount equal to
the difference between the fair market value of the Common Stock on the date of
exercise and the exercise price, or the selling price of the Common Stock and
the exercise price, whichever is less. The balance of the optionee's gain on a
disqualifying disposition, if any, is taxed as capital gain.
The Company is not entitled to any tax deduction as a result of the
grant or exercise of an ISO, or on a later disposition of the Common Stock
received, except that in the event of a
20
<PAGE>
disqualifying disposition, the Company is entitled to a deduction equal to the
amount of ordinary income realized by the optionee.
Non-Qualified Stock Options. A NQSO is any stock option other than an
ISO. Such options are referred to as "non-qualified" because they do not meet
the requirements of, and are not eligible for, the favorable tax treatment
provided by Section 422 of the Code.
No taxable income is realized by an optionee upon the grant of a NQSO,
nor is the Company entitled to a tax deduction by reason of such grant. Upon the
exercise of a NQSO, the optionee realizes ordinary income in an amount equal to
the excess of the fair market value of the Common Stock on the date of exercise
over the exercise price and the Company is entitled to a corresponding tax
deduction.
Upon a subsequent sale or other disposition of Common Stock acquired
through exercise of a NQSO, the optionee realizes a short-term or long-term
capital gain or loss to the extent of any intervening appreciation or
depreciation. Such a resale by the optionee has no tax consequence to the
Company.
The following table sets forth grants of options made under the Plan
during 1997 to (i) each of the executive officers named on page three; (ii) all
current executive officers, as a group; (iii) all employees, including all
current officers who are not executive officers, as a group. Grants under the
Plan are made at the discretion of the Committee. Accordingly, future grants
under the Plan are not yet determinable.
21
<PAGE>
PLAN BENEFITS
Stock Option Plan
<TABLE>
<CAPTION>
Number of Shares Weighted Average
Subject to Options Exercise Price
Name and Position Granted (#) Per Share ($/sh)
- ----------------- ------------- -----------------
<S> <C> <C>
Jerry C. Moyes -- --
Chairman of the Board
& President
William F. Riley III 75,000 $15.02
Executive Vice President &
Chief Financial Officer
Rodney K. Sartor -- --
Executive Vice President
Patrick J. Farley 30,000 $15.88
Executive Vice President
Kevin H. Jensen 60,000 $15.30
Executive Vice President
Executive Officer Group 165,000 $15.28
Employee Group 501,375 $15.81
- ------------------------------
</TABLE>
Amendments to Plan
The Board of Directors has reviewed the options currently remaining in
the option pool for the Plan and has determined that it is appropriate to
increase the number of shares authorized for issuance under the Plan. As of
March 17,1998, (i) 1,189,410 shares have been issued upon exercise of options
and are included in the total number of shares of outstanding Common Stock and
(ii) option grants representing 2,417,865 shares were outstanding under the
Plan. The Board believes that an increase in the number of authorized shares is
necessary for the continued optimal use of the Plan. Therefore, the Board is
proposing the Amendment to the Plan that would increase the number of shares
authorized for issuance under the Plan from 3,825,000 to 4,200,000.
22
<PAGE>
Required Vote
Approval of the Amendment to the Plan requires the affirmative vote of
a majority of shares of Common Stock present at the Annual Meeting in person or
by proxy. Abstentions are considered present for this proposal, so they will
have the same effect as votes against the Amendment. Broker non-votes are not
considered present for this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE AMENDMENT TO THE SWIFT TRANSPORTATION CO., INC. STOCK OPTION
PLAN.
RELATIONSHIP WITH
INDEPENDENT ACCOUNTANTS
The principal independent public accounting firm utilized by the
Company during the fiscal year ended December 31, 1997 was KPMG Peat Marwick
LLP, independent certified public accountants (the "Auditors"). It is presently
contemplated that the Auditors will be retained as the principal accounting firm
to be utilized by the Company during the current fiscal year. A representative
of the Auditors will attend the Annual Meeting for the purpose of responding to
appropriate questions and will be afforded an opportunity to make a statement if
the Auditors so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1999 Annual Meeting must be received at
the principal executive offices of the Company by December 15, 1998 to be
considered for inclusion in the Company's proxy materials relating to such
meeting.
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.
SWIFT TRANSPORTATION CO., INC.
Jerry C. Moyes
Chairman of the Board, President
and Chief Executive Officer
April 13, 1998
23
<PAGE>
SWIFT TRANSPORTATION CO., INC.
Annual Meeting of Stockholders
May 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jerry C. Moyes and William F. Riley
III, and each of them individually, as proxy with power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all shares
of Common Stock of Swift Transportation Co., Inc. held of record by the
undersigned on March 31, 1998 at the Annual Meeting of Stockholders to be held
on May 28, 1998, and at any adjourments thereof.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
^ DETACH HERE BEFORE MAILING TOP PORTION ^
<PAGE>
<TABLE>
<CAPTION>
Please mark |
your vote as [X] |
indicated in |_____
this example
<S> <C> <C> <C>
The Board of Directors recommends a vote FOR WITHHELD
FOR Proposal 1 ALL FOR ALL
Proposal 1 - ELECTION OF TWO DIRECTORS [ ] [ ] This proxy, when properly executed, will be voted in the
TO CLASS II OF THE BOARD manner directed herein by the undersigned stockholder. If no
OF DIRECTORS direction is given, this proxy will be voted for the two director
nominees named in proposal 1, for the increase in the number of
Jerry C. Moyes shares authorized under the Company's Stock Option Plan, and at the
discretion of the proxies on such other matters as may properly
Alphonse E. Frei come before the meeting or any adjourments thereof.
WITHHELD FOR: (Write that nominee(s) name
in the space provided below).
_____________________________________
The board of Directors recommends a vote
For Proposal 2 FOR AGAINST
Proposal 2 - Approval of amendment to [ ] [ ]
Stock Option Plan to increase authorized
shares from 3,825,000 to 4,200,000
_______
|
|
|
Signature(s)__________________________________________________________________________________________ Date _________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
</TABLE>
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
