OTR EXPRESS, INC
804 N. Meadowbrook Drive
Olathe, Kansas 66062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 1, 1997
TO ALL STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders of OTR
Express, Inc. (the "Company") to be held on Thursday, May 1, 1997, at 7:00
p.m., Kansas City Time, at the Doubletree Hotel, 10100 College Boulevard,
Overland Park, Kansas, for the following purposes:
(1)To elect three Class B directors to serve until the 2000 Annual Meeting
of Stockholders or until their successors are duly elected and qualified;
(2)To approve the selection by the Board of Directors of the firm of Arthur
Andersen LLP as the independent auditors for the Company for 1997; and
(3)To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of record of the Company's Common Stock, $.01 par value, as of the
close of business on March 13, 1997, will be entitled to notice of and to
vote at the Annual Meeting and any adjournment thereof. A list of
stockholders entitled to vote at the Annual Meeting will be kept at the
Company's offices at 804 N. Meadowbrook Drive, Olathe, Kansas 66062 for a
period of ten days prior to the Annual Meeting and will be available at the
Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
William P. Ward, Chairman of the Board
Dated: April 2, 1997
IMPORTANT----YOUR PROXY AND A RETURN ENVELOPE ARE ENCLOSED
You are urged to sign, date and mail your proxy even though
you may plan to attend the Annual Meeting. No postage is
required if your proxy is mailed in the United States in the
enclosed return envelope. If you attend the Annual Meeting,
you may vote by proxy or you may withdraw your proxy and
vote in person. By returning your proxy promptly, a quorum
will be assured at the Annual Meeting, which will prevent costly follow-up
and delays.
<PAGE>
OTR EXPRESS, INC.
804 N. Meadowbrook Drive
Olathe, Kansas 66062
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1997
PROXY STATEMENT
The proposals in the accompanying form of proxy (the "Proxy") are solicited
by the Board of Directors of OTR Express, Inc. (the "Company") for use at
its Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Thursday, May 1, 1997, at 7:00 p.m., Kansas City Time, at the Doubletree
Hotel, 10100 College Boulevard, Overland Park, Kansas, and any adjournment
or postponement thereof. This Proxy Statement, the accompanying form of
Proxy and the Company's Annual Report for the year ended December 31, 1996
(the "Annual Report") are being mailed or given to stockholders on or about
April 2, 1997.
Proxies. Shares represented by a duly executed Proxy received prior to the
Annual Meeting will be voted at the Annual Meeting. If a stockholder
specifies a choice on the Proxy with respect to any matter to be acted upon,
the shares will be voted in accordance with the choices specified in the
Proxy with respect to the proposals described in this Proxy Statement. If
no choice is specified, the shares represented by the Proxy will be voted in
favor of the proposals set forth in this Proxy Statement. None of the
proposals are related to or conditioned on the approval of any other proposal.
Any given person giving Proxy has the power to revoke it at any time before
it is exercised by giving written notice to the Secretary of the Company at
any time prior to the voting of the shares represented by the Proxy.
Other Matters. Management of the Company does not intend to present any
matter to the Annual Meeting except as indicated herein, and presently knows
of no other matter to be presented at the Annual Meeting. Should any other
matters properly come before the Annual Meeting, the persons named in the
accompanying form of Proxy will vote the Proxy in accordance with their
judgment of the best interests of the Company on such matters.
Solicitation and Expense. The Company will bear all the costs of
solicitation of Proxies and preparing, assembling, printing and mailing the
Proxy Statement, the Proxy and additional materials which may be furnished
to stockholders. In addition to the use of the mails, Proxies may be
solicited by personal contact, telephone or telegraph by regular employees
of the Company, and the Company will reimburse brokers, custodians,
fiduciaries or other persons for their reasonable expenses in sending proxy
soliciation material to beneficial owners of shares.
Voting. Only stockholders of record of the Company's common stock, $.01 par
value (the "Common Stock"), at the close of business on March 13, 1997 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, the Company had 1,840,515 shares of Common
Stock outstanding and entitled to vote at the Annual Meeting. Each holder
of Common Stock is entitled to one vote per share on each matter to properly
come before the Annual Meeting, except for the election of directors, in which
case each stockholder shall have the right to cumulatively vote such
stockholder's shares. Cumulative voting entitles each stockholder to cast
as many votes in the aggregate as shall equal the number of shares held by
such
<PAGE>
stockholder multiplied by the number of directors to be elected. The
stockholder may cast the whole number of such votes for one nominee or
distribute the votes among two or more nominees.
The Bylaws of the Company require that a majority of the votes of the shares
of Common Stock issued, outstanding and entitled to vote at the Annual
Meeting be present in person or represented by Proxy at the Annual Meeting
in order to constitute a quorum for the transaction of business. Provided a
quorum is present, the affirmative vote of (a) a plurality of the votes cast
by the holders of the Common Stock present in person or represented by Proxy
at the Annual Meeting and entitled to vote on the subject matter is required
for the election of directors and (b) a majority of the votes cast by the
holders of the Common Stock present in person or represented by Proxy at the
Annual Meeting and entitled to vote on the subject matter as required for the
approval and ratification of the Board of Directors' selection of
independent auditors. Stockholders do not have any dissenters' rights of
appraisal in connection with any of the matters to be voted upon. Votes that
are cast against the proposals are counted both for purposes of determining
the presence or absence of a quorum for the transaction of business and for
purposes of determining the total number number of votes cast on a given
proposal. Abstentions will be counted for purposes of determining the total
number of votes cast on a given proposal, and therefore will have the same
effect as a vote against a given proposal. Broker non-votes (i.e., a proxy
card returned by a holder on behalf of its beneficial owner that is not voted
on a particular matter because voting instructions have not been received and
the broker has no discretionary authority to vote) are not counted for
purposes of determining the number of shares present or represented with
respect to a particular proposal for which there is no authorization to
vote and will not be considered as votes cast and thus will not affect
the outcome of voting.
The Company. The Company's principal executive office is located at 804 N.
Meadowbrook Drive, Olathe, Kansas 66062.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth the beneficial ownership of the Company's
voting securities (Common Stock) as of February 28, 1997 by each person and
group known to the Company to be the beneficial owner of more than 5% of
its Common Stock.
<CAPTION>
Name and Address of Amount & Nature of % of Class<FN1>
Beneficial Owner Beneficial Ownership<FN1>
<S> <C> <C>
William P. Ward 263,212<FN2> 14.21%
804 N. Meadowbrook Dr.
Olathe, KS 66062
Janice K. Ward 263,212<FN2> 14.21%
804 N. Meadowbrook Dr.
Olathe, KS 66062
Robert Fleming, Inc. 179,000<FN3> 9.73%
320 Park Avenue
New York, NY 10022
Robert B. Westphal 134,400<FN4> 7.30%
109 N. 6th Street
Fort Smith, AR 72901
Dr. Ralph E. MacNaughton 127,237<FN5> 6.91%
#17 Wycklow
Overland Park, KS 66207
Dimensional Fund Advisors Inc. 93,900<FN6> 5.10%
1299 Ocean Avenue
Santa Monica, CA 90401
<FN>
<FN1>Calculated in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended. Nature of beneficial ownership of shares of Common
Stock is direct unless indicated otherwise by footnote. Beneficial ownership
as shown in the table arises from sole voting power and sole investment power
unless otherwise indicated by footnote.
<FN2>Includes 64,768 shares owned of record by Associated Commercial
Analysts Corporation ("ACA"), which is 100% owned by Mr. and Mrs. Ward.
Also includes 109,352 shares held jointly by Mr. and Mrs. Ward; 4,700 shares
held directly by each of Mr. Ward and Mrs. Ward; 6,320 shares held by a
family trust for which Mr. Ward is sole trustee with voting and dispositive
power; and 7,455 and 4,471 shares purchasable pursuant to options which are
currently exercisable by Mr. Ward and Mrs. Ward, respectively. In addition,
inclues 61,446 shares owned by the ESOP of which Mr. Ward is the sole trustee,
with sole voting and dispositive power. Of the shares owned by the ESOP,
5,251 and 1,960 shares have been allocated to the ESOP accounts of Mr. Ward
and Mrs. Ward, respectively.
<FN3>As reflected on the Robert Fleming, Inc. Schedule 13G dated February
14, 1997.
<FN4>As reflected on Mr. Westphal's Schedule 13D dated March 11, 1996.
<FN5>Includes 62,602 shares held in family trusts of which Dr. MacNaughton
is trustee and 53,635 shares held in family trusts of which his spouse is
trustee. Also includes 1,000 shares purchasable pursuant to options that
are currently exercisable by Dr. MacNaughton.
<FN6>As reflected on Dimensional Fund Advisors Inc. ("Dimensional") Schedule
13G dated February 7, 1996. Dimensional, a registered investment advisor,
is deemed to have beneficial ownership of 93,900 shares of the Company's
Common Stock as of December 31, 1996, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of which
Dimensional serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares.
</FN>
</TABLE>
<PAGE>
<TABLE>
The following table sets forth, with respect to the Company's voting
securities (Common Stock) as of February 28, 1997, (i) shares beneficially
owned by all directors (current and nominee) and named executive officers of
the Company, and (ii) total shares beneficially owned by all executive
officers and directors as a group.
<CAPTION>
Name of Beneficial Owner Amount & Nature of
Beneficial Ownership(1) % of Class(1)
<S> <C> <C>
William P. Ward 263,212<FN2> 14.21%
Janice K. Ward 263,212<FN2> 14.21%
Dr. Ralph E. MacNaughton 127,237<FN3> 6.91%
Dr. James P. Anthony 70,615<FN4> 3.83%
Dean W. Graves 51,413<FN5> 2.79%
Frank J. Becker 25,000<FN6> 1.36%
Terry G. Christenberry 7,000<FN7> .38%
Charles M. Foudree 3,000<FN8> .16%
Gary J. Klusman 1,470<FN9> .08%
All executive
officers and directors
as a group (11 persons) 557,701<FN10> 29.90%
<FN>
<FN1>See footnote (1) to the table on the preceding page.
<FN2>See footnote (2) to the table on the preceding page.
<FN3>See footnote (5) to the table on the preceding page.
<FN4>Includes 2,700 and 24,400 shares held by Dr. Anthony's pension trust
and profit sharing trust, respectively, 26,220 shares owned by his spouse
and 5,580 shares held for the benefit of his minor children. Also includes
1,000 shares purchasable pursuant to options which are currently exercisable
by Dr. Anthony.
<FN5>Includes 13,100 shares owned by Mr. Graves' spouse for which Mr. Graves
disclaims beneficial ownership, 500 shares owned jointly with his spouse, and
19,650, 13,383 and 1,000 shares held by his HR-10 retirement plan, profit
sharing trust and individual retirement account, respectively. Also
includes 1,000 shares purchasable pursuant to options which are currently
exercisable by Mr. Graves.
<FN6>Includes 10,000 shares held by Mr. Becker's HR-10 retirement plan.
<FN7>Includes 2,000 held in Mr. Christenberry's individual retirement
account and 2000 shares held in Mrs. Christenberry's individual retirement
account, for which Mr. Christenberry disclaims beneficial ownership. Also
includes 1,000 shares purchasable pursuant to options which are currently
exercisable by Mr. Christenberry.
<FN8>Includes 1,000 shares held by Mr. Foudree's trust and 1,000 shares held
in the individual retirement account of his spouse. Also includes 1,000
shares purchasable pursuant to options which are currently exercisable by Mr.
Foudree.
<FN9>Includes 1,400 shares held in Mr. Klusman's individual retirement account.
<FN10>Includes 19,435 shares purchasable pursuant to options which are
currently exercisable and 61,466 shares owned by the ESOP of which Mr. Ward
is the sole trustee, with sole voting and dispositive power. Of the shares
owned by the ESOP, a total of 9,531 of the ESOP shares have been allocated
to the accounts of the Company's executive officers.
</FN>
</TABLE>
<PAGE>
PROPOSAL ONE:
ELECTION OF CLASS B DIRECTORS
The number of directors constituting the Board of Directors has been fixed at
nine. The Articles of Incorporation of the Company divide the Board of
Directors into three classes of directors, as nearly equal in number as
possible, who serve staggered terms. The term of office of one class of
directors expires each year in rotation so that one class is elected at each
Annual Meeting of Stockholders for a full three-year term.
Nominees. The following table contains certain information concerning each
of the individuals nominated by the Board of Directors for election as a
Class B Director at the 1997 Annual Meeting. Each is presently a director
whose term expires in 1997. Each Class B Director to be elected at the 1997
Annual Meeting will serve until the Annual Meeting of Stockholders in 2000
or until his successor is elected and qualified. The shares represented by
the enclosed Proxy will be voted, unless otherwise indicated, for the
election of the three nominees for Class B Director named below. In the
unanticipated event that any nominee should become unavailable, the Board
of Directors, in its discretion, may designate a substitute nominee, in
which event such shares will be voted for such substitute nominee.
Management recommends a vote for the election of the three nominees for Class
B Director named below.
Name of Nominee for Age Director Principal Occupation
Director Since for Last Five Years
and Directorships Held
Frank J. Becker 61 1997 Mr. Becker has been President of
Becker Investments, Inc., an
investment company located in
Lawrence, Kansas since January
1993 and prior to that time,
Mr. Becker was a private
investor. From 1979 to 1988,
Mr. Becker was Chairman of the
Board and Chief Executive Officer
of Becker Corporation, a tank
trucking company. Mr. Becker is
also a director of Western Resources,
Inc. and a member of the Board of
Trustees of the Kansas University
Endowment Association.
Dr. Ralph E. MacNaughton 68 1988 Dr. MacNaughton has been retired
(1) since June 1994. He had been a
radiologist in the Carondelet
Radiology Group at St. Joseph's
Hospital in Kansas City, Missouri,
for more than the prior five years.
William P. Ward 58 1985 Mr. Ward founded the Company and
(2) has been its President and
Chairman of the Board since
its incorporation in 1985.
Since 1974, Mr. Ward has
been Chairman and an officer
of Associated Commercial Analysts
Corporation ("ACA"), an affiliate
of the Company that has acted as
a general partner for numerous real
estate limited partnerships. Since
the formation of the Company in 1985,
ACA has not formed any new real estate
limited partnerships. ACA is
presently managing six such
partnerships. Mr. Ward is the
husband of Janice K. Ward and
the brother-in-law of Dean W. Graves.
(1) Member of the Compensation Committee.
(2) Member of the Executive Committee.
<PAGE>
THE BOARD OF DIRECTORS Continuing Directors.
The following table contains certain information concerning the Board
members whose terms do not expire in 1997 and continue after the Annual
Meeting.
Current Principal Occupation
Name Age Director Term for the Last Five Years
Since Expires and Directorships Held
Terry G. Christenberry 50 1992 1999 Mr. Christenberry has been
(3) the President and a director
of Christenberry Collet &
Company Inc., an investment
banking firm located in Kansas
City, Missouri, since its
incorporation in June 1994.
From 1986 to June 1994, Mr.
Christenberry was Executive
Vice President and a director
of H.B. Oppenheimer & Company
Inc., also an investment
banking firm located in
Kansas City, Missouri.
Mr. Christenberry has also
been a director of Smithway
Motor Xpress Corporation
since 1996.
Dean W. Graves 62 1991 1999 Mr. Graves has been the sole
(2) owner of Dean Graves, FAIA
Architectural Firm, located in
Kansas City, Missouri, for
more than the prior five
years. Mr. Graves is the
brother-in-law of Mr. and
Mrs. Ward.
Gary J. Klusman 37 1995 1999 Mr. Klusman has been the
(2) Executive Vice President of
the Company since October
1994 and a director since
February 1995. Mr. Klusman
was the Vice President-
Finance and Chief Financial
Officer of the Company from
December 1991 to October 1994.
Dr. James P. Anthony 49 1989 1998 Dr. Anthony has been a
(3) radiologist in the Carondelet
Radiology Group at St.
Joseph's Hospital in Kansas
City, Missouri, for more
than the prior five years.
Janice K. Ward 57 1985 1998 Mrs. Ward has been Vice
President-Compensation and
Administration, Secretary and
a director of the Company
since its incorporation in
1985. Mrs. Ward has been
an officer and director of
ACA, an affiliate of the
Company, since 1984. Mrs.
Ward is the wife of William
P. Ward and the sister-
in-law of Mr. Graves.
Mrs. Ward supervises the
Company's personnel relations,
employee benefits and payroll.
She is also the manager in
charge of the driver
incentive profit centers.
<PAGE>
Charles M. Foudree 52 1994 1998 Mr. Foudree has been Executive
(1)(3) Vice President-Finance and
a director of Harmon
Industries, Inc., a
manufacturer of signal and
control systems for railroads
and mass transit systems
worldwide, located in Blue
Springs, Missouri, and has
been with Harmon in a
variety of executive positions
for more than the prior five
years.
(1) Member of the Compensation Committee.
(2) Member of the Executive Committee.
(3) Member of the Audit Committee.
Meetings of Board of Directors and Committees. The business and affairs of
the Company are managed by its Board of Directors. The Board has established
an Executive Committee, an Audit Committee and a Compensation Committee.
The entire Board of Directors acts as the nominating committee exclusively
responsible for selecting candidates for election as directors. The
Executive Committee is empowered to act between meetings of the Board of
Directors with powers of the full Board, except with respect to certain matters.
The Audit Committee's responsibilities include making recommendations to the
board of directors of the firm to be engaged to audit the Company and
reviewing with the independent auditors the plan for, and results of, the
auditing engagement and the Company's internal accounting controls. The
Compensation Committee is responsible for reviewing and approving the
salaries and classifications of the Company's executive officers and other
significant employees and the Company's personnel policies and administering
the Company's 1991 and 1996 Option Plans. The Board of Directors of the
Company held 6 meetings last year; the Compensation Committee held one
meeting during the last year; and the Executive Committee did not meet during
the last year. During the last year, each director attended at least 75%
of the directors' meetings (and at least 75% of the meetings of committees
on which he or she served) during the period for which he or she was a
director (and during the period for which he served as a committee member).
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee consists entirely of non-employee Directors of the
Company and there are no Compensation Committee interlocks with other
companies.
Compensation of Directors. Non-officer directors are each paid annual fees
of $2,400 for serving on the Company's Board of Directors, plus $200 for each
meeting of the Board (and $100 for each meeting of a committee of the Board)
they attend. Mr. Christenberry's director's fees were paid to his employer,
Christenberry Collet & Company Inc. A total of $18,200 was earned by
non-officer directors for service on the Board during 1996. Officer-directors
do not receive annual fees or fees for attendance at meetings In addition
to the foregoing fees, commencing in 1996 each non-officer director was
granted a 1,000 share stock option annually pursuant to the 1996 Directors'
Stock Option Plan for his service on the Board.
<PAGE>
EXECUTIVE OFFICERS
Information About Other Executive Officers. Each executive officer is
elected annually and will serve until reelected or until his or her
successor is elected and qualified. The following information relating to the
Company's executive officers is with respect to their ages, principal
occupations and positions during the past five years and other biographical
information.
Name Age Principal Occupation for Last Five Years
Steven W. Ruben 35 Mr. Ruben has been Vice President -
Finance and Chief Financial Officer of the
Company since November 1995. From October 1987
to November 1995, Mr. Ruben was an Audit
Manager for Mayer Hoffman McCann, Certified
Public Accountants, in Kansas City, Missouri.
Christine D. Schowengerdt 43 Ms. Schowengerdt has been the Company's
Treasurer since its incorporation in 1985.
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 of the other most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 (determined as of the end of the last year) for the years
ended December 31, 1996, 1995 and 1994:
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Secur-
Name and ities All
Principal Other Restr Under LTIP other
Position Year Salary Bonus Annual Stock Option PO's Comp
($) ($) Comp Award /SARs # ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William P. Ward, 1996 150,509 0 0 0 3,676 0 0
President, CEO 1995 142,086 0 0 0 7,455 0 0
1994 211,892 0 0 0 0 0 0
Gary J. Klusman, 1996 120,958 0 0 0 3,676 0 0
Exec. Vice 1995 101,367 0 0 0 6,455 0 0
President 1994 82,754 0 0 0 0 0 0
</TABLE>
<PAGE>
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term*
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of total
Underlying Options Exercise
Options Granted to or Base
Granted Employees Price Expir
Name (#)(A,B) in Fisc.Yr.($/sh)(C)date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
William P. Ward 3,676 14.7% 5.00 12/15/01 3,555 7,855
Gary J. Klusman 3,676 14.7% 5.00 12/15/06 8,091 20,505
</TABLE>
* The dollar amounts set forth under these columns are the result of
calculations of the 5% and 10% rates set by the Securities and Exchange
Commission and are not intended to forecast possible future appreciation.
(A) Mr. Ward's options were granted for a term of 5 years. 100% of Mr.
Ward's options become exercisable on January 1, 1998.
(B) Mr. Klusman's options were granted for a term of 10 years. 100% of Mr.
Klusman's options become exercisable on January 1, 1998.
(C)The exercise price and tax withholding obligations related to exercise
may be paid by delivery of already owned shares or by offset of the
underlying shares, subject to certain conditions.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year And Option Values at
December 31, 1996
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options Options
Acquired at Year End at Year End
on Value (#) ($)
Exercise Realized(A) Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
William P. Ward -0- -0- 3,667/7,464 -0-/-0-
Gary J. Klusman -0- -0- -0-/11,131 -0-/-0-
</TABLE>
(A) Market value of underlying securities at year-end minus the exercise
or base price of "in-the-money" options.
Compensation Committee Report on Executive Compensation. On an annual basis,
the Compensation Committee reviews the salaries and performance adjustments
of the executive officers, is responsible for administration of the OTR
Express, Inc. 1991 Stock Option Plan ("1991 Option Plan") and the 1996 Option
Plan, and oversees the administration of the Company's compensation program.
In accordance with Securities and Exchange Commission rules designed to
enhance disclosure of companies' policies toward executive compensation, the
following report is submitted by the below listed committee members in their
capacity as the Board's Compensation Committee. The report addresses the
Company's compensation policy as it related to the executive officers for
1996.
<PAGE>
General Compensation Policy. The Compensation Committee of the Board of
Directors was, and continues to be, guided by a belief that executive
compensation should reflect the Company's performance consisting of the
Company's revenue, operating ratio (operating expenses divided by operating
revenue), operating income and earnings per share, while at the same time
considering surrounding competitive pressures, retention of key executive
officers and individual performance as evidenced by informal evaluations.
The Compensation Committee has not yet adopted a policy with respect to the
$1,000,000 limitation on deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended.
<PAGE>
1996 Compensation. To accomplish the Company's compensation policy, the
executive compensation package integrates (i) annual base salary, (ii)
current year performance adjustments to such salary, and (iii) stock option
grants under the Company's 1996 Option Plan. The overall compensation
policy, as implemented, endeavors to enhance the profitability of the
Company (and, thus, stockholder value) by tying the financial interests of
the management with those of the Company.
Base Salary. The Compensation Committee initially determines the amount of
executive officer base salary based on factors such as prior level of pay,
quality of experience, responsibilities of position and salary levels of
similarly positioned executives in other companies. Once base salary has
been determined, the Compensation Committee divides the executive officers
into two groups: Operating Officers and Administrative Officers. The
Operating Officers consist of Mr. Ward (Chief Executive Officer), Mr. Klusman
(Executive Vice President) and Mrs. Ward (Vice-President - Compensation and
Administration). The Administrative Officers consist of the remaining
executive officers, Mr. Ruben (Vice President-Chief Financial Officer) and
Ms. Schowengerdt (Treasurer).
For Operating Officers, the Compensation Committee has adopted a policy that
base salaries will be annually adjusted based on factors such as prior level
of pay, quality of experience, responsibilities of position, salary levels of
similarly positioned executives in other companies and the general changes in
the cost of living standards as published by the Department of Labor.
Accordingly, effective January 1, 1996, each Operating Officer was given a
base annual salary raise equal to 3.0%. Effective July 1, 1996, all
Operating Officers were given base annual salary raises of between 8% and
10% based on factors including quality of experience, responsibilities of
position and salary levels of similarly positioned executives in other
companies.
For Administrative Officers, raises are determined subjectively by the CEO
and approved by the Compensation Committee. Such raises are based upon
informal evaluations by the CEO and, to a lesser extent, other executive
officers.
Performance Adjustments. For the Operating Officers, the Company has in
place a Performance Adjustment Plan which couples the executive's cash
compensation with specific target improvements in the Company's revenues,
operating ratio, operating income, stock price and earnings per share (the
"Performance Factors"), which are each weighted equally. For 1996, the
Compensation Committee set the target level of improvement in Performance
Factors with at least a 33% improvement target in four of the five factors.
Under the Performance Adjustment Plan, each Operating Officer will receive
a maximum 30% of his or her annual base salary ("Target Adjustment") if the
target level of improvement in Performance Factors is reached. Achievement
of less than the target level of improvement in Performance Factors will
result in a 1% decrease in the Target Adjustment for each 1% deviation in
such target level. For example, if the Target Adjustment is $20,000 and the
Company reaches 50% of its target level of improvement in Performance Factors,
then the amount of actual performance adjustment would be $10,000.
<PAGE>
In 1996, the Company reached 13% of its target level of improvement in
Performance Factors. Accordingly, the Operating Officers received an actual
performance adjustment of 13% of their Target Adjustments.
Administrative Officers do not participate in the Performance Adjustment
Plan and, thus, do not receive a performance adjustment.
Stock Option Awards. The Compensation Committee may also award stock options
to executive officers under the 1996 Option Plan. In general, the Committee
believes that stock options are an effective incentive for executives to
create value for stockholders since the value of an option bears a direct
relationship to appreciation in the Company's stock price. Obviously, when
stockholder value decreases, the stock options granted to executives either
decrease in value or have no value.
In December 1996, the Committee authorized the granting of options to the
executive officers to acquire 12,866 shares of Common Stock under the 1996
Option Plan. A total of 12,134 shares authorized under the 1996 Option Plan
were granted to employees other than executive officers in December 1996.
Chairman and CEO Compensation. William P. Ward, Chairman and CEO of the
Company, is subject to the same general compensation package as the other
Operating Officers as set forth above.
The Compensation Committee decided to increase Mr. Ward's annual base salary
by the Department of Labor's cost of living adjustment, 3.0% effective
January 1, 1996 until June 30, 1996. Effective July 1, 1996 the Compensation
Committee decided to increase Mr. Ward's annual base salary 9%, based on
factors including quality of experience, responsibilities of position, and
salary levels of similarly positioned executives in other Companies.
Mr. Ward also received $5,562 in performance adjustment to his base annual
salary under the Performance Adjustment Plan. As noted above, such
performance adjustment was 13% of his Targeted Adjustment of $43,188.
In December 1996, the Committee authorized a grant of options to Mr. Ward to
acquire 3,676 shares of Common Stock under the 1996 Option Plan.
Summary. The Compensation Committee believes that the executive officers of
the Company are dedicated to achieving significant improvements in long-term
financial performance and that the compensation policies and programs
contribute to achieving this senior management focus. The Compensation
Committee believes that the compensation levels during 1996 adequately
reflect the Company's compensation goals and policies.
The Compensation Committee report is submitted by:
Dr. Ralph E. MacNaughton
Charles M. Foudree
<PAGE>
COMPANY PERFORMANCE
<TABLE>
The following graph shows a comparison of cumulative total returns for the
Company, the NASDAQ Market Index, and an industry index based the applicable
Standard Industrial Classification code ("SIC Industry Index").
<CAPTION>
SIC Code
Measurement Period OTRX NASDAQ Market Index 4213 Trucking, except local
<S> <C> <C> <C>
1/22/92 100.00 100.00 100.00
12/31/92 67.50 99.19 113.24
12/31/93 115.00 118.98 128.27
12/31/94 190.00 124.92 123.32
12/31/95 90.00 162.03 104.54
12/31/96 70.00 201.35 98.76
</TABLE>
The above graph compares the performance of the Company with that of the
NASDAQ Market Index and the SIC Industry Index, with the investment weighted
on market capitalization. The total cumulative return on investment (change
in stock price plus reinvested dividends) for the Company, the NASDAQ Market
Index and the SIC Industry Index is based on the stock prices as of January
22, 1992, assuming a $100 investment.
The SIC Industry Index is comprised of all those companies with a four
digit SIC code of 4213 (Trucking, except local).
<PAGE>
PROPOSAL TWO:
APPROVAL OF INDEPENDENT AUDITORS
For 1996, Arthur Andersen LLP served as the independent auditors for the
Company and audited the financial statements of the Company including reports
to the stockholders and others. The Board of Directors has selected and
appointed Arthur Andersen LLP as the independent auditors for the Company for
the year ending December 31, 1997. A representative of Arthur Andersen LLP
is expected to be present at the Annual Meeting. Such representative will
have the opportunity to make a statement and is expected to be available
to respond to appropriate questions from stockholders. The affirmative vote
of the holders of a majority of the shares present or represented by Proxy at
the Annual Meeting is necessary for the approval of the selection of
independent auditors. The Board of Directors recommends that the
stockholders vote for the following resolution which will be presented at
the Annual Meeting:
"RESOLVED, that the selection by the Board of Directors of the Company of
Arthur Andersen LLP as the Company's independent auditors for the year
ending December 31, 1997, be and hereby is approved."
MISCELLANEOUS
Section 16 Reporting. Based solely upon a review of Forms 3, 4 and 5 and
amendments thereto furnished to the Company with respect to the Company's
last fiscal year, the Company is not aware of any reports required to be
filed with the Securities and Exchange Commission under Section 16(a) of the
Securities Exchange Act of 1934, as amended, that were filed late or not
filed by the Company's officers or directors with respect to such year. The
Company is not aware of any person, other than officers or directors, who
owns more than 10% of the Company's Common Stock.
Stockholder Proposals. In the event any stockholder intends to present a
proposal at the next Annual Meeting of Stockholders to be held in 1998, such
proposal must be received by the Secretary of the Company, in writing, on or
before December 3, 1997, to be considered for inclusion in the Company's
Proxy Statement relating to the next Annual Meeting of Stockholders.
Annual Report. A copy of the Company's Annual Report (including financial
statements and schedules, as filed with the SEC) accompanies this Proxy
Statement. The Annual Report is not part of the proxy solicitation materials.
<PAGE>
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN TO THE COMPANY THE ACCOMPANYING PROXY. IF YOU ARE
PRESENT AT THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
BY THE BOARD OF DIRECTORS,
William P. Ward
April 2, 1997 Chairman of the Board
