SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act
of 1934
Filed by Registrant
Filed by a Party other than the Registrant o
Check the Appropriate Box:
__ Preliminary Proxy Statement
X Definitive Proxy Statement
__ Definitive Additional Materials
__ Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
COVENANT TRANSPORT, INC.
(Name of Registrant as Specified in its Charter)
The Covenant Transport, Inc. Board of Directors
(Name of Person(s) Filing Proxy Statement)
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: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Price per unit or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
$N/A = Amount on which filing fee is calculated.
__ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
1
<PAGE>
COVENANT TRANSPORT, INC.
400 Birmingham Highway
Chattanooga, TN 37404
-----------------------------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 1997
-----------------------------------------------------
To Our Stockholders:
The 1996 Annual Meeting of Stockholders (the "Annual Meeting") of
Covenant Transport, Inc., a Nevada Corporation (the "Company"), will be held at
the Company, 400 Birmingham Highway Chattanooga, TN 37404, at 10:00 a.m.,
Eastern Daylight Time, on Thursday, May 1, 1997 for the following purposes:
1. To consider and act upon a proposal to elect six (6) directors
of the Company;
2. To consider and act upon a proposal to ratify the selection of
Coopers & Lybrand L.L.P. as independent public accountants for
the Company for 1997; and
3. To consider and act upon such other matters as may properly
come before the meeting and any adjournment thereof.
The foregoing matters are more fully described in the accompanying
Proxy Statement.
The Board of Directors has fixed the close of business on March 31,
1997 as the record date for the determination of Stockholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournment thereof.
Shares of Common Stock may be voted at the Annual Meeting only if the holder is
present at the Annual Meeting in person or by valid proxy. YOUR VOTE IS
IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
REQUESTED TO PROMPTLY DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE. Returning your proxy now will not interfere with your right
to attend the Annual Meeting or to vote your shares personally at the Annual
Meeting, if you wish to do so. The prompt return of your proxy may save the
Company additional expenses of solicitation.
All Stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
David R. Parker
Chairman of the Board
Chattanooga, TN 37404
April 1, 1997
2
<PAGE>
COVENANT TRANSPORT, INC.
400 Birmingham Highway
Chattanooga, TN 37404
-----------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1997
-----------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Covenant Transport, Inc., a Nevada
corporation (the "Company"), to be used at the 1997 Annual Meeting of
Stockholders of the Company (the "Annual Meeting"), which will be held at the
Company, 400 Birmingham Highway, Chattanooga, TN 37404 on Thursday, May 1, 1997,
at 10:00 a.m. EST, and any adjournment thereof. All costs of the solicitation
will be borne by the Company. The approximate date of mailing this proxy
statement and the enclosed form of proxy is April 1, 1997.
The enclosed copy of the Company's annual report for the fiscal year
ended December 31, 1996, is not incorporated into this Proxy Statement and is
not to be deemed a part of the proxy solicitation material.
PROXIES AND VOTING
Only stockholders of record at the close of business on March 31, 1997
("Stockholders"), are entitled to vote, either in person or by valid proxy, at
the Annual Meeting. Holders of Class A Common Stock are entitled to one vote for
each share held. Holders of Class B Common Stock are entitled to two votes for
each share held. On March 31, 1997, there were issued and outstanding 11,000,000
shares of Class A Common Stock, par value one cent ($.01), entitled to cast an
aggregate 11,000,000 votes on all matters subject to a vote at the Annual
Meeting, and 2,350,000 shares of Class B Common Stock, par value one cent
($.01), entitled to cast an aggregate 4,7000,000 votes on all matters subject to
a vote at the Annual Meeting. The Company has a total of 13,350,000 shares of
Common Stock outstanding, entitled to cast an aggregate 15,700,000 votes on all
matters subject to a vote at the Annual Meeting. The number of issued and
outstanding shares excludes 670,000 shares of Class A Common Stock reserved for
issuance to key employees under the Company's incentive stock plan, of which
138,750 shares were at March 31, 1997 and are currently, subject to vested but
unexercised options (and are not entitled to vote at the Annual Meeting). The
Company has no other class of stock outstanding. Stockholders are not entitled
to cumulative voting in the election of directors.
All proxies that are properly executed and received by the Company
prior to the Annual Meeting will be voted in accordance with the choices
indicated. Any Stockholder may be represented and may vote at the Annual Meeting
by a proxy or proxies appointed by an instrument in writing. In the event that
any such instrument in writing shall designate two (2) or more persons to act as
proxies, a majority of such persons present at the meeting, or, if only one
shall be present, then that one shall have and may exercise all of the powers
conferred by such written instrument upon all of the persons so designated
unless the instrument shall otherwise provide. No such proxy shall be valid
after the expiration of six (6) months from the date of its execution, unless
coupled with an interest or unless the person executing it specifies therein the
length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution. Any Stockholder giving a
proxy may revoke it at any time prior to its use at the Annual Meeting by filing
with the Secretary of the Company a revocation of the proxy, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
meeting and voting in person.
Other than the election of Directors, which requires a plurality of the
votes cast, each matter to be submitted to the Stockholders requires the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter, only
those cast "For" or "Against" are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the
meeting.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, the Stockholders will elect six directors to
serve as the Board of Directors until the 1998 Annual Meeting of the
Stockholders of the Company or until their successors are elected and qualified.
In the absence of contrary instructions, each proxy will be voted for the
election of the individuals designated as directors below, all of whom are
standing for re-election to the Board of Directors. David R. Parker and
Jacqueline F. Parker, who together are entitled to cast 59% of the eligible
votes at the Annual Meeting, have indicated that they will vote for the named
nominees, and assuming that they do, such nominees will be elected.
Information Concerning Directors and Executive Officers
Information concerning the names, ages, positions with the Company,
tenure as a director, and business experience of the Company's current directors
and other executive officers is set forth below. All references to experience
with the Company include positions with the Company's operating subsidiary,
Covenant Transport, Inc., a Tennessee corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
<S> <C> <C> <C>
David R. Parker 39 Chairman of the Board,
President, Chief Executive
Officer November 6, 1995
Michael W. Miller 39 Vice President - Operations;
Director April 27, 1995
R. H. Lovin, Jr. 45 Vice President -
Administration,
Secretary; Director November 4, 1994
Bradley A. Moline 30 Treasurer and Chief Financial
Office NA
Ronald B. Pope 52 Vice President - Sales and
Marketing NA
William T. Alt <F1><F2> 60 Director November 4, 1994
Hugh O. Maclellan, Jr.<F1><F2>57 Director November 4, 1994
Mark A. Scudder<F1><F2> 34 Director October 28, 1994
- ------------------------------------
<FN>
<F1> Member of the Audit Committee.
<F2> Member of the Compensation Committee.
</FN>
</TABLE>
David R. Parker has served as the Company's President since its
organization in November 1985 and as Chairman of the Board and Chief Executive
Officer since July 1994. Before founding the Company, Mr. Parker served as a
terminal manager and Vice President of Operations and Marketing for Southwest
Equipment Rental, Inc. d/b/a/ Southwest Motor Freight from 1974 to 1985. Mr.
Parker was elected to the Board of Directors of the Interstate Truckload
Carriers' Conference of the American Trucking Associations in 1994.
Michael W. Miller has served as the Company's Vice President -
Operations since September 1993 and Operations Manager since October 1990. From
1987 to 1990, Mr. Miller was the Company's Assistant Operations Manager. Prior
to joining the Company, Mr. Miller operated his own cartage company from 1982 to
1986, served as a terminal manager for Interstate Systems from 1979 to 1982, and
held the position of traffic manager for Jackson Manufacturing from 1975 to
1979.
R. H. Lovin, Jr. has served as the Company's Vice President -
Administration since May 1994 and Corporate Secretary since August 1995, prior
to which he served as the Company's Chief Financial Officer since 1986. Before
joining the Company, Mr. Lovin served as a comptroller/accountant for Perry
2
<PAGE>
Smith Company and Olin Chemical Co. Mr. Lovin became a director immediately
following the closing of the Company's initial public offering on November 4,
1994.
Bradley A. Moline, the Company's Treasurer and Chief Financial Officer,
joined Covenant in June 1994, prior to which he served as a certified public
accountant for six years. From August 1993 to May 1994, Mr. Moline served as a
supervisor with the Lincoln, Nebraska office of Grant Thornton. From December
1988 to August 1993, he was with the Kansas City, Missouri office of Ernst &
Young.
Ronald B. Pope has served as Covenant's Vice President - Sales and
Marketing since October 1993, having previously served as Covenant's sales
manager for the western region since December 1990. From 1986 to 1990, Mr. Pope
was self-employed and/or provided a variety of sales and marketing functions in
the truckload transportation industry. Mr. Pope previously served from 1984 to
1986 as Executive Vice President/Marketing for P.S.T. Vans, a truckload carrier,
and held marketing positions from 1980 to 1984 for Western Express, also a
truckload carrier.
William T. Alt has engaged in the private practice of law since 1962
and has served as outside counsel to the Company since 1986. Mr. Alt became a
director immediately following the closing of the Company's initial public
offering on November 4, 1994.
Hugh O. Maclellan, Jr. has served as Chairman of the Executive
Committee of Provident Life and Accident Insurance Company, Chattanooga,
Tennessee, since 1988. Mr. Maclellan is President of the Maclellan Foundation
and Chairman of the Board of Trustees of King College, Bristol, Tennessee. Mr.
Maclellan also serves as a director of American National Bank and Trust Company,
Chattanooga, Tennessee. Mr. Maclellan became a director immediately following
the closing of the Company's initial public offering on November 4, 1994.
Mark A. Scudder has engaged in the private practice of law since 1988.
He is a principal of Scudder Law Firm, P.C., Lincoln, Nebraska, the Company's
outside corporate and securities counsel, with which he has practiced since July
1993. From May 1988 to June 1993, Mr. Scudder practiced with the Kansas City,
Missouri law firm Spencer Fane Britt & Browne. Mr. Scudder became a director
contemporaneously with the Company's initial public offering on October 28,
1994. Another principal of Scudder Law Firm, P.C. serves as a member of the
board of directors of Swift Transportation Co., Inc., a nationwide truckload
carrier with common stock traded on the Nasdaq National Market.
Meetings and Compensation
Board of Directors. The Board of Directors of the Company held four
regularly scheduled meetings and two telephonic meetings during the fiscal year
ended December 31, 1996. Each of the directors attended all meetings of the
Board of Directors and all meetings held by committees of the Board on which
they served. Directors who are not employees of the Company received an annual
retainer of $10,000 plus $1,000 per regularly scheduled meeting of the Board of
Directors and reimbursement of expenses incurred in attending such Board
meetings. Total compensation for each of the non-employee directors was $14,000
in 1996.
Compensation Committee. The Compensation Committee of the Board of
Directors met once during 1996. This committee reviews all aspects of
compensation of the Company's executive officers and makes recommendations on
such matters to the full Board of Directors. The Compensation Committee also has
sole discretion to select participants, grant awards, and otherwise administer
the Company's Incentive Stock Plan. The Report of the Compensation Committee for
1996 is set forth below. See "Report of the Compensation Committee."
Audit Committee. The Audit Committee met once during 1996. The Audit
Committee makes recommendations to the Board concerning the selection of outside
auditors, reviews the Company's financial statements, reviews and discusses
audit plans, audit work, internal controls, and the report and
3
<PAGE>
recommendations of the Company's independent auditors, and considers such other
matters in relation to the external audit of the financial affairs of the
Company as may be necessary or appropriate in order to facilitate accurate and
timely financial reporting.
Nominating Committee. The Board does not maintain a standing nominating
committee or other committee performing similar functions.
Compensation Committee Interlocks and Insider Participation. Messrs.
Alt, Maclellan, and Scudder served as the Compensation Committee in 1996. None
of such individuals has been an officer or employee of the Company. Mr.
Scudder's law firm serves as the Company's corporate and securities counsel and
earned approximately $105,000 in fees for legal services during 1996. Mr. Alt
serves as the Company's counsel in certain other matters and earned
approximately $20,250 in fees for legal services during 1996.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE NOMINEES FOR DIRECTOR PRESENTED IN
PROPOSAL 1.
EXECUTIVE COMPENSATION
<TABLE>
The following table sets forth information concerning the annual and
long-term compensation paid to the chief executive officer and the two other
named executive officers of the Company (the "Named Officers"), for services in
all capacities to the Company for the fiscal years ended December 31, 1996,
1995, and 1994.
Summary Compensation Table
<CAPTION>
Long Term Compensation
- --------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- --------------------------------------------------------------------------------
Name and Restricted All Other
Principal Other Annual Stock Options LTIP Compensation
Position Year Salary Bonus Compensation Award(s) (#)<F1> Payouts <F2>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David R.
Parker 1996 $487,500 - - - 133,750 - $7,819
Presi- 1995 $487,500 - - - - - $7,554
dent 1994 $486,584 - - - - - $3,095
Michael W.
Miller
Vice
Presi-
dent - 1996 $134,270 $22,825 - - 25,000 - -
Opera- 1995 $113,550 $25,000 - - - - -
tions 1994 $85,369 $15,000 - - 24,000 - -
Bradley A.
Moline
Chief
Financial 1996 $96,492 $20,542 - - 15,000 - -
Officer/ 1995 $86,784 $11,250 - - - - -
Treasurer 1994 $44,000 - - - 12,000 - -
R. H. Lovin
Jr.
Vice
President 1996 $88,899 $20,542 - - 15,000 - -
Adminis- 1995 $80,000 $22,500 - - - - -
tration 1994 $75,798 $15,000 - - 24,000 - -
- -------------------------------
<FN>
<F1> Represents options to purchase Class A Common Stock. The options
granted in 1994 to Messrs. Miller and Lovin are vested and exercisable
at $16.50 per share. The option to purchase 12,000 shares granted to
Mr. Moline in 1994 provide that half of shares subject to the option
are exercisable and half become exercisable in 1999, at an exercise
price of $16.50 per share. The options granted to Messrs. Parker,
Miller, Lovin, and Moline in 1996 vest at a rate of 20% per year and
are exercisable at $15.50 per share.
<F2> Reportable portion of premiums paid on split-dollar life insurance
policies.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
The following table lists options or SARs granted to the Named Officers
during the fiscal year ended December 31, 1996.
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
<CAPTION>
Potential realizable
value at assumed
annual rates of
price appreciation
for option term
- --------------------------------------------------------------------------------
Percent
of total
options/
SARs
Options/ granted to Exercise
SAR's employees or base
granted in fiscal price Expiration
Name (#) year ($/Sh) Date 5% ($) 10% ($)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David R. Parker 133,750 50% 15.50 06/02/07 1,303,777 3,304,027
Michael W. Miller 25,000 9.3% 15.50 06/02/07 243,697 617,575
Bradley A. Moline 15,000 5.6% 15.50 06/02/07 146,218 370,545
R. H. Lovin, Jr 15,000 5.6% 15.50 06/02/07 146,218 370,545
</TABLE>
<TABLE>
The following table demonstrates that no options under the Plan were
exercised during the fiscal year ended December 31, 1996 by the Named Officers.
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Option Value
as of December 31, 1996 <F1>
- --------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year End<F1> at Fiscal Year End<F2>
- --------------------------------------------------------------------------------
Shares
Acquired
on Value
Exercise Realized Exercis- Unexercis- Exercis- Unexercis-
Name # ($) able able able able
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David R. Parker . -0- -0- -0- 133,750 -0- -0-
Michael W. Miller -0- -0- 24,000 25,000 -0- -0-
Bradley A. Moline -0- -0- 6,000 21,000 -0- -0-
R. H. Lovin, Jr . -0- -0- 24,000 15,000 -0- -0-
- ------------------------------------
<FN>
<F1> Exercisable options were granted to Messrs. Miller and Lovin on October
28, 1994 at an exercise price is $16.50, the market value on the date
of grant. Mr. Moline was granted an option to purchase 12,000 shares,
of which 6,000 shares are exercisable, at an exercise price of $16.50.
All options granted on June 3, 1996 vest at a rate of 20% per year at
an exercise price of $15.50 per share, the market value on the date of
the grant. To the extent permissible, all grants are intended to
qualify as "incentive stock options" under the Internal Revenue Code.
<F2> Based on the $14.375 closing price of the Company's Class A Common
Stock on December 29, 1996.
</FN>
</TABLE>
The Company does not have a long-term incentive plan or a defined
benefit or actuarial plan and has never issued any stock appreciation rights.
5
<PAGE>
Employment Agreements
The Company currently does not have any employment, severance, or
change-in-control agreements with any of its executive officers. However, under
certain circumstances in which there is a change of control, holders of
outstanding stock options granted under the Plan may be entitled to exercise
such options notwithstanding that such options may otherwise not have been fully
exercisable. The Compensation Committee has the authority to extend similar
rights to holders of additional awards under the Plan.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors prepared the
following report on executive compensation.
The Compensation Committee reviews the compensation of the Company's
executive officers annually and believes that the Company's executive officers,
including the Named Officers and the Chief Executive Officer, should be
compensated at a level comparable to persons holding similar positions at peer
companies, taking into account the relative size of the companies,
responsibilities of the officers, experience, geographical location, and the
relative performance of the Company and its peers, measured by stock
performance, operating margin, and revenue and net income growth rates. In
addition, the Compensation Committee will consider the attainment of specific
goals that may be established for such officers from time to time. Corporate
performance, measured by stock appreciation, is an important aspect of the
executive officers' compensation, although the manner of incentive differs for
the chief executive officer. A summary of the considerations for the chief
executive officer and other executive officers is set forth below.
Chief Executive Officer. The Compensation Committee recognizes Mr.
Parker's substantial responsibility and contribution to the Company's operating
performance, operating margin, revenue and net income growth rates, and
attainment of Company goals, as well as his large stockholdings. At Mr. Parker's
request, his salary remained the same in 1996. The Committee believes that Mr.
Parker's salary and stock options granted in 1996 are reasonable compared to
similarly situated executives.
Other Executive Officers. The Company's other executive officers are
compensated through a mix of salary and incentive compensation. In establishing
compensation, the Board of Directors annually considers (i) the Company's
operating performance, stock performance, operating margin, and revenue and net
income growth rates, (ii) team-building skills, individual performance, past
performance and potential with the Company, (iii) local compensation levels and
cost of living, and (iv) compensation information disclosed by similar
publicly-held truckload motor carriers. Salary and bonus levels are largely
subjective, with compensation levels at other publicly-traded truckload motor
carriers and individual performance being the most important factors.
Many trucking companies experienced a difficult operating environment
in 1996, and the Company's profit margin decreased. However, the Company was
able to grow and maintain its operating efficiency better than most motor
carriers. Accordingly, the Committee approved modest salary increases and
bonuses for some executive officers. Michael Miller received the largest salary
increase (18%) for 1996 in view of a substantial increase in his areas of
responsibility. The Committee continues to believe that 390,000 outstanding
stock options link stock appreciation to the compensation of its executive
officers and other key employees.
Compensation Committee:
William T. Alt
Hugh O. Maclellan, Jr.
Mark A. Scudder
6
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
<TABLE>
The following table sets forth, as of March 31, 1997, the number and
percentage of outstanding shares of Common Stock beneficially owned by each
person known by the Company to beneficially own more than 5% of such stock, by
each director and Named Officer of the Company, and by all directors and
executive officers of the Company as a group.
<CAPTION>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Amount &
Nature of
Beneficial
Owner-
Title of Class Name of Beneficial Owner<F1> ship<F2><F3> Percent of Class
<S> <C> <C> <C>
Class A & Class B David R. Parker & 41.7% of Class A
Common Jacqueline F. Parker 6,934,185<F4> 100.0% of Class B
51.9% of Total
Class A Common Michael W. Miller 31,153 *
Class A Common R. H. Lovin, Jr. 27,526 *
Class A Common Bradley A. Moline 12,840
William T. Alt
No Securities 300 Forest Avenue 0 *
Owned Chattanooga, TN 37405
Hugh O. Maclellan, Jr.
Class A Common 501 Provident Building 4,700 *
Chattanooga, TN 37402
Mark A. Scudder
Class A Common 411 S. 13th Street, #200 2,450<F5> *
Lincoln, NE 68508
Clyde M. Fuller
Class A Common 7823 Stonehenge Drive 2,075,000<F6> 18.9% of Class A
Chattanooga, TN 37421 15.5% of Total
Gilder Gagnon Howe & Co.
Class A Common 1775 Broadway 1,731,230 15.7% of Class A
New York, NY 10019 13.0% of Total
RCM Capital Management,
L.L.C.<F7>
Class A Common Four Embarcadero Center,
Suite 2900 1,321,200 12.0% of Class A
San Francisco, CA 94111 9.9% of Total
Class A & Class B All directors and executive
officers as a group (8 7,012,404 52.5%
persons)
- ---------------------------------
* Less than one percent (1%).
<FN>
<F1> The business address of Mr. and Mrs. Parker, Mr. Lovin, Mr. Moline, and
Mr. Miller is 400 Birmingham Highway, Chattanooga, TN 37404.
<F2> Includes 24,000 shares underlying exercisable stock options granted in
1994 for each of Mr. Miller and Mr. Lovin and 6,000 shares underlying
exercisable stock option granted in 1994 for Mr. Moline. Also includes
shares underlying stock options granted in 1996 that become exercisable
within 60 days of this proxy statement as follows: Mr. Parker - 26,750;
Mr. Miller - 5,000; Mr. Moline - 3,000; and Mr. Lovin - 3,000.
<F3> Includes the following shares of Class A Common Stock attributable to
Named Officers invested in the employer stock fund through the
Company's 401(k) Plan, assuming (a) all amounts allocated to such fund
by executive officers were fully invested, and (b) that the number of
shares is equivalent to the dollar amount invested in such fund divided
by the $14.375 closing price of the Company's Class A Common Stock on
December 29, 1996: Mr. Parker - 2,435; Mr. Miller - 1,253 ; Mr. Moline
- 840; and Mr. Lovin - 526.
<F4> Includes 4,557,435 shares of Class A Common Stock, 2,350,000 shares of
Class B Common Stock, and 26,750 shares that will vest in June 1997
from an underlying stock option granted in 1996. All shares are owned
by Mr. and Mrs. Parker as Joint Tenants with Rights of Survivorship,
except 200,000 shares of Class A Common Stock owned by the Parker
Family Limited Partnership, of which Mr. and Mrs. Parker are general
partners.
<F5> Includes 200 shares held as custodian for minor child under the Uniform
Gifts to Minors Act, as to which beneficial ownership is disclaimed.
<F6> Owned by C & F Corporation, a corporation wholly owned by Mr. Fuller.
<F7> Group of investors consisting of RCM Capital Management L.L.C., RCM
Limited L.P., and RCM General Corporation. The group reports sole
voting power of 1,119,200 shares; no shares with shared voting power;
1,239,200 sole dispositive power; and 82,000 shared dispositive power.
RCM Capital Management L.L.C. is a wholly owned subsidiary of Dresdner
Bank AG, Jurgen-Ponto-Platz 1, 60301 Frankfurt, Germany.
</FN>
</TABLE>
7
<PAGE>
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR COVENANT TRANSPORT, INC.
The following graph compares the cumulative total stockholder return of
the Company's Class A Common Stock with the cumulative total stockholder return
of the Nasdaq Stock Market (U.S. Companies) and the Nasdaq Trucking &
Transportation Stocks commencing October 28, 1994, and ending December 29, 1996.
The stock performance graph assumes $100 was invested on October 28, 1994. There
can be no assurance that the Company's stock performance will continue into the
future with the same or similar trends depicted in the graph below. The Company
will not make or endorse any predictions as to future stock performance. The
CRSP Index for Nasdaq Trucking & Transportation Stocks includes all publicly
held truckload motor carriers traded on the Nasdaq Stock Market, as well as all
Nasdaq companies within the Standard Industrial Code Classifications 3700-3799,
4200-4299, 4400-4499, and 4500-4599. The Company will provide the names of all
companies in such index upon request.
[GRAPHIC OMITTED]
8
<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Company leased its headquarters terminal at Chattanooga, Tennessee
from David R. and Jacqueline F. Parker for $237,248 in 1996. The Company has an
option to purchase the property at any time during the term of the lease at an
option price equal to the appraised value of the property increased by 5% each
year after the appraisal. The Company also leases from the Parkers a small
terminal and trailer drop-lot at Greer, South Carolina for annual rent of
$12,000.
Tenn-Ga Truck Sales, Inc. ("Truck Sales") is a corporation wholly-owned
by Clyde M. Fuller. In 1994, Truck Sales purchased revenue equipment scheduled
for trade-in from the Company for an aggregate $9,727,909. In all instances the
purchase price was equal to, or in excess of, the trade-in amounts negotiated
with the tractor manufacturer or fair values listed in industry trailer
publications.
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 officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors, and greater than 10% stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely upon a review of the copies of such forms furnished to
the Company, or written representations that no Forms 5 were required, the
Company believes that its officers, directors and greater than 10% beneficial
owners complied with all Section 16(a) filing requirements applicable to them
during the Company's preceding fiscal year.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. as independent
public accountants for the Company for the 1997 fiscal year. Coopers & Lybrand
L.L.P. has served as independent public accountants for the Company since 1992.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at the
Annual Meeting with an opportunity to make a statement, if they desire to do so,
and to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" PROPOSAL 2 TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual
Meeting of the Stockholders of the Company must be received by the Corporate
Secretary of the Company at the Company's principal executive offices on or
before January 15, 1998, to be included in the Company's proxy material related
to that 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.
Covenant Transport, Inc.
David R. Parker
Chairman of the Board
April 1, 1997
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