SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act
of 1934
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Price per unit or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total Fee paid N/A
[ ] Fee paid previously with preliminary materials N/A
[ ] 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
<PAGE>
COVENANT TRANSPORT, INC.
400 Birmingham Highway
Chattanooga, Tennessee 37419
------------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1998
------------------------------------
To Our Stockholders:
The 1998 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, Tennessee 37419, at 10:00 a.m.,
Eastern Time, on Tuesday, May 12, 1998 for the following purposes:
1. To consider and act upon a proposal to elect seven (7) 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 1998; 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, 1998
as the record date for the determination of Stockholders entitled to receive
notice of and to vote at the Annual Meeting or any adjournment thereof. Shares
of Common Stock may be voted at the Annual Meeting only if the holder is present
at the Annual Meeting in person or by valid proxy. YOUR VOTE IS IMPORTANT. TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE REQUESTED TO PROMPTLY
DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
Returning your proxy now will not interfere with your right to attend the Annual
Meeting or to vote your shares personally at the Annual Meeting, if you wish to
do so. The prompt return of your proxy may save the Company additional expenses
of solicitation.
All Stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
/s/ David R. Parker
David R. Parker
Chairman of the Board
Chattanooga, Tennessee 37419
April 10, 1998
<PAGE>
COVENANT TRANSPORT, INC.
400 Birmingham Highway
Chattanooga, Tennessee 37419
------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1998
------------------------------------
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 1998 Annual Meeting of
Stockholders of the Company (the "Annual Meeting"), which will be held at the
Company, 400 Birmingham Highway, Chattanooga, Tennessee 37419 on Tuesday, May
12, 1998, at 10:00 a.m. Eastern Time, and any adjournment thereof. All costs of
the solicitation will be borne by the Company. The approximate date of mailing
this proxy statement and the enclosed form of proxy is April 10, 1998.
The enclosed copy of the Company's annual report for the fiscal year ended
December 31, 1997, is not incorporated into this Proxy Statement and is not to
be deemed a part of the proxy solicitation material.
PROXIES AND VOTING
Only stockholders of record at the close of business on March 31, 1998
("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, 1998, there were issued and outstanding 11,013,500
shares of Class A Common Stock, par value one cent ($.01), entitled to cast an
aggregate 11,013,500 votes on all matters subject to a vote at the Annual
Meeting, and 2,350,000 shares of Class B Common Stock, par value one cent
($.01), entitled to cast an aggregate 4,700,000 votes on all matters subject to
a vote at the Annual Meeting. The Company has a total of 13,363,500 shares of
Common Stock outstanding, entitled to cast an aggregate 15,713,500 votes on all
matters subject to a vote at the Annual Meeting. The number of issued and
outstanding shares excludes 656,800 shares of Class A Common Stock reserved for
issuance to key employees under the Company's incentive stock plan, of which
202,700 shares were at March 26, 1998 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 are counted only for
purposes of determining whether a quorum is present at the meeting. If no
direction is specified by the stockholder, the proxy will be voted "For" the
proposals as specified in this notice and, at the discretion of the proxy
holder, upon such other matters as may properly come before the meeting or any
adjournment thereof.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, the Stockholders will elect seven directors to
serve as the Board of Directors until the 1999 Annual Meeting of the
Stockholders of the Company or until their successors are elected and qualified.
The Company currently has six directors -- David R. Parker, Michael W. Miller,
R.H. Lovin, Jr., William T. Alt, Hugh O. Maclellan, Jr., and Mark A. Scudder. On
February 26, 1998, the Board of Directors voted to expand the number of
directors to seven effective at the Annual Meeting. The Board nominated Robert
E. Bosworth to fill the additional director position. In the absence of contrary
instructions, each proxy will be voted for the election of the existing
directors and Mr. Bosworth.
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,
director nominees, 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. All
executive officers are elected annually by the Board of Directors.
NAME AGE POSITION DIRECTOR
SINCE
David R. Parker 40 Chairman of the Board, President,
Chief Executive Officer 1985
Michael W. Miller 40 Executive Vice President, Chief
Operating Officer, Director 1995
R. H. Lovin, Jr. 46 Vice President - Administration,
Secretary, Director 1994
Joey B. Hogan 36 Treasurer and Chief Financial
Officer NA
Ronald B. Pope 53 Vice President - Sales and
Marketing NA
William T. Alt (1)(2) 61 Director 1994
Hugh O. Maclellan, Jr.(1)(2) 58 Director 1994
Mark A. Scudder(1)(2) 35 Director 1994
Robert E. Bosworth 51 Director Nominee
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
David R. Parker has served as President since founding the Company in 1985
and as Chairman of the Board and Chief Executive Officer since 1994. Mr. Parker
was elected to the Board of Directors of the Truckload Carriers' Association in
1994.
Michael W. Miller has served as the Company's Executive Vice President and
Chief Operating Officer since 1997. He previously served as Vice President -
Operations since 1993, Operations Manager since 1990, and Assistant Operations
Manager since 1987. 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.
Joey B. Hogan, the Company's Treasurer and Chief Financial Officer, joined
Covenant in those capacities in August 1997. Prior to joining the Company, Mr.
Hogan served as Chief Financial Officer of The McKenzie Companies in Cleveland,
Tennessee, a group of privately-owned companies, including National Cash Advance
and certain investment and real estate concerns. From 1986 to 1996, Mr. Hogan
served in various capacities, including three years as Director of Finance, with
Chattem, Inc., a publicly-held company, headquartered in Chattanooga, Tennessee,
involved in the manufacturing and marketing of over-the-counter pharmaceuticals
and toiletries products.
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. From 1984 to 1986, Mr. Pope served as
Executive Vice President/Marketing for P.S.T. Vans, a truckload carrier, and
from 1980 to 1984 held marketing positions 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 SunTrust Bank, Chattanooga, N.A. 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 is also a director of
UMB Bank Nebraska, N.A., a national bank subsidiary of UMB Financial
Corporation, a publicly-traded bank holding company. Mr. Scudder became a
director immediately following the closing of the Company's initial public
offering on November 4, 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.
Robert E. Bosworth currently serves as business and management consultant
to various corporations in the Chattanooga area. Prior to February 1998, Mr.
Bosworth served for more than five years as Executive Vice President and Chief
Financial Officer of Chattem, Inc., a publicly-held company, headquartered in
Chattanooga, Tennessee, involved in the manufacturing and marketing of
over-the-counter pharmaceuticals and toiletries products. The Company has
nominated Mr. Bosworth to become a director.
Meetings and Compensation
Board of Directors. The Board of Directors of the Company held three
regularly scheduled meetings during the fiscal year ended December 31, 1997.
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 $13,000 in 1997.
3
<PAGE>
Compensation Committee. The Compensation Committee of the Board of
Directors met once during 1997. This committee reviews all aspects of
compensation of the Company's executive officers and makes recommendations on
such matters to the full Board of Directors. The Report of the Compensation
Committee for 1997 is set forth below. See "Report of the Compensation
Committee."
Audit Committee. The Audit Committee met once during 1997. The Audit
Committee makes recommendations to the Board concerning the selection of outside
auditors, reviews the Company's financial statements, reviews and discusses
audit plans, audit work, internal controls, and the report and recommendations
of the Company's independent auditors, and considers such other matters in
relation to the external audit of the financial affairs of the Company as may be
necessary or appropriate in order to facilitate accurate and timely financial
reporting.
Nominating Committee. The Board does not maintain a standing nominating
committee or other committee performing similar functions.
Compensation Committee Interlocks and Insider Participation. Messrs. Alt,
Maclellan, and Scudder served as the Compensation Committee in 1997. 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 $147,900 in fees for legal services during 1997. Mr. Alt serves as
the Company's counsel in certain other matters and earned approximately $23,000
in fees for legal services during 1997.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation paid to the chief executive officer and the four other
named executive officers of the Company (the "Named Officers"), for services in
all capacities to the Company for the fiscal years ended December 31, 1997,
1996, and 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted
Name and Principal Other Annual Stock Options LTIP All Other
Position Year Salary Bonus<F1> Compensation<F2> Award(s) # Payouts Compensation<F3>
David R. Parker
Chairman,
President, and 1997 $487,500 $140,000 - - - - $8,217
Chief Executive 1996 $487,500 - - - 133,750 - $7,819
Officer 1995 $487,500 - - - - - $7,554
Michael W. Miller
Executive Vice
President and 1997 $142,716 $ 50,000 - - - - -
Chief Operating 1996 $134,270 $ 7,000 - - 25,000 - -
Officer 1995 $113,550 $ 22,825 - - - - -
Ronald B. Pope 1997 $ 97,600 $ 34,097 - - - - -
Vice President 1996 $ 81,645 $ 12,000 - - 10,000 - -
Sales/Marketing 1995 $ 70,461 $ 11,686 - - - - -
R. H. Lovin, Jr. 1997 $ 95,573 $ 15,000 - - - - -
Vice President 1996 $ 88,899 $ 12,000 - - 15,000 - -
Administration 1995 $ 80,000 $ 20,542 - - - - -
Joey B. Hogan<F4>
Chief Financial 1997 $ 46,040 $ 34,097 - - 25,000 - -
Officer and 1996 $ - $ - - - - - -
Treasurer 1995 $ - $ - - - - - -
- ------------------------
<FN>
<F1> Reflects value of bonus earned by the Named Officer during the fiscal year covered.
<F2> Other annual compensation did not exceed 10% of any Named Officer's total salary for any reported year.
<F3> Reportable portion of premiums paid on split-dollar life insurance policies.
<F4> Although not required, Mr. Hogan is included in this table. Mr. Hogan joined the Company in August 1997 with an
annualized salary of $129,000.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
The following table lists options or SARs granted to the Named Officers
during the fiscal year ended December 31, 1997.
<CAPTION>
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
<S> <C> <C> <C> <C> <C>
Potential realizable
value at assumed
Individual Grants annual rates of stock
price appreciation for
option term
Options/ Exercise
SAR's Percent of total options/SARs or base Expiration
Name granted granted to employees in fiscal price Date 5% ($) 10% ($)
(#) year ($/Sh)
Joey B. Hogan 25,000 17% 18.75 08/06/07 297,794 747,067
</TABLE>
<TABLE>
The following table demonstrates that no options under the Plan were
exercised during the fiscal year ended December 31, 1997 by the Named Officers.
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Option Value as of December 31, 1997
<S> <C> <C> <C> <C>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options In-the-Money
Acquired Value at Fiscal Year End Options at Fiscal year End<F1>
Name on Realized (#) ($)
Exercise ($)
Exercisable Unexercisable Exercisable Unexercisable
David R. Parker -0- -0- 26,750 107,000 -0- -0-
Michael W. Miller -0- -0- 29,000 20,000 -0- -0-
Ronald B. Pope -0- -0- 7,000 13,000 -0- -0-
R. H. Lovin, Jr. -0- -0- 27,000 12,000 -0- -0-
Joey B. Hogan -0- -0- 0 25,000 -0- -0-
- ------------------------
<FN>
<F1> Based on the $15.25 closing price of the Company's Class A Common Stock on
December 31, 1997.
</FN>
</TABLE>
The Company does not have a long-term incentive plan or a defined benefit
or actuarial plan and has never issued any stock appreciation rights.
Employment Agreements
The Company currently does not have any employment, 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 Board of Directors has the authority to extend similar rights
to holders of additional awards under the Plan.
6
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors prepared the
following report on executive compensation.
Under the Compensation Committee's supervision, the Company has adopted
compensation policies that seek to attract and retain excellent management
personnel and align the interests of senior management with the interests of
stockholders. The three main components of senior management's compensation are
salary, bonus, and stock options.
Base Salary. In approving the base salaries of the Company's senior
management team for 1997, the Compensation Committee reviewed individual
performance and the compensation of persons holding similar positions at other
publicly-traded truckload carriers. The Compensation Committee took into account
the relative size of comparable companies, growth rates, geographic
considerations, and operating performance. In addition, the Compensation
Committee considered the expanded roles of senior management in response to the
Company's growth and its acquisition strategy. The Compensation Committee
believes that the base salaries of senior management, other than the salary of
the Chief Executive Officer that is discussed below, are at or below the average
levels paid by comparable, publicly-traded truckload carriers. Mr. Hogan's
salary was negotiated by Mr. Parker in August 1997 with the approval of the
Compensation Committee.
Annual Bonus. In establishing bonuses for 1997, the Compensation Committee
considered three primary factors. First, the Company exceeded its financial
performance goals. Second, the Compensation Committee considered whether members
of management met their individual goals. Third, the Compensation Committee
considered increases in responsibility undertaken during the year. Based on
these factors, the Compensation Committee approved the bonuses for senior
management.
Stock Options. The Compensation Committee believes that the use of stock
options as a component of potential compensation can align the interests of
management and stockholders and encourage senior management to focus on
long-term, profitable growth. From time-to-time the Compensation Committee has
made or recommended stock option grants to members of senior management,
including the Chief Executive Officer. In light of significant grants in 1994
and 1996, the Company did not make stock option grants to senior management in
1997, with the exception of the Company's Chief Financial Officer, who received
an option to purchase 25,000 shares in connection with his hiring in August
1997.
Chief Executive Officer. Mr. Parker's base salary has not been changed
since the Company's initial public offering. The Compensation Committee believes
it is reasonable in relation to the base salaries of CEOs of comparable
companies. In January 1997, Mr. Parker established goals for himself and the
Company for the year. All of the goals were substantially met or exceeded.
Although Mr. Parker had not taken a bonus in the past, the Compensation
Committee recommended a bonus of $140,000 based upon the Company's financial
performance and the attainment of these goals. Mr. Parker's beneficial ownership
of more than 50% of the Company's outstanding stock ensures that his net worth
is linked to the Company's stock price performance.
Compensation Committee
William T. Alt
Hugh O. Maclellan, Jr.
Mark A. Scudder
7
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth, as of March 16, 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, director nominee, and Named Officer of the Company, and by all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
<S> <C> <C> <C>
Amount & Nature
of Beneficial
Title of Class Name of Beneficial Owner<F1> Ownership<F2> Percent of Class
41.1% of Class A
Class A & Class B David R. Parker & 6,958,725<F3> 100.0% of Class B
Common Jacqueline F. Parker 51.3% of Total
Class A Common Michael W. Miller 37,052 *
Class A Common R. H. Lovin, Jr. 30,000 *
Class A Common Joey B. Hogan 5,750 *
Class A Common Ronald B. Pope 9,204 *
William T. Alt
No Securities 300 Forest Avenue 0 *
Owned Chattanooga, TN 37405
Hugh O. Maclellan, Jr.
Class A Common 501 Provident Building 5,700 *
Chattanooga, TN 37402
Class A Common Mark A. Scudder<F4> 2,650 *
Robert E. Bosworth
Class A Common 174 Meadow Pond Run 1,000 *
Lookout Mountain, GA 30750
Class A Common Clyde M. Fuller<F5> 2,100,000 18.7% of Class A
15.5% of Total
Class A Common Dresdner RCM Global Investors LLC(6) 1,323,900 11.8% of Class A
9.8% of Total
Class A & Class B All directors and executive officers
Common as a group (8 persons) 7,049,081 52.0% of Total
- ---------------------
<FN>
* Less than one percent (1%).
<F1> The business address of Mr. and Mrs. Parker, Mr. Lovin, Mr. Hogan,
Mr. Pope, Mr. Miller, and Mr. Fuller is 400 Birmingham Highway,
Chattanooga, TN 37419.
<F2> In accordance with applicable rules under the Securities Exchange Act of
1934, as amended, the number of shares of Class A Common Stock
beneficially owned includes (i) the following shares underlying stock
options that are exercisable or will become exercisable within 60 days of
the date of this proxy: Mr. Parker - 53,500; Mr. Miller - 34,000; Mr.
Lovin - 30,000; Mr. Pope - 9,000; Mr. Hogan - 5,000; and (ii) the
following shares 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 Named Officers were fully invested, and (b) that
the number of shares is equivalent to the dollar amount invested in such
fund divided by the $21.75 closing price of the Company's Class A Common
Stock on March 16, 1998: Mr. Parker - 225; Mr. Miller - 152; and Mr. Pope
- 104.
<F3> Includes 4,555,225 shares of Class A Common Stock; 2,350,000 shares of
Class B Common Stock; and 53,500 shares of Class A Common Stock underlying
stock options that are exercisable or will become exercisable within 60
days of the date of this proxy statement. 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.
<F4> Mr. Scudder's business address is 411 S. 13th Street, Suite 200, Lincoln,
NE 68508. His holdings include 200 shares of Class A Common Stock held as
custodian for minor child under the Uniform Gifts to Minors Act, as to
which beneficial ownership is disclaimed.
<F5> Includes 25,000 vested shares of Class A Common Stock from an
underlying stock option granted in 1997. (6) Group of investors consisting
of Dresdner RCM Global Investors LLC, a Delaware limited liability company
("Dresdner RCM"), RCM Limited L.P., a California limited partnership, and
RCM General Corporation, a California corporation. As reported on Form
13-G filed February 6, 1998, the group has sole voting power of 1,085,400
shares; no shares with shared voting power; 1,301,900 sole dispositive
power; and 32,000 shared dispositive power. The address of Dresdner RCM is
Four Embarcadero Center, Suite 2900, San Francisco, CA 94111. Dresdner RCM
is a wholly owned subsidiary of Dresdner Bank AG, Jurgen-Ponto-Platz 1,
60301 Frankfurt, Germany.
</FN>
</TABLE>
8
<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 31, 1997.
GRAPH WAS CENTERED HERE
IN PRINTED FORM
<TABLE>
<CAPTION>
LEGEND
<S> <C> <C> <C> <C> <C> <C> <C>
Symbol CRSP Total Returns Index for: 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
______ # Covenant Transport, Inc. 100.0 61.5 73.7 78.2
- ------ * Nasdaq Stock Market (US Companies) 86.6 99.4 97.2 137.4 169.0 207.4
====== ^ Nasdaq Trucking & Transportation Stocks 86.6 105.2 95.4 111.3 122.3 157.3
SIC 3700-3799, 4200-4299, 4400-4599,
4700-4799 US & Foreign
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 10/28/94.
</TABLE>
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 above. 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.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1997, the Company paid David R. and Jacqueline F. Parker approximately
$212,000 in rent for the Company's former headquarters in Chattanooga,
Tennessee. The lease of the former headquarters expires in 2004 and provided for
rent of $20,180.97 per month in 1997 with annual increases of five percent.
During the third quarter of 1997, the Parkers voluntarily reduced the Company's
rent by $5,000 per month. The Parkers have listed the property for sale, and the
Company's obligations will terminate upon sale. The Company also leased a small
terminal and trailer drop-lot at Greer, South Carolina from the Parkers for
annual rent of $12,000 in 1997.
In 1997, the Company engaged in several transactions with Clyde M. Fuller,
a holder of approximately 15.5% of the Company's outstanding Common Stock, the
stepfather of David R. Parker, and an employee of the Company at a nominal
salary. The Company made several advances to Mr. Fuller during 1997 for his
business purposes. The maximum amount outstanding was $648,999, and at December
31, 1997, the outstanding balance owed by Mr. Fuller was approximately $482,000.
The amount bears interest at 7%, payable annually, and becomes due on June 4,
2001.
The Company paid $119,430 in 1997 to charter a turboprop airplane owned by
Mr. Fuller. The average rate per hour was $600 in 1997 and has been raised to
$900 per hour in 1998 following a substantial upgrade of the plane. The rental
rate was negotiated by Mr. Fuller and Mr. Parker, and the Company believes the
rate represents fair market value.
During 1997, C & F Corporation, a corporation wholly owned by Mr. Fuller,
merged into a subsidiary of the Company. The sole asset of C & F Corporation was
2,075,000 shares of the Company's Class A Common Stock. Immediately following
the merger, the Company retired the 2,075,000 shares previously owned by C & F
Corporation. As consideration for the merger, the Company issued Mr. Fuller
2,075,000 new shares of Class A Common Stock. The Company's capitalization and
number of shares beneficially owned by Mr. Fuller were not changed in the
transaction.
Tenn-Ga Truck Sales, Inc., a corporation wholly owned by Mr. Fuller,
purchased used tractors from the Company for approximately $1,160,500 during
1997. The price per tractor was the same offer the Company had received from the
equipment manufacturer, and the Company believes it represents fair market
value. Mr. Parker and Mr. Fuller agreed on the price.
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.
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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 1998 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 1999 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
December 11, 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.
/s/ David R. Parker
David R. Parker
Chairman of the Board
April 10, 1998
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