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
SMITHWAY MOTOR XPRESS CORP.
(Name of Registrant as Specified in its Charter)
THE SMITHWAY MOTOR XPRESS CORP. 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
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(2) Form, Schedule or Registration Statement No.: N/A
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(3) Filing Party: N/A
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(4) Date Filed: N/A
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<PAGE>
SMITHWAY MOTOR XPRESS CORP.
2031 Quail Avenue
Fort Dodge, Iowa 50501
-----------------------------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 1999
-----------------------------------------------------
To Our Stockholders:
The 1999 Annual Meeting of Stockholders (the "Annual Meeting") of
Smithway Motor Xpress Corp., a Nevada Corporation (the "Company"), will be held
at the Company's headquarters located at 2031 Quail Avenue, Fort Dodge, Iowa
50501, at 9:30 a.m. Central Time, on Friday, May 7, 1999 for the following
purposes:
1. To consider and act upon a proposal to elect five (5)
directors of the Company;
2. To consider and act upon a proposal to ratify the selection of
KPMG Peat Marwick LLP, as independent public accountants for
the Company for the fiscal year ending December 31, 1999;
3. To consider and act upon a proposal to amend the Incentive
Stock Plan to reserve an additional 275,000 shares of the
Company's Class A common stock for issuance to participants;
and
4. 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 9,
1999, 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/ William G. Smith
William G. Smith
Chairman of the Board
Fort Dodge, Iowa 50501
April 2, 1999
<PAGE>
SMITHWAY MOTOR XPRESS CORP.
2031 Quail Avenue
Fort Dodge, Iowa 50501
-----------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1999
-----------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Smithway Motor Xpress Corp., a Nevada
corporation (the "Company"), to be used at the 1999 Annual Meeting of
Stockholders of the Company (the "Annual Meeting"), which will be held at the
Company's headquarters located at 2031 Quail Avenue, Fort Dodge, Iowa 50501, on
Friday, May 7, 1999, at 9:30 a.m., Central Time, and any adjournment thereof.
All costs of the solicitation will be borne by the Company. The Company does not
intend to solicit proxies other than by this mailing; provided, that directors,
officers, and employees may solicit proxies by use of the mails or telephone
without compensation other than their regular compensation. The approximate date
of mailing this proxy statement and the enclosed form of proxy is April 2, 1999.
The enclosed copy of the Company's annual report for the fiscal year ended
December 31, 1998, 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 9, 1999
("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 February 12, 1999, there were issued and outstanding
4,024,627 shares of Class A Common Stock, par value one cent ($.01), entitled to
cast an aggregate 4,024,627 votes on all matters subject to a vote at the Annual
Meeting, and 1,000,000 shares of Class B Common Stock, par value one cent
($.01), entitled to cast an aggregate 2,000,000 votes on all matters subject to
a vote at the Annual Meeting. The Company has a total of 5,024,627 shares of
Common Stock outstanding, entitled to cast an aggregate 6,024,627 votes on all
matters subject to a vote at the Annual Meeting. The number of issued and
outstanding shares excludes 209,092 remaining shares of Class A Common Stock
reserved for issuance to employees under the Company's Incentive Stock Plan.
Options or other grants under the Plan covering an aggregate of approximately
156,000 such shares have been granted, and on February 12, 1999, approximately
98,000 of such shares were subject to vested but unexercised options. There are
25,000 shares of Class A Common Stock reserved for issuance under the Company's
Outside Director Stock Plan. Of those shares, 6,000 are subject to vested but
unexercised options. Holders of unexercised options 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.
Any Stockholder may be represented and may vote at the Annual Meeting by a
proxy or proxies appointed by an instrument in writing. If in the event that any
such instrument in writing designates two (2) or more persons to act as proxies,
a majority of such persons present at the meeting, or, if only one is present,
then that one may exercise all of the powers conferred by such written
instrument 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. Subject to the above, any
proxy duly executed is not revoked and continues in full force and effect until
an instrument revoking it or a duly executed proxy bearing a later date is filed
with the Secretary of the Company.
2
<PAGE>
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,
proxies cast "For" or "Against" are included. If no direction is given to the
proxy holder, the proxy will be voted "For" the proposals as specified in this
proxy statement, and, at the discretion of the proxy holder, upon such other
matters as may properly come before the meeting or any adjournment thereof.
Proxies marked "Abstain" and broker non-votes are counted only for purposes of
determining whether a quorum is present at the meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, the Stockholders will elect five (5) directors to
serve as the Board of Directors until the 2000 Annual Meeting of 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 William
G. Smith, G. Larry Owens, Herbert D. Ihle, Robert E. Rich, and Terry G.
Christenberry, all of whom are standing for re-election to the Board of
Directors. William G. Smith, Marlys L. Smith, and G. Larry Owens, who together
are entitled to cast over 50% 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, Smithway
Motor Xpress, Inc., an Iowa corporation.
Director
Name Age Position Since
- --------------------------------------------------------------------------------
William G. Smith. . . . . 59 Chairman of the Board, President,
and Chief Executive Officer 1972
G. Larry Owens. . . . . . 61 Executive Vice President, Chief Operating
Officer, Chief Financial 1996
Officer, and Director
Martin D. Smith. . . . . . 50 Director of Operations -
Michael E. Oleson. . . . . 48 Treasurer and Chief Accounting Officer -
Daniel S. O'Brion. . . . . 39 Director of Sales and Marketing -
Herbert D. Ihle. . . . . . 59 Director 1996
Robert E. Rich. . . . . . 67 Director 1996
Terry G. Christenberry. . 52 Director 1996
William G. Smith has been employed by the Company since 1958, served as
President since 1984, and as Chairman of the Board and Chief Executive Officer
since January 1995. Prior to 1984, Mr. Smith served in various other executive
management capacities. Mr. Smith is a past Chairman of the Iowa Motor Truck
Association and currently serves on its executive committee. In addition, Mr.
Smith serves on the Board of Regents of Waldorf College in Forest City, Iowa.
G. Larry Owens has served as Executive Vice President and Chief Financial
Officer since joining Smithway in January 1993 and was appointed to also serve
as Chief Operating Officer in May 1998. Prior to joining Smithway, Mr. Owens
spent twenty-five years in the banking industry, most recently from 1982 through
1992 as President of Boatmen's Bancshares' regional banks in Spencer and Fort
Dodge, Iowa.
Martin D. Smith has served as Smithway's Director of Operations since 1989
and as Director of Administration from 1977 to 1989. Martin D. Smith is
unrelated to William G. Smith.
3
<PAGE>
Michael E. Oleson served as Smithway's Controller upon joining the Company
in 1980 and in January 1995 was named Treasurer and Chief Accounting Officer.
Prior to joining Smithway, Mr. Oleson was employed as an accountant with
Mallinger Truck Line, Inc., in Fort Dodge, Iowa, from 1974 to 1980.
Daniel S. O'Brion has been Director of Sales and Marketing for Smithway
since 1990 and served as a sales representative prior to 1990.
Herbert D. Ihle has been President and owner of Diversified Financial
Services, a Naples, Florida, management and financial services consulting firm,
since 1989. From 1990 to 1992, Mr. Ihle served as Senior Vice President -
Finance and Controller for Northwest Airlines, and from 1963 to 1989 served in
various positions, including Executive Vice President - Finance, for Pillsbury
Co. Mr. Ihle is also a director of Lutheran Brotherhood Insurance Company and
serves as Chairman of the Board of Regents of Waldorf College in Forest City,
Iowa.
Robert E. Rich is a private investor and has been involved in the
management of several privately owned farming and manufacturing companies since
1978. From 1967 through 1978, Mr. Rich served as Executive Vice President and
Treasurer and a member of the Board of Directors of Iowa Southern Utilities. Mr.
Rich is a certified public accountant.
Terry G. Christenberry has been 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 September 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 also serves as a director of OTR
Express, Inc., a nationwide truckload carrier with common stock traded on the
Nasdaq National Market.
Meetings and Compensation
Board of Directors. During the fiscal year ended December 31, 1998, the
Board of Directors of the Company met on six occasions. All directors attended
in person or participated by telephone in at least 75% of the total number of
meetings of the Board of Directors and all of the meetings held by committees of
the Board on which they served. Directors who are not employees of the Company
receive $1,000 for each meeting of the Board of Directors attended by such
director and $250 per committee or telephonic meeting attended by the director.
Non-employee directors also receive the annual option to purchase 1,000 shares
of the Company's Class A Common Stock at 85% of the market price on the date of
the annual meeting and are reimbursed for their expenses incurred in attending
the meetings.
Compensation Committee. The Compensation Committee of the Board of
Directors met twice during the fiscal year ended December 31, 1998, and all
members were present at such meetings. Messrs. Ihle, Rich, and Christenberry
serve on the Compensation Committee. 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 1998 is set forth below. See "Compensation Committee Report on
Executive Compensation."
Audit Committee. The Audit Committee, comprised of Messrs. Rich, Ihle, and
Christenberry, met twice during the fiscal year ended December 31, 1998, and all
members were present at such meetings. The Audit Committee makes recommendations
to the Board concerning the selection of outside auditors, reviews the Company's
financial statements, and reviews and discusses audit plans, audit work,
internal controls, and the report and recommendations of the Company's
independent auditors. The Audit Committee also 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.
4
<PAGE>
Compensation Committee Interlocks, Insider Participation, and Related Party
Transactions
Mr. Christenberry has served on the Compensation Committee since the
Company's initial public offering on June 27, 1996. He is not an officer or
employee of the Company. Mr. Christenberry is the President and a director of
Christenberry, Collett & Company, Inc., an investment banking firm that has been
retained by the Company since 1994 to provide various financial advisory
services. The Company paid Christenberry, Collett & Company, Inc. approximately
$150,000 in financial consulting fees during 1998, primarily for services in
connection with acquisitions of businesses.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation paid to the chief executive officer and the one other
named executive officer of the Company whose total cash compensation exceeded
$100,000 (the "Named Officers"), for services in all capacities to the Company
for the fiscal years ended December 31, 1998, 1997, and 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------- --------------------------------
Awards Payouts
-------------------- ----------
Restricted
Name and Principal Other Annual Stock Options LTIP All Other
Position Year Salary Bonus Compensation(1) Award(s)(2) (#) Payouts Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William G. Smith,
Chairman, 1998 $300,000 - - 5,521 - - -
President, and 1997 $300,000 - - 4,322 - - -
CEO 1996 $300,000 - - - - - -
G. Larry Owens, 1998 $150,000 - - 2,317 - - -
Executive Vice 1997 $125,000 - - 1,757 25,000 - -
President, COO, 1996 $ 82,000 $23,000 - - - - -
and CFO
- ----------------------
</TABLE>
(1) Other annual compensation did not exceed 10% of the Named Officer's total
salary for any reported year.
(2) Stock bonuses of Class A Common Stock granted by the Board of Directors
effective January 28, 1999, and January 30, 1998. Amounts presented for Mr.
Owens are net amounts reflecting 1,364 shares of the 1999 grant and 1,124
shares of the 1998 grant withheld to satisfy tax withholding obligations.
The following table sets forth information with respect to the Named
Officers concerning the exercise and ownership of options held at December 31,
1998:
<TABLE>
<CAPTION>
Aggregated Option Exercises and Holdings
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options at 12/31/98 Options at 12/31/98(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
William G. Smith............... - - - -
G. Larry Owens................. - - 25,000/0 $0/0
- -------------------------
</TABLE>
(1) The December 31, 1998 closing price of $7.50 was below the exercise price
of $8.875.
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 contracts, severance, or
change-in-control agreements with any of its executive officers. However, under
certain circumstances in which there is a change of control,
5
<PAGE>
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. Similar rights could be extended to holders of
additional awards under the Plan if any such awards were granted.
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-based compensation.
Base Salary. In approving the base salaries of the Company's senior
management team for 1998, 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.
Annual Bonus. The Compensation Committee approved bonuses for 1998 for
senior management, other than Mr. Smith and Mr. Owens, based upon two primary
factors. First, the Company integrated three acquisitions in 1998. Second, the
Compensation Committee considered whether members of management met their
individual goals that had been established at the beginning of the year. Mr.
Smith and Mr. Owens participate in a separate incentive compensation plan that
allocates a bonus amount equal to a percentage of corporate profits.
Stock-Based Compensation. The Compensation Committee believes that the use
of stock-based compensation 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 and other stock awards to
members of senior management. In 1998, the Company paid William G. Smith's and
G. Larry Owens' bonus in shares of Class A Common Stock. Mr. Smith was granted
5,521 shares and Mr. Owens was granted 3,681 shares. Mr. Owens elected to have
1,364 shares withheld to satisfy tax withholding obligations. The Company did
not make stock option grants to senior management in 1998.
Chief Executive Officer. Mr. Smith'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. Mr.
Smith participated in the Profit Incentive Plan, as explained above. In view of
his large stockholdings, Mr. Smith has not received stock option grants to date.
As the Company's largest stockholder, Mr. Smith's net worth is directly affected
by the Company's performance and stock price.
Compensation Committee:
Herbert D. Ihle
Robert E. Rich
Terry G. Christenberry
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors, and greater than 10% stockholders
are required by SEC regulations 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.
6
<PAGE>
Stock Price Performance Graph
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR SMITHWAY MOTOR XPRESS CORP.
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 June 27, 1996, and ending December 31, 1998.
GRAPH WAS CENTERED HERE IN PRINTED FORM
<TABLE>
<CAPTION>
LEGEND
<S> <C> <C> <C> <C> <C> <C> <C>
Symbol CRSP Total Returns Index for: 12/1993 12/1994 12/1995 12/1996 12/1997 12/1998
- ------- ------------------------------ ------- ------- ------- ------- ------- -------
______ # Smithway Motor Xpress Corp. 95.6 152.9 88.2
- ------ * Nasdaq Stock Market (US Companies) 65.0 63.5 89.8 110.4 135.3 190.7
====== ^ Nasdaq Trucking & Transportation Stocks 87.9 79.7 93.0 102.7 131.5 116.7
SIC 3700-3799, 4200-4299, 4400-4599,
4700-4799 US & Foreign
</TABLE>
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 $100.0 on 06/27/1996.
The stock performance graph assumes $100 was invested on June 27, 1996, the
date of the Company's initial public offering. 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
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, 4400-4599, and 4700-4799.
7
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth, as of February 12, 1999, 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, by each Named Officer of the Company, and by all directors and
executive officers of the Company as a group. Share numbers are as of February
16, 1999, for Lord, Abbett & Co. based upon a Schedule 13G filed with the
Securities and Exchange Commission.
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Amount & Nature
of Beneficial Percent of(1)
Title of Class Name of Beneficial Owner(2) Ownership(3) Class A Class B Total
<S> <C> <C> <C> <C> <C>
Class A Common 1,043,352
Class B Common William G. and Marlys L. Smith(4) 1,000,000 25.9% 100% 40.7%
Class A Common G. Larry Owens(5) 176,536 4.4% - 3.5%
Class A Common Martin D. Smith 32,584 * - *
Class A Common Michael E. Oleson 33,811 * - *
Class A Common Daniel S. O'Brion 29,296 * - *
Class A Common Herbert D. Ihle 6,000 * - *
Class A Common Robert E. Rich 5,000 * - *
Class A Common Terry G. Christenberry(6) 5,500 * - *
Class A Common Lord, Abbett & Co. 571,650 14.2% - 11.4%
Class A & Class B All directors and executive officers 2,331,579 33.1% 100% 46.4%
Common as a group (8 persons)
- ----------------------
</TABLE>
* Less than one percent (1%).
(1) The Class A Common Stock is entitled to one vote per share. The Class B
Common Stock is entitled to two votes per share so long as it is
beneficially owned by William G. Smith or certain members of his immediate
family. The Smiths beneficially own shares of Class A and Class B Common
Stock with 50.5% of the voting power of all outstanding voting shares,
including the 190,000 shares over which Melissa Turner is voting trustee.
(2) The business address of William G. and Marlys L. Smith is 2031 Quail
Avenue, Fort Dodge, Iowa 50501. The business address of Lord, Abbett & Co.
is 767 Fifth Ave., New York, New York 10153.
(3) In accordance with applicable rules under the Securities Exchange Act of
1934, as amended, the number of shares beneficially owned includes 20,000
shares of Class A Common Stock underlying options to purchase granted under
the plan to each of Martin D. Smith, Michael E. Oleson, and Daniel S.
O'Brion (the "Optionees") that are currently exercisable or will become
exercisable within 60 days. The 5,000 remaining shares underlying options
granted to the Optionees are not exercisable within 60 days and are
excluded. The shares owned also include 12,584, 11,820, and 9,296 shares
held under the Company's 401(k) plan for Martin D. Smith, Michael E.
Oleson, and Daniel S. O'Brion, respectively. The total shares includes
3,000 shares of Class A Common Stock underlying options to purchase granted
under the Outside Director Stock Plan to each of Messrs. Rich, Ihle, and
Christenberry that are currently exercisable or will be exercisable within
60 days. Unless otherwise indicated all shares are owned directly.
(4) All shares held as joint tenants with rights of survivorship except 190,000
shares of Class A Common Stock held in the name of Melissa Turner as voting
trustee for the benefit of the Smith Family Limited Partnership and 15,910
shares of Class A Common Stock held for the Smiths under the Company's
401(k) Plan. Melissa Turner is the daughter of William G. and Marlys L.
Smith.
(5) Includes 200 shares held as custodian for minor children under the Uniform
Gifts to Minors Act, as to which beneficial ownership is disclaimed, 7,262
shares of Class A Common Stock held under the Company's 401(k) Plan, and an
option to purchase 25,000 shares granted to Mr. Owens under the Company's
Incentive Stock Plan, which options are fully vested.
(6) Includes 500 shares held under the Christenberry, Collett & Company, Inc.
401(k) Plan, a unitized plan that does not allocate a specific number of
shares to Mr. Christenberry's account, accordingly, beneficial ownership is
disclaimed.
8
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick LLP as independent
certified public accountants for the Company for the 1999 fiscal year. KPMG Peat
Marwick LLP has served as independent certified public accountants for the
Company since December 1994. Representatives of KPMG Peat Marwick LLP 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 KPMG PEAT MARWICK LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY.
PROPOSAL 3
APPROVAL OF AMENDMENT TO INCENTIVE STOCK PLAN
Description of Plan
In March 1995, the Company's Board of Directors and stockholders adopted
the Incentive Stock Plan (the "Plan") to attract and retain employees and
motivate them through incentives that are aligned with the Company's goals of
increased profitability and stockholder value. Awards may be in the form of
incentive stock options, non-qualified stock options, restricted stock awards,
or any other awards of stock consistent with the Plan's purpose. The Plan is
administered by the Board of Directors. All employees are eligible for
participation, and actual participants in the Plan are selected from
time-to-time by the administrator. The administrator may substitute new stock
options for previously granted options. No awards of incentive stock options may
be made after December 31, 2004, the period under applicable provisions of the
Internal Revenue Code. The Company originally reserved 225,000 shares of Class A
Common Stock for issuance pursuant to the Plan, and to date has awarded options
and other grants covering approximately 156,000 of such shares, including
116,000 shares underlying options and other grants to its executive officers.
Seventy-five thousand options were granted to the Company's executive officers
at $9.50.
Plan Amendment
The proposed Amendment to the Plan (the "Amendment") would reserve an
additional 275,000 shares of Class A Common Stock for issuance, bringing the
total number of shares subject to the Plan to 500,000. The Board of Directors
has recommended approval of Proposal 3 and believes that the ability to offer
additional equity incentives is important to providing compensation that aligns
the interests of employees and stockholders. The market price of the stock as of
December 31, 1998, was $7.50, which results in the stock underlying the entire
275,000 shares covered by the Amendment having a market value of $2.1 million at
such date and the stock underlying the options and other grants granted to the
executive officers having a market value of $870,000.
Federal Income Tax Consequences for Incentive Stock Options
Options granted as incentive stock options ("ISOs") are intended to qualify
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
for special tax treatment. Neither the grant of the ISO nor the exercise of the
ISO by a participant ("Optionee") will result in the recognition of taxable
income to the Optionee. However, the exercise of an ISO will result in an item
of tax preference to an Optionee potentially subject to the alternative minimum
tax. The ultimate sale or other disposition by the Optionee of the shares
obtained upon exercise of the ISO will result in capital gain or loss equal to
the difference between the fair market value on the date of sale and the
exercise price. The Company will not have a deduction with regard to the ISO at
the time of the grant, the exercise, or the ultimate sale of the shares.
Notwithstanding the foregoing, if an Optionee sells or disposes of the shares
prior to two years after the date of the grant of the ISO or one year after the
date of the exercise, the Optionee will recognize compensation income on the
sale to the extent the value on the date of exercise exceeded the exercise
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price. The excess of the amount received on the sale over the value on the date
of exercise will be capital gain. In the case of such a disqualifying
disposition of shares, the Company may deduct the amount of income recognized as
compensation income. A person entitled to exercise the ISO after the death of an
Optionee may sell the stock obtained on the exercise of an option at any time
without regard to the normal holding requirements. In addition to the foregoing
federal tax considerations, the exercise of an ISO and the ultimate sale or
other disposition of the shares acquired thereby will in most cases be subject
to state income taxation.
Federal Income Tax Consequences for Nonstatutory Stock Options
An Optionee does not realize any compensation income upon the grant of a
nonstatutory stock option ("NSO"). Additionally, the Company may not take a tax
deduction at the time of the grant. Upon exercise of an NSO, an Optionee
realizes and must report as compensation income an amount equal to the
difference between the fair market value of the securities on the date of
exercise and the exercise price. The Company is entitled to take a deduction at
the same time and in the same amount as the Optionee reports as compensation
income, provided the Company withholds federal income tax in accordance with the
Code and applicable Treasury regulations. In addition to the foregoing federal
tax considerations, the exercise of an Option and the ultimate sale or other
disposition of the shares of Common Stock acquired thereby will in most cases be
subject to state income taxation.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 3
TO AMEND THE INCENTIVE STOCK PLAN TO RESERVE AN ADDITIONAL 275,000 SHARES OF
CLASS A COMMON STOCK FOR ISSUANCE TO PARTICIPANTS, FOR A TOTAL OF 500,000
SHARES.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 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 4, 1999, to be eligible for inclusion in the Company's proxy material
related to that meeting. The inclusion of any such proposals in such proxy
material shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended.
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.
Smithway Motor Xpress Corp.
/s/ William G. Smith
William G. Smith
Chairman of the Board
April 2, 1999
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