The Board of Directors is ultimately responsible for overseeing risk management at the Company. The Board has delegated to the Compensation Committee responsibility for oversight of compensation risk. The Board has delegated to the Audit Committee various risk management responsibilities. To fulfill these responsibilities, at each quarterly meeting the Audit Committee receives (i) a report from the Director of Internal Audit regarding internal controls and an update on Internal Audit’s annual plan, (ii) a report from the General Counsel regarding any material litigation developments or regulatory risks, (iii) a report from the Company’s independent auditors and (iv) a update on the most recent meeting of the Company’s health, safety and en
vironmental team. The Audit Committee reports the results of any material issues to the Board. The Board has also charged the Audit Committee with the responsibility for undertaking an annual comprehensive risk review, which includes a review of the steps taken by the Company to mitigate key risks. The list of risks is generally prepared by management and discussed at the Audit Committee meeting. Any issues that arise from this discussion are then reviewed with the Board as necessary. The Audit Committee also receives an annual report from the General Counsel highlighting certain non-business risks and the processes used to mitigate those risks. The Board has charged the Nominating and Governance Committee with managing the risks related to succession planning. In addition to reports from the Audit, Compensation and Nominating and Governance Committees, the Board periodically discusses risk management issues as necessary.
Controlled Company
The Board of Directors has determined that the Company is a “controlled company” as that term is defined by Nasdaq since the Yeager family, pursuant to their ownership of all Class B Common Stock, control 59% of the voting power of the Company as of March 11, 2010. Pursuant to the Yeager Family Stockholder Agreement, the Yeager family members have agreed to vote all of their shares of Class B Common Stock in accordance with the vote of the holders of a majority of such shares.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to all employees. The Company’s Code of Business Conduct and Ethics may be found on the Company’s website, www.hubgroup.com.
Communicating with the Board
Stockholders may communicate directly with the Board of Directors. All communications should be directed to the Company’s Secretary at the address set forth above and should prominently indicate on the outside of the envelope that it is intended for the Board of Directors or for non-management directors. Each communication intended for the Board of Directors and received by the Secretary which is not otherwise commercial in nature will be forwarded to the specified party following its clearance through normal security procedures.
Review of Related Party Transactions
The Company does not employ specific procedures for the review, approval or ratification of related party transactions involving directors, nominees for directors, executive officers and their immediate family members, but considers such transactions on a case-by-case basis as they arise.
OWNERSHIP OF THE CAPITAL STOCK OF THE COMPANY
The following table sets forth information with respect to the number of shares of Class A Common Stock and Class B Common Stock beneficially owned by (i) each director of the Company, (ii) the current executive officers of the Company named in the table under “Compensation of Directors and Executive Officers--Summary Compensation Table,” (iii) all directors and executive officers of the Company as a group, and (iv) based on information available to the Company and a review of statements filed with the Commission pursuant to Section 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each person that owns beneficially (directly or together with affiliates) more than 5% of the Class A Common Stock or Class B Common Stock, in each case as of February 28, 2010, except as otherwise
noted. The Company believes that each individual or entity named has sole investment and voting power with respect to shares of the Class A Common Stock or Class B Common Stock indicated as beneficially owned by them, except as otherwise noted.
|
|
Number (1) |
|
Name
|
|
Class A
|
|
|
Class B
|
|
|
Percentage(2)
|
|
David P. Yeager (3)(4)
|
|
|
405,099 |
|
|
|
662,296 |
|
|
|
2.8 |
% |
Mark A. Yeager (3)(5)
|
|
|
699,578 |
|
|
|
662,296 |
|
|
|
3.6 |
% |
Terri A. Pizzuto (6)
|
|
|
88,732 |
|
|
|
-- |
|
|
|
* |
|
David L. Marsh (7)
|
|
|
73,948 |
|
|
|
-- |
|
|
|
* |
|
Christopher R. Kravas (8)
|
|
|
68,393 |
|
|
|
-- |
|
|
|
* |
|
Gary D. Eppen (9)
|
|
|
52,024 |
|
|
|
-- |
|
|
|
* |
|
Charles R. Reaves (10)
|
|
|
70,377 |
|
|
|
-- |
|
|
|
* |
|
Martin P. Slark (11)
|
|
|
67,119 |
|
|
|
-- |
|
|
|
* |
|
All directors and executive officers (13 people) (12)
|
|
|
1,668,142 |
|
|
|
662,296 |
|
|
|
6.1 |
% |
Debra A. Jensen (3)(13)
|
|
|
176,439 |
|
|
|
662,296 |
|
|
|
2.2 |
% |
Wellington Management Company, LLP (14)
|
|
|
2,213,717 |
|
|
|
-- |
|
|
|
5.8 |
% |
T. Rowe Price Associates, Inc. (15)
|
|
|
3,300,600 |
|
|
|
-- |
|
|
|
8.7 |
% |
BlackRock, Inc. (16)
|
|
|
2,990,158 |
|
|
|
-- |
|
|
|
7.9 |
% |
Frontier Capital Management (17)
|
|
|
2,496,418 |
|
|
|
-- |
|
|
|
6.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________________________________________
* Represents less than 1% of the outstanding shares of Common Stock.
(1)
|
Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule 13d-3(d), shares not outstanding which are subject to options, warrants, rights, or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but not deemed outstanding for the purpose of calculating the percentage owned by each other person listed.
|
(2)
|
Represents percentage of total number of outstanding shares of Class A Common Stock and Class B Common Stock.
|
(3)
|
The Yeager family members are parties to a stockholders’ agreement (the “Yeager Family Stockholder Agreement”), pursuant to which they have agreed to vote all of their shares of Class B Common Stock in accordance with the vote of the holders of a majority of such shares. Except as provided in footnotes 4 and 5, each of the Yeager family members disclaims beneficial ownership of the shares of Class B Common Stock held by the other Yeager family members. The Class B Common Stock represents approximately 59% of the total votes allocable to the Common Stock. Members of the Yeager family own all of the Class B Common Stock.
|
(4)
|
Includes 51,624 shares of Class B Common Stock owned by the Laura C. Yeager 1994 GST Trust, 51,624 shares of Class B Common Stock owned by the Matthew D. Yeager 1994 GST Trust and 51,624 shares of Class B Common Stock owned by the Phillip D. Yeager 1994 GST Trust and 386,341 shares of Class B Common Stock as to which David P. Yeager may be deemed to have shared voting discretion pursuant to the Yeager Family Stockholder Agreement. See Note 3. Includes 45,735 shares of restricted stock. Also includes 176,439 shares of Class A Common Stock held by the Phillip C. Yeager 1994 Trust as Mr. Yeager has shared voting and dispositive power for these shares.
|
(5)
|
Includes 43,826 shares of Class A Common Stock and 44,040 shares of Class B Common Stock owned by the Alexander B. Yeager 1994 GST Trust and 43,826 shares of Class A Common Stock and 44,040 shares of Class B Common Stock owned by the Samantha N. Yeager 1994 GST Trust and 19,907 shares of Class A Common Stock owned by the Mark A. Yeager Perpetual Trust (for which Mark A. Yeager serves as sole trustee and has sole investment and voting discretion) and 469,126 shares of Class B Common Stock as to which Mark A. Yeager may be deemed to have shared voting discretion pursuant to the Yeager Family Stockholder Agreement. See Note 3. Also includes 40,630 shares of restricted stock. Also includes 176,439 shares of Class A Common Stock held by the Phillip C. Yeager 1994 Trust as Mr. Yeager has shared voting and dispositive power with respect to these shares.
|
(6)
|
Includes 26,530 shares of restricted stock and 4,800 shares of Class A Common Stock issuable upon exercise of options.
|
(7)
|
Includes 20,315 shares of restricted stock.
|
(8)
|
Includes 20,315 shares of restricted stock.
|
(9)
|
Includes 7,848 shares of restricted stock. 44,176 shares are held in the Gary D. Eppen Trust dated April 22, 1996.
|
(10)
|
Includes 7,848 shares of restricted stock.
|
(11)
|
Includes 24,000 shares of Class A Common Stock issuable upon exercise of options and 7,848 shares of restricted stock.
|
(12)
|
Includes 59,800 shares of Class A Common Stock issuable upon exercise of options and 274,326 shares of restricted stock.
|
(13)
|
Includes 25,000 shares of Class B Common Stock owned by the Elizabeth A. Jensen 1994 GST Trust and 25,000 shares of Class B Common Stock owned by the Patrick R. Jensen 1994 GST Trust and 469,125 shares of Class B Common Stock as to which Debra A. Jensen may be deemed to have shared voting discretion pursuant to the Yeager Family Stockholder Agreement. See Note 3. Also includes 176,439 shares of Class A Common Stock held by the Phillip C. Yeager 1994 Trust as Ms. Jensen has shared voting and dispositive power with respect to these shares. Debra A. Jensen is the sister of David P. Yeager and Mark A. Yeager.
|
(14)
|
Wellington Management Company, LLP (“Wellington”) filed an amendment to a Schedule 13G with the Commission indicating beneficial ownership of shares of Class A Common Stock. According to the Schedule 13G, Wellington has shared dispositive power with respect to all 2,213,717 shares of Class A Common Stock beneficially owned and shared voting power with respect to 913,853 shares of Class A Common Stock beneficially owned. These securities are owned by various individual and institutional investors, which Wellington serves as investment advisor with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Exchange Act, Wellington is deemed the beneficial owner of such securities; however, Wellington expressly disclaims that it is, in fact, the beneficial owner of such securities. The number of shares beneficiall
y owned by Wellington is indicated as of February 12, 2010. The address of Wellington is 75 State Street, Boston, MA 02109.
|
(15)
|
T. Rowe Price Associates, Inc. (“Price Associates”) filed an amendment to a Schedule 13G with the Commission indicating beneficial ownership of shares of Class A Common Stock. According to the Schedule 13G, Price Associates has sole dispositive power with respect to all 3,300,600 shares of Class A Common Stock beneficially owned and sole voting power with respect to 887,800 shares of Class A Common Stock beneficially owned. These securities are owned by various individual and institutional investors which Price Associates serves as investment advisor with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Exchange Act, Price Associates is deemed the beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. The number
of shares beneficially owned by Price Associates is indicated as of February 12, 2010. The address of Price Associates is 100 E. Pratt Street, Baltimore, MD 21202.
|
(16)
|
BlackRock, Inc. (“BlackRock”) filed a Schedule 13G with the Commission indicating beneficial ownership of shares of Class A Common Stock, some of which was acquired in its acquisition of Barclays Global Investors, NA. According to the Schedule 13G, BlackRock has sole dispositive power with respect to all 2,990,158 shares of Class A Common Stock beneficially owned and sole voting power with respect to all 2,990,158 shares of Class A Common Stock beneficially owned. The number of shares beneficially owned by BlackRock is indicated as of January 20, 2010. The address of BlackRock, Inc. is 40 East 52nd Street, New York, NY 10022.
|
(17)
|
Frontier Capital Management Co., LLC (“Frontier Capital”) filed a Schedule 13G with the Commission indicating beneficial ownership of shares of Class A Common Stock. According to the Schedule 13G, Frontier Capital has sole dispositive power with respect to all 2,496,418 shares of Class A Common Stock and sole voting power with respect to all 2,496,418 shares of Class A Common Stock. The number of shares beneficially owned by Frontier Capital is indicated as of February 12, 2010. The address of Frontier Capital is 99 Summer Street, Boston, MA 02110.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors, and greater than ten-percent stockholders are required by Commission regulation to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the Company’s 2009 fiscal year all applicable Section 16(a) filing requirements were complied with by the officers, directors, and greater than ten-percent beneficial owners.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Overview of Compensation Program
Our Compensation Committee has the responsibility for determining the compensation that is paid or awarded to our Company’s executive officers. Our Compensation Committee consists of the three independent members of the Board. Our Compensation Committee ensures that the total compensation paid to our executive officers is fair, reasonable and competitive and drives behavior that increases stockholder value over the long-term.
Compensation Philosophy and Objectives
Our Company’s compensation philosophy is designed to link executive performance to long-term stockholder value, connect pay with individual performance, maintain a compensation system that is competitive with industry standards and attract and retain outstanding executives. We seek to incent our executives through both short term and long term awards, with a goal of superior Company performance. Our ultimate objective is to improve stockholder value.
Our Compensation Committee evaluates both performance and compensation to ensure that our Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of our peer companies. To that end, our Compensation Committee believes executive compensation packages provided to our executives should include both cash and stock-based compensation that reward performance as measured against pre-established goals.
Role of Executive Officers in Compensation Decisions
Our Compensation Committee, with input and recommendations from our Chief Executive Officer and President, makes all compensation decisions for the executive officers and approves recommendations of equity awards to all executive officers of the Company. The Chief Executive Officer and President annually review the performance of the executive officers. The conclusions reached and recommendations based on these reviews, including salary adjustments and annual stock and cash award amounts, are presented to the Compensation Committee. Our Compensation Committee can exercise its discretion in modifying any recommended adjustments of stock or cash awards to executives.
Setting Executive Compensation
Based on the foregoing objectives, our Compensation Committee has structured the Company’s annual and long-term incentive-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by the Company and reward the executives for achieving such goals.
Compensation Consultant. To help the Company achieve its compensation objectives, our Compensation Committee engaged Hay Group, Inc. as its independent compensation consultant for 2009. Hay Group has been the compensation consultant to the Compensation Committee since 2004. The consultant’s role is to advise our Compensation Committee on all executive compensation matters. The Compensation Committee asked the consultant to provide relevant market data and evaluate the Company’s total compensation system relative to the compensation systems employed by comparable companies in the transportation industry and the overall U.S. industrial market. The consultant also provides an additional measure of assurance that the Company’s ex
ecutive compensation program is a reasonable and appropriate means to achieve our objectives. Except for its work for the Compensation Committee, Hay Group does not provide any other compensation consulting services to the Company.
Market Benchmarking. A benchmark group of publicly-traded companies in the transportation industry is used annually by our Compensation Committee to ensure that Hub Group’s compensation programs offer competitive total compensation opportunities and reflect best practices in compensation plan design. For 2009, the companies comprising the “Compensation Peer Group” were:
CH Robinson Worldwide, Inc.
Expeditors International of Washington, Inc.
Forward Air Corp.
J.B. Hunt Transport Services, Inc.
Landstar System, Inc.
Pacer International, Inc.
Universal Truckload Services, Inc.
UTI Worldwide, Inc.
Werner Enterprises, Inc.
In addition, information on annual base salary increases and compensation data for the U.S. general industrial markets is provided by our Compensation Committee’s independent compensation consultant.
The Company’s CEO and President develop pay recommendations for the Company’s executives based on (i) the aforementioned market data, (ii) each executive’s individual performance and functional responsibilities as determined by the CEO and President; and (iii) Company performance, both financial and non-financial. Our Compensation Committee reviews and approves these pay recommendations with the advice of its independent compensation consultant. Our Compensation Committee also sets the base salary and incentive opportunities for the Company’s CEO based on (i) the aforementioned market data, (ii) the CEO’s individual performance and responsibilities and (iii) Company performance, both financial and non-financial.
Our Compensation Committee generally seeks to set the base salary for executive officers at the 50th percentile of compensation paid to similarly situated executives according to the general survey data. Our Compensation Committee also considers, on a secondary basis, the proxy data of the companies comprising the Compensation Peer Group. Variations to this objective do occur as dictated by the experience level of the individual, personal performance and market factors.
There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, our Compensation Committee reviews information provided by our compensation consultant to determine the appropriate level and mix of incentive compensation. Pay for such incentive compensation is awarded as a result of the performance of the Company or the individual, depending on the type of award, compared to pre-established goals.
2009 Executive Compensation Components
The Company’s executive compensation program has three components--base salary, annual incentives, and long-term incentives. Base salary and annual incentives are primarily designed to reward current and past performance. Long-term incentives are primarily designed to provide strong incentives for long-term future Company growth.
Base Salary. To attract and retain qualified executives, base salary is provided to our executive officers. The base salary is determined based on position and responsibility using competitive criteria within the transportation industry. During its review of base salaries for the executives, our Compensation Committee primarily considers (i) market data provided by our outside consultants, (ii) an internal review of the executive’s compensation, both individually and relative to other officers and (iii) individual performance of the executive. Salary levels are typically reviewed annually as part of our annual performance review process as well as upon a promotion or other change in job responsibilities. Increases a
re based on increases in the cost of living, individual performance and, to a lesser extent, trends within the industry.
For 2009, management recommended an increase in salary from $399,489 to $460,000 for Mr. Mark Yeager in connection with his promotion to Vice Chairman. Management recommended that no other named executive officers receive a salary increase due to the challenging economic conditions. The Compensation Committee agreed with this recommendation.
Annual Cash Incentive. The Company’s annual cash incentive recognizes and rewards executives for taking actions that build the value of the Company and generate competitive total returns for stockholders. Our annual cash incentive is determined with the assistance of the third party survey data referred to above and the value of the target award is generally set at 60% of the executive’s annual base salary. This incentive is based solely on earnings per share (“EPS”) for our Chief Executive Officer and President. For our other executive officers, this incentive is based on a combination of EPS (80%) and on individual performance compared against certain pre-determined personal goals (20%). The personal g
oals vary by officer. For 2009, the personal goals for officers responsible for each of our service lines were generally tied to specific financial metrics for the service line managed by the executive. For our other executives, the personal goals were generally tied to specific objectives within their area of responsibility. The personal goals are generally set at a level that are believed to be achievable with superior personal performance.
Ms. Pizzuto’s personal goals required her to maintain strong investor relations (25%), assist with analysis and due diligence for acquisitions (25%) and maintain strong financial processes, controls and team leaders (50%). Ms. Pizzuto met or exceeded each of these goals and earned her full annual cash incentive related to her personal goals of $36,000.
Mr. Marsh’s personal goals required him to meet a combined gross margin goal for intermodal, brokerage and logistics, an intermodal volume growth target and a cost reduction target relating to sales, pricing and customer service. The gross margin goal had a target incentive of $18,000 and the intermodal volume and cost reduction goals each had a target incentive of $9,000, making Mr. Marsh’s total potential incentive related to personal goals $36,000. The gross margin goal was measured by a scale under which Mr. Marsh would not earn any incentive unless combined gross margin was at least $163.4 million with 100% of his target incentive achieved if gross margin was $171.3 million. The combined gross margin generated was less than $163.4 million and therefore Mr. Marsh earned nothing under this goal. The i
ntermodal volume growth goal was measured by a scale under which Mr. Marsh would not earn any incentive if intermodal volume declined by more than 3% with 100% of his target incentive achieved if intermodal volume was flat and 200% of his target incentive achieved if intermodal volume grew by 3%. Intermodal volume declined by 4.7% and therefore Mr. Marsh earned nothing under this goal. The cost reduction goal was measured by a scale under which Mr. Marsh would not earn any incentive if certain selling, general and administrative (“SG&A”) expenses were more than $24.9 million with 100% of his target incentive achieved if these SG&A expenses were $24.2 million and 150% of his target incentive achieved if these SG&A expenses were $23.5 million or less. The actual SG&A expenses were $22.1 million and therefore Mr. Marsh earned 150% of this target incentive or $13,500. In addition, the Compensation Committee elected to give Mr. Marsh an addit
ional bonus of $16,500 in recognition of his superior contributions to the Company in a difficult economic environment. Mr. Marsh’s total bonus related to personal goals was therefore $30,000.
Mr. Kravas’ personal goals required him to meet a service line defined profitability growth goal for intermodal, an intermodal volume growth target and a cost reduction target relating to intermodal. The service line defined profitability growth goal for intermodal had a target incentive of $18,000 and the other two goals had a target incentive of $9,000 each, making Mr. Kravas’ total potential incentive related to personal goals $36,000. The intermodal service line profitability growth goal was measured by a scale under which Mr. Kravas would not earn any incentive if intermodal service line defined profitability was not at least $92.6 million and 100% of his target incentive if the intermodal service line defined profitability was $96.5 million. The intermodal service line profitability was
less than $92.6 million and therefore Mr. Kravas earned nothing under this goal. The intermodal volume growth goal was measured by a scale under which Mr. Kravas would not earn any incentive if intermodal volume declined by more than 3% with 100% of his target incentive achieved if intermodal volume was flat and 200% of his target incentive achieved if intermodal volume grew by 3%. Intermodal volume declined by 4.7% and therefore Mr. Kravas earned nothing under this goal. The cost reduction goal was measured by a scale under which Mr. Kravas would not earn any incentive if certain selling, general and administrative (“SG&A”) expenses were more than $17.1 million with 100% of his target incentive achieved if these SG&A expenses were $16.6 million and 150% of his target incentive achieved if these SG&A expenses were $16.1 million or less. The actual SG&A expenses were $16.1 million and therefore Mr. Kravas earned 150% of this target incentive or $13,
500. In addition, the Compensation Committee elected to give Mr. Kravas an additional bonus of $16,500 in recognition of his superior contributions to the Company in a difficult economic environment. Mr. Kravas’ total bonus related to personal goals was therefore $30,000.
Each year our Compensation Committee sets an EPS target for our Company. Once the year is completed, Hub Group’s earnings per share are compared against the EPS target. If we meet the EPS target, we pay the EPS portion of the award. If we do not meet our EPS target, we do not pay any cash incentive related to EPS or we pay a reduced incentive based on a sliding scale. In the same way, our executives can earn, also on a sliding scale, up to twice their EPS target incentive if we substantially exceed our EPS target. In light of the uncertain economic environment in 2009, our Compensation Committee decided to set two six month EPS targets rather than one twelve month EPS target. The target for the first six months was set in February and the target for the second six mo
nths was set in August. For the first six months of 2009, our sliding scale started at $0.53. Our EPS target for the first six months of 2009 was set at $0.64. Our executives could earn twice their EPS target incentive if we earned $0.76 per share during the first six months of 2009. During the first six months of 2009 we earned $0.39 per share and therefore no EPS bonus was earned for this period. For the second six months of 2009, our sliding scale started at $0.53. Our EPS target for the second six months of 2009 was set at $0.64. Our executives could earn twice their EPS target incentive if we earned $0.76 per share during the second six months of 2009. During the second six months of 2009 we earned $0.52 per share and therefore no EPS bonus was earned for this period.
Mr. David Yeager’s target incentive related to EPS was $344,920 for 2009. Mr. Yeager received 0% of this targeted amount in accordance with the sliding scale previously approved by the Compensation Committee. Mr. Mark Yeager’s target incentive related to EPS was $276,000 for 2009. Mr. Mark Yeager received 0% of this targeted amount. Ms. Pizzuto’s target incentive related to EPS was $144,000 for 2009. Ms. Pizzuto received 0% of this targeted amount. Mr. Marsh’s target incentive related to EPS was $144,000 for 2009. Mr. Marsh received 0% of this targeted amount. Mr. Kravas’ target incentive related to EPS was $144,000 for 2009. Mr. Kravas received 0% of this targeted amount.
All cash compensation is approved by our Compensation Committee before it is paid to our executive officers.
Long-Term Equity Incentives. The Company’s Long-Term Equity Incentive Program serves to reward executive performance that successfully executes the Company’s long-term business strategy and builds stockholder value. The program allows for the awarding of options and stock appreciation rights, restricted stock and performance units. The Long-Term Equity Incentive Program encourages participants to focus on long-term Company performance and provides an opportunity for executive officers and certain designated key employees to increase their ownership stake in the Company through grants of the Company’s Class A Common Stock. The Company maintains the Hub Group, Inc. 1
996 Long-Term Incentive Plan, 1997 Long-Term Incentive Plan, 1999 Long-Term Incentive Plan and the Hub Group, Inc. 2002 Long-Term Incentive Plan.
For the last few years, the Company has made an annual grant of restricted stock to its executive officers. Starting with the December 2005 grant, our Compensation Committee agreed to keep the number of shares generally fixed for three years so that executives, like stockholders, will be directly impacted by changes in our stock price. This three year cycle expired at the end of 2008. For 2009, the number of shares of restricted stock granted was determined with the help of our outside compensation consultant and was designed to be competitive using general market data and the Compensation Peer Group. For grants made in 2007 and prior years the restricted stock vests over a period of three years. For grants made in 2008 and 2009, the re
stricted stock vests over a period of five years.
Our Compensation Committee has delegated to our Chief Executive Officer the ability to grant $500,000 of restricted stock to non-executive officers each year. Our Chief Executive Officer grants this stock from time to time to new hires or in connection with a promotion or outstanding performance by current employees. The Company has not granted any stock options since 2003.
Perquisites and Other Compensation
Our Company provides executive officers with perquisites and other personal benefits that the Company and our Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. Our Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to named executive officers.
The perquisites and other compensation we provided in 2009 are as follows. All of our named executive officers participated in our 401(k) plan and received matching funds up to the federally allowed maximum match. We maintain $50,000 of life insurance on all of our executive officers. The Company maintains a non-qualified deferred compensation plan and provides a matching contribution to participants. The Company also makes available to its executive officers an annual physical at a local hospital. The Company allows personal use of its fractional airplane interests by certain executive officers. Personal use of our aircraft interests requires approval by the Chief Executive Officer. Our executives must reimburse the Company for their personal use of our aircraft interests
at the Standard Industry Fare Level plus either 20% or 30% depending on the aircraft.
Retirement and Other Benefits
Pension Benefits
We do not provide pension arrangements or subsidized post-retirement health coverage for our executives or employees.
Non-Qualified Deferred Compensation
Our executive officers, in addition to certain other key managerial employees, are entitled to participate in the Hub Group, Inc. Non-Qualified Deferred Compensation Plan. Pursuant to this plan, eligible employees can defer certain compensation on a pre-tax basis. The Hub Group, Inc. Non-Qualified Deferred Compensation Plan is discussed in further detail under the heading “Nonqualified Deferred Compensation” on page 23.
Other Post-Employment Payments
All of our executive officers are employees-at-will and as such do not have employment contracts with us. Certain payments will be made upon a change of control or the retirement of our executive officers. These payments are discussed in further detail under “Potential Payouts upon Termination or Change of Control” on page 25.
Ownership Guidelines
To directly align the interests of executive officers with the interests of the stockholders, in the fall of 2006 our Board adopted a policy that requires each executive officer to maintain a minimum ownership interest in the Company. Each executive officer must own Company stock with a value of at least two times their base annual salary. Each executive officer has five years to meet this requirement. Until they do, executive officers must retain a minimum of 25% of the stock granted to them in any one year. Our independent directors have also agreed to maintain stock valued at twice their annual retainer.
Tax and Accounting Implications
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits the Company’s deduction for compensation paid to the executive officers named in the Summary Compensation Table to $1 million each unless certain requirements are met. The policy of our Compensation Committee with respect to section 162(m) is to establish and maintain a compensation program which will optimize the deductibility of compensation. Our Compensation Committee, however, reserves the right to use its judgment, where merited by our Compensation Committee’s need to respond to changing business conditions or by an executive officer’s individual performance, to authorize compensation which may not, in a specific case, be fully deductible to the Co
mpany.
Section 274(e) of the Code limits the Company’s deduction for expenses allocated to certain personal use of its fractional airplane interests. For 2009, such expenses, less amounts reimbursed to the Company, were not deductible for federal income tax purposes.
Compensation Committee Report
This report is submitted by the Compensation Committee of the Board of Directors.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis and has recommended to the Board that it be included in this Proxy Statement.
COMPENSATION COMMITTEE
Gary D. Eppen
Charles R. Reaves
Martin P. Slark, Chairman
2009 SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term and other compensation for services rendered to the Company for the fiscal years ended December 31, 2009, December 31, 2008 and December 31, 2007 paid or awarded to those persons who were: (i) the Company’s chief executive officer at December 31, 2009, (ii) the Company’s chief financial officer at December 31, 2009 and (iii) the Company’s three most highly compensated executive officers other than the chief executive officer and chief financial officer (collectively, together with the Company’s chief executive officer and chief financial officer, the “Named Executive Officers”).<
/div>
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
|
|
Stock Awards ($)(1)
|
|
Option Awards ($)
|
|
Non-Equity Incentive Plan Compensa-tion(2) ($)
|
|
Change in Pension Value and Nonquali-fied Deferred Compensation Earnings(3) ($)
|
|
All Other
Compensa- tion (4) ($)
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Yeager |
|
2009 |
|
574,867 |
|
--- |
|
500,009 |
|
--- |
|
--- |
|
--- |
|
154,756 |
(6) |
1,229,632 |
Chairman and Chief |
|
2008 |
|
574,867 |
|
--- |
|
533,233 |
|
--- |
|
137,968 |
|
--- |
|
173,442 |
|
1,441,620 |
Executive Officer |
|
2007 |
|
574,867 |
|
--- |
|
570,065 |
|
--- |
|
500,134 |
|
51,229 |
|
114,472 |
|
1,810,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A.Yeager
|
|
2009 |
|
460,000 |
(5) |
--- |
|
450,014 |
|
--- |
|
--- |
|
49,885 |
|
74,056 |
(7) |
1,033,955 |
Vice Chairman, President |
|
2008 |
|
399,489 |
|
--- |
|
457,057 |
|
--- |
|
95,877 |
|
51,077 |
|
98,061 |
|
1,116,926 |
and Chief Operating Officer |
|
2007 |
|
399,489 |
|
--- |
|
488,627 |
|
--- |
|
347,555 |
|
37,795 |
|
72,175 |
|
1,345,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terri A. Pizzuto |
|
2009 |
|
300,000 |
|
--- |
|
280,013 |
|
--- |
|
36,000 |
|
--- |
|
15,207 |
(8) |
631,220 |
Executive Vice President, |
|
2008 |
|
300,000 |
|
--- |
|
309,343 |
|
--- |
|
93,600 |
|
--- |
|
15,493 |
|
729,974 |
CFO and Treasurer
|
|
2007 |
|
287,365 |
|
-- |
|
275,500 |
|
-- |
|
230,886 |
|
--- |
|
14,984 |
|
808,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Marsh |
|
2009 |
|
300,000 |
|
--- |
|
225,020 |
|
--- |
|
30,000 |
|
6,218 |
|
22,741 |
(9) |
583,979 |
Chief Marketing
|
|
2008 |
|
300,000 |
|
--- |
|
228,528 |
|
--- |
|
72,900 |
|
6,416 |
|
21,519 |
|
640,901 |
Officer |
|
2007 |
|
286,372 |
|
--- |
|
325,751 |
|
--- |
|
181,026 |
|
7,613 |
|
19,104 |
|
819,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher R. Kravas |
|
2009 |
|
300,000 |
|
--- |
|
225,020 |
|
--- |
|
30,000 |
|
1,803 |
|
22,051 |
(10) |
578,874 |
Chief Intermodal Officer
|
|
2008 |
|
300,000 |
|
--- |
|
228,528 |
|
--- |
|
73,800 |
|
1,876 |
|
16,828 |
|
632,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Consists of the aggregate grant date fair value of restricted stock awards made by our Company to our executives in 2009, 2008 and 2007 in accordance with FASB Statement No. 123(R). The amounts expensed in 2009, 2008 and 2007 in accordance with FASB Statement No. 123(R) with respect to restricted stock awards made by our Company to our executives each with a vesting period of five years, except for awards made in 2007 and prior years which vest over three years, are $396,670, $410,096 and $306,690, respectively, for Mr. David Yeager; $344,290, $351,511 and $312,881, respectively, for Mr. Mark Yeager; $234,714, $229,660 and $192,856, respectively, for Ms. Pizzuto; $199,293, $219,105 and $200,253, respectively, for Mr. Marsh; and $172,148 and $175,755 for 2009 and 2008, respectively, for Mr. Kravas.
(2) In addition to salary, our Compensation Committee provides an annual cash incentive. Our annual cash incentive is determined with the assistance of third party survey data and the value of the target award is generally set at 60% of the executive’s annual salary. This incentive is based solely on earnings per share (“EPS”) for our Chief Executive Officer and President. For our other executive officers, this incentive is based on a combination of EPS (80% in 2009 and 2008 and 60% in 2007) and on individual performance compared against certain predetermined personal goals (20% in 2009 and 2008 and 40% in 2007).
(3) Represents above market earnings on deferred compensation.
(4) Personal use of our aircraft requires approval by the Chief Executive Officer. Our executives must reimburse the Company for their personal use of our aircraft interest at the Standard Industry Fare Level plus either 20% or 30% depending on the aircraft. We value the personal use of our aircraft interests as the difference between the amount paid by the executive to the Company for use of the plane and the aggregate incremental cost of using the plane. The incremental cost includes the hourly flight fee, all fuel charges, overnight fees, on-board catering, landing fees, parking fees, certain taxes and passenger ground transportation. We do not include in incremental costs the fixed costs that do not change based on personal usage, such as monthly management fees or the purchase or lease cost
s of our fractional interest in aircraft.
(5) Mr. Mark Yeager received a salary increase in connection with his promotion to Vice Chairman.
(6) Represents our Company’s matching contribution to the Section 401(k) plan of $6,095, the value of insurance premiums paid by the Company for term life insurance equal to $48 and the match made to Mr. Yeager’s account in our current Deferred Compensation Plan equal to $17,246. Also represents Mr. Yeager’s personal use of our Company’s fractional airplane interests equal to $131,367.
(7) Represents our Company’s matching contribution to the Section 401(k) plan of $6,080, the value of insurance premiums paid by the Company for term life insurance equal to $48, the vested match made to Mr. Yeager’s account in our original Deferred Compensation Plan equal to $9,404 and the match made to Mr. Yeager’s account in our current Deferred Compensation Plan equal to $13,800. Also represents Mr. Yeager’s personal use of our Company’s fractional airplane interests equal to $44,724.
(8) Represents our Company’s matching contribution to the Section 401(k) plan of $6,159, the value of insurance premiums paid by the Company for term life insurance equal to $48 and the match made to Ms. Pizzuto’s account in our current Deferred Compensation Plan equal to $9,000.
(9) Represents our Company’s matching contribution to the Section 401(k) plan of $6,193, the value of insurance premiums paid by the Company for term life insurance equal to $48, the vested match made to Mr. Marsh’s account in our original Deferred Compensation Plan equal to $7,500 and the match made to Mr. Marsh’s account in our current Deferred Compensation Plan equal to $9,000.
(10) Represents our Company’s matching contribution to the Section 401(k) plan of $6,253, the value of insurance premiums paid by the Company for term life insurance equal to $48, the vested match made to Mr. Kravas’s account in our original Deferred Compensation Plan equal to $6,750 and the match made to Mr. Kravas’s account in our current Deferred Compensation Plan equal to $9,000.
2009 GRANTS OF PLAN-BASED AWARDS
|
|
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
|
|
Estimated Future Payouts Under Equity Incentive Plan
Awards
|
|
All Other Stock Awards: Number of Shares of Stock or
|
|
All Other Option Awards: Number of Securities Underlying
|
|
Exercise or Base Price of Option Awards
|
|
Grant Date Fair Value of Stock and Option Awards
|
Name
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Units
(#)(2)
|
|
Options
(# )
|
|
($/Sh)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Yeager
|
1/2/2009
|
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
18,512 |
|
-- |
|
-- |
|
500,009 |
Mark A. Yeager
|
1/2/2009
|
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
16,661 |
|
-- |
|
-- |
|
450,014 |
Terri A. Pizzuto
|
1/2/2009
|
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
10,367 |
|
-- |
|
-- |
|
280,013 |
David L. Marsh
|
1/2/2009
|
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
8,331 |
|
-- |
|
-- |
|
225,020 |
Christopher R. Kravas
|
1/2/2009
|
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
-- |
|
8,331 |
|
-- |
|
-- |
|
225,020 |
(1) We do not have any multi-year non-equity incentive plan awards. Our non-equity incentive plan award is made on an annual basis based on a single year’s performance. Please see Footnote 2 to the Summary Compensation Table for a description of this plan.
(2) Restricted stock that vests ratably annually on the date of grant over five years.
Narrative Description for Summary Compensation and Grants of Plan-Based Awards Tables
On March 15, 2007, Ms. Pizzuto was appointed by the Board to the position of Executive Vice President, Chief Financial Officer and Treasurer. In connection with this promotion, and after considering compensation data provided by the Hay Group, the Compensation Committee approved, upon the recommendation of Hub’s CEO, an increase in Ms. Pizzuto’s base salary from $253,071 to $300,000 and an increase in her annual cash incentive target from $151,843 to $180,000. Ms. Pizzuto was also granted 2,004 shares of restricted stock on May 7, 2007 in connection with her promotion. These restricted shares had a value of $75,030 on the grant date. In late October 2007, Mr. Marsh was promoted to the position of Chief Marketing Officer. In connection with this promotion, the Compensation Committee
approved, upon the recommendation of Hub’s CEO, an increase in Mr. Marsh’s base salary from $283,894 to $300,000 and an increase in his annual cash incentive target from $170,336 to $180,000, pro-rated for 2007. In late October 2007, Mr. Kravas was promoted to the position of Chief Intermodal Officer. In connection with this promotion, the Compensation Committee approved, upon the recommendation of Hub’s CEO, an increase in Mr. Kravas’ base salary from $273,182 to $300,000 and an increase in his annual cash incentive target from $163,909 to $180,000, pro-rated for 2007. In October 2008, Mr. Mark Yeager was promoted to Vice Chairman and the Compensation Committee approved, effective January 1, 2009, an increase in his salary from $399,489 to $460,000 in connection with this promotion.
As part of the annual compensation package, our Compensation Committee grants restricted Class A Common Stock to our executive officers. These awards are generally based on merit and third party survey data.
In October 2006, our Compensation Committee agreed to keep the number of shares generally fixed for the 2006, 2007 and 2008 compensation packages so that executives, like stockholders, will be directly impacted by changes in our stock price. For 2009, the number of shares of restricted stock granted was determined with the help of our outside compensation consultant and was designed to be competitive using general market data and the Compensation Peer Group. The Compensation Committee expects to grant this fixed number of shares for three years (2009, 2010 and 2011).
These restricted shares are entitled to dividends to the same extent as ordinary shares, but the dividends are restricted to the same extent as the underlying security. Once the restricted stock vests, any dividends paid on that stock also vest.
We do not have employment agreements with our executive officers.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2009
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number
of
Securities Underlying Unexercised Options
(#)
|
|
Number of Securities Underlying Unexercised Options
(#)
|
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
|
|
Option Exercise Price
|
|
Option Expiration
|
|
Number of Shares or Units of Stock That Have Not Vested
|
|
Market Value of Shares or Units of Stock That Have Not Vested
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#) |
|
($)
|
|
Date
|
|
|
(#) |
|
($)
|
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Yeager
|
|
|
-- |
|
|
-- |
|
-- |
|
|
-- |
|
|
-- |
|
|
18,512
|
(1) |
|
495,936
|
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,553 |
(2) |
|
443,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,897 |
(3) |
|
184,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A. Yeager
|
|
|
-- |
|
|
-- |
|
-- |
|
|
-- |
|
|
-- |
|
|
16,661 |
(1) |
|
446,348 |
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,188 |
(2) |
|
380,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,912 |
(3) |
|
158,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terri A. Pizzuto
|
|
|
6,800 |
|
|
-- |
|
-- |
|
|
2.43 |
|
7/2/2012
|
|
|
10,367 |
(1) |
|
277,732 |
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,603 |
(2) |
|
257,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,333 |
(3) |
|
89,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
668 |
(4) |
|
17,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Marsh
|
|
|
-- |
|
|
-- -- |
|
-- -- |
|
|
-- |
|
|
-- |
|
|
8,331 |
(1) |
|
223,187 |
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,094 |
(2) |
|
190,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,941 |
(3) |
|
105,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher R. Kravas
|
|
|
-- |
|
|
-- |
|
-- |
|
|
-- |
|
|
-- |
|
|
8,331 |
(1) |
|
223,187 |
|
-- |
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,094 |
(2) |
|
190,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,956 |
(3) |
|
79,191 |
|
|
|
|
|
(1) Restricted stock remaining from a grant made on January 2, 2009 that vests ratably annually on the date of grant over five years.
(2) Restricted stock remaining from a grant made on January 2, 2008 that vests ratably annually on the date of grant over five years.
(3) Restricted stock remaining from a grant made on January 2, 2007 that vests ratably annually on the date of grant over three years.
(4) Restricted stock remaining from a grant made on May 7, 2007 that vests ratably annually on the date of grant over three years.
2009 OPTION EXERCISES AND STOCK VESTED
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
Shares
Acquired
on Exercise
|
|
Value Realized
On Exercise
|
|
|
Number of
Shares
Acquired
on Vesting
|
|
Value Realized
on Vesting
|
|
Name
|
|
|
(#) |
|
($)
|
|
|
|
(#) |
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Yeager
|
|
|
29,334 |
|
|
622,991 |
|
|
|
11,036 |
|
|
298,082 |
|
Mark A. Yeager
|
|
|
29,333 |
|
|
624,206 |
|
|
|
9,460 |
|
|
255,515 |
|
Terri A. Pizzuto
|
|
|
-- |
|
|
-- |
|
|
|
6,402 |
|
|
171,228 |
|
David L. Marsh
|
|
|
-- |
|
|
-- |
|
|
|
5,715 |
|
|
154,362 |
|
Christopher R. Kravas
|
|
|
12,000 |
|
|
276,521 |
|
|
|
4,730 |
|
|
127,757 |
|
2009 NONQUALIFIED DEFERRED COMPENSATION
Original Deferred Compensation Plan
|
|
Executive Contributions in Last FY
|
|
|
Registrant Contributions in Last FY
|
|
|
Aggregate Earnings in Last FY
|
|
|
Aggregate Withdrawals/
Distributions
|
|
|
Aggregate Balance
at Last
FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Yeager
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Mark A. Yeager
|
|
|
-- |
|
|
|
-- |
|
|
|
98,587 |
|
|
|
-- |
|
|
|
1,090,650 |
|
Terri A. Pizzuto
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
David L. Marsh
|
|
|
-- |
|
|
|
-- |
|
|
|
12,289 |
|
|
|
-- |
|
|
|
147,826 |
|
Christopher R. Kravas
|
|
|
-- |
|
|
|
-- |
|
|
|
3,564 |
|
|
|
-- |
|
|
|
46,504 |
|
(1) That portion of the interest that is above market is included in Change in Pension Value and Nonqualified Deferred Compensation Earnings in the Summary Compensation Table.
(2) The amount of compensation in the aggregate balance that was reported as compensation in the 2009 Summary Compensation Table is $59,289 for Mr. Mark Yeager, $13,718 for Mr. Marsh and $8,553 for Mr. Kravas. The amount of compensation in the aggregate balance that was reported as compensation in the 2008 Summary Compensation Table is $29,560 for Mr. David Yeager, $60,527 for Mr. Mark Yeager, $10,916 for Mr. Marsh and $1,876 for Mr. Kravas. The amount of compensation in the aggregate balance that was reported as compensation in the 2007 Summary Compensation Table is $65,779 for Mr. David Yeager, $43,072 for Mr. Mark Yeager and $11,696 for Mr. Marsh.
Current Deferred Compensation Plan
|
|
Executive Contributions in Last FY
|
|
|
Registrant Contributions in Last FY
|
|
|
Aggregate Earnings in Last FY
|
|
|
Aggregate Withdrawals/
Distributions
|
|
|
Aggregate Balance
at Last
FYE
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Yeager
|
|
|
237,144 |
|
|
|
17,246 |
|
|
|
625,927 |
|
|
|
-- |
|
|
|
2,175,993 |
|
Mark A. Yeager
|
|
|
116,938 |
|
|
|
13,800 |
|
|
|
137,576 |
|
|
|
-- |
|
|
|
619,079 |
|
Terri A. Pizzuto
|
|
|
30,000 |
|
|
|
9,000 |
|
|
|
30,008 |
|
|
|
-- |
|
|
|
181,444 |
|
David L. Marsh
|
|
|
55,935 |
|
|
|
9,000 |
|
|
|
50,031 |
|
|
|
-- |
|
|
|
295,904 |
|
Christopher R. Kravas
|
|
|
37,380 |
|
|
|
9,000 |
|
|
|
44,495 |
|
|
|
-- |
|
|
|
242,046 |
|
(1) Executive contributions are included in Salary in the Summary Compensation Table.
(2) Our Company contributions are a match made subject to a cliff vesting requirement as more fully explained below. Our Company contributions are included in All Other Compensation in the Summary Compensation Table.
(3) None of these earnings are included in the Summary Compensation Table as these are earnings on investments made in various commonly available investment vehicles.
(4) The amount of compensation in the aggregate balance that was reported as compensation in the 2009 Summary Compensation Table is $254,390 for Mr. David Yeager, $130,738 for Mr. Mark Yeager, $39,000 for Ms. Pizzuto, $64,935 for Mr. Marsh and $46,380 for Mr. Kravas. The amount of compensation in the aggregate balance that was reported as compensation in the 2008 Summary Compensation Table is $346,379 for Mr. David Yeager, $126,346 for Mr. Mark Yeager, $40,154 for Ms. Pizzuto, $119,090 for Mr. Marsh and $56,247 for Mr. Kravas. The amount of compensation in the aggregate balance that was reported as compensation in the 2007 Summary Compensation Table is $333,144 for Mr. David Yeager, $141,722 for Mr. Mark Yeager, $37,737 for Ms. Pizzuto and $51,956 for Mr. Marsh.
We maintain two non-qualified deferred compensation plans. Our Compensation Committee adopted our first plan with an effective date of January 1, 2000 (the “Original Plan”). We allowed a select group of management and highly compensated employees to make contributions to our Original Plan through 2004. Our Compensation Committee adopted a new non-qualified deferred compensation plan effective January 1, 2005 (the “Current Plan”). We allowed a select group of management and highly compensated employees to make contributions to our Current Plan beginning in 2005.
Our Original Plan is not funded and provides for a fixed rate of return on our employees’ deferrals and any match by our Company. We provided participants with a fixed rate of return of 10% for contributions made in 2000 and 2001 and 8% for contributions made in 2002, 2003 and 2004. Participating employees could contribute up to 15% of their cash compensation under the Original Plan. The Original Plan also included a match by our Company. The match is equal to 50% of the first 6% of contributions to the plan with a maximum match equivalent to 3% of base salary. The match is subject to a five year cliff vest measured from the date of the contribution. For example, if the employee made a contribution in 2000, the match vested if the employee was still employed on January 1, 20
05. Subject to certain exceptions, we also pay interest on the match at the same rate as the interest paid on the employees’ contribution. The interest on the match is subject to forfeiture if the underlying match is forfeited and vests when our match vests. Any deferral, including the match and all interest, made under the Original Plan will be paid out upon the earlier of (i) the termination of such employee’s employment or (ii) the payout date originally selected by the employee.
Our Current Plan is funded and does not provide for a fixed rate of return. Each participating employee selects from a range of investment options. We then provide an investment return equal to the return from the selected investment options. The investment options which may be selected by the participating employees track commonly available investment vehicles, including mutual funds, bond funds and money market funds. Participating employees can contribute up to 50% of their salary and up to 100% of their annual cash incentive under the Current Plan.
The Current Plan also includes a match by our Company. The match is equal to 50% of the first 6% of contributions to the plan with a maximum match equivalent to 3% of base salary. The match for 2005, 2006 and 2007 has vested. The match for contributions made starting January 1, 2008 and future years will vest over three years on a cliff basis. For example, an employee who contributed to the Current Plan in 2008 received a match in early 2009 that will vest on January 1, 2011. The Company match, if vested, and earnings thereon, is paid out seven months after separation from service in either a lump sum or over a period of up to ten years, at the employee’s election. The employee’s contributions, and earnings thereon, are paid out upon separation from service
or at a predetermined date and may be paid out in a lump sum or over a period of up to ten years. The match is subject to forfeiture if the participant leaves the Company and goes to work for a competitor.
Potential Payouts Upon Termination or Change of Control
As required, in the following section we disclose the amount that would have been earned by our named executive officers due to the vesting of our performance units assuming a change of control on December 31, 2009.
David P. Yeager, Chairman and CEO
Change of Control
Mr. Yeager has been granted various awards of restricted stock under our Long-Term Incentive Plans. Pursuant to his award agreements, this restricted stock vests upon a change of control. As of December 31, 2009, Mr. Yeager owned 41,962 shares of restricted stock. Assuming the triggering event took place on the last business day of 2009, the value of the restricted stock would be $1,124,162.
Mr. Yeager is a participant in our Current Deferred Compensation Plan. Our Current Plan provides for the vesting of the Company match and any earnings thereon upon a change of control. Assuming a change of control as defined under this plan occurred on December 31, 2009, a total of $43,140 worth of Company matching contributions and interest or earnings thereon would have vested.
Mark A. Yeager, Vice Chairman, President and COO
Change of Control
Mr. Yeager has been granted various awards of restricted stock under our Long-Term Incentive Plans. Pursuant to his award agreements, this restricted stock vests upon a change of control. As of December 31, 2009, Mr. Yeager owned 36,761 shares of restricted stock. Assuming the triggering event took place on the last business day of 2009, the value of the restricted stock would be $984,827.
Mr. Yeager is a participant in our Current Deferred Compensation Plan. Our Current Plan provides for the vesting of the Company match and any earnings thereon upon a change of control. Assuming a change of control as defined under this plan occurred on December 31, 2009, a total of $30,598 worth of Company matching contributions and interest or earnings thereon would have vested.
Terri A. Pizzuto, Executive Vice President, Treasurer and CFO
Change of Control
Ms. Pizzuto has been granted various awards of restricted stock under our Long-Term Incentive Plans. Pursuant to her award agreements, this restricted stock vests upon a change of control. As of December 31, 2009, Ms. Pizzuto owned 23,971 shares of restricted stock. Assuming the triggering event took place on the last business day of 2009, the value of the restricted stock would be $642,183.
Ms. Pizzuto is a participant in our Current Deferred Compensation Plan. Our Current Plan provides for the vesting of the Company match and any earnings thereon upon a change of control. Assuming a change of control as defined under this plan occurred on December 31, 2009, a total of $20,917 worth of Company matching contributions and interest or earnings thereon would have vested.
David L. Marsh, Chief Marketing Officer
Change of Control
Mr. Marsh has been granted various awards of restricted stock under our Long-Term Incentive Plans. Pursuant to his award agreements, this restricted stock vests upon a change of control. As of December 31, 2009, Mr. Marsh owned 19,366 shares of restricted stock. Assuming the triggering event took place on the last business day of 2009, the value of the restricted stock would be $518,815.
Mr. Marsh is a participant in our Current Deferred Compensation Plan. Our Current Plan provides for the vesting of the Company match and any earnings thereon upon a change of control. Assuming a change of control as defined under this plan occurred on December 31, 2009, a total of $18,043 worth of Company matching contributions and interest or earnings thereon would have vested.
Christopher R. Kravas, Chief Intermodal Officer
Change of Control
Mr. Kravas has been granted various awards of restricted stock under our Long-Term Incentive Plans. Pursuant to his award agreements, this restricted stock vests upon a change of control. As of December 31, 2009, Mr. Kravas owned 18,381 shares of restricted stock. Assuming the triggering event took place on the last business day of 2009, the value of the restricted stock would be $492,427.
Mr. Kravas is a participant in our Current Deferred Compensation Plan. Our Current Plan provides for the vesting of the Company match and any earnings thereon upon a change of control. Assuming a change of control as defined under this plan occurred on December 31, 2009, a total of $20,687 worth of Company matching contributions and interest or earnings thereon would have vested.
Definition of “Change of Control”
For purposes of the foregoing discussion, a change of control is defined as a change in the beneficial ownership of the Company’s voting stock or a change in the composition of the Board which occurs as follows: (i) Any “person” (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) who is not as of the date of this grant but later becomes a beneficial owner, directly or indirectly, of stock of the Company representing 30 percent or more of the total voting power of the Company’s then outstanding stock; or (ii) A tender offer (for which a filing has been made with the SEC which purports to comply with the requirements of Section 14(d) of the Exchange Act and the corresponding SEC rules) is made for the stock of the Company, which has not been negoti
ated and approved by the Board. In case of a tender offer described in this paragraph, the change in control will be deemed to have occurred upon the first to occur of (A) any time during the offer when the person (using the definition in (i) above) making the offer owns or has accepted for payment stock of the Company with 25 percent or more of the total voting power of the Company’s stock, or (B) three business days before the offer is to terminate unless the offer is withdrawn first, if the person making the offer could own, by the terms of the offer plus any shares owned by this person, stock with 50 percent or more of the total voting power of the Company’s stock when the offer terminates; or (iii) Individuals who were the Board’s nominees for election as directors of the Company immediately prior to a meeting of the stockholders of the Company involving a contest for the election of directors shall not constitute a majority of the Board following the election.
The following table sets forth a summary of the compensation for services rendered to the Company for the fiscal year ended December 31, 2009 for the Company’s independent directors.
|
|
Fees Earned or
Paid in
Cash
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary D. Eppen
|
|
|
60,000 |
|
|
|
108,040 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,800(2) |
|
|
|
169,840 |
|
Charles R. Reaves
|
|
|
60,000 |
|
|
|
108,040 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
--- |
|
|
|
168,040 |
|
Martin P. Slark
|
|
|
60,000 |
|
|
|
108,040 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
--- |
|
|
|
168,040 |
|
(1) Consists of the aggregate grant date fair value of restricted stock awards made by our Company in 2009 in accordance with FASB Statement No. 123(R). The amounts expensed in 2009 in accordance with FASB Statement No. 123(R) with respect to restricted stock awards made by our Company each with a vesting period of three years are $99,073 for Messrs. Eppen, Reaves and Slark.
(2) Mr. Eppen contributed to our Deferred Compensation Plan in 2009 and received a match of $1,800 for 2009.
Messrs. Eppen, Reaves and Slark each have 1,182 shares of restricted stock remaining from a grant made on January 2, 2007 that vests ratably over three years, 2,365 shares of restricted stock remaining from a grant made on January 2, 2008 that vests ratably over three years and 4,000 shares of restricted stock remaining from a grant made on January 2, 2009 that vests ratably over three years. Mr. Reaves and Mr. Eppen have no options and Mr. Slark has 24,000 exercisable options.
Directors who are not our employees received $60,000 for serving as a director during 2009. Directors who are our employees do not receive additional compensation for such services. Both employee and non-employee directors are reimbursed for their travel and other expenses incurred in connection with attending meetings of the Board of Directors or committees thereof. In connection with their 2009 compensation package, on January 2, 2009, Messrs. Eppen, Reaves and Slark each received a grant of 4,000 shares of restricted Class A Common Stock with a value on the date of grant of $108,040. This restricted stock vests ratably over a three-year period.
Transactions with Related Persons
We paid Systems Delivery, Inc., solely owned by Mr. Timothy Wood, who is the brother-in-law of Mr. Mark Yeager, approximately $69,000.00 in 2009 to provide information technology consulting services. Following the expiration of the Systems Delivery arrangement, on September 14, 2009, we hired Mr. Wood to serve as the Company's Vice President of Applications Development. As an employee, Mr. Wood was paid $53,333 for 2009 in salary and bonuses. These transactions were approved in advance by our Nominating and Governance Committee.
Audit Committee Report
Management has primary responsibility for the Company’s internal control and financial reporting process, and for making an assessment of the effectiveness of the Company’s internal control over financial reporting. Ernst & Young LLP is responsible for performing an independent audit of the Company’s (i) consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and (ii) the Company’s internal control over financial reporting and to issue an opinion on those financial statements and internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes.
The Audit Committee has reviewed and discussed the Company’s quarterly and annual audited financial statements with management and with Ernst & Young LLP, the Company’s independent public accountants. The Company has also discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, as adopted by the Auditing Standards Board of the American Institute of Certified Public Accountants. The Audit Committee has also received from Ernst & Young LLP the written communication and the letter required by applicable requirements of the PCAOB regarding Ernst & Young LLP’s communication with the Audit Committee concerning independence.
The Audit Committee has discussed with Ernst & Young LLP their independence and considered whether the provision of non-audit services referred to under “Independent Public Accountants” on page 29 is compatible with maintaining their independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the December 31, 2009 audited financial statements be included in the Company’s Annual Report on Form 10-K for 2009.
AUDIT COMMITTEE
Gary D. Eppen, Chairman
Charles R. Reaves
Martin P. Slark
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected Ernst & Young LLP as the independent accountant of the Company. Representatives of Ernst & Young LLP will be present at the Annual Meeting and will be given the opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
The fees billed by Ernst & Young in 2008 and 2009 for services provided to us were as follows:
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
Audit Fees (1)
|
|
$ |
805,328 |
|
|
$ |
807,367 |
|
Audit-Related Fees (2)
|
|
|
-- |
|
|
|
-- |
|
Tax Fees (3)
|
|
|
-- |
|
|
|
-- |
|
All Other Fees (4)
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$ |
805,328 |
|
|
$ |
807,367 |
|
|
|
|
|
|
|
|
|
|
(1) “Audit Fees” are the aggregate fees billed by Ernst & Young for professional services rendered for the audit of the Company’s annual financial statements for the years ended December 31, 2009 and December 31, 2008, the audit of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 and December 31, 2008, the reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q during 2009 and 2008, and consultation with respect to various accounting and financial reporting matters during 2009 and 2008.
(2) “Audit-related fees” include fees billed for assurance and related services that are reasonably related to the performance of the audit and not included in the “audit fees” described above.
(3) “Tax Fees” are fees for tax services billed by Ernst & Young .
(4) “All Other Fees” are fees billed by Ernst & Young in 2009 or 2008 that are not included in the above classifications.
The Audit Committee must pre-approve any audit or any permissible non-audit services to be provided by the Company’s independent auditors, and has established pre-approval policies and procedures for such services. Permissible non-audit services are those allowed under the regulations of the Securities and Exchange Commission. The Audit Committee may approve, at the beginning of each year, certain specific categories of permissible non-audit services within an aggregated budgeted dollar limit. The Audit Committee must approve on a project-by-project basis any permissible non-audit services that do not fall within a pre-approved category, or pre-approved permissible non-audit services that exceed the previously approved fees. All services provided by Ernst & Young during 2009 were approved by the Audit Committee and were permiss
ible under applicable laws and regulations and will continue to be pre-approved by the Audit Committee.
PROXY SOLICITATION EXPENSE
The Company will pay the expense of any proxy solicitation. In addition to the solicitation of proxies by use of the mail, solicitation also may be made by telephone, telegraph or personal interview by directors, officers, and regular employees of the Company, none of whom will receive additional compensation for any such solicitation. The Company will, upon request, reimburse brokers, banks, and similar organizations for out-of-pocket and reasonable clerical expenses incurred in forwarding proxy material to their principals.
STOCKHOLDER PROPOSALS
Proposals of stockholders must be received in writing by the Secretary of the Company at the principal executive offices of the Company no later than November 25, 2010, in order to be considered for inclusion in the Company’s proxy statement and form of proxy relating to the next annual meeting of stockholders.
The Company anticipates that its next annual meeting of stockholders will be held in May 2011. If a stockholder desires to submit a proposal for consideration at the next annual meeting of stockholders, written notice of such stockholder’s intent to make such a proposal must be given and received by the Secretary of the Company at the principal executive offices of the Company either by personal delivery or by United States mail no earlier than February 5, 2011 nor later than March 7, 2011. Each notice must describe the proposal in sufficient detail for the proposal to be summarized on the agenda for the annual meeting of stockholders and must set forth: (i) the name and address, as it appears on the books of the Company, of the stockholder who intends to make the proposal; (ii) a representation tha
t the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at such meeting to present such proposal; and (iii) the class and number of shares of the Company which are beneficially owned by the stockholder. In addition, the notice must set forth the reasons for conducting such proposed business at the annual meeting of stockholders and any material interest of the stockholder in such business. The presiding officer of the annual meeting of stockholders will, if the facts warrant, refuse to acknowledge a proposal not made in compliance with the foregoing procedure, and any such proposal not properly brought before the annual meeting of stockholders will not be considered.
|
By order of the Board of Directors, |
|
|
|
|
|
|
By:
|
/s/ David C. Zeilstra |
|
|
|
Name: DAVID C. ZEILSTRA |
|
|
|
Title: Vice President, Secretary and General Counsel |
|
|
|
|
|
Downers Grove, Illinois
March 25, 2010
Each stockholder, whether or not he or she expects to be present in person at the Annual Meeting, is requested to MARK, SIGN, DATE, and RETURN THE ENCLOSED PROXY in the accompanying envelope as promptly as possible. A stockholder may revoke his or her proxy at any time prior to voting.
HUB GROUP, INC.
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders to be held on May 6, 2010
The undersigned appoints David P. Yeager and Mark A. Yeager, or either of them, proxies for the undersigned, each with full power of substitution, to attend the Annual Meeting of Stockholders of Hub Group, Inc., to be held on May 6, 2010 at 10:00 a.m., Chicago time, and at any adjournments or postponements of the Annual Meeting, and to vote as specified in this Proxy all of the Class A Common Stock of the Company which the undersigned would be entitled to vote if personally present. This Proxy when properly executed will be voted in accordance with your indicated directions. If no direction is made, this Proxy will be voted FOR the election of each of the nominees for the Board of Directors.
The Board of Directors recommends a vote FOR the election of each of the nominees for the Board of Directors.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
HUB GROUP, INC.
May 6, 2010
NOTICE OF INTERNET AVALABILTY OF PROXY MATERIAL:
The Annual Report to Stockholders, Notice of Meeting, Proxy Statement and Proxy Card
are available at www.hubgroup.com/proxy.html
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE PROPOSALS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE X
1. Election of Directors
Nominees:
___ David P. Yeager
___ Mark A. Yeager
___ Gary D. Eppen
___ Charles R. Reaves
___ Martin P. Slark
___ For All Nominees
___ Withhold Authority For All Nominees
___ For All Except (see instructions below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to withhold, as shown here: X
The undersigned hereby acknowledges receipt of the Proxy Statement and Form 10-K.
Signature of Stockholder________________________Date ______Signature of Stockholder_____________________Date________
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.