UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the Appropriate Box:
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14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material under ss.240.14a-12
HEARTLAND EXPRESS, INC.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
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paid previously. Identify the previous filing by registration statement
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HEARTLAND EXPRESS, INC.
901 North Kansas Avenue
North Liberty, Iowa 52317
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 2009
Dear Fellow Stockholders:
The 2009 Annual Meeting of Stockholders (the "Annual Meeting") of Heartland
Express, Inc., a Nevada corporation (the "Company"), will be held at The Holiday
Inn Conference Center, 1220 First Avenue, Coralville, Iowa, 52241, at 8:00 a.m.
local time, on Thursday, May 7, 2009, for the following purposes:
1. To consider and act upon a proposal to elect six (6) directors of the
Company; and
2. Ratify the appointment of KPMG LLP as Heartland Express, Inc.'s
independent registered public accounting firm for the fiscal year
ending December 31, 2009; and
3. To consider and act upon such other matters as may properly come
before the Annual 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 10, 2009,
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.
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Important Notice Regarding the Availability of Proxy Materials
for the Meeting of Stockholders to Be Held on May 7, 2009
-------------------------------------------------------------------------
Pursuant to the rules promulgated by the Securities and Exchange Commission, we
have elected to provide access to our proxy materials both by: (i) sending you
this full set of proxy materials, including a proxy card; and (ii) notifying you
of the availability of our proxy materials on the internet. This Notice of
Meeting, Proxy Statement, and our Annual Report to Stockholders for the fiscal
year ended December 31, 2008, are available online and may be accessed at
www.eproxyaccess.com/htld. In accordance with such new rules, we do not use
"cookies" or other software that identifies visitors accessing these materials
on this website. "We encourage you to access and review all of the important
information contained in the proxy materials before voting."
To obtain directions to the Annual Meeting, please call Thomas Hill at (319)
626-3600.
By Order of the Board of Directors,
Russell A. Gerdin
Chairman of the Board
North Liberty, Iowa 52317
March 25, 2009
HEARTLAND EXPRESS, INC.
901 North Kansas Avenue
North Liberty, Iowa 52317
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 2009
This Proxy Statement is furnished in connection with the solicitation of
proxies from the stockholders of Heartland Express, Inc., a Nevada corporation
(the "Company"), to be voted at the 2009 Annual Meeting of Stockholders of the
Company (the "Annual Meeting"), which will be held at The Holiday Inn Conference
Center, 1220 First Avenue, Coralville, Iowa 52241, on Thursday, May 7, 2009, at
8:00 a.m. local time, and any adjournment thereof. THE ENCLOSED PROXY IS
SOLICITED BY OUR BOARD OF DIRECTORS. All costs of the solicitation will be borne
by the Company. The approximate date of mailing this Proxy Statement and the
enclosed form of proxy is March 25, 2009.
PROXIES AND VOTING
Only stockholders of record at the close of business on March 10, 2009
("Stockholders") are entitled to vote, either in person or by valid proxy, at
the Annual Meeting. On the record date of March 10, 2009, the Company had
90,688,621 shares of $0.01 par value common stock issued and outstanding. Each
share is entitled to one vote. The Company has no other class of stock
outstanding. Stockholders are not entitled to cumulative voting in the election
of directors.
All proxies that are properly executed and received by the Company prior to
the Annual Meeting will be voted in accordance with the choices indicated unless
timely revoked. Any Stockholder may be represented and may vote at the Annual
Meeting by a proxy or proxies appointed by an instrument in writing. In the
event that any such instrument in writing shall designate two (2) or more
persons to act as proxies, a majority of such persons present at the meeting
shall have and may exercise, or, if only one shall be present, then that one
shall have and may exercise, all of the powers conferred by such written
instrument upon all of the persons so designated unless the instrument shall
otherwise provide. No such proxy shall be valid after the expiration of six (6)
months from the date of its execution, unless coupled with an interest or unless
the person executing it specifies therein the length of time for which it is to
continue in force, which in no case shall exceed seven (7) years from the date
of its execution. Any Stockholder giving a proxy may revoke it at any time prior
to its use at the Annual Meeting by filing with the Secretary of the Company a
revocation of the proxy, by delivering to the Company a duly executed proxy
bearing a later date, or by attending the meeting and voting in person.
Other than the election of directors, which requires a plurality of the
votes cast, any matters submitted to the Stockholders will require the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter, only
those cast "For" or "Against" are included. If no direction is specified by the
Stockholder, the proxy will be voted "For" the proposals specified in this Proxy
Statement, and at the discretion of the proxy holders, 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.
1
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, the Stockholders will elect six (6) directors to
serve as the Board of Directors until the 2010 Annual Meeting of Stockholders or
until their successors are duly elected and qualified. The Company currently has
six directors: Russell A. Gerdin, Richard O. Jacobson, Dr. Benjamin J. Allen,
Michael J. Gerdin, Lawrence D. Crouse and James G. Pratt. In the absence of
contrary instructions, each proxy will be voted for the election of each of the
existing directors.
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, Heartland
Express, Inc. of Iowa, an Iowa corporation. The Board of Directors elects all
executive officers annually.
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DIRECTOR
NAME AGE POSITION SINCE
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Russell A. Gerdin 67 Chairman of the Board and
Chief Executive Officer 1978
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Michael J. Gerdin 39 Director and President 1996
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Richard O. Jacobson 72 Director 1994
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Dr. Benjamin J. Allen 62 Director 1995
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Lawrence D. Crouse 68 Director 1999
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James G. Pratt 60 Director 2006
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John P. Cosaert 61 Executive Vice President of Finance
and Treasurer N/A
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Richard L. Meehan 63 Executive Vice President of Marketing
and Operations N/A
--------------------------------------------------------------------------------
Thomas E. Hill 55 Vice President, Controller,
and Secretary N/A
--------------------------------------------------------------------------------
Russell A. Gerdin has served as the Company's Chief Executive Officer since
1978 and Chairman of the Board since 1986. Mr. Russell Gerdin served as
President of the Company from 1978 to May 2006. Russell A. Gerdin is the father
of Michael J. Gerdin.
Michael J. Gerdin has served as President of the Company since May of 2006
and as a director since 1996. Mr. Michael Gerdin served as the Company's Vice
President of Regional Operations from January 2001 until May 2006. In addition
he previously served as President of A & M Express, Inc., a wholly-owned
subsidiary of the Company, from September 1998 through December 2000. From July
1997 to September 1998, Mr. Michael Gerdin coordinated the operations
departments of Heartland Express and A & M Express. From 1992 until July 1997,
Mr. Michael Gerdin held a variety of positions within the Company, including
positions in the operations, sales, safety, and driver recruiting departments.
Michael J. Gerdin is the son of Russell A. Gerdin.
2
Richard O. Jacobson has served as a director since 1994 and is Chairman of
the Nominating Committee and a member of the Audit and Compensation Committees.
Mr. Jacobson served as Chairman from October 1998 to June 2007, and served as
President and Chief Executive Officer from 1968 to October 1998, of Jacobson
Warehouse Company, Inc. and Jacobson Transportation Company, Inc., Des Moines,
Iowa.
Dr. Benjamin J. Allen has served as a director since 1995 and is Chairman
of the Compensation Committee and a member of the Audit and Nominating
Committees. Dr. Allen is currently the President of the University of Northern
Iowa, a position he assumed in June of 2006. Dr. Allen was the Vice President
for Academic Affairs and Provost at Iowa State University in Ames, Iowa from
2002 through May 2006. He also served as a Distinguished Professor in Business
at Iowa State University, a position to which he was originally appointed in
1988. In addition, Dr. Allen served as Dean of the College of Business at Iowa
State University from 1994 to 2001 and as the Interim Vice President for
External Affairs of Iowa State University in 2001 and 2002. Dr. Allen was a
Brookings Economics Fellow in the Office of Transportation Regulatory Policy of
the United States Department of Transportation from 1976 to 1977. Dr. Allen
served as Chair of the Committee for the Study of Freight Capacity for the Next
Century for the National Academy of Sciences in 2001 and 2002.
Lawrence D. Crouse has served as a director from 1986 to 1991 and from 1999
to present. Mr. Crouse is a member of the Audit, Compensation, and Nominating
Committees. He served as the Chairman of the Audit Committee until August 2006.
Mr. Crouse is a business consultant and the President of Oak Creek Ranch, LLC, a
real estate holding company with operations in several states. Mr. Crouse served
as Chairman and CEO of Crouse Cartage Company, a regional, less-than-truckload
carrier based in Carroll, Iowa, from 1987 to December 1996 and as its Vice
Chairman from January 1997 to May 1998. Crouse Cartage was a subsidiary of
Transfinancial Holdings, Inc., a publicly traded company. Mr. Crouse served as
Vice President and a director of Transfinancial Holdings, Inc. from 1991 until
May 1998. He is the trustee of a trust for the benefit of Russell Gerdin's
children, and voting trustee for a Grantor Retained Annuity Trust for the
benefit of Ann Gerdin.
James G. Pratt has served as a director since June 2006 and is Chairman of
the Audit Committee and is a member of the Compensation and Nominating
Committees. Mr. Pratt is a Senior Vice President and Chief Financial Officer of
Hills Bank and Trust Company in Hills, Iowa, positions he has held since 1986.
In addition, he has served as the Treasurer of Hills Bancorporation, an SEC
reporting one-bank holding company, since 1983 and Secretary of Hills
Bancorporation since 2004. Mr. Pratt is a certified public accountant and
previously was employed by Ernst & Ernst, now Ernst & Young, and McGladrey &
Pullen, now RSM McGladrey, prior to joining Hills Bank and Trust Company in
1982.
John P. Cosaert has served as the Company's Executive Vice President of
Finance since April 1996. From 1986 to April 1996 he served as Vice President of
Finance and Treasurer of the Company.
Richard L. Meehan has served as the Company's Executive Vice President of
Marketing and Operations since April 1996. From 1986 to April 1996 he served as
Vice President of Marketing of the Company.
Thomas E. Hill has served as the Company's Vice President and Controller
since April 1996 and as the Company's Secretary since May 2006. Mr. Hill has
served in the Company's accounting department since June 1983.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 1.
3
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
Meetings and Director Compensation
The Board of Directors of the Company meets on a regularly scheduled basis.
The Board of Directors held a total of four meetings during the last fiscal
year, all of which were regularly scheduled meetings. Each of the directors
attended 75% or more of the meetings of the Board of Directors and the meetings
held by all of the committees of the Board on which he served. The Company has
no formal policy regarding attendance by its directors at annual stockholders
meetings. All directors have historically attended those meetings, and all but
one of the six of the then-current directors were present at the 2008 annual
meeting of stockholders.
Independent Directors
Of the six members currently serving on the Board of Directors, the Board
has determined that Lawrence D. Crouse, Richard O. Jacobson, Dr. Benjamin J.
Allen, and James G. Pratt are "independent directors" as defined in the rules of
the National Association of Securities Dealers, Inc. ("NASD") and also meet the
additional independence standards and other requirements for audit committee
membership set forth by NASD and Securities and Exchange Commission ("SEC")
rules.
Committees of the Board and Other Corporate Governance Matters
The Board of Directors has a standing Audit Committee, Compensation
Committee, and Nominating Committee. All three committees are composed of
independent directors.
Audit Committee. The Audit Committee presently consists of James G. Pratt
(Chairman), Lawrence D. Crouse, Dr. Benjamin J. Allen, and Richard O. Jacobson,
all of which satisfy the independence and audit committee membership criteria of
the NASD. The Board has determined that James G. Pratt qualifies as an "audit
committee financial expert," as defined by the SEC and NASD rules. The Audit
Committee's primary duties include maintaining communication between the Board
of Directors, the Company's independent registered public accounting firm and
the Company's executive officers and accounting personnel with respect to the
Company's financial affairs in general, including financial statements and
audits, the adequacy and effectiveness of the internal accounting controls and
systems and the retention and termination of the independent registered public
accounting firm. The Audit Committee also reviews quarterly financial and
operating results of the Company, through meetings and conference calls, with
the management, independent registered public accounting firm, and, when
appropriate, the securities counsel for the Company. The Board has adopted a
charter for the Audit Committee, which sets forth the purpose and
responsibilities of the Audit Committee in greater detail. A copy of the charter
is available on the Company's website at www.heartlandexpress.com. The Audit
Committee met seven times during fiscal year 2008.
Compensation Committee. The Compensation Committee presently consists of
independent directors Dr. Benjamin J. Allen (Chairman), Richard O. Jacobson,
James G. Pratt, and Lawrence D. Crouse. The primary responsibilities of the
Compensation Committee are to review the compensation policies of the Company
and to periodically make salary recommendations to the Board of Directors for
all elected officers. The Board has adopted a charter for the Compensation
Committee, which sets forth the purpose and responsibilities of the Compensation
Committee in greater detail. A copy of the charter is available on the Company's
website at www.heartlandexpress.com. The Compensation Committee met one time
during fiscal year 2008. See "Compensation Discussion and Analysis - Overview"
for a description of the functions of the Compensation Committee.
4
Nominating Committee. The Nominating Committee presently consists of
independent directors Richard O. Jacobson (Chairman), Lawrence D. Crouse, James
G. Pratt, and Dr. Benjamin J. Allen. The Nominating Committee met one time
during fiscal year 2008. The primary responsibilities of the Nominating
Committee are to identify and recommend to the Board for nomination individuals
qualified to serve as directors. The Nominating Committee will consider
recommendations from many sources, including stockholders, regarding possible
director candidates. Guidelines regarding the qualifications of candidates for
directors, including stockholder proposed candidates, insofar as they apply to
non-employees, generally favor individuals who have managed relatively large,
complex business, educational, or other organizations or who, in a professional
or business capacity, are accustomed to dealing with complex business or
financial problems. In addition to these guidelines, the Committee will also
evaluate whether the candidate's skills are complementary to the existing Board
members' skills, and the Board's needs for operational, management, financial,
and other expertise. With regard to specific qualities and skills, the
Nominating Committee believes it necessary that: (i) at least a majority of the
members of the Board of Directors qualify as independent under NASD Rules; (ii)
at least three members of the Board of Directors satisfy the additional
independence and other requirements for audit committee membership; and (iii) at
least one member of the Board of Directors eligible to serve on the Audit
Committee has sufficient knowledge, experience, and training concerning
accounting and financial matters so as to qualify as an "audit committee
financial expert" within the meaning of applicable SEC and NASD rules. The Board
has adopted a charter for the Nominating Committee, which sets forth the purpose
and responsibilities of the Nominating Committee in greater detail. A copy of
the charter is available on the Company's website at www.heartlandexpress.com.
The Nominating Committee recommends that the Board of Directors nominate the six
directors named in this Proxy Statement for re-election at the Annual Meeting.
It is generally the policy of the Nominating and Corporate Governance Committee
to consider stockholder recommendations of proposed director nominees if such
recommendations are serious and timely received. Such recommendations should be
submitted to the Secretary of the Company at 901 North Kansas Avenue, North
Liberty, Iowa 52317, for consideration by the Nominating Committee at least 120
days prior to the first anniversary of the date of the proxy statement for the
prior year's Annual Meeting (by November 25, 2009 for director candidates to be
considered or nomination for election at the 2010 Annual Meeting). In addition,
any stockholder director nominee recommendation must include the following
information:
o the proposed nominee's name and qualifications and the reason for such
recommendation;
o the name and record address of the stockholder(s) proposing such
nominee;
o the number of shares of our common stock that are beneficially owned
by such stockholder(s); and
o a description of any financial or other relationship between the
stockholder(s) and such nominee or between the nominee and us or any
of our subsidiaries.
In order to be considered by the Board, any candidate proposed by one or
more stockholders will be required to submit appropriate biographical and other
information equivalent to that required of all other director candidates.
Stockholder Communications. Stockholders may send communications to any
director in writing by sending them to the director in care of the Secretary of
Heartland Express at 901 North Kansas Avenue, North Liberty, Iowa 52317. The
Secretary will forward all such written communications to the director to whom
it is addressed.
Code of Ethics. The Board of Directors has adopted a Code of Business
Conduct and Ethics for all employees and directors of the Company, and a Code of
Ethics for Senior Financial Officers, as recommended by the Audit Committee.
Such code constitutes a "code of ethics" within the meaning of Item 406(b) of
5
Regulation S-K. Copies of the codes are available on the Company's website at
www.heartlandexpress.com.
Compensation Committee Interlocks and Insider Participation
In 2008, our Compensation Committee was comprised of Richard O. Jacobson,
Dr. Benjamin J. Allen, James G. Pratt and Lawrence D. Crouse. No member of the
Compensation Committee is or has been an officer or employee of the Company, or
has or had any relationship with the Company requiring disclosure under Item 404
of SEC Regulation S-K. During 2008, none of our executive officers served as a
member of the board of directors or compensation committee (or other committee
performing equivalent functions) of any entity that had one or more executive
officers serving as a member of our Board of Directors.
All compensation decisions affecting the executive officers of the Company
are made by the Compensation Committee of the Board of Directors. The Committee
deliberates and votes upon the compensation to be paid to each of the five
executive officers. The Committee does take the guidance from the Company's
Chief Executive Officer concerning the compensation of executive officers (other
than the Chief Executive Officer).
Compensation Committee Report
"Report of the Compensation Committee." In performing its duties, the
Compensation Committee, as required by applicable rules and regulations
promulgated by the SEC, issues a report recommending to the Board of Directors
that our Compensation Discussion and Analysis be included in this Proxy
Statement. The Report of the Compensation Committee follows.
"The Report of the Compensation Committee shall not be deemed to be
incorporated by reference into any filing made by us under the Securities Act of
1933 or the Exchange Act, notwithstanding any general statement contained in any
such filings incorporating this Proxy Statement by reference, except to the
extent we incorporate such report by specific reference."
Report of the Compensation Committee
We have reviewed and discussed the Compensation Discussion and
Analysis contained in this Proxy Statement with management. Based on that
review and discussion, we have recommended to the Board of Directors that
the Compensation Discussion and Analysis be included in this Proxy
Statement.
By the Members of the Compensation Committee:
Dr. Benjamin J. Allen (Chairman)
Lawrence D. Crouse
Richard O. Jacobson
James G. Pratt
6
Compensation Discussion and Analysis
Overview
The Compensation Committee assists the Board of Directors in its
responsibilities relating to executive compensation and in fulfilling its
responsibilities relating to our compensation and benefit programs and policies.
The Compensation Committee may make recommendations with respect to our
compensation plans and reviews and approves the compensation of executive
officers. The Compensation Committee currently consists of three directors, all
of whom are independent under applicable NASD and SEC rules. The Compensation
Committee receives recommendations from our Chief Executive Officer regarding
the compensation of executive officers (other than the Chief Executive Officer).
Compensation Philosophy and Objectives
Our executive compensation policies are designed to achieve four primary
objectives:
o attract and retain well-qualified executives who will lead us and inspire
superior performance;
o provide incentives for achievement of corporate goals and individual
performance;
o provide incentives for achievement of long-term stockholder return; and
o align the interests of management with those of the stockholders to
encourage continuing increases in stockholder value.
Elements of Compensation
The components of compensation are intended to accomplish one or more of
the compensation objectives discussed above.
"Base Salary and Benefits". To attract and retain officers with exceptional
abilities and talent, annual base salaries are set to provide competitive levels
of compensation. The Compensation Committee considers each officer's
performance, current compensation, and responsibilities within our Company. The
Compensation Committee does not formally benchmark salary or total executive
compensation against the executive compensation of any other company or group of
companies. From time to time, the Compensation Committee has considered the form
and level of compensation disclosed by other publicly traded truckload carriers,
certain other transportation companies, and companies of similar size and market
capitalization in general. However, the Compensation Committee does not use a
peer group for compensation purposes. The Compensation Committee also considers
past individual performance and achievements when establishing base salaries.
"Annual Cash Bonus Incentives". Annual cash bonus incentives are sometimes
used to reward our employees. Past bonus plans have been based on the percentage
increase in growth of our fleet and revenue miles, and maintaining a certain
level of customer service. There were not any targets established for annual
cash bonuses and there were no cash bonuses paid during 2008 to Named Executive
Officers.
Longer-Term Equity-Based Incentives. A portion of potential career
compensation is also linked to corporate performance through equity-based
compensation awards, historically in the form of stock awards. Since going
public in 1986, our Chief Executive Officer has contributed shares of our common
7
stock from his personal holdings to two separate stock award plans. The most
recent plan was adopted in March 2002. The plan participants have included our
executive officers and other key personnel. The awarded stock has vested
incrementally over a five-year period. All stock awards for executive officers
were fully vested as of March 7, 2007.
Stock awards under our equity-based compensation plan are designed to:
o more closely align executive officer and stockholder interests;
o reward key employees for building stockholder value; and
o encourage long-term investment in the Company by participating officers.
Although we do not have specific stock ownership guidelines, the
Compensation Committee believes that stock ownership by management has been
demonstrated to be beneficial to stockholders.
We have never granted stock options and have no plans to do so in the
foreseeable future.
"Tuition Plan". We maintain a tuition award program for the children of
certain employees, including executive officers. Contributions to the program
are based upon our performance. During 2008, we contributed $591,000 to the
program, based upon 2007 performance. There were no payments to our executive
officers under the tuition award program in 2008.
"Retirement Plan". We have a qualified 401(k) savings plan that covers all
employees, except for highly-compensated employees as defined by Internal
Revenue code. None of our named executive officers participate in the forgoing
plan.
"Deferred Compensation Plan". We have a non-qualified deferred compensation
plan ("DC Plan") primarily for employees excluded from participation in our
qualified retirement plan due to being highly compensated employees as
determined by Internal Revenue limitations. The DC Plan is unfunded for tax
purposes and for purposes of ERISA. The named executive officers in this proxy
statement are eligible to participate in the DC Plan. Employer contributions to
the DC Plan are discretionary and subject to the approval of our Compensation
Committee. Participants may elect to defer up to 100% of their salary, including
any cash bonus, to the DC Plan. The election to defer compensation under the DC
Plan is irrevocable for each plan year as of the beginning of each plan year.
Participant contributions are made into a trust account for the purpose of
administering and providing for payment of the deferred compensation under this
plan. The investment of contributions are self-directed by participants within
an established array of money market, equity and fixed income mutual funds.
Investment in our common stock is prohibited under the DC Plan. We do not pay
interest or other earnings on the invested contributions. Earnings are generated
by the investments selected by the participants. The aggregate earnings on these
investments, by each named executive officer who is a participant in the DC
Plan, are included in the Nonqualified Deferred Compensation table and are
attributable to the specific investments selected by each participant.
Participants may change the designation of their investments at such times as
mutually agreed by the parties. As of December 31, 2008, participants could
change their investment designation on a daily basis. Participants elect in
advance of the deferral of their compensation when the funds will be
distributable. The aggregate vested balances of the participants are
distributable, as designated by each participant, when the following occur: the
participant's termination of employment; a change in control; or the
participant's death or disability. The DC Plan provides for distributions to be
made in either a lump sum amount or installments.
8
Compensation Paid to Our Named Executive Officers During 2008
A summary of the Compensation Committee's considerations for setting the
compensation for 2008, earned by, or paid to those persons who were, at December
31, 2008, (i) our Chief Executive Officer, (ii) our Chief Financial Officer, and
(iii) our three other most highly compensated executive officers with total
compensation exceeding $100,000 for the fiscal year ended December 31, 2008
(collectively, the "Named Executive Officers") are set forth below. The
Compensation Committee evaluates and sets the compensation of Mr. Russell
Gerdin, our Chief Executive Officer differently than it does our other executive
officers.
Compensation of Our Chief Executive Officer. Mr. Russell Gerdin receives a
base salary only, with no bonus or long-term incentives. The Compensation
Committee recognizes Mr. Russell Gerdin's substantial responsibility and
contribution to our operating performance, operating margin, revenue and net
income growth rates, and attainment of our goals, as well as his large
stockholdings. At Mr. Russell Gerdin's request, his salary has remained the same
since 1986, and he has never been paid a bonus. The Compensation Committee
believes that Mr. Russell Gerdin's salary is reasonable compared to similarly
situated executives, and that as a direct and indirect holder of approximately
42% of the Company's outstanding stock, Mr. Russell Gerdin receives an incentive
through appreciation in the market value of the Company's stock. Because of Mr.
Russell Gerdin's request, the Compensation Committee did not consider or
recommend an increase in annual compensation or any incentive compensation for
Mr. Russell Gerdin. Thus, the Company's performance directly affects Mr. Russell
Gerdin, but not in the form of salary or bonuses.
Compensation of Our Other Named Executive Officers. Our other Named
Executive Officers are compensated through a mix of salary and incentive
compensation. The Compensation Committee relies on the business experience of
its members, the historical compensation levels of the Named Executive Officers,
and its general understanding of compensation levels at public companies to
determine that the CEO's recommendations with respect to the compensation levels
and forms were appropriate for 2008. The form of compensation was consistent
with past years, with compensation consisting primarily of salary. For each of
the Named Executive Officers, the Compensation Committee considered, among other
things, our financial and operating results during 2007, the duties and
responsibilities of each executive, and the length of time each executive has
been with us as further described in each executive's biography found herein.
Based upon the foregoing, the Compensation Committee approved the following
annual base salary increases for our Named Executive Officers, other than our
CEO: (i) a $9,279 increase for Michael J. Gerdin; (ii) a $9,230 increase for
John P. Cosaert; (iii) a $9,230 increase for Richard L. Meehan, and (iv) a
$13,040 increase for Thomas E. Hill.
All full-time, non-driver personnel are eligible for annual cash bonus
incentives that are sometimes used to reward our employees. Past bonus plans
have been based on the percentage increase in growth of our fleet and revenue
miles, and maintaining a certain level of customer service. There were not any
targets established for annual cash bonuses and there were no cash bonuses paid
during 2008 to full-time, non-driver personnel.
We believe that stock ownership by our Named Executive Officers helps to
align the interests of such officers with the interests of stockholders in
maximizing long-term stockholder value. This objective was advanced through the
award of shares of restricted stock contributed by Mr. Russell Gerdin to key
employees, including certain Named Executive Officers, in 2002. The Compensation
9
Committee believes that the equity ownership of our senior management currently
is sufficient to align their long-term interests with those of our stockholders,
and therefore did not recommend any stock-based awards to the Named Executive
Officers in 2008.
Except as provided by the terms of the DC Plan, whereupon employer
contributions to this plan immediately become fully vested in the event of a
change of control of our Company, there are no employment contracts, termination
of employment agreements, change in control agreements, or other arrangements
with our executive officers, including our Named Executive Officers, that
provide for payment or benefits to any executive officer at, following, or in
connection with a change in control of our Company, a change in an executive
officer's responsibilities, or an executive officer's termination of employment,
including resignation, severance, retirement, or constructive termination.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
PAID TO THE NAMED EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth information concerning the total
compensation for the fiscal year 2008 awarded to, earned by, or paid to those
persons, who were, at December 31, 2008, the Named Executive Officers.
--------------------------------------------------------------------------------
Stock All Other
Name and Salary Bonus Awards(1) Compensation(2) Total
Principal Position Year ($) ($) ($) ($) ($)
------------------ ------- ------- ------- ------- ---------------- -------
Russell A. Gerdin, 2008 300,000 - - - 300,000
Chairman and Chief 2007 300,000 - - - 300,000
Executive Office 2006 300,000 - - - 300,000
------------------ ------- ------- ------- ------- -------------- -------
Michael J. Gerdin, 2008 229,519 - - - 229,519
President and 2007 220,240 - - - 220,240
Director 2006 152,396 13,716 - - 166,112
------------------ ------- ------- ------- ------- --------------- -------
John P. Cosaert, 2008 219,520 - - - 219,520
Executive Vice 2007 210,290 - 14,660 - 224,950
President of 2006 204,623 18,416 87,960 - 310,999
Finance, Tresurer,
and Chief
Financial Officer
------------------ ------- ------- ------- ------- ---------------- --------
Richard L. Meehan, 2008 219,520 - - - 219,520
Executive Vice 2007 210,290 - 14,660 - 224,950
President of 2006 204,623 18,416 87,960 - 310,999
Marketing and
Operations
------------------ ------- ------- ------- ------- ---------------- --------
Thomas E. Hill, 2008 130,480 - - - 130,480
Vice President, 2007 117,440 - 5,498 13,955 136,893
Controller and 2006 109,862 9,888 32,985 11,175 163,910
Secretary
--------------------------------------------------------------------------------
(1) No restricted stock grants were made during 2008 or 2007. This column
represents the dollar amount recognized for financial statement reporting
purposes with respect to the 2007 and 2006 fiscal years for the fair value
of restricted stock granted in prior fiscal years in accordance with
Statement of Financial Accounting Standards No. 123R. Pursuant to SEC
rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. For information on the
valuation assumptions with respect to grants made prior to 2008, refer to
the notes of our financial statements as provided in the Form 10-K for the
respective year-end, as filed with the SEC. These amounts reflect our
accounting expense for these awards, and do not correspond to the actual
value that will be recognized by the Named Executive Officers. All shares
of restricted stock were fully vested as of December 31, 2007.
(2) This amount represents contributions made under our tuition award program
as discussed in the Compensation Discussion and Analysis.
10
Narrative to the Summary Compensation Table
See "Compensation Discussion and Analysis" for a complete description of
our compensation plans pursuant to which the amounts listed under the Summary
Compensation Table were paid or awarded and the criteria for such award or
payment.
Nonqualified Deferred Compensation
The following table provides information with respect to the DC Plan as
discussed in the Compensation Discussion and Analysis. The amounts shown include
compensation earned and deferred in current and prior years, and earnings on, or
distributions of, such amounts.
----------------------- --------------- ------------------- --------------------
Executive Aggregate Aggregate Balance
Contributions Earnings(Loss) in at December 31,
in 2008 2008(1) 2008(2)
Name ($) ($) ($)
----------------------- --------------- ------------------- --------------------
Russell A. Gerdin - - -
----------------------- --------------- ------------------- --------------------
Michael J. Gerdin - (7,242) 23,990
----------------------- --------------- ------------------- --------------------
John P. Cosaert - 22,298 684,501
----------------------- --------------- ------------------- --------------------
Richard L. Meehan 42,700 (193,568) 377,944
----------------------- --------------- ------------------- --------------------
Thomas E. Hill 13,048 (48,035) 178,665
----------------------- --------------- ------------------- --------------------
------- ------------------------------------------------------------------------
(1) The amounts are limited to deferred compensation contributed or earned
during 2008 and are not reported in the Summary Compensation Table because
the amounts are not considered above-market or preferential earnings under
the DC Plan.
------- ------------------------------------------------------------------------
(2) The amounts were not required to be and were not reported in the Summary
Compensation Table for prior years.
------- ------------------------------------------------------------------------
Narrative to Nonqualified Deferred Compensation
See "Compensation Discussion and Analysis" for a complete description of
our DC Plan. Under the terms of the DC Plan, in the event of a change of control
of our Company, the employer contributions to this plan immediately become fully
vested. There were no employer contributions during the year ended December 31,
2008.
Director Compensation Table
The following table provides information concerning the compensation of all
directors for the fiscal year ended December 31, 2008.
------------------------------- ------------------ ---------------
Name Fees Earned or
Paid in Cash Total
($) ($)
------------------------------- ------------------ ---------------
Dr. Benjamin J. Allen 9,500 9,500
------------------------------- ------------------ ---------------
James G. Pratt 19,500 19,500
------------------------------- ------------------ ---------------
Lawrence D. Crouse 9,500 9,500
------------------------------- ------------------ ---------------
Richard O. Jacobson 8,500 8,500
------------------------------- ------------------ ---------------
11
Narrative to Director Compensation Table
Directors who are not employees of the Company are paid a $5,000 annual
retainer, which is paid in quarterly installments. Additionally, directors who
are not employees are compensated $1,000 for attendance at each Board of
Directors meeting along with travel expenses. For each committee meeting
attended, non-employee directors are paid $500. If the Audit Committee
chairperson is a CPA, he receives an additional $10,000 in annual compensation.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, MANAGEMENT AND OTHERS
The following table sets forth, as of March 10, 2009, the number and
percentage of outstanding shares of common stock beneficially owned by each
person known by the Company to beneficially own more than 5% of such stock, by
each director and Named Executive Officer of the Company, and by all directors
and executive officers of the Company as a group.
--------------------------------------------------------------------------------
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
--------------------------------------------------------------------------------
Amount and
Nature Percent
Title of Beneficial of
of Class Name and Address of Beneficial Owner Ownership Class
--------------------------------------------------------------------------------
Russell A. Gerdin, Chief Executive
Officer and Director
Common Stock 901 North Kansas Avenue
North Liberty, Iowa 52317 38,099,359 (1) 42.0%
--------------------------------------------------------------------------------
Michael J. Gerdin, President
and Director
Common Stock 901 North Kansas Avenue
North Liberty, Iowa 52317 - -
--------------------------------------------------------------------------------
Richard O. Jacobson, Director
Common Stock P.O. Box 224
Des Moines, IA 50301 285,413 (2) *
--------------------------------------------------------------------------------
Benjamin J. Allen, Director
Common Stock Room 20 Seerley Hall
Cedar Falls, Iowa 50614 1,588 *
--------------------------------------------------------------------------------
Lawrence D. Crouse, Director
Common Stock P.O. Box 480
Burke, SD 57523 5,033,208 (3) 5.5%
--------------------------------------------------------------------------------
James G. Pratt, Director
Common Stock 11 The Woods NE
Iowa City, Iowa 52240 1,000 *
--------------------------------------------------------------------------------
John P. Cosaert, Executive
Vice President
Common Stock 901 North Kansas Avenue
North Liberty, Iowa 52317 67,745 *
--------------------------------------------------------------------------------
Richard L. Meehan, Executive
Vice President
Common Stock 901 North Kansas Avenue
North Liberty, Iowa 52317 48,053 (4) *
--------------------------------------------------------------------------------
Thomas E. Hill, Vice President
and Secretary
Common Stock 901 North Kansas Avenue
North Liberty, Iowa 52317 41,734 *
--------------------------------------------------------------------------------
Lord, Abbett & Co. LLC
Common Stock 90 Hudson Street
Jersey City, NJ 07302 7,365,112 (5) 8.1%
--------------------------------------------------------------------------------
All directors and executive
officers as a group
Common Stock (9 individuals) 40,302,870 44.4%
--------------------------------------------------------------------------------
12
--------------------------------------------------------------------------------
* Less than one percent (1%)
1 Includes (i) 1,936,276 shares of common stock represented by voting trust
certificates that are owned by Gerdin Family Investments, LP ("GFI"), and
(ii) 36,163,083 shares of common stock owned by grantor retained annuity
trusts established by Mr. Gerdin's spouse for the benefit of Mr. and Mrs.
Gerdin's children ("Mrs. Gerdin's GRATS"). As the general partner of GFI,
Mr. Gerdin has dispositive power over the shares represented by voting
trust certificates owned by GFI, but neither Mr. nor Mrs. Gerdin has voting
power over such shares. As the trustee of Mrs. Gerdin's GRATS, Mr. Gerdin
has dispositive power over all shares owned by Mrs. Gerdin's GRATS and
voting power over 34,824,089 shares. Mrs. Gerdin disclaims beneficial
ownership over (i) the shares of common stock represented by voting trust
certificates owned by GFI, and (ii) the shares of common stock owned by
Mrs. Gerdin's GRATS.
2 All shares are owned by the Richard O. Jacobson Foundation, a private
foundation established by Mr. Jacobson. Mr. Jacobson has voting and
dispositive power over the shares, but neither he nor any of his family
members may receive distribution from the foundations assets. Accordingly,
beneficial ownership is disclaimed.
3 Includes (i) 47,565 shares of common stock held directly by Mr. Crouse,
(ii) 1,936,276 shares of common stock represented by voting trust
certificates which are owned by GFI, of which Mr. Crouse is the voting
trustee, (iii) 1,710,373 shares of common stock owned by the 2005 Gerdin
Children's Trust ("Gerdin's Children's Trust"), of which Mr. Crouse is the
trustee, and (iv) 1,338,994 shares of common stock owned by Mrs. Gerdin's
GRATS, of which Mr. Crouse is the voting trustee. Mr. Crouse has sole
voting power over all of the shares of common stock listed in this footnote
3 and sole dispositive power over (i) the shares he owns directly and (ii)
the shares owned by the Gerdin Children's Trust.
4 All shares of common stock are owned directly by Mr. Meehan except for
25,069 shares held by Mr. Meehan's wife. Mr. Meehan disclaims beneficial
ownership of such shares.
5 Lord, Abbett & Co. LLC. has sole voting power over 6,602,884 shares and
sole dispositive power over 7,365,112 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
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 reports that they file under Section 16(a). Based
solely upon a review of the copies of such forms furnished to the Company, 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our Audit Committee has established procedures relating to the review,
approval, or ratification of any transaction, or any proposed transaction, in
which we were or are to be a participant and the amount involved exceeds
$120,000, and in which any "related person" (as that term is defined in
Instruction 1 to Item 404(a) of Regulation S-K) had or will have a direct or
indirect material interest ("Interested Transactions"). Upon review of the
material facts of all Interested Transactions, the Audit Committee will either
approve or disapprove the Interested Transactions, subject to certain
exceptions, by taking into account, among other factors it deems appropriate,
whether the terms are arms'-length and the extent of the related person's
interest in the transaction. No director may participate in any discussion or
approval of an Interested Transaction for which he is a related party. If an
Interested Transaction will be ongoing, the Audit Committee may establish
guidelines for our management to follow in its ongoing dealings with the related
party and then at least annually must review and assess ongoing relationships
with the related party. No Interested Transactions were submitted to the Audit
Committee for approval or ratification during 2008.
13
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected KPMG LLP as the
Company's independent registered public accounting firm for the current fiscal
year ending December 31, 2009. The Audit Committee has also pre-approved the
engagement of KPMG LLP to provide federal and state tax return preparation,
advisory and related services to the Company during 2009. Although ratification
by the shareholders of the selection of KPMG LLP as the Company's independent
registered public accounting firm is not required by law or by the Bylaws of the
Company, the Audit Committee believes it is appropriate to seek shareholder
ratification of this appointment in light of the critical role played by the
independent registered public accounting firm in auditing the Company's
financial statements and the effectiveness of internal control over financial
reporting. If this selection is not ratified at the Annual Meeting, the Audit
Committee intends to reconsider its selection of independent registered public
accounting firm for the fiscal year ending December 31, 2009.
Representatives of KPMG LLP are expected to be present at the Annual
Meeting. They will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit and Other Fees
The following table shows the fees for professional services provided by
KPMG LLP, the Company's independent registered public accounting firm, for the
audit of our annual financial statements for each of the fiscal years ended
December 31, 2008 and 2007, and the review of financial statements included in
our quarterly reports on Form 10-Q during those periods, as well as fees billed
by KPMG LLP for other services rendered during those periods:
2008 2007
----------- -----------
Audit Fees (1) $ 263,237 $ 256,066
Audit-Related Fees (2) - 20,000
Tax Fees (3) 17,500 16,000
All Other Fees - -
----------- -----------
Total $ 280,737 $ 292,066
=========== ===========
(1) Audit Fees represent fees billed for professional services rendered by the
principal independent registered public accounting firm for the audit of
our annual financial statements and review of financial statements included
in our quarterly reports on Form 10-Q, audits of internal controls over
financial reporting, or services that are normally provided by such
accountant in connection with statutory or regulatory filings or
engagements for those fiscal years.
(2) Audit-Related Fees represent fees billed for assurance and related services
by the principal independent registered public accounting firm that are
reasonably related to the performance of the audit or review of financial
statements.
(3) Tax Fees represent fees billed for professional services rendered by the
principal independent accountant for tax compliance, tax advice, and tax
planning.
14
Audit Committee Pre-Approval Policy
The Company's Audit Committee approves all audit and non-audit services
that KPMG LLP is engaged to perform in advance of any such engagement. There are
no other specific policies or procedures relating to the pre-approval of
services performed by KPMG LLP. No audit-related, tax, or other non-audit
services were approved by the Audit Committee pursuant to the de minimus
exception to the pre-approval requirement under Rule 2-01, paragraph
(c)(7)(i)(C), of Regulation S-X during the fiscal year ended December 31, 2008.
Audit Committee Review
The Audit Committee has reviewed the services rendered by KPMG LLP during
2008 and has determined that the services rendered are compatible with
maintaining the independence of KPMG LLP as the Company's independent registered
public accounting firm.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE SELECTION OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.
Audit Committee Report for Fiscal 2008
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. The Audit Committee's actions are
governed by a written charter, which has been adopted by the Board of
Directors. All of the members of the Audit Committee are independent as
defined by Rule 4200(a)(15) of the National Association of Securities
Dealer's listing standards, and also meet the additional independence and
other requirements for audit committee membership under Rule 4350(d)(2) of
those standards. In fulfilling its oversight responsibilities, the Audit
Committee reviewed and discussed with management the audited financial
statements included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2008, including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements. In addition, the Audit Committee has discussed with the
Company's independent registered public accounting firm its independence
from management and the Company, including the matters in the written
disclosures required by applicable requirements of the Public Company
Accounting Oversight Board, and considered the compatibility of non-audit
services with the independent registered public accounting firm's
independence.
In performing its duties, the Audit Committee has discussed the
Company's financial statements, management's assessment of internal
controls over financial reporting, and the effectiveness of internal
controls over financial reporting with management and the Company's
independent registered public accounting firm and, in issuing this report,
has relied upon the responses and information provided to the Audit
Committee by management and such accounting firm. For the fiscal year ended
December 31, 2008, the Audit Committee (i) reviewed and discussed the
audited financial statements, management's assessment of internal controls
over financial reporting, and the effectiveness of internal controls over
financial reporting with management and KPMG LLP, the Company's independent
registered public accounting firm; (ii) discussed with the independent
15
registered public accounting firm the matters required to be disclosed by
Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended; (iii) received and discussed with the independent
registered public accounting firm the written disclosures and the letter
from such accounting firm required by applicable requirements of the Public
Company Accounting Oversight Board and (iv) has discussed with the
independent registered public accounting firm its independence. The Audit
Committee met with representatives of the independent registered public
accounting firm without management or other persons present two times
during 2008.
Based on the foregoing reviews and meetings, the Audit Committee
recommended to the Board of Directors that the audited financial statements
be included in the Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, for filing with the SEC.
By the Members of the Audit Committee:
James G. Pratt, Chairman
Lawrence D. Crouse
Dr. Benjamin J. Allen
Richard O. Jacobson
PROPOSALS BY STOCKHOLDERS
Stockholder proposals intended to be presented at the 2010 Annual Meeting
of the Stockholders of the Company must be received by the Company on or before
November 25, 2009, to be eligible for inclusion in the Company's proxy materials
relating to the meeting. The inclusion of any such stockholder proposals in such
proxy materials will be subject to the requirements of the proxy rules adopted
under the Exchange Act, including Rule 14a-8.
The Company must receive in writing any stockholder proposals intended to
be considered at its 2010 Annual Meeting of Stockholders, but not included in
the Company's proxy materials relating to the meeting, by February 11, 2010.
Pursuant to Rule 14(a)-4(c)(1) under the Exchange Act, the proxy holders
designated by an executed proxy in the form accompanying the Company's 2010
proxy statement will have discretionary authority to vote on any stockholder
proposal that is considered at the 2010 Annual Meeting of Stockholders, but not
received on or prior to the deadline described above.
All stockholder proposals should be sent via certified mail, return receipt
requested, and addressed to Thomas E. Hill, Secretary, Heartland Express, Inc.,
901 North Kansas Avenue, North Liberty, Iowa 52317.
Form 10-K Report Available
Copies of the Company's 2008 Form 10-K Annual Report to the SEC, including
financial statements and financial statement schedule, are available through the
Company's internet website, www.heartlandexpress.com, in the "Investor
Information" section or through the SEC's website at www.sec.gov. This
information may also be obtained without charge from the Company. Such report is
not incorporated in this Proxy Statement and is not to be considered a part of
the proxy solicitation material.
16
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. If any other matters do
properly come before the meeting, it is intended that the persons named in the
accompanying proxy will vote thereon in accordance with their judgment. The
proxy will also have the power to vote for the adjournment of the meeting from
time to time.
A copy of the Annual Report of the Company for the year ended December 31,
2008, is mailed to stockholders together with this Proxy Statement. Such report
is not incorporated in this Proxy Statement and is not to be considered a part
of the proxy solicitation material.
By order of the Board of Directors
Russell A. Gerdin
Chairman of the Board
March 25, 2009
North Liberty, Iowa
17