SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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Saia, Inc.

 

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held April 27, 2010

 

 

To Our Shareholders:

 

We cordially invite you to attend the 2010 annual meeting of shareholders of Saia, Inc. The meeting will take place at the Renaissance Concourse Atlanta Airport Hotel, One Hartsfield Centre Parkway, Atlanta, Georgia 30354 on April 27, 2010 at 10:30 a.m. local time. We look forward to your attendance, either in person or by proxy.

 

The purpose of the meeting is to:

 

1. Elect three directors, each for a term of three years;

 

2. Ratify the appointment of KPMG LLP as Saia’s independent registered public accounting firm for fiscal year 2010; and

 

3. Transact any other business that may properly come before the meeting and any postponement or adjournment of the meeting.

 

Only shareholders of record at the close of business on March 12, 2010 may vote at the meeting or any postponements or adjournments of the meeting.

 

By order of the Board of Directors,

 

James A. Darby
Secretary

 

March 26, 2010

 

Please complete, date, sign and return the accompanying proxy card or vote by telephone. The enclosed return envelope requires no additional postage if mailed in either the United States or Canada. Alternatively, you may vote electronically via the Internet. Go to www.investorvote.com and follow the steps outlined on the secure website.

 

If you are a registered shareholder, you may elect to have next year’s proxy statement and annual report made available to you via the Internet. We strongly encourage you to enroll in this service. It is a cost-effective way for us to send you proxy materials and annual reports.

 

Your vote is very important. Please vote whether or not you plan to attend the meeting.

Saia, Inc.
11465 Johns Creek Parkway
Johns Creek, Georgia 30097

 

2010 PROXY STATEMENT

 

The Board of Directors of Saia, Inc. (“Saia”) is furnishing you this proxy statement in connection with the solicitation of proxies on its behalf for the 2010 annual meeting of shareholders. The meeting will take place at the Renaissance Concourse Atlanta Airport Hotel, One Hartsfield Centre Parkway, Atlanta, Georgia 30354 on April 27, 2010 at 10:30 a.m. local time. At the meeting, shareholders will vote on the election of three directors, the ratification of the appointment of KPMG LLP as Saia’s independent registered public accounting firm for fiscal year 2010, and will transact any other business that may properly come before the meeting, although we know of no other business to be presented.

 

By submitting your proxy (either by signing and returning the enclosed proxy card or by voting electronically on the Internet or by telephone), you authorize Herbert A. Trucksess, III and Björn E. Olsson, directors of Saia, and James A. Darby, Saia’s Vice President — Finance, Chief Financial Officer and Secretary, to represent you and vote your shares at the meeting in accordance with your instructions. They also may vote your shares to adjourn the meeting and will be authorized to vote your shares at any postponements or adjournments of the meeting.

 

Saia’s Annual Report to Shareholders for the fiscal year ended December 31, 2009, which includes Saia’s audited annual consolidated financial statements, accompanies this proxy statement. Although the Annual Report is being distributed with this proxy statement, it does not constitute a part of the proxy solicitation materials and is not incorporated by reference into this proxy statement.

 

We are first sending this proxy statement, form of proxy and accompanying materials to shareholders on or about March 26, 2010.

 

 

 

INFORMATION ABOUT THE ANNUAL MEETING

 

What is the purpose of the annual meeting?

 

At the annual meeting, the shareholders will be asked to:

 

1. Elect three directors, each for a term of three years; and

 

2. Ratify the appointment of KPMG LLP as Saia’s independent registered public accounting firm for fiscal year 2010.

 

Shareholders also will transact any other business that may properly come before the meeting. Members of Saia’s management team and a representative of KPMG LLP, Saia’s independent registered public accounting firm, will be present at the annual meeting to respond to appropriate questions from shareholders.

 

Who is entitled to vote?

 

You may vote if you owned shares of our common stock at the close of business on March 12, 2010, the record date for the annual meeting, provided such shares are held directly in your name as the stockholder of record or are held for you as the beneficial owner through a bank, broker or other nominee. Each outstanding share of common stock is entitled to one vote for all matters that properly come before the annual meeting for a vote. At the close of business on the record date, there were 15,867,280 shares of Saia common stock outstanding and entitled to vote.

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

 

Stockholders of Record.  If your shares are registered directly with our transfer agent, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to those shares, and these proxy materials are being sent directly to you by us. As the stockholder of record you have the right to grant your voting proxy directly to us through the enclosed proxy card or to vote in person at the annual meeting.

 

Beneficial Owners.  Many of our shareholders hold their shares through a bank, broker or other nominee rather than directly in their own name. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials (including a voting instruction card) are being forwarded to you by your bank, broker or nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your bank, broker or nominee on how to vote your share. As the beneficial owner of shares, you are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the annual meeting unless you obtain a legal proxy from your bank, broker or nominee and present it at the annual meeting. Your bank, broker or nominee has enclosed a voting instruction card for you to use in directing the bank, broker or nominee regarding how to vote your shares.

 

How do I vote?

 

Stockholders of Record.

 

1. You May Vote by Mail.  If you properly complete and sign the accompanying proxy card and return it in the enclosed envelope, it will be voted in accordance with your instructions. The enclosed envelope requires no additional postage if mailed in either the United States or Canada.

 

2. You May Vote by Telephone or the Internet.  You may vote by telephone or on the Internet by following the instructions included on the proxy card. If you vote by telephone or on the Internet, you do not have to mail in your proxy card. Internet and telephone voting are available 24 hours a day. Votes submitted through the Internet or by telephone must be received by 11:59 p.m. Eastern time on April 26, 2010.

 

 

3. You May Vote in Person at the Meeting.   You may deliver your completed proxy card in person. Additionally, we will pass out written ballots to registered shareholders who wish to vote in person at the meeting.

 

Beneficial Owners.

 

If you hold your shares in street name, follow the voting instruction card you receive from your bank, broker or other nominee. If you want to vote in person at the annual meeting, you must obtain a legal proxy from your bank, broker or nominee and present it at the annual meeting.

 

Can I change my vote?

 

Stockholders of Record.  You may change your vote at any time before the proxy is exercised by voting in person at the annual meeting, giving written notice to Saia’s Secretary revoking your proxy, submitting a properly signed proxy bearing a later date or voting again by telephone or on the Internet (your latest telephone or Internet vote is counted).

 

Beneficial Owners.  If you hold your shares through a bank, broker or other nominee, you may change your vote by submitting new voting instructions following the instructions provided by your bank, broker or nominee.

What if I do not vote for some of the items listed on the proxy card or voting instruction card?

 

Stockholders of Record.  If you indicate a choice with respect to any matter to be acted upon on your proxy card, the shares will be voted in accordance with your instructions. Proxy cards that are signed and returned, but do not contain voting instructions with respect to a proposal, will be voted in accordance with the recommendations of the Board with respect to that proposal.

 

Beneficial Owners.  If you indicate a choice with respect to any matter to be acted upon on your voting instruction card, the shares will be voted in accordance with your instructions. If you do not indicate a choice with respect to a proposal or do not return your voting instruction card, the bank, broker or other nominee will determine if it has the discretionary authority to vote your shares. Recent changes in regulations now prohibit banks, brokers and other nominees from voting shares in elections of directors unless the beneficial owners indicate how the shares are to be voted. Therefore, unlike in prior years, unless you instruct your bank, broker or nominee on how to vote your shares with respect to the election of directors, your bank, broker or nominee will be prohibited from voting on your behalf. As such, it is critical that you cast your vote if you want it to count in the election of directors at the annual meeting. Your bank, broker or nominee will, however, continue to have discretionary authority to vote uninstructed shares on the ratification of the appointment of the Company’s independent registered public accounting firm.

 

How many shares must be present to hold the meeting?

 

A quorum must be present at the annual meeting for any business to be conducted. The presence at the annual meeting, in person or by proxy, of the holders of a majority of the shares of Saia common stock outstanding on the record date will constitute a quorum. Abstentions and broker non-votes (which occur when a bank, broker or other nominee holding shares for a beneficial owner does not have discretionary voting authority with respect to a proposal and has not received instructions with respect to that proposal from the beneficial owner) will be treated as shares present for purposes of determining whether a quorum is present.

 

What if a quorum is not present at the meeting?

 

If a quorum is not present at the scheduled time of the meeting, the shareholders who are represented may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given.

 

How does the Board of Directors recommend I vote on the proposals?

 

Your Board recommends that you vote:

 

 

Who will count the votes?

 

Saia’s transfer agent, Computershare Trust Company, N.A., will tabulate and certify the votes. Renée McKenzie, the Company’s Treasurer, will serve as the inspector of elections.

 

Will any other business be conducted at the meeting?

 

We know of no other business that will be presented at the meeting. If any other matter properly comes before the shareholders for a vote at the meeting the proxy holders will vote your shares in accordance with their best judgment.

 

How many votes are required to elect the director nominees?

 

Because this is considered an uncontested election under the Company’s Bylaws, a nominee for Director is elected to the Board if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Abstentions will not affect the election of Directors. In tabulating the voting results for the election of directors, only “FOR” and “AGAINST” votes are counted. If an incumbent Director fails to receive a majority of the vote for re-election, the Nominating and Governance Committee of the Board will act on an expedited basis to determine whether to accept the Director’s previously tendered irrevocable resignation and will submit such

recommendation for prompt consideration by the Board. In considering whether to accept or reject the tendered resignation, the Nominating and Governance Committee and the Board will consider any factors they deem relevant in deciding whether to accept a Director’s resignation. Any Director who tenders his or her resignation pursuant to this provision of the Corporate Governance Guidelines will not participate in the Nominating and Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation.

 

What happens if a nominee is unable to stand for election?

 

If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee unless you have withheld authority.

 

How many votes are required to ratify the appointment of Saia’s independent registered public accounting firm?

 

The ratification of the appointment of KPMG LLP as Saia’s independent registered public accounting firm requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy and entitled to vote.

 

What effect will abstentions and broker non-votes have on the proposals?

 

Shares voting “abstain” and broker non-votes with respect to any nominee for director will be excluded entirely from the vote and will have no effect on the election of directors. Shares voting “abstain” on the ratification of the appointment of the Company’s independent registered public accounting firm will be treated as shares present for quorum purposes and entitled to vote, so they will have the same practical effect as votes against the proposal.

 

PROPOSAL 1

 

ELECTION OF DIRECTORS

 

Current Nominees

 

The Board of Directors currently consists of nine directors divided into three classes (Class I, Class II and Class III). Directors in each class are elected to serve for three-year terms that expire in successive years. The terms of the Class II directors will expire at the upcoming annual meeting. The Board of Directors has nominated John J. Holland, Richard D. O’Dell and Douglas W. Rockel for election as Class II directors for three-year terms expiring at the annual meeting of shareholders to be held in 2013 and until their successors are elected and qualified. Messrs. Holland, O’Dell and Rockel currently serve as Class II directors.

 

Each nominee has consented to being named in this proxy statement and has agreed to serve if elected. If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority.

 

Because this is considered an uncontested election under the Company’s Bylaws, a nominee for director is elected to the Board if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Abstentions will not affect the election of directors. In tabulating the voting results for the election of directors, only “FOR” and “AGAINST” votes are counted. If an incumbent director fails to receive a majority of the vote for re-election, the Nominating and Governance Committee of the Board will act on an expedited basis to determine whether to accept the director’s previously tendered irrevocable resignation, and will submit such recommendation for prompt consideration by the Board. In considering whether to accept or reject the tendered resignation, the Nominating and Governance Committee and the Board will consider any factors they deem relevant in deciding whether to accept a director’s resignation. Any Director who tenders his or her resignation pursuant to this provision of the Corporate Governance Guidelines will not participate in the Nominating and Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation.

 

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE THREE NOMINEES.

 

The following tables set forth certain information regarding each nominee for director and continuing director of the Company. The information presented includes information provided to the Company by each nominee and director including such person’s name, age, principal occupation and business experience for the past five years, the names of other publicly-held companies of which such person currently serves as a director or has served as a director during the past five years and the year in which the nominee first became a director of Saia.

 

In addition to the information presented below regarding the specific experience, qualifications, attributes and skills of each nominee and director that led the Board of Directors to the conclusion that such person should serve as a director, the Board also believes that all of the nominees and continuing directors have a reputation for high personal and professional ethics, integrity, values and character. Each nominee and continuing director brings a strong and unique background and set of skills to the Board of Directors giving the Board as a whole competence and experience in a wide variety of areas, including corporate governance and board service, executive management, law and regulation, the less-than-truckload (“LTL”) and transportation industry, accounting and finance, and risk assessment. They have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to the Company and the Board. Each nominee and continuing director is committed to achieving, monitoring and improving on the Company’s business strategy.

 

NOMINEES FOR ELECTION AS
CLASS II DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE 2013 ANNUAL MEETING

 

 

Continuing Directors

 

CLASS III DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2011 ANNUAL MEETING

 

 

CLASS I DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2012 ANNUAL MEETING

 

 

CORPORATE GOVERNANCE

 

THE BOARD, BOARD MEETINGS AND COMMITTEES

 

The system of governance practices followed by the Company is memorialized in the charters of the three standing committees of the Board of Directors (the Audit Committee, the Compensation Committee and the Nominating and Governance Committee) and in the Company’s Corporate Governance Guidelines. The charters and Corporate Governance Guidelines are intended to provide the Board with the necessary authority and practices to review and evaluate the Company’s business and to make decisions independent of the influence of the Company’s management. The Corporate Governance Guidelines establish guidelines for the Board with respect to Board meetings, Board composition, selection and election, director responsibility, director access to management and independent advisors, and non-employee director compensation.

 

The Corporate Governance Guidelines and committee charters are reviewed periodically and updated as necessary to reflect evolving governance practices and changes in regulatory requirements. The Corporate Governance Guidelines are reviewed annually and were most recently modified by the Board effective December 11, 2008. The Corporate Governance Guidelines and each of the Board’s committee charters are available free of charge on the Company’s website (www.saia.com).

 

The Company has adopted a Code of Ethics and Business Conduct applicable to all directors, officers and employees, including its principal executive officer, principal financial officer and controller. The Code of Ethics and Business Conduct is filed as Exhibit 14 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed with the Securities and Exchange Commission.

 

Board Leadership Structure

 

The Board separated the Chief Executive Officer and Chairman of the Board positions following the 2006 sale of Jevic Transportation, Inc. (“Jevic”), the Company’s hybrid less-than-truckload and truckload carrier business. Prior to the sale, Saia was a holding company comprised of two operating units, Saia Motor Freight Line, LLC (“Saia Motor Freight”) and Jevic. Following the sale of Jevic, the Board determined that in order to promote Board continuity, Mr. Trucksess, formerly the Company’s Chief Executive Officer, would remain as Chairman of the Board and Mr. O’Dell, formerly the president and Chief Executive Officer of Saia Motor Freight, would become

Chief Executive Officer of the holding company. The Board believes having a separate Chairman and Chief Executive Officer allow each to more fully focus on their applicable responsibilities. The Chief Executive Officer is responsible for setting the strategic director for the Company and the day to day leadership and performance of the Company, while the Chairman provides guidance to the Chief Executive Officer and sets the agenda for Board meetings and presides over meetings of the full Board.

 

Additionally, the Board created a Lead Independent Director position in order to have a director in a leadership position that was “independent” under all applicable rules of the Nasdaq Global Select Market and the Securities and Exchange Commission. The Lead Independent Director is elected annually by the independent directors. For 2009, the Lead Independent Director was Björn E. Olsson. The primary responsibilities of the Lead Independent Director are to:

 

 

In addition, the Lead Independent Director has the authority to call meetings of independent directors. If requested by major shareholders, the Lead Independent Director shall make himself reasonably available for direct communication.

 

Meetings

 

The Board of Directors held twelve meetings in 2009. Each director attended at least 75% of the meetings convened by the Board and the applicable committees during such director’s service on the Board.

 

Executive sessions of non-employee directors and separate executive sessions of independent directors are held as part of each regularly scheduled meeting of the Board. The sessions are chaired by the Lead Independent Director.

 

Committees

 

The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Current Committee memberships are as follows:

 

 

Audit Committee

 

The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act of 1934”). The Audit Committee held eight meetings in

2009. The functions of the Audit Committee are described in the Audit Committee charter and include the following:

 

 

Each member of the Audit Committee meets the independence and experience requirements for audit committee members as established by The Nasdaq Global Select Market. The Board of Directors has determined that Mr. Olson, Mr. Holland and Mr. Rockel are “audit committee financial experts,” as defined by applicable rules of the Securities and Exchange Commission.

 

Compensation Committee

 

The Compensation Committee held four meetings in 2009. The functions of the Compensation Committee are described in the Compensation Committee charter and include the following:

 

 

Each member of the Compensation Committee qualifies as (i) an independent director under applicable NASDAQ rules; (ii) an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986 (the “Internal Revenue Code”), as amended; and (iii) a “non-employee director” for purposes of Rule 16b-3 of the Securities Exchange Act of 1934.

 

Nominating and Governance Committee

 

The Nominating and Governance Committee held two meetings in 2009. The functions of the Nominating and Governance Committee are described in the Nominating and Governance Committee charter and include the following:

 

 

Each member of the Nominating and Governance Committee meets the definition of an independent director under applicable NASDAQ rules.

Risk Oversight

 

The Board of Directors oversees an enterprise-wide approach to risk management, designed to support the achievement of Company objectives, improve long-term Company performance and create shareholder value. A fundamental part of risk management is understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The involvement of the full Board of Directors in setting the Company’s business strategy and objectives is integral to the Board’s assessment of the Company’s risk and also a determination of what constitutes an appropriate level of risk for the Company. The full Board of Directors conducts an annual risk assessment of the Company’s financial risk, legal/compliance risk and operational/strategic risk, and addresses individual risk issues throughout the year as necessary.

 

While the Board of Directors has the ultimate oversight responsibility for the risk management process, the Board’s delegates responsibility for certain aspects of risk management to its committees. In particular, the Audit Committee focuses on key business and financial risks and related controls and processes. Per its charter, the Audit Committee discusses with management the Company’s major financial reporting exposures concerning risk assessment and management and the steps management has taken to monitor and control such exposures. The Company’s Compensation Committee strives to create incentives that encourage a level of risk-taking behavior consistent with the Company’s business strategy and objectives and helps ensure that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. Finally, the Company’s Nominating and Governance Committee is responsible for overseeing the Company’s major non-financial reporting enterprise risk assessment and management processes. The Chair of the Nominating and Governance Committee discusses with both the Audit Committee and the Compensation Committee the processes used in the oversight of the non-financial reporting enterprise risk assessment and management processes.

 

The Board believes its leadership structure enhances overall risk oversight. While the Board requires risk assessments from management, the combination of Board member experience, diversity of perspectives, continuing education and independence of governance processes provide an effective basis for testing, overseeing and supplementing management assessments.

 

ELECTION OF DIRECTORS

 

Election to the Company’s Board of Directors, in a contested election, shall be by a plurality of the votes cast at any meeting of stockholders. An election will be considered contested in which (i) the Secretary of the Company receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for Director set forth in the Company’s Bylaws and (ii) such nomination has not been withdrawn by such stockholder on or before the 10th day before the Company first mails its notice of meeting for such meeting to the stockholders. If Directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee.

 

In an uncontested election, Directors shall be elected by a majority of the votes cast “for” and “against” at any meeting of stockholders. If an incumbent Director fails to receive a majority of the vote for re-election in an uncontested election, the Nominating and Governance Committee will act on an expedited basis to determine whether to accept the Director’s previously tendered irrevocable resignation and will submit such recommendation for prompt consideration by the Board. In considering whether to accept or reject the tendered resignation, the Nominating and Governance Committee and the Board will consider any factors they deem relevant in deciding whether to accept a Director’s resignation. Any Director who tenders his or her resignation pursuant to this provision of the Corporate Governance Guidelines will not participate in the Nominating and Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation. The election of directors at the 2010 annual meeting of the Company’s shareholders is an uncontested election.

 

The Board will nominate for election or re-election as Director only candidates who agree to tender, promptly following the meeting at which they are elected or re-elected as Director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the next annual meeting at which they will face re-election and (ii) Board acceptance of such resignation. The Board will fill Director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other Directors in accordance with the Corporate Governance Guidelines.

 

CONSIDERATION OF DIRECTOR NOMINEES

 

Director Qualifications

 

The Corporate Governance Guidelines include director qualification standards which provide as follows:

 

 

While the selection of qualified directors is a complex, subjective process that requires consideration of many intangible factors, the Corporate Governance Guidelines provide that directors and candidates for director generally should, at a minimum, meet the following criteria:

 

 

In considering whether to recommend any candidate as a director nominee, including candidates recommended by shareholders in accordance with the procedures discussed below, the Nominating and Governance Committee will apply the criteria set forth in the Corporate Governance Guidelines. The Nominating and Governance Committee seeks nominees with a broad range of experience, professions, skills, geographic representation and backgrounds. The Nominating and Governance Committee does not assign specific weights to the criteria and no particular criterion is necessarily applicable to all prospective nominees. The Nominating and Governance Committee believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. The Nominating and Governance Committee assesses the effectiveness of the Corporate Governance Guidelines, including with respect to director nominations and qualifications and achievement of having directors with a broad range of experience and backgrounds, through completion of the committee’s annual self-evaluation process.

 

Procedures for Recommendations and Nominations by Shareholders

 

Shareholder Recommendations

 

The Nominating and Governance Committee has adopted policies concerning the process for the consideration of director candidates recommended by shareholders. The Nominating and Governance Committee will consider director recommendations from shareholders. Any shareholder wishing to recommend a candidate for consideration should send the following information to the Secretary of the Company, Saia, Inc., 11465 Johns Creek Parkway, Suite 400, Johns Creek, Georgia 30097:

 

 

 

The recommendation must be accompanied by the information concerning the candidate required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to the Securities Exchange Act and rules adopted thereunder, generally providing for the disclosure of:

 

 

The recommendation must describe all relationships between the candidate and the recommending shareholder and any agreements or understandings between the recommending shareholder and the candidate regarding the recommendation. The nominating recommendation shall describe all relationships between the candidate and any of the Company’s competitors, customers, suppliers or other persons with special interests regarding the Company.

 

The recommending shareholder must furnish a statement supporting its view that the candidate possesses the minimum qualifications prescribed by the Nominating Committee for director nominees, and briefly describing the contributions that the nominee would be expected to make to the board and to the governance of the Company. The recommending shareholder must state whether, in the view of the shareholder, the candidate, if elected, would represent all shareholders and not serve for the purpose of advancing or favoring any particular shareholder or other constituency of the Company.

 

The nominating recommendation must be accompanied by the consent of the candidate to be interviewed by the Committee, if the Committee chooses to do so in its discretion (and the recommending shareholder must furnish the candidate’s contact information for this purpose), and, if nominated and elected, to serve as a director of the Company.

 

If a recommendation is submitted by a group of two or more shareholders, the information regarding recommending shareholders must be submitted with respect to each shareholder in the group.

 

The Secretary of Saia will promptly forward such materials to the Nominating and Governance Committee Chair and the Chairman of the Board of Saia. The Secretary will also maintain copies of such materials for future reference by the Committee when filling Board positions.

 

If a vacancy arises or the Board decides to expand its membership, the Nominating and Governance Committee will seek recommendations of potential candidates from a variety of sources (including incumbent directors, shareholders, the Corporation’s management and third party search firms). At that time, the Nominating and Governance Committee also will consider potential candidates submitted by shareholders in accordance with the procedures described above. The Nominating and Governance Committee then evaluates each potential candidate’s educational background, employment history, outside commitments and other relevant factors to determine whether he or she is potentially qualified to serve on the Board. The Committee seeks to identify and

recruit the best available candidates and it intends to evaluate qualified shareholder candidates on the same basis as those submitted by other sources.

 

After completing this process, the Nominating and Governance Committee will determine whether one or more candidates are sufficiently qualified to warrant further investigation. If the process yields one or more desirable candidates, the Committee will rank them by order of preference, depending on their respective qualifications and Saia’s needs. The Nominating and Governance Committee Chair, or another director designated by the Nominating and Governance Committee Chair, will then contact the desired candidate(s) to evaluate their potential interest and to set up interviews with the full Committee. All such interviews are held in person and include only the candidate and the Nominating and Governance Committee members. Based upon interview results, the candidate’s qualifications and appropriate background checks, the Nominating and Governance Committee then decides whether it will recommend the candidate’s nomination to the full Board.

 

Shareholder Nominations

 

Separate procedures apply if a shareholder wishes to submit a director candidate at an annual meeting. To nominate a director candidate for election at an annual meeting, a shareholder must deliver timely notice of such nomination to the principal executive offices of the Company in accordance with, and containing the information required by, our Bylaws. To be timely, the notice must be received at the Company’s principal executive offices no later than the close of business on the 90th calendar day nor earlier than the 120^th calendar day prior to the first anniversary date of the immediately preceding year’s annual meeting. The Company’s Bylaws have been filed with the Securities and Exchange Commission and copies are available from the Company.

 

SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

 

The Board of Directors has adopted the following procedures for shareholders to send communications to the Board or individual directors of the Company:

 

Shareholders seeking to communicate with the Board of Directors should submit their written comments to the Secretary of the Company, Saia, Inc., 11465 Johns Creek Parkway, Suite 400, Johns Creek, Georgia 30097. The Secretary of the Company will forward all such communications (excluding routine advertisements and business solicitations and communications which the Secretary of the Company, in his or her sole discretion, deems to be a security risk or for harassment purposes) to each member of the Board of Directors, or if applicable, to the individual director(s) named in the correspondence. Subject to the following, the Chairman of the Board and the Lead Independent Director will receive copies of all shareholder communications, including those addressed to individual directors, unless such communications address allegations of misconduct or mismanagement on the part of the Chairman. In such event, the Secretary of the Company will first consult with and receive the approval of the Lead Independent Director before disclosing or otherwise discussing the communication with the Chairman.

 

The Company reserves the right to screen materials sent to its directors for potential security risks and/or harassment purposes and the Company also reserves the right to verify ownership status before forwarding shareholder communications to the Board of Directors.

 

The Secretary of the Company will determine the appropriate timing for forwarding shareholder communications to the directors. The Secretary will consider each communication to determine whether it should be forwarded promptly or compiled and sent with other communications and other Board materials in advance of the next scheduled Board meeting.

 

Shareholders also have an opportunity to communicate with the Board of Directors at the Company’s annual meeting of shareholders. The Company’s Corporate Governance Guidelines provide that absent unusual circumstances, directors are expected to attend all annual meetings of shareholders. Each of the directors then-serving on the Board attended the Company’s 2009 annual meeting of shareholders.

 

STOCK OWNERSHIP

 

Directors and Executive Officers

 

The following table sets forth the amount of Saia’s common stock beneficially owned by each director and each executive officer named in the Summary Compensation Table on page 26 and all directors and executive officers as a group, as of February 26, 2010. Unless otherwise indicated, beneficial ownership is direct and the person indicated has sole voting and investment power.

 

 

 

 

SAIA, INC.
COMPENSATION DISCUSSION AND ANALYSIS

 

Executive Compensation Philosophy and Oversight

 

Saia Inc.’s (“Saia” or the “Company”) executive compensation philosophy is determined by the Compensation Committee of the Board of Directors (the “Committee”). The Committee believes that the executive compensation program should link pay with performance and should attract, motivate, reward and facilitate the retention of the executive talent required to achieve corporate objectives, especially to create value for the Company’s shareholders. To this end, Saia integrates several key compensation components that are designed to align rewards with the short- and long-term performance of the Company and of each executive. These components are:

 

 

The executive compensation program is administered by the Committee, which is made up entirely of independent directors. A complete description of the Committee’s responsibilities is provided in the Committee’s Charter, which is approved by the Board of Directors and can be found on the Company’s website (www.saia.com) under the investor relations section.

 

The Committee annually reviews the Company’s compensation philosophy, the overall design of the compensation program and the design elements of each component of compensation. In making annual decisions about compensation for the executives identified in the Summary Compensation Table (the “Named Executive Officers”) as described in the table above, the Compensation Committee also takes the following factors into consideration, although none of these factors are persuasive individually or in the aggregate:

 

 

The Committee uses peer group data as a means to test external equity. That, coupled with the internal equity analysis, helps to promote overall, fundamental fairness in the program. The desire to achieve fundamental fairness drives the design, levels and components of the reward system. The Committee then tailors the program as needed in a given year to reflect Company needs and individual contributions and performance, present and future.

 

The Committee does not believe Saia’s incentive compensation arrangements encourage employees to take unnecessary or excessive risks. As described in detail below, for the Company’s senior executives, the Committee believes it has established a reasonable mix of short- and long-term compensation, particularly incentive

compensation. The short-term incentive is in the form of salary and a cash bonus that is capped to eliminate windfall payouts. One-half of the long term incentive is in the form of performance unit plan grants that are based on Company stock price performance over a three-year period, rewarding longer-term financial performance. Performance unit awards are settled in shares of the Company’s common stock and the number of shares that can be received is capped. Profit earned upon exercising stock options, as well as stock received under the performance unit plan grants, are subject to the stock ownership guidelines discussed below, further aligning the long-term interests of management with that of shareholders. As discussed below, the Board has also implemented a compensation recovery policy to provide for reimbursement of performance-based compensation in certain instances. The company also has incentive plans that are structured to cap potential incentive payments as well as processes to monitor and control that sales transactions subject to sales incentive plans meet specific company defined criteria.

 

The Committee has retained Mercer US, Inc. (“Mercer”) as its executive compensation consultant to provide information, analyses and advice regarding executive and director compensation. The Mercer consultant who performs these services reports directly to the Committee chair. The Committee has established procedures to ensure that Mercer’s advice to the Committee remains objective and is not influenced by the Company’s management. The Board has adopted a policy that prohibits Mercer and its affiliates from providing services to the Company without the prior approval of the Board. Other than services provided to the Compensation Committee, the Company did not use the services of Mercer or its affiliates in 2008 or 2009. The Committee regularly meets with the Mercer consultant outside the presence of management to discuss executive compensation philosophy and specific levels of compensation and to ensure that Mercer receives from management the information required to perform its duties. The Committee formally evaluates the performance of Mercer on an annual basis and may terminate the services of Mercer at any time.

 

Peer Group

 

To assist the Compensation Committee in determining the appropriate compensation design, levels and components for the Company’s executive officers, the Committee annually reviews compensation data for similar positions at other comparable, like-sized companies. The peer group companies are selected with input from Mercer and are comprised of U.S. publicly traded transportation companies with annual revenues one-half to three times Saia’s revenues. In addition to revenues, the Committee also strives to select companies with similar assets, net incomes and market caps. For comparison, the Company’s 2008 operating revenues were $1,030 million. The specific peers included in the review for 2009 were:

 

Some of the peer group companies have extensive stock ownership by executives. If the ownership amounts were disclosed by the peer group company to have a material impact on executive compensation levels, the specific compensation element is excluded from the competitive data and associated analysis.

 

2008, 2009 and 2010 Executive Compensation Decisions

 

Total Compensation

 

Based on the Committee’s annual reviews for 2008, 2009 and 2010, the Committee has concluded that the amounts payable to each Named Executive Officer under each individual element, as well as the Named Executive Officer’s total compensation in the aggregate, were reasonable and were consistent with the recommendations of Mercer. The Committee further concluded that the Company’s executive compensation program met the objectives of attracting, retaining, motivating, and rewarding talented executives who can contribute to Saia’s long-term success and thereby build value for shareholders. Decisions with respect to each component of executive compensation are described below.

 

Base Salary

 

The Committee has selected the market 50th percentile (using the peer group listed above) as the targeted positioning for base salaries of the Company’s executives. For 2009, Mercer’s analysis showed the Company’s executive base salaries were generally well below the 50th percentile, although, in the view of the Committee, within a reasonable range of the 50th percentile. For each Named Executive Officer, the Committee also considered the factors bulleted under “Executive Compensation Philosophy and Oversight”, giving special attention to individual and Company performance, experience, future advancement potential, impact on Saia’s results, pay mix, internal equity, and the importance of executive retention. Based on the current economic environment, Company performance and the Company’s strategic plan, the Named Executive Officers did not receive an increase in base salary in December 2008. In addition, effective April 2009, Saia executives took a 5% reduction in base salary and a 10% reduction in total compensation. The reduction was made as a result of significant competitive and financial challenges faced in 2009 and was part of a Company-wide reduction of compensation. This reduction places base compensation for 2010 further below the targeted 50% level, and the Committee intends to address this discrepancy over time as the economy and Company performance improve. Due to the continuation of challenged industry conditions, the Named Executive Officers did not receive an increase in base salary in December 2009.

 

Annual Incentives

 

The Annual Incentive Plan provides all officers and other salaried Company employees the opportunity to receive cash payments. The plan sets out a threshold, target and maximum payout level for each executive and an associated performance goal to achieve the payout levels. For 2009, the potential payout levels for Named Executive Officers were as follows:

 

 

The Committee strives to set the threshold, target and maximum performance goals at levels such that the relative likelihood that Saia will achieve such goals remains consistent from year to year. It is the intent of the Committee that the threshold goals should be attainable a majority of the time, target goals should, on average, be reasonably expected to be achieved and that maximum goals should be attained a minority of the time. These levels of expected performance are taken into consideration in the compensation philosophy and evaluation of compensation previously discussed. Establishing the expected performance goals relative to these criteria is inherently subject to considerable judgment on the part of the Committee. When making these judgments the Committee

considers the Company’s past performance, the volatility of the performance, the budget, current economic conditions and other forecasts of future results.

 

For 2009, the annual incentive goals set by the Committee for the Named Executive Officers were based on a combination of two measures. Corporate earnings per share was the basis for 75% of the annual incentive and operating ratio improvement as compared to a competitor group was the basis for 25% of the incentive. Earnings per share were selected to align the goal with shareholder interests and competitive practices. Operating ratio improvement was chosen as a measure based on the Company’s focus on improving profitability. The peer group for the comparison of operating ratio improvement was comprised of four non-union less-than-truckload publicly traded companies: Old Dominion Freight Line, Inc., Con-way, Inc., Vitran Corporation, Inc., and FedEx Freight (less-than-truckload subsidiary of FedEx). These four companies were selected because their operations are most directly comparable to the Company’s and they are non-union publicly traded entities. The Company’s operating ratio improvement is measured compared to the peer group’s average operating ratio improvement. The specific earnings per share and operating ratio improvement measures for 2009 were as follows:

 

Annual Incentive Targets for 2009

 

 

The combination of the two measures is only applicable to the Company’s officers. For all other salaried employees, the payout of the annual incentive is based only on the achievement of the earnings per share goals. The officers are only eligible to receive payment on the operating ratio measure if overall the Company has achieved the threshold earnings per share measure. Based on earnings per share performance in 2009, there were no payouts under the annual incentive plan for 2009.

 

Due to the continuation of challenged industry conditions, the Committee has not approved a 2010 annual incentive plan. Should business conditions improve, the Committee plans to reconsider establishing an annual or partial year 2010 incentive plan.

 

Over the past five years Saia has exceeded target incentive goals three times but has not achieved the maximum performance goals. The payout percentages over the past five years have been between zero and approximately 123% of an executive’s target incentive opportunity.

 

Long-Term Incentives

 

Under the authority granted in the Amended and Restated 2003 Omnibus Incentive Plan, the Committee has chosen to provide long-term incentives to the executive officers as a means to stimulate performance superior to other companies in Saia’s industry, to tie compensation to shareholder value creation and to encourage executive retention. All Company officers are eligible to participate in the long-term incentive program. For 2010, 2009 and 2008, 50% of a Named Executive Officer’s long-term incentive opportunity was granted in performance units and 50% in stock options (valued using the Black-Scholes option pricing model). This mix of awards was selected to balance the focus between relative and absolute stock performance and reflect competitive practices. The Committee also made a special grant of restricted stock units in 2008 to Mr. O’Dell and Mr. Albanese to facilitate executive retention, as described below.

 

To determine the total value of the long-term incentives granted each year, the Committee has utilized market data prepared by Mercer. Mercer has analyzed the types and median targets of long-term incentives granted to comparable officers at the peer group companies detailed in the “Peer Group” section above. The Committee has then used the Mercer analysis and pay mix, position, and internal equity factors to determine the appropriate target

percentages of base compensation and the value of the long-term incentive for each officer. For 2009 and 2010, the target long-term incentives as a percentage of base salary for the Named Executive Officers were:

 

 

Once the targets and values were determined, the key elements of the awards were established, as described below.

 

Stock Options

 

The role of stock options is to reward executives for increasing absolute long-term shareholder value. The value of each stock option award is equal to 50% of the target long-term incentive award using the Black-Scholes option pricing model. Stock option grants have historically been awarded in the first quarter of the fiscal year. The Company has a policy to make annual equity awards to the Company’s executive officers, including the Named Executive Officers, on the third trading day following the release of the Company’s financial results for the prior fiscal year. The exercise price of the stock options is equal to the closing share price of Saia common stock on NASDAQ on the grant date. The Omnibus Incentive Plan strictly prohibits re-pricing of stock options. All stock options granted to date have been non-qualified stock options.

 

Stock options granted in 2010, 2009 and 2008 have a three-year cliff vesting schedule and a seven-year term. The only exception to this vesting and term schedule was a special grant of 19,990 options to Mr. O’Dell made in February 2007 in recognition of his promotion to CEO. These options have a ten-year term and vest one-third on each of the third, fourth and fifth anniversary of grant. All stock options granted to date vest on the basis of passage of time, subject to earlier vesting upon a change of control and, as to Mr. O’Dell and Mr. Albanese, subject to their employment agreements described below. The Committee believes time-vested awards encourage long-term value creation and executive retention because generally executives can realize value from such awards only if the Company’s stock price increases and they remain employed at Saia at least until the awards vest. Providing for a vesting period over a number of years also helps ensure against executive taking excessive or unnecessary risks that might threaten the long-term value of the Company.

 

In February 2009, the Company granted a total of 53,350 stock options to the Named Executive Officers, representing 56% of the total stock options granted at that time. In February 2010, the Company granted a total of 53,250 stock options to the Named Executive Officers, representing 56% of the total stock options granted at that time. The Company uses a Black Scholes model to determine grant levels.

 

Performance Units

 

The remaining 50% of the Named Executive Officer’s long-term incentive opportunity is awarded in performance units. The role of performance units is to reward executives for long-term value creation relative to peer companies. Since the size of the peer companies is not critical in assessing relative total shareholder returns, the peer group used for comparison is broader than the peer group used for determining base salaries and other long-term incentives. The peer group includes public companies in the broader transportation industry because this provides a wider spectrum from which to determine rewards tied to the creation of longer-term shareholder value. The peer companies are as follows:

 

 

 

The following peer companies were added to the peer group for the 2010-2012 performance period in order to expand the market peer group to include certain other types of transportation industry participants.

 

 

The period of measurement for total shareholder return for each performance unit award is three years. Total shareholder return is calculated by taking the average closing common stock prices for the last 60 days prior to the beginning of the performance period and comparing it to the average closing common stock prices for the last 60 days prior to the end of the performance period. At the end of the performance period, the percentile rank of the Company’s total shareholder return is calculated relative to the total shareholder return of each of the peer

companies. Any peer company that is no longer publicly traded is excluded from this calculation. Over the performance periods of 2010-2012, 2009-2011 and 2008-2010, the payouts will be determined as follows:

 

 

The payout associated with the Company’s percentile rank will be based on the chart above with payouts interpolated for performance between the 25th and 50th percentiles and the 50th and 75th percentiles. If the Company’s total shareholder return for the performance period is negative, no payouts are made regardless of the Company’s percentile rank. The Committee believes providing such performance units that are valued based on the Company’s total shareholder return is important to align the incentive value with the interest of shareholders, since the vesting of performance units is contingent on the relative performance of the Company’s total shareholder return over the three-year measurement period. This further helps ensure against executives taking excessive or unnecessary risks that might threaten the long-term value of the Company.

 

Historically, payouts for the performance units were made in cash; however, beginning with awards granted in 2007 the payouts are made in stock in order to reduce earnings volatility associated with the cash based awards. The number of shares paid is based on the number of units issued to the employee and the Company’s total shareholder return. No payouts were made on performance units granted for the 2006-2008 or 2007-2009 performance periods since total shareholder returns for those periods were negative. Performance unit awards are not scheduled to be paid out, if at all, until the first quarter of 2011 for the 2008-2010 performance period, the first quarter of 2012 for the 2009-2011 performance period and the first quarter of 2013 for the 2010-2012 performance period.

 

Restricted Stock

 

In 2008, the Committee addressed concerns about the impact of market volatility on long-term executive retention. Following an evaluation with the assistance of Mercer regarding various approaches to promote retention, the Committee approved a grant of 34,000 shares of restricted stock to Mr. O’Dell and 17,000 shares of restricted stock to Mr. Albanese. These grants coincided with the grant date of stock options in February 2008. The shares of restricted stock vest 25% on February 1, 2011; 25% on February 1, 2012 and the balance on February 1, 2013 assuming the executive has been in continuous service to the Company since the award date.

 

Other Benefits and Perquisites

 

Benefits

 

The Company provides certain benefits to substantially all employees, including the Named Executive Officers. These benefits include paid holidays and vacation, medical, dental, disability and life insurance and a defined contribution retirement plan. The defined contribution retirement plan is a 401(k) plan to which employees may elect to make pre-tax contributions. The Company has the discretion to match 50% of all employee contributions, up to a maximum employee contribution of six percent of annual salary. Due to the current economic conditions, the Company elected to temporarily suspend the matching contribution for all employees, including for executive officers, starting in February 2009 and will reassess that decision as economic and industry conditions change and the Company’s performance improves.

 

Deferred Compensation Plan

 

In addition to the benefits provided to all employees, the Company has established for officers (including all of the Named Executive Officers) and certain other employees an Executive Capital Accumulation Plan which is a non-qualified deferred compensation plan. The deferred compensation plan was implemented to motivate and ensure the retention of key employees by providing them with greater flexibility in structuring the timing of their

compensation and tax payments. The Committee believes that the Company’s deferred compensation plans provide a valuable benefit to senior executives while resulting in minimal costs to the Company.

 

Pursuant to the Capital Accumulation Plan, the Company has made an annual discretionary contribution for each participant that is equal to five percent of his or her base salary and annual incentive payment. In addition, to the extent a participant’s contribution to the 401(k) plan is limited under restrictions placed on “Highly Compensated Employees” under ERISA, the participant may elect to contribute the limited amount to the 401(k) plan and the difference to the Capital Accumulation Plan. To the extent the Company is unable to match participant contributions under the 401(k) plan because of the ERISA limitations, the matching contributions will be made by the Company to the Capital Accumulation Plan. The Company’s regular annual five percent contribution has a five year vesting period. Due to the current economic conditions, the Company elected to not make the annual discretionary contribution for 2009 and will reassess that decision as economic and industry conditions change and the Company’s performance improves.

 

The Capital Accumulation Plan also allows the participant to make an elective deferral each year of up to 50% of base salary and up to 100% of any annual incentive plan payment. The participant must irrevocably elect the base salary deferral before the beginning of the year in which compensation is being made and the annual incentive deferral no later than six months through the performance period.

 

The plan provides the same investment options to participants as are available under the 401(k) plan, except that participants may also elect to invest in Saia stock under the plan. Participants may elect to transfer balances between investment options without restriction at any time throughout the year, except that any investment in Saia stock is an irrevocable election and upon distribution that investment will be paid out in Saia stock, rather than cash. Vested plan balances become distributable to the participant upon termination of employment.

 

Perquisites

 

The types and amounts of perquisites have been determined by the Committee with input from Mercer based on perquisites granted to comparable officers by companies in the peer group applicable to base salary. The Company provides these perquisites because many companies in the peer group provide similar perquisites to their Named Executive Officers, and the Committee believes they are necessary for retention purposes. The Committee reviews the perquisites provided to the Named Executive Officers in an attempt to ensure that the perquisites continue to be appropriate in light of the Committee’s overall goal of designing a compensation program that maximizes the interest of Saia’s shareholders.

 

During 2009 and 2008, two Named Executive Officers (Mr. O’Dell and Mr. Albanese) received perquisites with a value greater than $10,000. (See the “All Other Compensation” column of the Summary Compensation Table.) The perquisites provided to the Named Executive Officers include the following:

 

 

Post-Employment Compensation

 

The Committee believes that severance and change in control arrangements are an important part of overall compensation for the Named Executive Officers because they help to secure the continued employment and dedication of the Named Executive Officers notwithstanding any concern they might have regarding their own continued employment prior to or following a change in control. The Committee also believes that these arrangements are important as a recruitment and retention device, as most of the companies with which Saia competes for executive talent have similar agreements in place for their senior employees. The Committee annually

reviews the material terms of the agreements to ensure they are consistent with the Company’s compensation philosophy.

 

Executive Severance Agreements

 

The Company has entered into severance agreements with each of the Named Executive Officers. These agreements include a “double trigger”, meaning they provide for severance payments and other benefits only if there is a change in control of the Company and thereafter the executive’s employment is terminated involuntarily (other than for cause) or voluntarily with good reason. The material terms of the executive severance agreements are reviewed annually by the Committee with input from Mercer and outside legal counsel to confirm that they remain generally consistent with competitive practices. The Committee believes these agreements reward service and tenure and recognizes the need for financial security for key executives when employment ends. Rewards focus on our ongoing needs within the changing landscape of the transportation industry.

 

Under the severance agreements, if there is a change in control of the Company and within 24 months after the change in control the executive’s employment is terminated involuntarily by the Company (other than for cause) or voluntarily by the executive with good reason, the executive would receive a severance payment equal to two times (three times for Mr. O’Dell) the highest annual base salary and annual incentive bonus paid or payable to the executive for any twelve consecutive months in the three years ending with the date of the executive’s termination. In addition, all applicable health, medical, life insurance and long-term disability plans and programs covering the executive would continue for a period of two years (three years in the case of Mr. O’Dell) following the termination date. The severance agreements also provide for a gross-up payment for any excise tax imposed by Section 4999 of the Internal Revenue Code. In the event of a change in control, all outstanding stock options would immediately vest and the executive would have one year from the date of the change in control (two years in the case of Mr. O’Dell) to exercise the options, but not beyond the original term of the option.

 

Employment Agreements — Mr. O’Dell and Mr. Albanese

 

In order to provide an incentive for executive retention and to help support certain non-competition and non-solicitation provisions, the Company has entered into employment agreements with Mr. O’Dell and Mr. Albanese. The employment agreements are for two-year terms (renewing daily) and each agreement provides for a minimum base salary. Subject to the minimum base salary, the Committee may set the executive’s salary at any level it deems appropriate and the Committee evaluates and sets the base salaries on an annual basis.

 

The employment agreements include severance payments and benefits to Mr. O’Dell and Mr. Albanese in the event of their employment termination under certain circumstances. All severance payments and benefits pursuant to the employment agreements are conditioned upon the executive’s compliance with the non-disclosure, non-competition and employee and customer non-solicitation provisions of the employment agreement. The Company believes these provisions help ensure the long-term success of the Company and facilitate executive retention.

 

In the event the executive’s employment is terminated by the Company without cause or by the executive for good reason, the employment agreement provides that the executive is entitled to receive base salary and benefits accrued through the termination date, along with a severance benefit equal to two times his annual rate of base salary immediately preceding his termination of employment, paid in a lump sum on the first day of the seventh month immediately following the executive’s last day of employment. In addition, the Company is obligated to pay the executive a pro rated target bonus based on the actual portion of the fiscal year elapsed prior to the termination of the executive’s employment. Such payment will be made in a lump sum on the first day of the seventh month immediately following the executive’s last day of employment together with interest on such target bonus at a reasonable rate to be determined by the Company. During the period of 24 months following the executive’s termination of employment, the executive (and if covered under the applicable program, his spouse) would remain covered by the employee benefit plans and programs that covered him immediately prior to his termination of employment subject to certain exceptions. All outstanding stock options held by executive at the time of termination become fully exercisable upon such termination and the executive would have two years from the date of such termination to exercise such stock options, but not beyond the term of the option. Benefits provided under the employment agreement are subject to a gross-up payment for any excise tax imposed by Section 4999 of the Internal

Revenue Code. The employment agreement provides that in the event of an employment termination that would provide severance benefits under the executive severance agreement and the executive’s employment agreement, the executive would be entitled to the greater of each benefit provided under the applicable agreements.

 

In the event of death or disability, Mr. O’Dell and Mr. Albanese (or their respective estates) would be eligible to receive salary and benefits accrued through the date of the event, except that if the event occurred prior to the end of the performance period, any annual incentive would be forfeited. However, payment of long-term incentive performance units would be calculated using the event date as the end of the performance period, and then paid out based on a pro rata portion of the entire performance period. All outstanding stock options would immediately vest and would expire in one year, but not beyond the term of the option.

 

The material terms of the employment agreements are reviewed annually by the Committee with input from Mercer and outside legal counsel to confirm that they remain generally consistent with competitive practices.

 

Other Compensation Policies

 

Stock Ownership Guidelines

 

Because the Company is committed to aligning the executives’ interests with those of the shareholders, the Board has approved stock ownership guidelines for all officers who are eligible to receive long-term incentives, including all of the Named Executive Officers. The required number of shares for each officer is determined by multiplying his or her current base salary by the multiple noted below and dividing by the current share price. The current multiples are as follows:

 

 

While executives are not subject to a specific time period for satisfying the stock ownership guidelines, they are required to retain as owned stock 50 percent of after tax profits from stock option exercises and stock-based performance unit awards until such time as the Stock Ownership Guideline is met. The Committee reviews the stock ownership guidelines at each meeting and monitors the progress towards, and continued compliance with, the stock ownership guidelines.

 

Compensation Recovery Policy

 

In 2007, the Board of Directors adopted a formal policy that provides that the Company will, to the extent permitted by governing law, require reimbursement of all or a portion, as applicable, of any performance-based compensation paid to any participant in the Company’s long-term incentive plans after January 30, 2007 where (a) the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement, and (b) a lower payment, or no payment, would have been made to the participant based upon the restated financial results. In each such instance, the Company will, to the extent practicable, seek to recover the amount by which the individual participant’s performance-based compensation exceeded the amount that would have been paid based on the restated financial results, plus a reasonable rate of interest.

 

Prohibited Transactions

 

No employee, including Named Executive Officers, may engage in short sales of Saia common stock or in transactions involving puts, calls, or other derivative securities of the Company or in hedging transactions with respect to the Company. Additionally, all employees, including Named Executive Officers, are prohibited from holding Saia stock in a margin account and from pledging Saia common stock as collateral for indebtedness, except in circumstances where the holder can clearly demonstrate the financial capacity to repay the indebtedness without resort to the pledged stock.

Tax Policies

 

Under Section 162(m) of the Internal Revenue Code, the Company is limited to a $1 million annual deduction on non-performance-based compensation paid to certain Named Executive Officers. Based on the legal definition, Saia’s long-term incentive instruments (stock options and performance units) are considered performance-based compensation and are therefore deductible by the Company. Since Mr. O’Dell is the only Named Executive Officer whose deductible compensation has the potential to reach the $1 million limit (and then only in an outstanding performance year), no specific action has been taken to comply with Section 162(m).

 

Section 409A of the Internal Revenue Code generally changes the tax rules that affect most forms of deferred compensation that were not earned and vested prior to 2005. The Committee takes Section 409A into account in determining the form and timing of compensation paid to executives.

 

Sections 280G and 409A of the Internal Revenue Code limit Saia’s ability to take a tax deduction for certain “excess parachute payments” (as defined in Code Sections 280G and 409A) and impose excise taxes on each executive that receives “excess parachute payments” in connection with his or her severance from the Company in connection with a change in control. The Committee considers the adverse tax liabilities imposed by Code Sections 280G and 409A, as well as other competitive factors, when it structures certain post-termination compensation payable to the Named Executive Officers. The potential adverse tax consequences to the Company and/or the executive, however, are not necessarily determinative factors in such decisions.

 

Accounting Policies

 

For all stock option grants prior to January 1, 2003, stock-based compensation to employees is accounted for based on the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation.

 

In December 2004, the FASB issued FASB ASC Topic 718- Stock Compensation. This replaced SFAS No. 123 and supersedes APB Opinion No. 25. The Company records a non-cash expense for the stock compensation plans using the fair value method. Historically, the Company has recorded compensation cost in accordance with APB Opinion No. 25, which did not require the recording of an expense for stock options if they were granted at a price equal to the fair market value of Saia’s common stock on the grant date. No changes to the design of the long-term incentive program have been made as a result of fair-value accounting under FASB ASC Topic 718-Stock Compensation.

 

REPORT OF THE COMPENSATION COMMITTEE
OF SAIA, INC.

 

The Compensation Committee of the Board of Directors of the Company has submitted the following report for inclusion in this Proxy Statement:

 

Our Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on our Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

The foregoing report is provided by the following directors, who constitute the Committee:

 

Compensation Committee Members
Linda J. French, Chair
William F. Martin, Jr.
Björn E. Olsson

Jeffrey C. Ward

SUMMARY COMPENSATION TABLE

 

The following table sets forth the compensation awarded to, earned by or paid to Saia’s chief executive officer, chief financial officer and its three other most highly compensated executive officers (the “Named Executive Officers”) for services rendered in all capacities within Saia during the fiscal years ended December 31, 2009, 2008 and 2007.

 

SUMMARY COMPENSATION TABLE

 

 

 

 

All Other Compensation

 

The following table sets forth the detail of other compensation awarded to, earned by or paid to Saia’s Named Executive Officers for services rendered in all capacities within Saia during the fiscal years ended December 31, 2009, 2008 and 2007.

 

All Other Compensation

 

 

 

 

Grants of Plan-Based Awards

 

The following table sets forth the detail of grants of plan-based awards to Saia’s Named Executive Officers for services rendered in all capacities within Saia during the fiscal year ended December 31, 2009. See further details regarding these grants in the description of “Long Term Incentives” on page 19 of the Compensation Discussion and Analysis included above.

 

Grants of Plan-Based Awards — 2009

 

 

 

 

All long-term incentives awarded in 2009 were awarded under the Amended and Restated Saia, Inc. 2003 Omnibus Incentive Plan. The performance period for these awards is 2009-2011. Each participant who received an award is assigned a target incentive, which is a number of shares of Saia stock with a value equal to the specified percentage of annual base salary for the participant. The number of shares that are paid to a participant with respect to the three-year performance period is based on the total shareholder return of Saia compared to the total shareholder return of 29 peer companies. If the total shareholder return of Saia for the three-year period is negative, no payouts are made under the award. Because the amount of an executive’s payout is based on the Company’s total shareholder return compared to that of members of a peer group over a three-year period, the exact amount of the payout (if any) cannot be determined at this time.

 

The stock option grants to the Named Executive Officers are made by the Committee on the same day as the grants to other stock option recipients.

 

Stock options granted in 2009 have an exercise price equal to the market closing price of Saia stock on the date of grant and a three-year cliff vesting schedule and a seven-year term. The grant date fair value of the stock options was determined using the Black-Scholes-Merton formula with the following assumptions:

 

 

Outstanding Equity Awards

 

The following table sets forth information regarding the number of shares of unexercised stock options and the number of shares and value of restricted stock outstanding at December 31, 2009 for the Named Executive Officers.

 

Outstanding Equity Awards at December 31, 2009