SCHEDULE 14A INFORMATION

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

Filed by the Registrant    þ
Filed by a Party other than the Registrant    o
Check the appropriate box:
o		Preliminary Proxy Statement
o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to § 240.14a-12

Saia, Inc.

 

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
þ		No fee required.
o		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
		1) Title of each class of securities to which transaction applies:
		2) Aggregate number of securities to which transaction applies:
		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):
		4) Proposed maximum aggregate value of transaction:
		5) Total fee paid:
o		Fee paid previously with preliminary materials.
o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		1) Amount Previously Paid:
		2) Form, Schedule or Registration Statement No.:
		3) Filing Party:
		4) Date Filed:

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 19, 2007

 

 

 

 

 

To Our Shareholders:

 

We cordially invite you to attend the 2007 annual meeting of shareholders of Saia, Inc., formerly known as SCS Transportation, Inc. The meeting will take place at EBC Office and Conference Center, 11330 Lakefield Dr., Bldg. 2, Duluth, Georgia 30097 on April 19, 2007, 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 auditors for fiscal year 2007;

 

3. Consider and vote upon proposed amendments to Saia’s Amended and Restated 2003 Omnibus Incentive Plan; and

 

4. 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 2, 2007 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 16, 2007

 

Please complete, date, sign and return the accompanying proxy card or vote electronically via the Internet or by telephone. The enclosed return envelope requires no additional postage if mailed in either the United States or Canada.

 

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
Duluth, Georgia 30097

 

2007 PROXY STATEMENT

 

The Board of Directors of Saia, Inc., formerly known as SCS Transportation, Inc., (“Saia”) is furnishing you this proxy statement in connection with the solicitation of proxies on its behalf for the 2007 annual meeting of shareholders. The meeting will take place at EBC Office and Conference Center, 11330 Lakefield Dr., Bldg. 2, Duluth, Georgia 30097 on April 19, 2007, 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 auditors for fiscal year 2007, will consider and vote upon proposed amendments to Saia’s Amended and Restated 2003 Omnibus Incentive Plan, 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, Chairman of Saia’s Board of Directors, James A. Darby, Saia’s Vice President — Finance, Chief Financial Officer and Secretary, and John J. Holland, a director of Saia, 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, 2006, which includes Saia’s audited annual 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 16, 2007.

 

 

 

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;

 

2. Ratify the appointment of KPMG LLP as Saia’s independent auditors for fiscal year 2007; and

 

3. Consider and vote upon proposed amendments to Saia’s Amended and Restated 2003 Omnibus Incentive Plan.

 

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 auditors, will be present at the meeting to respond to appropriate questions from shareholders.

 

Who is entitled to vote?

 

The record date for the meeting is March 2, 2007. Only shareholders of record at the close of business on that date are entitled to vote at the meeting. The only class of stock entitled to be voted at the meeting is Saia’s common stock. Each outstanding share of common stock is entitled to one vote for all matters before the meeting. At the close of business on the record date there were 14,327,072 shares of Saia common stock outstanding.

 

Am I entitled to vote if my shares are held in “street name”?

 

If your shares are held by a bank or brokerage firm, you are considered the “beneficial owner” of shares held in “street name.” If your shares are held in street name, these proxy materials are being forwarded to you by your bank or brokerage firm (the “record holder”), along with a voting instruction card. As the beneficial owner, you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with your instructions. If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given.

 

As the beneficial owner of shares, you are invited to attend the annual meeting. If you are a beneficial owner, however, you may not vote your shares in person at the meeting unless you obtain a proxy form from the record holder of your shares.

 

How many shares must be present to hold the meeting?

 

A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum. Proxies received but marked as abstentions or treated as broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

 

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 do I vote?

 

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 on the Internet.  If you are a registered shareholder (that is, if you hold your stock directly and not in street name), 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 18, 2007.

 

If your shares are held in street name, you still may be able to vote your shares electronically by telephone or on the Internet. A large number of banks and brokerage firms participate in a program provided through ADP Investor Communications Services that offers telephone and Internet voting options. If your shares are held in an account at a bank or brokerage firm that participates in the ADP program, you may vote those shares electronically by telephone or on the Internet by following the instructions set forth on the voting form provided to you.

 

 

3. You May Vote in Person at the Meeting.  If you are a registered shareholder and attend 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 of shares held in street name who wish to vote at the meeting will need to obtain a proxy form from their record holder.

 

Can I change my vote after I submit my proxy?

 

Yes, you may revoke your proxy and change your vote:

 

 

Your attendance at the meeting itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote in person at the meeting.

 

Who will count the votes?

 

Saia’s transfer agent, UMB Bank, n.a., will tabulate and certify the votes. A representative of the transfer agent will serve as an inspector of election.

 

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

 

Your Board recommends that you vote:

 

 

What if I do not specify how my shares are to be voted?

 

If you submit a proxy but do not indicate any voting instructions, your shares will be voted:

 

 

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, however, the proxy holders will vote your shares in accordance with their best judgment.

 

How many votes are required to elect the director nominees?

 

The affirmative vote of a plurality of the votes cast at the meeting is required to elect the three nominees as directors. This means that the three nominees will be elected if they receive more affirmative votes than any other person. If you vote “Withheld” with respect to one or more nominees, your shares will not be voted with respect to the person or persons indicated, although they will be counted for purposes of determining whether there is a quorum.

 

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 auditors?

 

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

 

How many votes are required to approve the proposed amendments to the Saia, Inc. Amended and Restated 2003 Omnibus Incentive Plan?

 

The approval of the proposed amendments to the Saia, Inc. Amended and Restated 2003 Omnibus Incentive Plan requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy and entitled to vote.

 

How will abstentions be treated?

 

Abstentions will be treated as shares present for quorum purposes and entitled to vote, so they will have the same practical effect as votes against a proposal.

 

How will broker non-votes be treated?

 

Broker non-votes will be treated as shares present for quorum purposes, but not entitled to vote, so they will not affect the outcome of any 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 2010 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.

 

The affirmative vote of a plurality of the votes cast at the meeting is required to elect the three nominees as directors. This means that the three nominees will be elected if they receive more affirmative votes than any other person.

 

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

 

The following table sets forth, with respect to each nominee, the nominee’s name, age, principal occupation and employment during the past five years, the year in which the nominee first became a director of Saia and directorships held in other public companies.

 

NOMINEES FOR ELECTION AS
CLASS II DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE 2010 ANNUAL MEETING

 

 

Continuing Directors

 

The terms of Saia’s three Class I directors expire at the annual meeting of shareholders to be held in 2009. The terms of Saia’s three Class III directors expire at the annual meeting of shareholders to be held in 2008. The following tables set forth, with respect to each Class I and Class III director, his or her name, age, principal occupation and employment during the past five years, the year in which he or she first became a director of Saia and directorships held in other public companies.

 

CLASS I DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2009 ANNUAL MEETING

 

 

CLASS III DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2008 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 July 20, 2006. The Audit Committee charter, included as Exhibit A, was most recently modified by the Board in January 2007. 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).

 

Non-Employee Chairman of the Board

 

The Board of Directors has designated a non-employee director, Mr. Herbert A. Trucksess, III, as the Chairman of the Board. Mr. Trucksess formerly served as the Company’s Chief Executive Officer.

 

Lead Independent Director

 

The Board of Directors includes a Lead Independent Director.

 

The Lead Independent Director is elected annually by the independent directors. For 2006, the Lead Independent Director was Douglas W. Rockel. The primary responsibilities of the Lead Independent Director are to:

 

 

Meetings

 

The Board of Directors held thirteen meetings in 2006. 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 are held as part of each regularly scheduled meeting of the Board. The sessions are chaired by the Lead Independent Director. Any non-employee director can request that an additional executive session be scheduled.

 

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. The Audit Committee held six meetings in 2006. 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 Stock Market. The Board of Directors has determined that Mr. Olson, Mr. Holland, and Mr. Olsson are “audit committee financial experts,” as defined by applicable rules of the Securities and Exchange Commission.

 

Compensation Committee

 

The Compensation Committee held eight meetings in 2006. The functions of the Compensation Committee are described in the Compensation Committee charter and include the following:

 

 

Each member of the Compensation Committee meets the definition of an independent director as established by The Nasdaq Stock Market.

 

Nominating and Governance Committee

 

The Nominating and Governance Committee held three meetings in 2006. 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 as established by The Nasdaq Stock Market.

 

ELECTION OF DIRECTORS

 

Pursuant to the Company’s Corporate Governance Guidelines, in an uncontested election of directors (i.e., an election where the only nominees are those recommended by the Board of Directors), any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election will promptly tender his or her resignation to the Chairman of the Board following certification of the stockholder vote.

The Nominating and Governance Committee will promptly consider the resignation and will recommend to the Board whether to accept the tendered resignation or reject it. In considering whether to accept or reject the tendered resignation, the Nominating and Governance Committee will consider all factors deemed relevant by the members of the Nominating and Governance Committee including, without limitation, the stated reasons why stockholders “withheld” votes for election from such director, the length of service and qualifications of the director whose resignation has been tendered, the director’s contributions to the Company, and the Company’s Corporate Governance Guidelines. The Board will act on the Nominating and Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting where the election occurred. In considering the Nominating and Governance Committee’s recommendation, the Board will consider the factors considered by the Nominating and Governance Committee and such additional information and factors the Board believes to be relevant. Following the Board’s decision on the Nominating and Governance Committee’s recommendation, the Company will promptly publicly disclose the Board’s decision whether to accept the resignation as tendered (providing a full explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation) in a Form 8-K filed with the Securities and Exchange Commission. To the extent that one or more directors’ resignations are accepted by the Board, the Nominating and Governance Committee will recommend to the Board whether to fill such vacancy or vacancies or to reduce the size of the Board. 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. If a majority of the members of the Nominating and Governance Committee received a greater number of votes “withheld” from their election than votes “for” their election at the same election, then the independent directors who are on the Board who did not receive a greater number of votes “withheld” from their election than votes “for” their election (or who were not standing for election) will appoint a Board committee amongst themselves solely for the purpose of considering the tendered resignations and will recommend to the Board whether to accept or reject them. This Board committee may, but need not, consist of all of the independent directors who did not receive a greater number of votes “withheld” from their election than votes “for” their election or who were not standing for election.

 

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:

 

 

 

Procedures for Recommendations and Nominations by Shareholders

 

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

 

 

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.

 

Separate procedures apply if a shareholder wishes to submit a director candidate at the Company’s annual meeting that is not approved by the Nominating and Governance Committee or the Board of Directors. Pursuant to Section 2.07(a) of the Amended and Restated By-Laws of the Company, for nominations to be properly brought before an annual meeting pursuant to clause (C) of paragraph (a)(i) of Section 2.07 of the By-Laws, the shareholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a shareholder’s notice must be delivered or mailed to and received at the principal executive offices of the Company not later than the close of business on the 90^th calendar day nor earlier than the 120th calendar day prior to the anniversary date of the first mailing of the Company’s proxy statement for the immediately preceding year’s annual meeting. Such shareholder’s notice shall set forth the following items:

 

 

The foregoing summary is qualified in its entirety by reference to the Company’s By-Laws, which have been filed with the Securities and Exchange Commission and copies of which 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, Duluth, 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 2006 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, each executive officer, and each former executive officer named in the Summary Compensation Table on page 22 and all directors and executive officers as a group, as of January 31, 2007. Unless otherwise indicated, beneficial ownership is direct and the person indicated has sole voting and investment power.

 

 

 

 

SAIA, INC.
COMPENSATION DISCUSSION AND ANALYSIS

 

Saia, Inc. (Saia or the Company) is among the leading regional less-than-truckload (LTL) companies in the United States, serving the South, Southwest, Pacific Northwest, Midwest, and Western Regions of the United States. Saia’s primary long-term corporate objective is to create superior value for our shareholders. To achieve this, Saia is committed to delivering best-in-class service to our customers, which in turn seeks to produce continued growth and value not only for shareholders but also for our employees. To achieve these objectives, the Company has developed a comprehensive business strategy that emphasizes long-term value through employee development, operational excellence and superior financial performance. Saia’s executive compensation program is designed to further these objectives. Our executive compensation program is performance-based, aligns executives’ interests with shareholders, and rewards executives for achievement of short- and long-term business performance goals.

 

Oversight of the Executive Compensation Program

 

The Company’s Executive Compensation Program is administered by the Compensation Committee of the Board of Directors (the “Committee”). The Committee, which is composed entirely of independent directors (as defined in the applicable rules for The Nasdaq Stock Market, as well as applicable federal law), is responsible for all components of Saia’s officer compensation programs. The current Committee members include Ms. French, Mr. Olsson, and Mr. Rockel. Ms. French serves as the Committee Chair.

 

The purpose of the Committee is to aid the Board of Directors in meeting the responsibilities with regard to oversight and determination of executive compensation. Among other things, the Committee reviews, recommends and approves salaries and other compensation and benefits of executive officers, administers the equity incentive plans, and administers other awards under the Omnibus Incentive Plan. A more complete description of the Committee’s responsibilities is provided in the Committee’s Charter approved by the Board of Directors, which can be found on the Company’s website (www.saia.com) in the investor relations section.

 

The Committee has the authority to engage the services of independent compensation consultants and legal advisers. In 2006, the Committee retained the services of Mercer Human Resource Consulting (“the Consultant”) to advise on issues related to the Committee’s responsibilities. The Consultant was selected by the Committee and reports to the Chair of the Committee. The Committee has the authority to determine the scope of the Consultant’s services and retains the right to terminate the Consultant’s contract at any time.

 

Executive Compensation Philosophy

 

It is the Company’s belief that the Executive Compensation Program should (1) link pay and performance and (2) attract, motivate, reward and facilitate the retention of the executive talent required to achieve corporate objectives. The primary long-term corporate objective is to create value for the Company’s shareholders. To this end, the Company’s Executive Compensation Program focuses significantly on long-term stock price performance.

 

In support of this philosophy, Saia uses several different executive compensation elements that align rewards with the short- and long-term performance of the Company and each executive. These programs are structured to deliver competitive compensation levels for the achievement of specific performance objectives.

 

Our philosophy for each component of pay is as follows:

 

 

 

The Compensation Committee annually reviews the executive compensation levels of the Named Executive Officers (i.e. executive officers disclosed in the Summary Compensation Table on page 22) using competitive data for similar positions at other, like-sized companies, generally meaning companies of one-half to three times our revenues. Data is gathered from published compensation surveys and the proxy statements from a group of publicly traded transportation peer companies. The specific peers included in the review of proxy statements during 2006 were Arkansas Best Corporation, Covenant Transport, Inc., HeartLand Express, Inc., Knight Transportation, Inc., Marten Transportation Ltd., Old Dominion Freight Line, Inc., Quality Distribution, Inc., U.S. Xpress Enterprise, Inc., USA Truck, Inc., Vitran Corporation, and Werner Enterprises, Inc. This review is conducted by the Committee’s Consultant. While the Committee carefully reviews the competitive compensation data, other factors considered in determining appropriate compensation levels include executive experience, Company performance, individual performance, internal pay equity, and succession planning. There were no material differences in the factors considered for each Named Executive Officer in the decision to increase or decrease compensation.

 

Regarding the CEO’s compensation, the Committee meets in executive session to determine the amount, form, and terms of such compensation for Board approval. For all other officer compensation decisions, the CEO provides recommendations and may be present for the decisions and related discussions, but may not vote.

 

Components of the Executive Compensation Program

 

The primary elements of the Executive Compensation Program are base salaries, annual incentives, long-term incentives, and other benefits and perquisites.

 

The Committee annually reviews all elements of the Named Executive Officer’s compensation programs relative to the executive compensation philosophy, including base salaries, annual incentives, long-term incentives, the dollar value to executives and cost to the Company of all perquisites and other personal benefits, the earnings and accumulated payout obligations under the Company’s non-qualified deferred compensation program, the actual projected payout obligations under the Company’s Supplemental Executive Retirement Plan (applicable only to Mr. Trucksess) and compensation under several potential severance and change-in-control scenarios. This review is conducted through the use of, among other things, competitive compensation data and tally sheets that set forth total rewards history, as well as potential rewards under various employment termination scenarios. Each of these compensation components are detailed further below.

 

Base Salaries — Base salaries represent the fixed portion of the Executive Compensation Program and are commensurate with the executive’s job level. Base salary levels for the Named Executive Officers in 2006 were established through comparisons with the market survey data described above. Overall, the base salary levels are close to the market 50th percentile, in the aggregate. The Committee’s intent is to target the marketplace’s 50th percentile for officer base salaries, over time, based on performance and growth in the experience of the executives. The specific factors considered in determining the base salary increases for 2006 were competitive compensation levels, executive experience, Company performance, individual performance, internal pay equity and succession planning.

 

All salaried employees, including the Named Executive Officers, are eligible for an annual merit increase to base salary. The targeted 2006 increase budgeted for all officers was 3.5% of base salary. The average actual merit increase for Named Executive Officers was 3.2% of base salary. The merit increases for Mr. Trucksess, Mr. Bellinghausen, and Mr. Robinson were effective corresponding with the date of the executive’s last merit increase. For all other Named Executive Officers, the effective date of the merit increases was August 1, 2006.

 

Mr. Trucksess’ salary was increased to $489,258, reflecting a 3% merit increase for 2006. In connection with the annual review of Mr. Trucksess’ compensation, the Committee reviewed an internal equity analysis, comparing Mr. Trucksess’ compensation as a multiple of average employee pay by job level.

 

In addition to the 2006 annual merit increases, base salary levels were increased on July 1, 2006 as a result of promotions and increased job responsibilities associated with the consolidation and relocation of the holding company. For those Named Executive Officers receiving such increase, the average increase was 20% of base salary.

 

As a result of the 2006 increases in base salary levels, the compensation that may be earned from the annual and long-term incentives, the Company’s contribution to the SCST Executive Capital Accumulation Plan, and severance arrangements increased for the Named Executive Officers.

 

Annual Incentive Compensation — The annual incentive component of the Executive Compensation Program represents the variable portion of the total compensation opportunity that motivates and rewards executives to achieve short-term corporate objectives. Saia’s annual incentive plan is structured to provide cash incentives to key employees based on the achievement of key corporate, business unit and individual objectives for a fiscal year. Under the plan, a funding pool is created based on the performance of selected financial goals. For 2006, the corporate performance measure was earnings per share and the business unit performance measure for Saia Motor Freight Line, Inc. was business unit operating income (excluding property gains and losses and integration charges). These measures were selected based on how well they reflect the short-term performance of the Company, how well they are understood by participants, and their alignment with competitive practice. Saia’s annual incentive plan sets target, threshold and maximum levels used to determine the payout. These target payouts range from 30% of base salary to 60% of base salary for the Company’s Named Executive Officers. Maximum opportunities for the annual incentive are 200% of the target.

 

For 2006, the weighting of the performance measures for the Named Executive Officers were as follows:

 

 

The actual incentives paid to Mr. Trucksess and Mr. Bellinghausen for 2006 were at target levels pursuant to their severance package associated with their departure as a result of the consolidation and relocation of the holding company. For Mr. Robinson for 2006 his incentive was paid at target for the first half of 2006 consistent with Mr. Trucksess and Mr. Bellinghausen and his individual performance levels and was paid using the Saia operating income metrics and individual performance levels for the second half of 2006. For the other Named Executive Officers, actual annual incentives paid for 2006 were based on Saia’s operating income, and individual performance levels. Actual Saia Motor Freight operating income (excluding property gains and losses and integration charges) was $59.8 million compared to a goal of $58.7 million resulting in an incentive of 105.8% of target for that measure. Individual performance was determined by reviewing each Named Executive Officer’s performance relative to pre-established individual performance goals. The individual goals were selected based on the respective individual’s areas of responsibility. While most of the individual performance goals were established with objective measurement criteria, some discretion is applied in determining performance levels relative to goals and the associated individual incentive awards. For 2006, the average payout for the individual incentive portion of the annual incentive for Named Executive Officers was 104.3% of target.

 

For 2007, the annual incentive plan for Named Executive Officers is structured to provide cash incentives to key employees based on the achievement of corporate earnings per share. This measure was selected based on how well it is understood by participants and to align with competitive practice. The weighting of each of the 2007 performance goals for all of the Named Executive Officers is 100% on corporate earnings per share.

 

The EPS performance goals for 2007 were set considering 2006 performance, the strategic plan, and the annual 2007 budget. Generally, the Committee sets the target level for the EPS goal at the budget level approved by the

Board of Directors. Threshold and maximum EPS goals are set considering competitive goal range spreads and the incremental earnings between the minimum and target, and target and maximum goals. For 2007, the threshold EPS goal is above 2006 actual performance and the target goal is above the average estimate of the stock analysts who cover the Company.

 

Over the past five years, the performance at the Company’s business unit, Saia Motor Freight, has exceeded target incentive goals four times and has not exceeded the maximum performance goals. Generally, the Committee sets the threshold, target, and maximum levels such that the relative difficulty of achieving the target level is consistent from year to year.

 

Long-Term Incentive Compensation — The long-term incentive component of the Executive Compensation Program represents the variable portion of the total compensation opportunity that motivates and rewards executives to achieve long-term corporate objectives. We believe that executive officers should have an ongoing stake in the success of the Company and they should have a considerable portion of their total compensation tied to Company stock price performance since the primary long-term corporate objective is to create value for our shareholders. The role of Saia’s long-term incentives is to reward executives for such long-term shareholder value creation.

 

Under the Amended and Restated 2003 Omnibus Incentive Plan, which was approved by shareholders in 2003 and amendments to which were approved by shareholders in 2005, the Compensation Committee has the authority to provide long-term incentives to key employees using a variety of devices, including stock options, restricted stock, and performance units. In order to provide a strong focus on creating value relative to other companies in our industry, and to tie compensation to shareholder value creation, the Committee has elected to use a combination of performance unit awards and stock option grants. For 2006, 50% of a Named Executive Officer’s long-term incentive opportunity was granted in performance units and 50% was in stock options valued using the Black-Scholes option valuation model. This mix between performance units and stock options was selected to balance the focus between relative and absolute stock performance and reflect competitive practices.

 

The role of the performance units is to reward executives for long-term value creation relative to peer companies. Under the performance units granted in 2006, participants will earn cash awards based on Saia’s total shareholder return (TSR) performance relative to a group of 30 primarily small and mid-capitalization trucking transportation and logistics peer companies over a three-year performance period of 2006 — 2008 with payouts as follows:

 

 

At the end of the performance period, the percentile rank of the Company’s TSR will be calculated. Any Peer Company that is no longer publicly traded will be excluded from this calculation. 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 percentile and the 50th and 75th percentile. If TSR at the end of the performance period is negative, no payouts are made under the awards.

 

Actual awards for the recently completed 2004-2006 performance period, as disclosed in Summary Compensation Table under Non-Equity Incentive Plan Compensation, were 160% of target, based on a final determination of TSR over the performance period, and were paid out during the first quarter of 2007. Actual awards are not scheduled to be paid out until the first quarter of 2008 for the 2005-2007 performance period and first quarter of 2009 for the 2006-2008 performance period, based on a final determination of TSR over the relevant performance period.

 

The role of the stock options is to reward executives for the absolute long-term value creation. The Compensation Committee has the plenary authority to determine when and to whom awards shall be granted, the term of each award, the number of shares covered by each award, and all other conditions of the award.

 

It has been our practice that the material terms and conditions of all stock options are established and approved by the Committee. Specifically, the CEO’s award is determined and approved by the Compensation Committee. The award levels for the other Named Executive Officers and other participants are proposed by the CEO and reviewed and approved by the Compensation Committee.

 

The timing of the stock option grants has historically been in the first quarter of the fiscal year with the exact grant date corresponding with the date of the meeting of the Compensation Committee. Saia has not and does not plan to have a practice to time option award grants made to existing or new executives with the release of non-public material information. In 2006, the Company adopted a policy to make regular equity awards (e.g., annual grants) to the Company’s executive officers and directors on the third trading day following the release of the Company’s financial results for the prior fiscal year (except as otherwise provided in the Amended and Restated Saia, Inc. 2003 Omnibus Incentive Plan). The stock option grants to the Named Executive Officers are approved by the Compensation Committee on the same day as the grants to other stock option recipients. The exercise price of the stock options is equal to the market closing share price of Saia on the grant date.

 

Stock options granted in 2006 and 2007 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, except for a special grant of 19,990 options to Mr. O’Dell made in February 2007 in recognition of his promotion to CEO which have a ten-year term and vest one-third in the third year, one-third in the fourth year and one-third in the fifth year. The three-year cliff vesting schedule is designed to coincide with payouts under the performance unit awards made in 2006 and 2007 in order to provide cash to facilitate the exercise of the stock options and promote increased stock ownership.

 

A total of 44,240 non-qualified stock options were granted to the Named Executive Officers in 2006, representing 60% of the total stock options granted. In February 2007, the Company granted a total of 47,860 non-qualified stock options to the Named Executive Officers, representing 58% of the total stock options granted.

 

Benefits and Perquisites — The Company provides medical, dental, disability, life insurance and defined contribution retirement benefits, to which substantially all employees, including the Named Executive Officers, are entitled to participate. The role of these plans is to provide a competitive level of health, welfare, and retirement benefits to substantially all employees. The amounts that the Named Executive Officers have chosen to contribute to the defined contribution plan are included in the salary column of the Summary Compensation Table and the matching contributions are included in the All Other Compensation column on page 22. Additional details regarding the design of the defined contribution retirement benefits are disclosed on page 26.

 

In addition to the benefits provided to all employees, the Company provides benefits and perquisites that are limited to officers. These programs are reviewed annually by the Compensation Committee regarding their competitiveness and appropriateness. No modifications were made to these programs in fiscal year 2006. The officer-only benefits and perquisites are described below.

 

The Company provides a non-qualified deferred compensation plan, titled the SCST Executive Capital Accumulation Plan, to officers. The role of this plan is to provide the opportunity to defer taxation on all or a portion of base salary and a portion of annual incentives through irrevocable elective deferrals, and to provide a supplemental executive retirement benefit that is consistent with competitive practices. The amounts which the Named Executive Officers have chosen to contribute to the SCST Executive Capital Accumulation Plan are included in the salary column of the Summary Compensation Table. Additional details of the Plan are disclosed on page 26.

 

The Company provides a non-qualified supplemental defined benefit retirement plan to Mr. Trucksess that is reduced by amounts received from the SCST Executive Capital Accumulation Plan. The purpose of this plan is to provide Mr. Trucksess with approximately the difference between the supplemental retirement benefits that he would have received under his previous employment contract with his former employer (Yellow Corporation, now known as YRC Worldwide Inc.), had Mr. Trucksess continued his employment with Yellow Corporation, and the expected actual retirement benefits Mr. Trucksess is entitled to from Yellow Corporation. This contractual benefit was negotiated at the time the Company was formed, when Mr. Trucksess assumed the role of Chairman and CEO, and is not provided to other executives. This retirement benefit is payable to Mr. Trucksess upon retirement under

the SCST Executive Capital Accumulation Plan and his Employment Agreement. Additional details of the Plan are disclosed on page 27.

 

The Company provides limited perquisites to its Named Executive Officers. The perquisites for the Named Executive Officers include a car allowance ($7,200 maximum allowance for all Named Executive Officers), financial/legal planning allowance ($5,000 maximum allowance for Mr. Trucksess and Mr. O’Dell and $4,000 for other Named Executive Officers), executive term life insurance ($1,000,000 coverage for Mr. Trucksess and $500,000 for other Named Executive Officers), and country club memberships (no maximum level and provided only to Mr. Trucksess and Mr. O’Dell). In fiscal 2006, two Named Executive Officers received perquisites with a value greater than $10,000 as disclosed in the “All Other Compensation” columns of the Summary Compensation Table disclosed on page 22.

 

Termination of Employment/Severance Arrangements

 

The Company has entered into Executive Severance Agreements with all the Named Executive Officers. These executive agreements provide the executives with severance in the event of a change-in-control and termination (i.e., double trigger) without cause or for good reason. The role of these agreements is to reduce the distraction that may be caused by the personal uncertainties of continued employment created by a proposal from a third person concerning a possible business combination with or acquisition of equity securities of Saia to be consistent with competitive practice.

 

The material terms of the executive severance agreements are designed to be consistent with competitive practices including a gross-up provision for excise taxes. Designing the agreements to be consistent with competitive practice facilitates our ability to attract, motivate, reward, and retain the executive talent required to meet the Company’s business objectives.

 

The material terms of the executive severance agreements are as follows:

 

 

A summary of the severance arrangements with remaining Named Executive Officers are as follows:

 

 

The rationale for the higher severance multiples and longer benefits continuation periods for most senior executives is after termination, there typically is a longer job search period required to find another comparable position the more senior the executive. Furthermore, they also are typically at greater risk of termination in the event of a change-in-control. A more detailed description of the specific circumstances that would trigger severance payouts and the estimated payments and benefits that would be provided in each covered circumstance for the Named Executive Officers, assuming that the relevant triggering event occurred on the last business day of fiscal 2006, are disclosed in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement on page 28.

 

Mr. Albanese and O’Dell also have severance rights pursuant to their employment contracts in the event of termination by Saia for disability, termination without cause, termination for good reason, or termination by death.

 

Under such employment contracts, in the event of termination by Saia for disability or termination by death, the executive is provided the severance right of immediate vesting of outstanding stock options. In the event of termination by Saia without cause or termination for good reason, the executive is provided the severance rights of base salary continuation for a period of 24 months after termination, pro rata target bonus based on the actual portion of the fiscal year in which termination of employment occurs, eligible for payment of retirement benefits under Saia’s nonqualified defined contribution plan, if any, continuation for 24 months of benefits plans and programs that covered them immediately prior to termination of employment, and immediate vesting of all outstanding stock options with two years from termination to exercise (but not beyond the term of such option), and payment of excise tax or interest or penalties imposed by Section 4999 of the Internal Revenue Code as a result of payments or benefits received by the executive. These severance benefits are conditioned upon the executive’s compliance with non-competition and non-solicitation provisions. A more detailed description of the specific circumstances that would trigger severance payouts and the estimated payments and benefits that would be provided in each covered circumstance for the Named Executive Officers, assuming that the relevant triggering event occurred on the last business day of fiscal 2006, are disclosed in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement on page 28.

 

In the event of termination without cause in situations like a reduction in workforce that would not be covered by the Executive Severance Agreements, or for those individuals who do not have such agreements, the Company has in the past provided a minimum of 12 weeks of severance compensation for officers. This practice has provided competitive severance levels to officers who are not covered by other formal severance arrangements in the event of termination that typically is unrelated to an individual’s job performance. The severance payment supports the former employee for a limited period of time for the transition from employment at Saia to their next employer. This is not a formal policy of the Company, but an informal practice that the Company has the right to modify or eliminate at anytime.

 

As of December 31, 2006, Mr. Trucksess ceased to be an employee of Saia as a result of the sale of Jevic and the relocation and consolidation of the holding company. He remains Chairman of the Board of Directors of Saia, Inc. In accordance with the employment agreement entered into between the Company and Mr. Trucksess’ (filed as exhibit 10.5 of the Company’s annual report on Form 10-K for the year ended December 31, 2002 and the modification of the employment agreement dated December 7, 2006 filed as exhibit 10.1 of the Company’s Form 8-K filed on December 13, 2006) Mr. Trucksess will receive certain termination benefits. The amounts of Mr. Trucksess’ termination payments are disclosed in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement on page 28. Additionally, Mr. Bellinghausen received termination benefits in connection with his termination as a result of the sale of Jevic and the relocation and consolidation of the holding company effective December 31, 2006. Mr. Bellinghausen’s termination benefits are disclosed in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement on page 28.

 

Tax Implications of Executive Compensation

 

Under Section 162(m) of the Internal Revenue Code, publicly traded companies may not receive a tax deduction on non-performance-based compensation paid to Named Executive Officers in excess of $1 million. Saia’s awards of performance units and stock under the 2003 Omnibus Incentive Plan qualify as performance-based compensation under the law; except with respect to performance units and stock options, no specific actions have been taken with regard to the annual incentive plan to comply with Section 162(m) at this time, since only Messrs. Trucksess’ and O’Dell’s cash compensation has the potential to be effected by the $1 million limit, and then only in an outstanding performance year. The rationale for this practice is that from time to time it may be in the best interests of shareholders to allow for some flexibility in the manner in which payouts under the annual incentive plan are determined, to appropriately link pay and performance.

 

Section 409A is a section of the Internal Revenue Code added by the American Jobs Creation Act of 2004 which reforms the rules for governing nonqualified deferred compensation (NQDC) plans and arrangements. Section 409A generally applies to amounts deferred after December 31, 2004. However, the rules under

Section 409A would also apply to any amounts deferred prior to that time if a “material modification” is made to the plan after October 3, 2004. Amendments have been made to the Executive Severance Agreements and Employment Agreements in 2006 to comply with Section 409A. Specifically, separation payouts to key executives under these agreements have been delayed for six months as required under Section 409A. Aggregate amount of the delayed payments shall be paid in a lump sum, plus interest on such amount based on the six-month Treasury Bill rate calculated from the date of termination of employment.

 

Accounting Implications of Executive Compensation

 

In December 2004, the FASB issued SFAS No. 123 (Revised), Share-Based Payment. SFAS No. 123-R replaces SFAS No. 123 and supersedes APB Opinion No. 25. Accordingly, the Company records a non-cash expense for our stock compensation plans using the fair value method. Historically we have recorded our 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 our 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 SFAS No. 123-R.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s Directors, Executive Officers, and beneficial owners of more than 10% of Common Stock to file with the SEC reports regarding their ownership and changes in ownership of the Company’s securities. The Company believes that during fiscal 2006, its Directors, Executive Officers, and greater-than-ten-percent shareholders complied with all Section 16(a) filing requirements, with the exception of two instances of late filings for the following stock transactions in 2006: Mark H. Robinson purchased “phantom” stock units in the Company’s deferred compensation plan on December 14, 2006 and reported the purchase on Form 4 on February 6, 2007; and Jeffrey C. Ward received a grant of shares for his service on the Board on March 2, 2006, and reported the grant on March 8, 2006.

 

Compensation Recovery Policy

 

In 2007 the Company adopted a formal policy regarding the recovery of performance-based compensation during years in which restated performance would have reduced the amount paid. It is the policy of the Board of Directors that the Company will, to the extent permitted by governing law, require reimbursement of all or a portion thereof, 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 compensation exceeded the amount that would have been paid based on the restated financial results, plus a reasonable rate of interest.

 

Stock Ownership Guidelines

 

The Committee has approved the Saia Stock Ownership Guidelines (“Ownership Guidelines”), which apply to officers who receive long-term incentives. The purpose of the guidelines is to further align executives’ interests with shareholders’ through stock ownership.

 

The number of shares that an officer needs to acquire to satisfy the Ownership Guidelines is determined by multiplying their current base salary by the applicable multiple of base salary and dividing by the share price. The current Ownership Guidelines are set based on competitive levels and are as follows:

 

 

The Committee reviews Ownership Guidelines at least annually and monitors each covered executive’s progress toward, and continued compliance with, the guidelines.

 

The table below describes the ownership guidelines for each current Named Executive Officer and the number of shares owned as of December 31, 2006.

 

 

 

 

The Named Executive Officers are not in compliance with the above stock ownership guidelines due to recent changes in the guidelines for changes in positions due to the recent sale of Jevic and the consolidation and relocation of the holding company and the recent decrease in the stock price.

SUMMARY COMPENSATION TABLE

 

The following table sets forth the compensation awarded to, earned by or paid to Saia’s chief executive officer and chief financial officer (including all individuals who served in those capacities during 2006) and its three other most highly compensated executive officers (the “Named Executive Officers” or “NEOs”) for services rendered in all capacities within Saia during the fiscal year ended December 31, 2006.

 

SUMMARY COMPENSATION TABLE — 2006
(All values represented in 000s)

 

 

 

 

Saia is a party to an employment agreement with Herbert A. Trucksess, III. Mr. Trucksess’ employment with the Company terminated on December 31, 2006. Mr. Trucksess continues to serve as Chairman of the Company’s Board of Directors. Upon his termination and following the six-month waiting period required by Section 409 of the Internal Revenue Code, Mr. Trucksess will receive a lump sum cash payment equal to three times his annual rate of base compensation and a pro rated target bonus based on the actual portion of the fiscal year elapsed prior to the termination of the executive’s employment. Mr. Trucksess and his spouse will remain covered under the employee benefit plans in which he participated prior to termination of employment for 36 months. All outstanding stock options held by Mr. Trucksess at the time of termination vested and remain exercisable until the earlier of three years following his termination or the expiration of the option term. In addition, Mr. Trucksess is eligible to receive the supplemental retirement benefits described in “Pension Benefits” below.

 

Saia also has entered into employment agreements with Richard D. O’Dell and Anthony D. Albanese. The terms and conditions of these employment agreements are summarized below.

 

During the employment period, Messrs. O’Dell and Albanese (i) receive a base salary (which shall be reviewed annually but shall at no time during the term of the agreement be decreased from the rate then in effect); (ii) participate in a bonus program for which the criteria and parameters for payment are determined annually by the Compensation Committee of the Board of Directors; and (iii) participate in employee benefit plans made available by Saia to its executives from time to time.

 

Each employment agreement terminates immediately upon the executive officer’s death. Saia may terminate the executive’s employment agreement in the event of the permanent and total disability of the executive or for cause. Each of Messrs. O’Dell and Albanese may terminate his employment at any time by providing 30 days’ notice to the Company, in which case he will receive base salary to the date of termination and all his outstanding stock options will be forfeited.

 

Each of Mr. O’Dell and Mr. Albanese are entitled to certain payments upon termination in some circumstances. See “Potential Payments Upon Termination or Change in Control.”

 

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 year ended December 31, 2006.

 

All Other Compensation — 2006

 

 

 

 

 

Grants of Plan-Based Awards

 

The following table sets forth the detail of grants of plan-based awards to Saia’s Named Executive Officers (NEOs) for services rendered in all capacities within Saia during the fiscal year ended December 31, 2006.

 

Grants of Plan-Based Awards — 2006

 

 

 

Footnotes:

 

 

All long-term incentives awarded in 2006 were awarded under the Saia, Inc. Amended and Restated 2003 Omnibus Incentive Plan, which was approved by the shareholders at the 2005 annual meeting. The performance period for these awards is 2006-2008. Each participant who received an award is assigned a target cash incentive, which is a percentage of average annual base salary during the three years of the performance period. The amount of the target cash incentive that is 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 selected peer companies. If the total shareholder return of Saia for the three-year period is negative, no payouts are made under the award. Payouts are made in cash at the end of the three-year performance period. 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 target and maximum amounts in the table above were calculated based on the participant’s base salary at December 31, 2006 using each participant’s appropriate payout percentage for the target payout estimate and two times the target amount for the maximum payout estimate.

 

The stock option grants to the Named Executive Officers are approved by the Compensation Committee on the same day as the grants to other stock option recipients. Stock options granted in 2006 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 at December 31, 2006

 

The following table sets forth information regarding the number of shares of unexercised stock options and the number of shares and value of unvested restricted stock outstanding on December 31, 2006 for our Named Executive Officers.

 

 

All unexercisable options were issued under the Saia, Inc. Amended and Restated 2003 Omnibus Incentive Plan.

 

 

Footnotes:

 

 

Option Exercises and Stock Vested — 2006

 

The following table sets forth information regarding the number and value of stock options exercised and stock vested during 2006 for our Named Executive Officers.

 

 

Equity Compensation Plan Information, as of December 31, 2006

 

 

 

 

Nonqualified Deferred Compensation — 2006

 

 

 

 

Saia maintains a non-qualified deferred compensation plan, titled the SCST Executive Capital Accumulation Plan. The Company’s officers are eligible to participate in the plan. Annually, the Company contributes an amount equal to 5 percent of each participant’s base salary and annual incentive plan payments to the plan. In addition, to the extent a participant’s contribution to their respective 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 Capital Accumulation Plan. To the extent the Company was unable to match participant contributions under the 401(k) plan because of the ERISA limitations on the amount of contributions, the matching contributions will be made by the Company to the Capital Accumulation Plan.

 

The plan also allows the participant to make an elective deferral each year of up to 50 percent of base salary or 100 percent of any annual incentive plan payment. The participant must irrevocably elect the elective deferral during the year preceding the year for which compensation is being deferred. The plan is designed to provide the same investment options to participants as are available under their respective 401(k) plans, except that participants may also elect to invest in Saia stock under the plan. Participants may elect to transfer balances between investment options, other than Saia stock, without restriction at any time throughout the year.

 

Plan balances become distributable to the participant upon termination of employment. In order to be eligible to receive payment of the 5 percent annual Company contribution, the participant must have been employed by Saia or an affiliated company, including service with the Company’s former parent (Yellow Corporation) prior to the spin-off of the Company from Yellow Corporation, for a period of at least five years from the date of contribution, unless termination is the result of disability or death. If a participant is terminated for cause, as defined under the applicable plan, all amounts plus investment earnings attributable to the 5 percent annual Company contribution are forfeited.

 

Pension Benefits — 2006