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 24, 2008

 

 

 

 

 

To Our Shareholders:

 

We cordially invite you to attend the 2008 annual meeting of shareholders of Saia, Inc. The meeting will take place at EBC Office and Conference Center, 11330 Lakefield Dr., Bldg 2, Johns Creek, Georgia 30097 on April 24, 2008, 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 2008; 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 10, 2008 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 20, 2008

 

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
Johns Creek, Georgia 30097

 

2008 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 2008 annual meeting of shareholders. The meeting will take place at EBC Office and Conference Center, 11330 Lakefield Dr., Bldg. 2, Johns Creek, Georgia 30097 on April 24, 2008, 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 2008, 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, 2007, 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 20, 2008.

 

 

 

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 auditors for fiscal year 2008.

 

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 10, 2008. 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 13,448,602 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 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 23, 2008.

 

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 Broadridge Financial Solutions 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 Broadridge 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, Computershare Trust Company, 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?

 

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 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 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, except that in the case of the election of directors, they will have no effect.

 

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 III directors will expire at the upcoming annual meeting. The Board of Directors has nominated Linda J. French, William F. Martin, Jr. and Björn E. Olsson for election as Class III directors for three-year terms expiring at the annual meeting of shareholders to be held in 2011 and until their successors are elected and qualified. Ms. French and Messrs. Martin and Olsson currently serve as Class III 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 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 III DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE 2011 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 II directors expire at the annual meeting of shareholders to be held in 2010. The following tables set forth, with respect to each Class I and Class II director, his name, age, principal occupation and employment during the past five years, the year in which he 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 II DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2010 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 6, 2007. The Audit Committee charter, included as Exhibit A, was most recently modified by the Board in December 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 2007, the Lead Independent Director was Douglas W. Rockel. The primary responsibilities of the Lead Independent Director are to:

 

 

Meetings

 

The Board of Directors held five meetings in 2007. 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. The Audit Committee held eight meetings in 2007. 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 four meetings in 2007. 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 2007. 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

 

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 Board will nominate for election or re-election as Director only candidates who agree to tender, promptly following the annual 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:

 

 

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, Johns Creek, 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 120^th 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, 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 2007 annual meeting of shareholders, with the exception of Mr. Ward.

 

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 22 and all directors and executive officers as a group, as of January 31, 2008. 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. 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, in order 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 Nasdaq-traded issuers, as well as applicable federal law), is responsible for all components of Saia’s officer compensation programs. The current Committee members are Ms. French, Mr. Martin, 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 its 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 the Named Executive Officers (i.e. executive officers disclosed in the summary compensation table on page 22), 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 retained Mercer (US) Inc.(“Mercer”) to provide information, analyses, and advice regarding executive and director compensation, as described below. 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. These procedures include: a direct reporting relationship of the Mercer consultant to the Committee; a provision in the Committee’s engagement letter with Mercer specifying the information, data, and recommendations that can and cannot be shared with management; an annual update to the Committee on Mercer’s financial relationship with the Company, including a summary of the work performed for the Company during the preceding 12 months; and written assurances from Mercer that, within the Mercer organization, the Mercer consultant who performs services for the Company has a reporting relationship and compensation determined separately from Mercer’s other lines of business and from its other work for the Company. Mercer has provided the Committee with written assurance that these procedures continue to be in place and were followed during the last completed fiscal year.

 

All of the decisions with respect to determining the amount or form of executive and director compensation under the Company’s executive and director compensation programs are made by the Committee and the Board and may reflect factors and considerations other than the information and advice provided by Mercer.

 

Executive Compensation Philosophy

 

It is our 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 superior value for our shareholders. To this end, our 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 Committee annually reviews the executive compensation levels of the Named Executive Officers 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 two published compensation surveys, Mercer’s Americas Executive Remuneration Database and Watson Wyatt’s Top Management Compensation report, the proxy statements from a group of publicly-traded transportation peer companies and from compensation data developed by Mercer. The peers were select based on three criteria 1) companies publicly-traded in the United States, 2) companies in a similar industry, 3) companies of comparable size (0.5x — 3x of Saia’s revenue). The specific peers included in the review of proxy statements during 2007 and 2006 were Arkansas Best Corporation, Celadon Group, Inc., Covenant Transportation, Heartland Express, Knight Transportation, Inc., Marten Transportation Ltd., Old Dominion Freight Line, Inc., Quality Distribution, U.S. Xpress Enterprise, Inc., USA Truck, Inc., Vitran Corporation, and Werner Enterprises.

 

Mercer presents the comparative data to the Committee, which considers it along with other factors in determining appropriate compensation levels. Other factors include executive experience, Company performance, individual performance, executive retention, internal pay equity, and succession planning. The only material differences in the factors considered for each Named Executive Officer in the decision to increase or decrease compensation were an increased focus on executive retention for the Chief Executive Officer and the Senior Vice President of Sales & Operations. Regarding the CEO’s compensation, the Committee meets in executive session to determine the amount, form, and terms of such compensation for Board approval. The CEO participates in a discussion with the Committee regarding his performance, as well as goal setting for the following year. The CEO does not provide a recommendation for his own compensation and is not present for the decisions and related Committee discussions. For all other officer compensation decisions, the CEO provides recommendations and may be present at the Committee meeting for the decisions and related discussions, but does 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, and compensation under several potential severance and change-in-control scenarios. This review is aided by the analysis of competitive compensation data. Tally sheets are provided to the Committee as a summary of historical compensation information for Named Executive Officers. 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 2007 and 2006

were established through comparisons with published compensation survey data and peer group data described above under “Executive Compensation Policy.” 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. All salaried employees, including the Named Executive Officers, are eligible for an annual merit increase to base salary. The targeted 2007 increase budgeted for all officers was 2.5% of base salary. The average actual merit increase for Named Executive Officers was 2.5% of base salary. The effective date of the merit increases was December 1, 2007. The average 2006 merit increase for Named Executive Officers was 3.2% of base salary and was effective August 1, 2006.

 

Mr. O’Dell’s salary was increased to $429,475 reflecting a 2.5% merit increase for 2007. In connection with the annual review of Mr. O’Dell’s compensation, the Committee reviewed an internal equity analysis, comparing Mr. O’Dell’s compensation as a multiple of average employee pay by job level. The Committee was comfortable with the pay differentials between the CEO and other job levels.

 

As a result of the 2007 increases in base salary levels, the compensation that may be earned from the annual and long-term incentives, the Company’s contribution to the Company’s Executive Capital Accumulation Plan as described in the Benefits and Perquisites section below, and severance arrangements increased for the Named Executive Officers.

 

Annual Incentive Compensation — The annual incentive component of the Executive Compensation Program represents a 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 objectives for a fiscal year. Under the plan, a funding pool is created based on the attainment of selected financial goals. Saia’s annual incentive plan sets target, threshold and maximum levels to determine the payout. These target payouts range from 30% of base salary to 70% of base salary for the Company’s Named Executive Officers. Maximum opportunities for the annual incentive are 200% of the target.

 

For 2007, the annual incentive plan for Named Executive Officers was structured to provide cash incentives to key employees based entirely on the achievement of corporate earnings per share with a threshold payout at $1.80 per share and a target payout at $2.44 per share. This measure was selected to align with shareholder interests and competitive practice. Based on the earnings per share for 2007, there were no payouts under the annual incentive plan.

 

For the Named Executive Officers, actual annual incentives paid for 2006 were based on Saia’s operating income and on individual performance levels. Actual Saia Motor Freight operating income for 2006 (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 was applied in determining performance levels relative to goals and the associated individual incentive awards. For 2006, the average payout for the annual incentive for Named Executive Officers was 104.3% of target.

 

For 2008, the annual incentive plan for Named Executive Officers is structured to provide cash incentives to key employees based in part on the achievement of corporate earnings per share. The weighting of the performance measures for the Named Executive Officers is 75% on corporate earnings per share and 25% based on an operating ratio improvement compared to a competitor group. The competitor group is comprised of the four nonunion less-than-truckload publicly traded companies: Old Dominion Freight Line, Inc., Con-way, Inc., Vitran Corporation, Inc., and Fedex Freight. Operating ratio improvement was chosen as a measure based on the Company’s focus on improving profitability. The earnings per share performance goals for 2008 were set considering 2007 performance, the strategic plan, and the annual 2008 budget. Generally, the Committee sets the target level for the earnings per share goal at the budget level approved by the Board of Directors. Threshold and maximum earnings per share goals are set considering competitive goal range spreads and the incremental earnings between the minimum and target, and target and maximum goals.

Over the past five years, the performance at the Company’s business unit, Saia Motor Freight, has exceeded target incentive goals four times but has not exceeded the maximum performance goals. The payout percentage with the corporate goals over the past five years has been between zero and approximately 123% of an executive’s target incentive opportunity. 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 another 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 superior value for our shareholders. Stock price performance determines one-fourth to one-third of total compensation of the Named Executive Officers. 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 and 2007, the 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, to tie compensation to shareholder value creation and to enhance executive retention incentives, the Committee has elected to use a combination of performance unit awards, stock option grants and restricted stock awards. For 2007 and 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.

 

Performance Units

 

The role of the performance units is to reward executives for long-term value creation relative to peer companies. Under the performance unit awards granted in 2006, participants are eligible to earn cash and, for the 2007 awards, participants are eligible to receive stock based on Saia’s total shareholder return performance relative to a group of industry peers. Since the size of the peer companies is not critical in assessing relative total shareholder returns, the peer group used to assess relative total shareholder return performance is broader than the peer group used for reviewing executive compensation pay levels as described above under “Executive Compensation Philosophy”. The peer companies are the following: Arkansas Best Corp., CH Robinson Worldwide, Inc., Celadon Group Inc., Covenant Transport, Inc., CNF, Inc., EGL Inc., FEDEX Corp., Frozen Food Express Industries, Forward Air Corp., Heartland Express, Inc., Hub Group, Inc., J. B. Hunt Transport Svcs., Inc., Knight Transportation, Inc., Landstar Systems, Inc., Marten Transport, Ltd., Old Dominion Freight Line, Inc., Pacer International, Inc., Patriot Transportation Holdings, Inc., P.A.M. Transportation, Inc., Quality Distribution, Inc., Ryder System Inc., Universal Truckload Services, United Parcel Services, Inc. USA Truck Inc., UTI Worldwide Inc., US Xpress Enterprises, Inc., Vitran Corporation, Werner Enterprises, Inc., and YRC Worldwide, Inc. Over a three-year performance period of 2007 — 2009 and 2006 — 2008 relative to the total shareholder return of the peer group, the payouts will be determined as follows:

 

 

At the end of the Performance Period, the percentile rank of the Company’s total shareholder return 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 the total shareholder return at the end of the performance period is negative, no payouts are made under the awards. The target award levels were

determined based on Saia’s long-term incentive grant guidelines, which were developed based on published compensation surveys and peer group data described above under “Executive Compensation Philosophy.”

 

Actual awards for the recently completed 2005 — 2007 performance period, as disclosed in Summary Compensation Table under Non-Equity Incentive Plan Compensation, were zero percent of target, based on a final determination of a negative total shareholder return over the performance period, resulting in no payout. Actual awards for the 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 total shareholder return 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 2009 for the 2006 — 2008 performance period and first quarter of 2010 for the 2007 — 2009 performance period, based on a final determination of total shareholder return over the relevant performance period.

 

Stock Options

 

The role of stock options is to reward executives for absolute long-term value creation. The Committee decides when and to whom awards will 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 Committee. The award levels for the other Named Executive Officers and other participants are proposed by the CEO and reviewed and approved by the 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 Committee. In 2006, the Company adopted a policy to make regular equity awards (e.g., annual grants) to the Company’s executive officers 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 Committee on the same day as the grants to other stock option recipients. The exercise price of the stock options is equal to the 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 also 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.

 

In February 2007, the Company granted a total of 47,860 non-qualified stock options to the Named Executive Officers, representing 56% of the total stock options granted. The size of the stock option awards were determined based on Saia’s long-term incentive grant guidelines, which were developed based on published compensation surveys and peer group data describe above under “Executive Compensation Philosophy”, and the Black-Scholes valuation model.

 

In February 2008, the Company granted at total of 60,130 non-qualified stock options to the Named Executive Officers, representing 54% of the total stock options granted.

 

Restricted Stock

 

In 2008, the Committee was advised by Mercer to issue restricted stock so as to address the Committee’s concerns about executive retention and the impact of market volatility on long-term executive retention. Following an evaluation by the Committee with the assistance of Mercer regarding various approaches to promote executive retention, the Committee, in February 2008, approved the issuance of an award of 34,000 shares of restricted stock to Mr. O’Dell and 17,000 shares of restricted stock to Mr. Albanese. The shares of restricted stock vest as follows:

 

 

 

Benefits and Perquisites — The Company provides competitive benefits of medical, dental, disability, life insurance and defined contribution retirement benefits to substantially all employees, including the Named Executive Officers. 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 23. Additional details regarding the design of the defined contribution retirement benefits are disclosed on page 27.

 

In addition to the benefits provided to all employees, the Company provides certain benefits and perquisites that are limited to officers. These programs are reviewed annually by the Committee regarding their competitiveness and appropriateness. No modifications were made to these programs in fiscal year 2007. These benefits and perquisites are described below.

 

The Named Executive Officers participate in the Company’s non-qualified deferred compensation plan, referred to herein as the Company’s Executive Capital Accumulation Plan. 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 retirement benefit that is consistent with competitive practices. The amounts which the Named Executive Officers have chosen to contribute to the Company’s Executive Capital Accumulation Plan are included in the salary column of the Summary Compensation Table. 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 each Named Executive Officer), financial/legal planning allowance ($5,000 maximum allowance for Mr. O’Dell and $4,000 for each other Named Executive Officer), executive term life insurance ($1,000,000 for Mr. O’Dell and $500,000 for each other Named Executive Officer), and country club memberships (no maximum level and provided only to Mr. O’Dell). In fiscal 2007 and 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 agreements provide severance in the event of a change-in-control followed by 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 and potential conflict of interests created by a proposal from a third person concerning a possible business combination with or acquisition of equity securities of Saia.

 

The material terms of the Executive Severance Agreements are designed to be generally consistent with competitive practices and based on suggestions provided by Mercer, include 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 Executive Severance Agreements with the Named Executive Officers is as follows:

 

 

The rationale for the higher severance multiples and longer benefits continuation periods for Mr. O’Dell detailed in the chart above is that after termination there typically is a longer job search period required to find another comparable position the more senior the executive. Furthermore, senior executives 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 2007, are disclosed in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement on page 28.

 

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

 

Under such employment agreements, in the event of termination by Saia for disability or upon death, all options immediately vest and are exercisable for two years following termination (but not beyond the term of such option). In the event of termination by Saia without cause or termination for good reason, Mr. Albanese continues to receive base salary for a period of 24 months after termination and Mr. O’Dell continues to receive base salary for a period of 36 months after termination. Additionally, in the event of termination by Saia without cause or termination for good reason, each would receive a pro rata target bonus based on the actual portion of the fiscal year in which termination of employment occurs; payment of retirement benefits under Saia’s nonqualified defined contribution plan, if any; continuation for 24 months of benefit plans and programs that covered the executive immediately prior to termination of employment in the case of Mr. Albanese, and continuation for 36 months in the case of Mr. O’Dell; immediate vesting of all outstanding stock options with two years from termination to exercise (but not beyond the term of such option); and, if applicable, payment of excise tax and 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 in the agreements. 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 2007, 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 such as 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.

 

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 in any year. Saia’s awards of performance units and stock options 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 to comply with Section 162(m) at this time, since only Mr. 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 governing nonqualified deferred compensation (NQDC) plans and arrangements. Section 409A generally applies to amounts deferred after December 31, 2004. However, the rules applicable to 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 were made to the Executive Severance Agreements and Mr. O’Dell’s and Mr. Albanese’s 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. The aggregate amount of the delayed payments will 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.

 

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, 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, which includes all the Named Executive Officers. The purpose of the Ownership Guidelines is to further align executives’ interests with shareholders’ through stock ownership, including the Non-Qualified Deferred Plan share equivalents.

The number of shares that an officer is to own to satisfy the Ownership Guidelines is determined by multiplying his or her 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 the Ownership Guidelines at least annually and monitors each covered executive’s progress toward, and continued compliance with, the Ownership Guidelines.

 

The table below describes the Ownership Guidelines for each Named Executive Officer and the number of shares owned as of December 31, 2007.

 

 

 

 

Named Executive Officers are not in compliance with the Ownership Guidelines due, in part, to recent changes in the Ownership Guidelines, because of changes in positions 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, 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, 2007 and 2006.

 

SUMMARY COMPENSATION TABLE

 

 

 

 

Saia 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 will be reviewed annually but will 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. The Company may terminate the executive’s employment agreement in the event of the permanent and total disability of the executive or for cause. Each executive officer may terminate his employment at any time by providing 30 days’ notice to the Company, in which case the executive will receive base salary to the date of termination and all outstanding stock options held by the executive 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 of 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 years ended December 31, 2007 and 2006.

 

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, 2007.

 

Grants of Plan-Based Awards — 2007

 

 

 

 

All long-term incentives awarded in 2007 were awarded under the Saia, Inc. Amended and Restated 2003 Omnibus Incentive Plan,. The performance period for these awards is 2007 — 2009. Each participant who received an award is assigned a target incentive, which is a percentage of average annual base salary during the three years of the performance period. The amount of the target 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 15 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 (2006 — 2008 awards) or stock (2007 — 2009 awards) at the end of the three-year performance period based on the respective 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, 2007 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 2007 (other than the special grant to Mr. O’Dell described below) 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:

 

 

 

In addition to the regular stock option grant, a special grant was made to Mr. O’Dell, the Company’s CEO, on February 2, 2007 following his promotion to CEO. These options have an exercise price equal to the market closing price of Saia stock on the date of grant and a ten-year term. One-third of the options will vest at the end of year three, one-third at the end of year four and one-third at the end of year five. The grant date fair value of the stock options was determined using the Black-Scholes-Merton formula with the following assumptions:

 

 

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:

 

 

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, 2007 for the Named Executive Officers.

 

Outstanding Equity Awards at December 31, 2007

 

 

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

 

 

 

The following table sets forth information regarding the number and value of stock option exercises and stock awards vested during 2007 for the Named Executive Officers.

 

Option Exercises and Stock Vested — 2007

 

 

Nonqualified Deferred Compensation — 2007

 

 

 

 

Saia maintains a non-qualified deferred compensation plan, referred to herein as the Company’s 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 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 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 and up to 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 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 — 2007

 

 

Potential Payments Upon Termination or Change in Control

 

Change of Control Agreements

 

Each of the Named Executive Officers in the Summary Compensation Table is party to an Executive Severance Agreement. Under the Executive Severance Agreements with the executive officers, they will receive certain compensation in the event of a “Change of Control” of Saia followed within two years by (i) the termination of the executive’s employment for any reason other than death, disability, retirement or “cause” or (ii) the resignation of the executive due to an adverse change in title, authority or duties, a transfer to a new location, a reduction in salary, or a reduction in fringe benefits or annual bonus below a level consistent with Saia’s practice prior to the Change of Control. In the event of a qualifying change of control event the executive officer will receive: (i) a lump sum cash payment equal to two times the highest average annual rate of base compensation and bonuses paid or payable in any consecutive 12 month period during the three years prior to termination, except in the case of Mr. O’Dell whose lump sum cash payment is three times the highest average annual rate of base compensation and bonuses paid or payable in any consecutive 12 month period during the three years period to termination; (ii) a pro rated payout of benefits for the performance unit award based on the actual portion of the performance period elapsed prior to the termination of the executive’s employment; (iii) beginning on the date of the executive’s termination of

employment, the executive (and spouse if applicable) will remain covered under the employee benefit plans in which he participated prior to termination of employment for 24 months (36 months for Mr. O’Dell); (iv) all outstanding stock options held by the executive officer at the time of termination will vest and remain exercisable for one year (but not beyond the expiration of the term).

 

Saia agrees to pay the officer a gross up payment to make the officer whole for any taxes incurred by the officer for any payment, distribution or other benefit (including any acceleration of vesting of any benefit) received or deemed received by the officer under the Executive Severance Agreement or otherwise that triggers the excise tax imposed by Section 4999 of the Internal Revenue Code.

 

For the purpose of the Executive Severance Agreements, a “Change of Control” will be deemed to have taken place if: (i) a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, purchases or otherwise acquires shares of Saia and as a result thereof becomes the beneficial owner of shares of Saia having 20% or more of the total number of votes that may be cast for the election of directors of Saia; or (ii) as the result of, or in connection with any cash tender or exchange offer, merger or other business combination, or contested election, or any combination of the foregoing transactions, the directors then serving on the Board of Directors cease to constitute a majority of the Board of Directors of Saia or any successor to Saia.

 

The following table details the amounts that each Named Executive Officer would have received under the Executive Severance Agreements if their employment had terminated (following a “change of control”) on December 31, 2007, the last business day of the Company’s fiscal 2007, and based on the Company’s closing stock price as of December 31, 2007 of $13.30:

 

 

  Employment Agreements

 

The tables below reflect the amount of compensation to be paid to Mr. O’Dell and Mr. Albanese, the only Named Executive Officers of the Company with employment agreements; in the event of termination of such executive’s employment. The amount of compensation payable to the officer upon voluntary termination, involuntary not-for-cause termination, for cause termination, and in the event of disability or death is shown below. The amounts shown in the tables below assume that such termination was effective as of December 31, 2007, and thus amounts earned through such time are estimates of the amounts which would be paid out to the respective executive upon his termination under the provisions. The actual amounts to be paid out can only be determined at the time of such executive’s actual separation from the Company.

 

Regardless of the manner in which Mr. O’Dell or Mr. Albanese terminate employment, they may be entitled to receive amounts earned during the term of employment. Such amounts include: