hubgroup2008proxy.htm
SCHEDULE
14A
INFORMATION
Proxy
Statement Pursuant
to Section 14(a) of the Securities Exchange Act of 1934
Filed
by
the Registrant [X]
Filed
by
a Party other than the Registrant [ ]
Check
the
appropriate box:
[ ]
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Preliminary
Proxy Statement
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[ ]
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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[ ]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material under Section 240.14a-12
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HUB
GROUP, INC.
(Name
of Registrant as
Specified in its Charter)
(Name
of Person(s)
Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[ ]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title
of each class of securities to which transaction applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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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 is determined):
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4)
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Proposed
maximum aggregate value of transaction:
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[ ]
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Fee
paid previously with preliminary materials
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[
] 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.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement No.:
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April
2,
2008
Dear
Stockholder:
You
are
cordially invited to attend the 2008 Annual Meeting of Stockholders of Hub
Group, Inc. This meeting will be held at The Hyatt Lodge on the
McDonald’s campus at 2715 Jorie Boulevard, Oak Brook, Illinois at 10:00 a.m.
Chicago time on Wednesday, May 14, 2008.
The
attached Notice of 2008 Annual Meeting of Stockholders and Proxy Statement
describe the matters to be acted upon. The Annual Report to
Stockholders on Form 10-K is also enclosed.
We
hope
you will be able to attend the meeting. However, even if you
anticipate attending in person, we urge you to mark, sign, date, and return
the
enclosed proxy card to ensure that your shares will be
represented. If you attend, you will, of course, be entitled to vote
in person.
Sincerely,
PHILLIP
C. YEAGER
Chairman
HUB
GROUP, INC.
NOTICE OF 2008 ANNUAL MEETING OF STOCKHOLDERS
To
the
Stockholders of Hub Group, Inc.:
The
Annual Meeting of Stockholders of Hub Group, Inc., a Delaware corporation (the
“Company”), will be held at The Hyatt Lodge on the McDonald’s campus at 2715
Jorie Boulevard, Oak Brook, Illinois on Wednesday, May 14, 2008, at 10:00
a.m., Chicago time, for the following purposes:
(1)
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To
elect six directors of the Company to hold office until the next
annual
meeting of stockholders; and
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(2)
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To
transact such other business as may properly be presented at the
Annual
Meeting or any
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A
proxy
statement with respect to the Annual Meeting accompanies and forms a part of
this Notice. The Company’s Annual Report to Stockholders on Form 10-K
also accompanies this Notice.
The
Board
of Directors has fixed the close of business on March 19, 2008, as the record
date for determining stockholders entitled to notice of, and to vote at, the
Annual Meeting.
By
order
of the Board of Directors,
DAVID
C.
ZEILSTRA
Vice
President, Secretary and General Counsel
Downers
Grove, Illinois
April
2,
2008
YOUR
VOTE IS
IMPORTANT
PLEASE
MARK, SIGN AND DATE THE
ENCLOSED PROXY AND
RETURN
IT PROMPTLY IN THE ENCLOSED
ENVELOPE WHETHER
OR
NOT YOU EXPECT TO ATTEND THE
ANNUAL MEETING.
Important
Notice Regarding the Availability of
Proxy
Materials for the Stockholders Meeting to be
Held
on May 14, 2008
The
Proxy Statement and Annual Report to Stockholders are
Available
at
www.hubgroup.com/proxy.html
HUB
GROUP, INC.
3050
HIGHLAND PARKWAY, SUITE 100
DOWNERS
GROVE, ILLINOIS 60515
PROXY
STATEMENT
This
Proxy Statement is furnished in connection with the solicitation by the Board
of
Directors of Hub Group, Inc., a Delaware corporation (“Hub Group” or the
“Company”), of proxies for use at the 2008 Annual Meeting of Stockholders of the
Company to be held on Wednesday, May 14, 2008, and any adjournment thereof
(the
“Annual Meeting”). This Proxy Statement and accompanying form of
proxy are first being sent to stockholders on or about April 2,
2008.
The
Company’s Class A common stock, $.01 par value (the “Class A Common Stock”), and
the Class B common stock, $.01 par value (the “Class B Common Stock,” together
with the Class A Common Stock, the “Common Stock”), are the only issued and
outstanding classes of stock. Only stockholders of record at the
close of business on March 19, 2008 (the “Record Date”), are entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, the
Company had 36,966,606 shares of Class A Common Stock (each a “Class A Share”)
and 662,296 shares of Class B Common Stock (each a “Class B Share,” and
collectively with the Class A Shares, the “Shares”) outstanding and entitled to
vote.
VOTING
RIGHTS AND PROCEDURES
Shares
represented by an effective proxy given by a stockholder will be voted as
directed by the stockholder. If a properly signed proxy form is
returned to the Company and one or more proposals are not marked, it will be
voted in accordance with the recommendation of the Board of Directors on all
such proposals. A stockholder giving a proxy may revoke it at any
time prior to the voting of the proxy by giving written notice to the Secretary
of the Company, by executing a later dated proxy or by attending the Annual
Meeting and voting in person. If
your shares are held in a bank or brokerage account, you will receive proxy
materials from your bank or broker, which will include a voting instruction
form. If you would like to attend the Annual Meeting and vote these
shares in person, you must obtain a proxy from your bank or
broker. You must request this form from your bank or broker; they
will not automatically supply one to you.
Each
Class A Share is entitled to one (1) vote and each Class B Share is entitled
to
approximately eighty (80) votes. The holders of Shares having a
majority of the votes that could be cast by the holders of all Shares, present
in person or represented by proxy, will constitute a quorum at the Annual
Meeting. Abstentions will be treated as Shares that are present and
entitled to vote for purposes of determining the presence of a
quorum. If a broker indicates on the proxy that it does not have
discretionary authority as to certain Shares to vote on a particular matter,
those Shares will be considered as present and entitled to vote for purposes
of
determining the presence of a quorum. As of March 19, 2008, the
Yeager family members own all 662,296 shares of Class B Common Stock and
1,001,821 shares of Class A Common Stock. Consequently, the Yeager
family controls approximately 60% of the voting power of the Company on all
matters presented for stockholder action. The Yeager family members
are parties to a stockholders’ agreement, pursuant to which they have agreed to
vote all of their shares of Class B Common Stock in accordance with the vote
of
the holders of a majority of such shares. Election inspectors
appointed for the meeting will tabulate votes cast by proxy or in person at
the
Annual Meeting and such election inspectors will determine whether or not a
quorum is present.
The
Board
of Directors knows of no matters to be presented at the Annual Meeting other
than those set forth in the Notice of 2008 Annual Meeting of Stockholders
enclosed herewith. However, if any other matters do come before the
meeting, it is intended that the holders of the proxies will vote thereon in
their discretion. Any such other matter will require for its approval
the affirmative vote of the holders of Shares having a majority of the votes
present in person or represented by proxy at the Annual Meeting, provided a
quorum is present, or such greater vote as may be required under the Company’s
Certificate of Incorporation, the Company’s By-laws or applicable
law. A list of stockholders as of the record date will be available
for inspection at the Annual Meeting and for a period of ten days prior to
the
Annual Meeting at the Company’s offices in Downers Grove.
ELECTION
OF DIRECTORS
The
number of directors of the Company, as determined by the Board of Directors
under Article III of the Company’s By-laws, is currently six. Each
director holds office until his or her successor is elected and qualified or
until his or her earlier death, resignation, retirement, disqualification or
removal.
The
nominees for whom the enclosed proxy is intended to be voted are set forth
below. Each nominee for election as director currently serves as a
director of the Company. It is not contemplated that any of these
nominees will be unavailable for election, but if such a situation should arise,
the proxy will be voted in accordance with the best judgment of the proxyholder
for such person or persons as may be designated by the Board of Directors unless
the stockholder has directed otherwise.
Directors
are elected by a plurality of the votes cast at the Annual Meeting, provided
a
quorum is present. Abstentions, withholding of authority to vote in
the election, or broker non-votes will not affect the outcome of the
election. Stockholders are not allowed to cumulate their votes in the
election of directors.
Nominees
for Election as Directors
Business
Experience During the Past
Five Years
Name
Age
and
Other
Information
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Phillip
C. Yeager
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80
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Phillip
C. Yeager has been Chairman of the Board since October 1985. From
April
1971 to October 1985, Mr. Yeager served as President of Hub City
Terminals, Inc. (“Hub Chicago”). Mr. Yeager became
involved in intermodal transportation in 1959, five years after the
introduction of intermodal transportation in the United States, as
an
employee of the Pennsylvania and Pennsylvania Central Railroads.
He spent
19 years with the Pennsylvania and Pennsylvania Central Railroads,
12 of
which involved intermodal transportation. In 1991, the Intermodal
Transportation Association named Mr. Yeager the Man of the
Year. In 1995, he received the Salzburg Practitioners Award
from Syracuse University. In October 1996, Mr. Yeager was inducted
into
the Chicago Area Entrepreneurship Hall of Fame sponsored by the University
of Illinois at Chicago. In March 1997, he received the
Presidential Medal from Dowling College for his achievements in
transportation services. In September 1998 he received the
Silver Kingpin award from the Intermodal Association of North America
and
in February 1999 the New York Traffic Club named him Transportation
Person
of the Year. In June 2006, Mr. Yeager was awarded an
honorary Doctor of Public Service degree from the University of Denver
in
recognition of his achievements in the intermodal industry. In
December 2006, the Containerization and Intermodal Institute presented
Mr.
Yeager with their 2006 Connie Award in recognition of his contributions
to
the industry. Mr. Yeager graduated from the University of
Cincinnati in 1951 with a Bachelor of Arts degree in
Economics. Mr. Yeager is the father of David P. Yeager and Mark
A. Yeager.
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David
P. Yeager
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55
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David
P. Yeager has served as the Company’s Vice Chairman of the Board since
January 1992 and as Chief Executive Officer of the Company since
March
1995. From October 1985 through December 1991, Mr. Yeager was President
of
Hub Chicago. From 1983 to October 1985, he served as Vice President,
Marketing of Hub Chicago. Mr. Yeager founded the St. Louis Hub in
1980 and
served as its President from 1980 to 1983. Mr. Yeager founded the
Pittsburgh Hub in 1975 and served as its President from 1975 to 1977.
Mr.
Yeager received a Masters in Business Administration degree from
the
University of Chicago in 1987 and a Bachelor of Arts degree from
the
University of Dayton in 1975. Mr. Yeager is the son of Phillip C.
Yeager
and the brother of Mark A. Yeager.
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Mark
A. Yeager
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43
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Mark
A. Yeager has been the Company’s President since January 2005 and has been
the Chief Operating Officer and a director since May 2004. From
July 1999 through December 2004, Mr. Yeager was President-Field
Operations. From November 1997 through June 1999 Mr. Yeager was
Division President, Secretary and General Counsel. From March
1995 to November 1997, Mr. Yeager was Vice President, Secretary and
General Counsel. From May 1992 to March 1995, Mr. Yeager served
as the Company’s Vice President-Quality. Prior to joining the Company in
1992, Mr. Yeager was an associate at the law firm of Grippo & Elden
from January 1991 through May 1992 and an associate at the law firm
of
Sidley & Austin from May 1989 through January 1991. Mr. Yeager
received a Juris Doctor degree from Georgetown University in 1989
and a
Bachelor of Arts degree from Indiana University in 1986. Mr. Yeager
is the
son of Phillip C. Yeager and the brother of David P. Yeager.
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Gary
D. Eppen
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71
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Gary
D. Eppen has served as a director of the Company since February 1996.
Currently retired, Mr. Eppen is formerly the Ralph and Dorothy Keller
Distinguished Service Professor of Operations Management and Deputy
Dean
for part-time programs in the Graduate School of Business at The
University of Chicago. He received a Ph.D. in Operations Research
from
Cornell University in 1964, a Master of Science in Industrial Engineering
from the University of Minnesota in 1960, a Bachelor of Science from
the
University of Minnesota in 1959 and an Associate in Arts degree in
Pre-Engineering from Austin Junior College in 1956.
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Charles
R. Reaves
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69
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Charles
R. Reaves has served as a director of the Company since February
1996.
Since 1994, Mr. Reaves has been President and Chief Executive Officer
of
Reaves Enterprises, Inc., a real estate development company. From
April
1962 until November 1994, Mr. Reaves worked for Sears Roebuck &
Company in various positions, most recently as President and Chief
Executive Officer of Sears Logistics Services, Inc., a transportation,
distribution and home delivery subsidiary of Sears Roebuck &
Company. Mr. Reaves received a Bachelor of Science degree in
Business Administration from Arkansas State University in 1961.
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Martin
P. Slark
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53
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Martin
P. Slark has served as a director of the Company since February 1996.
Since 1976, Mr. Slark has been employed by Molex Incorporated (“Molex”), a
publicly traded manufacturer of electronic, electrical and fiber
optic
interconnection products and systems. Having worked for Molex
in Europe, the United States and Asia, Mr. Slark is presently a Director
and Vice Chairman and Chief Executive Officer of Molex. Mr.
Slark is a companion of the British Institute of Management and received
a
Masters in Business Administration degree from the University of
East
London in 1993 and a Post-Graduate Diploma in Management Studies
from
Portsmouth University in 1981.
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The
Board of Directors recommends that the stockholders vote FOR the election of
each nominee for director named above.
MEETINGS
AND COMMITTEES OF THE BOARD
The
Board
of Directors has an Audit Committee, a Compensation Committee and a Nominating
and Governance Committee. During the fiscal year ended December 31,
2007, the full Board of Directors met five times, the Audit Committee met nine
times, the Compensation Committee met four times and the Nominating and
Governance Committee met once. During 2007, all directors, except Mr.
Phillip C. Yeager, attended at least 75% of the meetings of the Board of
Directors and the committees thereof on which they served. The
Company encourages each member of the Board of Directors to attend each annual
meeting of stockholders. All directors, except Mr. Phillip C. Yeager,
attended the Company’s 2007 annual meeting of stockholders held on May 7,
2007.
Audit
Committee
The
duties of the Audit Committee are to oversee the Company’s internal control
structure, review the Company’s financial statements and other financial
information to be included in the Company’s 10-K and annual report to
stockholders, select the independent auditors for the Company and its
subsidiaries and review the Company’s annual audit plan. The members
of the Audit Committee are Messrs. Eppen, Reaves and Slark. The Audit
Committee has a written charter which is available on the Company’s website at
www.hubgroup.com. The
Committee annually reviews and assesses the adequacy of the
Charter.
The
Board of Directors has determined
that Messrs. Eppen, Reaves and Slark are “independent” in
accordance with the applicable
corporate governance listing standards of the Nasdaq Stock
Market. The Board of Directors has determined that the Audit
Committee does not have an “audit committee financial expert” as that term is
defined in the Securities and Exchange Commission
regulations. However, the Board of Directors has determined that all
of the members of the Audit Committee are able to read and understand
fundamental financial statements within the meaning of the Nasdaq Audit
Committee requirements and that at least one of its members has the financial
sophistication required by Nasdaq. The Board of Directors has
determined that by satisfying the requirements of the Nasdaq listing standards
with a member of the Audit Committee that has the requisite “financial
sophistication” qualifications, the Audit Committee has the financial expertise
necessary to fulfill the duties and the obligations of the Audit Committee.
The
Board of Directors has concluded that the appointment of an “audit committee
financial expert” is not necessary at this time.
Compensation
Committee
The
Compensation Committee is responsible for providing assistance to the Board
in
the discharge of its responsibilities relating to compensation and development
of the Company’s Chief Executive Officer and other executive officers. In
addition, the Compensation Committee reviews, adopts, terminates, amends or
recommends to the Board the adoption, termination or amendment of equity-based
employee plans, incentive compensation plans and employee benefit plans, as
further described in the Compensation Committee Charter. The
Compensation Committee may use a compensation consultant to assist in the
evaluation of Chief Executive Officer or executive officer compensation. The
Compensation Committee has the sole authority to retain and terminate any
compensation consultant and to approve the consultant’s fees and other retention
terms. The members of the Compensation Committee are Messrs. Eppen,
Reaves and Slark. The Compensation Committee has a written charter
which is available on the Company’s website at www.hubgroup.com. The
Committee annually reviews and assesses the adequacy of the
Charter.
Nominating
and Governance Committee
The
duties of the Nominating and Governance Committee are to identify individuals
qualified to become Board members and nominate the director nominees for the
next annual meeting of stockholders, assist the Board with succession planning
and develop and recommend to the Board the corporate governance guidelines
applicable to the Company. The members of the Nominating and
Governance Committee are Messrs. Eppen, Reaves and Slark. The
Nominating and Governance Committee has a written charter which is available
on
the Company’s website at www.hubgroup.com. The
Committee annually reviews and assesses the adequacy of the
Charter.
Nominations
of Directors
Directors
may be nominated by the Board of Directors or by stockholders in accordance
with
the Bylaws of the Company. As a matter of course, the Nominating and
Governance Committee will review the qualifications of various persons to
determine whether they might make good candidates for consideration for
membership on the Board of Directors. The Nominating and Governance
Committee will review all proposed nominees for the Board of Directors,
including those proposed by stockholders, in accordance with the mandate
contained in its charter. This will include a review of the person’s
judgment, experience, independence, understanding of the Company’s business or
other related industries and such other factors as the Nominating and Governance
Committee determines are relevant in light of the needs of the Board of
Directors and the Company. The Nominating and Governance Committee
will select qualified candidates and review its recommendations with the Board
of Directors, which will decide whether to invite the candidate to be a nominee
for election to the Board of Directors.
The
Company has not paid a fee to any third party to identify or assist in
identifying or evaluating potential nominees. Each nominee for
election as a director is standing for reelection.
For
a stockholder to
submit a candidate for consideration by the Nominating and Governance Committee,
a stockholder must notify the Company’s Secretary. In addition, the
Bylaws permit stockholders to nominate directors at a stockholder
meeting. If a stockholder desires to nominate persons for
election as directors at the next Annual Meeting of Stockholders, written notice
of such stockholder’s intent to make such a nomination must be given and
received by the Secretary of the Company at 3050 Highland Parkway, Suite 100,
Downers Grove, IL 60515, either by personal delivery or by United States mail
within the time period set forth below under “Stockholder
Proposals.” Each notice must describe the nomination in sufficient
detail for the nomination to be summarized on the agenda for the meeting and
must set forth: (i) the name and address, as it appears on the books of the
Company, of the stockholder making the nomination, (ii) a representation that
the stockholder is a holder of record of stock in the Company entitled to vote
at the annual meeting of stockholders and intends to appear in person or by
proxy at the meeting to present the nomination, (iii) a statement of the class
and number of shares beneficially owned by the stockholder, (iv) the name and
address of any person to be nominated, (v) a description of all arrangements
or
understandings between the stockholder and each nominee and any other person
or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, (vi) such other information
regarding such nominee proposed by such stockholder as would be required to
be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission (the “Commission”), and (vii) the consent of
such nominee to serve as a director of the Company if elected. The
presiding officer of the annual meeting of stockholders will, if the facts
warrant, refuse to acknowledge a nomination not made in compliance with the
foregoing procedure, and any such nomination not properly brought before the
meeting will not be considered.
Controlled
Company
The
Board of Directors has determined
that the Company is a “controlled company” as that term is defined by Nasdaq
since the Yeager family, pursuant to their ownership of all Class B Common
Stock, control 59% of the voting power of the Company as of March 19,
2008. Pursuant to the Yeager Family Stockholder Agreement, the Yeager
family members have agreed to vote all of their shares of Class B Common Stock
in accordance with the vote of the holders of a majority of such
shares.
Code
of Ethics
The
Company has adopted a Code of
Business Conduct and Ethics that applies to all employees. The
Company’s Code of Business Conduct and Ethics may be found on the Company’s
website, www.hubgroup.com.
Communicating
with the Board
Stockholders
may communicate directly with the Board of Directors. All
communications should be directed to the Company’s Secretary at the address set
forth above and should prominently indicate on the outside of the envelope
that
it is intended for the Board of Directors or for non-management
directors. Each communication intended for the Board of Directors and
received by the Secretary which is not otherwise commercial in nature will
be
forwarded to the specified party following its clearance through normal security
procedures.
Review
of Related Party Transactions
The
Company does not employ specific
procedures for the review, approval or ratification of related party
transactions involving directors, nominees for directors, executive officers
and
their immediate family members, but considers such transactions on a
case-by-case basis as they arise.
OWNERSHIP
OF THE CAPITAL STOCK OF THE COMPANY
The
following table sets forth information with respect to the number of shares
of
Class A Common Stock and Class B Common Stock beneficially owned by (i) each
director of the Company, (ii) the current executive officers of the Company
named in the table under “Compensation of Directors and Executive
Officers--Summary Compensation Table,” (iii) all directors and executive
officers of the Company as a group, and (iv) based on information available
to
the Company and a review of statements filed with the Commission pursuant to
Section 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended
(the
“Exchange Act”), each person that owns beneficially (directly or together with
affiliates) more than 5% of the Class A Common Stock or Class B Common Stock,
in
each case as of February 29, 2008, except as otherwise noted. The
Company believes that each individual or entity named has sole investment and
voting power with respect to shares of the Class A Common Stock or Class B
Common Stock indicated as beneficially owned by them, except as otherwise
noted.
Number
(1)
Name
|
Class
A
|
Class
B
|
Percentage(2)
|
Phillip
C. Yeager (3)(4)(5)
|
281,439
|
662,296
|
2.5%
|
David
P. Yeager (3)(6)
|
289,108
|
662,296
|
2.5%
|
Mark
A. Yeager (3)(7)
|
519,274
|
662,296
|
3.1%
|
Terri
A. Pizzuto (8)
|
73,880
|
--
|
*
|
David
L. Marsh (9)
|
62,798
|
--
|
*
|
Donald
G. Maltby (10)
|
47,416
|
--
|
*
|
Gary
D. Eppen (11)
|
45,838
|
--
|
*
|
Charles
R. Reaves (12)
|
150,626
|
--
|
*
|
Martin
P. Slark (13)
|
61,659
|
--
|
*
|
All
directors and executive officers (15 people) (14)
|
1,871,867
|
662,296
|
6.7%
|
Debra
A. Jensen (3)(15)
|
--
|
662,296
|
1.8%
|
Wellington
Management Company, LLP
(16)...............................
|
4,179,757
|
--
|
11.1%
|
T.
Rowe Price Associates, Inc.
(17)...............................
|
3,412,100
|
--
|
9.1%
|
Neuberger
Berman (18).......... .....................
|
2,706,995
|
--
|
7.2%
|
Barclays
(19).......... .....................
|
2,136,264
|
--
|
5.7%
|
FMR
LLC (20).......... .....................
|
2,094,031
|
--
|
5.6%
|
Friess Associates LLC (21)
|
1,902,722
|
--
|
5.1%
|
____________________________________________________
* Represents
less than 1% of the outstanding shares of Common Stock.
(1)
|
Calculated
pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights,
or
conversion privileges exercisable within 60 days are deemed outstanding
for the purpose of calculating the number and percentage owned by
such
person, but not deemed outstanding for the purpose of calculating
the
percentage owned by each other person listed.
|
(2)
|
Represents
percentage of total number of outstanding shares of Class A Common
Stock
and Class B Common Stock.
|
(3)
|
The
Yeager family members are parties to a stockholders’ agreement (the
“Yeager Family Stockholder Agreement”), pursuant to which they have agreed
to vote all of their shares of Class B Common Stock in accordance
with the
vote of the holders of a majority of such shares. Except as
provided in footnotes 6 and 7, each of the Yeager family members
disclaims
beneficial ownership of the shares of Class B Common Stock held by
the
other Yeager family members. The Class B Common Stock
represents approximately 59% of the total votes allocable to the
Common
Stock. Members of the Yeager family own all of the Class B
Common Stock.
|
(4)
|
Includes
563,934 shares of Class B Common Stock as to which Phillip C. Yeager
may
be deemed to have shared voting discretion pursuant to the Yeager
Family
Stockholder Agreement. See Note 3. Also includes
88,000 shares of Class A Common Stock issuable upon exercise of
options.
|
(5)
|
Includes
2,000 shares of Class A Common Stock held by his wife. Mr.
Yeager disclaims beneficial ownership of these
shares.
|
(6)
|
Includes
46,794 shares of Class B Common Stock owned by the Laura C. Yeager
1994
GST Trust, 46,794 shares of Class B Common Stock owned by the Matthew
D.
Yeager 1994 GST Trust and 46,794 shares of Class B Common Stock owned
by
the Phillip D. Yeager 1994 GST Trust and 419,127 shares of Class
B Common
Stock as to which David P. Yeager may be deemed to have shared voting
discretion pursuant to the Yeager Family Stockholder
Agreement. See Note 3. Includes 41,383 shares of restricted
stock.
|
(7)
|
Includes
43,826 shares of Class A Common Stock and 36,794 shares of Class
B Common
Stock owned by the Alexander B. Yeager 1994 GST Trust and 43,826
shares of
Class A Common Stock and 36,794 shares of Class B Common Stock owned
by
the Samantha N. Yeager 1994 GST Trust and 44,907 shares of Class
A Common
Stock owned by the Mark A. Yeager Perpetual Trust (for which Mark
A.
Yeager serves as sole trustee and has sole investment and voting
discretion) and 501,914 shares of Class B Common Stock as to which
Mark A.
Yeager may be deemed to have shared voting discretion pursuant to
the
Yeager Family Stockholder Agreement. See Note 3. Also includes 35,472
shares of restricted stock.
|
(8)
|
Includes
24,084 shares of restricted stock and 6,800 shares of Class A Common
Stock
issuable upon exercise of options.
|
(9)
|
Includes
20,691 shares of restricted stock.
|
(10)
|
Includes
17,736 shares of restricted stock.
|
(11)
|
Includes
7,095 shares of restricted stock. 38,743 shares are held in the
Gary D. Eppen Trust dated April 22,
1996.
|
(12)
|
Includes
7,095 shares of restricted stock. 89,367 shares are pledged as
security.
|
(13)
|
Includes
24,000 shares of Class A Common Stock issuable upon exercise of options
and 7,095 shares of restricted
stock.
|
(14)
|
Includes
185,800 shares of Class A Common Stock issuable upon exercise of
options
and 261,182 shares of restricted
stock.
|
(15)
|
Includes
25,000 shares of Class B Common Stock owned by the Elizabeth A. Jensen
1994 GST Trust and 25,000 shares of Class B Common Stock owned by
the
Patrick R. Jensen 1994 GST Trust and 501,913 shares of Class B Common
Stock as to which Debra A. Jensen may be deemed to have shared voting
discretion pursuant to the Yeager Family Stockholder Agreement. See
Note
3. Debra A. Jensen is the daughter of Phillip C. Yeager.
|
(16)
|
Wellington
Management Company, LLP (“Wellington”) filed an amendment to a Schedule
13G with the Commission indicating beneficial ownership of shares
of Class
A Common Stock. According to the Schedule 13G, Wellington has
shared dispositive power with respect to all 4,179,757 shares of
Class A
Common Stock beneficially owned and shared voting power with respect
to
2,450,998 shares of Class A Common Stock beneficially owned. These
securities are owned by various individual and institutional investors,
which Wellington serves as investment advisor with power to direct
investments and/or sole power to vote the securities. For
purposes of the reporting requirements of the Exchange Act, Wellington
is
deemed the beneficial owner of such securities; however, Wellington
expressly disclaims that it is, in fact, the beneficial owner of
such
securities. The number of shares beneficially owned by
Wellington is indicated as of February 14, 2008. The address of Wellington
is 75 State Street, Boston, MA 02109.
|
(17)
|
T.
Rowe Price Associates, Inc. (“Price Associates”) filed a Schedule 13G with
the Commission indicating beneficial ownership of shares of Class
A Common
Stock. According to the Schedule 13G, Price Associates has sole
dispositive power with respect to all 3,412,100 shares of Class A
Common
Stock beneficially owned and sole voting power with respect to 838,800
shares of Class A Common Stock beneficially owned. These securities
are
owned by various individual and institutional investors which Price
Associates serves as investment advisor with power to direct investments
and/or sole power to vote the securities. For purposes of the
reporting requirements of the Exchange Act, Price Associates is deemed
the
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such
securities. The number of shares beneficially owned by Price
Associates is indicated as of February 14, 2008. The address of Price
Associates is 100 E. Pratt Street, Baltimore, MD 21202.
|
(18)
|
Neuberger
Berman Inc., Neuberger Berman, LLC, Neuberger Berman Management Inc.,
and
Neuberger Berman Equity Funds (collectively “Neuberger
Berman”) filed a Schedule
13G with the Commission indicating beneficial ownership of shares
of Class
A Common Stock. According to the Schedule 13G, Neuberger Berman
has sole voting power with respect to 103,002 shares of Class A Common
Stock, shared voting power with respect to 2,009,800 shares of Class
A
Common Stock and shared dispositive power with respect to all
2,706,995 shares of
Class A Common Stock. The number of shares beneficially owned
by Neuberger Berman is indicated as of February 12, 2008. The
address of Neuberger Berman is 605 Third Avenue, New York, NY
10158.
|
(19)
|
Barclays
Global Investors,
NA,
Barclays Global Fund Advisors and Barclays Global Investors, Ltd.
(collectively “Barclays”) filed a Schedule 13G with the Commission
indicating beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, Barclays has sole
dispositive power with respect to all 2,136,264 shares of Class
A Common Stock
beneficially owned and sole voting power with respect to 1,648,558
shares
of Class A Common Stock beneficially owned. Barclays has indicated
that
the shares reported held by Barclays are held in trust accounts for
the
economic benefit of the beneficiaries of those accounts. The
number of shares beneficially owned by Barclays is indicated as of
January
10, 2008. The address of the business office of Barclays Global
Investors, NA is 45 Fremont Street, San Francisco, CA
94105.
|
(20)
|
FMR
LLC (“FMR”) filed an amendment to a Schedule 13G with the Commission
indicating beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, FMR has sole dispositive
power with respect to all 2,094,031 shares of Class A Common Stock
beneficially owned and sole voting power with respect to 1,034,146
shares
of Class A Common Stock beneficially owned. These securities are
owned by
various individual and institutional investors, which FMR serves
as
investment advisor with power to direct investments and/or sole power
to
vote the securities. For purposes of the reporting requirements
of the Exchange Act, FMR is deemed the beneficial owner of such
securities; however, FMR expressly disclaims that it is, in fact,
the
beneficial owner of such securities. The number of shares
beneficially owned by FMR is indicated as of February 13, 2008. The
address of FMR is 82 Devonshire Street, Boston, MA 02109.
|
(21)
|
Friess
Associates LLC (“Friess”)
filed an amendment to a Schedule 13G with the Commission indicating
beneficial ownership of shares of Class A Common
Stock. According to the Schedule 13G, Friess has sole voting
power and
sole dispositive power with
respect to all 1,902,722 shares of Class
A Common
Stock. The number of shares beneficially owned by Friess is
indicated as of February 14, 2008. The address of Friess is 115
E. Snow King, Jackson, WY
83001.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who own more than ten percent of a registered class of
the
Company’s equity securities, to file with the Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors, and greater than
ten-percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To
the
Company’s knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports
were
required, during the Company’s 2007 fiscal year all applicable Section 16(a)
filing requirements were complied with by the officers, directors, and greater
than ten-percent beneficial owners.
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
Discussion and Analysis
Overview
of Compensation
Program
Our
Compensation Committee has the responsibility for determining the compensation
that is paid or awarded to our Company’s executive officers. Our
Compensation Committee consists of the three independent members of the
Board. Our Compensation Committee ensures that the total compensation
paid to our executive officers, is fair, reasonable and competitive and drives
behavior that increases stockholder value over the long-term.
Compensation
Philosophy and
Objectives
Our
Company’s compensation philosophy is designed to link executive performance to
long-term stockholder value, connect pay with individual performance, maintain
a
compensation system that is competitive with industry standards and attract
and
retain outstanding executives. We seek to incent our executives
through both short term and long term awards, with a goal of superior Company
performance. Our ultimate objective is to improve stockholder
value.
Our
Compensation Committee evaluates both performance and compensation to ensure
that our Company maintains its ability to attract and retain superior employees
in key positions and that compensation provided to key employees remains
competitive relative to the compensation paid to similarly situated executives
of our peer companies. To that end, our Compensation Committee believes
executive compensation packages provided to our executives should include both
cash and stock-based compensation that reward performance as measured against
pre-established goals.
Role
of Executive Officers in
Compensation Decisions
Our
CompensationCommittee, with input
and
recommendations from our Chief Executive Officer and President, makes all
compensation decisions for the executive officers and approves recommendations
of equity awards to all executive officers of the Company. The Chief Executive
Officer and President annually review the performance of the executive officers.
The conclusions reached and recommendations based on these reviews, including
salary adjustments and annual stock and cash award amounts, are presented to
theCompensation
Committee. Our CompensationCommittee can exercise
its discretion in
modifying any recommended
adjustments ofstock or cash
awards to executives.
Setting
Executive
Compensation
Based
on
the foregoing objectives, our Compensation Committee has structured the
Company’s annual and long-term incentive-based cash and non-cash executive
compensation to motivate executives to achieve the business goals set by the
Company and reward the executives for achieving such goals.
Compensation
Consultant. To help the Company achieve its compensation
objectives, our Compensation Committee engaged Hay Group, Inc. as its
independent compensation consultant for 2007. The consultant’s role
is to advise our Compensation Committee on all executive compensation matters.
The consultant assists by providing relevant market data and evaluating the
total compensation system relative to the compensation systems employed by
comparable companies in the transportation industry and the overall U.S.
industrial market. The consultant also provides an additional measure of
assurance that the Company’s executive compensation program is a reasonable and
appropriate means to achieve our objectives. Our Compensation
Committee reviews the performance and level of service provided by its
independent compensation consultant on an annual basis.
Market
Benchmarking. A benchmark group of publicly-traded companies
in the transportation industry is used annually by our Compensation Committee
to
ensure that Hub Group’s compensation programs offer competitive total
compensation opportunities and reflect best practices in compensation plan
design. In 2007, the companies comprising the “Compensation Peer
Group” were:
CH
Robinson Worldwide, Inc.
EGL,
Inc.
Expeditors
International of Washington, Inc.
Forward
Air Corp.
J.B.
Hunt
Transport Services, Inc.
Landstar
System, Inc.
Pacer
International, Inc.
Swift
Transportation Co., Inc.
UTI
Worldwide, Inc.
Werner
Enterprises, Inc.
In
addition, information on annual base salary increases and compensation data
for
the U.S. general industrial markets is provided by our Compensation Committee’s
independent compensation consultant.
The
Company’s CEO develops pay recommendations for the Company’s executives based on
(i) the aforementioned market data, (ii) each executive’s individual performance
and functional responsibilities as determined by the CEO and President; and
(iii) Company performance, both financial and non-financial. Our
Compensation Committee reviews and approves these pay recommendations with
the
advice of its independent compensation consultant. Our Compensation
Committee also sets the base salary and incentive opportunities for the
Company’s CEO based on (i) the aforementioned market data, (ii) the CEO’s
individual performance and responsibilities and (iii) Company performance,
both
financial and non-financial.
Our
Compensation Committee generally seeks to set the base salary for executive
officers at the 50th
percentile of compensation paid to similarly situated executives of the
companies comprising the Compensation Peer Group. Variations to this objective
do occur as dictated by the experience level of the individual, personal
performance and market factors.
There
is
no pre-established policy or target for the allocation between either cash
and
non-cash or short-term and long-term incentive compensation. Rather, our
Compensation Committee reviews information provided by our compensation
consultant to determine the appropriate level and mix of incentive
compensation. Pay for such incentive compensation is awarded as a
result of the performance of the Company or the individual, depending on the
type of award, compared to pre-established goals.
2007Executive
Compensation
Components
The
Company’s executive compensation program has three components--base salary,
annual incentives, and long-term incentives. Base salary and annual
incentives are primarily designed to reward current and past performance.
Long-term incentives are primarily designed to provide strong incentives for
long-term future Company growth.
Base
Salary. To
attract and retain qualified executives, base salary is provided to our
executive officers. The base salary is determined based on position
and responsibility using competitive criteria within the transportation
industry. During its review of base salaries for the executives,
ourCompensationCommittee
primarily considers (i) market
data provided by our outside consultants, (ii) an internal review of the
executive’s compensation, both individually and relative to other officers and
(iii) individual performance of the executive. Salary levels
are typically reviewed annually as part of our annual performance review process
as well as upon a promotion or other change in job
responsibilities. Increases are based on increases in the cost of
living, individual performance and, to a lesser extent, trends within the
industry.
Annual
Cash
Incentive. The Company’s annual cash incentive recognizes and
rewards executives for taking actions that build the value of the Company and
generate competitive total returns for stockholders. Our annual cash
incentive is determined with the assistance of the third party survey data
referred to above and the value of the target award is generally set at 60%
of
the executive’s annual base salary. This incentive is based solely on
earnings per share (“EPS”) for our Chief Executive Officer and
President. For our other executive officers, this incentive is based
on a combination of EPS (60%) and on individual performance compared against
certain pre-determined personal goals (40%). The personal goals vary
by officer. For 2007, the personal goals for officers responsible for
each of our service lines were generally tied to specific financial metrics
for
the service line managed by the executive. For our other
executives, the personal goals were generally tied to specific objectives within
their area of responsibility. The personal goals are generally set at
a level that are believed to be achievable with superior personal
performance.
Mr.
White’s personal goals required him to maintain compliance with Sarbanes Oxley
(10%), identify, negotiate and close acquisitions (50%), maintain a strong
presence at investor conferences (20%) and maintain strong controls and
processes in the finance area (20%). As Mr. White left our Company in
March of 2007 he did not receive any annual cash incentive.
Ms.
Pizzuto’s personal goals required her to maintain compliance with Sarbanes Oxley
(30%), provide accurate financial statements by the 10th
day of
the following month (20%), provide timely budget and updated forecasts quarterly
(15%), assist with acquisitions (15%), develop executive level financial reports
monthly (15%) and assist with accounts receivable collection issues
(5%). Ms. Pizzuto met or exceeded each of these goals and earned her
full annual cash incentive related to her personal goals of
$72,720.
Mr.
Marsh’s personal goals required him to meet a service line defined profitability
growth goal for highway. The growth goal was measured by a sliding
scale under which Mr. Marsh would not earn any incentive if he did not grow
the
service line defined profitability by at least 5% but could earn up to 150%
of
his target incentive if the service line defined profitability grew by
28%. Mr. Marsh’s target incentive for his personal goals was
$68,778. The profitability of Mr. Marsh’s service line did grow more
than 5%, but he did not meet the growth goal target and he therefore earned
45.7% of his target incentive or $31,432 in annual cash incentive related to
his
personal goals.
Mr.
Maltby’s personal goals required him to increase transactional business (25%)
and meet a service line defined profitability growth goal for logistics
(75%). The growth goal was measured by a sliding scale under which
Mr. Maltby would not earn any incentive if he did not grow the service line
defined profitability but could earn up to 150% of his target incentive if
the
service line defined profitability grew by 28%. Mr. Maltby’s target
incentive related to his transactional business goal was $16,391 and his target
incentive related to his service line defined profitability growth goal was
$49,173. Mr. Maltby met his transactional goal and therefore received
$16,391 related to that goal and exceeded his growth goal and therefore received
$64,908 or 132% of his target incentive related to growth. In total,
Mr. Maltby received $81,229 in annual cash incentive related to his personal
goals.
Each
year
our Compensation Committee sets an EPS target for our Company. Once
the year is completed, Hub Group’s earnings per share are compared against the
EPS target. If we meet the EPS target, we pay the EPS portion of the
award. If we do not meet our EPS target, we do not pay any cash
incentive related to EPS or we pay a reduced incentive based on a sliding
scale. In the same way, our executives can earn, also on a sliding
scale, up to twice their EPS target incentive if we substantially exceed our
EPS
target. For 2007, our sliding scale started at $1.17, which equals
our 2006 EPS after excluding the two cents of earnings per share that resulted
from our former subsidiary Hub Group Distribution Services, LLC. Our
EPS target for 2007 was set at $1.39, which represents a 19% increase in our
EPS
from continuing operations. Our executives could earn twice their EPS
target incentive if we earned $1.61 per share, which represents a 38% increase
over 2006 EPS from continuing operations. During 2007, we earned $1.53 per
share. The Compensation Committee, in its discretion and with the
support of management, elected to exclude four cents per share of certain
non-recurring tax benefits when determining the Company’s 2007 EPS for EPS
compensation purposes. Based on our pre-approved sliding scale, our
executives therefore received 145% of their EPS target incentive.
Mr.
David
Yeager’s target incentive related to EPS was $344,920 for 2007. Mr.
Yeager received 145% of this targeted amount, or $500,134 due to the Company’s
strong performance in 2007. Mr. Mark Yeager’s target incentive
related to EPS was $239,693 for 2007. Mr. Mark Yeager received 145%
of this targeted amount or $347,555. Ms. Pizzuto’s target incentive
related to EPS was $109,080 for 2007. Ms. Pizzuto received 145% of
this targeted amount or $158,166. Mr. Marsh’s target incentive
related to EPS was $103,168 for 2007. Mr. Marsh received 145% of this
targeted amount or $149,594. Mr. Maltby’s target incentive related to
EPS was $98,345 for 2007. Mr. Maltby received 145% of this targeted
amount or $142,600.
All
cash
compensation is approved by our Compensation Committee before it is paid to
our
executive officers.
Long-Term
Equity
Incentives. The Company’s Long-Term Equity Incentive Program
serves to reward executive performance that successfully executes the Company’s
long-term business strategy and builds stockholder value. The program
allows for the awarding of options and stock appreciation rights, restricted
stock and performance units. The Long-Term Equity Incentive Program
encourages participants to focus on long-term Company performance and provides
an opportunity for executive officers and certain designated key employees
to
increase their ownership stake in the Company through grants of the Company’s
Class A Common Stock. The Company maintains the Hub Group, Inc.
1996 Long-Term Incentive Plan, 1997 Long-Term Incentive Plan, 1999 Long-Term
Incentive Plan and the Hub Group, Inc. 2002 Long-Term Incentive
Plan.
For
the last few years, the Company has
made an annual grant of restricted stock to its executive officers with a three
year vesting period. The size of this grant was determined with the
help of our outside compensation consultant and was generally designed to be
competitive with the Compensation Peer Group. In October 2005, our
Compensation Committee discussed the proposed restricted stock grants which
would be part of the 2006 executive compensation package. After
considering these grants, our Compensation Committee approved the grants in
late
December 2005. Starting with this December 2005 grant, our
Compensation Committee agreed to keep the number of shares
generally
fixed for three years so that executives, like stockholders, will be directly
impacted by changes in our stock price. For the 2007 compensation
package and future years, our Compensation Committee decided to make the annual
restricted stock grants in early January rather than in late
December. For grants made in 2007 and prior years the restricted
stock vested over a period of three years. For grants made in 2008,
the restricted stock will vest over a period of five years.
In
conducting the compensation review at the end of 2005, our outside consultants
and our Compensation Committee discussed the need for a substantial long-term
incentive grant to motivate superior long-term performance. After
discussing this issue for some time, on May 22, 2006, our Compensation Committee
granted performance units to certain of our executive officers. In
order for these performance units to be earned and converted to restricted
stock
on a one for one basis, Hub Group’s combined operating income for 2006, 2007 and
2008 (the “Performance Period”) must total $254.7 million (the “Performance
Target”). The Performance Target was set at a level that required Hub
Group to grow its operating income by 24% each year compounded
annually. No restricted stock will be awarded and the performance
units will be canceled and forfeited should we fail to meet the Performance
Target. If our Performance Target is met, but Hub Group’s operating
income for the Performance Period does not meet or exceed $283 million, the
performance units will be earned, subject to our Compensation Committee having
the right to reduce to less than 100% the percentage of performance units
earned. The $283 million of combined operating income requires us to
grow our operating income by 30% annually over this three year
period. If our operating income for the Performance Period equals or
exceeds $283 million, then the performance units will be fully earned and not
subject to a downward adjustment by the Compensation
Committee. Should the executive officers receive restricted stock
under this program, this restricted stock will be granted in early 2009 and
then
vests ratably as of the first business day of January in each of 2010, 2011
and
2012 provided the officer remains an employee of Hub Group on each of these
vesting dates. The performance units are designed to incent and
reward the management team for achieving superior operating income growth over
this three year period.
Our
Compensation Committee has
delegated to our Chief Executive Officer the ability to grant $500,000 of
restricted stock to non-executive officers each year. Our Chief
Executive Officer grants this stock from time to time to new hires or in
connection with a promotion or outstanding performance by current
employees. The Company has not granted any stock options since 2003
and does not currently have plans to issue additional options.
Perquisites
and
Other
Compensation
Our
Company provides executive officers
with perquisites and other personal benefits that the Company and our
Compensation Committee
believe are reasonable and
consistent with its overall compensation program to better enable the Company
to
attract and retain superior employees for key positions.
Our
CompensationCommittee
periodically reviews the levels of perquisites and other personal benefits
provided to named executive officers.
The
perquisites and other
compensation we
provided in2007are
as follows. All of our named
executive officers participated in our 401(k) plan and received matching funds
up to the federallyallowed
maximum match. We maintain $50,000
of life insurance on all
of our executive
officers. The Company maintains a deferred compensation
planand provides a matching
contribution to participants. The Company also makes
available to its
executive officers an annual physical at a local hospital. The
Company allows
personal use of its fractional
airplane interests by certain executive officers. Personal use of our
aircraftinterestrequires
approval by the Chief Executive
Officer. Our executives must reimburse the Company for their personal
use of our aircraft interest at
the Standard Industry Fare Level plus
either 20% or 30% depending on the aircraft.
Retirement
and Other
Benefits
Pension
Benefits
We
do not provide pension arrangements
or subsidized post-retirement health coverage for our executives or
employees.
Non-Qualified
Deferred
Compensation
Our
executive officers, in addition to
certain other key managerial employees, are entitled to participate in the
Hub
Group, Inc. Non-Qualified
Deferred Compensation
Plan. Pursuant
to this plan, eligible employees can defer certain compensation on a pre-tax
basis. The Hub Group, Inc. Non-Qualified Deferred Compensation Plan
is discussed in further detail under the heading “Nonqualified Deferred
Compensation” on page 22.
Other
Post-Employment
Payments
All
of our executive officers are
employees-at-will and as such do not have employment contracts with
us. Certain payments will be made upon a change of control or
theretirementof
our executive
officers. These payments are discussed in further detail
under “Potential
Payouts upon Termination or Change of Control”on page24.
Ownership
Guidelines
To
directly align the interests of
executive officers with the interests of the stockholders, in the fall of 2006
our Board adopted a policy that requires each executive officer to maintain
a
minimum ownership interest in the Company. Each executive officer
must own Company stock with a value of at least two times their base annual
salary. Each executive officer has five years to meet this
requirement. Until they do, executive officers must retain a minimum
of 25% of the stock granted
to them in any one year. Our independent directors have also agreed
to maintain stock valued at twice their annual retainer.
Tax
and Accounting
Implications
Deductibility
of Executive Compensation
Section
162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”) limits the Company’s deduction for
compensation paid to the executive officers named in the Summary Compensation
Table to $1 million each unless certain requirements are met. The
policy of our Compensation Committee with respect to section 162(m) is to
establish and maintain a compensation program which will optimize the
deductibility of compensation. Our Compensation Committee, however,
reserves the right to use its judgment, where merited by our Compensation
Committee’s need to respond to changing business conditions or by an executive
officer’s individual performance, to authorize compensation which may not, in a
specific case, be fully deductible to the Company. For 2007, the
amount of certain compensation in excess of $1 million for each of the named
executive officers was not deductible for federal income tax
purposes.
Section
274(e) of the Code limits
the Company's deduction for expenses allocated to certain personal use of its
fractional airplane interests. For 2007, such expenses not reimbursed
to the Company were not deductible for federal income tax purposes.
2007
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term and other
compensation for services rendered to the Company for the fiscal years ended
December 31, 2007 and December 31, 2006 paid or awarded to those persons who
were: (i) the Company’s chief executive officer at December 31, 2007, (ii) the
Company’s chief financial officer at December 31, 2007, (iii) the Company’s
former chief financial officer and (iv) the Company’s three most highly
compensated executive officers other than the chief executive officer and chief
financial officer (collectively, together with the Company’s chief executive
officer and chief financial officer, the “Named Executive
Officers”).
Name
and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
(1)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation(2) ($)
|
Change
in Pension Value and Nonquali-fied Deferred Compensation
Earnings
(3) ($)
|
All
Other
Compensation
(4)
($)
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
David
P. Yeager
Vice
Chairman and Chief
Executive
Officer
|
2007
2006
|
574,867
558,123
|
--
--
|
306,690
219,351
|
--
--
|
500,134
669,748
|
51,229
43,204
|
114,472(5)
114,906
|
1,547,392
1,605,332
|
Mark
A. Yeager
President
and Chief Operating Officer
|
2007
2006
|
399,489
387,853
|
--
--
|
312,881
216,217
|
--
--
|
347,555
465,424
|
37,795
31,840
|
72,175(6)
46,743
|
1,169,895
1,148,077
|
Terri
A. Pizzuto
Executive
Vice President,
CFO
and Treasurer
|
2007
|
287,365
|
--
|
192,856
|
--
--
|
230,886
|
--
|
14,984(7)
|
726,091
|
Thomas
M. White
Former
Sr. Vice President,
Treasurer
and CFO
|
2007
2006
|
161,942
349,211
|
--
--
|
--
181,762
|
--
--
|
--
335,243
|
423
2,210
|
- - (8)
25,382
|
162,365
893,808
|
David
L.
Marsh
Chief
Marketing Officer
|
2007
2006
|
286,372
270,375
|
--
--
|
200,253
136,115
|
--
--
|
181,026
309,560
|
7,613
6,449
|
19,104(9)
19,451
|
694,368
741,950
|
Donald
G. Maltby
Executive
Vice President
-Logistics
|
2007
2006
|
273,182
265,225
|
--
--
|
156,441
122,226
|
--
--
|
223,900
254,616
|
1,575
2,669
|
22,367(10)
21,991
|
677,465
666,727
|
(1)
Consists of amounts expensed in 2007 and 2006 in accordance with FASB Statement
No. 123(R) with respect to restricted stock awards made by our Company to our
executives each with a vesting period of three years.
(2)
In
addition to salary, our Compensation Committee provides an annual cash
incentive. Our annual cash incentive is determined with the
assistance of third party survey data and the value of the target award is
generally set at 60% of the executive’s annual salary. This incentive
is based solely on earnings per share (“EPS”) for our Chief Executive Officer
and President. For our other executive officers, this incentive is
based on a combination of EPS (60%) and on individual performance compared
against certain predetermined personal goals (40%).
(3)
Represents above market earnings on deferred compensation.
(4)
Personal use of our aircraft requires approval by the Chief Executive
Officer. Our executives must reimburse the Company for their personal
use of our aircraft interest at the Standard Industry Fare Level plus either
20%
or 30% depending on the aircraft. We value the personal use of our
aircraft interests as the difference between the amount paid by the executive
to
the Company for use of the plane and the aggregate incremental cost of using
the
plane. The incremental cost includes the hourly flight fee, all fuel
charges, overnight fees, on-board catering, landing fees, parking fees, certain
taxes and passenger ground transportation. We do not include in
incremental costs the fixed costs that do not change based on personal usage,
such as monthly management fees or the purchase or lease costs of our fractional
interest in aircraft.
(5)
Represents our Company’s matching contribution to the Section 401(k) plan of
$5,905, the value of insurance premiums paid by the Company for term life
insurance equal to $48, the vested match made to Mr. Yeager’s account in our
original Deferred Compensation Plan equal to $14,550, the match made to Mr.
Yeager’s account in our current Deferred Compensation Plan equal to $17,246 and
the value of an executive physical equal to $640. Also represents Mr.
Yeager’s personal use of our Company’s fractional airplane interests equal to
$76,083.
(6)
Represents our Company’s matching contribution to the Section 401(k) plan of
$5,906, the value of insurance premiums paid by the Company for term life
insurance equal to $48, the vested match made to Mr. Yeager’s account in our
original Deferred Compensation Plan equal to $7,277 and the match made to Mr.
Yeager’s account in our current Deferred Compensation Plan equal to $11,985 and
the value of an executive physical equal to $1,315. Also represents
Mr. Yeager’s personal use of our Company’s fractional airplane interests equal
to $45,644.
(7)
Represents our Company’s matching contribution to the Section 401(k) plan of
$5,936, the value of insurance premiums paid by the Company for term life
insurance equal to $48 and the match made to Ms. Pizzuto’s account in our
current Deferred Compensation Plan equal to $9,000. Ms. Pizzuto
became Hub’s Chief Financial Officer in March 2007.
(8)
Mr.
White served as the Company’s Chief Financial Officer until he resigned from the
Company in March 2007.
(9)
Represents our Company’s matching contribution to the Section 401(k) plan of
$5,973, the value of insurance premiums paid by the Company for term life
insurance equal to $48, the vested match made to Mr. Marsh’s account in our
original Deferred Compensation Plan equal to $4,083, the match made to Mr.
Marsh’s account in our current Deferred Compensation Plan equal to
$9,000.
(10)
Represents our Company’s matching contribution to the Section 401(k) plan of
$5,934, the value of insurance premiums paid by the Company for term life
insurance equal to $48, the vested match made to Mr. Maltby’s account in our
original Deferred Compensation Plan equal to $8,190 and the match made to Mr.
Maltby’s account in our current Deferred Compensation Plan equal to
$8,195.
2007
GRANTS OF PLAN-BASED AWARDS
|
|
Estimated
Future Payouts
Under
Non-Equity
Incentive
Plan
Awards(1)
|
Estimated
Future Payouts Under Equity Incentive Plan
Awards
|
All
Other Stock Awards: Number of Shares of Stock or
|
All
Other Option Awards: Number of Securities Underlying
|
Exercise
or Base Price of Option
|
Grant
Date Fair Value of Stock
|
Name
|
Grant Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
Units
(#)(2)
|
Options
(#
)
|
Awards
($/Sh)
|
and
Option Awards
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
David
P. Yeager
|
1/2/2007
|
--
|
--
|
--
|
--
|
--
|
--
|
20,692
|
--
|
--
|
570,065
|
Mark
A. Yeager
|
1/2/2007
|
--
|
--
|
--
|
--
|
--
|
--
|
17,736
|
--
|
--
|
488,627
|
Terri
A. Pizzuto
|
1/2/2007
5/7/2007
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
10,000
2,004
|
--
--
|
--
--
|
275,500
75,030
|
Thomas
M. White
|
1/2/2007
|
--
|
--
|
--
|
--
|
--
|
--
|
14,780(3)
|
--
|
--
|
407,189
|
David
L. Marsh
|
1/2/2007
|
--
|
--
|
--
|
--
|
--
|
--
|
11,824
|
--
|
--
|
325,751
|
Donald
G. Maltby
|
1/2/2007
|
--
|
--
|
--
|
--
|
--
|
--
|
8,868
|
--
|
--
|
244,313
|
(1)
We do
not have any multi-year non-equity incentive plan awards. Our
non-equity incentive plan award is made on an annual basis based on a single
year’s performance. Please see Footnote 2 to the Summary Compensation
Table for a description of this plan.
(2)
Restricted stock that vests ratably annually on the date of grant over three
years.
(3)
These
shares were forfeited due to Mr. White’s resignation from the Company on March
16, 2007.
Narrative
Description for Summary Compensation and Grants of Plan-Based Awards
Tables
On
March 15, 2007, Mr. White resigned
his position as Chief Financial Officer and Ms. Pizzuto was appointed by the
Board to the position of Executive Vice President, Chief Financial Officer
and
Treasurer. In connection with this promotion, and after considering
compensation data provided by the Hay Group, the Compensation Committee
approved, upon the recommendation of Hub’s CEO, an increase in Ms. Pizzuto’s
base salary from $253,071 to $300,000 and an increase in her annual cash
incentive target from $151,843 to $180,000. Ms. Pizzuto was also granted 2,004
shares of restricted stock on May 7, 2007 in connection with her
promotion. These restricted shares had a value of $75,030 on the
grant date. In late October 2007, Mr. Marsh was promoted to our Chief
Marketing Officer. In connection with this promotion, the
Compensation Committee approved, upon the recommendation of Hub’s CEO, an
increase in Mr. Marsh’s base salary from $283,894 to $300,000 and an increase in
his annual cash incentive target from $170,336 to $180,000, pro-rated for
2007.
As
part
of the annual compensation package, our Compensation Committee grants restricted
Class A Common Stock to our executive officers. These awards are
generally based on merit and third party survey data.
In
December 2005, our Compensation Committee granted restricted stock to our
executive officers that vests over three years. Mr. David Yeager
received 20,692 restricted shares with a value on the date of grant of $350,005,
Mr. Mark Yeager received 17,736 restricted shares with a value on the date
of
grant of $300,004, Ms. Pizzuto received 8,868 restricted shares with a value
on
the date of grant of $150,002, Mr. White received 14,780 restricted shares
with
a value on the date of grant of $250,004, Mr. Marsh received 11,824 restricted
shares with a value on the date of grant of $200,003 and Mr. Maltby received
8,868 restricted shares with a value on the date of grant of $150,002. Although
granted in late 2005, this restricted stock was part of each executive’s 2006
compensation package. Going forward, our Compensation Committee has
elected to make its annual grants of restricted stock in early January rather
than late December.
In
October 2006, our Compensation Committee agreed to keep the number of shares
generally fixed for the 2006, 2007 and 2008 compensation packages so that
executives, like stockholders, will be directly impacted by changes in our
stock
price. Consistent with this arrangement, all of the named executive
officers except for Ms. Pizzuto received the same number of restricted shares
in
January 2007 as the prior year grant. Ms. Pizzuto received additional
shares due to her superior performance.
These
restricted shares are entitled to dividends to the same extent as ordinary
shares, but the dividends are restricted to the same extent as the underlying
security. Once the restricted stock vests, any dividends paid on that
stock also vest.
We
do not
have employment agreements with our executive officers.
OUTSTANDING
EQUITY
AWARDS AT DECEMBER 31,
2007
|
Option
Awards
|
Stock
Awards
|
|
Number
of
Securities
Underlying Unexercised Options
(#)
|
Number
of Securities Underlying Unexercised Options
(#)
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
|
Option
Exercise Price
|
Option
Expiration
|
Number
of Shares or Units of Stock That Have Not Vested
|
Market
Value of Shares or Units of Stock That Have Not Vested
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other
Rights
That Have Not Vested
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or
Other Rights That Have Not Vested
|
Name
|
Exercisable
|
Unexercisable
|
(#)
|
($)
|
Date
|
(#)
|
($)
|
(#)
|
($)
|
|
|
|
|
|
|
|
|
|
|
David
P. Yeager
|
--
|
--
|
--
|
--
|
--
|
6,897(1)20,692
(2)
|
183,322
549,993
|
77,420
(5)
|
2,057,824
|
Mark
A. Yeager
|
--
|
--
|
--
|
--
|
--
|
5,912
(1)
17,736
(2)
|
157,141
471,423
|
64,516
(5)
|
1,714,835
|
Terri
A. Pizzuto
|
6,800
|
--
|
--
|
2.43
|
7/2/2012
|
454
(3)
2,956
(1)
10,000
(2)
2,004
(4)
|
12,067
78,570
265,800
53,266
|
43,010
(5)
|
1,143,206
|
Thomas
M. White
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
David
L. Marsh
|
--
|
--
--
|
--
--
|
--
|
--
|
3,941
(1)
11,824
(2)
|
104,752
314,282
|
43,010
(5)
|
1,143,206
|
Donald
G. Maltby
|
--
|
--
|
--
|
--
|
--
|
2,956
(1)
8,868
(2)
|
78,570
235,711
|
43,010
(5)
|
1,143,206
|
(1)
Restricted stock remaining from a grant made on December 21, 2005 that vests
ratably annually on the date of grant over three years.
(2)
Restricted stock remaining from a grant made on January 2, 2007 that vests
ratably annually on the date of grant over three years.
(3)
Restricted stock remaining from a grant made on May 13, 2005 that vests ratably
annually on the date of grant over three years.
(4)
Restricted stock remaining from a grant made on May 7, 2007 that vests ratably
annually on the date of grant over three years.
(5)
On
May 22, 2006, our
Compensation Committee granted performance units to certain of our executive
officers. In order for these performance units to be earned and
converted to restricted stock on a one for one basis, Hub Group’s combined
operating income for 2006, 2007 and 2008 (the “Performance Period”) must total
$254.7 million (the “Performance Target”). The Performance Target was
set at a level that required Hub Group to grow its operating income by 24%
each
year compounded annually. No restricted stock will be awarded and the
performance units will be canceled and forfeited should we fail to meet the
Performance Target. If our Performance Target is met, but Hub Group’s
operating income for the Performance Period does not meet or exceed $283
million, the performance units will be earned, subject to our Compensation
Committee having the right to reduce to less than 100% the percentage of
performance units earned. The $283 million of combined operating
income requires us to grow our operating income by 30% annually over this three
year period. If our operating income for the Performance Period
equals or exceeds $283 million, then the performance units will be fully earned
and not subject to a downward adjustment by the Compensation
Committee. Should the executive officers receive restricted stock
under this program, this restricted stock will be granted in early 2009 and
then
vests ratably as of the first business day of January in each of 2010, 2011
and
2012 provided the officer remains an employee of Hub Group on each of these
vesting dates. The performance units are designed to incent and
reward the management team for achieving superior operating income growth over
this three year period. See Footnote 8 to our financial statements
for a discussion of how we valued these awards.
2007
OPTION EXERCISES AND STOCK VESTED
|
Option
Awards
|
Stock
Awards
|
|
Number
of
Shares
Acquired
on
Exercise
|
Value
Realized
On
Exercise
|
Number
of
Shares
Acquired
on
Vesting
|
Value
Realized
on
Vesting
|
Name
|
(#)
|
($)
|
(#)
|
($)
|
|
|
|
|
|
David
P. Yeager
|
--
|
--
|
6,897
|
191,944
|
Mark
A. Yeager
|
--
|
--
|
9,773
|
268,662
|
Terri
A. Pizzuto
|
6,000
|
178,499
|
6,340
|
186,210
|
Thomas
M. White
|
--
|
--
|
--
|
--
|
David
L. Marsh
|
29,400
|
870,429
|
5,871
|
161,730
|
Donald
G. Maltby
|
--
|
--
|
4,886
|
134,317
|
2007
NONQUALIFIED DEFERRED
COMPENSATION
Original
Deferred Compensation Plan
|
Executive
Contributions in Last FY
|
Registrant
Contributions in Last FY
|
Aggregate
Earnings in Last FY
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance
at
Last
FYE
|
Name
|
($)
|
($)
|
($)(1)
|
($)
|
($)(2)
|
|
|
|
|
|
|
David
P. Yeager
|
--
|
--
|
110,408
|
--
|
1,237,991
|
Mark
A. Yeager
|
--
|
--
|
81,455
|
--
|
902,454
|
Terri
A. Pizzuto
|
--
|
--
|
--
|
--
|
--
|
Thomas
M. White
|
--
|
--
|
912
|
46,827
|
--
|
David
L. Marsh
|
--
|
--
|
16,408
|
--
|
193,120
|
Donald
G. Maltby
|
--
|
--
|
3,395
|
40,085
|
44,299
|
(1)
That
portion of the interest that is above market is included in Change in Pension
Value and Nonqualified Deferred Compensation Earnings in the Summary
Compensation Table. A portion of the earnings is interest earned on a
matching contribution that has not yet vested and is subject to
forfeiture. The amount of interest reported that is subject to
forfeiture is $3,153 for Mr. David Yeager, $1,989 for Mr. Mark Yeager, $1,254
for Mr. Marsh and $783 for Mr. Maltby.
(2)
Prior
to 2006 we did not track the portion of the aggregate balance that was
previously reported as compensation in the Summary Compensation
Table. The amount of compensation in the aggregate balance that was
reported as compensation in the 2007 Summary Compensation Table is $65,779
for
Mr. David Yeager, $43,072 for Mr. Mark Yeager, $423 for Mr. White, $11,696
for
Mr. Marsh and $9,765 for Mr. Maltby. The amount of compensation in
the aggregate balance that was reported as compensation in the 2006 Summary
Compensation Table is $59,378 for Mr. David Yeager, $39,117 for Mr. Mark Yeager,
$2,210 for Mr. White, $10,232 for Mr. Marsh and $10,544 for Mr.
Maltby.
Current
Deferred Compensation Plan
|
Executive
Contributions in Last FY
|
Registrant
Contributions in Last FY
|
Aggregate
Earnings in Last FY
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance
at
Last
FYE
|
Name
|
($)(1)
|
($)(2)
|
($)(3)
|
($)
|
($)(4)
|
|
|
|
|
|
|
David
P. Yeager
|
315,898
|
17,246
|
-151
|
--
|
607,845
|
Mark
A. Yeager
|
129,737
|
11,985
|
18,649
|
--
|
368,123
|
Terri
A. Pizzuto
|
28,737
|
9,000
|
6,858
|
--
|
102,007
|
Thomas
M. White
|
6,769
|
--
|
13,372
|
105,933
|
--
|
David
L. Marsh
|
42,956
|
9,000
|
5,811
|
--
|
157,589
|
Donald
G. Maltby
|
19,123
|
8,195
|
5,857
|
--
|
89,837
|
(1)
Executive contributions are included in Salary in the Summary Compensation
Table.
(2)
Our
Company contributions are a match made subject to a cliff vesting requirement
as
more fully explained below. Our Company contributions are included in
All Other Compensation in the Summary Compensation Table.
(3)
None
of these earnings are included in the Summary Compensation Table as these are
earnings on investments made in various commonly available investment
vehicles.
(4)
Prior
to 2006 we did not track the portion of the aggregate balance that was
previously reported as compensation in the Summary Compensation
Table. The amount of compensation in the aggregate balance that was
reported as compensation in the 2007 Summary Compensation Table is $333,144
for
Mr. David Yeager, $141,722 for Mr. Mark Yeager, $37,737 for Ms. Pizzuto, $6,769
for Mr. White, $51,956 for Mr. Marsh and $27,318 for Mr. Maltby. The
amount of compensation in the aggregate balance that was reported as
compensation in the 2006 Summary Compensation Table is $128,368 for Mr. David
Yeager, $69,814 for Mr. Mark Yeager, $45,397 for Mr. White, $48,667 for Mr.
Marsh and $23,871 for Mr. Maltby.
We
maintain two non-qualified deferred compensation plans. Our
Compensation Committee adopted our first plan with an effective date of January
1, 2000 (the “Original Plan”). We allowed a select group of
management and highly compensated employees to make contributions to our
Original Plan through 2004. Our Compensation Committee adopted a new
non-qualified deferred compensation plan effective January 1, 2005 (the “Current
Plan”). We allowed a select group of management and highly
compensated employees to make contributions to our Current Plan beginning in
2005.
Our
Original Plan is not funded and provides for a fixed rate of return on our
employees’ deferrals and any match by our Company. We provided
participants with a fixed rate of return of 10% for contributions made in 2000
and 2001 and 8% for contributions made in 2002, 2003 and
2004. Participating employees could contribute up to 15% of their
cash compensation under the Original Plan. The Original Plan also
included a match by our Company. The match is equal to 50% of the
first 6% of contributions to the plan with a maximum match equivalent to 3%
of
base salary. The match is subject to a five year cliff vest measured from the
date of the contribution. For example, if the employee made a
contribution in 2000, the match vested if the employee was still employed on
January 1, 2005. Subject to certain exceptions, we also pay interest
on the match at the same rate as the interest paid on the employees’
contribution. The interest on the match is subject to forfeiture if
the underlying match is forfeited and vests when our match vests. Any
deferral, including the match and all interest, made under the Original Plan
will be paid out upon the earlier of (i) the termination of such employee’s
employment or (ii) the payout date originally selected by the
employee.
Our
Current Plan is funded and does not provide for a fixed rate of
return. Each participating employee selects from a range of
investment options. We then provide an investment return equal to the
return from the selected investment options. The investment options
which may be selected by the participating employees track commonly available
investment vehicles, including mutual funds, bond funds and money market
funds. Participating employees can contribute up to 50% of their
salary and up to 100% of their annual cash incentive under the Current
Plan.
The
Current Plan also includes a match by our Company. The match is equal
to 50% of the first 6% of contributions to the plan with a maximum match
equivalent to 3% of base salary. Each annual match vests once the
employee achieves three years of service; however, all employees’ years of
service were reset to zero as of January 1, 2005 for purposes of this
match. For example, an employee who was hired on January 1, 1990
would be deemed to have zero years of service on January 1, 2005 for purposes
of
the Current Plan. If the employee participated in the Current Plan in
2005, 2006 and 2007, his Company match for the all three years would vest on
January 1, 2008. The Company match, if vested, and earnings thereon,
is paid out seven months after separation from service in either a lump sum
or
over a period of up to ten years, at the employee’s election. The
employee’s contributions, and earnings thereon, are paid out upon separation
from service or at a predetermined date and may be paid out in a lump sum or
over a period of up to ten years. The match is subject to forfeiture
if the participant leaves the Company and goes to work for a
competitor.
Potential
Payouts Upon Termination or Change of Control
David
P. Yeager, Vice Chairman and CEO
Change
of Control
Mr.
Yeager has been granted performance units and various awards of restricted
stock
under our Long-Term Incentive Plans. Pursuant to his award
agreements, this restricted stock vests upon a change of control and these
performance units will be fully earned and the corresponding restricted stock
will be granted and immediately vest upon a change of control. As of
December 31, 2007, Mr. Yeager owned 77,420 performance units and 27,589 shares
of restricted stock. Assuming the triggering event took place on the
last business day of 2007, the value of the performance units and restricted
stock would be $2,791,139.
Mr.
Yeager is a participant in both of our deferred compensation
plans. Our Original Plan provides for the vesting of the Company
match and any interest thereon upon a change of control. Our Current
Plan provides for the vesting of the Company match and any earnings thereon
upon
a change of control. Assuming a change of control as defined under
these plans occurred on December 31, 2007, a total of $90,257 worth of Company
matching contributions and interest or earnings thereon would have
vested.
Retirement
Upon
retirement, which is defined as the termination of employment on or after the
age of 55, Mr. Yeager would be entitled to immediate vesting of any non-vested
employer match and interest thereon under our Original Deferred Compensation
Plan. As of December 31, 2007, Mr. Yeager was 54 years old and
therefore does not at this time qualify for this benefit.
Mark
A. Yeager, President and COO
Change
of Control
Mr.
Yeager has been granted performance units and various awards of restricted
stock
under our Long-Term Incentive Plans. Pursuant to his award
agreements, this restricted stock vests upon a change of control and these
performance units will be fully earned and the corresponding restricted stock
will be granted and immediately vest upon a change of control. As of
December 31, 2007, Mr. Yeager owned 64,516 performance units and 23,648 shares
of restricted stock. Assuming the triggering event took place on the
last business day of 2007, the value of the performance units and restricted
stock would be $2,343,399.
Mr.
Yeager is a participant in both of our deferred compensation
plans. Our Original Plan provides for the vesting of the Company
match and any interest thereon upon a change of control. Our Current
Plan provides for the vesting of the Company match and any earnings thereon
upon
a change of control. Assuming a change of control as defined under
these plans occurred on December 31, 2007, a total of $59,650 worth of Company
matching contributions and interest or earnings thereon would have
vested.
Retirement
Upon
retirement, which is defined as the termination of employment on or after the
age of 55, Mr. Yeager would be entitled to immediate vesting of any non-vested
employer match and interest thereon under our Original Deferred Compensation
Plan. As of December 31, 2007, Mr. Yeager was 43 years old and
therefore does not at this time qualify for this benefit.
Terri
A. Pizzuto, Executive Vice President, Treasurer and CFO
Change
of Control
Ms.
Pizzuto has been granted performance units and various awards of restricted
stock under our Long-Term Incentive Plans. Pursuant to her award
agreements, this restricted stock vests upon a change of control and these
performance units will be fully earned and the corresponding restricted stock
will be granted and immediately vest upon a change of control. As of
December 31, 2007, Ms. Pizzuto owned 43,010 performance units and 15,414 shares
of restricted stock. Assuming the triggering event took place on the
last business day of 2007, the value of the performance units and restricted
stock would be $1,552,910.
Ms.
Pizzuto is a participant in our Current Deferred Compensation
Plan. Our Current Plan provides for the vesting of the Company match
and any earnings thereon upon a change of control. Assuming a change
of control as defined under these plans occurred on December 31, 2007, a total
of $23,183 worth of Company matching contributions and interest or earnings
thereon would have vested.
David
L. Marsh, Chief Marketing Officer
Change
of Control
Mr.
Marsh
has been granted performance units and various awards of restricted stock under
our Long-Term Incentive Plans. Pursuant to his award agreements, this
restricted stock vests upon a change of control and these performance units
will
be fully earned and the corresponding restricted stock will be granted and
immediately vest upon a change of control. As of December 31, 2007,
Mr. Marsh owned 43,010 performance units and 15,765 shares of restricted
stock. Assuming the triggering event took place on the last business
day of 2007, the value of the performance units and restricted stock would
be
$1,562,240.
Mr.
Marsh
is a participant in both of our deferred compensation plans. Our
Original Plan provides for the vesting of the Company match and any interest
thereon upon a change of control. Our Current Plan provides for the
vesting of the Company match and any earnings thereon upon a change of
control. Assuming a change of control as defined under these plans
occurred on December 31, 2007, a total of $41,202 worth of Company matching
contributions and interest or earnings thereon would have vested.
Retirement
Upon
retirement, which is defined as the termination of employment on or after the
age of 55, Mr. Marsh would be entitled to immediate vesting of any non-vested
employer match and interest thereon under our Original Deferred Compensation
Plan. As of December 31, 2007, Mr. Marsh was 40 years old and
therefore does not at this time qualify for this benefit.
Donald
G. Maltby, Executive Vice President-Logistics
Change
of Control
Mr.
Maltby has been granted performance units and various awards of restricted
stock
under our Long-Term Incentive Plans. Pursuant to his award
agreements, this restricted stock vests upon a change of control and these
performance units will be fully earned and the corresponding restricted stock
will be granted and immediately vest upon a change of control. As of
December 31, 2007, Mr. Maltby owned 43,010 performance units and 11,824 shares
of restricted stock. Assuming the triggering event took place on the
last business day of 2007, the value of the performance units and restricted
stock would be $1,457,487.
Mr.
Maltby is a participant in both of our deferred compensation
plans. Our Original Plan provides for the vesting of the Company
match and any interest thereon upon a change of control. Our Current
Plan provides for the vesting of the Company match and any earnings thereon
upon
a change of control. Assuming a change of control as defined under
these plans occurred on December 31, 2007, a total of $34,100 worth of Company
matching contributions and interest or earnings thereon would have
vested.
Retirement
Upon
retirement, which is defined as the termination of employment on or after the
age of 55, Mr. Maltby would be entitled to immediate vesting of any non-vested
employer match and interest thereon under our Original Deferred Compensation
Plan. As of December 31, 2007, Mr. Maltby was 53 years old and
therefore does not at this time qualify for this benefit.
Thomas
M. White, Former Sr. Vice President, Treasurer and CFO
Mr.
White
was no longer employed by the Company on December 31, 2007 and is therefore
not
entitled to any benefits upon a change of control as of December 31,
2007.
Definition
of “Change of Control”
For
purposes of the foregoing
discussion, a change of control under the Original Deferred Compensation Plan
is
defined as a change in the ownership or effective control of the Company, or
a
substantial portion of the Company’s assets as defined in section 409A of the
Internal Revenue Code of 1986, as amended from time to time. Under
all other plans described above a change of control is defined for these
purposes as a change in the beneficial ownership of the Company's voting stock
or a change in the composition of the Board which occurs as follows: (i) Any
“person” (as such term is used in Section 13(d) and 14(d)(2) of the Exchange
Act) who is not as of the date of this grant but later becomes a beneficial
owner, directly or indirectly, of stock of the Company representing 30 percent
or more of the total voting power of the Company's then outstanding stock;
or
(ii) A tender offer (for which a filing has been made with the SEC which
purports to comply with the requirements of Section 14(d) of the Exchange Act
and the corresponding SEC rules) is made for the stock of the Company, which
has
not been negotiated and approved by the Board. In case of a tender offer
described in this paragraph, the change in control will be deemed to have
occurred upon the first to occur of (A) any time during the offer when the
person (using the definition in (i) above) making the offer owns or has accepted
for payment stock of the Company with 25 percent or more of the total voting
power of the Company's stock, or (B) three business days before the offer is
to
terminate unless the offer is withdrawn first, if the person making the offer
could own, by the terms of the offer plus any shares owned by this person,
stock
with 50 percent or more of the total voting power of the Company's stock when
the offer terminates; or (iii) Individuals who were the Board’s nominees for
election as directors of the Company immediately prior to a meeting of the
stockholders of the Company involving a contest for the election of directors
shall not constitute a majority of the Board following the
election.
The
following table sets forth a
summary of the compensation for services rendered to the Company for the
fiscal
year ended December 31, 2007 for the Company’s independent
directors.
|
Fees
Earned or
Paid
in
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
|
All
Other
Compensation
|
Total
|
Name
|
($)
|
($)
|
($)
|
($)
|
Earnings
|
($)
|
($)
|
|
|
|
|
|
|
|
|
Gary
D. Eppen
|
60,000
|
72,582
|
--
|
--
|
--
|
1,725(1)
|
134,307
|
Charles
R. Reaves
|
60,000
|
72,582
|
--
|
--
|
--
|
--
|
132,582
|
Martin
P. Slark
|
60,000
|
72,582
|
--
|
--
|
--
|
--
|
132,582
|
(1) Mr.
Eppen
contributed to our Deferred Compensation Plan in 2007 and received a match
of
$1,725 for 2007.
Mr.
Eppen
has no options, 1,182 shares of restricted stock remaining from a grant made
on
December 21, 2005 that vests ratably over three years and 3,548 shares of
restricted stock remaining from a grant made on January 2, 2007 that vests
ratably over three years. Mr. Reaves has no options, 1,182 shares of
restricted stock remaining from a grant made on December 21, 2005 that vests
ratably over three years and 3,548 shares of restricted stock remaining from
a
grant made on January 2, 2007 that vests ratably over three years. Mr. Slark
has
24,000 exercisable options, 1,182 shares of restricted stock remaining from
a
grant made on December 21, 2005 that vests ratably over three years and 3,548
shares of restricted stock remaining from a grant made on January 2, 2007 that
vests ratably over three years.
Directors
who are not employees of the Company received $60,000 for serving as a director
during 2007. Directors who are employees of the Company do not receive
additional compensation for such services. Both employee and
non-employee directors are reimbursed for their travel and other expenses
incurred in connection with attending meetings of the Board of Directors
or
committees thereof. In connection with their 2007 compensation
package, on January 2, 2007, Messrs. Eppen, Reaves and Slark each received
a
grant of 3,548 shares of restricted Class A Common Stock with a value on
the
date of grant of $97,747. This restricted stock vests ratably over a
three-year period.
Compensation
Committee Report
This
report is submitted by the
Compensation Committee of the Board of Directors.
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis prepared by management and has recommended
to the Board that it be included in this Proxy Statement.
COMPENSATION
COMMITTEE
Gary
D.
Eppen
Charles
R. Reaves
Martin
P.
Slark, Chairman
Audit
Committee Report
The
Audit Committee has reviewed and
discussed the Company’s quarterly and annual audited financial statements with
management and with Ernst & Young, LLP, the Company’s independent public
accountants. The Company has also discussed with Ernst & Young
LLP the matters required to be discussed by Statement on Auditing Standards
No.
61, Communication with Audit Committees, as amended, by the Auditing Standards
Board of the American Institute of Certified Public Accountants. The
Audit Committee has also received from Ernst & Young LLP the written
disclosures required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, regarding their
independence. The Audit Committee has discussed with Ernst &
Young LLP their independence and considered whether the provision of non-audit
services referred to under “Independent Public Accountants” on page 29 is
compatible with maintaining their independence. Based on the review
and discussions referred to above, the Audit Committee recommended to the Board
of Directors that the December 31, 2007 audited financial statements be included
in the Company’s Annual Report on Form 10-K for 2007.
AUDIT
COMMITTEE
Gary
D. Eppen, Chairman
Charles
R. Reaves
Martin
P. Slark
INDEPENDENT
PUBLIC ACCOUNTANTS
The
Audit
Committee has selected Ernst & Young LLP as the independent accountant of
the Company. Representatives of Ernst & Young LLP will be present at the
Annual Meeting and will be given the opportunity to make a statement if they
desire to do so. They will also be available to respond to
appropriate questions.
The
fees
billed by Ernst & Young in 2006 and 2007 for services provided to us were as
follows:
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
Audit
Fees (1)
|
|
$ |
1,079,300 |
|
|
$ |
826,400 |
|
Audit-Related
Fees (2)
|
|
|
102,800 |
|
|
|
161,900 |
|
Tax
Fees (3)
|
|
|
40,000 |
|
|
|
9,836 |
|
All
Other Fees (4)
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$ |
1,222,100 |
|
|
$ |
998,136 |
|
|
|
|
|
|
|
|
|
|
(1)
“Audit Fees” are the aggregate fees billed by Ernst & Young for professional
services rendered for the audit of the Company’s annual financial statements for
the years ended December 31, 2007 and December 31, 2006, the audit of the
effectiveness of the Company’s internal control over financial reporting as of
December 31, 2007 and December 31, 2006, the reviews of the financial statements
included in the Company’s quarterly reports on Form 10-Q during 2007 and 2006,
and consultation with respect to various accounting and financial reporting
matters during 2007 and 2006.
(2)
“Audit-related fees” include fees billed for assurance and related services that
are reasonably related to the performance of the audit and not included in
the
“audit fees” described above. The 2007 and 2006 Audit-related fees
include audit services performed in connection with potential
acquisitions.
(3)
“Tax Fees” are fees billed by Ernst & Young in 2007 for review of the
deferred compensation plan and in 2006 for review of Comtrak’s state and local
filing requirements.
(4)
“All Other Fees” are fees billed by Ernst & Young in 2007 or 2006 that are
not included in the above classifications.
The
Audit
Committee must pre-approve any audit or any permissible non-audit services
to be
provided by the Company’s independent auditors, and has established pre-approval
policies and procedures for such services. Permissible non-audit services are
those allowed under the regulations of the Securities and Exchange Commission.
The Audit Committee may approve, at the beginning of each year, certain specific
categories of permissible non-audit services within an aggregated budgeted
dollar limit. The Audit Committee must approve on a project-by-project basis
any
permissible non-audit services that do not fall within a pre-approved category,
or pre-approved permissible non-audit services that exceed the previously
approved fees. All services provided by Ernst & Young during 2007 were
approved by the Audit Committee and were permissible under applicable laws
and
regulations and will continue to be pre-approved by the Audit
Committee.
PROXY
SOLICITATION EXPENSE
The
Company will pay the expense of any proxy solicitation. In addition
to the solicitation of proxies by use of the mail, solicitation also may be
made
by telephone, telegraph or personal interview by directors, officers, and
regular employees of the Company, none of whom will receive additional
compensation for any such solicitation. The Company will, upon
request, reimburse brokers, banks, and similar organizations for out-of-pocket
and reasonable clerical expenses incurred in forwarding proxy material to their
principals.
STOCKHOLDER
PROPOSALS
Proposals
of stockholders must be received in writing by the Secretary of the Company
at
the principal executive offices of the Company no later than December 3, 2008,
in order to be considered for inclusion in the Company’s proxy statement and
form of proxy relating to the next annual meeting of stockholders.
The
Company anticipates that its next annual meeting of stockholders will be held
in
May 2009. If a stockholder desires to submit a proposal for
consideration at the next annual meeting of stockholders, written notice of
such
stockholder’s intent to make such a proposal must be given and received by the
Secretary of the Company at the principal executive offices of the Company
either by personal delivery or by United States mail no earlier than February
13, 2009 nor later than March 14, 2009. Each notice must describe the
proposal in sufficient detail for the proposal to be summarized on the agenda
for the annual meeting of stockholders and must set forth: (i) the
name and address, as it appears on the books of the Company, of the stockholder
who intends to make the proposal; (ii) a representation that the stockholder
is
a holder of record of stock of the Company entitled to vote at such meeting
and
intends to appear in person or by proxy at such meeting to present such
proposal; and (iii) the class and number of shares of the Company which are
beneficially owned by the stockholder. In addition, the notice must
set forth the reasons for conducting such proposed business at the annual
meeting of stockholders and any material interest of the stockholder in such
business. The presiding officer of the annual meeting of stockholders
will, if the facts warrant, refuse to acknowledge a proposal not made in
compliance with the foregoing procedure, and any such proposal not properly
brought before the annual meeting of stockholders will not be
considered.
By
order
of the Board of Directors,
DAVID
C.
ZEILSTRA
Vice
President, Secretary and General Counsel
Downers
Grove, Illinois
April
2,
2008
Each
stockholder, whether or not he or she expects to be present in person at the
Annual Meeting, is requested to MARK, SIGN, DATE, and RETURN THE ENCLOSED PROXY
in the accompanying envelope as promptly as possible. A stockholder
may revoke his or her proxy at any time prior to voting.
THIS
PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED
“FOR” THE PROPOSALS.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The
Board of Directors recommends a vote FOR the listed nominees.
1.
Election of Directors
Nominees: FOR WITHHELD
FOR ALL
01
Phillip C. Yeager
02
David
P. Yeager
03
Mark
A. Yeager
04
Gary
D. Eppen
05
Charles R. Reaves
06
Martin
P. Slark
Withheld
for the nominees you list below: (Write that
Nominee’s
name in the space provided
below.) The
undersigned hereby acknowledges receipt
of the Proxy Statement and Form 10-K.
_________________________________________
Signature__________________________________________Signature________________________________________Date
NOTE:
Please sign exactly as your name appears. Joint owners should each sign.
When
signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
FOLD
AND DETACH HERE
WE
ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH
ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet
and telephone voting is
available through 11:59 PM Eastern Time
the
day prior to annual meeting
day.
Your
Internet or telephone vote authorizes the named proxies to vote your shares
in
the same manner
as
if you marked, signed and returned your proxy card.
Internet |
|
Telephone |
http://www.proxyvoting.com/hubg |
|
1-866-540-5760 |
Use
the Internet to
vote your proxy. |
OR |
Use
any touch-tone
telephone to vote your proxy. |
Have
your proxy card
in hand when |
|
Have
your proxy card
in hand when you call. |
you
access the web
site. |
|
|
If
you
vote your proxy by Internet or by telephone, you do NOT need to mail back
your
proxy card. To vote by mail, mark, sign and date your proxy card and return
it
in the enclosed postage-paid envelope.
HUB
GROUP, INC.
This
Proxy is solicited on behalf of the Board of Directors
for
the Annual Meeting of Stockholders to be held on May 14, 2008
The
undersigned appoints Phillip C. Yeager, David P. Yeager and Mark A. Yeager,
or
any of them, proxies for the undersigned, each with full power of substitution,
to attend the Annual Meeting of Stockholders of Hub Group, Inc., to be held
on
May 14, 2008 at 10:00 a.m., Chicago time, and at any adjournments or
postponements of the Annual Meeting, and to vote as specified in this Proxy
all
of the Class A Common Stock of the Company which the undersigned would be
entitled to vote if personally present. This Proxy when properly executed
will
be voted in accordance with your indicated directions. If no direction is
made,
this Proxy will be voted FOR the election of each of the nominees for the
Board
of Directors.
The
Board
of Directors recommends a vote FOR the election of each of the nominees for
the
Board of Directors.
YOUR
VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND
RETURN
IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued
and to be signed on reverse side)
Address
Change/Comments
FOLD
AND DETACH HERE