by Marty Cook
Posted 11/7/2013 11:08 am
Updated 1 year ago
Knight Transportation Inc. of Phoenix criticized USA Truck's decision to implement bonus and severance packages for the officers of the Van Buren company.
USA Truck, currently trying to fend off a takeover attempt by Knight, filed details of its plans with the SEC on Tuesday. The "Retention Bonus Plan" and the "Management Severance Plan" were approved by the Executive Compensation Committee of USA Truck's board of directors Oct. 30 in a clear answer to Knight’s takeover bid.
The company said in its filing with the SEC the plans were needed "as a means of assuring the continued focus of the new and expanded management team that is critical to the successful execution of the Company's turnaround strategy, and mitigating any uncertainty regarding future employment resulting from Knight Transportation, Inc.'s unsolicited proposal to acquire the Company and its ongoing efforts to disrupt the Company’s turnaround."
USA Truck officers will receive bonuses ranging from 6.25 percent to 25 percent on April 11, 2014, under the bonus plan. CEO John Simone, who joined the company in February, will receive $50,000 in December and be eligible for a bonus equal to a quarter of his salary plus an additional $150,000 for a total of $265,000 because of Simone's "ultimate responsibility for supervising the overall execution of the turnaround plan."
Chief financial officer Cliff Beckham ($75,000), executive vice president Michael Weindel Jr. ($53,751) and general counsel J. Rodney Mills ($22,800) were specifically mentioned in the filing as bonus recipients. Each recipient would have to repay the bonuses if any chose to resign from USA Truck before Oct. 30, 2014.
The severance plan makes officers eligible for severance benefits if any is terminated without cause that is not related to a "change in control" and eligible to "change-in-control" benefits if any is terminated without cause for 12 months following a ownership change.
According to the filing, officers would not be eligible for both benefits detailed in the severance plan.
Simone would receive $460,000 from the severance benefit, Beckham $300,000, Weindel $215,004 and Mills $91,200. The payments would be monthly for a period of six months to one year.
The change-in-control benefit would make Simone eligible for a lump-sum payment of $2,012,500, which the company said represented 250 percent of his salary plus his performance bonus. Simone would also be eligible to stay covered by USA Truck’s health insurance for two years.
Beckham, Weindel and Mills would receive 100 percent of their salaries as a change-in-control termination benefit and stay eligible for health insurance for one year. Beckham's benefit would be $300,000, Weindel's $215,004 and Mills $182,400.
Beneficiaries would also receive relocation fees that were at least $20,000 and, in Simone's case, $50,000.
Knight Transportation announced in September that it had offered USA Truck $242 million, which included $9 a share and the assumption of $147 million in debt. USA Truck rejected the offer, and Knight issued a 17-page presentation Monday that said USA Truck’s turnaround showed only "limited improvement."
Knight owns more than 1.3 million shares of USA Truck stock.
"Knight Transportation is disappointed that USA Truck's Board chose to waste its shareholders resources by implementing retention and severance plans," the company said in a released statement. "These defensive and self-serving measures from USA Truck would add to any potential transaction expenses, reducing value for its shareholders. Knight continues to believe that a combination with USA Truck would deliver value for all Knight and USA Truck stakeholders and that its proposal is significantly more attractive than USA Truck’s standalone prospects."