SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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Saia, Inc.

(Name of Registrant as Specified In Its Charter)

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

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Notice of Annual Meeting of Stockholders

To be held April 27, 2021

March 22, 2021

To Our Stockholders:

We cordially invite you to attend the 2021 annual meeting of stockholders of Saia, Inc. The meeting will be held in a virtual format on April 27, 2021, at 10:30 a.m., Eastern Daylight Time. Stockholders will not be able to attend the Annual Meeting physically but will be able to participate by submitting questions and voting online. To be admitted to the virtual Annual Meeting at www.meetingcenter.io/234957592, you must enter the control number found on your proxy card, voter instruction form or the notice. You will also be required to enter a password for the meeting, which is SAIA2021. We look forward to your participation.

The purpose of the meeting is to:

 

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

 

2.	Vote on an advisory basis to approve the compensation of Saia’s Named Executive Officers;

 

3.	Consider an amendment to our Amended and Restated Certificate of Incorporation to declassify our Board of Directors;

 

4.	Ratify the appointment of KPMG LLP as Saia’s independent registered public accounting firm for fiscal year 2021; and

 

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

Only stockholders of record at the close of business on March 8, 2021 may vote at the meeting or any postponements or adjournments of the meeting.

By order of the Board of Directors,

 

Douglas L. Col

Secretary

 

 

 

2021 Proxy Statement

SAIA, INC.

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PROXY SUMMARY

 

 

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PROXY SUMMARY

 

 

2021 Proxy Statement

SAIA, INC.

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PROXY SUMMARY

 

 

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PROXY SUMMARY

 

 

2021 Proxy Statement

SAIA, INC.

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SAIA, INC.

11465 Johns Creek Parkway, Suite 400

Johns Creek, Georgia 30097

 

2021 PROXY STATEMENT

The Board of Directors (the “Board”) of Saia, Inc. (“Saia” or the “Company”) is furnishing you this proxy statement in connection with the solicitation of proxies on its behalf for the 2021 annual meeting of stockholders. The meeting will be held in a virtual format on April 27, 2021, at 10:30 a.m., Eastern Daylight Time. Stockholders will not be able to attend the Annual Meeting physically. To be admitted to the virtual Annual Meeting at www.meetingcenter.io/234957592, you must enter the control number found on your proxy card or the notice you previously received. You will also be required to enter a password for the meeting, which is SAIA2021. At the meeting, stockholders will vote on (a) the election of three directors, (b) an advisory basis to approve the compensation of Saia’s Named Executive Officers, (c) a management proposal to amended our Certificate of Incorporation to declassify our Board of Directors, (d) the ratification of the appointment of KPMG LLP as Saia’s independent registered public accounting firm for fiscal year 2021, and (e) the transaction of any other business that may properly come before the meeting, and any postponement or adjournment of the meeting, although we know of no other business to be presented.

By submitting your proxy (either by signing and returning the enclosed proxy card or by voting electronically on the internet or by telephone), you authorize Frederick J. Holzgrefe, III and Richard D. O’Dell and each of them to represent you and vote your shares at the meeting in accordance with your instructions. They also may vote your shares to adjourn the meeting and will be authorized to vote your shares at any postponements or adjournments of the meeting.

Saia’s Annual Report to Stockholders for the fiscal year ended December 31, 2020, which includes Saia’s audited annual consolidated financial statements, accompanies this proxy statement. Although the Annual Report is being distributed with this proxy statement, it does not constitute a part of the proxy solicitation materials and is not incorporated by reference into this proxy statement.

We are first sending this proxy statement, form of proxy and accompanying materials to stockholders on or about March 22, 2021.

 

 

2021 Proxy Statement

SAIA, INC.

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Proposal 1 – Election of Directors

The Board of Directors currently consists of eight directors divided into three classes as follows: Class I comprised of three directors, Class II comprised of two directors and Class III comprised of three directors. Directors in each class are elected to serve for three-year terms that expire in successive years.

The terms of the Class I directors will expire at the upcoming annual meeting. The Board of Directors has nominated Di-Ann Eisnor, Jeffrey C. Ward, and Susan F. Ward for election as Class I directors. Ms. Eisnor, Mr. Ward and Ms. Ward currently serve as Class I directors.

Proposal 3 asks stockholders to approve an amendment to our Amended and Restated Certificate of Incorporation to declassify the Board of Directors. The election of directors under this Proposal 1 will be held pursuant to Saia’s current Amended and Restated Certificate of Incorporation. As a result, Class I directors elected at the 2021 annual meeting will be elected for three-year terms expiring at the annual meeting of stockholders to be held in 2024 and until their successors are elected and qualified.

Each nominee has consented to being named in this proxy statement and has agreed to serve if elected. If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. Proxies cannot be voted for a greater number of persons than the three nominees named herein.

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

 

				Your Board of Directors unanimously recommends that you vote “FOR” the election of each of the three nominees. Unless authority to vote in the election of directors is withheld, it is the intention of the persons named proxies to vote “FOR” the election of the three nominees named in this proposal.

 

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PROPOSAL 1 – ELECTION OF DIRECTORS

 

Board Nomination Process

 

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Number of New Directors in Last Six Years: 6 Directors

 

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Average Tenure of Directors: 6 Years

 

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Average Age of Directors: 58 Years

 

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Percentage of Woman Directors: 37.5%

 

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Percentage of Ethnically Diverse Directors: 25%

 

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Percentage of Independent Directors: 75%

The Nominating and Governance Committee is responsible for recommending director candidates to the Board of Directors. The Nominating and Governance Committee will apply the criteria set forth in the Corporate Governance Guidelines when considering whether to recommend any candidate as a director nominee, including candidates recommended by stockholders. The Nominating and Governance Committee seeks nominees with a broad range of experience, professions, skills, geographic representation and backgrounds. The Nominating and Governance Committee believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities.

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

 

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A majority of the members of the Board of Directors must qualify as independent directors in accordance with the rules of The Nasdaq Global Select Market;

 

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No member of the Board of Directors should serve on the Board of Directors of more than three other public companies;

 

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No person may stand for election as a director of the Company after reaching age 72; and

 

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No director shall serve as a director, officer or employee of a competitor of the Company.

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

 

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Directors and candidates should have high personal and professional ethics, integrity, values and character and be committed to representing the best interests of the Company and its stockholders;

 

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Directors and candidates should have experience and a successful track record at senior policy-making levels in business, government, technology, accounting, law and/or administration;

 

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Directors and candidates should have sufficient time to devote to the affairs of the Company and to enhance their knowledge of the Company’s business, operations and industry; and

 

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Directors and candidates should have expertise or a breadth of knowledge about issues affecting the Company that is useful to the Company and complementary to the background and experience of other Board members.

If a vacancy arises or the Board decides to expand its membership, the Nominating and Governance Committee may seek recommendations of potential candidates from a variety of sources (including incumbent directors, stockholders, the Company’s management and professional recruitment firms). The Nominating and Governance Committee evaluates each potential candidate’s educational background, employment history, outside commitments and other relevant factors to determine whether he or she is potentially qualified to serve on the Board. The Nominating and Governance Committee seeks to identify and recruit the best available candidates. The Committee evaluates qualified candidates recommended by stockholders on the same basis as those submitted by other sources. Stockholders who wish to recommend a candidate for director or nominate a candidate for election at an annual meeting should follow the procedures described on page 67.

 

2021 Proxy Statement

SAIA, INC.

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PROPOSAL 1 – ELECTION OF DIRECTORS

 

Board Diversity

The Board is committed to having diverse individuals from different backgrounds with varying perspectives, professional experience, education and skills serving as members of the Board. The Board believes that a diverse membership with a variety of perspectives and experiences is an important feature of a well-functioning board, and the composition of the Board reflects the Board’s commitment to diversity. When identifying candidates for the Board, the Board endeavors to search for highly qualified women and individuals from minority groups to include in the pool from which directors are chosen. Of the eight members of Saia’s Board, three are women and two are ethnically diverse.

Directors’ Skills and Expertise

 

Skills & Attributes		Count of Directors
Senior Executive		6
Transportation		7
Strategic Planning		7
Operations		6
Financial or Accounting		5
Risk Management		7
Technology & Cybersecurity		2
Human Capital Management		6
Health & Safety		5
Sales & Marketing		5
Environmental, Social & Governance		7
Innovation, Engineering & Disruptive Technologies		4

Board Refreshment

In the past six years, the Company has refreshed two-thirds of its Board by adding six new directors, five of whom are independent. The Company believes that it benefits from having longer tenured directors, including our Chairman, on the Board who are familiar with the Company’s business. We believe the average tenure of our directors of six years reflects the balance the Board seeks between different perspectives brought by longer-serving directors and new directors.

 

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PROPOSAL 1 – ELECTION OF DIRECTORS

 

INFORMATION CONCERNING NOMINEES AND CONTINUING DIRECTORS

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

NOMINEES FOR ELECTION AS CLASS I DIRECTORS

FOR A THREE-YEAR TERM EXPIRING AT THE 2024 ANNUAL MEETING

Di-Ann Eisnor

 

 

 

2021 Proxy Statement

SAIA, INC.

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PROPOSAL 1 – ELECTION OF DIRECTORS

 

Jeffrey C. Ward

 

 

 

Susan F. Ward

 

 

 

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PROPOSAL 1 – ELECTION OF DIRECTORS

 

CLASS II DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE

AT THE 2022 ANNUAL MEETING

Frederick J. Holzgrefe, III

 

 

 

Richard D. O’Dell

 

 

 

2021 Proxy Statement

SAIA, INC.

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PROPOSAL 1 – ELECTION OF DIRECTORS

 

CLASS III DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE

AT THE 2023 ANNUAL MEETING

Donna E. Epps

 

 

 

John P. Gainor, Jr.

 

 

 

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PROPOSAL 1 – ELECTION OF DIRECTORS

 

Randolph W. Melville

 

 

 

2021 Proxy Statement

SAIA, INC.

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CORPORATE GOVERNANCE

Corporate Governance Guidelines and Code of Business Conduct and Ethics

The Board has adopted Corporate Governance Guidelines establishing guidelines and standards with respect to Board governance and meetings, Board composition and diversity, selection and election of directors, director responsibility, director access to management and independent advisors and non-employee director compensation. The Nominating and Governance Committee of the Board regularly reviews and assesses corporate governance developments and recommends to the Board modifications to the Corporate Governance Guidelines as warranted.

The Company has adopted a Code of Business Conduct and Ethics applicable to all directors, officers and employees, including its principal executive officer, principal financial officer and principal accounting officer. The Code of Business Conduct and Ethics is filed as Exhibit 14.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission. The Corporate Governance Guidelines and the Code of Business Conduct and Ethics are posted at the “Investor Relations – Governance” page of the Company’s website (www.saia.com).

Director Independence

In February 2021, the Board, with the assistance of the Nominating and Governance Committee, conducted an evaluation of director independence based on the rules and regulations of Nasdaq Global Select Market (“Nasdaq”) and determined that each of Di-Ann Eisnor, Donna E. Epps, John P. Gainor, Jr., Randolph W. Melville, Jeffrey C. Ward, and Susan F. Ward qualifies as an independent director under such rules and regulations. Mr. O’Dell, as a result of serving as Chief Executive Officer until April 2020, and Mr. Holzgrefe, as a result of his current service as Chief Executive Officer, are not independent.

Director Compensation

Our non-employee directors receive annual compensation as shown in the tables below for service on the Board. Director compensation is approved by the Board each year based on the recommendation of the Compensation Committee, except the Compensation Committee sets the number of shares of restricted stock to be issued to non-employee directors each year. In order to assist the Compensation Committee in its recommendation, the Committee’s executive compensation consultant conducts an annual review of Saia’s non-employee director compensation program to assess the competitiveness of the compensation program for non-employee directors and advises the Committee of recent market trends as to director compensation. As part of the review, the consultant analyzes Saia’s non-employee director compensation relative to a composite of peer group data and relevant cross-industry survey data. Based in part on the consultant’s study, the Compensation Committee annually makes a recommendation concerning non-employee director compensation for approval by the full Board.

The amounts payable to non-employee directors for 2020 are indicated below:

 

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Annual retainer of $65,000

 

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Additional annual retainers for the following:

 

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Chairman - $100,000

 

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Lead Independent Director - $20,000

 

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Audit Committee Chair - $15,000

 

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Audit Committee Member - $10,000

 

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Compensation Committee Chair - $15,000

 

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Compensation Committee Member - $7,500

 

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CORPORATE GOVERNANCE

 

–

Nominating and Governance Committee Chair - $10,000

 

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Nominating and Governance Committee Member - $5,000

 

•

Grant of shares of restricted stock with a target value of $110,000

There are no separate fees paid for meeting attendance. If a director serves on more than one committee, additional compensation is paid for each committee. All non-employee directors are reimbursed for travel and other out-of-pocket incidental expenses related to meetings.

The 2018 Omnibus Incentive Plan governed grants of restricted stock to non-employee directors in 2020 and will continue to do so in 2021. Under the 2018 Omnibus Incentive Plan, each non-employee director has the option to receive up to 100% of his or her annual Board and committee retainers in shares of common stock in lieu of cash, with the value of the shares to be computed by reference to the fair market value of Saia’s common stock on the date of payment.

Under 2018 Omnibus Incentive Plan, the Compensation Committee is to approve an annual grant of restricted stock to each non-employee director, with the value on the grant date not to exceed $500,000. The shares of restricted stock are issued on May 1st each year. For 2020, each non-employee director received 1,098 shares of restricted stock. This number was determined by the Compensation Committee based on its decision to award non-employee directors restricted stock with a value of $110,000 using the closing stock price on February 6, 2020, which was the date of the Committee’s decision.

For 2021, shares of restricted stock will be issued to non-employee directors under the 2018 Omnibus Incentive Plan. On February 11, 2021, the Compensation Committee approved a grant of 548 shares of restricted stock to each non-employee director based on its decision to award restricted stock with a value of $110,000 using the closing stock price on that date. These shares of restricted stock are to be issued on May 1, 2021.

The restricted stock issued in 2020 is subject to a one-year cliff vesting restriction and the shares of restricted stock to be issued in 2021 will also be subject to a one-year cliff vesting restriction. In each case, any unvested shares will become fully vested upon cessation of the director’s service on the Board (other than for cause) or upon a change in control of the Company.

Under the Director’s Deferred Fee Plan, non-employee directors may defer all or a portion of annual fees earned. The deferrals are converted into phantom stock units equivalent to the value of Company common stock. Upon the directors’ termination, death or disability, accumulated deferrals are distributed in the form of Company common stock in accordance with elections made by the directors. The following non-employee directors held phantom stock units under the Directors Deferred Fee Plan as of December 31, 2020, for the following number of shares: Mr. Gainor 14,838; Mr. Melville 19,557; Mr. Ward 53,748; and Ms. Ward 1,556.

Directors who are Company employees do not receive any additional compensation for their service as directors. Mr. Holzgrefe, as an employee of Saia, did not receive any compensation for his service as a director in 2020 and Mr. O’Dell did not receive compensation for his service as a director prior to his retirement as Chief Executive Officer in April 2020.

 

2021 Proxy Statement

SAIA, INC.

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CORPORATE GOVERNANCE

 

The following table sets forth all compensation earned by the Company’s non-employee directors for service as a director for the year ended December 31, 2020.

2020 NON-EMPLOYEE DIRECTOR COMPENSATION TABLE

 

Name		Fees Earned or Paid in Cash ($)(1)(2)				Stock Awards ($)(3)				Total ($)
Di-Ann Eisnor			—				172,834				172,834
Donna E. Epps			80,000				100,302				180,302
William F. Evans(4)			90,000				100,302				190,302
John P. Gainor, Jr.			—				180,325				180,325
John J. Holland(5)			97,500				100,302				197,802
Randolph W. Melville			—				197,773				197,773
Bjorn E. Olsson(6)			—				—				—
Richard D. O’Dell			165,000				100,302				265,302
Herbert A. Trucksess, III(7)			—				—				—
Jeffrey C. Ward			—				177,767				177,767
Susan F. Ward			87,500				100,302				187,802

(1)	Amounts represent cash payments in 2020 for Board and Committee service.

 

(2)	Amount of cash fees deferred under the Director’s Deferred Fee Plan with phantom stock units in 2020: Mr. Gainor $180,325; Mr. Melville $197,773; Mr. Ward $177,767; and Ms. Ward $100,302. Ms. Eisnor received 794 restricted shares in lieu of cash fees.

 

(3)	This column represents the dollar amount of aggregate grant date fair value of stock granted in 2020. All stock was issued on May 1, 2020.

 

(4)	Mr. Evans retired from the Board on June 26, 2020.

 

(5)	Mr. Holland retired from the Board on November 9, 2020.

 

(6)	Mr. Olsson retired from the Board on April 28, 2020.

 

(7)	Mr. Trucksess retired from the Board on April 28, 2020.

Saia provides customary liability insurance for its directors and officers. The annual cost of this coverage for 2020 was $667,275.

Director Stock Ownership Guidelines

In order to align non-employee directors’ interests with those of the Company and its stockholders, the Board has approved stock ownership guidelines for the Company’s non-employee directors. Under the guidelines, non-employee directors have three years from the date they joined the Board to acquire shares of the Company’s common stock valued at five times the then-current annual retainer for non-employee directors. Units held in the Company’s Director’s Deferred Fee Plan are included as units of stock for the purposes of the guidelines. Under Company policy, directors are precluded from selling shares earned as a director until the director is in compliance with the stock ownership guidelines. All of our directors have met or are on track to meet their objectives within the three-year time requirement.

Majority Voting Standard for Director Elections

The election of directors at the 2021 annual meeting of stockholders is an uncontested election under the Company’s Bylaws. Because this is an uncontested election, a nominee for director is elected to the Board if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Abstentions will not affect the election of directors. In tabulating the voting results for the election of directors, only “FOR” and “AGAINST” votes are counted. If an incumbent director fails to receive a majority of the vote for re-election in an uncontested election, the Nominating and Governance Committee of the Board will act on an expedited basis to determine whether to accept the director’s previously tendered irrevocable resignation and will submit such recommendation for prompt consideration by the Board. In considering whether to accept or reject the tendered resignation, the Nominating and Governance Committee and the Board will consider any factors they deem relevant. Any director who fails to receive a majority of the vote for re-election will not participate in the Nominating and Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation.

Election to the Company’s Board of Directors in a contested election is by a plurality of the votes cast at any meeting of stockholders having a quorum. An election will be considered contested if (i) the Secretary of the Company receives a

 

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

Board Meetings, Committees of the Board and Board Leadership Structure

Attendance at Board and Committee Meetings; Executive Sessions

The Board of Directors held eight meetings in 2020. Each director attended at least 75% of the meetings convened by the Board and the applicable committees during such director’s service on the Board during 2020.

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

Annual Evaluation Process of the Board and Committees

With oversight by the Nominating and Governance Committee, the Board of Directors conducts annual Board and Committee performance evaluations that are intended to determine whether the Board and each of its Committees are functioning effectively and to provide them with an opportunity to reflect upon and improve processes and effectiveness. The evaluation is conducted through the completion by each director of a questionnaire assessing the performance of the Board and each Committee of which the director is a member. Each Committee and the full Board review and discuss the results of the Committee and Board evaluations. The goal is to use the results of the assessment process to enhance the functioning of the Board and the Committees as well as the ability of the Board and Committees to carry out their oversight functions.

Director Orientation and Continuing Education

The Company conducts an orientation program for each new director that includes, among other things, a review of the Company’s business strategy and operations, technology, financial condition, legal and regulatory framework and other relevant topics. The Company also provides continuing education opportunities and programs for current directors. These programs include presentation by outside subject matter experts, participation in governance and industry seminars and site visits.

Board Leadership Structure

Saia’s Board structure provides for a Chief Executive Officer separate from the Chairman of the Board. The Board believes maintaining separate roles allows the Chairman to devote his time and attention to matters of Board oversight and governance and allows the Chief Executive Officer the opportunity to focus his time and energy managing the business.

The Board of Directors designates a director to serve as Chairman of the Board and selected Richard D. O’Dell, former Chief Executive Officer, to serve as Chairman in April 2020. The primary responsibilities of the Chairman are to:

 

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Preside at all meetings of the Board and provide leadership in Board deliberations;

 

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Preside at all stockholder meetings;

 

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Prepare, in collaboration with the Chief Executive Officer and Lead Independent Director, Board meeting schedules and agendas;

 

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Provide support and advice to the Chief Executive Officer;

 

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Participate in the identification and recruitment of potential non-employee directors;

 

•

Support the Chief Executive Officer in serving as an ambassador for the Company with stockholders, customers and industry groups;

 

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SAIA, INC.

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CORPORATE GOVERNANCE

 

•

With the Lead Independent Director, provide input concerning the performance of the Chief Executive Officer and participate in discussions with the Chief Executive Officer concerning performance; and

 

•

Participate in planning for Chief Executive Officer succession.

Because the Chairman is not independent under Nasdaq rules and regulations, the independent directors elected Randolph W. Melville as Lead Independent Director for 2020. The primary responsibilities of the Lead Independent Director are to:

 

•

Prepare, in collaboration with the Chief Executive Officer and Chairman, Board meeting schedules and agendas;

 

•

Advise the Chairman as to the quality, quantity and timeliness of the flow of information to the non-employee directors;

 

•

Chair all meetings of the Board at which the Chairman is not present;

 

•

Coordinate, develop the agenda for, chair and moderate meetings of independent directors, and generally act as principal liaison between the independent directors and the Chairman;

 

•

With the Chairman, provide input concerning the performance of the Chief Executive Officer and participate in discussions with the Chief Executive Officer concerning performance; and

 

•

Provide input to the Nominating and Governance Committee regarding the appointment of chairs and members of the various committees.

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

Board’s Role in Corporate Strategy

The Board is actively involved in overseeing, reviewing and guiding the Company’s corporate strategy. The Board formally reviews the Company’s business strategy, including the risks and opportunities facing the Company and its business, at an annual strategic planning session. In addition, long-range strategic issues are discussed as a matter of course at regular Board meetings. The Board regularly discusses corporate strategy throughout the year with management formally as well as informally and during executive sessions of the Board as appropriate. As discussed in “Board’s Role in Risk Management Process” below, the Board views risk management and oversight as an integral part of the strategic planning process and provides oversight of management’s process to identify, manage and mitigate risks inherent in the Company’s strategic plans.

Board’s Role in Risk Management Process

The Company’s senior management has the responsibility to develop and implement the Company’s strategic plans and to identify, evaluate, manage, and mitigate the risks inherent in those plans. It is the responsibility of the Board to oversee the development and execution of the Company’s strategic plans and to understand the associated risks and the steps that senior management is taking to manage and mitigate those risks. The Board executes its oversight responsibility both through active review and discussion of key risks facing the Company and by delegating certain oversight responsibilities to the Board Committees. The full Board has retained responsibility for oversight of strategic risks as well as risks not otherwise delegated to one of the Committees, including cybersecurity, sustainability and climate change risks.

As part of its risk management oversight, the full Board, based on input from management and the Nominating and Governance Committee, conducts a number of reviews throughout the year to ensure that the Company’s strategy and risk management is appropriate and prudent, including a review of specific risks, ranking of the likelihood and significance of those risks and a review of mitigation plans. In addition, the Board has delegated certain risk management oversight responsibilities to specific Board Committees, each of which reports regularly to the full Board. In performing these oversight responsibilities, each Committee has full access to management, as well as the ability to engage independent advisors.

 

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The following is a summary of the general risk oversight functions of the Committees:

COMMITTEE RISK OVERSIGHT

 

Audit Committee				Nominating and Governance Committee				Compensation Committee
The Audit Committee oversees Company risks relating to accounting and financial reporting and related legal and regulatory compliance.   To satisfy these responsibilities, the Committee meets regularly with the Company’s chief financial officer, chief accounting officer, director of internal audit, outside legal counsel, KPMG LLP and other members of management.   The Committee receives regular reports relating to issues such as the status and findings of audits being conducted by the internal and independent auditors, the status of material litigation and other contingent liabilities, and changes in accounting requirements or practices that could affect the content or presentation of the Company’s financial statements.   The Committee is also responsible for reviewing any “hot-line” or other reports concerning accounting, internal controls or auditing matters.				The Nominating and Governance Committee oversees risks relating to board leadership and effectiveness, and corporate governance matters. The Committee also oversees the overall enterprise risk management process.   To assist the Committee in discharging its responsibilities, it works with officers of the Company responsible for relevant risk areas and keeps abreast of the Company’s significant risk management practices and strategies.				The Compensation Committee oversees risks relating to the Company’s compensation and benefits systems and reviews annually policies and practices to determine whether they are reasonably likely to meet the Committee’s objectives for executive pay and to ensure that the Company’s compensation practices present no risk of a material adverse effect on the Company.   To assist it in satisfying these oversight responsibilities, the Committee has retained its own independent compensation consultant and meets regularly with management to understand the financial, human resources and shareholder implications of its compensation decisions.

Succession Planning

Succession planning and leadership development are key priorities for the Board and management. The Board regularly reviews the Company’s human capital related activities in support of the Company’s business strategy, which includes a discussion of the Company’s training and development programs, leadership bench and succession plans with a focus on key positions at the senior executive level and other critical roles. The Board also has regular and direct exposure to high potential leaders through formal Board and Committee presentations and informal events.

Board Committees

The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, each of which is comprised entirely of independent directors. Current Committee memberships are as follows:

 

Audit Committee

Compensation Committee

Nominating and Governance Committee

Susan F. Ward, Chair Donna E. Epps John P. Gainor, Jr.

Randolph W. Melville, Chair Di-Ann Eisnor Jeffrey C. Ward

John P. Gainor, Jr., Chair Donna E. Epps Randolph W. Melville Jeffrey C. Ward

 

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CORPORATE GOVERNANCE

 

Each of the Committees acts pursuant to a written charter adopted by the Board. A copy of each Committee charter is posted at the “Investor Relations – Governance” page of the Company’s website (www.saia.com).

Audit Committee

The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act of 1934”). The Audit Committee held five meetings in 2020. The functions of the Audit Committee are described in the Audit Committee Charter and include, among others, the following:

 

•

review the adequacy and quality of Saia’s accounting and internal control systems;

 

•

review Saia’s financial reporting process on behalf of the Board of Directors;

 

•

oversee the entire audit function, both internal and independent, including the selection of the independent registered public accounting firm;

 

•

review the Company’s major financial reporting exposures concerning risk assessment and management and the steps management has taken to monitor and control such exposures; and

 

•

provide an effective communication link between the auditors (internal and independent) and the Board of Directors.

The Board of Directors has determined that all members of the Audit Committee are “audit committee financial experts,” as defined by applicable rules of the Securities and Exchange Commission, and all have accounting and related financial expertise and are independent in accordance with Nasdaq rules.

Compensation Committee

The Compensation Committee held five meetings in 2020. The functions of the Compensation Committee are described in the Compensation Committee Charter and include, among others, the following:

 

•

determine the salaries, bonuses and other remuneration and terms and conditions of employment of the Named Executive Officers of Saia, except as to the Chief Executive Officer, the Committee makes a recommendation as to compensation, which is then finally determined by the Board;

 

•

supervise the administration of Saia’s incentive compensation and equity-based compensation plans and approve grants under those plans;

 

•

establish Saia’s executive officer compensation policies and recommend to the Board the compensation of non-employee directors; and

 

•

assist the Board in its oversight of the Company’s human capital management strategies and practices.

Each member of the Compensation Committee qualifies as (i) an independent director under applicable Nasdaq rules and Rule 10C-1 of the Securities Exchange Act of 1934; and (ii) a “non-employee director” for purposes of Rule 16b-3 of the Securities Exchange Act of 1934.

The Compensation Committee has retained Mercer (US) Inc. as its executive compensation consultant to provide information, analysis and recommendations regarding executive and director compensation. Mercer reports directly to the Compensation Committee and takes direction from the Committee. While it is necessary for Mercer to interact with management to gather information, the Committee has adopted protocols governing if and when the consultant’s advice and recommendations can be shared with management. The Committee periodically meets with the Mercer consultant outside the presence of management to discuss executive compensation philosophy and specific levels of compensation and to ensure that Mercer receives from management the information required to perform its duties on a timely basis. The Compensation Committee formally evaluates the performance of Mercer on an annual basis and may terminate the services of Mercer at any time.

For 2020, the Company paid Mercer $ 90,630 for executive and director compensation services rendered to the Compensation Committee. Mercer is a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. (“MMC”).

 

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Since 2010, including during 2020, the Company has used Marsh USA, Inc., an affiliate of MMC, to provide insurance brokerage services, based on a determination made by management of the expertise of Marsh USA, Inc. in providing insurance brokerage services for the transportation industry. The Company paid Marsh USA, Inc. $1,589,406 in fees in 2020 for such insurance brokerage services (this amount does not include insurance premiums that are paid through Marsh USA, Inc. to insurance carriers on behalf of Saia).

In connection with the Compensation Committee’s consideration of the independence of Mercer, the Committee confirmed with Mercer that:

 

•

The Mercer consultant receives no incentive or other compensation based on the fees charged to the Company for other services provided by Mercer or any of its affiliates;

 

•

The Mercer consultant is not responsible for selling other Mercer or affiliate services to the Company;

 

•

Mercer’s professional standards prohibit the individual consultant from considering any other relationships Mercer or any of its affiliates may have with the Company in rendering their advice and recommendations;

 

•

The Mercer consultant has no business or personal relationships with any members of Saia management or the Board other than providing executive compensation consulting; and

 

•

The Mercer consultant and his immediate family members own no shares of Saia’s common stock.

In its evaluation of the relationship with Mercer, the Compensation Committee also reviewed the protocols used by the Committee in its dealings with Mercer which include:

 

•

The Committee has sole authority to retain and terminate Mercer at any time;

 

•

The Mercer consultant has direct access to the Committee without management intervention;

 

•

The Committee has in place a process to formally evaluate the quality and objectivity of the services provided by Mercer each year and determine whether to continue to retain Mercer;

 

•

The Committee has in place rules for the engagement which limit how the individual Mercer consultant may interact with management; and

 

•

The Committee periodically meets with the Mercer consultant outside the presence of management to discuss executive compensation philosophy and specific levels of compensation and ensure that Mercer receives from management the information required to perform its duties in a timely manner.

Following this assessment of the relationship of Mercer and its affiliates with the Company, the Compensation Committee concluded that Mercer’s work for the Committee does not raise any conflict of interest and that Mercer qualified as independent.

Nominating and Governance Committee

The Nominating and Governance Committee held four meetings in 2020. The functions of the Nominating and Governance Committee are described in the Nominating and Governance Committee Charter and include, among others, the following:

 

•

review the size and composition of the Board and make recommendations to the Board as appropriate;

 

•

advise and make recommendations to the Board on corporate governance matters;

 

•

review criteria for election to the Board and recommend candidates for Board membership. In identifying candidates for the Board, the Committee is to search for highly qualified women and individuals from minority groups to include in the pool from which directors are chosen;

 

•

review the structure and composition of Board committees and make recommendations to the Board as appropriate;

 

•

develop and oversee an annual self-evaluation process for the Board and its committees;

 

•

review the Company’s major enterprise risk assessment and management processes for matters other than financial reporting risk matters;

 

 

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CORPORATE GOVERNANCE

 

•

provide oversight of corporate ethics issues and at least annually assess the adequacy of the Company’s Code of Business Conduct and Ethics; and

 

•

provide oversight on management succession issues.

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

Corporate Responsibility at Saia

We are committed to being a good corporate citizen and we embrace our responsibility to the environment, our employees and the communities we serve. Our management is focused on developing and implementing strategies and initiatives that address each of these areas and the Board provides direct oversight of management’s execution of those strategies and initiatives.

Environmental Initiatives

We seek to meet or exceed environmental standards in all areas where we operate. We are focused on improving energy efficiency and lowering our greenhouse gas emissions through updating our tractor and trailer fleet and improving our freight terminals.

 

•

Since 2015, we have improved our fleet mpg by more than 12% through significant investments in new, more energy-efficient tractors and trailers.

 

•

Trailer skirts and more fuel efficient tires are installed on all of our 53-foot and 28-foot trailers.

 

•

Engine idling has been reduced through an automatic engine shutoff system.

 

•

Our drivers and dock workers are trained on the proper handling of hazardous materials and we have implemented programs to quickly address environmental incidents.

 

•

LED lighting has been installed in our new terminals and we have replaced older lighting with LED lights in approximately 50 terminals.

 

•

In 2021, we plan to conduct pilot programs using tractors and forklifts powered by alternate fuels to explore the possibilities of these technologies for our future.

Social Responsibility

The success of Saia is fundamentally connected to the well-being of our people. We strive to attract, engage, develop and retain employees who feel valued and included, have opportunities to grow and who are driven to succeed. Saia’s human capital management strategies and initiatives are overseen at the Board level by the Compensation Committee.

Safety. Our highest priority is the safety of our employees and the communities we serve. We have invested in some of the latest safety technologies and we provide our employees with extensive safety training. Saia has repeatedly been recognized by the American Trucking Associations’ Safety Council for our outstanding safety record.

 

•

Our new tractors are equipped with an advanced safety package, which includes collision mitigation technology, active brake assistance, adaptive cruise control, lane departure warning, roll stability control systems and LED headlights.

 

•

Video recording technology is installed in our entire tractor fleet that automatically records events such as hard braking, bumps and sharp turns as a means to help coach our drivers on safe driving practices.

 

•

We conduct regular pre-shift safety training meetings.

 

•

Our drivers are trained using the Smith System Defensive Driving program on an annual basis to reinforce safe driving skills.

 

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Employee Development and Training. We place a premium on finding and developing the right people and we invest significant effort and resources on developing and training our employees.

 

•

We have over 300 driver-trainers who assist in providing all new drivers with 40 hours of on-boarding training.

 

•

Our new dockworkers also receive onboarding training that is supplemented with ongoing safety and job training.

 

•

We offer a “dock-to-driver” program that provides our employees who desire the opportunity to earn their commercial driver certifications to further their careers.

 

•

New customer service representatives receive 20 days of training.

 

•

We provide on-going sales and management training programs

 

•

We continue to develop our succession planning process.

Workplace Culture. Creating and maintaining a strong and positive employee culture is critical to our success. We pride ourselves on the fair treatment of our employees and strive to have a high level of employee satisfaction and productivity. Saia is committed to fostering a work environment that values and promotes diversity and inclusion. In 2020, Forbes named Saia to their list of America’s Best Employers for Diversity.

 

•

We provide a competitive compensation and benefits package to our employees, including an industry-leading medical program.

 

•

Our voluntary wellness program promotes healthier lifestyles through proactive evaluation and management of major health and wellness indicators.

 

•

In 2021, we established a Diversity Council that will focus on promoting a culture where individual differences are respected and all employees are valued for the skills and contributions they bring to the Company.

 

•

We have an extensive employee communications program, which starts with an employee’s manager and is supplemented through a monthly employee magazine, quarterly reports on performance by senior executives and annual employee engagement surveys.

 

•

We provide employee recognition and rewards programs, including iSaia that recognizes the special contributions of our employees.

For more information about the Company’s Corporate Responsibility matters please visit the Company’s website at www.saia.com.

Stockholder Communications with the Board of Directors

Stockholders seeking to communicate with the Board of Directors should submit their written correspondence to the Secretary of the Company, Saia, Inc., 11465 Johns Creek Parkway, Suite 400, Johns Creek, Georgia 30097. The Secretary of the Company will forward all such communications (excluding routine advertisements and business solicitations and communications which the Secretary of the Company, in his or her sole discretion, deems to be a security risk or for harassment purposes) to each member of the Board of Directors, or if applicable, to the individual director(s) named in the correspondence. Subject to the following, the Chairman of the Board and the Lead Independent Director will receive copies of all stockholder communications, including those addressed to individual directors. The Secretary will consider each communication to determine whether it should be forwarded promptly or compiled and sent with other communications and other Board materials in advance of the next scheduled Board meeting.

Stockholders also have an opportunity to communicate with the Board of Directors at the Company’s annual meeting of stockholders. The Company’s Corporate Governance Guidelines provide that absent unusual circumstances, directors are expected to attend all annual meetings of stockholders. All members of the Board of Directors attended the 2020 annual meeting of stockholders.

 

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Stock Ownership

Directors and Executive Officers

The following table sets forth the amount of Saia’s common stock beneficially owned by each director and each executive officer named in the Summary Compensation Table on page 39 and all directors and executive officers as a group, as of January 15, 2021. Unless otherwise indicated, beneficial ownership is direct and the person indicated has sole voting and investment power.

 

		Common Stock Beneficially Owned
Name of Beneficial Owner		Shares Beneficially Owned(1)				Rights to Acquire Beneficial Ownership(2)				Total				Percent of Class(3)				Shares Held Under Deferral Plans(4)
Di-Ann Eisnor			7,507				—				7,507				*				—
Donna E. Epps			1,618				—				1,618				*				—
John P. Gainor, Jr.			400				—				400				*				14,838
Frederick J. Holzgrefe, III			1,181				8,120				9,301				*				5,003
Randolph W. Melville			—				—				—				*				19,557
Richard D. O’Dell			19,106				14,120				33,226				*				—
Jeffrey C. Ward			7,579				—				7,579				*				53,748
Susan F. Ward			—				—				—				*				1,556
Douglas L. Col			—				1,270				1,270				*				3,286
Paul C. Peck			—				1,250				1,250				*				18,251
Karla J. Staver			1,709				—				1,709				*				—
Raymond R. Ramu			22				3,920				3,942				*				8,488
All directors and executive officers as a group (12 persons)			39,122				28,680				67,802				0.3	%			124,727

*	Denotes less than 1%

 

(1)	Includes common stock owned directly and indirectly.

 

(2)	Number of shares that can be acquired on January 15, 2021 or within 60 days thereafter through the exercise of stock options or vesting of restricted stock. These shares are excluded from the “Shares Beneficially Owned” column.

 

(3)

Based on the number of shares outstanding on January 15, 2021 (26,236,570) and includes the number of shares subject to acquisition by the relevant beneficial owner within 60 days thereafter. Including the number of shares subject to acquisition by the relevant beneficial owner pursuant to the Company’s Directors’ Deferred Fee Plan or Executive Capital Accumulation Plan upon such beneficial owner’s termination of services as a director or employee, the Percent of Class for all directors and executive officers as a group equals 0.73%.

 

(4)

Represents shares of common stock from phantom stock units on an as converted basis as of January 15, 2021, receipt of which has been deferred pursuant to the Company’s Directors’ Deferred Fee Plan or Executive Capital Accumulation Plan. The value of the phantom stock units deferred pursuant to the Company’s Directors’ Deferred Fee Plan and Executive Capital Accumulation Plan track the performance of the Company’s common stock and the phantom stock units are payable in stock upon the relevant beneficial owner’s termination of service as director or employee.

 

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes our executive compensation philosophy and programs, the decisions the Compensation Committee has made under those programs and the factors considered in making those decisions. This Compensation Discussion and Analysis focuses on the compensation of our Named Executive Officers for 2020, who were:

 

•

Frederick J. Holzgrefe, III, President & Chief Executive Officer

 

•

Richard D. O’Dell, Former Chief Executive Officer

 

•

Douglas L. Col, Executive Vice President & Chief Financial Officer

 

•

Robert S. Chambers, Former Vice President & Chief Financial Officer

 

•

Raymond R. Ramu, Executive Vice President & Chief Customer Officer

 

•

Paul C. Peck, Executive Vice President Operations

 

•

Karla J. Staver, Vice President of Safety and Human Resources

Mr. O’Dell retired as Chief Executive Officer on April 28, 2020 and became Chairman of the Board on that date and Mr. Chambers resigned as Vice President and Chief Financial Officer on January 2, 2020. Mr. Peck will cease serving as Executive Vice President Operations, effective March 31, 2021, and will support a transition through his retirement date of July 1, 2021.

Executive Summary

The following provides an overview of our compensation philosophy and programs, including the focus on pay for performance, best practice pay programs and alignment of the interests of Saia’s executives with those of Saia’s stockholders. Details about the compensation awarded to Saia’s Named Executive Officers can be found in the Summary Compensation Table and related compensation tables in this proxy statement.

 

•

Saia relates pay to performance to incent executives to achieve corporate objectives.

The Company’s executive compensation program is designed to link pay with performance by requiring that a significant portion of each executive’s target compensation is at risk and is earned based on achieving corporate financial and operating targets, total stockholder return and stock price appreciation.

 

•

Saia aligns executives’ interests with those of the stockholders.

All significant elements of long-term compensation are paid through equity awards in the form of performance shares, stock options and restricted stock. The Company maintains stock ownership guidelines for the executive officers to further align the interests of our executive officers with our stockholders.

 

•

Saia annually assesses its executive compensation programs.

The Compensation Committee designs the Company’s executive compensation program to attract, motivate, reward and facilitate the retention of executive talent to achieve corporate objectives. The program is comprised of base salary, cash-based annual incentive awards, equity-based long-term incentive awards, customary benefits and perquisites and severance benefits. Elements of the program are generally designed to provide target compensation opportunity around the 50^th percentile of the peer group, but can be higher or lower based on individual performance, tenure, additional responsibility and for executive retention and succession planning purposes. The Committee works with Mercer (US) Inc., its executive compensation consultant, each year to assess our program against our transportation industry peers and general industry.

 

•

2020 Say-on-Pay results support our current compensation policies and practices.

In accordance with the recommendations of our stockholders in 2011 and 2017, Saia holds a stockholder advisory “say-on-pay” vote on an annual basis. In 2020, holders of 97.2% of Saia’s stock voting on the matter approved, on an

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

advisory basis, the compensation paid to Saia’s Named Executive Officers as described in the 2020 proxy statement. The Compensation Committee believes that this vote demonstrates strong support by our stockholders of our compensation philosophy and goals and the compensation decisions made by the Committee. Based on these favorable results, the Compensation Committee was encouraged to continue its practices in determining executive compensation.

Key Features of Saia’s Executive Compensation Program

 

What Saia Does		What Saia Doesn’t Do
✓ Links a significant portion of pay to Company performance		û   No “single-trigger” change-of-control cash payments
✓ Encourages stock ownership by using stock ownership guidelines for all officers at two to five times their base salary		û   No stock option repricing or option grants below market value
✓ Mitigates risk taking by emphasizing long-term equity incentives, placing caps on potential payments, and maintaining clawback provisions		û   No hedging transactions, pledges or margin accounts with respect to Company stock
✓ Assesses executive compensation against a representative and relevant peer group to assist in setting compensation		û   No excessive perquisites
✓ Uses an independent compensation consultant		û   No significant Company cash payments upon death or disability
		û   No tax gross-up provisions for our Named Executive Officers

COVID-19

At the beginning of 2020, the Company’s plan for the year centered on execution, productivity and building density in new and existing markets. After reporting record profitability in the first quarter, second quarter results were impacted by the loss of volume we experienced as parts of the economy shut down in an effort to slow the spread of COVID-19. The decline in business activity in early spring was sudden and dramatic, but by the middle of the second quarter volumes had begun to stabilize. We experienced shipment and revenue declines of 10% in the second quarter, but management quickly adapted to the new environment, cut costs and found opportunities for improved efficiency and the Company remained profitable in the second quarter. Customer activity continued to build momentum in the second half of the year and the Company posted record quarterly earnings in both the third and fourth quarters of 2020. A summary of our financial and operating performance for 2020 compared to the two prior years is provided in the tables below.

While vaccines for COVID-19 have been developed and are in the process of being administered, it remains unclear how much longer the pandemic will continue and whether variants of COVID-19 will cause a significant increase in cases. There continues to be a significant level of uncertainty as to when and to what extent governments and other authorities will lift the measures taken to prevent the spread of the disease, and whether such measures may need to be re-instituted once lifted in the event COVID-19 continues to spread.

The pandemic created unprecedented challenges during 2020. From the outset of the pandemic, the Company was identified as an essential service provider, thus we operated throughout the pandemic. Our Named Executive Officers and other senior management of the Company have provided strong leadership through the pandemic. They implemented a number of measures that were designed to limit the adverse effect of the pandemic on our business and on our employees and customers. Such measures included:

 

•

Providing additional paid time off in 2020 to support all hourly full time employees in the midst of the pandemic

 

•

Maintaining all medical insurance plans for eligible employees and their families

 

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•

Introducing new social distanced and touch-free operating protocols in addition to the distribution of personal protective equipment to our employees across our network to help our employees work safely

 

•

Enhancing cleaning programs for our locations and equipment to limit potential exposure or transmission of the virus

 

•

Shifting more than 1,000 employees to a work-from-home environment to reduce their workplace exposure to COVID-19

 

•

Suspending the 401(k) plan for the second quarter of 2020, while also providing a one-time cash bonus of $250 for virtually all employees

 

•

Providing an annual incentive compensation program for all salaried employees for the full year of 2020 after suspending incentive programs in the first quarter of 2020. This allowed for full participation and shared performance objectives, but delayed payments to ensure that the Company maintained financial performance through the year

Despite the significant uncertainties concerning the long-term effect of the pandemic on our business, the Compensation Committee elected to make no changes to the executive compensation program in 2020 in response to the pandemic. This is largely the result of the stabilized revenues in the middle of the second quarter and the increased customer activity and strong financial performance in the second half of the year.

Financial and Operating Performance

The following graphs highlight Saia’s financial and operating performance for fiscal years 2018-2020:

 

 

(1)	Operating ratio is the calculation of operating expenses divided by operating revenue.

 

(2)	$100 invested on December 31, 2017 in the Company’s common stock.

CEO Succession

On April 28, 2020, the date of the prior year annual meeting, Mr. O’Dell retired as Chief Executive Officer and Herbert A. Trucksess, III, retired as Chairman of the Board. On that date Mr. Holzgrefe became President and Chief Executive Officer and Mr. O’Dell became Chairman of the Board.

The Company entered into an Employment Agreement with Mr. Holzgrefe, effective on April 28, 2020, that provides for a minimum base salary of $723,000 and participation in the Company’s annual and long-term incentive compensation plans and other benefit plans of Saia. Mr. Holzgrefe’s target annual incentive was set at 100% of base salary and his target long-term incentive was set at 200% of base salary. Mr. Holzgrefe’s base salary and target annual incentive approximated the 25^th percentile of compensation paid to peer group company CEOs and his target long-term incentive was between the 25^th and 50^th percentiles. The Board established these compensation levels based on the recommendation of the Compensation Committee and the review of peer group data provided by Mercer.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Mr. Holzgrefe’s Employment Agreement provides that if he is terminated without Cause or leaves for Good Reason, he is entitled to severance benefits, including a cash payment equal to two times his annual rate of base salary, and he (and his spouse, as applicable) would remain covered for 24 months following such termination by certain employee benefit plans and programs. In addition, all stock options held by Mr. Holzgrefe would become fully exercisable for a period of two years following his termination (but not beyond the term of the option) and shares of restricted stock held for one year or more would vest pro rata over three years. The severance benefits are contingent on the execution by Mr. Holzgrefe of a release in favor of the Company and the compliance with non-disclosure, non-competition and non-solicitation provisions contained in the Employment Agreement.

In addition, effective April 28, 2020, Mr. Holzgrefe entered into a double trigger Executive Severance Agreement that provides him with certain severance benefits in the event of a Change of Control of the Company followed within two years by (i) the termination by the Company of Mr. Holzgrefe’s employment for any reason other than death, disability, retirement or “cause” or (ii) the resignation of Mr. Holzgrefe due to an adverse change in title, authority or duties, a transfer to a new location more than 50 miles from the location where he was employed immediately prior to the Change of Control, a reduction in salary, or a reduction in fringe benefits or annual bonus below a level consistent with Saia’s practice prior to the Change of Control. The severance benefits in such event include a lump sum payment equal to three times the highest base salary and annual cash bonuses paid or payable to him in any consecutive 12 month period during the three years prior to termination and the immediate vesting of all outstanding stock options, which options remain exercisable for one year. In addition, for three years following the employment termination Mr. Holzgrefe is deemed to remain an employee of the Company for purposes of applicable medical, life insurance and long-term disability plans and programs covering him.

Upon his retirement as Chief Executive Officer, Mr. O’Dell became non-executive Chairman of the Board on April 28, 2020. See “Director Compensation” for information on compensation paid to non-employee directors. Mr. O’Dell’s Employment Agreement and Executive Severance Agreement both terminated as of April 28, 2020, except the restrictive covenants included in the Employment Agreement survive the termination. Mr. O’Dell will be reimbursed for the cost of health insurance coverage for himself and his spouse for 24 months following his retirement as CEO.

Executive Compensation Oversight

Role of Compensation Committee

Saia’s executive compensation program is designed and administered by the Compensation Committee, which is made up entirely of independent directors. The Compensation Committee, with the assistance of Mercer, as independent compensation consultant to the Compensation Committee, annually reviews the Company’s compensation philosophy, the overall design of the compensation program and the elements of each component of compensation. In making decisions about compensation for the Named Executive Officers as described in the compensation tables in this proxy statement, the Compensation Committee takes the following factors into consideration, among others, although none of these factors is determinative individually:

 

•

The competitive environment for recruiting and retaining senior executives, including compensation trends, best practices, and executive compensation paid by our industry peers;

 

•

The individual’s performance, experience and future advancement potential;

 

•

The Company’s past financial and operating performance, as well as the strategic plan for future periods;

 

•

The current economic conditions and the competitive market environment in which the Company operates;

 

•

The Company’s stock ownership and retention policies;

 

•

Each Named Executive Officer’s historical total compensation, including the value of all outstanding equity awards granted to the Named Executive Officer, and future compensation opportunities based on tally sheets; and

 

•

Internal pay equity.

The Compensation Committee reviews and approves all elements of our executive compensation program, other than Mr. Holzgrefe’s compensation, which is approved by the Board, based on an assessment of his performance conducted by the Board and based on the recommendation of the Compensation Committee. Mr. Holzgrefe makes

 

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recommendations to the Compensation Committee as to elements of compensation for his direct reports and provides performance reviews to assist the Compensation Committee in setting executive compensation.

Role of Compensation Consultant

The Compensation Committee enters into a consulting agreement with its outside consultant on an annual basis. The Compensation Committee retained Mercer as its executive compensation consultant to provide information, analysis and recommendations regarding executive and director compensation. Mercer reports directly to the Compensation Committee and takes direction from the Committee. While it is necessary for Mercer to interact with management to gather information, the Committee has adopted protocols governing if and when the consultant’s advice and recommendations can be shared with management. The Committee periodically meets with the Mercer consultant outside the presence of management to discuss executive compensation philosophy and specific levels of compensation and to ensure that Mercer receives from management the information required to perform its duties on a timely basis. The Committee formally evaluates the performance of Mercer on an annual basis and may terminate the services of Mercer at any time.

Additional Information

Additional information about the structure and practices of the Compensation Committee and role of the compensation consultant is presented under the heading Corporate Governance – Board Committees, Compensation Committee in this proxy statement.

Executive Compensation Philosophy

The Compensation Committee believes the executive compensation program should link pay with performance and should attract, motivate, reward and facilitate the retention of the executive talent required to achieve corporate objectives and to create value for the Company’s stockholders. We align the interests of our executives with those of our stockholders through an annual incentive plan that uses annual metrics that we believe are important in determining our stock price and through long-term equity incentives in the form of performance shares, stock options and restricted stock. Our compensation program has achieved strong support from our stockholders with over 97.2% of the shares voting on the matter at the 2020 annual stockholders meeting having voted in favor of approval of the compensation of our Named Executive Officers, as disclosed in the 2020 proxy statement.

Executive Compensation Components

The specific components of Saia’s executive compensation program are:

 

Component		Key Characteristics		Objective
Base Salary — Cash		Fixed compensation component. Reviewed annually and adjusted if and when appropriate.		Provide a fixed form of executive compensation for performing daily responsibilities.
Annual Incentives — Cash		Variable compensation component. Performance-based award opportunity, payable upon attaining specific corporate annual financial and operating targets.		Motivate and reward executives for corporate achievement of specific annual performance objectives.
Long-Term Incentives — Stock and Stock Options		Variable compensation component. Performance-based award opportunity, generally granted annually as a combination of performance shares, restricted stock and stock options. Amounts actually earned will vary based on stock price appreciation and corporate performance.		Motivate and reward executives over a three- to seven-year period for increased stockholder value. Also used for executive retention.
Other Benefits and Perquisites — Various Forms		Fixed compensation component.		Provide employee benefits consistent with those provided by the peer group and for executive retention.
Post-Employment Compensation — Cash and Benefits		Fixed compensation component.		Promote recruitment and retention and support non-competition, non-disclosure and non-solicitation agreements.

 

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Pay equity

To create stockholder value and motivate its employees, the Company is committed to internal and external pay equity. To assess internal pay equity, the Compensation Committee annually reviews the relationship between the compensation of the Chief Executive Officer to that of other Named Executive Officers and salaried employees generally. During the past three years, the Chief Executive Officer’s total direct compensation (salary and short- and long-term incentive awards) has been approximately 1.57 times the total direct compensation of the next highest paid Named Executive Officer, which the Committee believes is an appropriate multiple based on the additional responsibilities of the Chief Executive Officer. See also CEO Pay Ratio, elsewhere in this proxy statement. To test external pay equity, the Committee annually reviews compensation data for similar positions at peer group companies, described below, in the transportation industry with revenue levels comparable to Saia’s and data from general industry surveys.

Compensation Review Peer Group

To assist the Compensation Committee in determining the design, components and levels of compensation for the Company’s executive officers, the Committee annually reviews compensation data for similar positions at U.S. publicly-traded transportation companies with annual revenues of approximately one-half to three times Saia’s revenues. The Committee focuses on these transportation peers because it believes transportation companies with a scale comparable to Saia’s are our primary competitors for executive talent and provide a sound basis to assess Saia’s executive compensation.

The peer group used in the review during 2020 was:

 

Company		Transportation Business		2019 Revenues (in millions)
Air Transport Services Group, Inc.		Air Freight & Logistics			$1,452
ArcBest Corporation		Trucking			$2,988
Covenant Transportation Group, Inc.		Trucking			$   885
Echo Global Logistics, Inc.		Air Freight & Logistics			$2,185
Forward Air Corporation		Air Freight & Logistics			$1,410
Hub Group, Inc.		Trucking			$3,668
Kansas City Southern		Railroad			$2,866
Landstar System, Inc.		Trucking			$4,085
Marten Transport, Ltd.		Trucking			$   843
Old Dominion Freight Line, Inc.		Trucking			$4,109
Roadrunner Transportation Systems, Inc.		Trucking			$   573
Universal Logistics Holdings		Trucking			$1,512
US Xpress Enterprises, Inc.		Trucking			$1,707
Werner Enterprises, Inc.		Trucking			$2,464
Saia, Inc.		Trucking			$1,787

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

EXECUTIVE COMPENSATION DECISIONS FOR 2020

COVID-19

When the Compensation Committee finalized the 2020 executive compensation program, the potential spread of COVID-19, the onset of the pandemic and the resulting economic consequences were not known. As a result, the Committee designed the executive compensation program for 2020 based on our expectations for the year at that time. COVID-19 caused a sudden decrease in our revenues in the first part of the second quarter, but revenues began to stabilize by the middle part of the second quarter. Customer activity continued to build momentum in the second half of

 

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the year and the Company posted record earnings in the third and fourth quarters of 2020. Our entire employee base, including our executive officers, performed extremely well through the challenges brought about by the pandemic. Our executives showed strong leadership by adopting many steps to address issues from the pandemic and to insure that the Company’s business could continue to serve the needs of our customers. Despite uncertainties in the early stages of the pandemic as to how the Company would perform over the entire year and notwithstanding the challenges to our leadership team, the Compensation Committee elected to make no changes to the executive officer compensation program in 2020 in response to the pandemic. As a result, the elements of the 2020 executive compensation program detailed below, which were set before the onset of the pandemic, remained in place throughout the year.

Pay Mix

The following graph sets forth the key components of compensation and pay mix for the Named Executive Officers based on target payout levels for 2020:

 

Base Salary

Saia provides market competitive base salaries to attract and retain outstanding talent and to provide a fixed component of pay for our Named Executive Officers. The Compensation Committee uses the median of the peer group companies as the general reference point for base salaries because it believes the median is the best representation of competitive base salary levels in the market for similar roles and talent. In setting individual base salary levels, the Compensation Committee adjusts levels as it deems appropriate. Typical reasons for adjusting an individual officer’s base salary above or below the market median include tenure of the officer in the position, job performance, pay mix, internal pay equity, additional responsibilities of the officer, executive retention and succession planning.

Changes made to base salaries of the Named Executive Officers for 2020 were as follows:

 

•

Mr. Holzgrefe’s base salary was increased from $567,000 to $723,000 in April 2020 in connection with his promotion to President and Chief Executive Officer.

 

•

Mr. Col’s base salary was set at $375,000 in connection with his promotion to Vice President of Finance and Chief Financial Officer in January 2020.

 

•

Mr. Peck’s base salary was increased on January 1, 2020 from $361,000 to $375,000 based on a compensation market analysis and to incent continued focus on operational execution.

 

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Annual Cash Incentives

Annual cash incentive awards are used to reward executives for achievement of corporate financial and operating targets for the year. The annual cash incentive awards provide for threshold, target and maximum payouts as a percentage of base salary for each executive.

The Compensation Committee uses the median of the peer group companies as the general reference point for target annual cash incentives because it believes the median is the best representation of competitive annual cash incentive levels in the market for similar roles and talent. In setting individual target annual cash incentive levels, the Compensation Committee has the discretion to adjust the target level as it deems appropriate. Typical reasons for adjusting an individual officer’s target annual incentive level above or below the market median include tenure of the officer in the position, job performance, additional responsibilities of the officer, executive retention and succession planning. At the highest level of achievement, the annual cash incentive opportunity was 200% of the target in 2020. At a threshold level of performance, the incentive opportunity was 25% of the target in 2020, with no incentive earned if performance was below the threshold achievement level.

The Committee seeks to set the threshold, target and maximum performance goals at levels such that the relative likelihood that Saia will achieve such goals remains consistent from year to year. It is the intent of the Committee that the threshold goals should be attainable a majority of the time, target goals should, on average, be reasonably expected to be achieved and maximum goals should be attained a minority of the time. Establishing the expected performance goals relative to these criteria is inherently subject to considerable judgment on the part of the Committee.

Changes made to the annual cash incentive targets for the Named Executive Officers for 2020 were as follows:

 

•

Mr. Holzgrefe’s target annual incentive was increased from 85% to 100% of base salary in connection with his promotion to President and Chief Executive Officer in April 2020.

 

•

Mr. Col’s target annual incentive was set at 65% of base salary in connection with his promotion to Vice President of Finance and Chief Financial Officer in January 2020.

 

•

Mr. Peck’s target annual incentive was increased from 125% to 155% of base salary, based on a compensation market analysis and to incent continued focus on operational execution.

For 2020 the potential payout levels under the annual incentive awards for the Named Executive Officers were as follows:

Potential Payouts of Annual Incentives for 2020

 

				Payout as a % of Base Salary
Named Executive Officer		Title		Threshold				Target				Maximum
Frederick J. Holzgrefe, III		President & Chief Executive Officer			25	%			100	%			200	%
Richard D. O’Dell		Former Chief Executive Officer			30	%			120	%			240	%
Douglas L. Col		Executive Vice President & Chief Financial Officer			16	%			65	%			130	%
Raymond R. Ramu		Executive Vice President & Chief Customer Officer			18.75	%			75	%			150	%
Paul C. Peck		Executive Vice President Operations			38.75	%			155	%			310	%
Karla J. Staver		Vice President of Safety & Human Resources			12.5	%			50	%			100	%

Robert S. Chambers resigned as Vice President and Chief Financial Officer on January 2, 2020. His annual payout as a percentage of base salary had a threshold of 15%, a target of 60% and a maximum of 120%.

Performance Targets and Actual Performance for 2020

For 2020, the annual cash incentive awards for the Named Executive Officers were based 50% on achieving an annual operating income target and 50% on achieving an annual operating ratio target. The Compensation Committee believes

 

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using an operating income target rather than an earnings-per-share target more closely reflects actual performance of management for the year by eliminating the impact of changes to the effective tax rate. Saia uses operating ratio as a performance goal because it is an objective measure of profitability of Saia’s business, is a common measure of profitability within the industry and can have a direct impact on Saia’s stock price. Operating ratio is defined as operating expenses divided by operating revenue.

The operating income and operating ratio performance targets for 2020 were set by the Compensation Committee considering past performance, the strategic plan, current economic conditions and other forecasts of performance for the year. The performance targets and actual performance for 2020 were as follows:

 

		Threshold				Target				Maximum				Actual
Operating income (in millions) (50% weighting)		$	139.0			$	188.2			$	253.9			$	180.3
Operating ratio (50% weighting)(1)			92.9	%			90.3	%			87.0	%			90.1	%

(1)	Operating ratio is the calculation of operating expenses divided by operating revenue.

Based on these results, the final payout of the annual incentive plan was 87.4% of target for 2020. See the “2020 Grants of Plan-Based Awards Table” that follows the Summary Compensation Table for additional information about annual cash incentive awards granted to the Named Executive Officers for 2020.

Long-Term Equity Incentives

The Compensation Committee provides long-term equity awards to the executive officers to align the interests of the executive with the interests of our stockholders, reward executives for achieving stockholder valuation increases over a multi-year period, and encourage executive retention. The long-term equity awards are provided through performance stock units, restricted stock and stock options.

Long-term equity awards are typically granted in early February each year on the third trading day following the release of the Company’s financial results for the prior fiscal year. For new hires, the grant date is typically on or around their hire date.

Long-Term Equity Incentive Plan Targets

The Committee grants long-term equity awards for each Named Executive Officer based on a target percentage of base salary for such officer. The Compensation Committee uses the median of the peer group companies as the general reference point for target long-term equity awards because it believes the median is the best representation of competitive long-term equity incentive levels in the market for similar roles and talent. In setting individual target equity incentive levels, the Compensation Committee has discretion to adjust the target level as it deems appropriate. Typical reasons for adjusting an individual officer’s target equity incentive level above or below the market median include tenure of the officer in the position, job performance, additional responsibilities of the officer, executive retention and succession planning.

Changes made to the target long-term equity incentive plan as a percentage of base salary for the Named Executive Officers for 2020 were as follows:

 

•

Mr. Holzgrefe’s target long-term incentive was increased from 180% to 200% of base salary in April 2020 in connection with his promotion to President and Chief Executive Officer effective for 2021 awards.

 

•

Mr. Col’s target long-term incentive was set at 100% of base salary in connection with his promotion as Vice President of Finance and Chief Financial Officer in January 2020.

 

•

Effective January 1, 2020, Mr. Ramu’s target long-term incentive was increased from 125% to 140% of base salary as a result of his performance and to adjust to market compensation levels.

 

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For 2020 the target long-term equity incentive as a percentage of base salary for the Named Executive Officers was as follows:

 

				Target as a % of Base Salary
Named Executive Officer		Title
Frederick J. Holzgrefe, III		President & Chief Executive Officer			180	%
Richard D. O’Dell		Former Chief Executive Officer			240	%
Douglas L. Col		Executive Vice President & Chief Financial Officer			100	%
Raymond R. Ramu		Executive Vice President & Chief Customer Officer			140	%
Paul C. Peck		Executive Vice President Operations			0	%
Karla J. Staver		Vice President of Safety & Human Resources			60	%

Robert S. Chambers resigned as Vice President and Chief Financial Officer on January 2, 2020. His annual target as a percentage of base salary was 100%.

Components of Long-Term Equity Incentive Awards

For 2020, 50% of a Named Executive Officer’s long-term equity incentive opportunity was granted in performance stock units, 25% in stock options (valued using the Black-Scholes option pricing model), and 25% in restricted stock (valued using the intrinsic-value pricing model). The Committee believes this mix of awards appropriately balances relative and absolute stock performance, reflects competitive pay practices and promotes executive retention.

 

Why performance stock units?		Why options?		Why restricted stock?
•  Performance-based because the number of shares earned depends on stock price performance and the value of the shares fluctuates based on the stock price.		•  Performance-based because their value is tied solely to the Company’s stock price, which directly correlates to Saia’s stockholders’ interests.		•  Inherent value upon issuance mitigates significant employee compensation swings.
•  The number of shares earned is tied to total stockholder return of the Company over a three-year period compared to a peer group, a key metric of executive performance.		•  Fosters an innovative environment focused on long-term growth of the Company and stockholder value.		•  Strong long-term executive retention incentive.
•  Rewards executives for increasing Saia’s total stockholder return relative to Company peers over a three-year period.		•  Declines in stock price following the grant of stock options have a negative impact on executive pay (i.e., when a stock option is “underwater” it has no value).		•  Aligns executive’s interests with stockholders and encourages appropriate degree of risk-taking consistent with long-term growth.
		•  Highly valued by employees and is an important retention tool.
		•  Stock ownership guidelines mitigate the perception that options may cause a focus on short-term stock price movement.

 

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The long-term equity incentive awards made to the Named Executive Officers in 2020 were as follows:

Performance Stock Units

For 2020, 50% of the Named Executive Officers’ long-term equity incentive opportunity was awarded in performance stock units, which are paid in shares of Saia stock. The role of performance stock units is to reward executives for long-term value creation relative to other transportation companies. The Compensation Committee believes that measuring Saia stock performance against that of a broad group of transportation companies over a multi-year period provides a key metric for assessing the long-term performance of Saia’s Named Executive Officers. Providing a significant portion of long-term compensation on this basis also aligns the interests of the Named Executive Officers with the interests of our stockholders and helps insure against executives taking excessive or unnecessary risks that might threaten the long-term value of the Company.

The number of shares of stock that are granted to a participant is based on the total stockholder return of Saia compared to the total stockholder return of the companies in the broader transportation group over a three-year performance period. At the end of the performance period, the percentile rank of the Company’s total stockholder return is calculated relative to the total stockholder return of each of the companies in the group. Because the performance period for each grant of performance stock units is three years, participants can have overlapping three-year award opportunities at any time.

Since the size of the companies is not critical in assessing relative total stockholder returns, the group used for comparison purposes for performance stock units (the “PSU Group”) is comprised of U.S. publicly-traded companies in the broader transportation industry, regardless of revenues. The Committee believes using performance of the PSU Group provides a wider spectrum from which to assess management performance. The companies included in the PSU Group for open performance periods are as follows:

 

 

For the performance periods beginning in 2018, 2019 and 2020, the payouts of performance stock units will be determined as follows:

 

Percent Rank of Saia’s Total Stockholder Return Compared to PSU Group		Payout Percentage of Target Incentive
At 75th percentile or higher			200	%
At 50th percentile			100	%
At 25th percentile			25	%
Below 25th percentile			0	%

The payout associated with the Company’s percentile rank is based on the chart above with payouts interpolated for performance between the 25th and 50th percentiles and the 50th and 75th percentiles.

 

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For awards made in 2019 and 2020, if the Company’s total stockholder return for the three-year performance period is negative, any payouts of the target incentive are reduced by half. For example, if the Company’s total stockholder return over the three-year period is negative, but the Company’s total stockholder return compared to the PSU Group is at the 50^th percentile, the associated payout percentage will be 50%, not 100%. Previously, if the Company’s total stockholder return over the performance period was negative, no payouts of performance stock units were made for the performance period, even if Company performance was strong compared to the PSU Group. Given the cyclical nature of the transportation industry, the Compensation Committee made this change to continue to provide an incentive under the plan in the case of an economic downturn affecting the entire industry and to conform to peer group practice generally.

The following table details the payout percentages compared to target of the performance stock units paid out the last three years:

 

Payout Month		Performance Period				Payout Percentage of Target Incentive
February 2021			2018 to 2020				200	%
February 2020			2017 to 2019				200	%
February 2019			2016 to 2018				200	%

In February 2020, the Company granted performance stock units for 19,829 shares (at target) to the Named Executive Officers, representing 61% of the total target units granted at that time. See the “2020 Grants of Plan-Based Awards Table” that follows the Summary Compensation Table for additional information about performance stock units granted to the Named Executive Officers in 2020.

See the “Potential Payments Upon Termination or Change in Control” section for a description of the effect of termination of employment or a change in control of the Company have on the performance stock units awarded to the Named Executive Officers.

Stock Options

The role of stock options is to reward executives for increasing absolute long-term stockholder value. For 2020, the value of each stock option award was equal to 25% of the target long-term equity incentive award for the executive using the Black-Scholes option pricing model. The exercise price of the stock options is equal to the closing share price of Saia common stock on NASDAQ on the grant date. The Company’s Omnibus Incentive Plan strictly prohibits re-pricing of stock options. All stock options granted have been non-qualified stock options.

All stock options vest based on the passage of time, subject to earlier vesting upon a change in control and, as to Mr. Holzgrefe, subject to his employment agreement described below. The Committee believes time-vested options encourage long-term value creation and executive retention because generally executives can realize value from such options only if the Company’s stock price increases after grant and they remain employed at Saia at least until the options vest. Providing for a vesting period over a number of years also helps ensure against executives taking excessive or unnecessary risks that might threaten the long-term value of the Company.

In February 2020, the Company granted a total of 29,830 stock options to the Named Executive Officers, representing 61% of the total stock options granted at that time. Stock options granted in February 2020 vest one-third each year on the anniversary of the grant date and have a seven-year term, after which, if not exercised, the option expires. See the “2020 Grants of Plan-Based Awards Table” that follows the Summary Compensation Table for additional information about the specific stock option grants made to the Named Executive Officers in 2020.

See the “Potential Payments Upon Termination or Change in Control” section for a description of the effect a termination of employment or a change in control of the Company have on the stock options awarded to the Named Executive Officers.

 

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Restricted Stock Awards

The Committee uses restricted stock as a part of the long-term equity incentive plan to help reduce significant executive compensation swings, for executive retention and to better align the Company’s long-term compensation practices with its peers. The value of restricted stock grants in 2020 under the long-term equity incentive plan was equal to 25% of the target long-term equity incentive award for the executive. In February 2020, the Company granted a total of 9,914 shares of restricted stock to the Named Executive Officers, representing 61% of the total restricted stock awards granted at that time. These restricted stock grants have a three-year cliff vesting schedule subject to earlier vesting upon death, disability and retirement. See the “2020 Grants of Plan-Based Awards Table” that follows the Summary Compensation Table for additional information on restricted stock grants made to the Named Executive Officers in 2020.

The Company also uses restricted stock grants from time to time to address concerns about long-term executive retention, as part of a total compensation package granted to an executive upon initial hiring and to recognize the significant promotion of an executive. These restricted stock grants have historically vested over a five year period in order to promote executive retention. In connection with his promotion to Executive Vice President and Chief Financial Officer, Mr. Col received a grant of 4,185 shares of restricted stock on July 31, 2020 with an initial valuation of $500,000, which vest over five years.

See the “Potential Payments Upon Termination or Change in Control” section for a description of the effect a termination of employment or a change in control of the Company have on the restricted stock granted to the Named Executive Officers.

Other Benefits and Perquisites

Benefits

The Company provides customary employee benefits to substantially all employees, including the Named Executive Officers. These benefits include paid holidays and vacation, medical, disability and life insurance and a defined contribution retirement plan. The defined contribution retirement plan is a 401(k) savings plan to which employees may elect to make pre-tax contributions. The Company has the discretion to match 50% of all employee contributions, up to a maximum employee contribution of 6% of annual salary.

Deferred Compensation Plan

The Company has established for officers (including all of the Named Executive Officers) and certain other employees a Capital Accumulation Plan, which is a non-qualified deferred compensation plan. The Capital Accumulation Plan was implemented to motivate and retain key employees by providing them with greater flexibility in structuring the timing of their compensation and tax payments. The Compensation Committee believes that the Capital Accumulation Plan provides a valuable benefit to senior executives with minimal cost to the Company.

The Capital Accumulation Plan allows a participant to make an elective deferral each year of up to 50% of base salary and up to 100% of any annual incentive plan payment. The Company typically makes an annual discretionary contribution under the Capital Accumulation Plan for each participant equal to 5% of his or her base salary and annual incentive payment, which contribution is subject to a five year vesting period. In addition, to the extent a participant’s contribution to the 401(k) savings plan is limited under restrictions placed on “Highly Compensated Employees” under ERISA, the participant may elect to contribute the amount so limited to the Capital Accumulation Plan. To the extent the Company is unable to match participant contributions under the 401(k) savings plan because of the ERISA limitations, the matching contributions will be made by the Company to the Capital Accumulation Plan.

The Capital Accumulation Plan provides the same investment options to participants as are available under the 401(k) savings plan, except that participants may also elect to invest in Saia stock under the Capital Accumulation Plan. Participants may elect to transfer balances between investment options without restriction at any time throughout the year, except that any investment in Saia stock is an irrevocable election and upon distribution that investment will be paid out in Saia stock, rather than cash. Vested plan balances become distributable to the participant upon termination of employment subject to Section 409A of the Internal Revenue Code.

 

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Perquisites

The types and amounts of perquisites provided to the Named Executive Officers are determined by the Compensation Committee with input from Mercer based on perquisites granted to comparable officers by companies in the executive compensation peer group. The Company provides these perquisites because many companies in the peer group provide similar perquisites to their Named Executive Officers and because the Committee believes they are important for executive retention. However, the perquisites that the Company provides are generally fewer and less costly than those provided by members of the peer group. The value of the perquisites provided to the Named Executive Officers for 2020 are set forth in the “All Other Compensation” column of the Summary Compensation Table.

Post-Employment Compensation

Severance Agreements

Commencing in February 2015, all stock option grants (including those made to each of the Named Executive Officers other than the Chief Executive Officer) contain non-competition and employee and customer non-solicitation provisions, as well as provisions designed to protect Saia’s intellectual property. To provide an additional incentive for executives to agree to the restrictive covenants, the Company entered into a severance agreement with each executive who received a stock option grant (other than the Chief Executive Officer) that generally provides for severance payments equal to base salary over the non-compete period in the event the executive’s employment is involuntarily terminated without cause as defined in the agreements. To receive the severance payments, the executive must sign a general release of claims against the Company and must comply with the executive’s obligations under any other agreement with the Company, including the restrictive covenants in the executive’s stock option agreement. (Mr. Holzgrefe’s severance arrangements are governed by the terms of his employment agreement and Change in Control Agreement.)

Double Trigger Change in Control Agreements

The Company has change in control agreements with each of the Named Executive Officers (the “Change in Control Agreements”). The Compensation Committee believes the Change in Control Agreements are an important part of Saia’s overall compensation program for the Named Executive Officers because they help secure the continued employment and dedication of the Named Executive Officers notwithstanding any concern the executive might have regarding their own continued employment in the event of a potential change in control transaction.

The Change in Control Agreements include a “double trigger,” meaning they provide for severance payments and other benefits only if there is a change in control of the Company and only if after the change in control the executive’s employment is terminated involuntarily (other than for cause) or voluntarily with good reason within two years after the change in control. The Change in Control Agreements are reviewed periodically by the Committee to ensure they are consistent with the Company’s compensation philosophy. The Committee also receives input from Mercer and outside legal counsel to confirm that the agreements remain generally consistent with competitive practices.

The amount of the severance payments and benefits under these agreements are based on peer group and general industry practices and are described in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement.

Employment Agreement

To promote executive retention, continuity and stability in the Company’s leadership and help support certain non-competition and non-solicitation provisions, the Company entered into an employment agreement with Mr. Holzgrefe at the time he was named Chief Executive Officer in April 2020. The employment agreement is for a two-year initial term (renewing daily) and provides for a minimum base salary that is to be reviewed annually, participation in the Company’s annual and long-term incentive plans, other benefits that are provided to senior executives of Saia and severance benefits in the event of Mr. Holzgrefe’s employment termination under certain circumstances. All severance benefits under the employment agreement are conditioned upon Mr. Holzgrefe’s compliance with the non-disclosure, non-competition and employee and customer non-solicitation provisions of the employment agreement. The material terms of the employment agreement are reviewed periodically by the Committee

 

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with input from Mercer and outside legal counsel to confirm that they remain generally consistent with competitive practices. The payments to be made to Mr. Holzgrefe under his employment agreement upon termination of employment or a change in control of the Company are described in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement.

2021 Compensation Plan

In determining compensation for the Named Executive Officers for 2021, the Compensation Committee considered the results of the “say-on-pay” vote at the 2020 annual meeting of stockholders, at which holders of 97.2% of Saia’s stock voting on the matter approved, on an advisory basis, the compensation paid to Saia’s Named Executive Officers as described in the 2020 proxy statement. Based in part on this level of support by our stockholders, the Compensation Committee did not change the executive compensation philosophy or the structure of the annual or long-term incentive plans for 2021. The Company implemented an approximate 3.5% salary and wage increase for all Saia employees, including the Named Executive Officers, on January 1, 2021. In addition, the executive compensation for certain Named Executive Officers was adjusted as described below.

 

•

On February 8, 2021, retroactive to January 1, 2021, the Board approved an increase in Mr. Holzgrefe’s compensation with base salary set to $825,000, target annual incentive set to 100% of base salary and long-term incentive set to 250% of base salary. The compensation increase was based on Mr. Holzgrefe’s performance since becoming Chief Executive Officer in April 2020 and to set his compensation approximately at the median compensation paid to Chief Executive Officers by peer group companies and in general industry. See “CEO Succession” above for additional information concerning Mr. Holzgrefe’s compensation and the terms of his employment agreement.

 

•

On October 27, 2020, the Board approved an increase in Mr. Col’s compensation with base salary set to $425,000, target annual incentive set to 70% of base salary and long-term incentive set to 135% of base salary, effective January 1, 2021. The compensation increase was based on Mr. Col’s performance since being Chief Financial Officer in January 2020. Following the Company-wide salary and wage increase effective on January 1, 2021, Mr. Col’s base salary was set to $437,750.

Risk Assessment in Compensation Programs

The Compensation Committee regularly assesses the Company’s executive and broad-based compensation and benefits programs, policies and practices to determine if they create undesired or unintended risk of a material nature. Although the Committee reviews all executive compensation programs, it focuses on those programs with variability of payout, and reviews the ability of a participant to directly affect payout, the controls on participant action and actual payouts.

Based on that assessment, the Compensation Committee concluded that the Company’s compensation programs are designed and administered with an appropriate balance of risk and reward in relation to the Company’s business strategy and do not encourage executives to take unnecessary or excessive risks. The following features of the compensation programs help to mitigate risk taking:

 

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A mix of short- and long-term compensation, particularly incentive compensation, to encourage executives to focus on goals consistent with the interests of Saia stockholders.

 

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Short-term incentives in the form of an annual cash bonus based on annual Company performance, with caps to eliminate windfall payouts.

 

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Long-term incentives awarded in performance stock units based on Company stock price performance over a three-year period relative to Company peers, stock options and restricted stock, rewarding longer-term financial performance consistent with the interests of Saia stockholders.

 

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Performance stock units that are settled in common stock of the Company with a cap on the number of shares that can be awarded.

 

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Stock ownership guidelines that encourage executives to retain significant amounts of Saia common stock, thereby aligning the long-term interests of management with those of the stockholders.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

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A clawback policy to provide for the recovery of incentive compensation awarded to an officer or executive of Saia if the result of a performance measure upon which the award was based is subsequently restated or otherwise adjusted in a manner that would reduce the size of the award. The clawback policy also provides for recoupment under certain circumstances involving improper conduct by the executive.

 

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A policy that prohibits executives from engaging in short sales of Saia common stock or in transactions involving puts, calls, or other derivative securities of the Company or in hedging transactions with respect to the Company’s stock. The policy also restricts executives from holding stock in margin accounts and from pledging stock of the Company.

Other Compensation Policies

Stock Ownership Guidelines

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

 

Name		Title		Multiple of Salary				Compliance(1)
Frederick J. Holzgrefe, III		President & Chief Executive Officer			5				Yes
Richard D. O’Dell		Former Chief Executive Officer			—				(2	)
Douglas L. Col		Executive Vice President & Chief Financial Officer			2.5				Yes
Robert S. Chambers		Former Vice President & Chief Financial Officer			—				(3	)
Raymond R. Ramu		Executive Vice President & Chief Customer Officer			2				Yes
Paul C. Peck		Executive Vice President Operations			2				Yes
Karla J. Staver		Vice President of Safety & Human Resources			2				(4	)

(1)	As of December 31, 2020.

 

(2)	Mr. O’Dell ceased being an executive officer in April 2020.

 

(3)	Mr. Chambers left the Company in January 2020.

 

(4)	Ms. Staver became an executive officer in 2019. She has until 2024 to meet her guideline.

Executives are to satisfy the guidelines within five years of becoming subject to the guidelines. Until the guidelines are met, executives are encouraged to hold 75% of the realized share value (net of taxes) attributable to option exercises, performance stock unit payouts and vesting in restricted stock. The Compensation Committee monitors the progress toward, and continued compliance with, the stock ownership guidelines on a regular basis. The types of equity counted for purposes of the stock ownership guidelines are common stock, including restricted stock, and Company stock units held in the deferred compensation plan.

Although there are no formal penalties for not fulfilling the requirements of the ownership guidelines, non-compliance may affect future equity awards. The foregoing sets forth the Company’s current ownership guidelines for executives. The Board (or any committee designated by the Board) may, at any time, amend, modify or terminate the guidelines in full or in part. The Board (or any committee designated by the Board) may also grant waivers of the guidelines in the event of special circumstances or as otherwise determined advisable or in the best interest of the Company in given circumstances.

Prohibition Against Short Sales, Hedging and Margin Accounts

Under the Company’s insider trading policy, Saia employees, including the Named Executive Officers, and Saia directors, are prohibited from engaging in short sales of Saia common stock or in transactions involving puts, calls, or other derivative securities or in hedging transactions (such as zero-cost collars and forward sale contracts) with respect

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

to the Company’s stock. Additionally, such employees, including the Named Executive Officers, and directors are prohibited from holding Saia stock in a margin account and from pledging Saia common stock as collateral for indebtedness.

Clawback Policy

The Board of Directors has adopted a policy that authorizes the Company, at the direction of the Compensation Committee, to seek to recover incentive compensation awarded to an officer or executive of Saia if the result of a performance measure upon which the award was based is subsequently restated or otherwise adjusted in a manner that would reduce the size of the award. In addition, if an officer or executive of Saia engages in “Improper Conduct” (as defined under the policy), Saia may, within three years following the payment or vesting of incentive compensation, seek recovery of such incentive compensation. In such instance, the Company may also cancel any unpaid or unvested incentive compensation. The Compensation Committee has discretion to determine whether to seek recovery in a given situation based on a number of factors, including an assessment of the relative costs and benefits of seeking the recovery, whether seeking the recovery may violate applicable law or otherwise prejudice Saia’s interests, and such other factors as it deems relevant.

Tax Policies

Historically, the Compensation Committee structured annual and long-term incentives with the intention of satisfying the performance-based exemption from Section 162(m) of the Internal Revenue Code in order to deduct for tax purposes compensation paid to certain executive officers in excess of $1 million. Federal legislation signed into law on December 22, 2017, referred to as the Tax Cuts and Jobs Act, repealed the exemption from Section 162(m)’s deduction limit for performance-based compensation, effective for taxable years beginning after December 31, 2017. As a result, compensation granted or paid in 2018 or thereafter to the Named Executive Officers may not be fully deductible for income tax purposes.

In establishing the compensation for executive officers, the Compensation Committee believes that the potential deductibility of the compensation should be only one of a number of relevant factors taken into consideration, and not the sole or primary factor. The Committee believes that executive compensation must be maintained at the requisite level to attract and retain the executive officers essential to Saia’s financial success and, as a result, retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the compensation is not deductible by Saia for tax purposes.

Section 409A of the Internal Revenue Code regulates deferred compensation that was not earned and vested prior to 2005. The Committee considers Section 409A in determining the form and timing of compensation paid to executives.

Sections 280G and 4999 of the Internal Revenue Code limit Saia’s ability to take a tax deduction for certain “excess parachute payments” (as defined in Code Sections 280G and 4999) and impose excise taxes on each executive that receives “excess parachute payments” related to his or her severance from the Company in connection with a change in control. The Committee considers the adverse tax liabilities imposed by Code Sections 280G and 4999, as well as other competitive factors, in structuring certain post-termination compensation payable to the Named Executive Officers. The potential adverse tax consequences to the Company and/or the executive, however, are not necessarily determinative factors in such decisions.

Accounting Policies

The Company accounts for its employee stock-based compensation awards in accordance with ASC Topic 718, Compensation-Stock Compensation. ASC Topic 718 requires that all employee stock-based compensation is recognized as a cost in the financial statements and that for equity-classified awards such costs are measured at the grant date fair value of the award.

 

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Compensation Committee Report of SAIA, Inc.

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

Our Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on the Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and in this Proxy Statement.

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

Compensation Committee Members

Randolph W. Melville, Chair

Di-Ann Eisnor

Jeffrey C. Ward

 

38		SAIA, INC.		2021 Proxy Statement

Summary Compensation Table

The following table sets forth the compensation awarded to, earned by or paid to the Named Executive Officers for services rendered in all capacities within Saia during the fiscal years ended December 31, 2020, 2019 and 2018.

 

Name & Principal Position		Year				Salary ($)				Bonus ($)				Stock Awards ($)(1)				Option Awards ($)(2)				Non-Equity Incentive Plan Compensation ($)				All Other Compensation ($)(3)				Total ($)
Frederick J. Holzgrefe, III, President & Chief Executive Officer (PEO)			2020				664,320				—				765,428				184,711				563,137				76,575				2,254,170
			2019				556,118				—				742,507				203,063				256,244				68,232				1,826,164
			2018				506,891				—				637,485				192,730				466,281				55,618				1,859,005
Richard D. O’Dell, Former Chief Executive Officer (PEO)(4)			2020				328,320				—				1,576,847				380,514				306,042				100,968				2,692,691
			2019				850,601				—				1,530,047				418,384				554,276				100,461				3,453,769
			2018				749,196				—				1,108,539				335,141				827,008				76,767				3,096,651
Douglas L. Col Executive Vice President & Chief Financial Officer (PFO)(5)			2020				368,445				—				700,598				68,001				211,122				41,612				1,389,778
Robert S. Chambers Former Vice President & Chief Financial Officer (PFO)(6)			2020				22,164				—				—				—				—				3,145				25,308
			2019				230,289				175,000				449,986				—				—				9,396				864,670
Raymond R. Ramu, Executive Vice President & Chief Customer Officer			2020				463,512				—				487,273				117,675				303,833				56,231				1,428,523
			2019				455,039				—				421,866				115,478				184,987				49,688				1,227,057
			2018				415,648				—				307,483				93,042				254,898				40,676				1,111,747
Paul C. Peck Executive Vice President Operations(7)			2020				386,250				—				—				—				508,013				48,874				943,137
			2019				354,834				—				—				—				270,469				35,905				661,208
			2018				279,322				—				97,922				29,669				160,804				33,253				600,971
Karla J. Staver Vice President of Safety & Human Resources(8)			2020				335,016				—				150,701				36,412				146,402				29,099				697,629
			2019				345,050				—				199,979				—				51,032				26,729				622,790

(1)

Stock Awards are comprised of performance stock units and restricted stock. Valuation is based on aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 8 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2020 for valuation assumptions used. At maximum performance levels for the performance stock units, these values for Mr. Holzgrefe would be: 2020: $1,352,803; 2019: $1,373,750; 2018: $1,167,491; for Mr. O’Dell: 2020: $2,786,619; 2019: $2,830,692; 2018: $2,030,113; for Mr. Col: 2020: $496,975; for Mr. Ramu: 2020: $861,140; 2019: $780,419; 2018: $563,193; for Mr. Peck: 2018: $179,335; for Ms. Staver: 2020: $266,417; 2019: $0.

 

(2)	Valuation is based on aggregate grant date fair value of the awards as computed in accordance with FASB ASC Topic 718. See Note 8 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2020 for valuation assumptions used.

 

(3)	All other compensation amounts received by each Named Executive Officer for 2020 are set forth below:

 

Name		Perquisites & Other Personal Benefits ($)(1)				Car Allowance ($)				Company Contributions to Defined Contribution Plans (401(k)) ($)				Company Contributions to Defined Contribution Plans (Def. Comp.) ($)				Life Insurance Premiums ($)
Frederick J. Holzgrefe, III			8,162				6,638				8,550				51,120				2,105
Richard D. O’Dell			2,499				4,200				8,550				83,880				1,838
Douglas L. Col			5,228				7,114				5,742				21,250				2,279
Robert S. Chambers			856				1,800				469				—				20
Raymond R. Ramu			7,479				3,532				8,481				35,497				1,242
Paul C. Peck			7,276				3,702				8,550				25,782				3,564
Karla J. Staver			40				4,167				6,038				16,532				2,322
(1)   Payment of country club dues, relocation, fuel and tax preparation reimbursements.

 

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