Knight Transportation of Phoenix has taken an exception to USA Truck’s decision to hold bonus and severance packages for the officers of the carrier, considering it a waste of the company’s resources.
Knight is making its attempt to take over the Arkansas-based carrier, which had filed details of its plans with the SEC on November 12, 2013.
Knight has expressed disappointment with the board of USA Truck, since it chose to “waste its shareholders by implementing retention and severance plans. The defensive and self-serving measures from USA Truck would add to any potential transaction expenses, reducing value for its shareholders. Knight has continued to believe that a partnership with USA Truck will deliver value for both of their stakeholders, and that this proposal is more attractive than USA Truck’s standalone prospects.”
Officers from USA Truck will get bonuses that range from 6.25 percent to 25 percent under the bonus plan, starting from April 2014. Each of these recipients will have to repay the bonuses, if any of them decide to leave the company before October 2014.
About Knight Transportation
Knight Transportation is a publicly traded American truckload motor shipping carrier, based in Phoenix, Arizona. It was founded in 1990 by the Knight family: Cousins Randy and Gary Knight, and brothers Kevin and Keith Knight.
The company started out by transporting commodities from Phoenix to Los Angeles, California. They started out with only a handful of trucks, and one service center. Nowadays, they run a fleet of over 4,000 tractors and 87,000 trailers. Knight Transportation has grown from only a handful of associates to more than 4,000. They have developed from a small, family-run business to a publicly-held company on the New York Stock Exchange (KNX) in 1994. Knight engages in the transportation of commodities in the United States. The company provides asset-based dry and temperature controlled truckload carrier services, primarily to short or medium lengths of haul. Knight also offers non-asset based brokerage services.
By September of 2007, Knight currently has 27 regional dry van service centers, 6 regional temperature controlled service centers, 12 brokerage service centers, and 13 truck and trailer sales locations.
USA Truck Info
USA Truck is an over-the-road trucking company. It is a transport and logistics provider found in Van Buren Arkansas, with staging facilities, terminals, and offices located all over the United States. USA Truck transports their commodities throughout the continental US. They also travel into and out of several portions of Canada. By allowing through trailer-service from its terminal in Laredo, Texas, USA Truck also transports several commodities throughout parts of Mexico.
It also has agreements to provide services to other trucking companies who have entered into dedicated contracts, but for several reasons cannot provide their service. USA Truck has also begun to interface heavily with rail carriers.
The plan is called the “Retention Bonus Plan”, and the “Management Services Plan”. The Executive Compensation Committee of the USA Truck’s board of directors has approved both plans since October 30 2013. Most of them felt that the move was a solution to Knight’s takeover bid, and its efforts to provide a policy, if ever Knight takes control of the company.
Retention bonuses have been proven to be a useful tool in getting employees to stay at work. Retention bonuses are one of the most important tools that are being used to retain their employees. It is an incentive that is paid to employees to retain them through a critical business cycle. Retention bonuses are becoming more and more common in the corporate world, since companies are going through more transitions, acquisitions, and mergers. They need to give the right people an attractive incentive to stay on through these transitions to ensure their productivity.
A severance package is a payment and type of benefit that an employee receives when he or she leaves the company. These may include the following, in addition to the employee’s remaining regular pay:
Additional payment based on the months of service
Payment for unused vacation days or sick leaves
Payment in lieu of a required notice period
Dental, medical, or life insurance
Assistance when searching for a new job, access to employment services, or help in writing a resume.
Severance packages are usually offered to employees who have been laid off, or are on the verge of retirement. Severance pay was instituted to protect the new employees. Severance packages may be offered to people who have resigned, regardless of the circumstances of the resignation, or if the employee is fired. Severance package policies are often found in the company’s employee handbook. This is subject to strict government regulation in many countries. Contracts have often mentioned that the employees cannot sue the employer for wrongful dismissal, or make an attempt to collect unemployment benefits. If that employee does so, then they should return the severance money.
The severance plan makes these officers eligible for severance benefits, if any is terminated without the cause relating to a type of “change in control”. And any benefit that is eligible for a “change in control” is terminated without cause for 12 months right after an ownership change.
Officers are not eligible for both benefits that are detailed in the severance plan. These payments would be held monthly, for a period of six months to a whole year.
A severance agreement is simply more than a contract from an employer. These can prevent the employee from working in a rival company, and waive any right for the possibility of pursuing a legal claim against the previous employer. An employee may also give up the right to seek unemployment compensation. He or she may contact an employment attorney to assist in the evaluation and review or a severance agreement. In February 2010, the Western District of Michigan has declared that severance pay is not subject to FICA taxes.