def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12
SCS Transportation, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To Be Held April 20,
2006
To Our Shareholders:
We cordially invite you to attend the 2006 annual meeting of
shareholders of SCS Transportation, Inc. The meeting will take
place at the Marriott Country Club Plaza, 4445 Main Street,
Kansas City, MO 64111 on April 20, 2006, at 10:00 a.m.
local time. We look forward to your attendance either in person
or by proxy.
The purpose of the meeting is to:
1. Elect three directors, each for a term of three years;
2. Ratify the appointment of KPMG LLP as SCS
Transportations independent auditors for fiscal year
2006; and
3. Transact any other business that may properly come
before the meeting and any postponement or adjournment of the
meeting.
Only shareholders of record at the close of business on
February 21, 2006 may vote at the meeting or any
postponements or adjournments of the meeting.
By order of the Board of Directors,
James J. Bellinghausen
Secretary
March 10, 2006
Please complete, date, sign and return the accompanying proxy
card or vote electronically via the Internet or by telephone.
The enclosed return envelope requires no additional postage if
mailed in either the United States or Canada.
If you are a registered shareholder, you may elect to have
next years proxy statement and annual report made
available to you via the Internet. We strongly encourage you to
enroll in this service. It is a cost-effective way for us to
send you proxy materials and annual reports.
Your vote is very important. Please vote whether or not you
plan to attend the meeting.
SCS
Transportation, Inc.
4435 Main Street,
Suite 930
Kansas City, MO 64111
2006 PROXY STATEMENT
The Board of Directors of SCS Transportation, Inc. (SCS
Transportation or the Company) is furnishing
you this proxy statement in connection with the solicitation of
proxies on its behalf for the 2006 annual meeting of
shareholders. The meeting will take place at the Marriott
Country Club Plaza, 4445 Main Street, Kansas City, MO 64111 on
April 20, 2006, at 10:00 a.m. local time. At the
meeting, shareholders will vote on the election of three
directors, the ratification of the appointment of KPMG LLP as
SCS Transportations independent auditors for fiscal year
2006, and will transact any other business that may properly
come before the meeting although we know of no other business to
be presented.
By submitting your proxy (either by signing and returning the
enclosed proxy card or by voting electronically on the Internet
or by telephone), you authorize Douglas W. Rockel, a director of
SCS Transportation, John J. Holland, a director of SCS
Transportation, and James J. Bellinghausen, SCS
Transportations Vice President Finance,
Chief Financial Officer and Secretary, 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.
SCS Transportations Annual Report to Shareholders for the
fiscal year ended December 31, 2005, which includes SCS
Transportations audited annual financial statements,
accompanies this proxy statement. Although the Annual Report is
being distributed with this proxy statement, it does not
constitute a part of the proxy solicitation materials and is not
incorporated by reference into this proxy statement.
We are first sending this proxy statement, form of proxy and
accompanying materials to shareholders on or about
March 10, 2006.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, PLEASE PROMPTLY SUBMIT YOUR PROXY EITHER IN THE
ENCLOSED ENVELOPE, VIA THE INTERNET OR BY TELEPHONE.
INFORMATION
ABOUT THE ANNUAL MEETING
What is
the purpose of the annual meeting?
At the annual meeting, the shareholders will be asked to:
1. Elect three directors, each for a term of three
years; and
2. Ratify the appointment of KPMG LLP as SCS
Transportations independent auditors for fiscal year 2006.
Shareholders also will transact any other business that may
properly come before the meeting. Members of SCS
Transportations management team and a representative of
KPMG LLP, SCS Transportations independent auditors, will
be present at the meeting to respond to appropriate questions
from shareholders.
Who is
entitled to vote?
The record date for the meeting is February 21, 2006. Only
shareholders of record at the close of business on that date are
entitled to vote at the meeting. The only class of stock
entitled to be voted at the meeting is SCS Transportations
common stock. Each outstanding share of common stock is entitled
to one vote for all matters before the meeting. At the close of
business on the record date there were 14,632,162 shares of
SCS Transportation common stock outstanding.
Am I
entitled to vote if my shares are held in street
name?
If your shares are held by a bank or brokerage firm, you are
considered the beneficial owner of shares held in
street name. If your shares are held in street name,
these proxy materials are being forwarded to you by your bank or
brokerage firm (the record holder), along with a
voting instruction card. As the beneficial owner, you have the
right to direct your record holder how to vote your shares, and
the record holder is required to vote your shares in accordance
with your instructions. If you hold shares beneficially in
street name and do not provide your broker with voting
instructions, your shares may constitute broker
non-votes. Generally, broker non-votes occur on a matter
when a broker is not permitted to vote on that matter without
instructions from the beneficial owner and instructions are not
given.
As the beneficial owner of shares, you are invited to attend the
annual meeting. If you are a beneficial owner, however, you may
not vote your shares in person at the meeting unless you obtain
a proxy form from the record holder of your shares.
How many
shares must be present to hold the meeting?
A quorum must be present at the meeting for any business to be
conducted. The presence at the meeting, in person or by proxy,
of the holders of a majority of the shares of common stock
outstanding on the record date will constitute a quorum. Proxies
received but marked as abstentions or treated as broker
non-votes will be included in the calculation of the number of
shares considered to be present at the meeting.
What if a
quorum is not present at the meeting?
If a quorum is not present at the scheduled time of the meeting,
the shareholders who are represented may adjourn the meeting
until a quorum is present. The time and place of the adjourned
meeting will be announced at the time the adjournment is taken,
and no other notice will be given.
How do I
vote?
1. You May Vote by Mail. If you properly
complete and sign the accompanying proxy card and return it in
the enclosed envelope, it will be voted in accordance with your
instructions. The enclosed envelope requires no additional
postage if mailed in either the United States or Canada.
2. You May Vote by Telephone or on the
Internet. If you are a registered shareholder
(that is, if you hold your stock directly and not in street
name), you may vote by telephone or on the Internet by following
the instructions included on the proxy card. If you vote by
telephone or on the Internet, you do not have to mail in your
proxy card. Internet and telephone voting are available
24 hours a day. Votes submitted through the Internet or by
telephone must be received by 11:59 p.m. Eastern time on
April 19, 2006.
If your shares are held in street name, you still may be able to
vote your shares electronically by telephone or on the Internet.
A large number of banks and brokerage firms participate in a
program provided through ADP Investor Communications Services
that offers telephone and Internet voting options. If your
shares are held in an account at a bank or brokerage firm that
participates in the ADP program, you may vote those shares
electronically by telephone or on the Internet by following the
instructions set forth on the voting form provided to you.
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NOTE:
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If you are a registered shareholder, you may elect to have
next years proxy statement and annual report made
available to you via the Internet. We strongly encourage you to
enroll in this service. It is a cost-effective way for us to
send you proxy materials and annual reports.
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3. You May Vote in Person at the
Meeting. If you are a registered shareholder and
attend the meeting, you may deliver your completed proxy card in
person. Additionally, we will pass out written ballots to
registered shareholders who wish to vote in person at the
meeting. Beneficial owners of shares held in street name who
wish to vote at the meeting will need to obtain a proxy form
from their record holder.
2
Can I
change my vote after I submit my proxy?
Yes, you may revoke your proxy and change your vote:
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by signing another proxy with a later date;
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by voting by telephone or on the Internet (your latest telephone
or Internet vote is counted); or
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if you are a registered shareholder, by giving written notice of
such revocation to the Secretary of SCS Transportation
prior to or at the meeting or by voting in person at the meeting.
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Your attendance at the meeting itself will not revoke your proxy
unless you give written notice of revocation to the Secretary
before your proxy is voted or you vote in person at the meeting.
Who will
count the votes?
ADP Investor Communication Services will tabulate and certify
the votes. A representative of ADP Investor Communication
Services will serve as an inspector of election.
How does
the Board of Directors recommend I vote on the
proposals?
Your Board recommends that you vote:
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FOR the election of the three nominees to the Board of
Directors; and
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FOR the ratification of KPMG LLP as SCS Transportations
independent auditors.
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What if I
do not specify how my shares are to be voted?
If you submit a proxy but do not indicate any voting
instructions, your shares will be voted:
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FOR the election of the three nominees to the Board of
Directors; and
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FOR the ratification of KPMG LLP as SCS Transportations
independent auditors.
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Will any
other business be conducted at the meeting?
We know of no other business that will be presented at the
meeting. If any other matter properly comes before the
shareholders for a vote at the meeting, however, the proxy
holders will vote your shares in accordance with their best
judgment.
How many
votes are required to elect the director nominees?
The affirmative vote of a majority of the votes cast at the
meeting is required to elect the three nominees as directors.
This means that the three nominees will be elected if they
receive the affirmative vote of a majority of shares present at
the meeting in person or by proxy and entitled to vote. If you
vote Withheld with respect to one or more nominees,
your shares will not be voted with respect to the person or
persons indicated, although they will be counted for purposes of
determining whether there is a quorum.
What
happens if a nominee is unable to stand for election?
If a nominee is unable to stand for election, the Board of
Directors may either reduce the number of directors to be
elected or select a substitute nominee. If a substitute nominee
is selected, the proxy holders will vote your shares for the
substitute nominee, unless you have withheld authority.
How many
votes are required to ratify the appointment of SCS
Transportations independent auditors?
The ratification of the appointment of KPMG LLP as SCS
Transportations independent auditors requires the
affirmative vote of a majority of the shares present at the
meeting in person or by proxy and entitled to vote.
3
How will
abstentions be treated?
Abstentions will be treated as shares present for quorum
purposes and entitled to vote, so they will have the same
practical effect as votes against a proposal.
How will
broker non-votes be treated?
Broker non-votes will be treated as shares present for quorum
purposes, but not entitled to vote, so they will not affect the
outcome of any proposal.
PROPOSAL 1
ELECTION OF DIRECTORS
Current
Nominees
The Board of Directors currently consists of eight directors
divided into three classes (Class I, Class II and
Class III). Directors in each class are elected to serve
for three-year terms that expire in successive years. The terms
of the Class I directors will expire at the upcoming annual
meeting. The Board of Directors has nominated Herbert A.
Trucksess, III, James A. Olson and Jeffrey C. Ward for
election as Class I directors for three-year terms expiring
at the annual meeting of shareholders to be held in 2009 and
until their successors are elected and qualified.
Mr. Trucksess, Mr. Olson and Mr. Ward currently
serve as Class I directors. Mr. Ward was elected to
the Board in connection with a settlement agreement between the
Company and the Ramius Group (as hereinafter defined) dated
March 2, 2006. Pursuant to the settlement agreement, the
Company agreed to nominate Mr. Ward for election at the
2006 annual meeting, and to solicit proxies for his election.
The Ramius Group agreed to vote for each of the nominees for
election to the Board at the 2006 annual meeting.
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.
The affirmative vote of a majority of the votes cast at the
meeting is required to elect the three nominees as directors.
This means that the three nominees will be elected if they
receive the affirmative vote of a majority of shares present at
the meeting in person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE ELECTION OF EACH OF THE THREE NOMINEES.
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The following table sets forth, with respect to each nominee,
the nominees name, age, principal occupation and
employment during the past five years, the year in which the
nominee first became a director of SCS Transportation and
directorships held in other public companies.
NOMINEES
FOR ELECTION AS
CLASS I DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE 2009 ANNUAL MEETING
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Director, Year First Elected as
Director
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Age
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Principal Occupation, Business
and Directorships
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Herbert A. Trucksess, III,
2000
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56
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Mr. Trucksess is Chairman of the
Board of Directors, President and Chief Executive Officer of SCS
Transportation. He was named President and Chief Executive
Officer of the Yellow Regional Transportation Group (now SCS
Transportation, Inc.) in February 2000.
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James A. Olson, 2002
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Mr. Olson is the Chief Financial
Officer of Plaza Belmont LLC, a private equity fund. He retired
in March 1999 from Ernst & Young LLP after
32 years. Mr. Olson is a member of the Board of
Trustees of Entertainment Properties Trust, a publicly-traded
real estate investment trust, and a director of American Century
Mutual Funds.
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Jeffrey C. Ward, 2006
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Mr. Ward is a Vice President at
A.T. Kearney, Inc., a global management consulting firm, where
he is responsible for consulting assignments with a focus on the
North American freight market. Mr. Ward joined A.T.
Kearney, Inc. in 1991.
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Continuing
Directors
The terms of SCS Transportations two Class II
directors expire at the annual meeting of shareholders to be
held in 2007. The terms of SCS Transportations three
Class III directors expire at the annual meeting of
shareholders to be held in 2008. The following tables set forth,
with respect to each Class II and Class III director,
his or her name, age, principal occupation and employment during
the past five years, the year in which he or she first became a
director of SCS Transportation and directorships held in other
public companies.
CLASS II
DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2007 ANNUAL MEETING
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Director, Year First Elected as
Director
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Age
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Principal Occupation, Business
and Directorships
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John J. Holland, 2002
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56
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Mr. Holland was the President and
Chief Executive Officer and a director of Butler Manufacturing
Company, a publicly-traded manufacturer of prefabricated
buildings, from July 1999 and Chairman of the Board of Directors
of Butler from November 2001 to October 2004. Prior to that he
held various other positions at Butler. Mr. Holland is a
member of the Board of Directors of Cooper Tire and Rubber
Company.
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Douglas W. Rockel, 2002
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Mr. Rockel has been President,
Chief Executive Officer and Chairman of the Board of Directors
of Roots, Inc., a private commercial real estate development and
investment company since August 2001. Prior to that he was a
Senior Vice President with ABN Amro Securities (formerly ING
Barings) from February 1997 to July 2001.
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CLASS III
DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2008 ANNUAL MEETING
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Director, Year First Elected as
Director
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Age
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Principal Occupation, Business
and Directorships
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Linda J. French, 2004
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58
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Ms. French is retired from her
position as assistant professor of business administration at
William Jewell College in Liberty, Missouri, where she served
from 1997 to August 2001. Prior to joining the
William Jewell faculty, Ms. French was a partner at
the law firm of Blackwell Sanders Peper Martin and an executive
officer of Payless Cashways, Inc.
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William F. Martin, Jr., 2004
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58
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Mr. Martin retired from Yellow
Corporation, the former parent company of SCS Transportation,
Inc., now known as YRC Worldwide Inc., in 2002, after
25 years of service. He had been senior vice president of
legal, general counsel and corporate secretary.
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Bjorn E. Olsson, 2005
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Mr. Olsson served on the Resident
Management Team at George K. Baum & Company, an
investment bank, from September 2001 to September 2004. Prior to
that time Mr. Olsson was President and Chief Executive
Officer/Chief Operating Officer of Harmon Industries, Inc., a
publicly-traded supplier of signal and train control systems to
the transportation industry, from August 1990 to November 2000.
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CORPORATE
GOVERNANCE
THE BOARD, BOARD MEETINGS AND COMMITTEES
The system of governance practices followed by the Company is
memorialized in the charters of the three standing committees of
the Board of Directors (the Audit Committee, the Compensation
Committee, and the Nominating and Governance Committee) and in
the Companys Corporate Governance Guidelines. The charters
and Corporate Governance Guidelines are intended to provide the
Board with the necessary authority and practices to review and
evaluate the Companys business and to make decisions
independent of the influence of the Companys management.
The Corporate Governance Guidelines establish guidelines for the
Board with respect to Board meetings, Board composition and
selection, director responsibility, director access to
management and independent advisors, and non-employee director
compensation.
The Corporate Governance Guidelines and committee charters are
reviewed periodically and updated as necessary to reflect
evolving governance practices and changes in regulatory
requirements. The Corporate Governance Guidelines are reviewed
annually and were most recently modified by the Board effective
December 7, 2005. The Audit Committee charter, included as
Exhibit A, was most recently modified by the Board in July
2005. We have also adopted a code of business conduct and ethics
for our executive officers. The Corporate Governance Guidelines,
the code of business conduct and ethics and each of the
Boards committee charters are available free of charge on
the Companys website (www.scstransportation.com).
Lead
Independent Director
The Board of Directors includes a Lead Independent Director.
The Lead Independent Director is elected annually by the
non-employee directors. Douglas W. Rockel has served as the Lead
Independent Director since 2004. The primary responsibilities of
the Lead Independent Director are to:
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set jointly with the Chairman of the Board the schedule for
Board meetings and provide input to the Chairman concerning the
agenda for Board meetings;
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advise the Chairman as to the quality, quantity and timeliness
of the flow of information to the non-employee directors;
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coordinate, develop the agenda for, chair and moderate meetings
of non-employee directors, and generally act as principal
liaison between the non-employee directors and the Chairman;
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provide input to the Compensation Committee concerning the Chief
Executive Officers performance; and
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provide input to the Nominating and Governance Committee
regarding the appointment of chairs and members of the various
committees.
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Meetings
The Board of Directors held ten meetings in 2005. Each director
attended at least 75 percent of the meetings convened by
the Board and the applicable committees during such
directors service on the Board.
Executive sessions of non-employee directors are held as part of
each regularly scheduled meeting of the Board. The sessions are
chaired by the Lead Independent Director. Any non-employee
director can request that an additional executive session be
scheduled.
Committees
The Board of Directors has an Audit Committee, a Compensation
Committee and a Nominating and Governance Committee. Current
Committee memberships are as follows:
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Audit Committee
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Compensation Committee
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Nominating and Governance
Committee
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James A. Olson, Chairman
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Linda J. French, Chairperson
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John J. Holland, Chairman
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John J. Holland
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Bjorn E. Olsson
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Linda J. French
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Bjorn E. Olsson
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Douglas W. Rockel
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Douglas W. Rockel
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Audit
Committee
The Audit Committee has been established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The Audit Committee held seven meetings in 2005. The functions
of the Audit Committee are described in the Audit Committee
charter and include the following:
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review the adequacy and quality of SCS Transportations
accounting and internal control systems;
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review SCS Transportations financial reporting process on
behalf of the Board of Directors;
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oversee the entire audit function, both internal and
independent, including the selection of the independent auditors;
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review and assess SCS Transportations compliance with
legal requirements and codes of conduct; and
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provide an effective communication link between the auditors
(internal and independent) and the Board of Directors.
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Each member of the Audit Committee meets the independence and
experience requirements for audit committee members as
established by The Nasdaq Stock Market. The Board of Directors
has determined that Mr. Olson, Mr. Holland, and
Mr. Olsson are audit committee financial
experts, as defined by applicable rules of the Securities
and Exchange Commission.
Compensation
Committee
The Compensation Committee, which held four meetings in 2005,
performs the following functions:
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determines the salaries, bonuses, perquisites and other
remuneration and terms and conditions of employment of the
executive officers of SCS Transportation;
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supervises the administration of SCS Transportations
incentive compensation and equity-based compensation
plans; and
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makes recommendations to the Board of Directors with respect to
SCS Transportations compensation policies.
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Each member of the Compensation Committee meets the definition
of an independent director as established by The Nasdaq Stock
Market.
Nominating
and Governance Committee
The Nominating and Governance Committee held four meetings in
2005. The functions of the Nominating and Governance Committee
are described in the Nominating and Governance Committee charter
and include the following:
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review the size and composition of the Board and make
recommendations to the Board as appropriate;
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review criteria for election to the Board and recommend
candidates for Board membership;
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review the structure and composition of Board committees and
make recommendations to the Board as appropriate; and
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develop and oversee an annual self-evaluation process for the
Board and its committees.
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Each member of the Nominating and Governance Committee meets the
definition of an independent director as established by The
Nasdaq Stock Market.
DIRECTORS
COMPENSATION
Non-employee (outside) directors receive:
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An annual retainer of $20,000 (Chairpersons of the Nominating
and Governance Committee and the Compensation Committee receive
an additional annual fee of $5,000, the chairperson of the Audit
Committee receives an additional annual fee of $10,000, and the
Lead Independent Director receives an additional annual fee of
$10,000);
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$1,500 for each Board meeting attended in person and $750 for
participation in each telephonic Board meeting; and
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$1,000 for each committee meeting attended in person and $500
for participation in each telephonic committee meeting.
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Non-employee directors are reimbursed for travel and other
out-of-pocket
incidental expenses related to meetings, and for spousal travel
to certain meetings. Pursuant to the Amended and Restated SCS
Transportation, Inc. 2003 Omnibus Incentive Plan, at least
50 percent of the annual retainer for each non-employee
director and at least 50 percent of the annual fee paid to
each Committee chairperson and Lead Independent Director is paid
in SCS Transportation common stock, rather than cash, with the
value of such stock based on the fair market value of SCS
Transportation common stock at the date of the award. In
addition, pursuant to the Amended and Restated SCS
Transportation, Inc. 2003 Omnibus Incentive Plan, non-employee
directors receive an annual award of shares of the
Companys common stock not to exceed 3,000 shares,
with the actual number of shares determined annually by the
Compensation Committee with the award made on the third business
day following the annual meeting of shareholders. In 2005, each
non-employee director received an award of 1,200 shares.
The Compensation Committee has determined that each non-employee
director will receive an award of 1,010 shares in 2006.
Mr. Ward received an award of 215 shares upon joining
the Board in March 2006.
Under the Directors Deferred Fee Plan, non-employee
directors may defer all or a portion of annual fees earned,
which deferrals are converted into 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.
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The Board of Directors has adopted a guideline for stock
ownership for non-employee directors that provides that each
non-employee director retain so long as they serve on the Board
any annual fees paid in stock and shall retain in stock all
after-tax proceeds from the exercise of any stock options. In
addition, directors are to retain any stock otherwise acquired
so long as they serve on the Board. The Board believes
significant stock ownership by non-employee directors further
aligns their interests with the interests of SCS
Transportations shareholders.
CONSIDERATION
OF DIRECTOR NOMINEES
Director
Qualifications
The Corporate Governance Guidelines include director
qualification standards, which 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 Stock 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 70; and
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No director shall serve as a director, officer or employee of a
competitor of the Company.
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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 interests of the Company and its
shareholders;
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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 Companys 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.
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Procedures
for Recommendations and Nominations by Shareholders
The Nominating and Governance Committee has adopted policies
concerning the process for the consideration of director
candidates by shareholders. The Nominating and Governance
Committee will consider director candidates submitted by
shareholders of SCS Transportation. Any shareholder wishing to
submit a candidate for consideration should send the following
information to the Secretary of the Company, SCS Transportation,
Inc., 4435 Main Street, Suite 930, Kansas City, MO 64111:
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The name and address of the shareholder submitting the candidate
as it appears on the Companys books; the number and class
of shares owned beneficially and of record by such shareholder
and the length of period held; and proof of ownership of such
shares;
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Name, age and address of the candidate;
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A detailed resume describing, among other things, the
candidates educational background, occupation, employment
history, and material outside commitments (e.g., memberships on
other boards and committees, charitable foundations, etc.);
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9
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Any information relating to such candidate that is required to
be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in
each case pursuant to the Securities Exchange Act of 1934 and
rules adopted thereunder;
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A description of any arrangements or understandings between the
recommending shareholder and such candidate;
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A supporting statement which describes the candidates
reasons for seeking election to the Board of Directors, and
documents his or her ability to satisfy the director
qualifications described in SCS Transportations
Corporate Governance Guidelines; and
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A signed statement from the candidate, confirming his or her
willingness to serve on the Board of Directors.
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The Secretary of SCS Transportation will promptly forward such
materials to the Nominating and Governance Committee Chair and
the Chairman of the Board of SCS Transportation. The Secretary
will also maintain copies of such materials for future reference
by the Committee when filling Board positions.
If a vacancy arises or the Board decides to expand its
membership, the Nominating and Governance Committee will seek
recommendations of potential candidates from a variety of
sources (including incumbent directors, shareholders, the
Corporations management and third party search firms). At
that time, the Nominating and Governance Committee also will
consider potential candidates submitted by shareholders in
accordance with the procedures described above. The Nominating
and Governance Committee then evaluates each potential
candidates educational background, employment history,
outside commitments and other relevant factors to determine
whether he or she is potentially qualified to serve on the
Board. The Committee seeks to identify and recruit the best
available candidates, and it intends to evaluate qualified
shareholder candidates on the same basis as those submitted by
other sources.
After completing this process, the Nominating and Governance
Committee will determine whether one or more candidates are
sufficiently qualified to warrant further investigation. If the
process yields one or more desirable candidates, the Committee
will rank them by order of preference, depending on their
respective qualifications and SCS Transportations needs.
The Nominating and Governance Committee Chair, or another
director designated by the Nominating and Governance Committee
Chair, will then contact the desired candidate(s) to evaluate
their potential interest and to set up interviews with the full
Committee. All such interviews are held in person, and include
only the candidate and the Nominating and Governance Committee
members. Based upon interview results, the candidates
qualifications and appropriate background checks, the Nominating
and Governance Committee then decides whether it will recommend
the candidates nomination to the full Board.
Separate procedures apply if a shareholder wishes to submit a
director candidate at the Companys annual meeting that is
not approved by the Nominating and Governance Committee or the
Board of Directors. Pursuant to Section 2.07(a) of the
Amended and Restated By-Laws of the Company, for nominations to
be properly brought before an annual meeting pursuant to clause
(C) of paragraph (a)(i) of Section 2.07 of the
By-Laws, the shareholder must have given timely notice thereof
in writing to the Secretary of the Company. To be timely, a
shareholders notice must be delivered or mailed to and
received at the principal executive offices of the Company not
later than the close of business on the 90th calendar day
nor earlier than the 120th calendar day prior to the
anniversary date of the first mailing of the Companys
proxy statement for the immediately preceding years annual
meeting. Such shareholders notice shall set forth the
following items:
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As to each person whom the shareholder proposes to nominate for
election or reelection as a director, all information relating
to such person that is required to be disclosed in solicitations
of proxies for election of directors in an election contest, or
is otherwise required, in each case pursuant to the Securities
Exchange Act of 1934 and the rules promulgated thereunder;
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As to the shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination is made:
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10
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The name and address of such shareholder and of such beneficial
owner as they appear on the Companys books;
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The class and number of shares of the Company which are owned
beneficially and of record by such shareholder and such
beneficial owner;
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A representation that the shareholder is a holder of record of
stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
propose such nomination; and
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A representation whether the shareholder or the beneficial
owner, if any, intends or is part of a group which intends to
(i) deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of the
Companys outstanding capital stock required to elect the
nominee
and/or
(ii) otherwise solicit proxies from shareholders in support
of such nomination.
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The foregoing summary is qualified in its entirety by reference
to the Companys By-Laws, which have been filed with the
Securities and Exchange Commission and copies of which are
available from the Company.
SHAREHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors has adopted the following procedures for
shareholders to send communications to the Board or individual
directors of the Company:
Shareholders seeking to communicate with the Board of Directors
should submit their written comments to the Secretary of the
Company, SCS Transportation, Inc., 4435 Main Street,
Suite 930, Kansas City, MO 64111. The Secretary of the
Company will forward all such communications (excluding routine
advertisements and business solicitations and communications
which the Secretary of the Company, in his or her sole
discretion, deems to be a security risk or for harassment
purposes) to each member of the Board of Directors, or if
applicable, to the individual director(s) named in the
correspondence. Subject to the following, the Chairman of the
Board and the Lead Independent Director will receive copies of
all shareholder communications, including those addressed to
individual directors, unless such communications address
allegations of misconduct or mismanagement on the part of the
Chairman. In such event, the Secretary of the Company will first
consult with and receive the approval of the Lead Independent
Director before disclosing or otherwise discussing the
communication with the Chairman.
The Company reserves the right to screen materials sent to its
directors for potential security risks
and/or
harassment purposes, and the Company also reserves the right to
verify ownership status before forwarding shareholder
communications to the Board of Directors.
The Secretary of the Company will determine the appropriate
timing for forwarding shareholder communications to the
directors. The Secretary will consider each communication to
determine whether it should be forwarded promptly or compiled
and sent with other communications and other Board materials in
advance of the next scheduled Board meeting.
Shareholders also have an opportunity to communicate with the
Board of Directors at the Companys annual meeting of
shareholders. The Companys Corporate Governance Guidelines
provide that absent unusual circumstances, directors are
expected to attend all annual meetings of shareholders. In
attendance at the Companys 2005 annual meeting of
shareholders were Herbert A. Trucksess, III, Linda J.
French, John J. Holland, William F. Martin, Jr.,
James A. Olson and Douglas W. Rockel.
11
STOCK
OWNERSHIP
Directors
and Executive Officers
The following table sets forth the amount of SCS
Transportations common stock beneficially owned by each
director, each executive officer named in the Summary
Compensation Table on page 18 and all directors and
executive officers as a group, as of January 31, 2006.
Unless otherwise indicated, beneficial ownership is direct and
the person indicated has sole voting and investment power.
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Common Stock Beneficially
Owned
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Share
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Rights to
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Units Held
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Shares
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Acquire
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Under
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Beneficially
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Beneficial
|
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Percent of
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Deferral
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Name of Beneficial
Owner
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Owned(1)
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Ownership(2)
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Total
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Class(3)
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Plans(4)
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Herbert A. Trucksess, III
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200,606
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366,658
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567,264
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3.81
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%
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Linda J. French
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800
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800
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*
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1,983
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John J. Holland
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1,079
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12,500
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13,579
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*
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3,607
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William F. Martin, Jr.
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200
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200
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*
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1,826
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James A. Olson
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1,037
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12,500
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13,537
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*
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4,132
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Bjorn E. Olsson
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*
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2,139
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Douglas W. Rockel
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2,075
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12,500
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14,575
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*
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4,132
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Richard D. ODell
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93,082
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93,082
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*
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30,239
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David H. Gorman
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9,350
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9,350
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*
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James J. Bellinghausen
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10,110
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32,266
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42,376
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*
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3,824
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David J. Letke
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2,550
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5,570
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8,120
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*
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Mark H. Robinson
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19,804
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19,804
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*
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8,532
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Paul J. Karvois
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5,000
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73,329
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78,329
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*
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All directors and executive
officers as a group (15 persons)
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226,207
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645,547
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871,754
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5.75
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%
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60,414
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(1) |
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Includes common stock owned directly and indirectly. 100,000 of
Mr. Trucksess shares are held indirectly in a
revocable trust. |
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(2) |
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Number of shares that can be acquired on January 31, 2006
or within 60 days thereafter through the exercise of stock
options. These shares are excluded from the
Shares Beneficially Owned column. |
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(3) |
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Based on the number of shares outstanding on January 31,
2006 (14,503,279), plus the number of shares subject to
acquisition within 60 days thereafter, by the relevant
beneficial owner. |
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(4) |
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Represents phantom stock units, receipt of which has been
deferred pursuant to the SCST Executive Capital Accumulation
Plan or the SCS Transportation, Inc. Directors Deferred
Fee Plan. The phantom stock units deferred pursuant to the SCST
Executive Capital Accumulation Plan are payable in cash, while
the phantom stock units deferred pursuant to the SCS
Transportation, Inc. Directors Deferred Fee Plan are
payable in stock; in each case, the phantom stock units
value tracks the performance of the Companys common stock.
The units are not considered beneficially owned under the rules
of the Securities and Exchange Commission. |
12
STOCK
PERFORMANCE GRAPH
Securities and Exchange Commission rules require this proxy
statement to contain a graph comparing, over a five-year period
(or such shorter period as may apply), the performance of SCS
Transportations common stock against a broad equity market
index and against either a published industry or
line-of-business
index or a peer group index.
The broad equity market is represented by the Russell 2000 Index
and the industry index is represented by the Nasdaq
Transportation Index. This industry index replaces a peer group
index used in the prior year. That peer group was comprised of
the following companies: Arkansas Best Corporation, Central
Freight Lines, Inc., Covenant Transport, Inc., CNF, Inc.,
Heartland Express, Inc., J.B. Hunt Transport Services, Inc.,
Knight Transportation, Inc., Marten Transport, Ltd., Old
Dominion Freight Line, Inc., P.A.M. Transportation Services,
Inc., Swift Transportation Co., Inc., US Xpress Enterprises,
Inc., Vitran Corporation Inc., Werner Enterprises, Inc., and YRC
Worldwide Inc.
The following graph compares the cumulative total return on SCS
Transportations common stock from October 1, 2002
(the date which SCS Transportation officially became a publicly
traded company) through the end of 2005 with the Russell 2000
Index, the Nasdaq Transportation Index, and the former peer
group index for the same period. The graph shows the value of
$100 invested in SCS Transportations common stock and in
each of the foregoing indices on October 1, 2002, and
assumes the reinvestment of all dividends. No dividends were
paid on SCS Transportations common stock during this
period. The graph depicts the change in the value of SCS
Transportations common stock relative to the indices as of
the end of the last four fiscal years. Historical stock
performance is not necessarily indicative of future stock price
performance.
COMPARISON
OF CUMULATIVE TOTAL RETURN
(SCS TRANSPORTATION, RUSSELL 2000 INDEX, NASDAQ TRANSPORTATION
INDEX AND FORMER PEER GROUP INDEX)
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October 1,
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2002
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December 31, 2002
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December 31, 2003
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December 31, 2004
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December 31, 2005
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SCS Transportation
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$
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100.00
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$
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122.20
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$
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216.77
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$
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288.16
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$
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262.02
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Nasdaq Transportation Index
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$
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100.00
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$
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114.44
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$
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154.73
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$
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196.62
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$
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215.02
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Former Peer Group
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$
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100.00
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$
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114.14
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$
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140.48
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$
|
192.22
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$
|
188.98
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Russell 2000 Index
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$
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100.00
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$
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104.48
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$
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153.85
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$
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182.05
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$
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190.34
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13
REPORT ON
EXECUTIVE COMPENSATION OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The
Committees Responsibilities
The Compensation Committee, which is composed entirely of
non-employee directors, is responsible for all components of SCS
Transportations officer compensation programs. The
Compensation Committee works closely with the entire Board of
Directors in the execution of its duties. This report is
required by rules established by the Securities and Exchange
Commission and provides specific information regarding
compensation for SCS Transportations Chairman, President
and Chief Executive Officer, and the other Named Executive
Officers listed in the Summary Compensation Table, as well as
information concerning compensation arrangements applicable to
all executive officers of SCS Transportation.
Compensation
Philosophy and Objectives of Executive Compensation
Programs
It is the philosophy of SCS Transportation and the Committee
that all compensation programs should (1) link pay and
performance and (2) attract, motivate, reward and
facilitate the retention of the executive talent required to
achieve corporate objectives. SCS Transportation also focuses
strongly on compensation tied to stock price performance, since
this form of compensation provides a clear link to enhanced
shareholder value. The Committee regularly works with
compensation consultants to assist with the design,
implementation, and communication of various compensation plans.
SCS Transportation annually determines competitive compensation
levels of officers using published compensation surveys (for
companies of comparable size to SCS Transportation as measured
by revenues), information obtained from compensation
consultants, and analysis of compensation data contained in the
proxy statements for transportation industry peer companies. The
outcome of the review is used as an input in determining
appropriate compensation levels for the following year. While
the Committee carefully reviews the competitive compensation
levels, other factors like executive experience, Company
performance, individual performance, internal pay equity
analysis and succession planning are considered in determining
appropriate compensation levels. The Committee uses a
deliberative process in its decision-making under which
significant compensation decisions are made over two or more
meetings of the Committee. The Company encourages members of the
Committee to regularly participate in continuing education
programs to keep abreast of the latest practices in the area of
executive compensation.
Review of
Program Elements
The Committee reviews all elements of SCS Transportations
compensation programs for executives, including base salaries,
annual performance-based incentives, long-term incentives, the
dollar value to executives and cost to the Company of all
perquisites and other personal benefits, the earnings and
accumulated payout obligations under the Companys
non-qualified deferred compensation program, the actual
projected payout obligations under the Companys
supplemental executive retirement plan (applicable only to
Mr. Trucksess) and compensation under several potential
severance and
change-in-control
scenarios. The compensation review is conducted through the use
of, among other things, tally sheets that set forth total
rewards history, as well as potential rewards under various
employment termination scenarios. Each of these pay delivery
programs is further detailed below.
Base Salaries. Base salaries for SCS
Transportations Named Executive Officers for 2005 were
established through comparisons with the market survey data
described above. Overall, SCS Transportations base
salaries for Named Executive Officers are close to the market
50th percentile in the aggregate. The Committees
intent is to target the marketplace 50th percentile for
officer base salaries, over time, based on performance and
growth in the experience of our executives.
All salaried employees, including executives, are eligible for
an annual merit increase to base salary based primarily on
competitive compensation levels, performance of job
responsibilities and accomplishment of predetermined performance
objectives. In 2005, except for the August 2005 promotions of
Dave Gorman to President and CEO of Jevic Transportation, Inc.
and Mark Robinson to VP Information Technology at the
14
holding company, the Named Executive Officers did not receive
base salary increases due to increases in targeted annual and
long-term incentives.
Annual Incentive Compensation. SCS
Transportations annual incentive plan is structured to
provide cash incentives to key employees based on the
achievement of key corporate, business unit (for business unit
employees) and individual objectives. Under the plan, funding
pools are created at the corporate and business unit levels
based on overall company and business unit performance on
selected financial goals. For 2005, the corporate goals under
the plan were net income and return on capital. The 2005
business unit goals for Jevic Transportation, Inc. and Saia
Motor Freight Line, Inc. were operating income and return on
capital. The plan is structured with target awards set near the
market 50th percentile, with an opportunity to achieve
upper quartile payouts for outstanding performance.
Actual annual incentives paid to the Named Executive Officers
for 2005 in the corporate incentive pool were 35% below target,
since overall corporate performance was below target. Actual
annual incentive payouts for Saia were 23% above target as a
result of Saias performance relative to plan objectives.
Jevic performance was below the target threshold and, as a
result, no annual incentive payments were made with respect to
Jevic.
Long-Term Incentive Compensation. SCS
Transportation believes that its executive officers should have
an ongoing stake in the success of SCS Transportation. SCS
Transportation also believes these key employees should have a
considerable portion of their total compensation tied to SCS
Transportations stock price performance, since
stock-related compensation is tied to shareholder value.
Under the Companys Amended and Restated 2003 Omnibus
Incentive Plan, which was approved by shareholders in 2005, the
Compensation Committee has the authority to provide long-term
incentives to key employees using a variety of devices,
including stock options, restricted stock, and performance
units. In order to provide a strong focus on creating value
relative to other companies in our industry, and to tie
compensation to shareholder value creation, the Committee has
elected to use a combination of performance unit awards and
stock option grants. For 2005, 75% of an executives long
term incentive opportunity was reflected in performance units
and 25% was in stock options using the Black-Scholes option
valuation model. In order to reduce volatility in long-term
incentive accruals and to provide more consistency with the
practices of the Companys competitors, for 2006 the mix
was changed to 50% performance unit awards and 50% stock options.
Under the performance unit program, participants earn cash
awards based on SCS Transportations total shareholder
return (TSR) performance relative to a group of industry peers
over a three year period. However, SCS Transportations TSR
must be positive over the three year period in order for any
payout to occur. The targeted performance unit payouts for the
2003-2005
and
2004-2006
performance periods were generally set below the market
50th percentile pay levels, in order to effectively manage
the aggregate cost of the program. Actual awards for the
2003-2005
performance period were 150% of target, based on a final
determination of TSR over the performance period, and were paid
out during the first quarter of 2006. Actual awards are not
scheduled to be paid out until the first quarter of 2007 for the
2004-2006 performance period and first quarter of 2008 for the
2005-2007
performance period, based on a final determination of TSR over
the relevant performance period.
The performance units granted in 2006 have a three-year
performance period of
2006-2008
with payouts based on SCS Transportations TSR relative to
a group of 30 primarily small and mid-capitalization trucking
transportation and logistics peer companies. The payouts under
the plan can range from 0% to 200% of the target award and no
payouts are made if the Companys TSR is below the
25th percentile of the peer group or if TSR during the
performance period is not positive.
A total of 31,370 non-qualified stock options were granted to
the Named Executive Officers in 2005, representing 64% of the
total stock options granted. In January 2006, the Company
granted a total of 41,990 non-qualified stock options to the
Named Executive Officers, representing 57% of the total stock
options granted. The exercise price of the options was set at
fair market value on the grant date and the options have a three
year cliff vesting schedule and a seven year term. The vesting
schedule is designed to coincide with payouts under the
performance unit awards made in 2005 and 2006 in order to
provide cash to facilitate the
15
exercise of the stock options and promote increased stock
ownership. The stock options granted will be fully expensed as
the Company adopted the fair value method of recording stock
option expense under SFAS No. 123, Accounting
for Stock-Based Compensation as amended by
SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure,
on January 1, 2003.
Perquisites,
Deferred Compensation, Retirement, Employment Contracts, and
Severance Agreements.
As part of the compensation review described above, the
Committee reviewed the executive perquisites, non-qualified
deferred compensation plan, defined contribution plans,
supplemental executive retirement plan, employment contracts,
and
change-in-control
executive severance agreements using data provided by a
compensation consultant. The executive perquisites for the Named
Executive Officers include a car allowance, financial/legal
planning allowance, executive life insurance, and country club
membership (Mr. Trucksess and Mr. ODell only).
The financial/legal planning allowance and executive life
insurance benefits were increased for 2005 to reflect median
competitive levels. The executive perquisites, non-qualified
deferred compensation plan, defined contribution plans,
supplemental executive retirement plan, employment contracts,
and
change-in-control
executive severance agreements are structured in a manner that
is consistent with competitive practice and were not modified
for 2006. See the Retirement Plans and
Employment Contracts and
Change-In-Control
Arrangements sections of this proxy statement for detailed
descriptions of these plans and agreements.
Stock
Ownership Guidelines
In coordination with the decision in 2005 to grant stock
options, new SCST Stock Ownership Guidelines (Ownership
Guidelines) were approved. The Ownership Guidelines apply
to officers who receive long-term incentives. Except for
individuals who have satisfied the Ownership Guidelines, 75% of
after-tax proceeds (or 75% of pre-tax proceeds if invested in
the Companys non-qualified tax deferred plan) of any
performance unit awarded in 2005 or 2006 are to be applied
toward acquiring SCS Transportation common shares or share
equivalents. The Ownership Guidelines specify that these shares
and those acquired from exercising stock options granted in 2005
and 2006 be held for a minimum period of five years or until the
Ownership Guidelines are achieved. The Ownership Guidelines are
as follows:
|
|
|
|
|
Position
|
|
Multiple of Base
Salary
|
|
|
Chief Executive Officer
|
|
|
5.0x
|
|
Subsidiary Presidents
|
|
|
3.0x
|
|
Holding Company Senior Officers
and Saia SVP Operations and Sales
|
|
|
2.5x
|
|
Other Subsidiary Officers
|
|
|
2.0x
|
|
The Ownership Guidelines can be satisfied through purchases of
Company stock, the exercise of stock options (with the
investment being equal to the exercise price paid plus income
tax liability created), and through investment in share
equivalent units in the Companys non-qualified tax
deferred plan (in which case the Guidelines specify 75% of
pre-tax proceeds rather than after-tax proceeds). The Committee
reviews stock ownership by executives subject to the Ownership
Guidelines.
For performance unit awards granted in 2003 and 2004 the
ownership guidelines in place at the time of grant specified an
investment of 50% of after tax proceeds (or 50% of pre-tax
proceeds for investments in the Companys non-qualified tax
deferred plan).
Chief
Executive Officer Compensation
The discussion below applies to Mr. Trucksess
compensation.
Base Salary. Mr. Trucksess salary
was initially adjusted in October 2002 following the
Companys spin-off with a subsequent increase on
January 1, 2004 to an annual base salary of $475,008. The
Committee determined not to increase annual base compensation
for 2005 for any Named Executive Officer, including
Mr. Trucksess, due to increases in targeted annual and
long-term incentives. In connection with the annual
16
review of Mr. Trucksess compensation, the Committee
reviewed an internal equity analysis comparing
Mr. Trucksess compensation as a multiple of average
employee pay by job level.
Annual Incentive Award. Based on SCS
Transportations performance on the measures described
under the Annual Incentive Compensation section above, the
Compensation Committee provided Mr. Trucksess with an
annual incentive of $243,318 for 2005. This award was below
target since corporate performance on net income and return on
capital for SCS Transportation were below the target set by the
Committee and personal goals were below target as assessed by
the Committee and the Board.
Long-Term Incentives. Mr. Trucksess
participates in the performance unit plan described above. His
target awards under the plan for the
2003-2005
and
2004-2006
performance periods were below the market 50th percentile.
An award of $503,746 (150% of target) for the
2003-2005
performance period was paid in the first quarter of 2006 based
on the Companys TSR over the
2003-2005
performance period. Actual awards are not scheduled to be paid
until the first quarter of 2007 for the
2004-2006
performance period and first quarter of 2008 for the
2005-2007
performance period, based on a final determination of TSR over
the performance period. In 2006, the Committee granted 16,000
non-qualified stock options to Mr. Trucksess in addition to
performance units. The size of the option grant to
Mr. Trucksess was determined using a grant value (based on
the Black Scholes option valuation model) approximately equal to
the
2006-2008
performance unit plan target award opportunity. The exercise
price of the options was set at fair market value on the grant
date and the options have a three-year cliff vesting schedule
and a seven year term. Mr. Trucksess total targeted
long-term incentive awards as a percentage of base salary,
including performance units and stock options, for 2006 will
remain below the market 50th percentile. It is the intent
of the Committee to increase awards over time to provide market
50th percentile levels.
Perquisites, Deferred Compensation, Retirement, Employment
Contracts, and Severance Agreements. Based on
input from the Committees compensation consultant and the
Committees review of the executive perquisites,
non-qualified deferred compensation plan, defined contribution
plans, supplemental executive retirement plan, employment
contract, and
change-in-control
executive severance agreement applicable to Mr. Trucksess,
the maximum on Mr. Trucksess executive life insurance
was increased for 2005 from $500,000 to $1,000,000 and the
financial/legal planning allowance was increased from $3,500 to
$5,000. The Committee believes compensation under these
arrangements is consistent with median competitive levels and no
changes were made for 2006.
Limitation
of Tax Deduction for Executive Compensation
Under Section 162(m) of the Internal Revenue Code, publicly
traded companies may not receive a tax deduction on
non-performance based compensation to executive officers in
excess of $1 million. Awards under SCS
Transportations performance unit plan under the 2003
Omnibus Incentive Plan qualify as performance-based compensation
under the law. Except with respect to the performance unit plan,
no specific actions have been taken with regard to cash
compensation to comply with Section 162(m) at this time,
since only Messrs. Trucksess and ODells
cash compensation has the potential to be effected by the
$1 million limit, and then only in an outstanding
performance year.
COMPENSATION COMMITTEE MEMBERS
Linda J. French, Chairperson
Bjorn E. Olsson
Douglas W. Rockel
17
SUMMARY
COMPENSATION TABLE
The following table sets forth the compensation awarded to,
earned by or paid to SCS Transportations chief executive
officer and its four other most highly compensated executive
officers (the Named Executive Officers) for services
rendered in all capacities within SCS Transportation during the
fiscal years ended December 31, 2005, 2004 and 2003.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
Payouts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual
|
|
|
Securities Underlying
|
|
|
LTIP
|
|
|
All Other
|
|
Name and Principal
Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Compensation
(1) ($)
|
|
|
Options (#)
|
|
|
Payout ($)
|
|
|
Compensation ($)
|
|
Herbert A. Trucksess, III
|
|
|
2005
|
|
|
$
|
475,008
|
|
|
$
|
243,318
|
|
|
$
|
|
|
|
|
9,840
|
|
|
$
|
|
|
|
$
|
45,175
|
(2)
|
Chairman, President and
|
|
|
2004
|
|
|
$
|
475,008
|
|
|
$
|
263,344
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
37,136
|
(2)
|
Chief Executive Officer
|
|
|
2003
|
|
|
$
|
450,000
|
|
|
$
|
290,651
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
13,652
|
(2)
|
Richard D. ODell
|
|
|
2005
|
|
|
$
|
331,008
|
|
|
$
|
244,284
|
|
|
$
|
|
|
|
|
5,880
|
|
|
$
|
|
|
|
$
|
30,953
|
(2)
|
President and Chief
|
|
|
2004
|
|
|
$
|
324,388
|
|
|
$
|
154,649
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
27,751
|
(2)
|
Executive Officer
|
|
|
2003
|
|
|
$
|
308,750
|
|
|
$
|
155,610
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
25,119
|
(2)
|
Saia Motor Freight Line, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David H. Gorman
|
|
|
2005
|
|
|
$
|
179,590
|
|
|
$
|
|
|
|
$
|
|
|
|
|
3,930
|
|
|
$
|
|
|
|
$
|
10,867
|
(2)
|
President and Chief
|
|
|
2004
|
|
|
$
|
139,212
|
|
|
$
|
7,137
|
|
|
$
|
25,041
|
|
|
|
|
|
|
$
|
|
|
|
$
|
10,289
|
(2)
|
Executive Officer
|
|
|
2003
|
|
|
$
|
134,793
|
|
|
$
|
8,412
|
|
|
$
|
28,910
|
|
|
|
|
|
|
$
|
|
|
|
$
|
9,897
|
(2)
|
Jevic Transportation, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Bellinghausen
|
|
|
2005
|
|
|
$
|
207,000
|
|
|
$
|
69,759
|
|
|
$
|
|
|
|
|
2,450
|
|
|
$
|
|
|
|
$
|
20,316
|
(2)
|
Vice President Finance and
|
|
|
2004
|
|
|
$
|
203,500
|
|
|
$
|
72,527
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
17,627
|
(2)
|
Chief Financial Officer
|
|
|
2003
|
|
|
$
|
188,500
|
|
|
$
|
78,268
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
9,562
|
(2)
|
David J. Letke
|
|
|
2005
|
|
|
$
|
179,000
|
|
|
$
|
48,258
|
|
|
$
|
|
|
|
|
2,120
|
|
|
$
|
|
|
|
$
|
17,694
|
(2)
|
Vice
President Operations
|
|
|
2004
|
|
|
$
|
177,252
|
|
|
$
|
49,134
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
14,217
|
(2)
|
and Planning
|
|
|
2003
|
|
|
$
|
157,537
|
|
|
$
|
50,876
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
6,417
|
(2)
|
Mark H. Robinson
|
|
|
2005
|
|
|
$
|
176,639
|
|
|
$
|
86,906
|
|
|
$
|
|
|
|
|
2,590
|
|
|
$
|
|
|
|
$
|
18,748
|
(2)
|
Vice President Information
|
|
|
2004
|
|
|
$
|
169,508
|
|
|
$
|
63,659
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
16,939
|
(2)
|
Technology and Chief
|
|
|
2003
|
|
|
$
|
163,508
|
|
|
$
|
64,095
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
15,626
|
(2)
|
Information Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul J. Karvois
|
|
|
2005
|
|
|
$
|
228,923
|
|
|
$
|
|
|
|
$
|
|
|
|
|
4,560
|
|
|
$
|
|
|
|
$
|
1,289,277
|
(3)
|
Former President and Chief
|
|
|
2004
|
|
|
$
|
302,962
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
18,840
|
(2)
|
Executive Officer
|
|
|
2003
|
|
|
$
|
300,000
|
|
|
$
|
58,793
|
|
|
$
|
45,028
|
|
|
|
|
|
|
$
|
|
|
|
$
|
18,063
|
(2)
|
Jevic Transportation, Inc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Named Executive Officers receive certain perquisites,
including a car allowance, a financial and tax planning
allowance, life insurance, spousal travel expenses and for
Mr. Trucksess and Mr. ODell, country club dues.
With the exception of the individuals discussed below, such
perquisites did not reach the threshold for reporting of $50,000
or 10 percent of salary and bonus set forth in the
applicable rules of the Securities and Exchange Commission.
Mr. Gormans other annual compensation in 2004
included a $7,200 car allowance, $17,434 under a covenant not to
compete, $107 for personal mileage and $300 allowance for a gym
membership and his other annual compensation in 2003 included
$9,900 car allowance, $18,517 under a covenant not to compete,
$193 personal mileage and $300 allowance for gym membership.
Mr. Karvois other annual compensation in 2003
included $28,613 under a covenant not to compete, $14,400
automobile allowance, $1,936 for spouse travel and $79 for
personal mileage. |
|
(2) |
|
The compensation amounts include matching contributions under a
401(k) benefit plan and a capital accumulation plan.
Contributions in 2005 to the 401(k) plan and capital
accumulation plan, respectively were $5,791 and $39,384 for
Mr. Trucksess, $5,775 and $25,178 for Mr. ODell,
$3,906 and $6,961 for Mr. Gorman, $5,710 and $14,606 for
Mr. Bellinghausen, $5,717 and $11,977 for Mr. Letke,
and $6,608 and $12,140 for Mr. Robinson. |
|
(3) |
|
Represents a severance payment of $762,579 to Mr. Karvois
under the terms of his separation agreement with Jevic
Transportation, Inc., a $6,166 company matching
contribution under a 401(k) benefit plan and a $520,532
distribution of deferred compensation from the SCST Capital
Accumulation Plan which includes a $15,148 company
contribution made in 2005 prior to his termination date. |
18
STOCK
OPTIONS ISSUED IN LAST FISCAL YEAR
The following table sets forth information regarding stock
options issued during the fiscal year ended December 31,
2005 to the Named Executive Officers pursuant to the Amended and
Restated 2003 Omnibus Incentive Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Issued to
|
|
|
|
|
|
|
|
Potential Realizable Value at
assumed annual rate of
|
|
|
Underlying
|
|
Employees
|
|
Exercise or
|
|
Fair Market
|
|
|
|
stock price appreciation for
|
|
|
Options
|
|
in Fiscal
|
|
Base Price
|
|
Value on
|
|
Expiration
|
|
option term
|
Name
|
|
Issued (#)
|
|
Year
|
|
($/share)
|
|
Issue Date
|
|
Date
|
|
0%
|
|
5%
|
|
10%
|
|
Herbert A. Trucksess, III
|
|
|
9,840
|
|
|
|
19.95
|
%
|
|
$
|
23.00
|
|
|
$
|
23.00
|
|
|
|
2/2/2012
|
|
|
$
|
|
|
|
$
|
92,135
|
|
|
$
|
214,714
|
|
Richard D. ODell
|
|
|
5,880
|
|
|
|
11.92
|
%
|
|
$
|
23.00
|
|
|
$
|
23.00
|
|
|
|
2/2/2012
|
|
|
$
|
|
|
|
$
|
55,056
|
|
|
$
|
128,305
|
|
David H. Gorman
|
|
|
950
|
|
|
|
1.93
|
%
|
|
$
|
23.00
|
|
|
$
|
23.00
|
|
|
|
2/2/2012
|
|
|
$
|
|
|
|
$
|
8,895
|
|
|
$
|
20,729
|
|
|
|
|
2,980
|
|
|
|
6.04
|
%
|
|
$
|
16.88
|
|
|
$
|
16.88
|
|
|
|
8/24/2012
|
|
|
$
|
|
|
|
$
|
20,478
|
|
|
$
|
47,723
|
|
James J. Bellinghausen
|
|
|
2,450
|
|
|
|
4.97
|
%
|
|
$
|
23.00
|
|
|
$
|
23.00
|
|
|
|
2/2/2012
|
|
|
$
|
|
|
|
$
|
22,940
|
|
|
$
|
53,460
|
|
David J. Letke
|
|
|
2,120
|
|
|
|
4.30
|
%
|
|
$
|
23.00
|
|
|
$
|
23.00
|
|
|
|
2/2/2012
|
|
|
$
|
|
|
|
$
|
19,850
|
|
|
$
|
46,259
|
|
Mark H. Robinson
|
|
|
1,280
|
|
|
|
2.60
|
%
|
|
$
|
23.00
|
|
|
$
|
23.00
|
|
|
|
2/2/2012
|
|
|
$
|
|
|
|
$
|
11,985
|
|
|
$
|
27,930
|
|
|
|
|
1,310
|
|
|
|
2.66
|
%
|
|
$
|
16.88
|
|
|
$
|
16.88
|
|
|
|
8/24/2012
|
|
|
$
|
|
|
|
$
|
9,002
|
|
|
$
|
20,979
|
|
Paul J. Karvois
|
|
|
4,560
|
|
|
|
9.25
|
%
|
|
$
|
23.00
|
|
|
$
|
23.00
|
|
|
|
9/22/2007(1
|
)
|
|
$
|
|
|
|
$
|
14,418
|
|
|
$
|
30,007
|
|
|
|
|
(1)
|
|
Mr. Karvois stock
options expire 2 years from his separation date with the
Company.
|
AGGREGATED
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth for each Named Executive Officer
certain information about stock options exercised during the
fiscal year ended December 31, 2005 and unexercised stock
options held at the end of the fiscal year. The value realized
upon exercise of an option is the difference between the
exercise price of the option and the fair market value of SCS
Transportations common stock on the exercise date. The
value of an unexercised
in-the-money
option at fiscal year-end is the difference between its exercise
price and the fair market value of SCS Transportations
common stock on December 31, 2005. The actual gain, if any,
on exercise will depend on the value of SCS
Transportations common stock on the date of exercise. An
option is
in-the-money
if the fair market value of SCS Transportations common
stock exceeds the exercise price of the option. An option is
unexercisable if it has not yet vested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Value of Unexercised
|
|
|
|
Shares
|
|
|
|
|
|
Underlying Unexercised
|
|
|
In-the-Money Options at
|
|
|
|
Acquired on
|
|
|
Value
|
|
|
Options at Year-End
(#)
|
|
|
Year-End ($)
|
|
Name
|
|
Exercise (#)
|
|
|
Realized ($)
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Herbert A. Trucksess, III
|
|
|
85,320
|
|
|
$
|
1,281,992
|
|
|
|
360,115
|
|
|
|
9,840
|
|
|
$
|
5,943,502
|
|
|
|
|
|
Richard D. ODell
|
|
|
|
|
|
|
|
|
|
|
77,642
|
|
|
|
5,880
|
|
|
$
|
1,320,310
|
|
|
|
|
|
David H. Gorman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,930
|
|
|
|
|
|
|
$
|
13,023
|
|
James J. Bellinghausen
|
|
|
|
|
|
|
|
|
|
|
27,436
|
|
|
|
2,450
|
|
|
$
|
467,537
|
|
|
|
|
|
David J. Letke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,120
|
|
|
|
|
|
|
|
|
|
Mark H. Robinson
|
|
|
|
|
|
|
|
|
|
|
13,644
|
|
|
|
2,590
|
|
|
$
|
232,507
|
|
|
$
|
5,725
|
|
Paul J. Karvois
|
|
|
|
|
|
|
|
|
|
|
73,329
|
|
|
|
|
|
|
$
|
1,135,386
|
|
|
|
|
|
19
LONG-TERM
INCENTIVE PLANS AWARDS IN LAST FISCAL
YEAR
All long-term incentives awarded in fiscal 2005 were awarded
under the Amended and Restated SCS Transportation, Inc.
2003 Omnibus Incentive Plan, which was approved by the
shareholders at the 2005 annual meeting. The performance period
for these awards is
2005-2007.
Each participant who received an award is assigned a target cash
incentive, which is a percentage of average annual base salary
during the three years of the performance period. The amount of
the target cash incentive that is paid to a participant with
respect to the three-year performance period is based on the
total shareholder return of SCS Transportation compared to the
total shareholder return of 15 peer companies as follows:
|
|
|
|
|
If SCS Transportations
Total Shareholder Return Over the
|
|
Then the Percentage of Target
Cash
|
|
Performance Period as Compared
to Peer Companies
|
|
Incentive Payable to Participant
is
|
|
|
Ranks 4th or higher
|
|
|
200
|
%
|
Ranks 5th
|
|
|
175
|
%
|
Ranks 6th
|
|
|
150
|
%
|
Ranks 7th
|
|
|
125
|
%
|
Ranks 8th
|
|
|
100
|
%
|
Ranks 9th
|
|
|
81
|
%
|
Ranks 10th
|
|
|
63
|
%
|
Ranks 11th
|
|
|
44
|
%
|
Ranks 12th
|
|
|
25
|
%
|
Ranks < 12th
|
|
|
0
|
%
|
If the total shareholder return of SCS Transportation for the
three-year period is negative, no payouts are made under the
award. Payouts are made in cash at the end of the three-year
performance period.
Because the amount of an executives payout is based on the
Companys total shareholder return compared to that of
members of a peer group over a three-year period, the exact
amount of the payout (if any) cannot be determined at this time.
The following table describes the long-term incentive grants
made to the Named Executive Officers during 2005.
Mr. Karvois long-term incentive for
2005-2007
terminated in connection with his separation from the Company.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares,
|
|
|
Performance or Other Period
|
|
Name
|
|
Units or Other Rights
(#)
|
|
|
Until Maturation or
Payout
|
|
|
Herbert A. Trucksess, III
|
|
|
(1
|
)
|
|
|
2005 - 2007
|
|
Richard D. ODell
|
|
|
(2
|
)
|
|
|
2005 - 2007
|
|
David H. Gorman
|
|
|
(3
|
)
|
|
|
2005 - 2007
|
|
James J. Bellinghausen
|
|
|
(4
|
)
|
|
|
2005 - 2007
|
|
David J. Letke
|
|
|
(4
|
)
|
|
|
2005 - 2007
|
|
Mark H. Robinson
|
|
|
(5
|
)
|
|
|
2005 - 2007
|
|
|
|
|
(1) |
|
With respect to Mr. Trucksess, the target payout percentage
is 70% of average base salary over the performance period. |
|
(2) |
|
With respect to Mr. ODell, the target payout
percentage is 60% of average base salary over the performance
period. |
|
(3) |
|
With respect to Mr. Gorman, the target payout percentage is
44% of average base salary over the performance period. |
|
(4) |
|
With respect to Mr. Bellinghausen and Mr. Letke, the
target payout percentage is 40% of average base salary over the
performance period. |
|
(5) |
|
With respect to Mr. Robinson the target payout percentage
is 37% of average base salary over the performance period. |
20
RETIREMENT
PLANS
Defined
Contribution Plans
SCS Transportation and its subsidiaries sponsor defined
contribution retirement plans that contain provisions for cash
or deferred arrangements under Section 401(k) of the
Internal Revenue Code. The arrangements allow eligible employees
to contribute a percentage of annual compensation, before
federal income taxes, to the plans. For 2005, the maximum annual
employee contribution was $14,000 of eligible compensation, not
to exceed $210,000. In addition, a participant who is at least
age 50 or attains age 50 during the year may elect a
catch-up
contribution of up to $4,000.
To encourage plan participation, SCS Transportation matches
employee contributions at the rate of 50 percent up to a
maximum employee contribution of 6 percent of annual
compensation. Under the Saia Motor Freight Line, Inc.
(Saia) plan, matching company contributions are
vested immediately. Under the Jevic Transportation, Inc.
(Jevic) plan, matching company contributions vest
progressively over a six-year period unless termination is the
result of death or disability in which case the matching company
contributions are 100 percent vested.
A participant may choose to invest his or her account balance
among one or a combination of mutual funds that are valued on a
daily basis. SCS Transportation stock is not an available
investment option under either plan.
Account balances become distributable to the participant at the
cessation of employment, retirement on or after age 65 or
death. Participants have various options available to them as to
the timing and method of distribution.
The Named Executive Officers participate in their respective
company plans and the executive officers of SCS Transportation
are eligible to participate in the Saia plan. The amounts which
the Named Executive Officers have chosen to contribute to the
defined contribution plans are included in the salary column of
the Summary Compensation Table and the matching contributions
are included in the All Other Compensation column.
Non-Qualified
Deferred Compensation Plan
SCS Transportation maintains a non-qualified deferred
compensation plan, titled the SCST Executive Capital
Accumulation Plan. The officers of SCS Transportation, Saia and
Jevic are eligible to participate in the plan.
Annually, each company contributes an amount equal to
5 percent of each participants base salary and annual
incentive plan payments to the plan. In addition, to the extent
a participants contribution to their respective 401(k)
plan is limited under restrictions placed on Highly
Compensated Employees under ERISA, the participant may
elect to contribute the limited amount to the Capital
Accumulation Plan. To the extent each company was unable to
match participant contributions under the 401(k) plan because of
the ERISA limitations, the matching contributions will be made
by each company to the Capital Accumulation Plan.
The plan also allows the participant to make an elective
deferral each year of up to 50 percent of base salary or
100 percent of any annual incentive plan payment. The
participant must irrevocably elect the elective deferral on or
before June 30 of the year preceding the year for which
compensation is being deferred.
The plan is designed to provide the same investment options to
participants as are available under their respective 401(k)
plans, except that participants may also elect to invest in SCS
Transportation stock under the SCST Executive Capital
Accumulation Plan. Participants may elect to transfer balances
between investment options, other than SCS Transportation stock,
without restriction at any time throughout the year.
Plan balances become distributable to the participant upon
termination of employment. In order to be eligible to receive
payment of the 5 percent annual company contribution, the
participant must have been employed by SCS Transportation or an
affiliated company, including service with Yellow Corporation
prior to
21
the spin-off of SCS Transportation from Yellow Corporation, for
a period of at least five years from the date of contribution,
unless termination is the result of disability or death.
If a participant is terminated for cause, as defined under the
applicable plan, all amounts plus investment earnings
attributable to the 5 percent annual company contribution
are forfeited.
EMPLOYMENT
CONTRACTS AND
CHANGE-IN-CONTROL
ARRANGEMENTS
Employment
Contracts
SCS Transportation has entered into an employment agreement with
Herbert A. Trucksess, III. SCS Transportation and Saia
Motor Freight Line, Inc., a wholly owned subsidiary of SCS
Transportation, entered into an employment agreement with
Richard D. ODell. The terms and conditions of the
employment agreements with these officers are summarized below.
Term. The employment agreement with
Mr. Trucksess is for three years and the employment
agreement with Mr. ODell is for two years. Each
agreement was entered into in November 2002 with the term
renewing daily.
Compensation. During the employment
period, the executive officers (i) receive a base salary
(which shall be reviewed annually but shall at no time during
the term of the agreement be decreased from the rate then in
effect); (ii) participate in a bonus program for which the
criteria and parameters for payment are determined annually by
the Compensation Committee of the Board of Directors; and
(iii) participate in employee benefit plans made available
by SCS Transportation to its executives from time to time.
Mr. Trucksess receives a supplemental retirement benefit,
reduced by amounts received from the SCST Executive Capital
Accumulation Plan, that is intended to provide
Mr. Trucksess with approximately the difference between the
supplemental retirement benefits that he would have received
under his previous employment contract with his former employer
(Yellow Corporation now YRC Worldwide Inc.), had
Mr. Trucksess continued his employment with Yellow
Corporation, and the expected actual retirement benefits
Mr. Trucksess will be entitled to from Yellow Corporation.
Mr. Trucksess supplemental retirement benefit will
generally be computed using 16 years of credit service plus
his actual combined service at SCS Transportation and Yellow
Corporation (approximately 12 years at December 31,
2005).
Pursuant to his employment contract, at age 65,
Mr. Trucksess will receive an annual pension benefit
amounting to (a) one and three sevenths percent of his
final average annual compensation paid in the five highest
consecutive years of his last 10 consecutive years of combined
employment with SCS Transportation and Yellow Corporation,
multiplied by his total combined years of employment with SCS
Transportation and Yellow Corporation, reduced by (b) one
and three sevenths percent of his primary Social Security
entitlement at retirement, multiplied by his total combined
years of employment with SCS Transportation and Yellow
Corporation, such amount further reduced by the benefits under
the Yellow Corporation qualified and nonqualified pension plans
and the SCS Transportation nonqualified plan attributable to SCS
Transportations contributions. His total combined years of
employment with SCS Transportation and Yellow Corporation is
computed by adding (a) his actual years and months of
service with SCS Transportation and Yellow Corporation from
June 1, 1994 through the date of his termination and
(b) 16 years and (c) one-third of [the sum of
(a) his actual years and months of service with SCS
Transportation and Yellow Corporation from June 1, 1994
through the date of his termination and (b) 16 years,
minus (c) 17.95 years]. The following table sets forth
the gross annual benefits (single life at age 65), before
deduction of the applicable primary Social Security offset
amount and deduction of amounts contributed by SCS
Transportation to Mr. Trucksess 401(k)
22
and SCST Executive Capital Accumulation Plan accounts, payable
to Mr. Trucksess upon retirement under the SCS
Transportation nonqualified plan and the SCS Transportation
employment agreement.
PENSION
VALUE TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of Service(2)
|
|
Eligible
Remuneration(1)
|
|
|
30
|
|
|
35
|
|
|
40
|
|
|
$
|
500,000
|
|
|
$
|
59,800
|
|
|
$
|
95,500
|
|
|
$
|
131,200
|
|
|
550,000
|
|
|
|
81,200
|
|
|
|
120,500
|
|
|
|
159,800
|
|
|
600,000
|
|
|
|
102,600
|
|
|
|
145,500
|
|
|
|
188,400
|
|
|
650,000
|
|
|
|
124,100
|
|
|
|
170,500
|
|
|
|
216,900
|
|
|
700,000
|
|
|
|
145,500
|
|
|
|
195,500
|
|
|
|
245,500
|
|
|
750,000
|
|
|
|
166,900
|
|
|
|
220,500
|
|
|
|
274,100
|
|
|
800,000
|
|
|
|
188,400
|
|
|
|
245,500
|
|
|
|
302,600
|
|
|
850,000
|
|
|
|
209,800
|
|
|
|
270,500
|
|
|
|
331,200
|
|
|
900,000
|
|
|
|
231,200
|
|
|
|
295,500
|
|
|
|
359,800
|
|
|
950,000
|
|
|
|
252,600
|
|
|
|
320,500
|
|
|
|
388,400
|
|
|
1,000,000
|
|
|
|
274,100
|
|
|
|
345,500
|
|
|
|
416,900
|
|
|
|
|
(1) |
|
Eligible Remuneration as used in this table is defined as final
average covered compensation (salary and annual bonus) for the
five highest consecutive years of Mr. Trucksess last
ten consecutive years of participation preceding termination of
employment under the agreements. |
|
(2) |
|
Years of Service is computed by adding (a) his actual years
and months of service with SCS Transportation and Yellow
Corporation from June 1, 1994 through the date of his
termination and (b) 16 years and (c) one-third of
[the sum of (a) his actual years and months of service with
SCS Transportation and Yellow Corporation from June 1, 1994
through the date of his termination and (b) 16 years,
minus (c) 17.95 years] The estimated annual benefit
Mr. Trucksess is entitled to receive from Yellow
Corporation at age 65 is $154,500. |
Termination. Each employment agreement
terminates immediately upon the executive officers death.
The employer may terminate the executives employment
agreement in the event of the permanent and total disability of
the executive or for cause. Each executive officer may terminate
his employment at any time by providing 30 days
notice to the employer, in which case the executive shall
receive base salary to the date of termination and all
outstanding stock options held by the executive shall be
forfeited.
Benefits for Qualifying Terminations. A
Qualifying Termination is defined as a termination
by the employer for any reason other than for cause, disability
or death. A Qualifying Termination is also deemed to
occur if the executive terminates his agreement for good
reason (principally relating to assignment of duties
inconsistent with the officers position, reductions in
compensation or certain employment transfers). In addition, a
Qualifying Termination is deemed to occur if the
executive resigns or is terminated within two years after a
change of control.
In the event of a Qualifying Termination: (i) the
executive officer will receive a lump sum cash payment equal to
three times the annual rate of base compensation in the case of
Mr. Trucksess and two times the annual rate of base
compensation in the case of Mr. ODell; (ii) the
executive officer will receive a pro rated target bonus based on
the actual portion of the fiscal year elapsed prior to the
termination of the executives employment;
(iii) beginning on the date of the executives
termination of employment, the executive (and spouse if
applicable) shall remain covered under the employee benefit
plans in which he participated prior to termination of
employment for 36 months with respect to Mr. Trucksess
and for 24 months with respect to Mr. ODell; and
(iv) all outstanding stock options held by the executive
officer at the time of termination shall vest and remain
exercisable for three years in the case of Mr. Trucksess
and two years in the case of Mr. ODell. In addition,
in the event of a Qualifying Termination of Mr. Trucksess,
he will become eligible to receive the supplemental retirement
benefits referred to above.
23
SCS Transportation agrees to pay any taxes incurred by the
officer for any payment, distribution or other benefit
(including any acceleration of vesting of any benefit) received
or deemed received by the officer under the employment agreement
that triggers the excise tax imposed by Section 4999 of the
Internal Revenue Code.
Under the employment agreements, each executive officer has
agreed that, during the period of employment and for the
two-year period following his termination, he or his affiliates
will not engage (whether as owner, operator, manager, employee,
officer, director, consultant, advisor, representative or
otherwise), directly or indirectly, in any endeavor, activity or
business that competes with SCS Transportation or any of its
affiliates and he will not solicit for employment or hire any
employees of the employer or its affiliates or divert or attempt
to divert from the employer any business with any customer or
account of the employer.
Change of
Control Agreements
Each of the Named Executive Officers in the Summary Compensation
Table (other than Mr. Karvois who is no longer employed by
the Company) is party to an Executive Severance Agreement. In
the event of a Change of Control of SCS
Transportation followed within two years by (i) the
termination of the executives employment for any reason
other than death, disability, retirement or cause or
(ii) the resignation of the executive due to an adverse
change in title, authority or duties, a transfer to a new
location, a reduction in salary, or a reduction in fringe
benefits or annual bonus below a level consistent with SCS
Transportations practice prior to a Change of Control, the
Executive Severance Agreements provide that the executive shall
(i) be paid a lump sum cash amount equal to the sum of two
times (except for Mr. Trucksess for which the computation
is three times) the executives highest compensation
(salary plus bonus) for any consecutive 12 month period
within the previous three years; and (ii) remain eligible
for coverage under applicable medical, life insurance and
long-term disability plans for two years (three years in the
case of Mr. Trucksess) following termination. (In the case
of Mr. Trucksess and Mr. ODell, payments are
only to the extent that they would exceed payments under the
change of control provisions of their employment agreements.)
SCS Transportation agrees to pay any taxes incurred by the
officer for any payment, distribution or other benefit
(including any acceleration of vesting of any benefit) received
or deemed received by the officer under the Executive Severance
Agreement or otherwise that triggers the excise tax imposed by
Section 4999 of the Internal Revenue Code.
For the purpose of the Agreements, a Change of
Control will be deemed to have taken place if: (i) a
third person, including a group as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934,
purchases or otherwise acquires shares of SCS Transportation and
as a result thereof becomes the beneficial owner of shares of
SCS Transportation having 20% or more of the total number of
votes that may be cast for the election of directors of SCS
Transportation; or (ii) as the result of, or in connection
with any cash tender or exchange offer, merger or other business
combination, or contested election, or any combination of the
foregoing transactions, the directors then serving on the Board
of Directors cease to constitute a majority of the Board of
Directors of SCS Transportation or any successor to SCS
Transportation.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Linda J.
French, Bjorn E. Olsson and Douglas W. Rockel. None of these
individuals is or has ever been an officer or employee of SCS
Transportation. During fiscal 2005, no executive officer of SCS
Transportation served as a director of any corporation for which
any of these individuals served as an executive officer, and
there were no other Compensation Committee interlocks with the
companies with which these individuals or SCS
Transportations other directors are affiliated.
24
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee operates pursuant to a written charter,
which has been approved and adopted by the Board of Directors
and is reviewed and reassessed annually by the Audit Committee.
The Committee charter is included within this proxy as
Exhibit A and is available within the corporate governance
section of the Companys website at
www.scstransportation.com. For the year ended
December 31, 2005 and as of the date of the adoption of
this report, the Audit Committee was comprised of three
directors who met the independence and experience requirements
of The Nasdaq Stock Market. Messrs. Olson, Holland and
Olsson are audit committee financial experts as
defined by the applicable rules of the Securities and Exchange
Commission.
The Audit Committee oversees SCS Transportations financial
reporting process on behalf of the Board of Directors and
oversees the entire audit function, including the selection of
independent auditors. Management has the primary responsibility
for the financial statements and the financial reporting
process, including the systems of internal controls and the
companys legal and regulatory compliance. In fulfilling
its oversight responsibilities, the Audit Committee reviewed and
discussed with management the audited financial statements for
the year ended December 31, 2005, including a discussion of
the acceptability and quality of the accounting principles, the
reasonableness of significant accounting judgments and critical
accounting policies and estimates, the clarity of disclosures in
the financial statements, and managements assessment and
report on internal control over financial reporting. The Audit
Committee also discussed with the Chief Executive Officer and
Chief Financial Officer their respective certifications with
respect to SCS Transportations Annual Report on
Form 10-K
for the year ended December 31, 2005.
The Audit Committee reviewed with the independent auditors, who
are responsible for expressing opinions on (i) the
conformity of those audited financial statements with generally
accepted accounting principles, (ii) managements
assessment of internal controls over financial reporting, and
(iii) the effectiveness of internal controls over financial
reporting, their judgments as to the acceptability and quality
of SCS Transportations accounting principles and such
other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards, including
those matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees. In
addition, the Audit Committee has received the written
disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has
discussed those disclosures and other matters relating to
independence with the auditors.
The Audit Committee discussed with SCS Transportations
internal and independent auditors the overall scope and plans
for their respective audits. The Audit Committee meets with the
internal auditor and independent auditors, with and without
management present, to discuss the results of their examinations
of SCS Transportations internal controls, including
controls over the financial reporting process, and the overall
quality of SCS Transportations financial reporting.
Members of the Audit Committee rely without independent
verification on the information provided to them and on the
representations made by management and the independent auditors.
In reliance on the reviews and discussions with management and
with the independent auditors referred to above, and the receipt
of an unqualified opinion from KPMG LLP dated February 17,
2006 regarding the audited financial statements of SCS
Transportation for the year ended December 31, 2005, as
well as the opinions of KPMG LLP on managements assessment
of internal controls over financial reporting and on the
effectiveness of internal controls over financial reporting, the
Audit Committee recommended to the Board of Directors (and the
Board approved) that the audited financial statements be
included in the Annual Report on
Form 10-K
for the year ended December 31, 2005 for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE MEMBERS
James A. Olson, Chairman
John J. Holland
Bjorn E. Olsson
25
The foregoing Stock Performance Graph, Report on Executive
Compensation of the Compensation Committee of the Board of
Directors, and Report of the Audit Committee of the Board of
Directors shall not be deemed to be soliciting material or be
incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent SCS Transportation specifically
incorporates this information by reference, and shall not
otherwise be deemed to be filed with the Securities and Exchange
Commission under such Acts.
PROPOSAL 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
Appointment
of Auditors
KPMG LLP audited SCS Transportations annual financial
statements for the fiscal year ended December 31, 2005. The
Audit Committee has appointed KPMG LLP to be SCS
Transportations independent auditors for the fiscal year
ending December 31, 2006. The shareholders are asked to
ratify this appointment at the annual meeting. A representative
of KPMG LLP will be present at the meeting to respond to
appropriate questions and to make a statement if they so desire.
Auditors
Fees
KPMG LLP billed SCS Transportation the following amounts for
services provided during fiscal 2004 and 2005:
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
Audit Fees
|
|
$
|
811,575
|
*
|
|
$
|
785,040
|
*
|
Audit-Related Fees
|
|
|
28,452
|
|
|
|
26,687
|
|
Tax Fees
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
840,027
|
|
|
$
|
811,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Audit fees in 2004 include additional audit fees paid in 2005
subsequent to the publication of the proxy statement for the
annual meeting of shareholders in 2005. Audit fees in 2005
include approximately $28,000 of estimated fees because final
terms and fees for certain audit services have not been
finalized. |
|
|
|
|
|
Audit Fees. This category includes the fees
and
out-of-pocket
expenses for the audit of SCS Transportations annual
financial statements and review of SCS Transportations
quarterly reports.
|
|
|
|
Audit-Related Fees. This category consists of
fees for assurance and related services reasonably related to
the performance of the audit or the review of SCS
Transportations financial statements, not otherwise
reported under Audit Fees.
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|
|
|
Tax Fees. This category consists of fees for
tax compliance, tax advice and tax planning.
|
|
|
|
All Other Fees. This category consists of fees
for other non-audit services.
|
The Audit Committee has a written policy governing the
engagement of SCS Transportations independent auditors for
audit and non-audit services. Under this policy, the Audit
Committee is required to pre-approve all audit and non-audit
services performed by the Companys independent auditor to
assure that the provision of such services does not impair the
auditors independence. Under the Audit Committee policy,
the independent auditor may not perform any non-audit service
which independent auditors are prohibited from performing under
the rules and regulations of the Securities and Exchange
Commission or the Public Company Accounting Oversight Board. The
Audit Committee may delegate its pre-approval authority to one
or more of its members, but not to management. The member or
members to whom such authority is delegated shall report any
pre-approval decisions to the Audit Committee at its next
scheduled meeting.
26
At the beginning of each fiscal year, the Audit Committee
reviews with management and the independent auditor the types of
services that are likely to be required throughout the year.
Those services are comprised of four categories: audit services,
audit-related services, tax services and all other permissible
services. The independent auditor provides for each proposed
service documentation regarding the specific services to be
provided. At that time, the Audit Committee pre-approves a list
of specific audit related services that may be provided within
each of these categories, and sets fee limits for each specific
service or project. Management is then authorized to engage the
independent auditor to perform the pre-approved services as
needed throughout the year, subject to providing the Audit
Committee with regular updates. The Audit Committee reviews all
billings submitted by the independent auditor on a regular basis
to ensure that their services do not exceed pre-defined limits.
The Audit Committee must review and approve in advance, on a
case-by-case
basis, all other projects, services and fees to be performed by
or paid to the independent auditor. The Audit Committee also
must approve in advance any fees for pre-approved services that
exceed the pre-established limits, as described above. All audit
and audit-related services performed in 2005 were approved in
advance by the Audit Committee.
Vote
Required For Ratification
The Audit Committee was responsible for selecting SCS
Transportations independent auditors for fiscal year 2006.
Accordingly, shareholder approval is not required to appoint
KPMG LLP as SCS Transportations independent auditors for
fiscal year 2006. The Board of Directors believes, however, that
submitting the appointment of KPMG LLP to the shareholders for
ratification is a matter of good corporate governance. The Audit
Committee is solely responsible for selecting SCS
Transportations independent auditors. If the shareholders
do not ratify the appointment, the Audit Committee will review
its future selection of independent auditors.
The ratification of the appointment of KPMG LLP as SCS
Transportations independent auditors requires the
affirmative vote of a majority of the shares present at the
meeting in person or by proxy and entitled to vote.
YOUR
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE RATIFICATION OF KPMG LLP AS INDEPENDENT
AUDITORS FOR 2006.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires directors and certain officers of SCS
Transportation and persons who own more than ten percent of SCS
Transportations common stock to file with the Securities
and Exchange Commission initial reports of beneficial ownership
(Form 3) and reports of subsequent changes in their
beneficial ownership (Form 4 or Form 5) of SCS
Transportations common stock. Such directors, officers and
greater-than-ten-percent
shareholders are required to furnish SCS Transportation with
copies of the Section 16(a) reports they file. The
Securities and Exchange Commission has established specific due
dates for these reports, and SCS Transportation is required to
disclose in this proxy statement any late filings or failures to
file.
Based solely upon a review of the copies of the
Section 16(a) reports (and any amendments thereto)
furnished to SCS Transportation and written representations from
certain reporting persons that no additional reports were
required, SCS Transportation believes that its directors,
reporting officers and
greater-than-ten-percent
shareholders complied with all these filing requirements for the
fiscal year ended December 31, 2005, with the exception of
two instances of inadvertent late filings for the following
stock transactions by Directors in 2005: a purchase and sale of
shares of common stock by then-Director Klaus E. Agthe on
April 14, 2005 and April 18, 2005 reported on
Form 4 on May 2, 2005; and the purchase of shares of
common stock by Director Linda J. French on May 6, 2005,
reported on Form 4 on June 10, 2005.
27
SIGNIFICANT
SHAREHOLDERS
The following table lists certain persons known by SCS
Transportation to own beneficially, as of February 21,
2006, more than five percent of SCS Transportations common
stock.
|
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|
|
|
|
|
|
|
Name and Address of Beneficial
Owner
|
|
Number of Shares
|
|
|
Percent of Class(1)
|
|
|
Barclays Global Investors, N.A.
and related entities as a group(2)
|
|
|
|
|
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|
|
45 Fremont Street, 17th Floor
|
|
|
|
|
|
|
|
|
San Francisco, CA 94105
|
|
|
1,821,569
|
(3)
|
|
|
12.45
|
%
|
Ramius Capital Group, LLC and
related entities as a group(4)
|
|
|
|
|
|
|
|
|
666 Third Avenue
|
|
|
|
|
|
|
|
|
New York, NY 10017
|
|
|
1,431,663
|
(5)
|
|
|
9.78
|
%
|
Dimensional Fund Advisors,
Inc.(6)
|
|
|
|
|
|
|
|
|
1299 Ocean Avenue, 11th Floor
|
|
|
|
|
|
|
|
|
Santa Monica, CA 90401
|
|
|
1,317,823
|
|
|
|
9.01
|
%
|
Hotchkis and Wiley Capital
Management, LLC
|
|
|
|
|
|
|
|
|
725 South Figueroa Street,
39th Floor
|
|
|
|
|
|
|
|
|
Los Angeles, CA 90017
|
|
|
930,703
|
(7)
|
|
|
6.36
|
%
|
Goldman Sachs Asset Management,
L.P.
|
|
|
|
|
|
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|
|
32 Old Slip
|
|
|
|
|
|
|
|
|
New York, NY 10005
|
|
|
737,260
|
(8)
|
|
|
5.04
|
%
|
|
|
|
(1) |
|
For each person or group, the percentage ownership was
determined by dividing the number of shares shown in the table
by 14,632,162 (the number of shares of our common stock
outstanding as of February 21, 2006). |
|
(2) |
|
Based on the Schedule 13G Information Statement described
in Note 3, the group (the Barclays Group)
consists of the following entities at each respective address,
with the number of shares owned by each entity within the group
noted thereafter: (i) Barclays Global Investors, N.A.; 45
Fremont Street, San Francisco, CA 94105;
1,645,657 shares; and (ii) Barclays Global
Fund Advisors; 45 Fremont Street, San Francisco, CA
94105; 175,912 shares. |
|
(3) |
|
Based on a Schedule 13G Information Statement filed by the
Barclays Group on January 26, 2006. Such Schedule 13G
discloses that Barclays Global Investors, N.A. has sole
dispositive power over 1,645,657 of the shares of common stock
and sole voting power over 1,515,392 of the shares of common
stock. Barclays Global Fund Advisors has sole dispositive
power over 175,912 of the shares of common stock and sole voting
power over 175,558 of the shares of common stock. |
|
(4) |
|
Based on the Schedule 13D Information Statement described
in Note 5, the group (the Ramius Group)
consists of the following entities and persons with the number
of shares owned by each entity within the group noted
thereafter: Starboard Value and Opportunity Master
Fund Ltd. (Starboard); 623,326 shares;
Parche, LLC, 249,636 shares; RCG Ambrose Master Fund, Ltd.
(Ambrose); 87,043 shares; RCG Halifax Fund,
Ltd. (Halifax); 79,589 shares; Ramius Master
Fund, Ltd., 390,069 shares; Admiral Advisors, LLC, may be
deemed the beneficial owner of the shares owned by Starboard and
Parche; Ramius Advisors, LLC, may be deemed the beneficial owner
of the shares owned by Ramius Master Fund, Ltd.; Ramius Capital
Group, LLC, may be deemed the beneficial owner of the shares
owned by Starboard, Parche, Ambrose, Halifax and Ramius Master
Fund, Ltd.; C4S & Co., LLC, may be deemed the
beneficial owner of the shares owned by Starboard, Parche,
Ambrose, Halifax and Ramius Master Fund, Ltd.; Peter A. Cohen
may be deemed the beneficial owner of the shares owned by
Starboard, Parche, Ambrose, Halifax and Ramius Master Fund,
Ltd.; Morgan B. Stark may be deemed the beneficial owner of the
shares owned by Starboard, Parche, Ambrose, Halifax and Ramius
Master Fund, Ltd.; Jeffrey M. Solomon may be deemed the
beneficial owner of the shares owned by Starboard, Parche,
Ambrose, Halifax and Ramius Master Fund, Ltd.; Thomas W. Strauss
may be deemed the beneficial owner of the shares owned by
Starboard, Parche, Ambrose, Halifax and Ramius Master Fund,
Ltd.; Jeffrey C. Smith, 0 shares; and
Jeffrey C. Ward, 2,000 shares. |
28
|
|
|
(5) |
|
Based on a Schedule 13D Information Statement filed by the
Ramius Group on January 27, 2006. Such Schedule 13D
discloses that Starboard has sole dispositive power and sole
voting power over 623,326 shares; Parche, LLC has sole
dispositive power and sole voting power over
249,636 shares; Ambrose has sole dispositive power and sole
voting power over 87,043 shares; Halifax has sole
dispositive power and sole voting power over 79,589 shares;
Ramius Master Fund, Ltd. has sole dispositive power and sole
voting power over 390,069 shares; Admiral Advisors, LLC has
sole dispositive power and sole voting power over
872,962 shares; Ramius Advisors, LLC has sole dispositive
power and sole voting power over 390,069 shares; Ramius
Capital Group, LLC has sole dispositive power and sole voting
power over 1,429,663 shares; C4S & Co., LLC has
sole dispositive power and sole voting power over
1,429,663 shares; Peter A. Cohen, Morgan B. Stark, Jeffrey
M. Solomon and Thomas W. Strauss have shared dispositive power
and shared voting power over 1,429,663 shares; and Jeffrey
C. Ward has sole dispositive power and sole voting power over
2,000 shares. |
|
(6) |
|
Based on a Schedule 13G Information Statement filed by
Dimensional Fund Advisors, Inc. on February 6, 2006.
Such Schedule 13G discloses that Dimensional
Fund Advisors, Inc. possesses investment
and/or
voting power over 1,317,823 of the shares of common stock that
are owned by funds over which Dimensional Fund Advisors,
Inc. serves as investment advisor and investment manager.
Dimensional Fund Advisors, Inc. serves as investment advisor for
four investment companies and serves as investment manager to
certain other commingled group trusts and separate accounts. |
|
(7) |
|
Based on a Schedule 13G Information Statement filed by
Hotchkis and Wiley Capital Management, LLC on February 14,
2006. Such Schedule 13G discloses that Hotchkis and Wiley
Capital Management, LLC has sole dispositive power over 930,703
of the shares of common stock and sole voting power over 682,803
of the shares of common stock. |
|
(8) |
|
Based on a Schedule 13G Information Statement filed by
Goldman Sachs Asset Management LP on February 8, 2006. Such
Schedule 13G discloses that Goldman Sachs Asset Management
LP has sole dispositive power over 737,260 of the shares of
common stock and sole voting power over 605,313 of the shares of
common stock. |
OTHER
MATTERS
We know of no other business that will be presented at the
meeting. If any other matter properly comes before the
shareholders for a vote at the meeting, however, the proxy
holders will vote your shares in accordance with their best
judgment.
ADDITIONAL
INFORMATION
Proxy
Solicitation
SCS Transportation will bear the entire cost of this proxy
solicitation. In addition to soliciting proxies by this mailing,
we expect that our directors, officers and regularly engaged
employees may solicit proxies personally or by mail, telephone,
facsimile or other electronic means, for which solicitation they
will not receive any additional compensation. SCS Transportation
will reimburse brokerage firms, custodians, fiduciaries and
other nominees for their
out-of-pocket
expenses in forwarding solicitation materials to beneficial
owners upon our request.
Shareholder
Proposals for 2007 Annual Meeting
Any shareholder who intends to present a proposal at the annual
meeting in 2007 must deliver the proposal to SCS
Transportations corporate Secretary at 4435 Main Street,
Suite 930, Kansas City, MO 64111:
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Not later than November 10, 2006, if the proposal is
submitted for inclusion in our proxy materials for that meeting
pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934.
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29
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|
On or after November 10, 2006, and on or before
December 10, 2006, if the proposal is submitted pursuant to
SCS Transportations by-laws, in which case we are not
required to include the proposal in our proxy materials.
|
By order of the Board of Directors,
James J. Bellinghausen
Secretary
30
Exhibit A
SCS
TRANSPORTATION, INC.
AUDIT COMMITTEE CHARTER
Committee
Role
The Audit Committee is a committee of the Board of Directors.
Its primary role is to assist the Board in fulfilling its
oversight responsibilities by reviewing the financial
information, which will be provided to the shareholders and
others, the system of internal controls, which management and
the Board of Directors have established, the audit process and
the Companys legal and regulatory compliance. In doing so,
it is the responsibility of the Audit Committee to provide an
open avenue of communication between the Board of Directors,
management, counsel, other Board committees and advisors, the
internal audit function and the independent (external)
accountants.
Committee
Membership
The Committee shall consist of at least three and no more than
five independent directors that shall be appointed annually by
the Board of Directors on the recommendation of the Nominating
and Governance Committee. The Board of Directors shall appoint
one of the members of the Audit Committee as chairperson.
Independent directors are (consistent with Nasdaq independence
requirements) persons other than an officer or employee of the
Company, who have no relationship to the Company that may
interfere with the exercise of their independent judgment in
carrying out the responsibilities of a director. Committee
members shall have (1) the ability to read and understand
fundamental financial statements, including a companys
balance sheet, income statement, statement of cash flow, and key
performance indicators; and (2) the ability to understand
key business and financial risks and related controls and
control processes. Committee members may enhance their
familiarity with finance and accounting by participating in
educational programs conducted by the Company or an outside
consultant. The Board of Directors will determine whether at
least one member of the Committee qualifies as an audit
committee financial expert in compliance with the criteria
established by the SEC. The existence of such a member,
including his or her name and whether or not he or she is
independent, will be disclosed as required by the SEC. Audit
Committee members shall not simultaneously serve on the audit
committees of more than two other public companies.
Committee
Operating Principles
In carrying out its responsibilities, the Audit Committee
believes its policies and procedures should remain flexible, in
order to best react to changing conditions and to ensure to the
directors and shareholders that the corporate accounting and
reporting practices of the Company are in accordance with all
requirements and are of the highest quality. The Committee shall
fulfill its responsibilities within the context of the following
overriding principles:
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|
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|
Communications The chairperson and other
members of the Committee shall, to the extent appropriate, have
contact throughout the year with senior management, internal
audit, external accountants, and other key Committee advisors,
as applicable, to strengthen the Committees knowledge of
relevant current and prospective business issues.
|
|
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|
Committee Education/Orientation The
Committee, with management, shall develop and participate in a
process for review of important financial and operating topics
that present potential significant risk to the Company.
|
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|
Meeting Scheduling and
Agenda Scheduling of the meetings and
providing the Committee with written agendas for all meetings
shall be the responsibility of the Committee chairperson, with
input from Committee members, management and other key Committee
advisors, as requested.
|
A-1
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|
Committee Expectations and Information
Needs The Committee shall communicate its
expectations and information needs to management, internal
audit, and external parties, including external accountants.
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|
External Resources The Committee shall
have the power to conduct or authorize investigations into
matters within the Committees scope of responsibilities.
The Committee shall have unrestricted access to members of
management and all information relevant to its responsibilities.
The Committee shall be empowered to retain independent counsel,
external accountants, or others to assist it in the conduct of
its duties, as the Committee deems necessary. The Company must
provide appropriate funding, as determined by the Committee, to
compensate the external accountants engaged for the purpose of
rendering an audit report or performing other audit, review or
attest services, to compensate any advisers employed by the
Committee, and to pay ordinary administrative expenses that are
necessary or appropriate in carrying out the Committees
duties.
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|
Committee Meeting Attendees The
Committee shall request members of management, counsel, internal
audit, and external accountants, to participate in Committee
meetings, as necessary, to carry out the Committee
responsibilities. Periodically and at least annually, the
Committee shall meet in private session with only the Committee
members. The Committee shall also meet in executive session
separately with the internal auditor and external accountants,
at least annually. However, either the internal auditor or the
external accountants, or counsel, may, at any time, request a
meeting with the Audit Committee or the Committee chairperson,
with or without management attendance.
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Reporting to the Board of Directors The
Committee, through the Committee chairperson, shall report
Committee actions and recommendations to the full Board.
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|
Audit Committee Charter Annually, the
Committee shall review and reassess the adequacy of this Charter
and recommend any proposed changes to the Board for approval.
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Other Functions The Committee shall
perform such other functions assigned by law, Nasdaq, the
Companys certificate of incorporation or bylaws, or the
Board of Directors.
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|
External Reports The Committee shall
provide for inclusion in the Companys proxy statement or
other SEC filings, any report from the Audit Committee required
by applicable laws and regulations and stating among other
things whether the Audit Committee has:
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|
Reviewed and discussed the audited financial statements with
management.
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|
Discussed with the external accountants the matters required to
be discussed by SAS 61 relating to the conduct of the audit.
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Received disclosures from the external accountants regarding the
accountants independence as required by Independence
Standards Board Standard No. l and discussed with the
accountants their independence.
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|
Recommended to the Board of Directors that the audited financial
statements be included in the Companys Annual Report on
Form 10-K.
|
Meeting
Frequency
The Committee shall meet at least on a quarterly basis.
Additional meetings shall be scheduled as considered necessary
by the Committee or chairperson.
Committees
Relationship with the External Accountants
The Committee shall have the sole authority to appoint (and
recommend that the Board of Directors submit for stockholder
ratification) the external accountants, approve the compensation
of the external accountants, approve the terms of their
engagement, approve any non-audit functions, evaluate whether
the Company should rotate auditors on a regular basis, and
discharge the external accountants. The Audit Committee shall
preapprove all auditing services and permitted non-audit
services (including the fees and
A-2
terms thereof) to be performed by the external accountants,
subject to the de minimis exceptions for non-audit
services described in Section 10A(i)(1)(B) of the Exchange
Act which are approved by the Committee prior to the completion
of the audit.
The external accountants, in their capacity as independent
public accountants, shall report directly to the Audit Committee.
The Committee shall annually review (1) the experience and
qualifications of the senior members of the external accounting
team; (2) the scope and approach of the annual audit;
(3) a description of the quality control procedures the
external accounting firm has established; (4) a report from
the external accountants describing any material issues raised
by the firms most recent peer review or internal quality
control review, or by any inquiry or investigation conducted by
governmental or professional authorities during the preceding
five (5) years with respect to independent audits carried
out by the firm and the steps taken to deal with any reported
problems; (5) any issue involving a disagreement with
management; and (6) the Companys application of
accounting principles where the Companys external
accountants team consulted with specialty partners of the
external accountants.
The Committee shall annually review the external
accountants identification of issues and business and
financial risks and exposures and their assessment of
quantitative and qualitative factors used in concluding the
Companys financial statements are in accordance with
generally accepted accounting principles.
The Committee shall annually review the performance (including
the effectiveness, objectivity, and independence) of the
external accountants. The Committee shall ensure receipt of a
formal written statement from the external accountants
consistent with the standards set by the Independence Standards
Board. Additionally, the Committee shall discuss with the
external accountants any relationships or services that may
affect the external accountants objectivity or
independence, including a review of the nature of all services
provided and related fees charged by the external accountants.
If the Committee is not satisfied with the external
accountants assurances of independence, it shall take or
recommend to the full Board appropriate action to ensure the
independence of the external accountants.
If the external accountant identifies significant issues
relative to the overall Board responsibility that have been
communicated to management but, in their judgment, have not been
adequately addressed, they should communicate these issues to
the Committee chairperson.
The external accountants shall be instructed to communicate
directly to the Audit Committee any serious difficulties or
disputes with management and it is the responsibility of the
Audit Committee to resolve disputes regarding financial
reporting. The external accountant is ultimately responsible to
the Audit Committee of the Company.
The external accountants and management shall discuss with the
Committee the appropriateness of accounting principles and
financial disclosure practices used and particularly about the
degree of aggressiveness or conservatism of the Companys
accounting principles and underlying estimates.
The Committee shall also determine, in regards to new
transactions or events, the external accountants reasoning
for the appropriateness of the accounting principles and
disclosure practices adopted by management.
The Committee shall obtain from the external accountants
assurance that Section 10A of the Private Securities
Litigation Reform Act of 1995 has not been implicated.
Committees
Relationship with the Internal Auditor
The internal audit function shall be responsible to the Board of
Directors through the Committee.
The Committee should annually:
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|
Evaluate the internal audit process for establishing the annual
internal audit plan and the focus on risk.
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|
Consider the audit scope and role of the internal audit function.
|
A-3
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|
Review and evaluate the scope, risk assessment and nature of the
internal audit plan and any subsequent changes, including
whether or not the internal audit plan is sufficiently linked to
the Companys overall business objectives and
managements success and risk factors.
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|
Consider and review with the internal auditor and management:
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Significant findings during the year and managements
responses thereto, including the timetable for implementation of
the recommendations to correct weaknesses in internal controls.
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|
Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access
to required information.
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Any changes required in the planned scope of their audit plan.
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The internal audit budget.
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The internal audit charter.
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|
The internal auditors performance and changes in internal
audit leadership
and/or key
financial management, including determining that the
independence and objectivity of the internal auditor is
maintained.
|
If the internal auditor identifies significant issues relative
to the overall Board responsibility that have been communicated
to management but, in their judgment, have not been adequately
addressed, they should communicate these issues to the Committee
chairperson.
Primary
Committee Responsibilities
The
Committee should:
Internal Controls and Risk Management
|
|
|
|
|
Review the Companys process for assessing significant
risks or exposures and the steps management has taken to
minimize such risks to the Company.
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Consider and review with management and the external accountants:
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The effectiveness of or weaknesses in the Companys
internal financial and accounting controls, including
computerized information system controls and security in the
overall control environment.
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Any related significant findings of the external accountants and
internal auditor together with managements responses
thereto, including the timetable for implementation of
recommendations to correct weaknesses in internal controls.
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Review the Companys policy on retention of the external
accountants for any non-audit services and the fee for such
services.
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Correspondence
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Review with management and the external accountants any
correspondence with regulators or government agencies and any
employee complaints or published reports that raise material
issues regarding the Companys financial statements,
accounting policies, or internal controls.
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Regulatory and accounting requirements
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Review with management and the external accountants the effect
of regulatory changes, significant new or proposed accounting
guidelines and off-balance sheet structures on the
Companys financial statements.
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Review and approve all related party transactions as identified
by management and the external accountants.
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Recommend guidelines to the Board of Directors for the hiring by
the Company of employees of the Companys external
accountants.
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Financial Reporting
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Review filings with the SEC and other published financial
documents containing the Companys financial statements,
including annual and interim reports, press releases and
statutory filings.
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A-4
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Review key financial statement risks, issues and disclosures and
their impact or potential effect on reported financial
information with management and external accountants.
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Review the effect of alternative methods of accounting under
generally accepted accounting principles on the Companys
reported results.
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Review with management and the external accountants at the
completion of the annual examination:
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The Companys annual financial statements and related
footnotes.
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The results of external accountants audit of the financial
statements and their report thereon.
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Any significant changes required in the external
accountants audit plan.
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The significant estimates and judgments underlying the financial
statements.
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Managements assessment of the effectiveness of the
Companys internal control over financial reporting,
together with a summary of any significant deficiencies and
material weaknesses identified.
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The external accountants evaluation of managements
assessment and the external accountants opinion on the
effectiveness of internal controls over financial reporting,
together with a summary of any significant deficiencies and
material weaknesses identified.
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Other matters related to the conduct of the audit, which are to
be communicated to the Committee under generally accepted
auditing standards.
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Compliance with Laws and Regulations
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Review with management and external accountants the
Companys process for determining risks and exposures from
asserted and unasserted litigation and claims and from
noncompliance with laws and regulations.
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Review with the Companys general counsel, external
accountants and others any legal, tax or regulatory matters that
may have a material impact on Company operations and the
financial statements, related Company compliance policies, and
programs and reports received from regulators.
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Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and the
confidential, anonymous submissions by employees of concerns
regarding questionable accounting or auditing matters.
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Compliance with Codes of Ethical Conduct
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Review and assess the Companys processes for administering
a code of ethical conduct, including conflict of interest
policies and identification and reporting of related party
transactions.
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Review with the internal auditors and external accountants the
results of their review of the Companys monitoring of
compliance with the Companys code of conduct, including
compliance with the Foreign Corrupt Practices Act.
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Review policies and procedures with respect to officers
expense accounts and perquisites, including their use of
corporate assets, and consider the results of any review of
these areas by the internal auditors
and/or
external accountants.
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While the Audit Committee has the responsibilities and powers
set forth in this charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the
Companys financial statements are complete and accurate
and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the
external accountants.
A-5
UMB BANK SECURITIES TRANSFER
DIVISION
P.O. BOX 419064
KANSAS CITY, MO 64141-6064
VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by SCS Transportation, Inc. in mailing proxy materials, you can consent
to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up
for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you
agree to receive or access shareholder communications electronically in future years.
VOTE BY PHONE 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to SCS
Transportation, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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SCSTR1
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KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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DETACH AND RETURN THIS PORTION ONLY |
SCS TRANSPORTATION, INC.
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Vote on Directors |
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1.
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Elect three directors, each for a
term of three years: |
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Nominees: |
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01) Herbert A. Trucksess, III
02) James A. Olson
03) Jeffrey C. Ward |
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Vote on Proposal |
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For |
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Against |
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Abstain |
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2.
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Ratify the appointment of KPMG LLP as the
Companys independent auditors for 2006.
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Please sign as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. |
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For address changes and/or comments, please check
this box and write them on the back where indicated |
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Yes
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No |
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Please indicate if you plan to attend this meeting |
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HOUSEHOLDING
ELECTION - Please indicate if you
consent to receive certain future investor
communications in a single package per household |
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual
nominee, mark For All Except and write the
nominees name on the line below. |
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your Internet or telephone vote authorizes the named proxies to vote these shares in the same manner
as if you marked, signed and returned your proxy card.
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
You can view the Annual Report and Proxy Statement
on the Internet at www.scstransportation.com
SCS TRANSPORTATION, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS, APRIL 20, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints DOUGLAS W. ROCKEL, JOHN J. HOLLAND and JAMES J. BELLINGHAUSEN,
and each of them, with full power of substitution, proxies of the undersigned to vote the shares of
Common Stock of SCS Transportation, Inc. standing in the name of the undersigned or with respect to
which the undersigned is entitled to vote, at the Annual Meeting of Shareholders of SCS
Transportation, Inc., to be held at the Marriott Country Club Plaza, 4445 Main Street, Kansas City,
Missouri, on Thursday, April 20, 2006, at 10:00 a.m., and at any adjournments thereof. Without
limiting the authority granted herein, the above named proxies are expressly authorized to vote as
directed by the undersigned as to those matters set forth on the reverse side hereof and in their
discretion on all other matters that are properly brought before the Annual Meeting.
If more than one of the above named proxies shall be present in person or by substitution at such
meeting or at any adjournment thereof, the majority of said proxies so present and voting, either
in person or by substitution, shall exercise all of the powers hereby given. The undersigned hereby
revokes any proxy heretofore given to vote at such meeting.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned
shareholder. If no choice is specified, this proxy will be voted FOR the nominees named hereon,
and FOR proposal 2.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be marked, dated and signed, on the other side)