EXHIBIT 10.12

 

Summary of Compensation Arrangements for Directors,

Chief Executive Officer, and Certain Other Executive Officers

 

Overnite Corporation (“Overnite”) does not have any employment agreements with
its directors or employees. Provided below is a summary of Overnite’s
compensation for its directors, chief executive officer, and certain other
executive officers as of January 27, 2005.

 

Summary of Directors’ Compensation

 

Effective as of January 1, 2005, all non-employee directors receive a retainer
of $55,000 per year. Chairpersons of board committees, other than the
chairperson of the Audit Committee, receive an additional annual retainer of
$10,000, and the chairperson of the Audit Committee receives an additional
annual retainer of $20,000. Half of the retainers are payable in cash and half
in shares of Overnite common stock, unless the director elects to receive more
than half of the retainer in shares of Overnite common stock. On January 27,
2005, each non-employee director received 1,000 shares of restricted stock,
which will vest on January 27, 2008.

 

Employee directors do not receive additional compensation for their service on
the Board of Directors.

 

Summary of Chief Executive Officer’s Compensation

 

Base Salary. Effective as of January 1, 2005, Leo H. Suggs, Overnite’s Chief
Executive Officer (“CEO”), will receive a base salary of $689,000 for 2005.

 

Annual Incentive Award. On January 27, 2005, the Executive Compensation
Committee approved an annual incentive award for 2004 for Mr. Suggs of $775,000
under the Overnite Corporation Executive Incentive Compensation and Deferral
Plan (the “EIP”), payable in cash or deferrable under the EIP. Mr. Suggs
deferred such annual incentive award under the equity swap provisions (the
“Equity Swap Plan”) of the EIP, which allows an executive officer who has
attained age 65 an election to forego all or a portion of his respective
incentive award in exchange for grants of retention stock units equivalent to
133% of the value of the amount foregone, subject to a two-year vesting period.
These retention stock units are valued based on $32.10, the closing price of
Overnite’s common stock on January 27, 2005, the date of the grant. Mr. Suggs
deferred his annual incentive award under the Equity Swap Plan in exchange for
32,111 shares of retention stock units. He is entitled to receive dividend
equivalents on the retention stock units during the vesting period that are paid
at the same rate and time as dividends would have been paid on an equivalent
number of shares of Overnite common stock.

 

The Executive Compensation Committee will consider an annual incentive award for
Mr. Suggs for 2005. In determining annual incentive awards for Mr. Suggs, the
Executive Compensation Committee considers quantitative performance metrics,
including revenue, operating income, net income, operating ratio, and free cash
flow, and qualitative measures, including product quality (on-time service and
cargo claims), ethics/corporate governance, employee relations/morale,
advancement of strategy, and succession planning.

 

Restricted Stock. On January 27, 2005, the Executive Compensation Committee
approved the grant of 5,000 shares of restricted stock to Mr. Suggs pursuant to
the Overnite Corporation Stock Incentive Plan (the “Incentive Plan”). These
shares of restricted stock vest three years from the grant date; provided,
however, these shares of restricted stock shall also fully vest in the event Mr.
Suggs retires on or after January 31, 2007, provided that he remains in the
continuous employ of Overnite until his retirement. Mr. Suggs is entitled to
receive dividends on these shares of restricted stock at the same rate and same
time as dividends would have been paid on all other shares of Overnite common
stock.

 

Long-Term Incentive Program. Mr. Suggs may be able to earn performance shares
and cash awards under Overnite’s Long-Term Incentive Program as described below.

 

Other Compensation Arrangements. Other compensation to Mr. Suggs for 2004
consisted of executive life insurance premiums ($59,771), company-matching
contributions to employee contributions to our 401(k) plans ($20,181),

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Group Term Life ($6,841), and interest earned under the savings plan for
employees of Overnite Transportation ($90). Other perquisites for Mr. Suggs
totaled less than $50,000 and consisted of payments associated with items such
as personal use of company car, country club dues, and financial planning
services.

 

Salary of Other Executive Officer Compensation

 

Base Salaries. Effective as of January 1, 2005, the executive officers (other
than the CEO) named in the 2004 Proxy Statement (the “Named Executive Officers”)
will receive the following base salaries for 2005:

 

Name

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Annual

Base Salary

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Patrick D. Hanley

   $ 301,350

Gordon S. Mackenzie

   $ 290,000

John W. Fain

   $ 242,000

Mark B. Goodwin

   $ 229,000

 

Annual Incentive Awards. On January 27, 2005, the Executive Compensation
Committee approved annual incentive awards under the EIP for 2004, payable in
cash or deferrable under the EIP, to the Named Executive Officers, as follows:

 

Name

--------------------------------------------------------------------------------

   Annual
Incentive Award

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Patrick D. Hanley

   $ 350,000

Gordon S. Mackenzie

   $ 325,000

John W. Fain

   $ 325,000

Mark B. Goodwin

   $ 165,000

 

The Equity Swap Plan allows executive officers under the age of 65 an option to
forego all or a portion of their respective incentive awards in exchange for
grants of retention stock units equivalent to 150% of the incentive amount
foregone, subject to a three-year vesting period. These retention stock units
are valued based on $32.10, the closing price of Overnite common stock on
January 27, 2005, the date of the grant. Messrs. Fain and Goodwin deferred their
annual incentive awards under the Equity Swap Plan in exchange for 15,187 and
7,710 shares of retention stock units, respectively. They are entitled to
receive dividend equivalents on the retention stock units during the vesting
period that are paid at the same rate and time as dividends would have been paid
on an equivalent number of shares of Overnite common stock.

 

The Executive Compensation Committee will consider annual incentive awards for
the Named Executive Officers in 2005. In determining annual incentive awards,
the Executive Compensation Committee considers quantitative performance metrics,
including revenue, operating income, net income, operating ratio, and free cash
flow, and qualitative measures, including product quality (on-time service and
cargo claims), ethics/corporate governance, employee relations/morale,
advancement of strategy, and succession planning.

 

Restricted Stock. On January 27, 2005, the Executive Compensation Committee
approved the grant of shares of restricted stock to the Named Executive Officers
pursuant to the Incentive Plan in the amounts indicated below:

 

Name

--------------------------------------------------------------------------------

  

Shares of
Restricted

Stock

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Patrick D. Hanley

   5,000

Gordon S. Mackenzie

   5,000

John W. Fain

   5,000

Mark B. Goodwin

   3,000

 

The shares of restricted stock vest three years from the grant date.

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Other Compensation Arrangements. Other compensation for each of the Named
Executive Officers for 2004 consisted of: (a) executive life insurance premiums
(Mr. Hanley, $7,671; Mr. Mackenzie, $7,876; Mr. Fain, $3,027; and Mr. Goodwin,
$4,481); (b) company-matching contributions to employee contributions to our
401(k) plans (Mr. Hanley, $10,296; Mr. Mackenzie, $9,664; Mr. Fain, $8,295; and
Mr. Goodwin, $7,612); and (c) Group Term Life (Mr. Hanley, $1,932; Mr.
Mackenzie, $1,798; Mr. Fain, $515; and Mr. Goodwin, $774). Other perquisites for
the Named Executive Officers totaled less than $50,000 each and consisted of
payments associated with items such as personal use of company car, financial
planning services, and country club dues.

 

Potential Awards for the CEO and the Named Executive Officers under the Overnite
Long-Term Incentive Program. Under the Overnite Long-Term Incentive Program, the
CEO and the Named Executive Officers may be able to earn performance shares and
cash awards depending upon Overnite’s ability to achieve a three-year cumulative
earnings per share target ranging from $5.26 to $5.88 for fiscal years 2004,
2005, and 2006. No performance shares or cash awards are earned if the minimum
earnings performance target is not met. Varying levels of awards may be earned
based upon the extent to which the performance target is reached, with minimum
and maximum awards for the CEO and the Named Executive Officers as follows:

 

Leo H. Suggs, cash award of $468,750 to $1,406,250 and share award of 15,121
shares to 45,363 shares; Patrick D. Hanley, Gordon S. Mackenzie, and John W.
Fain, cash awards of $230,000 to $690,000 and share awards of 7,419 shares to
22,258 shares; and Mark B. Goodwin, cash award of $125,000 to $375,000 and share
award of 4,032 shares to 12,097 shares.

 

Additionally, if the three-year cumulative earnings per share is between $5.26
and $5.55 and Overnite’s stock price exceeds $35.00 for 20 consecutive days, a
premium payment of up to 15% of the cash component will be paid in addition to
the award. Any additional payment will be either 15% of the cash target amount
payable for achieving the earnings per share target or an amount that, when
added to the earnings per share payment, equals 100% of the cash target award,
whichever is less.