exhibit103.htm


    Exhibit
10.3

    Covenant
Transportation Group, Inc.

    2009
Named Executive Officer Bonus Program

     

        In March 31,
2009, the Compensation Committee of the Board of Directors approved
performance-based bonus opportunities under which each of our Chief Executive
Officer, Chief Financial Officer, and our three other must highly
compensated executive officers (collectively, the "Named Executive Officers") is
eligible to receive a bonus of up to 75% of his 2009 base salary (prior to any
forfeiture under the 2009 Voluntary Incentive Opportunity) based upon our
achievement of certain performance targets (the "2009 Bonus
Plan").  Each Named Executive Officer may choose to receive up to 100%
of the bonus in Class A common stock under the Incentive Plan. While under the 2008
Bonus Plan each Named Executive Officer was required to accept at least 25% of
his bonus for 2008, if any, in the form of Class A common stock under the
Incentive Plan, under the 2009 Bonus Plan there is no such requirement based on
the adoption of the 2009 Voluntary Incentive Opportunity and related salary
reductions.  As in 2008, the percentage of salary assigned to each
Named Executive Officer is based on the Compensation Committee's evaluation of
(i) the magnitude of each Named Executive Officer's ability to impact
corporate performance based on the executive's responsibilities at the time the
targets were set, (ii) the composition of each Named Executive Officer's
total compensation package, and (iii) our long-term financial
goals.

    
          

          In connection
with the 2009 performance-based bonus opportunities described above, the
Compensation Committee set performance targets for each Named Executive Officer
(other than Messrs. Tony Smith and Jim Brower, whose performance targets are
provided below) related to us having consolidated operating income of
$26,515,000 and a consolidated operating ratio of 95.3% for 2009.  As
with the performance targets for 2008, the Compensation Committee also created
specific parameters for awarding bonuses within certain incremental ranges of
achievement of the performance targets, subject to upward or downward adjustment
in defined circumstances.  The applicable percentage of the achieved
performance target is then multiplied by the Named Executive Officer's target
bonus (50% of the Named Executive Officer's 2009 base salary prior to any
forfeiture under the 2009 Voluntary Incentive Opportunity) to determine the
Named Executive Officer's bonus.  The following table sets forth a
summary of the incremental levels of achievement of the performance targets and
the related percentage of the potential bonus associated with such
achievement.

      


      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	
                                                2009
      Incremental Ranges of Performance Targets
(Consolidated)

                                              
	
                                                Consolidated

                                                Operating
      Income

                                                ($)

                                                (000s)

                                              	
                                                Consolidated

                                                Operating
      Ratio

                                                (%)

                                              	
                                                %
      of Bonus 

                                                Opportunity
      Paid as 

                                                Bonus

                                                (%)

                                              
	
                                                17,951

                                              	
                                                96.8

                                              	
                                                50.0

                                              
	
                                                22,289

                                              	
                                                96.0

                                              	
                                                75.0

                                              
	
                                                26,515

                                              	
                                                95.3

                                              	
                                                100.0

                                              
	
                                                29,333

                                              	
                                                95.3

                                              	
                                                125.0

                                              
	
                                                32,150

                                              	
                                                95.3

                                              	
                                                150.0

                                              


                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

          For Mr.
Smith, the Compensation Committee set performance targets, of which 20% (versus
10% in 2008)  were related to the consolidated performance targets set
forth above and 80% (versus 90% in 2008) were related to SRT having operating
income of $9,398,000 and an operating ratio of 92% for 2009.  The
portion of the pay-out performance based on consolidated performance was
increased over 2008 to incentivize Mr. Smith to maximize results for the
consolidated group, while still rewarding Mr. Smith for the individual results
of SRT.  As with the performance targets for the other Named Executive
Officers, the Compensation Committee also created specific parameters for
awarding a bonus to Mr. Smith within certain incremental ranges of achievement
of the performance targets, subject to upward or downward adjustment in defined
circumstances.  The following table sets forth, with respect to Mr.
Smith, a summary of the incremental levels of achievement of the performance
targets and the related percentage of the potential bonus associated with such
achievement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                  2009
      Incremental Ranges of Performance Targets (SRT)

                                                
	
                                                  SRT

                                                  Operating
      Income

                                                  ($)

                                                  (000s)

                                                	
                                                  SRT

                                                  Operating
      Ratio

                                                  (%)

                                                	
                                                  %
      of Bonus 

                                                  Opportunity
      Paid as 

                                                  Bonus

                                                  (%)

                                                
	
                                                  7,613

                                                	
                                                  93.5

                                                	
                                                  50.0

                                                
	
                                                  8,517

                                                	
                                                  92.8

                                                	
                                                  75.0

                                                
	
                                                  9,398

                                                	
                                                  92.0

                                                	
                                                  100.0

                                                
	
                                                  9,986

                                                	
                                                  92.0

                                                	
                                                  125.0

                                                
	
                                                  10,573

                                                	
                                                  92.0

                                                	
                                                  150.0

                                                


                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      


          For Mr.
Brower, the Compensation Committee set performance targets, of which 20% (versus
10% in 2008) were related to the consolidated performance targets set forth
above and 80% (versus 90% in 2008) were related to Star having operating income
of $3,407,000 and an operating ratio of 94% for 2009.  The portion of
the pay-out performance based on consolidated performance was increased over
2008 to incentivize Mr. Brower to maximize results for the consolidated group,
while still rewarding Mr. Brower for the individual results of
Star.  As with the performance targets for the other Named Executive
Officers, the Compensation Committee also created specific parameters for
awarding a bonus to Mr. Brower within certain incremental ranges of achievement
of the performance targets, subject to upward or downward adjustment in defined
circumstances.  The following table sets forth, with respect to Mr.
Brower, a summary of the incremental levels of achievement of the performance
targets and the related percentage of the potential bonus associated with such
achievement.

      


      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          2009
      Incremental Ranges of Performance Targets (Star)

                                        
	
                                          Star

                                          Operating
      Income

                                          ($)

                                          (000s)

                                        	
                                          Star

                                          Operating
      Ratio

                                          (%)

                                        	
                                          %
      of Bonus 

                                          Opportunity
      Paid as 

                                          Bonus

                                          (%)

                                        
	
                                          2,544

                                        	
                                          95.5

                                        	
                                          50.0

                                        
	
                                          2,981

                                        	
                                          94.8

                                        	
                                          75.0

                                        
	
                                          3,407

                                        	
                                          94.0

                                        	
                                          100.0

                                        
	
                                          3,691

                                        	
                                          94.0

                                        	
                                          125.0

                                        
	
                                          3,974

                                        	
                                          94.0

                                        	
                                          150.0

                                        


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

          The
Compensation Committee believes that the performance targets represent
aggressive, yet achievable goals for the Named Executive Officers to earn 100%
of the eligible bonus amount.

       

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10-Q