Heartland Express gets a gold star…

April 9, 2010

Anyone who hangs out around kids will eventually hear some whiny version of, —I should get (fill in the blank) because everyone else has it.

But being in proxy season, we find that there’s plenty of executives who try to use that logic, too. Proxy after proxy tells us that — —in order to attract the best talent — companies must allow their executives to whisk around the globe on the company jet (even for personal travel), hold court in a luxury NFL suite, and rake in thousands of “gross-up” dollars to pay their own taxes. The company — and therefore the shareholders — foot the bill for that largesse. However, there are some companies that dare to be different, and today’s Gold Star highlights one of them.

To be sure, it was the sheer brevity of the 16-page proxy that Heartland Express, Inc. (HTLD) filed that initially caught our attention. After all, some companies take 16 pages (no exaggeration) to explain their various bonus plans!

Then again, simplicity rules here. Chairman/CEO Russell Gerdin’s base salary in 2009 was $300,000. Once you add in all his stock awards, options, 2009 bonus, non-equity incentive plan, perks, gross-ups, and “All Other Compensation” his salary swelled to— $300,000.

How is that possible? The proxy explains this compensatory enigma as follows:

The Compensation Committee believes that Mr. Russell Gerdin’s salary is reasonable compared to similarly situated executives, and that as a direct and indirect holder of approximately 42% of the Company’s outstanding stock, Mr. Russell Gerdin receives an incentive through appreciation in the market value of the Company’s stock—.

Okay, one might argue, but Gerdin owns a large stake of the company. What about the other NEOs?

Like Gerdin, in the past few years they’ve received good salaries, but no additional stock, options, bonuses, perks, or other kinds of compensation. The proxy explains:

We believe that stock ownership by our Named Executive Officers helps to align the interests of such officers with the interests of stockholders in maximizing long-term stockholder value…The Compensation Committee believes that the equity ownership of our senior management currently is sufficient to align their long-term interests with those of our stockholders, and therefore did not recommend any stock-based awards to the Named Executive Officers in 2009.

What a novel idea! Pay talented leaders well, give them enough stock so they’ve got a stake in the company’s future success, and then stop!

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