New Markets. New Innovation. New Growth.
Annual Report 2015
Dear Fellow Shareholders,
2015 was a year of celebration and achievement for Wabash National Corporation. Not only did it mark
Wabash National’s 30th anniversary, it also was the fourth consecutive year of record revenue and profitability, as
well as the sixth consecutive year of revenue and operating income growth.
Overall, it was a year driven by outstanding execution, as we continued to implement our strategic
growth and diversification strategy to become a recognized leader in the design, manufacture, and distribution
of transportation and diversified industrial products and services throughout North America and in key emerging
regions. When we first introduced our long-term strategic plan in 2008 with the goal of diversifying our business to
expand revenue and products away from concentrated dependence on the highly cyclical dry van trailer segment,
we identified four key objectives which included: 1) To profitably grow and diversify the business organically by
leveraging existing assets and capabilities; 2) To offset cyclicality in our core trailer business by diversifying through
selective acquisition; 3) To continue driving cost optimization through operational excellence and supply chain
initiatives; and 4) To drive pricing initiatives in the core trailer business to enhance margins and overall profitability.
Our clear focus on this strategy, the passion and leadership of our management team, and the dedication of
associates around the world, were all critical to delivering Wabash National’s record performance in 2015.
The execution of this long-term strategy to transform the company has continued to exceed our expectations.
Revenue for the full year 2015 surpassed the $2 billion level for the first time in Wabash National’s history and
achieved the topline objective that we had established just two years ago. All-time records were also achieved in
operating income, at $180 million, representing an impressive $58 million, or 47%, increase over 2014, along with
registering new records for gross margin of 15% and operating margin of 8.9%. These achievements were made
possible by impressively leveraging a strong trailer market within our core Commercial Trailer Products (CTP)
business to drive margin optimization, while delivering excellent cost management within our Diversified Products
(DPG) and Retail businesses.
2015 Highlights
• Achieved all-time company records in Revenue, Operating Income, Gross Profit and Operating EBITDA.
• Maintained our #1 market share position among trailer manufacturers in North America, while enhancing
gross margin performance across the business, a position we have held for 15 of the past 22 years.
• Named one of the “50 Best U.S. Manufacturers” by IndustryWeek magazine for the third time, having also
appeared on the list in 2006 and 2013.
• Executed our balanced capital allocation strategy, delivering on our commitment by aggressively
addressing both return of capital to shareholders and debt reduction in 2015.
• Consistent with our quest to remain industry leaders in environmental responsibility and sustainability, our
operations in Cadiz, Kentucky, and San José Iturbide, Mexico, earned ISO 14001:2004 registrations for
environmental management.
• Staying true to our value to be good corporate citizens, we raised a record $360,000 for local and national
charities through our annual charity golf outing, supported significantly by the generosity of our supplier
community. In addition, including the golf outing proceeds, we raised a record $723,000 in community
impact for the United Way.
• Our CTP segment set an all-time record for gross margin performance through operational efficiency,
supply chain optimization and improved pricing.
• CTP expanded its product offerings into the Class 5-7 medium-duty market with the launch of its first
line of dry and refrigerated truck bodies, expanding our portfolio of transportation equipment designed to
help customers meet changing trends in shipping needs.
• Our Composites business expanded operations to Frankfort, Indiana, and launched a full suite of
aerodynamic trailer solutions, creating the broadest OEM product offering available.
• Our Process Systems business (PS) initiated stationary silo production at our recently expanded San José
Iturbide Operation in Mexico, allowing us to better serve the food, dairy and beverage markets in the
southern United States, Mexico and South America.
• Our Aviation & Truck Equipment business (AVTE) expanded its operations in Kansas City, Kansas,
allowing for the consolidation of its two manufacturing facilities in the area and providing improved
service levels and responsiveness to customers.
• Our Retail segment continued growth of its customer-site service (CSS) support operations, added five
additional mobile service units and achieved R-stamp tank service certification for our fifth Wabash
National Trailer Centers location.
Looking Forward to 2016
With the accomplishments of 2015 now a matter of record, having demonstrated once again the efficacy
of our strategic plan, we begin 2016 with a high level of momentum and confidence. Armed with a near-record
backlog of $1.2 billion, a continuing favorable demand environment in our core van business, demonstrated
excellence in operational performance across all business segments, and strong momentum with the introduction
of new product offerings to drive growth in areas previously untapped, we look forward to delivering even greater
results in the current year.
During the first quarter, we have already introduced several key innovations that are the result of years
of research and development. This included a new rear impact guard (RIG) design option for our dry van trailers
that is engineered to prevent underride in multiple offset impact scenarios, setting a new industry standard for
performance and safety, and a first-ever prototype composite refrigerated van utilizing our new, proprietary molded
structural composite technology.
We also expanded our dealer network for Progress Tank brand truck-mounted vacuum tanks, adding four
dealers to support the East Coast, Mid-Atlantic and Midwest regions.
And, our Walker Engineered Products business signed an agreement in the first quarter with W.M.
Sprinkman Corporation to collaborate on building stainless steel processing equipment for craft brewers, a growing
segment in the U.S. beer market, and providing product and market expansion opportunities for that business.
As we progress further through the year, the ramp-up of the recently established Final Mile Facility
in Lafayette to support our entry into the medium-duty truck body arena will pick up pace, our new industry-
leading rear impact guard will be in volume production, and customer adoption of our Smartway Elite-verified
aerodynamic offerings will ramp up.
It looks to be another exciting year for Wabash National.
Concluding Remarks
Following four consecutive years of record performance, and well-positioned to keep the streak going, it is
important to recognize that none of this would be possible without the exceptional efforts and contributions of the
more than 6,000 associates who make up the Wabash National team across the globe. I continue to feel honored and
privileged to work with such talented and dedicated people.
Special thanks and gratitude is extended to our entire team for their outstanding efforts during the past
year to bring us to this point, and for their passion and commitment to take us to greater levels of performance and
achievement during the current year and beyond.
Our efforts to date have helped to fundamentally change the composition of our business to one that is
much more balanced and diverse, with greater resiliency and capability to perform well during both strong and
weak demand environments. However, more opportunity remains. We commit to remain laser focused in our
quest to attain best-in-class levels of performance in all aspects of our business; to continue to seek opportunities
to strategically grow our business both organically and through selective acquisitions; and, to further optimize and
leverage all current capabilities. Through all this, we will continue to be responsible stewards of the business to
assure that the proper balance between risk and reward is considered in all decisions, with the primary objective to
build long-term value and sustainability.
I thank you for your continued confidence and support of Wabash National.
Sincerely,
Richard J. Giromini
President and Chief Executive Officer
New Markets. New Innovation. New Growth.
This page intentionally left blank.
WABASH NATIONAL CORPORATION
1000 Sagamore Parkway South
Lafayette, Indiana 47905
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 12, 2016
To the Stockholders of Wabash National Corporation:
The 2016 Annual Meeting of Stockholders of Wabash National Corporation will be held at the Wabash National Corporation
Ehrlich Innovation Center, located at 3233 Kossuth Street, Lafayette, IN 47905, on Thursday, May 12, 2016, at 10:00 a.m. local
time for the following purposes:
1. To elect seven members of the Board of Directors from the nominees named in the accompanying proxy statement;
2. To hold an advisory vote on the compensation of our executive officers;
3. To re-approve the performance goals included in the Wabash National Corporation 2011 Omnibus Incentive Plan;
4. To ratify the appointment of Ernst & Young LLP as Wabash National Corporation’s independent registered public accounting
firm for the year ending December 31, 2016; and
5. To consider any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof.
Management is currently not aware of any other business to come before the Annual Meeting.
Each outstanding share of Wabash National Corporation (NYSE:WNC) Common Stock entitles the holder of record at the close
of business on March 14, 2016, to receive notice of and to vote at the Annual Meeting or any adjournment or postponement of the
Annual Meeting. Shares of our Common Stock can be voted at the Annual Meeting only if the holder is present in person or by valid
proxy. Management cordially invites you to attend the Annual Meeting.
IF YOU PLAN TO ATTEND
Please note that space limitations make it necessary to limit attendance to stockholders and one guest. Registration and seating
will begin at 9:00 a.m. Stockholders holding stock in brokerage accounts (“street name” holders) will need to bring a copy of a
brokerage statement reflecting stock ownership as of the record date. Cameras, recording devices and other electronic devices will not
be permitted at the meeting.
By Order of the Board of Directors
ERIN J. ROTH
Senior Vice President
March 31, 2016 General Counsel and Corporate Secretary
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, WE URGE YOU TO VOTE YOUR SHARES AT
YOUR EARLIEST CONVENIENCE. THIS WILL ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING.
PROMPTLY VOTING YOUR SHARES BY SIGNING, DATING AND RETURNING THE PROXY CARD MAILED WITH
YOUR NOTICE, OR BY VOTING VIA THE INTERNET OR BY TELEPHONE, WILL SAVE US THE EXPENSE AND EXTRA
WORK OF ADDITIONAL SOLICITATION. AN ADDRESSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES IS ENCLOSED WITH YOUR PROXY CARD. SUBMITTING YOUR PROXY NOW WILL
NOT PREVENT YOU FROM VOTING YOUR SHARES AT THE MEETING IF YOU DESIRE TO DO SO, AS YOUR PROXY IS
REVOCABLE AT YOUR OPTION. YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY.
TABLE OF CONTENTS
PROXY STATEMENT
Annual Meeting of Stockholders on May 12, 2016
About the Meeting ..................................................................................................................................................................................... 1
Proposal 1: Election of Directors ............................................................................................................................................................ 4
Corporate Governance Matters and Termination of Shareholder Rights Plan ................................................................................... 4
Related Persons Transactions Policy .................................................................................................................................................. 4
Director Independence ......................................................................................................................................................................... 5
Qualifications and Nominations of Director Candidates .................................................................................................................... 6
Information on Directors Standing for Election .................................................................................................................................. 6
Meetings of the Board of Directors, its Leadership Structure and its Committees ............................................................................. 9
Nominating and Corporate Governance Committee Responsibilities .......................................................................................... 9
Compensation Committee Responsibilities ................................................................................................................................ 10
Audit Committee Responsibilities .............................................................................................................................................. 10
Board’s Role in Risk Oversight .......................................................................................................................................................... 11
Director Nomination Process ............................................................................................................................................................ 12
Communications with the Board of Directors ................................................................................................................................... 12
Director Compensation ...................................................................................................................................................................... 13
Non-employee Director Stock Ownership Guidelines ....................................................................................................................... 14
Beneficial Ownership Reporting ........................................................................................................................................................ 15
Executive Compensation Discussion and Analysis
Executive Summary – 2015 Financial Highlights ...................................................................................................................... 17
Best Practices .............................................................................................................................................................................. 18
Compensation Program Objectives and Philosophy ................................................................................................................... 19
Summary of Key Compensation Decisions and Outcomes for 2015 ......................................................................................... 20
Our 2015 Say on Pay Vote .......................................................................................................................................................... 21
Philosophy and Objectives of Wabash National’s Compensation Program ............................................................................... 21
Independent Review and Approval of Executive Compensation .............................................................................................. 23
The Role of the Compensation Committee’s Independent Compensation Consultant ............................................................... 24
Peer Group Analysis and Compensation Market Data ............................................................................................................... 24
Direct Compensation Elements – Base Salary ............................................................................................................................ 26
Direct Compensation Elements – Short Term Incentive Plan .................................................................................................... 27
Performance Metrics for the 2015 STI Plan ........................................................................................................................ 27
Approval of STI Rates ......................................................................................................................................................... 27
2015 Performance Results for STI ...................................................................................................................................... 28
Direct Compensation Elements – Long Term Incentive Plan .................................................................................................... 29
Approval of LTI Award Values ........................................................................................................................................... 29
LTI Award Mix .................................................................................................................................................................... 30
Performance Stock Units (“PSU”) Performance Metrics .................................................................................................... 31
Payout of PSUs for 2013 to 2015 Performance Cycle ........................................................................................................ 32
LTI Grant Practices .............................................................................................................................................................. 32
Executive Stock Ownership Guidelines and Insider Trading Policy .......................................................................................... 33
Deductibility Cap on Executive Compensation .......................................................................................................................... 33
Indirect Compensation Elements – Perquisites, Retirement Benefits, Deferred Compensation Benefits .................................. 34
Potential Payments Upon Change-in-Control and Other Potential Post-Employment Payments .............................................. 34
Compensation Committee Report ............................................................................................................................................... 36
Executive Compensation Tables
Summary Compensation Table and Footnotes ........................................................................................................................... 37
Grants of Plan-Based Awards Table and Footnotes ................................................................................................................... 39
Outstanding Equity Awards at Fiscal Year-End Table and Footnotes ....................................................................................... 41
Option Exercises and Stock Vested Table .................................................................................................................................. 44
Non-Qualified Deferred Compensation Contributions and Earnings Table ............................................................................... 44
Potential Payments on Termination or Change-in-Control ........................................................................................................ 45
Potential Payments on Termination or Change-in-Control – Payment and Benefit Estimates .................................................. 50
Equity Compensation Plan Information ............................................................................................................................................ 52
Restricted Stock Grants ...................................................................................................................................................................... 53
Proposal 2: Advisory Vote on the Compensation of Our Executive Officers ................................................................................... 54
Proposal 3: Re-Approval of Performance Goals Included in the Corporation’s 2011 Omnibus Incentive Plan .......................... 57
Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm ..................................................... 65
Audit Committee Report ..................................................................................................................................................................... 66
General Matters ....................................................................................................................................................................................... 67
WABASH NATIONAL CORPORATION
1000 Sagamore Parkway South
Lafayette, Indiana 47905
PROXY STATEMENT
Annual Meeting of Stockholders on May 12, 2016
This Proxy Statement is furnished on or about March 31, 2016 to stockholders of Wabash National Corporation (hereinafter,
“we,” “us,” “Company,” “Wabash,” and “Wabash National”), 1000 Sagamore Parkway South, Lafayette, Indiana 47905, in
connection with the solicitation by our Board of Directors of proxies to be voted at the Annual Meeting of Stockholders to be held at
the Wabash National Corporation Ehrlich Innovation Center, located at 3233 Kossuth Street, Lafayette, IN 47905, on Thursday,
May 12, 2016 at 10:00 a.m. local time, (the “Annual Meeting”) and at any adjournments or postponements of the Annual Meeting.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 12, 2016.
Our Annual Report and this Proxy Statement are available at http://material.proxyvote.com/929566. To access our Annual Report and
Proxy Statement, enter the control number referenced on your proxy card.
ABOUT THE MEETING
What is The Purpose of the Annual Meeting?
At the Annual Meeting, our management will report on our performance during 2015 and respond to questions from our
stockholders. In addition, stockholders will act upon the matters outlined in the accompanying Notice of Annual Meeting of
Stockholders, which include the following four proposals:
Proposal 1 To elect seven members of the Board of Directors;
Proposal 2 To hold an advisory vote on the compensation of our executive officers;
Proposal 3
To re-approve the performance goals included in the Wabash National Corporation 2011 Omnibus Incentive Plan;
and
Proposal 4
To ratify the appointment of Ernst & Young LLP as Wabash National Corporation’s independent registered public
accounting firm for the year ending December 31, 2016.
Stockholders will also consider any other matters that properly come before the Annual Meeting or any adjournment or
postponement thereof. Management is currently not aware of any other business to come before the Annual Meeting.
Who is Entitled to Vote?
Only stockholders of record at the close of business on March 14, 2016 (the “Record Date”) are entitled to receive notice of the
Annual Meeting and to vote the shares of common stock of the Company (“Common Stock”) that they held on the Record Date at the
Annual Meeting, or any postponement or adjournment of the Annual Meeting. Each share entitles its holder to cast one vote on each
matter to be voted upon.
A list of stockholders of record as of the Record Date will be available for inspection during ordinary business hours at our
offices located at 1000 Sagamore Parkway South, Lafayette, Indiana 47905, from May 5, 2016 to the date of our Annual Meeting. The
list will also be available for inspection at the Annual Meeting.
1
Who can Attend the Annual Meeting?
All stockholders as of the close of business on the Record Date, or their duly appointed proxies, may attend the Annual Meeting.
Please note that if you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a
copy of a brokerage statement reflecting your stock ownership as of the Record Date and check in at the registration desk at the
Annual Meeting. Alternatively, to vote, you may contact the person in whose name your shares are registered and obtain a proxy from
that person and bring it to the Annual Meeting.
What Constitutes a Quorum?
The presence at the Annual Meeting, in person or by valid proxy, of the holders of a majority of the shares of our Common Stock
outstanding on the Record Date will constitute a quorum, permitting us to conduct our business at the Annual Meeting. As of the
Record Date, 65,315,924 shares of Common Stock, held by 662 stockholders of record, were outstanding and entitled to vote at the
Annual Meeting. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of
shares considered to be present at the Annual Meeting.
How do I Vote?
You can vote on matters to come before the Annual Meeting in the following four ways:
• Visit the website noted on your proxy card to vote via the internet;
• Use the telephone number on your proxy card to vote by telephone;
• Vote by mail by completing, dating and signing the proxy card mailed with your notice and returning it in the provided
postage-paid envelope. If you do so, you will authorize the individuals named on the proxy card, referred to as the proxies, to
vote your shares according to your instructions. If you provide no instructions, the proxies will vote your shares according to
the recommendation of the Board of Directors or, if no recommendation is given, in their own discretion; or,
• Attend the Annual Meeting and cast your vote in person.
What if I Vote and Then Change my Mind?
You may revoke your proxy at any time before it is exercised by:
• Providing written notice of revocation to the Corporate Secretary, Wabash National Corporation, 1000 Sagamore Parkway
South, Lafayette, Indiana 47905;
• By voting again, on a later date, via the internet or by telephone (only your latest internet or telephone proxy submitted prior
to the Annual Meeting will be counted);
• Submitting another duly executed proxy bearing a later date; or
• Attending the Annual Meeting and casting your vote in person.
Your last vote will be the vote that is counted.
What are the Board’s Recommendations?
The Board recommends that you vote FOR election of the nominated slate of directors (p. 4), FOR the approval of the
compensation of our executive officers (p. 54), FOR the re-approval of the performance goals included in the Wabash National
Corporation 2011 Omnibus Incentive Plan (p. 57), and FOR ratification of the appointment of our auditors (p. 65). Unless you give
other instructions, the persons named as proxy holders on the proxy card will vote in accordance with the Board’s recommendation.
With respect to any other matter that properly comes before the meeting, the proxy holders will vote in their own discretion.
What Vote is Required for Each Proposal?
The following table summarizes the vote threshold required for approval of each proposal and the effect of abstentions,
uninstructed shares held by banks or brokers, and unmarked, signed proxy cards. If you hold your shares in “street name” through a
broker or other nominee, your broker or nominee may elect to exercise voting discretion with respect to the appointment of our
auditors. Under New York Stock Exchange (“NYSE”) Rules, this proposal is considered a “discretionary” item, meaning that
brokerage firms that have forwarded this Proxy Statement to clients 25 days or more before the Annual Meeting may vote in their
discretion for this item on behalf of clients who have not furnished voting instructions at least 15 days before the date of the Annual
Meeting and brokerage firms that have forwarded this Proxy Statement to clients less than 25 days before the Annual Meeting may
vote in their discretion for this item on behalf of clients who have not furnished voting instructions at least 10 days before the date of
2
the Annual Meeting. If you do not give your broker or nominee specific instructions, your broker or nominee may elect not to
exercise its discretion on the ratification of the appointment of our auditors, in which case your shares will not be voted on this matter.
If you hold your shares in “street name” through a broker or other nominee, your broker or nominee may not exercise discretion
to vote your shares with respect to the election of directors, the re-approval of the performance goals included in the 2011 Omnibus
Incentive Plan or the advisory vote on executive compensation. Shares for which the broker does not exercise its discretion or for
which it has no discretion and for which it has received no instructions, so-called broker “non-votes,” will not be counted in
determining the number of shares necessary for approval of such matters; however, those shares will be counted in determining
whether there is a quorum.
On all proposals, if you sign and return a proxy or voting instruction card, but do not mark how your shares are to be voted, they
will be voted as the Board recommends.
Proposal
Number
1
2
3
4
Item
Election of Directors
Advisory vote on executive compensation
Re-approval of performance goals included
in the Corporation’s 2011 Omnibus
Incentive Plan
Ratification of Appointment of Independent
Auditor
Who will Bear the Costs of this Proxy Solicitation?
Vote Required for
Approval of Each Item
Majority of votes cast
Majority of shares present and entitled
to vote
Majority of votes cast
Abstentions
No effect
Same effect as
"against"
No effect
Uninstructed
Shares
Not voted
Not voted
Unmarked
Proxy
Cards
Voted "for"
Voted "for"
Not voted
Voted "for"
Majority of shares present and entitled
to vote
Same effect as
"against”
Discretionary
Voted "for"
vote
We will bear the cost of solicitation of proxies. This includes the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of our outstanding Common Stock. We may solicit proxies by mail, personal
interview, telephone or via the Internet through our officers, directors and other management associates, who will receive no
additional compensation for their services. In addition, we have retained Laurel Hill Advisory Group, LLC to assist with proxy
solicitation. For their services, we will pay a fee of $5,500 plus out-of-pocket expenses.
3
PROPOSAL 1
Election of Directors
Our Bylaws provide that our Board of Directors, or the Board, shall be comprised of not less than three, nor more than nine,
directors with the exact number to be fixed by resolution of the Board. The Board has fixed the authorized number of directors at
seven directors.
At the Annual Meeting, seven directors are to be elected, each of whom shall serve for a term of one year or until his or her
successor is duly elected and qualified or until his or her earlier death, resignation or removal. Proxies representing shares held on the
Record Date that are returned duly executed will be voted, unless otherwise specified, in favor of the seven nominees for the Board
named below. In accordance with our Bylaws, each nominee, as a condition to nomination, has submitted to the Nominating and
Corporate Governance Committee an irrevocable resignation from the Board that is effective only in the event a nominee does not
receive the required vote of our stockholders to be elected to the Board and the Board accepts the nominee’s resignation. Each of the
nominees has consented to be named in this Proxy Statement and to serve on the Board if elected. It is not anticipated that any
nominee will become unable or unwilling to accept nomination or election, but, if that should occur, the persons named in the proxy
intend to vote for the election in his or her stead, such other person as the Nominating and Corporate Governance Committee may
recommend to the Board.
Corporate Governance Matters and Termination of Shareholder Rights Agreement
Our Board has adopted Corporate Governance Guidelines (the “Guidelines”). Our Board has also adopted a Code of Business
Conduct and Ethics and a Code of Business Conduct and Ethics for the Chief Executive Officer and Senior Financial Officers (the
“Codes”). The Guidelines set forth a framework within which the Board oversees and directs the affairs of Wabash National. The
Guidelines cover, among other things, the composition and functions of the Board, director independence, director stock ownership,
management succession and review, Board committees, the selection of new directors, and director responsibilities and duties.
The Codes cover, among other things, compliance with laws, rules and regulations (including insider trading), conflicts of
interest, corporate opportunities, confidentiality, protection and use of company assets, and the reporting process for any illegal or
unethical conduct. The Code of Business Conduct and Ethics applies to all of our directors, officers, and associates, including our
Chief Executive Officer and Chief Financial Officer. The Code of Business Conduct and Ethics for the Chief Executive Officer and
Senior Financial Officers includes provisions that are specifically applicable to our Chief Executive Officer, Chief Financial Officer
and senior financial executives.
Any amendment to or waiver from a provision of the Codes for a director or executive officer (including for our Chief Executive
Officer, or CEO, and Chief Financial Officer, or CFO) will be promptly disclosed and posted on our website as required by law or the
listing standards of the NYSE.
The Guidelines and the Codes are available on the Investor Relations/Corporate Governance page of our website at
www.wabashnational.com and are available in print without charge by writing to: Wabash National Corporation, Attention: Corporate
Secretary, 1000 Sagamore Parkway South, Lafayette, Indiana 47905.
Our Shareholder Rights Agreement, or “poison pill”, which was originally adopted on December 29, 2005, was terminated by our
Board in March 2015, earlier than its scheduled expiration date of December 28, 2015.
Related Persons Transactions Policy
Our Board has adopted a written Related Persons Transactions Policy. The Related Persons Transactions Policy sets forth our
policy and procedures for review, approval and monitoring of transactions in which the Company and “related persons” are
participants. Related persons include directors, nominees for director, officers, stockholders owning 5% or greater of our outstanding
stock, and any immediate family members of the aforementioned. The Related Persons Transactions Policy is administered by a
committee designated by the Board, which is currently the Audit Committee.
The Related Persons Transactions Policy covers any related person transaction that meets the minimum threshold for disclosure
in our annual meeting proxy statement under the relevant Securities and Exchange Commission (the “SEC”) rules, which currently
covers transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest. Related
person transactions must be approved, ratified, rejected or referred to the Board by the Audit Committee. The policy provides that as a
general rule all related person transactions should be on terms reasonably comparable to those that could be obtained by the Company
in arm’s length dealings with an unrelated third party. However, the policy takes into account that in certain cases it may be
4
impractical or unnecessary to make such a comparison. In such cases, the transaction may be approved in accordance with the
provisions of the Delaware General Corporation Law. When evaluating potential related person transactions, the Audit Committee
considers all reasonably available facts and circumstances and approves only the related person transactions determined in good faith
to be in compliance with, or not inconsistent with, our Code of Business Conduct and Ethics, and the best interests of our
stockholders.
The Related Persons Transaction Policy provides that management, or the affected director or officer will bring any relevant
transaction to the attention of the Audit Committee. Additionally, each year, our directors and executive officers complete annual
questionnaires designed to elicit information about potential related person transactions, and the directors and officers must promptly
advise the Corporate Secretary if there are any changes to the information previously provided. If a director is involved in the
transaction, he or she will be recused from all discussions and decisions with regard to the transaction, to the extent practicable. The
transaction must be approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable. All
related person transactions will be disclosed to the full Board, and will be included in the Company’s proxy statement and other
appropriate filings as required by the rules and regulations of the SEC and the NYSE.
Our General Counsel, Erin J. Roth, disclosed to the Audit Committee that she is married to an equity partner in the law firm of
Barnes & Thornburg, LLP, a firm retained by the Company for several legal matters, including product liability, commercial and
employment litigation matters, and for associate benefits, environmental, real estate, intellectual property, tax, anti-corruption, and
export compliance legal counseling services. The Company has retained Barnes & Thornburg for such services since 2006, which
pre-dates Ms. Roth’s employment with the Company. The process for retaining Barnes & Thornburg is the same as for retaining other
law firms on behalf of the Company, with members of the legal department considering attorney expertise and familiarity with the
Company and the legal issue, jurisdiction, any actual or potential conflicts of interest, past performance and/or referral
recommendations, as well as fee/rate structure prior to engaging any law firm for any legal matters. During 2015, the Company paid
Barnes & Thornburg approximately $744,000 for legal services rendered. The fees the Company paid to Barnes & Thornburg were
consistent with fees paid to – and were retained under similar terms and fee arrangements as – other law firms retained in 2015 by the
Company. Pursuant to our Related Persons Transaction Policy and the Audit Committee Charter, this transaction was approved by the
Audit Committee, and subsequently approved by the Board, after determining that it is not inconsistent with our Code of Business
Conduct and Ethics.
Our Senior Vice President, Group President – Commercial Trailer Products, Brent L. Yeagy, disclosed to the Audit Committee
that the Company has utilized MidState Engineering LLC (“Midstate”), a company owned by Mr. Yeagy’s brother, to provide the
following services from time to time: automation and controls programming, facility engineering, machine fabrication and design, and
equipment fabrication/maintenance services. Multiple parties and functions throughout Wabash National are involved in the decision
to retain the services of MidState, including maintenance services, facilities services, van operations, platform operations, advanced
manufacturing and Wabash Composites – none of which are under the direct supervision or control of Mr. Yeagy. The process to
retain MidState is the same as the process for retaining other vendors of facilities, equipment and maintenance-related services, and is
ultimately managed through our Global Supply Chain function, which does not report to Mr. Yeagy. During 2015, the Company paid
MidState approximately $1,583,000. The fees the Company paid to MidState were consistent with fees paid to, and were contracted
under similar terms of, other facilities, equipment and maintenance-related services retained in 2015 by Wabash National. Pursuant to
our Related Persons Transaction Policy and the Audit Committee Charter, this transaction was approved by the Audit Committee, and
subsequently approved by the Board, after determining that it is not inconsistent with our Code of Business Conduct and Ethics.
Director Independence
Under the rules of the NYSE, the Board must affirmatively determine that a director has no material relationship with the
Company for the director to be considered independent. Our Board of Directors undertook its annual review of director independence
in February 2016. The purpose of the review was to determine whether any relationship or transaction existed that was inconsistent
with a determination that the director or director nominee is independent. The Board considered transactions and relationships
between each director and director nominee, and any member of his or her immediate family, and Wabash and its subsidiaries and
affiliates. The Board also considered whether there were any transactions or relationships between directors or director nominees or
any member of their immediate families (or any entity of which a director or director nominee or an immediate family member is an
executive officer, general partner or significant equity holder) and members of our senior management or their affiliates. As a result of
this review, the Board of Directors affirmatively determined that all of the directors nominated for election at the Annual Meeting are
independent of Wabash National and its management within the meaning of the rules of NYSE, with the exception of Richard J.
Giromini who is the CEO of Wabash National.
5
On May 24, 2007, Dr. Martin Jischke assumed the position of Chairman of the Board. Among his other responsibilities, our
Chairman of the Board presides at the executive sessions of our independent and non-management directors and facilitates
communication between our independent directors and management.
Qualifications and Nomination of Director Candidates
To be considered by the Nominating and Corporate Governance Committee, a director nominee must meet the following
minimum criteria:
• Has the highest personal and professional integrity;
• Has a record of exceptional ability and judgment;
• Possesses skills and knowledge useful to our oversight;
• Able and willing to devote the required amount of time to our affairs, including attendance at Board and committee meetings;
• Has the interest, capacity and willingness, in conjunction with the other members of the Board, to serve the long-term
interests of the Company and its stockholders;
• May be required to be a “financial expert” as defined in Item 401 of Regulation S-K; and
• Free of any personal or professional relationships that would adversely affect their ability to serve our best interests and those
of our stockholders.
Pursuant to the Guidelines, the Nominating and Corporate Governance Committee also reviews, among other things, expertise,
skills, knowledge, and experience. In reviewing these items, the Board may consider the diversity of director candidates, including
diversity of expertise, geography, gender, and ethnicity. We seek independent directors who represent a mix of backgrounds and
experiences that will enhance the quality of the Board’s deliberations and decisions. The goal in reviewing these considerations for
individual director candidates is that they, when taken together with those of other Board members, will lead to a Board that is
effective, collegial, and responsive to the needs of the Company and its stockholders.
Information on Directors Standing for Election
The biographies of each of the nominees below contains information regarding the experiences, qualifications, attributes or skills
that caused the Nominating and Corporate Governance Committee and the Board to determine that the person should serve as a
director for the Company. The name, age, business experience, and public company directorships of each nominee for director, during
at least the last five years, are set forth in the table below. For additional information concerning the nominees for director, including
stock ownership and compensation, see “Director Compensation” and “Beneficial Ownership of Common Stock,” which follow:
SINCE
December 2005
NAME
AGE
OCCUPATION, BUSINESS EXPERIENCE & DIRECTORSHIPS
Richard J. Giromini
62
Mr. Giromini has served as our President and Chief Executive Officer since January
1, 2007. He had been Executive Vice President and Chief Operating Officer from
February 28, 2005 until December 2005 at which time he was appointed President
and a Director of the Company. He had been Senior Vice President — Chief
Operating Officer since joining the Company on July 15, 2002. Prior to joining
Wabash National, Mr. Giromini was with Accuride Corporation from April 1998 to
July 2002, where he served in capacities as Senior Vice President — Technology and
Continuous Improvement; Senior Vice President and General Manager — Light
Vehicle Operations; and President and CEO of AKW LP. Previously, Mr. Giromini
was employed by ITT Automotive, Inc. from 1996 to 1998 serving as Director of
Manufacturing. Prior to 1996, Mr. Giromini was employed with Hayes Wheels,
Doehler-Jarvis and General Motors in roles of increasing responsibility. Mr.
Giromini previously served as a Director of Robbins & Myers, Inc., a leading
supplier of engineered equipment and systems for critical applications in global
energy, industrial chemical and pharmaceutical markets, from 2008 until its
acquisition by National Oilwell Varco in 2013.
The sales, operations and strategic leadership experience reflected in Mr. Giromini’s
summary, as well as his performance as our Chief Executive Officer, his
participation on our Board, and his prior experience as a board member for another
public company, supported the Board’s conclusion that he should again be nominated
as a director.
6
SINCE
January 2002
February 2006
March 2011
NAME
AGE
OCCUPATION, BUSINESS EXPERIENCE & DIRECTORSHIPS
Dr. Martin C. Jischke
74
James D. Kelly
63
John E. Kunz
51
Dr. Jischke served as President of Purdue University, West Lafayette, Indiana, from
August 2000 until his retirement in July 2007. Dr. Jischke became Chairman of our
Board of Directors at the 2007 Annual Meeting. Dr. Jischke also serves as a Director
of Vectren Corporation and Duke Realty Corporation, and on the Board of Trustees
of the Illinois Institute of Technology. Dr. Jischke has served in leadership positions,
including as President, of four major research universities in the United States, in
which he was charged with the strategic and financial leadership of each
organization. He was also previously appointed as a Special Assistant to the United
States Secretary of Transportation.
The financial and strategic leadership experience reflected in Dr. Jischke’s summary,
the diversity of thought provided by his academic background, his service on the
boards of other large public companies and his performance as Chairman of our
Board, supported the Board’s conclusion that he should again be nominated as a
director.
Prior to his retirement in September 2010, Mr. Kelly was the Vice President
Enterprise Initiatives for Cummins Inc., a position he held since March 2010.
Previously, Mr. Kelly served as the President, Engine Business and as a Vice
President for Cummins Inc. from May 2005 until March 2010. Between 1976 and
1988, and following 1989, Mr. Kelly was employed by Cummins in a variety of
positions of increasing responsibility including the Vice President and General
Manager — Mid Range Engine Business between 2001 and 2004, and the Vice
President and General Manager — Mid Range and Heavy Duty Engine Business
from 2004 through May 2005. Prior to his resignation in October, 2015, Mr. Kelly
served as a Director of AM Castle & Co., and previously served on the advisory
board of MAG US Holdings, LLC until its reorganization in January 2015.
The sales and operational expertise reflected in Mr. Kelly’s summary, as well as his
participation on our Board and his prior experience as a board member for another
public company, supported the Board’s conclusion that he should again be nominated
as a director.
Mr. Kunz is the Vice President and Controller of Tenneco Inc., a global manufacturer
of automotive emission control and ride control systems. In this role, which he has
held since March 1, 2015, Mr. Kunz serves as the company's principal accounting
officer with responsibility for the company’s corporate accounting and financial
reporting globally. Prior to his current position, Mr. Kunz served as Tenneco’s Vice
President, Treasurer and Tax, a position he held since July 2006, preceded by his
position as Tenneco’s Vice President and Treasurer, which he held from February
2004 until July 2006. Prior to his employment with Tenneco, Mr. Kunz was the Vice
President and Treasurer of Great Lakes Chemical Corporation, a position he held
from August 2001 until February 2004, after holding several finance positions of
increasing responsibility at Great Lakes, beginning in 1999. Additionally, Mr. Kunz
was employed by KPMG, LLP from 1986 to 1990.
As reflected in his summary, Mr. Kunz’s financial expertise, his experience
managing the financial aspects of cyclical manufacturers in the transportation,
chemical and steel sectors, as well as his expertise in managing financing and equity
transactions, and his participation on our Board all supported the Board’s conclusion
that he should again be nominated as a director.
7
NAME
AGE
OCCUPATION, BUSINESS EXPERIENCE & DIRECTORSHIPS
Larry J. Magee
61
Ann D. Murtlow
55
Scott K. Sorensen
54
Mr. Magee is the President and CEO of Heartland Automotive Services, Inc., the
largest operator of quick lube retail service centers, operating over 540 Jiffy Lube
locations in North America. He has held this position since April 2015. Prior to
assuming this role, Mr. Magee was the President, Consumer Tire U.S. & Canada, for
Bridgestone Americas Tire Operations, LLC a position he held from January 2011
until his retirement from Bridgestone in September 2013. He also served as
Chairman of BFS Retail & Commercial Operations, LLC and Bridgestone of Canada,
Inc. From December 2001 until January 2011, he served as Chairman, Chief
Executive Officer and President of BFS Retail & Commercial Operations, LLC.
Prior to December 2001, Mr. Magee served as President of Bridgestone/Firestone
Retail Division, beginning in 1998. Mr. Magee has over 38 years combined
experience in sales, marketing, and operational management, and held positions of
increasing responsibility within the Bridgestone/Firestone family of companies
during his 38-year tenure with Bridgestone/Firestone.
The retail leadership expertise reflected in Mr. Magee’s summary, including his
performance as the chief executive officer and as a board member for divisions of
another company, as well as his participation on our Board, supported the Board’s
conclusion that he should again be nominated as a director.
Mrs. Murtlow is the President and Chief Executive Officer of United Way of Central
Indiana, a position she has held since April 1, 2013. Prior to assuming this role,
beginning in 2011, she was the principal in a consulting firm, AM Consulting LLC,
which provided global energy and utility mergers and acquisition advisory services.
From 2002 to 2011, Mrs. Murtlow was an AES Corporation executive, where she
was one of the few female CEOs in the electric utility industry, holding the role of
President and Chief Executive Officer at Indianapolis Power & Light Company.
Mrs. Murtlow also currently serves as a Director of First Internet Bancorp and its
subsidiary First Internet Bank, and Great Plains Energy and its subsidiaries Kansas
City Power & Light Company and KCP&L Greater Missouri Operations. She
previously served as a Director of Herff Jones from 2009 until its sale to an
investment group in 2014, and as a director of the Federal Reserve Bank of Chicago
from 2007 to 2012.
The financial and strategic leadership experience reflected in Mrs. Murtlow’s
summary, her service on the boards of other public and private companies, and her
participation on our Board supported the Board’s decision that she should again be
nominated as a director.
Mr. Sorensen is the Chief Executive Officer and a member of the Board of Directors
of Sorenson Holdings and its subsidiary Sorenson Communications, a provider of
communication services and products. Mr. Sorensen held the position of Chief
Financial Officer of Sorenson Communications from August 2007 to March 2016.
Previously, Mr. Sorensen was the Chief Financial Officer of Headwaters, Inc. from
October 2005 to August 2007. Prior to joining Headwaters, Mr. Sorensen was the
Vice President and Chief Financial Officer of Hillenbrand Industries, Inc., a
manufacturer and provider of products and services for the health care and funeral
services industries, from March 2001 until October 2005.
Mr. Sorensen’s financial expertise and experience in corporate finance, combined
with his experience in manufacturing and technology, as reflected in his summary,
and his participation on our Board, supported the Board’s conclusion that he should
again be nominated as a director.
SINCE
January 2005
February 2013
March 2005
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE
DIRECTOR NOMINEES LISTED ABOVE.
8
Meetings of the Board of Directors, its Leadership Structure and its Committees
Information concerning the Board and the three standing committees maintained by the Board is set forth below. Board
committees currently consist only of directors who are not employees of the Company and whom the Board has determined are
“independent” within the meaning of the listing standards of the NYSE.
During 2015, our Board held five meetings. In 2015, each director attended all meetings of the Board and of the committees on
which s/he serves. Our Board strongly encourages all of our directors to attend our Annual Meeting. In 2015, all of our directors
attended the Annual Meeting.
The Guidelines provide that the independent members of the Board may select the Chairman of the Board and the Company’s
Chief Executive Officer in the manner they consider in the best interests of the Company. The Chairman of the Board and Chief
Executive Officer positions are held by separate persons, and the Board believes that this is appropriate given the differences between
the two roles in our current management structure. Our Chief Executive Officer, among other duties, is responsible for setting the
strategic direction for the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board,
among his other responsibilities, presides at the executive sessions of our independent and non-management directors and facilitates
communication between our independent directors and management. The Board does not have a formal policy on whether the roles of
Board Chairman and Chief Executive Officer should be separate or combined and reserves the right to change the Board’s current
leadership structure when, in its judgment, such a change is appropriate for our Company.
The Board has three standing committees: the Nominating and Corporate Governance Committee; the Compensation Committee;
and the Audit Committee. All committee charters can be accessed electronically from the Investor Relations/Corporate Governance
page of our website at www.wabashnational.com or by writing to us at Wabash National Corporation, Attention: Corporate Secretary,
1000 Sagamore Parkway South, Lafayette, Indiana 47905.
The following table indicates each standing committee or committees on which our directors served in 2015:
Name
Richard J. Giromini
Dr. Martin C. Jischke
James D. Kelly
John E. Kunz
Larry J. Magee
Ann D. Murtlow
Scott K. Sorensen
1 Indicates the current chair of the applicable committee.
Nominating and
Corporate
Governance Committee
Compensation
Committee
Audit
Committee
X
X 1
X
X
X
X 1
X
X
X
X
X
X 1
Effective following the 2016 Annual Meeting, if all of the nominees for election at the Annual Meeting are elected, the directors
who will serve on the Nominating and Corporate Governance Committee are currently expected to be Mrs. Murtlow and
Messrs. Kelly and Magee, with Mr. Magee serving as chair; the directors who will serve on the Compensation Committee are
currently expected to be Dr. Jischke, Mrs. Murtlow and Messrs. Kelly, Kunz, Sorensen and Magee, with Mr. Kunz serving as chair;
and the directors who will serve on the Audit Committee are currently expected to be Dr. Jischke, and Messrs. Sorensen and Kunz,
with Mr. Sorensen serving as chair.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee met three times during 2015. The Committee’s responsibilities include:
• Assisting the Board by either identifying or reviewing stockholder-nominated individuals qualified to become directors and
by recommending to the Board the director nominees for the next annual meeting of stockholders;
• Developing and recommending to the Board corporate governance principles;
• Leading the Board in its annual review of the CEO’s and the Board’s performance (including each of its members); and
• Recommending to the Board director nominees for each Board committee.
As part of the Committee’s annual review of the Board’s performance, and its process for recommending director nominees for the
next annual meeting of stockholders, it regularly considers each member’s attendance and overall contributions to the Board, the
diversity of the Board’s composition (including diversity of expertise, geography, age, gender, and ethnicity), and the willingness of a
9
member to represent and serve the long-term interests of our stockholders. And, as required by the Company’s Corporate Governance
Guidelines, once any Board member reaches the age of 72, the Committee annually considers the member’s continuation on the
Board, and recommends to the Board whether, in light of all the circumstances, the Board should request that such member continue
to serve on or retire from the Board.
Compensation Committee
The Compensation Committee met five times during 2015. The Compensation Committee’s responsibilities include:
• Considering, recommending, administering and implementing our incentive compensation plans and equity-based plans;
• Annually reviewing and recommending to the Board the forms and amounts of director compensation; and
• Annually reviewing and approving the corporate goals and objectives relevant to the CEO’s and other executive officers’
compensation, evaluating their performance in light of those goals and objectives, and setting compensation levels based on
the evaluations.
The Compensation Committee is responsible for determining our compensation policies for executive officers and for the
administration of our equity and incentive plans, including our 2011 Omnibus Incentive Plan. The Compensation Committee works
closely with our Senior Vice President of Human Resources in gathering the necessary market data to assess executive compensation.
In addition, our CEO makes recommendations to the Compensation Committee for the other executive officers on the amount of base
salary, target cash awards pursuant to our short-term incentive plan and target equity awards pursuant to our long-term incentive plan.
Our CEO also discusses with and makes recommendations to the Compensation Committee regarding performance targets for our
short-term and long-term incentive plans before they are established, and upon conclusion of the performance period. For a discussion
of our CEO’s role and recommendations with respect to compensation decisions affecting our Named Executive Officers, see the
Compensation Discussion and Analysis below. Pursuant to the Compensation Committee’s charter, the Committee may form and
delegate to subcommittees of the Committee its responsibilities.
The Compensation Committee has historically engaged an independent compensation consultant, which is currently Meridian
Compensation Partners LLC (“Meridian”). The Committee requested that Meridian provide competitive market assessments
regarding executive officer compensation, which were used by the Committee in determining the appropriate executive compensation
levels for 2015 and 2016, in line with the Company’s compensation plans, philosophies and goals.
Additionally, beginning in 2015, the Compensation Committee, instead of the Nominating and Corporate Governance
Committee, became responsible for assessing and setting the compensation of the Company’s non-employee directors. At the request
of the Committee, a competitive market assessment of director compensation was prepared by Meridian. In February 2016, the
Committee reviewed this market assessment and following its review, recommended adjustments to director compensation levels
consistent with the competitive market assessment data, with the adjustments to take retroactive effect on January 1, 2016. See
Schedule of 2016 Director Fees.
Audit Committee
The Board has established a separately-designated standing Audit Committee in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934 (the “Exchange Act”). The Audit Committee met eight times during 2015. In addition to the Board’s
determination that each member of the Audit Committee is “independent” within the meaning of the rules of the NYSE, the Board
also determined that Mr. Kunz and Mr. Sorensen are “audit committee financial experts” as defined by the rules of the SEC, and that
they, along with Dr. Jischke, have accounting and related financial management expertise within the meaning of the listing standards
of the NYSE. The experience of Mr. Kunz and Mr. Sorensen relevant to such determination is described above under “Information on
Directors Standing for Election.”
The Audit Committee’s responsibilities include:
• Reviewing the independence of the independent auditors and making decisions regarding engaging and discharging
independent auditors;
• Reviewing with the independent auditors the plans and results of auditing engagements;
• Reviewing and approving non-audit services provided by our independent auditors and the range of audit and non-audit fees;
• Reviewing the scope and results of our internal audit procedures and the adequacy of the system of internal controls;
• Overseeing special investigations;
• Reviewing our financial statements and reports filed with the SEC;
• Overseeing our efforts to ensure that our business and operations are conducted in compliance with legal and regulatory
standards applicable to us, as well as ethical business practices;
10
• Overseeing the Company’s internal reporting system regarding compliance with federal, state and local laws;
• Establishing and implementing procedures for confidential communications for “whistleblowers” and others who have
concerns with our accounting, internal accounting controls and audit matters; and
• Reviewing our significant accounting policies.
Board’s Role in Risk Oversight
The Board believes that strong and effective internal controls and risk management processes are essential elements in achieving
long-term stockholder value. The Board, directly and through its committees, is responsible for overseeing risks potentially affecting
the Company, while management is principally tasked with direct responsibility for management and assessment of risks and the
implementation of processes and controls to mitigate their effects on the Company. The Board conducts oversight of risks that may
affect the Company primarily through the Audit Committee and the Nominating and Corporate Governance Committee.
Specifically, the Audit Committee (i) reviews with senior management our internal system of audit and financial controls and
steps taken to monitor and mitigate risk exposure and (ii) reviews and investigates any matters pertaining to the integrity of
management, including conflicts of interest, compliance with our financial controls, and adherence to standards of business conduct as
required in the policies of the Company. This is accomplished through the regular review of reports and presentations given by senior
management, including our Senior Vice President – Chief Financial Officer and our Senior Vice President – General Counsel, as well
as our Corporate Controller and Director of Internal Audit. The Audit Committee also regularly meets with our Vice President –
Chief Information Officer to discuss and assess potential information/data security risks. In addition, the Audit Committee regularly
meets with our external auditors to discuss and assess potential risks, and regularly reviews our risk management practices and risk-
related policies (for example, the Company’s Code of Business Conduct and Ethics, information security policies, risk management
and insurance portfolio, and legal and regulatory reviews).
The Nominating and Corporate Governance Committee oversees the Guidelines and other governance matters that contribute to
successful risk oversight and management. This is accomplished through, among other tasks, reviewing succession plans for the CEO
and other key executives, reviewing performance evaluations of the Board (including each of its members) and CEO, monitoring legal
developments and trends regarding corporate governance practices, and evaluating potential related persons transactions.
The committees make full reports to the Board of Directors at each quarterly meeting regarding each committee’s considerations
and actions. The Board of Directors also receives regular reports directly from officers responsible for oversight of financial and
systemic risks within the Company, on both the nature of those risks and on how the officers assess and manage risks generally. The
Company holds quarterly disclosure committee meetings prior to the submission of quarterly or annual reports on the financial
performance of the Company at which areas of risk are discussed, and is adopting similar procedures for the Company’s submission
of its reports on the Company’s reasonable country of origin inquiry and due diligence into the source country of certain “conflict
minerals” necessary to the functionality of products manufactured by the Company, and reports to the Audit Committee on the results
of those meetings. In addition, the Company’s Director of Internal Audit conducts regular interviews with officers responsible for
oversight of financial and systemic risks within the Company, as well as testing regarding the same, and reports the results of those
interviews to the Board on at least a quarterly basis.
The Board of Directors, primarily through the Compensation Committee, also considers the structure and nature of the
Company’s compensation policies and procedures, with a focus on the level of risk to the Company, if any, from those policies and
procedures. In carrying out its oversight in this area, the Board of Directors and Compensation Committee regularly interact with the
Senior Vice President of Human Resources, who reviews with them the Company’s pay practices for salaried associates, including the
Company’s compensation plans and the methods of review and approval for these plans. Additionally, the Company’s incentive-based
pay programs are benchmarked and designed in consultation with the Compensation Committee’s independent compensation
consultant, Meridian. Based on reports to the Board of Directors and Compensation Committee and discussions thereof, the Board of
Directors has concluded that the Company’s compensation policies and practices are not reasonably likely to have a material adverse
effect on the Company. This is due, in part, to the fact that the performance metrics for determining short-term incentive awards are
based on publicly reported metrics and, therefore, are not easily susceptible to manipulation; the maximum payouts for short-term
incentive awards are capped, thereby reducing the risk that executives might be motivated to pursue excessively high short-term goals
to maximize short-term payouts; and, the maximum number of long-term incentive awards that are performance-based are also
capped, thereby reducing the risk that executives may be motivated to pursue excessively high performance targets (at the expense of
long-term strategic growth) to maximize the number of performance-based awards received. In addition, the Company’s stock
ownership guidelines incentivize our executives to focus on the Company’s long-term, sustainable growth.
11
The Nominating and Corporate Governance Committee will consider stockholder recommendations for director nominees sent to
the Nominating and Corporate Governance Committee, Wabash National Corporation, Attention: Corporate Secretary, 1000
Sagamore Parkway South, Lafayette, Indiana 47905. Stockholder recommendations for director nominees should include:
Director Nomination Process
• The name and address of the stockholder recommending the person to be nominated;
• A representation that the stockholder is a holder of record of our stock, including the number of shares held and the period of
holding;
• A description of all arrangements or understandings between the stockholder and the recommended nominee;
• Such other information regarding the recommended nominee as would be required to be included in a proxy statement filed
pursuant to Regulation 14A under the Exchange Act;
• The consent of the recommended nominee to serve as a director if so elected; and
• All other information requirements set forth in our Bylaws.
Stockholders’ nominees that comply with the procedures for submitting a stockholder nomination will receive the same
consideration as other candidates identified by or to the Nominating and Corporate Governance Committee. The procedures for
submitting a stockholder nomination are set forth below under “Stockholder Proposals and Nominations.” Upon receipt by the
Corporate Secretary of a stockholder notice of a director nomination, the Corporate Secretary will notify the stockholder that the
notice has been received and will be presented to the Nominating and Corporate Governance Committee for review.
Identifying and Evaluating Nominees for Directors
The Nominating and Corporate Governance Committee, with the assistance of the General Counsel and, if desired by the
Nominating and Corporate Governance Committee, a retained search firm, will screen candidates, perform reference checks, prepare a
biography for each candidate for the Nominating and Corporate Governance Committee to review and conduct interviews. The
Nominating and Corporate Governance Committee, the Chairman, and the Chief Executive Officer will interview candidates that meet
the criteria. The Nominating and Corporate Governance Committee will recommend to the Board of Directors nominees that best suit
the Board’s needs.
Communications with the Board of Directors
Stockholders or other interested persons wishing to make known complaints or concerns about our accounting, internal
accounting controls or auditing matters, or bring other concerns to the Board or the Audit Committee, or to otherwise communicate
with our independent directors as a group or the entire Board, individually or as a group, may do so by sending an email to
board@wabashnational.com or auditcommittee@wabashnational.com, or by writing to them care of Wabash National Corporation,
Attention: General Counsel, 1000 Sagamore Parkway South, Lafayette, Indiana 47905.
Pursuant to the direction of the Board, all correspondence will be received and processed by the General Counsel’s office. You
will receive a written acknowledgment from the General Counsel’s office upon receipt of your written correspondence. You may
report your concerns anonymously or confidentially. All communications received in accordance with the above procedures will be
reviewed initially by the General Counsel, who will relay all such communications to the appropriate director, directors or committee.
12
Non-employee directors were compensated in 2015 for their service as a director as shown in the chart below:
Director Compensation
Schedule of 2015 Director Fees
Effective January 1, 2015
Annual Retainers(1)
Board ................................................................................................................................................................................ $ 150,000 (2)
Member:
Audit Committee ............................................................................................................................................................
Compensation Committee ..............................................................................................................................................
Nominating and Corporate Governance Committee ......................................................................................................
Chairman of the Board .....................................................................................................................................................
Audit Committee Chair ....................................................................................................................................................
Compensation Committee Chair .....................................................................................................................................
Nominating and Corporate Governance Committee Chair ..............................................................................................
$10,000
8,000
8,000
25,000
15,000
12,000
10,000
Amount
(1) All annual cash retainers are paid in quarterly installments. Annual grants of restricted stock units, referenced in footnote 2
below, are paid in full following the election of directors at the annual meeting.
(2) Consists of a $75,000 cash retainer and an award of restricted stock units of Company stock having an aggregate market value
at the time of grant of $75,000. Restricted stock units vest in full on the first anniversary of the grant date.
At the February 2016 Board meeting, the Board resolved that, effective January 1, 2016, and concomitant with increases in base
salary compensation to executive officers, compensation for the Non-employee directors shall be as follows (with the exception of the
annual grant of restricted stock units, which shall be paid following the election of directors at the annual meeting):
Schedule of 2016 Director Fees
Effective January 1, 2016
Amount
Annual Retainers(1)
Board ................................................................................................................................................................................ $ 175,000 (2)
Member:
Audit Committee ............................................................................................................................................................
Compensation Committee ..............................................................................................................................................
Nominating and Corporate Governance Committee ......................................................................................................
Chairman of the Board .....................................................................................................................................................
Audit Committee Chair ....................................................................................................................................................
Compensation Committee Chair .....................................................................................................................................
Nominating and Corporate Governance Committee Chair ..............................................................................................
(1) All annual cash retainers are paid in quarterly installments. Annual grants of restricted stock units, referenced in footnote 2
$10,000
8,000
8,000
25,000
15,000
12,000
10,000
below, are paid in full following the election of directors at the annual meeting.
(2) Consists of a $75,000 cash retainer and an award of restricted stock units of Company stock having an aggregate market value
at the time of grant of $100,000. Restricted stock units vest in full on the first anniversary of the grant date.
13
The following table summarizes the compensation paid to our directors during 2015, other than Mr. Giromini, whose
compensation is discussed below under Executive Compensation.
Director Compensation for Year-End
December 31, 2015
(1)
Fees Earned or Paid in
Cash
($)
$118,000
$91,000
$97,000
$93,000
$91,000
$98,000
(2)
Stock Awards
($)
$75,000
$75,000
$75,000
$75,000
$75,000
$75,000
(3)
All Other
Compensation
($)
—
$3,590
$3,830
$3,760
—
$3,870
Total
($)
$193,000
$169,590
$175,830
$171,670
$166,000
$176,870
Name
Martin C. Jischke
James D. Kelly
John E. Kunz
Larry J. Magee
Ann D. Murtlow
Scott K. Sorensen
(1) Consists of cash fees earned in 2015, some of which were not paid until January 2016, for annual retainers and per meeting fees,
as described on the previous page. Directors are entitled to defer a portion of their cash compensation pursuant to our Non-
Qualified Deferred Compensation Plan, whose material terms are described in the narrative preceding the Non-Qualified
Deferred Compensation Table in the Executive Compensation section below. This column includes any amounts a director elects
to defer pursuant to the Non-Qualified Deferred Compensation Plan.
(2) Consists of a grant of restricted stock units on May 14, 2015, which will vest on May 14, 2016.
(3) Consists of the Company’s match pursuant to our Non-Qualified Deferred Compensation Plan. The Company fully matches the
first 3% of earnings deferred by a participant under the non-qualified deferred compensation plan. In addition, the Company will
contribute ½% for each additional percent of deferred earnings contributed by the participant, up to a maximum of 5% of the
participant’s deferred earnings (thus resulting in a maximum of a 4% Company match on a participant’s deferral of 5% of his/her
earnings).
Non-employee Director Stock Ownership Guidelines
The Board believes that it is important for each director to have a financial stake in the Company, aligning the director’s interests
with those of the Company’s stockholders. To meet this objective, the Board has established stock ownership guidelines, which
provide that each non-employee director is required to hold 65% of all Company shares received through Company incentive
compensation plans (the “Director Holding Requirement”) until the non-employee director achieves a target ownership level equal to
five (5) times the cash portion of the non-employee director’s Annual Board Retainer. Once a non-employee director has achieved
his/her stated target ownership level, s/he is no longer required to adhere to the Director Holding Requirement, unless and until his/her
ownership level falls below the target. For purposes of calculating target ownership levels, the following types of Company shares are
counted: stock owned by the non-employee director; vested or unvested restricted stock and restricted stock units; and performance
shares deemed earned, but not yet vested.
Non-employee directors are required to comply with the guidelines immediately upon their appointment as a director, however,
they may forfeit shares to pay taxes upon vesting of shares and/or the exercise price upon stock option exercise. As of December 31,
2015, all non-employee directors met the guidelines.
Other
The Board requires that every new director participate in a detailed orientation, which includes a review of business and financial
operations, meetings with company executives and others, and an overview of our corporate governance policies and procedures.
Additionally, all Board members travel at least annually to visit some of our key operations and meet with business and operations
leadership at these sites.
The Company reimburses all directors for travel and other reasonable, necessary business expenses incurred in the performance
of their services for the Company and extends coverage to them under the Company’s travel accident and directors’ and officers’
liability insurance policies. In addition, the Company allocates to each director a biennial allowance of $10,000 to reimburse costs
associated with attending continuing education courses related to Board of Directors service.
14
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and 10% stockholders to file reports of ownership of
our equity securities. To our knowledge, based solely on our review of the copies of such forms furnished to us in 2015 and written
representations from our executive officers and directors, we believe that all Section 16(a) filing requirements of our directors and
executive officers were met.
Beneficial Ownership of Common Stock
The following table sets forth certain information as of March 14, 2016 (unless otherwise specified), with respect to the beneficial
ownership of our Common Stock by each person who is known to own beneficially more than 5% of the outstanding shares of
Common Stock, each person currently serving as a director, each nominee for director, each Named Executive Officer (as defined in
the Compensation Discussion & Analysis below), and all directors and executive officers as a group:
NAME AND ADDRESS OF BENEFICIAL OWNER
Black Rock, Inc. and affiliates ...................................................................................................................
40 East 52nd Street
New York, New York 10022
The Vanguard Group, Inc. ..........................................................................................................................
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Richard J. Giromini ....................................................................................................................................
Martin C. Jischke ........................................................................................................................................
James D. Kelly ...........................................................................................................................................
John E. Kunz .............................................................................................................................................
Larry J. Magee ............................................................................................................................................
Ann D. Murtlow .........................................................................................................................................
William D. Pitchford ..................................................................................................................................
Erin J. Roth .................................................................................................................................................
Scott K. Sorensen .......................................................................................................................................
Jeffery L. Taylor .........................................................................................................................................
Mark J. Weber ............................................................................................................................................
Brent L. Yeagy ...........................................................................................................................................
All executive officers and directors as a group (12 persons) ....................................................................
*
Less than one percent
(1)
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED
PERCENT
OF CLASS
(rounded)
4,792,282(2)
7.2%
8,543,358(3)
12.8%
1,011,424 (4)
88,794
66,308
31,443
88,800
17,035 (5)
29,445 (6)
119,976 (7)
1.6%
*
*
*
*
*
*
*
69,900 (8) *
*
*
*
2.9%
24,882 (9)
228,406(10)
108,139(11)
1,854,126(12)
(1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power
with respect to securities. Shares of Common Stock subject to restricted stock units and/or performance share units are not
deemed outstanding by the Company for purposes of reporting on common stock outstanding. As such, only those units that
will vest within 60 days of March 14, 2016 are deemed outstanding for purposes of computing the percentage ownership of the
person holding such units. Shares of Common Stock subject to options currently exercisable or exercisable within 60 days of
March 14, 2016 are deemed outstanding for purposes of computing the percentage ownership of the person holding such
options, but are not deemed outstanding for purposes of computing the percentage ownership of any other person. Except where
indicated otherwise, and subject to community property laws where applicable, the persons named in the table above have sole
voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.
(2)
Based solely on a Schedule 13G/A filed January 27, 2016 by BlackRock, Inc. on its own behalf and on behalf of its subsidiaries
BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset Management Canada Limited,
BlackRock Investment Management (Australia) Limited, BlackRock Advisors, LLC, BlackRock Investment Management,
LLC, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial
Management, Inc., BlackRock Investment Management (UK) Limited, BlackRock International Limited, and BlackRock Japan
Co Ltd. (collectively, the “BlackRock Subsidiaries”). BlackRock, Inc. has sole voting power with respect to 4,582,095 shares.
None of the BlackRock Subsidiaries claim beneficial ownership of 5% or greater of the outstanding shares of Common Stock.
(3)
Based solely on the Schedule 13G/A filed February 11, 2016 by The Vanguard Group, Inc. on its own behalf and on behalf of
its subsidiaries Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. (collectively, the “Vanguard
Subsidiaries”). The Vanguard Group has sole voting power with respect to 148,772 shares, shared voting power with respect to
15
7,700 shares, sole dispositive power with respect to 8,391,186 shares, and shared dispositive power with respect to 152,172
shares. None of the Vanguard Subsidiaries claim beneficial ownership of 5% or greater of the outstanding shares of Common
Stock.
(4)
Includes options held by Mr. Giromini to purchase 502,494 shares that are currently, or will be within 60 days of March 14,
2016, exercisable. Does not include any restricted stock units or performance share units, as no such awards held by Mr.
Giromini will vest within 60 days of March 14, 2016.
(5) Through a family estate-planning structure, Mrs. Murtlow shares voting and investment power on all reported shares with her
spouse.
(6)
(7)
Includes options held by Mr. Pitchford to purchase 18,940 shares that are currently, or will be within 60 days of March 14,
2016, exercisable. Does not include any restricted stock units or performance share units, as no such awards held by Mr.
Pitchford will vest within 60 days of March 14, 2016.
Includes options held by Ms. Roth to purchase 55,137 shares that are currently, or will be within 60 days of March 14, 2016,
exercisable. Does not include any restricted stock units or performance share units, as no such awards held by Ms. Roth will
vest within 60 days of March 14, 2016.
(8) Through a family estate-planning structure, Mr. Sorensen shares voting and investment power on all reported shares with his
spouse.
(9)
(10)
Includes options held by Mr. Taylor to purchase 13,861 shares that are currently, or will be within 60 days of March 14, 2016,
exercisable. Does not include any restricted stock units or performance share units, as no such awards held by Mr. Taylor will
vest within 60 days of March 14, 2016.
Includes options held by Mr. Weber to purchase 118,465 shares that are currently, or will be within 60 days of March 14, 2016,
exercisable. Includes 14,000 shares of which Mr. Weber shares voting and investment power with his spouse. Does not include
any restricted stock units or performance share units, as no such awards held by Mr. Weber will vest within 60 days of March
14, 2016.
(11)
Includes options held by Mr. Yeagy to purchase 75,968 shares that are currently, or will be within 60 days of March 14, 2016,
exercisable. Does not include any restricted stock units or performance share units, as no such awards held by Mr. Yeagy will
vest within 60 days of March 14, 2016.
(12) Includes options held by our executive officers to purchase an aggregate of 784,865 shares that are currently, or will be within
60 days of March 14, 2016, exercisable. The Company’s directors do not hold any options. Does not include any restricted
stock units or performance share units, as no such awards held by our executive officers will vest within 60 days of March 14,
2016.
16
Executive Compensation
Compensation Discussion and Analysis
The Board of Directors and the Company recognize that our stockholders should have as much trust in the integrity of the
Company’s executive compensation process as our customers have in the quality of our products. We place tremendous effort and
rigor into our executive compensation processes. We strive to be fair and reasonable while simultaneously aligning the interests of
our stockholders and the executives who have been entrusted to lead the Company.
The following compensation discussion and analysis (“CD&A”) provides information regarding the objectives and elements of
our compensation philosophy and policies for our NEOs in 2015 and key changes to the policies in 2016. Throughout this CD&A,
Wabash National’s Named Executive Officers, or NEOs, means:
• Richard J. Giromini – president and chief executive officer (“CEO”)
• Jeffery L. Taylor – senior vice president and chief financial officer (“CFO”)
• Erin J. Roth – senior vice president, general counsel and secretary (“General Counsel”)
• Mark J. Weber – senior vice president, president – Diversified Products Group (“Group President – DPG”)
• Brent L. Yeagy – senior vice president, president – Commercial Trailer Products (“Group President – CTP”)
Executive Summary
2015 Financial Highlights
Over the past five years, we have made significant progress toward our strategy to transform ourselves into a diversified
industrial manufacturer with a higher growth and margin profile. With this strategic goal in mind, we accomplished the following
since 2011:
• Grown revenue from $1.19 billion in 2011 to $2.03 billion in 2015;
• Grown operating income from $19.8 million in 2011 to $180.4 million in 2015;
• Grown net income from $15 million in 2011 to $104.3 million in 2015;
• Improvement in gross profit margins from 5.6% in 2011 to 15.0% in 2015; and
• Net debt and liquidity as of year-end 2011 were $49.8 million and $125.7 million, respectively. As of year-end 2015, net
debt and liquidity were $147.4 million and $348 million, respectively.
During 2015, management continued to make progress on our strategic initiatives, as highlighted in the specific
accomplishments detailed below:
• Record operating income for the fourth consecutive year, up 47% over the prior year;
• Full-year adjusted earnings of $1.49 per diluted share, up 67.4% over full-year 2014;
• Continued to maintain record liquidity levels, with year-end 2015 liquidity of $348 million;
• Reduced net debt by $58.2 million during 2015;
• Expansion into Class 5-7 truck body markets, further diversifying the Company’s end market customer base;
• New aerodynamic product offerings by the Company’s Diversified Products segment;
• Fully exhausted $60 million share repurchase program authorized by our Board of Directors in 2015;
• Authorized new $100 million share repurchase plan;
• Continued to execute on the Company’s strategy to reduce debt by entering into agreements to repurchase up to $54.2
million in principal of the Company’s outstanding Convertible Senior Notes;
• Continued to invest in a flexible manufacturing footprint to optimize manufacturing costs long-term, add necessary
capacity, enhance customer service and support future growth; and
• The management team also continued to drive productivity and lean initiatives across the organization, resulting in
savings enabling us to fund growth initiatives and capital investments.
17
Highlighted below are certain executive compensation governance practices (that we employ and avoid) that support the needs
of our business, drive performance and align with our shareholders’ long-term interests. We believe our executive compensation
practices align with our corporate values and mission and provide a foundation for long-term success. These practices include:
Best Practices
PRACTICES WE AVOID
χ No Pledging/Hedging Transactions or Short
Sales Permitted – Our policies prohibit
executives, including the NEOs, and directors
from pledging or engaging in hedging or short
sales with respect to the Company’s common
stock.
Appreciation
χ No Repricing Underwater Stock Options or
Rights Without
Stock
Stockholder Approval – We do not permit
underwater stock options or stock appreciation
rights to be repriced without stockholder approval.
χ Employment Contracts – With the exception of
our CEO (whose contract was originally executed
upon his appointment as our COO in 2002), we do
not have employment contracts for our NEOs. The
Compensation Committee reviews our CEO’s
performance on a yearly basis before determining
whether to terminate the agreement.
χ No Unique Retirement Programs – We do not
have retirement programs uniquely applicable to
our executive officers, nor do we provide
additional supplemental executive
retirement
service credit as a recruitment tool.
χ No Substantial Perquisites – We do not provide
substantial perquisites to our executive officers.
PRACTICES WE EMPLOY
√ Pay for Performance – We tie pay to performance.
The majority of NEO pay is not guaranteed – and is
performance-based. We set financial goals for
corporate and business unit performance.
√ Reasonable Executive Severance/Change-in-
Control Policy – We believe we have reasonable
post-employment and change-in-control provisions
that are generally in line with our peer group.
√ Peer Review – We
closely monitor
the
compensation systems of companies of similar size
and similar industries, with the objective of setting
total compensation for our NEOs at levels that are
generally competitive with our peer group, but also
account
financial
for
performance objectives.
the Company’s own
√ Mitigate Undue Risk – Our compensation
practices are designed to discourage excessive risk-
taking as related to performance and payout under
our compensation programs.
√ Annual NEO Pay Review - Our Compensation
Committee reviews NEO pay annually, and the
CEO and other NEOs are evaluated on their
performance annually as part of this process
√ Double Trigger Change-in-Control Severance
Benefits - We employ a double-trigger change in
control provision as part of our Change-in-Control
policy.
√ Stock Ownership Guidelines – Our expectations
for stock ownership align executives’ interests with
those of our shareholders and all of the NEOs are in
compliance with those guidelines.
√
Independent Compensation Committee and
Compensation Consulting
– Our
Compensation Committee is comprised entirely of
independent directors and engages an independent
consultant.
Firm
18
Compensation Program Objectives and Philosophy
Our Committee works closely with the Company’s leadership team to refine our compensation program, to clearly articulate its
objectives to our executives and to emphasize through the design of the compensation program our focus on performance-based
compensation so that executives are awarded for results that create long-term shareholder value. The main elements of our
compensation structure and how each supports our compensation philosophy and objectives are summarized below:
Wabash National Corporation Executive Compensation Design
Total Direct Compensation
Total Indirect Compensation
Short-Term Compensation
Long-Term Compensation
Other Indirect Components
Base Salary
Short-Term Incentive Plan
Long-Term Incentive Plan
Fixed.
Fixed compensation
component payable in
cash. Reviewed
annually and adjusted
when appropriate.
Variable.
Annual cash award for
achievement of current-year
financial and operational
goals.
Variable.
Equity awards designed to
attract and retain quality
executive management, and
align NEO interests with those
of the Company’s stockholders.
Fixed.
Deferred compensation
benefits; perquisites; additional
benefits payable upon a
Change-in-Control event or
severance without Cause.
The primary objectives and philosophy of our compensation programs are to (i) drive executive behaviors that maximize long-
term shareholder value creation, (ii) attract and retain talented executive officers with the skills necessary to successfully manage and
grow our business, and (iii) align the interests of our executive officers with those of our stockholders by rewarding them for strong
company performance. In support of these objectives, we:
• Target NEO total compensation package competitive with peers – We regularly compare our NEOs’ total compensation
levels, as well as the elements of our NEO pay, with companies of a similar size and complexity;
• Deliver a meaningful proportion of NEO compensation in share-based and performance-based incentives – In 2015,
45% to 58% of NEO total compensation was targeted to be delivered in the form of restricted stock units, options and
performance share units, with a goal of driving sustainable stockholder value; and
• Weight a significant portion of NEO compensation toward variable and performance-based pay elements – In 2015,
65% to 75% of NEO total compensation was targeted to be delivered in variable Short-Term (annual) or Long-Term incentive
compensation. As shown below, approximately 79% of our CEO’s target total compensation in 2015 was performance-based.
* Percentages listed in the chart above are rounded to the nearest whole number, which may result in totals slightly below or in excess of 100%.
19
Summary of Key Compensation Decisions and Outcomes for 2015
The key decisions the Committee made during 2015 are summarized below and discussed in greater detail in the remainder of
this CD&A.
Base Salary Adjustments
The Committee approved increases in base salary for our NEOs, ranging from 2.7% to 18.2%, to more closely align our NEOs with
median base salary levels of our peer group. The Committee increased our CEO’s base salary by 3.75% from $800,000 to $830,000 in
2015.
Short-Term Incentive Plan (“STI”)
Company-Wide:
• The metrics and weightings of the metrics used in the Company-wide STI program in 2015, in which the CEO, CFO and
General Counsel participated, were as follows: Operating Income (80%) and Net Working Capital (20%).
• The Committee increased the 2015 target award for each of our CFO (from 55% to 65% of base salary) and General Counsel
(from 55% to 60% of base salary) to better align the compensation of the executives with market practices in a way that
further emphasizes performance-based pay. The target incentive award percentages for our CEO remained unchanged from
2014 (at 100% of base salary).
• Based on actual Company-wide 2015 performance, the STI attainment was at the maximum achievement, or 200% payout,
level of performance on each of Operating Income and Net Working Capital, and payouts of these incentives occurred in
March 2016.
Commercial Trailer Products (“CTP”):
• The metrics and weightings of the metrics used in CTP’s STI program in 2015, in which the Group President - CTP
participated, were as follows: Company-wide Operating Income (55%), CTP Operating Income (25%), and Company-wide
Net Working Capital (20%).
• The Committee increased the 2015 target award percentage for our Group President - CTP (from 55% to 65% of base salary) to
better align his compensation with market practices in a way that further emphasizes performance-based pay.
• Based on actual CTP 2015 performance, attainment of the CTP Operating Income metric was at the maximum achievement, or
200% payout, level of performance, resulting in a weighted award payout of 200% to our Group President – CTP, Mr.
Yeagy. Payout of this incentive occurred in March 2016.
Diversified Products Group (“DPG”):
• The metrics and weightings of the metrics used in DPG’s STI program in 2015, in which the Group President - DPG
participated, were as follows: Company-wide Operating Income (55%), DPG Operating Income (25%), and Company-wide
Net Working Capital (20%).
• The target award percentage for our Group President - DPG was unchanged from 2014 (at 65% of base salary).
• Based on actual DPG 2015 performance, attainment of the DPG Operating Income metric was above the threshold, but below
the target, level of achievement (attaining results at 84% of target), resulting in a weighted award payout of 165% to our
Group President – DPG, Mr. Weber. Payout of this incentive occurred in March 2016.
Long-Term Incentive Plan
Consistent with 2014, the Committee granted performance stock units (“PSUs”), as well as service-based restricted stock units
(“RSU’s”) and stock options to each of the NEOs. Each NEO’s total LTI award was allocated as follows: 50% PSUs, 30% RSUs and
20% non-qualified stock options. The PSUs and RSUs will be settled in shares.
Also consistent with 2014, for each of the NEOs, the number of PSUs earned will depend upon achievement against two equally
weighted metrics: Relative Total Shareholder Return measured against a peer group of 12 similarly-cyclical companies (i.e. a
different peer group than the peer group used generally by the Committee in setting compensation), and Cumulative EBITDA
Performance. Each metric will be measured over a three-year period. Additionally, for our CEO only, his ability to earn RSUs will
20
also be tied to a one-year operating income performance metric.
The Committee increased the 2015 target award percentages for each of our CEO (from 215% to 250% of salary grade mid-point),
CFO (from 100% to 125%), General Counsel (from 100% to 110%) and Group President – CTP (from 100% to 125%) to better align
the compensation of the executives with market practices. The target award percentage for our Group President – DPG remained
unchanged (at 125%).
Executive Severance Plan
In 2015, the Committee approved, and the Company adopted an Executive Severance Plan (the “ESP”) for the Company’s executives.
The ESP is effective January 1, 2016 and reflects market practice and consistency across the Company’s compensation arrangements.
Pursuant to the ESP, to receive benefits under the ESP, participants are required to execute a release, non-compete, and non-
solicitation agreement with the Company.
Compensation Peer Group
The Committee utilizes two compensation benchmarking peer groups to assess the competitiveness of the NEO’s target compensation
levels. The peer groups are intended to reflect companies with similar revenue size and business complexity as the Company.
Our 2015 Say-on-Pay Vote
The Compensation Committee carefully considered the results of the Company’s “Say on Pay Vote” taken by stockholders at its
2015 Annual Meeting, and the Committee plans to continue to carefully consider the results of this vote each year. At the 2015 Annual
Meeting, approximately 97% of the stockholder votes cast on the proposal were cast in favor of the resolution stating that the
stockholders “approve the compensation of Wabash National’s executive officers.” The Compensation Committee believes that the
level of support indicated by those votes reflects favorably on the Company’s executive compensation program, which emphasizes
“pay for performance,” even in the highly cyclical industry in which Wabash National operates.
2015 Compensation Overview
At Wabash National, we aspire to provide ever increasing value to all of our stakeholders, including customers, stockholders,
associates, suppliers and our community. To achieve this aspiration, our business strategy includes:
• Exceptional operating performance, including driving continuous improvement, production safety, product innovation and
quality;
• Disciplined growth of stockholder value; and
• Development and retention of high performance associates.
Execution of our strategy is expected to create a sustainable business that rewards our customers, our associates and our
stockholders. Wabash National’s compensation program is designed to motivate our NEOs and other salaried associates to execute
our business strategies and strive for higher company performance, while maintaining our core values of safety, customer satisfaction,
product quality, best-in-class service, continuous improvement, product innovation, and ethical, trustworthy business practices.
Although Wabash National’s compensation program applies to most salaried associates, this Proxy Statement focuses on its
applicability to our NEOs.
The Compensation Committee (the “Committee”) is responsible for implementing our executive compensation policies and
programs and works closely with management, in particular our CEO and our Senior Vice President of Human Resources, in assessing
appropriate compensation for our NEOs. To assist in identifying appropriate levels of compensation, the Committee has engaged the
services of Meridian, an independent compensation consultant, for assistance in 2015 and 2016 compensation plan design, and to
provide compensation market data and general review and advice regarding our compensation disclosures. More information on the
Committee’s processes and procedures can be found above in “Compensation Committee.”
Philosophy and Objectives of Wabash National Compensation Program
Our overall compensation philosophy is to provide compensation packages to our executives, including our NEOs, that are
competitive with those of executives in our peer group, while at the same time keeping our compensation program equitable,
straightforward in structure, and reflective of our overall Company performance. In implementing this philosophy, we award
compensation to meet our three principle objectives: aligning executive compensation with our Company’s annual and long-term
performance goals; using equity-based awards to align executive and stockholder interests; and setting compensation at levels that
assist us in attracting and retaining qualified executives.
21
To align the incentive components of our compensation program with Company performance, we choose simple, transparent, and
consistently communicated metrics that align compensation to our business strategies and our stockholders’ interests. Additionally,
we utilize a mix of compensation components to meet the following goals:
• Attract, retain, and motivate high-caliber executives;
• As the responsibility of an associate/executive increases within the Company, place a larger portion of total
compensation “at-risk,” with an increasing portion tied to long-term incentives;
• Provide the appropriate level of reward for performance;
• Recognize the cyclical nature of our primary truck-trailer business and the need to manage shareholder value through the
business cycle by managing compensation levels and components;
• Provide stockholder alignment by encouraging NEOs to be long-term stockholders of Wabash National;
• Structure compensation programs to meet the tax deductibility criteria in the U.S. Internal Revenue Code when
practicable; and
• Structure the compensation program to be regarded positively by our stockholders and associates, while providing the
Compensation Committee with the flexibility needed to satisfy all of the above listed goals.
Each component of Wabash National’s compensation structure, and the primary objective of each component, is summarized in
the table below:
Component
Primary objective
Characteristics and Description
Base Salary
Attract and retain.
Fixed cash, competitively assessed against our peer
group. Also takes into consideration level of
responsibility, experience, knowledge, individual
performance and internal equity considerations.
Reviewed annually and adjusted when appropriate.
Short-Term
Incentive
Award
Promote achievement of short-
term financial goals aligned with
shareholder interests.
Short-term incentive paid in cash, based on performance
measured against annually established company-wide and
business unit financial goals. Rewards executives for
superior financial performance of the Company.
Create alignment with
shareholder interests and
promote achievement of longer-
term financial and strategic
objectives.
Long-Term
Incentive
Award
Award is delivered through a combination of
Performance Stock Units, Restricted Stock Units and
Non-qualified Stock Options. Rewards executives for
long-term growth of the Company.
22
Where Reported in
the Executive
Compensation Tables
Summary
Compensation Table –
“Salary” column
Summary
Compensation Table –
“Non-Equity Incentive
Plan Compensation”
column
Grants of Plan-Based
Awards table –
“Estimated Possible
Payouts Under Non-
Equity Incentive Plan
Awards” column
Summary
Compensation Table –
“Stock” and “Option”
columns
Grants of Plan-Based
Awards table –
“Estimated Possible
Payouts Under Equity
Incentive Plan
Awards,” Stock, and
Options columns
Outstanding Equity
Awards at Fiscal Year-
End table
Option Exercises and
Stock Vested table
Component
Primary objective
Characteristics and Description
Where Reported in
the Executive
Compensation Tables
Perquisites
Attract and retain.
Executive physicals; credit monitoring; health club
discounts; matching contributions to health savings
accounts; amounts paid on life/disability insurance on
behalf of the executive. Limited relative to peer group.
Summary
Compensation Table –
“All Other
Compensation” column
Retirement
Benefits
Attract and retain
A 401(k) plan, on which the Company has partially
matched associate contributions, when the performance
of the Company has allowed.
Deferred
Compensation
Benefits
Attract and retain
Non-qualified deferred compensation plan where a select
group of associates, including NEOs, can elect to defer
base salary and/or STI Awards. The Company has
partially matched associate contributions, when the
performance of the Company has allowed.
Summary
Compensation Table –
“All Other
Compensation” column
Summary
Compensation Table –
“All Other
Compensation” column
Non-Qualified Deferred
Compensation table.
Potential
Payments
Upon Change
in Control
Encourage executives to operate
in the best interests of
stockholders both before and
after a Change in Control event
Fixed cash and certain rights with respect to equity
awards. Contingent in nature and payable only if an
NEO’s employment is terminated as specified under the
Company’s Change in Control Plan (or under the CEO’s
employment agreement)
Potential Payments on
Termination or Change
in Control Payment and
Benefits Estimate table
Other
Potential
Post-
Employment
Payments
Provide potential payments
under scenarios of death,
disability, termination without
cause, and voluntary separation
Contingent in nature; amounts are payable only if an
NEO’s employment is terminated as specified under the
arrangements of various plans – including the ESP – or
insurance policies
Potential Payments on
Termination or Change
in Control Payment and
Benefits Estimate table
The Compensation Committee believes that the Company’s existing executive compensation structure continues to encompass
several “best practices,” as described earlier in this CD&A, and continues to be effective in not only rewarding executives for
Company performance, but also aligning executive interests with long-term stockholder interests. The Committee will continue to
analyze our executive compensation structure and adjust it as appropriate to reflect our performance and competitive needs, while
always incorporating our longstanding philosophies of paying for performance, supporting business strategies, and paying
competitively. We believe these philosophies will continue to attract and retain quality business leaders, and will drive our NEOs and
other salaried associates to produce sustainable, positive results for Wabash National and its stockholders.
Compensation Methodology and Process
Independent Review and Approval of Executive Compensation
The Compensation Committee, consisting of only independent members of the Board, is responsible for reviewing and
approving the Wabash National compensation program, particularly the corporate and business segment goals and objectives related
to compensation for the majority of salaried associates. The Committee evaluates the NEOs’ performance in relation to the
established goals and ultimately approves the compensation for the NEOs after evaluating their compensation packages. See the
“Compensation Committee” section of this Proxy Statement for a detailed listing of the Committee responsibilities and members.
In reviewing competitive peer group data discussed with management and Meridian, the Committee does not specifically
“benchmark” or target a certain percentage or level of compensation to the NEOs. Rather, the Committee considers competitive peer
group data as one significant factor in setting pay levels and amounts. The Committee realizes that competitive alternatives vary from
individual to individual and may extend beyond equivalent positions in our industry or at other publicly-traded or similarly-situated
companies. Consistent with our compensation objectives, the Committee retains the flexibility to also consider subjective factors, such
as each executive’s fulfillment of duties, teamwork, level of responsibility, knowledge, time in position, experience and internal equity
among the executives with similar experience and job responsibilities. When determining long-term incentive compensation, the
23
Compensation Committee also considers the cost of the plan to the Company and present and future availability of shares under our
equity plans.
The Committee annually reviews previously approved compensation plans and levels to ensure continued alignment with our
business strategy, the Company’s performance, and the interest of our associates and stockholders, as well as market practices for all
elements of executive compensation, and approves necessary adjustments to remain competitive.
The Nominating and Corporate Governance Committee directs an annual evaluation of the CEO, and provides the results of the
evaluation to the Compensation Committee for the Compensation Committee to use in making its decision whether to renew the
CEO’s employment agreement, as well as setting and approving the CEO’s compensation each year.
While the Committee does independently determine and approve the CEO’s compensation each year, it relies on the input of the
CEO in setting compensation for the other NEOs. (In addition, as noted on page 21, the Committee also carefully considers the results
of voting on the annual non-binding “say-on-pay” proposal.) The CEO provides the Committee with an evaluation of each NEO’s
performance, as well as his recommendations for changes to the NEOs’ base salaries (if any) and STI and LTI award levels, which are
based on criteria and peer group data discussed with the Committee and Meridian. The Committee has the discretion to accept, reject
or modify any of the CEO’s recommendations. The other NEOs are not present during these discussions.
The Role of the Compensation Committee’s Independent Compensation Consultant
As noted under the “Compensation Committee” section of this Proxy Statement, the Committee has retained Meridian, a national
compensation consulting firm, to assist it in fulfilling its responsibilities and duties. Meridian reviewed the Company’s executive
compensation program design and assessed our compensation approach relative to our performance and our market assessment peer
group.
Specifically, Meridian’s engagement encompasses advisory services such as annual review of executive compensation
philosophy, a competitive assessment of executive compensation levels and “pay-for-performance” linkage, executive cash and equity
incentive program design, review of the CEO’s employment agreement, competitive assessment of non-employee director
compensation, and other ad hoc support. Meridian works at the direction of, and reports directly to, the Compensation Committee.
Meridian does not provide any other services to Wabash National.
The Compensation Committee has analyzed the work of Meridian as a compensation consultant, taking into consideration all
relevant factors, including the following factors: (i) the provision of other services to the Company by Meridian; (ii) the amount of
fees from the Company paid to Meridian as a percentage of Meridian’s total revenue; (iii) the policies and procedures of Meridian that
are designed to prevent conflicts of interest; (iv) any business or personal relationship between the individual compensation advisors
employed by Meridian and any executive officer of the Company; (v) any business or personal relationship between the individual
compensation advisors employed by Meridian and any member of the Compensation Committee; and (vi) any stock of the Company
owned by Meridian or the individual compensation advisors employed by Meridian. The Compensation Committee has determined,
based on its analysis in light of all relevant factors, including the factors listed above, that the work of Meridian and the individual
compensation advisors employed by Meridian as compensation consultants to the Compensation Committee has not created any
conflicts of interest, and that Meridian is independent pursuant to the independence standards set forth in the NYSE listing standards
promulgated pursuant to Section 10C of the Exchange Act.
Peer Group Analysis and Compensation Market Data
To help assess the competitiveness of total compensation for each NEO, the Committee analyzed executive compensation data
from the following two sources:(i) published proxies of companies specifically selected as proxy peer companies (the “Proxy Peer
Group”), and (ii) the proprietary Equilar database (the “Equilar Peer Group”) For purposes of review, the Committee utilized data
from the Proxy Peer Group as the primary data source to assess the competitive positioning for the CEO and CFO target
compensation. Given the limited positional data available from proxies, the Committee utilized data from the Equilar Peer Group as
the primary data source to assess competitive positioning for the NEO’s other than the CEO and CFO. Data from the Equilar Peer
Group was considered a secondary data source for the CEO and CFO positions.
The companies in the Proxy Peer Group and the Equilar Peer Group, indicated in the charts below, are similar to Wabash
National in revenue, complexity, and market capitalization. The Committee reviews annually both peer groups, which were originally
recommended by Meridian, to confirm that they continue to be appropriate comparator groups for NEO compensation, and makes
adjustments as it deems appropriate. The Committee believes the exercise of evaluating the peer groups is important because the
availability of qualified executive talent is limited, and the design of our compensation program is important in helping us attract – and
retain – qualified candidates by providing compensation that is competitive within the industries of industrial machinery, heavy trucks,
and auto parts and equipment and the broader market for executive talent. The revenues listed in the charts below reflect those from
24
the four quarters directly preceding the Committee’s December 2014 meeting, in which it reviewed and set the Company’s 2015
executive compensation programs.
2015 Proxy Peer Group
Company
A.O. Smith
Accuride Corporation
Actuant Corporation
Allison Transmission Holdings, Inc.
Barnes Group
Briggs & Stratton Corporation
Chart Industries, Inc.
Commercial Vehicle Group, Inc.
Donaldson Company, Inc.
EnPro Industries, Inc.
Federal Signal Corporation
Graftech International Ltd.
Greenbrier Companies, Inc.
Meritor, Inc.
Modine Manufacturing Company
Nordson Corp.
Tecumseh Products Company
Tower International, Inc.
TriMas Corporation
Westinghouse Air Brake Technologies (Wabtec) Corporation
Woodward, Inc.
25th Percentile
Median
75th Percentile
Wabash National Corporation
Revenues
($, in millions)
$2,288
Market Cap as
of Oct. 31, 2014
($, in millions)
$4,101
$677
$1,400
$2,074
$1,243
$1,834
$1,171
$811
$2,471
$1,178
$874
$1,134
$2,204
$3,788
$1,507
$1,646
$755
$2,164
$1,472
$2,905
$2,001
$1,171
$1,507
$2,164
$1,863
$230
$2,059
$5,766
$1,991
$926
$1,419
$195
$5,753
$1,548
$891
$585
$1,712
$1,124
$614
$4,830
$68
$504
$1,433
$8,307
$3,354
$614
$1,433
$3,354
$711
25
2015 Equilar Peer Group
Company
Revenues
(TTM-$Mn)
Market Value -
10/31/2014
($Mn)
Flowserve Corp.
Trinity Industries Inc.
Colfax Corporation
Xylem Inc.
Harsco Corporation
Pall Corporation
ITT Corporation
Donaldson
A.O. Smith Corp.
Tower International, Inc.
IDEX Corporation
Nordson Corporation
TriMas Corporation
Chart Industries Inc.
Graco Inc.
Barnes Group Inc.
Drew Industries Inc.
Federal Signal Corp.
Coherent Inc.
Checkpoint Systems Inc.
II-VI Inc.
ESCO Technologies Inc.
25th Percentile
Median
75th Percentile
Wabash National Corporation
$4,886
$5,765
$4,589
$3,907
$2,255
$2,856
$2,640
$2,471
$2,288
$2,164
$2,144
$1,646
$1,472
$1,171
$1,187
$1,243
$1,126
$874
$795
$673
$719
$531
$1,137
$1,895
$2,598
$1,863
$9,268
$5,558
$6,726
$6,613
$1,752
$9,764
$4,127
$5,753
$4,101
$504
$5,948
$4,830
$1,433
$1,419
$4,668
$1,991
$1,136
$891
$1,625
$553
$840
$1,000
$1,207
$3,046
$5,704
$711
Direct Compensation Elements
The following information describes, in detail, each direct compensation element, including a discussion of performance
metrics, where applicable. It is intended that this information be read in conjunction with the information provided in the tables that
follow this CD&A.
Base Salary
In determining salary levels for each of our NEOs (other than our CEO), the Committee takes into consideration a competitive
market assessment provided to it by Meridian, which analyzes the pay practices at the peer group companies listed above, as well as
26
several subjective factors previously discussed on page 23. The Committee also considers each NEO’s current salary as compared to
an internal Company salary grade range for other employees, as well as the salary practices of the relevant peer group.
In determining the salary level for our CEO, the Committee takes into consideration the Proxy Peer Group assessment
addressed above, as well as the annual performance evaluation of our CEO conducted by the Board’s Nominating & Corporate
Governance Committee. In 2015, the Compensation Committee increased our CEO’s salary by 3.75%, from $800,000 to $830,000 –
considering the Proxy Peer Group data, as well as the results of his performance evaluation, which noted his significant role in leading
the Company to another year of record-setting financial performance levels.
Short-Term Incentive Plan
Our short-term incentive plan, or STI Plan, is designed to reward participants for meeting or exceeding financial and other
performance goals during a calendar year, and is available to NEOs, as well as other executives and key associates. If STI Plan targets
are met, participants receive a cash bonus. In short, we strive to pay for performance – we pay higher compensation when our
management team achieves our predetermined goals, and lower compensation when it does not. The following factors are used to
calculate the amount of the STI award actually paid to NEOs: Base salary earnings; Target STI Rate, as described below under
Approval of STI Rates; and Wabash National’s operating performance against the STI metrics, as described below under Performance
Metrics for STI. The STI Plan awards are made pursuant to the 2011 Omnibus Incentive Plan, which was last approved by our
stockholders at the May 2011 Annual Meeting. (We are seeking re-approval of the performance goals in the 2011 Omnibus Incentive
Plan at the upcoming May 2016 Annual Meeting. See Proposal 3.) Individual STI payouts cannot exceed the maximum as established
in the approved plan. However, in addition to the performance metrics, participants in the STI Plan also had to meet or exceed
personal performance criteria reviewed during the Company’s associate performance review process or their STI Award could be
decreased or eliminated.
Performance Metrics for the 2015 STI Plan
For 2015, as in 2014, the Committee established Operating Income and Net Working Capital as the performance metrics used in
the calculation of STI awards. The Committee deemed these metrics appropriate for the short-term focus and business goals of the
Company, as both metrics provide clear and easily measurable goals for Plan participants.
For those participants in the STI Plan who were employed at the corporate level of the Company, including the following NEOs –
Messrs. Giromini and Taylor, and Ms. Roth – payout under the STI Plan was contingent upon the achievement of pre-determined
corporate-wide targets of Operating Income and Net Working Capital for Wabash National. Each performance metric was
independent of the other in calculating whether corporate-level STI Plan participants would earn a STI Award, with 80% of the total
STI Award dependent upon achievement of the Operating Income targets, and 20% upon achievement of the Net Working Capital
targets.
For those participants in the STI Plan who were employed at a segment business unit (“SBU”) level of the Company, including
two of our NEO’s – Messrs. Weber and Yeagy - 55% of any award made under the STI Plan was contingent upon the achievement of
the pre-determined Operating Income target at the corporate level, 20% was contingent upon the achievement of the pre-determined
Net Working Capital target at the corporate level, and the remaining 25% of any such STI Plan award was contingent upon the
achievement of pre-determined Operating Income targets at the applicable SBU level. The targets described above and Wabash
National’s actual performance results, are listed in the table below under “2015 Performance Results for STI.”
Approval of STI Rates
After review and consideration of peer group data and discussion with Meridian, the Committee approves target STI rates. In
2015, the Committee set target STI rates for our NEOs to align with the median target cash bonus rates of the relevant peer group.
Our CEO’s target STI rate represents the rate set forth in his employment agreement, which the Proxy Peer Group data continues to
indicate is an appropriate rate and consistent with the median. In 2015, the Committee increased STI rates for our CFO (from 55% to
65% of base salary) and General Counsel (from 55% to 60% of base salary) to more closely align them with the median of the
respective peer group; the rates for our other NEOs were unchanged from 2014. The Committee’s 2015 approved STI Rates for each
NEO are set forth below:
Mr. Giromini
Mr. Taylor
Ms. Roth
Mr. Weber
Mr. Yeagy
Target STI Rate
100%
65%
60%
65%
65%
27
2015 Performance Results for STI
For our NEOs employed at the corporate level, as well as for those employed at the SBU level, the amount of the Total STI
Award paid in 2015 was calculated in two steps, as follows:
Corporate-level NEOs
SBU-level NEOs
1. Base Salary Earnings x Target STI Rate = Target STI Bonus 1. Base Salary Earnings x Target STI Rate = Target STI Bonus
2. Target STI Bonus
x (20% x Actual Corporate NWC Payout as a % of Target)
x (80% x Actual Corporate OI Payout as a % of Target)
= Total STI Award Amount
2. Target STI Bonus
x (20% x Actual Corporate NWC Payout as a % of Target)
x (55% x Actual Corporate OI Payout as a % of Target)
x (25% x Actual SBU OI Payout as a % of Target)
= Total STI Award Amount
Both the Operating Income and the Net Working Capital performance metrics under the STI Plan may be achieved at a threshold,
target or maximum level. The threshold, target and maximum goals were based on various outcomes considered by the Compensation
Committee, with the target amounts reflecting the Company’s operating budget approved by the Board.
Because annual targets for performance goals are set at levels based on our expected financial performance for the year, the
Committee believes that paying at 200% of a performance metric’s target for superior performance provides appropriate incentive to
achieve outcomes clearly exceeding target expectations. However, by capping the potential payout for such superior performance, the
Committee believes this reduces the risk that executives might be motivated to pursue excessively high short-term goals to maximize
short-term payouts, at the expense of the long-term performance of the Company.
The Committee further believes that threshold amounts, which are set at 80% or greater of the applicable metric under the Board-
approved operating budget, represent sufficient performance to warrant incentive compensation, and that a potential payout equal to
50% of target is appropriate for such an achievement level. If the threshold level of performance for a particular goal is not achieved,
the payout for that goal is zero. Actual performance payout is interpolated between the performance target levels set forth below.
The chart below details the goals necessary for the corporate–level NEOs (our CEO, CFO and General Counsel) to achieve STI
payout in 2015, as well as the Company’s actual performance results, calculated in accordance with the STI Plan:
(reported in millions,
except for percentages)
Net Working Capital (“NWC”)
20% of STI Award
Corporate Operating Income (“OI”)
80% of STI Award
Performance Payout
Weighted Performance Payout to NEOs
Threshold
13.0%
Target
12.0%
Maximum
11.0%
Actual
10.9%
$107 million
$134 million
$161 million
$180.4 million
50%
100%
200%
200% - NWC
200% - Corp OI
200%
(Messrs. Giromini & Taylor,
and Ms. Roth)
28
The chart below details the corporate goals and the SBU Operating Income goals necessary for Messrs. Weber and Yeagy to
achieve payout, as well as the actual performance results for the Commercial Trailer Products and Diversified Products business units,
calculated in accordance with the STI Plan:
(reported in millions,
except for percentages)
Corporate NWC
20% of STI Award
Corporate OI
55% of STI Award
Operating Income –
Commercial Trailer Products (“CTP”)
25% of STI Award
Operating Income –
Diversified Products (“DP”)
25% of STI Award
Threshold
13.0%
Target
12.0%
Maximum
11.0%
Actual
10.9%
$107 million
$134 million
$161 million
$181.5 million1
$76.9 million
$96.6 million
$115.4 million
$159.3 million1
$45.8 million
$57.7 million
$68.7 million
$48.4 million1
Performance Payout on SBU OI Results
50%
100%
200%
Weighted Performance Payout to NEOs
200% - CTP OI
60% - DP OI
200% - Mr. Yeagy (CTP)
165% - Mr. Weber (DP)
1Actual results for purposes of calculating performance under our STI Plan. Amounts differ from results reported in the
Company’s 10-K and other external filings due to non-recurring items during the year. The externally reported Corporate OI was
$180.4 million, with the difference attributable to a $1.1 million non-cash impairment of intangible assets in 2015. The externally
reported OI for CTP $158.8 million, with the difference attributable to a favorable change in internal corporate cost allocation
methods. The externally reported OI for DPG was $47.9 million, with the difference attributable to the above-mentioned non-cash
impairment of intangible assets, offset by an unfavorable change in internal corporate cost allocation methods.
As noted above, while actual performance against either metric might exceed the listed “Maximum” performance levels, STI Plan
Awards are capped at a maximum of 200% of the STI Award that can be earned for meeting “Target” performance levels. The STI
Plan Awards paid to each NEO under the STI Plan are also set forth in footnote 2 the Summary Compensation Table below. The
Committee did not exercise its authority to decrease or eliminate any NEO STI payouts for fiscal 2015. For fiscal 2015, STI award
payouts to the NEOs represented approximately 19.7% of the total amount of STI award payouts to all eligible STI Plan participants.
Long-Term Incentive Plan
Our long-term incentive plan, or LTI Plan, is designed to reward our executives, including NEOs, for increasing stockholder
value. It is also intended to be used as an attraction and retention tool in recruiting and promoting executive talent. We believe that
equity-based awards are an important part of an equitable structure because it is fair to our executives and to the Company that the
level of rewards for our executives increase and decrease based on the return to stockholders.
Approval of LTI Award Values
In 2015, the Committee approved LTI awards consisting of Restricted Stock Units (“RSUs”), Non-Qualified Stock Options
(“NQOs”), and Performance Stock Units (“PSUs”) – all awarded under the stockholder-approved 2011 Omnibus Incentive Plan. The
Committee establishes LTI award grant values to the NEOs based on the following factors: level of responsibility, individual
performance, peer group data, and the number of shares available under the 2011 Omnibus Incentive Plan. Generally at its first
regularly-scheduled Committee meeting each year, the Committee approves the anticipated LTI award values and mix after review
and consideration of peer group data on target long-term incentives. At the time of grant, the Committee has the discretion to increase
or decrease the base-level award to distinguish an individual’s level of past performance, to deliver particular LTI value, or to reflect
other adjustments as the Committee deems necessary.
The Committee calculates and approves the actual number of each type of award granted to each NEO by: (1) setting the overall
LTI award value, taking into account the factors discussed above, which is generally expressed as a percentage of the NEO’s salary
grade mid-point; (2) calculating, at the close of the market on the day of the award grants, the targeted value to apply to each of the
NQOs/PSUs/RSUs; and (3) dividing the overall LTI award value for each NEO by the RSU/PSU/NQO targeted values, to reach the
targeted award mix (see LTI Award Mix below for a discussion of the 2015 approved LTI Award mix). For detail regarding the
calculated values of each of the awarded RSUs, PSUs and NQOs, see the Grants of Plan-Based Awards table and footnote 6 thereto.
29
In establishing the LTI award values in 2015, the Committee increased the target LTI rates for our CEO (from 215% to 250% of
salary grade mid-point), CFO (from 100% to 125% of salary grade mid-point), General Counsel (from 100% to 110% of salary grade
mid-point) and Group President – CTP (from 100% to 125% of salary grade mid-point) in 2015 to more closely align them with the
median of our peer group. The target LTI rate for our Group President - DPG remained unchanged. The Committee’s 2015 approved
LTI award rates and salary grade mid-point values for each NEO are set forth below:
2015
LTI Award
Rate
250%
125%
110%
125%
125%
2015
Salary Grade
Mid-Point
$848,300
$412,700
$365,600
$412,700
$412,700
2015
LTI Target
Grant Value
$2,120,750
$515,875
$402,160
$515,875
$515,875
Mr. Giromini
Mr. Taylor
Ms. Roth
Mr. Weber
Mr. Yeagy
LTI Award Mix
In 2015, the Committee approved a targeted award mix of 30% RSUs, 20% NQOs and 50% PSUs. The Committee believes this
is an appropriate mix to emphasize its goals of encouraging stock ownership in Wabash National, retaining NEOs in the long-term,
and focusing NEOs on long-term growth in stockholder value. The general terms for each form of equity awarded to the NEOs in
2015 are listed below:
PSUs
RSUs
NQOs
Relative Total Shareholder Return
(50%) and
Cumulative EBITDA Performance
(50%)
None, with the exception of the RSUs
granted to our CEO, which were
conditioned upon the Company
achieving at least $50 million in
Operating Income in 2015
None
(but cannot be exercised
for value unless the
Company’s stock price
increases over time)
Performance Metrics
Performance Period
Three years
None
None
Vesting Period
Restrictions/
Expiration
Earned awards, if any, vest in full on
third anniversary of the grant date
Earned only upon achievement of at
least threshold performance level,
and paid out in Wabash National
Common Stock upon vesting
Award vests in full on
third anniversary of the grant date
Award vests in three
equal installments over
three years
Restricted until vesting date,
at which time they are paid out in
Wabash National Common Stock
Expire ten years
from the grant date
In addition to the restrictions listed above, all awards granted to the NEOs pursuant to the Company’s equity compensation plans
are subject to the Company’s Stock Ownership Guidelines, which are discussed on page 33. See the Grants of Plan Based Awards
table and footnotes on pages 39-40 for more information on LTI awards delivered to the NEOs, as well as the terms of the awards.
The Committee views both the PSUs and NQOs as performance-based awards, as PSUs can only be earned upon achievement of
the three-year performance metrics established by the Committee and the value of the NQOs is tied to increases in the value of
Wabash National Common Stock. Company executives will not realize any value from the NQO awards unless Company stock price
increases, thereby increasing value to stockholders. Additionally, the Committee views the RSU award to our CEO as performance-
based, as the RSUs to be earned by Mr. Giromini were subject to a one-year performance period with a performance target of $50
million in Operating Income in fiscal year 2015, as well as a three-year time-based vesting period from the date of grant. The PSUs
and NQOs awarded to all NEOs, as well as our CEO’s RSUs, are intended to be performance-based for purposes of preserving the tax
deductibility of that portion of our NEOs’ compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended
(“the Code”).
For fiscal 2015, the number of RSUs granted to the NEOs represented 37% of all RSUs granted to all LTI Plan eligible
participants; the number of PSUs granted (but not yet earned) to the NEOs represented 50% of all PSUs granted (but not yet earned) to
all LTI Plan eligible participants; and, the number of NQOs granted to the NEOs represented 47% of all NQOs granted to all LTI Plan
eligible participants. These proportions are consistent with our philosophy that as our associates, including NEOs, assume greater
responsibility in the Company, a larger portion of incentive compensation should be focused on at-risk and long-term awards.
30
PSU Performance Metrics
The Committee established two independent performance metrics associated with the award of PSUs in 2015:
• Relative Total Shareholder Return (“RTSR”); and
• Cumulative EBITDA Performance.
Each of these metrics are independent of the other in calculating whether LTI Plan participants will earn the PSUs attributable to
such metric, with each of RTSR and Cumulative EBITDA Performance weighted at 50% of the total LTI Award. The Committee
chose these metrics to emphasize the Company’s continued focus on growth and the creation of stockholder value in the long term.
Relative Total Shareholder Return
RTSR will be measured relative to a group of similarly-cyclical companies over a three-year period, as the Committee believes
this is the fairest way to track and award Company performance with regard to stockholder return in a highly-cyclical industry. RTSR
performance will be measured in relation to the following “Cyclical Peer Group”:
Accuride Corp (ACW) Meritor (MTOR) Commercial Vehicle Group (CVGI)
Federal Signal (FSS) Navistar (NAV) Spartan Motors (SPAR)
Oshkosh (OSK) Paccar (PCAR) Tower International (TOWR)
Tecumseh (TECU)* Modine (MOD) TriMas (TRS)
*In the event any Cyclical Peer Group company ceases to be an independent, publicly-traded company during the performance
period, the Committee may substitute an alternate cyclical company, in the order listed below: Trinity Industries, Inc. and Actuant
Corporation. As of September 2015, Tecumseh ceased being an independent, publicly-traded company and was replaced in the
Cyclical Peer Group with Trinity Industries, Inc. for purposes of tracking RTSR performance over the entire performance period.
The Cyclical Peer Group companies were recommended following Meridian’s analysis to best correlate each company’s cycle
length and position in cycle, as compared to that of Wabash National. The start of the RTSR performance period was January 1, 2015
and Wabash National’s relative ranking versus the Cyclical Peer Group will be measured at the completion of the three-year
performance period (close of NYSE market on December 31, 2017). RTSR performance will be measured on full-month stock
performance for December 2014 versus December 2017 (using average closing stock price performance for each month), by including
only those companies who are in the Cyclical Peer Group as of the close of business on December 31, 2014 and continue as
independent, publicly-traded companies on December 31, 2017.
The Company must achieve an RTSR ranking level within the Cyclical Peer Group of nine or above by the end of the three-year
performance period for the NEOs to earn at least 50% of the PSUs granted under the 2015 LTI Plan. The chart below details the
potential RTSR award rates for various ranking levels that trigger payment of PSUs under the 2015 LTI Plan:
Wabash National
RTSR Ranking
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10 th -13th
RTSR
Award Rate
200%
190%
180%
160%
140%
120%
100%
75%
50%
0%
Cumulative EBITDA Performance
The performance period for measurement of Cumulative EBITDA Performance began with the start of the Company’s fiscal year
on January 1, 2015 and will continue through the close of the Company’s fiscal year on December 31, 2017.
Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, and other
non-operating income and expense. Cumulative EBITDA Performance is calculated by totaling the Company’s Operating EBITDA
results from each of the three performance period fiscal years.
31
The chart below details the level of Cumulative EBITDA Performance necessary for the NEOs to earn the PSUs attributable to
this metric granted under the 2015 LTI Plan:
Cumulative EBITDA as % of Target
115%
100%
74%
<74%
Percent of PSU Target Value
200% (Maximum)
100% (Target)
50% (Threshold)
0%
If the Company fails to meet the “Threshold” performance level set forth above then our NEOs will not receive any portion of the
PSU awards that are tied to this metric. And, while actual Cumulative EBITDA Performance might exceed the listed “Maximum”
performance level, LTI Plan Awards are capped at a maximum of 200% of the LTI Award that can be earned for meeting “Target”
performance levels. Actual performance payout is interpolated between the performance levels set forth above.
Calculation of Total PSUs Earned at End of Three-Year Performance Period
Assuming achievement of the goals associated with the RTSR and Cumulative EBITDA Performance metrics, the total number of
PSUs that will be earned by the NEOs at the end of the three-year performance period will be calculated as follows:
Number of PSUs granted (but not yet earned) to NEOs in 2015
x (50% x Actual RTSR Ranking Award Rate)
x (50% x Actual Cumulative EBITDA Award Rate, as a Percentage of Target)
= Total Earned PSUs
Payout of PSUs for 2013 to 2015 Performance Cycle
The PSUs granted on February 20, 2013 were subject to a three-year performance period established by the Compensation
Committee in the Company’s 2013 LTI Plan, which ended on December 31, 2015. Under the Company’s 2013 LTI Plan, the
Committee established two performance metrics – RTSR and Cumulative EBITDA Performance – for measurement over the three-
year period. These metrics were independent of the other in calculating whether LTI Plan participants would earn the PSUs
attributable to such metric, with each metric weighted at 50% of the total LTI Award. As of December 31, 2015:
• The Company ranked 4th within the Cyclical Peer Group with regard to the RTSR metric (resulting in NEOs earning 140% of
the portion of the award tied to that metric), and
• The Company achieved Cumulative EBITDA over the performance period of $548.4 million, which exceeded the “Maximum”
performance level ($360 million) with regard to the Cumulative EBITDA Performance metric (resulting in NEOs earning
200% of the portion of the award tied to that metric).
As a result, each NEO earned 170% of the targeted number of PSUs granted to them in February 2013. Each earned PSU vested
on February 20, 2016, which was three years from the original date of grant. Upon vesting, each NEO received one share of the
Company’s Common Stock for each fully vested PSU.
LTI Grant Practices
Grants of equity awards are generally made to our executives, including NEOs, at one time each year pursuant to the LTI Plan.
The Compensation Committee typically reviews and approves awards and award levels under the LTI Plan in February of each year in
conjunction with regularly scheduled meetings of the Compensation Committee and the Board of Directors, which occur after the
release of year-end financial results from the previous year.
While most of our equity awards are made at the above-described time period, we occasionally make grants of RSUs or NQOs to
executives at other times, including in connection with the initial hiring of a new executive or a promotion. We do not have any
specific program, plan or practice related to the timing of equity award grants to executives in coordination with the release of non-
public information.
Mr. Giromini, who also serves as a director of the Company, has the authority to grant awards such as inducement grants within
prescribed parameters under the 2011 Omnibus Incentive Plan to Company associates who are not officers or directors of the
Company. Mr. Giromini is the only officer who has the authority to grant these equity awards. No other executive officer has the
authority to grant any equity awards under the Plan.
32
All options are granted with an exercise price equal to the closing market price on the date of grant, as reported on the NYSE.
The date of grant for our equity awards is set by the Board of Directors, with the grant date generally being the date the awards are
approved by the Compensation Committee in its February meeting.
Executive Stock Ownership Guidelines and Insider Trading Policy
In February 2005, we first adopted stock ownership guidelines for our executive officers, including our NEOs. Upon evaluation
of prevalent market practices, we revised these guidelines in September 2011.
These guidelines are designed to encourage our executive officers to work towards and maintain a certain equity stake in the
Company and more closely align their interests with those of other stockholders. Our current stock ownership guidelines provide that
each executive is required to hold 65% of all Company shares received through the Company’s incentive compensation plans (the
“Executive Holding Requirement”) until the executive achieves the target ownership levels set for his/her position. Once a Company
executive has achieved his/her stated target ownership level, s/he is no longer required to adhere to the Executive Holding
Requirement, unless and until his/her ownership level falls below the target. The target ownership levels are as follows:
CEO
Executive Vice Presidents Three (3) times base salary
Senior Vice Presidents
Five (5) times base salary
Two-and-one-half (2 ½) times base salary
For purposes of calculating target ownership levels, the following types of Company shares are counted: stock owned by the
executive; vested and unvested restricted stock and restricted stock units; and, performance shares deemed earned, but not yet vested.
Company executives are required to comply with the guidelines immediately upon hire or promotion. However, executives may
forfeit shares to pay taxes upon vesting of shares and/or the exercise price upon stock option exercise. The Compensation Committee
reviews compliance with the guidelines on a periodic basis; as of December 31, 2015, all of our NEOs were in compliance.
Under our Insider Trading Policy, our executive officers, including our NEOs are prohibited from engaging in:
selling short our Common Stock,
•
• pledging of Company securities and/or holding Company securities in margin accounts; and
• hedging and/or offsetting transactions regarding our Common Stock.
Deductibility Cap on Executive Compensation
Under Section 162(m) of the Code, and applicable Treasury regulations, no tax deduction is allowed for annual compensation in
excess of $1,000,000 to the CEO and the three other most highly compensated officers other than the CFO. However, performance-
based compensation, as defined in the Code, is fully deductible if the programs, among other requirements, are: (1) approved by
stockholders, (2) the compensation is payable only upon attainment of pre-established, objective performance goals, and (3) the board
committee that establishes such goals consists only of “outside directors” as defined for purposes of Section 162(m).
The Committee strives to provide NEOs with compensation programs that will preserve the tax deductibility of compensation
paid by Wabash National, to the extent reasonably practicable and to the extent consistent with Wabash National’s other compensation
objectives. For 2015, all of the members of the Compensation Committee qualified as “outside directors,” as defined for purposes of
Section 162(m). The Committee believes, however, that stockholders interests are best served by not restricting the Committee’s
discretion and flexibility in structuring compensation programs, even though such programs may result in certain non-deductible
compensation expenses. With the exception of approximately $503,570 of non-performance-based compensation paid to Mr.
Giromini in 2015, all other 2015 executive compensation (other than the CFO’s) was fully deductible. As described in detail on page
30 under LTI Award Mix, the Compensation Committee took steps in 2014 and 2015 to qualify a greater amount of our CEO’s
compensation as deductible in the future by establishing an Operating Income performance metric that the Company must first meet
prior to our CEO receiving annual grants of RSUs.
33
Indirect Compensation Elements
The following sections describe each indirect compensation element. It is intended that this information be read in conjunction
with the information provided in the tables that follow this CD&A.
Perquisites
We offer our NEOs various perquisites that the Committee believes are reasonable to remain competitive. These perquisites
constitute a small percentage of total compensation. The Committee conducts an annual review of perquisites offered to the NEOs as
part of the Committee’s overall NEO compensation review process. For more information on these perquisites and to whom they are
provided, see footnote 4 to the Summary Compensation Table. In addition to the items listed in the aforementioned footnote, NEOs,
as well as other Company employees, are also provided access to general financial planning services and Wabash National-sponsored
seats at a local sporting venue for personal use when not occupied for business purposes, both at no incremental cost to the Company.
Retirement Benefit Plan
Retirement Benefits
The Company has adopted a Retirement Benefit Plan that is also applicable to our NEOs. The purpose of the plan is to clearly define
benefits that are provided to qualified associates who retire from the workforce after service to the Company. Additional information
regarding this Plan, including definitions of key terms and a quantification of retirement benefits, is set forth below in the section
entitled Potential Payments on Termination or Change-in-Control.
Tax-qualified Defined Contribution Plan
We maintain a tax-qualified defined contribution plan in the form of a traditional 401(k) plan with a Roth 401(k) option, either
of which is available to a majority of the Company’s associates, including the NEOs. The Company matches dollar-for-dollar the first
3% of compensation an associate places into these plans, and matches one-half of the next 2% contributed by the associate to the plan,
up to federal limits. Any annual Company matches are reported under the “All Other Compensation” column, and related footnote 4,
of the Summary Compensation Table.
Deferred Compensation Benefits
We maintain a non-qualified, unfunded deferred compensation plan that allows our directors and eligible highly-compensated
associates, including the NEOs, to voluntarily elect to defer certain forms of compensation prior to the compensation being earned and
vested. We make the non-qualified plan available to our highly-compensated associates as a financial planning tool and as an
additional method to save for retirement. Executive officers do not receive preferential earnings on their deferred compensation. As a
result, we do not view earnings received on contributions to the deferred compensation plan as providing executives with additional
compensation. All deferred compensation benefits are designed to attract, retain, and motivate associates. Such deferred
compensation benefits are commonly offered by companies with whom we compete for talent.
The Company matches dollar-for-dollar the first 3% of compensation an associate places into the non-qualified deferred
compensation plan, and matches one-half of the next 2% the associate contributes to the plan. Any annual Company matches are
reported under the “All Other Compensation” column, and related footnote 4, of the Summary Compensation Table.
Participants in the Deferred Compensation Plan are general creditors of the Company. See the Non-Qualified Deferred
Compensation Table below for additional information.
Potential Payments Upon Change-in-Control and Other Potential Post-Employment Payments
Associate Severance Plan
We have adopted an Associate Severance Plan that provides for severance benefits for all of our associates, including our NEOs, in
the event we terminate their employment without cause. For additional information regarding this Plan, including a quantification of
severance benefits that would be received assuming termination of eligible NEOs on December 31, 2015, see the section entitled
Potential Payments on Termination or Change in Control, and the accompanying table.
Executive Severance Plan
On December 9, 2015, the Company adopted the Wabash National Corporation Executive Severance Plan (the “ESP”). The ESP
was effective as of January 1, 2016 and was adopted to provide enhanced severance protections to certain executives who are
designated by the Compensation Committee as eligible to participate in the ESP, including all of the NEOs. The ESP is not intended
to duplicate any benefits that may be provided under other Company compensation plans or arrangements, but rather to provide
enhanced benefits to certain executives who agree to execute a release, non-compete, and non-solicitation agreement with the
34
Company upon termination. While the ESP was not in effect in 2015, it became available to certain designated executives, including
the NEOs, beginning in 2016.
For additional information regarding the ESP, including definitions of key terms and benefits, see the section entitled Potential
Payments on Termination or Change in Control. However, since the ESP was not in effect in 2015, a quantification of severance
benefits under the ESP is not included in the Potential Payments on Termination or Change in Control – Payment and Benefit
Estimates table.
Other Severance and Change-in-Control Agreements
In 2015, we did not have individual employment or severance agreements with any of our NEOs, other than an employment
agreement with Mr. Giromini, which automatically renews on an annual basis unless either the Board or Mr. Giromini chooses not to
renew it. Mr. Giromini’s agreement provides for payments and other benefits if his employment terminates based upon certain
qualifying events, such as termination “without cause” or leaving employment for “good reason.” The Board believed these terms,
which were originally negotiated when Mr. Giromini was initially hired in 2002, were necessary to hire Mr. Giromini and were
consistent with industry practice. In deciding to renew Mr. Giromini’s contract in 2015, the Board determined that such terms
remained consistent with industry practice. For more information on Mr. Giromini’s employment agreement, see pages 48-49.
We have adopted a change-in-control plan applicable to NEOs, as well as other executives of the Company, as specifically
designated by our Board of Directors. We determined that this plan was appropriate based on the prevalence of similar plans within
the market, as well as the dynamic nature of the business environment in which we operate. We also believe the change-in-control
plan, similar to the severance provisions of Mr. Giromini’s employment agreement, is an appropriate tool to motivate executive
officers to exhibit the proper behavior when considering potential business opportunities. By defining compensation and benefits
payable under various merger and acquisition scenarios, change-in-control agreements enable the NEOs to set aside personal financial
and career objectives and focus on maximizing stockholder value. These agreements help to minimize distractions such as the
officer’s concern about what may happen to his or her position, and help to keep the officer focused on the Company’s and its
stockholders’ best interests in analyzing opportunities that may arise. Furthermore, they ensure continuity of the leadership team at a
time when business continuity is of paramount concern. Under the terms of his employment agreement as amended in December
2010, and renewed most recently in 2015, Mr. Giromini is entitled to receive the greater of the benefits pursuant to our change-in-
control plan or his employment agreement, but not both.
Additional information regarding these provisions, including a definition of key terms and a quantification of benefits that would
be received assuming a triggering event on December 31, 2015, is set forth below in the Potential Payments on Termination or
Change in Control – Payment and Benefit Estimates table.
Executive Life Insurance Program
Pursuant to the terms of his employment agreement, we maintain a life insurance policy on Mr. Giromini. We have purchased
and maintain this policy but provide Mr. Giromini with an interest in the death benefit. Mr. Giromini is responsible for taxes on the
income imputed in connection with this agreement under Internal Revenue Service rules. Upon termination of employment, the life
insurance policy will be assigned to Mr. Giromini or his beneficiary. This was a negotiated benefit entered into when Mr. Giromini
began employment with the Company.
35
Compensation Committee Report
The Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in
this Proxy Statement. Based on the review and discussion, the Compensation Committee recommended to the Board of Directors that
the Compensation Discussion and Analysis be included in this Proxy Statement and in the Wabash National Corporation Annual
Report on Form 10-K for the fiscal year ended December 31, 2015 (including through incorporation by reference to this Proxy
Statement).
COMPENSATION COMMITTEE
Martin C. Jischke
James D. Kelly
John E. Kunz
Larry J. Magee
Ann D. Murtlow
Scott K. Sorensen
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors in 2015 consisted of Dr. Jischke, Mrs. Murtlow and Messrs. Kelly,
Kunz, Magee and Sorensen. None of these individuals is currently, or has ever been, an officer or associate of Wabash National or
any of our subsidiaries. In addition, during 2015, none of our executive officers served as a member of a board of directors or on the
compensation committee of any other entity that had an executive officer serving on our Board of Directors or on our Compensation
Committee.
36
In this section, we provide tabular and narrative information regarding the compensation of our NEOs for the fiscal year ended
December 31, 2015.
Executive Compensation Tables
Summary Compensation Table
for the Year Ended December 31, 2015
The following table summarizes the compensation of the NEOs for the year ended December 31, 2015 and for the years ended
December 31, 2014 and 2013. The NEOs are the Company’s Chief Executive Officer, Chief Financial Officer, and the three other
most highly compensated executive officers in 2015 as determined by calculating total compensation pursuant to the table below.
Non-Equity
Incentive Plan
Stock
Salary Bonus Compensation Awards
Option
Awards Compensation
All Other
Total
Name and Principal Position
RICHARD J. GIROMINI
President,
Chief Executive Officer
(1)
Year
2015 $ 857,808
2014 $ 797,442
2013 $ 699,346
(2)
--
--
--
(3)
$ 1,715,616
$ 1,052,624
$ 1,118,954
(4)
(4)
$ 1,944,163 $ 412,776
$ 1,500,825 $ 336,686
$ 1,023,105 $ 445,590
(5)
$ 192,624
$ 166,634
$ 156,655
($)
$ 5,122,987
$ 3,854,210
$ 3,443,650
JEFFERY L. TAYLOR
Senior Vice President -
Chief Financial Officer
ERIN J. ROTH
Senior Vice President -
General Counsel & Secretary
2015 $ 334,712
2014 $ 273,654
2013 $ 209,523
2015 $ 346,135
2014 $ 319,192
2013 $ 288,116
MARK J. WEBER
Senior Vice President, Group President
- Diversified Products
2015 $ 387,673
2014 $ 364,596
2013 $ 337,385
BRENT L. YEAGY
Senior Vice President, Group President
- Commercial Trailer Products
2015 $ 387,058
2014 $ 343,788
2013 $ 285,173
--
--
--
--
--
--
--
--
--
--
--
--
$ 435,125
$ 198,673
$ 136,888
$ 472,981 $ 100,372
$ 439,981 $ 68,138
$ 65,058 $ 28,321
$ 43,162
$ 39,476
$ 40,423
$ 1,386,352
$ 1,016,821
$ 480,213
$ 415,362
$ 231,734
$ 230,492
$ 368,646 $ 78,322
$ 303,681 $ 68,138
$ 226,888 $ 98,816
$ 25,302
$ 25,233
$ 22,771
$ 1,233,767
$ 947,977
$ 867,083
$ 415,780
$ 260,686
$ 323,889
$ 503,175
$ 277,953
$ 166,707
$ 472,981 $ 100,372
$ 424,513 $ 95,243
$ 251,225 $ 109,421
$ 47,471
$ 46,709
$ 43,721
$ 1,424,277
$ 1,191,748
$ 1,065,641
$ 472,981 $ 100,372
$ 303,681 $ 68,138
$ 171,508 $ 74,663
$ 46,091
$ 43,230
$ 36,673
$ 1,509,677
$ 1,036,790
$ 734,724
* All reported values are rounded to the nearest dollar; as a result, the value reported in the “Total” column above may not
reflect the sum of all other values reported in this table.
• D
u
(1) This column includes base salary earnings for each NEO, as well as amounts deferred by the NEOs under the Company’s Non-
Qualified Deferred Compensation Plan. For salary amounts deferred in 2015, see the first column of the Non-Qualified
Deferred Compensation table on page 44.
(2)
(3)
Our annual bonuses are performance based, not discretionary, and are therefore included as Non-Equity Incentive Plan
Compensation in the table above.
For 2015, non-equity incentive plan compensation includes cash awards under the Company’s 2015 STI Plan. Cash awards
earned for the performance period ending December 31, 2015 were paid to NEOs in March 2016 unless deferred by the NEO
under the Company’s Non-Qualified Deferred Compensation Plan. The following table shows the awards earned under the
2015 STI Plan. All reported values are rounded to the nearest dollar:
2015 STI Plan Awards
Name
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
Target Award as
% of Base Salary
Earnings
100%
65%
60%
65%
65%
Base Salary
Earnings
$857,808
$334,712
$346,135
$387,673
$387,058
Actual
Performance as
% of Target
200%
200%
200%
165%
200%
Award
Amount
$ 1,715,616
$ 435,125
$ 415,362
$ 415,780
$ 503,175
37
For additional information on our STI Plan structure in 2015, including plan metrics and performance measurements, see the
CD&A relating to our STI Plan on pages 27-29.
(4) Amounts represent the aggregate grant date fair value of grants made to each NEO during 2015 under the Company’s 2015 LTI
Plan, as computed in accordance with FASB ASC Topic 718. The values in these columns exclude the effect of estimated
forfeitures. Grants in 2015 consisted of restricted stock units (RSUs), non-qualified stock options (NQOs), and performance
stock units (PSUs) awarded under the Company’s stockholder-approved 2011 Omnibus Incentive Plan. For the per-share grant
date fair values applicable to the RSUs, PSUs, and NQOs see Grants of Plan Based Awards table. The following table shows
the number of each award granted at “Target” performance levels under the 2015 LTI Plan:
Name
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
2015 LTI Plan Awards
RSUs
(#)
44,930
10,930
8,520
10,930
10,930
NQOs
(#)
46,800
11,380
8,880
11,380
11,380
PSUs
(#)
74,890
18,220
14,200
18,220
18,220
As discussed in the CD&A, the PSUs reported above have not yet been earned by the NEO’s and will be earned only upon
achievement of the Committee-approved performance metrics during the three-year performance period. (See pp. [ ]). The
PSUs reported above represent the “Target” payout level of PSUs; at “Maximum” payout level, assuming the Company
achieves “Maximum” performance levels for both LTI performance metrics, the payout of PSUs would be 200% of “Target,”
with award payouts to each of the NEOs as follows: Mr. Giromini – 149,780, with a grant date fair value of $2,615,908; Mr.
Taylor – 36,440, with a grant date fair value of $636,425; Ms. Roth – 28,400, with a grant date fair value of $496,006; Mr.
Weber – 36,440, with a grant date fair value of $636,425; and Mr. Yeagy – 36,440, with a grant date fair value of $636,425.
All reported grant date fair values are rounded to the nearest dollar.
For additional information on our LTI Plan structure in 2015, including plan metrics and performance measurements, see the
CD&A relating to our LTI Plan on pages 29-32. All awards granted to the NEOs during 2015 are subject to the revised stock
ownership guidelines adopted by the Board in 2011. RSUs will vest in full three years after the grant date. NQOs vest ratably
over the three years following the grant date. Earned PSUs will vest three years after the grant date, providing each participant
with one share of the Company’s common stock for each vested PSU.
Further information regarding the valuation of equity awards can be found in Note 8 to our Consolidated Financial Statements
in our Annual Report on Form 10-K for the year ended December 31, 2015. We caution that the amounts reported in the table
for equity awards and, therefore, total NEO compensation may not represent the amounts that the NEOs will actually realize
from the awards. Whether, and to what extent, an NEO realizes value will depend on a number of factors, including our
performance and stock price. For example, the value that would have been expensed in 2015 relating to certain NEO stock
awards if our share price at the respective stock grant dates was $11.83 (the closing share price on December 31, 2015) differs
from the values set forth above due to the general fluctuations of the Company’s share price between December 31, 2013 and
December 31, 2015.
(5) The following table provides details about each component of the “All Other Compensation” column. All reported values are
rounded to the nearest dollar. Amounts in this column consist of: (i) payments with respect to our 401(k) and non-qualified
deferred compensation plans; (ii) payments with respect to term life insurance for the benefit of the respective NEO;
(iii) payments with respect to the Executive Life Insurance Plan; and (iv) miscellaneous compensation or perquisites.
For 2015, the amount reported in “Misc Perquisites” for Mr. Giromini includes $69,607 in payments with respect to the
Executive Life Insurance Plan.
38
Name
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
Company Contributions to
Defined Contribution Plans
(a)
$114,184
Misc
Perquisites
(b)
$78,440
$ 41,546
$ 24,445
$ 43,010
$ 42,902
$ 1,616
$ 857
$ 4,461
$ 3,189
Total All
Other
Compensation
$192,624
$ 43,162
$ 25,302
$ 47,471
$ 46,091
(a) Company contributions to defined contribution plans include Company “matches” against cash compensation (salary
or bonus) deferred by an NEO into the Company’s 401(k) and non-qualified deferred compensation plans. See the
CD&A under Deferred Compensation Benefits and Retirement Benefits on pages 34-35, as well as the Non-Qualified
Deferred Compensation table on pg. 45, for additional information regarding the Company’s deferred compensation
match programs.
(b) Miscellaneous perquisites include: amounts paid with respect to long-term disability insurance and term life insurance
for the benefit of the respective NEO, including the Executive Life Insurance Plan for Mr. Giromini; executive
physicals and health club discounts; credit monitoring services; Company matching contributions to health savings
accounts; and, as applicable, tax gross ups associated with such benefits.
Grants of Plan-Based Awards
for the Year Ended December 31, 2015
All Other All Other
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
(2)
Target
Maximum
($)
($)
Estimated Possible Payouts
Under Equity Incentive
Plan Awards
(3)
Exercise
or Base
Price of
Threshold Target Maximum Stock or Underlying Option
Awards
Option
Awards:
Number of Number of
Securities
Shares of
Stock
Awards:
(#)
(#)
(#)
Threshold
($)
(50)%
Name
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
Grant
Date
(1)
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
2/17/15
(100)%
(200%)
(50)%
(100)%
(200%)
$428,904
$857,808
$1,715,616
—
—
—
—
—
—
—
—
—
—
—
—
$108,781
$217,562
$435,125
—
—
—
—
—
—
—
—
—
$103,840
$207,681
$415,362
—
—
—
—
—
—
—
—
—
$125,994
$251,988
$503,975
—
—
—
—
—
—
—
—
—
$125,794
$251,588
$503,175
—
—
—
—
—
—
—
—
—
37,445
74,890
149,780
—
—
—
—
—
—
—
—
—
9,110
18,220
36,440
—
—
—
—
—
—
—
—
—
7,100
14,200
28,400
—
—
—
—
—
—
—
—
—
9,110
18,220
36,440
—
—
—
—
—
—
—
—
—
9,110
18,220
36,440
—
—
—
—
—
—
39
Grant
Date Fair
Value of
Stock and
Option
Awards
(6)
($)
—
$1,307,954
$ 636,209
Options
(5)
(#)
—
—
—
($/Sh)
—
—
—
46,800
$14.16
$ 412,776
—
—
—
—
—
—
—
$ 318,212
$ 154,769
11,380
$14.16
$ 100,372
—
—
—
—
—
—
—
$ 248,003
$ 120,643
8,880
$14.16
$ 78,322
—
—
—
—
—
—
—
$ 318,212
$ 154,769
11,380
$14.16
$ 100,372
—
—
—
—
—
—
—
$ 318,212
$ 154,769
Units
(4)
(#)
—
—
44,930
—
—
—
10,930
—
—
—
8,520
—
—
—
10,930
—
—
—
10,930
—
11,380
$14.16
$ 100,372
(1) As discussed under “LTI Grant Practices” in the CD&A above, the grant date of equity awards is set by our Board of Directors
with a date that is generally the date the awards are approved by the Compensation Committee.
(2) These columns show the range of cash payouts targeted for 2015 performance under our STI Plan as described in the section
titled “Short-Term Incentive Plan” in the CD&A. In February 2015, the Compensation Committee recommended, and our Board
of Directors approved, STI Plan awards for all eligible associates, including awards to the NEOs (for a detailed description of the
awards, see pages 27-29 in the CD&A and footnote 2 to the Summary Compensation Table).
(3) Represents the potential payout range of PSUs granted in 2015 pursuant to the 2011 Omnibus Incentive Plan. As set forth in the
chart below, the number of PSUs actually earned by each NEO will be dependent upon meeting Company financial performance
targets over a three-year performance period, as established in the Company’s 2015 LTI Plan. Under the Company’s 2015 LTI
Plan, the Committee established two performance metrics – Relative Total Shareholder Return (“RTSR”) and Cumulative
EBITDA Performance; these metrics are independent of the other in calculating whether LTI Plan participants will earn the
PSUs, with each metric weighted at 50% of the total LTI Award. No PSUs will be awarded unless the Company meets the
“Threshold” achievement level on at least one of these metrics at the end of the three-year performance period. The maximum
number of PSUs each NEO could earn, assuming the Company achieves the established “Maximum” performance level on each
of the performance metrics, is listed in the “Maximum Achievement Level” column. For a detailed description of the awards and
the PSUs the NEOs will earn as a result of Company achievement against each of the performance metrics described above, see
pages 29-32 in the CD&A, under Long-Term Incentive Plan.
Each earned PSU will vest in full on the three-year anniversary of the date of grant, which was February 17, 2015. Upon vesting,
the recipient is entitled to receive one share of the Company’s Common Stock for each fully vested PSU. Dividends are not paid
or accrued on the PSU awards.
Grant at Threshold Achievement
Level of Each Performance Metric
(#)
Grant at Target Achievement Level
of Each Performance Metric
(#)
Grant at Maximum Achievement
Level of Each Performance Metric
(#)
Relative Total
Shareholder
Return
18,722
4,555
3,550
4,555
4,555
Cumulative
EBITDA
Performance
18,723
4,555
3,550
4,555
4,555
Relative Total
Shareholder
Return
37,445
9,110
7,100
9,100
9,100
Cumulative
EBITDA
Performance
37,445
9,110
7,100
9,100
9,100
Relative Total
Shareholder
Return
74,890
18,220
14,200
18,220
18,220
Cumulative
EBITDA
Performance
74,890
18,220
14,200
18,220
18,220
Name
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
(4) Amounts represent the number of RSUs granted pursuant to the 2011 Omnibus Incentive Plan, which vest in full on the three-
year anniversary of the date of grant. These awards were granted on February 17, 2015, and upon vesting, the recipient is entitled
to receive one share of the Company’s Common Stock for each fully vested RSU. Dividends, when paid, will accrue on RSUs at
the same rate as on shares of our Common Stock, but any dividends so declared by the Company will not be paid to holders of
RSUs unless and until the RSUs vest to the grantee.
(5) Amounts represent NQOs granted pursuant to the 2011 Omnibus Incentive Plan, which vest in three equal installments over the
first three anniversaries of the date of grant (February 17, 2015). Dividends are not paid or accrued on the NQO awards.
(6) The amounts shown in this column represent the grant date fair market value of the PSUs, RSUs, and NQOs granted on February
17, 2015, as determined pursuant to FASB ASC Topic 718, and exclude the effect of estimated forfeitures. The amount reported
for the PSUs represents the grant date fair market value of the PSUs at “Target.” For PSUs, the fair value for one-half of the
award (the portion of the award requiring achievement of established Cumulative EBITDA Performance metrics) was the market
value of the underlying stock on the grant date (which was $14.16 – the same as the exercise price for the awarded NQOs); the
fair value for the other half of the PSU award (the portion of the award requiring achievement of established RTSR metrics,
which is a market-based metric) was $20.77, which was calculated using a Monte Carlo pricing model used to value market-
based metrics. For RSUs, the fair value on the grant date was $14.16, which was the market value of the underlying stock on the
dates of grant. For the NQOs, the fair value on the grant date was $8.82, which was calculated using a binomial option pricing
model.
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
For Mr. Giromini, the amounts disclosed in the tables above are in part a result of the terms of his employment agreement. We
have no other employment agreements with our NEOs.
40
Effective January 1, 2007, the Board appointed Mr. Giromini to serve as Chief Executive Officer and his employment agreement
was amended. The following is a description of Mr. Giromini’s employment agreements in effect since 2002. In June 2002, we
entered into an employment agreement with Mr. Giromini to serve as Chief Operating Officer effective July 15, 2002 through July 15,
2003. Mr. Giromini’s initial base salary was $325,000 per year, subject to annual adjustments. On January 1, 2007, in connection with
Mr. Giromini becoming our Chief Executive Officer, we entered into an amendment to his employment agreement to provide that
Mr. Giromini’s title and duties would be those of the President and Chief Executive Officer. The amendment provided that Mr.
Giromini would receive an annual base salary of not less than $620,000, with eligibility for an annual incentive bonus targeted at 80%
of his base salary, which was increased by the Compensation Committee in February 2010 to 100% of his base salary. The actual
annual incentive bonus for Mr. Giromini may range from 0% to 200% of base salary and is determined at the discretion of the
Compensation Committee on an annual basis, based upon Company and individual performance criteria set by the Committee each
year. In addition, Mr. Giromini is entitled to payment of an additional sum to enable him to participate in an executive life insurance
program. Effective December 31, 2010, we entered into an amendment to his employment agreement for purposes of clarifying
language in connection with Section 409A of Code.
The term of Mr. Giromini’s employment agreement is one year, but it automatically renews for an additional year unless either
the Board or Mr. Giromini chooses not to renew the agreement by providing notice to the other party not less than 60 days prior to the
end of the then current term. As such, at least 60 days prior to the end of the one-year term, the Compensation Committee evaluates
the agreement and Mr. Giromini’s performance to determine if the agreement should renew for another one-year term. Mr. Giromini’s
agreement provides for payments and other benefits if his employment terminates based upon certain qualifying events, such as
termination “without cause” or leaving employment for “good reason.” The Board believed these terms, which were originally
negotiated when Mr. Giromini was initially hired in 2002, were necessary to hire Mr. Giromini and were consistent with industry
practice at that time. In deciding to allow Mr. Giromini’s contract to renew in 2015, the Board determined that such terms remained
consistent with industry practice. A description of the termination provisions, whether or not following a change-in-control, and a
quantification of benefits that would be received by Mr. Giromini can be found under the heading “Potential Payments upon
Termination or Change-in-Control.”
Outstanding Equity Awards at Fiscal Year-End
December 31, 2015
Option Awards
Stock Awards
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
(2)
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
24,710
(1)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
—
(2)
Market
Value of
Unexercised
Options
($)
—
Option
Exercise
Price
($)
16.81
Option
Expiration
Date
5/18/2016
Number of
Shares or
Units of
Stock that
Have Not
Yet Vested
(#)
—
(2)
Market
Value of
Shares of
Stock That
Have Not
Vested
($)
—
Name
Richard J. Giromini 5/18/2006
Grant
Date
5/24/2007
90,000
2/6/2008
58,300
2/23/2011
96,051
2/23/2012
118,230
—
—
—
—
14.19
—
5/24/2017
8.57
$ 190,058
2/6/2018
10.21
10.85
$ 155,603
2/23/2021
$ 115,865
2/23/2022
—
—
—
—
—
—
—
—
2/20/2013
48,460
24,230
9.61
$ 161,372
2/20/2023
45,760 (3) $ 541,341
2/20/2013
—
2/19/2014
13,457
2/17/2015
—
Jeffery L. Taylor
2/20/2013
3,080
2/20/2013
—
—
26,913
46,800
—
—
—
13.32
14.16
—
—
—
—
103,734 (4) $1,227,173
2/19/2024
38,750 (5) $ 458,413 64,590 (7)
$ 764,100
2/17/2025
44,930 (6) $ 531,522 74,890 (8)
$ 885,949
9.61
$ 10,256
2/20/2023
2,910 (3) $ 34,425
—
—
6,596 (4) $ 78,031
—
—
—
—
2/19/2014
2,724
5,446
13.32
9/16/2014
2/17/2015
—
—
—
—
11,380
14.16
2/19/2024
7,840 (5) $ 92,747 13,070 (7)
$ 154,618
—
10,000 (9) $ 118,300
—
—
2/17/2025
10,930 (6) $ 129,302 18,220 (8)
$ 215,543
—
—
—
—
41
Option Awards
Stock Awards
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
(2)
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
—
—
—
—
—
—
—
—
—
—
—
—
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
(1)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
(2)
Market
Value of
Unexercised
Options
($)
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock that
Have Not
Yet Vested
(#)
(2)
Market
Value of
Shares of
Stock That
Have Not
Vested
($)
Name
Erin J. Roth
Grant
Date
5/24/2007
2/6/2008
2/23/2011
7,500
1,900
9,000
2/23/2012
12,210
2/20/2013
10,747
2/20/2013
—
2/19/2014
2,724
2/17/2015
—
Mark J. Weber
5/18/2006
5/24/2007
2/6/2008
2/11/2009
1/5/2010
4,660
7,500
8,900
2,452
6,666
2/23/2011
30,000
2/23/2012
29,030
2/20/2013
11,900
2/20/2013
—
2/19/2014
3,807
2/17/2015
—
Brent L. Yeagy
5/18/2006
5/24/2007
2/6/2008
4,250
7,500
9,400
2/23/2011
13,578
2/23/2012
19,810
2/20/2013
8,120
2/20/2013
—
2/19/2014
2,724
2/17/2015
—
—
—
—
—
5,373
—
5,446
8,880
—
—
—
—
—
—
—
5,950
—
7,613
11,380
—
—
—
—
—
4,060
—
5,446
11,380
14.19
8.57
10.21
10.85
9.61
—
13.32
14.16
16.81
14.19
8.57
3.59
2.06
10.21
10.85
9.61
—
13.32
14.16
16.81
14.19
8.57
10.21
10.85
9.61
—
13.32
14.16
—
5/24/2017
$6,194
2/6/2018
$14,580
2/23/2021
$11,966
2/23/2022
—
—
—
—
—
—
—
—
$35,786
2/20/2023
10,150 (3) $ 120,075
—
23,001 (4) $ 272,102
—
—
—
—
—
—
—
—
—
—
—
—
—
2/19/2024
7,840 (5) $ 92,747 13,070 (7)
$ 154,618
2/17/2025
8,520 (6) $ 100,792 14,200 (8)
$ 167,986
5/18/2016
5/24/2017
$29,014
2/6/2018
$20,204
2/11/2019
$65,127
1/5/2020
$48,600
2/23/2021
$28,449
2/23/2022
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$39,627
2/20/2023
11,240 (3) $ 132,969
—
25,466 (4) $ 301,263
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2/19/2024
10,960 (5) $ 129,657 18,270 (7)
$ 216,134
2/17/2025
10,930 (6) $ 129,302 18,220 (8)
$ 215,543
5/18/2016
5/24/2017
$30,644
2/6/2018
$22,011
2/23/2021
$19,414
2/23/2022
—
—
—
—
—
—
—
—
—
—
$27,040
2/20/2023
7,670 (3) $ 90,736
—
17,391 (4) $ 205,736
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2/19/2024
7,840 (5) $ 92,747 13,070 (7)
$ 154,618
2/17/2025
10,930 (6) $ 129,302 18,220 (8)
$ 215,543
(1) The vesting date of each service-based option award that is not otherwise fully vested is listed below by expiration date:
Expiration Date
2/20/2023 .........................................
2/19/2024 .........................................
Vesting Schedule and Date
One installment on February 20, 2016.
Two equal installments on February 19, 2016 and 2017.
2/17/2025 .........................................
Three equal installments on February 17, 2016, 2017 and 2018.
(2) For options, calculated by multiplying any positive difference between the option exercise price and the closing price of our
Common Stock on December 31, 2015, which was $11.83, by the number of listed options that have not been exercised
(vested and unvested). No value is shown for “underwater” options. For restricted stock, RSUs and PSUs, calculated by
multiplying the closing price of our Common Stock on December 31, 2015 ($11.83) by the number of listed shares (earned
and unearned). All reported numbers have been rounded to the nearest dollar.
42
(3) 2013 RSU Award. Granted on February 20, 2013. Vested on February 20, 2016.
(4) 2013 PSU Award. Granted on February 20, 2013. The amounts reported above for each NEO reflect the PSUs that were earned
by each NEO as of December 31, 2015, which was the end of the three-year performance period, as established by the
Committee in the Company’s 2013 LTI Plan. Under the Company’s 2013 LTI Plan, the Committee established two
performance metrics – Relative Total Shareholder Return (“RTSR”) and Cumulative EBITDA Performance – for measurement
over the three year period. These metrics were independent of the other in calculating whether LTI Plan participants would
earn the PSUs, with each metric weighted at 50% of the total LTI Award. As described more fully in the section entitled
Payout of PSUs for 2013 to 2015 Performance Cycle on page 32 as of December 31, 2015, the Company performed at the
140% performance level with regard to the RTSR metric, and exceeded the “Maximum” performance level with regard to the
Cumulative EBITDA Performance metric (resulting in NEOs earning 200% of the portion of the award tied to that metric). As
such, each NEO earned 170% of the targeted number of PSUs granted to them in February 2013. Each earned PSU vested on
February 20, 2016, which was three years from the original date of grant. Upon vesting, each NEO received one share of the
Company’s Common Stock for each fully vested PSU.
(5) 2014 RSU Award. Granted on February 19, 2014. Vests on February 19, 2017.
(6) 2015 RSU Award. Granted on February 17, 2015. Vests on February 17, 2018.
(7) 2014 PSU Award. Granted on February 19, 2014. The amounts reported above for each NEO reflect the PSUs that would be
earned by each NEO at “Target” achievement levels, assuming the Company meets the financial performance targets over a
three-year performance period, as established by the Committee in the Company’s 2014 LTI Plan. Under the Company’s 2014
LTI Plan, the Committee established two performance metrics – Relative Total Shareholder Return (“RTSR”) and Cumulative
EBITDA Performance; these metrics are independent of the other in calculating whether LTI Plan participants will earn the
PSUs, with each metric weighted at 50% of the total LTI Award. No PSUs will be awarded unless the Company meets the
“Threshold” achievement level on at least one of these metrics at the end of the three-year performance period. Each earned
PSU will vest in full on the three year anniversary of the date of grant. Upon vesting, the recipient is entitled to receive one
share of the Company’s Common Stock for each fully vested PSU.
(8) 2015 PSU Award. Granted on February 17, 2015. The amounts reported above for each NEO reflect the PSUs that would be
earned by each NEO at “Target” achievement levels, assuming the Company meets the financial performance targets over a
three-year performance period, as established by the Committee in the Company’s 2015 LTI Plan. Under the Company’s 2015
LTI Plan, the Committee established two performance metrics – Relative Total Shareholder Return (“RTSR”) and Cumulative
EBITDA Performance; these metrics are independent of the other in calculating whether LTI Plan participants will earn the
PSUs, with each metric weighted at 50% of the total LTI Award. No PSUs will be awarded unless the Company meets the
“Threshold” achievement level on at least one of these metrics at the end of the three-year performance period. For a detailed
description of the awards and the PSUs the NEO’s would earn as a result of Company achievement against each of the
performance metrics described above, see pages 29-32 in the CD&A, under Long-Term Incentive Plan. Each earned PSU will
vest in full on the three year anniversary of the date of grant. Upon vesting, the recipient is entitled to receive one share of the
Company’s Common Stock for each fully vested PSU.
(9) Award to Mr. Taylor in connection with his appointment as our Senior Vice President – Chief Financial Officer. Granted on
September 16, 2014. Vests on September 16, 2017.
43
The following table sets forth information concerning the exercise of options and the vesting of stock awards during 2015 by
each of the NEOs:
Option Exercises and Stock Vested
Option Awards
Stock Awards (1)
Name
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
Number of Shares
Acquired on
Exercise
(#)
—
—
—
—
—
Value Realized
on Exercise
($)
—
—
—
—
—
Number of Shares
Acquired on
Vesting
(#)
40,530 (2)
70,935 (3)
—
8,990 (2)
15,720 (3)
9,950 (2)
17,415 (3)
6,790 (2)
11,895 (3)
Value Realized
on Vesting
($)
$574,310
$1,005,149
—
$127,388
$222,752
$140,992
$246,771
$ 96,214
$168,552
(1) Values are based on the closing stock price on the date of vesting.
(2) Restricted stock units that vested on February 23, 2015.
(3) Performance units that vested on February 23, 2015.
Eligible highly-compensated associates, including the NEOs, may defer receipt of all or part of their cash compensation (base
salary and annual non-equity incentive compensation) under the non-qualified deferred compensation plan. Amounts deferred under
this program are invested among the investment funds available under the program from time to time pursuant to the participant’s
direction and participants become entitled to the returns on those investments. Under the plan, participants may elect to receive the
funds in a lump sum or in up to 10 annual installments following retirement, as well as limited in-service distributions. The deferred
compensation plan is unfunded and subject to forfeiture in the event of bankruptcy.
The following table sets forth information concerning NEOs’ contributions and earnings with respect to the Company’s non-
qualified deferred compensation plan:
Name
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
Non-Qualified Deferred Compensation
Executive
Contribution in
last FY
(1)
$ 128,671
$ 38,492
$ 17,307
$ 40,173
$ 69,670
Registrant
Contributions in
last FY
(2)
$ 102,937
$ 30,793
$ 13,845
$ 32,138
$ 35,609
Aggregate Earnings
in last FY
(3)
$ (30,919)
$ (4,103)
$ (6,740)
$ (12,681)
$ (9,897)
Aggregate
Withdrawals /
Distributions
—
$ 22,659
—
$ 31,839
$ 8,413
Aggregate Balance
at Last FYE
(4)
$ 1,248,675
$ 73,169
$ 109,638
$ 190,911
$ 629,028
(1) Amounts reflected in this column represent a portion of each NEO’s salary deferred in 2015. It also reflects the portion of the STI
award earned in 2015, but not paid until 2016, that each NEO elected to defer. It does not reflect the portion of the STI award
earned in 2014, but paid in 2015, that each NEO elected to defer. These amounts are also included in the “Salary” and “Non-
Equity Incentive Plan Compensation” columns in the Summary Compensation Table on page 37.
(2) Registrant contributions consist of a match against earnings deferred by a participant under the non-qualified deferred
compensation plan. The Company fully matches the first 3% of earnings deferred by a participant under the non-qualified deferred
compensation plan. In addition, the Company will contribute ½% for each additional percent of deferred earnings contributed by
the participant, up to a maximum of 5% total of the participant’s deferred earnings (thus resulting in a maximum of a 4% Company
match on a participant’s deferral of 5% of his/her earnings). The amounts in this column represent the Company’s matching
contributions during the fiscal year, as well as its match against the portion of the STI award, earned in 2015 but not paid until
2016, each NEO elected to defer. These amounts are also included in the Summary Compensation Table under the “All Other
Compensation” column on page 37.
44
(3) Amounts reflected in this column include changes in plan values during the last fiscal year, as well as any dividends and interest
earned by the plan participant with regard to the investment funds chosen by such participant during the fiscal year.
(4) The amounts reported in this column do not reflect the executive or registrant contributions associated with the STI awards earned
in 2015, but not paid until 2016 (i.e. executive or registrant contributions after the close of the Company’s last fiscal year). The
following represents the extent to which the amounts that are reported in this aggregate balance column were previously reported
as compensation to our NEOs in our Summary Compensation Tables in 2015 and prior years:
Name
2015
($)
Richard J. Giromini ..........................................................................................................................................................
Jeffery L. Taylor ...............................................................................................................................................................
Erin J. Roth .......................................................................................................................................................................
Mark J. Weber ..................................................................................................................................................................
Brent L. Yeagy .................................................................................................................................................................
77,203
30,124
31,152
34,890
34,835
Prior
Years
($)
549,066
43,492
70,996
219,257
231,052
The section below describes the payments that may be made to NEOs in connection with a change-in-control or pursuant to
Potential Payments on Termination or Change-in-Control
certain termination events in 2015.
Retirement Benefit Plan
The Company has adopted a Retirement Benefit Plan that is applicable to all employees, including our NEOs. In 2015, under the
Retirement Benefit Plan, “Regular Retirees” and “Early Retirees” were entitled to certain benefits upon his/her date of retirement. A
“Regular Retiree” was defined as an executive attaining at least 65 years of age or older entering the tenth year of Company service,
and an “Early Retiree” was defined as an executive attaining at least 55 years of age and entering the fifth year of Company service.
Together, Regular Retirees and Early Retirees are referred to as “Retirees”.
The plan provided that all Retiree awards continue to vest, as scheduled, in the calendar year of retirement. Early Retirees had
three years from their retirement date to exercise options but not more than 10 years from the original date of grant. Regular Retirees
had 10 years from the original grant date to exercise options. Retirees who were eligible to receive, and had received, PSUs and
RSUs, which typically vest in full three years after the grant date, received a prorated award based on the Retiree’s period of
participation (but, in the case of PSUs, only once the performance metrics to earn such awards have been satisfied). In the event of
death and disability, as defined in each outstanding equity award agreement, outstanding and equity awards vested in a manner
consistent with vesting provisions applicable to Early Retirees.
Regardless of the effective date of retirement, Retirees were entitled to payment of all eligible and unused vacation pay,
payable under and calculated pursuant to state law and Company policy, which accrued in the year of retirement. Retirees were also
eligible to receive a prorated incentive in lieu of bonus, if a short-term incentive was otherwise paid to eligible associates, the year
following retirement. Retirees were not required to be actively employed by the Company on the date a short-term incentive payment
is made. Additionally, retirees celebrating a 5, 10, 15, 20 or greater service anniversary in their year of retirement received a service
award that is generally available to all associates. Retirees could also elect to continue health care benefits generally available to all
associates, in accordance with applicable state and Federal COBRA laws, and could convert their basic company paid life insurance to
term life insurance per state and Federal laws and pursuant to the applicable life insurance plan document.
Beginning in 2016, the definition of “Retirees” under the Retirement Benefit Plan changed. However, this change does not impact
LTI awards made prior to 2016, as the LTI Plan documents (including outstanding equity award agreements) adopted by the
Compensation Committee prior to 2016 all specify that the definition of Retirees in effect at the time of the grant of the award shall
control throughout the life of the applicable awards.
Beginning in 2016, “Retiree” is defined as: (a) an associate attaining at least 65 years of age, with no service requirement, as of
his/her date of Retirement, or (b) an associate attaining at least 55 years of age, who has completed his/her 10th year of service with the
Company as of his/her date of Retirement. Retirees will have 10 years from the original grant date to exercise vested options, and all
unvested options as of a Retiree’s date of Retirement shall be forfeited. Retirees who will be eligible to receive PSUs, which typically
vest in full three years after the grant date (subject to the achievement of the applicable performance objectives during the applicable
performance period), will receive a prorated award based on the Retiree’s period of participation. Retirees who will be eligible to
receive RSUs, which typically vest in full three years after the grant date, will receive the full amount of any granted award so long as
the Retiree’s date of Retirement is at least 12 months after the Grant Date of any RSU, otherwise any unvested RSU shall be forfeited.
45
Additionally, beginning in 2016, all outstanding and prospective equity awards shall vest in full (and without proration) in the
event of the death or disability, as each of those terms are defined in each equity award agreement, of an executive. This change also
does not impact LTI awards made prior to 2016, as the LTI Plan documents (including outstanding equity award agreements) adopted
by the Compensation Committee prior to 2016 all specify that the terms of those awards shall control throughout the life of the
applicable awards. All other terms and conditions of the Retirement Benefit Plan in effect prior to 2016 will remain unchanged.
Associate Severance Plan
In the absence of an employment agreement and/or coverage under the Executive Severance Plan (discussed below) providing
for superior benefits, our Associate Severance Plan provides severance benefits to all of our associates, including our NEOs, in the
event we terminate their employment without cause. Under this plan, our NEOs are eligible for a severance payment, on a bi-weekly
basis, equal to the NEO’s base salary for a period of one month or, if the executive executes a general release, for a period of up to
18 months. In addition to the severance payment, the executive is entitled to receive a lump sum amount equal to his or her COBRA
healthcare premiums for the duration of the severance period. We determined this plan was appropriate based on the prevalence of
similar plans within the market and its importance in attracting and retaining qualified executives.
Executive Severance Plan
As noted previously in the CD&A, the Company adopted an Executive Severance Plan (“ESP”) in 2015, which may provide
additional benefits to certain designated executives, including our NEOs, in the event we terminate their employment without cause.
We determined this plan was appropriate for use with certain executives, including our NEOs, having significant knowledge of and
responsibility for our business, as it reflected market practices for securing certain promises from executives in exchange for the
provision of superior benefits in the event of a termination without cause. However, the ESP was not made effective until January 1,
2016, and as a result, the benefits provided by the ESP were not available to our NEOs in 2015.
To participate in the ESP, each executive who is designated by the Compensation Committee as an eligible employee must agree
to the terms and conditions of the ESP by signing a participation agreement and returning it to the Company within 30 days after being
designated as an eligible employee. For purposes of determining severance benefits under the ESP, each participant will be
designated by the Committee as either a “Tier I” participant (our CEO), a “Tier II” participant (certain executives, including the other
NEOs) or a “Tier III” participant.
Pursuant to the ESP, NEOs whose employment is terminated by the Company without cause (and not as a result of disability or
death) would be entitled to receive the following severance benefits:
• Severance payments equal to a multiple of the sum of the participant’s: (a) annual base salary and (b) target annual incentive
bonus (STI Award) for the year of termination, payable in installments over the applicable severance period. The applicable
multiple for the CEO is two times the above sum. The applicable multiple for the other NEOs is one and a half times the
above sum;
• A pro-rated annual cash incentive bonus (STI Award) for the year of termination, based upon actual Company performance
through the end of the performance period in which termination occurs;
• Payment of any annual cash incentive bonus (STI Award) that was otherwise earned for the fiscal year that ended prior to the
termination of the participant’s employment, to the extent not previously paid;
• Subject to the participant’s election of COBRA coverage, payment or reimbursement of the Company’s portion of medical,
dental and vision care premiums for a period equal to: (a) 24 months for the CEO, or; (b) 18 months for the other NEOs;
• Outplacement services with a cost to the Company not in excess of $30,000; and each outstanding equity award will be treated
as provided in the applicable Company equity plan and award agreement.
For purposes of the Plan, “cause” (as a reason for termination of employment) is defined as provided in a participant’s
employment agreement with the Company, if applicable. Otherwise, “cause” generally is defined as: (i) a participant’s willful and
continued failure to perform his or her principal duties; (ii) conviction of, or a plea of guilty or nolo contendere to, any misdemeanor
involving moral turpitude or dishonesty or any felony; (iii) illegal conduct or gross misconduct which results in material and
demonstrable damage to the business or reputation of the Company or an affiliate; (iv) gross negligence resulting in material economic
harm to the Company or an affiliate; (v) material violation of the Company’s applicable Code of Business Conduct and Ethics or
similar policy; or (vi) a participant’s breach of the restrictive covenants set out in the Plan (as described below).
To receive any of the severance benefits described above, a participant must agree to release all claims against the Company
and its affiliates. In addition, to participate in and receive any severance benefits under the Plan, each participant must comply with
covenants not to compete with the Company, not to solicit or interfere with customers of the Company and not to solicit Company
employees or contractors, in each case for a period equal to 24 months following termination, in the case of our CEO, or 18 months
following termination, in the case of our other NEOs. Receipt of severance benefits under the Plan is also conditioned upon
46
compliance with confidentiality and non-disparagement restrictions, as well as the return of Company property and cooperation with
investigative, administrative, regulatory and judicial proceedings as reasonably requested by the Company.
The Plan is not intended to duplicate any benefits that may be provided under other Company compensation plans or
arrangements. As a result, if a participant’s employment is terminated in connection with a change in control of the Company in
circumstances that would entitle the participant to severance benefits under the Wabash National Corporation Change in Control
Severance Pay Plan (the “Change in Control Plan”), the participant will receive severance benefits only under the Change in Control
Plan. Similarly, if a participant’s employment is terminated in circumstances that would entitle the participant to severance benefits
under an employment agreement with the Company or an affiliate, the participant will receive severance benefits only under
whichever arrangement provides the greater aggregate severance benefits.
Change-in-Control.
We provide severance pay and benefits in connection with a “change in control” and Qualifying Termination, as defined below,
to the Company’s executive officers, including all of the NEOs, in accordance with the terms of a change in control plan that we
adopted in September 2011 (the “Change in Control Plan”). For the purposes of this paragraph, a “change in control” means that (i)
any person or group, other than any person or group that owns more than 50% of the total fair market value of Company stock prior to
such transaction, acquires ownership of stock of the Company that, together with stock previously held by such person or group,
constitutes more than 50% of the total fair market value of Company stock; (ii) there is a change in the effective control of the
Company which means either (A) any one person or group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of Company that represents 30% or more of the total
voting power of Company stock, or (B) a majority of members of the Board is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or
election; or (iii) any person or group acquires ownership of all or substantially all of the assets of Company. Benefits under the policy
are payable in the event of a termination within 24 months after a change in control that is either by the Company “without cause” or
by the executive for “good reason” (a “Qualifying Termination”). An executive must execute a release in favor of the Company to
receive benefits under the Change in Control Plan. Mr. Giromini will not receive payments under our Change in Control Plan if he is
entitled to greater benefits under the terms of his employment agreement, as described below.
Our 2011 Omnibus Incentive Plan provides that, upon a “change in control” in which awards are not assumed, all outstanding
restricted stock, deferred stock units, and dividend equivalent rights, other than unearned performance-based awards, shall vest in full
and shares shall be delivered immediately prior to the occurrence of such change in control. All outstanding stock options and stock
appreciation rights shall either (i) become immediately exercisable for a period of 15 days prior to the scheduled consummation of the
corporate transaction or (ii) our Board, or a committee thereof, may elect, in its sole discretion, to cancel any outstanding awards of
stock options, restricted stock, deferred stock units and/or stock appreciation units and pay to the holder, in the case of restricted stock
or deferred stock units, an amount equal to the formula or fixed price per share paid to holders of shares of stock pursuant to such
change in control and, in the case of options or stock appreciation rights, an amount equal to the product of the number of shares of
stock subject to such options or stock appreciation rights multiplied by the amount, if any, by which (x) the formula or fixed price per
share paid to holders of shares of stock pursuant to such change in control transaction exceeds (y) the option price or stock
appreciation right price applicable to the stock subject to such options or stock appreciation rights. Accelerated vesting upon a “change
in control” will not occur to the extent that provision is made in writing in connection with the change in control for the assumption or
continuation of the outstanding awards, or for the substitution of such outstanding awards for similar awards relating to the stock of
the successor entity, or a parent or subsidiary of the successor entity, with appropriate adjustments to the number of shares of stock
that would be delivered and the exercise price, grant price or purchase price relating to any such award. For the purposes of this
paragraph, a “change in control” means (i) the dissolution or liquidation of the Company or a merger, consolidation, or reorganization
of the Company with one or more other entities in which the Company is not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another person or entity, or (iii) any transaction (including without limitation a merger or reorganization in
which the Company is the surviving entity) which results in any person or entity owning 50% or more of the combined voting power
of all classes of stock of the Company.
In the case of our CEO, the benefits under the Change in Control Plan upon a Qualifying Termination are a severance payment of
three times base salary, plus three times his Target Annual Bonus for the year in which the Qualifying Termination occurs. In addition,
a payment will be made for a pro-rata portion of his Target Annual Bonus for the current year, health benefits will be continued for 18
months (or until he obtains comparable coverage), and he shall be entitled to receive outplacement counseling services equal to no
greater than $25,000. To be eligible for these benefits, Mr. Giromini would be required to execute a two-year non-compete/non-
solicitation agreement.
In the case of our other NEOs, the benefits under the Change in Control Plan upon a Qualifying Termination are a severance
payment of two times base salary plus two times the executive’s Target Annual Bonus for the year in which the Qualifying
47
Termination occurs. In addition, a payment will be made for a pro-rata portion of the executive’s Target Annual Bonus for the current
year, health benefits will be continued for 18 months (or until the executive obtains comparable coverage), and each shall be entitled
to receive outplacement counseling services equal to no greater than $25,000. To be eligible for these benefits, each would be
required to execute a two-year non-compete/non-solicitation agreement.
For purposes of our Change in Control Plan, “Target Annual Bonus” means: The greater of (i) the amount that would be paid to
the NEO as an annual bonus payment assuming the target level of performance for the year, as set by the Compensation Committee,
had been achieved and (ii) the average annual bonus awarded to the NEO for the prior two calendar years.
Mr. Giromini’s Agreement.
Mr. Giromini’s employment agreement has certain provisions that provide for payments to him in the event of the termination of
his employment or in the event of a termination of his employment in connection with a change-in-control.
• Termination for cause or without good reason — In the event that Mr. Giromini’s employment is terminated for “cause” or
he terminates employment without “good reason” (each as defined below), we will pay the compensation and benefits
otherwise payable to him through the termination date of his employment. However, Mr. Giromini shall not be entitled to any
bonus payment for the fiscal year in which he is terminated for cause.
• Termination by reason of death or disability — If Mr. Giromini’s employment is terminated by reason of death or disability,
we are required to pay to him or his estate, as the case may be, the compensation and benefits otherwise payable to him
through his date of termination, and a pro-rated bonus payment for the portion of the year served assuming the applicable
goals are satisfied. In addition, Mr. Giromini, or his estate, will maintain all of his rights in connection with his vested
options.
• Termination without cause or for good reason — In the event that we terminate Mr. Giromini’s employment without
“cause,” or he terminates employment for “good reason,” we are required to pay to him his then current base salary (or an
amount equal to $620,000 per year, if greater) for a period of two years. During such two-year period, or until Mr. Giromini
is eligible to receive benefits from another employer, whichever is longer, the Company will provide for his participation in a
health plan and such benefits will be in addition to any other benefits due to him under any other health plan. The Company
will provide for his participation in a health plan for 18 months with an additional lump sum payment, less applicable
withholdings for federal, state, and local taxes, equal to six months’ premiums (at the rate and level of coverage applicable at
the end of the 18-month period) under the Company’s health policy if coverage cannot be continued for more than 18
months. In addition, Mr. Giromini will maintain his rights in connection with his vested options. Furthermore, if
Mr. Giromini’s termination occurs at our election without cause, he is entitled to receive a pro-rata portion of his bonus for
the year in which he is terminated assuming the applicable goals are satisfied.
• Termination without cause or for good reason in connection with a change-in-control — In the event that we terminate
Mr. Giromini’s employment without “cause,” or he terminates employment for “good reason,” within 180 days of a “change
of control” (as defined below) we are required to pay to him a sum equal to three times his then base salary (or three times
$620,000, whichever is greater) plus his target bonus for that fiscal year. We are also required to pay to him the compensation
and benefits otherwise payable to him through the last day of his employment. In addition, any unvested stock options or
restricted stock held by Mr. Giromini shall immediately and fully vest upon his termination. Furthermore, at our election, we
are required to either continue Mr. Giromini’s benefits for a period of three years following his termination or pay him a
lump sum payment equal to three years’ premiums (at the rate and coverage level applicable at termination) under our health
and dental insurance policy plus three years’ premiums under our life insurance policy. The Company will provide for his
participation in the plans for 18 months with an additional lump sum payment, less applicable withholdings for federal, state,
and local taxes, equal to 18 months’ premiums (at the rate and level of coverage applicable at the end of the 18-month period)
under the Company’s health and dental insurance policy if coverage cannot be continued for more than 18 months. Any
change of control payment that becomes subject to the excise tax imposed by Section 4999 of the Internal Revenue Code or
any interest or penalties with respect to such excise tax, including any additional excise tax, interest or penalties imposed on
the restorative payment, requires that we make an additional restorative payment to Mr. Giromini that will fund the payment
of such taxes, interest and penalties.
The payments and benefits payable to Mr. Giromini in connection with a termination without cause or for good reason are
contingent upon his execution of a negotiated general release of all claims within 45 days following his termination of employment.
Mr. Giromini has also agreed not to compete with us during the term of his agreement and for a period of two years after termination
for any reason. As provided for under the Company’s change-in-control policy and his employment agreement, Mr. Giromini, upon a
change-in-control, is entitled to receive benefits under either the change-in-control policy or his employment agreement, but not both.
48
For purposes of Mr. Giromini’s employment agreement, the following definitions apply:
• “Cause” means:
• The willful and continued failure to perform the executive’s principal duties (other than any such failure resulting from
vacation, leave of absence, or incapacity due to injury, accident, illness, or physical or mental incapacity) as reasonably
determined by the Board in good faith after the executive has been given written, dated notice by the Board specifying
in reasonable detail his failure to perform and specifying a reasonable period of time, but in any event not less than 20
business days, to correct the problems set forth in the notice;
• The executive’s chronic alcoholism or addiction to non-medically prescribed drugs;
• Theft or embezzlement of the Company’s money, equipment, or securities by the executive;
• The executive’s conviction of, or the entry of a pleading of guilty or nolo contendere to, any felony or misdemeanor
involving moral turpitude or dishonesty; or
• The executive’s material breach of the employment agreement, and the failure to cure such breach within 10 business
days of written notice thereof specifying the breach.
• “Change of Control” means:
• Any person, other than any person currently a beneficial owner, becomes the beneficial owner of 50% or more of the
combined voting power of our outstanding Common Stock;
• During any two-year period, individuals who at the beginning of such period constitute the Board of Directors,
including any new director whose election resulted from a vacancy on the Board of Directors caused by the mandatory
retirement, death, or disability of a director and was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period, cease for any reason to constitute a majority of the Board of
Directors;
• We consummate a merger or consolidation with or into another company, the result of which is that our stockholders at
the time of the execution of the agreement to merge or consolidate own less than 80% of the total equity of the company
surviving or resulting from the merger or consolidation, or of a company owning 100% of the total equity of such
surviving or resulting company;
• The sale in one or a series of transactions of all or substantially all of our assets;
• Any person has commenced a tender or exchange offer, or entered into an agreement or received an option to acquire
beneficial ownership of 50% or more of our Common Stock, unless the Board of Directors has made a reasonable
determination that such action does not constitute and will not constitute a change of control; or
• There is a change of control of a nature that would generally be required to be reported under the requirements of the
Securities and Exchange Commission, other than in circumstances specifically covered above.
• “Good Reason” means:
• A material reduction in the executive’s base salary or bonus opportunity;
• A material diminishment of the executive’s position, duties, or responsibilities;
• The assignment by us to the executive of substantial additional duties or responsibilities that are inconsistent with the
duties or responsibilities then being carried out by the executive and which are not duties of an executive nature;
• Material breach of the employment agreement by us;
• Material fraud on our part; or
• Discontinuance of the active operation of our business, or our insolvency, or the filing by or against us of a petition in
bankruptcy or for reorganization or restructuring pursuant to applicable insolvency or bankruptcy law.
49
Potential Payments on Termination or Change in Control – Payment and Benefit Estimates
The table below was prepared to reflect the estimated payments that would have been made pursuant to the policies and
agreements described above. Except as otherwise noted, the estimated payments were calculated as though the applicable triggering
event occurred and the NEO’s employment was terminated on December 31, 2015, using the share price of $11.83 of our Common
Stock as of December 31, 2015.
In addition, the reported estimated payments were calculated utilizing the following assumptions:
General Assumptions
• The amounts shown do not include distributions of plan balances under the Wabash National Deferred Compensation Plan.
Those amounts are shown in the Nonqualified Deferred Compensation table.
• The amounts shown do not include any potential payments under the ESP, as the ESP was not in effect as of December 31,
2015.
• No payments or benefits are payable or due upon a voluntary termination or termination for cause, other than amounts
already earned.
• Salary amounts payable use full salary values as of December 31, 2015. Bonus amounts payable are at the 2015 STI
“Target” level, as approved by the Compensation Committee. See footnote 2 to the Summary Compensation Table (p. 37) for
discussion of the 2015 STI Plan “Target” bonus amounts used to calculate the values reflected in this column.
• As discussed previously, upon a change-in-control, Mr. Giromini is entitled to receive benefits under either the Change in
Control Plan or his employment agreement, but not both. Unless otherwise noted, all “change-in-control” values reflected in
this table assume Mr. Giromini elected to receive benefits under his employment agreement.
Equity-based Assumptions
• Pursuant to our 2011 Omnibus Incentive Plan, we assumed that all outstanding equity awards were not assumed or continued
as part of the “change in control” event. As such, all outstanding restricted stock, deferred stock units, and dividend
equivalent rights, other than unearned performance-based awards, vested immediately and all outstanding stock options and
stock appreciation rights were assumed to have become immediately exercisable (for the 15 day period prescribed in
Company’s 2011 Omnibus Incentive Plan).
• Additionally, the amounts shown in the “Change in Control only” scenario do not account for the terms and conditions of our
Change in Control Policy, which requires both a change in control event and a termination before outstanding equity awards
would become subject to accelerated vesting. Instead, the amounts shown in the “Change in Control only” scenario reflect
only the assumptions regarding the 2011 Omnibus Incentive Plan, which are described in the immediately preceding bullet
point.
Accelerated Vesting of Equity Value
(3)
Short-
Term
Salary
(1)
Incentive Performance Restricted
Plan Bonus Stock Units
(2)
(4)
Stock
(5)
Stock
Options
(6)
Welfare
Benefits
Continuation
(7)
$1,660,000 $2,490,000
--
--
--
$186,087
$2,490,000 $3,320,000
$1,227,173
$1,531,275
$53,791
$266,630
--
--
$487,500
--
--
--
$1,227,173
$1,531,275
$53,791
--
--
--
--
--
--
--
--
$29,929
$650,000
$633,750
$78,031
$374,774
$3,419
$54,929
Executive
Richard J. Giromini
Termination without cause or
by executive for good reason
Termination following a
change-in-control
Change-in-Control only
Termination as Result of Death
Jeffery L. Taylor
Termination without cause or
by executive for good reason
Termination following a
change-in-control
Change-in-Control only
--
Erin J. Roth
Termination without cause or
by executive for good reason
Termination following a
change-in-control
Change-in-Control only
--
--
$78,031
$374,774
$3,419
--
--
--
--
$29,929
$502,500
$670,000
$693,339
$272,101
$313,613
$11,928
$54,929
--
--
$272,101
$313,613
$11,928
--
50
Life
Parachute
Tax
Insurance Gross-up
Payment
Benefit
(8)
Total
($)
--
--
--
$2,746,448
--
--
--
--
--
--
--
$ 4,336,087
$2,978,040 $ 11,866,909
--
--
--
--
--
--
--
--
$ 2,812,239
$ 2,746,448
$ 517,429
$ 1,794,903
$ 456,224
$ 532,429
$ 2,015,910
$ 597,643
Accelerated Vesting of Equity Value
(3)
Short-
Term
Salary
(1)
Incentive Performance Restricted
Plan Bonus Stock Units
(2)
(4)
Stock
(5)
Stock
Options
(6)
Welfare
Benefits
Continuation
(7)
$562,500
--
--
--
--
$26,199
$750,000
$876,863
$301,263
$391,928
$13,209
$51,199
--
--
$301,263
$391,928
$13,209
--
$562,500
--
--
--
--
$29,929
$750,000
$731,250
$205,736
$312,785
$9,013
$54,929
--
--
$205,736
$312,785
$9,013
--
Life
Parachute
Tax
Insurance Gross-up
Payment
Benefit
(8)
Total
($)
--
--
--
--
--
--
--
--
--
--
--
--
$ 588,699
$ 2,384,462
$ 706,400
$ 592,429
$ 2,063,713
$ 527,534
Executive
Mark J. Weber
Termination without cause or
by executive for good reason
Termination following a
change-in-control
Change-in-Control only
Brent L. Yeagy
Termination without cause or
by executive for good reason
Termination following a
change-in-control
Change-in-Control only
(1) Pursuant to the Company’s severance plan, which is applicable to all associates, NEOs (other than the CEO) are entitled to one
and a half times base salary upon termination without cause or by the executive with good reason. In the event of a change-in-
control and qualifying termination, pursuant to our Change in Control Plan, our NEOs (other than Mr. Giromini) are provided a
lump sum payment of two times the NEO’s base salary.
Pursuant to Mr. Giromini’s employment agreement, he is entitled to two times his base salary, if he is terminated without cause or
if he voluntarily terminates his employment with good reason. Additionally, for Mr. Giromini, both his employment agreement
and our Change in Control Plan entitled him to receive a lump sum payment of three times his base salary upon a change-in-
control and qualifying termination.
(2) Pursuant to our Change in Control Plan, in the event of a change-in-control and qualifying termination, our NEOs (other than Mr.
Giromini) are provided payment of two times the NEO’s Target Annual Bonus and a pro-rata portion of the NEO’s Target Annual
Bonus for the year in which s/he is terminated.
For Mr. Giromini, in the event of a change-in-control and qualifying termination, our Change in Control Plan provides for three
times his Target Annual Bonus and a pro-rata portion of his Target Annual Bonus for the year in which he is terminated.
However, under Mr. Giromini’s employment agreement, in the event of a change-in-control and qualifying termination, he is
entitled to payment of three times his target bonus (which is defined in his employment agreement as being the target annual
incentive bonus set by the Compensation Committee each year) for the year in which he is terminated, as well as a pro-rata
portion of his target bonus for the year in which he is terminated. Also pursuant to his employment agreement, if he is terminated
by us without cause or if he terminates his employment for good reason, he is entitled to two times his target bonus and a pro-rata
portion of his target bonus for the year in which he is terminated. Due to the difference in the definitions of “Target Annual
Bonus” in our Change in Control Plan (see pg. 49), and “target bonus” in Mr. Giromini’s employment agreement (see above), the
Short-Term Incentive Plan bonus to which Mr. Giromini would be entitled could be calculated using different bases.
With the exception of Mr. Giromini, the figures reported above are based on multiples of the calculated Target Annual Bonus (as
defined by the Change in Control Plan, see pg. 49). For each of Ms. Roth and Mr. Weber the Target Annual Bonus is equal to the
average of the annual bonuses each was paid in 2013 and 2014; for Messrs. Taylor and Yeagy, it is equal to the amount that
would be paid to each as an annual bonus payment, assuming the “target” level of performance for 2015, as set by the
Compensation Committee.
For Mr. Giromini, since we’ve assumed Mr. Giromini elected to receive benefits under his employment agreement, the figures
reported above reflect multiples of his “target bonus,” as defined by his employment agreement. Had we reported Target Annual
Bonus (as defined by our Change in Control Plan) for Mr. Giromini, the figure reported above for would have been $4,343,156,
which is equal to the average of the annual bonuses he was paid in 2013 and 2014.
(3) Pursuant to our 2011 Omnibus Incentive Plan, all outstanding restricted stock, restricted stock units, and dividend equivalent
rights, other than unearned performance-based awards, vest immediately, but only if the outstanding awards are not assumed or
continued as part of the “change in control” event.
In the event these awards are assumed/continued as part of the change in control event, and an NEO is thereafter terminated
within 12 months of the change in control event, any assumed award will vest immediately to the NEO at the time of termination.
Under Mr. Giromini’s employment agreement, however, if he is terminated following a change in control event, all outstanding
51
equity compensation grants that are outstanding to him are accelerated and vest immediately, even if such termination occurs
more than 12 months after the change in control event.
(4) Amounts reflected in this column include earned performance stock units awarded in 2013; the performance period for these
awards ended on December 31, 2015. For a description of all performance stock unit awards, see footnotes 4, 7 and 8 to the
Outstanding Equity Awards at Fiscal Year-End table on pages 41-42. Only performance stock units earned as of the triggering
event are subject to the accelerated vesting features of the Change in Control Plan.
(5) Amounts reflected in this column assume that any awards granted in 2013, 2014 or 2015 pursuant to our 2011 Omnibus Incentive
Plan were not assumed or continued as part of the “change in control” event, and as such, pursuant to the terms of our 2011
Omnibus Incentive Plan, include outstanding restricted stock units, but do not include any outstanding, unearned performance-
based stock units. For a description of the 2015 awards, see the Grants of Plan Based Awards table and accompanying narrative
on pages 39-40; for a detailed description of the effect of a “change of control” on awards granted pursuant to our 2011 Omnibus
Incentive Plan, see page 47.
(6) Amounts reflected in this column assume that any non-qualified stock option awards granted in 2013, 2014 or 2015 pursuant to
our 2011 Omnibus Incentive Plan were not assumed or continued as part of the “change in control” event, and as such, become
immediately exercisable for a period of 15 days prior to the consummation of the change of control corporate transaction. For a
description of the 2015 awards, see the Grants of Plan Based Awards table and accompanying narrative on pages 39-40; for a
detailed description of the effect of a “change of control” on awards granted pursuant to our 2011 Omnibus Incentive Plan, see
page 47.
(7) Pursuant to the Company’s Associate Severance Plan, which is applicable to all associates, all NEOs (including Mr. Giromini) are
entitled to reimbursement for welfare benefits continuation for one and a half years upon termination without cause or by the
executive with good reason.
Pursuant to our Change in Control Plan, in the event of a change-in-control and qualifying termination, all NEOs (including Mr.
Giromini), are provided outplacement counseling services no greater in value than $25,000, and reimbursement for welfare
benefits continuation for up to 18 months.
Pursuant to Mr. Giromini’s employment agreement, if he is terminated by us without cause or if he terminates his employment for
good reason, he is entitled to payment of premiums on his Executive Life Insurance Program, as well as reimbursement for
welfare benefits continuation for two years. Also pursuant to his employment agreement, in the event of a change-in-control and
qualifying termination, he is entitled to payment of premiums on his Executive Life Insurance Program, as well as reimbursement
for welfare benefits continuation for three years.
(8) Current value of payout under the Executive Life Insurance Plan payable to Mr. Giromini’s beneficiaries in the event of his
termination as a result of his death.
The following table summarizes information regarding our equity compensation plan as of December 31, 2015:
Equity Compensation Plan Information
PLAN CATEGORY
Equity Compensation Plans
Approved by Security Holders (1)
NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS (2)
WEIGHTED AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
COMPENSATION PLANS (3)
1,820,956
$11.61
2,868,748
(1) All equity compensation plans have been approved by the Company’s stockholders. As a result, the numbers and value shown
reflect all equity compensation plans.
(2) Consists of shares of Common Stock to be issued upon exercise of outstanding options granted under the Wabash National
Corporation 2007 Omnibus Incentive Plan (“the 2007 Plan”) and the Wabash National Corporation 2011 Omnibus Incentive Plan
(“the 2011 Plan”).
(3) Consists of shares of Common Stock available for future issuance pursuant to the 2011 Plan, which includes shares previously
available for issuance under the 2007 Plan that are now available for issuance under the 2011 Plan. There were a total of
2,868,748 shares of Common Stock available as of December 31, 2015 for future issuance under the 2011 Plan pursuant to grants
in the form of restricted stock, stock units, unrestricted stock, options and other incentive awards, subject to certain limitations in
the 2011 Plan.
52
Restricted Stock Grants
We have issued an aggregate of 323,070 shares of restricted stock pursuant to the Wabash National Corporation 2004 Stock
Incentive Plan, of which 94,697 were forfeited or otherwise cancelled, and 228,373 vested on or before December 31, 2015, with no
shares remaining subject to forfeiture as of that date.
We have issued an aggregate of 1,407,283 shares of restricted stock and restricted stock units (which, upon vesting convert to
shares of the Company’s common stock) pursuant to the 2007 Plan, of which 403,139 were forfeited or otherwise cancelled, and
1,004,144 vested on or before December 31, 2015, with no shares remaining subject to forfeiture as of that date. These amounts
exclude the issuance of performance stock units (which, upon vesting convert to shares of the Company’s common stock) in the
aggregate of 180,880 of which 6,512 were forfeited or otherwise cancelled, and 174,368 vested on or before December 31, 2015, with
no shares remaining subject to forfeiture as of that date.
We have issued an aggregate of 1,032,195 shares of restricted stock and restricted stock units (which, upon vesting will convert
to shares of the Company’s common stock) pursuant to the 2011 Plan, of which 95,266 were forfeited or otherwise cancelled, and
275,493 vested on or before December 31, 2015, with 661,436 remaining subject to forfeiture as of that date. These amounts exclude
the issuance of performance stock units (which are subject to three-year performance criteria, but upon vesting will convert to shares
of the Company’s common stock) in the aggregate of 1,149,335, of which 56,195 have been forfeited or otherwise cancelled, and
216,461 vested on or before December 31, 2015, with 876,680 remaining subject to forfeiture as of that date.
53
PROPOSAL 2
Advisory Vote on the Compensation of Our Executive Officers
We are asking stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of the NEOs of our
Company. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our executive
officers and the philosophy, policies and practices described in this Proxy Statement. We urge you to read the “Executive
Compensation” section of this Proxy Statement, including our “Compensation Discussion and Analysis,” Executive Compensation
Tables and related narrative discussion, beginning on page 17, which provides details on the Company’s compensation programs and
policies for our executive officers, including the 2015 compensation of our NEOs. Our Compensation Discussion and Analysis
(“CD&A”) provides stockholders with a detailed description of our compensation programs, including the philosophy and strategy
underpinning the programs, the individual elements of the compensation programs, and how our compensation plans are administered.
Our compensation philosophy, discussed in the CD&A section “Philosophy and Objectives of Wabash National Compensation
Program” is supported by the following principles:
•
•
•
•
•
•
•
Attract, retain, and motivate high-caliber executives;
As the responsibility of an associate/executive increases within the Company, place a larger portion of total compensation
“at-risk,” with an increasing portion tied to long-term incentives;
Provide the appropriate level of reward for performance;
Recognize the cyclical nature of our primary truck-trailer business and the need to manage value through the business cycle
by managing compensation levels and components;
Provide stockholder alignment by encouraging NEOs to be long-term stockholders of Wabash National;
Structure compensation programs to meet the tax deductibility criteria in the U.S. Internal Revenue Code, when practicable;
and
Structure the compensation program to be regarded positively by our stockholders and associates, while providing the
Compensation Committee with the flexibility needed to satisfy all of these listed goals.
We believe the executive compensation program has been instrumental in retaining and attracting high quality executive
management who guided the Company through its acquisition of the Walker Group in 2012, and led the Company to record-setting
years for revenue, gross profit and operating income in each of the last four years. For a more detailed description of the Company’s
financial results for 2015, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
We are committed to “pay for performance,” meaning that a significant portion of our executive officer compensation is variable,
“at-risk,” and will be determined based on our performance. In addition, we design our executive compensation to encourage long-
term commitment by our executive officers to Wabash National. We believe our executive compensation programs encompass
several “best practices” including:
•
•
Annual Peer Review by Independent Compensation Committee - Annual monitoring of the compensation systems of
companies of similar size and similar complexity by our Compensation Committee, with the objective of setting total target
compensation (base salary, annual cash incentives and long-term equity incentives) for executives at levels that are generally
competitive with our peer group, but also accounting for the Company’s own financial performance objectives and
cyclicality. The Compensation Committee is comprised entirely of independent members, and it engages an independent
consultant to assist in this annual review process.
Pay for Performance - A significant portion (ranging from approximately 65% to 79% of our executives’ target total
compensation) is considered to be performance-based, with approximately 79% of our CEO’s total compensation in 2015 (at
“Target”) classified as performance-based compensation. To motivate our executive officers to align their interests with those
of our stockholders, we provide annual incentives, which are designed to reward our executive officers for the attainment of
short-term financial performance goals, as well as long-term incentives, which are designed to reward them for the
achievement of identified long-term financial performance goals, as well as for increases in our stockholder value over time.
•
In 2015, we established corporate performance goals under the Company’s Short-Term Incentive Plan based on the
Company’s attainment of its Operating Income and Net Working Capital goals, creating a clear and direct relationship
between executive pay and the Company’s financial performance in 2015.
•
In 2015, we established a three-year corporate performance period under the Company’s Long-Term Incentive (“LTI”)
Plan, requiring the Company to achieve certain Cumulative EBITDA Performance and Relative Total Shareholder
Return targets set by the Compensation Committee before LTI Plan participants could earn Performance Stock Units
54
granted under the 2015 LTI Plan. This created a clear and direct relationship between executive pay and the focus on
long-term increases in stockholder value.
• Mitigate Undue Risk – Our compensation practices are designed to discourage excessive risk-taking and/or an emphasis on
short-term results at the expense of the long-term performance of the Company. Payouts under all of our compensation
programs are “capped” at specified “maximum” payout levels for this reason.
•
•
•
•
•
•
•
•
Alignment with Shareholders - Long-term incentives are provided to executive officers in the form of stock options,
restricted stock units, and performance stock units. These equity-based awards, which vest over a period of three years,
constituted between 45% and 58% of our executives’ target total compensation in 2015 (with 58% of our CEO’s target total
compensation comprised of equity-linked awards). These awards link compensation with the long-term price performance of
our stock and also provide a substantial retention incentive for our executives.
Stock Ownership Guidelines - We have adopted Stock Ownership guidelines to encourage the retention of stock by our
executives and to strengthen the relationship between compensation and performance.
Employment Contracts - We do not have individual employment or severance agreements with any of our NEOs, other than
an employment agreement with Mr. Giromini, which was originally executed when he became our COO in 2002. Mr.
Giromini’s employment agreement automatically renews each year unless either Mr. Giromini or the Board chooses not to
renew the agreement. The Compensation Committee annually reviews the agreement and Mr. Giromini’s performance.
Double Trigger Change in Control Benefits - We employ a double-trigger change in control provision as part of our Change-
in-Control policy.
No Pledging/Hedging Transactions or Short Sales Permitted - We have adopted a policy precluding all directors and
associates, including our executive officers, and their Related Persons from pledging or engaging in hedging or short sales
with respect to the Company’s stock.
No Substantial Perquisites - We do not provide substantial perquisites to our executive officers.
No Unique Retirement Programs - We do not have retirement programs uniquely applicable to our executive officers.
No Repricing of Underwater Stock Options – We do not permit underwater stock options to be repriced without stockholder
approval.
The Compensation Committee discharges many of the Board’s responsibilities related to executive compensation and
continuously strives to align our compensation policies with our performance. The Committee will continue to analyze our executive
compensation policies and practices and adjust them as appropriate to reflect our performance and competitive needs. The Board
believes that the executive compensation - as disclosed in the CD&A, tabular disclosures, and other narrative executive compensation
disclosures in this Proxy Statement - reflects our compensation philosophy and aligns with the pay practices of our peer group.
Effect of the Proposal
This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our
executive officers’ compensation. This say-on-pay vote is an advisory vote that is not binding on us.
The approval or disapproval by stockholders will not require the Board or the Compensation Committee to take any action
regarding the Company’s executive compensation practices. The final decisions on the compensation and benefits of our NEOs and
on whether, and if so, how, to address stockholder disapproval remain with the Board and the Compensation Committee.
The Board believes that the Compensation Committee is in the best position to consider the extensive information and factors
necessary to make independent, objective, and competitive compensation recommendations and decisions that are in the best interests
of Wabash National and its stockholders.
However, the Board and our Compensation Committee value the opinions expressed by stockholders in their vote on this
proposal, and will carefully consider the outcome of the vote when making future compensation decisions with respect to our
executive officers. In that regard, the Board and our Compensation Committee carefully considered the results of last year’s say-on-
pay vote, in which 97% of stockholders voted in favor of our say-on-pay proposal, and took such results into account by continuing to
emphasize the core principles of our compensation philosophy and best practices of our compensation programs.
The Board urges you to carefully review the CD&A section of this Proxy Statement, together with the executive compensation
tables, which describe our compensation philosophy and programs in greater detail, and to approve the following resolution:
“RESOLVED, that the stockholders hereby approve on an advisory basis the compensation paid to the Wabash National
Corporation named executive officers, as disclosed in the Wabash National Corporation Proxy Statement pursuant to the
55
rules of the Securities and Exchange Commission (including the Compensation Discussion and Analysis, compensation tables
and narrative discussion).”
Board Recommendation
The Board of Directors UNANIMOUSLY recommends that you vote “FOR” the approval
of the compensation of our executive officers, as disclosed in this Proxy Statement.
56
PROPOSAL 3
Re-Approval of the Performance Goals Included in
the Wabash National Corporation 2011 Omnibus Incentive Plan
We are requesting that our stockholders vote to re-approve the material terms of performance-based compensation under the
Wabash National Corporation 2011 Omnibus Incentive Plan (the “2011 Plan”).
In 2011, the Board of Directors adopted, and the stockholders approved, the 2011 Plan. The purpose of the 2011 Plan is to
provide eligible persons with an incentive to contribute to the success of the Company and to operate and manage the Company’s
business in a manner that will provide for the Company’s long-term growth and profitability to benefit its stockholders and other
important stakeholders, including its employees and customers, and provide a means of obtaining, rewarding and retaining key
personnel. As of March 31, 2016, there were approximately 2,679,000 shares available for issuance under the 2011 Plan.
This summaries below of the material terms of performance-based compensation and the other principal features of the 2011 Plan
are qualified in their entirety by the more detailed terms and conditions of the 2011 Plan, a copy of which is attached as Exhibit A to
this Proxy Statement.
Performance Goals
The 2011 Plan is intended to comply with Section 162(m) of the Internal Revenue Code. Section 162(m) places a limit of
$1,000,000 on the amount that the Company may deduct in any one taxable year for compensation paid to each of its “covered
employees.” The Company’s covered employees include its Chief Executive Officer and each of its other three most highly-paid
executive officers, other than the Chief Financial Officer. There is, however, an exception to this limit for compensation earned
pursuant to certain performance-based awards. A performance-based award made under the 2011 Plan is eligible for this exception
provided that certain Section 162(m) requirements are met. One of these requirements relates to shareholder approval (and, in certain
cases, re-approval) of the material terms of the performance goals underlying the performance-based award. The performance goals in
the 2011 Plan were approved by shareholders in 2011. Section 162(m) requires re-approval of those performance goals after five years
if the Compensation Committee has retained discretion to vary the targets under the performance goals from year to year. Our
Compensation Committee has retained discretion to vary the targets under the performance goals from year to year. Accordingly, the
Company is seeking re-approval of the performance goals included in the 2011 Plan to preserve the Company’s ability to deduct
compensation earned by certain executives pursuant to any performance-based award that may be made in the future under the 2011
Plan.
The following discussion summarizes the material terms of the performance goals under the 2011 Plan, including a description of:
− Eligibility—the individuals eligible for performance awards under the 2011 Plan;
− Business Criteria Underlying Performance Goals—the business criteria on which the underlying performance goals are based;
and
− Award Limits—the maximum amount of compensation that may be paid to an eligible participant during a specified period if
the performance goals are met.
Eligibility
Awards may be made under the 2011 Plan to employees, officers or directors of the Company or any of our affiliates, or a
consultant (who is a natural person) or adviser (who is a natural person) currently providing services to the Company or any of our
affiliates.
Business Criteria Underlying Performance Goals.
To be considered performance-based compensation, an award must be subject to the accomplishment of one or more performance
goals. Under the 2011 Plan, the performance goals must be related to the following performance measures and are subject to
compliance with applicable law:
(a) total stockholder return;
(b) such total stockholder return as compared to total return (on a comparable basis) of a publicly available index
such as, but not limited to, the Standard & Poor’s 500 Stock Index;
(c) net income;
57
(d) pretax earnings;
(e) earnings before interest expense, taxes, depreciation and amortization;
(f) earnings before interest expense, taxes, depreciation and amortization and before bonuses, service fees, and
extraordinary or special items;
(g) pretax operating earnings after interest expense and before bonuses, service fees, and extraordinary or special
items;
(h) operating margin;
(i) operating income;
(j) earnings per share;
(k) return on equity;
(l)
return on capital;
(m) return on investment;
(n) operating earnings;
(o) working capital;
(p) ratio of debt to stockholders’ equity;
(q) free cash flow; and
(r) revenue.
Any performance measure(s) may be used to measure (i) the performance of the Company, a subsidiary, and/or an affiliate as a
whole, (ii) the Company, any subsidiary, and/or any other affiliate or any combination, or (iii) any business unit of the Company,
subsidiary, and/or affiliate or any combination thereof, as the Compensation Committee may deem appropriate. The Company may
also use any of the above performance measures as compared to the performance of a group of comparator companies, or published or
special index that the Compensation Committee, deems appropriate. The Company may also select performance measure (j) above as
compared to various stock market indices. The Compensation Committee has the authority to provide for accelerated vesting of any
award based on the achievement of performance goals pursuant to the performance measures specified above.
Award Limits.
Awards under the 2011 Plan are subject to the following limits:
The maximum number of shares of Company common stock subject to options or stock appreciation rights (“SARs”) that can be
awarded under the 2011 Plan to any person is 750,000 per calendar year; provided, however, that the maximum number of shares of
Company common stock subject to options or SARs that can be granted under the 2011 Plan to any person in the year that the person is
first employed by the Company, or any affiliate, is 1,000,000.
The maximum number of shares that can be granted under the 2011 Plan to any person, other than pursuant to options or SARs, is
500,000 per calendar year; provided, however, that the maximum number of shares of Company common stock subject to awards other
than options or SARs that can be granted under the 2011 Plan to any person in the year that the person is first employed by the Company,
or any affiliate, is 600,000.
The maximum amount that may be paid as a performance-based cash-settled award in a 12-month performance period to any
person is $2,500,000 and the maximum amount that may be paid as performance-based cash-settled awards in respect of a
performance period greater than 12 months by any person is $5,000,000.
The preceding limitations are subject to adjustment for stock dividends and similar events as provided in the 2011 Plan.
It is not possible to determine the actual amount of compensation that will be earned under the 2011 Plan in 2016 or in future
years because the awards earned will depend on future performance as measured against the applicable performance goals established
by the Compensation Committee. The Company expects that future awards under the 2011 Plan will be granted in a manner
substantially consistent with the historical grant of awards under the 2011 Plan. For information regarding past grants and outstanding
equity awards, see the disclosure in this Proxy Statement in “Grants of Plan-Based Awards” and “Outstanding Equity Awards at 2015
Fiscal Year-End.”
58
Other Features of the 2011 Plan
Administration
Except as the Board may otherwise determine, the committee appointed by the Board to administer the 2011 Plan must consist of
two or more directors of the Company who: (a) are not officers or employees of the Company, (b) qualify as “outside directors” within
the meaning of Section 162(m) of the Internal Revenue Code, (c) meet such other requirements as may be established from time to
time by the SEC for plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act and (d)
comply with the independence requirements of the stock exchange on which the our common stock is listed. The 2011 Plan is
currently administered by the Compensation Committee of the Board of Directors. Subject to the terms of the 2011 Plan, the
Compensation Committee selects participants to receive awards, determines the types of awards and terms and conditions of awards,
and interprets provisions of the 2011 Plan. Members of the Compensation Committee serve at the pleasure of the Board of Directors.
The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company
who may also be officers or employees of the Company, to administer the Plan with respect to employees or other service providers
who are not executive officers or directors of the Company.
Common Stock Reserved for Issuance under the 2011 Plan
The shares of common stock reserved for issuance under the 2011 Plan consists of authorized but unissued shares or treasury
shares or any combination thereof.
Share Usage
Under the terms of the 2011 Plan, any shares of our common stock that are subject to awards are counted against the 2011 Plan
share limit as one share for every one share subject to the award. Shares subject to awards granted under the 2011 Plan or the 2007
Omnibus Incentive Plan, as amended (the “2007 Plan”) that terminate by expiration, forfeiture, cancellation, or which are settled in
cash in lieu of shares or are exchanged prior to the issuance of shares for awards not involving shares shall be available again for grant
under the 2011 Plan. Any shares tendered to pay the option price of an option granted under the 2011 Plan or the 2007 Plan or to
satisfy tax withholding obligations associated with an award granted under either plan, shall become available again for grant under
the 2011 Plan. Any shares that were subject to a SAR granted under the 2011 Plan that were not issued upon the exercise of such SAR
shall become available again for grant under the 2011 Plan.
Amendment or Termination of the 2011 Plan
The Board of Directors may terminate, suspend, or amend the 2011 Plan at any time and for any reason as to any shares as to
which awards have not been made. The 2011 Plan will terminate in any event ten years after the effective date of the 2011 Plan, which
will be May 19, 2021. Amendments must be submitted for stockholder approval to the extent stated by the Board, required by
applicable law or required by applicable stock exchange listing requirements. In addition, no amendment may be made to the no-
repricing provisions described below without the approval of the Company’s stockholders.
No-Repricing
Under the 2011 Plan, except in connection with certain corporate transactions, no amendment or modification may be made to an
outstanding stock option or SAR, including, without limitation, by replacement of stock options or SARs with another award type, that
would be treated as a repricing under the rules of the stock exchange on which our common stock is listed or would replace stock
options or SARs with cash, in each case, without the approval of the stockholders provided, that, appropriate adjustments may be
made to outstanding stock options and SARs to achieve compliance with applicable law, including the Internal Revenue Code.
Option
The 2011 Plan permits the granting of options to purchase shares of our common stock intended to qualify as incentive stock
options under the Internal Revenue Code and stock options that do not qualify as incentive stock options. The exercise price of each
stock option may not be less than 100% of the fair market value of our common stock on the date of grant date. The fair market value
is generally determined as the closing price of the common stock on the grant date or other determination date. In the case of certain
10% stockholders who receive incentive stock options, the exercise price may not be less than 110% of the fair market value of the
common stock on the date of grant. An exception to these requirements is made for options that the Company grants in substitution for
options held by employees of companies that the Company acquires. In such a case the exercise price is adjusted to preserve the
economic value of the employee’s stock option from his or her former employer.
The term of each stock option is fixed by the Compensation Committee and may not exceed ten years from the date of grant (five
years if the optionee is a 10% stockholder and the option is intended to be an incentive stock option). The Compensation Committee
59
determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or
termination of employment during which options may be exercised. Options may be made exercisable in installments. The
exercisability of options may be accelerated by the Compensation Committee.
In general, an optionee may pay the exercise price of an option by cash or cash equivalents, or, if the option agreement so
provides, by tendering shares of our common stock with a fair market value equal to the option exercise price, by means of a broker-
assisted cashless exercise or, any combination thereof. An award agreement may provide for other methods as well.
Other Awards
Under the 2011 Plan, the following types of awards may also be made:
SARs. A SAR is an award that gives the holder the right to receive, upon exercise thereof, the excess of (a) the fair market value
of one share of our common stock on the date of exercise over (b) the SAR exercise price on the grant date. The SAR exercise price
must be at least equal to the fair market value of a share of our common stock on the date of grant, as determined in accordance with
the 2011 Plan.
Restricted Stock. Restricted stock is an award of shares of our common stock, which may be granted for no consideration (other
than the par value of the shares which is deemed paid by services). At the time a grant of restricted stock is made, the Compensation
Committee may establish a period of time applicable to such restricted stock. The Compensation Committee also may, at the time of
grant, prescribe restrictions in addition to or other than the expiration of the restricted period, including the satisfaction of corporate or
individual performance objectives, applicable to all or any portion of the award of restricted stock. There is a minimum three-year
vesting requirement for time-vested restricted stock awards and deferred stock unit awards and one-year minimum vesting
requirement for performance-vesting restricted stock awards and deferred stock unit awards, with up to ten percent of shares reserved
for issuance under the plan carved-out from the foregoing minimum requirements. Further, the foregoing limitation does not apply to
any dividends or dividend equivalent rights, or other distributions, issued in connection with any award granted at any time under the
2011 Plan.
Unless the Compensation Committee provides otherwise in the award agreement, holders of restricted stock will have the right to
vote such stock and the right to receive any dividends declared or paid with respect to such stock. The Compensation Committee may
provide that any dividends paid on restricted stock must be reinvested in shares of our common stock, which may or may not be
subject to the same vesting conditions and restrictions applicable to the restricted stock.
Unrestricted Stock. An award of unrestricted stock is an award of shares of our common stock free of restrictions. The
Compensation Committee may grant (or sell at par value or such other higher purchase price determined by the Compensation
Committee) an award of shares of unrestricted stock under the 2011 Plan. Unrestricted stock awards may be granted or sold as
described in the preceding sentence in respect of services and other valid consideration, or in lieu of, or in addition to, any cash
compensation due to the grantee.
Deferred Stock Units. A stock unit is a bookkeeping entry that represents the equivalent of one share of Company common stock.
The same terms and restrictions as may be set forth by the Compensation Committee with respect to shares of restricted stock apply to
deferred stock units. However, holders of deferred stock units will have no rights as stockholders or any other rights (other than those
of a general creditor of the Company). The Compensation Committee may provide that the holder of deferred stock units will be
entitled to receive, upon the Company’s payment of a cash dividend on its outstanding common stock, a cash payment for each stock
unit held equal to the per-share dividend paid on our common stock. The Compensation Committee may also provide in the award
agreement that such cash payment will be deemed reinvested in additional deferred stock units at a price per unit equal to the fair
market value of a share of Company common stock on the date that such dividend is paid.
Dividend Equivalent Rights. A dividend equivalent right is an award entitling the recipient to receive credits based on cash
distributions that would have been paid on the shares of our common stock specified in the dividend equivalent right (or other award
to which it relates) if such shares had been issued to and held by the recipient. The terms and conditions of dividend equivalent rights
will be specified in the grant. Except as may otherwise be provided by the Compensation Committee either in the award Agreement,
in another agreement with the recipient, or in writing after the award agreement is issued, a recipient’s rights in all dividend equivalent
rights will automatically terminate upon the recipient’s termination of service for any reason.
Performance-Based Awards. These awards are awards of options, SARs, restricted stock, deferred stock units, performance
shares or other equity-based awards made subject to the achievement of performance goals over a performance period specified by the
Compensation Committee and that comply with applicable law. Subject to the terms of the 2011 Plan, the Compensation Committee
60
may pay earned shares or units in cash or in shares of our common stock (or in a combination of cash and shares of our common
stock) equal to the value of the earned common stock or units at the close of the applicable performance period or as soon as
practicable thereafter. Performance-based awards to individuals who are covered under Section 162(m) of the Internal Revenue Code,
or who the Compensation Committee designates as likely to be covered in the future, will comply with the requirement that payments
to such employees qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code (as described
below) to the extent that the Compensation Committee so designates. Such employees include the chief executive officer and the three
highest compensated executive officers (other than the chief financial officer) determined at the end of each year (the “covered
employees”).
Recoupment
Award agreements for awards granted pursuant to the 2011 Plan may be subject to mandatory repayment by the recipient to the
Company of any gain realized by the recipient to the extent the recipient is in violation of or in conflict with certain agreements with
the Company (including but not limited to an employment or non-competition agreement). The Company may also annul an award if
the recipient is an employee and is terminated for Cause as defined in the applicable award agreement, the 2011 Plan, or any other
agreement with the Company.
Any award granted pursuant to the 2011 Plan shall be subject to mandatory repayment to the extent the recipient is, or in the
future becomes, subject to any Company “clawback” or recoupment policy that requires the repayment to the Company of
compensation paid to by the Company or an affiliate in the event that such recipient fails to comply with, or violates, the terms or
requirements of such policy.
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the securities laws, a recipient subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002 and any recipient who knowingly engaged in the misconduct, was grossly negligent in
engaging in the misconduct, knowingly failed to prevent the misconduct or was grossly negligent in failing to prevent the misconduct,
shall reimburse the Company the amount of any payment in settlement of an award earned or accrued during the 12-month period
following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of
the financial document that contained such material noncompliance.
Notwithstanding any other provision of the 2011 Plan or any provision of any award agreement, if the Company is required to
prepare an accounting restatement, the recipient shall forfeit any cash or stock received in connection with an award (or an amount
equal to the fair market value of such stock on the date of delivery thereof to the recipient if the recipient no longer holds the common
stock) if, pursuant to the terms of the award agreement for such award, the amount of the award earned or the vesting in the award was
expressly based on the achievement of pre-established performance goals set forth in the award agreement (including earnings, gains,
or other performance goals) that are later determined, as a result of the accounting restatement, not to have been achieved.
Effect of Certain Corporate Transactions
Certain change of control transactions involving us, such as a sale of the Company, may cause awards granted under the 2011
Plan to vest, unless the awards are continued or substituted for in connection with the change of control transaction.
Adjustments for Stock Dividends and Similar Events
The Compensation Committee will make appropriate adjustments in outstanding awards and the number of shares available for
issuance under the 2011 Plan, including the individual limitations on awards, to reflect stock splits and other similar events.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code limits publicly-held companies such as the Company to an annual deduction for
federal income tax purposes of $1 million for compensation paid to their covered employees. However, performance-based
compensation is excluded from this limitation. The 2011 Plan is designed to permit the Compensation Committee to grant stock
options and stock appreciation rights that qualify as performance-based for purposes of satisfying the conditions of Section 162(m).
To qualify as performance-based:
(i)
(ii)
the compensation must be paid solely on account of the attainment of one or more pre-established, objective performance
goals;
the performance goal under which compensation is paid must be established by a compensation committee comprised solely
of two or more directors who qualify as outside directors for purposes of the exception;
61
(iii)
(iv)
(v)
the material terms under which the compensation is to be paid must be disclosed to and subsequently approved by
stockholders of the corporation before payment is made in a separate vote;
the performance goals must be established not later than the earlier of (a) 90 days after the beginning of any performance
period applicable to the award and (b) the day on which 25% of any performance period applicable to the award has expired,
or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m) of the
Internal Revenue Code; and
the Compensation Committee must certify in writing before payment of the compensation that the performance goals and
any other material terms were in fact satisfied.
In the case of compensation attributable to stock options, the performance goal requirement (summarized in (i) above) is deemed
satisfied, and the certification requirement (summarized in (v) above) is inapplicable, if the grant or award is made by the
Compensation Committee; the 2011 Plan under which the option is granted states the maximum number of shares with respect to
which options may be granted during a specified period to an employee; and under the terms of the option, the amount of
compensation is based solely on an increase in the value of the Company’s common stock after the date of grant.
Under the Internal Revenue Code, a director is an “outside director” of the Company if he or she is not a current employee of the
Company; is not a former employee who receives compensation for prior services (other than under a qualified retirement plan); has
not been an officer of the Company; and does not receive, directly or indirectly (including amounts paid to an entity that employs the
director or in which the director has at least a five percent ownership interest), remuneration from the Company in any capacity other
than as a director.
Federal Income Tax Consequences
Non-Qualified Options
The grant of an option is not a taxable event for the grantee or the Company. Upon exercising a non-qualified option, a grantee
will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the
Company common stock on the date of exercise. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a
non-qualified option, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the
disposition and the tax basis of the shares of Company common stock (generally, the amount paid for the shares plus the amount
treated as ordinary income at the time the option was exercised).
If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code,
we will be entitled to a business expense deduction in the same amount and generally at the same time the grantee recognizes ordinary
income.
A grantee who has transferred a non-qualified stock option to a family member by gift will realize taxable income at the time the
non-qualified stock option is exercised by the family member. The grantee will be subject to withholding of income and employment
taxes at that time. The family member’s tax basis in the shares of Company common stock will be the fair market value of the shares
of Company common stock on the date the option is exercised. The transfer of vested non-qualified stock options will be treated as a
completed gift for gift and estate tax purposes. Once the gift is completed, neither the transferred options nor the shares acquired on
exercise of the transferred options will be includable in the grantee’s estate for estate tax purposes.
In the event a grantee transfers a non-qualified stock option to his or her ex-spouse incident to the grantee’s divorce, neither the
grantee nor the ex-spouse will recognize any taxable income at the time of the transfer. In general, a transfer is made “incident to
divorce” if the transfer occurs within one year after the marriage ends or if it is related to the end of the marriage (for example, if the
transfer is made pursuant to a divorce order or settlement agreement). Upon the subsequent exercise of such option by the ex-spouse,
the ex-spouse will recognize taxable income in an amount equal to the difference between the exercise price and the fair market value
of the shares of Company common stock at the time of exercise. Any distribution to the ex-spouse as a result of the exercise of the
option will be subject to employment and income tax withholding at this time.
Incentive Stock Options
The grant of an option is not a taxable event for the grantee or for the Company. A grantee will not recognize taxable income
upon exercise of an incentive stock option (except that the alternative minimum tax may apply), and any gain realized upon a
disposition of the Company common stock received pursuant to the exercise of an incentive stock option will be taxed as long-term
capital gain if the grantee holds the shares of Company common stock for at least two years after the date of grant and for one year
after the date of exercise (the “holding period requirement”). We will not be entitled to any business expense deduction with respect to
the exercise of an incentive stock option, except as discussed below.
62
For the exercise of an option to qualify for the foregoing tax treatment, the grantee generally must be our employee or an
employee of our subsidiary from the date the option is granted through a date within three months before the date of exercise of the
option.
If all of the foregoing requirements are met except the holding period requirement mentioned above, the grantee will recognize
ordinary income upon the disposition of the Company common stock in an amount generally equal to the excess of the fair market
value of the Company common stock at the time the option was exercised over the option exercise price (but not in excess of the gain
realized on the sale). The balance of the realized gain, if any, will be capital gain. We will be allowed a business expense deduction to
the extent the grantee recognizes ordinary income, subject to our compliance with Section 162(m) of the Internal Revenue Code and to
certain reporting requirements.
SARs
There are no immediate tax consequences of receiving an award of SARs that is settled in Company common stock under the
2011 Plan. Upon exercising a SAR that is settled in Company common stock, a grantee will recognize ordinary income in an amount
equal to the difference between the exercise price and the fair market value of the Company common stock on the date of exercise. If
we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will
be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary
income.
Restricted Stock
A grantee who is awarded restricted stock will not recognize any taxable income for federal income tax purposes in the year of
the award, provided that the shares of Common Stock are subject to restrictions (that is, the restricted stock is nontransferable and
subject to a substantial risk of forfeiture). However, the grantee may elect under Section 83(b) of the Internal Revenue Code to
recognize compensation income in the year of the award in an amount equal to the fair market value of the Company common stock
on the date of the award (less the purchase price, if any), determined without regard to the restrictions. If the grantee does not make
such a Section 83(b) election, the fair market value of the Company common stock on the date the restrictions lapse (less the purchase
price, if any) will be treated as compensation income to the grantee and will be taxable in the year the restrictions lapse and dividends
paid while the Company common stock is subject to restrictions will be subject to withholding taxes. If we comply with applicable
reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business
expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.
Unrestricted Stock
Participants who are awarded unrestricted Company common stock are required to recognize ordinary income in an amount equal
to the fair market value of the shares of Company common Stock on the date of the award, reduced by the amount, if any, paid for
such shares. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue
Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes
ordinary income.
Deferred Stock Units
There are no immediate tax consequences of receiving an award of deferred stock units under the 2011 Plan. A grantee who is
awarded deferred stock units is required to recognize ordinary income in an amount equal to the fair market value of shares issued to
such grantee at the end of the restriction period or, if later, the payment date. If we comply with applicable reporting requirements and
with the restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same
amount and generally at the same time as the grantee recognizes ordinary income.
Dividend Equivalent Rights
Participants who receive dividend equivalent rights are required to recognize ordinary income in an amount distributed to the
grantee pursuant to the award. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the
Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at the same time as the
grantee recognizes ordinary income.
Performance-Based Awards
The award of a performance-based award has no federal income tax consequences for us or for the grantee. The payment of the
award is taxable to a grantee as ordinary income. If we comply with applicable reporting requirements and with the restrictions of
63
Section 162(m) of the Internal Revenue Code, we will be entitled to a business expense deduction in the same amount and generally at
the same time as the grantee recognizes ordinary income.
Section 280G
To the extent payments that are contingent on a change in control are determined to exceed certain Code limitations, they may be
subject to a 20% nondeductible excise tax and the Company’s deduction with respect to the associated compensation expense may be
disallowed in whole or in part.
Section 409A
The Company intends for awards granted under the 2011 Plan to comply with Section 409A of the Code. To the extent a grantee
would be subject to the additional 20% excise tax imposed on certain nonqualified deferred compensation plans as a result of a
provision of an award under the 2011 Plan, the provision will be deemed amended to the minimum extent necessary to avoid
application of the 20% excise tax.
Previous Equity Grants Under the 2011 Plan
The following table provides information about all previous equity grants under the 2011 Plan since it was adopted in 2011, as of
March 31, 2016:
Name of Individual or Identity of Group
Richard J. Giromini
Jeffery L. Taylor
Erin J. Roth
Mark J. Weber
Brent L. Yeagy
All Current Executive Officers
All Current Directors who are not Executive Officers
Nominees for Election as Director
Number of Equity Awards Granted Since
Inception of 2011 Plan
Restricted
Stock Units
(#)
Performance
Stock Units
(at Target)
Stock
Options (#)
(#)
278,090
263,665
362,306
24,170
59,380
69,680
51,540
508,560
0
0
56,170
50,681
63,303
53,453
517,562
153,635
0
65,103
69,835
87,797
74,167
702,194
0
0
Total amount of awards granted under the Plan (all employees and
Directors)
1,240,700
1,451,901
1,353,858
Board Recommendation
The Board of Directors UNANIMOUSLY recommends that you vote “FOR” the re-approval of the performance goals
included in the Wabash National Corporation 2011 Omnibus Incentive Plan.
64
PROPOSAL 4
Ratification of Appointment of Independent Registered Public Accounting Firm
Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has appointed the accounting firm Ernst & Young LLP the independent
registered public accounting firm for the Company for the year ending December 31, 2016. Ernst & Young acted as our independent
auditors for the year ended December 31, 2015. Representatives of Ernst & Young are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they desire and are expected to be available to respond to appropriate questions. The
Audit Committee is responsible for hiring, compensating and overseeing the independent registered public accounting firm, and
reserves the right to exercise that responsibility at any time. If the appointment of Ernst & Young is not ratified by the stockholders,
the Audit Committee is not obligated to appoint another registered public accounting firm, but the Audit Committee will give
consideration to such unfavorable vote.
Board Recommendation
The Board of Directors UNANIMOUSLY recommends that you vote “FOR” ratification of the appointment of
Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2016.
The fees billed by Ernst & Young for professional services provided to us for the years ended December 31, 2015 and
December 31, 2014 were as follows:
Principal Accounting Fees and Services
FEE CATEGORY
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
Total Fees
Audit Fees.
($ in thousands)
2015
$ 1,342
305
--
--
$ 1,647
2014
$ 1,323
16
--
10
$ 1,349
Consist of fees billed for professional services rendered for the audit of our consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports, and services in connection with securities offerings and
registration statements.
Audit-Related Fees.
Consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of
our consolidated financial statements and are not reported under “Audit Fees.” In 2015 and 2014, these services included audits of
benefit plans, services in connection with due diligence related to acquisitions, and other audit-related services.
Tax Fees.
Consist of fees billed for professional services related to tax compliance, tax advice and tax planning.
All Other Fees.
Consist of fees for services provided by Ernst & Young that are not included in the service categories reported above.
In 2015 and 2014, all Ernst & Young fees were pre-approved by the Audit Committee pursuant to the policy described below.
After consideration, the Audit Committee has concluded that the provision of non-audit services by Ernst & Young to Wabash is
compatible with maintaining the independence of Ernst & Young.
65
Pre-Approval Policy for Audit and Non-Audit Fees
The Audit Committee has sole authority and responsibility to select, evaluate and, if necessary, replace the independent auditor.
The Audit Committee has sole authority to approve all audit engagement fees and terms, and the Committee, or a member of the
Committee, must pre-approve any non-audit service provided to the Company by the Company’s independent auditor. The Audit
Committee reviews the status of each engagement at its regularly scheduled meetings. In 2015 and 2014, the Committee pre-approved
all services provided by the independent auditor. The independent auditor provides an engagement letter in advance of the meeting of
the Audit Committee that occurs in connection with our annual meeting of stockholders, outlining the scope of the audit and related
audit fees.
Audit Committee Report
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND
SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER FILING BY US UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT WE
SPECIFICALLY INCORPORATE THIS REPORT.
The Audit Committee of the Board of Directors in 2015 consisted of Mr. Sorensen, Dr. Jischke, and Mr. Kunz. The Committee’s
responsibilities are described in a written charter adopted by the Board of Directors in February 2003, and revised and updated in
December 2015. The charter is available on our website at www.wabashnational.com or by writing to us at Wabash National
Corporation, Attention: Corporate Secretary, P.O. Box 6129, Lafayette, Indiana 47903.
As part of its ongoing activities, the Audit Committee has:
• Reviewed and discussed with management our audited consolidated financial statements for the year ended December 31,
2015;
• Discussed with Ernst & Young, our independent auditors for 2015, the matters required to be discussed by Statement on
Auditing Standards No. 16, Communication with Audit Committees, as amended, as adopted by the Public Company
Accounting Oversight Board in Rule 3200T; and
• Received the written disclosures and the letter from the independent auditors required by applicable requirements of the
Public Company Accounting Oversight Board regarding the independent auditors’ communications with the Audit
Committee concerning independence, and has discussed with the independent auditors their independence.
On the basis of these reviews and discussions, the Audit Committee recommended that our audited consolidated financial
statements be included in our Annual Report on Form 10-K for the year ended December 31, 2015, for filing with the SEC.
AUDIT COMMITTEE
Scott K. Sorensen
Martin C. Jischke
John E. Kunz
66
General M atters
Availability of Certain Documents
A copy of our 2015 Annual Report on Form 10-K is posted with this Proxy Statement. You also may obtain additional
copies without charge and without the exhibits by writing to: W abash National Corpora tion, Attention:
Corporate Secretary, P.O. Box 6129, Lafayette, Indiana 47903. These documents also are available through our
website at www.wabashnational.com.
The charters for our Audit, Compensation, and Nominating and Corporate Governance Committees, as well as our Corporate
Governance Guidelines and our Codes of Business Conduct and Ethics, are available on the Corporate Governance page of the
Investor Relations section of our website at www.wabashnational.com and are available in print without charge by writing to: Wabash
National Corporation, Attention: Corporate Secretary, P.O. Box 6129, Lafayette, Indiana 47903.
Stockholder Proposals and Nominations
Stockholder Proposals for Inclusion in 2017 Proxy Statement. To be eligible for inclusion in the proxy statement for our 2017
Annual Meeting, stockholder proposals must be received by the Company’s Corporate Secretary no later than the close of business on
December 3, 2016. However, if the date of the 2017 Annual Meeting has changed by more than 30 days from the date of the 2016
Annual Meeting indicated herein, then stockholder proposals must be received a reasonable time before the Company begins to print
and send its proxy materials for the 2017 Annual Meeting. Proposals should be sent to Wabash National Corporation, Attention:
Corporate Secretary, 1000 Sagamore Parkway South, Lafayette, Indiana 47905 and follow the procedures required by Rule 14a-8 of
the Securities Exchange Act of 1934.
Stockholder Director Nominations and other Stockholder Proposals for Presentation at the 2017 Annual Meeting. Under our
Bylaws, written notice of stockholder nominations to the Board of Directors and any other business proposed by a stockholder that is
not to be included in our proxy statement must be delivered to the Company’s Corporate Secretary not less than 90 nor more than
120 days prior to the first anniversary of the preceding year’s annual meeting. Accordingly, any stockholder who wishes to have a
nomination or other business considered at the 2016 Annual Meeting must deliver a written notice (containing the information
specified in our Bylaws regarding the stockholder, the nominee and the proposed action, as appropriate) to the Company’s Corporate
Secretary between January 11, 2017 and February 11, 2017. However, if the date of the 2017 Annual Meeting is more than 30 days
before or after the first anniversary of the 2016 Annual Meeting, any stockholder who wishes to have a nomination or other business
considered at the 2017 Annual Meeting must deliver written notice (containing the information specified in our Bylaws regarding the
stockholder, the nominee and the proposed action, as appropriate) to the Company’s Corporate Secretary not earlier than 120 days
prior to such Annual Meeting and not later than the later of the 90th day prior to such Annual Meeting or the tenth day following the
public announcement of such Annual Meeting. SEC rules permit management to vote proxies in its discretion with respect to such
matters if we advise stockholders how management intends to vote. A nomination or other proposal will be disregarded if it does not
comply with the above procedure and any additional requirements set forth in our Bylaws. Please note that these requirements are
separate from the SEC’s requirements to have your proposal included in our proxy materials.
Householding of Proxy M aterials
Stockholders residing in the same household who hold their stock through a bank or broker may receive only one set of proxy
materials in accordance with a notice sent earlier by their bank or broker. This practice of sending only one copy of proxy materials is
called “householding” and this practice saves us money in printing and distribution costs and reduces the environmental impact of our
Annual Meeting. This practice will continue unless instructions to the contrary are received by your bank or broker from one or more
of the stockholders within the household.
If you hold your shares in “street name” and reside in a household that received only one copy of the proxy materials, you can
request to receive a separate copy in the future by following the instructions sent by your bank or broker. If your household is
receiving multiple copies of the proxy materials, you may request that only a single set of materials be sent by following the
instructions sent by your bank or broker.
67
Directions to the 2015 Annual Meeting of Stockholders, to be held at the Wabash National Corporation Ehrlich Innovation
Directions to the Annual Meeting
Center, located at 3233 Kossuth Street, Lafayette, IN 47905, are set forth below:
Directions from Indianapolis and other points south of West Lafayette:
Take I-65 North toward Chicago to Lafayette Exit 172. Turn left (West) on St. Rd. 26 to U.S. 52. Turn left (South) on U.S. 52,
drive approximately 1/2 mile to Kossuth Street. Turn right (West) on Kossuth Street. Drive approximately 1/10 mile; 3233
Kossuth Street (the Wabash National Corporation Ehrlich Innovation Center) will be on the left (South) side of the street.
Directions from Chicago and other points north of West Lafayette:
Take I-65 South to Lafayette Exit 172. Turn right (West) on St. Rd. 26 to U.S. 52. Turn left (South) on U.S. 52, drive
approximately 1/2 mile to Kossuth Street. Turn right (West) on Kossuth Street. Drive approximately 1/10 mile; 3233 Kossuth
Street (the Wabash National Corporation Ehrlich Innovation Center) will be on the left (South) side of the street.
As of the date of this Proxy Statement, the Board of Directors does not intend to present at the Annual Meeting any matters other
than those described in this Proxy Statement and does not know of any matters that will be presented by other parties. If any other
matter is properly brought before the meeting for action by the stockholders, proxies in the enclosed form returned to Wabash
National will be voted in accordance with the recommendation of the Board of Directors or, in the absence of such a recommendation,
in accordance with the judgment of the proxy holder.
Other Matters
By Order of the Board of Directors
March 31, 2016
Erin J. Roth
Senior Vice President
General Counsel & Corporate Secretary
68
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[x]
[ ]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2015
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number: 1-10883
WABASH NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
1000 Sagamore Parkway South
Lafayette, Indiana
(Address of Principal Executive Offices)
52-1375208
(IRS Employer
Identification Number)
47905
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code: (765) 771-5300
Title of each class
Common Stock, $.01 Par Value
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2015 was $819,745,393 based upon the
closing price of the Company's common stock as quoted on the New York Stock Exchange composite tape on such date.
The number of shares outstanding of the registrant's common stock as of February 18, 2016 was 64,935,898.
Part III of this Form 10-K incorporates by reference certain portions of the registrant’s Proxy Statement for its Annual Meeting of
Stockholders to be filed within 120 days after December 31, 2015.
TABLE OF CONTENTS
WABASH NATIONAL CORPORATION
FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2015
Pages
PART I
Item 1
Business .............................................................................................................................
4
Item 1A Risk Factors ......................................................................................................................
16
Item 1B Unresolved Staff Comments ..............................................................................................
24
Item 2
Properties ..........................................................................................................................
24
Item 3
Legal Proceedings ..............................................................................................................
25
Item 4 Mine Safety Disclosures ...................................................................................................
28
PART II
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ...........................................................................................
29
Item 6
Selected Financial Data .....................................................................................................
30
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of
Operations .........................................................................................................................
31
Item 7A Quantitative and Qualitative Disclosures about Market Risk ...........................................
53
Item 8
Financial Statements and Supplementary Data ..................................................................
55
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure .........................................................................................................................
88
Item 9A Controls and Procedures ....................................................................................................
88
Item 9B Other Information .............................................................................................................
91
PART III
Item 10 Executive Officers of the Registrant .................................................................................
91
Item 11 Executive Compensation ..................................................................................................
91
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters ...........................................................................................................
91
Item 13 Certain Relationships and Related Transactions, and Director Independence ..................
91
Item 14
Principal Accounting Fees and Services ............................................................................
91
PART IV
Item 15 Exhibits and Financial Statement Schedules ....................................................................
92
SIGNATURES ..................................................................................................................................
94
2
FORWARD LOOKING STATEMENTS
This Annual Report of Wabash National Corporation (together with its subsidiaries, “Wabash,”
“Company,” “us,” “we,” or “our”) contains “forward-looking statements” within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking
statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan” or
“anticipate” and other similar words. Our “forward-looking statements” include, but are not limited to, statements
regarding:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our business plan;
our expected revenues, income or loss;
our ability to manage our indebtedness
our strategic plan and plans for future operations;
financing needs, plans and liquidity, including for working capital and capital expenditures;
our ability to achieve sustained profitability;
reliance on certain customers and corporate relationships;
availability and pricing of raw materials;
availability of capital and financing;
dependence on industry trends;
the outcome of any pending litigation or notice of environmental dispute;
export sales and new markets;
engineering and manufacturing capabilities and capacity;
acceptance of new technology and products;
government regulation; and
assumptions relating to the foregoing.
Although we believe that the expectations expressed in our forward-looking statements are reasonable,
actual results could differ materially from those projected or assumed in our forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking statements, are subject to change and
are subject to inherent risks and uncertainties, such as those disclosed in this Annual Report. Each forward-looking
statement contained in this Annual Report reflects our management’s view only as of the date on which that
forward-looking statement was made. We are not obligated to update forward-looking statements or publicly
release the result of any revisions to them to reflect events or circumstances after the date of this Annual Report or to
reflect the occurrence of unanticipated events, except as required by law.
Currently known risks and uncertainties that could cause actual results to differ materially from our
expectations are described throughout this Annual Report, including in “Item 1A. Risk Factors.” We urge you to
carefully review that section for a more complete discussion of the risks of an investment in our securities.
3
PART I
ITEM 1—BUSINESS
Overview
Wabash National Corporation (together with its subsidiaries, “Wabash,” “Company,” “us,” “we,” or “our”)
was founded in 1985 as a start-up company in Lafayette, Indiana. We are now a diversified industrial manufacturer
and North America’s leading producer of semi-trailers and liquid transportation systems. We design, manufacture
and market a diverse range of products, including dry freight and refrigerated trailers, platform trailers, bulk tank
trailers, dry and refrigerated truck bodies, truck-mounted tanks, intermodal equipment, aircraft refueling equipment,
structural composite panels and products, trailer aerodynamic solutions and specialty food grade and pharmaceutical
equipment. We believe our position as a leader in our key industries is the result of longstanding relationships with
our core customers, our demonstrated ability to attract new customers, our broad and innovative product lines, our
technological leadership and our extensive distribution and service network. Our management team is focused on
continuing to optimize our manufacturing and retail operations to match the current demand environment,
implementing cost savings initiatives and lean manufacturing techniques, strengthening our capital structure,
developing innovative products that enable our customers to succeed, improving earnings and continuing
diversification of the business into higher margin opportunities that leverage our intellectual and process
capabilities.
Wabash was incorporated in Delaware in 1991 and is the successor by merger to a Maryland corporation
organized in 1985. Our internet website is www.wabashnational.com. We make our electronic filings with the
Securities Exchange Commission (the “SEC”), including our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments to these reports available on our website free of charge as
soon as practicable after we file or furnish them with the SEC. Information on the website is not part of this Annual
Report.
Operating Segments
We manage our business in three segments: Commercial Trailer Products, Diversified Products and Retail.
Certain corporate-related administrative costs, interest and income taxes are not allocated to these three segments,
but are reported in our Corporate and Eliminations segment. Financial results by operating segment, including
information about revenues from customers, measures of profit and loss and financial information regarding
geographic areas and export sales are discussed in Note 12, Segments and Related Information, of the accompanying
consolidated financial statements. By operating segment, net sales, prior to the elimination of intersegment sales,
were as follows (dollars in thousands):
Year Ended December 31,
2015
2014
2013
Sales by Segment
Commercial Trailer Products
$
1,509,380
$
1,294,164
$
1,082,456
Diversified Products
Retail
Corporate and Eliminations
428,021
167,291
(77,203)
466,238
190,080
(87,167)
458,653
181,486
(86,909)
Total
$
2,027,489
$
1,863,315
$
1,635,686
Commercial Trailer Products
Commercial Trailer Products segment sales as a percentage of our consolidated net sales and gross margin
measured prior to intersegment eliminations were:
4
Percentage of net sales
Percentage of gross profit
Year Ended December 31,
2015
71.7
61.1
%
%
2014
66.4
45.8
%
%
2013
62.8
39.5
%
%
The Commercial Trailer Products segment manufactures standard and customized van and platform trailers.
We seek to identify and produce proprietary custom products that offer exceptional value to customers with the
potential to generate higher profit margin than standardized products. We believe that we have the engineering and
manufacturing capability to produce these products efficiently. We introduced our proprietary composite product,
DuraPlate, in 1996 and have experienced widespread truck trailer industry acceptance. Since 2002, sales of our
DuraPlate trailers have represented approximately 94% of our total new dry van trailer sales. We are also a
competitive producer of refrigerated trailer products as well as other specialty products, including converter dollies.
Through our Transcraft subsidiary we also manufacture steel and aluminum flatbed and dropdeck trailers. Through
our Commercial Trailer Products segment, we also operate a wood flooring production facility that manufactures
laminated hard wood oak products for our van trailer products.
Commercial Trailer Products’ transportation equipment is marketed under the Wabash, DuraPlate,
XD-35®, ArcticLite®, RoadRailer®, Transcraft® and Benson® trademarks directly to
DuraPlateHD, DuraPlate
customers, through independent dealers and through our Company-owned retail branch network. Historically, we
have focused on our longstanding core customers representing many of the largest companies in the trucking
industry, but have expanded this focus over the past several years to include numerous additional key accounts. Our
relationships with our core customers have been central to our growth since inception. We have also actively
pursued the diversification of our customer base through our network of independent dealers. For our van business
we utilize a total of 25 independent dealers with approximately 63 locations throughout North America to market
and distribute our trailers. We distribute our flatbed and dropdeck trailers through a network of 73 independent
dealers with approximately 123 locations throughout North America. In addition, we maintain a used fleet sales
center to focus on selling both large and small fleet trade packages to the wholesale market.
Diversified Products
Diversified Products segment sales as a percentage of our consolidated net sales and gross margin
measured prior to intersegment eliminations were:
Percentage of net sales
Percentage of gross profit
Year Ended December 31,
2015
20.3
32.4
%
%
2014
23.9
45.2
%
%
2013
26.7
51.0
%
%
The Diversified Products segment focuses on our commitment to expand our customer base, diversify our
product offerings, end markets and revenues, and extend our market leadership by leveraging our intellectual
property and technology, including our proprietary DuraPlate® panel technology, drawing on our core
manufacturing expertise and making available products that are complementary to the truck and tank trailers and
transportation equipment we offer. This segment includes a wide array of products and customer-specific solutions.
Leveraging our intellectual property and technology and core manufacturing expertise into new applications and
market sectors enables us to deliver greater value to our customers and shareholders.
The Diversified Products segment is comprised of four strategic business units: Tank Trailer, Aviation &
Truck Equipment, Process Systems and Composites. The Tank Trailer business sells products through several
brands including Walker Transport, Brenner® Tank, Bulk International and Beall® Trailers. These brands represent
leading positions in liquid transportation systems and include a full line of stainless steel and aluminum tank trailers
for the North American chemical, dairy, food and beverage, and petroleum and energy services markets. Offerings
related to our Process Systems business include brands such as Walker® Engineered Products and Extract
Technology® and represent what we estimate to be leading positions in isolators, stationary silos and downflow
booths around the world for the chemical, dairy, food and beverage, pharmaceutical and nuclear markets. The
Aviation & Truck Equipment business is a leading manufacturer of truck-mounted tanks used in the aviation, refined
fuel, heating oil, propane and liquid waste industries with products offered under the Garsite and Progress Tank
5
brands. Our Composites business includes offerings under our DuraPlate® composite panel technology, which
contains unique properties of strength and durability that can be utilized in numerous applications in addition to
truck trailers and truck bodies. The Diversified Products segment has leveraged our DuraPlate® panel technology to
develop numerous proprietary products, including the DuraPlate® AeroSkirt®, an aerodynamic solution for over-the-
road trailers that provides approximately 6% improvement in fuel economy, as well as a line of foldable portable
storage containers. Leveraging its experience with DuraPlate® and trailer aerodynamics, the Composites business
has developed a full line of aerodynamic solutions designed to improve overall trailer aerodynamics and fuel
economy, most notably the AeroSkirt CX™, Ventix DRSTM and AeroFinTM. In addition, we utilize our DuraPlate®
technology in the production of truck bodies, overhead doors and other industrial applications. These DuraPlate®
composite products are sold to original equipment manufacturers and aftermarket customers.
Through these brands and product offerings, our Diversified Products segment now serves a variety of end
markets, a number of which we believe are less cyclical than the markets served by our Commercial Trailer Products
and Retail segments. We expect to continue to focus on diversifying our Diversified Products segment to enhance
our business model, strengthen our revenues and become a stronger company that can deliver greater value to our
shareholders.
Retail
Retail segment sales as a percentage of our consolidated net sales and gross margin measured prior to
intersegment eliminations were:
Percentage of net sales
%
8.0
%
9.7
Year Ended December 31,
2015
2014
2013
10.5
%
Percentage of gross profit
%
6.5
%
9.0
%
9.5
The Retail segment includes our 15 Company-owned retail branch locations, which are strategically located
near large metropolitan areas to provide additional opportunities to distribute our products, diversify our factory
direct sales and also offer services and support capabilities for our customers. Additionally, this segment includes 9
on-site service locations, where we provide dedicated service on a customer’s site in conjunction with long-term
service and maintenance contracts. Our retail branch network’s sale of new and used trailers, aftermarket parts and
service generally provides enhanced margin opportunities.
Strategy
We are committed to a corporate strategy that seeks to maximize shareholder value by executing on the
core elements of our strategic plan:
• Value Creation. We intend to continue our focus on improved earnings and cash flow.
• Operational Excellence. We are focused on maintaining a reduced cost structure by adhering to
continuous improvement and lean manufacturing initiatives.
• People. We recognize that to achieve our strategic goals we must continue to develop the
organization’s skills to advance our employees’ capabilities and to attract talented people.
• Customer Focus. We have been successful in developing longstanding relationships with core
customers, and while we intend to maintain these relationships we seek to create new revenue
opportunities by developing new customer relationships through the offering of customized
transportation solutions.
•
Innovation. We intend to continue to be the technology leader by providing new and differentiated
products and services that generate enhanced profit margins.
6
• Corporate Growth. We intend to expand our product offering and competitive advantage by
increasing our focus on the diversification of products and leveraging our intellectual and physical
assets for organic growth.
Industry and Competition
Trucking in the U.S., according to the American Trucking Association (ATA), was estimated to be a $700
billion industry in 2014, representing approximately 80% of the total transportation industry revenue. Furthermore,
ATA estimates that approximately 69% of all freight tonnage in 2014 was carried by trucks. Trailer demand is a
direct function of the amount of freight to be transported. Furthermore, ATA estimates that the percentage of freight
tonnage carried by trucks will grow 25% by 2026. To meet this continued high demand for freight, truck carriers
will need to replace and expand their fleets, which typically results in increased trailer orders.
Transportation in the U.S., including trucking, is a cyclical industry that has experienced three cycles over
the last 20 years. In each of the last three cycles the decline in freight tonnage preceded the general U.S. economic
downturn by approximately two and one-half years and the recovery has generally preceded that of the economy as
a whole. The trailer industry generally follows the transportation industry, experiencing cycles in the early and late
90’s lasting approximately 58 and 67 months, respectively. Truck freight tonnage, according to ATA statistics,
started declining year-over-year in 2006 and remained at depressed levels through 2009. The most recent cycle
concluded in 2009, lasting a total of 89 months. After three consecutive years with total trailer demand well below
normal replacement demand levels estimated to be approximately 220,000 trailers, the four year period ending
December 2015 represent consecutive years of significant improvement in which the total trailer market increased
year-over-year by 14%, 1%, 15% and 14% in 2012, 2013, 2014 and 2015, respectively, with total shipments of
approximately 232,000; 234,000, 269,000 and 307,000, respectively. In our view, we expect to see continued strong
demand for new trailer equipment as the economic and industry specific indicators we track, including but not
limited to ATA’s truck tonnage index, employment growth, housing and auto sectors, as well as the overall gross
domestic product, appear to be trending in a positive direction.
Wabash, and its three largest competitors, Great Dane, Utility and Hyundai Translead, are generally viewed
as the top trailer manufacturers in the U.S. and accounted for approximately 69% of U.S. new trailer market share in
2015. Our market share of U.S. total trailer shipments in 2015 was approximately 20%. Trailer manufacturers
compete primarily through the quality of their products, customer relationships, service availability and price. Over
the past several years, we have seen a number of our competitors follow our leadership in the development and use
of composite sidewalls that compete directly with our DuraPlate products. Our product development is focused on
maintaining our leading position with respect to these products and on development of new products and markets,
leveraging our proprietary DuraPlate® product, as well as our expertise in the engineering and design of customized
products.
The table below sets forth new trailer production for Wabash and, as provided by Trailer Body Builders
Magazine, our largest competitors and the trailer industry as a whole within North America. The data represents all
segments of the market, except containers and chassis. For the years included below, we have participated primarily
in the van and platform trailer segments and added the tank trailer segment beginning in 2012 with the acquisitions
of Walker Group Holdings (“Walker”) in May 2012 and certain assets of Beall Corporation (“Beall’) in February
2013. Van trailer demand, the largest segment within the trailer industry, has continued to show sequential
improvements over each of the last five years from a low of approximately 52,000 trailers in 2009 and recovering to
an estimated 227,000 van trailers in 2015. Our market share for van trailers in 2015 was approximately 24%, a
decrease of less than 1% from 2014.
Wabash
Great Dane
Utility
Hyundai Translead
Stoughton
Other principal producers
Total Industry
2015
63,000
52,000
49,000
43,000
15,000
40,000
302,000
2014
56,000
48,000
41,000
34,000
13,000
37,000
265,000
2013
46,000
44,000
39,000
27,000
12,000
31,000
232,000(1)
2012
45,000(2)
44,000
38,000
23,000
11,000
33,000
227,000
2011
49,000
39,000
33,000
18,000
9,000
25,000
201,000(1)
(1) Data revised by publisher in a subsequent year.
(2) The 2012 production includes Walker volumes on a full-year pro forma basis.
7
Our diversified product segment, in most cases, participates in markets different than our traditional van
and platform trailer product offerings. The end markets that our diversified products serve are broader and more
diverse than the trailer industry, including environmental, pharmaceutical, biotech, oil and gas, moving and storage
and specialty vehicle. In addition, our diversification efforts pertain to new and emerging markets and many of the
products are driven by regulatory requirements or, in most cases, customer-specific needs. However, some of our
diversification efforts are considered to be in the early growth stages and future success is largely dependent on
continued customer adoption of our product solutions and general expansion of our customer base and distribution
channels.
Competitive Strengths
We believe our core competitive strengths include:
• Long-Term Core Customer Relationships – We are the leading provider of trailers to a significant
number of top tier trucking companies, generating a revenue base that has helped to sustain us as one
of the market leaders. Our van products are preferred by many of the industry’s leading carriers. We
are also a leading provider of liquid-transportation systems and engineered products and we have a
strong customer base, consisting of mostly private fleets, and have earned a leading market position
across many of the markets we serve.
• Innovative Product Offerings – Our DuraPlate proprietary technology offers what we believe to be a
superior trailer, which customers value. A DuraPlate trailer is a composite plate trailer using material
that contains a high-density polyethylene core bonded between high-strength steel skins. We believe
trailers compared to standard trailers include
that the competitive advantages of our DuraPlate
providing a lower total cost of ownership through the following:
-‐
-‐
-
-‐
-‐
Extended Service Life – operate three to five years longer;
Lower Operating and Maintenance Costs – greater durability and performance;
Less Downtime – higher utilization for fleets;
Extended Warranty – warranty period for DuraPlate panels is ten years; and
Improved Resale Value – higher trade-in and resale values.
We have been manufacturing DuraPlate trailers for over 20 years and through December 2015 have
sold approximately 600,000 DuraPlate® trailers. We believe that this proven experience, combined
with ownership and knowledge of the DuraPlate panel technology, will help ensure continued industry
leadership in the future. We continue to introduce new innovations in our DuraPlate® line of products,
including DuraPlateHD® and DuraPlate XD-35®, along with new innovations in other product lines,
including our ArcticLite® refrigerated trailers and Lean Duplex tank trailers.
• Significant Market Share and Brand Recognition – We have been one of the three largest
manufacturers of trailers in North America since 1994, with one of the most widely recognized brands
in the industry. We are currently the largest producer of van trailers in North America and, according
to data published by Trailer Body Builders Magazine, our Transcraft subsidiary is one of the leading
producers of platform trailers. We are also the largest manufacturers of liquid stainless steel and
aluminum tank trailers in North America through our Walker Transport, Brenner® Tank, Bulk
International and Beall® brands. We participate broadly in the transportation industry through each of
our three business segments. As a percentage of our consolidated net sales, new trailer sales for our
dry and refrigerated vans, platforms and tanks represented approximately 83% in 2015.
• Committed Focus on Operational Excellence – Safety, quality, on-time delivery, productivity and
cost reduction are the core elements of our program of continuous improvement. We currently
maintain an ISO 14001 registration of our Environmental Management System at our Lafayette,
8
Indiana facilities and an ISO 9001 registration of our Quality Management System at our Lafayette,
Indiana and Cadiz, Kentucky facilities.
• Technology –We continue to be recognized by the trucking industry as a leader in developing
technology to provide value-added solutions for our customers that reduce trailer operating costs,
improve revenue opportunities, and solve unique transportation problems. Throughout our history, we
have been and we expect we will continue to be a leading innovator in the design and production of
trailers. Recent new trailer introductions and value-added options include the Lean Duplex tank trailer,
a stainless steel option that reduces weight while providing enhanced performance characteristics over
typical chemical tank trailers; Trustlock Plus®, a proprietary single-lock rear door mechanism; a
combination ID/Stop light, a dual-function rear ID light that also actuates as a brake indicator;
MaxClearenceTM Overhead Door System, a vertical door that provides an opening that would be
comparable to that of swing door models; and the DuraPlate® AeroSkirt®, Ventix DRSTM, AeroFinTM
and AeroSkirt CXTM, durable aerodynamic solutions that, based on verified laboratory and track
testing, provides improved fuel efficiencies of 9% or greater when used in specific combinations.
In addition to the introduction of new trailer product innovations made through our DuraPlate® family
over the past 20 years, we have also focused on a customer-centered approach in developing product
enhancements for other industries we serve. Some of the more recent innovations include: the
development of mobile clean rooms, or self-contained laboratories, which are configured to provide
isolation and containment solutions into a rapidly deployable and flexible manufacturing facility for
pharmaceutical and other technology applications; the development of a Refined Fuel truck with
integrated Auxiliary Power Unit designed to improve fuel efficiency and prolong the useful operating
life of fuel delivery vehicles; and the introduction of the Truck Body line leveraging our fleet-proven
DuraPlate® technology for dry truck bodies as well as the introduction of a revolutionary proprietary
composite panel designed to improve weight and thermal efficiency in refrigerated truck body
applications.
• Corporate Culture – We benefit from an experienced, value-driven management team and dedicated
workforce focused on operational excellence.
• Extensive Distribution Network – Our 15 Company-owned retail branches extend our sales network
throughout North America, diversify our factory direct sales, provide an outlet for used trailer sales
and support our national service contracts. Additionally, we utilize a network of 25 independent
dealers with approximately 63 locations throughout North America to distribute our van trailers, and
our Transcraft distribution network consists of 73 independent dealers with approximately 123
locations throughout North America. Our tank trailers are distributed through a network of 65
independent dealers with 66 locations throughout North America.
Regulation
Truck trailer length, height, width, maximum weight capacity and other specifications are regulated by
individual states. The federal government also regulates certain safety and environmental sustainability features
incorporated in the design and use of truck and tank trailers. These regulations include, but are not limited to,
requirements on anti-lock braking systems and rear-impact guard standards, the use of aerodynamic devices and fuel
saving technologies, as well as operator restrictions as to hours of service and minimum driver safety standards (see
“Industry Trends”). In addition, most tank trailers we manufacture have specific federal regulations and restrictions
that dictate tank design, material type and thickness. Manufacturing operations are subject to environmental laws
enforced by federal, state and local agencies (see "Environmental Matters").
Products
Since our inception, we have expanded our product offerings from a single truck trailer dry van product to a
broad range of transportation equipment and diversified industrial products.
Our Commercial Trailer Products segment specializes in the development of innovative proprietary
products for our key markets. Commercial Trailer Products segment sales represented approximately 72%, 66% and
9
63% of our consolidated net sales as measured before elimination of intersegment sales in 2015, 2014 and 2013,
respectively. Our current Commercial Trailer Products primarily include the following:
• Dry Van Trailers. The dry van market represents our largest product line and includes trailers sold
under DuraPlate, DuraPlateHD, and DuraPlate® XD-35® trademarks. Our DuraPlate® trailers utilize a
proprietary technology that consists of a composite plate wall for increased durability and greater
strength.
• Platform Trailers. Platform trailers are sold under the Transcraft® and Benson® trademarks. Platform
trailers consist of a trailer chassis with a flat or “drop” loading deck without permanent sides or a roof.
These trailers are primarily utilized to haul steel coils, construction materials and large equipment. In
addition to our all steel and combination steel and aluminum platform trailers, we also offer a premium
all-aluminum platform trailer.
• Refrigerated Trailers. Refrigerated trailers have insulating foam in the walls, roof and floor, which
improves both the insulation capabilities and durability of the trailers. Our refrigerated trailers are sold
under the ArcticLite® trademark and use our proprietary SolarGuard® technology, coupled with our
foaming process, which we believe enables customers to achieve lower costs through reduced
operating hours of refrigeration equipment and therefore reduced fuel consumption.
•
Specialty Trailers. These products include a wide array of specialty equipment and services generally
focused on products that require a higher degree of customer specifications and requirements. These
specialty products include converter dollies, Big Tire Hauler, Steel Coil Hauler and RoadRailer®
trailers.
• Aftermarket Parts and Rail. Aftermarket component products are manufactured to provide continued
support to our customers throughout the life cycle of the trailer. Aurora Parts & Accessories, LLC is
the exclusive supplier of the aftermarket component products for the company’s dry van, refrigerated
and platform trailers. Additionally, rail components are sold to provide continued support of the Road
Railer® product line as well as to expand our offerings in the rail markets.
• Truck Bodies. Introduced in 2015, the truck body product leverages our fleet-proven DuraPlate®
technology utilized in dry van trailers and also includes the introduction of a revolutionary proprietary
molded structural composite panel designed to improve weight and thermal efficiency in refrigerated
truck body applications.
• Used Trailers. This includes the sale of used trailers through our used fleet sales center to facilitate
new trailer sales with a focus on selling both large and small fleet trade packages to the wholesale
market.
• Wood Products. We manufacture laminated hardwood oak products used primarily in our dry van
trailer segment at our manufacturing operations located in Harrison, Arkansas.
Our Diversified Products segment focuses on our commitment to expand our customer base, diversify our
product offerings, end markets and revenues, and extend our market leadership by leveraging our intellectual
property and technology, including our proprietary DuraPlate® panel technology, drawing on our core
manufacturing expertise and making available products that are complementary to the truck and tank trailers and
transportation equipment we offer. Diversified Products segment sales represented approximately 20%, 24% and
27% of our consolidated net sales as measured before elimination of intersegment sales in 2015, 2014 and 2013,
respectively. Our current Diversified Products segment primarily includes the following:
• Tank Trailers. Tank Trailers currently has several principal brands dedicated to transportation
products including Walker Transport, Brenner® Tank, Bulk Tank International as well as Beall®
Trailers. Equipment sold under these brands include stainless steel and aluminum liquid and dry bulk
tank trailers and other transport solutions for the dairy, food and beverage, chemical, environmental,
petroleum and refined fuel industries.
10
-‐ Walker Transport – Founded as the original Walker business in 1943, the Walker Transport brand
includes stainless-steel tank trailers for the dairy, food and beverage end markets.
-‐ Brenner® Tank – Founded in 1900, Brenner® Tank manufactures stainless-steel and aluminum tank
trailers, dry bulk trailers, fiberglass reinforced poly tank trailers as well as vacuum tank trailers
and carbon steel frac tanks for the oil and gas, chemical, energy and environmental services end
markets.
-‐ Bulk Tank International – Manufactures stainless-steel tank trailers for the oil and gas and
chemical end markets.
-‐ Beall® Trailers – With tank trailer production dating to 1928, the Beall® brand includes aluminum
tank trailers and related tank trailer equipment for the dry bulk and petroleum end markets.
• Process Systems. Process Systems currently sells products under the Walker Engineered Products and
Extract Technology® brands and specializes in the design and production of a broad range of products
including: a portfolio of products for storage, mixing and blending, including process vessels, as well
as round horizontal and vertical storage silo tanks; containment and isolation systems for the
pharmaceutical, chemical, and nuclear industries, including custom designed turnkey systems and
spare components for full service and maintenance contracts; containment systems for the
pharmaceutical, chemical and biotech markets; and mobile water storage tanks used in the oil and gas
industry to pump high-pressure water into underground wells.
-‐ Walker Engineered Products – Since the 1960s, Walker has marketed stainless-steel storage tanks
and silos, mixers, and processors for the dairy, food and beverage, pharmaceutical, chemical and
biotech end markets under the Walker Engineered Products brand.
-‐ Extract Technology® – Since 1981, the Extract Technology® brand has included stainless-steel
isolators and downflow booths, as well as custom-fabricated equipment, including workstations
and drum booths for the pharmaceutical, fine chemical, biotech and nuclear end markets.
• Aviation & Truck Equipment. Aviation & Truck Equipment currently sells products under the Progress
Tank and Garsite brands, which are dedicated to serving aircraft refuelers and hydrant dispensers for
in-to-plane fueling companies, airlines, freight distribution companies and fuel marketers around the
globe; military grade refueling and water tankers for applications and environments required by the
military; truck mounted tanks for fuel delivery; and vacuum tankers.
-‐
Progress Tank – Since 1920, the Progress Tank brand has included aluminum and stainless-steel
truck-mounted tanks for the oil and gas and environmental end markets.
-‐ Garsite – Founded in 1952, Garsite is a value-added assembler of aircraft refuelers, hydrant
dispensers, and above-ground fuel storage tanks for the aviation end market.
• Composites. Our composite products expand the use of DuraPlate® composite panels, already a proven
product in the semi-trailer market for over 20 years, into new product and market applications. In
2009, we introduced our EPA Smartway®1 approved DuraPlate® AeroSkirt®. In February 2015 we
introduced three solutions designed to significantly improve trailer aerodynamics and fuel economy
featuring a trailer drag reduction system to manage airflow across the entire length of trailer, or Ventix
DRSTM, an aerodynamic tail devised to direct airflow across the rear of the trailer, or AeroFinTM, and a
new lighter version of our AeroSkirt design called AeroSkirt CXTM. Other composite products include
truck bodies, overhead doors, foldable portable storage containers and other industrial applications.
We continue to develop new products and actively explore markets that can benefit from the proven
performance of our proprietary technology.
Our Retail segment offers products in three general categories, including new trailers, used trailers and
parts and service. Retail segment sales represented approximately 8% of our consolidated net sales as measured
1 EPA Smartway® is a registered trademark of U.S. Environmental Protection Agency (EPA)
11
before elimination of intersegment sales in 2015 and approximately 10% in each of the prior two years. The
following is a description of each product category:
• New Trailers. We sell new trailers produced by the Commercial Trailer Products and Diversified
Products segments. Additionally, we sell specialty trailers produced by third parties that are purchased
in smaller quantities for local or regional transportation needs. As a percentage of consolidated net
sales, new trailer sales through our Retail segment represented approximately 3%, 5% and 5% of
consolidated net sales in 2015, 2014 and 2013, respectively.
• Parts & Service. We provide replacement parts and accessories, maintenance service and trailer
repairs and conversions for trailers and other related equipment. As a percentage of consolidated net
sales, parts and service sales within our Retail segment represented approximately 4%, 4% and 5% in
2015, 2014 and 2013, respectively.
• Used Trailers. We sell used trailers through our retail branch network to enable us to remarket and
promote new trailer sales in the local regions in which we operate. Used trailer sales represented less
than 1% of consolidated net sales in each of 2015, 2014 and 2013.
Customers
Our customer base has historically included many of the nation’s largest truckload (TL) common carriers,
leasing companies, private fleet carriers, less-than-truckload (LTL) common carriers and package carriers. We
continue to expand our customer base and diversify into the broader trailer market through our independent dealer
and company-owned retail networks, as well as through strategic acquisitions. Furthermore, we continue to
diversify our products organically by expanding the use of DuraPlate® composite panel technology through products
such as DuraPlate® AeroSkirts®, truck bodies, overhead doors and portable storage containers as well as strategically
through our acquisitions. All of these efforts have been accomplished while maintaining our relationships with our
core customers. Our five largest customers together accounted for approximately 25%, 20% and 17% of our
aggregate net sales in 2015, 2014 and 2013, respectively. No individual customer accounted for more than 10% or
more of our aggregate net sales during the past three years. International sales, primarily to Canadian customers,
accounted for less than 10% of net sales for each of the last three years.
We have established relationships as a supplier to many large customers in the transportation industry,
including the following:
• Truckload Carriers: Averitt Express, Inc.; Celadon Group, Inc.; Covenant Transportation Group, Inc;
Cowan Systems, LLC; Crete Carrier Corporation; Heartland Express, Inc.; J.B Hunt Transport, Inc.;
Knight Transportation, Inc.; Schneider National, Inc.; Swift Transportation Corporation; U.S. Xpress
Enterprises, Inc.; and Werner Enterprises, Inc.
• Less-Than-Truckload Carriers: FedEx Corporation; Old Dominion Freight Lines, Inc.; R&L Carriers
Inc.; and YRC Worldwide, Inc.
• Refrigerated Carriers: CR England, Inc.; K&B Transportation, Inc.; Prime, Inc.; and Southern
Refrigerated Transport, Inc.
• Leasing Companies: Penske Truck Leasing Company; Wells Fargo Equipment Finance, Inc.; and Xtra
Lease, Inc.
• Private Fleets: C&S Wholesale Grocers, Inc.; Dollar General Corporation; and Safeway, Inc.
• Liquid Carriers: Dana Liquid Transport Corporation; Evergreen Tank Solutions LLC; Kenan
Advantage Group, Inc.; Martin Transport, Inc.; Oakley Transport, Inc.; Quality Carriers, Inc.; Superior
Tank, Inc.; and Trimac Transportation.
Through our Diversified Products segment we also sell our products to several other customers including,
but not limited to: Atlantic Aviation; GlaxoSmithKline Services Unlimited; Dairy Farmers of America; Southwest
12
Airlines Company;
Nestlé; Matlack Leasing LLC; Wabash Manufacturing, Inc. (an unaffiliated company); and
Whiting Door Manufacturing Corp.
Marketing and Distribution
We market and distribute our products through the following channels:
• Factory direct accounts;
• Company-owned distribution network; and
•
Independent dealerships.
Factory direct accounts are generally large fleets, with over 7,500 trailers, that are high volume purchasers.
Historically, we have focused on the factory direct market in which customers are highly knowledgeable of the life-
cycle costs of trailer equipment and, therefore, are best equipped to appreciate the design and value-added features
of our products.
Our Company-owned distribution network generates retail sales of trailers to smaller fleets and independent
operators located in geographic regions where our branches are located. This branch network enables us to provide
maintenance and other services to customers.
We also sell our van trailers through a network of 25 independent dealers with approximately 63 locations
throughout North America. Our platform trailers are sold through 73 independent dealers with approximately 123
locations throughout North America. Our tank trailers are distributed through a network of 65 independent dealers
with 66 locations throughout North America. The dealers primarily serve mid-market and smaller sized carriers and
private fleets in the geographic region where the dealer is located and occasionally may sell to large fleets. The
dealers may also perform service work for our customers.
Raw Materials
We utilize a variety of raw materials and components including, specialty steel coil, stainless steel, plastic,
aluminum, lumber, tires, landing gear, axles and suspensions, which we purchase from a limited number of
suppliers. Costs of raw materials and component parts represented approximately 63%, 65% and 65% of our
consolidated net sales in 2015, 2014 and 2013, respectively. Raw material costs as a percentage of our consolidated
net sales realized throughout 2015 are in line with recent years; however, we have seen some declining raw material
costs in recent quarters. Significant price fluctuations or shortages in raw materials or finished components have
had, and could have further, adverse effects on our results of operations. In 2016 and for the foreseeable future, we
expect that the raw materials used in the greatest quantity will be steel, aluminum, plastic and wood. We will
endeavor to pass along any raw material and component cost increases and, to minimize the effect of price
fluctuations, we hedge certain commodities that have the potential to significantly impact our operations.
Backlog
Orders that have been confirmed by customers in writing, have defined delivery timeframes and can be
produced during the next 18 months are included in our backlog. Orders that comprise our backlog may be subject
to changes in quantities, delivery, specifications, terms or cancellation. Our backlog of orders at December 31, 2015
and 2014 was approximately $1,191 million and $1,087 million, respectively, and we expect to complete the
majority of our backlog orders as of December 31, 2015 within 12 months of this date.
Patents and Intellectual Property
We hold or have applied for 104 patents in the U.S. on various components and techniques utilized in our
manufacture of transportation equipment and engineered products. In addition, we hold or have applied for 126
patents in foreign countries.
Our patents include intellectual property related to the manufacture of trailers and aerodynamic-related
products using our proprietary DuraPlate® product, truck body, trailer, and aerodynamic-related products utilizing
13
other composite materials, our containment and isolation systems, and other engineered products – all of which we
believe offer us a significant competitive advantage in the markets in which we compete.
Our DuraPlate® patent portfolio includes several patents and pending patent applications, which cover not
only utilization of our DuraPlate® product in the manufacture of trailers, but also cover a number of aerodynamic-
related products aimed at increasing the fuel efficiency of trailers. Patents in our DuraPlate® patent portfolio have
expiration dates ranging from 2016 to 2035. While certain patents relating to the combined use of DuraPlate®
panels and logistics systems within the sidewalls of our dry van trailers will expire in 2016, several other issued
patents and pending patent applications relating to the use of DuraPlate® panels, or other composite materials,
within aerodynamic-related products as well as modular storage and shipping containers will not begin to expire
until 2035. Additionally, we believe that our proprietary DuraPlate® production process, which has been developed
and refined since 1995, offers us a significant competitive advantage in the industry – above and beyond the benefits
provided by any patent protection concerning the use and/or design of our DuraPlate® products. While unpatented,
we believe the proprietary knowledge of this process and the significant intellectual and capital hurdles in creating a
similar production process provide us with an advantage over others in the industry who utilize composite sandwich
panel technology.
Our intellectual property portfolio further includes a number of patent applications related to the
manufacture of truck bodies and trailers using polymer composite component parts. These patent applications cover
the polymer composite component structure and method of manufacturing the same. We believe the intellectual
property related to this emerging use of polymer composite technology in our industry will offer us a significant
market advantage to create proprietary products exploiting this technology. Additionally, our intellectual property
portfolio includes patent applications related to the rear impact guard (RIG) of a trailer. These patent applications
include new RIG designs which surpass the current and proposed federal regulatory RIG standards for the U.S. and
Canada.
In addition, our intellectual property portfolio includes patents and patent applications covering many of
our engineered products, including our containment and isolation systems, as well as many trailer industry
components. These products have become highly desirable and are recognized for their innovation in the markets
we serve. The engineered products patents and patent applications relate to our industry leading isolation systems,
sold under the Extract Technology® brand name. These patents will not begin to expire until 2021. The patents and
patent applications relating to our proprietary trailer-industry componentry include, for example, those covering the
Trust Lock Plus® door locking mechanism, the use of bonded intermediate logistics strips, the bonded D-ring hold-
down device, bonded skylights, the DuraPlate® arched roof, and the Max Clearance® Overhead Door System, which
provides additional overhead clearance when an overhead-style rear door is in the opened position that would be
comparable to that of swing-door models. The patents covering these products will not expire before 2029. Further,
another patented product sold by the Diversified Products segment includes the ShakerTank® trailer, a vibrating bulk
tank trailer used in transporting viscous materials, whose patents will not expire before 2026. We believe all of
these proprietary products offer us a competitive market advantage in the industries in which we compete.
We also hold or have applied for 46 trademarks in the U.S., as well as 60 trademarks in foreign countries.
These trademarks include the Wabash®, Wabash National®, Transcraft®, Benson®, Extract Technology®, Beall® and
Brenner® brand names as well as trademarks associated with our proprietary products such as DuraPlate®,
RoadRailer®, Transcraft®, Arctic Lite®, and Benson® trailers. Additionally, we utilize several tradenames that are
each well-recognized in their industries, including Walker Transport, Walker Stainless Equipment, Walker
Engineered Products, Garsite, Bulk Tank International and Progress Tank. Our trademarks associated with
additional proprietary products include Max Clearance® Overhead Door System, Trust Lock Plus®, EZ-7®,
DuraPlate AeroSkirt®, DuraPlate AeroSkirt CXTM, DuraPlate XD-35®, DuraPlate HD®, SolarGuard®, Ventix
DRSTM, AeroFinTM, AeroFin XL™ and EZ-Adjust®. We believe these trademarks are important for the
identification of our products and the associated customer goodwill; however, our business is not materially
dependent on such trademarks.
Research and Development
Research and development expenses are charged to earnings as incurred and were $4.8 million, $1.7
million and $2.2 million in 2015, 2014 and 2013, respectively.
14
Environmental Matters
Our facilities are subject to various environmental laws and regulations including those relating to air
emissions, wastewater discharges, the handling and disposal of solid and hazardous wastes and occupational safety
and health. Our operations and facilities have been, and in the future may become, the subject of enforcement
actions or proceedings for non-compliance with such laws or for remediation of company-related releases of
substances into the environment. Resolution of such matters with regulators can result in commitments to
compliance abatement or remediation programs and, in some cases, the payment of penalties (see Item 3 “Legal
Proceedings”).
We believe that our facilities are in substantial compliance with applicable environmental laws and
regulations. Our facilities have incurred, and will continue to incur, capital and operating expenditures and other
costs in complying with these laws and regulations. However, we currently do not anticipate that the future costs of
environmental compliance will have a material adverse effect on our business, financial condition or results of
operations.
Employees
As of December 31, 2015 and 2014, we had approximately 5,300 and 5,100 full-time employees,
respectively. Throughout 2015, essentially all of our active employees were non-union. Our temporary employees
represented approximately 17% of our overall production workforce as of December 31, 2015 as compared to
approximately 18% at the end of the prior year period. We place a strong emphasis on maintaining good employee
relations and development through competitive compensation and related benefits, a safe work environment and
promoting educational programs and quality improvement teams.
Executive Officers of Wabash National Corporation
The following are the executive officers of the Company:
Name
Richard J. Giromini
William D. Pitchford
Erin J. Roth
Jeffery L. Taylor
Mark J. Weber
Brent L. Yeagy
Age
62
61
40
50
44
45
Position
President and Chief Executive Officer, Director
Senior Vice President – Human Resources and Assistant Secretary
Senior Vice President – General Counsel and Secretary
Senior Vice President – Chief Financial Officer
Senior Vice President – Group President, Diversified Products Group
Senior Vice President – Group President, Commercial Trailer Products
Richard J. Giromini. Mr. Giromini was promoted to President and Chief Executive Officer in January
2007. He had been Executive Vice President and Chief Operating Officer from February 2005 until December 2005
when he was appointed President and a Director of the Company. Prior to that, he had been Senior Vice President -
Chief Operating Officer since joining the Company in July 2002. Mr. Giromini was with Accuride Corporation
from April 1998 to July 2002, where he served in capacities as Senior Vice President - Technology and Continuous
Improvement; Senior Vice President and General Manager - Light Vehicle Operations; and President and CEO of
AKW LP. Previously, Mr. Giromini was employed by ITT Automotive, Inc. from 1996 to 1998 serving as the
Director of Manufacturing. Mr. Giromini holds a Master of Science degree in Industrial Management and a
Bachelor of Science degree in Mechanical and Industrial Engineering, both from Clarkson University. He is also a
graduate of the Advanced Management Program at the Duke University Fuqua School of Management.
William D. Pitchford. Mr. Pitchford was promoted to Senior Vice President – Human Resources and
Assistant Secretary in June 2013. He joined the Company in December 2011 as Vice President – Human Resources
with an extensive Human Resource background including executive leadership, talent management, training and
development, labor relations, employee engagement, compensation design and organizational development. Prior
to joining the Company, Mr. Pitchford served as Vice President - Human Resources for Rio Tinto Alcan
Corporation in Chicago, Illinois, from January 2009 to December 2010 and was with Ford Motor Company for more
than 30 years where he held a variety of key leadership positions including Human Resources Director, Labor
Relations Director and Senior Human Resources Manager. Mr. Pitchford holds a Master of Arts degree in Human
Resources from Central Michigan University and a Bachelor of Science degree from Indiana State University.
15
Erin J. Roth. Ms. Roth was promoted to Senior Vice President – General Counsel and Secretary in January
2011. Prior to her promotion, she served as Vice President – General Counsel and Secretary, beginning in March
2010, after first joining the Company in March 2007 as Corporate Counsel. Immediately prior to joining the
Company, Ms. Roth was engaged in the private practice of law with Barnes & Thornburg, LLP, representing a
number of private and public companies throughout the U.S. Ms. Roth holds a Juris Doctorate from the Georgetown
University Law Center and a Bachelor of Science degree in Accounting from Butler University.
Jeffery L. Taylor. Mr. Taylor was appointed Senior Vice President and Chief Financial Officer in January
2014. Mr. Taylor joined the company in July 2012 as Vice President of Finance and Investor Relations and was
promoted to Vice President – Acting Chief Financial Officer and Treasurer in June 2013. Prior to joining the
Company, Mr. Taylor was with King Pharmaceuticals, Inc. from May 2006 to July 2011 as Vice President, Finance
– Technical Operations, and with Eastman Chemical Company from June 1997 to May 2006 where he served in
various positions of increasing responsibility within finance, accounting, investor relations and business
management, including its Global Business Controller – Coatings, Adhesives, Specialty Polymers & Inks. Mr.
Taylor earned his Masters of Business Administration from the University of Texas at Austin and his Bachelor of
Science in Chemical Engineering from Arizona State University.
Mark J. Weber. Mr. Weber was appointed to Senior Vice President - Group President of Diversified
Products Group in June 2013. Mr. Weber joined the Company in August 2005 as Director of Internal Audit, was
promoted in February 2007 to Director of Finance, and in November 2007 to Vice President and Corporate
Controller. In August 2009 Mr. Weber was then appointed to the position of Senior Vice President – Chief Financial
Officer. Prior to joining the Company, Mr. Weber was with Great Lakes Chemical Corporation from October 1995
through August 2005 where he served in several positions of increasing responsibility within accounting and
finance, including Vice President of Finance. Mr. Weber earned his Masters of Business Administration and
Bachelor of Science in Accounting from Purdue University’s Krannert School of Management.
Brent L. Yeagy. Mr. Yeagy was appointed to Senior Vice President – Group President of Commercial
Trailer Products Group in June 2013. He had been Vice President and General Manager for the Commercial Trailer
Products Group since January 2010. Prior to that, he had been Vice President of Van Manufacturing since 2007.
Mr. Yeagy has held numerous operations related roles since joining Wabash National in February 2003. Prior to
joining the Company, Mr. Yeagy held various roles within Human Resources, Environmental Engineering and
Safety Management for Delco Remy International from July 1999 through February 2003. Mr. Yeagy served in
various Plant Engineering roles at Rexnord Corporation from December 1995 through July 1997. Mr. Yeagy is a
veteran of the United States Navy, serving from 1991 to 1994. He received his Masters of Business Administration
from Anderson University and his Master and Bachelor degrees in Science from Purdue University. He is also a
graduate of the University of Michigan, Ross School of Business Program in Executive Management and the
Stanford Executive Program.
ITEM 1A—RISK FACTORS
You should carefully consider the risks described below in addition to other information contained or
incorporated by reference in this Annual Report before investing in our securities. Realization of any of the
following risks could have a material adverse effect on our business, financial condition, cash flows and results of
operations.
Risks Related to Our Business, Strategy and Operations
Our business is highly cyclical, which has had, and could have further, adverse effects on our sales and results
of operations.
The truck trailer manufacturing industry historically has been and is expected to continue to be cyclical, as
well as affected by overall economic conditions. Customers historically have replaced trailers in cycles that run
from five to 12 years, depending on service and trailer type. Poor economic conditions can adversely affect demand
for new trailers and has led to an overall aging of trailer fleets beyond a typical replacement cycle. Customers’
buying patterns can also be influenced by regulatory changes, such as federal hours-of-service rules as well as
overall truck safety and federal emissions standards.
16
The steps we have taken to diversify our product offerings through the implementation of our strategic plan
do not insulate us from this cyclicality. During downturns, we operate with a lower level of backlog and have had to
temporarily slow down or halt production at some or all of our facilities, including extending normal shut down
periods and reducing salaried headcount levels. An economic downturn may reduce, and in the past has reduced,
demand for trailers, resulting in lower sales volumes, lower prices and decreased profits or losses.
We may not be able to execute on our long-term strategic plan and growth initiatives, or meet our long-term
financial goals.
Our long-term strategic plan is intended to generate long-term value for our shareholders while delivering
profitable growth through all our business segments. The long-term financial goals that we expect to achieve as a
result of our long-term strategic plan and organic growth initiatives are based on certain assumptions, which may
prove to be incorrect. We cannot provide any assurance that we will be able to fully execute on our strategic plan or
growth initiatives, which are subject to a variety of risks, including, but not limited to, our ability to: diversify the
product offerings of our non-trailer businesses; leverage acquired businesses and assets to grow sales with our
existing products; design and develop new products to meet the needs of our customers; increase the pricing of our
products and services to offset cost increases and expand gross margins; and execute potential future acquisitions,
mergers, and other business development opportunities. If we are unable to successfully execute on our strategic
plan, we may experience increased competition, adverse financial consequences and a decrease in the value of our
stock. Additionally, our management’s attention to the implementation of the strategic plan, which includes our
efforts at diversification, may distract them from implementing our core business which may also have adverse
financial consequences.
Demand for new trailers is sensitive to economic conditions over which we have no control and that may
adversely affect our revenues and profitability.
Demand for trailers is sensitive to changes in economic conditions such as the level of employment,
consumer confidence, consumer income, new housing starts, industrial production, government regulations and the
availability of financing and interest rates. The status of these economic conditions periodically have an adverse
effect on truck freight and the demand for and the pricing of our trailers, and have also resulted in, and could in the
future result in, the inability of customers to meet their contractual terms or payment obligations, which could cause
our operating revenues and profits to decline.
We have a limited number of suppliers of raw materials and components; increases in the price of raw
materials or the inability to obtain raw materials could adversely affect our results of operations.
We currently rely on a limited number of suppliers for certain key components and raw materials in the
manufacturing of our products, such as tires, landing gear, axles, suspensions, specialty steel coil, stainless steel,
plastic, aluminum and lumber. From time to time, there have been and may in the future be shortages of supplies of
raw materials or components, or our suppliers may place us on allocation, which would have an adverse impact on
our ability to meet demand for our products. Shortages and allocations may result in inefficient operations and a
build-up of inventory, which can negatively affect our working capital position. In addition, price volatility in
commodities we purchase that impacts the pricing of raw materials could have negative impacts on our operating
margins. The loss of any of our suppliers or their inability to meet our price, quality, quantity and delivery
requirements could have a significant adverse impact on our results of operations.
Global economic weakness could negatively impact our operations and financial performance.
While the trailer industry has recently experienced a period of economic recovery, we cannot provide any
assurances that we will be profitable in future periods or that we will be able to sustain or increase profitability in the
future. Increasing our profitability will depend on several factors, including, but not limited to, our ability to
increase our overall trailer volumes, improve our gross margins, gain continued momentum on our product
diversification efforts and manage our expenses. If we are unable to sustain profitability in the future, we may not
be able to meet our payment and other obligations under our outstanding debt agreements.
We continue to be reliant on the credit, housing and construction-related markets in the U.S. The same
general economic concerns faced by us are also faced by our customers. We believe that some of our customers are
highly leveraged, have limited access to capital, and their continued existence may be reliant on liquidity from
17
global credit markets and other sources of external financing. Lack of liquidity by our customers could impact our
ability to collect amounts owed to us. While we have taken steps to address these concerns through the
implementation of our strategic plan, we are not immune to the pressures being faced by our industry or the global
economy, and our results of operations may decline.
A change in our customer relationships or in the financial condition of our customers has had, and could have
further, adverse effects on our business.
We have longstanding relationships with a number of large customers to whom we supply our products.
We do not have long-term agreements with these customers. Our success is dependent, to a significant extent, upon
the continued strength of these relationships and the growth of our core customers. We often are unable to predict
the level of demand for our products from these customers, or the timing of their orders. In addition, the same
economic conditions that adversely affect us also often adversely affect our customers. Furthermore, we are subject
to a concentration of risk as the five largest customers together accounted for approximately 25% of our aggregate
net sales in 2015 and there have been customers historically who have individually accounted for greater than 10%
of our aggregate net sales. The loss of a significant customer or unexpected delays in product purchases could
further adversely affect our business and results of operations.
Significant competition in the industries in which we operate may result in our competitors offering new or
better products and services or lower prices, which could result in a loss of customers and a decrease in our
revenues.
The industries in which we participate are highly competitive. We compete with other manufacturers of
varying sizes, some of which have substantial financial resources. Trailer manufacturers compete primarily on the
quality of their products, customer relationships, service availability and price. Barriers to entry in the standard
truck trailer manufacturing industry are low. As a result, it is possible that additional competitors could enter the
market at any time. In the recent past, manufacturing over-capacity and high leverage of some of our competitors,
along with bankruptcies and financial stresses that affected the industry, contributed to significant pricing pressures.
If we are unable to successfully compete with other trailer manufacturers, we could lose customers and our
revenues may decline. In addition, competitive pressures in the industry may affect the market prices of our new
and used equipment, which, in turn, may adversely affect our sales margins and results of operations.
Our backlog may not be indicative of the level of our future revenues.
Our backlog represents future production for which we have written orders from our customers that can be
produced or sold in the next 18 months. Orders that comprise our backlog may be subject to changes in quantities,
delivery, specifications and terms, or cancellation, and our reported backlog may not be converted to revenue in any
particular period and actual revenue from such orders may not equal our backlog. Therefore, our backlog may not
be indicative of the level of our future revenues.
International operations are subject to increased risks, which could harm our business, operating results
and financial condition.
Our ability to manage our business and conduct operations internationally requires considerable
management attention and resources and is subject to a number of risks, including the following:
•
•
•
•
•
•
challenges caused by distance, language and cultural differences and by doing business with foreign
agencies and governments;
longer payment cycles in some countries;
uncertainty regarding liability for services and content;
credit risk and higher levels of payment fraud;
currency exchange rate fluctuations and our ability to manage these fluctuations;
foreign exchange controls that might prevent us from repatriating cash earned outside the U.S.;
18
•
•
•
•
•
import and export requirements that may prevent us from shipping products or providing services to
a particular market and may increase our operating costs;
potentially adverse tax consequences;
higher costs associated with doing business internationally;
different expectations regarding working hours, work culture and work-related benefits; and
different employee/employer relationships and the existence of workers’ councils and labor unions.
Compliance with complex foreign and U.S. laws and regulations that apply to international operations
may increase our cost of doing business and could expose us or our employees to fines, penalties and other
liabilities. These numerous and sometimes conflicting laws and regulations include import and export
requirements, content requirements, trade restrictions, tax laws, environmental laws and regulations, sanctions,
internal and disclosure control rules, data privacy requirements, labor relations laws, U.S. laws such as the Foreign
Corrupt Practices Act and substantially equivalent local laws prohibiting corrupt payments to governmental
officials and/or other foreign persons. Although we have policies and procedures designed to ensure compliance
with these laws and regulations, there can be no assurance that our officers, employees, contractors or agents will
not violate our policies. Any violation of the laws and regulations that apply to our operations and properties
could result in, among other consequences, fines, environmental and other liabilities, criminal sanctions against us,
our officers or our employees, prohibitions on our ability to offer our products and services to one or more
countries and could also materially damage our reputation, our brand, our efforts to diversify our business, our
ability to attract and retain employees, our business and our operating results.
Our technology and products may not achieve market acceptance or competing products could gain market
share, which could adversely affect our competitive position.
We continue to optimize and expand our product offerings to meet our customer needs through our
established brands, such as DuraPlate®, DuraPlateHD®, DuraPlate® XD-35®, DuraPlate AeroSkirt®, ArcticLite®,
Transcraft®, Benson®, Walker Transport, Brenner® Tank, Garsite, Progress Tank, Bulk Tank International, and
Extract Technology®. While we target product development to meet customer needs, there is no assurance that our
product development efforts will be embraced and that we will meet our sales projections. Companies in the truck
transportation industry, a very fluid industry in which our customers primarily operate, make frequent changes to
maximize their operations and profits.
Over the past several years, we have seen a number of our competitors follow our leadership in the
development and use of composite sidewalls that bring them into direct competition with our DuraPlate products.
Our product development is focused on maintaining our leadership for these products but competitive pressures may
erode our market share or margins. We hold patents on various components and techniques utilized in our
manufacturing of transportation equipment and engineered products with expiration dates ranging from 2016 to
2035. We continue to take steps to protect our proprietary rights in our products and the processes used to produce
them. However, the steps we have taken may not be sufficient or may not be enforced by a court of law. If we are
unable to protect our intellectual properties, other parties may attempt to copy or otherwise obtain or use our
products or technology. If competitors are able to use our technology, our ability to effectively compete could be
harmed. In addition, litigation related to intellectual property could result in substantial costs and efforts which may
not result in a successful outcome.
Disruption of our manufacturing operations would have an adverse effect on our financial condition and
results of operations.
We manufacture our van trailer products at two facilities in Lafayette, Indiana, a flatbed trailer facility in
Cadiz, Kentucky, a hardwood floor facility in Harrison, Arkansas, six liquid-transportation systems facilities in New
Lisbon, Wisconsin; Fond du Lac, Wisconsin; Kansas City, Kansas; Portland, Oregon; and Queretaro, Mexico, three
engineered products facilities in New Lisbon, Wisconsin; Elroy, Wisconsin; Huddersfield, United Kingdom and
produce DuraPlate® products at facilities in Lafayette, Indiana and Frankfort, Indiana. An unexpected disruption in
our production at any of these facilities for any length of time would have an adverse effect on our business,
financial condition and results of operations.
19
The inability to attract and retain key personnel could adversely affect our results of operations.
Our ability to operate our business and implement our strategies depends, in part, on the efforts of our
executive officers and other key associates. Our future success depends, in large part, on our ability to attract and
retain qualified personnel, including manufacturing personnel, sales professionals and engineers. The unexpected
loss of services of any of our key personnel or the failure to attract or retain other qualified personnel could have a
material adverse effect on the operation of our business.
We rely significantly on information technology to support our operations and if we are unable to protect
against service interruptions or security breaches, our business could be adversely impacted.
We depend on a number of information technologies to integrate departments and functions, to enhance the
ability to service customers, to improve our control environment and to manage our cost reduction initiatives. We
have put in place a number of systems, processes, and practices designed to protect against the failure of our
systems, as well as the misappropriation, exposure or corruption of the information stored thereon. Unintentional
service disruptions or intentional actions such as intellectual property theft, cyber-attacks, unauthorized access or
malicious software, may lead to such misappropriation, exposure or corruption if our protective measures prove to
be inadequate. Any issues involving these critical business applications and infrastructure may adversely impact our
ability to manage operations and the customers we serve. We could also encounter violations of applicable law or
reputational damage from the disclosure of confidential business, customer, or employee information or the failure
to protect the privacy rights of our employees in their personal identifying information. In addition, the disclosure
of non-public information could lead to the loss of our intellectual property and diminished competitive advantages.
Should any of the foregoing events occur, we may be required to incur significant costs to protect against damage
caused by these disruptions or security breaches in the future.
We are subject to extensive governmental laws and regulations, and our costs related to compliance with, or
our failure to comply with, existing or future laws and regulations could adversely affect our business and
results of operations.
The length, height, width, maximum weight capacity and other specifications of truck and tank trailers are
regulated by individual states. The federal government also regulates certain trailer safety features, such as lamps,
reflective devices, tires, air-brake systems and rear-impact guards. In addition, most tank trailers we manufacture
have specific federal regulations and restrictions that dictate tank design, material type and thickness. Changes or
anticipation of changes in these regulations can have a material impact on our financial results, as our customers
may defer purchasing decisions and we may have to re-engineer products. We are subject to various environmental
laws and regulations dealing with the transportation, storage, presence, use, disposal and handling of hazardous
materials, discharge of storm water and underground fuel storage tanks, and we may be subject to liability associated
with operations of prior owners of acquired property. In addition, we are subject to laws and regulations relating to
the employment of our employees and labor-related practices.
If we are found to be in violation of applicable laws or regulations in the future, it could have an adverse
effect on our business, financial condition and results of operations. Our costs of complying with these or any other
current or future regulations may be material. In addition, if we fail to comply with existing or future laws and
regulations, we may be subject to governmental or judicial fines or sanctions.
Regulations related to conflict-free minerals may force us to incur additional expenses and otherwise
adversely affect our business and results of operations.
As mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and
Exchange Commission adopted rules regarding disclosure of the use of certain minerals, known as conflict minerals,
originating from the Democratic Republic of Congo or adjoining countries. These requirements require ongoing due
diligence efforts and disclosure requirements. We may incur significant costs to determine the source of any such
minerals used in our products. We may also incur costs with respect to potential changes to products, processes or
sources of supply as a consequence of our diligence activities. Further, the implementation of these rules and their
effect on customer and/or supplier behavior could adversely affect the sourcing, supply and pricing of materials used
in our products, as the number of suppliers offering conflict-free minerals could be limited. We may incur
additional costs or face regulatory scrutiny if we determine that some of our products contain materials not
20
determined to be conflict-free or if we are unable to sufficiently verify the origins of all conflict minerals used in our
products. Accordingly, compliance with these rules could have a material adverse effect on our business, results of
operations and/or financial condition.
Product liability and other legal claims could have an adverse effect on our financial condition and results of
operations.
As a manufacturer of products widely used in commerce, we are subject to product liability claims and
litigation, as well as warranty claims. From time to time claims may involve material amounts and novel legal
theories, and any insurance we carry may not provide adequate coverage to insulate us from material liabilities for
these claims.
In addition to product liability claims, we are subject to legal proceedings and claims that arise in the
ordinary course of business, such as workers' compensation claims, OSHA investigations, employment disputes and
customer and supplier disputes arising out of the conduct of our business. Litigation may result in substantial costs
and may divert management's attention and resources from the operation of our business, which could have a
material adverse effect on our business, results of operations or financial condition. As described in more detail in
Item 3 “Legal Proceedings” below, we are currently appealing a judgment rendered by the Fourth Civil Court of
Curitiba, Brazil, in a lawsuit that has been pending since 2001. While we are appealing this judgment, which
renders it unenforceable at this time, and the Brazilian Court of Appeals has the authority to render a new judgment
in the case without any regard to the lower court’s findings, the ultimate outcome of the case is uncertain and the
resolution of this litigation may result in us incurring substantial costs that are not covered by insurance.
An impairment in the carrying value of goodwill and other long-lived intangible assets could negatively affect
our operating results.
We have a substantial amount of goodwill and purchased intangible assets on our balance sheet as a result
of acquisitions. At December 31, 2015, approximately 90% of these long-lived intangible assets were concentrated
in our Diversified Products segment. The carrying value of goodwill represents the fair value of an acquired
business in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of other long-
lived intangible assets represents the fair value of trademarks and trade names, customer relationships and
technology as of the acquisition date, net of any accumulated amortization. Under generally accepted accounting
principles, goodwill is required to be reviewed for impairment at least annually, or more frequently if potential
interim indicators exist that could result in impairment, and other long-lived intangible assets require review for
impairment only when indicators exist. If any business conditions or other factors cause profitability or cash flows
to significantly decline, we may be required to record a non-cash impairment charge, which could adversely affect
our operating results. Events and conditions that could result in impairment include a prolonged period of global
economic weakness, a further decline in economic conditions or a slow, weak economic recovery, sustained declines
in the price of our common stock, adverse changes in the regulatory environment, adverse changes in the market
share of our products, adverse changes in interest rates, or other factors leading to reductions in the long-term sales
or profitability that we expect.
Our ability to fund operations is limited by our cash on hand and available borrowing capacity under our
revolving credit facility.
We believe our liquidity, defined as cash on hand and available borrowing capacity, on December 31, 2015
of $347.9 million and our expected continued profitability will be more than adequate to fund working capital
requirements and capital expenditures throughout 2016, which we expect to be a period of continued strong demand
within the trailer manufacturing industry. Furthermore, we continue to have the option, subject to certain
conditions, to request an additional incremental increase of $50 million to the total commitment of our revolving
credit facility. Our liquidity position as of December 31, 2015 represented an increase of $58.0 million and $93.6
million from December 31, 2014 and 2013, respectively. Our ability to fund our working capital needs and capital
expenditures is limited by the net cash provided by operations, cash on hand and available borrowings under our
revolving credit facility. Declines in net cash provided by operations, increases in working capital requirements
necessitated by an increased demand for our products and services, decreases in the availability under the revolving
credit facility or changes in the credit our suppliers provide to us, could rapidly exhaust our liquidity.
21
Risks Related to Our Indebtedness
Our levels of indebtedness could adversely affect our business, financial condition and results of operations
and our ability to meet our payment obligations under our debt agreements.
As of December 31, 2015, we had $326 million of indebtedness, including: $191 million secured debt,
$131 million unsecured debt, $3 million in capital lease obligations and $1 million in an industrial revenue bond.
This level of debt could have significant consequences on our future operations, including, among others:
• making it more difficult for us to meet our payment and other obligations under our outstanding debt
agreements;
•
•
•
•
•
resulting in an event of default if we fail to comply with the restrictive covenants contained in our
debt agreements, which could result in all of our debt becoming immediately due and payable;
reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions
and other general corporate purposes, and limiting our ability to obtain additional financing for these
purposes;
subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with
variable interest rates;
limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in
our business, the industry in which we operate and the general economy; and
placing us at a competitive disadvantage compared to our competitors that have less debt or are less
leveraged.
Any of the factors listed above could have a material adverse effect on our business, financial condition
and results of operations and our ability to meet our payment obligations under our debt agreements.
Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from
our business to pay our debt obligations.
Our ability to make scheduled principal payments of, to pay interest on or to refinance our indebtedness
depends on our future performance, which is subject to regulatory, economic, financial, competitive and other
factors beyond our control. While we do not have significant scheduled principal payments until 2018, our
business may not continue to generate cash flow from operations in the future sufficient to service our debt and
make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt
one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms
that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital
markets and our financial condition at such time. We may not be able to engage in any of these activities or
engage in these activities on desirable terms, which could result in a default on our debt obligations.
Despite our current debt levels, we may still incur substantially more debt or take other actions that would
intensify the risks discussed above.
Despite our current consolidated debt levels, we may be able to incur substantial additional debt in the
future, subject to the restrictions contained in our debt instruments, some of which may be secured debt. We are
not restricted under the terms of the indenture governing our Convertible Senior Notes due 2018 (the “Notes”)
from incurring additional debt, securing existing or future debt, recapitalizing our debt or taking a number of other
actions that are not limited by the terms of the indenture governing the Notes. Our Amended and Restated
Revolving Credit Agreement restricts our ability to incur additional indebtedness, including secured indebtedness,
but if the facilities mature or are repaid, we may not be subject to such restrictions under the terms of any
subsequent indebtedness.
22
The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition
and operating results.
In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled
to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert
their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock
(other than cash in lieu of any fractional share), we would be required to settle a portion or all of our conversion
obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do
not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a
portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a
material reduction of our working capital.
Future sales of our common stock in the public market could lower the market price for our common stock.
In the future, we may sell additional shares of our common stock to raise capital. In addition, a
substantial number of shares of our common stock are reserved for issuance upon the exercise of stock options and
upon conversion of the Notes. We cannot predict the size of future issuances or the effect, if any, that they may
have on the market price for our common stock. The issuance and sale of substantial amounts of common stock,
or the perception that such issuances and sales may occur, could adversely affect the market price of our common
stock and impair our ability to raise capital through the sale of additional equity securities.
Provisions of the Notes could discourage a potential future acquisition of us by a third party.
Certain provisions of the Notes could make it more difficult or more expensive for a third party to acquire
us. Upon the occurrence of certain transactions constituting a fundamental change, holders of the Notes will have
the right, at their option, to require us to repurchase all of their Notes or any portion of the principal amount of
such Notes in integral multiples of $1,000. We also may be required to issue additional shares upon conversion in
the event of certain corporate transactions. In addition, the indenture for the Notes prohibits us from engaging in
certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the
Notes. These and other provisions of the Notes could prevent or deter a third party from acquiring us even where
the acquisition could be beneficial to our stockholders.
Our Term Loan Credit Agreement and revolving credit facility contain restrictive covenants that, if
breached, could limit our financial and operating flexibility and subject us to other risks.
Our Term Loan Credit Agreement and revolving credit facility include customary covenants limiting our
ability to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock, enter into
transactions with affiliates, merge, dissolve, repay subordinated indebtedness, make investments and dispose of
assets. As required under our revolving credit facility, we are required to maintain a minimum fixed charge
coverage ratio of not less than 1.1 to 1.0 as of the end of any period of 12 fiscal months when excess availability
under the Amended and Restated Revolving Credit Agreement is less than 10% of the total revolving commitment.
If availability under the Amended and Restated Revolving Credit Agreement is less than 12.5% of the total
revolving commitment or if there exists an event of default, amounts in any of the Borrowers’ and the Revolver
Guarantors’ deposit accounts (other than certain excluded accounts) will be transferred daily into a blocked account
held by the Revolver Agent and applied to reduce the outstanding amounts under the facility.
As of December 31, 2015, we believe we are in compliance with the provisions of both our Term Loan
Credit Agreement and our revolving credit facility. Our ability to comply with the various terms and conditions in
the future may be affected by events beyond our control, including prevailing economic, financial and industry
conditions.
23
Risks Related to an Investment in Our Common Stock
Our common stock has experienced, and may continue to experience, price and trading volume volatility.
The trading price and volume of our common stock has been and may continue to be subject to large
fluctuations. The market price and volume of our common stock may increase or decrease in response to a number
of events and factors, including:
•
•
•
•
•
•
•
•
•
trends in our industry and the markets in which we operate;
changes in the market price of the products we sell;
the introduction of new technologies or products by us or by our competitors;
changes in expectations as to our future financial performance, including financial estimates by
securities analysts and investors;
operating results that vary from the expectations of securities analysts and investors;
announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships,
joint ventures, financings or capital commitments;
changes in laws and regulations;
general economic and competitive conditions; and
changes in key management personnel.
Also, shareholders may from time to time engage in proxy solicitations, advance shareholder proposals or
otherwise attempt to effect changes or acquire control over the Company. Such shareholder campaigns could
disrupt the Company’s operations and divert the attention of the Company’s Board of Directors and senior
management and employees from the pursuit of business strategies and adversely affect the Company’s results of
operations and financial condition.
This volatility may adversely affect the prices of our common stock regardless of our operating
performance. To the extent that the price of our common stock declines, our ability to raise funds through the
issuance of equity or otherwise use our common stock as consideration will be reduced. These factors may limit our
ability to implement our operating and growth plans.
ITEM 1B—UNRESOLVED STAFF COMMENTS
None.
ITEM 2—PROPERTIES
Our main Lafayette, Indiana facility is a 1.2 million square foot facility that houses truck trailer, truck body
and composite material production, tool and die operations, research and development laboratories and offices. Our
second Lafayette, Indiana facility is 0.8 million square feet and used primarily for the production of refrigerated van
trailers. In total, our facilities have the capacity to produce approximately 80,000 trailers annually on a three shift,
five-day workweek schedule, depending on the mix of products.
We have 15 Retail branch facilities located throughout North America. Each sales and service branch
consists of an office, parts warehouse and service space, and ranges in size from 4,000 to 70,000 square feet per
facility. The 15 facilities are located in 11 states and seven of the facilities are leased.
Properties owned by Wabash are subject to security interests held by our lenders. We believe the facilities
we are now using are adequate and suitable for our current business operations and the currently foreseeable level of
operations. The following table provides information regarding the locations of our major facilities which are in the
following areas in the United States, Mexico and United Kingdom:
24
Location
Ashland, Kentucky
Baton Rouge, Louisiana
Owned or Leased
Leased
Leased
Cadiz, Kentucky
Chicago, Illinois
Columbus, Ohio
Dallas, Texas
Denver, Colorado
Leased
Leased
Owned
Owned
Owned
Dunmore, Pennsylvania
Elroy, Wisconsin
Findlay, Ohio
Fond du Lac, Wisconsin
Frankfort, Indiana
Harrison, Arkansas
Houston, Texas
Huddersfield, United Kingdom Leased property/Owned building
Kansas City, Kansas
Owned
Owned
Leased
Owned
Leased
Owned
Leased
Leased
Lafayette, Indiana
Mauston, Wisconsin
Miami, Florida
New Lisbon, Wisconsin
Phoenix, Arizona
Portland, Oregon
Queretaro, Mexico
San Antonio, Texas
Smithton, Pennsylvania
Tavares, Florida
West Memphis, Arkansas
Owned
Leased
Owned
Owned/Leased
Owned
Owned
Owned
Owned
Owned
Leased
Leased
ITEM 3—LEGAL PROCEEDINGS
Description of Activities at Location
Parts distribution
Service and parts distribution
Manufacturing, new trailers and parts
distribution
Service and parts distribution
New trailers, used trailers, service and parts
distribution
New trailers, used trailers, service and parts
distribution
New trailers, used trailers, service and parts
distribution
New trailers, used trailers, service and parts
distribution
Manufacturing
Service and parts distribution
Manufacturing
Manufacturing
Manufacturing
Service and parts distribution
Manufacturing
Manufacturing
Corporate Headquarters, Manufacturing and
used trailers
Service and parts distribution
New trailers, used trailers, service and parts
distribution
Manufacturing
New trailers, used trailers, service and parts
distribution
Manufacturing
Manufacturing
New trailers, used trailers, service and parts
distribution
New trailers, used trailers, service and parts
distribution
Manufacturing
Service and parts distribution
Segment
Retail
Retail
Commercial Trailer Products and Retail
Retail
Retail
Retail
Retail
Retail
Diversified Products
Diversified Products
Diversified Products
Diversified Products
Diversified Products
Retail
Diversified Products
Diversified Products
Commercial Trailer Products,
Diversified Products and Retail
Retail
Retail
Diversified Products
Retail
Diversified Products
Diversified Products
Retail
Retail
Diversified Products
Retail
We are involved in a number of legal proceedings concerning matters arising in connection with the
conduct of our business activities, and are periodically subject to governmental examinations (including by
regulatory and tax authorities), and information gathering requests (collectively, "governmental examinations"). As
of December 31, 2015, we were named as a defendant or were otherwise involved in numerous legal proceedings
and governmental examinations in various jurisdictions, both in the United States and internationally.
We have recorded liabilities for certain of our outstanding legal proceedings and governmental
examinations. A liability is accrued when it is both (a) probable that a loss with respect to the legal proceeding has
occurred and (b) the amount of loss can be reasonably estimated. We evaluate, on a quarterly basis, developments
in legal proceedings and governmental examinations that could cause an increase or decrease in the amount of the
liability that has been previously accrued. These legal proceedings, as well as governmental examinations, involve
various lines of business and a variety of claims (including, but not limited to, common law tort, contract, antitrust
and consumer protection claims), some of which present novel factual allegations and/or unique legal theories.
While some matters pending against us specify the damages claimed by the plaintiff, many seek a not-yet-quantified
amount of damages or are at very early stages of the legal process. Even when the amount of damages claimed
against Wabash is stated, the claimed amount may be exaggerated and/or unsupported. As a result, it is not
25
currently possible to estimate a range of possible loss beyond previously accrued liabilities relating to some matters
including those described below. Such previously accrued liabilities may not represent our maximum loss exposure.
The legal proceedings and governmental examinations underlying the estimated range will change from time to time
and actual results may vary significantly from the currently accrued liabilities.
Based on our current knowledge, and taking into consideration litigation-related liabilities, we believe we
are not a party to, nor is any of our properties the subject of, any pending legal proceeding or governmental
examination other than the matters below, which are addressed individually, that could have a material adverse
effect on our consolidated financial condition or liquidity if determined in a manner adverse to us. However, in light
of the uncertainties involved in such matters, the ultimate outcome of a particular matter could be material to our
operating results for a particular period depending on, among other factors, the size of the loss or liability imposed
and the level of our income for that period. Costs associated with the litigation and settlements of legal matters are
reported within General and Administrative Expenses in the Consolidated Statements of Operations.
Brazil Joint Venture
In March 2001, Bernard Krone Indústria e Comércio de Máquinas Agrícolas Ltda. (“BK”) filed suit against
us in the Fourth Civil Court of Curitiba in the State of Paraná, Brazil. Because of the bankruptcy of BK, this
proceeding is now pending before the Second Civil Court of Bankruptcies and Creditors Reorganization of Curitiba,
State of Paraná (No. 232/99).
The case grows out of a joint venture agreement between BK and Wabash related to marketing of
RoadRailer trailers in Brazil and other areas of South America. When BK was placed into the Brazilian equivalent
of bankruptcy late in 2000, the joint venture was dissolved. BK subsequently filed its lawsuit against Wabash
alleging that it was forced to terminate business with other companies because of the exclusivity and non-compete
clauses purportedly found in the joint venture agreement. BK asserted damages, exclusive of any potentially court-
imposed interest or inflation adjustments, of approximately R$20.8 million (Brazilian Reais). BK did not change the
amount of damages it asserted following its filing of the case in 2001.
A bench (non-jury) trial was held on March 30, 2010 in Curitiba, Paraná, Brazil. On November 22, 2011,
the Fourth Civil Court of Curitiba partially granted BK’s claims, and ordered Wabash to pay BK lost profits,
compensatory, economic and moral damages in excess of the amount of compensatory damages asserted by BK.
The total ordered damages amount is approximately R$26.7 million (Brazilian Reais), which is $6.9 million U.S.
dollars using current exchange rates and exclusive of any potentially court-imposed interest, fees or inflation
adjustments (which are currently estimated at a maximum of approximately $48 million, at current exchange rates,
but may change with the passage of time and/or the discretion of the court at the time of final judgment in this
matter). Due, in part, to the amount and type of damages awarded by the Fourth Civil Court of Curitiba, Wabash
immediately filed for clarification of the judgment. The Fourth Civil Court has issued its clarification of judgment,
leaving the underlying decision unchanged and referring the parties to the State of Paraná Court of Appeals for any
further appeal of the decision. As such, Wabash filed its notice of appeal with the Court of Appeals, as well as its
initial appeal papers, on April 22, 2013. The Court of Appeals has the authority to re-hear all facts presented to the
lower court, as well as to reconsider the legal questions presented in the case, and to render a new judgment in the
case without regard to the lower court’s findings. Pending outcome of this appeal process, the judgment is not
enforceable by the plaintiff. Any ruling from the Court of Appeals is not expected before the second quarter of
2016, and, accordingly, the judgment rendered by the lower court cannot be enforced prior to that time, and may be
overturned or reduced as a result of this process. We believe that the claims asserted by BK are without merit and
we intend to continue to vigorously defend our position. We have not recorded a charge with respect to this loss
contingency as of December 31, 2015. Furthermore, at this time, we do not have sufficient information to predict
the ultimate outcome of the case and is unable to reasonably estimate the amount of any possible loss or range of
loss that it may be required to pay at the conclusion of the case. We will reassess the need for the recognition of a
loss contingency upon official assignment of the case in the Court of Appeals, upon a decision to settle this case
with the plaintiffs or an internal decision as to an amount that we would be willing to settle or upon the outcome of
the appeals process.
Intellectual Property
In October 2006, we filed a patent infringement suit against Vanguard National Corporation (“Vanguard”)
regarding our U.S. Patent Nos. 6,986,546 and 6,220,651 in the U.S. District Court for the Northern District of
26
Indiana (Civil Action No. 4:06-cv-135). We amended the Complaint in April 2007. In May 2007, Vanguard filed
its Answer to the Amended Complaint, along with Counterclaims seeking findings of non-infringement, invalidity,
and unenforceability of the subject patents. We filed a reply to Vanguard’s counterclaims in May 2007, denying any
wrongdoing or merit to the allegations as set forth in the counterclaims. The case has currently been stayed by
agreement of the parties while the U.S. Patent and Trademark Office (“Patent Office”) undertakes a reexamination
of U.S. Patent Nos. 6,986,546. In June 2010, the Patent Office notified Wabash that the reexamination is complete
and the Patent Office has reissued U.S. Patent No. 6,986,546 without cancelling any claims of the patent. The
parties have not yet petitioned the Court to lift the stay, and it is unknown at this time when the parties’ petition to
lift the stay may be filed or granted.
We believe that our claims against Vanguard have merit and that the claims asserted by Vanguard are
without merit. We intend to vigorously defend our position and intellectual property. We believe that the resolution
of this lawsuit will not have a material adverse effect on our financial position, liquidity or future results of
operations. However, at this stage of the proceeding, no assurance can be given as to the ultimate outcome of the
case.
Walker Acquisition
In connection with our acquisition of Walker in May 2012, there is an outstanding claim of approximately
$2.9 million for unpaid benefits owed by the Seller that is currently in dispute and that is not expected to have a
material adverse effect on our financial condition or results of operations.
Environmental Disputes
In August 2014, we were noticed as a potentially responsible party (“PRP”) by the South Carolina
Department of Health and Environmental Control (“DHEC”) pertaining to the Philip Services Site located in Rock
Hill, South Carolina pursuant to the Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”) and corresponding South Carolina statutes. PRPs include parties identified through manifest records
as having contributed to deliveries of hazardous substances to the Philip Services Site between 1979 and 1999. The
DHEC’s allegation that we are a PRP arises out of four manifest entries in 1989 under the name of a company
unaffiliated with Wabash National (or any of its former or current subsidiaries) that purport to be delivering a de
minimis amount of hazardous waste to the Philip Services Site “c/o Wabash National Corporation.” As such, the
Philip Services Site PRP Group (“PRP Group”) notified Wabash in August 2014 that it was offering us the
opportunity to resolve any liabilities associated with the Philip Services Site by entering into a Cash Out and
Reopener Settlement Agreement (the “Settlement Agreement”) with the PRP Group, as well as a Consent Decree
with the DHEC. We have accepted an offer from the PRP Group to enter into the Settlement Agreement and
Consent Decree, while reserving our rights to contest our liability for any deliveries of hazardous materials to the
Philips Services Site. The requested settlement payment is immaterial to Wabash’s financial conditions or
operations, and as a result, if the Settlement Agreement and Consent Decree are finalized, our agreement to become
a party to them is not expected to have a material adverse effect on our financial condition or results of operations.
Bulk Tank International, S. de R.L. de C.V. (“Bulk”), one of the companies acquired in the Walker
acquisition, entered into agreements in 2011 with the Mexican federal environmental agency, PROFEPA, and the
applicable state environmental agency, PROPAEG, pursuant to PROFEPA’s and PROPAEG’s respective
environmental audit programs to resolve noncompliance with federal and state environmental laws at Bulk’s
Guanajuato facility. Bulk completed all required corrective actions and received a Certification of Clean Industry
from PROPAEG, and is seeking the same certification from PROFEPA, which we expect it will receive following
the conclusion of a final audit process that commenced in December 2014. As a result, we do not expect that this
matter will have a material adverse effect on our financial condition or results of operations.
In January 2012, we were noticed as a PRP by the U.S. Environmental Protection Agency (“EPA”) and the
Louisiana Department of Environmental Quality (“LDEQ”) pertaining to the Marine Shale Processors Site located
in Amelia, Louisiana (“MSP Site”) pursuant to CERCLA and corresponding Louisiana statutes. PRPs include
current and former owners and operators of facilities at which hazardous substances were allegedly disposed. The
EPA’s allegation that we are a PRP arises out of one alleged shipment of waste to the MSP Site in 1992 from the
Company’s branch facility in Dallas, Texas. As such, the MSP Site PRP Group notified Wabash in January 2012
that, as a result of a March 18, 2009 Cooperative Agreement for Site Investigation and Remediation entered into
between the MSP Site PRP Group and the LDEQ, we were being offered a “De Minimis Cash-Out Settlement” to
27
contribute to the remediation costs, which would remain open until February 29, 2012. We chose not to enter into
the settlement and have denied any liability. In addition, we have requested that the MSP Site PRP Group remove
the Company from the list of PRPs for the MSP Site, based upon the following facts: we acquired this branch
facility in 1997 – five years after the alleged shipment - as part of the assets we acquired out of the Fruehauf Trailer
Corporation (“Fruehauf”) bankruptcy (Case No. 96-1563, United States Bankruptcy Court, District of Delaware
(“Bankruptcy Court”)); as part of the Asset Purchase Agreement regarding our purchase of assets from Fruehauf, we
did not assume liability for “Off-Site Environmental Liabilities,” which are defined to include any environmental
claims arising out of the treatment, storage, disposal or other disposition of any Hazardous Substance at any location
other than any of the acquired locations/assets; the Bankruptcy Court, in an Order dated May 26, 1999, also
provided that, except for those certain specified liabilities assumed by Wabash under the terms of the Asset Purchase
Agreement, we and our subsidiaries shall not be subject to claims asserting successor liability; and the “no successor
liability” language of the Asset Purchase Agreement and the Bankruptcy Court Order form the basis for our request
that we be removed from the list of PRPs for the MSP Site. The MSP Site PRP Group is currently considering our
request, but has provided no timeline to us for a response. However, the MSP Site PRP Group has agreed to
indefinitely extend the time period by which we must respond to the De Minimis Cash-Out Settlement offer. We do
not expect that this proceeding will have a material adverse effect on our financial condition or results of operations.
In September 2003, we were noticed as a PRP by the EPA pertaining to the Motorola 52nd Street, Phoenix,
Arizona Superfund Site (the “Superfund Site”) pursuant to the CERCLA. The EPA’s allegation that we were a PRP
arises out of our acquisition of a former branch facility located approximately five miles from the original Superfund
Site. We acquired this facility in 1997, operated the facility until 2000, and sold the facility to a third party in 2002.
In June 2010, we were contacted by the Roosevelt Irrigation District (“RID”) informing us that the Arizona
Department of Environmental Quality (“ADEQ”) had approved a remediation plan in excess of $100 million for the
RID portion of the Superfund Site, and demanded that we contribute to the cost of the plan or be named as a
defendant in a CERCLA action to be filed in July 2010. Wabash initiated settlement discussions with the RID and
the ADEQ in July 2010 to provide a full release from the RID, and a covenant not-to-sue and contribution protection
regarding the former branch property from the ADEQ, in exchange for payment from us. If the settlement is
approved by all parties, it will prevent any third party from successfully bringing claims against us for
environmental contamination relating to this former branch property. We have been awaiting approval from the
ADEQ since the settlement was first proposed in July 2010. In December 2015, we received tentative approval of
our settlement offer from the ADEQ, and are now awaiting concurring approval from the RID. Based on
communications with the RID and ADEQ in December 2015, we do not expect to receive a response regarding the
approval of the settlement from the RID for, at least, several additional months. Based upon our limited period of
ownership of the former branch property, and the fact that it no longer owns the former branch property, we do not
anticipate that the RID will reject the proposed settlement, but no assurance can be given at this time as to the RID’s
response to the settlement proposal tentatively approved by the ADEQ. The proposed settlement terms have been
accrued and did not have a material adverse effect on our financial condition or results of operations, and we believe
that any ongoing proceedings will not have a material adverse effect on our financial condition or results of
operations.
In January 2006, we received a letter from the North Carolina Department of Environment and Natural
Resources indicating that a site that we formerly owned near Charlotte, North Carolina has been included on the
state's October 2005 Inactive Hazardous Waste Sites Priority List. The letter states that we were being notified in
fulfillment of the state's “statutory duty” to notify those who own and those who at present are known to be
responsible for each Site on the Priority List. Following receipt of this notice, no action has ever been requested
from Wabash, and since 2006 we have not received any further communications regarding this matter from the state
of North Carolina. We do not expect that this designation will have a material adverse effect on our financial
condition or results of operations.
ITEM 4—MINE SAFETY DISCLOSURES
Not Applicable.
28
PART II
ITEM 5—MARKET FOR REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Information Regarding our Common Stock
Our common stock is traded on the New York Stock Exchange (ticker symbol: WNC). The number of
record holders of our common stock at February 18, 2016 was 664.
We declared quarterly dividends of $0.045 per share on our common stock from the first quarter of 2005
through the third quarter of 2008. In December 2008, we suspended the payment of our quarterly dividend due to
the continued weak economic environment and the uncertainty as to the timing of a recovery as well as our effort to
enhance liquidity. No dividends on our common stock were declared or paid in 2015. The reinstatement of
quarterly cash dividends on our common stock will depend on our future earnings, capital availability, financial
condition and the discretion of our Board of Directors.
Our Certificate of Incorporation, as amended and approved by our stockholders, authorizes 225 million
shares of capital stock, consisting of 200 million shares of common stock, par value $0.01 per share, and 25 million
shares of preferred stock, par value $0.01 per share.
High and low stock prices as reported on the New York Stock Exchange for the last two years were:
2015
2014
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
Low
$14.96
$15.21
$14.09
$13.10
$14.60
$14.89
$14.91
$13.41
$11.36
$12.31
$10.16
$10.02
$11.77
$12.52
$12.94
$9.44
29
Performance Graph
The following graph shows a comparison of cumulative total returns for an investment in our common
stock, the S&P 500 Composite Index and the Dow Jones Transportation Index. It covers the period commencing
December 31, 2010 and ending December 31, 2015. The graph assumes that the value for the investment in our
common stock and in each index was $100 on December 31, 2010.
Comparative of Cumulative Total Return
December 31, 2010 through December 31, 2015
among Wabash National Corporation, the S&P 500 Index
and the Dow Jones Transportation Index
Purchases of Our Equity Securities
On December 18, 2014, our Board of Directors authorized a share repurchase program (“Repurchase
Program”) which allows the repurchase of common stock of up to $60 million over a two year period. Stock
repurchases under the Repurchase Program may be made in the open market or in private transactions at times and
in amounts that management deems appropriate. Management may limit or terminate the Repurchase Program at
any time based on market conditions, liquidity needs, or other factors. During the fourth quarter of 2015, there were
1,573,552 shares repurchased pursuant to our Repurchase Program. As of December 31, 2015, total shares
repurchased under this program reached the $60 million limit and therefore exhausted the full authority of the
authorized program. Additionally, for the quarter ended December 31, 2015, there were no shares surrendered or
withheld to cover minimum employee tax withholding obligations upon the vesting of restricted stock awards.
Total Number of
Shares Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Maximum Amount
That May Yet Be
Purchased Under the
Plans or Programs
($ in millions)
Period
October 2015
November 2015
582,449 $
December 2015
991,103 $
0 $
0.00
12.83
11.37
0 $
582,449 $
991,103 $
Total
1,573,552 $
11.91
1,573,552 $
ITEM 6—SELECTED FINANCIAL DATA
18.6
11.2
0.0
0.0
The following selected consolidated financial data with respect to Wabash National for each of the five
years in the period ending December 31, 2015, have been derived from our consolidated financial statements. The
following information should be read in conjunction with Management's Discussion and Analysis of Financial
30
Condition and Results of Operations and the consolidated financial statements and notes thereto included elsewhere
in this Annual Report.
Statement of Comprehensive Income Data:
Net sales
Cost of sales
Gross profit
Years Ended December 31,
2015
2014
2013
2012
2011
(Dollars in thousands, except per share data)
$
2,027,489
1,724,046
$
1,863,315
1,630,681
$
1,635,686
1,420,563
$
1,461,854
1,298,031
$
1,187,244
1,120,524
$
303,443
$
232,634
$
215,123
$
163,823
$
66,720
Selling, general and administrative expenses
Amortization of intangibles
Other operating expenses
100,728
21,259
1,087
88,370
21,878
-
89,263
21,786
883
68,340
10,590
14,409
43,975
2,955
-
Income (Loss) from operations
$
180,369
$
122,386
$
103,191
$
70,484
$
19,790
Interest expense
Other, net
(19,548)
2,490
(22,165)
(1,759)
(26,308)
740
(21,724)
(97)
(4,136)
(441)
Income (Loss) before income taxes
$
163,311
$
98,462
$
77,623
$
48,663
$
15,213
Income tax expense (benefit)
59,022
37,532
31,094
(56,968)
171
Net income (loss)
$
104,289
$
60,930
$
46,529
$
105,631
$
15,042
Preferred stock dividends and early extinguishment
-
-
-
-
-
Net income (loss) applicable to common stockholders
$
104,289
$
60,930
$
46,529
$
105,631
$
15,042
Basic net income (loss) per common share
$
1.55
$
0.88
$
0.67
$
1.53
$
0.22
Diluted net income (loss) per common share
$
1.50
$
0.85
$
0.67
$
1.53
$
0.22
Balance Sheet Data:
Working capital
Total assets
Total debt and capital leases
Stockholders' equity
$
318,430
$
298,802
$
232,638
$
221,402
$
95,529
$
950,126
$
928,651
$
912,245
$
902,626
$
388,050
$
315,633
$
332,527
$
370,595
$
425,151
$
69,821
$
439,811
$
390,832
$
322,379
$
268,727
$
146,346
ITEM 7—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
describes the matters that we consider to be important to understanding the results of our operations for each of the
three years in the period ended December 31, 2015, and our capital resources and liquidity as of December 31, 2015.
Our discussion begins with our assessment of the condition of the North American trailer industry along with a
summary of the actions we have taken to strengthen the Company. We then analyze the results of our operations for
the last three years, including the trends in the overall business and our operating segments, followed by a discussion
of our cash flows and liquidity, capital markets events and transactions, our credit facility and contractual
commitments. We also provide a review of the critical accounting judgments and estimates that we have made that
we believe are most important to an understanding of our MD&A and our consolidated financial statements. These
are the critical accounting policies that affect the recognition and measurement of our transactions and the balances
in our consolidated financial statements. We conclude our MD&A with information on recent accounting
pronouncements that we adopted during the year, if any, as well as those not yet adopted that may have an impact on
our financial accounting practices.
31
We have three reportable operating segments: Commercial Trailer Products, Diversified Products and
Retail. The Commercial Trailer Products segment produces trailers that are sold to customers who purchase trailers
directly, through our Company-owned Retail branches, or through independent dealers. The Diversified Products
segment focuses on our commitment to expand our customer base, diversify our product offerings and revenues and
extend our market leadership by leveraging our proprietary DuraPlate® panel technology, drawing on our core
manufacturing expertise and making available products that are complementary to the truck and tank trailers and
transportation equipment we offer. The Retail segment includes the sale of new and used trailers, as well as the sale
of aftermarket parts and service through our retail branch network.
Executive Summary
We were successful in delivering results for 2015 that we consider transformational and are record-setting
in several aspects. With a growing and healthy demand environment for trailers throughout 2015, as evidenced by
the increase in new trailer shipments to 64,700 trailers, or 12.8% as compared to the prior year, our healthy backlog
of $1,191 million as of December 31, 2015, as well as a trailer demand forecast by industry forecasters, ACT and
FTR Associates (“FTR”), that remains significantly above replacement demand levels for the next several years, we
were able to successfully deliver significant margin improvements through improved product pricing and continued
operational execution to improve overall productivity. More specifically, according to most recent ACT estimates,
total new trailer shipments in 2015 totaled approximately 307,000 trailers representing an increase of 14% as
compared to the prior year, and representing a fifth consecutive year that total trailer demand exceeded normal
replacement demand levels estimated to be approximately 220,000 trailers per year.
In addition to our commitment to long-term profitable growth within each of our existing reporting
segments, our strategic initiatives included a focus on diversification efforts, both organic and strategic, to transform
Wabash into a diversified industrial manufacturer with a higher growth and margin profile and successfully deliver a
greater value to our shareholders. Organically, our focus is on profitably growing and diversifying our operations
through leveraging our existing assets, capabilities and technology into higher margin products and markets and
thereby providing value-added customer solutions. Strategically, our focus remains to continue our transition into a
diversified industrial manufacturer, profitably growing and further broadening the product portfolio we offer, the
customers and end markets we serve and strengthening our geographic presence. Recent acquisitions have provided,
and potential future acquisitions may further provide, us the opportunity to move forward on this strategic initiative
and our long-term plan to become a diversified industrial manufacturer. Our recent acquisitions have enabled us to
recognize top-line growth, improved profitability and margin expansion; provided us access to additional markets
while expanding our manufacturing footprint; allowed us to offer one of the broadest product portfolios in the trailer
industry. Our Diversified Products segment now represents 21% of our consolidated revenues and 23% of our
consolidated operating income for the current year period, providing significant contributions to our bottom line.
Throughout 2015 we also demonstrated our commitment to be responsible stewards of the business by
maintaining a balanced approach to capital allocation. Our continuing strong business performance, solid backlog
and outlook, and financial position provided us the opportunity to take specific actions as part of the ongoing
commitment to prudently manage the overall financial risks of the Company, returning capital to our shareholders
and deleveraging our balance sheet. These actions included completing our $60 million share repurchase program
previously approved by our Board of Directors in December 2014 as well as executing agreements with existing
holders of our outstanding Convertible Senior Notes to purchase approximately $54 million in principal.
Furthermore, in February 2016, our Board of Directors authorized the repurchase of up to an additional $100 million
of our common stock over a two-year period. The actions taken will lower our overall balance sheet risk while
maintaining the flexibility to continue to execute our long-term strategy.
The outlook for the overall trailer market for 2016 continues to indicate a strong and growing demand
environment. In fact, the most recent estimates from industry forecasters, ACT and FTR, indicate demand levels to
be in excess of the estimated replacement demand in every year through 2020. More specifically, ACT is currently
estimating 2016 demand will be approximately 299,000, or down 3% as compared to the previous year period, with
2017 through 2020 industry demand levels ranging between 254,000 and 276,000 trailers. In addition, FTR
anticipates trailer demand for 2016 to remain strong at approximately 279,000 trailers, a decrease of 9% as
compared to 2015 production levels. This continued strong demand environment for new trailer equipment as well
as the positive economic and industry specific indicators we monitor reinforce our belief that the current trailer
demand cycle will be an extended cycle with a strong likelihood for several more years of demand significantly
above replacement levels. We believe we are well positioned to capitalize on the expected strong overall demand
32
levels while also achieving continued margin growth through improvements in product pricing as well as
productivity improvements and other operational excellence initiatives.
However, we are not relying solely on volume and product pricing within the trailer industry to improve
operations and enhance profitability. We remain committed to enhancing and diversifying our business model
through the organic and strategic initiatives discussed previously. Through our three operating segments we offer a
wide array of products and customer-specific solutions that we believe provide a sound foundation for achieving
these goals. Continuing to identify attractive opportunities to leverage our core competencies, proprietary
technology and core manufacturing expertise into new applications and end markets enables us to deliver greater
value to our customers and shareholders.
Operating Performance
We measure our operating performance in five key areas – Safety/Morale, Quality, Delivery, Cost
Reduction and Environment. We maintain a continuous improvement mindset in each of these key performance
areas. Our objective of being better today than yesterday and better tomorrow than we are today is simple,
straightforward and easily understood by all our employees.
• Safety/Morale. The safety of our employees is our number-one value and highest priority. We
continually focus on reducing the severity and frequency of workplace injuries to create a safe
environment for our employees and minimize workers compensation costs. We believe that our
improved environmental, health and safety management translates into higher labor productivity and
lower costs as a result of less time away from work and improved system management. In nine of the
last ten years one of our manufacturing sites has been recognized for safety including recent awards
from the Truck Trailer Manufacturer Association’s Plant Safety Awards granted to our Walker
Stainless and Bulk Tank facilities. Our focus on safety also extends beyond our facilities. We are a
founding member of the Cargo Tank Risk Management Committee, a group dedicated to reducing the
hazards faced by workers on and around cargo tanks.
• Quality. We monitor product quality on a continual basis through a number of means for both internal
and external performance as follows:
-‐
Internal performance. Our primary internal quality measurement is Process Yield. Process
Yield is a performance metric that measures the impact of all aspects of the business on our
ability to ship our products at the end of the production process. As with previous years, the
expectations of the highest quality product continue to increase while maintaining Process
Yield performance and reducing rework. In addition, we currently maintain an ISO 9001
registration of our Quality Management System at our Lafayette operations.
- External performance. We actively track our warranty claims and costs to identify and drive
improvement opportunities in quality and reliability. Early life cycle warranty claims for our
van trailers are trended for performance monitoring. Using a unit based warranty reporting
process to track performance and document failure rates, early life cycle warranty units per
100 trailers shipped averaged approximately 2.0, 3.4 and 4.8 units in 2015, 2014 and 2013,
respectively. The substantial improvement trend from 2013 to 2015 was driven by our
successful execution of continuous improvement programs centered on process variation
reduction, and responding to the input from our customers. We expect that these activities
will continue to drive down our total warranty cost profile.
• Delivery/Productivity. We measure productivity on many fronts. Some key indicators include
production line cycle-time, labor-hours per trailer and inventory levels. Improvements over the last
several years in these areas have translated into significant improvements in our ability to better
manage inventory flow and control costs.
-‐ During the past several years Commercial Trailer Products has focused on productivity
enhancements within manufacturing assembly and sub-assembly areas through developing the
capability for mixed model production. These efforts have resulted in throughput
improvements in our Lafayette, Indiana, and Cadiz, Kentucky facilities. In 2015 we produced
33
14% and 41% more trailers than in 2014 and 2013, respectively, utilizing the same facilities
and manufacturing lines hence enabling us to reduce manufacturing cost per unit and grow
operating margin.
-‐
In 2015, Diversified Products continued improving the flexibility and efficiency of their
operations. The launch of our new Wabash Composites facility in Frankfort, Indiana, leased
to provide dedicated manufacturing space to support the expanding product line and
continued growth of our Composites business, allows us to manufacture our diverse product
offerings more efficiently. Recently, Diversified Products also broadened its tank trailer
manufacturing versatility by adding production capabilities for petroleum trailers to our Fond
du Lac, Wisconsin, manufacturing facility and pneumatic dry bulk trailers to our Portland,
Oregon; Fond du Lac, Wisconsin; and New Lisbon, Wisconsin, facilities. In 2015, we also
benefitted from the added capacity at our facility in Queretaro, Mexico for stationary silos for
food, dairy and beverage industries, to better serve the markets in Southern U.S., Mexico and
South America.
• Cost Reduction. We believe continuous improvement is a fundamental component of our operational
excellence focus. Our continued focus on our balanced scorecard process has allowed us to improve
all areas of manufacturing including safety, quality, on-time delivery, cost reduction, employee morale
and environment. By focusing on continuous improvement and utilizing our balanced scorecard
process we have realized total cost per unit reductions as a result of increased capacity utilization of all
facilities while maintaining a lower level of fixed overhead. We also have a tank trailer manufacturing
facility in Queretaro, Mexico that provides a low cost advantage for our tank trailer product line.
• Environment.
We strive to manufacture products that are both socially responsible and
environmentally sustainable. We demonstrate our commitment to sustainability by maintaining ISO
14001 registration of our Environmental Management System at our Lafayette, Indiana facilities,
which was one of the first trailer manufacturing operations in the world to be ISO 14001 registered.
ISO 14001 requires us
third-party verified environmental
improvements. In 2015, our Cadiz, Kentucky facility also achieved ISO 14001 registration. At our
facilities, we initiated employee-based recycling programs that reduce waste being sent to the landfill,
installed a fifty-five foot wind turbine to produce electricity and reduce our carbon emissions, and
restored a natural wildlife habitat to enhance the environment and protect native animals. Our
commitment to sustainable operations has also been demonstrated internationally by our Bulk Tank
International facility being recommended for ISO 14001 registration in 2015.
to demonstrate quantifiable and
Industry Trends
Truck transportation in the U.S., according to the ATA, was estimated to be a $700 billion industry in 2014.
ATA estimates that approximately 69% of all freight tonnage is carried by trucks. Trailer demand is a direct
function of the amount of freight to be transported. To monitor the state of the industry, we evaluate a number of
indicators related to trailer manufacturing and the transportation industry. Recent trends we have observed include
the following:
• Transportation / Trailer Cycle. Transportation in the U.S., including trucking, is a cyclical industry
that has experienced three cycles over the last 20 years. The most recently completed cycle began in
early 2001 when industry trailer shipments totaled approximately 140,000, reached a peak in 2006 with
shipments of approximately 280,000 and reached the bottom in 2009 with shipments of approximately
79,000 units. In each of these three U.S. economic downturns, the decline in freight tonnage preceded
the general economic decline by approximately two and one-half years and its recovery has generally
preceded that of the economy as a whole. The trailer industry generally follows the transportation
industry cycles. After three consecutive years with total trailer demand well below normal
replacement demand levels estimated to be between 200,000 trailers and 220,000 trailers, the five year
period ending December 2015 demonstrated consecutive years of significant improvement in which
the total trailer market increased year-over-year approximately 64%, 14%, 1%, 15% and 14% for 2011,
2012, 2013, 2014 and 2015, respectively, with total shipments of approximately 204,000, 232,000,
234,000, 269,000 and 307,000, respectively. The 2015 trailer shipments represent an all-time industry
record. As we enter the seventh year of an economic recovery, ACT is estimating demand within the
34
trailer industry in 2016 at approximately 299,000 and forecasting continued strong demand levels into
the foreseeable future with estimated annual average demand for the four year period ending 2020 to
be approximately 264,000 new trailers. Our view is generally consistent with ACT that trailer demand
will remain significantly above replacement levels for 2016 and has the potential to remain above
replacement levels for several years beyond 2016.
• New Trailer Orders. According to ACT, total orders in 2015 were approximately 316,000 trailers, an
11% decrease from approximately 357,000 trailers ordered in 2014. Total orders for the dry van
segment, the largest within the trailer industry, were approximately 195,000, a decrease of 10% from
2014.
• Transportation Regulations and Legislation. There are several different areas within both federal and
state government regulations and legislation that are expected to have an impact on trailer demand,
including:
-‐ The Federal Motor Carrier Safety Administration (the “FMCSA”) has taken steps in recent years
to improve truck safety standards, particularly by implementing the Compliance, Safety, and
Accountability (“CSA”) program as well as requiring Electronic Logging Devices. CSA is
considered a comprehensive driver and fleet rating system that measures both the freight carriers
and drivers on several safety related criteria, including driver safety, equipment maintenance and
overall condition of trailers. This system drives increased awareness and action by carriers since
enforcement actions were targeted and implemented beginning in June 2011. CSA is generally
believed to have contributed to the tightening of the supply of drivers and capacity after 2011 as
carriers took measures to improve their rating.
-‐
In July 2013, a new FMCSA hours-of-service rule went into effect, reducing total driver hours
from 82 hours per week to 70 hours. Congress included language in the 2016 spending package
that requires the agency to meet an appropriate safety, driver health and driver longevity standard
before re-imposing those restrictions. Specifically, the language prohibits FMCSA from
reinstating certain sections of the rule’s 34-hour restart provisions unless an FMCSA study finds
that they result in statistically significant improvements in safety and driver health, among other
things. We believe this language will make it very difficult for FMCSA to justify re-instituting the
restart restrictions. In other words, the simple 34-hour restart rule, with no additional restrictions,
will likely remain in place for the foreseeable future. Nevertheless, we believe the rule will keep
trucking equipment utilization at record-high levels and, therefore, increase the general need for
equipment.
-‐ There are several new regulations that will likely come into effect in the next two years, including
Drug and Alcohol Clearinghouse Requirement, Speed Limiters, and Corporate Average Fuel
Economy among others. The cumulative effect of the existing and upcoming regulations will be a
further decrease in driver productivity and reduction of the driver pool, which will likely lead to
higher demand for additional drivers and equipment to fill the gap.
-‐ The California Air Resource Board (“CARB”) regulations mandate that refrigeration units older
than 7 years may no longer operate in California. As refrigeration units become obsolete, capacity
in the refrigerated segment will tighten and an increase in demand for new refrigerated trailers is
likely. CARB regulations also mandate fuel efficiency improvements on all fleets operating in
California for which our DuraPlate® AeroSkirt® provides a durable and cost effective aerodynamic
side skirt solution that yields the improved fuel efficiencies required by these regulations. Pending
federal greenhouse gas and fuel efficiency regulations may also lead to a higher demand for our
DuraPlate® AeroSkirt® and other aerodynamic device products.
• Other Developments. Other developments and potential impacts on the industry include:
- While we believe the need for trailer equipment will be positively impacted by the legislative and
regulatory changes addressed above, these demand drivers could be offset by factors that
contribute to the increased concentration and density of loads, including the miniaturization of
35
electronic products and packaging optimization of bulk goods. Increases in load concentration or
density could contribute to decreased need or demand for dry van trailers.
- Trucking company profitability, which can be influenced by factors such as fuel prices, freight
tonnage volumes, and government regulations, is highly correlated with the overall economy of
the U.S. Carrier profitability significantly impacts demand for, and the financial ability to
purchase new trailers.
- Fleet equipment utilization has been rising due to increasing freight volumes, new government
regulations and shortages of qualified truck drivers. As a result, trucking companies are under
increased pressure to look for alternative ways to move freight, leading to more intermodal freight
movement. We believe that railroads are at or near capacity, which will limit their ability to
respond to freight demand pressures. Therefore, we expect that the majority of freight will
continue to be moved by truck and, according to ATA, freight tonnage carried by trucks is
expected to increase approximately 25% throughout the next decade.
Results of Operations
The following table sets forth certain operating data as a percentage of net sales for the periods indicated:
Net sales
Cost of sales
Gross profit
General and administrative expenses
Selling expenses
Amortization of intangibles
Other operating expenses
Income from operations
Interest expense
Other, net
Income before income taxes
Income tax expense (benefit)
Years Ended December 31,
2015
100.0
%
2014
100.0
%
2013
100.0
%
85.0
15.0
3.6
1.3
1.1
0.1
8.9
(0.9)
0.1
8.1
3.1
87.5
12.5
3.3
1.4
1.2
-
6.6
(1.2)
(0.1)
5.3
2.0
86.8
13.2
3.6
1.9
1.3
0.1
6.3
(1.6)
-
4.7
1.9
Net income
%
5.0
%
3.3
%
2.8
2015 Compared to 2014
Net Sales
Net sales in 2015 increased $164.2 million, or 8.8%, compared to the 2014 period. By business segment,
net sales prior to intersegment eliminations and related units sold were as follows (dollars in thousands):
36
(prior to elimination of intersegment sales)
Change
2015
2014
$
%
Year Ended December 31,
Sales by Segment
Commercial Trailer Products
$
1,509,380
$
1,294,164
$
215,216
Diversified Products
Retail
Eliminations
Total
New Trailers
Commercial Trailer Products
Diversified Products
Retail
Eliminations
Total
Used Trailers
Commercial Trailer Products
Diversified Products
Retail
Eliminations
Total
16.6
(8.2)
(12.0)
428,021
167,291
(77,203)
466,238
190,080
(87,167)
(38,217)
(22,789)
$
2,027,489
$
1,863,315
$
164,174
8.8
(units)
61,350
3,400
2,500
(2,550)
64,700
(units)
1,000
150
950
(50)
2,050
53,550
3,550
3,450
(3,200)
57,350
3,150
150
1,550
-
4,850
7,800
(150)
(950)
14.6
(4.2)
(27.5)
7,350
12.8
(2,150)
-
(600)
(68.3)
-
(38.7)
(2,800)
(57.7)
Commercial Trailer Products segment sales, prior to the elimination of intersegment sales, were $1.5 billion
in 2015, an increase of $215.2 million, or 16.6%, compared to 2014. The increase in sales was primarily due to a
14.6% increase in new trailer shipments, as approximately 61,350 trailers were shipped in 2015 compared to 53,550
trailers shipped in the prior year. The increase in sales was further aided by an improved pricing environment as
average selling prices increased 2.5% as compared to the prior year. Used trailer sales decreased $3.6 million, or
15.3%, compared to the prior year due to decreased availability of product through fleet trade packages as
approximately 2,150 fewer used trailers shipped in 2015 as compared to the prior year.
Diversified Products segment sales, prior to the elimination of intersegment sales, were $428.0 million in
2015, down $38.2 million, or 8.2%, compared to 2014. New trailer sales decreased $9.4 million, or 4.1%, due to a
4.2% decrease in new trailer shipments, as approximately 3,400 trailers were shipped in 2015 compared to 3,550
trailers shipped in the prior year. Parts and service sales decreased $7.5 million, or 7.5%, compared to the prior year
due to decreased demand. Equipment and other sales decreased $21.3 million, or 16.0%, due to lower demand for
our non-trailer truck mounted equipment and other engineered products.
Retail segment sales were $167.3 million in 2015, down $22.8 million, or 12.0%, compared to 2014. New
trailer sales decreased $21.4 million, or 24.0%, as approximately 950 fewer new trailers were shipped in 2015 as
compared to 2014 as a result of fewer retail locations for the entirety of 2015 resulting from the transition of three of
our former West Coast branches to independent dealers in May 2014. As compared to the prior year, new trailer
average selling prices increased 3.5%, primarily due to customer and product mix as well as improved pricing. Used
trailer sales decreased $3.3 million, or 19.6%, as approximately 600 fewer used trailers were shipped in 2015 as
compared to 2014. Parts and service sales were up $2.6 million, or 3.2%, as compared to the prior year.
Cost of Sales
Cost of sales in 2015 was $1,724.0 million, an increase of $93.4 million, or 5.7%, as compared to 2014. As
a percentage of net sales, cost of sales was 85.0% in 2015, compared to 87.5% for 2014.
37
Commercial Trailer Products segment cost of sales, as detailed in the following table, was $1,322.6 million
in 2015, an increase of $133.2 million, or 11.2%, compared to 2014. As a percentage of net sales, cost of sales was
87.6% in 2015 compared to 91.9% in 2014.
Commercial Trailer Products Segment
2015
2014
(prior to elimination of intersegment sales)
(dollars in thousands)
Year Ended December 31,
Material Costs
Other Manufacturing Costs
% of Net
Sales
68.8%
18.8%
87.6%
$
1,038,195
284,413
$
1,322,608
% of Net
Sales
72.0%
19.9%
91.9%
$
932,233
257,131
$
1,189,364
Cost of sales is comprised of material costs, a variable expense, and other manufacturing costs, comprised
of both fixed and variable expenses, including direct and indirect labor, outbound freight, and overhead expenses.
Commercial Trailer Products material costs were 68.8% of net sales in 2015 compared to 72.0% in 2014. Material
costs as a percentage of sales in 2015 decreased due to improved pricing and continued material cost optimization
through product design and sourcing as compared to the prior year period. Other manufacturing costs increased
$27.3 million in the current year as compared to the prior year, resulting from increased labor and other variable
costs related to increases in new trailer production volumes. As a percentage of sales, other manufacturing costs
decreased from 19.9% in 2014 to 18.8% in 2015 due to increased leverage of fixed costs from higher production and
a reduction in variable manufacturing cost through improved productivity.
Diversified Products segment cost of sales, prior to the elimination of intersegment sales, was $329.2
million in 2015, a decrease of $33.7 million, or 9.3%, compared to 2014. The decrease in cost of sales was
primarily driven by an 8.2% decrease in sales. As a percentage of net sales prior to the elimination of intersegment
sales, cost of sales was 76.9% in 2015 compared to 77.8% in 2014. The 90 basis point decrease as a percentage of
net sales was due primarily to product mix and operational efficiencies.
Retail segment cost of sales, prior to the elimination of intersegment sales, was $147.4 million in 2015, a
decrease of $21.9 million, or 13.0%, compared to 2014. As a percentage of net sales prior to the elimination of
intersegment sales, cost of sales was 88.1% in 2015 compared to 89.1% in 2014. Cost of sales as a percentage of net
sales decreased primarily due to product mix driven by an increased percentage of sales from our higher margin
parts and service product lines in 2015 as compared to the prior year.
Gross Profit
Gross profit was $303.4 million in 2015, an improvement of $70.8 million, or 30.4% from 2014. Gross
profit as a percentage of sales was 15.0% in 2015 as compared to 12.5% in 2014. Gross profit by segment was as
follows (in thousands):
Year Ended December 31,
Change
2015
2014
$
%
Gross Profit by Segment:
Commercial Trailer Products
$
186,772
$
104,800
$
81,972
Diversified Products
Retail
Corporate and Eliminations
98,839
19,871
(2,039)
103,379
20,728
3,727
(4,540)
(857)
(5,766)
Total
$
303,443
$
232,634
$
70,809
78.2
(4.4)
(4.1)
30.4
Commercial Trailer Products segment gross profit was $186.8 million in 2015 compared to $104.8 million
in the prior year. Gross profit, as a percentage of net sales prior to the elimination of intersegment sales, was 12.4%
38
in 2015 as compared to 8.1% in 2014. The increase in gross profit and gross profit margin as compared to the prior
year was primarily driven by the increase in new trailer volumes, an improved pricing environment and increased
operational efficiencies.
Diversified Products segment gross profit was $98.8 million in 2015 compared to $103.4 million in 2014.
Gross profit, as a percentage of net sales prior to the elimination of intersegment sales, was 23.1% in 2015 compared
to 22.2% in 2014. The increase in gross profit as a percentage of net sales, as compared to the prior year, was
attributable to product mix and operational efficiencies.
Retail segment gross profit was $19.9 million in 2015 compared to $20.7 million in 2014. Gross profit, as
a percentage of net sales prior to the elimination of intersegment sales, was 11.9% in 2015 compared to 10.9% in
2014. Gross profit margin increased primarily due to product mix driven by an increased percentage of sales from
our higher margin parts and service product lines in 2015 as compared to the prior year.
General and Administrative Expenses
General and administrative expenses in 2015 increased $11.8 million, or 19.1%, from the prior year as a
result of a $9.7 million increase in salaries and employee related costs, including employee incentive programs, as
well as a $2.1 million increase in other operating expenses, primarily technology costs, professional fees and outside
services. General and administrative expenses, as a percentage of net sales, were 3.6% in 2015 compared to 3.3% in
2014.
Selling Expenses
Selling expenses were $27.2 million in 2015, an increase of $0.6 million, or 2.1%, compared to the prior
year, as a $1.5 million increase in salaries and employee related costs, including employee incentive programs were
partially offset by lower advertising, promotional and various other selling related expenses. As a percentage of net
sales, selling expenses were 1.3% in 2015 compared to 1.4% in the prior year.
Amortization of Intangibles
Amortization of intangibles was $21.3 million in 2015 compared to $21.9 million in 2014. Amortization of
intangibles for both periods primarily includes amortization expense recognized for intangible assets recorded from
the acquisition of Walker in May 2012 and certain assets of Beall in February 2013.
Other Operating Expenses
Other operating expenses of $1.1 million in 2015 include the impairment of intangible assets recognized in
connection with consolidating our existing tradenames within the Diversified Products Group segment.
Other Income (Expense)
Interest expense in 2015 totaled $19.5 million compared to $22.2 million in the prior year. Interest expense
for both periods primarily relates to interest and non-cash accretion charges on our Convertible Senior Notes and
Term Loan Credit Agreement. The decrease from the prior year is primarily due to lower outstanding loan
commitments through voluntary debt payments made over the prior year, as well as lower interest rates achieved
through amendments to both our Revolving Credit Agreement and Term Loan Credit Agreement during 2015.
Other, net for 2015 represented income of $2.5 million as compared to an expense of $1.8 million for the
prior year period. The current year period primarily consists of an $8.3 million gain on the sale of our former Retail
branch real estate in Fontana, California and Portland, Oregon partially offset by $5.3 million of accelerated
amortization and related fees in connection with the refinancing of our Term Loan Credit Agreement in March 2015
and $0.3 million of charges incurred in connection with the amendment to our Revolving Credit Agreement in June
2015 (see “Debt Agreements and Related Amendments” section below for further details). The prior year period
includes a loss on early extinguishment of debt of $1.0 million for debt issuance costs recognized on the voluntary
principal payments made on our Term Loan Credit Agreement as well as a $0.6 million loss on the transition of
three of our Retail branches to independent dealer facilities.
39
Income Taxes
We recognized income tax expense of $59.0 million in 2015 compared to $37.5 million in the prior year.
The effective tax rate for 2015 was 36.1%, which differs from the U.S. Federal statutory rate of 35% primarily due
to the impact of state and local taxes offset by the benefit of the U.S. Internal Revenue Code domestic
manufacturing deduction. Cash taxes paid in 2015 were $66.3 million.
2014 Compared to 2013
Net Sales
Net sales in 2014 increased $227.6 million, or 13.9%, compared to the 2013 period. By business segment,
net sales prior to intersegment eliminations and related units sold were as follows (dollars in thousands):
(prior to elimination of intersegment sales)
Change
2014
2013
$
%
Year Ended December 31,
Sales by Segment
Commercial Trailer Products
$
1,294,164
$
1,082,456
$
211,708
Diversified Products
Retail
Eliminations
Total
New Trailers
Commercial Trailer Products
Diversified Products
Retail
Eliminations
Total
Used Trailers
Commercial Trailer Products
Diversified Products
Retail
Eliminations
Total
466,238
190,080
(87,167)
458,653
181,486
(86,909)
7,585
8,594
$
1,863,315
$
1,635,686
$
227,629
(units)
53,550
3,550
3,450
(3,200)
57,350
(units)
3,150
150
1,550
-
4,850
43,800
3,050
3,000
(3,050)
46,800
4,300
100
1,300
-
5,700
9,750
500
450
10,550
(1,150)
50
250
19.6
1.7
4.7
13.9
22.3
16.4
15.0
22.5
(26.7)
50.0
19.2
(850)
(14.9)
Commercial Trailer Products segment sales, prior to the elimination of intersegment sales, were $1,294.2
million in 2014, an increase of $211.7 million, or 19.6%, compared to 2013. The increase in sales was primarily due
to a 22.3% increase in new trailer shipments, as approximately 53,550 trailers were shipped in 2014 compared to
43,800 trailers shipped in the prior year. The increase in trailer shipments was partially offset by product mix,
which lowered average selling prices by 0.7% as compared to the prior year. Used trailer sales decreased $9.9
million, or 29.5%, compared to the previous year with approximately 1,150 fewer used trailer shipments in 2014 as
compared to the prior year, which was primarily due to decreased availability of product because of fewer fleet trade
packages received.
Diversified Products segment sales, prior to the elimination of intersegment sales, were $466.2 million in
2014, up $7.6 million, or 1.6%, compared to 2013. New trailer sales increased $22.6 million, or 11.0%, due to a
16.4% increase in new trailer shipments, as approximately 3,550 trailers were shipped in 2014 compared to 3,050
trailers shipped in the prior year, partially offset by a 5.2% decrease in average selling prices. Parts and service sales
decreased $5.5 million, or 5.2%, compared to the prior year due to decreased demand. Equipment and other sales
40
decreased $10.9 million, or 7.5%, due to the timing of shipments and customer acceptance for our non-trailer truck
mounted equipment and other engineered products. Used trailer sales increased $1.4 million, or 45.4%, as a result
of an increase in used trailer shipments and a favorable customer and product mix, which increased used trailer
average selling prices by 15.2% as compared to 2013.
Retail segment sales, prior to the elimination of intersegment sales, were $190.1 million in 2014, up $8.6
million, or 4.7%, compared to 2013. New trailer sales increased $6.0 million, or 7.3%, as approximately 450 more
trailers were shipped in 2014 as compared to 2013. As compared to the prior year, new trailer average selling prices
decreased 5.8%, primarily due to customer and product mix. Used trailer sales increased $4.1 million, or 32.2%,
primarily due to an increase in volume demand, as approximately 250 more used trailers were shipped in 2014 as
compared to 2013. Parts and service sales were down $0.9 million, or 1.1%, and equipment and other sales were
down $0.7 million, or 16.6%, as compared to the prior year.
Cost of Sales
Cost of sales in 2014 was $1,630.7 million, an increase of $210.1 million, or 14.8%, as compared to 2013.
As a percentage of net sales, cost of sales was 87.5% in 2014, compared to 86.8% for 2013.
Commercial Trailer Products segment cost of sales, as detailed in the following table, was $1,189.4 million
in 2014, an increase of $191.1 million, or 19.1%, compared to 2013. As a percentage of net sales, cost of sales was
91.9% in 2014 compared to 92.2% in 2013.
Commercial Trailer Products Segment
2014
2013
(prior to elimination of intersegment sales)
(dollars in thousands)
Year Ended December 31,
Material Costs
Other Manufacturing Costs
% of Net
Sales
72.0%
19.9%
91.9%
% of Net
Sales
72.0%
20.2%
92.2%
$
779,736
218,538
$
998,274
$
932,233
257,131
$
1,189,364
Cost of sales is comprised of material costs, a variable expense, and other manufacturing costs, comprised
of both fixed and variable expenses, including direct and indirect labor, outbound freight, and overhead expenses.
Commercial Trailer Products material costs, prior to the elimination of intersegment sales, were 72.0% of net sales
in 2014 consistent with 2013. Material costs as a percentage of sales in 2014 were in line with 2013 as raw material,
commodity, and component costs remained relatively consistent as compared to the prior year. Other manufacturing
costs increased $38.6 million in the current year as compared to the prior year, resulting from increased labor and
other variable costs related to increases in new trailer production volumes. As a percentage of sales, other
manufacturing costs decreased from 20.2% in 2013 to 19.9% in 2014 due to increased leverage of fixed costs from
higher production.
Diversified Products segment cost of sales, prior to the elimination of intersegment sales, was $362.9
million in 2014, an increase of $12.8 million, or 3.7%, compared to 2013. The increase in cost of sales was
primarily driven by an increase in sales volume due to stronger tank trailer demand as compared to the prior year.
Cost of sales as a percentage of net sales, prior to the elimination of intersegment sales, was 77.8% in 2014
compared to 76.3% in 2013. The 150 basis point increase as a percentage of net sales was primarily the result of
lower average selling prices for tank trailers due to customer and product mix as compared to the prior year, as well
as competitive market pressures within certain product lines of both the composite product and tank trailer
businesses.
Retail segment cost of sales, prior to the elimination of intersegment sales, was $169.4 million in 2014, an
increase of $8.0 million, or 5.0%, compared to 2013. As a percentage of net sales, cost of sales was 89.1% in 2014
compared to 88.9% in 2013. Cost of sales as a percentage of net sales increased slightly compared to the prior year
as a result of product mix as a higher percentage of sales were from the lower margin new and used trailer product
lines as compared to the prior year.
41
Gross Profit
Gross profit was $232.6 million in 2014, an improvement of $17.5 million, or 8.1% from 2013. Gross
profit as a percentage of sales was 12.5% in 2014 as compared to 13.2% in 2013. Gross profit by segment was as
follows (in thousands):
Year Ended December 31,
Change
2014
2013
$
%
Gross Profit by Segment:
Commercial Trailer Products
$
104,800
$
84,182
$
20,618
Diversified Products
Retail
Corporate and Eliminations
103,379
20,728
3,727
108,627
20,122
2,192
(5,248)
606
1,535
Total
$
232,634
$
215,123
$
17,511
24.5
(4.8)
3.0
8.1
Commercial Trailer Products segment gross profit, prior to the elimination of intersegment sales, was
$104.8 million in 2014 compared to $84.2 million in the prior year. Gross profit, as a percentage of net sales, was
8.1% in 2014 as compared to 7.8% in 2013. The increase in gross profit and profit margin as compared to the prior
year was primarily driven by the increase in new trailer volumes and improved pricing partially offset by customer
and product mix.
Diversified Products segment gross profit, prior to the elimination of intersegment sales, was $103.4
million in 2014 compared to $108.6 million in 2013. Gross profit, as a percentage of net sales, was 22.2% in 2014
compared to 23.7% in 2013. The decreases in gross profit and gross profit as a percentage of net sales, as compared
to the prior year, are primarily due to product mix and competitive market pressures within certain product lines.
Retail segment gross profit, prior to the elimination of intersegment sales, was $20.7 million in 2014
compared to $20.1 million in 2013. Gross profit, as a percentage of net sales, in 2014 was 10.9% compared to
11.1% in 2013. Gross profit margin was relatively consistent with the prior year as increased demand was offset by
product mix and an increase in costs to support growth initiatives.
General and Administrative Expenses
General and administrative expenses in 2014 increased $3.0 million, or 5.1%, from the prior year as a result
of a $4.5 million increase in salaries and employee related costs, including employee incentive programs, partially
offset by decreases in bad debt expense of $0.7 million, due to certain uncollectable accounts receivable identified in
the prior year, as well as lower outside professional services of $0.4 million. General and administrative expenses,
as a percentage of net sales, were 3.3% in 2014 compared to 3.6% in 2013.
Selling Expenses
Selling expenses were $26.7 million in 2014, a decrease of $3.9 million, or 12.8%, compared to the prior
year, primarily due to a $3.2 million decrease in salaries and employee related costs, including employee incentive
programs, and lower advertising and promotional costs. As a percentage of net sales, selling expenses were 1.4% in
2014 compared to 1.9% in the prior year.
Amortization of Intangibles
Amortization of intangibles was $21.9 million in 2014 compared to $21.8 million in 2013. Amortization of
intangibles for both periods primarily includes amortization expense recognized for intangible assets recorded from
the acquisition of Walker in May 2012 and certain assets of Beall in February 2013.
42
Other Income (Expense)
Interest expense in 2014 totaled $22.2 million compared to $26.3 million in the prior year. Interest expense
for both periods primarily related to interest and non-cash accretion charges on our Convertible Senior Notes and
Term Loan Credit Agreement. The decrease from 2013 was due to lower outstanding loan commitments through
voluntary debt payments made over the previous year, as well as reduced interest rates achieved as a result of
repricing the Term Loan Credit Agreement in April 2013.
Other, net in 2014 included a loss on early extinguishment of debt of $1.0 million, representing the write-
off of debt issuance costs recognized on $40 million of voluntary principal payments made on our Term Loan Credit
agreement during 2014, as well as a $0.6 million loss on the transition of three of our Retail branch locations to
independent dealer facilities.
Income Taxes
We recognized income tax expense of $37.5 million in 2014 compared to $31.1 million in the prior year.
The effective tax rate for 2014 was 38.1%, which differs from the U.S. Federal statutory rate of 35% primarily due
to the impact of state and local taxes offset by the benefit of the U.S. Internal Revenue Code domestic
manufacturing deduction. Cash taxes paid in 2014 were approximately $20.2 million.
Liquidity and Capital Resources
Capital Structure
Our capital structure is comprised of a mix of debt and equity. As of December 31, 2015, our debt to
equity ratio was approximately 0.7:1.0. Our long-term objective is to generate operating cash flows sufficient to
support the growth within our businesses and increase shareholder value. This objective will be achieved through a
balanced capital allocation strategy of maintaining strong liquidity, deleveraging our balance sheet, investing in the
business, both organically and strategically, and returning capital to our shareholders. Throughout 2015 and in
keeping to this balanced approach, several actions were taken to demonstrate our commitment to prudently manage
the overall financial risk and increase shareholder value through a return of capital. These actions include
completing our $60 million share repurchase program previously approved by our Board of Directors in December
2014 as well as executing agreements with existing holders of our outstanding Convertible Senior Notes due 2018 to
purchase $54.2 million in principal (see “Debt Agreements and Related Amendments” section below for details).
Furthermore, in early 2016 our Board of Directors authorized the repurchase of up to an additional $100 million of
our common stock over a two-year period. For 2016, we expect to continue our commitment to fund our working
capital requirements and capital expenditures while also returning capital to our shareholders and deleveraging our
balance sheet through cash flows from operations as well as available borrowings under our existing Credit
Agreement.
Debt Agreements and Related Amendments
Convertible Senior Notes
In April 2012, we issued Convertible Senior Notes due 2018 (the “Notes”) with an aggregate principal
amount of $150 million in a public offering. The Notes bear interest at the rate of 3.375% per annum from the date
of issuance, payable semi-annually on May 1 and November 1. The Notes are senior unsecured obligations and rank
equally with our existing and future senior unsecured debt.
The Notes are convertible by their holders into cash, shares of our common stock or any combination
thereof at our election, at an initial conversion rate of 85.4372 shares of our common stock per $1,000 in principal
amount of Notes, which is equal to an initial conversion price of approximately $11.70 per share, only under the
following circumstances: (A) before November 1, 2017 (1) during any calendar quarter commencing after the
calendar quarter ending on June 30, 2012 (and only during such calendar quarter), if the last reported sale price of
the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading
days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of
the conversion price on each applicable trading day; (2) during the five business day period after any five
consecutive trading day period (the “measurement period”) in which the trading price (as defined in the indenture
43
for the Notes) per $1,000 principal amount of Notes for each trading day of the measurement period was less than
98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading
day; and (3) upon the occurrence of specified corporate events as described in the indenture for the Notes; and (B) at
any time on or after November 1, 2017 until the close of business on the second business day immediately preceding
the maturity date. As of December 31, 2015, the Notes were not convertible based on the above criteria. If the
Notes outstanding at December 31, 2015 were converted as of December 31, 2015, the if-converted value would
exceed the principal amount by approximately $1 million.
It is our intent to settle conversions through a net share settlement, which involves repayment of cash for
the principal portion and delivery of shares of common stock for the excess of the conversion value over the
principal portion. We used the net proceeds of $145.1 million from the sale of the Notes to fund a portion of the
purchase price of the acquisition of Walker Group Holdings (“Walker”) in May 2012.
We account separately for the liability and equity components of the Notes in accordance with authoritative
guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance required the
carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does
not have an associated conversion feature. We determined that senior, unsecured corporate bonds traded on the
market represent a similar liability to the Notes without the conversion option. Based on market data available for
publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar
maturity, we estimated the implied interest rate of the Notes to be 7.0%, assuming no conversion option.
Assumptions used in the estimate represent what market participants would use in pricing the liability component,
including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable
inputs. The estimated implied interest rate was applied to the Notes, which resulted in a fair value of the liability
component of $123.8 million upon issuance, calculated as the present value of implied future payments based on the
$150.0 million aggregate principal amount. The $21.7 million difference between the cash proceeds before offering
expenses of $145.5 million and the estimated fair value of the liability component was recorded in additional paid-in
capital. The discount on the liability portion of the Notes is being amortized over the life of the Notes using the
effective interest rate method.
On December 15, 2015, we executed agreements with existing holders of the Notes to repurchase $54.2
million in principal of such Notes, of which $19.0 million was acquired in December for $22.9 million, excluding
accrued interest. The remaining $35.2 million in principal of the Notes are scheduled to be repurchased in early
2016 and, therefore, is classified as current on our Consolidated Balance Sheet as of December 31, 2015. During
2015, in connection with the repurchase of a portion of the Notes, we recognized a loss on debt extinguishment of
$0.2 million which was included in Other, net on our Consolidated Statement of Operations.
Revolving Credit Agreement
On June 4, 2015, we entered into a Joinder and First Amendment to Amended and Restated Credit
Agreement, First Amendment to Amended and Restated Security Agreement and First Amendment to Amended and
Restated Guaranty Agreement (the “Amendment”) by and among us, certain of our subsidiaries designated as Loan
Parties (as defined in the Amendment), Wells Fargo Capital Finance, LLC, as arranger and administrative agent (the
“Agent”), and the other Lenders party thereto. The Amendment amends, among other things, the Amended and
Restated Credit Agreement (as amended, the “Credit Agreement”), dated as of May 8, 2012, among us, certain of
our subsidiaries from time to time party thereto (together with us, the “Borrowers”), the several lenders from time to
time party thereto, and the Agent and provides for, among other things, a five year, $175 million senior secured
revolving credit facility (the “Credit Facility”).
The Amendment, among other things (i) increases the total commitments under the Credit Facility from
$150 million to $175 million, and (ii) extends the maturity date of the Credit Facility from May 8, 2017 to June 4,
2020, but provides for an accelerated maturity in the event our outstanding Notes are not converted, redeemed,
repurchased or refinanced in full on or before the date that is 121 days prior to the maturity date thereof and we are
not then maintaining, and continue to maintain until the Notes are converted, redeemed, repurchased or refinanced in
full, (x) Liquidity of at least $125 million and (y) availability under the Credit Facility of at least $25 million.
Liquidity, as defined in the Credit Agreement, reflects the difference between (i) the sum of (A) unrestricted cash
and cash equivalents and (B) availability under the Credit Facility and (ii) the amount necessary to fully redeem the
Notes.
44
In addition, the Amendment (i) provides that borrowings under the Credit Facility will bear interest, at the
Borrowers’ election, at (x) LIBOR plus a margin ranging from 150 basis points to 200 basis points (in lieu of the
previous range from 175 basis points to 225 basis points), or (y) a base rate plus a margin ranging from 50 basis
points to 100 basis points (in lieu of the previous range from 75 basis points to 125 basis points), in each case, based
upon the monthly average excess availability under the Credit Facility, (ii) provides that the monthly unused line fee
shall be equal to 25 basis points (which amount was previously 37.5 basis points) times the average unused
availability under the Credit Facility, (iii) provides that if availability under the Credit Facility is less than 12.5%
(which threshold was previously 15%) of the total commitment under the Credit Facility or if there exists an event of
default, amounts in any of the Borrowers’ and the subsidiary guarantors’ deposit accounts (other than certain
excluded accounts) will be transferred daily into a blocked account held by the Agent and applied to reduce the
outstanding amounts under the Credit Facility, (iv) provides that we will be required to maintain a minimum fixed
charge coverage ratio of not less than 1.1 to 1.0 as of the end of any period of 12 fiscal months when excess
availability under the Credit Facility is less than 10% (which threshold was previously 12.5%) of the total
commitment under the Credit Facility and (v) amends certain negative covenants in the Credit Agreement.
The Credit Agreement is guaranteed by the Revolver Guarantors and is secured by (i) first priority security
interests (subject only to customary permitted liens and certain other permitted liens) in substantially all personal
property of the Borrowers and the Revolver Guarantors, consisting of accounts receivable, inventory, cash, deposit
and securities accounts and any cash or other assets in such accounts and, to the extent evidencing or otherwise
related to such property, all general intangibles, licenses, intercompany debt, letter of credit rights, commercial tort
claims, chattel paper, instruments, supporting obligations, documents and payment intangibles (collectively, the
“Revolver Priority Collateral”), and (ii) second-priority liens on and security interests in (subject only to the liens
securing the Term Loan Credit Agreement customary permitted liens and certain other permitted liens) (A) equity
interests of each direct subsidiary held by the Borrower and each Revolving Guarantor (subject to customary
limitations in the case of the equity of foreign subsidiaries), and (B) substantially all other tangible and intangible
assets of the Borrowers and the Revolving Guarantors including equipment, general intangibles, intercompany
notes, insurance policies, investment property, intellectual property and material owned real property (in each case,
except to the extent constituting Revolver Priority Collateral) (collectively, the “Term Priority Collateral”). The
respective priorities of the security interests securing the Credit Agreement and the Term Loan Credit Agreement
are governed by an Intercreditor Agreement between the Revolver Agent and the Term Agent (as defined below)
(the “Intercreditor Agreement”).
Subject to the terms of the Intercreditor Agreement, if the covenants under the Credit Agreement are
breached, the lenders may, subject to various customary cure rights, require the immediate payment of all amounts
outstanding and foreclose on collateral. Other customary events of default in the Credit Agreement include, without
limitation, failure to pay obligations when due, initiation of insolvency proceedings, defaults on certain other
indebtedness, and the incurrence of certain judgments that are not stayed, satisfied, bonded or discharged within 30
days.
As of December 31, 2015, we were in compliance with all covenants of the Credit Agreement.
Term Loan Credit Agreement and Related Amendment
In May 2012 we entered into a credit agreement among us, the several lenders from time to time party
thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, joint lead arranger and joint bookrunner (the
“Term Agent”), and Wells Fargo Securities, LLC, as joint lead arranger and joint bookrunner (the “Term Loan
Credit Agreement”), which initially provided, among other things, for a senior secured term loan facility of $300
million. Also in May 2012, certain of our subsidiaries (the “Term Guarantors”) entered into a general continuing
guarantee of our obligations under the Term Loan Credit Agreement in favor of the Term Agent (the “Term
Guarantee”).
In April 2013, we entered into Amendment No.1 to Credit Agreement (the “Amendment”), which became
effective on May 9, 2013. As of the Amendment date, there was $297.0 million of term loans outstanding under the
Term Loan Credit Agreement (the “Initial Loans”), of which we paid $20.0 million in connection with the
Amendment. Under the Amendment, the lenders agreed to provide us term loans in an aggregate principal amount
of $277.0 million, which were exchanged for and used to refinance the Initial Loans (the “Tranche B-1 Loans”).
45
On March 19, 2015, we entered into Amendment No. 2 to Credit Agreement (“Amendment No. 2”). As of
the Amendment No. 2 date, there was $192.8 million of the Tranche B-1 Loans outstanding. Under Amendment
No. 2, the lenders agreed to provide to us term loans in an aggregate principal amount of $192.8 million (the
“Tranche B-2 Loans”), which were used to refinance the outstanding Tranche B-1 Loans. The Tranche B-2 Loans
mature on March 19, 2022, but provide for an accelerated maturity in the event our outstanding Notes are not
converted, redeemed, repurchased or refinanced in full on or before the date that is 91 days prior to the maturity date
thereof and we are not then maintaining, and continue to maintain until the Notes are converted, redeemed,
repurchased or refinanced in full, liquidity of at least $125 million. Liquidity, as defined in the Term Loan Credit
Agreement, reflects the difference between (i) the sum of (A) unrestricted cash and cash equivalents and (B) the
amount available and permitted to be drawn under our existing Credit Agreement and (ii) the amount necessary to
fully redeem the Notes. The Tranche B-2 Loans shall amortize in equal quarterly installments in aggregate amounts
equal to 0.25% of the original principal amount of the Tranche B-2 Loans, with the balance payable at maturity, and
will bear interest at a rate, at our election, equal to (i) LIBOR (subject to a floor of 1.00%) plus a margin of 3.25% or
(ii) a base rate plus a margin of 2.25%.
Amendment No. 2 also provides for a 1% prepayment premium applicable in the event that we enter into a
refinancing of, or amendment in respect of, the Tranche B-2 Loans on or prior to the first anniversary of the
effective date of Amendment No. 2, or March 19, 2016, that, in either case, results in the all-in yield (including, for
purposes of such determination, the applicable interest rate, margin, original issue discount, upfront fees and interest
rate floors, but excluding any customary arrangement, structuring, commitment or underwriting fees) of such
refinancing or amendment being less than the all-in yield (determined on the same basis) on the Tranche B-2 Loans.
Additionally, Amendment No. 2 amends the Term Loan Credit Agreement by (i) removing the maximum
senior secured leverage ratio test, (ii) modifying the accordion feature, as defined in the Term Loan Credit
Agreement, to provide for a senior secured incremental term loan facility in an aggregate amount not to exceed the
greater of (A) $75 million (less the aggregate amount of (1) any increases in the maximum revolver amount under
the existing Credit Agreement and (2) certain permitted indebtedness incurred for the purpose of prepaying or
repurchasing the Notes) and (B) an amount such that the senior secured leverage ratio would not be greater than 3.0
to 1.0, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not
currently party to the Term Loan Credit Agreement, to provide such increased amounts. The senior secured
leverage ratio is defined in the Term Loan Credit Agreement and reflects a ratio of consolidated net total secured
indebtedness to consolidated EBITDA and (iii) amending certain negative covenants.
The Term Loan Credit Agreement, as amended, is guaranteed by the Term Guarantors and is secured by (i)
first-priority liens on and security interests in the Term Priority Collateral, and (ii) second-priority security interests
in the Revolver Priority Collateral. In addition, the Term Loan Credit Agreement, as amended, contains customary
covenants limiting our ability to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase
stock, enter into transactions with affiliates, merge, dissolve, pay off subordinated indebtedness, make investments
and dispose of assets.
Subject to the terms of the Intercreditor Agreement, if the covenants under the Term Loan Credit
Agreement, as amended, are breached, the lenders may, subject to various customary cure rights, require the
immediate payment of all amounts outstanding and foreclose on collateral. Other customary events of default in the
Term Loan Credit Agreement, as amended, include, without limitation, failure to pay obligations when due,
initiation of insolvency proceedings, defaults on certain other indebtedness, and the incurrence of certain judgments
that are not stayed, satisfied, bonded or discharged within 60 days.
During the second quarter of 2015 and in connection with the $13.1 million sale of our former Retail
branch real estate in Fontana, California and Portland, Oregon, we are required, under the Term Loan Agreement, to
reinvest amounts up to $10.0 million for qualified assets within 12 months of the sale. Further, a mandatory
principal payment is required for asset sales greater than $10.0 million, with the amount of the required payment
equal to the excess above $10.0 million, or $3.1 million. However, the lenders party to the Term Loan Credit
Agreement approved a waiver providing us the opportunity to use the excess proceeds to exercise a purchase option
on a capital lease obligation for one of our existing manufacturing facilities, and we exercised the option on July 10,
2015. As of December 31, 2015 all requirements related to the restrictions on use of the excess proceeds have been
satisfied.
46
For the years ended December 31, 2015, 2014 and 2013, under the Term Loan Credit Agreement we paid
interest of $8.5 million, $10.0 million and $14.9 million, respectively, and principal of $1.4 million, $42.1 million,
and $62.8 million, respectively. As of December 31, 2015, we had $191.4 million outstanding under the Term Loan
Credit Agreement, of which $1.9 million was classified as current on the Company’s Consolidated Balance Sheet as
a result of Amendment No. 2 of the Term Loan Credit Agreement which requires a mandatory 1% per year principal
payment.
For the years ended December 31, 2015, 2014 and 2013, the Company charged $0.2 million, $0.9 million
and $0.9 million, respectively, of amortization for original issuance discount fees as Interest expense in the
Consolidated Statements of Operations. In addition, for the year ended December 31, 2015 the Company charged
$5.3 million of accelerated amortization and related fees in connection with Amendment No. 2 included in Other,
net in the Consolidated Statements of Operations. Additionally, in connection with Amendment No. 2 of the Term
Loan Credit Agreement, the Company paid a total of $0.9 million in original issuance discount fees which are being
amortized over the life of the amended Term Loan Credit Agreement using the effective interest rate method.
Cash Flow
2015 compared to 2014
Cash provided by operating activities for 2015 totaled $131.8 million, compared to $92.6 million in 2014.
The cash provided by operations during the current year period was the result of net income adjusted for various
non-cash activities, including depreciation, amortization, gain (loss) on the sale of assets, deferred taxes, loss on debt
extinguishment, stock-based compensation, accretion of debt discount and impairment of intangibles, of $148.4
million, partially offset by a $16.6 million increase in our working capital. Changes in key working capital accounts
for 2015 and 2014 are summarized below (in thousands):
Source (Use) of cash:
Accounts receivable
Inventories
Accounts payable and accrued liabilities
2015
2014
Change
$
(17,618)
$
(14,848)
$
(2,770)
10,162
(12,243)
3,116
(26,787)
7,046
14,544
Net (use) source of cash
$
(19,699)
$
(38,519)
$
18,820
Accounts receivable increased by $17.6 million in 2015 as compared to an increase of $14.8 million in the
prior year period. Days sales outstanding, a measure of working capital efficiency that measures the amount of time
a receivable is outstanding, increased to approximately 25 days as of December 31, 2015, compared to 23 days in
2014. The increase in accounts receivable for 2015 was primarily the result of the timing of shipments and an 8.8%
increase in our consolidated net sales compared to the prior year. Inventory decreased by $10.2 million during 2015
as compared to a decrease of $3.1 million in 2014. The decrease in inventory for the 2015 period was primarily due
to lower finished goods inventories at December 31, 2015 as customer shipments exceeded production in 2015. Our
inventory turns, a commonly used measure of working capital efficiency that measures how quickly inventory turns
per year was approximately 8 times in 2015 compared to approximately 7 times in 2014. Accounts payable and
accrued liabilities decreased by $12.2 million in 2015 compared to a decrease of $26.8 million for 2014. The
decrease in 2015 was primarily due to timing of production, a decrease in deposits from customers for products not
delivered as well as an increase in volume-based rebate incentives offered by our suppliers as compared to the prior
year. Days payable outstanding, a measure of working capital efficiency that measures the amount of time a payable
is outstanding, was 16 days in 2015 and 19 days for the 2014 period.
Investing activities used $7.6 million during 2015 compared to $15.8 million used in 2014. Investing
activities for 2015 include capital expenditures to support growth and improvement initiatives at our facilities
totaling $20.8 million, partially offset by proceeds from the sale of property, plant and equipment totaling $13.2
million, which was comprised primarily of the sale of our former Retail branch real estate. Cash used in investing
activities in 2014 was primarily related to capital expenditures totaling $20.0 million, partially offset by proceeds
from the sale of certain Retail branch location assets totaling $4.1 million.
Financing activities used $91.4 million during 2015, primarily due to the repurchases of common stock
through our share repurchase program totaling $60.1 million and repurchase of Notes totaling $22.9 million,
principal payments under existing debt and capital lease obligations of $6.1 million, and debt issuance costs of $2.6
47
million incurred in relation to Amendment No. 2 to our Term Loan Credit Agreement and the amendment to our
Revolving Credit Agreement. Financing activities used $44.0 million during 2014 primarily due to principal
payments under our term loan credit facility of approximately $42.1 million.
As of December 31, 2015, our liquidity position, defined as cash on hand and available borrowing capacity,
amounted to $347.9 million, representing an increase of $58.0 million from December 31, 2014. Total debt and
capital lease obligations amounted to $315.6 million as of December 31, 2015. As we continue to see a strong
demand environment within the trailer industry as well as our continued excellence in operating performance
metrics across all business segments, we believe our liquidity is adequate to fund our currently planned operations,
working capital needs and capital expenditures for 2016.
2014 compared to 2013
Cash provided by operating activities for 2014 totaled $92.6 million, compared to $128.7 million in 2013.
The cash provided by operations during the current year period was the result of net income adjusted for various
non-cash activities, including depreciation, amortization, deferred taxes, stock-based compensation, accretion of
debt discount, and loss on debt extinguishment, of $131.2 million, partially offset by a $38.6 million increase in our
working capital. Changes in key working capital accounts for 2014 and 2013 are summarized below (in thousands):
Source (Use) of cash:
Accounts receivable
Inventories
Accounts payable and accrued liabilities
2014
2013
Change
$
(14,848)
$
(23,691)
$
8,843
3,116
(26,787)
6,260
18,082
(3,144)
(44,869)
Net (use) source of cash
$
(38,519)
$
651
$
(39,170)
Accounts receivable increased by $14.8 million in 2014 as compared to an increase of $23.7 million in the
prior year period. Days sales outstanding, a measure of working capital efficiency that measures the amount of time
a receivable is outstanding, decreased to approximately 23 days as of December 31, 2014, compared to 24 days in
2013. The increase in accounts receivable for 2014 was primarily the result of the timing of shipments and a 13.9%
increase in our consolidated net sales compared to the prior year. Inventory decreased by $3.1 million during 2014
as compared to a decrease of $6.3 million in 2013. The decrease in inventory for the 2014 period was primarily due
to lower finished goods inventories at December 31, 2014 as customer shipments exceeded production in 2014. Our
inventory turns, a commonly used measure of working capital efficiency that measures how quickly inventory turns
per year was approximately 7 times in 2014 compared to approximately 6 times in 2013. Accounts payable and
accrued liabilities decreased by $26.8 million in 2014 compared to an increase of $18.1 million for 2013. The
decrease in 2014 was primarily due to a reduced amount of deposits from customers for products not delivered, as
well as the impact of early payment discounts offered by our suppliers. Days payable outstanding, a measure of
working capital efficiency that measures the amount of time a payable is outstanding, was 19 days in 2014 and 25
days for the 2013 period.
Investing activities used $15.8 million during 2014 compared to $31.5 million used in 2013. Investing
activities for 2014 included capital expenditures to support growth and improvement initiatives at our facilities
totaling $20.0 million partially offset by proceeds from the sale of certain Retail branch location assets totaling $4.1
million. Cash used in investing activities in 2013 was primarily related to the acquisition of certain assets of Beall
completed in the first quarter totaling $13.9 million and capital expenditures totaling $18.4 million.
Financing activities used $44.0 million and $65.3 million during 2014 and 2013, respectively, primarily
due to principal payments under our term loan credit facility of approximately $42.1 million and $62.8 million,
respectively.
As of December 31, 2014, our liquidity position, defined as cash on hand and available borrowing capacity,
amounted to $289.9 million, represented an increase of $35.6 million from December 31, 2013. Total debt and
capital lease obligations amounted to $332.5 million as of December 31, 2014.
48
Capital Expenditures
Capital spending amounted to $20.8 million for 2015 and is anticipated to be approximately $30 million for
2016. Capital spending for 2015 was primarily utilized to support growth, productivity improvements and
environmental, health and safety initiatives within our facilities.
Off-Balance Sheet Transactions
As of December 31, 2015, we had approximately $8.2 million in operating lease commitments. We did not
enter into any material off-balance sheet debt or operating lease transactions during the year.
Outlook
The demand environment for trailers remained healthy throughout 2015, as evidenced by our strong and
growing backlog, a trailer demand forecast by industry forecasters significantly above replacement demand levels
for the next several years and our ability to increase prices to improve and recapture lost margins. Recent estimates
from industry analysts, ACT Research Company (“ACT”) and FTR Associates (“FTR”), forecast demand for 2016
and beyond to remain strong. ACT currently estimates demand to be approximately 299,000 trailers for 2016,
representing a decrease of 2.7% as compared to 2015, and forecasting continued strong demand levels into the
foreseeable future with estimated annual average demand for the four year period ending 2020 to be approximately
264,000 new trailers. FTR anticipates new trailer demand to be approximately 279,000 new trailers in 2016,
representing a decrease of 8.6% as compared to 2015 as well as projecting a decrease in 2017 with demand totaling
240,000 trailers. In spite of strong forecasted demand, there remain downside risks relating to issues with both the
domestic and global economies, including the housing and construction-related markets in the U.S.
Other potential risks we face as we proceed into 2016 will primarily relate to our ability to manage the cost
and supply of raw materials, commodities and component. Significant increases in the cost of certain commodities,
raw materials or components could have an adverse effect on our results of operations. As has been our practice, we
will endeavor to pass raw material and component price increases to our customers in addition to continuing our cost
management and hedging activities in an effort to minimize the risk changes in material costs could have on our
operating results. In addition, we rely on a limited number of suppliers for certain key components and raw
materials in the manufacturing of our products, including tires, landing gear, axles, suspensions aluminum
extrusions and specialty steel coil. At the current and expected demand levels, there may be shortages of supplies of
raw materials or components which would have an adverse impact on our ability to meet demand for our products.
We believe we are well-positioned for long-term growth in the trailer industry because: (1) our core
customers are among the dominant participants in the trucking industry; (2) our DuraPlate® and other industry
leading brand trailers continue to have increased market acceptance; (3) our focus is on developing solutions that
reduce our customers’ trailer maintenance and operating costs providing the best overall value; and (4) our presence
throughout North America utilizing both our extensive independent dealer network in addition to the Company-
owned branch locations to market and sell our products.
Based on the published industry demand forecasts, customer feedback regarding their current requirements,
our existing backlog of orders and our continued efforts to be selective in our order acceptance to ensure we obtain
appropriate value for our products, we estimate that for the full year 2016 total new trailers sold will be between
60,000 and 62,000, which reflects trailer volumes 4% to 7% lower than 2015 demand levels, primarily the result of a
road construction project impacting the production of our dry van trailers in 2016. While our expectations for trailer
volumes are similar to the demand levels forecasted by industry analysts, our commitment to continue to grow
margins within our Commercial Trailer Products segment and the continued productivity and cost optimization
initiatives through all of our businesses, we expect to see continued improvements during 2016.
We are not relying solely on strong new trailer volumes and price recovery to improve operations and
enhance our profitability. We believe our strategic initiative to become a diversified industrial manufacturer will
provide us the opportunity to address new markets, enhance our financial profile and reduce the cyclicality within
our business. While demand for some of these products is dependent on the development of new products, customer
acceptance of our product solutions and the general expansion of our customer base and distribution channels, we
remain committed to enhancing and diversifying our business model through the organic and strategic initiatives.
Through our three operating segments we offer a wide array of products and customer-specific solutions that we
49
believe provide a good foundation for achieving these goals. In addition, we have been and will continue to focus
on developing innovative new products that both add value to our customers’ operations and allow us to continue to
differentiate our products from the competition.
Contractual Obligations and Commercial Commitments
A summary of payments of our contractual obligations and commercial commitments, both on and off
balance sheet, as of December 31, 2015 are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
Total
DEBT:
Revolving Facility (due 2020)
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Convertible Senior Notes (due 2018)
Term Loan Credit Facility (due 2022)
Industrial Revenue Bond
Capital Leases (including principal and interest)
TOTAL DEBT
OTHER:
Operating Leases
TOTAL OTHER
35,165
1,928
518
943
-
1,928
538
594
95,835
1,928
93
453
-
-
-
1,928
1,928
181,759
-
361
-
361
-
389
131,000
191,399
1,149
3,101
$
38,554
$
3,060
$
98,309
$
2,289
$
2,289
$
182,148
$
326,649
$
3,458
$
2,688
$
1,267
$
628
$
137
$
-
$
8,178
$
3,458
$
2,688
$
1,267
$
628
$
137
$
-
$
8,178
OTHER COMMERCIAL COMMITMENTS:
Letters of Credit
$
5,987
$
-
$
-
$
-
$
-
$
-
$
5,987
Raw Material Purchase Commitments
Used Trailer Purchase Commitments
TOTAL OTHER COMMERCIAL
COMMITMENTS
71,728
2,105
690
-
-
-
-
-
-
-
-
-
72,418
2,105
$
79,820
$
690
$
-
$
-
$
-
$
-
$
80,510
TOTAL OBLIGATIONS
$
121,832
$
6,438
$
99,576
$
2,917
$
2,426
$
182,148
$
415,337
Scheduled payments for our Revolving Facility exclude interest payments as rates are variable.
Borrowings under the Revolving Facility bear interest at a variable rate based on the London Interbank Offer Rate
(LIBOR) or a base rate determined by the lender’s prime rate plus an applicable margin, as defined in the agreement.
Outstanding borrowings under the Revolving Facility bear interest at a rate, at our election, equal to (i) LIBOR plus
a margin ranging from 1.50% to 2.00% or (ii) a base rate plus a margin ranging from 0.50% to 1.00%, in each case
depending upon the monthly average excess availability under the Revolving Facility. We are required to pay a
monthly unused line fee equal to 0.25% times the average daily unused availability along with other customary fees
and expenses of our agent and lenders.
Scheduled payments for our Convertible Senior Notes exclude interest payments that bear interest at the
rate of 3.375% per annum from the date of issuance, payable semi-annually on May 1 and November 1.
Scheduled payments for our Term Loan Credit Agreement, as amended, exclude interest payments as rates
are variable. Borrowings under the Term Loan Credit Agreement, as amended, bear interest at a variable rate, at our
election, equal to (i) LIBOR (subject to a floor of 1.00%) plus a margin of 3.25% or (ii) a base rate plus a margin of
2.25%. The Term Loan Credit Agreement matures in March 2022, but provides for an accelerated maturity in the
event our outstanding Convertible Senior Notes are not converted, redeemed, repurchased or refinanced in full on or
before the date that is 91 days prior to the maturity date thereof and we are not then maintaining, and continue to
maintain until the Convertible Senior Notes are converted, redeemed, repurchased or refinanced in full, liquidity of
at least $125 million.
50
Capital leases represent future minimum lease payments including interest. Operating leases represent the
total future minimum lease payments.
We have $72.4 million in purchase commitments through March 2017 for various raw material
commodities, including aluminum, steel and nickel as well as other raw material components that are within normal
production requirements.
We have used trailer purchase commitments totaling $2.1 million related to commitments with certain
customers to accept used trailers on trade for new trailer purchases. These commitments arise in the normal course
of business related to future new trailer orders at the time a new trailer order is placed by the customer.
We have standby letters of credit totaling $6.0 million issued in connection with workers compensation
claims and surety bonds.
Significant Accounting Policies and Critical Accounting Estimates
Our significant accounting policies are more fully described in Note 2 to our consolidated financial
statements. Certain of our accounting policies require the application of significant judgment by management in
selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are
subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of
existing contracts, evaluation of trends in the industry, information provided by our customers and information
available from other outside sources, as appropriate.
We consider an accounting estimate to be critical if it requires us to make assumptions about matters that
were uncertain at the time we were making the estimate or changes in the estimate or different estimates that we
could have selected would have had a material impact on our financial condition or results of operations.
The table below presents information about the nature and rationale for our critical accounting estimates:
Balance Sheet
Caption
Critical Estimate
Item
Nature of Estimates
Required
Assumptions/
Approaches Used
Other accrued
liabilities and other
non-current liabilities
Warranty
Accounts receivable
Allowance for
doubtful accounts
Estimating warranty requires
us to forecast the resolution
of existing claims and
expected future claims on
products sold.
Estimating the allowance for
doubtful accounts requires
us to estimate the financial
capability of customers to
pay for products.
We base our estimate on
historical trends of trailers
sold and payment amounts,
combined with our current
understanding of the status of
existing claims, recall
campaigns and discussions
with our customers.
We base our estimates on
historical experience, the
length of time an account is
outstanding, evaluation of
customer’s financial condition
and information from credit
rating services.
Key Factors
Failure rates and
estimated repair
costs
Customer
financial
condition
Inventories
Lower of cost or
market write-
downs
We evaluate future demand
for products, market
conditions and incentive
programs.
Property, plant and
equipment, intangible
assets, goodwill and
other assets
Impairment of
long- lived assets
We are required periodically
to review the recoverability
of certain of our assets based
on projections of anticipated
future cash flows, including
future profitability
assessments of various
product lines.
51
Estimates are based on recent
sales data, historical
experience, external market
analysis and third party
appraisal services.
Market
conditions
Product type
We estimate cash flows using
internal budgets based on
recent sales data, and
independent trailer production
volume to assist with
estimating future demand.
Future
production
estimates
Balance Sheet
Caption
Critical Estimate
Item
Nature of Estimates
Required
Assumptions/
Approaches Used
Additional paid-in
capital
Stock-based
compensation
We are required to estimate
the fair value of all stock
awards we grant.
We use a binomial valuation
model to estimate the fair
value of stock awards. We
feel the binomial model
provides the most accurate
estimate of fair value.
Key Factors
Risk-free interest
rate
Historical
volatility
Dividend yield
Expected term
In addition, there are other items within our financial statements that require estimation, but are not as
critical as those discussed above. Changes in estimates used in these and other items could have a significant effect
on our consolidated financial statements. The determination of the fair market value of our finished goods,
primarily consisting of new trailers, and used trailer inventories are subject to variation, particularly in times of
rapidly changing market conditions. A 5% change in the valuation of our finished goods and used trailer inventories
at December 31, 2015, would be approximately $3.7 million.
Other
Inflation
We have historically been able to offset the impact of rising costs through productivity improvements as
well as selective price increases. As a result, inflation has not had, and is not expected to have, a significant impact
on our business.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards
Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue
recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. This ASU is
based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue
and cash flows arising from customer contracts, including significant judgments and changes in judgments and
assets recognized from costs incurred to obtain or fulfill a contract. Furthermore, the FASB issued ASU No. 2015-
14, Revenue from Contracts with Customers (Topic 606), which deferred the effective date of ASU No. 2014-09 for
public business entities to annual reporting periods beginning after December 15, 2017, including interim reporting
periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning
after December 15, 2016, including interim reporting periods within that reporting period. The effective date will be
the first quarter of fiscal year 2018 using one of two retrospective application methods. We are currently assessing
the potential impact of the adoption of ASU 2014-09 on our financial statements and related disclosures and have
not yet decided on a transition method.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going
Concern, which requires management to evaluate whether there is substantial doubt about an entity’s ability to
continue as a going concern and provide related footnote disclosures. The guidance is effective for annual and
interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted for financial
statements that have not been previously issued. The standard allows for either a full retrospective or modified
retrospective transition method. We do not expect this standard to have a material impact on our financial
statements upon adoption.
In April 2015, the FASB issued ASU No. 2015-03, Imputation of Interest. Also, in August 2015, the
FASB issued ASU No. 2015-15, Imputation of Interest, Presentation and Subsequent Measurement of Debt
Issuance Costs Associated with Line-of-Credit Agreements These ASUs simplify the presentation of debt issuance
costs to be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent
with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not
affected by these ASUs. The guidance provided in ASU No. 2015-03 did not address presentation or subsequent
measurement of debt issuance costs related to line-of-credit arrangements, therefore, ASU No. 2015-15 provided
52
authoritative guidance permitting an entity to defer and present debt issuance costs as an asset and subsequently
amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of
whether there are any outstanding borrowings on the line-of-credit arrangement. These ASUs are effective for
annual and interim reporting periods beginning after December 15, 2015. The standard requires a retrospective
approach where the balance sheet of each individual period presented should be adjusted to reflect the period-
specific effects of applying the new guidance. The standard also requires compliance with applicable disclosures for
a change in an accounting principle. We do not expect these standards to have a material impact on our consolidated
financial statements upon adoption.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This ASU,
which applies to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail
inventory method, requires that entities measure inventory at the lower of cost or net realizable value. The guidance
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should
be applied on a prospective basis. We are currently assessing the potential impact of adopting this guidance, but do
not, at this time, anticipate a material impact to our consolidated results of operations, financial position, or cash
flows.
In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet
Classification of Deferred Taxes. This amendment changes how deferred taxes are recognized by eliminating the
requirement of presenting deferred tax liabilities and assets as current and noncurrent on the balance sheet. Instead,
the requirement will be to classify all deferred tax liabilities and assets as noncurrent. ASU 2015-17 is effective for
annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period,
with earlier adoption permitted. ASU 2015-17 can be adopted either prospectively or retrospectively to all periods
presented. We currently plan to early adopt ASU 2015-17 prospectively during 2016. Upon adoption of ASU 2015-
17, deferred income taxes classified as current assets and liabilities will be presented as non-current items.
ITEM 7A—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In addition to the risks inherent in our operations, we have exposure to financial and market risk resulting
from volatility in commodity prices and interest rates. The following discussion provides additional detail regarding
our exposure to these risks.
a. Commodity Price Risks
We are exposed to fluctuation in commodity prices through the purchase of various raw materials that are
processed from commodities such as aluminum, steel, lumber, nickel, copper and polyethylene. Given the historical
volatility of certain commodity prices, this exposure can significantly impact product costs. We manage some of
our commodity price changes by entering into fixed price contracts with our suppliers. As of December 31, 2015,
we had $72.4 million in raw material purchase commitments through March 2017 for materials that will be used in
the production process, as compared to $71.3 million as of December 31, 2014. We typically do not set prices for
our products more than 45-90 days in advance of our commodity purchases and can, subject to competitive market
conditions, take into account the cost of the commodity in setting our prices for each order. To the extent that we
are unable to offset the increased commodity costs in our product prices, our results would be materially and
adversely affected.
b.
Interest Rates
As of December 31, 2015, we had no floating rate debt outstanding under our revolving facility and for
2015 we maintained an average floating rate borrowing level of less than $0.1 million under our revolving facility.
In addition, as of December 31, 2015, we had outstanding borrowings under our Term Loan Credit Agreement, as
amended, totaling $191.4 million that bear interest at a floating rate, subject to a minimum interest rate. Based on
the average borrowings under our revolving facility and the outstanding indebtedness under our Term Loan Credit
Agreement a hypothetical 100 basis-point change in the floating interest rate would result in a corresponding change
in interest expense over a one-year period of $0.8 million. This sensitivity analysis does not account for the change
in the competitive environment indirectly related to the change in interest rates and the potential managerial action
taken in response to these changes.
53
c. Foreign Exchange Rates
We are subject to fluctuations in the British pound sterling and Mexican peso exchange rates that impact
transactions with our foreign subsidiaries, as well as U.S. denominated transactions between these foreign
subsidiaries and unrelated parties. A five percent change in the British pound sterling or Mexican peso exchange
rates would have an immaterial impact on results of operations. We do not hold or issue derivative financial
instruments for speculative purposes.
54
ITEM 8—FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm ...........................................................
Consolidated Balance Sheets as of December 31, 2015 and 2014 .................................................
Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and
2013 .........................................................................................................................................
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015,
2014 and 2013 ..........................................................................................................................
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2015,
2014 and 2013 ..........................................................................................................................
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and
2013 .........................................................................................................................................
Notes to Consolidated Financial Statements ...................................................................................
Pages
56
57
58
59
60
61
62
55
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Wabash National Corporation:
We have audited the accompanying consolidated balance sheets of Wabash National Corporation as of
December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income,
stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2015. These
financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Wabash National Corporation at December 31, 2015 and 2014, and the
consolidated results of its operations and its cash flows for each of the three years in the period ended December 31,
2015, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Wabash National Corporation’s internal control over financial reporting as of December 31,
2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2016
expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Indianapolis, Indiana
February 26, 2016
56
WABASH NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
December 31,
2015
2014
$
178,853
$
146,113
152,824
166,982
22,431
8,417
135,206
177,144
16,993
10,203
$
529,507
$
485,659
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable
Inventories
Deferred income taxes
Prepaid expenses and other
Total current assets
PROPERTY, PLANT AND EQUIPM ENT
140,438
142,892
DEFERRED INCOM E TAXES
GOODWILL
INTANGIBLE ASSETS
OTHER ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt
Current portion of capital lease obligations
Accounts payable
Other accrued liabilities
Total current liabilities
LONG-TERM DEBT
CAPITAL LEASE OBLIGATIONS
DEFERRED INCOM E TAXES
OTHER NONCURRENT LIABILITIES
COM M ITM ENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 200,000,000 shares authorized, $0.01 par value, 64,929,510
and 68,998,069 shares outstanding, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Treasury stock at cost, 6,638,643 and 1,987,073 common shares, respectively
Total stockholders' equity
1,358
149,718
114,616
14,489
-
149,603
137,100
13,397
$
950,126
$
928,651
$
37,611
$
496
806
79,618
93,042
1,458
96,213
88,690
$
211,077
$
186,857
275,341
324,777
1,875
1,497
20,525
715
642,908
(111,907)
(1,500)
(90,405)
5,796
2,349
18,040
709
635,606
(216,198)
(637)
(28,648)
$
439,811
$
390,832
$
950,126
$
928,651
The accompanying notes are an integral part of these Consolidated Statements.
57
WABASH NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Year Ended December 31,
2015
2014
2013
NET SALES
$
2,027,489
$
1,863,315
$
1,635,686
COST OF SALES
1,724,046
1,630,681
1,420,563
Gross profit
$
303,443
$
232,634
$
215,123
GENERAL AND ADMINISTRATIVE EXPENSES
73,495
61,694
58,666
SELLING EXPENSES
27,233
26,676
30,597
AMORTIZATION OF INTANGIBLES
21,259
21,878
21,786
OTHER OPERATING EXPENSES
1,087
-
883
Income from operations
$
180,369
$
122,386
$
103,191
OTHER INCOME (EXPENSE):
Interest expense
Other, net
(19,548)
2,490
(22,165)
(1,759)
(26,308)
740
Income before income taxes
$
163,311
$
98,462
$
77,623
INCOME TAX EXPENSE
59,022
37,532
31,094
Net income
$
104,289
$
60,930
$
46,529
BASIC NET INCOME PER SHARE
$
1.55
$
0.88
$
0.67
DILUTED NET INCOME PER SHARE
$
1.50
$
0.85
$
0.67
The accompanying notes are an integral part of these Consolidated Statements.
58
WABAS H NATIONAL CORPORATION
CONS OLIDATED S TATEMENTS OF COMPREHENS IVE INCOME
(Dollars in thousands)
Year Ended December 31,
2015
2014
2013
NET INCOM E
$
104,289
$
60,930
$
46,529
Other comprehensive (loss) income:
Foreign currency translation adjustment
Total other comprehensive (loss) income
(863)
(863)
(619)
(619)
(266)
(266)
COM PREHENSIVE INCOM E
$
103,426
$
60,311
$
46,263
The accompanying notes are an integral part of these Consolidated Statements.
59
WABASH NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
BALANCES, December 31, 2012
68,378,984
$
702
$
618,550
$
(323,657)
$
248
$
(27,116)
$
268,727
Net income for the year
Foreign currency translation
Stock-based compensation
Stock repurchase
Common stock issued in connection with:
Stock option exercises
-
-
62,183
(3,665)
85,917
-
-
-
-
3
-
-
6,822
-
599
46,529
-
-
-
-
-
(266)
-
-
-
-
-
(35)
46,529
(266)
6,822
(35)
-
-
602
BALANCES, December 31, 2013
68,523,419
$
705
$
625,971
$
(277,128)
$
(18)
$
(27,151)
$
322,379
Net income for the year
Foreign currency translation
Stock-based compensation
Stock repurchase
Common stock issued in connection with:
Stock option exercises
-
-
392,470
(113,203)
195,383
-
-
4
-
-
-
-
7,714
-
1,921
60,930
-
-
-
-
-
(619)
-
-
-
-
-
(1,497)
60,930
(619)
7,718
(1,497)
-
-
1,921
BALANCES, December 31, 2014
68,998,069
$
709
$
635,606
$
(216,198)
$
(637)
$
(28,648)
$
390,832
Net income for the year
Foreign currency translation
Stock-based compensation
Stock repurchase
Equity component of convertible senior notes repurchase
Common stock issued in connection with:
Stock option exercises
-
-
396,389
(4,651,570)
-
186,622
-
-
4
-
-
2
-
-
10,006
-
(4,714)
2,010
104,291
-
-
-
-
(863)
-
-
-
-
-
(61,757)
104,291
(863)
10,010
(61,757)
(4,714)
-
-
-
2,012
BALANCES, December 31, 2015
64,929,510
$
715
$
642,908
$
(111,907)
$
(1,500)
$
(90,405)
$
439,811
The accompanying notes are an integral part of these Consolidated Statements.
60
WABASH NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation
Amortization of intangibles
Net (gain) loss on sale of property, plant and equipment
Loss on debt extinguishment
Deferred income taxes
Stock-based compensation
Non-cash interest expense
Impairment of intangibles
Changes in operating assets and liabilities
Accounts receivable
Inventories
Prepaid expenses and other
Accounts payable and accrued liabilities
Other, net
Years Ended December 31,
2015
2014
2013
$
104,289
$
60,930
$
46,529
16,739
21,259
(8,299)
5,808
(7,749)
10,010
5,222
1,087
(17,618)
10,162
1,786
(12,243)
1,342
16,951
21,878
13
1,042
16,573
7,833
5,994
(14,848)
3,116
(571)
(26,787)
511
16,550
21,786
140
1,889
30,089
7,480
5,817
(23,691)
6,260
(3,893)
18,082
1,631
Net cash provided by operating activities
$
131,795
$
92,635
$
128,669
Cash flows from investing activities
Capital expenditures
Acquisitions, net of cash acquired
Proceeds from sale of property, plant and equipment
Other
(20,847)
(19,957)
-
13,203
-
-
87
4,113
(18,352)
(15,985)
305
2,500
Net cash used in investing activities
$
(7,644)
$
(15,757)
$
(31,532)
Cash flows from financing activities
Proceeds from exercise of stock options
Borrowings under revolving credit facilities
Payments under revolving credit facilities
Principal payments under capital lease obligations
Proceeds from issuance of term loan credit facility
Principal payments under term loan credit facility
Principal payments under industrial revenue bond
Debt issuance costs paid
Convertible senior notes repurchase
Stock repurchase
2,012
1,134
(1,134)
(4,201)
192,845
(194,291)
(496)
(2,587)
(22,936)
(61,757)
1,921
806
(806)
(1,898)
-
600
1,166
(1,166)
(1,700)
-
(42,078)
(62,827)
(475)
-
-
(1,497)
(381)
(981)
-
(35)
Net cash used in financing activities
$
(91,411)
$
(44,027)
$
(65,324)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest
Income taxes
$
32,740
146,113
$
32,851
113,262
$
31,813
81,449
$
178,853
$
146,113
$
113,262
$
14,578
$
16,136
$
20,913
$
66,283
$
20,220
$
941
The accompanying notes are an integral part of these Consolidated Statements.
61
WABASH NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
DESCRIPTION OF THE BUSINESS
Wabash National Corporation (the “Company”) designs, manufactures and markets standard and
customized truck and tank trailers, intermodal equipment and transportation related products under the Wabash,
Wabash National, DuraPlate, DuraPlate HD, DuraPlate XD-35®, DuraPlate AeroSkirt®, ArcticLite®, RoadRailer,
TrustLock Plus, Transcraft, Benson®, Walker Transport, Walker Engineered Products, Brenner Tank, Garsite,
Progress Tank, Bulk Tank International, Extract Technology, and Beall® brand names or trademarks. The
Company’s wholly-owned subsidiaries, Wabash National Trailer Centers, Inc. and Brenner Tank Services, LLC, sell
new and used trailers through its retail network and provides aftermarket parts and service for the Company’s and
competitors’ trailers and related equipment.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Consolidation
The consolidated financial statements reflect the accounts of the Company and its wholly-owned and
majority-owned subsidiaries. All significant intercompany profits, transactions and balances have been eliminated
in consolidation.
b. Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that directly affect the amounts reported in its
consolidated financial statements and accompanying notes. Actual results could differ from these estimates.
c. Revenue Recognition
The Company recognizes revenue from the sale of its products when the customer has made a fixed
commitment to purchase a product for a fixed or determinable price, collection is reasonably assured under the
Company’s normal billing and credit terms and ownership and all risk of loss has been transferred to the buyer,
which is normally upon shipment to or pick up by the customer. Revenues on certain contracts are recorded on a
percentage of completion method, measured by either actual labor incurred to the estimated total labor or actual total
cost incurred to the total estimated costs for each project. Revenues exclude all taxes collected from the customer.
Shipping and handling fees are included in Net Sales and the associated costs included in Cost of Sales in the
Consolidated Statements of Operations.
d. Used Trailer Trade Commitments and Residual Value Guarantees
The Company has commitments with certain customers to accept used trailers on trade for new trailer
purchases. These commitments arise in the normal course of business related to future new trailer orders at the time
a new trailer order is placed by the customer. The Company acquired used trailers on trade of approximately $12.8
million, $26.8 million and $26.2 million in 2015, 2014 and 2013, respectively. As of December 31, 2015 and 2014,
the Company had approximately $2.1 million and $10.0 million, respectively, of outstanding trade commitments.
On occasion, the amount of the trade allowance provided for in the used trailer commitments, or cost, may exceed
the net realizable value of the underlying used trailer. In these instances, the Company’s policy is to recognize the
loss related to these commitments at the time the new trailer revenue is recognized. Net realizable value of used
trailers is measured considering market sales data for comparable types of trailers. The net realizable value of the
used trailers subject to the remaining outstanding trade commitments was estimated by the Company to be
approximately $2.2 million and $10.0 million as of December 31, 2015 and 2014, respectively.
e. Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with a maturity of three months or less at
the time of purchase.
62
f.
Accounts Receivable
Accounts receivable are shown net of allowance for doubtful accounts and primarily include trade
receivables. The Company records and maintains a provision for doubtful accounts for customers based upon a
variety of factors including the Company’s historical collection experience, the length of time the account has been
outstanding and the financial condition of the customer. If the circumstances related to specific customers were to
change, the Company’s estimates with respect to the collectability of the related accounts could be further adjusted.
The Company’s policy is to write-off receivables when they are determined to be uncollectible. Provisions to the
allowance for doubtful accounts are charged to both General and Administrative Expenses and Selling Expenses in
the Consolidated Statements of Operations. The following table presents the changes in the allowance for doubtful
accounts (in thousands):
Years Ended December 31,
2015
2014
2013
Balance at beginning of year
$
1,047
$
2,058
$
858
Provision
Write-offs, net of recoveries
210
(301)
178
(1,189)
908
292
Balance at end of year
$
956
$
1,047
$
2,058
g.
Inventories
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) method, or market.
The cost of manufactured inventory includes raw material, labor and overhead. Inventories consist of the following
(in thousands):
December 31,
Raw materials and components
$
65,790
2015
Work in progress
Finished goods
Aftermarket parts
Used trailers
18,201
67,260
8,714
7,017
2014
$
63,847
23,145
68,923
8,446
12,783
$
166,982
$
177,144
h. Prepaid Expenses and Other
Prepaid expenses and other as of December 31, 2015 and 2014 were $8.4 million and $10.2 million,
respectively. Prepaid expenses and other primarily includes items such as insurance premiums, maintenance
agreements and other receivables. Insurance premiums and maintenance agreements are charged to expense over
the contractual life, which is generally one year or less. Other receivables primarily consist of costs in excess of
billings on contracts for which the Company recognizes revenue on a percentage of completion basis.
i. Property, Plant and Equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation. Maintenance and
repairs are charged to expense as incurred, while expenditures that extend the useful life of an asset are capitalized.
Depreciation is recorded using the straight-line method over the estimated useful lives of the depreciable assets. The
estimated useful lives are up to 33 years for buildings and building improvements and range from three to ten years
for machinery and equipment. Depreciation expense, which is recorded in Cost of Sales and General and
Administrative Expenses in the Consolidated Statements of Operations, as appropriate, on property, plant and
equipment was $16.2 million, $16.5 million and $15.7 million in 2015, 2014 and 2013, respectively, and includes
amortization of assets recorded in connection with the Company’s capital lease agreements. As of December 31,
2015 and 2014, the assets related to the Company’s capital lease agreements are recorded within Property, Plant and
63
Equipment in the Consolidated Balance Sheet for the amount of $5.0 million and $10.2 million, respectively, net of
accumulated depreciation of $2.6 million and $3.5 million, respectively.
Property, plant and equipment consist of the following (in thousands):
Land
Buildings and building improvements
Machinery and equipment
Construction in progress
Less: accumulated depreciation
j.
Intangible Assets
December 31,
2015
$
22,978
114,216
220,814
13,741
$
371,749
(231,311)
$
140,438
2014
$
25,982
115,856
210,488
10,518
$
362,844
(219,952)
$
142,892
As of December 31, 2015, the balances of intangible assets, other than goodwill, were as follows (in
thousands):
Tradenames and trademarks
Customer relationships
Technology
Weighted Average
Amortization Period
20 years
10 years
12 years
Gross Intangible
Assets
$
37,894
151,634
16,517
Accumulated
Amortization
$
(9,970)
(76,340)
(5,119)
Net Intangible
Assets
$
27,924
75,294
11,398
Total
12 years
$
206,045
$
(91,429)
$
114,616
As of December 31, 2014, the balances of intangible assets, other than goodwill, were as follows (in
thousands):
Tradenames and trademarks
Customer relationships
Technology
Weighted Average
Amortization Period
20 years
10 years
12 years
Gross Intangible
Assets
$
39,222
151,839
16,517
Accumulated
Amortization
$
(8,252)
(58,534)
(3,692)
Net Intangible
Assets
$
30,970
93,305
12,825
Total
12 years
$
207,578
$
(70,478)
$
137,100
Intangible asset amortization expense was $21.3 million, $21.9 million and $21.8 million for 2015, 2014
and 2013, respectively. Annual intangible asset amortization expense for the next 5 fiscal years is estimated to be
$20.0 million in 2016; $16.9 million in 2017; $15.4 million in 2018; $14.5 million in 2019 and $13.7 million in
2020. Additionally, during the fourth quarter of 2015 the Company’s Diversified Products reporting unit recognized
a $1.1 million impairment of intangible assets as specific tradenames of this reporting unit were consolidated. As a
result, a full impairment of the related assets was recorded within Other Operating Expenses in the Company’s
Consolidated Statements of Operations.
k. Goodwill
The changes in the carrying amounts of goodwill, all of which are included in the Company’s Diversified
Products segment as of December 31, 2015, except for approximately $9.9 million allocated to the Company’s
Retail segment, for the years ended December 31, 2015 and 2014 were as follows (in thousands):
64
Balance as of December 31, 2013
$
149,967
Goodwill disposed
Effects of foreign currency
(500)
136
Balance as of December 31, 2014
$
149,603
Effects of foreign currency
115
Balance as of December 31, 2015
$
149,718
Goodwill represents the excess purchase price over fair value of the net assets acquired. The Company
reviews goodwill for impairment, at the reporting unit level, annually on October 1 and whenever events or changes
in circumstances indicate its carrying value may not be recoverable. In accordance with ASC 350, Intangibles –
Goodwill and Other, goodwill is reviewed for impairment utilizing either a qualitative assessment or a two-step
quantitative process.
The Company has the option to first assess qualitative factors to determine whether the existence of events
or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less
than its carrying amount. In assessing the qualitative factors to determine whether it is more likely than not that the
fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and
circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of
relevant events and circumstances and how these may impact a reporting unit's fair value or carrying amount involve
The judgments and assumptions include the identification of
significant judgments and assumptions.
macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and
Company specific events and making the assessment on whether each relevant factor will impact the impairment test
positively or negatively and the magnitude of any such impact. If, after assessing the totality of events or
circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less
than its carrying amount, then performing the two-step impairment test is unnecessary.
For reporting units in which the Company performs the two-step quantitative analysis, the first step
compares the carrying value, including goodwill, of each reporting unit with its estimated fair value. If the fair
value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value
is greater than the fair value, this suggests that an impairment may exist and a second step is required in which the
implied fair value of goodwill is calculated as the excess of the fair value of the reporting unit over the fair values
assigned to its assets and liabilities. If this implied fair value is less than the carrying value, the difference is
recognized as an impairment loss charged to the reporting unit. In assessing goodwill using this quantitative
approach, the Company establishes fair value for the purpose of impairment testing by averaging the fair value using
an income and market approach. The income approach employs a discounted cash flow model incorporating similar
pricing concepts used to calculate fair value in an acquisition due diligence process and a discount rate that takes
into account the Company’s estimated average cost of capital. The market approach employs market multiples
based on comparable publicly traded companies in similar industries as the reporting unit. Estimates of fair value are
established using current and forward multiples adjusted for size and performance of the reporting unit relative to
peer companies.
For 2015 and 2013, the Company completed its goodwill impairment testing during the fourth quarter using
the qualitative approach. For 2014, the Company completed its testing using the quantitative assessment. Based on
the testing performed in each of these years, the Company believes it is more likely than not that the fair value of its
reporting units are greater than their carrying amount. As such, no impairment of goodwill was recognized in 2015,
2014 or 2013. Furthermore, in 2014, the Company’s Retail reporting unit recognized a partial disposal of goodwill
in the amount of $0.5 million resulting from the transitioning of three Retail branch locations to independent dealer
facilities during the second quarter of 2014.
l. Other Assets
The Company capitalizes the cost of computer software developed or obtained for internal use. Capitalized
software is amortized using the straight-line method over three to seven years. As of December 31, 2015 and 2014,
the Company had software costs, net of amortization, of $2.7 million and $2.2 million, respectively. Amortization
expense for 2015, 2014 and 2013 was $0.6 million, $0.5 million and $0.7 million, respectively.
65
m. Long-Lived Assets
Long-lived assets, consisting primarily of intangible assets and property, plant and equipment, are reviewed
for impairment whenever facts and circumstances indicate that the carrying amount may not be recoverable.
Specifically, this process involves comparing an asset’s carrying value to the estimated undiscounted future cash
flows the asset is expected to generate over its remaining life. If this process were to result in the conclusion that the
carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be
recorded through a charge to operations. Fair value is determined based upon discounted cash flows or appraisals as
appropriate.
n. Other Accrued Liabilities
The following table presents the major components of Other Accrued Liabilities (in thousands):
Payroll and related taxes
$
34,427
$
30,362
December 31,
2015
2014
Warranty
Customer Deposits
Accrued taxes
Self-insurance
All other
19,709
14,877
8,075
7,677
8,277
15,462
21,680
8,371
7,494
5,321
$
93,042
$
88,690
The following table presents the changes in the product warranty accrual included in Other Accrued
Liabilities (in thousands):
Balance as of January 1
Provision for warranties issued in current year
Recovery of pre-existing warranties
Payments
2015
2014
$
15,462
$
14,719
9,714
(409)
(5,058)
7,058
(296)
(6,019)
Balance as of December 31
$
19,709
$
15,462
The Company offers a limited warranty for its products with a coverage period that ranges between one and
five years, except that the coverage period for DuraPlate® trailer panels is ten years. The Company passes through
component manufacturers’ warranties to our customers. The Company’s policy is to accrue the estimated cost of
warranty coverage at the time of the sale.
The following table presents the changes in the self-insurance accrual included in Other Accrued Liabilities
(in thousands):
66
Balance as of January 1, 2014
Expense
Payments
Self-Insurance
Accrual
$
9,399
34,662
(36,567)
Balance as of December 31, 2014
$
7,494
Expense
Payments
40,023
(39,840)
Balance as of December 31, 2015
$
7,677
The Company is self-insured up to specified limits for medical and workers’ compensation coverage. The
self-insurance reserves have been recorded to reflect the undiscounted estimated liabilities, including claims
incurred but not reported, as well as catastrophic claims as appropriate.
o.
Income Taxes
The Company determines its provision or benefit for income taxes under the asset and liability method.
The asset and liability method measures the expected tax impact at current enacted rates of future taxable income or
deductions resulting from differences in the tax and financial reporting basis of assets and liabilities reflected in the
Consolidated Balance Sheets. Future tax benefits of tax losses and credit carryforwards are recognized as deferred
tax assets. Deferred tax assets are reduced by a valuation allowance to the extent management determines that it is
more-likely-than-not the Company would not realize the value of these assets.
The Company accounts for income tax contingencies by prescribing a “more-likely-than-not” recognition
threshold that a tax position is required to meet before being recognized in the financial statements.
p. Concentration of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist
principally of cash, cash equivalents and customer receivables. We place our cash and cash equivalents with high
quality financial institutions. Generally, we do not require collateral or other security to support customer
receivables.
q. Research and Development
Research and development expenses are charged to earnings as incurred and were $4.8 million, $1.7
million and $2.5 million in 2015, 2014 and 2013, respectively.
r. Reclassification of Prior Year Presentation
Certain prior year amounts were reclassified for consistency with the current period presentation. These
reclassifications did not materially impact the consolidated financial statements.
s. New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards
Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue
recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. This ASU is
based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue
and cash flows arising from customer contracts, including significant judgments and changes in judgments and
assets recognized from costs incurred to obtain or fulfill a contract. Furthermore, the FASB issued ASU No. 2015-
14, Revenue from Contracts with Customers (Topic 606), which deferred the effective date of ASU No. 2014-09 for
public business entities to annual reporting periods beginning after December 15, 2017, including interim reporting
periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning
67
after December 15, 2016, including interim reporting periods within that reporting period. The effective date for the
Company will be the first quarter of fiscal year 2018 using one of two retrospective application methods. The
Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its financial statements and
related disclosures and have not yet decided on a transition method.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going
Concern, which requires management to evaluate whether there is substantial doubt about an entity’s ability to
continue as a going concern and provide related footnote disclosures. The guidance is effective for annual and
interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted for financial
statements that have not been previously issued. The standard allows for either a full retrospective or modified
retrospective transition method. The Company does not expect this standard to have a material impact on the
Company’s financial statements upon adoption.
In April 2015, the FASB issued ASU No. 2015-03, Imputation of Interest. Also, in August 2015, the
FASB issued ASU No. 2015-15, Imputation of Interest, Presentation and Subsequent Measurement of Debt
Issuance Costs Associated with Line-of-Credit Agreements These ASUs simplify the presentation of debt issuance
costs to be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent
with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not
affected by these ASUs. The guidance provided in ASU No. 2015-03 did not address presentation or subsequent
measurement of debt issuance costs related to line-of-credit arrangements, therefore, ASU No. 2015-15 provided
authoritative guidance permitting an entity to defer and present debt issuance costs as an asset and subsequently
amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of
whether there are any outstanding borrowings on the line-of-credit arrangement. These ASUs are effective for
annual and interim reporting periods beginning after December 15, 2015. The standard requires a retrospective
approach where the balance sheet of each individual period presented should be adjusted to reflect the period-
specific effects of applying the new guidance. The standard also requires compliance with applicable disclosures for
a change in an accounting principle. The Company does not expect these standards to have a material impact on the
Company’s consolidated financial statements upon adoption.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This ASU,
which applies to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail
inventory method, requires that entities measure inventory at the lower of cost or net realizable value. The guidance
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should
be applied on a prospective basis. The Company is currently assessing the potential impact of adopting this
guidance, but does not, at this time, anticipate a material impact to its consolidated results of operations, financial
position, or cash flows.
In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet
Classification of Deferred Taxes. This amendment changes how deferred taxes are recognized by eliminating the
requirement of presenting deferred tax liabilities and assets as current and noncurrent on the balance sheet. Instead,
the requirement will be to classify all deferred tax liabilities and assets as noncurrent. ASU 2015-17 is effective for
annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period,
with earlier adoption permitted. ASU 2015-17 can be adopted either prospectively or retrospectively to all periods
presented. The Company currently plans on adopting ASU 2015-17 prospectively during fiscal year 2016. Upon
adoption of ASU 2015-17, deferred income taxes classified as current assets and liabilities will be presented as non-
current items.
3.
PER SHARE OF COMMON STOCK
Per share results have been calculated based on the average number of common shares outstanding. The
calculation of basic and diluted net income per share is determined using net income applicable to common
stockholders as the numerator and the number of shares included in the denominator as follows (in thousands,
except per share amounts):
68
Years Ended December 31,
2015
2014
2013
Basic net income per share
Net income applicable to common stockholders
$
104,289
$
60,930
$
46,529
Undistributed earnings allocated to participating securities
Net income applicable to common stockholders excluding amounts
-
(481)
(457)
applicable to participating securities
Weighted average common shares outstanding
Basic net income per share
$
104,289
$
60,449
$
46,072
67,201
68,895
68,460
$
1.55
$
0.88
$
0.67
Diluted net income per share:
Net income applicable to common stockholders
Undistributed earnings allocated to participating securities
Net income applicable to common stockholders excluding
$
104,289
-
$
60,930
(481)
$
46,529
(457)
amounts applicable to participating securities
$
104,289
$
60,449
$
46,072
Weighted average common shares outstanding
Dilutive shares from assumed conversion of convertible senior notes
Dilutive stock options and restricted stock
Diluted weighted average common shares outstanding
67,201
1,128
1,039
69,368
68,895
1,354
814
71,063
68,460
63
558
69,081
Diluted net income per share
$
1.50
$
0.85
$
0.67
Average diluted shares outstanding for the periods ended December 31, 2015, 2014 and 2013 exclude
options to purchase common shares totaling 666, 581, and 1,121, respectively, because the exercise prices were
greater than the average market price of the common shares. In addition, the calculation of diluted net income per
share for each period includes the impact of the Company’s Notes as the average stock price of the Company’s
common stock during these periods was above the initial conversion price of approximately $11.70 per share.
4.
LEASE ARRANGEMENTS
The Company leases office space, manufacturing, warehouse and service facilities and equipment for
varying periods under both operating and capital lease agreements. Future minimum lease payments required under
these lease commitments as of December 31, 2015 are as follows (in thousands):
Capital
Leases
Operating
2016
2017
2018
2019
2020
Thereafter
943
594
453
361
361
389
Leases
3,458
2,688
1,267
628
137
-
Total minimum lease payments
$
3,101
$
8,178
Interest
(420)
Present value of net minimum lease payments
$
2,681
Total rental expense was $6.2 million, $5.8 million and $4.6 million for 2015, 2014 and 2013, respectively.
69
5.
DEBT
Long-term debt consists of the following (in thousands):
December 31,
2015
2014
Convertible senior notes
$
131,000
$
150,000
Term loan credit agreement
Industrial revenue bond
191,399
1,149
192,845
1,645
Less: unamortized discount
Less: current portion
(10,596)
(37,611)
(19,217)
(496)
$
323,548
$
344,490
$
275,341
$
324,777
Maturities of long-term debt for the five years succeeding December 31, 2015 and thereafter are as follows
(in thousands):
2016
2017
2018
2019
2020
Thereafter
37,611
2,466
97,856
1,928
1,928
181,759
Maturities of long-term debt
$
323,548
Convertible Senior Notes
In April 2012, the Company issued Convertible Senior Notes due 2018 (the “Notes”) with an aggregate
principal amount of $150 million in a public offering. The Notes bear interest at the rate of 3.375% per annum from
the date of issuance, payable semi-annually on May 1 and November 1. The Notes are senior unsecured obligations
of the Company ranking equally with its existing and future senior unsecured debt.
The Notes are convertible by their holders into cash, shares of the Company’s common stock or any
combination thereof at the Company’s election, at an initial conversion rate of 85.4372 shares of the Company’s
common stock per $1,000 in principal amount of Notes, which is equal to an initial conversion price of
approximately $11.70 per share, only under the following circumstances: (A) before November 1, 2017 (1) during
any calendar quarter commencing after the calendar quarter ending on June 30, 2012 (and only during such calendar
quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive)
during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar
quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five
business day period after any five consecutive trading day period (the “measurement period”) in which the trading
price (as defined in the indenture for the Notes) per $1,000 principal amount of Notes for each trading day of the
measurement period was less than 98% of the product of the last reported sale price of the Company’s common
stock and the conversion rate on each such trading day; and (3) upon the occurrence of specified corporate events as
described in the indenture for the Notes; and (B) at any time on or after November 1, 2017 until the close of business
on the second business day immediately preceding the maturity date. As of December 30, 2015, the Notes were not
convertible based on the above criteria. If the Notes outstanding at December 31, 2015 were converted as of
December 31, 2015, the if-converted value would exceed the principal amount by approximately $1 million.
It is the Company’s intent to settle conversions through a net share settlement, which involves repayment
of cash for the principal portion and delivery of shares of common stock for the excess of the conversion value over
the principal portion. The Company used the net proceeds of $145.1 million from the sale of the Notes to fund a
portion of the purchase price of the acquisition of Walker Group Holdings (“Walker”) in May 2012.
70
The Company accounts separately for the liability and equity components of the Notes in accordance with
authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance
required the carrying amount of the liability component to be estimated by measuring the fair value of a similar
liability that does not have an associated conversion feature. The Company determined that senior, unsecured
corporate bonds traded on the market represent a similar liability to the Notes without the conversion option. Based
on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same
industry and with similar maturity, the Company estimated the implied interest rate of the Notes to be 7.0%,
assuming no conversion option. Assumptions used in the estimate represent what market participants would use in
pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are
defined as Level 2 observable inputs. The estimated implied interest rate was applied to the Notes, which resulted in
a fair value of the liability component of $123.8 million upon issuance, calculated as the present value of implied
future payments based on the $150.0 million aggregate principal amount. The $21.7 million difference between the
cash proceeds before offering expenses of $145.5 million and the estimated fair value of the liability component was
recorded in additional paid-in capital. The discount on the liability portion of the Notes is being amortized over the
life of the Notes using the effective interest rate method.
On December 15, 2015, the Company executed agreements with existing holders of the Notes to repurchase
$54.2 million in principal of such Notes of which $19.0 million was acquired in December for $22.9 million,
excluding accrued interest. The remaining $35.2 million in principal of the Notes is scheduled to be repurchased in
February 2016 and, therefore, is classified as current on the Company’s Consolidated Balance Sheet as of December
31, 2015. In connection with the repurchase of a portion of the Notes, the Company recognized a loss on debt
extinguishment of $0.2 million which was included in Other, net on our Consolidated Statement of Operations.
The Company applies the treasury stock method in calculating the dilutive impact of the Notes. For the
year ended December 31, 2015, the Notes had a dilutive impact.
The following table summarizes information about the equity and liability components of the Notes
(dollars in thousands). The fair value of the notes outstanding were measured based on quoted market prices.
Principal amount of convertible notes outstanding
Unamortized discount of liability component
Net carrying amount of liability component
Less: current portion
Long-term debt
December 31,
2015
2014
$
131,000
(9,732)
$
150,000
(15,399)
121,268
(35,165)
134,601
-
$
86,103
$
134,601
Carrying value of equity component, net of issuance costs
$
15,810
$
20,993
Remaining amortization period of discount on the liability component
2.3 years
3.3 years
The contractual coupon interest expense and accretion of discount on the liability component for the Notes
for the years ended December 31, 2015, 2014 and 2013 were as follow (in thousands):
Contractual coupon interest expense
2015
$
5,063
Accretion of discount on the liability component
$
4,256
2014
$
5,063
$
3,973
2013
$
5,063
$
3,710
Years Ended December 31,
Revolving Credit Agreement
On June 4, 2015, the Company entered into a Joinder and First Amendment to Amended and Restated
Credit Agreement, First Amendment to Amended and Restated Security Agreement and First Amendment to
Amended and Restated Guaranty Agreement (the “Amendment”) by and among the Company, certain of its
subsidiaries designated as Loan Parties (as defined in the Amendment), Wells Fargo Capital Finance, LLC, as
71
arranger and administrative agent (the “Agent”), and the other Lenders party thereto. The Amendment amends,
among other things, the Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), dated as
of May 8, 2012, among the Company, certain subsidiaries of the Company from time to time party thereto (together
with the Company, the “Borrowers”), the several lenders from time to time party thereto, and the Agent and
provides for, among other things, a five year, $175 million senior secured revolving credit facility (the “Credit
Facility”).
The Amendment, among other things (i) increases the total commitments under the Credit Facility from
$150 million to $175 million, and (ii) extends the maturity date of the Credit Facility from May 8, 2017 to June 4,
2020, but provides for an accelerated maturity in the event the Company’s outstanding Notes are not converted,
redeemed, repurchased or refinanced in full on or before the date that is 121 days prior to the maturity date thereof
and the Company is not then maintaining, and continues to maintain until the Notes are converted, redeemed,
repurchased or refinanced in full, (x) Liquidity of at least $125 million and (y) availability under the Credit Facility
of at least $25 million. Liquidity, as defined in the Credit Agreement, reflects the difference between (i) the sum of
(A) unrestricted cash and cash equivalents and (B) availability under the Credit Facility and (ii) the amount
necessary to fully redeem the Notes.
In addition, the Amendment (i) provides that borrowings under the Credit Facility will bear interest, at the
Borrowers’ election, at (x) LIBOR plus a margin ranging from 150 basis points to 200 basis points (in lieu of the
previous range from 175 basis points to 225 basis points), or (y) a base rate plus a margin ranging from 50 basis
points to 100 basis points (in lieu of the previous range from 75 basis points to 125 basis points), in each case, based
upon the monthly average excess availability under the Credit Facility, (ii) provides that the monthly unused line fee
shall be equal to 25 basis points (which amount was previously 37.5 basis points) times the average unused
availability under the Credit Facility, (iii) provides that if availability under the Credit Facility is less than 12.5%
(which threshold was previously 15%) of the total commitment under the Credit Facility or if there exists an event of
default, amounts in any of the Borrowers’ and the subsidiary guarantors’ deposit accounts (other than certain
excluded accounts) will be transferred daily into a blocked account held by the Agent and applied to reduce the
outstanding amounts under the Credit Facility, (iv) provides that the Company will be required to maintain a
minimum fixed charge coverage ratio of not less than 1.1 to 1.0 as of the end of any period of 12 fiscal months when
excess availability under the Credit Facility is less than 10% (which threshold was previously 12.5%) of the total
commitment under the Credit Facility and (v) amends certain negative covenants in the Credit Agreement.
The Credit Agreement is guaranteed by certain of the Company’s subsidiaries (the “Revolver Guarantors”)
and is secured by (i) first priority security interests (subject only to customary permitted liens and certain other
permitted liens) in substantially all personal property of the Borrowers and the Revolver Guarantors, consisting of
accounts receivable, inventory, cash, deposit and securities accounts and any cash or other assets in such accounts
and, to the extent evidencing or otherwise related to such property, all general intangibles, licenses, intercompany
debt, letter of credit rights, commercial tort claims, chattel paper, instruments, supporting obligations, documents
and payment intangibles (collectively, the “Revolver Priority Collateral”), and (ii) second-priority liens on and
security interests in (subject only to the liens securing the Term Loan Credit Agreement, customary permitted liens
and certain other permitted liens) (A) equity interests of each direct subsidiary held by the Borrower and each
Revolving Guarantor (subject to customary limitations in the case of the equity of foreign subsidiaries), and (B)
substantially all other tangible and intangible assets of the Borrowers and the Revolving Guarantors including
equipment, general intangibles, intercompany notes, insurance policies, investment property, intellectual property
and material owned real property (in each case, except to the extent constituting Revolver Priority Collateral)
(collectively, the “Term Priority Collateral”). The respective priorities of the security interests securing the Credit
Agreement and the Term Loan Credit Agreement are governed by an Intercreditor Agreement between the Revolver
Agent and the Term Agent (as defined below) (the “Intercreditor Agreement”).
Subject to the terms of the Intercreditor Agreement, if the covenants under the Credit Agreement are
breached, the lenders may, subject to various customary cure rights, require the immediate payment of all amounts
outstanding and foreclose on collateral. Other customary events of default in the Credit Agreement include, without
limitation, failure to pay obligations when due, initiation of insolvency proceedings, defaults on certain other
indebtedness, and the incurrence of certain judgments that are not stayed, satisfied, bonded or discharged within 30
days.
As of December 31, 2015 and 2014 the Company had no material outstanding borrowings under the Credit
Agreement and was in compliance with all covenants. The Company’s liquidity position, defined as cash on hand
72
and available borrowing capacity on the revolving credit facility, amounted to $347.9 million as of December 31,
2015.
Term Loan Credit Agreement
In May 2012 the Company entered into a credit agreement among the Company, the several lenders from
time to time party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, joint lead arranger and
joint bookrunner (the “Term Agent”), and Wells Fargo Securities, LLC, as joint lead arranger and joint bookrunner
(the “Term Loan Credit Agreement”), which initially provided, among other things, for a senior secured term loan
facility of $300 million. Also in May 2012, certain of the Company’s subsidiaries (the “Term Guarantors”) entered
into a general continuing guarantee of the Company’s obligations under the Term Loan Credit Agreement in favor
of the Term Agent (the “Term Guarantee”).
In April 2013, the Company entered into Amendment No.1 to Credit Agreement (the “Amendment”),
which became effective on May 9, 2013. As of the Amendment date, there was $297.0 million of term loans
outstanding under the Term Loan Credit Agreement (the “Initial Loans”), of which the Company paid $20.0 million
in connection with the Amendment. Under the Amendment, the lenders agreed to provide to the Company term
loans in an aggregate principal amount of $277.0 million, which were exchanged for and used to refinance the Initial
Loans (the “Tranche B-1 Loans”).
On March 19, 2015, the Company entered into Amendment No. 2 to Credit Agreement (“Amendment No.
2”). As of the Amendment No. 2 date, there was $192.8 million of the Tranche B-1 Loans outstanding. Under
Amendment No. 2, the lenders agreed to provide to the Company term loans in an aggregate principal amount of
$192.8 million (the “Tranche B-2 Loans”), which were used to refinance the outstanding Tranche B-1 Loans. The
Tranche B-2 Loans mature on March 19, 2022, but provide for an accelerated maturity in the event the Company’s
outstanding Notes are not converted, redeemed, repurchased or refinanced in full on or before the date that is 91
days prior to the maturity date thereof and the Company is not then maintaining, and continues to maintain until the
Notes are converted, redeemed, repurchased or refinanced in full, liquidity of at least $125 million. Liquidity, as
defined in the Term Loan Credit Agreement, reflects the difference between (i) the sum of (A) unrestricted cash and
cash equivalents and (B) the amount available and permitted to be drawn under the Company’s existing Credit
Agreement and (ii) the amount necessary to fully redeem the Notes. The Tranche B-2 Loans shall amortize in equal
quarterly installments in aggregate amounts equal to 0.25% of the original principal amount of the Tranche B-2
Loans, with the balance payable at maturity, and will bear interest at a rate, at the Company’s election, equal to (i)
LIBOR (subject to a floor of 1.00%) plus a margin of 3.25% or (ii) a base rate plus a margin of 2.25%.
Amendment No. 2 also provides for a 1% prepayment premium applicable in the event that the Company
enters into a refinancing of, or amendment in respect of, the Tranche B-2 Loans on or prior to the first anniversary of
the effective date of Amendment No. 2, or March 19, 2016, that, in either case, results in the all-in yield (including,
for purposes of such determination, the applicable interest rate, margin, original issue discount, upfront fees and
interest rate floors, but excluding any customary arrangement, structuring, commitment or underwriting fees) of
such refinancing or amendment being less than the all-in yield (determined on the same basis) on the Tranche B-2
Loans.
Additionally, Amendment No. 2 amends the Term Loan Credit Agreement by (i) removing the maximum
senior secured leverage ratio test, (ii) modifying the accordion feature, as described in the Term Loan Credit
Agreement, to provide for a senior secured incremental term loan facility in an aggregate amount not to exceed the
greater of (A) $75 million (less the aggregate amount of (1) any increases in the maximum revolver amount under
the Company’s existing Credit Agreement and (2) certain permitted indebtedness incurred for the purpose of
prepaying or repurchasing the Convertible Notes) and (B) an amount such that the senior secured leverage ratio
would not be greater than 3.0 to 1.0, subject to certain conditions, including obtaining commitments from any one or
more lenders, whether or not currently party to the Term Loan Credit Agreement, to provide such increased
amounts. The senior secured leverage ratio is defined in the Term Loan Credit Agreement and reflects a ratio of
consolidated net total secured indebtedness to consolidated EBITDA and (iii) amending certain negative covenants.
The Term Loan Credit Agreement, as amended, is guaranteed by the Term Guarantors and is secured by (i)
first-priority liens on and security interests in the Term Priority Collateral, and (ii) second-priority security interests
in the Revolver Priority Collateral. In addition, the Term Loan Credit Agreement, as amended, contains customary
covenants limiting the Company’s ability to, among other things, pay cash dividends, incur debt or liens, redeem or
73
repurchase stock, enter into transactions with affiliates, merge, dissolve, pay off subordinated indebtedness, make
investments and dispose of assets.
Subject to the terms of the Intercreditor Agreement, if the covenants under the Term Loan Credit
Agreement, as amended, are breached, the lenders may, subject to various customary cure rights, require the
immediate payment of all amounts outstanding and foreclose on collateral. Other customary events of default in the
Term Loan Credit Agreement, as amended, include, without limitation, failure to pay obligations when due,
initiation of insolvency proceedings, defaults on certain other indebtedness, and the incurrence of certain judgments
that are not stayed, satisfied, bonded or discharged within 60 days.
During the second quarter of 2015 and in connection with the $13.1 million sale of the Company’s former
Retail branch real estate in Fontana, California and Portland, Oregon, the Company was required, under the Term
Loan Agreement, to reinvest amounts up to $10.0 million for qualified assets within 12 months of the sale. Further,
a mandatory principal payment was required for asset sales greater than $10.0 million, with the amount of the
required payment equal to the excess above $10.0 million, or $3.1 million. However, the lenders party to the Term
Loan Credit Agreement approved a waiver providing the Company the opportunity to use the excess proceeds to
exercise a purchase option on a capital lease obligation for one of the Company’s existing manufacturing facilities,
and the Company exercised the option on July 10, 2015. As of December 31, 2015 all requirements related to the
restrictions on use of the excess proceeds have been satisfied.
For the years ended December 31, 2015, 2014 and 2013, under the Term Loan Credit Agreement the
Company paid interest of $8.5 million, $10.0 million and $14.9 million, respectively, and principal of $1.4 million,
$42.1 million and $62.8 million, respectively. As of December 31, 2015, the Company had $191.4 million
outstanding under the Term Loan Credit Agreement, of which $1.9 million was classified as current on the
Company’s Consolidated Balance Sheet as a result of Amendment No. 2 of the Term Loan Credit Agreement which
requires a mandatory 1% per year principal payment.
For the years ended December 31, 2015, 2014 and 2013, the Company charged $0.2 million, $0.9 million
and $0.9 million, respectively, of amortization for original issuance discount fees as Interest Expense in the
Consolidated Statements of Operations. For the year ended December 31, 2015 the Company charged $5.3 million
of accelerated amortization and related fees in connection with Amendment No. 2 included in Other, net in the
Consolidated Statements of Operations. Additionally, in connection with Amendment No. 2 of the Term Loan
Credit Agreement, the Company paid a total of $0.9 million in original issuance discount fees which are being
amortized over the life of the amended Term Loan Credit Agreement using the effective interest rate method.
Other Debt Facilities
In November 2012, the Company entered into a loan agreement with GE Government Finance, Inc., as
lender and the County of Trigg, Kentucky as issuer for a $2.5 million Industrial Revenue Bond. The funds received
were used to purchase the equipment needed for the expansion of the Company’s Cadiz, Kentucky facility. The
loan bears interest at a rate of 4.25% and matures in March 2018. As of December 31, 2015, the Company had $1.1
million outstanding of which $0.5 million was classified as current on the Consolidated Balance Sheet.
6.
FAIR VALUE MEASUREMENTS
The Company’s fair value measurements are based upon a three-level valuation hierarchy. These valuation
techniques are based upon the transparency of inputs (observable and unobservable) to the valuation of an asset or
liability as of the measurement date. Observable inputs reflect market data obtained from independent sources,
while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the
following fair value hierarchy:
• Level 1 — Valuation is based on quoted prices for identical assets or liabilities in active markets;
• Level 2 — Valuation is based on quoted prices for similar assets or liabilities in active markets, or
other inputs that are observable for the asset or liability, either directly or indirectly, for the full term of
the financial instrument; and
74
• Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value
measurement.
Recurring Fair Value Measurements
The Company maintains a non-qualified deferred compensation plan which is offered to senior
management and other key employees. The amount owed to participants is an unfunded and unsecured general
obligation of the Company. Participants are offered various investment options with which to invest the amount
owed to them, and the plan administrator maintains a record of the liability owed to participants by investment. To
minimize the impact of the change in market value of this liability, the Company has elected to purchase a separate
portfolio of investments through the plan administrator similar to those chosen by the participant.
The investments purchased by the Company (asset) as of December 31, 2015, include mutual funds, $1.1
million of which are classified as Level 1, and life-insurance contracts valued based on the performance of
underlying mutual funds, $8.4 million of which are classified as Level 2, as compared to $0.4 million and $7.4
million for mutual funds and life insurance contracts at December 31, 2014, respectively.
Nonrecurring Fair Value Measurements
Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject
to fair value adjustments in certain circumstances, such as when there is evidence of impairment.
The Company reviews for goodwill impairment annually and whenever events or changes in circumstances
indicate its carrying value may not be recoverable. The fair value of the reporting units is determined using the
income approach. The income approach focuses on the income-producing capability of an asset, measuring the
current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost
savings, corporate tax structure and product offerings. Value indications are developed by discounting expected
cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the
expected rate of inflation and risks associated with the reporting unit. These assets would generally be classified
within Level 3, in the event that the Company were required to measure and record such assets at fair value within
its consolidated financial statements.
The Company periodically evaluates the carrying value of long-lived assets to be held and used, including
definite-lived intangible assets and property plant and equipment, when events or circumstances warrant such a
review. Fair value is determined primarily using anticipated cash flows assumed by a market participant discounted
at a rate commensurate with the risk involved and these assets would generally be classified within Level 3, in the
event that the Company were required to measure and record such assets at fair value within its consolidated
financial statements.
Assets and liabilities acquired in business combinations are recorded at their fair value as of the date of
acquisition.
The carrying amounts of accounts receivable and accounts payable reported in the Consolidated Balance
Sheets approximate fair value.
Estimated Fair Value of Debt
The estimated fair value of long-term debt at December 31, 2015 consists primarily of the Notes and
borrowings under its Term Loan Credit Agreement, as amended (see Note 5). The fair value of the Notes, the Term
Loan Credit Agreement, as amended, and the revolving credit facility are based upon third party pricing sources,
which generally does not represent daily market activity, nor does it represent data obtained from an exchange, and
are classified as Level 2. The interest rates on the Company’s borrowings under the revolving credit facility are
adjusted regularly to reflect current market rates and thus carrying value approximates fair value for these
borrowings. All other debt and capital lease obligations approximate their fair value as determined by discounted
cash flows and are classified as Level 3.
75
The Company’s carrying and estimated fair value of debt, at December 31, 2015 and 2014 were as follows:
Carrying
Value
December 31, 2015
Fair Value
Level 1
Level 2
Level 3
Carrying
Value
December 31, 2014
Fair Value
Level 1
Level 2
Level 3
Instrument
Convertible senior notes
$ 121,268
$ - $ 155,694
$ -
$ 134,601
$ - $ 188,490
$ -
Term loan credit agreement
190,535
- 190,442
-
189,027
- 192,845
-
Industrial revenue bond
Capital lease obligations
1,149
- - 1,149
1,645
- - 1,645
2,681
- - 2,681
7,254
- - 7,254
$ 315,633
$ - $ 346,136
$ 3,830
$ 332,527
$ - $ 381,335
$ 8,899
7.
STOCKHOLDERS’ EQUITY
a. Common and Preferred Stock
On December 18, 2014, the Company’s Board of Directors approved a stock repurchase program
authorizing the Company to repurchase up to $60 million of its common stock over a two year period. Stock
repurchases under this program may be made in open market or in private transactions at times and in amounts that
management deems appropriate. As of December 31, 2015, total shares repurchased under this program reached the
$60 million limit and, therefore, exhausted the full authority of the authorized program.
On February 1, 2016, the Company’s Board of Directors approved a stock repurchase program authorizing
the Company to repurchase up to $100 million of its common stock over a two year period. Stock repurchases under
this program may be made in open market or in private transactions at times and in amounts that management deems
appropriate.
The Board of Directors has the authority to issue common and unclassed preferred stock of up to 200
million shares and 25 million shares, respectively, with par value of $0.01 per share as well as to fix dividends,
voting and conversion rights, redemption provisions, liquidation preferences and other rights and restrictions.
Effective March 30, 2015, the Company eliminated a series of preferred stock previously designated as
Series D Junior Participating Preferred Stock.
b. Stockholders’ Rights Plan
The Company’s Stockholders’ Rights Plan (the “Rights Plan”) was designed to deter coercive or unfair
takeover tactics in the event of an unsolicited takeover attempt. It was not intended to prevent a takeover on terms
that were favorable and fair to all stockholders and would not interfere with a merger approved by our board of
directors. Each right entitled stockholders to buy one one-thousandth of a share of Series D Junior Participating
Preferred Stock at an exercise price of $120. The rights would be exercisable only if a person or a group acquired or
announced a tender or exchange offer to acquire 20% or more of our common stock or if we entered into other
business combination transactions not approved by our board of directors. In the event the rights became
exercisable, the Rights Plan allowed for our stockholders to acquire our stock or the stock of the surviving
corporation, whether or not we are the surviving corporation, having a value twice that of the exercise price of the
rights. Effective March 30, 2015, the Company executed an amendment to its Rights Plan. Pursuant to the
amendment, the Final Expiration Date (as defined in the Rights Plan) was advanced from December 28, 2015 to
March 30, 2015. As a result of the Amendment, effective with the close of business on March 30, 2015, the rights
(as defined in the Rights Plan and outlined above) expired and were no longer outstanding and the Rights Plan
terminated by its terms.
8.
STOCK-BASED COMPENSATION
In May 2011, the Company adopted and shareholders approved the 2011 Omnibus Incentive Plan (the
“Omnibus Plan”). This plan provides for the issuance of stock options, restricted stock, stock appreciation rights
and performance units to directors, officers and other eligible employees of the Company. The Omnibus Plan makes
76
available approximately 7.5 million shares for issuance, subject to adjustments for stock dividends, recapitalizations
and the like.
The Company recognizes all share-based awards to eligible employees based upon their fair value. The
Company’s policy is to recognize expense for awards that have service conditions only subject to graded vesting
using the straight-line attribution method. Total stock-based compensation expense was $10.0 million, $7.8 million
and $7.5 million in 2015, 2014 and 2013, respectively. The amount of compensation costs related to nonvested
stock options and restricted stock not yet recognized was $12.0 million at December 31, 2015, for which the
weighted average remaining life was 1.8 years.
Stock Options
Stock options are awarded with an exercise price equal to the market price of the underlying stock on the
date of grant, become fully exercisable three years after the date of grant and expire ten years after the date of grant.
The fair value of stock option awards is estimated on the date of grant using a binomial option-pricing model that
uses the assumptions noted in the following table:
Valuation Assumptions
Risk-free interest rate
Expected volatility
Expected dividend yield
Expected term
2015
2.14%
72.5%
0.00%
5 yrs.
2014
2.73%
72.0%
0.00%
5 yrs.
2013
2.02%
75.3%
0.00%
5 yrs.
The expected volatility is based upon the Company’s historical experience. The expected term represents
the period of time that options granted are expected to be outstanding. The risk-free interest rate utilized for periods
throughout the contractual life of the options are based on U.S. Treasury security yields at the time of grant.
A summary of all stock option activity during 2015 is as follows:
Options Outstanding at December 31, 2014
1,909,456
Number of
Options
Granted
Exercised
Forfeited
Expired
Options Outstanding at December 31, 2015
190,810
(186,622)
(9,656)
(83,032)
1,820,956
Weighted
Average
Exercise
Price
$
11.79
$
14.16
$
10.78
$
12.16
$
$
23.55
11.61
Weighted
Average
Remaining
Contractual
Life
Aggregate
Intrinsic
Value ($ in
millions)
5.5
$
3.3
5.2
$
2.3
Options Exercisable at December 31, 2015
1,398,229
$
11.25
4.3
$
2.1
During 2015, 2014 and 2013, the Company granted 190,810, 200,720, and 361,220 stock options with
aggregate fair values on the date of grant of $1.7 million, $1.7 million and $2.2 million, respectively. The weighted
average estimated fair value of the stock options granted in 2015, 2014 and 2013 were $8.82, $8.34 and $6.13 per
stock option, respectively. The total intrinsic value of stock options exercised during 2015, 2014 and 2013 was $0.6
million, $0.7 million and $0.3 million, respectively.
Restricted Stock
Restricted stock awards vest over a period of one to three years and may be based on the achievement of
specific financial performance metrics. These shares are valued at the market price on the date of grant, are
forfeitable in the event of terminated employment prior to vesting and could include the right to vote and receive
dividends.
77
A summary of all restricted stock activity during 2015 is as follows:
Number of
Shares
Restricted Stock Outstanding at December 31, 2014
1,288,769
Granted
Vested
Forfeited
667,126
(396,389)
(21,390)
Restricted Stock Outstanding at December 31, 2015
1,538,116
Weighted
Average
Grant Date
Fair Value
$
11.70
$
14.84
$
10.84
$
$
13.44
13.25
During 2015, 2014 and 2013, the Company granted 667,126, 572,052 and 521,181 shares of restricted
stock, respectively, with aggregate fair values on the date of grant of $9.9 million, $7.9 million and $5.0 million,
respectively. The total fair value of restricted stock that vested during 2015, 2014 and 2013 was $5.6 million, $5.2
million and $0.6 million, respectively.
Cash-Settled Performance Units and Stock Appreciation Rights
In March 2010, the Company awarded eligible employees 326,250 cash-settled stock appreciation rights
and 434,661 cash-settled performance units. The stock appreciation rights vested in March 2013 and provided each
participant with the right to receive payment in cash representing the appreciation in the market value of the
Company’s common stock from the grant date to the award’s vesting date. The per share exercise price of a stock
appreciation right is equal to the closing market price of the Company’s stock on the date of grant. As of December
31, 2013, all stock appreciation rights awarded by the Company were fully vested. The total fair value of cash-
settled stock appreciation rights that vested in 2013 was $0.8 million. The performance units vested in March 2013
and provided each participant with the right to receive payments in cash for the lesser of the market value of the
Company’s stock on the date of grant or the vesting date. As of December 31, 2013, all cash-settled performance
units awarded by the Company were fully vested. The total fair value of cash-settled performance units that vested
in 2013 was $3.0 million. The number of performance units actually awarded to eligible employees was based on
the achievement of specific financial performance metrics.
9.
EMPLOYEE SAVINGS PLANS
Substantially all of the Company’s employees are eligible to participate in a defined contribution plan
under Section 401(k) of the Internal Revenue Code. The Company also provides a non-qualified defined
contribution plan for senior management and certain key employees. Both plans provide for the Company to match,
in cash, a percentage of each employee’s contributions up to certain limits. The Company’s matching contribution
and related expense for these plans was approximately $7.2 million, $5.7 million, and $4.9 million for 2015, 2014,
and 2013, respectively.
10.
INCOME TAXES
a.
Income Before Income Taxes
The consolidated income (loss) before income taxes for 2015, 2014 and 2013 consists of the following (in
thousands):
Domestic
Foreign
2015
2014
2013
$
163,325
(14)
$
98,246
216
$
77,465
158
Total income before income taxes
$
163,311
$
98,462
$
77,623
78
b.
Income Tax Expense
The consolidated income tax expense for 2015, 2014 and 2013 consists of the following components (in
thousands):
Current
Federal
State
Foreign
Deferred
Federal
State
Foreign
2015
2014
2013
$
58,090
$
19,036
$
158
8,627
54
1,805
118
717
130
$
66,771
$
20,959
$
1,005
$
(7,930)
$
12,913
$
26,792
288
(107)
3,778
(118)
3,412
(115)
$
(7,749)
$
16,573
$
30,089
Total consolidated expense
$
59,022
$
37,532
$
31,094
The following table provides a reconciliation of differences from the U.S. Federal statutory rate of 35% as
follows (in thousands):
Pretax book income
$
163,311
$
98,462
$
77,623
2015
2014
2013
Federal tax expense at 35% statutory rate
State and local income taxes
Benefit of domestic production deduction
Other
57,159
6,190
(5,255)
928
34,462
4,808
(2,010)
272
27,168
3,870
-
56
Total income tax expense
$
59,022
$
37,532
$
31,094
c. Deferred Taxes
The Company’s deferred income taxes are primarily due to temporary differences between financial and
income tax reporting for the depreciation of property, plant and equipment, amortization of intangibles,
compensation adjustments, inventory adjustments, other accrued liabilities and tax losses carried forward.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be realized. Companies are required to
assess whether valuation allowances should be established against their deferred tax assets based on the
consideration of all available evidence, both positive and negative, using a “more likely than not” standard. In
making such judgments, significant weight is given to evidence that can be objectively verified.
The Company assesses, on a quarterly basis, the realizability of its deferred tax assets by evaluating all
available evidence, both positive and negative, including: (1) the cumulative results of operations in recent years, (2)
the nature of recent losses, if applicable, (3) estimates of future taxable income, (4) the length of operating loss
carryforward (“NOLs”) periods and (5) the uncertainty associated with a possible change in ownership, which
imposes an annual limitation on the use of these carryforwards.
As of December 31, 2015 and 2014, the Company retained a valuation allowance of $1.2 and $1.3 million,
respectively, against deferred tax assets related to various state and local NOLs that are subject to restrictive rules
for future utilization.
79
As of December 31, 2015, the Company has no U.S. federal tax NOLs. The Company has various
multistate income tax NOLs, which have been recorded as a deferred income tax asset, of approximately $2.5
million, before valuation allowances. These NOLs will expire beginning in 2016, if unused.
The components of deferred tax assets and deferred tax liabilities as of December 31, 2015 and 2014 were
as follows (in thousands):
Deferred tax assets
2015
2014
Tax credits and loss carryforwards
$
563
$
2,550
Accrued liabilities
Incentive compensation
Other
Deferred tax liabilities
Property, plant and equipment
Intangibles
Prepaid assets
Convertible note discount
Other
9,211
24,682
3,909
6,882
19,333
3,389
$
38,365
$
32,154
(4,000)
(5,325)
(697)
(3,234)
(1,658)
(2,858)
(5,565)
(638)
(5,117)
(2,025)
$
(14,914)
$
(16,203)
Net deferred tax asset before valuation allowances and reserves
$
23,451
$
15,951
Valuation allowances
Net deferred tax asset
d. Tax Reserves
(1,159)
(1,307)
$
22,292
$
14,644
The Company’s policy with respect to interest and penalties associated with reserves or allowances for
uncertain tax positions is to classify such interest and penalties in income tax expense in the Statements of
Operations. As of December 31, 2015 and 2014, the total amount of unrecognized income tax benefits was
approximately $11.7 million and $11.0 million, respectively, all of which, if recognized, would impact the effective
income tax rate of the Company. As of December 31, 2015 and 2014, the Company had recorded a total of $1.1 and
$0.3 million, respectively of accrued interest and penalties related to uncertain tax positions. The Company foresees
no significant changes to the facts and circumstances underlying its reserves and allowances for uncertain income
tax positions as reasonably possible during the next 12 months. As of December 31, 2015, the Company is subject
to unexpired statutes of limitation for U.S. federal income taxes for the years 2003 through 2015. The Company is
also subject to unexpired statutes of limitation for Indiana state income taxes for the years 2003 through 2015.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in
thousands) and all balances as of December 31, 2015 are included in either Other Noncurrent Liabilities or Current
Deferred Income Taxes in the Company’s Consolidated Balance Sheet:
80
Balance at January 1, 2014
$
10,971
Decrease in prior year tax positions
(323)
Balance at December 31, 2014
$
10,648
Decrease in prior year tax positions
(23)
Balance at December 31, 2015
$
10,625
11.
COMMITMENTS AND CONTINGENCIES
a. Litigation
The Company is involved in a number of legal proceedings concerning matters arising in connection with
the conduct of its business activities, and is periodically subject to governmental examinations (including by
regulatory and tax authorities), and information gathering requests (collectively, "governmental examinations"). As
of December 31, 2015, the Company was named as a defendant or was otherwise involved in numerous legal
proceedings and governmental examinations in various jurisdictions, both in the United States and internationally.
The Company has recorded liabilities for certain of its outstanding legal proceedings and governmental
examinations. A liability is accrued when it is both (a) probable that a loss with respect to the legal proceeding has
occurred and (b) the amount of loss can be reasonably estimated. The Company evaluates, on a quarterly basis,
developments in legal proceedings and governmental examinations that could cause an increase or decrease in the
amount of the liability that has been previously accrued. These legal proceedings, as well as governmental
examinations, involve various lines of business of the Company and a variety of claims (including, but not limited
to, common law tort, contract, antitrust and consumer protection claims), some of which present novel factual
allegations and/or unique legal theories. While some matters pending against the Company specify the damages
claimed by the plaintiff, many seek a not-yet-quantified amount of damages or are at very early stages of the legal
process. Even when the amount of damages claimed against the Company are stated, the claimed amount may be
exaggerated and/or unsupported. As a result, it is not currently possible to estimate a range of possible loss beyond
previously accrued liabilities relating to some matters including those described below. Such previously accrued
liabilities may not represent the Company's maximum loss exposure. The legal proceedings and governmental
examinations underlying the estimated range will change from time to time and actual results may vary significantly
from the currently accrued liabilities.
Based on its current knowledge, and taking into consideration its litigation-related liabilities, the Company
believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding or
governmental examination other than the matters below, which are addressed individually, that would have a
material adverse effect on the Company's consolidated financial condition or liquidity if determined in a manner
adverse to the Company. However, in light of the uncertainties involved in such matters, the ultimate outcome of a
particular matter could be material to the Company's operating results for a particular period depending on, among
other factors, the size of the loss or liability imposed and the level of the Company's income for that period. Costs
associated with the litigation and settlements of legal matters are reported within General and Administrative
Expenses in the Consolidated Statements of Operations.
Brazil Joint Venture
In March 2001, Bernard Krone Indústria e Comércio de Máquinas Agrícolas Ltda. (“BK”) filed suit against
the Company in the Fourth Civil Court of Curitiba in the State of Paraná, Brazil. Because of the bankruptcy of BK,
this proceeding is now pending before the Second Civil Court of Bankruptcies and Creditors Reorganization of
Curitiba, State of Paraná (No. 232/99).
The case grows out of a joint venture agreement between BK and the Company related to marketing of
RoadRailer trailers in Brazil and other areas of South America. When BK was placed into the Brazilian equivalent
of bankruptcy late in 2000, the joint venture was dissolved. BK subsequently filed its lawsuit against the Company
81
alleging that it was forced to terminate business with other companies because of the exclusivity and non-compete
clauses purportedly found in the joint venture agreement. BK asserted damages, exclusive of any potentially court-
imposed interest or inflation adjustments, of approximately R$20.8 million (Brazilian Reais). BK did not change the
amount of damages it asserted following its filing of the case in 2001.
A bench (non-jury) trial was held on March 30, 2010 in Curitiba, Paraná, Brazil. On November 22, 2011,
the Fourth Civil Court of Curitiba partially granted BK’s claims, and ordered Wabash to pay BK lost profits,
compensatory, economic and moral damages in excess of the amount of compensatory damages asserted by BK.
The total ordered damages amount is approximately R$26.7 million (Brazilian Reais), which is approximately $6.9
million U.S. dollars using current exchange rates and exclusive of any potentially court-imposed interest, fees or
inflation adjustments (which are currently estimated at a maximum of approximately $48 million, at current
exchange rates, but may change with the passage of time and/or the discretion of the court at the time of final
judgment in this matter). Due, in part, to the amount and type of damages awarded by the Fourth Civil Court of
Curitiba, Wabash immediately filed for clarification of the judgment. The Fourth Civil Court has issued its
clarification of judgment, leaving the underlying decision unchanged and referring the parties to the State of Paraná
Court of Appeals for any further appeal of the decision. As such, the Company filed its notice of appeal with the
Court of Appeals, as well as its initial appeal papers, on April 22, 2013. The Court of Appeals has the authority to
re-hear all facts presented to the lower court, as well as to reconsider the legal questions presented in the case, and to
render a new judgment in the case without regard to the lower court’s findings. Pending outcome of this appeal
process, the judgment is not enforceable by the plaintiff. Any ruling from the Court of Appeals is not expected
before the second quarter of 2016, at the earliest, and, accordingly, the judgment rendered by the lower court cannot
be enforced prior to that time, and may be overturned or reduced as a result of this process. The Company believes
that the claims asserted by BK are without merit and it intends to continue to vigorously defend its position. The
Company has not recorded a charge with respect to this loss contingency as of December 31, 2015. Furthermore, at
this time, the Company does not have sufficient information to predict the ultimate outcome of the case and is
unable to reasonably estimate the amount of any possible loss or range of loss that it may be required to pay at the
conclusion of the case. The Company will reassess the need for the recognition of a loss contingency upon official
assignment of the case in the Court of Appeals, upon a decision to settle this case with the plaintiffs or an internal
decision as to an amount that the Company would be willing to settle or upon the outcome of the appeals process.
Intellectual Property
In October 2006, the Company filed a patent infringement suit against Vanguard National Corporation
(“Vanguard”) regarding the Company’s U.S. Patent Nos. 6,986,546 and 6,220,651 in the U.S. District Court for the
Northern District of Indiana (Civil Action No. 4:06-cv-135). The Company amended the Complaint in April 2007.
In May 2007, Vanguard filed its Answer to the Amended Complaint, along with Counterclaims seeking findings of
non-infringement, invalidity, and unenforceability of the subject patents. The Company filed a reply to Vanguard’s
counterclaims in May 2007, denying any wrongdoing or merit to the allegations as set forth in the counterclaims.
The case has currently been stayed by agreement of the parties while the U.S. Patent and Trademark Office (“Patent
Office”) undertakes a reexamination of U.S. Patent Nos. 6,986,546. In June 2010, the Patent Office notified the
Company that the reexamination is complete and the Patent Office has reissued U.S. Patent No. 6,986,546 without
cancelling any claims of the patent. The parties have not yet petitioned the Court to lift the stay, and it is unknown
at this time when the parties’ petition to lift the stay may be filed or granted.
The Company believes that its claims against Vanguard have merit and that the claims asserted by
Vanguard are without merit. The Company intends to vigorously defend its position and intellectual property. The
Company does not believe that the resolution of this lawsuit will have a material adverse effect on its financial
position, liquidity or future results of operations. However, at this stage of the proceeding, no assurance can be
given as to the ultimate outcome of the case.
Walker Acquisition
In connection with the Company’s acquisition of Walker in May 2012, there is an outstanding claim of
approximately $2.9 million for unpaid benefits that is currently in dispute and that is not expected to have a material
adverse effect on the Company’s financial condition or results of operations.
82
Environmental Disputes
In August 2014, the Company was noticed as a potentially responsible party (“PRP”) by the South Carolina
Department of Health and Environmental Control (“DHEC”) pertaining to the Philip Services Site located in Rock
Hill, South Carolina pursuant to the Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”) and corresponding South Carolina statutes. PRPs include parties identified through manifest records
as having contributed to deliveries of hazardous substances to the Philip Services Site between 1979 and 1999. The
DHEC’s allegation that the Company was a PRP arises out of four manifest entries in 1989 under the name of a
company unaffiliated with Wabash National (or any of its former or current subsidiaries) that purport to be
delivering a de minimis amount of hazardous waste to the Philip Services Site “c/o Wabash National Corporation.”
As such, the Philip Services Site PRP Group (“PRP Group”) notified Wabash in August 2014 that is was offering
the Company the opportunity to resolve any liabilities associated with the Philip Services Site by entering into a
Cash Out and Reopener Settlement Agreement (the “Settlement Agreement”) with the PRP Group, as well as a
Consent Decree with the DHEC. The Company has accepted the offer from the PRP Group to enter into the
Settlement Agreement and Consent Decree, while reserving its rights to contest its liability for any deliveries of
hazardous materials to the Philips Services Site. The requested settlement payment is immaterial to the Company’s
financial conditions or operations, and as a result, if the Settlement Agreement and Consent Decree are finalized, the
payment to be made by the Company thereunder is not expected to have a material adverse effect on the Company’s
financial condition or results of operations.
Bulk Tank International, S. de R.L. de C.V. (“Bulk”) entered into agreements in 2011 with the Mexican
federal environmental agency, PROFEPA, and the applicable state environmental agency, PROPAEG, pursuant to
PROFEPA’s and PROPAEG’s respective environmental audit programs to resolve noncompliance with federal and
state environmental laws at Bulk’s Guanajuato facility. Bulk completed all required corrective actions and received
a Certification of Clean Industry from PROPAEG, and is seeking the same certification from PROFEPA, which the
Company expects it will receive by early 2016, following the conclusion of a final audit process that commenced in
December 2014. As a result, the Company does not expect that this matter will have a material adverse effect on its
financial condition or results of operations.
In January 2012, the Company was noticed as a PRP by the U.S. Environmental Protection Agency
(“EPA”) and the Louisiana Department of Environmental Quality (“LDEQ”) pertaining to the Marine Shale
Processors Site located in Amelia, Louisiana (“MSP Site”) pursuant to CERCLA and corresponding Louisiana
statutes. PRPs include current and former owners and operators of facilities at which hazardous substances were
allegedly disposed. The EPA’s allegation that the Company is a PRP arises out of one alleged shipment of waste to
the MSP Site in 1992 from the Company’s branch facility in Dallas, Texas. As such, the MSP Site PRP Group
notified the Company in January 2012 that, as a result of a March 18, 2009 Cooperative Agreement for Site
Investigation and Remediation entered into between the MSP Site PRP Group and the LDEQ, the Company was
being offered a “De Minimis Cash-Out Settlement” to contribute to the remediation costs, which would remain open
until February 29, 2012. The Company chose not to enter into the settlement and has denied any liability. In
addition, the Company has requested that the MSP Site PRP Group remove the Company from the list of PRPs for
the MSP Site, based upon the following facts: the Company acquired this branch facility in 1997 – five years after
the alleged shipment - as part of the assets the Company acquired out of the Fruehauf Trailer Corporation
(“Fruehauf”) bankruptcy (Case No. 96-1563, United States Bankruptcy Court, District of Delaware (“Bankruptcy
Court”)); as part of the Asset Purchase Agreement regarding the Company’s purchase of assets from Fruehauf, the
Company did not assume liability for “Off-Site Environmental Liabilities,” which are defined to include any
environmental claims arising out of the treatment, storage, disposal or other disposition of any Hazardous Substance
at any location other than any of the acquired locations/assets; the Bankruptcy Court, in an Order dated May 26,
1999, also provided that, except for those certain specified liabilities assumed by the Company under the terms of
the Asset Purchase Agreement, the Company and its subsidiaries shall not be subject to claims asserting successor
liability; and the “no successor liability” language of the Asset Purchase Agreement and the Bankruptcy Court Order
form the basis for the Company’s request that it be removed from the list of PRPs for the MSP Site. The MSP Site
PRP Group is currently considering the Company’s request, but has provided no timeline to the Company for a
response. However, the MSP Site PRP Group has agreed to indefinitely extend the time period by which the
Company must respond to the De Minimis Cash-Out Settlement offer. The Company does not expect that this
proceeding will have a material adverse effect on its financial condition or results of operations.
In September 2003, the Company was noticed as a PRP by the EPA pertaining to the Motorola 52nd Street,
Phoenix, Arizona Superfund Site (the “Superfund Site”) pursuant to CERCLA. The EPA’s allegation that the
83
Company was a PRP arises out of the Company’s acquisition of a former branch facility located approximately five
miles from the original Superfund Site. The Company acquired this facility in 1997, operated the facility until 2000,
and sold the facility to a third party in 2002. In June 2010, the Company was contacted by the Roosevelt Irrigation
District (“RID”) informing it that the Arizona Department of Environmental Quality (“ADEQ”) had approved a
remediation plan in excess of $100 million for the RID portion of the Superfund Site, and demanded that the
Company contribute to the cost of the plan or be named as a defendant in a CERCLA action to be filed in July 2010.
The Company initiated settlement discussions with the RID and the ADEQ in July 2010 to provide a full release
from the RID, and a covenant not-to-sue and contribution protection regarding the former branch property from the
ADEQ, in exchange for payment from the Company. If the settlement is approved by all parties, it will prevent any
third party from successfully bringing claims against the Company for environmental contamination relating to this
former branch property. The Company has been awaiting approval from the ADEQ since the settlement was first
proposed in July 2010. In December 2015, we received tentative approval of our settlement offer from the ADEQ,
and are now awaiting concurring approval from the RID. Based on communications with the RID and ADEQ in
December 2015, we do not expect to receive a response regarding the approval of the settlement from the RID for, at
least, several additional months. Based upon the Company’s limited period of ownership of the former branch
property, and the fact that it no longer owns the former branch property, it does not anticipate that the RID will
reject the proposed settlement, but no assurance can be given at this time as to the RID’s response to the settlement
proposal tentatively approved by the ADEQ. The proposed settlement terms have been accrued and did not have a
material adverse effect on the Company’s financial condition or results of operations, and the Company believes that
any ongoing proceedings will not have a material adverse effect on the Company’s financial condition or results of
operations.
In January 2006, the Company received a letter from the North Carolina Department of Environment and
Natural Resources indicating that a site that the Company formerly owned near Charlotte, North Carolina has been
included on the state's October 2005 Inactive Hazardous Waste Sites Priority List. The letter states that the
Company was being notified in fulfillment of the state's “statutory duty” to notify those who own and those who at
present are known to be responsible for each Site on the Priority List. Following receipt of this notice, no action has
ever been requested from the Company, and since 2006 the Company has not received any further communications
regarding this matter from the state of North Carolina. The Company does not expect that this designation will have
a material adverse effect on its financial condition or results of operations.
b. Environmental Litigation Commitments and Contingencies
The Company generates and handles certain material, wastes and emissions in the normal course of
operations that are subject to various and evolving federal, state and local environmental laws and regulations.
The Company assesses its environmental liabilities on an on-going basis by evaluating currently available
facts, existing technology, presently enacted laws and regulations as well as experience in past treatment and
remediation efforts. Based on these evaluations, the Company estimates a lower and upper range for treatment and
remediation efforts and recognizes a liability for such probable costs based on the information available at the time.
As of December 31, 2015, in addition to a reserve of $0.2 million relating to the ADEQ proposed settlement
discussed above, the Company had reserved estimated remediation costs of $0.5 million for activities at existing and
former properties which are recorded within Other Accrued Liabilities in the Consolidated Balance Sheet.
c. Letters of Credit
As of December 31, 2015, the Company had standby letters of credit totaling $6.0 million issued in
connection with workers compensation claims and surety bonds.
d. Purchase Commitments
The Company has $72.4 million in purchase commitments through March 2017 for various raw material
commodities, including aluminum, steel and nickel as well as other raw material components which are within
normal production requirements.
84
12.
SEGMENTS AND RELATED INFORMATION
a. Segment Reporting
The Company manages its business in three segments: Commercial Trailer Products, Diversified Products
and Retail. The Commercial Trailer Products segment produces and sells new trailers to the Retail segment and to
customers who purchase trailers directly from the Company or through independent dealers. The Diversified
Products segment focuses on the Company’s commitment to expand its customer base, diversify its product
offerings and revenues and extend its market leadership by leveraging its proprietary DuraPlate® panel technology,
drawing on its core manufacturing expertise and making available products that are complementary to truck and
tank trailers and transportation equipment. The Retail segment includes the sale of new and used trailers, as well as
the sale of after-market parts and service, through its retail branch network.
The accounting policies of the segments are the same as those described in the summary of significant
accounting policies except that the Company evaluates segment performance based on income from operations. The
Company has not allocated certain corporate related administrative costs, interest and income taxes included in the
corporate and eliminations segment to the Company’s other reportable segment. The Company accounts for
intersegment sales and transfers at cost plus a specified mark-up. The Company manages its assets and capital
spending on a consolidated basis, not by operating segment, as the assets and capital spending of the Diversified
Products segment are intermixed with those of the Commercial Trailer Products segment. Therefore, our chief
operating decision maker does not review any asset or capital spending information by operating segment and,
accordingly, we do not report asset or capital spending information by operating segment. Reportable segment
information is as follows (in thousands):
85
2015
Net sales
External customers
Intersegment sales
T otal net sales
Depreciation and amortization
Income (Loss) from operations
Reconciling items to net income
Interest expense
Other, net
Income tax expense
Net income
2014
Net sales
External customers
Intersegment sales
T otal net sales
Depreciation and amortization
Income (Loss) from operations
Reconciling items to net income
Interest expense
Other, net
Income tax expense
Net income
2013
Net sales
External customers
Intersegment sales
T otal net sales
Depreciation and amortization
Income (Loss) from operations
Reconciling items to net income
Interest expense
Other, net
Income tax expense
Net income
Commercial
T railer Products
Diversified
Products
Retail
Corporate and
Eliminations
Consolidated
$
1,446,113
63,267
$
415,093
12,928
$
166,283
1,008
$
-
(77,203)
$
2,027,489
$
-
$
1,509,380
$
428,021
$
167,291
$
(77,203)
$
2,027,489
11,574
158,805
22,853
47,940
2,136
4,401
1,435
(30,777)
37,998
180,369
19,548
(2,490)
59,022
$
104,289
$
1,221,040
73,124
$
453,160
13,078
$
189,115
965
$
-
(87,167)
$
1,863,315
$
-
$
1,294,164
$
466,238
$
190,080
$
(87,167)
$
1,863,315
11,332
81,141
23,806
54,879
2,061
3,785
1,630
(17,419)
38,829
122,386
22,165
1,759
37,532
$
60,930
$
1,010,736
71,720
$
444,804
13,849
$
180,146
1,340
$
-
(86,909)
$
1,635,686
$
-
$
1,082,456
$
458,653
$
181,486
$
(86,909)
$
1,635,686
11,127
57,543
23,320
59,126
2,029
2,885
1,860
(16,363)
38,336
103,191
26,308
(740)
31,094
$
46,529
b. Customer Concentration
The Company is subject to a concentration of risk as the five largest customers together accounted for
approximately 25%, 20% and 17% of the Company’s aggregate net sales in 2015, 2014 and 2013, respectively. In
addition, for each of the last three years there were no customers whose revenue individually represented 10% or
more of our aggregate net sales. International sales, primarily to Canadian customers, accounted for less than 10%
in each of the last three years.
86
c. Product Information
The Company offers products primarily in four general categories: (1) new trailers, (2) used trailers, (3)
components, parts and service and (4) equipment and other. The following table sets forth the major product
categories and their percentage of consolidated net sales (dollars in thousands):
Eliminations
Consolidated
$
(60,467)
(2,562)
(14,116)
(58)
(77,203)
$
1,692,229
35,580
168,550
131,130
%
83.5
1.8
8.3
6.4
2,027,489
100.0
Eliminations
Consolidated
$
$
(72,862)
1,493,825
%
73.7
2.2
8.4
15.7
45,115
170,589
153,786
1,863,315
100.0
-
(14,183)
(122)
(87,167)
Eliminations
Consolidated
$
(71,888)
(5)
(14,811)
(205)
(86,909)
$
1,246,923
49,415
180,326
159,022
%
66.9
2.7
9.7
20.7
1,635,686
100.0
Year ended December 31,
2015
New trailers
Used trailers
Components, parts and service
Equipment and other
Total net external sales
2014
New trailers
Used trailers
Components, parts and service
Equipment and other
Total net external sales
2013
New trailers
Used trailers
Components, parts and service
Equipment and other
Total net external sales
Commercial
Trailer Products
$
1,467,029
19,962
6,300
16,089
1,509,380
Commercial
Trailer Products
$
1,250,264
23,576
3,475
16,849
1,294,164
Commercial
Trailer Products
$
1,031,004
33,443
7,420
10,589
1,082,456
Diversified
Products
$
218,028
4,558
93,251
112,184
428,021
Diversified
Products
$
227,382
4,593
100,764
133,499
466,238
Diversified
Products
$
204,812
3,158
106,312
144,371
458,653
Retail
$
67,639
13,622
83,115
2,915
167,291
Retail
$
89,041
16,946
80,533
3,560
190,080
Retail
$
82,995
12,819
81,405
4,267
181,486
87
13.
CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for fiscal years 2015, 2014 and
2013 (dollars in thousands, except per share amounts):
2015
2014
2013
Net sales
Gross profit
Net income
Basic net income per share
Diluted net income per share
(1)
Net sales
Gross profit
Net income
Basic net income per share
Diluted net income per share
(1)
Net sales
Gross profit
Net income
Basic net income per share
Diluted net income per share
(1)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
437,597
$
514,831
$
531,350
$
543,711
57,197
10,474
0.15
0.15
72,405
28,649
0.42
0.41
86,022
31,880
0.48
0.47
87,819
33,286
0.50
0.50
$
358,120
$
486,021
$
491,697
$
527,477
46,672
7,296
0.11
0.10
61,613
16,239
0.23
0.23
61,628
18,307
0.26
0.25
62,721
19,088
0.28
0.27
$
324,229
$
413,126
$
439,977
$
458,354
42,186
5,735
0.08
0.08
58,853
14,135
0.20
0.20
61,497
16,236
0.24
0.23
52,587
10,423
0.15
0.15
(1) Basic and diluted net income per share is computed independently for each of the quarters presented. Therefore, the sum of the
quarterly net income per share may differ from annual net income per share due to rounding.
ITEM 9—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 9A—CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance to our
management and board of directors that information required to be disclosed in the reports we file or submit under
the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure. Based on an evaluation conducted
under the supervision and with the participation of the Company’s management, including our Chief Executive
Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls
and procedures as of December 31, 2015, including those procedures described below, we, including our Chief
Executive Officer and our Chief Financial Officer, determined that those controls and procedures were effective.
Changes in Internal Controls
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, identified in connection with the evaluation required by Rules 13a-15(d) and
88
15d-15(d) of the Exchange Act that occurred during the fourth quarter of fiscal 2015 that have materially affected or
are reasonably likely to materially affect our internal control over financial reporting.
Report of Management on Internal Control over Financial Reporting
The management of Wabash National Corporation (“the Company”) is responsible for establishing and
maintaining adequate internal control over financial reporting. The Company’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting
principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of the financial statements in accordance with U.S. generally accepted accounting principles; (3) provide
reasonable assurance that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (4) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies and procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2015, based on criteria for effective internal control over financial reporting described in Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (COSO). Based on this assessment, management has concluded that internal control
over financial reporting is effective as of December 31, 2015.
Ernst & Young LLP, an Independent Registered Public Accounting Firm, has audited the Company’s
consolidated financial statements as of and for the year ended December 31, 2015, and its report on internal controls
over financial reporting as of December 31, 2015 appears on the following page.
Richard J. Giromini
Jeffery L. Taylor
February 26, 2016
President and Chief Executive Officer
Senior Vice President and Chief Financial Officer
89
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Wabash National Corporation:
We have audited Wabash National Corporation’s internal control over financial reporting as of December
31, 2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Wabash National
Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for
its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report
of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, Wabash National Corporation maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2015, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Wabash National Corporation as of December 31, 2015
and 2014, and the related consolidated statements of operations, comprehensive income, stockholder’s equity, and
cash flows for each of the three years in the period ended December 31, 2015 and our report dated February 26,
2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Indianapolis, Indiana
February 26, 2016
90
ITEM 9B—OTHER INFORMATION
None.
PART III
ITEM 10—EXECUTIVE OFFICERS OF THE REGISTRANT
The Company hereby incorporates by reference the information contained under the heading “Executive
Officers of Wabash National Corporation” from Item 1 Part I of this Annual Report.
The Company hereby incorporates by reference the information contained under the headings “Section
16(a) Beneficial Ownership Reporting Compliance” or “Election of Directors” from its definitive Proxy Statement
to be delivered to stockholders of the Company and filed with the SEC within 120 days after the end of the fiscal
year covered by this Annual Report in connection with the 2016 Annual Meeting of Stockholders to be held May 12,
2016.
Code of Ethics
As part of our system of corporate governance, our Board of Directors has adopted a Code of Business
Conduct and Ethics (“Code of Ethics”) that is specifically applicable to our Chief Executive Officer and Senior
Financial Officers. This Code of Ethics is available within the Corporate Governance section of the Investor
Relations page of our website at www.wabashnational.com. We will disclose any waivers for our Chief Executive
Officer or Senior Financial Officers under, or any amendments to, our Code of Ethics by posting such information
on our website at the address above.
ITEM 11—EXECUTIVE COMPENSATION
The Company hereby incorporates by reference the information contained under the headings “Executive
Compensation" and “Director Compensation” from its definitive Proxy Statement to be delivered to the stockholders
of the Company and filed with the SEC within 120 days after the end of the fiscal year covered by this Annual
Report in connection with the 2016 Annual Meeting of Stockholders to be held May 12, 2016.
ITEM 12—SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The Company hereby incorporates by reference the information contained under the headings "Beneficial
Ownership of Common Stock” and “Equity Compensation Plan Information” from its definitive Proxy Statement to
be delivered to the stockholders of the Company and filed with the SEC within 120 days after the end of the fiscal
year covered by this Annual Report in connection with the 2016 Annual Meeting of Stockholders to be held on May
12, 2016.
ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The Company hereby incorporates by reference the information contained under the headings “Election of
Directors” and “Related Persons Transactions Policy” from its definitive Proxy Statement to be delivered to the
stockholders of the Company and filed with the SEC within 120 days after the end of the fiscal year covered by this
Annual Report in connection with the 2016 Annual Meeting of Stockholders to be held on May 12, 2016.
ITEM 14—PRINCIPAL ACCOUNTING FEES AND SERVICES
Information required by Item 14 of this form and the audit committee’s pre-approval policies and
procedures regarding the engagement of the principal accountant are incorporated herein by reference to the
information contained under the heading “Ratification of Appointment of Independent Registered Public
Accounting Firm” from the Company’s definitive Proxy Statement to be delivered to the stockholders of the
Company and filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report in
connection with the 2016 Annual Meeting of Stockholders to be held on May 12, 2016.
91
PART IV
ITEM 15—EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements: The Company has included all required financial statements in Item 8 of this Annual
Report. The financial statement schedules have been omitted as they are not applicable or the required
information is included in the Notes to the consolidated financial statements.
(b) Exhibits: The following exhibits are filed with this Annual Report or incorporated herein by reference to the
document set forth next to the exhibit listed below:
2.01
3.01
3.02
3.03
4.01
4.02
4.03
Purchase and Sale Agreement by and among the Company, Walker Group Holdings LLC and Walker
Group Holdings LLC dated as of March 26, 2012 (16)
Amended and Restated Certificate of Incorporation of the Company, as amended (13)
Certificate of Elimination of Series D Junior Participating Preferred Stock of Wabash National Corporation
(6)
Amended and Restated Bylaws of the Company, as amended (12)
Specimen Stock Certificate (1)
Indenture, dated April 23, 2012 between the Company and Wells Fargo Bank, National Association, as
trustee (17)
Supplemental Indenture, dated April 23, 2012 between the Company and Wells Fargo Bank, National
Association, as trustee (17)
10.01# Executive Employment Agreement dated June 28, 2002 between the Company and Richard J. Giromini (2)
10.02 Asset Purchase Agreement dated July 22, 2003 (3)
10.03 Amendment No. 1 to the Asset Purchase Agreement dated September 19, 2003 (3)
10.04# 2004 Stock Incentive Plan (4)
10.05# Corporate Plan for Retirement – Executive Plan (5)
10.06# Amendment to Executive Employment Agreement dated January 1, 2007 between the Company and
Richard J. Giromini (8)
10.07# Form of Non-Qualified Stock Option Agreement under the 2007 Omnibus Incentive Plan (9)
10.08# 2007 Omnibus Incentive Plan, as amended (10)
10.09# 2011 Omnibus Incentive Plan (14)
10.10# Change in Control Severance Pay Plan (15)
10.11# Wabash National Corporation Executive Severance Plan (7)
10.12 Amended and Restated Credit Agreement, dated May 8, 2012, by and among Wabash National
Corporation, certain of its subsidiaries identified on the signature page thereto, Wells Fargo Capital
Finance, LLC as joint lead arranger, joint bookrunner and administrative agent, RBS Citizens Business
Capital, a division of RBS Citizens, N.A., as joint lead arranger, joint bookrunner and syndication agent,
BMO Harris Bank, N.A., as documentation agent, and the other lenders and agents therein (18)
10.13 Amended and Restated General Continuing Guaranty, dated as of May 8, 2012, by each subsidiary of
Wabash National Corporation party thereto in favor of Wells Fargo Capital Finance, LLC, as
administrative agent for the secured parties under the Amended and Restated Credit Agreement, dated
May 8, 2012 (18)
10.14 Credit Agreement dated as of May 8, 2012, among the Wabash National Corporation, the several lender
from time to time party thereto Morgan Stanley Senior Funding, Inc., as administrative agent, joint lead
arranger and joint bookrunner, and Wells Fargo Securities, LLC, as joint lead arranger and joint
bookrunner (18)
10.15 Amendment No. 1 to Credit Agreement, dated April 25, 2013, among Wabash National Corporation,
Morgan Stanley Senior Funding, Inc., as administrative agent, and each lender party thereto (19)
10.16 Amendment No. 2 to Credit Agreement, dated March 19, 2015, among Wabash National Corporation,
Morgan Stanley Senior Funding, Inc. and each lender party thereto (20)
10.18
10.17 General Continuing Guarantee, dated as of May 8, 2012, by each subsidiary of Wabash National
Corporation party thereto in favor of Morgan Stanley Senior Funding, Inc., as administrative agent for the
secured parties under the Credit Agreement, dated May 8, 2012 (18)
Joinder and First Amendment to Amended and Restated Credit Agreement, First Amendment to
Amended and Restated Security Agreement and First Amendment to Amended and Restated Guaranty
Agreement dated June 4, 2015 by and among Wabash National Corporation, certain of its subsidiaries
designated as Loan Parties (as defined in the Amendment), Wells Fargo Capital Finance, LLC, as
92
arranger and administrative agent, PNC National Bank National Association, and the other Lenders party
thereto (11)
21.01 List of Significant Subsidiaries (21)
23.01 Consent of Ernst & Young LLP (21)
31.01 Certification of Principal Executive Officer (21)
31.02 Certification of Principal Financial Officer (21)
32.01 Written Statement of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the
101
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (21)
Interactive Data File Pursuant to Rule 405 of Regulation S-T
# Management contract or compensatory plan
+ Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions
have been filed separately with the SEC.
(1) Incorporated by reference to the Registrant’s registration statement on Form S-3 (Registration No. 333-
27317) filed on May 16, 1997
(2) Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended June 30, 2002 (File No. 1-
10883)
(3) Incorporated by reference to the Registrant’s Form 8-K filed on September 29, 2003 (File No. 1-10883)
(4) Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended June 30, 2004 (File No. 1-
10883)
(5) Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended March 31, 2005 (File No. 1-
10883)
(6) Incorporated by reference to the Registrant’s Form 8-K filed on March 30, 2015 (File No. 1-10883)
(7) Incorporated by reference to the Registrant’s Form 8-K filed on December 16, 2015 (File No. 1-10883)
(8) Incorporated by reference to the Registrant’s Form 8-K filed on January 8, 2007 (File No. 1-10883)
(9) Incorporated by reference to the Registrant’s Form 8-K filed on May 24, 2007 (File No. 1-10883)
(10) Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2007 (File No. 1-
10883)
(11) Incorporated by reference to the Registrant’s Form 8-K filed on June 10, 2015 (File No. 1-10883)
(12) Incorporated by reference to the Registrant’s Form 8-K filed on August 4, 2009 (File No. 1-10883)
(13) Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2011 (File
No. 1-10883)
(14) Incorporated by reference to the Registrant’s Form 8-K filed on May 25, 2011 (File No. 1-10883)
(15) Incorporated by reference to the Registrant’s Form 8-K filed on September 14, 2011 (File No. 1-10883)
(16) Incorporated by reference to the Registrant’s Form 8-K filed on March 27, 2012 (File No.001-10883)
(17) Incorporated by reference to the Registrant’s Form 8-K filed on April 23, 2012 (File No.001-10883)
(18) Incorporated by reference to the Registrant’s Form 8-K filed on May 14, 2012 (File No 001-10883)
(19) Incorporated by reference to the Registrant’s Form 8-K filed on April 29, 2013 (File No 001-10883)
(20) Incorporated by reference to the Registrant’s Form 8-K filed on March 23, 2015 (File No 001-10883)
(21) Filed herewith
93
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WABASH NATIONAL CORPORATION
February 26, 2016
By:
/s/ Jeffery L. Taylor
Jeffery L. Taylor
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the date indicated.
Date
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
Signature and Title
/s/ Richard J. Giromini
Richard J. Giromini
President and Chief Executive Officer, Director
(Principal Executive Officer)
/s/ Jeffery L. Taylor
Jeffery L. Taylor
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting
Officer)
/s/ Martin C. Jischke
Dr. Martin C. Jischke
Chairman of the Board of Directors
/s/ James D. Kelly
James D. Kelly
Director
/s/ John E. Kunz
John E. Kunz
Director
/s/ Larry J. Magee
Larry J. Magee
Director
/s/ Ann D. Murtlow
Ann D. Murtlow
Director
/s/ Scott K. Sorensen
Scott K. Sorensen
Director
By:
By:
By:
By:
By:
By:
By:
By:
94
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCK
Exhibit 21.01
NAME OF SUBSIDIARY
Wabash National Trailer Centers, Inc.
Wabash Wood Products, Inc.
Wabash National, L.P.
Wabash National Manufacturing, L.P.
Wabash National Services, L.P.
Continental Transit Corporation
Transcraft Corporation
Walker Stainless Equipment Co., LLC
Garsite/Progress, LLC
Brenner Tank Services, LLC
Walker Group Holdings, LLC
Bulk Solutions, LLC
Brenner Tank LLC
Wabash National Holdings, Inc.
Extract Technology Limited
Wabash UK Holdings Limited
STATE OF
INCORPORATION
% OF SHARES OWNED
BY THE CORPORATION*
Delaware
Arkansas
Delaware
Delaware
Delaware
Indiana
Delaware
Delaware
Texas
Wisconsin
Texas
Texas
Wisconsin
Delaware
United Kingdom
United Kingdom
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
_______________________
*Includes both direct and indirect ownership by Wabash National Corporation
95
Exhibit 23.01
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-3 No. 333-194251) of Wabash National Corporation
(2) Registration Statement (Form S-8 No. 333-115682) pertaining to the 2004 Stock Incentive Plan of Wabash
National Corporation
(3) Registration Statement (Forms S-8 No. 333-149349) pertaining to the 2011 Omnibus Incentive Plan and the
2007 Omnibus Incentive Plan of Wabash National Corporation
(4) Registration Statement (Form S-8 No. 333-178778) pertaining to the 2011 Omnibus Incentive Plan of Wabash
National Corporation
of our reports dated February 26, 2016, with respect to the consolidated financial statements of Wabash National
Corporation and the effectiveness of internal control over financial reporting of Wabash National Corporation,
included in this Annual Report (Form 10-K) of Wabash National Corporation for the year ended December 31,
2015.
/s/ Ernst & Young LLP
Indianapolis, Indiana
February 26, 2016
96
CERTIFICATIONS
Exhibit 31.01
I, Richard J. Giromini, certify that:
1.
I have reviewed this report on Form 10-K of Wabash National Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 26, 2016
/s/Richard J. Giromini
Richard J. Giromini
President and Chief Executive Officer
(Principal Executive Officer)
97
CERTIFICATIONS
Exhibit 31.02
I, Jeffery L. Taylor, certify that:
1.
I have reviewed this report on Form 10-K of Wabash National Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 26, 2016
/s/ Jeffery L. Taylor
Jeffery L. Taylor
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
98
Written Statement of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
Exhibit 32.01
The undersigned, the Chief Executive Officer and the Senior Vice President, Chief Financial Officer of Wabash
National Corporation (the "Company"), each hereby certifies that, to his knowledge, on February 26, 2016:
(a)
(b)
the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 filed on February
26, 2016, with the Securities and Exchange Commission (the “Report”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Richard J. Giromini
Richard J. Giromini
President and Chief Executive Officer
February 26, 2016
/s/ Jeffery L. Taylor
Jeffery L. Taylor
Senior Vice President and Chief Financial Officer
February 26, 2016
A signed original of this written statement required by Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to Wabash National Corporation and will be retained
by Wabash National Corporation and furnished to the Securities and Exchange Commission or its staff upon
request.
99
Stockholder Information
Executive Officers
Directors
Richard J. Giromini
President, Chief Executive Officer and Director
Jeffery L. Taylor
Senior Vice President – Chief Financial Officer
Rodney P. Ehrlich
Senior Vice President – Chief Technology Officer
Bruce N. Ewald
Senior Vice President – Sales and Marketing
William D. Pitchford
Senior Vice President – Human Resources
Erin J. Roth
Senior Vice President – General Counsel
and Secretary
Mark J. Weber
Senior Vice President – Group President,
Diversified Products
Brent L. Yeagy
Senior Vice President – Group President,
Commercial Trailer Products
Auditors
Ernst & Young LLP
111 Monument Circle
Suite 2600
Indianapolis, IN 46204-5120
Transfer Agent
Wells Fargo Bank, N.A.
Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854
Telephone: 1-800-468-9716 or 651-450-4064
Fax: 651-450-4033
Form 10-K
In lieu of a separate annual report to stockholders,
enclosed is Wabash National Corporation’s
Form 10-K, which includes as an exhibit the
certifications required by Section 302 of the
Sarbanes Oxley Act.
Richard J. Giromini
President and Chief Executive Officer
Wabash National Corporation
Dr. Martin C. Jischke
Chairman of the Board
Wabash National Corporation
James D. Kelly
Director
Wabash National Corporation
John E. Kunz
Vice President – Treasurer and Tax
Tenneco, Inc.
Larry J. Magee
Director
Wabash National Corporation
Ann D. Murtlow
Chief Executive Officer
United Way of Central Indiana
Scott K. Sorensen
Chief Financial Officer
Sorenson Communications
Stock Listing
Symbol: WNC
New York Stock Exchange
Internet Address
www.wabashnational.com
Requests
For stockholder requests for information, please contact:
Wabash National Corporation
c/o Director - Investor Relations
1000 Sagamore Parkway S.
Lafayette, IN 47905
(765) 771-5310
Wabash National Corporation
1000 Sagamore Parkway South
Lafayette, IN 47905