MARTEN TRANSPORT LTD

The third component of our executive compensation program consists of equity-based compensation. We award stock options and performance unit awards to align the interests of our executive officers and key personnel with our stockholders and to increase our long-term value. Through deferred vesting, this component of our compensation program creates an incentive for individuals to remain with us and promote our long-term goals.

We generally grant an option to purchase shares of common stock, along with performance unit awards, to our key personnel who are not executive officers based primarily upon the individual’s actual and/or potential contribution and our financial performance. To date, all stock options have been granted at fair market value.

Pursuant to our 2015 Equity Incentive Plan and our 2005 Stock Incentive Plan, our named executive officers, as well as other employees, are eligible to receive equity compensation awards, including stock options and restricted stock awards, stock appreciation rights, performance unit awards and stock bonuses. For more information concerning the terms of these plans, we refer you to “Compensation and Other Benefits-Grants of Plan-based Awards.” Currently, we provide named executive officers with performance unit awards.

Stock options and performance unit awards become valuable as our common stock price increases and the holder remains employed during the period required for the option or unit award to “vest,” and, in the case of performance unit awards, our overall Company performance objectives are satisfied. This provides an incentive for the holder to remain employed by us. In addition, these agreements link a portion of an employee’s compensation to stockholders’ interests by providing an incentive to achieve corporate goals and increase the market price of our stock.

In May 2021, the Compensation Committee recommended, and our Board of Directors approved, the granting of performance unit awards under our 2015 Equity Incentive Plan to our current named executive officers totaling 70,400 share units. This was our twelfth grant of such awards. The unit awards will vest and become the right to receive a number of shares of common stock equal to a total vesting percentage multiplied by the number of units subject to such award. For purposes of the award, the vesting percentage is equal to the percentage increase, if any, in our net income for the year being measured over the prior year, as reflected in our audited financial statements for each such year, plus ten percentage points. The amount of unit awards within each of the grants to the named executive officers was tied to the level of each executive officer’s base compensation. All vested awards are to be paid to the named executive officers immediately upon vesting. For additional information concerning the terms of outstanding awards, we refer you to “Compensation and Other Benefits-Grants of Plan-based Awards.”

In May 2022, the Compensation Committee recommended, and our Board of Directors approved, the granting of performance unit awards under our 2015 Equity Incentive Plan to our current named executive officers totaling 60,900 share units. The terms of these awards are similar to the awards granted in 2021.

In May 2023, the Compensation Committee recommended, and our Board of Directors approved, the granting of performance unit awards under our 2015 Equity Incentive Plan to our current named executive officers and to Mr. Phillips and Mr. Baier, who were subsequently appointed as named executive officers in 2023, totaling 57,044 share units. The terms of these awards are similar to the awards granted in 2021.

The long-term incentive compensation information for our named executive officers during 2023, 2022 and 2021 is included in the Summary Compensation Table on page 27. Additional information on long-term incentive awards is shown in the Outstanding Equity Awards at Fiscal Year-end Table on page 32.