Related Person Transactions
|12 Months Ended|
Dec. 31, 2012
|Related Party Transactions [Abstract]|
|Related Person Transactions||
Note 6. Related Person Transactions
Each of Earl E. Congdon, John R. Congdon, David S. Congdon and John R. Congdon, Jr. are related to one another and served in various executive management positions and/or on our Board of Directors during 2012. We have entered into amended and restated employment agreements with Earl E. Congdon and David S. Congdon, which are incorporated by reference as exhibits to our Annual Report on Form 10-K. We regularly disclose the amount of compensation that we pay to these individuals, as well as any of their family members employed by us and whose compensation from time to time may require disclosure, in the proxy statement for our Annual Meeting of Shareholders.
During 2012, John R. Congdon resigned from his position as Senior Vice President but continues to be employed by the Company. In connection with his resignation as a Senior Vice President, the Board of Directors and Mr. Congdon agreed to terminate the amended and restated employment agreement between the Company and John R. Congdon.
Transactions with Old Dominion Truck Leasing, Inc.
Old Dominion Truck Leasing, Inc. (“Leasing”) is a North Carolina corporation whose voting stock is owned by an Earl E. Congdon Revocable Trust; the John R. Congdon Revocable Trust; and members of Earl E. Congdon’s and John R. Congdon’s families. Leasing is primarily engaged in the business of purchasing and leasing tractors, trailers and other vehicles. John R. Congdon is Chairman of the Board of Leasing, and Earl E. Congdon is Vice Chairman of the Board of Leasing. Since 1986, we have combined our requirements with Leasing for the purchase of tractors, trailers, equipment, parts, tires and fuel. We believe that the termination of this arrangement would not have a material adverse impact on our financial results.
We purchased $239,000, $278,000 and $242,000 of maintenance and other services from Leasing in 2012, 2011 and 2010, respectively. We intend to continue to purchase maintenance and other services from Leasing, provided that Leasing’s prices continue to be favorable to us.
We also paid Leasing $86,000 for leased equipment in 2010. These payments were for long-term leases for tractors used in our linehaul operations. We received no commission or other financial benefit from Leasing or any other party in connection with these lease transactions. We did not lease any equipment from Leasing in 2012 or 2011.
We charged Leasing $18,000, $18,000 and $17,000 for the rental of property in 2012, 2011 and 2010, respectively. No other services were provided to Leasing for the years ended December 31, 2012, 2011 and 2010.
Split-Dollar Life Insurance Policies
We are the owner of two split-dollar life insurance contracts insuring the life of John R. Congdon. The net cash surrender value for these policies was $6.8 million and $6.6 million at December 31, 2012 and 2011, respectively, and is included on our Balance Sheets under the caption “Other assets.” At December 31, 2012, these policies provided for an aggregate of $8.9 million in net death benefits due to the Company, of which we have endorsed $2.0 million to Mr. Congdon’s children.
The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/presentationRef