April 15, 2020

Dear P.A.M. Transportation Services, Inc. Shareowner:

Vote AGAINST Re-election of Matthew T. Moroun, Frederick P. Calderone and W. Scott Davis

At the April 29, 2020 P.A.M. Transportation Services, Inc. Annual General Meeting CalPERS will be voting AGAINST Matthew T. Moroun (Board Chair), Frederick P. Calderone and W. Scott Davis (both long-tenured directors with 12 or more years of service), who are standing for re-election at the company’s 2020 Annual General Meeting. As of record date March 10, 2020, CalPERS owned 426 shares of P.A.M. Transportation Services, Inc. common stock. As a long-term shareowner of the company, we believe these three board members have demonstrated a lack of responsiveness to multiple CalPERS shareowner engagement requests to address board composition related to diversity.

CalPERS Governance & Sustainability Principles Advocate for Board Diversity

Consistent with the CalPERS Governance & Sustainability Principles¹ we believe the board should facilitate a process that ensures a thorough understanding of the diverse characteristics necessary to effectively oversee management's execution of a long-term business strategy. Specifically, board diversity should be thought of in terms of skill sets, gender, age, nationality, race, sexual orientation, gender identity, and historically under-represented groups. Consideration should go beyond the traditional notion of diversity to include a more broad range of experience, thoughts, perspectives, and competencies to help enable effective board leadership.

Growing Evidence Diversity is Good for Business Performance

The 2015 McKinsey & Co. study, “Why Diversity Matters,” shows that companies in the top quartile for gender diversity and racial and ethnic diversity are respectively 15% and 35% more likely to have financial returns above their respective national industry median, while those in the bottom quartile are less likely to do so.² Another report from McKinsey titled “Delivering Through Diversity” shows that companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation than companies in the fourth quartile. For ethnic/cultural diversity, top-quartile companies were 33% more likely to outperform on profitability.³

¹ California Public Employees’ Retirement System Governance & Sustainability Principles

https://www.calpers.ca.gov/docs/forms-publications/governance-and-sustainability-principles.pdf

² McKinsey & Company, “Why Diversity Matters,” by Vivian Hunt, Dennis Layton, and Sara Prince, January 2015.

http://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters

³McKinsey & Company, “Delivering through Diversity” by Vivian Hunt, Sara Prince, Sundiatu Dixon-Fyle, Lareina Yee, January 2018.

https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity

PLEASE NOTE: The cost of this solicitation is being borne entirely by CalPERS and is being done through the use of the mail and telephone communication. CalPERS is not asking for your proxy card. Please do not send us your proxy card.

Hold Directors Accountable for Not Engaging with Shareholders

Board Chair Matthew T. Moroun, and long-tenured directors, Frederick P. Calderone and W. Scott Davis participate in the consideration of director nominees. CalPERS believes these three directors can be responsible and play a major role in recruiting diverse qualified directors and in the director selection process. These three board members should be held accountable for repeatedly ignoring our shareowner engagements on board diversity.

Governance Concerns at P.A.M. Transportation Services, Inc.

In addition to our request to vote AGAINST Matthew T. Moroun, Frederick P. Calderone, and W. Scott Davis, we would like to highlight the following governance concerns at the company:

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Non-responsiveness to CalPERS’ requests to engage the company regarding improving its board diversity. CalPERS’ multiple requests to engage the company starting in July 2017 and throughout 2018 and 2019 have been unanswered

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Board is not majority independent

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Board does not have a nominating committee

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Non-independent directors serve on a key board committee (compensation committee)

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Has plurality vote standard with no resignation policy for uncontested director elections

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Does not allow proxy access

Accountability Concerns at P.A.M Transportation – Vote AGAINST Re-election of Matthew T. Moroun, Frederick P. Calderone and W. Scott Davis

We believe Board Chair Matthew T. Moroun, and two long-tenured directors, Frederick P. Calderone and W. Scott Davis should be held accountable for demonstrating a lack of board responsiveness to shareowners’ concerns and engagement efforts on board diversity issues. Please vote AGAINST the re-election of these three board members.

Should you have any questions please feel free to contact Todd Mattley, CalPERS Associate Investment Manager at Engagements@calpers.ca.gov or 916-795-0565.

Thank you for your support.

Sincerely,

Simiso Nzima

Investment Director, Global Equity

CalPERS Investment Office