UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
------------------------
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
WERNER ENTERPRISES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[LOGO OF WERNER ENTERPRISES, INC.]
Post Office Box 45308
Omaha, Nebraska 68145-0308
___________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 200812, 2009
___________________________
Dear Stockholders:
Notice is hereby given that the 20082009 Annual Meeting of
Stockholders (the "2008"2009 Annual Meeting") of Werner
Enterprises, Inc., a Nebraska corporation (the "Company"),
will be held at the Omaha Marriott, 10220 Regency Circle,
Omaha,Embassy Suites Omaha-La Vista Hotel &
Conference Center, 12520 Westport Parkway, La Vista, Nebraska,
on Tuesday, May 13, 2008,12, 2009, at 10:00 a.m. local Central Daylight
time. This meeting will be held for the following purposes,
which are more fully described in the accompanying Proxy
Statement:
1. To elect three Class IIIII directors to each serve
for a three-year term expiring at the 20112012 Annual
Meeting of Stockholders and until their respective
successors are elected and qualified.
2. To ratify the appointment of KPMG LLP as the
Company's independent registered public accounting
firm for the year ending December 31, 2008.2009.
3. To transact such other business as may properly
come before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March
24, 2008,23, 2009, will be entitled to receive notice of and to vote at
the 20082009 Annual Meeting or any adjournment thereof.
Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting To Be Held on May 12, 2009
______________________________________________________
Enclosed you will find the Proxy Statement (including a Proxy)
relating to the 20082009 Annual Meeting and a copy of the
Company's Annual Report to Stockholders for the year ended
December 31, 20072008 (the "2007"2008 Annual Report"). The(The 2008
Annual Report includes our Annual Report on Form 10-K for
2008.) This Notice of Annual Meeting of Stockholders and the
Proxy Statement and 20072008 Annual Report are also available
without charge on the Company's website: www.werner.com under
the "Investor Information" tab.
All stockholders are cordially invited and encouraged to
attend the 20082009 Annual Meeting in person. However, regardless
of whether you attend the meeting, we request that you vote
and submit your proxyProxy as promptly as possible in order to
ensure the presence of a quorum and that your shares will be
voted in accordance with your wishes. Voting instructions are
enclosed and provided in the Proxy Statement for your
convenience. If you attend the meeting, you may vote by proxyProxy
or you may revoke your proxyProxy and cast your vote in person.
By Order of the Board of Directors
/s/ James L. Johnson
James L. Johnson
Omaha, Nebraska Senior Vice President, Controller
Omaha, NebraskaApril 10, 2009 and Corporate Secretary
April 8, 2008
TABLE OF CONTENTS
_________________
INTRODUCTION 1
Annual Meeting Information 12
Voting Information and Instructions 2
Record Date 2
Methods of Stockholder Voting 2
Revoking Your Proxy 2
Voting Your Proxy 23
Stockholder Privacy 23
Election of Directors and Cumulative Voting 23
Quorum 3
Expenses of Solicitation 3
Other Matters 34
PROPOSAL 1 - ELECTION OF DIRECTORS 34
Election and Voting Process 34
Director Nominees 4
Current Director Information 4
Recommendation of the Board of Directors - Proposal 1 6
CORPORATE GOVERNANCE 6
Role of the Board of Directors 6
Corporate Governance Policies and Materials 67
Committees of the Board of Directors 67
Director Independence Determination 7
Audit Committee 7
Audit Committee Independence and Financial Expert 8
Compensation Committee 8
Compensation Committee Independence 9
Compensation Committee Interlocks and Insider
Participation 9
Nominating and Corporate Governance Committee 9
Attendance at Board and Committee Meetings and Annual
Meeting 910
Stockholder Communications with the Board of Directors 10
Director Nomination Process 1011
Director Compensation and Benefits 1112
Director Stock Ownership 12
20072008 Compensation of Directors 12
Report of the Audit Committee 13
EXECUTIVE OFFICERS 14
Current Executive Officer Information 14
BENEFICIAL OWNERSHIP OF COMMON STOCK 16
Section 16(a) Beneficial Ownership Reporting
Compliance 16
Security Ownership of Directors, Executive Officers
and Certain Beneficial Owners 16
i
EXECUTIVE COMPENSATION 18
Compensation Discussion and Analysis 18
i
Named Executive Officers 1918
2008 Executive Compensation Program and PhilosophyObjectives 19
Elements of Executive Compensation 1920
Compensation Process and Determination 2225
Competitive Peer Groups and Benchmarking 2327
Other Executive Compensation Policies and
Considerations 2428
Employment Arrangements 2630
Arrangements and Potential Payments Upon Termination
or Change in Control 2630
Termination 2630
Change in Control 2630
Potential Benefits Payable Under the Equity Plan 2630
Report of the Compensation Committee 2731
Summary Compensation Table 2832
All Other Compensation for 2007 302008 34
Grants of Plan-Based Awards for 2007 312008 35
Outstanding Equity Awards at 20072008 Year-End 3135
Option Exercises for 2007 342008 38
Nonqualified Deferred Compensation for 2007 342008 38
Deferrals 3438
Earnings 3439
Distributions and In-Service"In Service" Withdrawals 3539
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 3640
Fees of Independent Registered Public Accounting Firm Fees 3640
Audit Fees 3640
Audit-Related Fees 3640
Tax Fees 3640
Policy of Audit Committee Pre-Approval of Audit and
Non-
AuditNon-Audit Services Performed by the Independent
Registered Public Accounting Firm 3741
Recommendation of the Board of Directors 37- Proposal 2 41
TRANSACTIONS WITH RELATED PERSONS 3842
Review and Approval of Related Person Transactions 3842
Related Person Transactions 3842
Land Lease Agreement 3842
Family Members of Executive Officers and Directors 3943
Owner-Operators 4044
Personal Use of Corporate Aircraft 4044
OTHER BUSINESS 4044
STOCKHOLDER PROPOSALS 4044
STOCKHOLDERS SHARING THE SAME ADDRESS 4145
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES;OFFICES 45
INTERNET WEBSITE 41AND AVAILABILITY OF MATERIALS 46
ii
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 200812, 2009
________________________
INTRODUCTION
We are sending you this Proxy Statement in connection with the
solicitation of proxies by our Board of Directors (the
"Board") for the 20082009 Annual Meeting of Stockholders of Werner
Enterprises, Inc. The 20082009 Annual Meeting will be held for
the purposes set forth in the Notice of Annual Meeting of
Stockholders on the cover page of this Proxy Statement. We
are mailing the Proxy Statement, Proxy and our Annual Report
to Stockholders for the year ended December 31, 20072008 ("20072008
Annual Report") on or about April 8, 2008.10, 2009.
In this Proxy Statement, we also use the following terms and
abbreviations:
* We refer to Werner Enterprises, Inc. as the "Company,"
"we" or "us,"us."
and to the 2008* The 2009 Annual Meeting of Stockholders is referred to
as the "Annual Meeting" or "2008"2009 Annual Meeting."
* References to "2007""2008" and "for the year ended December
31, 2007"2008" mean the Company's fiscal year for the period
beginning January 1, 20072008 and ending December 31, 2007.2008.
* The term "executive officers" means most of our seniorthose executives who are all
listed in the "CurrentCurrent Executive Officer Information"Information
section on page 14 of this Proxy Statement and on our
website.
References to "named executive
officers" mean* "Named Executive Officers" means the five executive
officers identified inon pages 18 and 19 of the
Summary Compensation Table and "Compensation Discussion and Analysis"Analysis section of Executive Compensation in this
Proxy Statement.
* "Proxy materials"Materials" means the Proxy Statement and Proxy
relating to the 2009 Annual Meeting and 2007the 2008 Annual
Report.
* We also refer to our "website," which means the
Internet website available at www.werner.com under the
"Investor Information" tab, as provided in the "Contacting
the Corporate SecretaryInternet
Website and Executive Offices; Website"Availability of Materials section of this
Proxy Statement.
This Proxy Statement and our 20072008 Annual Report are available
on our website. In these proxy materials,Proxy Materials, we refer to certain
reports and forms that we have filed with the Securities and
Exchange Commission ("SEC"). All of our SEC filings are
available on our website. You may also request copies of our
SEC filings and proxy materialsProxy Materials from the Corporate Secretary
at the contact information provided in the "ContactingContacting the
Corporate Secretary and Executive Offices; Website"Offices section of this
Proxy Statement.
1
Annual Meeting Information
The 20082009 Annual Meeting of Stockholders will be held at 10:00
a.m. local Central Daylight time on Tuesday, May 13, 2008,12, 2009, at
the Omaha Marriott,Embassy Suites Omaha-La Vista Hotel & Conference Center,
and at any adjournment(s) thereof. The Omaha MarriottEmbassy Suites Omaha-
La Vista Hotel & Conference Center is located at 10220 Regency Circle12520
Westport Parkway in Omaha,La Vista, Nebraska, which is near the intersection ofsituated just
off U.S. Interstate 68080 and West Dodge Road.the Giles Road Exit 442 in La
Vista's Southport development. Should you require additional
directions to attend the meeting and vote in person, you may
contact our Corporate Secretary at the information set forth
in the "ContactingContacting the Corporate Secretary and Executive
Offices; Website"Offices section on page 41.45. At the meeting, Clarence L.
Werner, Gregory L. Werner and Gary L. Werner and other members
of our management team will discuss our results of operations
and business plans. Members of our Board of Directors will
also be present to answer your questions.
1
Voting Information and Instructions
Record Date. The record date for the Annual Meeting is March
24, 2008.23, 2009. On the record date, 70,385,01371,576,367 shares of our issued
$0.01 par value Common Stockcommon stock were outstanding. At the Annual
Meeting, each stockholder will be entitled to one vote (in
person or by proxy)Proxy) per share that is owned of record at the
close of business on March 24, 2008.23, 2009. Each share has one vote
on each matter. Our stock transfer books will not be closed.
On March 24, 2008,23, 2009, the closing salemarket price of our Common Stockcommon
stock as reported on the NASDAQ Global Select MarketSM was
$19.66$14.55 per share.
Methods of Stockholder Voting. YouOnly stockholders of record as
of the close of business on the record date are entitled to
notice of, attend and vote at the Annual Meeting. Shares that
may be voted at the Annual Meeting include shares that are
held by (i) "registered stockholders" and (ii) "beneficial
owners."
If your shares are registered directly in your name with our
transfer agent, you are considered the "registered
stockholder" with respect to those shares. If you are a
registered stockholder, you may vote your shares by mail using
the enclosed Proxy and self-addressed postage-paid return envelope and by
following the instructions appearing on the Proxy. These instructions allowAs a
registered stockholder, you may also vote your shares in
person at the Annual Meeting.
Most stockholders hold their shares through a broker, bank or
other nominee, rather than holding shares registered directly
in their name. In that case, you are considered the
"beneficial owner" of shares held in street name. If you are
a beneficial owner, then your broker, bank or other nominee
will instruct you as to how your shares may be voted by proxy,
including whether Internet or telephonic voting options are
available. As a beneficial owner of shares, you may not vote
in person at the Annual Meeting unless you obtain a legal
proxy from your broker, bank or other nominee that gives you
the right to vote by completing,the shares.
Regardless of your type of stock ownership, signing
dating and returning the Proxy in the envelope.
Alternatively, you may vote by the Internet or telephone if
instructions for these other voting methods were enclosed with
your proxy materials. Signing and
returning the Proxy by mail, or submitting your Proxyproxy by the
Internet or telephone, does not affect your right as a
stockholder to vote in person at the Annual Meeting.
Revoking Your Proxy. Any stockholder who delivers an executed
proxyProxy has the right to revoke the proxyProxy at any time prior to
its use at the Annual Meeting. You may revoke your proxyProxy
before the Annual Meeting by:by (i) delivering a written and
executed notice of revocation of the proxyProxy to the Corporate
Secretary at our executive offices;offices or (ii) executing a
subsequent proxyProxy (dated later than the previously submitted
proxy) and delivering the subsequent proxy to our Corporate
Secretary; or (iii)Proxy). Alternatively, you may revoke your Proxy by attending
the Annual Meeting, informing the Corporate Secretary of your
Proxy revocation and voting in person. Attendance at the
Annual Meeting, in and of itself, will not constitute a
revocation of a proxy.Proxy.
2
Voting Your Proxy. When a proxyProxy is executed and returned (and
not revoked) prior to the Annual Meeting, the proxyProxy will be
voted according to the instructions you made when granting the
proxy.Proxy. Unless you specify otherwise or no choice is indicated
on theyour Proxy, all shares of our Common Stockcommon stock represented by
the proxyProxy will be voted:
(i) FOR the election of all nominees for Class III
director ("Proposal 1");
(ii) FOR the ratification of the appointment of KPMG LLP
as our independent registered public accounting
firm for 20082009 ("Proposal 2"); and
(iii) In accordance with the best judgment of the named
proxies on any other matters properly brought
before the Annual Meeting or any adjournment
thereof. See "Other Matters"Other Matters in this Proxy
Statement.
Stockholder Privacy. As a matter of Company policy, we keep
all proxies, ballots and voting tabulations that identify
individual stockholders private.private and confidential. Such
documents are available for examination only by certain
Company representatives associated with processing proxies and
tabulating the vote. Stockholder votes are not disclosed,
except as may be necessary to meet legal requirements.
Election of Directors and Cumulative Voting. With respect to
the election of directors, Company stockholders (or their
proxy if one is appointed) have cumulative voting rights under
the laws of the State of Nebraska. This means that you (or
your proxy) may eithermay: (i) vote your shares for as many directors
as are to be elected; (ii) cumulate your shares and give one
director nominee an amount of votes equal to the total number
of directors to be elected multiplied by the total number of
theiryour shares; or (iii) distribute an amount of votes calculated
as described in (ii) among as many director nominees as you
desire. If you desirewish to vote cumulatively, you must vote in
person or give your specific cumulative voting instructions to
the designated proxy, and your instructions must indicate the
number of votes represented by your shares that are to be cast
for one or more of the director nominees. The solicitation of
proxies on behalf of the Board of Directors includes a
solicitation for 2
discretionary authority to cumulate votes.
You may withhold authority to vote for any nominee(s) by
striking through the name(s) of such nominee(s) on the
accompanying Proxy.
Quorum. For business to be conducted at the Annual Meeting, a
quorum must be present. The presence at the Annual Meeting,
either in person or by proxy,Proxy, of a majority of all outstanding
shares of Common Stockcommon stock entitled to vote at the Annual Meeting
will constitute a quorum for the transaction of business.
Both abstentions and broker non-votes are counted for the
purpose of determining whether a quorum is present for the
transaction of business. ("Broker non-votes" are shares held
by a broker or nominee that are represented by proxy at the
Annual Meeting, but the beneficial owner of such shares has
not instructed the broker or nominee to vote on certain
matters and has not given the broker or nominee discretionary
voting power.) If a quorum is not present, the Annual Meeting
will be adjourned until a quorum is obtained.
Expenses of Solicitation
We will bear all costs of this proxy solicitation, including
expenses for the preparation, printing, assembly and mailing
of materials. Some of our directors, officers and regular
employees
may also solicit proxies in person or by the Internet,
telephone or other electronic communications, and they will
not receive any additional compensation for making such
solicitations. We will also reimburse brokerage firms and
other custodians and fiduciaries for all reasonable expenses
incurred for forwarding proxy materialsProxy Materials to beneficial owners
of our stock in accordance with customary practice. Your
cooperation in promptly voting your shares and submitting your
proxyProxy will help to avoid additional expense.
3
Other Matters
On the date of mailing this Proxy Statement, the Board of
Directors knows of no other matters to be brought before
stockholders at the Annual Meeting other than the matters
described in this Proxy Statement. If any other matters are
properly presented at the meeting, your signed proxyProxy gives the
persons named on the enclosed Proxy the discretionary
authority to vote the shares represented thereby in accordance
with their best judgment.
PROPOSAL 1 - ELECTION OF DIRECTORS
Our Articles of Incorporation provide that there shall be two
or three separate classes of directors. Each class must
consist of not less than two, nor more than five, directors,
and the classes should be nearly equal in number as possible.
Our By-Laws provide for eight directors, divided into three
classes (Class I, II and III), and each class should have the
same number of directors to the extent possible. Directors
hold office for a term of three years, and each term expires
at the third succeeding annual meeting of stockholders after
the respective director's election and until a successor is
elected and qualified. The terms of office for each class of
current directors expire at the annual meeting of stockholders
in the following years: Class I, 2010; Class II, 2008;2011; and
Class III, 2009.
Election and Voting Process
Assuming the presence of a quorum, directors are elected when
they receive a plurality of affirmative votes cast by holders
of the outstanding shares of our Common Stock,common stock, present or
represented by proxy, at the Annual Meeting and entitled to
vote thereon. This means that the three nominees receiving
the highest number of votes at the Annual Meeting, after
taking into account any cumulative voting, will be elected to
the Board. Shares not voted for any nominee (whether by
specifically withholding authority to vote on a Proxy or
3
otherwise) will not impact the election of directors except to
the extent that such failure to vote for a nominee results in
another individual receiving a larger proportion of the total
votes.
Each of the nominees designated in this Proxy Statement has
indicated his intention to serve as a director if elected, and
the Board does not know of any reason why any nominee will be
unavailable for election. In the event any nominee becomes
unwilling or unable to serve as a director, the shares
represented by your accompanying Proxy will be voted for any
substitute nominee designated by the Board, unless your proxyProxy
withholds authority to vote for the unavailable and/or
substitute nominee. There are no arrangements or
understandings between any of the nominees and any other
person pursuant to which any of the nominees was selected as a
nominee.
Director Nominees
You will be asked to elect three directors in Class IIIII to
each serve for a three-year term expiring at the 20112012 Annual
Meeting of Stockholders and until his respective successor is
elected and qualified. GaryClarence L. Werner, Gregory L. WernerPatrick J. Jung
and Michael L. SteinbachDuane K. Sather are current Class IIIII directors whose
terms will expire at the 20082009 Annual Meeting. They have been
nominated for election at the 20082009 Annual Meeting for terms
expiring at the 20112012 Annual Meeting of Stockholders and until
their respective successors are duly elected and qualified.
Current Director Information
Set forth belowin the table on the following page is certain
information provided to us by the director nominees and the
directors whose terms will continue after the 20082009 Annual
Meeting, all of whom are current directors.
4
Name Position withMembers of the Company orBoard of Directors
- -----------------------------------------------------------------------------------------
Term
Name Principal Occupation Term Ends Class
---- ------------------------------------------------- ----------------------------- ---- -----
Clarence L. Werner Chairman of Werner Enterprises, Inc. 2009 III
Gary L. Werner Vice Chairman 2008of Werner Enterprises, Inc. 2011 II
Gregory L. Werner President and Chief Executive Officer 20082011 II
of Werner Enterprises, Inc.
Gerald H. Timmerman President of Timmerman & Sons Feeding Co., Inc. 2010 I
Michael L. Steinbach Owner of Steinbach Farms & Equipment Sales 2011 II
and 2008 Steinbach Truck & Trailer
Kenneth M. Bird SuperintendentPresident and Chief Executive Officer 2010 I
of Westside Community Schools 2010the Bright Futures Foundation
Patrick J. Jung Chief Operating Officer of Surdell & Partners LLC 2009 III
Duane K. Sather Former Chairman of Sather Companies 2009 III
CLARENCE L. WERNER, 70,71, operated Werner Enterprises as a sole
proprietorship from 1956 until the Company's incorporation of Werner
Enterprises, Inc. in September 1982. He has been a Company
director since that time and also served as President until
1984. Since 1984, Mr. Werner has been our Chairman, of the Board, and he
served as our Chief Executive Officer of the Company from 1984 until February 8,
2007. Mr. Werner is the father of Gary L. Werner and Gregory
L. Werner.
GARY L. WERNER, 50,51, has been a director of the Company since
its incorporation. Mr. Werner was General Manager of the
CompanyWerner
Enterprises, Inc. and its predecessor from 1980 to 1982. He
also served as Vice President from 1982 until 1984, when he
was named our President and Chief Operating Officer of the Company.Officer. Mr.
Werner was then named Vice Chairman in 1991.1991 and has held such
position since that time. From 1993 to
4
April 1997, Mr. Werner
also reassumed the duties of President. Gary L. Werner is a
son of Clarence L. Werner and a brother of Gregory L. Werner.
GREGORY L. WERNER, 48,49, was elected as a director of the
Company in 1994. He served as aour Vice President of the Company from 1984 to
March 1996 and was Treasurer from 1982 until 1986. Mr. Werner
was promoted to Executive Vice President in March 1996 and
became President in April 1997. Mr. Werner has also directed
revenue equipment maintenance for the CompanyWerner Enterprises, Inc. and
its predecessor since 1981. He assumed responsibility for the
Company's Management Information Systems in 1993 and also
assumed the duties of Chief Operating Officer in 1999. Mr.
Werner was named our Chief Executive Officer of the Company onin February 8, 2007.
Gregory L. Werner is a son of Clarence L. Werner and a brother
of Gary L. Werner.
GERALD H. TIMMERMAN, 68,69, was elected as a Company director in
1988. Since 1970, Mr. Timmerman has been President of
Timmerman & Sons Feeding Co., Inc. in Springfield, Nebraska.
He also serves as a member of the board of directors of
McCarthy Group, LLC. Timmerman & Sons Feeding Co., Inc. is a
cattle feeding and ranching corporation with operations in
several Midwestern states. McCarthy Group, LLC is a private
equity investment firm based in Omaha, Nebraska.
MICHAEL L. STEINBACH, 53,54, was elected as a director of the
Company in 2002. He has been the sole owner of Steinbach
Farms & Equipment Sales since 1980. Steinbach Farms &
Equipment Sales buys and sells farmland and equipment and is
5
located in Valley, Nebraska. Mr. Steinbach has also been the
sole owner of Steinbach Truck & Trailer, a semi-tractor and
trailer dealership located in Valley, Nebraska, since 1997.
Mr. SteinbachHe also farms or custom farms approximately six thousand acres
of farmland.
KENNETH M. BIRD, 60,PH.D., 61, was appointed by theour Board of
Directors in 2002 to fill a vacant director position and was
then elected by the stockholders in 2004. He has beenPrior to his
retirement in May 2008, Dr. Bird served as Superintendent of the
Westside Community Schools in Omaha, Nebraska since 1992 and
also held various administrative positions in the Westside
School District since 1981. In
1998, Dr. Bird was the Nebraska Superintendent of the Year and
has been recognized for his technology leadership and vision.
He is alsocurrently the President and
Chief Executive Officer of Buildingthe Bright Futures Foundation, a
non-profitnonprofit entity and initiative that serves youth education in
Omaha, Nebraska. Dr. Bird is also active in local, state and
national professional organizations, and he serves on a number
of community and civic boards.
PATRICK J. JUNG, 60,61, was elected as a Company director in
2003. He currently serves as the Chief Operating Officer of
Surdell & Partners LLC, an advertising company in Omaha,
Nebraska. Prior to his position with Surdell & Partners LLC,
Mr. Jung was a practicing certified public accountant with
KPMG LLP for thirty years. Mr. Jung was also the audit
engagement partner on the Company's annual audit for the year
ended December 31, 1999 prior to his retirement from KPMG LLP
in 2000. Mr. Jung is currently a member of the board of directors of
Burlington Capital Group LLC (including America First Tax
Exempt Investors L.P.) and serves on its audit and governance
committees. He is also a member of the board of directors of
Supertel Hospitality, Inc. and serves as its audit committee
chair and as a member of its nominating committee. Located in
Omaha, Nebraska, Burlington Capital Group LLC's business
involves real estate, money management and emerging markets.
Supertel Hospitality, Inc., headquartered in Norfolk,
Nebraska, is a real estate investment trust that owns and
acquires limited-service hotels in the United States.
DUANE K. SATHER, 63,64, was elected as a Company director in
2006. He is an investor and serves as a director of several
privately held companies that construct and operate ethanol
plants. From 1972 to 1996, Mr. Sather was the President of
Sather Trucking Company, and fromCorporation. From 1988 to 1996, Mr. Sather washe also
served as Chairman of Sathers Inc., a wholesale candy
manufacturer and distributor. Sather Companies. In 1996, Sather CompaniesTrucking Corporation and
Sathers Inc. were sold to Favorite Brands International.
5
International, Inc.
in 1996.
Recommendation of the Board of Directors - Proposal 1
The Board of Directors recommends that stockholders vote FOR
---
the election of each Class III director nominee. Holders of
proxies solicited by the Board in this Proxy Statement will
vote the proxies as directed on each Proxy, or if no
instruction is made, for the election of all Class III
director nominees.
CORPORATE GOVERNANCE
Role of the Board of Directors
One of the primary roles of the Board of Directors is to
oversee our senior management in the competent and ethical
operation of our business and to ensure that our stockholders'
interests are being properly served. To achieve these
objectives, the Board establishes and maintains high standards
of responsibility and ethics that, when consistently applied
and followed, contribute to our business's overall success.
Corporate Governance Policies and Materials
The members of our Board of Directors possess a variety of
experience, knowledge and judgment, and the diversity of these
skills complements our corporate governance structure. Our
corporate governance policies are designed to enable effective
6
and thorough decision-making and to allow proper and
comprehensive monitoring of the Company's performance and
compliance. Our fundamental corporate governance principles
and practices are set forth in our Code of Corporate Conduct
and other policies, each of which is available on our website.
Committees of the Board of Directors
The Board of Directors conducts its business through (i)
meetings of the Board, (ii) actions taken by written consent
in lieu of meetings, (iii) actions of its committees and (iv)
discussions with management, the independent auditors and
other consultants retained from time to time. The Board has
three standing committees: the Audit Committee, the
Compensation Committee and the Nominating and Corporate
Governance Committee ("Governance Committee"). The Board
elects committee members at the Board's annual organizational
meeting. A majority of full committee membership elects
committee chairs, unless elected by the full Board. Committee
members cannot be removed except by a majority vote of
independent directors in office at the time. The
responsibilities and duties of each committee are discussed
below.
The committees operate pursuant to written charters (including
any amendments thereto) approved and adopted by the Board. These charters are available on our website. TheIn
2008, the Audit Committee recently amended its charter to further
reflect applicable listing standards of theThe Nasdaq Stock
Market Inc. ("NASDAQ"), and the Board approved these amendments on
February 18, 2008. On August 14, 2007, the Board approved
amendments to the AuditThe Compensation Committee and Governance
Committee charters that transferredwere not amended in 2008 or in 2009 prior
to the authority to evaluate and
approve or disapprove any "related person transactions" (as
defined in the "Transactions with Related Persons" sectiondate of this Proxy Statement) fromStatement. Each of the Audit Committee to the
Governance Committee. At that time, the Board also approved
additional amendments to the Governance Committee charter to
further define the Governance Committee's role in corporate
governance with respect to the development and oversight ofcommittee
charters is available on our practices and policies regarding corporate governance,
ethical issues and compliance matters.
6
website.
The current composition of each committee is as follows:
Audit Compensation Governance
Name Audit Committee Committee Committee
(1)
---- --------------- ------------ ---------------------- --------- ---------
Kenneth M. Bird X X
Patrick J. Jung X (Chair)(Chairman) X (Chair)(Chairman)
Duane K. Sather X X
Michael L. Steinbach X X
Michael L. SteinbachGerald H. Timmerman X X Gerald H. Timmerman X X X(Chairman)
____________________
(1) The Governance Committee does not have a Chair.
Director Independence Determination
The Board has determined that all members of the Board of
Directors are independent pursuant to SEC rules and the applicable NASDAQ
listing standards adopted by NASDAQ, except for Messrs.
Clarence L. Werner, Gary L. Werner and Gregory L. Werner. The
Board has also determined that each member of the three Board
committees satisfies the applicable independence requirements
of NASDAQ, the SEC and the Internal Revenue Service ("IRS").
Audit Committee
The following information in this section is not deemed to be
"soliciting material" or to otherwise be considered "filed"
with the SEC, nor shall this report be subject to Regulation
14A (other than as indicated) or to the liabilities set forth
in Section 18 of the Securities Exchange Act of 1934. This
information shall not be deemed to be incorporated by
reference into any prior or subsequent filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically
incorporates it by reference or treats it as soliciting
material.
Our Board of Directors established a separately-designated
standing Audit Committee to oversee our accounting and
financial reporting processes and our financial statement
audits, in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended ("Exchange Act").applicable SEC rules and NASDAQ
listing standards. As more fully described in its charter,
the Audit Committee is responsible for overseeing our
accounting and financial reporting processes, which includes
but is not limited to:
* Discussing the annual audit and resulting letter of
comments with management;
* Consulting with the auditors and management regarding
the adequacy of internal controls;
7
* Reviewing our financial statements prior to their
release with management and the independent auditors;
* Evaluating with management the process used to support
the Chief Executive Officer and Chief Financial
Officer certifications that accompany our periodic SEC
filings;
* Appointing the independent auditors for the next
fiscal year;
* Reviewing and approving all audit and non-audit
services;
* Overseeing the work of our internal audit department;
and
* Assessing and maintaining procedures for the anonymous
submission of complaints concerning accounting and
auditing irregularities.
7
The Audit Committee periodically meets in executive session
with our independent auditors and also in a separate executive
session with the senior manager in charge of our internal
audit department. These meetings are conducted without the
presence of our management.
TheAudit Committee Independence and Financial Expert. Our Board
of Directors has determined that each Audit Committee member
(i) meets the independence criteria for Audit Committee
membership prescribed by Rule 10A-3(b)(1) and Section
10A(m)(3) of the Securities Exchange Act of 1934 ("Exchange
Act"); (ii) is independent under the Exchange ActNASDAQ listing standards
and (ii)(iii) has sufficient knowledge and sophistication in
financial and auditing matters under the NASDAQ rules. The
Board has also designated Mr. Jung as an "audit committee
financial expert" as defined under the SEC rules.
We have provided the Report of the Audit Committee for 20072008 in
this Proxy Statement on page 13.
Compensation Committee
The Compensation Committee is responsible for determining and
approving the compensation of our Chairman, Vice Chairman and
President and Chief Executive Officer. The Compensation
Committee also approves the compensation of all other
executive officers after considering the recommendations of
our Chairman, Vice Chairman and President and Chief Executive
Officer. The Compensation Committee is also responsible for
recommending to the Board the compensation policies for
"outside directors" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code")., and U.S. Treasury Regulation Section 1.162-27.
In this Proxy Statement, "outside directors" refers to our
Board members who are not employees or executives of the
Company and satisfy the "outside director" requirements of
Section 162(m) of the Internal Revenue Code. All of our
outside directors satisfy the NASDAQ independence
requirements.
The Compensation Committee assumedhas responsibility in 2006 for oversight of
and determining awards of equity compensation pursuant to our
Equity Plan. Our Equity Plan provides for grants of
nonqualified stock options, restricted stock and stock
appreciation rights ("SARs") to employees and non-
employeenon-employee
directors. With respect to the Equity Plan, the Compensation
Committee has authority to determine the terms of granted
awards, including (i) recipients; (ii) the number of shares
subject to each award; (iii) the date on which awards are
granted, exercisable and become vested; (iv) whether or not
awards may be exercised in installments; (v) the type of
award; (vi) the form of consideration payable upon exercise of
each award; and (vii) any other terms of the awards consistent
with the terms of the Equity Plan.
As explained in more detail under "CompensationCompensation Process and
Determination"Determination within the "CompensationCompensation Discussion and Analysis" and "Executive Compensation" sections,Analysis
section, the Compensation Committee delegated to our President
and Chief Executive Officer certain authority that allows him
to modify the base salaries of executive officers within
ranges established by the Compensation Committee. The
Compensation Committee reviews and approves any such base
8
salary changes at its year-end meeting. This task was
performed in 2007.2008. The Compensation Committee also determines
the compensation of the Chairman, Vice Chairman and President
and Chief Executive Officer independent of each such officer's
participation or consultation.
During 2007,2008, the Compensation Committee continued to retain
the firm of Towers Perrin as its compensation consultant to
assist with the continued development and evaluation of
compensation policies and with the Compensation Committee's
determinations of compensation awards. The Compensation
Committee engaged Towers Perrin to provide independent and
unbiased third-party advice and expertise regarding executive
compensation and to provide a competitive market pay analysis
for our named executive officers.Named Executive Officers. This analysis compared the
base salary, annual cash bonus and long-term incentive
components of compensation to both a competitive peer group
and the general industry.
During 2007, Towers Perrin also performed an outside director
pay analysis. This analysis compared cash compensation
(including retainersWe have provided the Report of the Compensation Committee for
2008 in this Proxy Statement on page 31. For more information
about the Compensation Committee's activities, refer to the
Compensation Discussion and meeting fees)Analysis and equity compensation
for outside directors to a competitive peer group. The
analysis also considered director participation onReport of the
Compensation Committee sections of this Proxy Statement.
Compensation Committee Independence. Our Board committees and additional fees paid for chairing any such
committee.
8
The Boardof Directors
has determined that all current Compensation Committee members
aresatisfy the applicable SEC and NASDAQ independence
requirements. Each Compensation Committee member is also (i)
a "non-employee directors"director" as defined by Rule 16b-3 under the
Exchange Act and (ii) an "outside directors"director" as defined in
Section 162(m) of the Internal Revenue Code.
We have provided the Report of the Compensation Committee for
2007 in this Proxy Statement on page 27. For more information
about the Compensation Committee's activities, refer to the
"Compensation DiscussionCode and Analysis" section and Report of
the Compensation Committee within "Executive Compensation"
under this Proxy Statement.U.S. Treasury
Regulation Section 1.162-27.
Compensation Committee Interlocks and Insider Participation.
No member of the Compensation Committee was an officer or
employee of the Company at any time during 20072008 or on the date
of this Proxy Statement. During 2007, the Compensation
Committee was comprised of Kenneth M. Bird, Patrick J. Jung
and Gerald H. Timmerman, each of whom is an outside (non-
employee) director who satisfies the applicable SEC and NASDAQ
independence requirements. In 2007,2008, no member of the
Compensation Committee had any relationshiprelationships or transactiontransactions
with the Company that would require disclosure as a "related
person transaction" under Item 404 ofthe SEC Regulation S-Krules and regulations and in
the Proxy Statement section entitled "TransactionsTransactions with Related
Persons." During 2007,2008, none of our executive officers served
on the board of directors or compensation committee of any
other entity whose executive officer(s) served as a member of
our Board of Directors or Compensation Committee.
Nominating and Corporate Governance Committee
The Governance Committee is responsible for the director
nomination process. These duties include assisting the Board
in identifying, evaluating and recruiting qualified candidates
for election to the Board. The Governance Committee also
recommends for the Board's approval the director nominees for
any election of directors. The Governance Committee is also
responsible for various corporate governance matters,
including the development and oversight of our corporate
governance and compliance policies and practices and ethical
standards of conduct for our directors, officers and
employees. The Governance Committee administers our policies
regarding "related person transactions" (as discussed in the
"TransactionsTransactions with Related Persons"Persons section herein) and reviews
and approves or disapproves any such transactions. A more
complete description of the Governance Committee's functions
is provided in its charter.
Attendance at Board and Committee Meetings and Annual Meeting
During 2007,2008, the following meetings were held:
Board of Directors:
* The Board held five meetings.
* Four executive sessions of the independent
directors were also held without the presence of
management.
* The Board acted twice by unanimous written consent.
9
Audit Committee:
* The Audit Committee held sixfive meetings.
* Four executive sessions without the presence of
management were also conducted with the independent
auditors.
* Four executive sessions without the presence of
management were held with the senior manager of
internal audit.
* Mr. Jung participated in four meetings with
management and the independent auditors for the
purpose of reviewing financial results prior to the
issuance of earnings press releases.
* The Audit Committee did not act by unanimous
written consent.
9
Compensation Committee:
* The Compensation Committee held four meetings.
* The Compensation Committee did not act by unanimous
written consent.
Nominating and Corporate Governance Committee:
* The Governance Committee held one meeting.
* The Governance Committee did not act by unanimous
written consent.
During 2007,2008, each incumbent director attended and participated
in at least 75% of all meetings of the Board of Directors and
Board committees on which he served. The average Board and
Board committee meeting attendance was 96%97%. We encourage
directors to attend annual meetings of stockholders, although
we do not have a formal policy regarding director attendance
at these meetings. SevenAll of the eight then-currentour directors attended our Annual
Meeting of Stockholders in May 2007,2008, and we anticipate that
most, if not all, of our directors will attend the 20082009 Annual
Meeting.
Stockholder Communications with the Board of Directors
The Board of Directors established a process by which
stockholders and other parties may communicate directly with
members of the Board and/or the independent directors as a
group. You may direct any matter intended for the Board
and/or independent directors by writing to the intended
recipients in care of our Corporate Secretary at our executive
offices. The Corporate Secretary reserves the right not to
forward any abusive, threatening or otherwise inappropriate
materials. A majority of our independent directors approved
the process for collecting and organizing stockholder
communications received by our Corporate Secretary on the
Board's behalf. Our Stockholder Communications Procedure for
Communicating with the Board of Directors is included on our
website.
Director Nomination Process
Our Nominating and Corporate Governance Committee Directorship
Guidelines and Selection Policy ("Directorship Guidelines
Policy") and Policy Regarding Director Recommendations by
Stockholders ("Stockholder Recommendation Policy") are
available on our website. Stockholders may also request a
copy of these policies by writing to our Corporate Secretary
at our executive office address provided in this Proxy
Statement. The purpose of these policies is to describe the
process by which nominees for the Board of Directors are
selected. Each policy was approved by the Board of Directors
and is administered by the Governance Committee.
Generally, the Governance Committee considers director
candidates suggested by Board members, management and
stockholders. With respect to director candidates identified
by stockholders, the Stockholder Recommendation Policy
applies. In accordance with the Stockholder Recommendation
Policy, the Governance Committee will consider candidates
recommended by stockholders that have beneficially owned
(individually or as a group), for at least one year, at least
2% of our issued and outstanding common stock entitled to vote
10
on the recommendation for at least one year,recommendation. Such stock ownership is determined as
of the date the stockholder recommendation is submitted. You
must submit stockholder recommendations in writing, and each
recommendation must include all information required and
requested by the Stockholder Recommendation Policy.
In order for a stockholder's candidate to be evaluated and
considered as a prospective nominee, you must submit your
recommendation to our Corporate Secretary not less than 120
days before the one-year anniversary of the release date of
the previous year's proxy statement. (For example, the
release date of the 20072008 proxy statement was April 4, 2007.8, 2008.
Stockholder recommendations intended for consideration for the
director elections at the 20082009 Annual Meeting had to be
submitted on or before December 5, 2007.8, 2008.) Stockholder
10
recommendations for director nominees must be submitted no
later than December 8, 200811, 2009 for the 20092010 Annual Meeting of
Stockholders.
Generally, candidates for director positions should possess
the following skills and traits:
* Relevant business and financial expertise and
experience, including an understanding of fundamental
financial statements;
* The highest character and integrity and a reputation
for working constructively with others;
* Sufficient time to devote to meetings and consultation
on Board matters; and
* Freedom from conflicts of interest that would
interfere with the candidate's performance as a
director.
The Governance Committee evaluates prospective nominees
against certain minimum standards and qualifications, as
identified in the Directorship Guidelines Policy. The
standards and qualifications set forth in the Directorship
Guidelines Policy include, but are not limited to, the
prospective nominee's business experience, skills, talents and
ability to contribute to our success. The Governance
Committee also considers other relevant factors, such as the
balance of management and independent directors, the need for
Audit Committee expertise and relevant industry experience.
Prospective director candidates nominated by stockholders in
accordance with the Stockholder Recommendation Policy are
evaluated by the Governance Committee in the same manner as
any other prospective candidate. We have not engaged and have
not paid any fees to any third party for assistance with the
director nomination process.
Director Compensation and Benefits
Only outside (non-employee) members ofdirectors on our Board of Directors receive compensation for
their service as one of our directors. These outside
directors receive an annual compensation package that is
designed to attract, motivate and retain highly qualified
independent professionals to represent our stockholders.
Directors who are employees of the Company do not receive any
compensation for their service on our Board of Directors.
Our 20072008 annual compensation package for non-employeeoutside directors is
comprised of anthe annual cash retainerretainers and cash meeting fees. On August 14, 2007, our Compensation Committee
and Board approved an increase to the annual outside director
retainer from $10,000 to $15,000 and established a $5,000
annual retainer for the Compensation Committee Chair. These
changes became effective for the fourth quarter of 2007. In
modifying these retainers, the Compensation Committee
evaluated the incentives and compensation offered to outside
directors by those companies in our competitive peer group and
industry and assessed whether an increase in such compensation
would help us attract and retain high-quality outside
directors (our competitive peer group is described under
"Competitive Peer Groups and Benchmarking" within the
"Compensation Discussion and Analysis" section in this Proxy
Statement). The Compensation Committee also considered
whether an increasefees
provided in the outside directors' fixed
compensation would encourage effective Board service by
enhancing their independence from our non-independent
directors. These director retainer adjustments were disclosed
in Exhibit 10.1 to Form 10-Q filed withOutside Director Retainers and Fees table on
the SEC on October 31,
2007.
Eachnext page. We will also reimburse each outside director also receives reimbursement
at cost for all of their respective reasonable out-of-pocket
travel expenses incurred in connection with their attendance
at Board and Board committee meetings. In 2007, Mr. Jung attended an audit
committee seminar,The Compensation
Committee and Board believe the fee for this seminarcurrent outside director
retainer levels are appropriate to attract and related
travel expenses were equally shared by the three companies
(including us) of which Mr. Jung is a director.retain top
outside Board members.
11
Specifically, the 2007 and current 2008 compensation package
includes the fees and retainers for outside directors that are
provided in the following Outside Director Retainers and Fees
table:
Outside Director Retainers and Fees
---------------------------------------------------------------------------------------------
Amount Paid - Amount Paid -----------------------------------------------------------------------------------
Fee or Retainer 1st, 2nd and 3rd Quarters of 2007 4th Quarter of 2007 andAmount Paid in 2008
--------------- --------------------------------- -----------------------------------------------
Annual Board Retainer $10,000for $15,000
Board Membership (paid in quarterly $15,000installments of $3,750 each)
Annual Retainer for the $10,000
Audit Committee Chairman(1) (paid in quarterly for Board Membership installments of $2,500)$2,500 each)
Annual Retainer for the $5,000
Compensation Committee (paid in quarterly installments of $3,750)$1,250 each)
Chairman(2)
Board of Directors Meeting Fee $2,000
(paid for $2,000 (paid for
each Board meeting) each Board meeting)
Board Committee Meeting Fee $2,000
(paid for each $2,000 (paid for each
Committee meeting Committeecommittee meeting not held on
the held on the same day not held on the same day
as a Board meeting) as a Board meeting)
Annual Retainer for the $10,000 (paid in quarterly $10,000 (paid in quarterly
Audit Committee Chair (1) installments of $2,500) installments of $2,500)
Annual Retainer for the None $5,000 (paid in quarterly
Compensation Committee Chair (2) installments of $1,250)
----------------
(1) This retainer is not provided to the other directors
serving on the Audit Committee.
(2) This retainer is not provided to the other directors
serving on the Compensation Committee.
Director Stock Ownership. We do not have formal stock
ownership requirements for outside directors. The individual
stock ownership of each outside director is set forth in the
table under Security Ownership of Directors, Executive
Officers and Certain Beneficial Owners within the Beneficial
Ownership of Common Stock section.
2008 Compensation of Directors. The compensation received by
each outside director varies because such compensation is
based on (i) the number of Board and committee meetings held,
(ii) the Board committees on which the outside director serves
and (iii) whether the individual is the Chairman of the Audit
Committee or the Compensation Committee.
The 2008 Director Compensation table on page 13 presents the
compensation earned by each individual serving as an outside
director during 2008 for service on our Board and its
committees. This table does not include those directors who
are also employees of the Company because such employee
directors did not receive any compensation in 2008 for their
service on our Board. In 2008, we did not grant any awards of
stock, stock options, SARs or restricted stock to outside
directors. For that reason, we have omitted those columns
from the table.
12
2008 Director Compensation
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fees Earned or Non-Equity
Paid in Cash Incentive Plan All Other
Name ($)(1) Compensation ($) Compensation ($) Total ($)
---- ------------- ---------------- ---------------- ---------
Kenneth M. Bird 33,25033,000 - - 33,25033,000
Patrick J. Jung 44,50048,000 - - 44,50048,000
Duane K. Sather 31,25031,000 - - 31,25031,000
Michael L. Steinbach 31,25031,000 - - 31,25031,000
Gerald H. Timmerman 33,25033,000 - - 33,25033,000
____________________----------------
(1) The amounts in this column include fees and retainers
received for Board membership, Board committee
membership and for service as the Audit Committee
ChairChairman and Compensation Committee Chair.Chairman.
Report of the Audit Committee
The following report of the Audit Committee shall not be
deemed to be "soliciting material" or to otherwise be
considered "filed" with the SEC, nor shall this report be
subject to Regulation 14A (other than as indicated) or to the
liabilities set forth in Section 18 of the Securities Exchange
Act of 1934. This report shall not be deemed to be
incorporated by reference into any prior or subsequent filing
under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent that the Company
specifically incorporates it by reference or treats it as
soliciting material.
The Audit Committee of the Board of Directors is comprised of
Dr. Bird and Messrs. Bird, Jung, Sather, Steinbach and Timmerman.
Mr. Jung is the ChairChairman of the Audit Committee. All of the
Audit Committee members are qualified independent directors
under the audit committee structure and membership
requirements of the NASDAQ and SEC rules and regulations. The
primary purpose of the Audit Committee is to assist the Board
of Directors in its general oversight of the Company's
financial reporting process. The Audit Committee conducts its
oversight activities by exercising the certain
responsibilities and powers set forth in its written charter
adopted by the Board. A copy of the charter is available on
the Company's website.
The general duties of the Audit Committee include reviewing
the Company's financial information that will be presented to
stockholders;stockholders and filed with the SEC; appointing the
independent auditors; reviewing services provided by the
Company's independent registered public accounting firm and
internal audit department; and evaluating the Company's
accounting policies and its system of established internal
controls; and reviewing significant
financial transactions.controls.
The Audit Committee does not prepare financial statements or
perform audits, and its members are not auditors or certifiers
of the Company's financial statements. Rather, the Company's
management is responsible for the preparation, consistency,
integrity and fair presentation of the Company's financial
statements, accounting and financial principles, internal
control and disclosure control systems and procedures designed
to ensure compliance with applicable accounting standards,
laws and regulations. The Company's independent auditors,
KPMG LLP, are responsible for performing an independent audit
of the financial statements and for expressing an opinion on
the conformity of those statements with accounting principles
generally accepted in the United States of America ("GAAP").
13
In conjunction with the preparation of the Company's 20072008
audited financial statements, the Audit Committee met with
both management and the independent auditors of the Company to
review and discuss significant accounting issues and the
financial statements included in the Company's Annual Report
on Form 10-K for 20072008 prior to the issuance of such financial
statements. Management advised the Audit Committee that such
financial statements were prepared in accordance with GAAP,
and the Audit Committee discussed such financial statements
with management and the independent auditors. The Audit
Committee's assessment included a discussion with the
Company's independent auditors regarding matters that are
required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as
amended (AICPA, Professional Standards, Vol. I, AU section
380) and as adopted by the Public Company Accounting Oversight
Board in Rule 3200T, and as superseded by Statement on
Auditing Standards No. 114 (The Auditor's Communication With
Those Charged With Governance) adopted by the Public Company
Accounting Oversight Board.
The Audit Committee also received and reviewed the written
disclosures and letter submitted to the committee by the
Company's independent auditors, KPMG LLP. Such written
disclosures and letter are required by applicable requirements
of the Independence
StandardsPublic Company Accounting Oversight Board No. 1 (Independent Discussionsregarding
KPMG LLP's communications with the Audit Committees).Committee concerning
independence. The Audit Committee and KPMG LLP also discussed
KPMG LLP's independence as the independent auditors of the
Company.
Based on the foregoing reviews and discussions, the Audit
Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's
Annual Report on Form 10-K for 2007,2008, for filing with the SEC.
Patrick J. Jung, ChairChairman
Kenneth M. Bird
Duane K. Sather
Michael L. Steinbach
Gerald H. Timmerman
EXECUTIVE OFFICERS
Our By-Laws provide that each executive officer holds his or
her respective office for a term of one year or until his or
her successor becomes duly elected and qualified, except that
a term may be (i) longer than one year if such service is
specified in an employment contract or (ii) terminated sooner
than one year because of death, resignation or otherwise.
Pursuant to the By-Laws, our Board of Directors elects our
executive officers at the Board's annual organizational
meeting immediately following the annual meeting of
stockholders.
Current Executive Officer Information
The following table on page 15 identifies our current executive officers
and the capacities in which they now serve. Also set forth
belowfollowing the table is certain information provided to us by
these executive officers regarding their acquired business
experience.
14
Executive Officers
- --------------------------------------------------------------------------------------
Name Position with the Company Age
---- ------------------------- ---
Clarence L. Werner Chairman 7071
Gary L. Werner Vice Chairman 5051
Gregory L. Werner President and Chief Executive Officer 4849
Derek J. Leathers Senior Executive Vice President - ValuePresident-Value Added Services 39
& International 38and Chief Operating Officer
H. Marty Nordlund Senior Executive Vice President - SpecializedPresident-Specialized Services 4647
Robert E. Synowicki, Jr. Executive Vice President and Chief Information Officer 4950
Richard S. Reiser Executive Vice President and General Counsel 6163
John J. Steele Executive Vice President, Treasurer and Chief 51
Financial Officer 50
Jim S. Schelble Executive Vice President - SalesPresident-Sales and Marketing 4748
For information regarding the business experience of Messrs.
Clarence L. Werner, Gary L. Werner and Gregory L. Werner,
please refer to "Currentthe Current Director Information"Information section under
the "ProposalProposal 1 - Election of Directors" sectionDirectors of this Proxy
Statement.
DEREK J. LEATHERS, joined the Company in 1999 as the Managing
Director - MexicoDirector-Mexico Division. During his tenure with the
Company,us, he
received the following promotions: (i) Vice President - MexicoPresident-Mexico
Division in 2000; (ii) Vice President -
InternationalPresident-International in 2001;
(iii) Senior Vice President -
InternationalPresident-International in April 2003; (iv)
Senior Vice President - VanPresident-Van Division and International in July
2003; and (v) Executive Vice President - VanPresident-Van Division and
International in 2004. In 2006, Mr. Leathers was promoted to
his current position as Senior Executive Vice President - ValuePresident-Value
Added Services ("VAS") and International. He also serves as
our Chief Operating Officer, a position to which he was
elected by the Board on May 29, 2008. Prior to joining the
Company, Mr. Leathers was Vice President of Mexico Operations
for two years at Schneider National, a large truckload
carrier, and he held various other management positions during
his eight-year career at Schneider National.
H. MARTY NORDLUND, joined the Companyus in 1994 as an account executive.
He then received the following promotions with the Company:
(i) Director of Dedicated Fleet Services in 1995; (ii) Senior
Director of Dedicated Fleet Services in 1997; (iii) Vice
President - DedicatedPresident-Dedicated Fleet Services in 1998; (iv) Vice
President - SpecializedPresident-Specialized Services in 2001; (v) Senior Vice
President - SpecializedPresident-Specialized Services in 2003; and (vi) Executive
Vice President - SpecializedPresident-Specialized Services in 2005. In 2006, Mr.
Nordlund was named to his current position as Senior Executive
Vice President - SpecializedPresident-Specialized Services. Prior to joining the
Company, Mr. Nordlund held various management positions with
Crete Carrier Corporation, a large privately held truckload
carrier.
ROBERT E. SYNOWICKI, JR., joined the Company in 1987 as a tax
and finance manager. Since that time, he was appointed to the
following positions: (i) Treasurer in 1989; (ii) Vice
President, Treasurer and Chief Financial Officer in 1991;
(iii) Executive Vice President and Chief Financial Officer in
March 1996; and (iv) Executive Vice President and Chief
Operating Officer in November 1996. He was named to his
current position as Executive Vice President and Chief
Information Officer in 1999. Mr. Synowicki was employed by
the independent public accounting firm of Arthur Andersen &
Co. as a certified public accountant from 1983 until his
15
employment with the Companyus in 1987. Mr. Synowicki also serves on the
board of directors of Blue Cross and Blue Shield of Nebraska.Nebraska
and other professional organizations.
RICHARD S. REISER, joined the Company as Vice President and
General Counsel in 1993. He was promoted to our Executive
Vice President and General Counsel in 1996. Mr. Reiser was a
partner in the Omaha office of the law firm of Nelson and
Harding from 1975 to 1984. From 1984 until his employment
with the Company,us, he was engaged in the private practice of
15
law as a
principal and director of Gross & Welch, a professional
corporation and law firm, in Omaha, Nebraska. Mr. Reiser is
also active in various professional and civic organizations
and serves on the board of directors or as an officer for
several of these associations.
JOHN J. STEELE, joined the Company in 1989 as Controller.
During his time with the Company,us, he was appointed to the following
positions: (i) Corporate Secretary in 1992; (ii) Vice
President - ControllerPresident-Controller and Corporate Secretary in 1994; (iii)
Vice President, Treasurer and Chief Financial Officer in 1996;
and (iv) Senior Vice President, Treasurer and Chief Financial
Officer in 2004. He was named to his current position as our
Executive Vice President, Treasurer and Chief Financial
Officer in 2005. Mr. Steele was employed by the independent
public accounting firm of Arthur Andersen & Co. as a certified
public accountant from 1979 until his employment with the
Company in 1989.
JIM S. SCHELBLE, joined the Companyus in 1998 as theour Manager of New
Business Development. During his tenure with the Company, Mr.
Schelble was promoted to the following positions: (i)
Director of National Accounts in 1999; (ii) Senior Director of
Dedicated Services in 2000; (iii) Associate Vice President of
Corporate and Dedicated Sales in 2002; (iv) Vice
President -
SalesPresident-Sales in 2003; and (v) Senior Vice President - SalesPresident-Sales
in 2004. In 2005, he was named to his current position as our
Executive Vice President - SalesPresident-Sales and Marketing. Prior to
joining the Company, Mr. Schelble spent twelve years with
Roadway Express, a less-than-truckload carrier, in a variety
of management positions within operations, sales, and
marketing.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than 10% of our registered
class of equity securities (common stock), to file with the
SEC reports of beneficial ownership and changes in such
beneficial ownership. Officers, directors and greater than
10% stockholders are required by SEC rules to furnish us
copies of all Section 16(a) forms they file. We file Section
16(a) reports on behalf of our officers and directors to
report their initial and subsequent changes in beneficial
ownership of our Common
Stock.common stock.
Based solely upon our review of (i) the reports we filed on
behalf of our officers and directors, (ii) copies of such
forms furnished to us and (iii) written representations from
certain reporting persons that no Forms 5other reports were required
for those persons, we believe that all Section 16(a) filing
requirements applicable to our officers, directors and greater
than 10% beneficial owners were complied with during 2007; except that one Form 4
was filed for Chris C. Neil, Vice President, on August 15,
2007 (three business days after the August 10, 2007 due date)
with respect to Mr. Neil's exercising of stock options
involving 2,293 shares of our Common Stock on August 8, 2007
and Mr. Neil's disposal of all such shares on the same date.2008.
Security Ownership of Directors, Executive Officers and
Certain Beneficial Owners
The Beneficial Ownership table on page 17 sets forth certain
information as of March 24, 2008,23, 2009, with respect to the
beneficial ownership of our Common Stockcommon stock by:
(i) eachEach of our directors and director nominees;
(ii) each named executive officerEach Named Executive Officer listed in the Summary
Compensation Table on page 33 under the "Executive
Compensation"Executive
Compensation section;
16
(iii) eachEach person known to us to beneficially own more
than 5% of the outstanding shares of our Common
Stock;common
stock; and
(iv) allAll current executive officers, directors and
director nominees as a group.
16
On March 24, 2008,23, 2009, we had 70,385,01371,576,367 shares of Common Stockcommon stock
outstanding. Except as otherwise indicated in the table, the
persons listed have sole voting power and sole investment
power with respect to such shares of our common stock
indicated as beneficially owned by them. Unless otherwise
noted, the physical business address of each beneficial owner
set forth below is 14507 Frontier Road, Omaha, Nebraska 68138.
The footnotes to the Beneficial Ownership table are provided
on the following page.
Beneficial Ownership
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
Name of Shares Right to Total Percent of Shares
Beneficial Owner Owned Acquire (1) TotalShares Outstanding (2)
---------------- ----- ----------- ----------- ---------------
Clarence L. Werner (3) 22,967,985 615,000 23,582,985 33.2%23,084,318 85,000 23,169,318 32.3%
Gary L. Werner (4) 1,558,086 541,668 2,099,754 3.0%1,573,086 456,668 2,029,754 2.8%
Gregory L. Werner 3,283,594 756,670 4,040,264 5.7%
Daniel H. Cushman (5) 1,017 - 1,017 *3,303,594 601,669 3,905,263 5.4%
Derek J. Leathers (5) 1,803 94,418 96,2212,347 105,418 107,765 *
John J. Steele 5,376 62,584 67,9605,995 49,584 55,579 *
Kenneth M. Bird 500 - 500 *
Patrick J. Jung 2,000 - 2,000 *
Duane K. Sather 7,000 - 7,000 *
Michael L. Steinbach - - - -
Gerald H. Timmerman 13,6666,000 - 13,6666,000 *
Wellington Management
Company, LLP (6) 9,384,382 - 9,384,382 13.3%
Dimensional Fund 5,324,148 - 5,324,148 7.4%
Advisors LP (7) 5,760,765 - 5,760,765 8.2%(5)
All executive officers, 28,001,249 1,391,839 29,393,088 40.3%
directors and director
nominees as a group
(14 persons) (3)(4)(8) 27,851,179 2,208,010 30,059,189 41.4%
*Indicates beneficial ownership of less than 1%.
____________________----------------
17
(1) NumberThis column represents shares of shares underlyingour common stock that
a respective individual may acquire upon exercising
stock options whichthat are exercisablevested as of March 24, 2008,23, 2009 or
whichthat will vest and become exercisable 60 days
thereafter. The shares underlying these options are
not outstanding and may not be voted at the 2009 Annual
Meeting. This column does not include any shares of
restricted stock because all such shares awarded by the
Company will vest more than 60 days after March 23,
2009.
(2) The percentages are based upon 70,385,01371,576,367 shares, which
equals our outstanding shares as of March 24,
2008. For beneficial owners23, 2009. In
accordance with SEC rules, for individuals who hold
options exercisable within 60 days of March 24, 2008,23, 2009,
the number of shares of Common Stockcommon stock on which the
percentage is based also includes the number of shares
underlying such options.
17
(3) Clarence L. Werner has sole voting power with respect
to these 23,582,98523,169,318 shares, sole dispositive power for
8,581,7358,168,068 of these shares and shared dispositive power
with respect to 15,001,250 shares.
(4) The shares shown for Gary L. Werner do not include:
(i) 479,497 shares held by the Gary L. Werner
Irrevocable Inter Vivos QTIP Trust II (the sole trustee
of this trust is Union Bank and Trust Company, which
has sole investment and sole voting power over the
shares held by the trust); and (ii) 500,000 shares held
by the Becky K. Werner Revocable Trust (the sole
trustee of this trust is Becky K. Werner, Mr. Werner's
wife, and she has sole investment and sole voting power
over the shares held by the trust). Mr. Werner
disclaims actual and beneficial ownership of the shares
held by the Gary L. Werner Irrevocable Inter Vivos QTIP
Trust II and the shares held by the Becky K. Werner
Revocable Trust.
(5) Daniel H. Cushman's employment with the Company ended
on January 15, 2008. Prior to January 15, 2008, Mr.
Cushman was a named executive officer of the Company
and served as Senior Executive Vice President and
Chief Marketing Officer. Derek J. Leathers became a
named executive officer of the Company in 2008 upon
the end of Mr. Cushman's employment. Mr. Cushman's
business address is 3930 16th Avenue S.W., Post Office
Box 68, Cedar Rapids, Iowa 52406.
(6) Based on Schedule 13G (Amendment No. 1)2) as of December
31, 2007, as filed with the SEC by Wellington
Management Company, LLP, 75 State Street, Boston,
Massachusetts 02109. Wellington Management Company,
LLP claims no sole voting power or sole dispositive
power with respect to any of these shares, but does
claim shared voting power of 6,651,182 shares and
shared dispositive power with respect to 9,309,382
shares.
(7) Based on Schedule 13G (Amendment No. 1) as of December
31, 2007,2008, as filed with the SEC by Dimensional Fund
Advisors LP, 1299 Ocean Avenue, Santa Monica,
California 90401.LP. Dimensional Fund Advisors LP claims sole
voting power of 5,141,209 shares and sole dispositive
power with
respect to these 5,760,765of 5,324,148 shares, but does not claim any
shared voting power or shared dispositive power with
respect to any of these shares. (8) Daniel H. CushmanAccording to the
Schedule 13G filing, the address of this stockholder is
excluded from this group because
he is not currently an executive officer, nor was he
such an officer as of March 24, 2008.Palisades West, Building One, 6300 Bee Cave Road,
Austin, Texas 78746.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section of the Proxy Statement identifies our Named
Executive Officers and explains how our compensation policies
and practices are developed and operate with respect to the named executive officers identified below
and in the Summarysuch
Named Executive Officers. In Compensation Table. In "Compensation Discussion and
Analysis," we also discuss and analyze our executive
compensation program and the executive compensation amounts
shown below.in such section. This discussion should be read in
conjunction with the Summary Compensation Table (including the
related tabular and narrative disclosures) and the
"Compensation Committee"Compensation Committee section under "Corporate Governance"Corporate Governance in
this Proxy Statement. As indicated in that section, the
Compensation Committee of the Board of Directors is
responsible for establishing our executive compensation
policies and overseeing our executive compensation practices.
Our Compensation Committee is also comprised solely of non-
employeeoutside
directors, each of whom is independent pursuant to NASDAQ
listing standards.
18
Named Executive Officers. Pursuant to the SEC rules, our
named executive officersNamed Executive Officers consist of the Chief Executive
Officer ("CEO"), Chief Financial Officer ("CFO") and the three
most highly compensated executive officers (excluding the CEO
and CFO) who were executive officers as of December 31, 2007.
The2008.
Our five named executive officers ofNamed Executive Officers are identified in the Company during 2007
were:table
on page 19.
18
Named Executive Officers
-----------------------------------------------------------------------------
Name Position with the Company
---- -------------------------
1. Clarence L. Werner (1) Chairman
2. Gary L. Werner Vice Chairman
3. Gregory L. Werner (1) President and Chief Executive Officer
4. Daniel H. Cushman (2)Derek J. Leathers Senior Executive Vice PresidentPresident-VAS & International
and Chief MarketingOperating Officer
5. John J. Steele Executive Vice President, Treasurer and
Chief Financial Officer
____________________
(1) On February 8, 2007, Clarence L. Werner resignedThe Compensation Committee believes the executive compensation
program for our Named Executive Officers has been instrumental
to our business and in helping us accomplish our objectives.
We also regard the program as appropriate and fair in view of
our financial performance relative to our competitive peer
group and given the CEO,challenging economic and freight market
conditions in 2008. We believe these difficult conditions
have resulted in a more competitive market for executive
talent but, during this tough economic period, our Board of Directors appointed Gregory
L. Werner astotal
compensation mix allows us to retain qualified executive
officers who possess the CEO.
(2) Daniel H. Cushman was a named executive officer
during 2007necessary experience and until his employmentexpertise to
manage the Company, contribute to our long-standing success
and create value for our stockholders. (The peer group is
identified in the Competitive Peer Groups and Benchmarking
section within the Compensation Discussion and Analysis. Our
2008 financial statements are included in our Annual Report on
Form 10-K for 2008 filed with the Company
ended in January 2008. DuringSEC on March 2, 2009.)
2008 we have not made
any policies or specific decisions, nor have we taken
any steps, that affect Mr. Cushman's 2007
compensation or affect a fair understanding of such
compensation. Executive Compensation Program and Philosophy.Objectives. Our
executive compensation program is designed to achieve the
following primary objectives:
* Attract, motivate and retain talented high-quality
executives who contribute to the advancement of our
strategic, operational and financial goals.goals and to our
long-term success in today's competitive markets and
industry.
* Reward our named executive officers for their individual
performance, leadership and their contribution to the
achievement of our overall business objectives.
* Support our Mission Statement, Vision Statement and
guiding corporate principles. (Our Mission and Vision
Statements are included on our website at
www.werner.com under "About Us.")
The Compensation Committee carries out our executive
compensation philosophyobjectives by applying the following principles:
* Provide compensation that is competitive with that
paid by companies in our same market and industry for executive
talent. Our Compensation Committee has the authority
to engage the services of a third-party advisor to
assist with determining how our executive compensation
program compares to those of other companies.
* Reward performance by considering factors such as (i)
our financial performance, and (ii) the executive'sexecutive
officer's individual performance and contribution to
our overall business goals.goals and (iii) the performance
of the executive officer's business unit when
evaluated in light of overall Company performance and
the year's market, industry and economic conditions.
* Ensure that highly capable and goal-oriented
executives remain motivated and committed to the
Company, even when downturns in the industry and
economy affect companyCompany performance. This principle is
19
important with respect to encouraging our executives
to remain with the Company for long and productive
careers.
* Encourage executive officers to become stockholders
and facilitate stock ownership in the Company by
offering equity-based compensation. We believe that
stock ownership alignslinks our executive officers'
interests with those of our stockholders and supports
strategic decision-making and actions that will serve
our long-term interests.
* Provide limited executive perquisites.
Elements of Executive Compensation. Our Compensation
Committee's determination of compensation levels for executive
officers differs depending upon the position and current total
direct compensation of the individual being considered.
19
(Direct compensation includes base salary, bonuses and long-
term incentive awards.) The Compensation Committee will then
evaluate the individualfive elements of our
2008 executive compensation program:program are: (i) base salary,
(ii) performance-based compensation, long-
term(iii) long-term incentive
compensation, (iv) perquisites and (v) benefits. The
following discussion explains these elements and their primary
purposes ofwith respect to our 20072008 executive compensation
program.
Base Salary. Base salary is a fixed element of
compensation that we pay to each named executive officer for
the performance of his primary job duties and
responsibilities. Generally, each respective executive
officer's base salary is commensurate with such
person's responsibility, experience, tenure and job
performance. We review base salaries on an annual
basis.basis and at the time of hire, promotion or other
change in job function and responsibilities. Base
salaries are not established on the basis of any
specific performance criteria, but a number of factors
are considered when determining individual salary
levels. These factors include but are not limited to
(i) the individual's performance;overall performance and the level
of responsibility and complexity of the executive's
job; (ii) the performance of the business unit(s) or
function(s) under his leadership; (iii) how the
executive officer's salary compares to those of our
other executives; (iv) our overall performance and
achievements; and (iv)(v) the economic and business conditions
affecting the Company at the time of the review.review; and
(vi) salaries paid by companies within our competitive
peer group for the same or similar positions. The base
salaries paid to each of our
named executive officers will
vary due to the application of these factors. Market
adjustments to named executive officer base salaries are generallymay be made when
there is a significant change in an officer's position
or responsibilities or if competitive market data
indicates a significant deviation compared to market
salary practices; however,practices. However, while we may be guided by
such events and data, we do not set compensation levels
at targeted or specific levels relative to that of a
particular peer, competitor or industry group.
The Compensation Committee's determination of named executive officerNamed
Executive Officer compensation packages are primarily
made through the exercise of its particular judgment.judgment
and by applying the factors discussed above. The 2008
base salaries of our named
executive officersNamed Executive Officers are
disclosed in the Summary Compensation Table. With the
exception of Mr. Leathers, base salary levels in 2008
were identical to those in 2007 because we believed the
2007 levels remained competitive and modifications were
not warranted to achieve our executive compensation
program objectives. The 2008 base salaries of our
Named Executive Officers averaged slightly above the
75th percentile when compared to the salaries for
similar positions with companies in our competitive
peer group. Mr. Leathers' base salary increased as a
result of his promotion to Chief Operating Officer
("COO") in May 2008 and because of his additional
responsibilities.
Performance-Based Compensation (Annual Cash Bonus).Compensation. Performance-based
compensation is typically awarded in the form of annual
cash bonuses. Our annual cash bonus program is a
discretionary program designed to encourage and reward
executives for performance during the fiscal year and
performance-based compensation awards
are determined at the sole discretion of our
Compensation Committee. Weon a more short-term basis. However, we believe the
annual cash bonus program also contributes to our long-
term success because it rewards and drives individual
performance and motivates executive officers to improve
our overall performance,
which contributes to our long-term success.performance. Historically, annual cash
bonus payments to executive officers have been the same
or higher than the previous year's payment, and this
20
practice correlates with our relatively consistent
profitable growth recordfinancial results after considering the
economic and businessindustry conditions affecting us.that affect our
business.
Performance-based compensation is awarded by our
Compensation Committee. The Compensation Committee
awards performance-based compensation that it considers
appropriate based upon or after assessing: (i) the
financial and economic and business
conditions affectingenvironment concerning the
Company; (ii) the respective officer's individual
performance and contribution toward achieving our
business objectives; (iii) the amount of the executive
officer's bonus payment awarded in the preceding year;
(iv) the President and CEO's recommendation to the
Compensation Committee; (v) performance-based
compensation data and total cash compensation data
(cash compensation is inclusive of base salary and
performance-based compensation) for certain officer
positions, including actual bonuses paid in the
marketplace atby other transportation and logistics
services companies in our competitive peer group (such companies are listed under
"Competitive Peer Groups and Benchmarking" within the
"Compensation Discussion and Analysis" section in this
Proxy Statement);group; and
(vi) our overall financial results (including our
revenues, net income, operating ratio, profit margin,
number of tractors, stock pricetotal stockholder return and return on assets) relative
to other peer transportation and logistics services
companies. Final award amounts approved by the
Compensation Committee for each executive officer are
intended to be competitive for our market and
reflective of each respective executive officer's
performance and contribution to our financial and
business growthperformance and success.
20
In November 2007,December 2008, our Compensation Committee approved
and awarded annual cash bonuses to the named executive
officersNamed Executive
Officers under our discretionary annual cash bonus
program. These bonuses were awarded at the same level
as those awarded in 2006.2007, with the exception of Mr.
Steele. The Compensation Committee awarded Mr. Steele
an increased annual cash bonus in recognition of his
individual performance and assumption of additional
responsibilities within the Company in 2008. The
amount of Mr. Steele's 2008 annual cash bonus brought
his performance-based compensation and total cash
compensation closer to, but still below, the median for
financial executives in our competitive peer group.
Annual cash bonuses awarded to our other Named
Executive Officers were positioned between the median
and 75th percentile for comparable positions among our
peer group companies. The Compensation Committee also
compared our Named Executive Officers' total cash
compensation to that of our competitive peer group when
determining performance-based compensation awards. The
2008 total cash compensation of our Named Executive
Officers averaged slightly below the 75th percentile
for similar positions with the competitive peer group
companies. The competitive peer group information
considered by the Compensation Committee was provided
in the executive compensation survey prepared by Towers
Perrin.
In making its decision,2008 annual cash bonus decisions, the
Compensation Committee determined that our performance
for the nine-month period ended September 30, 20072008 was
equivalent to or exceeded the median revenues and net
income operating ratio, profit margin, number of
tractors and stock price of our transportation and logistics services
peers. The Compensation Committee also considereddetermined that
our overall financial performance met management's
expectations, particularly given the challenging
business and economic climate. The annual cash bonuses
awarded to our Named Executive Officers in 20072008 are
disclosed in the Summary Compensation Table.
Long-Term Incentive Compensation (Stock Options).Compensation. Our long-term
incentive program is important to us because it helps
attract a talented executive team, encourages long-term
retention of executive officers and enables us to
recognize efforts put forth by these
officers that contributedexecutives who
contribute to anyour stock price appreciation.appreciation and Company
development.
21
Our Equity Plan permits a variety of equity awards
under our ongoing long-term incentive program. We have
historically chosen a stock option long-term incentive
program because we believeprogram; and in May 2007, our stockholders approved
amendments to the Equity Plan that authorize us to
award restricted stock to our executive officers, in
addition to stock options link executive officer interests
with thoseor SARs. Since that time,
the Compensation Committee has considered whether to
grant awards other than stock options as part of our
stockholderslong-term incentive compensation. In 2008, we awarded
restricted stock for the first time under the Equity
Plan. In determining long-term incentive compensation,
our Compensation Committee evaluates which equity award
vehicles achieve the best balance between providing
appropriate long-term incentive compensation and
provide meaningful
equity ownership opportunities for executive officers.creating and maintaining long-term stockholder value.
The periodic vesting periods of long-term incentive
compensation also directly align theexecutive officer interests
and compensation of named executive officers with our stockholders' interests by
rewarding creation and preservation of long-term
stockholder value. The Compensation Committee also
believes this element of compensation provides equity
ownership opportunities for our executive officers.
Because we do not have a pension plan and some
executives' 401(k) Retirement Savings Plan
contributions are limited under federal income tax
rules (as discussed in the Benefits section on page
24), we believe our executive officers consider
potential wealth accumulation from equity gains when
planning for their retirement.
Stock option and restricted stock grants are made at
the discretion of the Compensation Committee and are
not necessarily made on an annual basis. In designing
long-term incentive awards and determining an overall
pool of stock options to make available for grant, the
Compensation Committee considers the Board's duty to
our stockholders to limit equity dilution, andwhether such
awards will help to accomplish our executive
compensation program objectives, how our relative
financial performance compares against the marketplace. The Compensation Committee also evaluates
each executive officer's responsibilities, individual
performancemarketplace
and contribution to our performance forthe emphasis placed on equity in the total mix of
compensation. For purposes of allocating the overall
stock option pool among executive officers.
In 2007,officers, our stockholders approved amendmentsCompensation
Committee also evaluates (i) the scope of each
executive's responsibilities, position and experience;
(ii) each executive officer's individual and business
unit performance and contribution to our Equity Plan that allowed usoverall
performance and financial results; (iii) the total mix
of compensation for each executive; (iv) our historical
practice of granting equity awards to award restrictedexecutive
officers; and (v) the perceived retention value of the
total compensation package in light of the current
labor and financial markets. By making awards less
frequently and not always annually, the Compensation
Committee may provide larger grants, which promotes
greater executive retention.
Stock options represent a right to purchase a certain
number of shares of our common stock at a particular
exercise price per share after designated vesting
periods occur. The exercise price is equal to the
NASDAQ Global Select MarketSM closing market price of
our common stock on the grant date. Stock option value
depends upon stock price appreciation. We believe this
factor motivates our executive officers. We believeofficers to improve and
maintain Company performance because strong financial
results may potentially increase the usevalue of any
unexercised stock options. Please refer to the Stock
Grant Practices section under Other Executive
Compensation Policies and Considerations on page 28 for
additional information regarding stock options.
An award of restricted stock would haveentitles the recipient to
receive a less dilutive effect on
earnings per share as comparedspecified number of shares of our common
stock, at no cost to stock options, andthe recipient, if the executive
officer remains employed with us when the restricted
stock would alsovests. The value of the restricted stock is
equal to the NASDAQ Global Select MarketSM closing
market price on any given date after granting.
Consequently, the restricted stock value may increase
or decrease with changes in the stock price during the
period between granting and vesting and on the vesting
22
date and each subsequent day thereafter. We believe
that restricted stock awards directly link executive
officer interests with those of our stockholders
because restricted stock units arevalue is impacted by both
increases and decreases inthese
stock price. Although we
have not granted anyprice changes. We also believe that despite the
stock price fluctuations, restricted stock awards,will have
value in the 2007
amendments to our Equity Plan permit the Compensation
Committee to make future grants comprised of a
combination oflong-term and can potentially deliver
greater share-for-share compensation value at grant
than stock options andoptions. By awarding restricted stock, we
are able to offer comparable grant date compensation
value with fewer shares, and we believe the use of
restricted stock accordingly results in less dilution
of earnings per share when compared to stock options.
Vesting of restricted stock is subject to continued
employment with us. This helps ensure that a portion
of an executive officer's awards inwill vest after
several years, which is intended to retain the
executive officer and cause them to focus on our ongoing long-term incentive program.
On November 29, 2007, we made stock option grants to
certain named executive officers. The options to
purchase our Common Stock were awarded by the
Compensation Committee pursuant to our Equity Plan.
The named executive officers who received stock options
were Daniel H. Cushman (25,000 shares) and John J.
Steele (15,000 shares). The Compensation Committeelong-
term business objectives.
We did not grant any stock options or SARs to Messrs. Clarence L.
Werner, Gary L. Wernerour Named
Executive Officers in 2008. On
July 31, 2008, the Compensation Committee awarded
30,000 shares of restricted stock to Mr. Leathers in
accordance with our Equity Plan. These shares were
awarded to Mr. Leathers as a result of his promotion to
COO and Gregory L. Werner.assumption of additional responsibilities.
Pursuant to the Restricted Stock Award Agreement
between us and Mr. Leathers, the restricted stock will
vest sixty months (five years) from the grant date of
the award. Mr. Leathers does not have any voting or
dividend rights with respect to such stock until it is
fully vested, and there are not any post-vesting sales
restrictions on the shares. (The Form of Restricted
Stock Award Agreement was included as Exhibit 10.1 to
our Quarterly Report on Form 10-Q filed with the SEC on
November 3, 2008.) Please refer to the Summary
Compensation Table and Grants of Plan-Based Awards for
2008 table for further details concerning these awards.long-term
incentive compensation awarded to our Named Executive
Officers.
Perquisites. Our executive compensation program includes
limited executive perquisites that we consider to be an
important element of our total executive reward
packages and are necessary for named executive officersNamed Executive Officers
to carry out the responsibilities of their positions.
We believe our named executive officerNamed Executive Officer perquisites and
other benefits are representative of and competitive
with those offered by companies with whom we compete
for executive talent, and offering these perquisites
and benefits helps us with attracting and retaining
valued and talented executive talent.officers.
The aggregate incremental 21
cost of provided perquisites and other
benefits provided to the named executive officersNamed Executive Officers is
shown in the "All Other Compensation" column of the
Summary Compensation Table and detailed in the "AllAll
Other Compensation for 2007"2008 section of thethis Proxy
Statement.
The perquisites offered under our 2008 executive
compensation program arewere as follows:
* IncomeAccounting, Legal and Tax Preparation Services. Our
Chairman, Vice Chairman and President and CEO
utilize incomeaccounting, legal and tax preparation(income tax
preparation) services provided by us. The
Chairman also utilizes our income tax, accounting
and legal services, and hefully reimburses us for such services,
and we receive no reimbursement from the Vice
Chairman and President and CEO. The
reimbursement amounts we receive from the
Chairman and the unreimbursed amounts included in
compensation for the Vice Chairman and President
and CEO are based on our estimate of the costs
incurred by the Company for our personnel to
provide these services.
* Country Club Membership. In 2007,2008, we provided
the Senior Executive Vice PresidentPresident-VAS &
International and Chief
Marketing OfficerCOO with a country club
membership. The membership fees and other
business-related and reasonably incurred expenses
were paid by us.us, and we received full
reimbursement from Mr. Leathers for any personal
expenses he incurred in connection with the
23
membership. We provide this membership for our
benefit, notwithstanding the incidental personal
benefit to Mr. Leathers.
* Personal Use of Corporate Aircraft.Aircraft and Property.
The Chairman, Vice Chairman and the President and
CEO are permitted personal use of our corporate
aircraft provided they reimburse the Company. WeCompany (we
do not provide non-reimbursed personal use to any
of these three executives.executives). When the Chairman,
Vice Chairman or President and CEO uses our
corporate aircraft for personal business, such
executive officerNamed Executive Officer reimburses us the higher
of our incremental cost or the IRS taxable
amount. Such
reimbursements made by the Chairman in 2007Our executive officers are
discussed in "Transactions with Related Persons."
Senior management is also
permitted limited personal use of the corporate
aircraft with the approval of the Chairman, Vice
Chairman or President and CEO.CEO, and we are not
reimbursed for such utilization of the aircraft
by the executive officer. None of our Named
Executive Officers used the corporate aircraft
for personal benefit in 2008 other than the
Chairman, whose reimbursements for such use are
discussed under Transactions with Related
Persons. In 2007, we provided the
Senior Executive Vice President and Chief
Marketing Officer with2008, Mr. Leathers was permitted
personal use of our corporate aircraft for one personal trip for himself and
other individuals.condominium.
* Company Vehicle. We provide each named executive
officerNamed Executive
Officer with one Company vehicle for business and
personal use, with the exception of the Chairman
and the President and CEO who are each provided
two Company vehicles. We are responsible for
paying the operating expenses of these vehicles,
which include costs such as fuel, repairs and
maintenance, insurance and licensing and
registration.
Benefits. As discussed above in "Perquisites,"Perquisites, we believe
our benefits are competitive and standard compared to
those offered by companies in our industry and
competitive peer group and are essential for retaining
exceptional executives. In 2008, we offered the
following benefits:
* Health and Welfare Benefits. Our named executive officersNamed Executive
Officers are eligible to participate in theour full
range of health and welfare benefits, and are
covered under the same plans and terms, that are
provided to all of our full-time employees in the
United States. In 2007,2008, we partially subsidized
the healthcare insurance premiums of the Senior
Executive Vice PresidentPresident-VAS & International and
Chief Marketing Officer received an
additional subsidy of his healthcare premiums.COO. These premiums are discusseddisclosed under "AllAll
Other Compensation for 2007."2008.
* 401(k) Plan. Our benefits also includeNamed Executive Officers are
eligible to participate in our 401(k) Retirement
Savings Plan (the "401(k) Plan"). This plan
allows participants to make pre-tax deferred
salary contributions through payroll deductions,
and the Company matches a certain portion of each
participant's contributions. Earnings on
participant and Company contributions to ourgrow tax-
deferred. 401(k) Plan and a Company matchmatching contributions are
made under our Employee Stock Purchase Plan, both of
which are madeto Named Executive Officers on the same
terms as provided to our full-timeeligible U.S. employees.
These contributions and
matches are also detailed under "All Other Compensation
for 2007." At the named executive officers'his respective request, the Vice Chairman and
the President and CEO do not receive a matching
contribution from us for the 401(k) Plan. TheOur
Chairman does not participate in thethis plan.
401(k) Plan Company-made matching contributions
for our other Named Executive Officers are
detailed under All Other Compensation for 2008.
* Employee Stock Purchase Plan. The Named
Executive Officers may elect to participate in
our Employee Stock Purchase Plan. Generally
under this plan, a participant may acquire shares
of our common stock at market price through
payroll deduction, and the Company will match an
amount equal to a specified percentage of each
participant's contributions. Such matching
amounts are made to Named Executive Officers on
the same terms as provided to our eligible U.S.
employees. The All Other Compensation for 2008
section identifies matching amounts made for
Named Executive Officers who participate in this
plan.
24
* Executive Nonqualified Excess Plan. We offer
participation in the Executive Nonqualified
Excess Plan ("nonqualified deferred compensation
plan") to key managerial employees because their
401(k) Plan contributions are limited under
federal income tax rules applicable to highly
compensated employees. We believe these
executives should have other similar means of
saving for retirement on a tax-deferred basis.
Our nonqualified deferred compensation plan (as
described further under "NonqualifiedNonqualified Deferred
Compensation for 2007") allows key employees whose
401(k) Plan contributions are limited by IRS
regulations affecting2008) enables these highly
compensated employees, including our Named
Executive Officers, to contribute additional amounts (in
addition to their 401(k) Plan contributions) on a
tax-deferred basis, subject to annual dollar
limits we impose. The nonqualified deferred
compensation plan provisions allow us to make
matching contributions; however, to date, we have
elected not to make a matchingany such contribution. Our
nonqualified deferred compensation plan is
described further under Nonqualified Deferred
Compensation for 2008.
Compensation Process and Determination. Annual executiveThe Compensation
Committee makes all annual compensation decisions are made byfor our
Named Executive Officers and executive officers.
Additionally, the President and CEO may also modify
compensation for certain executives within the Compensation
Committee.Committee parameters described below.
When determining total compensation, we apply a consistent
approach for all namedNamed Executive Officers and other executive
officers. The structure and levellevels of our executive
compensation isprogram are determined, in large part, by
considering all elements of compensation, rather than only a
few components in isolation. Our Compensation 22
Committee
evaluates each element individually and also takes into
account the position and current total direct compensation of
the individual being considered. (Direct compensation
includes base salary, bonuses and long-term incentive
compensation.) The Compensation Committee's determination of
compensation levels for our executive officers therefore
differs depending upon these factors. Our Compensation
Committee also exercises appropriate business judgment in how
it applies these standard approaches to the facts and
circumstances involving each respective executive officer.
The Compensation Committee determines each component of Chairman, Vice Chairmanan
executive officer's compensation based on its collective
assessment of the officer's performance, Company's overall
financial performance and therecommendations of our President and
CEO. Our Compensation Committee consultsmay also request executive
compensation guidance and advice from an independent third-partythird-
party consultant to assist with
developing executive(such as Towers Perrin) when deciding
compensation packages for our Chairman, Vice ChairmanNamed Executive Officers and Presidentother
executive officers. In addition to the factors and
CEO. Upon
assessing the executive compensation information compiled by the consultant,described above, our Compensation Committee then meets in executive sessionalso
considers and determines athe compensation package for these particular officers
based on each individual's job performance and
responsibilities, leadership, our financial and
operating performance and how the elements of executive
compensation apply to such individual. The CEO's
compensation is also reflective of our overall
performance and the achievementexecutive
officers as follows:
Compensation of the CEO's goals and
objectives for the Company. Our CEO is also eligible
for all of the same programs (such as health and
welfare benefits) as our other named executive
officers.All Named Executive Officers. Each year,
the Compensation Committee reviews each element of
executive compensation and how such elements relate to
the total direct compensation, and executive position and
related responsibilities of each named
executive officer.Named Executive
Officer. As part of this annual process, the
Compensation Committee also examines how such elements
are reflected in competitive executive compensation
market data when determining annual pay opportunities.
Generally, the amount of compensation realized or
potentially realizable does not directly impact the
level at which future pay opportunities are set.set, but
such amount is considered by the Compensation
Committee.
Compensation of Chairman, Vice Chairman and President and
CEO. Our Compensation Committee assesses the executive
compensation information compiled by the independent
third-party consultant (Towers Perrin) when developing
compensation packages for our Chairman, Vice Chairman
25
and President and CEO. Upon reviewing such
information, the Compensation Committee then meets in
executive session and determines a compensation package
for each of these particular officers based on how the
elements of executive compensation apply to the
individual and the related factors described above.
These factors generally include each individual's job
performance, responsibilities and the scope of their
position, leadership and our financial and operating
performance. The President and CEO's compensation is
reflective of our overall performance and the
achievement of the President and CEO's goals and
objectives for the Company. Our Chairman, Vice
Chairman and President and CEO are also eligible for
all of the same compensation programs, perquisites and
benefits as our other Named Executive Officers.
Our Chairman, Vice Chairman and President and CEO do
not participate in the Compensation Committee's
deliberations or decisions with regard to his own
respective compensation or the compensation of any
Named Executive Officer identified in this Compensation
of Chairman, Vice Chairman and President and CEO
section.
Compensation of Other Named Executive Officers and
Executive Officers. At the end of the year, the
Compensation Committee reviews the competitive market
compensation data for our peer group.group compiled by the
independent third-party consultant. Upon doing so, our
Compensation Committee establishes cash compensation
"pay ranges" (inclusive of base salary and annual cash
bonus "pay
ranges"bonus) according to job title (such as Senior Executive
Vice President and Executive Vice President). As
explained in the Compensation Committee section within
Corporate Governance, the Compensation Committee
delegated certain authority to our President and CEO
that permits him to adjust the base salaries of
executive officers. The President and CEO does not
have authority to modify his own base salary or that of
the Chairman or Vice Chairman. After our Compensation
Committee defines the cash compensation pay ranges, the
President and CEO may then make changes to the
executive officer base salaries during the following
year, provided such changes are within the parameters
of the pay ranges designated by the Compensation
Committee. Any proposed changes that do not fall
within the established pay ranges require approval of
the Compensation Committee. Our Compensation Committee
reviews and approves these base salary changes at the
close of the year. At that time, the President and CEO
presents his year-end total cash compensation
recommendations for the other Named Executive Officers
and executive officers. Our Compensation Committee
then reviews and approves such recommendations at its
year-end meeting. (For example, our Compensation
Committee sets base salaryestablished cash compensation pay ranges in
November 2007December 2008 for fiscal year 2008.2009. The President and
CEO has delegated authority to modify base salaries
throughout 20082009 within these ranges. In November 2008,or
December 2009, the Compensation Committee will review
the President and CEO's year-
end total cash compensation
recommendations for the
named executive officers, and such
recommendations will include these base salary
changes.)
After conducting its review of our peer group's
compensation data, the Compensation Committee also
evaluates and approves the annual cash bonus and long-termlong-
term incentive compensation for each namedthe other Named
Executive Officers and executive officer.officers. In making
such determinations, the Compensation Committee
considers the relevant factors and compensation
elements, including (i) each executive officer's
position and related responsibilities, (ii) overall
individual and Company performance and (iii)
achievement of corporate goals and objectives. Our
Compensation Committee determines annual cash bonus and
long-term incentive compensation near the end of the
fiscal year.
26
Our President and CEO participates in the Compensation
Committee's discussions regarding the compensation and
performance of the other Named Executive Officers and
executive officers. The Compensation Committee values
the President and CEO's evaluation of the other
executives because he has direct knowledge of each
person's performance and contributions to the Company.
Prior to the Compensation Committee's discussions, the
President and CEO may seek and consider input from the
Chairman and Vice Chairman. However, other than the
President and CEO, no other Named Executive Officer or
executive officer participates in the executive
compensation discussions and decisions of the
Compensation Committee.
Competitive Peer Groups and Benchmarking. The Compensation
Committee refers to a competitive market analysis preparedand market
data provided by Towers Perrin when it reviews and prepares
executive compensation packages for the year. In 2007, Towers Perrin
assistedThe market analysis
incorporates the market data and reflects compensation levels
and practices for executives holding similar positions at
companies within our peer group, which helps our Compensation
Committee with identifyingdetermine executive compensation at competitive
levels. In 2008, Towers Perrin prepared such an analysis for
the Company's peer group, which consists of companies that
specifically provide transportation and logistics services.Compensation Committee. The Compensation Committee then
compares three of our elements of executive compensation elements (base
salary, annual bonusperformance-based compensation and long-
term incentives)long-term incentive
compensation) to amounts paid for similar executive positions
among (i) those companies in our peer group (which consists of
companies that specifically provide transportation and
logistics services) and (ii)
23
a broader general industry group
comprised of companies with median revenues of $2 billion.
The Compensation Committee places more significance on our
competitive peer group than the general industry group.
Each year, our Compensation Committee also reviews the general
criteria and recommendations for the addition or removal of
companies in our competitive peer group. The criteria
include
but areincludes (but is not limited to market capitalization,to) revenues and
revenue growth, earnings per share and total stockholder
return, net income and industry of
operation. Upon applying these criteria, the Compensation
Committee was able to selectselected our peer group, which is comprised of 1715
companies in the transportation and logistics industry with
whom we compete for executive talent. Although theour
Compensation Committee may make changes tomodify the peer group when
appropriate, the Compensation Committee prefers to keep the
group remainedsubstantially consistent from year to year to produce
more consistent and useful executive compensation
benchmarking.
When the Compensation Committee conducted its annual review of
our peer group in October 2008, it removed the following four
companies: (i) Swift Transportation and (ii) U.S. Xpress
Enterprises, because these companies became privately held in
2008; (iii) Expeditors International of Washington, because it
competes more as a freight forwarder, rather than as a
truckload transportation and logistics company; and (iv) USA
Truck, because its revenues are not competitive under our peer
group criteria. Our Compensation Committee also added two
companies to the peer group: (i) C.H. Robinson Worldwide,
Inc., because it competes directly with us as a logistics
provider; and (ii) Universal Truckload Services, Inc., because
its revenues are competitive based on our peer group criteria.
Otherwise, our peer group did not change from 20062007 to 2007.2008.
Our competitive peer group for 2008 is shown in the table on
the following page.
27
Werner Enterprises, Inc.
2008 Competitive Peer Group
- --------------------------------------------------------------------------
Arkansas Best Knight Transportation
Celadon Group Landstar System
C.H. Robinson Worldwide, Inc. Marten Transport
Con-Way Old Dominion Freight Line
Covenant Transportation Group, Inc. Pacer International
Heartland Express Saia
Hub Group Universal Truckload Services, Inc.
J.B. Hunt Transport Services
In 2007, after applying2008, our Compensation Committee applied the competitive
peer group criteria to these criteria,15 companies. Upon doing so, we
found that our revenues fell nearest to those revenues in the
top quartile of our competitive peer group; as a result, we
compare total executivedirect compensation against the 75th percentile
of this peer group. The general industry data, on the other
hand, is regressed or size-adjusted according to our annual
revenues. Therefore, we compare total executive compensation
at the median of the general industry group.
Werner Enterprises, Inc.
2007 Competitive Peer Group
---------------------------
Arkansas Best Landstar System
Celadon Group Marten Transport
Con-Way Old Dominion Freight Line
Covenant Transport Pacer International
Expeditors International of Washington Saia
Heartland Express Swift Transportation
Hub Group USA Truck
J. B. Hunt Transport Services U.S. Xpress Enterprises
Knight Transportation
The Compensation Committee does not attempt to set
compensation elements for each executive to meet specific
benchmarks based on peer group and general industry data.
Instead, we consider these comparisons as one factor in
determining executive compensation levels. Generally, the
Compensation Committee reviews total compensation levels
annually and makes adjustments when job responsibilities,
individual performance or market data warrants such
modifications. Actual total compensation can vary from year
to year based on Company, operating unit and individual
performance.
Other Executive Compensation Policies and Considerations.
Stock Grant Practices. Under our Equity Plan, the
Compensation Committee may grant stock options, SARs
and restricted stock to our executive officers and
non-employeeoutside directors. We do not have an annual equity
program, and the Equity Plan does not require us to
grant equity awards on an annual or otherwise regular
basis. Therefore, our Compensation Committee does not
grant stock optionsequity awards on any pre-determined grant date.
Instead, the Compensation Committee selects a grant
date after it decides to award stock options.grant any equity awards. The
committee also selects a grant date that occurs when
neither the recipient nor the Compensation Committee
possess material nonpublic information. When choosing
the grant date, our Compensation Committee also
monitors long-term trends in our stock price and
attempts to select grant dates that will provide
incentives for management to increase our stock value
and increase the 24
stock price to higher levels.
Pursuant to our Equity Plan, the purchase price of the
Common Stockcommon stock under each stock option is equal to the
closing market price of our Common
Stockcommon stock on the date
the option is granted. For stock options granted prior
to the May 8, 2007 Equity Plan amendments discussed below,
the purchase price of the Common Stockcommon stock under each
option was equal to the closing market price of our
Common Stockcommon stock on the day prior to the date of grant.
Restricted stock is awarded at no cost to the
recipient.
28
Our Compensation Committee also establishes the vesting
period for each grant. We did not grant any stock
options in 2008. For that reason, and to further
explain the vesting periods of stock options awarded
under the Equity Plan, we have provided the Stock
Option Vesting Periods table below regarding stock
options granted in prior years for which a portion of
the option award remains outstanding. All stock
options granted to our named executive officersNamed Executive Officers in 2007
vest over a six-year period based on the followingprescribed
schedules and expire after ten years.
Stock Option Vesting Periods
-----------------------------------------------------------------
2007 Grant: 1999-2006 Grants:
Years from Grant Date Amount Vested Amount Vested
--------------------- ------------- -------------
2 Years (24 Months) 15% 25%
3 Years (36 Months) 20% 20%
4 Years (48 Months) 20% 20%
5 Years (60 Months) 20% 20%
6 Years (72 Months) 25% 15%
The restricted stock granted in 2008 is not subject to
periodic vesting periods like our stock options;
rather, the restricted stock will vest five years after
the grant date of the award and has no post-vesting
sales restrictions. The restricted stock does not give
the recipient any voting or dividend rights until such
stock fully vests.
Our Equity Plan also permits the Compensation Committee
to grant awards comprised of SARs to our executive officers and restricted stock.outside
directors. No such awards have been granted, in 20072008
or at any other time. On May 8, 2007, our stockholders
approved amendments to the Equity Plan, and the Equity
Plan was included as an exhibit to our Form 8-K filed
with the SEC on May 14, 2007. Please refer to "Long-Termthe
preceding Long-Term Incentive Compensation (Stock Options)" under "Elements of
Executive Compensation" and "Compensation Discussion
and Analysis"section for
additional details regarding stock option and
restricted stock determinations. The Summary
Compensation Table and Grants of Plan-Based Awards for
2008 table also provide information regarding stock
options and restricted stock granted to our Named
Executive Officers.
Executive Stock Ownership. We do not have formal stock
ownership guidelines or requirements for our executive
officers. As discussed in this Proxy Statement, our
Equity Plan permits us to grant nonqualified stock
options, SARs and restricted stock to executive
officers. The Compensation Committee granted stock
options to two namedOur executive officers may also increase
their stock ownership by electing to participate in our
Employee Stock Purchase Plan, as discussed under
Benefits on November 29,
2007: Daniel H. Cushman (25,000 shares) and John J.
Steele (15,000 shares).page 24. The individual stock ownership of
our named executive officersNamed Executive Officers is provided in the
Beneficial Ownership table.table on page 17.
Tax Deductibility of Executive Compensation; Accounting
Considerations. The Compensation Committee reviews
estimated tax and accounting (pro forma expense)
projections and implications and how these factors
impact the material elements of our executive
compensation program. Generally, executive salaries
and performance-based compensation are accrued as
expense over the requisite service period related to
the particular compensation element (this period is
typically equal to the performance period of the
executive officer), and we realize a tax deduction upon
the payment of the compensation to the executive.
Section 162(m) of the Internal Revenue Code prevents us
from taking a tax deduction, in any one taxable year,
for non-performance-based compensation in excess of $1
million paid to the Chief Executive Officer and the
29
next four highest compensated executive officers (the
CEO and such officersofficers. We
collectively refer to these executives as the "covered
officers").officers." Certain compensation of the covered
officers is specifically exempt from the deduction
limit to the extent that such compensation does not
exceed $1 million during any fiscal year or is
"performance-based" as defined in Section 162(m). The
25
Compensation Committee carefully considers and monitors
the effect of Section 162(m) on our executive
compensation program and will structure executive
compensation to preserve its tax deductibility under
Section 162(m) while maintaining our ability to
attract, motivate and retain high-quality executive
officers. The Compensation Committee also believes
there are circumstances where the interests of the
Company and our stockholders are best served by
maintaining flexibility in the manner compensation is
provided. In those events, the Compensation Committee
may, at its discretion, approve payments of
nondeductible compensation if the Compensation
Committee believes the circumstances warrant such
payments. All amounts paid to the covered officers
during 20072008 qualified as deductible under Section
162(m), except for $97,308$96,570 paid to Clarence L. Werner
and $66,423$106,423 paid to Gregory L. Werner. Our aggregate
cost of the lost tax deduction that resulted from
exceeding the Section 162(m) deductibility limit in
2008 was approximately $83,000.
Employment Arrangements
None of our named executive officersNamed Executive Officers has any type of written
employment agreement with us.
Arrangements and Potential Payments Upon Termination or Change
in Control
Termination. None of our named executive officersNamed Executive Officers for 2008
has a severance agreement or severance benefit arrangement
with us. We do not provide for incremental compensation or
special treatment for incentive compensation in the event of a
named executive officer'sNamed Executive Officer's voluntary termination, termination
for cause or termination by death or disability. None of our named executive officers for
2007 currently has any such severance benefit arrangement,
except Daniel H. Cushman. WeIn 2008, we
entered into a separation agreement with Mr.Daniel H. Cushman
upon the end ofwhen his employment ended with the Company on January 15,
2008 (the "Employment End Date").
Pursuant2008. Prior to thisthat date, Mr. Cushman was a Named Executive
Officer of the company for fiscal year 2007. The separation
agreement did not confer to Mr. Cushman (i) could
exercise his stock options that vested asany incremental
compensation or special treatment for such compensation.
Rather, the terms and conditions of the Employment
End Date, as permitted by andseparation agreement
were in accordance with the Equity
Plan; (ii) would be paid for any vacation (as paid time off)
accrued priorour plans and policies that apply to his Employment End Date, of which there was
none; and (iii) received dental and health insurance coverage
until January 31, 2008, which
all of our employees receive
throughwho are eligible for the last day ofrespective plan
or to which the month in which their employment
ends.respective policy applies. The separation
agreement also provided that if Mr. Cushman elected COBRA
continued health coverage after January 31, 2008, we would
subsidize such coverage until the earlier of March 31, 2008 or
Mr. Cushman's employment with another company.
Change in Control. None of our named executive officersNamed Executive Officers has a
change in control agreement with us, and we do not currently
provide for incremental compensation or special treatment for
incentive compensation related to a change in control. The
stockholder-approved Equity Plan amendments (approved in May
2007) included change in control provisions. Under the Equity
Plan, the Compensation Committee and the Board have the
authority and discretion to take certain actions in the event
of a change in control in the Company, and determinations of
such actions are generally made with respect to all named
executive officersNamed
Executive Officers or on a case-by-case basis. These actions
include, but are not limited to, adjusting outstanding option
awards or accelerating the vesting dates of outstanding
awards.
Potential Benefits Payable Under the Equity Plan. As stated
above, we do not have any severance or change in control
agreements with any of our named executive officers.Named Executive Officers. Our
Equity Plan, however, permits the vesting of outstanding
stock
options and restricted stockequity awards upon certain termination or resignation actions
following a change in control. The Equity Plan provides that
within the period beginning upon a change in control and
ending on the second anniversary of the change in control, a
named executive officerNamed Executive Officer may be terminated other than for
30
"cause" or may voluntarily resign for "good reason." Upon the
occurrence of either event, (i) all outstanding stock options
and SARs will become fully exercisable and (ii) all conditions
and restrictions (other than those imposed by law) on
outstanding restricted stock will be deemed satisfied as of
the executive officer's employment termination date. "Cause,"
26
"good reason" and "change in control" are defined in the
Equity Plan, as approved and amended, included as an exhibit
to the Form 8-K filed with the SEC on May 14, 2007.
The table below shows the potential benefits payable to each
named executive officerNamed Executive Officer due to the occurrence of either the
termination or resignation event described in the Equity Plan.
The amounts of the potential benefits represent the estimated
value of all unvested stock optionsequity awards that would fully vest upon
either event, assuming such event occurred on December 31,
20072008 (the last day of our fiscal year) and a stock price of
$17.03,$17.34 per share, which was the NASDAQ closing market price of
our Common Stockcommon stock on the same date. These amounts are the same
for both events and are reflected in the "Potential Benefit"
column.
Potential Benefits Payable Under the Equity Plan
- ------------------------------------------------------------------------------------
Name-----------------------------------------------------------------
Number of Unvested Potential
Name Shares Vesting Potential Benefit ($)(1)
---- --------------------------------- --------------------------------------- --------------
Clarence L. Werner 55,00035,000 -
Gary L. Werner 55,00035,000 -
Gregory L. Werner 55,00035,000 -
Daniel H. Cushman (2) 106,250 9,188Derek J. Leathers 78,250 531,460
John J. Steele 37,250 3,93830,250 7,845
____________________----------------
(1) The actual exercise prices of the stock options (as
specified in each named executive officer'sNamed Executive Officer's respective
award agreements) vary from the $17.03$17.34 closing market
price used to calculate the amounts in this table.
These actual exercise prices range from a minimum of
$16.68 per share to a maximum of $18.33 per share. No
potential benefit was calculated for stock options
where the option exercise price exceeded the $17.03$17.34
closing market price on December 31, 2007.
(2) Daniel H. Cushman's employment with2008. Shares of
restricted stock do not have an exercise price, thus
the Company ended
on January 15, 2008. Consequently, these 106,250
unvested stock options were forfeited uponpotential benefit was calculated using only the
end of
Mr. Cushman's employment.$17.34 closing market price.
Report of the Compensation Committee
The following report of the Compensation Committee shall not
be deemed to be "soliciting material" or to otherwise be
considered "filed" with the SEC, nor shall this report be
subject to Regulation 14A (other than as indicated) or to the
liabilities set forth in Section 18 of the Securities Exchange
Act of 1934. This report shall not be deemed to be
incorporated by reference into any prior or subsequent filing
under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent that the Company
specifically incorporates it by reference or treats it as
soliciting material.
In conjunction with the preparation of the Company's Annual
Report on Form 10-K for 20072008 and this Proxy Statement for the
Annual Meeting of Stockholders to be held May 13, 2008,12, 2009, the
Compensation Committee has reviewed and discussed with
management the foregoing "CompensationCompensation Discussion and Analysis"Analysis
section required(required by Item 402(b) of Regulation S-K.S-K) of this
Proxy Statement.
31
Based on such review and discussions,discussion, the Compensation
Committee recommended to the Board of Directors that the
"CompensationCompensation Discussion and Analysis"Analysis section be included in
this Proxy Statement and incorporated by reference into the
Company's Annual Report on Form 10-K for 2007.2008.
Patrick J. Jung, Committee ChairChairman
Kenneth M. Bird
Gerald H. Timmerman
27
Summary Compensation Table
The Summary Compensation Table provided on page 2933 presents
all elements of compensation for our named executive officersNamed Executive Officers
for 2006, 2007 and 2008 as follows:
* Salary: refers to Base Salary.
* Bonus: refers to Performance-Based Compensation
(Annual Cash Bonus).Compensation.
* Option Awards and Stock Awards: refers to amounts
expensed in our financial statements under SFAS No.
123 (Revised 2004), Share-Based Payment.
* All Other Compensation: represents the aggregate
amount of:
(i) Perquisites and other personal benefits;
(ii) Matching Company contributions to the 401(k)
Plan;
(iii) Insurance premiums paid by the Company;
(iv) Tax reimbursements; and
(v) Matching Company contributions under the
Employee Stock Purchase Plan.
You should read the Summary Compensation Table in conjunction
with the "CompensationCompensation Discussion and Analysis"Analysis section and the
tables and narrative descriptions that follow. Executive
deferrals to our 401(k) Plan and nonqualified deferred
compensation plan are included in the appropriate column
(typically the "Salary and/or Bonus" columns) for which the
compensation was earned.
The "Stock Awards" and "Non-Equity Incentive Plan Compensation" columns arecolumn is omitted
from the Summary Compensation Table because no stock orwe did not make
any non-equity incentive plan awards in 2006, 2007 or 2008.
We have also removed the "Nonqualified Deferred Compensation
Earnings" column from the Summary Compensation Table because
none of the earnings on the nonqualified deferred compensation
balances of our Named Executive Officers were made in 2007.
28above-market or
preferential earnings.
32
Summary Compensation Table
- -----------------------------------------------------------------------------------------------------
Change in
Pension
Value &
Nonqualified
Deferred-------------------------------------------------------------------------------------------------
Stock Option All
Option Compensation Other
Name and Bonus Awards EarningsAwards Compensation
Principal Position Year Salary ($)(1) ($) (6) ($) (2) ($)(2)(3) ($)(4) Total ($)
------------------ ---- ------ ------- ------- ------- ------------- ------ --------- ------------ ---------
Clarence L. Werner - 2008 715,000 350,000 - 64,064 31,570 1,160,634
Chairman 2007 715,000 350,000 - 174,815 - 32,308 1,272,123
Chairman (4)
2006 715,000 350,000 - 412,885 - 32,621 1,510,506
Gary L. Werner - 2008 356,750 230,000 - 64,064 18,115 668,929
Vice Chairman 2007 355,000 230,000 - 131,624 - 18,115 734,739
Vice Chairman
2006 355,000 230,000 - 261,667 - 17,260 863,927
Gregory L. Werner - 2008 720,000 350,000 - 64,064 36,423 1,170,487
President and CEO 2007 679,615 350,000 - 139,959 - 36,808 1,206,382
President and CEO (4)
2006 420,000 350,000 - 290,852 - 37,093 1,097,945
Daniel H. CushmanDerek J. Leathers - 2007 310,770 245,000 173,535 - 43,896 773,2012008 288,234 230,000 57,864 (6) 85,972 26,204 688,274
Senior Executive 2006 310,270 245,000 258,286 - 26,863 840,419
Vice
PresidentPresident-VAS &
International and Chief
Marketing OfficerCOO (5)
John J. Steele - 2008 210,000 100,000 - 53,865 17,065 380,930
Executive Vice 2007 210,000 80,000 - 49,225 - 17,419 356,644
ExecutivePresident, 2006 210,000 80,000 - 64,651 - 14,507 369,158
Vice President,
Treasurer and CFO
____________________----------------
(1) Annual cash bonus awards are made under the annual
cash bonus program. These bonusesBonuses reported in this column
were awarded by the Compensation Committee on December
2, 2008; November 29, 2007.2007; and November 30, 2006,
respectively.
(2) NoneThe stock and option awards reported in these columns
are also disclosed in the Grants of Plan-Based Awards
for 2008 table on page 35 and Outstanding Equity
Awards at December 31, 2008 tables on pages 36 and 37.
(3) We did not grant any option awards in 2008. The fair
value of the earningsoption awards reported in this column is
estimated using a Black-Scholes valuation model. For
a discussion of the assumptions used in the valuation,
refer to Note 5 of our Consolidated Financial
Statements in our Annual Report on nonqualified deferred
compensation balances are above-market or
preferential earnings.
(3)Form 10-K for 2008.
(4) Refer to the All Other Compensation for 20072008 table belowon
page 34 for a more detailed explanation of all other
compensation.
(4) On February 8,the
compensation reported in this column.
(5) Mr. Leathers was not a Named Executive Officer in 2007
Mr. Clarence L. Werner resigned
as the CEO and our Board appointed Gregory L. Werner
as the CEO.
(5) Daniel H. Cushman's employment with the Company
ended on January 15, 2008. Prior to January 15,
2008, Mr. Cushman was a named executive officer of
the Company during 2007 and until his employment
ended in January 2008.or 2006.
(6) On November 29, 2007,July 31, 2008, our Compensation Committee granted
Daniel H. CushmanDerek J. Leathers a total of 25,000 options
and John J. Steele a total30,000 shares of
15,000 options. These
grants were maderestricted stock, pursuant to our Equity Plan. ReferFair
value of this stock award is based upon the market
price of the underlying stock on the grant date,
reduced by the present value of estimated future
dividends because the award is not entitled to receive
dividends prior to vesting. Present value of
estimated future dividends is estimated based on a
$0.05 quarterly dividend amount per share and 3.0%
risk-free interest rate, each for the year ended
December 31, 2008. For further discussion of the
valuation and assumptions, refer to Note 5 of our
Consolidated Financial Statements in our Annual Report
on Form 10-K for 2007
for the assumptions used2008. None of our other Named
Executive Officers were granted any stock awards in
the valuation.
292008.
33
All Other Compensation for 20072008
The table below shows the components of "all other
compensation" provided in 20072008 to the named executive
officers.Named Executive
Officers.
All Other Compensation for 20072008
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Company
Contrib-
utions to
Company Employee
Perquisites Tax Contrib- Stock Severance
& Other ReimburseReimburse- Insurance utions to Purchase Payments/
Personal -mentsments Premiums 401(k) Plan Accruals
Name Year Benefits ($) ($) (1) ($) (2) Plan ($) ($) (3) ($) (4) Total ($)
---- ---- ------------ ------- ------- -------- ------- ------- ---------
Clarence L. Werner (5) 2007 20,801 11,5072008 20,331 11,239 - - - - 32,30831,570
Gary L. Werner (6) 20072008 12,666 5,449 - - - - 18,115
Gregory L. Werner (7) 2007 25,301 11,5072008 25,056 11,367 - - - - 36,808
Daniel H. Cushman36,423
Derek J. Leathers (8) 2007 28,893 8,245 2,112 3,837 8092008 16,272 6,883 2,239 - 43,896810 - 26,204
John J. Steele (9) 20072008 8,471 4,484 - 3,655 8093,300 810 - 17,41917,065
____________________----------------
(1) Tax gross-upsThe amounts reported in this column are the tax gross-
ups for Company vehicle use for Messrs. Clarence L.
Werner, Gary L. Werner, Gregory L. Werner and John J.
Steele. TaxThe amount reported for Mr. Leathers
represents tax gross-ups of $4,484 for Company vehicle
use and $3,761$2,399 for the IRS value of personal use of the corporate
aircraft for Mr. Cushman.condominium.
(2) Insurance premium of $2,112The amount reported in this column represents an additionala
partial subsidy of Daniel H. Cushman'sDerek J. Leathers' healthcare
insurance premiums.
(3) There is a 15% Company match for employee
contributions to the Employee Stock Purchase Plan.
(4) In 20072008 we did not, and do not currently, have any
change in control arrangements with any of the named
officers.Named
Executive Officers.
(5) Perquisites and personal benefits include $20,801$20,331 for
use of two Company vehicles.
(6) Perquisites and personal benefits include $10,166 for
use of one Company vehicle and $2,500 for income tax
preparation services.
(7) Perquisites and personal benefits include $20,801$20,556 for
use of two Company vehicles and $4,500 for income tax
preparation services.
(8) Perquisites and personal benefits include $8,471 for
use of one Company vehicle; $5,866$5,631 for Company-paid
country club membership; and $14,556$2,170 for personal use
of corporate aircraft.condominium.
(9) Perquisites and personal benefits include $8,471 for
use of one Company vehicle.
Our contributions on behalf of the named executive officersNamed Executive Officers to
the 401(k) Plan and Employee Stock Purchase Plan are made on
the same terms as provided to all of our full-timeeligible employees in
the United States. In addition to the above-mentioned
compensation, the named executive officersNamed Executive Officers also participated
in voluntary health and welfare benefit programs that are
available and comparable to such programs for all full-timeeligible
U.S. employees.
3034
Grants of Plan-Based Awards for 20072008
The following table sets forth information regarding
restricted stock and stock option awards granted to named executive officersNamed
Executive Officers under our Equity Plan during 2007.2008. Columns
required by the SEC regulations are omitted where there is no
amount to report or such column is inapplicable for all of the
named executive
officers.Named Executive Officers.
Grants of Plan-Based Awards for 20072008
- -----------------------------------------------------------------------------------------------
All Other All Other Option Grant Date
Stock Awards: Option Awards: Fair Value
Number of Number of Exercise or of Stock
Shares of Securities Base Price and Option
Grant Stock or Underlying of Option Awards
Name Grant Date Units (#)(1) Options (#)(1) ($/Sh) (1)(2) ($) (2)(3)
---- ---------- -------------- ------------- -------------- ----------- ---------- ------------------
Clarence L. Werner - - - - -
Gary L. Werner - - - - -
Gregory L. Werner - - - - -
Daniel H. Cushman 11/29/2007Derek J. Leathers 7/31/2008 30,000 - 25,000 17.18 161,113- 686,400
John J. Steele 11/29/2007 - 15,000 17.18 96,668- - - -
____________________----------------
(1) The stock and option awards reported in these columns
are also disclosed in the Summary Compensation Table
and Outstanding Equity Awards at December 31, 2008
table and therefore do not constitute additional
compensation not otherwise reported in this Proxy
Statement.
(2) Pursuant to our Equity Plan, the exercise price is
equal to the closing market price on the date of
grant.
(2)(3) The fair value of the restricted stock is based upon
the market price of the underlying common stock on the
grant date, reduced by the present value of estimated
future dividends because the award is not entitled to
receive dividends prior to vesting. The present value
of estimated future dividends was calculated based on
a $0.05 quarterly dividend amount per share and 3.0%
risk-free interest rate. The fair value of stock
options is estimated using a Black-Scholes valuation
model. Further discussion of the valuation and
assumptions regarding our stock and option awards is
provided in Note 5 of our Consolidated Financial
Statements in our Annual Report on Form 10-K for 2007
includes the assumptions used in determining
valuations provided in this column.2008.
Outstanding Equity Awards at 20072008 Year-End
The tabletables on page 32 presentspages 36 and 37 present information regarding
all outstanding equity awards held by each of the named executive
officersNamed
Executive Officers as of December 31, 2007. There are no outstanding2008. The stock option
and restricted stock awards for any executives; therefore,disclosed in these tables were
granted under our long-term incentive program.
For the columns
pertainingvesting dates of unvested stock options, please refer
to such stock awards are excluded from the table.Vesting Dates of Unvested and Unexercisable Stock
Options at December 31, 2008 table on page 37. This table
pertains to the second footnote of the Outstanding Equity
Awards at December 31, 2008 (Option Awards) table on page 36.
35
Outstanding Equity Awards at December 31, 20072008
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Option AwardsAwards(1)
-------------
Equity
Incentive
Plan Awards:
Number of Number of Number of
Securities Securities Securities
Underlying Underlying Underlying Option
Unexercised Unexercised Unexercised Exercise Option
Options: Options: Unearned Price Expiration
Name (#) Exercisable (#) Unexercisable (1)Unexercisable(2) Options (#) ($/Sh)(3) Date
---- --------------- --------------------- ----------- ------ ------------------------ ------------ --------- ----------
Clarence L. Werner 550,000 - - 9.77 09/29/2011
45,000 55,00065,000 35,000 - 18.33 05/20/2014
Gary L. Werner 201,66896,668 - - 7.73 07/12/2010
275,000 - - 9.77 09/29/2011
45,000 55,00065,000 35,000 - 18.33 05/20/2014
Gregory L. Werner 25,001 - - 7.35 12/21/2009
300,001150,001 - - 7.73 07/12/2010
366,668 - - 9.77 09/29/2011
45,000 55,00065,000 35,000 - 18.33 05/20/2014
Daniel H. Cushman 8,750 - - 9.26 04/09/2009
(2) 2,917 - - 8.96 04/14/2009
22,918 - - 7.35 12/21/2009
55,418Derek J. Leathers 33,334 - - 7.61 09/20/2010
66,66833,334 - - 9.77 09/29/2011
45,000 55,00022,750 12,250 - 18.33 05/20/2014
8,750 26,2509,000 11,000 - 16.68 10/22/2015
- 25,000 - 17.18 11/30/2017
John J. Steele 33,33413,334 - - 7.35 12/21/2009
12,500 - - 9.77 09/29/2011
9,000 11,00013,000 7,000 - 18.33 05/20/2014
3,750 11,2506,750 8,250 - 16.68 10/22/2015
- 15,000 - 17.18 11/30/2017
____________________----------------
(1) We did not grant any stock options in 2008. The option
awards granted in 2006 and 2007 and reported in this
table are also disclosed in the Summary Compensation
Table and therefore do not constitute additional
compensation not otherwise reported in this Proxy
Statement.
(2) The vesting dates of unvested and unexercisable stock
options are reported in the Vesting Dates of Unvested
and Unexercisable Stock Options at December 31, 2008
table on page 33.37.
(3) Pursuant to our Equity Plan, the exercise price is
equal to the closing market price on the date of grant.
36
Outstanding Equity Awards at December 31, 2008
- ---------------------------------------------------------------------------------------------------
Stock Awards(1)
------------
Equity Incentive Equity Incentive
Plan Awards: Plan Awards:
Number of Market Value Number of Market or Payout
Shares or of Shares or Unearned Shares, Value of Unearned
Units of Stock Units of Stock Units or Other Shares, Units or
That Have That Have Rights That Have Other Rights That
Name Not Vested (#) Not Vested ($)(2) Not Vested (#) Have Not Vested ($)
---- -------------- ----------------- ---------------- -------------------
Clarence L. Werner - - - -
Gary L. Werner - - - -
Gregory L. Werner - - - -
Derek J. Leathers 30,000(3) 520,200 - -
John J. Steele - - - -
----------------
(1) The stock awards reported in this table are also
disclosed in the Summary Compensation Table and Grants
of Plan-Based Awards for 2008 table and therefore do
not constitute additional compensation not otherwise
reported in this Proxy Statement.
(2) FollowingMarket value is calculated by multiplying the number of
restricted stock shares that have not vested by the
closing market price of our common stock ($17.34 per
share) as of the close of December 31, 2008 (the last
trading day of our fiscal year-end).
(3) This restricted stock award is scheduled to vest in its
entirety on July 31, 2013 (the fifth anniversary of the
July 31, 2008 grant date), provided Mr. Leathers
continues to be employed with the Company through the
vesting date. If he is not employed with us at such
time, all shares of restricted stock will be forfeited
upon the end of hisMr. Leathers' employment with the Company
in January 2008 and pursuant to his separation
agreement, Daniel H. Cushman exercised 210,421 vested
stock options and forfeited 106,250 unvested stock
options.
32
us.
Vesting Dates of Unvested and Unexercisable Stock Options as ofat December 31, 20072008
- ----------------------------------------------------------------------------------------------------------------------------------------------------
Shares Shares
Name Vesting Vesting Date Vesting Vesting Date
---- ------- ------------ ------- ------------
Clarence L. Werner 20,000 05/19/2008
20,000 05/19/2009 15,000 05/19/2010
Gary L. Werner 20,000 05/19/2008 20,000 05/19/2009 15,000 05/19/2010
Gregory L. Werner 20,000 05/19/2008
20,000 05/19/2009 15,000 05/19/2010
Daniel H. Cushman 20,000Derek J. Leathers 7,000 05/19/2008 7,000 10/21/2010
(1) 7,000 10/21/20082009 5,000 11/29/2010
20,000 05/19/2009 5,250 10/21/2011
7,0004,000 10/21/2009 5,000 11/29/3,000 10/21/2011
3,750 11/29/2009 5,000 11/29/2011
5,250 05/19/2010 5,000 11/29/2012
15,000 05/19/4,000 10/21/2010 6,250 11/29/2013
John J. Steele 4,000 05/19/20082009 3,000 10/21/11/29/2010
3,000 10/21/2008 3,000 11/29/2010
4,000 05/19/2009 2,250 10/21/2011
3,000 10/21/2009 3,000 11/29/2011
2,250 11/29/2009 3,000 11/29/2011
3,000 05/19/2010 3,000 11/29/2012
3,000 05/19/10/21/2010 3,750 11/29/2013
____________________
(1) Following the end of his employment with the Company
in January 2008 and pursuant to his separation
agreement, Daniel H. Cushman forfeited all of his
unvested stock options.
3337
Option Exercises for 20072008
The following table provides information regarding stock
options that were exercised by our named executive officersNamed Executive Officers
during 2007.2008. The "value realized on exercise" reflects the
total pre-tax value (stock price at exercise minusrealized by the grant/officers. This value is
calculated by subtracting the aggregate exercise price of the
option) realized byexercised options from the officers.
There are no outstandingaggregate market value of the
shares of common stock acquired on the exercise date. No
restricted stock awards vested during 2008 for any named executive
officers, so theseNamed
Executive Officers. For that reason, the columns regarding
vested stock awards have been omitted from the table.
Option Exercises for 20072008
- -------------------------------------------------------------------------------------------------------------------------------------------------
Option Awards
-------------
Number of Shares Value Realized
Name Acquired on Exercise (#) on Exercise ($)
---- ------------------------ ---------------
Clarence L. Werner (1) 675,000 7,016,845Werner(1) 550,000 3,993,605
Gary L. WernerWerner(2) 105,000 1,628,781
Gregory L. Werner(3) 175,001 2,723,973
Derek J. Leathers - -
Gregory L. Werner (2) 26,667 221,923
Daniel H. Cushman 1,564 12,371
John J. Steele (3) 18,750 168,04720,000 321,944
____________________----------------
(1) The total number of shares acquired on exercise and
held by Mr. Clarence L. Werner is 675,000.550,000.
(2) The total number of shares acquired on exercise and
held by Mr. Gary L. Werner is 15,000.
(3) The total number of shares acquired on exercise and
held by Mr. Gregory L. Werner is 6,900.
(3) The total number of shares acquired on exercise
and held by Mr. Steele is 2,150.20,000.
Nonqualified Deferred Compensation for 20072008
We established a nonqualified deferred compensation plan in
2005 for eligible key employees whose 401(k) Plan
contributions were limited by IRS regulations affecting highly
compensated employees. This plan is subject to the
requirements of Section 409A of the Internal Revenue Code and
is administered in good faith compliance with Section 409A.
The nonqualified deferred compensation plan also permits us to
make matching contributions to participant accounts. We did
not make any such matches in 20072008 and have not done so to
date.
Deferrals. Under the nonqualified deferred compensation plan,
eligible employees are permitted to defer a portion of their
base salary on a pre-tax basis. Such deferred amounts must be
within the annual dollar limitations we establish, and such
limitations in 20072008 were $10,500. The$8,500. Through December 31, 2008,
the annual dollar limitations arewere determined so that the
combined deferrals (in
both the 401(k) Plan and the nonqualified deferred
compensation plan)sum of a highly compensated participant willparticipant's 401(k) Plan
contributions and nonqualified deferred compensation plan
contributions would approximate the maximum deferralcontribution
amount available to non-
highlynon-highly compensated employees who
participate in the 401(k) Plan. Beginning January 1, 2009,
certain participants were allowed to defer combined amounts
that exceed the maximum 401(k) Internal Revenue Code deferral
limits for non-highly compensated employees. Prior to the
enrollment period for the next year, management establishes
maximum deferral limits that correspond to participants' job
titles (such as Senior Vice President or Vice President). The
maximum deferral limits for the 2009 nonqualified deferred
compensation plan year range from $8,500 to $17,000. The
maximum deferral limit for 2009 for each of the Named
Executive Officers and other executive officers is $17,000.
38
Earnings. Each participant in the nonqualified deferred
compensation plan selects one or more investment funds
available under the plan in which their contributed amounts of
deferred compensation are deemed to be invested. Deferred
compensation accounts will then accrue earnings based on the
return of the selected investment funds. The participant may
change how their deferred compensation is allocated to the
investment funds at any time, subject to limitations imposed
by the plan. Changes generally become effective as of the
first trading day following the change. 34
We do not pay
preferential earnings or guarantee above-market earnings on
any investments made under the plan. Any appreciation or
depreciation in a plan participant's account is due solely to
the participant's contributions and the underlying performance
of the investment funds selected by the participant.
Distributions and In-Service"In Service" Withdrawals. At the time of
making their deferral election for the year, a participant
elects under his salary deferral agreement whether the
resulting deferred compensation will be distributed to him in
annual installments or a lump sum. Distributions are made
after the executive officer's retirement or termination from
the Company. Under certain circumstances, participants may
also elect to receive scheduled or hardship "in service"
withdrawals while still employed with us. The specific
distribution options in this case depend upon the plan
provisions. None of our Named Executive Officers received
distributions or "in service" withdrawals during 2008.
The nonqualified deferred compensationNonqualified Deferred Compensation for 2008 table below
presents the following information related to our nonqualified
deferred compensation plan and named executive officerNamed Executive Officer
participants:
* Executive Contributions in 2007:2008: reflects voluntary
executive deferrals of base salary; these deferrals
are included in the "Salary" column of the Summary
Compensation Table.
* Company Contributions in 2007:2008: no such contributions
were made.
* Aggregate Earnings in 2007:2008: reflects the earnings
and/or losses on account balances; none of the
earnings are above-market or preferential earnings and
were therefore not included in the Summary
Compensation Table.
* Aggregate Withdrawals and Distributions in 2007:2008: no
withdrawals or distributions were made.
* Aggregate Balance as of December 31, 2007:2008: reflects
the total market value of the executive officer'sNamed Executive
Officer's nonqualified deferred compensation account,
including such participant's contributions and
earnings to date.
Footnotes to the Nonqualified Deferred Compensation for 2008
table are provided on the following page.
Nonqualified Deferred Compensation for 20072008
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Aggregate Aggregate
Executive Registrant AggregateCompany Earnings Aggregate Balance
Contributions Contributions Earnings(Losses) Withdrawals/ at End
Name in 20072008 ($)(1) in 2008 ($) in 20072008 ($) in 2007 ($)(2) Distributions ($) of 20072008 ($)(3)
---- ----------- ----------- ------------------------- ------------- -------------- ----------------- -------------------------
Clarence L. Werner - - - - -
Gary L. Werner 10,0198,477 - 1,809(9,731) - 22,90221,648
Gregory L. Werner 10,4818,499 - 2,106(8,780) - 33,943
Daniel H. Cushman 10,00033,662
Derek J. Leathers 7,800 - 2,189(10,076) - 33,41520,847
John J. Steele 10,5008,500 - 1,186(12,857) - 33,05328,696
35----------------
39
(1) The amounts disclosed in this column are reported as
compensation and included within the amounts in the
"Salary" column of the Summary Compensation Table on
page 33.
(2) We do not provide above-market or preferential
earnings on nonqualified deferred compensation plan
balances, so we did not report any portion of these
amounts in the Summary Compensation Table pursuant to
SEC rules.
(3) Of these balances, the following executive
contributions were reported in "Salary" column of the
Summary Compensation Table in our proxy statements
for 2006 and 2007: Clarence L. Werner, not
applicable; Gary L. Werner, $20,019; Gregory L.
Werner, $20,481; Derek J. Leathers, not applicable;
and John J. Steele, $20,500.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees of Independent Registered Public Accounting Firm Fees
The firm of KPMG LLP ("KPMG") is our independent registered
public accounting firm. The following table sets forth the
aggregate fees billed to us by KPMG for professional audit
services rendered in connection with the audit of our annual
financial statements and internal control over financial
reporting for 20072008 and 20062007 and for other services provided to
us by KPMG during those periods.
Independent Registered Public
Accounting Firm Fees for 2008 and 2007
and 2006
----------------------------------------
2007------------------------------------------
2008 ($) 20062007 ($)
-------- --------
Audit Fees 422,360 443,949 434,379
Audit-Related Fees - 7,000-
Tax Fees - -
All Other Fees - -
Total 422,360 443,949 441,379
Audit Fees. Audit fees consist of fees for (i) the audit of
our annual financial statements included in our Annual Reports
on Form 10-K for 20072008 and 2006,2007, (ii) review of our financial
statements included in our Quarterly Reports on Form 10-Q
during such periods and (iii) the audit of our internal
control over financial reporting during such periods.
Audit-Related Fees. Audit-related fees include fees incurred
in 2006 for the audit of our 401(k) Plan. This category of
fees may also consist of fees (i)
for assurance and related services that are reasonably related
to the performance of the audit or the review of our financial
statements and are not reported under "Audit Fees"Audit Fees and (ii) fees
related to audit and attest services not required by laws or
regulations and consultations concerning financial accounting
and reporting standards.
Tax Fees. Tax fees are defined as fees for professional
services for tax compliance, tax advice and tax planning.
These services may include assistance regarding federal, state
and international tax compliance, tax return preparation, tax
audits and customs and duties.
The Audit Committee has reviewed KPMG's provision of services
and believes that these services are compatible with
maintaining the independence of KPMG. KPMG did not provide
any non-audit services for us in 2007.2008.
40
The Audit Committee has approved KPMG as our independent
registered public accounting firm for 2008.2009. Representatives
of KPMG will be present at the 20082009 Annual Meeting and will
have an opportunity, should they so desire, to make a
statement. The KPMG representatives will also be available to
respond to appropriate questions from stockholders.
36
Policy of Audit Committee Pre-Approval of Audit and Non-Audit
Services Performed by the Independent Registered Public
Accounting Firm
The Audit Committee is responsible for pre-approving all audit
and non-audit services provided by independent registered
public accounting firms. Prior to the engagement of an
independent registered public accountant for the next year's
audit, our management will submit to the Audit Committee for
approval an itemized list of all audit and non-audit services
expected to be rendered during such year and the budgeted fees
for such services. The Audit Committee then pre-approves
these services according to the categories of service in the
Independent Registered Public Accounting Firm Fees for 2008
and 2007 table above.on page 40. When determining whether a service
should receive pre-
approval,pre-approval, the Audit Committee considers
whether such services are consistent with the SEC rules
regarding auditor independence. In the event circumstances
arise and it becomes necessary to engage the independent
registered public accountants for additional services not
contemplated in the original pre-approval, the Audit Committee
will approve such additional services prior to the
commencement of the engagement and provision of such services.
Pursuant to its charter, the Audit Committee may delegate to
its ChairChairman the pre-approval authority to address any
requests for pre-approval services between Audit Committee
meetings, and the Chairsuch Chairman must report any such pre-approval
decisions to the committee at its next meeting. Our
management and independent registered public accounting firm
periodically report to the full Audit Committee (i) the extent
of services provided by such accounting firm in accordance
with this pre-
approvalpre-approval and (ii) the fees for services
performed to date.
None of theWe did not pay any fees categorized as Audit-Related Fees, Tax
Fees andor All Other Fees we paid to KPMG during 20072008 and 2006 were
approved by2007.
Accordingly, the Audit Committee pursuantdid not approve any fees
during these periods that related to the waiver of pre-
approvalpre-approval
provisions andor the de minimis exception set forth in applicable
SEC rules.
Recommendation of the Board of Directors - Proposal 2
We are asking stockholders to ratify the appointment of KPMG
as our independent registered public accounting firm for 2008.2009.
Although this stockholder ratification is not required by our
By-Laws, Audit Committee charter or otherwise, the Board of
Directors is submitting the selection of KPMG to our
stockholders for ratification as a matter of corporate
governance.
In the event our stockholders do not ratify the appointment of
KPMG, then our Audit Committee and Board of Directors will
reconsider the appointment. Even if our stockholders ratify
the selection of KPMG, the Audit Committee will retain its
authority to, in its discretion and at any time during 2008,2009,
select a different independent registered public accounting
firm or terminate KPMG if the Audit Committee determines that
such a change would be in our best interests and those of our
stockholders.
The Board of Directors recommends that stockholders vote FOR
---
the ratification of the appointment of KPMG LLP as our
independent registered public accounting firm for the year
ending December 31, 2008.2009. Holders of proxies solicited by the
Board in this Proxy Statement will vote the proxies as
directed on each Proxy, or if no instruction is made, for the
ratification of the appointment of KPMG LLP.
3741
TRANSACTIONS WITH RELATED PERSONS
Review and Approval of Related Person Transactions
Our Governance Committee charter requires the Governance
Committee (each member of which is independent under
applicable NASDAQ listing standards and SEC rules) to review
and approve all related person transactions when such approval
is required under the NASDAQ and SEC rules and regulations.
All related person transactions that are required to be
disclosed under SEC rules are disclosed in our applicable SEC
filings.
As defined byFor purposes of Item 404 of SEC Regulation S-K, a "related
person transaction" is generally any effected or proposed
transaction, arrangement or relationship in which:
(i) The Company was or is to be a participant;
(ii) The amount involved exceeds or is expected to
exceed $120,000; and
(iii) Any "related person" has an interest.
Under Item 404, "related person" generally means:
* A director or director nominee of the Company;
* An executive officer of the Company;
* A security holder who is known to be the beneficial
owner of more than 5% of our Common Stock;common stock; or
* Any "immediate family member" of a director, director
nominee, executive officer or beneficial owner of more
than 5% of our Common Stock.common stock. "Immediate family
members" include spouse, children, parents, siblings,
in-laws, stepparents and stepchildren and any other
person sharing the related person's household.
* Any firm, corporation or other entity in which any of
the foregoing persons (i) is employed by, a director
of or a partner or principal in such entity or (ii)
has a beneficial ownership interest of 10% or more.
Related Person Transactions
Land Lease Agreement. The Company leases certain land from
the Clarence L. Werner Revocable Trust (the "Trust"), a
related person. Clarence L. Werner, Chairman of the Board,Werner
Enterprises, Inc., is the sole trustee of the Trust. On
February 8, 2007, the Company entered into a revised Lease
Agreement, effective as of May 21, 2002 (the "Lease
Agreement"), and a License Agreement (the "License Agreement")
with Mr. Werner in his capacity as trustee. The Lease
Agreement and License Agreement were approved by the
disinterested members of the Board of Directors at the Board's
February 8, 2007 meeting. The Lease Agreement was originally
entered into between the parties on May 21, 2002 with a 10-year10-
year lease term commencing June 1, 2002 (the "2002 Lease
Agreement").
The Lease Agreement covers the lease of land comprising
approximately 35 acres (referred to as the "Lodge Premises"),
with improvements consisting of lodging facilities and a
sporting clay range which the Company uses for business
meetings and customer and vendor promotion. The 2002 Lease
Agreement provided for a non-exclusive license to use for
hunting purposes a contiguous portion of farmland comprising
approximately 580 acres (referred to as the "Farmland
Premises"). These license rights were deleted from the Lease
Agreement and incorporated into the License Agreement.
3842
The Lease Agreement's current ten-year term expires May 31,
2012. The Lease Agreement gives the Company the option to
extend such agreement for two additional five-year periods,
through 2017 and 2022, respectively. Under the Lease
Agreement, the Company also makes annual rental payments of
One Dollar ($1.00) per year, and the Company is responsible
for the real estate taxes and maintenance costs on the Lodge
Premises. These costs totaled approximately $46,000$77,000 in 2007.2008.
Under the Lease Agreement, at any time during the lease or any
extension thereof, the Company has the option to purchase the
Lodge Premises from the Trust at its current market value,
excluding the value of all leasehold improvements the Company
made. The Company also has a right of first refusal to
purchase the Lodge Premises, or any part thereof, if the Trust
receives an offer from an unrelated third party to purchase
the Lodge Premises. The Trust has the option at any time
during the lease to demand that the Company exercise its
option to purchase the Lodge Premises. If the Company does
not elect to purchase the Lodge Premises as demanded by the
Trust, then the Company's option to purchase at any time
during the lease is forfeited; however, the Company will
retain the right of first refusal with respect to a purchase
offer from an unrelated third party. If the Company
terminates the Lease Agreement prior to the expiration of the
initial ten-year term and elects not to purchase the Lodge
Premises from the Trust, then the Trust agrees to pay the
Company the cost of all leasehold improvements, less
accumulated depreciation calculated on a straight-line basis
over the term of the Lease Agreement (ten years). If, at the
termination of the initial ten-year term or any of the two
five-year renewal periods, the Company has not exercised its
option to purchase the Lodge Premises accordingly, the
leasehold improvements become the property of the Trust.
However, the Company currently intends to exercise its option
to purchase the Lodge Premises at its current market value
prior to the completion of the initial ten-year lease period
or any of the two five-year renewal periods. The Company has
made leasehold improvements to the Lodge Premises of
approximately $6.1$6.2 million since the inception of leasehold
arrangements commenced in 1994.
The revisions to the Lease Agreement removed the provisions
relating to the Farmland Premises (including the description
of option to purchase rights described above), as of the
effective date of the 2002 Lease Agreement, and the Company
and the Trust entered into the separate License Agreement
defining the Company's respective rights to the Farmland
Premises. Under the License Agreement, the Company and its
invitees are granted a non-exclusive right to hunt and fish on
the Farmland Premises, for a term of one year, which is
automatically renewable unless either party terminates not
less than 30 days prior to the end of the current annual term.
The Trust agrees to use its best efforts to maintain a
controlled shooting area permit on the Farmland Premises while
the License Agreement is effective and to maintain the land in
a manner to maximize hunting cover for game birds. In
consideration of the license to hunt and fish on the Farmland
Premises, the Company agrees to pay the Trust an amount equal
to the real property taxes and special assessments levied on
the land and the cost of all fertilizer and seed used to
maintain the hunting cover and crops located on the land.
Such costs were approximately $31,000 for 2007.2008.
Family Members of Executive Officers and Directors. The
Company employs the family members of certain executive
officers in the following capacities: (i) Scott Robertson is
employed as the Director-Aviation and is Clarence L. Werner's
son-in-law and the brother-in-law of Gary L. Werner and
Gregory L. Werner; and (ii) Gary L. Werner's brother-in-law,
Daniel Matthew,Clint Werner is employed withas
Director-Maintenance Operations and is the Company's Fleet Truck
Sales subsidiary.son of Gregory L.
Werner and grandson of Clarence L. Werner. The total
compensation in 20072008 for Mr. Robertson was $167,734$165,075 (this
amount includes the use of one Company vehicle) and for Mr.
MatthewClint Werner was $142,700. The$122,955 (this amount includes the use of one
Company vehicle). In 2008, the Company also employs fouremployed seven
other family members (one of whom is Vern Werner, mentioned in
the "Owner-Operators" section below)following Owner-Operators section) of certain named executive
officers in various capacities, and each of these other family
members receivesreceived less than $120,000 in annual compensation.
39compensation in
2008.
43
Owner-Operators. During 2007,2008, the Company paid $7,501,944$7,600,906 to
Pegasus Enterprises, LLC, which is owned by Clarence L.
Werner's brother, Vern Werner, and sister-in-law. During that
time, the Company also paid $424,614$1,004,275 to WinRow Farms, which
is owned by Vern Werner. Pegasus Enterprises, LLC and WinRow
Farms lease tractors and drivers to us as owner-operators.
During 2007,2008, the Company sold used tractors to Pegasus
Enterprises, LLC at a total of $622,160$414,600 and to WinRow Farms at
a total of $219,000.$111,000. At December 31, 2007,2008, the Company had
notes receivable from Pegasus Enterprises, LLC of $1,374,483$1,237,491
related to the sale of 4037 used trucks. The largest aggregate
amount of principal outstanding during 20072008 was $1,487,882.$1,374,483.
The amount of principal paid during 20072008 was $546,708,$483,808, and the
amount of interest paid during 20072008 was $171,265.$152,914. The
interest rate payable on this debt ranges from 12%10% to 12.75%.
The payments to Pegasus Enterprises, LLC and WinRow Farms are
based on the same per-mile settlement scale that is applied to
the Company's other similar owner-operator contractors. The
Company believes the terms of the note agreements and the
tractor sales prices are no less favorable to the Company than
those that could be obtained from unrelated third parties, on
an arm's length basis.
Personal Use of Corporate Aircraft. Clarence L. Werner
utilized the Company's corporate aircraft for non-business
purposes during 2007.2008. Mr. Werner reimbursed the Company
$243,698$146,400 representing the aggregate incremental cost
associated with the personal flights. This cost is higher
than the imputed income calculated for income tax purposes in
accordance with IRS rules. The incremental cost is computed
using the average hourly variable costs of operating the
Company's aircraft, which primarily consists of fuel and
maintenance.
OTHER BUSINESS
We do not know of any business that will be presented for
consideration at the 20082009 Annual Meeting of Stockholders other
than that described in this Proxy Statement. As to other
business (if any) that may properly be brought before the
meeting, we intend that proxies solicited by the Board will be
voted in accordance with the best judgment of the person
voting the proxies.
STOCKHOLDER PROPOSALS
Only stockholders of record as of March 24, 2008,23, 2009, are entitled
to bring business before the 20082009 Annual Meeting. All
stockholder proposals must be in writing and include the
following:
(i) A brief description of the business the stockholder
desires to bring before the Annual Meeting;
(ii) The reason for conducting such proposed business at
the Annual Meeting;
(iii) The name and address of the stockholder proposing
such business;
(iv) The class and number of shares of our Common
Stockcommon stock
beneficially owned by such stockholder; and
(v) Any material interest of the stockholder in such
business.
To be eligible for inclusion in our 2009 proxy materials,2010 Proxy Materials,
stockholder proposals intended to be presented at our 20092010
Annual Meeting of Stockholders must be in writing and be
received by the Corporate Secretary at our executive offices
on or before December 8, 2008.11, 2009. The inclusion of any such
stockholder proposal in our 2009 proxy materials2010 Proxy Materials will be
subject to the applicable proxy rules and regulations under
the Exchange Act and will be considered untimely if received
after December 8, 2008.11, 2009. Stockholders may submit nominations
for directors to be elected at the 20092010 Annual Meeting of
Stockholders, and such nominations must be written and
delivered to the Corporate Secretary at our executive offices
by December 8, 2008.11, 2009. Such nominations are also subject to
the rules and regulations prescribed by the Exchange Act. For
a description of the process of submitting stockholder
4044
nominations for director, refer to the "DirectorDirector Nomination
Process"Process section under "Corporate Governance"Corporate Governance in this Proxy
Statement.
Stockholders may present proposals for consideration at the
20082009 Annual Meeting of Stockholders that are not intended for
inclusion in the 2008 proxy materials.2009 Proxy Materials. These proposals must
be received in writing by the Corporate Secretary at our
executive offices no later than April 23, 200822, 2009 for the 20082009
Annual Meeting. Pursuant to our By-Laws, stockholders may
make other proposals at the Annual Meeting to be discussed and
considered; but unless the Corporate Secretary receives the
written proposal at least twenty days before the Annual
Meeting, such proposal will be considered untimely and will
not be acted upon. Instead, the proposal will be laid over
for action at the next stockholder meeting held thirty days or
more later.
STOCKHOLDERS SHARING THE SAME ADDRESS
We have adopted a procedure called "householding," which has
been approved by the SEC."householding" pursuant to
SEC rules and regulations. Under this procedure, we will
deliver only one copy of this Proxy Statement and our 20072008
Annual Report to multiple stockholders who share the same
mailing address (if they appear to be members of the same
family), unless we have received contrary instructions from an
affected stockholder. Stockholders who participate in
householding will continue to receive separate Proxies. This
procedure reduces our printing and mailing costs and fees.
We will promptly deliver, upon written or oral request, a
separate copy of this Proxy Statement and the 20072008 Annual
Report to any stockholder at a shared address to which a
single copy of either of those documents was delivered. To
request a separate copy of this Proxy Statement and/or the
20072008 Annual Report, stockholders may write or call our
Corporate Secretary at our executive offices. You will not be
charged for any requested copies. This Proxy Statement and
our 20072008 Annual Report are also available on our website.
Householding of proxy materials occurs when you provide us or
your broker with a written householding consent. Stockholders
who would like to revoke their householding consent and
receive a separate copy of our subsequent proxy statements and
annual reports to stockholders should contact their broker (if
the shares are held in a brokerage account) or our Corporate
Secretary (if you hold registered shares). Stockholders who
share a mailing address and receive multiple copies of proxy
materials but would like to participate in householding and
receive a single copy of our proxy materials should contact
their broker or our Corporate Secretary.
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES;
WEBSITEOFFICES
Our current Corporate Secretary is James L. Johnson. The mailing
address, and telephone numbers and e-mail address for our
Corporate Secretary and executive offices are:
Werner Enterprises, Inc.
Attention: Corporate Secretary
Post Office Box 45308
Omaha, Nebraska 68145-0308
Phone: (402) 895-6640
Toll-Free: (800) 228-2240
E-Mail: invrelations@werner.com
4145
INTERNET WEBSITE AND AVAILABILITY OF MATERIALS
Our Internet website, as referred to in this Proxy Statement,
is: www.werner.com, under the "Investor Information" tab.
As
indicated inThis Proxy Statement, the "Introduction"Notice of Annual Meeting of
Stockholders and 2008 Annual Report (including our Annual
Report on page 1, the following
materials and information discussed in this Proxy StatementForm 10-K for 2008) are available on our website: our current andwebsite.
Our prior proxy statements, annual reports and SEC filings.filings are
also included on the website. You may also
requestobtain a copy of these
materials, without charge, on theour website or by contacting the
Corporate Secretary.
____________________- --------------
By Order of the Board of Directors
/s/ James L. Johnson
James L. Johnson
Senior Vice President, Controller
and Corporate Secretary
Omaha, Nebraska
April 8, 2008
4210, 2009
46
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
_______________________
PROXY
_______________________
This Proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders to be held Tuesday, May 13, 2008.12, 2009. The undersigned
stockholder hereby appoints and authorizes Clarenceeach of Gary L. Werner and
GaryGregory L. Werner to act as proxies, each with full power of substitution,
to represent and vote (as the undersigned stockholder directs in this
Proxy) all shares of Common Stockcommon stock of Werner Enterprises, Inc., that such
stockholder is entitled to vote (as of March 24, 2008)23, 2009) at the Annual
Meeting of Stockholders to be held on Tuesday, May 13, 200812, 2009 (including any
adjournments or postponements thereof), and to vote all such shares on
such other business that may properly come before such meeting.
The proposals to be voted on in this Proxy are not related to, and are not
conditioned upon, the approval of other matters. The Board of Directors
of Werner Enterprises, Inc. submits and recommends a vote "for" each of
the following proposals:
1. Proposal 1 - Election of Directors.
Check only one box. To withhold authority to vote for any individual
nominee(s), check "For All Except" and write the number(s) of the
nominee(s) on the line below the box.
For All Withhold All For All Except
Nominees: [ ] [ ] [ ]
1. GaryClarence L. Werner
2. Gregory L. WernerPatrick J. Jung
3. Michael L. SteinbachDuane K. Sather
______________
2. Proposal 2 - To ratify the appointment of KPMG LLP as the independent
registered accounting firm of Werner Enterprises, Inc. for the year
ending December 31, 2008.2009.
Check only one box.
For Against Abstain
[ ] [ ] [ ]
This Proxy, when properly executed, will be voted as directed by the
undersigned stockholder. If no direction is given with respect to a
proposal, this Proxy will be voted "FOR" the proposal.
Please date, sign and print your name. When shares are held by joint
tenants, both individuals should sign this Proxy. When signing as an
attorney, executor, administrator, trustee or guardian, please give your
full title. If the stockholder is a corporation, please provide the full
corporate name by the name of the authorized officer completing this
Proxy. If the stockholder is a partnership, please provide the full
partnership name by the name of the authorized person completing this
Proxy.
____________________________________ _____________________________________________________ __________ ___________________________ __________
Signature Date ____________________________________Signature (if held jointly) Date
________________________ ___________________________
Printed Name
If held jointly:
____________________________________ _____________________________
Signature Date
____________________________________ Printed Name
Please mark, sign, date and promptly return this Proxy using the enclosed
self-addressed postage-paid return envelope.
Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting To Be Held on May 12, 2009:
The Proxy Statement and 2008 Annual Report of Werner Enterprises, Inc.
are available at www.werner.com under the "Investor Information" tab.