WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
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PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 201611, 2021
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INTRODUCTIONPROXY STATEMENT SUMMARY AND BUSINESS OVERVIEW
We are sending you this Proxy Statement in connection with the solicitation of proxies by our Board of Directors (the “Board”) for the 20162021 Annual Meeting of Stockholders of Werner Enterprises, Inc. The 20162021 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, 20152020 (the “2015“2020 Annual Report”) on or about April 7, 2016.2, 2021.
In this Proxy Statement, we also use the following terms and abbreviations:
•We refer to Werner Enterprises, Inc. as the “Company,” “we,” “our” or “us.”
•The 20162021 Annual Meeting of Stockholders is referred to as the “Annual Meeting” or “2016“2021 Annual Meeting.”
•References to “2015”“2020” and “for the year ended December 31, 2015”2020” mean the Company’s fiscal year for the period beginning January 1, 20152020 and ending December 31, 2015.2020.
•The term “executive officers” means those executives listed in the Executive Officer Information section of this Proxy Statement.
Except where expressly noted, “Named Executive Officers” means the five executive officers identified in the •Compensation Discussion and Analysis section of this Proxy Statement.
The term “Proxy Materials” means and consists of this Proxy Statement, the proxy relating to the 20162021 Annual Meeting and the 20152020 Annual Report.
•We also refer to our “website,” which means the Internet website available at http://www.werner.com under the “Investors” link, as provided in the Internet Website and Availability of Materials section of this Proxy Statement.
This Proxy Statement and our 20152020 Annual Report are available on our website. In these Proxy Materials, we refer to certain reports and forms that we have filed with the U.S. Securities and Exchange Commission (the “SEC”). All of our SEC filings are available on our website, as well as the SEC website at www.sec.gov. You may also request copies of our SEC filings and Proxy Materials from our Corporate Secretary at the contact information provided in the Contacting the Corporate Secretary and Executive Offices section of this Proxy Statement.
ANNUAL MEETING INFORMATION
The 2016 Annual Meeting2020 Financial Highlights. COVID-19 significantly impacted the economy and our business in 2020. We believe we quickly adapted to the changing business conditions while keeping the health and safety of Stockholders will be held at 10:00 a.m. local Central Daylight time on Tuesday, May 10, 2016, at the Embassy Suites Omaha-La Vista Hotel & Conference Center, and at any adjournment(s) thereof. The Embassy Suites Omaha-La Vista Hotel & Conference Center is located at 12520 Westport Parkway in La Vista, Nebraska, which is situated near U.S. Interstate 80our associates, customers and the Giles Road exit (Exit 442)communities where we live and operate a priority. During a year full of uncertainty surrounding the COVID-19 pandemic, the Company was able to achieve record operating income in La Vista’s Southport development. Should you require additional directions2020 and year-over-year improvements in net income and earnings per diluted share.
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•Total revenues$2.4 billion | •Cash flow from operations$445.9 million |
•Operating income$227.4 million | •Capital expenditures, net$266.2 million |
•Net income$169.1 million | •Dividends paid$24.9 million |
•Earnings per diluted share$2.44 | •Stock repurchases$56.5 million |
•Operating ratio90.4% | •Stockholders’ equity$1.2 billion |
2020 Executive Compensation Program. Our executive compensation program has been instrumental to attendachieving our business objectives. Our total compensation mix allows us to retain qualified, innovative executive officers who possess the meetingnecessary experience and vote in person, you may contactexpertise to effectively lead and manage the Company, contribute to our Corporate Secretary at the contact information provided in the Contacting the Corporate Secretarylong-standing success and Executive Offices section. At the meeting, memberscreate value for our stockholders. The overall design of our management team will discusscompensation program, including the three primary pay components, has remained consistent year over year.
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| Annual Base Salary | •Fixed element of annual compensation |
| •Base salary increases in 2020 averaging less than 10% after no base salary increases in 2019 |
| •Executive officers voluntarily decreased their base salaries during second quarter of 2020 due to COVID-19 |
| Cash Annual Incentive Compensation | •Short-term cash incentive with variable payout opportunities based on four performance metrics measured against pre-defined annual goals |
| •No change in payout opportunities for 2020 |
| •No adjustment to performance metrics and target goals for 2020 established prior to the COVID-19 outbreak |
| Long-Term Incentive Compensation | •Long-term equity-based incentives split between restricted stock and performance stock with three-year vesting schedules |
| •No change to equity award design for 2020 |
Our executive compensation program includes the following best practices:
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| What we do | What we don’t do |
•Pay for performance | •Employment agreements for executive officers |
•Short-term and long-term incentive compensation | •Single-trigger severance arrangements |
•Recoupment policy for performance-based cash and equity awards | •Dividends or dividend equivalents on unvested or unearned equity awards |
•Annual say-on-pay vote | •Hedging and pledging of Werner securities |
•Independent compensation consultant | |
•Stock ownership guidelines | |
•Limited perquisites | |
Environmental, Social and Governance (“ESG”). At Werner, we are proud of the strong foundation of driving greater sustainability and inclusion throughout the 65 years of our resultsorganization. As an award-winning EPA SmartWay Transportation Partner, Werner eliminated over 300 million gallons in fuel consumption, improved fuel efficiency by over 29% and reduced over 3.3 million tons of operationsCO2 since 2007. Werner is proud of its highly-skilled and business plans. Memberssafety-conscious driver workforce, that includes 55% of ourdrivers who are ethnically diverse and 21% of drivers who are military veterans. Werner’s talented Board of Directors are also expected to be present.
VOTING INFORMATION AND INSTRUCTIONS
Record Date. The record date forhas strong business experience, relevant leadership skills and increasing diversity among its membership. After the 2021 Annual Meeting, is March 21, 2016. On the record date, 72,043,671 shareswe expect eight of common stock ($0.01 par value) were outstanding. At the Annual Meeting, each stockholdernine directors will be entitled to one vote (in person or by proxy) per share that is ownedindependent and four of record at the close of business on March 21, 2016. Each share has one vote on each matter. Our stock transfer books will not be closed. On March 21, 2016, the closing market price of our common stock as reported on the NASDAQ Global Select MarketSM was $27.62 per share.
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, of a majority of all outstanding shares of common 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. If a quorum is not present, the Annual Meetingnine directors will be adjourned untilgender or ethnically diverse.
In October 2020, we launched a quorum is obtained. “Broker non-votes” are shares held by a brokerage firm, bank or other nominee (collectively, a “broker”) that are represented by proxy at the Annual Meeting, but the broker has not received voting instructions from the beneficial owner of such sharescodified approach to sustainability organization-wide and does not have discretionary voting power for certain matters.
Stockholders Eligible to Vote. Only stockholders of record asunveiled key ESG milestones. As an important part of the closeSocial component of businessESG, we added “Inclusion” to our core values and adopted a Diversity, Equity and Inclusion (“DEI”) vision statement. Our ESG strategy will continue to evolve through five key themes:
(i)Establish a formalized ESG framework and strategy.
(ii)Identify meaningful, reportable metrics and goals to monitor, measure and report on the record date are entitledour ESG performance and progress.
(iii)Build on our strong foundation as an industry leader focused on reducing our environmental impact and carbon footprint through a young, innovative and modern truck and trailer fleet.
(iv)Foster and empower an inclusive culture that upholds our core values and provides equal opportunities for all.
(v)Continue to receive notice of, attenduphold transparency, ethics and vote at the Annual Meeting. Sharesintegrity in our governance practices with an emphasis on creating a more diverse Board with complementary skills that may be voted at the Annual Meeting include shares that are held by (i) “registered stockholders” and (ii) “beneficial owners.”align with our long-term strategy.
Since announcing our three key ESG milestones in October 2020, our recent accomplishments toward those goals include:
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(i)Carbon Emissions | If your shares are registered directly•55% carbon emissions reduction by 2035
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•Earned SmartWay Excellence award from the EPA for the 4th consecutive year |
•Testing electric truck and will test hydrogen truck |
•Invested in your name with our transfer agent (Wells Fargo Bank Minnesota, N.A.autonomous trucking technology company TuSimple |
Associate Resource Groups (“ARG”), you are considered a “ | •registered stockholderAdd 3 associate resource groups by end of 2021 |
•”Formed IDEAL (Inclusion, Diversity, Equity, Accountability & Learning) Council to oversee ARG development |
•Added Veterans’ ARG in March 2021; Young Emerging Professionals ARG will launch in May 2021 |
| Formal Diversity Leadership Position | •Establish formal diversity leadership position by end of first quarter 2021 |
•Appointed AVP - Diversity, Inclusion and the stockholder of record with respect to those shares.Learning in first quarter 2021 |
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(ii) | Most stockholders hold their shares through a broker, rather than holding shares registered directly in the stockholder’s name. In that case, you are considered a “beneficial owner” of shares held in street name.
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Stockholder Voting Methods. Your type of stock ownership determines the method by which you may vote your shares.
As we further develop our new ESG strategy, we will continue to advance these efforts, and others, and report on our progress in our inaugural Corporate Social Responsibility Report in 2021.
Registered Stockholders. If you are a registered stockholder, you may vote your shares by mail using the enclosed proxy and postage-paid return envelope and by following the instructions appearing on the proxy. As a registered stockholder, you may also vote your shares in person at the Annual Meeting by notifying and obtaining a ballot from the Corporate Secretary prior to the occurrence of any votes.
Beneficial Owners. If you are a beneficial owner, you have the right to instruct your broker how to vote the shares held in your account. Your broker will inform 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 from your broker a legal proxy that gives you the right to vote the shares.
Regardless of your type of stock ownership, your right to vote in person at the Annual Meeting is not affected by signing and returning the proxy by mail (as generally done by registered stockholders) or by submitting your proxy pursuant to your broker’s instructions (as done by beneficial owners, commonly by the Internet or telephone).
Voting Your Proxy and Designated Proxy Holders. When a proxy is executed and returned (and not revoked) prior to the Annual Meeting, the proxy will be voted according to the instructions you made when granting the proxy. Unless you specify otherwise or if no choice is indicated on your proxy, all shares of our common stock represented by the proxy will be voted:
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(i) | FOR the election of ALL nominees for Class I director (Proposal 1);
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(ii) | FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal 2); and
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(iii) | In accordance with the best judgment of the named proxy on any other matters properly brought before the Annual Meeting or any adjournment thereof. See Other Matters in this Proxy Statement.
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For purposes of the 2016 Annual Meeting, Clarence L. (“C.L.”) Werner will act as the appointed and authorized “Designated Proxy Holder.” Your executed proxy appoints the Designated Proxy Holder as your duly authorized
attorney-in-fact and gives the Designated Proxy Holder the power to represent and vote at the Annual Meeting all shares of our outstanding common stock that you are entitled to vote. The Designated Proxy Holder will vote your shares as instructed by you on your proxy. If you do not provide voting instructions on the proposals discussed in this Proxy Statement, or for any other matters properly presented at the Annual Meeting, your proxy also gives the Designated Proxy Holder the discretionary authority to vote your shares represented thereby as noted in this Proxy Statement and in accordance with his best judgment.
Revoking Your Proxy. Any stockholder who delivers an executed proxy has the right to revoke the proxy at any time prior to the call to vote at the Annual Meeting. You may revoke your proxy before the Annual Meeting by (i) delivering a written and executed notice of revocation of the proxy to the Corporate Secretary at our executive offices prior to the Annual Meeting or (ii) executing and delivering a subsequent proxy (dated later than the previously submitted proxy) before the Annual Meeting. 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.
Cumulative Voting in Director Elections. With respect to the election of directors, Company stockholders (or their proxy holder, if one is appointed) have cumulative voting rights under the laws of the State of Nebraska. This means that you (or your proxy holder) may: (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 your shares; or (iii) distribute an amount of votes calculated as described in section (ii) among as many director nominees as you desire. If you wish to vote cumulatively, you must vote in person or give your specific cumulative voting instructions to the selected 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 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.
Votes Required for Proposals and Voting Process. If you are a beneficial owner, certain exchange rules govern how brokers can vote your shares. If your broker does not receive voting instructions from you, the broker may generally vote your shares on certain routine matters but cannot vote your shares on the election of directors, corporate governance proposals and other non-routine matters; these broker non-votes will not be treated as votes cast at the Annual Meeting on non-routine matters. With respect to the proposals described in this Proxy Statement to be voted on at the 2016 Annual Meeting, the election of directors (“Proposal 1”) constitutes a non-routine matter. The ratification of the appointment of our independent registered public accounting firm (“Proposal 2”) is considered a routine matter.
The following votes are required for the two proposals discussed in this Proxy Statement to be voted on at the Annual Meeting, assuming the presence of a quorum:
Proposal 1. Directors are elected when they receive a plurality of affirmative votes cast by holders of the outstanding shares of our common stock, present or represented by proxy, at the Annual Meeting and entitled to vote thereon. This means the two nominees receiving the highest number of votes at the Annual Meeting, after taking into account any cumulative voting, will be elected to the Board. Abstentions and broker non-votes will not impact the election of directors.
Proposal 2. The ratification of the appointment of KPMG LLP as our independent registered public accounting firm requires the affirmative vote of a majority of the outstanding shares of our common stock, present or represented by proxy, at the Annual Meeting and entitled to vote thereon. Abstentions will be counted as votes cast and will have the same effect as a vote against the matter. Broker non-votes will also be counted as votes cast; however, because brokers may vote on this routine matter, no broker non-votes are expected in connection with this Proposal 2.
Voting Results. Our Corporate Secretary has been appointed by the Board to serve as the inspector of election for the Annual Meeting. Proxies and ballots will be received and tabulated by the inspector of election. Preliminary voting results will be announced at the Annual Meeting, and the inspector of election will then calculate final voting results. We will disclose the Annual Meeting voting results on a Current Report on Form 8-K filed with the SEC in accordance with SEC rules.
Stockholder Privacy. As a matter of Company policy, we keep all proxies, ballots and voting tabulations that identify individual stockholders private and confidential. Such documents are available for examination only by the inspector of election and certain Company representatives who assist with processing proxies and tabulating the vote. Stockholder votes are not otherwise disclosed within the Company, to members of our Board or to third parties, except as may be necessary to meet legal requirements.
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 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 Materials to beneficial owners of our stock in accordance with customary practice. Your cooperation in promptly voting your shares and submitting your proxy will help to avoid additional expense in the event the Company retains an outside firm to solicit proxies.
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 proxy authorizes the Designated Proxy Holder to vote the shares represented thereby in his discretion and according to his best judgment.
Assuming the presence of a quorum, all other matters that properly come before the Annual Meeting will each require the affirmative vote of a majority of the outstanding shares of our common stock, present or represented by proxy, at the Annual Meeting and entitled to vote thereon.
PROPOSAL 1 — ELECTION OF DIRECTORS
Our Articles of Incorporation provide that the Board may be divided into 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 eighta range of not less than seven nor more than nine 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 until a successor is elected and qualified. Each term expires at the third succeeding annual meeting of stockholders after the respective director’s election. The terms of office for each class of current directors expire at the annual meeting of stockholders in the following years: Class I, 2016;2022; Class II, 2017;2023; and Class III, 2018.2021.
Effective February 12, 2016, Gary L. Werner retired from the Board and as the Vice Chairman of the Company. The Board has not yet appointed an individual to fill the directorship vacancy created by Mr. Werner's retirement.
DIRECTOR NOMINEES
You will be asked to elect twothree directors in Class IIII to each serve for a three-year term expiring at the 20192024 Annual Meeting of Stockholders. In addition, as a result of certain vacancies, you will be asked to elect one Class I director to serve for a one-year term expiring at the 2022 Annual Meeting of Stockholders and one Class II director to serve for a two-year term expiring at the 2023 Annual Meeting of Stockholders and until his or her respective successor is elected and qualified. The twonominees for director at the 2021 Annual Meeting are:
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| Scott C. Arves–Class III | Vikram Mansharamani, Ph.D.–Class III | Alexi A. Wellman–Class III |
| Carmen A. Tapio–Class I | Derek J. Leathers–Class II | |
Mr. Clarence L. Werner, Chairman of the Board, Mr. Patrick J. Jung and Mr. Michael L. Gallagher, current Class IIII directors whose terms will expire at the 20162021 Annual Meeting, are:
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Kenneth M. Bird, Ed. D. | Dwaine J. Peetz, Jr., M.D. |
Dr. Bird and Dr. Peetz have been nominated bywill not stand for re-election to the Board, for re-election atbut they will continue to serve on the 2016 Annual Meeting for terms expiring at the 2019 Annual Meeting of Stockholders andBoard until their respective successors are duly electedterms expire. On March 24, 2020, former director, Gregory L. Werner, retired from the Board. On May 31, 2020, the Board appointed Mr. Leathers to fill the directorship vacancy and qualified.also named him Vice Chairman of the Board. On November 10, 2020, former independent director, Dr. Dwaine J. Peetz, Jr., retired from the Board, and the Board, acting upon recommendation of the Nominating and Corporate Governance Committee, appointed Ms. Tapio to fill the directorship vacancy. The individual qualifications, skills and experience of the nominees for director are discussed in their respective biographies in the following Director Information section.
Each of the nominees designated in this Proxy Statement has indicated his or her 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 you expressly withhold (whether on your proxy or in person at the Annual Meeting) authority to vote your shares for the unavailable nominee 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 INFORMATION
Identified in the table below are the director nominees and the directors whose terms will continue after the 20162021 Annual Meeting, all of whom are current members of our Board.Meeting. Certain information provided to us by our directors and director nominees regarding their qualifications, skills and experience is also set forth in the biographiesDirector Biographies and Director Skills and Qualifications matrix following the table. Family relationships between any directors and executive officers, who served at any time during 2015, are noted in the relevant biographies. None of the corporations or other organizations referenced in the biographies is a parent, subsidiary or affiliate of the Company.
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| MEMBERS AND NOMINEES OF THE BOARD OF DIRECTORS |
| Name | Principal Occupation | Term Ends | Class |
Clarence L. WernerDerek J. Leathers | Vice Chairman, President & Chief Executive Officer of Werner Enterprises, Inc. | 2018 | III |
Gregory L. Werner | Former Vice Chairman & Chief Executive
Officer of Werner Enterprises, Inc.
| 20172023 | II |
| Kenneth M. Bird, Ed.D. | President & Chief Executive Officer
of the Avenue Scholars Foundation
| 20162022 | I |
Patrick J. JungGerald H. Timmerman | President of Timmerman & Sons Feeding Co., Inc. | 2023 | II |
| Diane K. Duren | Former Executive Vice President and Corporate
Secretary of Union Pacific Corporation | 2023 | II |
| Jack A. Holmes | Chairman and director of EmergeTMS;
Former President of UPS Freight | 2022 | I |
| Carmen A. Tapio | Founder, President and Chief OperatingExecutive Officer of SurdellNorth End Teleservices, LLC | 2022 | I |
| Scott C. Arves | Former Director, President & Partners LLCChief Executive Officer of Transport America, Inc. | 2018N/A | III |
Dwaine J. Peetz, Jr., M.D.Vikram Mansharamani, Ph.D. | Former Thoracic Surgeon; Former Clinical Assistant Professor of Surgery at CreightonHarvard University School of Medicine and University of Nebraska Medical CenterLecturer | 2016 | I |
Duane K. Sather | Former President of Sather Trucking Corporation
and Former Chairman of Sathers Inc.
| 2018N/A | III |
Michael L. SteinbachAlexi A. Wellman | OwnerChief Financial Officer of Steinbach Farms & Equipment Sales LLC
and Steinbach Truck & Trailer LLC
Altaba, Inc. | 2017N/A | IIIII |
CLARENCE L. WERNERDirector Biographies. The information below includes the name, age, principal occupation for at least the last five years and other biographical information for each of our continuing directors and director nominees.
DEREK J. LEATHERS, 78, operated Werner Enterprises as51, was appointed by our Board of Directors in May 2020 to fill a sole proprietorship from 1956 untildirectorship vacancy and appointed Vice Chairman of the incorporation of Werner Enterprises, Inc. in September 1982. HeBoard. Mr. Leathers has been a Company directorour President since that time2011 and also served as President until 1984. He served as our Chief Executive Officer from 1984 until February 2007,since May 2016, and he currently serves in both positions. Mr. Leathers has worked in the transportation and logistics industry for 30 years. Throughout his tenure at Werner, he has held integral roles in many facets of the organization, including the establishment of Werner’s Mexico operations and oversight for all the asset operating groups. Prior to joining Werner in 1999, Mr. Leathers was Chairman from 1984 until May 2011. He served as Chairman Emeritus from May 2011 until August 2015, whenemployed by Schneider National, a large truckload carrier, for eight years, during which time he was elected to his current position as Chairmanbased out of Mexico City for several years and assumedwas one of the responsibilityfirst foreign members of ChiefMexico’s trucking association (CANACAR). Mr. Leathers is active in a number of local, state and national professional organizations and boards. He currently serves on the board of directors of the American Transportation Research Institute, is a founder and board member of PlaySmart, and is a board member and Executive Officer. As our founder,Committee member of the Greater Omaha Chamber of Commerce, among others. Mr. Werner has been actively involved in the Company’s business and operations since its inception 60 years ago. As a result of these professional experiences, Mr. WernerLeathers brings to the Board a unique understanding of our business and operations attributed to his long-standing commitment to, management of and involvement with the Company for 60 years, as well as his significant and extensive knowledge of the transportation industry. Mr. Werner is the father of Gregory L. Werner and Gary L. Werner.
GREGORY L. WERNER, 56, was elected as a director of the Company in 1994. He served as our Treasurer from 1982 to 1986, became Vice President in 1984, and was promoted to Executive Vice President in 1996. Mr. Werner also began directing revenue equipment maintenance for Werner Enterprises, Inc. and its predecessor in 1981 and became responsible for our management information systems in 1993. Mr. Werner served as our President from April 1997 until May 2011 and as our Chief Operating Officer from 1999 to 2007. Mr. Werner was our Chief Executive Officer from 2007 to August 2015. He was also the Vice Chairman from May 2011 until August 2015. Mr. Werner resigned as an executive officer of the Company effective August 27, 2015. Mr. Werner possesses significant knowledge and a thorough understanding of our business operations and industry, which is attributed to his long-term professional experience with the Company. Because of his past positions as our Vice Chairman and our Chief Executive Officer, Mr. Werner also provides the Board with an important insider perspective and management’s point-of-view about various aspects of our business operations and strategies. Mr. Werner is a son of C.L. Werner and brother of Gary L. Werner.
KENNETH M. BIRD, ED.D., 68,73, was appointed by our Board of Directors in 2002 to fill a vacant directorship position and was subsequently elected by the stockholders. Dr. Bird is currently the President & Chief Executive Officer of the Avenue Scholars, Foundation, a nonprofit entity that serves youth education in Omaha, Nebraska. Dr. Bird previously
served as Superintendent of Westside Community Schools in Omaha, Nebraska from 1992 until May 2008, and he also held various administrative positions with Westside Community Schools since 1981. Prior to 1981, heHe was employed by the Nebraska Department of Education from 1974 to 1981 and as a special education teacher at Westside Community School.Schools from 1970 to 1974. Dr. Bird’s broad range of board experience is also considerable and extensive. He is active in local, state and national professional organizations as a member of various advisory councils, committees and task forces. Dr. Bird serves as a director or trustee on a number of civic boards, and he has been the recipient of several professional, leadership and community service awards. He possesses significant overall board experience, administrative competence, executive and financial experience and proven leadership skills that enhance our Board’s diversity and discussions. As a result of these professional and other experiences, Dr. Bird brings to the Board a broad perspective of our community and an appreciation of corporate governance principles that contribute to the collective qualifications, skills and experience of our Board of Directors.
PATRICK J. JUNGGERALD H. TIMMERMAN, 68,81, was appointed by our Board of Directors in May 2016 to fill a vacant directorship position and was elected by the stockholders at the 2017 Annual Meeting. Mr. Timmerman was previously a director of the Company from 1988 to 2011. Since 1969, Mr. Timmerman has been and currently serves as President of Timmerman & Sons Feeding Co., Inc., a cattle feeding, ranching and beef production enterprise based in Springfield, Nebraska, with operations in several Midwestern states. Mr. Timmerman is also a partner in several other privately held entities that engage in integrated agricultural business operations. As a result of these and other professional experiences, as well as his prior service on the boards of directors of several privately held and civic organizations, Mr. Timmerman brings to our Board substantial business experience, financial acumen and outside board experience that contributes to the Board’s collective qualifications, skills and experience.
DIANE K. DUREN, 61, was elected as a director of the Company director in 2003.2017. In February 2017, Ms. Duren retired from Union Pacific Corporation, having served as Executive Vice President, Chief Administrative Officer and Corporate Secretary for four years, after serving as Vice President and General Manager–Chemicals in Marketing & Sales. Since joining Union Pacific in 1985, she held a variety of positions in the Finance and Marketing & Sales departments, including Vice President and General Manager–Agricultural Products. In 2011, she was awarded the Creighton University College of Business Alumni Merit Award. Prior to her employment at Union Pacific, she was a certified public accountant with Deloitte, Haskins & Sells in Omaha. Ms. Duren is a member of the board of directors of U.S. Silica Holdings, Inc. (SLCA) and serves on its audit and compensation committees. She has been active on multiple community and industry boards including American Red Cross, of which she served as chair of the Heartland Chapter in 2010 and 2011. In 2014, Ms. Duren was appointed by Omaha Mayor Jean Stothert to the Metropolitan Entertainment & Convention Authority Board of Directors and in 2019 was reappointed by the Omaha City Council and is the current Chairwoman of the Board. She also serves on the Board of Children’s Hospital and Medical Center as Chair. In 2018, Ms. Duren joined Peter Kiewit Foundation as a Community Advisor, and in 2019 became a trustee of the foundation. Ms. Duren also became a member of Creighton University’s Board of Trustees in 2019. Ms. Duren’s vast experience in the transportation industry, multiple leadership roles, and accounting and financial experience add great value and insight to the Board. Ms. Duren served as Chair of our Nominating and Corporate Governance Committee during 2019 and was appointed Chair of our Compensation Committee effective April 2020.
JACK A. HOLMES, 61, was appointed by our Board of Directors in August 2018 to fill the directorship position created by the expansion of the Board in 2018 and was elected by the stockholders at the 2019 Annual Meeting. Mr. Holmes served as President of UPS Freight from 2007 until his retirement in 2016. He began his career in transportation in 1979 outside of Philadelphia, Pennsylvania, when he joined UPS and served in several positions before holding leadership positions in Operations, Engineering and Human Resources. He also led the UPS transition team for the 2005 purchase of Overnite Transportation, now UPS Freight. Mr. Holmes currently serves as the Chief Operating OfficerChairman and a director of Surdell & PartnersEmergeTMS in Scottsdale, Arizona; a director of Sharps Compliance (SMED), on which he serves as Chairman of the Nominating and Governance Committee and the Compensation Committee; and is a member of the board of directors of Redwood Logistics and LaserShip. With his extensive leadership experience in the transportation industry, Mr. Holmes adds thoughtful insight through industry expertise to our Board of Directors. Mr. Holmes was appointed Chair of our Governance Committee effective April 2020.
CARMEN A. TAPIO, 55, was appointed by our Board of Directors in November 2020 to fill a directorship vacancy. Ms. Tapio is the Founder, President and CEO of North End Teleservices, LLC an advertising company in Omaha, Nebraska. She has held this position since 2017 and previously served as President and COO of North End Teleservices from 2015 to 2017. From 2010 to 2015, Ms. Tapio was the owner and manager of Core Advantage Consulting in Omaha, Nebraska and
from 2001 to 2009 served in several leadership positions with Carlson Companies of Minneapolis, Minnesota. Ms. Tapio is active in local community organizations and is currently on the Greater Omaha Chamber of Commerce board of directors and executive committee, serving as chair for both the Diversity and Inclusion Council and the CEO’s for Commitment to Opportunity, Diversity and Equity Council. Ms. Tapio also served as council chair for Leadership, Diversity, Equity and Inclusion for the state of Nebraska’s Blueprint Nebraska Task Force. Ms. Tapio brings a unique perspective to business, having worked for Fortune 500 and 100 companies in the United States, Australia, Mexico and throughout Europe. Her career has taken multiple paths, holding both executive and general management business roles and executive cultural roles, including chief diversity officer and vice president of Responsible Business.
SCOTT C. ARVES, 64, is a nominee for election to the Board in 2021. In January 2017, Mr. Arves retired from Transport America, Inc. after serving as Director, President & Chief Executive Officer for ten years. Prior to that, he had a 27-year career with Schneider National, Inc., where he most recently served as President of the Transportation Sector from May 2000 to June 2006. In that capacity, he was responsible for all of Schneider’s trucking and intermodal business, which was a $3 billion business employing approximately 20,000 people. He is currently a member of the Board of Advisors of CSM Companies and was a director of Commercial Vehicle Group (CVGI) from May 2005 to May 2019 and a director of TFI International (TFII) from May 2016 to December 2018. Mr. Arves brings to our Board substantial business experience in the truckload industry and previous board experience.
VIKRAM MANSHARAMANI, PH.D., 47, is a nominee for election to the Board in 2021. Dr. Mansharamani has been a Lecturer at Harvard University since 2017. Prior to that, he taught courses on finance and business ethics at Yale University from 2009 to 2017. He is an author, and his positionideas and writings have appeared in Fortune, Forbes, the New York Times, and many other publications. Dr. Mansharamani also advises several Fortune 500 CEO’s and their boards on how to navigate uncertainty in today’s dynamic global business and regulatory environment. He is the Founder and President of Kelan Advisors, LLC and served on the board of directors of the Africa Opportunity Fund from April 2014 to August 2019. Dr. Mansharamani has a Ph.D. and two masters degrees from MIT and a bachelors degree from Yale University. Dr. Mansharamani has a very diverse financial background with Surdell & Partners LLC, Mr. Junga wide variety of experiences which will bring a valuable perspective to our Board.
ALEXI A. WELLMAN, 50, is a nominee for election to the Board in 2021. Ms. Wellman has been the Chief Financial Officer of Altaba, Inc. since June 2017. She was Vice President, Finance and ultimately Vice President, Global Controller of Yahoo, Inc. from November 2013 to June 2017 and Chief Financial Officer of Nebraska Book Company from December 2011 to June 2013. Prior to her employment with Nebraska Book Company, she was a practicing certified public accountant with KPMG LLP for 3018 years, 207 years of which heshe served as an audit partner. HeShe was also the audit engagement partner on the Company’s annual audit for the year ended December 31, 19992010, prior to his retirement from KPMG LLPher departure in 2000. Mr. Jung is a member of2011. Ms. Wellman currently serves on the Board of ManagersDirectors and is an audit committee and compensation committee member of BurlingtonTWC Tech Holdings II Corp. (TWCTU) and Nebula Caravel Acquisition Corp. (NEBCU), both True Wind Capital Group LLC, which acts asspecial purpose acquisition companies. She also serves on the Board of ManagersDirectors of America First Multifamily Investors, L.P., a publicly traded company,V2verify, Inc. and serves on its audit and governance committees. Located in Omaha, Nebraska, Burlington Capital Group LLC’s business involves real estate, money management and emerging markets. Mr. Jung is a director and officer of the Omaha Zoological Society and also works with several civic boards and organizations. Mr. JungMatMaCorp. Ms. Wellman has significant knowledge and experience in financial management, accounting processes and corporate governance that is derived from his professional and other experiences. Hegovernance. She brings to our Board substantial accounting and financial expertise, and sophistication, exceptional administrative proficiency, overall board experience and comprehension of our business operations and industry that contribute to the Board’s collective qualifications, skills and experience. Mr. JungMs. Wellman also qualifies as an audit committee financial expertexpert.
Director Skills and serves as ChairQualifications. The Governance Committee considers the particular experience, qualifications, and skills of both our Audit Committee and Compensation Committee.
DWAINE J. PEETZ, JR., M.D., 65, was appointed by our Board of Directors in May 2011 to fill a vacant directorship position and was elected by the stockholders at the 2012 Annual Meeting. Dr. Peetz is a thoracic surgeon from Omaha, Nebraska and retired from practice in 2011. He was formerly the Assistant Clinical Professor of Surgery at the Creighton University School of Medicineeach director and the Clinical Assistant Professorrelevance of Surgery at the University of Nebraska Medical Center, both of which are nationally recognized and accredited medical schools located in Omaha, Nebraska. Dr. Peetz graduated from the Creighton University School of Medicine, completed his residency in thoracic surgery at the University of Michigan in Ann Arbor, Michigan and became certified by the American Board of Surgery in 1981 and American Board of Thoracic Surgery in 1983. During his distinguished career, Dr. Peetz acquired comprehensive leadership, board and administrative experience. He has been active in various professional organizations, served as the chairman and a member of several affiliated hospital committees and authored numerous medical publications and abstracts. From 1991 to 1999, he was also the chairman of the department of surgery for the Alegent Health Bergan Mercy Medical Center in Omaha, Nebraska. Because of these professional experiences, Dr. Peetz bringssuch key competencies to the BoardCompany’s business and operations when determining whether an important and unique point of view regarding organizational and operational management issues, business administration and financial knowledge, public health and safety expertise and valuable management insight. His sophisticated professional perspective and overall administrative adeptness are beneficial and contribute to the collective qualifications, skills and experience of our Board of Directors.
DUANE K. SATHER, 71, was electedindividual should serve as a Company director. The matrix that follows summarizes the skills and qualifications of the continuing directors and director nominees, which the Governance Committee considered in 2006. Mr. Sather’s extensive knowledgeits evaluation. The Company is continuing to refresh, diversify and experience inadd new capabilities to our industry is partially attributable to his service as President of Sather Trucking Corporation from 1972 to 1996. From 1988 to 1996, he also served as Chairman of Sathers Inc., a wholesale candy manufacturerBoard, and distributor. Sather Trucking Corporation and Sathers Inc. were sold to Favorite Brands International, Inc. in 1996. Mr. Sather is an investor and currently serves as a directorresult, following the 2021 Annual Meeting, if elected, seven of privately held companies that construct and operate ethanol plants in the Midwest. During hisnine directors will have a tenure with Sather Trucking Corporation and Sathers Inc., Mr. Sather gained a wide range of knowledge about the trucking industry, including managing a large workforce, overseeing a large business operation, marketing and logistics. Mr. Sather brings to the Board his diverse business and executive experience and comprehensive industry knowledge. This invaluable industry insight contributes to our Board’s collective qualifications, skills and experience.less than five years.
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| DIRECTOR SKILLS AND QUALIFICATIONS |
Skills and Qualifications | Derek J. Leathers | Kenneth M. Bird, Ed.D. | Gerald H. Timmerman | Diane K. Duren | Jack A. Holmes | Carmen A. Tapio | Scott C. Arves | Vikram Mansharamani, Ph.D. | Alexi A. Wellman | % |
| Strategy development and risk management | X | X | X | X | X | X | X | | X | 89% |
| CEO experience | X | X | X | | X | X | X | | | 67% |
| Marketing and sales | X | | X | X | X | X | X | | | 67% |
| Public company officer or director | X | | | X | X | X | X | | X | 67% |
| Government affairs, public policy, regulatory | X | X | X | | X | | | X | | 56% |
| Industry | X | | | X | X | | X | | | 44% |
| Corporate governance | | X | | X | X | | X | X | X | 67% |
| Financial | X | | | X | X | X | | X | X | 67% |
| Gender or ethnic diversity | | | | X | | X | | X | X | 44% |
MICHAEL L. STEINBACH, 61, was elected as a director of the Company in 2002. He has been an owner of Steinbach Farms & Equipment Sales LLC since 1973. Steinbach Farms & Equipment Sales LLC buys and sells farm and other equipment and is located in Valley, Nebraska. Mr. Steinbach has also been an owner of Steinbach Truck & Trailer LLC, a semi-tractor and trailer dealership located in Valley, Nebraska, since 1997. He also farms or custom farms approximately six thousand acres of farmland. Mr. Steinbach possesses an extensive understanding of the semi-tractor and trailer industry acquired from his experience in the equipment sales business. His depth of knowledge of our primary equipment (semi-tractors and trailers) is a valuable resource to the Company as we assess the age, productivity and other characteristics of our tractor and trailer fleet. This knowledge, coupled with Mr. Steinbach’s related comprehension of the truckload transportation industry and successful personal business experience, contribute to our Board’s collective qualifications, skills and experience.
RECOMMENDATION OF THE BOARD OF DIRECTORS — PROPOSAL 1
The Board of Directors unanimously recommends that stockholders vote FOR the election of each director nominee. The Designated Proxy Holder 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 director nominees.
CORPORATE GOVERNANCE
DIRECTOR INDEPENDENCE DETERMINATIONS
The Board has affirmatively determined that all members of and nominees to our Board of Directors are independent pursuant to SEC rules and the listing standards adopted by NASDAQ, except for C.L.Mr. Werner and Gregory L. Werner.Mr. Leathers . The Board has also determined that each member of the three Board committees satisfies the applicable independence requirements of NASDAQ and the SEC.
At its annual meeting, the Nominating and Corporate Governance Committee reviewed the (i) legal and regulatory standards for assessing Board and Board committee independence, (ii) criteria for determining a director’s “audit committee financial expert,” “non-employee director” and “outside director” status and (iii) responses to annual and biannual questionnaires completed by our directors.directors and director nominees. After completing its review, the Nominating and Corporate Governance Committee submitted its independence recommendations to our Board. Our Board then made its independence determinations based on the committee’s recommendations and after considering the information available to the committee.
ROLE AND LEADERSHIP 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.
The Chairman presides over each Board meeting and is actively involved in determining agendas for Board meetings and serving as a liaison between our Board and management. The Board electsappoints our Chairman each year at its annual meeting. Gary L.and our Chief Executive Officer. CL Werner servedcurrently serves as our Chairman until August 11, 2015, at which time he stepped downthrough the 2021 Annual Meeting, and was elected Vice Chairman. Gregory L. Werner servedDerek J. Leathers serves as our Vice Chairman, President and Chief Executive Officer (“CEO”) until he resigned from the Company on August 27, 2015. TheOfficer. Each individual was appointed by our Board elected our founder, C.L. Werner, as our Chairman and as our Chief Executive Officer in August 2015 to serve in such positions for the remainder of thehis current one-year term (which ends at the Board's annual meeting)position until he resigns, is removed, or until his respective successor is duly elected and qualified,unable to serve due to death or incapacity, pursuant to Section 2 of Article III of our By-Laws.
In recent years, theThe positions of Chairman and CEO have beenare held by two individuals but currently are held by one. Although C.L. Werner is not an independent director, weinstead of the same person. We believe our current leadership structure is effective for us in our period of transition.us. This configuration demonstrates to our stockholders, employees and customers that our primary leadership roles are served by atwo qualified personpeople who haseach have an extensive depth of knowledge about the Company’s business and industry shares a long-standing dedication to and significant ownership interest in the Company and isare committed to our development and success.
Although CL Werner is not an independent director and is no longer our largest stockholder, as our founder he demonstrates a long-standing dedication to the Company.
7
Our independent directors regularly meet in “executive sessions,” which are meetings conducted without the presence of management. These executive sessions are typically conducted after each quarterly Audit Committee meeting and may also be held when deemed appropriate by the independent directors. Our Audit Committee is currently comprised solely of allfive of our seven independent directors, each of whom typically attends each Audit Committee meeting.directors. Our independent directors do not formally select a lead independent director to preside over their executive sessions. Rather, Mr. Jung, Chair of the Audit Committee, presides over the executive sessions of the independent directors, and he also acts as a liaison between the independent directors, management and the full Board. Further information regarding the 20152020 executive sessions is provided under the Committees of the Board of Directors section.
We believe that unifying the Chairman and CEO positions during our leadership transition period, having the majority of our Board and each Board committee comprised of independent directors (who meet regularly in executive sessions) and having independent directors serve as Chairs of our Board committees provides an effective and strong leadership structure for the Company. Our Board has the flexibility to continue or modify our leadership structure in the future, as the Board deems appropriate or necessary.appropriate.
BOARD OVERSIGHT OF RISK MANAGEMENT
Company management is responsible for risk assessment and mitigation on a Company-wide basis, and our Board oversees and reviews these risk management efforts overall. Our Board believes that risk oversight fundamentally includes understanding the material risks we confront and how management responds to such risks, as well as a comprehension of what risk levels are appropriate for us. Typically, management identifies and measures various risks facing the Company and analyzes the factors associated with such risks, such as the probability and frequency of occurrence and potential impact on our cash flow, financial results and overall business and operations. Diverse types of risk are identified which are generally competitive, economic, regulatory or technological in nature. Management then develops response plans to address, mitigate and monitor identified risks and also reports and discusses these risks and plans with the Board. In its risk oversight role, our Board regularly evaluates and confers with management about the objectives of and risks involved with each plan. The Board also considers risk when assessing our business strategies and objectives, which is also integral to the Board’s risk management and tolerance evaluations.
While our Board has overall responsibility for risk oversight, each of the Board committees considers certain risks within its respective area of responsibility. Our Audit Committee has primary oversight responsibility with respect to risks relating to internal controls over financial reporting and contingent liabilities and risks that may be material to the Company. As discussed in the Risk Management Related to Compensation section, our Compensation Committee considers the Company’s risks in determining whether our executive compensation program encourages executive officers to take unreasonable risks relating to our business. Our Nominating and Corporate Governance Committee reviews risks related to legal and regulatory compliance concerning various corporate governance matters. The risk oversight roles of the Board, Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee did not impact our leadership structure because our Board is comprised of a majority, and such Board committees consist entirely, of independent directors.
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 and thorough decision-making and to allow proper and comprehensive monitoring of the Company’s performance and compliance. These policies are also meant to provide our Board with practical guidelines that are regularly reviewed and can be appropriately revised and updated in response to regulatory developments and evolving business and governance practices. 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. Pursuant to SEC rules, we will disclose amendments to or waivers from our Code of Corporate Conduct, as
they relate to our CEO, Chief Financial Officer (“CFO”) and Chief Accounting Officer (“CAO”), on our website or in a Current Report on Form 8-K filed with the SEC. To date, we have not granted any waivers from our Code of Corporate Conduct to the CEO, CFO or CAO.
HEDGING AND PLEDGING POLICY
In 2018, the Board of Directors formally adopted a policy on hedging and pledging of the Company’s common stock by directors and executive officers (officers who are subject to Section 16). The policy prohibits purchasing any financial instrument or entering into any transaction that is designed to hedge or offset any decrease in the market value of the Company’s common stock, including puts, calls, prepaid variable forward contracts, equity swaps, collars, exchange funds (excluding broad-based index funds), and other financial instruments that are designed to or have the effect of hedging or offsetting any decrease in the market value of the Company’s common stock. The policy also provides that directors and executive officers shall not pledge, hypothecate, or otherwise encumber shares of the Company’s common stock as collateral for indebtedness including, but not limited to, holding shares in a margin account or any other account that could cause the Company’s common stock to be subject to a margin call or otherwise be available as collateral for a margin loan. Each director and executive officer certified to compliance with this policy in their annual questionnaire completed at the end of 2020.
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.consultants. The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee (the “Governance Committee”). The Governance Committee evaluates each committee’s composition and appoints committee members annually. Theannually, subject to Board then approves each committee’s members appointed by the Governance Committee at the Board’s first meeting held thereafter. The Board may also make further changes to committee assignments from time to time as the Board deems appropriate or as advised by the Governance Committee.approval. 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.
Our Board delegates various responsibilities and authority to the committees to foster the effective governance of the Company. Each committee also meets periodically or when appropriate and reports their respective activities and actions to the full Board. The committees operate pursuant to written charters (including any amendments thereto) approved and adopted by the Board. Each committee charter is available onunder the Corporate Governance heading of our website.
The composition of each Board committee is as follows:
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| BOARD COMMITTEE MEMBERSHIP AND 2020 MEETINGS HELD |
Name | Audit Committee | Compensation Committee | Governance Committee | Board of Directors |
| Clarence L. Werner | | | | X |
Derek J. Leathers(1) | | | | X |
| Kenneth M. Bird, Ed.D. | | X | X | X |
| Patrick J. Jung | Chair | X | | X |
| Gerald H. Timmerman | X | | X | X |
| Diane K. Duren | X | Chair | X | X |
| Michael L. Gallagher | X | | X | X |
| Jack A. Holmes | X | X | Chair | X |
Carmen A. Tapio(2) | | X | X | X |
| Number of Meetings | 4 | 6 | 4 | 6(3) |
| | | | | |
| (1) | Mr. Leathers was appointed to the Board of Directors on May 31, 2020. |
| (2) | Ms. Tapio was appointed to the Board of Directors effective November 10, 2020. |
| (3) | Four (4) executive sessions of the independent directors were held in 2020. |
|
| | | | | |
| 2015 BOARD COMMITTEE MEMBERSHIP |
Name | Audit Committee | Compensation Committee | Governance Committee | Board of Directors |
| Clarence L. Werner | | | | X |
Gary L. Werner(1) | | | | X |
| Gregory L. Werner | | | | X |
| Kenneth M. Bird, Ed.D. | X | X | | X |
| Patrick J. Jung | Chair | Chair | | X |
| Dwaine J. Peetz, Jr., M.D. | X | X | X | X |
| Duane K. Sather | X | | Chair | X |
| Michael L. Steinbach | X | | X | X |
| Number of Meetings | 4 | 3 | 1 | 5(2) |
| | | | | | |
| (1) | Gary L. Werner retired as a Director effective February 12, 2016. |
| (2) | Four (4) executive sessions of the independent directors were held in 2015. |
ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS AND ANNUAL MEETING
During 2015,2020, each incumbent director except Gregory L. Werner, attended and participated in at least 75% or more of the aggregate of (i) the total number of meetings of the Board of Directors (held during the period for which he or she has been a director) and (ii) the total number of meetings held by all Board committees on which he or she served (during the periods that he or she served). WeUnder normal circumstances, we encourage directors to attend annual meetings of stockholders, although we do not have a formal policy regarding director attendance at these meetings. SevenDue to COVID-19 meeting restrictions during the early stages of the pandemic, our eight directors attendedthen serving were unable to attend our Annual Meeting of Stockholders in May 2015.2020. The number of meetings conducted in 20152020 by the Board and each Board committee are provided in the 2015 Board Committee Membership and 2020 Meetings Held table.
AUDIT COMMITTEE
In accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”), our Board of Directors established a separately-designated standing Audit Committee to oversee our accounting and financial reporting policies and processes, (including our internal control systems)systems, and the quarterly review and annual audit of our financial statementsservices performed by our independent registered public accounting firm. Such oversight is performed in accordance with the applicable SEC rules and NASDAQ listing standards. Please refer to the Report of the Audit Committee section for the 2020 report. As more fully described in its charter, the Audit Committee’s responsibility for overseeing our accounting and financial reporting processes 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;
•Reviewing our financial statements with management and the independent auditors prior to their release to the public;release;
•Evaluating with management the process used to support the CEO and CFO 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 and fees;
•Overseeing the work of our internal audit department and independent auditors; and
•Assessing and maintaining procedures for the anonymous submission of complaints concerning accounting and auditing irregularities.
The Audit Committee meets in executive session with our independent auditors and also in a separate executive session with the head of our internal audit department. These meetings are conducted without the presence of our management and occur at each quarterly Audit Committee meeting. In 2015,2020, as Audit Committee Chair, Mr. Jung also participated in four additional meetings with management and the independent auditors for the purpose of reviewing the Company’s financial results prior to the issuance of our quarterly earnings press releases.
Audit Committee Independence and Financial Expert. Our Board of Directors has determined that each Audit Committee member (i) meets the independence criteria prescribed by Rule 10A-3(b)(1) and Section 10A(m)(3) of the Exchange Act; (ii) is independent under the NASDAQ listing standards and (iii) has sufficient knowledge and sophistication in financial and auditing matters under the NASDAQ rules. The Board also designated Mr. Jung as an “audit committee financial expert” as defined under the SEC rules upon determining that Mr. Jung possesses the requisite qualifications and experience.experience and determined that director nominee Ms. Wellman will also qualify as an “audit committee financial expert” following Mr. Jung’s retirement.
Please refer to the Report of the Audit Committee section for the 2015 report.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for determining and approving the compensation of our executive officers. The Compensation Committee may consider the recommendations of our Vice Chairman, & CEO and President & Chief Operating Officer (“COO”).CEO. Prior to making any such compensation determinations, the committee performs an annual review of all compensation elements for our executive officers, including but not limited to base salary, incentive cash bonuses and stock awards. Our Compensation Committee is tasked with evaluating and approving our overall executive compensation strategy and elements to ensure such components align with our business objectives, stockholder interests and responsible corporate practices and culture. Additionally, the Compensation Committee is responsible
for recommending to the Board the compensation policies for our independent directors and overall Board members. The Compensation Committee has responsibility for oversight of and determining awards of equity compensation pursuant to the Werner Enterprises, Inc. Amended and Restated Equity Plan (the “Equity Plan”).
As explained in more detail under Compensation Determination Process within the Compensation Discussion and Analysis section, the Compensation Committee delegated to our Chairman & CEO certain authority that allows him to modify the base salaries of executive officers within ranges established by the Compensation Committee. The Compensation Committee annually reviews and approves any such base salary changes at its year-end meeting. These tasks were performed by the Compensation Committee in 2015.
The Report of the Compensation Committee section contains the 20152020 report. For more information about the Compensation Committee’s activities, refer to the Compensation Discussion and Analysis and Report of the Compensation Committee sections of this Proxy Statement. The Compensation Committee’s functions are also described in its charter.
Compensation Committee Independence. Our Board of Directors has determined that all current Compensation Committee members satisfy the applicable SEC and NASDAQ independence requirements. Each Compensation Committee member is also (i) a “non-employee director” as defined by Rule 16b-3 under the Exchange Act and (ii) an “outside director” as defined in Section 162(m) of the Internal Revenue Code and 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 20152020 or on the date of this Proxy Statement. In 2015,2020, no member of the Compensation Committee had any relationships or transactions with the Company that would require disclosure as a “related person transaction” under the SEC rules and regulations and in the Proxy Statement section entitled Transactions with Related Persons. During 2015,2020, 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
Our Governance Committee is comprised only of directors whom the Board has determined satisfy the applicable SEC and NASDAQ independence requirements. The Governance Committee is responsible for the director nomination process. These duties include assisting the Board in identifying, evaluating and recruiting qualified potential candidates for election to the Board. The Governance Committee recommends for the Board’s approval the director nominees for any election of directors. This process is described further in the Director Nomination Process section.
The Governance Committee is also responsible for various corporate governance matters, including the development and oversight of our corporate governance policies, compliance practices and ethical standards of conduct for our directors, officers and employees. The committee makes recommendations to the Board regarding our corporate governance processes and reviews our Code of Corporate Conduct. The Governance Committee also monitors the effectiveness, and advises on the composition, structure and size, of our Board and Board committees. It also annually assists our Board with its independence and expertise determinations. The Governance Committee has oversight of the administration of our policies regarding “related person transactions” (as discussed under the Transactions with Related Persons section herein), and the committee reviews and approves or disapproves any such transaction when such approval is required by SEC and NASDAQ rules and regulations. A more complete description of the Governance Committee’s functions is provided in its charter.
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. This process is described in our Stockholder Communications Procedure for Communicating with the Board of Directors, which is included on our website. 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. Generally, the Corporate Secretary will forward any received correspondence according to the stockholder’s instructions. The Corporate Secretary, however, reserves the right not to forward any abusive, threatening or otherwise inappropriate materials. A majority of our independent directors approved the process for collecting stockholder communications received by our Corporate Secretary on the Board’s behalf.
DIRECTOR NOMINATION PROCESS
Generally, the Governance Committee considers director candidates recommended by Board members, management and stockholders. Nominees for the Board of Directors are then selected by the Governance Committee according to the process summarized below and described in our current Nominating and Corporate Governance Committee Directorship Guidelines and Selection Policy (the “Directorship Guidelines Policy”) and Policy Regarding Director Recommendations by Stockholders (the “Stockholder Recommendation Policy”). Both policies are available free of charge on our website. Stockholders may also request a copy of these policies by contacting our Corporate Secretary at our executive office address or telephone number provided in this Proxy Statement. Each policy was approved by the Board of Directors and is administered by the Governance Committee. The Governance Committee evaluates the policies regularly and may update and revise the policies from time to time, subject to Board approval, when appropriate and as applicable legal or listing standards change.
Stockholder Recommendations for Director Candidates. 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 proposed by only “qualified stockholders.” A “qualified stockholder” is an individual stockholder or group of stockholders that has beneficially owned at least 2% of our issued and outstanding common stock for at least one year (and will hold such percentage of stock through the date of the annual meeting, and if the recommended candidate is elected, through his or her term of service). Such stock ownership is determined as of the date the stockholder recommendation is submitted. You must submit stockholder director candidate recommendations in a written proposal, and each proposal 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 20152020 proxy statement was April 9, 2015.3, 2020. Stockholder recommendations intended for consideration for the director elections at the 20162021 Annual Meeting hadneeded to be submitted on or before December 10, 2015.4, 2020.) Stockholder recommendations for director nominees must be submitted no later than the close of business on December 8, 20163, 2021 for the 20172022 Annual Meeting of Stockholders.
Stockholder recommendations for director candidates must be accompanied by a description of each candidate’s qualifications in sufficient detail to permit the Governance Committee to evaluate whether each candidate satisfies the independence, financial literacy and experience requirements of the SEC, NASDAQ or other applicable laws or regulations. Director candidates proposed by stockholders in accordance with the Stockholder Recommendation Policy are evaluated by the Governance Committee in the same manner as any other prospective candidate during the director nominee selection process. We have not engaged and have not paid any fees to any third party for assistance with the director nomination process.
In addition to the requirements described above and in the Stockholder Recommendation Policy, all written stockholder proposals containing director candidate recommendations must comply with Rule 14a-8 of the Exchange Act. Rule 14a-8 sets forth the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials. Contact information for our Corporate Secretary is provided in the Contacting the Corporate Secretary and Executive Offices section.
Desirable Skills and Traits for Director Candidates. 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, and the committeeCommittee will strive to recommend director nominees
who satisfy these standards and qualifications in large part. The basic standards and qualifications set forth in the Directorship Guidelines Policy include but are not limited to those skills and traits listed above and as follows:
•Representation of our stockholders as a whole;
•Background that contributes to a Board comprised of individuals with varied occupational experience and perspective;
•Leadership experience and ability to exercise sound business judgment;
•Accomplishments, credentials and recognition in their respective field;
•Contributions to the Board’s skills, competency and qualifications through expertise in an area of business significant to us;our Company;
•Personal and professional reputation for integrity, honesty, fairness and other similar traits; and
•Knowledge of issues affecting us and critical aspects of our business and operations.
The Governance Committee also considers other relevant factors, such as the balance of management and independent directors, the need for Audit Committee or other Board committee expertise, relevant industry experience and the candidate’s understanding of financial matters and financial sophistication, literacy and proficiency. OurThe Governance Committee does not have a formal policy with respect to diversity; however, the Governance Committeevalues diversity in its candidates and considers it desirable if potential nominees complimentcomplement and contribute to the Board’s overall diversity and composition. In this respect, we broadly construe diversity to mean an array of opinions, perspectives, skills, personal and professional experiences and backgrounds and other distinguished attributes. Diversity is not solely limited toattributes, including gender, race and ethnicity distinctions; rather, our interpretation of diversity also includes one’s ability to positively contribute to the chemistry and collaborative nature of our Board, as well as one’s personal and professional experiences, aptitude and expertise relevant to our transportation and logistics services industry.ethnic diversity.
DIRECTOR COMPENSATION AND BENEFITS
Only independent directors on our Board receive compensation for their service as one of our directors. The independent 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.
Compensation of Directors for 2020. In January 2020, the Compensation Committee approved two changes to the independent director compensation package, which became effective on April 1, 2020. Our compensation package for independent directors was last changed in 2017. The compensation package that was effective from January 1, 2020 to March 31, 2020 included the following components (with cash compensation paid in quarterly installments): (i) $50,000 annual cash retainer for Board membership, (ii) annual committee chair retainers of $15,000 Audit Committee, $10,000 Compensation Committee, and $5,000 Governance Committee, and (iii) annual restricted stock award of $50,000.
Our 2015current 2020 annual compensation package for independent directors is comprised of the annual cash retainers and cash meeting feesrestricted stock awards provided in the Independent Director Retainers and Fees table that follows. This compensation package did not change from 2014 to 2015. Additional annual retainers are paid to the Chairs of the Audit Committee and Compensation Committee, but directors do not receive any additional compensation for serving as the Governance Committee Chair or member of any other Board committee. We will also reimburse each independent director 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 and for other reasonable out-of-pocket expenses directly related to their Board and Board committee service. Our independent directors are also eligible for stock awards pursuant to our Equity Plan. Shares of restricted stock were awarded to our independent directors in 2015.
The Compensation Committee and Board believe the current independent director retainer levels are appropriate to attract and retain top independent and outside Board members.
|
| | | | |
| INDEPENDENT DIRECTOR ANNUAL RETAINERS AND FEES |
| Fee or Retainer | Amount Paid in 2015and Frequency of Payment |
Annual BoardCash Retainer for Board Membership | $50,000
(paid in quarterly installments of $12,500 each) |
| Cash Retainer for the Audit Committee Chair | $15,000
(paid in quarterly installments of $3,750 each)
|
AnnualCash Retainer for the
Audit Compensation Committee Chair
| $10,000
(paid in quarterly installments of $2,500 each)
|
AnnualCash Retainer for the
Compensation Governance Committee Chair
| $5,000 10,000
(paid in quarterly installments of $1,250$2,500 each) |
| Restricted Stock Award for Board Membership | $80,000
(three year vesting period from the date of Directors Meeting Fee | $2,000
(paid for each Board meeting)
|
Board Committee Meeting Fee | $2,000
(paid for each committee meeting not
held on the same day as a Board meeting)
grant) |
The Director Stock Ownership. Compensation for 2020We table presents the compensation of each individual serving as an independent director during 2020 for service on our Board and its committees. This table does not include those directors who are also Company employees or related parties because such directors are not considered independent directors and thus did not receive any compensation in 2020 for their service on our Board. (CL Werner and Derek Leathers were directors and named executive officers, and the compensation paid to each of them by the Company is discussed in the Executive Compensation section and provided in the Summary Compensation Table.) Our independent directors do not have formal stock ownership requirements for independent directors. The individual stock ownership of each independent director is set forthparticipate in the table under the Stock Ownership of Directors, Executive Officers and Certain Beneficial Owners section of this Proxy Statement.
Compensation of Directors for 2015. Theany benefit, pension or nonqualified deferred compensation received by each independent director varies because such compensation is based on (i) the number of Board and Board committee meetings held, (ii) the Board committees on which the independent director serves and (iii) whether the individual is the Chairplan of the Audit Committee orCompany. For these reasons, we have omitted those columns from the Compensation Committee.table.
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| DIRECTOR COMPENSATION FOR 2020 |
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) |
| Kenneth M. Bird, Ed.D. | | 43,750 | | | 80,000 | | — | — | | 123,750 | |
| Diane K. Duren | | 52,500 | | | 80,000 | | — | — | | 132,500 | |
| Michael L. Gallagher | | 43,750 | | | 80,000 | | — | — | | 123,750 | |
| Jack A. Holmes | | 51,250 | | | 80,000 | | — | — | | 131,250 | |
| Patrick J. Jung | | 61,250 | | | 80,000 | | — | — | | 141,250 | |
Dwaine J. Peetz, Jr., M.D.(4) | | 43,750 | | | 80,000 | | — | — | | 123,750 | |
| Carmen A. Tapio | | 4,688 | | | 40,000 | | — | — | | 44,688 | |
| Gerald H. Timmerman | | 43,750 | | | 80,000 | | — | — | | 123,750 | |
|
| (1) | The Board of Directors elected to voluntarily reduce their annual cash retainers for Board membership to support the Company’s initiatives to reduce costs in the third and fourth quarters of 2020, in light of the expected impact from the COVID-19 pandemic on the Company’s business and industry. All Board members elected reductions of 25% to their $12,500 quarterly installment payments for Board membership, which resulted in quarterly installment payments of $9,375 in the third and fourth quarters of 2020. The temporary percentage reductions in the annual cash retainers were effective from July 1, 2020 through December 31, 2020. |
| (2) | On May 12, 2020, each of the independent directors then serving on the Board received an annual award of 1,941 shares of restricted stock with a grant date fair value of $41.21 per share. On November 10, 2020, Ms. Tapio was awarded 995 shares of restricted stock, a prorated award in conjunction with her appointment to the Board, with a grant date fair value of $40.20 per share. The grant date fair value 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 values of estimated future dividends for the May 12, 2020 and November 10, 2020 grants were calculated based on a $0.09 quarterly dividend amount per share and 1.0% and 0.2% risk-free interest rates, respectively. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 8 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2020. |
| (3) | The aggregate number of shares of unvested restricted stock outstanding at December 31, 2020 for each independent director is as follows: Dr. Bird 3,624; Ms. Duren 3,624; Mr. Gallagher 3,624; Mr. Holmes 3,491; Mr. Jung 3,624; Ms. Tapio 995; and Mr. Timmerman 3,624. No option awards were outstanding. |
| (4) | Dr. Peetz retired from the Board on November 10, 2020, upon which his unvested restricted stock awards became fully vested. |
On November 30, 2015, the Compensation Committee, in its sole discretion, awarded each of
During 2020, restricted stock was granted to the independent directors 1,000 shareson May 12, 2020 and to Ms. Tapio on November 10, 2020. The grants of restricted stock to the independent directors were made in accordance with our Amended and Restated Equity Plan. PursuantPlan, and pursuant to the Restricted Stock Award Agreements with the restricted stock recipients, the restricted stock is subject to service-based vesting provisions. Beginning one year after the grant date of each award, the restricted stock will vest annually in three increments of 34%, 33% and 33%, respectively. The awards will then become fully vested on May 12, 2023 and November 30, 2018.10, 2023, respectively. The independent directors do not have any voting or dividend rights with respect to such stock until it is vested, and there are not any post-vesting sales restrictions on the shares. (The Amended and Restated Equity Plan and the Form of Restricted Stock Award Agreement waswere both included as Exhibit 10.1exhibits to our CurrentAnnual Report on Form 8-K10-K for the year ended December 31, 2020 filed with the SEC on December 4, 2009.February 24, 2021.) We did not grant any stock options, or stock appreciation rights ("SARs"(“SARs”), or performance stock to our independent directors in 2015.
2020.
The
Director CompensationStock Ownership. In February 2020, formal stock ownership guidelines for 2015 table presentsall independent directors were adopted. Stock ownership includes common stock owned (directly or indirectly) and time-vested restricted stock. The ownership guidelines require independent directors to own stock with a market value equal to or in excess of 3.0 times the compensation earned by each individual serving as ancurrent independent director during 2015annual cash retainer. Independent directors have three years from adoption of this policy or from their date of election to meet the ownership guidelines and are required to retain all restricted
stock granted as fees for service on our Board and its committees. This table does not include those directors who are also Company employees becausemembership until such employee directors are not consideredtime as they meet the ownership guidelines. All independent directors, and thus did not receive any compensation in 2015 for their service on our Board. (The compensation paid byexcept Ms. Tapio, met the Company to our employee directorsownership guidelines as of December 31, 2020. The individual stock ownership of each independent director is discussedset forth in the Executive Compensation section and provided intable under the Summary Compensation Table.)Stock Ownership of Directors, Executive Officers and Certain Beneficial Owners Our independent directors do not participate in any benefit, pension or nonqualified deferred compensation plansection of the Company. For these reasons, we have omitted those columns from the table.this Proxy Statement.
|
| | | | | | | | | | | | |
| DIRECTOR COMPENSATION FOR 2015 |
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) |
| Kenneth M. Bird, Ed.D. | | 37,000 | | | 26,489 | | — | — | | 63,489 | |
| Patrick J. Jung | | 52,000 | | | 26,489 | | — | — | | 78,489 | |
| Dwaine J. Peetz, Jr., M.D. | | 37,000 | | | 26,489 | | — | — | | 63,489 | |
| Duane K. Sather | | 31,000 | | | 26,489 | | — | — | | 57,489 | |
| Michael L. Steinbach | | 31,000 | | | 26,489 | | — | — | | 57,489 | |
| |
| (1) | The amounts in this column include fees and retainers received for Board membership, Board committee membership and for service as the Audit Committee Chair and Compensation Committee Chair. |
| (2) | On November 30, 2015, each of the independent directors was awarded 1,000 shares of restricted stock with a grant date fair value of $26.4887 per share. 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 $0.06 quarterly dividend amount per share and 1.0% risk-free interest rate. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 7 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2015. The aggregate number of unvested stock awards outstanding at December 31, 2015 for each independent director is 1,990 shares; no option awards are outstanding. |
EXECUTIVE OFFICERS
Pursuant to the By-Laws, our Board of Directors appoints our executive officers from time to time. Our By-Laws provide that each executive officer holds his or her respective office for a term of one yearuntil he or until hisshe resigns, is removed, 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 contractunable to serve due to death 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.incapacity.
EXECUTIVE OFFICER INFORMATION
The table that follows identifies our current executive officers and the capacities in which they now serve. Set forth following the table is certain biographical information provided to us by these executive officers regarding their acquired business skills and experience.
|
| | | | | | | |
| EXECUTIVE OFFICERS |
| Name | Position with the Company | Age |
Clarence L. WernerDerek J. Leathers | Vice Chairman, President & Chief Executive Officer | 78 |
Derek J. Leathers | President & Chief Operating Officer | 4651 |
| H. Marty Nordlund | Senior Executive Vice President—Specialized ServicesPresident & Chief Operating Officer | 5459 |
| John J. Steele | Executive Vice President, Treasurer & Chief Financial Officer | 5863 |
| Jim S. Schelble | Executive Vice President of Marketing and Driver Resources& Chief Administrative Officer | 55 |
James A. Mullen | Executive Vice President & General Counsel | 4760 |
| James L. Johnson | Executive Vice President,
Chief Accounting Officer & Corporate Secretary
| 57 |
| Craig T. Callahan | Executive Vice President & Chief Commercial Officer | 47 |
| Nathan J. Meisgeier | Executive Vice President & Chief Legal Officer | 47 |
| Daragh P. Mahon | Executive Vice President & Chief Information Officer | 52 |
For information regarding the business experience of Clarence L. Werner,Derek J. Leathers, please refer to Director Information under the Proposal 1 – Election of Directors section of this Proxy Statement.
DEREK J. LEATHERS joined the Company in 1999 as the Managing Director—Mexico Division. During his tenure with us, he has served in the following positions: (i) Vice President—Mexico Division in 2000; (ii) Vice President—International in 2001; (iii) Senior Vice President—International in April 2003; (iv) Senior Vice President—Van Division and International in July 2003; (v) Executive Vice President—Van Division and International in 2004; and (vi) Senior Executive Vice President and President of Werner Global Logistics in 2006. The Board then appointed Mr. Leathers our Chief Operating Officer in May 2008 and President in May 2011, and he currently serves in both positions. 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 us in 1994 as an account executive. He then received the following promotions within the Company: (i) Director of Dedicated Fleet Services in 1995; (ii) Senior Director of Dedicated Fleet Services in 1997; (iii) Vice President—President–Dedicated Fleet Services in 1998; (iv) Vice President—President–Specialized Services in 2001; (v) Senior Vice President—President–Specialized Services in 2003; (vi) Executive Vice President–Specialized Services in 2005; and (vi)(vii) Senior Executive Vice President—Specialized Services in 2005.2006. In 2006,May 2016, Mr. Nordlund was named to his current position as Senior Executive Vice President—Specialized Services.President and Chief Operating Officer. Before joining the Company, Mr. Nordlund held various management positions with Crete Carrier Corporation, a large privately held truckload carrier.
JOHN J. STEELE joined the Company in 1989 as Controller. During his time with us, he was appointed to the following positions: (i) Corporate Secretary in 1992; (ii) Vice President—President–Controller & Corporate Secretary in 1994; (iii) Vice President, Treasurer & Chief Financial Officer in 1996; and (iv) Senior Vice President, Treasurer & Chief Financial Officer in 2004. He was named to his current position as Executive Vice President, Treasurer & 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. Mr. Steele also serves on the board of directors of Morningside College.
JIM S. SCHELBLE joined us in 1998 as Manager of New Business Development. During his tenure with us, 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—President–Sales in 2003; (v) Senior Vice President—President–Sales in 2004; and (vi) Executive Vice President—President–Sales and Marketing in 2005.2005; and (vii) Executive Vice President of Marketing and Driver Resources in 2015. In 2015, May 2016,
Mr. Schelble assumed responsibility for Driver Recruiting in addition to Marketing, Pricing and Business Analytics and was named to his current position as Executive Vice President of Marketing and Driver Resources.Chief Administrative Officer. 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.
JAMES A. MULLEN joined us in 2006 as Vice President & General Counsel of Litigation. In June 2010, he was promoted to Executive Vice President & General Counsel. Before becoming employed by the Company, Mr. Mullen was an attorney with Fraser Stryker Law Firm in Omaha, Nebraska from 1993 to 1997. From 1997 until his employment with us, he was a partner with Lefler and Mullen, and later Mullen and Mullen, law firms in Omaha, Nebraska. Mr. MullenSchelble also serves as a director on the boardsstate board and executive board of several local non-profit organizations.the Combined Health Agencies Drive.
JAMES L. JOHNSON joined the Company in 1991 as Manager of Financial Reporting. Since that time, Mr. Johnson was appointed to the following positions with us: (i) Assistant Controller in 1992; (ii) Director of Accounting in 1994; (iii) Corporate Secretary & Controller in 1996; (iv) Vice President, Controller & Corporate Secretary in 2000; and (v) Senior Vice President, Controller & Corporate Secretary in 2005. He was named to his current position as Executive Vice President, Chief Accounting Officer & Corporate Secretary in July 2010. Mr. Johnson was employed by the independent public accounting firm of Arthur Andersen & Co. as a certified public accountant from 1985 until his employment with us in 1991.
CRAIG T. CALLAHAN joined the Company in 1995 as a management trainee and has held several leadership positions within Customer Service, Operations and Sales. In 2005, Mr. Callahan joined the Sales team and was promoted to Senior Director of National Accounts. In 2009, Mr. Callahan was named Vice President of Sales, assuming additional sales leadership responsibilities for business development and growth initiatives in Dedicated, Contract Logistics, Intermodal and Cross-Border Services. In 2015, Mr. Callahan was promoted to Senior Vice President of Sales, gaining additional responsibilities for Field and International Sales. In February 2018, Mr. Callahan was promoted to Executive Vice President and Chief Commercial Officer. Mr. Callahan also serves on the board of directors of College World Series of Omaha, Inc.
16
NATHAN J. MEISGEIER joined the Company in 2005 as Senior Counsel of Litigation. Since that time, Mr. Meisgeier has held the titles of Associate Vice President and Associate General Counsel before being promoted to Vice President and General Counsel in 2016. In February 2018, Mr. Meisgeier was promoted to Executive Vice President and Chief Legal Officer. Mr. Meisgeier practiced at the Kansas City law firm of Stinson, Mag and Fizzell for seven years before joining Werner in 2005.
DARAGH P. MAHON joined the Company in 2020 as Executive Vice President and Chief Information Officer. Prior to joining the Company, Mr. Mahon was employed at Vonage Business Inc. for six years with his last position held being Senior Vice President, Global IT and Business Applications. Prior to that he was employed by Sage North America for 10 years. Mr. Mahon is an advisory board member of Salesforce.
BENEFICIAL OWNERSHIP OF COMMON STOCK
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
The Beneficial Ownership table sets forth certain information as of March 21, 2016,22, 2021, with respect to the beneficial ownership of our common stock by: (i) each of our directors and director nominees; (ii) each of our Named Executive Officers; (iii) each person known to us to beneficially own more than 5% of the outstanding shares of our common stock; and (iv) all current executive officers, directors and director nominees as a group.
| |
(i) | Each of our directors and director nominees; |
| |
(ii) | Each of our Named Executive Officers; |
| |
(iii) | Each person known to us to beneficially own more than 5% of the outstanding shares of our common stock; and |
| |
(iv) | All current executive officers, directors and director nominees as a group. |
On March 21, 2016,22, 2021, we had 72,043,67167,918,148 shares of common stock outstanding. Except as otherwise indicated in the Beneficial Ownership 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 in the Beneficial Ownership table is: Werner Enterprises, Inc., 14507 Frontier Road, Omaha, Nebraska 68138.
|
| | | | | | | | | | | | | | |
| BENEFICIAL OWNERSHIP |
| | Amount and Nature of Beneficial Ownership | | |
Name of Beneficial Owner | Shares Owned | Right to Acquire(1) | Total Shares | Percent of Shares Outstanding(2) |
Clarence L. Werner(3) | | 21,154,405 | | | — |
| | | 21,154,405 | | | 29.4 | % | |
Gary L. Werner(4) (5) | | 1,892,650 | | | — |
| | | 1,892,650 | | | 2.6 | % | |
Gregory L. Werner(5) | | 3,579,233 | | | — |
| | | 3,579,233 | | | 5.0 | % | |
| Kenneth M. Bird, Ed.D. | | 2,510 | | | — |
| | | 2,510 | | | * |
| |
| Patrick J. Jung | | 4,010 | | | — |
| | | 4,010 | | | * |
| |
| Dwaine J. Peetz, Jr., M.D. | | 17,010 | | | — |
| | | 17,010 | | | * |
| |
| Duane K. Sather | | 8,896 | | | — |
| | | 8,896 | | | * |
| |
| Michael L. Steinbach | | 2,010 | | | — |
| | | 2,010 | | | * |
| |
| Derek J. Leathers | | 116,623 | | | 25,000 |
| | | 141,623 | | | * |
| |
| John J. Steele | | 28,763 | | | — |
| | | 28,763 | | | * |
| |
| James A. Mullen | | 22,768 | | | — |
| | | 22,768 | | | * |
| |
Fairpointe Capital LLC(6) | | 3,805,140 | | | — |
| | | 3,805,140 | | | 5.3 | % | |
Dimensional Fund Advisors LP(7) | | 3,784,349 | | | — |
| | | 3,784,349 | | | 5.3 | % | |
BlackRock, Inc.(8) | | 3,730,878 | | | — |
| | | 3,730,878 | | | 5.2 | % | |
All executive officers, directors and director nominees as a group (13 persons)(3) (4) (5) (9) | | 25,014,419 | | | 80,000 |
| | | 25,094,419 | | | 34.8 | % | |
*Indicates beneficial ownership of less than 1%. |
|
| |
BENEFICIAL OWNERSHIP — Continued |
(1) | This column represents shares of our common stock that a respective individual may acquire upon exercising stock options that are vested as of March 21, 2016 or that will vest and become exercisable 60 days thereafter. The shares underlying these options are not outstanding and may not be voted at the 2016 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 21, 2016. |
(2) | The percentages are based upon 72,043,671 shares, which equal our outstanding shares as of March 21, 2016. In accordance with SEC rules, for individuals who hold options exercisable within 60 days of March 21, 2016, the number of shares of common stock on which the percentage is based also includes the number of shares underlying such options. |
(3) | Clarence L. Werner has sole voting power with respect to 21,151,268 shares; sole dispositive power for 6,150,018 of these shares; shared voting power for 3,137 shares; and shared dispositive power with respect to 15,004,387 shares. |
(4) | Gary L. Werner served as the Company's Vice Chairman until February 12, 2016. Beneficial ownership information is based on information contained in the last Form 4 filed by Mr. Werner with the SEC on February 12, 2016. 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) | The shares shown for Gary L. Werner and Gregory L. Werner each include 250,000 shares held by the Clarence L. Werner Grandchildren's Trust for the benefit of the grandchildren of Clarence L. Werner, some of which are children of Gary L. Werner and Gregory L. Werner. Gary L. Werner and Gregory L. Werner have shared voting and dispositive power with respect to the shares in the trust. Both Gary L. Werner and Gregory L. Werner disclaim actual and beneficial ownership of the shares held by the Clarence L. Werner Grandchildren's Trust. The beneficial ownership of all executive officers, directors and director nominees as a group also includes such 250,000 shares held by the Clarence L. Werner Grandchildren's Trust. |
(6) | Based on Schedule 13G (Amendment No. 4) as of December 31, 2015, as filed with the SEC by Fairpointe Capital LLC. Fairpointe Capital LLC claims sole voting power of 3,755,406 shares and sole dispositive power of 3,805,140 shares, and does not claim any shared voting power or shared dispositive power with respect to any of these shares. According to the Schedule 13G filing, the address of this stockholder is 1 North Franklin Suite 3300, Chicago, Illinois 60606. |
(7) | Based on Schedule 13G as of December 31, 2015, as filed with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP claims sole voting power of 3,693,759 shares and sole dispositive power of 3,784,349 shares, and does not claim any shared voting power or shared dispositive power with respect to any of these shares. According to the Schedule 13G filing, the address of this stockholder is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
(8) | Based on Schedule 13G as of December 31, 2015, as filed with the SEC by BlackRock, Inc. BlackRock, Inc. claims sole voting power of 3,626,989 shares and sole dispositive power of 3,730,878 shares, and does not claim any shared voting power or shared dispositive power with respect to any of these shares. According to the Schedule 13G filing, the address of this stockholder is 55 East 52nd Street, New York, New York 10055. |
(9)
| Gary L. Werner is excluded from this group because he is not currently an executive officer or a director, nor was he as of March 21, 2016. |
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| BENEFICIAL OWNERSHIP |
| | Amount and Nature of Beneficial Ownership | | |
Name of Beneficial Owner | Shares Owned | Right to Acquire (1) | Total Shares | Percent of Shares Outstanding (2) |
Clarence L. Werner(3)(4) | | 3,137 | | | — | | | | 3,137 | | | * | |
| Kenneth M. Bird, Ed.D. | | 9,620 | | | 1,738 | | | 11,358 | | | * | |
Patrick J. Jung(4) | | 10,520 | | | 3,624 | | | 14,144 | | | * | |
| Gerald H. Timmerman | | 14,520 | | | 1,738 | | | 16,258 | | | * | |
| Diane K. Duren | | 10,520 | | | 1,738 | | | 12,258 | | | * | |
Michael L. Gallagher(4) | | 2,648 | | | 3,624 | | | 6,272 | | | * | |
| Jack A. Holmes | | 1,286 | | | 1,263 | | | 2,549 | | | * | |
| Carmen A. Tapio | | — | | | — | | | | — | | | * | |
Scott C. Arves(4) | | 550 | | | — | | | | 550 | | | * | |
Vikram Mansharamani, Ph.D.(4) | | — | | | — | | | | — | | | * | |
Alexi A. Wellman(4) | | — | | | — | | | | — | | | * | |
| Derek J. Leathers | | 224,956 | | | — | | | | 224,956 | | | * | |
| H. Marty Nordlund | | 39,617 | | | — | | | | 39,617 | | | * | |
| John J. Steele | | 61,963 | | | — | | | | 61,963 | | | * | |
| Jim S. Schelble | | 46,565 | | | — | | | | 46,565 | | | * | |
| James L. Johnson | | 66,343 | | | — | | | | 66,343 | | | * | |
BlackRock, Inc.(5) | | 7,875,625 | | | — | | | | 7,875,625 | | | 11.6 | % | |
The Vanguard Group(6) | | 5,952,107 | | | — | | | | 5,952,107 | | | 8.8 | % | |
Dimensional Fund Advisors LP(7) | | 3,900,308 | | | — | | | | 3,900,308 | | | 5.7 | % | |
Gregory L. Werner(8) | | 5,283,847 | | | — | | | | 5,283,847 | | | 7.8 | % | |
All current executive officers, directors and director nominees as a group (19 persons)(2) (3) | | 532,002 | | | 13,725 | | | 545,727 | | | * | |
*Indicates beneficial ownership of less than 1%. |
| (1) | This column represents restricted stock that will vest within 60 days after March 22, 2021. The shares are not outstanding and may not be voted at the 2021 Annual Meeting. |
| (2) | The percentages are based upon 67,918,148 shares, which equal our outstanding shares as of March 22, 2021. In accordance with SEC rules, for individuals who hold restricted stock that will vest within 60 days of March 22, 2021, the number of shares of common stock on which the percentage is based also includes the number of such shares. |
| (3) | Mr. Clarence L. Werner has shared voting and dispositive power for 3,137 shares. |
| (4) | Mr. Clarence L. Werner, Mr. Jung and Mr. Gallagher will serve as Board members through the 2021 Annual Meeting but will not stand for re-election. Mr. Arves, Dr. Mansharamani and Ms. Wellman have been nominated for election at the 2021 Annual Meeting. |
| (5) | Based on Schedule 13G as of December 31, 2020, as filed with the SEC by BlackRock, Inc. BlackRock, Inc. claims sole voting power of 7,643,684 shares and sole dispositive power of 7,875,625 shares, and does not claim any shared voting power or shared dispositive power with respect to any of these shares. According to the Schedule 13G filing, the address of this stockholder is 55 East 52nd Street, New York, New York 10055. |
| (6) | Based on Schedule 13G as of December 31, 2020, as filed with the SEC by The Vanguard Group. The Vanguard Group does not claim sole voting power with respect to any shares and claims shared voting power of 132,824 shares, sole dispositive power of 5,768,092 shares, and shared dispositive power of 184,015 shares. According to the Schedule 13G filing, the address of this stockholder is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. |
| (7) | Based on Schedule 13G as of December 31, 2020, as filed with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP claims sole voting power of 3,770,607 shares and sole dispositive power of 3,900,308 shares, and does not claim any shared voting power or shared dispositive power with respect to any of these shares. According to the Schedule 13G filing, the address of this stockholder is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
(8)
| Based on Schedule 13G as of December 31, 2020, as filed with the SEC by Gregory L. Werner. Mr. Werner claims sole voting power and sole dispositive power of 5,033,847 shares and claims shared voting power and shared dispositive power of 250,000 shares. According to the Schedule 13G filing, the address of this stockholder is 5604 South 118th Plaza, Omaha, Nebraska 68137. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive 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. Executive officers, directors and greater than 10% beneficial owners 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 executive officers and directors to report their initial and subsequent changes in beneficial ownership of our common stock.
Based solely upon our review of (i) the reports (including any amendments thereto) 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 other 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, in a timely manner, during 2015; except that we filed late (i) one Form 4 reporting one transaction for Gregory L. Werner, former Vice Chairman & CEO, with respect to the forfeiture of unvested restricted stock awards upon separation of employment and (ii) one Form 4 reporting one transaction for Derek J. Leathers, President & COO, with respect to shares required to satisfy tax withholding obligations in connection with the vesting of restricted stock.
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 such Named Executive Officers. In the Compensation Discussion and Analysis, we also discuss and analyze our executive compensation program and the executive compensation amounts shown 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 section under 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 independent directors, each of whom is independent pursuant to SEC rules and NASDAQ listing standards.
Named Executive Officers. Pursuant to the SEC rules, our NamedOur “Named Executive OfficersOfficers” consist of the CEO, CFO and the three most highly compensated executive officers (other than the CEO and CFO) who were serving as executive officers as of December 31, 2015.2020. Our five Named Executive Officers are identified in the table below.
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| | | | |
20152020 NAMED EXECUTIVE OFFICERS |
| Name | Position with the Company |
Clarence L. WernerDerek J. Leathers | Vice Chairman, President & Chief Executive Officer |
Gary L. WernerH. Marty Nordlund | FormerSenior Executive Vice Chairman |
Derek J. Leathers | President (“SEVP”) & Chief Operating Officer |
| John J. Steele | Executive Vice President (“EVP”), Treasurer & Chief Financial Officer |
James A. MullenJim S. Schelble | Executive Vice President (“EVP”) & General CounselChief Administrative Officer |
| James L. Johnson | Executive Vice President (“EVP”), Chief Accounting Officer & Corporate Secretary |
In accordance with applicable SEC rules, GregoryClarence L. Werner, our former Chief Executive Officer,Chairman who retired from the Company on May 31, 2020, is also a Named Executive Officer. Mr. Werner resigned from the Company effective August 27, 2015. Except where expressly noted, references to "Named“Named Executive Officers"Officers” in this Compensation Discussion and Analysis do not include Gregory L.Mr. Werner.
Executive Summary. The Company and its Compensation Committee believe our executive compensation program has been instrumental to our business and in helping us accomplish our objectives. We also regardcontinually review the program asto confirm it is appropriate and fair in view of our financial performance and size relative to our competitive peer group. (The peer group is identified in the Competitive Peer Groups and Benchmarking section.) Our total compensation mix allows us to retain qualified, innovative executive officers who possess the necessary experience and expertise to manage the Company, provide effective Company leadership, contribute to our long-standing success and create value for our stockholders. (The peer group is identified in the
Competitive Peer Groups
The table below summarizes and Benchmarking section within the Compensation Discussioncompares our key 2020 and Analysis.2019 financial results. Our 20152020 financial statements are included in our Annual Report on Form 10-K for 20152020 filed with the SEC.)
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| 2020 AND 2019 FINANCIAL RESULTS |
| 2020 (1) | 2019 (1) | Change (%) |
| Total revenues | | $2,372,178 | | | $2,463,701 | | | -4 | % | |
| Net income | | $169,078 | | | $166,944 | | | 1 | % | |
| Earnings per diluted share | | $2.44 | | | $2.38 | | | 2 | % | |
Operating ratio(2) | | 90.4 | % | | | 90.8 | % | | | | |
| Return on assets | | 8.0 | % | | | 7.8 | % | | | | |
| Return on equity | | 14.7 | % | | | 14.6 | % | | | | |
| Total shareholder return (1-year) | | 9.0 | % | | | 39.9 | % | | | | |
| Total shareholder return (3-year cumulative) | | 17.7 % | | | 56.2 | % | | | | |
| |
| (1) | Dollar amounts in thousands, except for per share amounts. |
| (2) | Operating expenses expressed as a percentage of operating revenues. |
20152020 was a very challenging and disruptive year of transition for our executive leadership team. In August 2015, Gary L. Werner stepped down as Chairman and was elected Vice Chairman; Gregory L. Werner resigned as our CEO but continues to serve on the Board; and founder and Chairman Emeritus, C.L. Werner, was elected by the Board as our Chairman and our CEO. Gary L. Werner retiredresulting from the COVID-19 pandemic. The Company reacted quickly to changing freight and the Board in February 2016. In connection with these changes, the Compensation Committee approved a severance agreement with Gregory L. Werner which included a $4.0 million cash severance benefit payable in installments over five years beginning in January 2016, as well as a $1.4 million retirement cash award for Gary L. Werner paid in February 2016. (Please refer to the Arrangementswork conditions and Potential Payments Upon Termination or Change in Control section for further information about these payments.) The Compensation Committee also established a base salary for C.L. Werner at an annual rate of $10,000 per his request.
In 2015, our financial results improved significantly from our financial results for 2014. Netachieved record results. Revenues were down 4% but net income increased 25%1% and earnings per diluted share increased 26%2%. The Company also generated $180 million of free cash flow during 2020. We believe the Company is built to thrive in 2015 compared to 2014. In looking at freight demand, 2014any trucking or logistics cycle. Our core strengths and 2015 were cyclically contrasting years. 2014 providedsustainable competitive advantages support our strong consistent performance. The Company’s cumulative total shareholder return (“TSR”) for the benefits of gradually improving demand from a strengthening economythree-year period ended December 31, 2020 was 17.7% and constrained supply due to a tight driver market and increasing safety regulations. Freight demand in 2015 did not strengthen asfor the year progressed, as the rate of economic growth slowed. The truckload sector also experienced supply increases in 2015 as small carrier confidence rose as a result of better rates in 2014 and much lower fuel prices
beginning in late 2014. Despite these economic factors and the ongoing challenges of a tight driver market, we were able to achieve notable improvements in our average number of tractors in service and our average revenues per tractor per week in our truckload segment, as well as increasing the operating margins in our logistics segment. These improvements more than offset cost increases related to driver pay and higher equipment depreciation resulting in the highest net income in the Company's history. Our 25% increase in net income from 2014 to 2015 compares to an average increase of 7% for our competitive peer group during that same period. Our 2015 total stockholder returnone-year period ended December 31, 2020 was 14 percentage points higher than the 2015 average total stockholder return for our competitive peer group. (In this Proxy Statement, "total stockholder return" refers to the percentage increase in the total dollar value of stockholders' shares, including changes in the market price of shares and re-investment of dividends.)9.0%. Please refer to Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for 20152020 filed with the SEC for more discussion of our 20152020 financial results.
The table below summarizes and compares our key 2015 and 2014 financial results.
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| 2015 AND 2014 FINANCIAL RESULTS |
| | 2015(1) | 2014(1) | Change (%) |
| Total revenues | | $2,093,529 | | | $2,139,289 | | | -2 | % | |
| Net income | | $123,714 | | | $98,650 | | | 25 | % | |
| Earnings per diluted share | | $1.71 | | | $1.36 | | | 26 | % | |
Operating ratio(2) | | 90.4 | % | | | 92.5 | % | | | | |
| Return on assets | | 8.0 | % | | | 7.0 | % | | | | |
| Return on equity | | 14.1 | % | | | 12.4 | % | | | | |
| | |
| (1) | Dollar amounts in thousands, except for per share amounts. |
| (2) | Operating expenses expressed as a percentage of operating revenues. |
After receiving no base salary increases in 2019, the Named Executive Officers received base salary increases in 2020 but voluntarily took reductions in their base salaries during second quarter of 2020 due to the unknown impact of the COVID-19 pandemic. See Base Salary for more discussion of the 2020 base salaries. The Compensation Committee considered, among other factors, our financialdid not adjust the performance total stockholder return, each executive’s individual performancemetrics and competitive levels of compensation among peers in relationtarget goals for 2020 for the cash annual incentive program (“AIP”), which were established prior to their financial results in making its decisions on total compensation for our Named Executive Officers. Additionally, in light of our recent leadership changes and our period of transition, the Compensation Committee revised its approach to its compensation decisions in the latter part of 2015. It elected not to use a compensation consultant in 2015, significantly reduced the number of companies in our competitive peer group and made limited changes to compensationCOVID-19 pandemic. The 2020 AIP payouts for the Named Executive Officers. Mr. Mullen wasOfficers ranged from 130.5% to 151.1% of target. See Cash Annual Incentive Compensation for more discussion of the only Named Executive Officer to receive a base salary increase for 2015 (previously approved by2020 AIP.
In February 2020, the Compensation Committee in 2014). Annual bonuses paid in 2015 were largely unchanged, with Mr. Mullen receiving a slightly lower bonus because of special circumstances considered in awarding his increased bonus in 2014, which were not present in 2015, and Gary L. Werner was not awarded a cash bonus for 2015 in light of his changing role in the Company. On February 10, 2015,equity-based long-term incentives to the Named Executive Officers were granted performance-basedsplit equally between restricted stock ("and performance stock")stock at increased award values from the prior year to recognize management’s high performance in 2019 relative to its peers in a difficult market and to further align with anmarket practice. The restricted stock vests evenly over a three-year period while the performance stock cliff vests at the end of three years. The number of performance shares earned will range from 0% to 200% of the target shares for each Named Executive Officer based on the level of attainment of the performance objectives (two-year cumulative earnings per diluted share target performance objective of $1.55with a three-year TSR modifier). See Long-Term Incentive Compensation for 2015. Actual 2015 earnings per diluted share was $1.71, resulting in the Named Executive Officers earning shares of performance stock at a level above target, which is reflective of and rewards our executive team for their contributions in achieving our record results.
We strive to retain talented executive officers by compensating them in a manner that rewards performance and aligns such officers’ interests with our stockholders’ long-term interests, and we believe our executive compensation program helps to accomplish this objective. Our Named Executive Officers operate as a team vested in the Company’s success, and we expect our Named Executive Officers to contribute to our overall accomplishments and progress, rather than focus solely on objectives exclusive to the individual officer’s area of responsibility.
When evaluating Named Executive Officer total compensation as a percentage of revenue and as a percentage of net income for 2010 to 2014 (these years included Gregory L. Werner but not C.L. Werner), we averaged 0.29% of revenues and 6.2% of net income compared to 0.22% of revenues and 3.0% of net income for our competitive peer group. Our compensation (including C.L. Werner but not Gregory L. Werner) for 2015 was 0.28% of revenues and 4.7% of net income, and we expect 2016 compensation as a percentage of revenues and as a percentage of net income to be more in line with the average of our competitive peer group due to the retirement of Gary L. Werner. Please refer to the Competitive Peer Group and Benchmarking section for information about our competitive peer group.
We also believe the total mix of compensation provided under our executive compensation program is competitive and attractive to our Named Executive Officers. We believe the components of our executive compensation program are directly connected to the principle that executive compensation should be based on performance (both individual and Company). The Company believes our program reflects such principle and effectively rewards performance in a simple and straightforward manner. Our elements of compensation promote and retain stability within our executive team and maintain value for our stockholders, which contribute to our positive long-term development and the overall successdiscussion of the Company.equity incentive awards.
As discussed below, numerous factors are considered when internal pay equity as to our executive officers is assessed. Under our executive compensation program, the base salary and performance-based elements of compensation motivate executive officers to achieve our annual financial and operational goals and drive business unit and individual performance. Our long-term incentive compensation encourages executive officers to remain employed with the Company, due partially to long-term vesting periods and potential wealth accumulation, and meaningfully aligns each Named Executive Officer’s interests and level of stock ownership with those of our stockholders. Perquisites and benefits are necessary for our Named Executive Officers to efficiently and effectively carry out their duties and also provide for the wellness of our executive officer team. We believe that each element in our compensation program, combined with the program objectives set forth below, rewards extraordinary executive performance and attracts and retains exemplary executive talent.
At the time of hiring, we typically indicate to each executive officer that such individual is employed “at will.” None of our Named Executive Officers has any employment agreement with the Company.
The Company’s executive compensation program is discussed on the following pages of this Proxy Statement, and we believe it serves the Company well. We regard our program as uncomplicated in design and believe it enables our compensation decisions and practices, including those discussed herein, to reflect and reinforce the Company’s values, culture and mission.
Consideration of Stockholder Say-on-Pay Vote. At the Company'sCompany’s Annual Meeting held in May 2014,2020, the Board asked Company stockholders to indicate on an advisory and non-binding basis whether they approve the Company'sCompany’s executive compensation (a "say-on-pay resolution"“say-on-pay resolution”). This proposal was contained in the Company's 2014Company’s 2020 proxy statement dated April 10, 2014,3, 2020, in accordance with Section 14A of the Exchange Act.
Voting results on our say-on-pay resolution overwhelmingly approved the compensation of our named executive officers, with moreMore than 92%98% of the stockholder votes were cast in favor of our say-on-pay resolution.resolution to approve, on an advisory basis, the compensation of our Named Executive Officers. The Company and its Compensation Committee believe this affirms our stockholders'stockholders’ support of the Company'sCompany’s approach to executive compensation and executive compensation program objectives. While such vote is advisory and non-binding, the Board and the Compensation Committee value our stockholders'stockholders’ opinions expressed in such vote and consider the voting outcome in making executive compensation decisions. The Board has determined that an advisory say-on-pay resolution will be included in the Company's proxy materials once every three years, with the next vote being held in 2017.
2015
2020 Executive Compensation Program and 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 and to our long-term success in today’s competitive markets and industry.
•Reward our executive officers for their individual performance, leadership and contribution to the achievement of our overall business objectives.
•Support our Mission Statement, VisionPurpose Statement and guiding corporate principles. (Our Mission and Vision Statements arePurpose Statement is included on our website.)
The Compensation Committee carries out our executive compensation objectives by applying the following principles:
•Provide compensation that is competitive with that paid by companies in our industry for executive talent. Our Compensation Committee has the authority to engage the services of an outside advisor and compensation consultant 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, (ii) the executive officer’s individual performance and contribution to our overall business goals and (iii) the performance of the executive officer’s area of responsibility when evaluated in light of overall Company performance and the year’s market, industry and economic conditions.
•Encourage our executive team to consider current and long-term opportunities and reasonable risks that result in positive Company performance and financial growth, industry innovation, consistent stockholder value and lasting collaborations with our customers and partners.
•Encourage executive officers to become stockholders and facilitate stock ownership in the Company by offering equity-based compensation. We believe that stock ownership links our executive officers’ interests with those of our stockholders and supports strategic decision-making and actions that will serve our long-term interests. We have adopted executive stock ownership guidelines and a policy on hedging and pledging to further this principle.
•Provide limited executive perquisites.
Elements of Executive Compensation. The five elements of our 20152020 executive compensation program are: (i) base salary, (ii) cash annual cash bonus,incentive compensation, (iii) long-term incentive compensation, and (iv) perquisites and (v) benefits. The following discussion explains these elements and their primary purposes with respect to our 20152020 executive compensation program.
The table below summarizes our total compensation mix for 2020. It excludes certain items that are reflected as “All Other Compensation” in the 2020 Summary Compensation Table. Such items are not typically considered in the Compensation Committee’s pay deliberations because the amounts are not material and, in certain cases, non-recurring.
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| 2020 PAY ELEMENTS |
| Base Salary (1) | Annual Incentive Compensation (2) | Restricted Stock | Performance Stock (2) | Variable Compensation (3) |
| CEO | 18% | 18% | 32% | 32% | 82% |
Other NEOs(4) | 36% | 22% | 21% | 21% | 64% |
| |
| (1) | Annual base salary rate set by the Compensation Committee in February 2020. |
| (2) | Cash and equity incentive compensation calculated at the target level of performance. |
| (3) | Variable compensation includes annual incentive compensation, restricted stock, and performance stock. |
| (4) | Other NEOs does not include Mr. Werner, who retired as Executive Chairman on May 31, 2020. |
Base Salary. Base salary is a fixed element of compensation that we pay to each executive officer for the performance of his primary duties and responsibilities. Generally, each respective executive officer’s base salary is commensurate with such person’s responsibility, experience, tenure and job performance. As discussed in this Executive Compensation section, baseBase salaries are reviewed on an annual basis and at the time of promotion or other change in job function and responsibilities. Base salaries are not established on the basis of any specific performance criteria, but aA number of factors are considered when determining individual salary levels. These factors include but are not limited to (i) the individual’s 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; (v) the economic and business conditions affecting the Company at the time of the 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 executive officers will vary due to the application of these factors. Market adjustments to executive base salaries may 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, 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.
At its regular year-end meeting in December 2014,
The following 2020 base salaries were approved by the Compensation Committee approvedin February 2020 for the Named Executive Officers.
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| BASE SALARY |
| Name | 2019 Base Salary ($) | 2020 Base Salary ($) | Change (%) |
| Clarence L. Werner | 362,500 | | 362,500 | | — | % |
| Derek J. Leathers | 725,000 | | 800,000 | | 10 | % |
| H. Marty Nordlund | 375,000 | | 375,000 | | — | % |
| John J. Steele | 285,000 | | 315,000 | | 11 | % |
| Jim S. Schelble | 310,000 | | 350,000 | | 13 | % |
James L. Johnson(1) | N/A | 360,000 | | N/A |
| (1) | Mr. Johnson was not a Named Executive Officer in 2019. |
Cash Annual Incentive Compensation. The 2020 AIP established target cash award amounts as a $12,000 increase to Mr. Mullen'spercentage of base salary, which varies by executive position. The 2020 AIP considers four performance metrics, with the financial metrics tied to pre-defined goals (25% operating income; 25% revenues less fuel surcharge revenues (“FSC”); 25% operating ratio (“OR”), net FSC; and 25% individual performance). Individual performance for 2015, but did not make any changesthe executive officers included predefined areas of improvement or strategic milestones under the executive’s purview to any other Named Executive Officer base salaries in 2015.be achieved during the year. The 2020 payout opportunities ranged from 0% to 200% of target depending on performance versus the goals. The table below shows the calculation of the AIP performance results.
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| ANNUAL INCENTIVE PLAN PERFORMANCE RESULTS |
| AIP Measure | Target (1) | Final Results (1) | Achieved (%) | Weight (%) | 2020 AIP Payout (% Target) |
Operating income(2) | $204.2 | $232.3 | 191.8% | 25% | 48.0% |
Revenues less FSC(3) | $2,273.9 | $2,213.6 | 80.1% | 25% | 20.0% |
Total Company OR, net FSC(2)(4) | 91.0% | 89.5% | 149.9% | 25% | 37.5% |
Total Trucking OR, net FSC(2)(5) | 89.0% | 86.5% | 182.3% | 45.6% |
| Individual performance | Varies by NEO | | 100.0% to 175.0% | 25% | 25.0% to 43.8% |
| Total | | | | 100% | 130.5% to 151.1% |
| (1) | Dollar amounts in millions. |
| (2) | Final results include adjustment of $4.9 million of insurance and claims expense for interest accrued during 2020 on an adverse jury verdict rendered in 2018, which the Compensation Committee determined should be added back to the 2020 operating income and subtracted from the 2020 operating expenses used in the calculation of ORs for purposes of the 2020 AIP payouts. |
| (3) | Operating revenues less trucking fuel surcharge revenues. |
| (4) | Operating expenses less trucking fuel surcharge revenues expressed as a percentage of operating revenues less trucking fuel surcharge revenues, for the total Company. Total Company OR applies to Messrs. Werner, Leathers, Nordlund, Steele and Johnson. |
| (5) | Operating expenses less trucking fuel surcharge revenues expressed as a percentage of operating revenues less trucking fuel surcharge revenues, for the Truckload Transportation Services segment. Total Trucking OR applies to Mr. Schelble. |
The Compensation Committee also established a base salarybelieves the 2020 AIP aligns pay for performance and the interest of $10,000 per year for C.L. Werner, at his request, upon his appointment to CEO.management with stockholders. The base salariestable that follows shows the calculation of the AIP payouts achieved for the Named Executive Officers to be paid in 2016, as determined by the Compensation Committee at its regular year-end meeting in November 2015, will be the same as those paid in 2015.
Annual Cash Bonus. Our annual cash bonus program is a discretionary program designed to encourage and reward executives for performance during the fiscal year and on a more short-term basis. Annual cash bonuses2020, which are awarded by our Compensation Committee at its regular year-end meeting. Annual cash bonuses are not calculated on the basis of any specific performance criteria, but a number of factors are considered when determining individual annual cash bonus amounts. The Compensation Committee awards annual cash bonuses that it considers appropriate based upon and after assessing: (i) the financial and economic environment 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 awardeddisclosed in the preceding year; (iv) the Chairman & CEO’s and President & COO’s recommendationSummary Compensation Table. The 2020 AIP payments occurred in February 2021. Please refer to the Compensation Committee; (v) annual cash bonus data and total cash compensation dataGrants of Plan-Based Awards for certain officer positions, including actual bonuses paid in2020 section for additional information regarding the marketplace by companies in our competitive peer group; and (vi) our overall financial results relative to our competitive peer group. Final award amounts approved by the Compensation Committee for each executive officer are intended to beAIP.
competitive for our market and reflective of each respective executive officer’s performance and contribution to our financial and business performance and success.
In November 2015, our Compensation Committee awarded annual cash bonuses to the Named Executive Officers for 2015 that were unchanged from 2014 for all of the Named Executive Officers except that Gary L. Werner was not awarded a cash bonus for 2015 in light of his changing role in the Company and Mr. Mullen's 2015 bonus was $10,000 lower than 2014 because of specific circumstances that were considered in awarding a higher bonus in 2014, which were not present in 2015.
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| CASH ANNUAL INCENTIVE COMPENSATION | |
| Name | 2020 Base Salary ($) | Target Payout (% Salary) | Target AIP Payout ($) | AIP Payout (% Target) | 2020 AIP Payout ($) | |
Clarence L. Werner(1) | 362,500 | | 100.0 | % | 362,500 | | 130.5 | % | 197,110 | | |
| Derek J. Leathers | 800,000 | | 100.0 | % | 800,000 | | 149.2 | % | 1,193,600 | | |
| H. Marty Nordlund | 375,000 | | 70.0 | % | 262,500 | | 138.8 | % | 364,350 | | |
| John J. Steele | 315,000 | | 60.0 | % | 189,000 | | 143.0 | % | 270,270 | | |
| Jim S. Schelble | 350,000 | | 60.0 | % | 210,000 | | 151.1 | % | 317,310 | | |
| James L. Johnson | 360,000 | | 60.0 | % | 216,000 | | 147.1 | % | 317,736 | | |
| (1) | Mr. Werner’s 2020 AIP payout was prorated for his May 31, 2020 retirement date. | |
2020 Long-Term Incentive 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 executives who contribute to our stock price appreciation and Company development. Accordingly, the Compensation Committee granted long-term equity awards (performance stock) to our executive officers in 2015, as described below.
Our Equity Plan permits a variety of equity awards under our ongoing long-term incentive program. 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 creating and maintaining long-term stockholder value.
The periodic vesting periods of long-term incentive compensation directly align executive officer interests and compensation 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.
Long-term equity awards are made at the discretion of the Compensation Committee. In designing long-term incentive awards and determining an overall pool of stock to make available for grant,Under our Equity Plan, the Compensation Committee considers the Board’s dutymay grant stock options, SARs, restricted stock, restricted stock units (“RSUs”) and performance stock to our stockholders to limit equity dilution, whether such awards will help to accomplish our executive compensation program objectives, how our relative financial performance compares against the marketplace and the emphasis placed on equity in the total mix of compensation. For purposes of allocating the overall stock pool among executive officers, our Compensation Committee also evaluates (i) the scope of each executive’s responsibilities, position and experience; (ii) each executive officer’s individual performance and contribution to our overall performance and financial results; (iii) the total mix of compensation for each executive; (iv) our historical practice of granting equity awards to executive officers; and (v) the perceived retention value of the total compensation package in light of the current labor and financial markets. The Compensation Committee will weigh these factors, in addition to long-term stockholder value and interests, when making any executive stock award determinations.
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 to improve and maintain Company performance because strong financial results may potentially increasenon-employee directors. The grant date is the value of any unexercised stock options. Please refer tosame date as the Stock Grant Practices section under Other Executive Compensation Policies and Considerations for additional information regarding stock options.
An award of restricted stock entitles the recipient to receive a specified number of shares of our common stock,meeting at no cost to the recipient, if the executive officer remains employed with us when the restricted stock vests. 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 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 value is impacted by these stock price changes, andwhich the Compensation Committee considersdecides to grant equity awards, after giving consideration to the grantingtiming of restricted stocksuch decisions to ensure that awards to be a means of increasing executive officer ownership in Company stock. We also believe that despiteoccur when neither the stock price fluctuations, restricted stock will have value in the long-term and will deliver greater share-
for-share compensation value at grant than stock options. 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.
Performance stock is similar to restricted stock except that the number of shares of common stock earned is based on the achievement of one or more performance objectives. A target level for the performance objective is determined byrecipient nor the Compensation Committee as well as a minimum and a maximum level. The numberpossess material nonpublic information. None of shares that can be earned at each of these levels is then determined by the Compensation Committee. Following the end of the performance period (currently the fiscal year), the Compensation Committee reviews and certifies the actual results of the performance objective compared to the levels set at the grant date and determines the number of shares earned by each executive officer. Theour restricted or performance stock earned is still subject to time-based vesting similar to an award of restricted stock. We believe that performanceawards give the recipient any voting or dividend rights until such stock not only directly links executive officer interests with those of our stockholders due to the change in value based on stock price changes but also ties the value of the award (number of shares) to the performance of the Company.
Vesting of stock options, restricted stock and performance stock is subject to continued employment with us. This condition helps ensure that a portion of an executive officer’s awards will vest after several years, which is intended to retain the executive officer and cause them to focus on our long-term business objectives.
When deciding upon the long-term incentive compensation of our Named Executive Officers, the Compensation Committee considers, among other factors, the information regarding competitive peer group long-term incentive compensation and total compensation. The Compensation Committee also assesses each Named Executive Officer’s respective contributions to our financial performance and our performance compared to other companies within our competitive peer group. The Compensation Committee also took into account our three-year (2013-2015) average total stockholder return of 6% compared to the three-year average total stockholder return of 29% for our competitive peer group.
vests, nor do they have any post-vesting sales restrictions.
On
In February 10, 2015,2020, the Compensation Committee, in its sole discretion, awarded the Named Executive Officers restricted stock and performance stock.stock for 2020. The restricted stock will vest in three annual increments of 34%, 33% and 33% beginning February 13, 2021 (one year after the grant date), subject to continued employment. The performance stock is earned based upon the level of attainment by the Company of specifieda cumulative earnings per diluted share performance objectivesobjective for the fiscal year endedtwo-year period from January 1, 2020 to December 31, 2015,2021, as established by the Compensation Committee. The target performance objective for 2015 was set by the Compensation Committee at $1.55 per diluted share, which was a 14% increase overworks with management to develop performance objectives that it believes are rigorous and challenging to achieve and that would contribute to our overall financial goals and create stockholder value. The number of shares that may ultimately be earned will range from 0% to 200% of the 2014 earnings per diluted share. The Compensation Committee determined thattarget shares stated in each executive’s award agreement based on the Company's actual 2015 earnings per diluted sharelevel of $1.71,attainment of the Named Executive Officers earnedperformance objective and subject to a TSR modifier whereby the following numbermaximum payout will be capped at 150% of shares: Gary L. Werner - 60,500 shares, Mr. Leathers - 52,500 shares, Mr. Steele - 10,500 shares and Mr. Mullen - 10,500 shares. Thetarget if absolute TSR during the three-year period ending December 31, 2022 is less than 25%. Any performance stock earned will vest, subject to continued employment, in five annual increments of 20% each beginning February 10, 2016 (one year after the grant date). The awards will become fully vested on February 10,13, 2023. The target grant date values of the stock awards to the Named Executive Officers are as follows: Mr. Werner–$1,125,000; Mr. Leathers–$2,800,000; Mr. Nordlund–$450,000; and Messrs. Steele, Schelble and Johnson–$400,000 each. The target value granted to each Named Executive Officer was split equally between restricted stock and performance stock. Mr. Werner forfeited 100% of his 2020 stock awards upon his retirement on May 31, 2020. The 2020 grants of restricted stock and performance stock to the Named Executive Officers are disclosed in the Summary Compensation Committee also awarded 47,500 shares at the target level to Gregory L. Werner, which he did not earn because he resigned before the end of the performance period.Table. Please refer to the Grants of Plan BasedPlan-Based Awards for 20152020 section for additional information regarding the performance stock.equity awards.
On2019 Performance Stock. In February 16, 2016,2019, the Compensation Committee in its sole discretion, awarded the Named Executive Officers restricted stock and performance stock for 2016.2019. The 2019 performance stock is earned based upon the level of attainment by the Company of specifieda cumulative earnings per diluted share performance objectivesobjective for the fiscal year endingtwo-year period from January 1, 2019 to December 31, 2016,2020, as established by the Compensation Committee. The number of shares that may ultimately be earned will range from 0 percent0% to 123 percent
200% of the target amountshares stated in each executive'sexecutive’s award agreement based on the level of attainment of the performance objectives.objective and subject to a TSR modifier whereby the maximum payout will be capped at 150% of target if absolute TSR during the three-year period ending December 31, 2021 is less than 30%. Any performance stock earned will vest, subject to continued employment, on February 11, 2022. The Compensation Committee has determined that insurance and claims expense of $3.9 million in five annual increments2019 and $4.9 million in 2020, for interest accrued during those years related to an adverse jury verdict rendered in 2018 that remains under appeal, is an unusual item not reflective of 20%actual performance and should be added back to pre-tax operating income for calculating diluted earnings per share for purposes of determining the achievement level of the 2019 performance shares. Cumulative earnings per diluted share from January 1, 2019 to December 31, 2020, adjusted for the accrued interest, amounted to 87.8% of the target goal. As a result, the TSR modifier that caps achievement at 150% will not impact the achievement level. The final performance and payout will be reported in the 2022 proxy statement.
2018 Performance Stock. In February 2018, the Compensation Committee awarded the named Executive Officers restricted stock and performance stock for 2018. The 2018 performance stock is earned based upon the level of attainment by the Company of a cumulative earnings per diluted share performance objective for the two-year period from January 1, 2018 to December 31, 2019, as established by the Compensation Committee. The number of shares that may ultimately be earned will range from 0% to 200% of the target shares stated in each beginningexecutive’s award agreement based on the level of attainment of the performance objective and subject to a TSR modifier whereby the maximum payout will be capped at 150% of target if absolute TSR during the three-year period ending December 31, 2020 is less than 30%. Any performance stock earned will vest, subject to continued employment, on February 16, 2017 (one year after7, 2021. The Compensation Committee has determined that insurance and claims expense of $3.9 million in 2019, for interest accrued in 2019 related to an adverse jury verdict rendered in 2018, is an unusual item not reflective of 2019 performance and should be added back to pre-tax operating income for calculating 2019 diluted earnings per share for purposes of determining the grant date)achievement level of the 2018 performance shares. Cumulative earnings per diluted share from January 1, 2018 to December 31, 2019 amounted to 190.5% of the target goal. Absolute TSR for the performance period was below 30%, so the achievement level and payout was capped at 150%. The awards will become fullyperformance shares vested on February 16, 2021. The performance stock awards were granted7, 2021 for the following number of target shares to the following Named Executive Officers: Mr. Leathers - 42,000 shares, Mr. Steele - 9,000 shares,Officers still employed and Mr. Mullen - 9,000 shares. The target number of performance stock awards granted in February 2016 were 5,500 shares less for Mr. Leathers and 500 shares less each for Mr. Steele and Mr. Mullen than the target
number granted in February 2015. The grant of this performance stock is not disclosed in the Summary Compensation Table as the awards occurred in 2016.paid out at a 150% achievement level.
Perquisites.Perquisites and Benefits. Our executive compensation program includes limited executive perquisites that we considerbelieve are reasonable and consistent with our overall compensation objectives. Our Compensation Committee periodically reviews the perquisites provided to executive officers. The perquisites offered under our 2020 executive compensation program were as follows:
•Country Club Membership. In 2020, we paid country club membership fees and other business-related and reasonably incurred expenses for certain Named Executive Officers, and we received full reimbursement from those individuals for any personal expenses incurred. We provide these memberships for our benefit, notwithstanding the incidental personal benefit.
•Company Vehicle. We provide Company vehicles to certain Named Executive Officers for business and personal use. We are responsible for paying the operating expenses of these vehicles, except for fuel.
•Medical Care Membership Program. We provide each Named Executive Officer with membership in a medical care program, which provides for an important element ofannual physical examination and unlimited direct access to a primary care physician. We believe the program allows our total executive reward packages and are necessary for Named Executive Officers to carry outdevote more time to our business and promotes the responsibilitieshealth and wellness of their positions. We believethese key employees.
•Personal Use of Corporate Aircraft. Mr. Leathers is eligible to use the Company’s aircraft for limited personal use. Personal use is limited to 30 flight hours per year, and Mr. Leathers must fully reimburse the Company for the incremental cost of his use. To the extent any personal travel on our aircraft results in imputed income to the executive, the Company does not provide any gross-up payments to cover the personal income tax obligation. Mr. Leathers did not use the Company’s aircraft for personal travel in 2020.
In 2020, we offered the following benefits to our executives: (i) health, dental and vision plans; (ii) other voluntary insurance plans, including life and disability; (iii) 401(k) retirement savings plan; (iv) employee stock purchase plan; and (v) nonqualified deferred compensation plan (see Nonqualified Deferred Compensation for 2020). These benefits are available to our Named Executive Officer perquisites andOfficers on the same terms as provided to 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 officers.eligible employees.
The aggregate incremental cost of perquisites and other benefits (and any related tax gross-ups) provided to the Named Executive Officers is shown in the “All Other Compensation” column of the Summary Compensation Table and detailed in the All Other Compensation for 20152020 section of this Proxy Statement.
The perquisites offered under our 2015 executive compensation program were as follows:
Accounting, Legal and Tax Services. C.L. Werner, Gary L. Werner and Gregory L. Werner utilize accounting, legal and income tax preparation services provided by us. C.L. Werner fully reimburses us for such services, but we are not reimbursed for such services from Gary L. Werner and Gregory L. Werner. The reimbursed amounts and the unreimbursed amounts included in compensation for Gary L. Werner and Gregory L. Werner are based on our estimate of the costs incurred by the Company for our personnel to provide these services.
Country Club Membership. In 2015, we provided Mr. Leathers with a country club membership. The membership fees and other business-related and reasonably incurred expenses were paid by us, and we received full reimbursement from Mr. Leathers for any personal expenses he incurred in connection with the membership. We provide this membership for our benefit, notwithstanding the incidental personal benefit to Mr. Leathers.
Personal Use of Corporate Aircraft. C.L. Werner, Gary L. Werner and Gregory L. Werner are permitted personal use of our corporate aircraft provided they reimburse the Company (we do not provide non-reimbursed personal use of the aircraft to these executives). When any of these individuals use our corporate aircraft for personal benefit, such Named Executive Officer reimburses us the higher of our incremental cost or the taxable amount calculated pursuant to the Internal Revenue Service (the “IRS”) regulations. C.L. Werner and Gregory L. Werner used the corporate aircraft for one personal round trip flight during 2015 for which each reimbursed the Company the IRS value of the flight. C.L. Werner also reimbursed the Company the IRS value of flights for certain members of his family when such individuals accompanied him on business trips in 2015. Gary L. Werner did not use the corporate aircraft for personal benefit in 2015. Our executive officers are also permitted limited personal use of the corporate aircraft with the approval of the Chairman & CEO or President & COO, and we provide transportation on the corporate aircraft for immediate family members of executive officers if such family members are specifically invited to attend events for appropriate Company-related business purposes or a business flight is already scheduled. In either case, we are not reimbursed for such utilization of the aircraft by the executive officer. Mr. Leathers, Mr. Steele and Mr. Mullen did not use the corporate aircraft for personal benefit in 2015.
Company Vehicle. We provide each Named Executive Officer (except C.L. Werner and Mr. Mullen) with one Company vehicle for business and personal use. 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. Mr. Mullen is paid a Company vehicle allowance in lieu of being provided a Company vehicle.
Medical Care Membership Program. We provide each Named Executive Officer (except Gregory L. Werner) with membership in a medical care program for their personal healthcare. We believe such membership, which provides for an annual physical examination and unlimited direct access to a primary care physician, allows our Named Executive Officers to devote more time to our business and promotes the health and wellness of these key employees. We began offering this perquisite in July 2012.
Benefits. As discussed above in 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 2015, we offered the following benefits:
Health and Welfare Benefits. Our Named Executive Officers are eligible to participate in our full range of health and welfare benefits, and are covered under the same plans and terms, that are offered to all of our full-time employees in the United States.
401(k) Plan. Our Named 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 one-half of the first three percent of each participant’s contributions. Earnings on participant and Company contributions grow tax-deferred. Matching contributions are made to Named Executive Officers on the same terms as provided to our eligible U.S. employees. At their respective request, Gary L. Werner and Gregory L. Werner do not receive a matching contribution from us for the 401(k) Plan; C.L. Werner does not participate in the 401(k) Plan. Matching contributions for our other Named Executive Officers are detailed under All Other Compensation for 2015.
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 employees. The All Other Compensation for 2015 section identifies matching amounts made for Named Executive Officers who participate in this plan.
Executive Nonqualified Excess Plan. We offer participation in the Executive Nonqualified Excess Plan (the “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 enables these highly compensated employees, including our Named Executive Officers, to contribute additional amounts on a tax-deferred basis, subject to annual dollar limits we impose. The nonqualified deferred compensation plan provisions allow the Company to make matching contributions; however, to date, we have elected not to make any such contribution. Our nonqualified deferred compensation plan is described further under Nonqualified Deferred Compensation for 2015.
Role of the Compensation Consultant. In 2015, ourFrederic W. Cook & Co. is an independent executive compensation consulting firm engaged by the Compensation Committee. The Compensation Committee elected tohas assessed the independence of the Consultant and determined that the Consultant’s work did not retain araise any conflicts of interest.
The Consultant assists the Committee in its evaluation of the compensation consultant. It is expected thatfor our executives. The Compensation Committee will retainengages the Consultant to (i) review and recommend any changes to the Company’s competitive peer group, (ii) prepare an executive compensation benchmarking review to include a competitive analysis of the compensation consultant againof the Company’s executives in comparison to our peer group, and (iii) review the future whenCompany’s compensation program and philosophy and recommend changes based on the Company’s business objectives, compensation trends and best practices to incorporate a mix of short-term and long-term incentive components and align pay for performance.
The Consultant reports directly to the Compensation Committee, deemsalthough it necessary.may work in cooperation with management only as required to carry out its obligations to the Compensation Committee. Without the Compensation Committee’s prior approval, the Consultant will not perform any services for us or our management. During 2020, the Company paid fees to the Consultant only for advising the Compensation Committee on the amount or form of executive and director compensation. The Company did not pay the Consultant any fees for additional projects or services.
Competitive Peer Groups and Benchmarking. Each year, our Compensation Committee reviews the general criteria and recommendations for the addition or removal ofThe companies in our competitivethe peer group. The criteria include but are not limited to market capitalization, revenues, net income and industry of operation. In conjunction with our Compensation Committee electing to not retain a compensation consultant, they alsogroup were selected by first reviewing the Company’s peer group from the prior year. It was determined that Genesee & Wyoming would be removed from the peer group as it was acquired in December 2019. U.S.-based public companies in trucking, air freight & logistics and railroads with revenues approximately one-third to three times the Company’s annual revenues with a preference for long-haul trucking or logistics competitors were then reviewed. From this review it was determined that there would be no other changes from the 2019 competitive peer group for 2015 would be comprised of three direct competitorsas shown in the transportation industry that are most similar in operation and size (revenues and market capitalization)—Heartland Express, Knight Transportation and Swift Transportation Company. All three companies were in our competitive peer group in 2014.table below.
| | | | | | | | |
| 2020 COMPETITIVE PEER GROUP |
| ArcBest | J.B. Hunt | Saia |
| Covenant Transportation Group | Kansas City Southern | Schneider National |
| Echo Global Logistics | Knight-Swift Transportation | U.S. Xpress Enterprises |
| Forward Air | Landstar System | YRC Worldwide |
| Heartland Express | Marten Transport | |
| Hub Group | Old Dominion Freight Line | |
The Compensation Committee reviews compensation practices and levels at peer companies during the executive compensation decision-making process so that the Compensation Committee can determine compensation levels in an informed manner and at levels the Compensation Committee believes are reasonably competitive. The Compensation Committee doeshas not attempt tohistorically set compensation elements for each executive to meet specific benchmarks based on peer group 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 and individual performance.
Compensation Determination Process. The Compensation Committee makes all annual compensation decisions for our Named Executive Officers. Additionally, the Chairman & CEO may also modify compensation for certain executives within the Compensation Committee parameters described below.
When determining total compensation, we apply a consistent approach for all Named Executive Officers. The structure and levels of our executive compensation program are determined, in large part, by considering all elements of compensation, rather than only a few components in isolation. Our Compensation Committee evaluates each element individually and also takes into account the position and current total direct compensation of the individual being considered. The Compensation Committee’s determination of compensation levels for our Named 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 Named Executive Officer.
The Compensation Committee determines each component of a Named Executive Officer’s compensation based on its collective assessment of the officer’s performance, the Company’s overall financial performance and recommendations of our Vice Chairman, & CEO and President & COO.CEO. Our Compensation Committee may also request executive compensation guidance and advice from an independent outside consultant when deciding compensation for our Named Executive Officers. The Compensation Committee meets annually (near the end of the year) to review the compensation of our Named Executive Officers. The Compensation Committee also meets during the first quarter of each year to determine the level of attainment of prior year performance objectives as they relate to the cash annual incentive program and the grant of performance stock in the prior yearyears and to consider the cash annual incentive program and granting new performance stockequity or incentive compensation awards for the current year and setting performance objectives related to any such grant.
each.
As explained in the
Compensation Committee section within Corporate Governance, the Compensation Committee delegated certain authority to our Chairman & CEO that permits him to adjust the base salaries of the other Named Executive Officers. The Chairman & CEO does not have authority to modify his own base salary or that of the President & COO. After our Compensation Committee defines the cash compensation pay ranges, the Chairman & CEO may then make changes to the other Named 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 the approval of the Compensation Committee before any such changes become effective. At the Compensation Committee’s annual compensation review meeting, the Chairman & CEO presents to our Compensation Committee his year-end total cash compensation recommendations for the other Named Executive Officers, and such recommendations include any base salary changes made by the Chairman & CEO during the year. Our Compensation Committee then reviews and approves such recommendations. (For example, our Compensation Committee established cash compensation pay ranges in November 2015 for fiscal year 2016. The Chairman & CEO has delegated authority to modify base salaries throughout 2016 within these ranges, if necessary. In November 2016, the Compensation Committee will review the Chairman & CEO’s total cash compensation recommendations for the other Named Executive Officers, and such recommendations will include these base salary changes.) During 2015, our Chairman & CEO did not make any increases to the other Named Executive Officer base salaries using this delegated authority.
Risk Management Related to Compensation. When reviewing and implementing the executive compensation program, the Company and our Compensation Committee formulate and adhere to certain practices that ensure consistent leadership and decision-making among our executive officers. The Compensation Committee assesses whether our program and practices are reasonably likely to have a material adverse effect on the Company and concluded they do not. The Compensation Committee does not believe our executive compensation program and practices are designed to promote or encourage unreasonable risk for the following reasons:
•Base salaries are fixed amounts determined on an annual basis and are established after considering a broad range of factors including competitive pay sources (rather than specific performance measures) are considered..
•Annual cash bonuses representincentive compensation represents a significant portion of our executive officers’ total cash compensation and areis awarded under our discretionary annual cash bonus program.Annual Incentive Program. The discretionary nature of the program allows for determinations of executive officer annual cash bonusesthe Compensation Committee to be based on several factors, as discussed under exercise some discretion through an individual performance metric,Annual Cash Bonus in addition to the Elements of Executive Compensation section of this Proxy Statement. While annual cash bonuses generally reward short-termfinancial performance and achievements, this compensation also contributes to our long-term successmetrics. Annual incentive targets are thoroughly vetted by motivating executive officers to better our overall results and business.
We generally consider and apply the same factors for our annual cash bonus program for the Named Executive Officers, other executive and non-executive officers, management and non-executive employees.the Compensation Committee, and goals are set taking into consideration the probability of achievement. Payouts are capped at 200%, are formulaic based, and are subject to recoupment.
•Long-term incentive compensation is important to further aligning our executive officers’ interests with those of our stockholders, and it balances short- and long-term decision-making by our executives. Most of ourLong-term incentive compensation is split between time-based restricted stock awardsand performance stock. The time-based restricted stock vests over three years. Performance stock achievement levels are capped at 200%, with a total shareholder return modifier if achievement is over 150%, have service-based or long-term vesting schedules, and the financial opportunity is realized through appreciation of our stock price over several years.
Thea three-year cliff vesting, and exercisingare subject to recoupment.
•The vesting of stock awards granted under our Equity Plan may be prohibited if an executive officer is terminated for cause or under other circumstances as provided in the Equity Plan.
•Our executives have significant stock ownership in the Company.Company, subject to stock ownership guidelines and a hedging and pledging policy. With respect to their stock ownership, our executive officers could lose significant value if our stock price was exposed to unreasonable risk.
Annual cash bonuses and long-term incentive compensation awards are not assured each year.
When structuring overall compensation practices for our non-executive employees, we consider whether our practices incentivize unreasonable risk-taking behavior and could consequently impact our risk management and oversight. We also evaluate the mix of pay and the elements of our executive compensation programprograms as they apply to employees generally. Our non-executive employee compensation practices are reviewed in the context of current and significant risks to determine if the practices encourage or induce employees to take unreasonable risks, and we
also take into account our other policies and procedures that operate to monitor and deter unreasonable risk (such as disciplinary or record-keeping policies). Management also notifies our BoardCompensation Committee of significant and across-the-board modifications to employee compensation practices. We concluded that our non-executive employee compensation practices do not encourage risks that are reasonably likely to have a material adverse effect on us.
Other Executive Compensation Policies and Considerations.
Stock Grant Practices.Hedging and Pledging Policy. Under our Equity Plan, the Compensation Committee may grant stock options, SARs, restricted stock, restricted stock units (RSUs) and performance stock to our executive officers and non-employee directors. The Equity Plan does not require us to grant equity awards on an annual or otherwise regular basis. In past years, our Compensation Committee considered the granting of equity awards to executive officers at its regular year-end meeting, but in 2014 began having a regular meeting in the first quarter of the year to consider the granting of performance stock to executive officers, the timing of which allows for the setting of appropriate performance goals. The grant date is generally the same date as the meeting at which the Compensation Committee decides to grant equity awards. The Compensation Committee also considers the timing of such decisions to ensure that awards occur when neither the recipient nor the Compensation Committee possess material nonpublic information.
The restricted stock and performance stock granted by the Compensation Committee isNamed Executive Officers are subject to a service-based vesting schedule. All currently outstanding awards of restricted stockpolicy on hedging and performance stock vest annually in five equal installments beginning on either (i) the third anniversarypledging of the grant date (2009 and 2010 grants)Company’s common stock. The policy prohibits purchasing any financial instrument or (ii)entering into any transaction that is designed to hedge or offset any decrease in the first anniversarymarket value of the grant date (2011-2016 grants). NoneCompany’s common stock, including puts, calls, prepaid variable forward contracts, equity swaps, collars, exchange funds (excluding broad-based index funds), and other financial instruments that are designed to or have the effect of our restrictedhedging or performance stock awards giveoffsetting any decrease in the recipient any voting or dividend rights until such stock vests, nor do they have any post-vesting sales restrictions.
Please refer tomarket value of the preceding Long-Term Incentive Compensation section for additional details regarding equity compensation determinations.Company’s common stock. The Summary Compensation Table and Grants of Plan-Based Awards for 2015 tablepolicy also provide information regarding equity compensation awarded to ourprovides that Named Executive Officers.Officers shall not pledge, hypothecate, or otherwise encumber shares of the Company’s common stock as collateral for indebtedness including, but not limited to, holding shares in a margin account or any other account that could cause the Company’s common stock to be subject to a margin call or otherwise be available as collateral for a margin loan. Each Named Executive Officer certified to compliance with this policy in their annual questionnaire completed at the end of 2020.
Executive Stock Ownership. Although we do not have formalThe Company’s executive officers and Senior Vice Presidents are subject to stock ownership guidelines. Stock ownership includes: (i) common stock owned (directly or indirectly), (ii) time-vested restricted stock, (iii) performance stock already earned and subject to continued time vesting and (iv) benefit plan shares. Ownership guidelines vary based on position and require the executive to own stock with a market value equal to or requirements for ourin excess of a specified multiple of the officer’s base salary. During 2020, the executive ownership guidelines were as follows: Chief Executive Officer–6.0 times, Chief Operating Officer–3.5 times, Executive Vice President–2.5 times and Senior Vice President–1.5 times. Any officer not meeting the ownership guidelines will be required to retain 75% of after-tax shares earned from long-term incentives until the ownership guideline is achieved. All of the Company’s officers and members of senior management covered by these guidelines had met their ownership requirement, other than Mr. Mahon who joined the Company in June 2020. In early 2021, the Compensation Committee approved adjustments to the ownership guidelines to further the alignment of executive and stockholder interests as follows: Chief Executive Officer–7.0 times, Executive Vice President–3.5 times and Senior Vice President–2.5 times.
Recoupment Policy. AIP payouts and performance-based restricted stock awards to the executive officers our executive officers aspaid within the twelve months following the year of a group beneficially own approximately 30%material accounting restatement may be recouped if the inaccurate financial information was used to determine the AIP or performance-based restricted stock payouts. Determination to recoup any awards will be at the discretion of the outstanding sharesBoard of our common stock. As discussed in this Proxy Statement, our Equity Plan permits usDirectors of the Company and may apply to grant nonqualified stock options, SARs, restricted stock, RSUs and performance stock tocurrent or former Company executive officers. Our executive officers may also increase their stock ownership by electing to participateThe Company has not had any accounting restatements since becoming a publicly-traded company in our Employee Stock Purchase Plan, as discussed under Benefits. The maximum annual contribution level for all employees is $20,000. The individual stock ownership of our Named Executive Officers is provided in the Beneficial Ownership table.1986.
Tax Deductibility of Executive Compensation; Accounting Considerations. The Compensation Committee reviews estimated tax and accounting (proforma expense) projections and implications and how these factors impact the material elements of our executive compensation program. Generally, executive compensation is 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.
Effective January 1, 2018, under the Tax Cuts and Jobs Act of 2017, (i) the performance-based exception to Section 162(m) is eliminated and (ii) the definition of covered employee is expanded to include the Internal Revenue Code prevents us from taking a tax deduction,CFO and certain former executive officers, resulting in any one taxable year, for non-performance-based compensationpay in excess of $1 million paidin 2018 or later generally not being deductible for the Company, subject to the CEOtransition rule for plans and the three next highest compensated executive officers (other than the CFO). We collectively refer to these executives as the “covered employees.” Certain compensation of the covered employees 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 definedagreements in Section 162(m).place on November 2, 2017. The Compensation Committee carefully considers and monitors the effect of Section 162(m) on the elements of our executive compensation program and will strive to structure executive compensation to preserve its tax deductibility under Section 162(m) while maintainingwithout sacrificing 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. Gary L.Because of the importance of linking pay and performance, the Compensation Committee expects to continue to impose performance conditions on its annual and long-term incentive compensation elements.
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 U.S. Securities and Exchange Commission, 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 Annual Report on Form 10-K for 2020 of Werner Enterprises, Inc. (the “Company”) and Derek Leathers had $259,012this Proxy Statement for the Annual Meeting of Stockholders to be held May 11, 2021, the Compensation Committee has reviewed and $402,064, respectively,discussed with management the foregoing Compensation Discussion and Analysis section (required by Item 402(b) of compensation paidRegulation S-K of the U.S. Securities and Exchange Commission) of this Proxy Statement.
Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in 2015 that was not deductible under Section 162(m).this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for 2020.
Diane K. Duren, Chair
Patrick J. Jung
Kenneth M. Bird, Ed.D.
Jack A. Holmes
Carmen A. Tapio
EMPLOYMENT ARRANGEMENTS
Each of our Named Executive Officers and other executive officers has been an employee of the Company for at least ten years, with the exception of Mr. Mullen, who joined the Company in 2006.years. None of our Named 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 Officers for 2015who were serving as executive officers at the end of 2020 has a severance agreement or severance benefit arrangement with us, except for Gregory L. Werner. Gary L. Werner was awarded a special retirement cash award in 2016. Please refer to the descriptions on the following page under Gregory L. Werner Severance Agreement and Gary L. Werner Retirement.us.
Change in Control. NoneDuring 2020, none of our Named Executive Officers hashad a change in control agreement with us, and we dodid not currently provide for incremental compensation or special treatment for incentive compensation related to a change in control as of December 31, 2020 except under the stockholder-approved Equity Plan, as described below. In February 2021, the Board adopted a Change in Control Severance Plan (the “CIC Plan”) that covers the Named Executive Officers. The CIC Plan only covers qualifying terminations in connection with a change in control (i.e., double trigger). The protection period for the CIC Plan is for 24 months beginning on the date of the change in control. The CIC Plan provides for cash severance payments ranging from 1.5 to 2.0 times annual base salary plus target AIP bonus and provides for limited continuation of some benefits. The definitions of “change in control”, “good reason” and “cause” are similar to the definitions of these terms in the Equity Plan.
Potential Benefits Payable Under the Equity Plan. Our Equity Plan permits the vesting of outstanding equity awards upon certain termination or resignation actions following a change in control. The Equity Plan provides that if a Named Executive Officer is terminated other than for “cause” or voluntarily resigns for “good reason” within the period beginning upon a change in control and ending on the second anniversary of the change in control, then (i) all outstanding stock options and SARs will become fully exercisable and (ii) all conditions, performance objectives and restrictions (other than those imposed by law) on outstanding restricted stock, RSUs and performance stock will be deemed satisfied as of the executive officer’s employment termination date. “Cause,” “good reason” and “change in control” are defined in the current stockholder-approved version of the Equity Plan. Our Equity Plan also provides that upon death of a participant, (i) all service period restrictions applicable to restricted stock and RSUs will lapse and such shares shall become fully vested and (ii) for any unearned performance shares, the performance objectives will be evaluated for actual performance to date and the resulting shares shall become fully vested.
The following Potential Benefits Payable Under the Equity Plan table shows the potential benefits payable to each Named 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 equity awards that would fully vest upon either event, assuming (i) such event occurred on December 31, 20152020 (the last day of our fiscal year), (ii) the 2020 performance stock was deemed to have been earned at the target level (in the event of either a termination or resignation following a change in control) or unearned (in the event of death), (iii) the 2019 performance stock was deemed to have been earned at 87.8% because the Company has achieved that level of performance for the two-year performance period and the absolute total shareholder return cap does not apply to awards where the level of performance is less than 150% and (iv) a stock price of $23.39$39.22 per share, which was the NASDAQ closing market price of our common stock on the same date. These amounts are the same for both events and are reflected in the “Potential Benefit” column.
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| POTENTIAL BENEFITS PAYABLE UNDER THE EQUITY PLAN |
| Name | Number of Unvested Shares Vesting | Potential Benefit ($)(1)(2) |
| Derek J. Leathers | | 195,582 | | (Restricted/Performance Stock) | | 7,670,726 | | |
| H. Marty Nordlund | | 42,453 | | (Restricted/Performance Stock) | | 1,665,007 | | |
| John J. Steele | | 27,139 | | (Restricted/Performance Stock) | | 1,064,392 | | |
| Jim S. Schelble | | 27,139 | | (Restricted/Performance Stock) | | 1,064,392 | | |
| James L. Johnson | | 27,139 | | (Restricted/Performance Stock) | | 1,064,392 | | |
|
| (1) | The potential benefit was calculated using the $39.22 closing market price on December 31, 2020. The potential benefit at December 31, 2020 includes $3,119,873 for Mr. Leathers, $754,514 for Mr. Nordlund, and $434,597 each for Messrs. Steele, Schelble and Johnson, for restricted and performance stock which became vested in February 2021. |
| (2) | In the event of a death, the potential benefit listed above would exclude $1,458,513 for Mr. Leathers, $234,418 for Mr. Nordlund, and $208,376 each for Messrs. Steele, Schelble and Johnson, for the 2020 performance stock for which the threshold level of performance had not yet been achieved as of December 31, 2020. |
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| | | | | | | | | | |
| POTENTIAL BENEFITS PAYABLE UNDER THE EQUITY PLAN |
| Name | Number of Unvested Shares Vesting | Potential Benefit ($)(1) |
| Clarence L. Werner | | — |
| (Restricted Stock) | | | — |
| |
| Gary L. Werner | | 131,500 |
| (Restricted Stock) | | | 3,075,785 |
| (2) |
| Derek J. Leathers | | 117,500 |
| (Restricted Stock) | | | 2,748,325 |
| |
| John J. Steele | | 25,100 |
| (Restricted Stock) | | | 587,089 |
| |
| James A. Mullen | | 27,700 |
| (Restricted Stock) | | | 647,903 |
| |
| |
| (1) | Shares of restricted stock do not have an exercise price, thus the potential benefit was calculated using only the $23.39 closing market price on December 31, 2015. The potential benefit at December 31, 2015 includes $470,139 for Gary L. Werner, $432,715 for Mr. Leathers and $86,543 each for Mr. Steele and Mr. Mullen, for performance stock which became vested on February 10, 2016. |
| (2) | The potential benefit at December 31, 2015 for Gary L. Werner includes $470,139 for performance stock which became vested on February 10, 2016; the remainder was forfeited upon his retirement on February 12, 2016 (see "Gary L. Werner Retirement" below). |
Gregory L. Werner Severance Agreement. Effective August 27, 2015, Gregory L. Werner resigned as our Chief Executive Officer. In connection with his resignation, Mr. Werner and the Company entered into a Severance Agreement and Release (the "Severance Agreement") dated August 27, 2015, the terms of which were approved by the Compensation Committee. Under the Severance Agreement and subject to the terms and conditions set forth therein, the Company and Mr. Werner agreed to the following severance benefits: (i) a cash severance benefit of $4.0 million, payable in ten (10) semi-annual installments of $400,000 each on January 1 and July 1 of each year, with the first payment to be made on January 1, 2016 and the last payment to be made on July 1, 2020, and (ii) payment of Mr. Werner's COBRA premiums for continuation of health benefits for a period of 18 months. In accordance with the terms of Mr. Werner's previously granted equity compensation award agreements and the Company's Amended and Restated Equity Plan, all unvested equity awards were forfeited upon the effective date of his resignation.
Gary L. Werner Retirement. Effective February 12, 2016, Gary L. Werner retired as our Vice Chairman. In connection with his retirement and in recognition of his more than 40 years of service, the Compensation Committee awarded Mr. Werner a special retirement cash award of $1.4 million which was paid on February 12, 2016. In accordance with the terms of Mr. Werner's previously granted equity compensation award agreements and the Company's Amended and Restated Equity Plan, all unvested equity awards were forfeited upon the effective date of his retirement.
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 U.S. Securities and Exchange Commission, 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 Annual Report on Form 10-K for 2015 of Werner Enterprises, Inc. (the “Company”) and this Proxy Statement for the Annual Meeting of Stockholders to be held May 10, 2016, the Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section (required by Item 402(b) of Regulation S-K of the U.S. Securities and Exchange Commission) of this Proxy Statement.
Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for 2015.
Patrick J. Jung, Chair
Kenneth M. Bird, Ed.D.
Dwaine J. Peetz, Jr., M.D.
SUMMARY COMPENSATION TABLE
The Summary Compensation Tablefollowing table presents all elements ofinformation about compensation forearned during 2020, 2019 and 2018 by our Named Executive Officers for 2013, 2014 and 2015 as follows:
Salary: Refers to Base Salary.
Bonus: Refers to Annual Cash Bonus.
Stock Awards: Refers to the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (Compensation – Stock Compensation). Accordingly, the table includes awards that have not yet vested, awards that were granted but later forfeited (such as upon an executive's separation), and performance-based awards that may or may not be achieved at the level of performance indicated.
All Other Compensation: Represents the aggregate amount of:
(i)Perquisites and other personal benefits having an aggregate value in excess of $10,000;
(ii)Tax reimbursements;
(iii)Matching Company contributions to the 401(k) Plan;
(iv)Matching Company contributions under the Employee Stock Purchase Plan; and
(v)Severance payments and accruals.
Officers. You should read the Summary Compensation Table in conjunction with the Compensation Discussion and Analysis section and the tables and narrative descriptions that follow. Executive deferrals to our 401(k) Plan and nonqualified deferred compensation plan are included in the appropriate column (typically the “Salary" and/or "Bonus” columns) for which the compensation was earned.
The “Non-Equity Incentive Plan Compensation” and “Option Awards” columnsColumns required by SEC regulations are omitted from the Summary Compensation Table because we did not make any of these awards in 2013, 2014 or 2015. We have also removed the “Nonqualified Deferred Compensation Earnings”where such column from the Summary Compensation Table because noneis inapplicable for all of the earnings on the nonqualified deferred compensation balances of our Named Executive Officers were above-market or preferential earnings.Officers.
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| SUMMARY COMPENSATION TABLE |
Name and Principal Position | Year | Salary (1) | Bonus ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) |
Clarence L. Werner –
Former Executive Chairman(5) | 2020 | 95,486 | — | | 1,125,000 | | 197,110 | | 53,544 | 1,471,140 |
| 2019 | 362,500 | — | | 1,125,000 | | 249,763 | | 50,129 | 1,787,392 |
| 2018 | 333,125 | — | | 1,125,000 | | 585,438 | | 58,006 | 2,101,569 |
Derek J. Leathers –
President & Chief Executive Officer | 2020 | 773,077 | — | | 2,800,000 | | 1,193,600 | | 43,352 | 4,810,029 |
| 2019 | 725,000 | — | | 2,250,000 | | 499,525 | | 47,488 | 3,522,013 |
| 2018 | 722,116 | — | | 2,250,000 | | 1,170,875 | | 40,459 | 4,183,450 |
H. Marty Nordlund –
SEVP & Chief Operating Officer | 2020 | 376,442 | — | | 450,000 | | 364,350 | | 44,487 | 1,235,279 |
| 2019 | 375,000 | — | | 550,000 | | 163,538 | | 45,990 | 1,134,528 |
| 2018 | 375,000 | — | | 550,000 | | 415,013 | | 43,004 | 1,383,017 |
John J. Steele –
EVP, Treasurer & Chief Financial Officer | 2020 | 311,596 | — | | 400,000 | | 270,270 | | 10,135 | 992,001 |
| 2019 | 285,000 | — | | 300,000 | | 117,819 | | 13,177 | 715,996 |
| 2018 | 282,692 | — | | 300,000 | | 270,351 | | 9,255 | 862,298 |
Jim S. Schelble –
EVP & Chief Administrative Officer | 2020 | 345,192 | — | | 400,000 | | 317,310 | | 37,703 | 1,100,205 |
| 2019 | 310,000 | — | | 300,000 | | 123,132 | | 39,066 | 772,198 |
| 2018 | 310,000 | — | | 300,000 | | 300,948 | | 37,553 | 948,501 |
James L. Johnson – EVP, Chief Accounting Officer & Corporate Secretary(6) | 2020 | 355,231 | — | | 400,000 | | 317,736 | | 10,946 | 1,083,913 |
| | | | | | |
| | | | | | |
| | | | | | | | |
| (1) | Base salary for 2020 reflects 27 biweekly payments instead of 26, as well as voluntary base salary reductions by the Named Executive Officers in light of the unknown impact from the COVID-19 pandemic. In April 2020, Mr. Werner reduced his annual base salary for the remainder of 2020 by $250,000. Mr. Leathers reduced his base salary for second quarter 2020 only by 25%. Messrs. Nordlund, Steele, Schelble, and Johnson reduced their respective base salaries for second quarter 2020 only by 15% each. |
| (2) | The stock awards reported in this column and the associated valuation assumptions are also disclosed in the Grants of Plan-Based Awards for 2020 table. The stock awarded in 2020 includes both restricted stock and performance stock. Reported amounts for restricted stock represent the grant date fair value and for performance stock represent the grant date fair value based on the probable outcome of the performance conditions (target level). The target value of the 2020 performance awards was as follows: Mr. Werner $562,500, Mr. Leathers $1,400,000, Mr. Nordlund $225,000 and Messrs. Steele, Schelble and Johnson $200,000. If the highest level of performance is achieved, the value of the 2020 awards would be as follows: Mr. Werner $1,125,000, Mr. Leathers $2,800,000, Mr. Nordlund $450,000 and Messrs. Steele, Schelble and Johnson $400,000. |
| (3) | Cash awards reported in this column represent the actual amounts earned under the Company’s performance-based AIP for fiscal years 2020, 2019 and 2018 based upon achievement of pre-defined performance metrics, and were paid in February following the end of each fiscal year. Such awards are also disclosed in the Grants of Plan-Based Awards for 2020 table. |
| (4) | Refer to the All Other Compensation for 2020 table for a more detailed explanation of the compensation reported in this column.
|
| (5) | Mr. Werner retired as Executive Chairman of the Company on May 31, 2020. He continues to serve as Chairman of the Board through the end of his current term, which will end in May 2021 following the 2021 Annual Meeting. His salary represents all salary paid in 2020. Mr. Werner’s 2020 AIP cash award payout was prorated for his retirement date. Upon his retirement, Mr. Werner forfeited 100% of his 2020 stock awards, 100% of his 2019 and 2018 performance stock awards, 75% of his 2019 restricted stock award, and 50% of his 2018 restricted stock award, representing the unvested portions of such awards. |
| (6) | Mr. Johnson was not a Named Executive Officer in 2019 or 2018. |
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| SUMMARY COMPENSATION TABLE |
Name and Principal Position | Year | Salary | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation($)(3) | Total ($) |
Clarence L. Werner – Chairman & CEO(4) | 2015 | | 10,000 | | | — |
| | | — |
| | | 2,250 | | 12,250 |
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | | |
|
Gary L. Werner – Vice Chairman(5) | 2015 | | 505,000 | | | — |
| | | 1,597,745 |
| (6) | | 39,194 | | 2,141,939 |
| 2014 | | 505,000 | | | 300,000 |
| | | 1,127,583 |
| (6) | | 37,392 | | 1,969,975 |
| 2013 | | 505,000 | | | 300,000 |
| | | — |
| | | 36,176 | | 841,176 |
Derek J. Leathers – President & COO | 2015 | | 519,000 | | | 320,000 |
| | | 1,367,440 |
| | | 32,351 | | 2,238,791 |
| 2014 | | 519,000 | | | 320,000 |
| | | 1,127,583 |
| | | 39,543 | | 2,006,126 |
| 2013 | | 519,000 | | | 320,000 |
| | | — |
| | | 41,476 | | 880,476 |
John J. Steele – Executive Vice President, Treasurer & CFO | 2015 | | 235,000 | | | 115,000 |
| | | 273,488 |
| | | 19,266 | | 642,754 |
| 2014 | | 235,000 | | | 115,000 |
| | | 225,517 |
| | | 20,396 | | 595,913 |
| 2013 | | 235,000 | | | 115,000 |
| �� | | — |
| | | 20,997 | | 370,997 |
James A. Mullen –
Executive Vice President and General Counsel | 2015 | | 362,000 | | | 120,000 |
| | | 273,488 |
| | | 16,332 | | 771,820 |
| 2014 | | 350,000 | | | 130,000 |
| | | 225,517 |
| | | 16,521 | | 722,038 |
| 2013 | | 350,000 | | | 110,000 |
| | | — |
| | | 18,344 | | 478,344 |
Gregory L. Werner – Former Vice Chairman & Former CEO(7) | 2015 | | 484,615 | | | — |
| | | 1,367,440 |
| (8) | | 4,048,170 | | 5,900,225 |
| 2014 | | 720,000 | | | 350,000 |
| | | 1,127,583 |
| (8) | | 40,043 | | 2,237,626 |
| 2013 | | 720,000 | | | 350,000 |
| | | — |
| | | 35,631 | | 1,105,631 |
| | | | | | | | | | | | | | | | |
| (1) | Annual cash bonus awards are made under the annual cash bonus program. Bonuses reported in this column were awarded by the Compensation Committee on November 30, 2015; December 1, 2014; and December 2, 2013, respectively. |
| (2) | The stock awards reported in this column and the associated valuation assumptions are also disclosed in the Grants of Plan-Based Awards for 2015 table. The Outstanding Equity Awards at December 31, 2015 tables include the stock awards reported in this column. The stock awarded in 2015 was subject to performance conditions and represents 100% of the target award, although the actual level attained was above the target level. If the highest level of performance had been achieved, the value of the 2015 stock awards would have been: Gary L. Werner - $2,029,568; Gregory L. Werner - $1,799,263; Mr. Leathers - $1,799,263; Mr. Steele - $359,853; and Mr. Mullen - $359,853. The stock awarded in 2014 was subject to performance conditions and represents 100% of the target award, which was the level that was attained. If the highest level of performance had been achieved, the value of the 2014 stock awards would have been: Gary L. Werner - $1,503,444; Gregory L. Werner - $1,503,444; Mr. Leathers - $1,503,444; Mr. Steele - $300,689; and Mr. Mullen - $300,689. |
| (3) | Refer to the All Other Compensation for 2015 table for a more detailed explanation of the compensation reported in this column. |
| (4) | Clarence L. Werner was elected as our Chairman on August 11, 2015, and as our Chairman and Chief Executive Officer on August 27, 2015. He previously served as our Chairman Emeritus until August 11, 2015, but was not a Named Executive Officer in 2014 or 2013. |
| (5) | Gary L. Werner retired from the Company and from the Board of Directors effective February 12, 2016. |
| (6) | Gary L. Werner forfeited 80% of his 2015 stock award and 60% of his 2014 stock award upon his retirement on February 12, 2016, representing the unvested portions of such awards. |
| (7) | Gregory L. Werner relinquished his position of Vice Chairman on August 11, 2015 and resigned as Chief Executive Officer effective August 27, 2015. He continues to serve on the Board of Directors. His salary represents the amount paid from January 1, 2015 through August 27, 2015. |
| (8) | Gregory L. Werner forfeited 100% of his 2015 stock award and 80% of his 2014 stock award upon his resignation on August 27, 2015, representing the unvested portions of such awards. |
ALL OTHER COMPENSATION FOR 20152020
The table below shows the components of “all other compensation” provided in 20152020 to the Named Executive Officers, as reported in the preceding Summary Compensation Table.
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| ALL OTHER COMPENSATION FOR 2020 |
| Name | Perquisites & Other Personal Benefits ($) | Tax Reimbursements ($) | Company Contributions to 401(k) Plan ($) | Company Contributions to Employee Stock Purchase Plan ($) | Total ($) |
Clarence L. Werner(1) | | 30,175 | | | 23,369 | | | — | | | | — | | | | 53,544 | |
Derek J. Leathers(2) | | 22,232 | | | 12,874 | | | 5,000 | | | 3,246 | | | 43,352 | |
H. Marty Nordlund(3) | | 24,257 | | | 11,984 | | | | 5,000 | | | 3,246 | | | 44,487 | |
John J. Steele(4) | | 2,700 | | | — | | | | 5,000 | | | 2,435 | | | 10,135 | |
Jim S. Schelble(3) | | 21,262 | | | 8,195 | | | | 5,000 | | | 3,246 | | | 37,703 | |
James L. Johnson(4) | | 2,700 | | | — | | | | 5,000 | | | 3,246 | | | 10,946 | |
|
| (1) | Perquisites and other personal benefits for Mr. Werner include $27,475 for use of one Company vehicle and personal medical care membership program. Tax reimbursements for Mr. Werner represent tax gross-ups for Company vehicle use. |
| (2) | Perquisites and other personal benefits for Mr. Leathers include use of one Company vehicle, Company-paid country club membership and personal medical care membership program. Tax reimbursements for Mr. Leathers represent tax gross-ups of (i) $12,363 for Company vehicle use and (ii) $511 for personal use of the corporate aircraft when his spouse accompanied him on a Company-related business trip. |
| (3) | Perquisites and other personal benefits for Messrs. Nordlund and Schelble include use of one Company vehicle, Company-paid country club membership and personal medical care membership program. Tax reimbursements for Messrs. Nordlund and Schelble represent tax gross-ups for Company vehicle use. |
| (4) | Perquisites and other personal benefits for Messrs. Steele and Johnson include personal medical care membership program. |
|
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| ALL OTHER COMPENSATION FOR 2015 |
| Name |
Perquisites & Other Personal Benefits ($) | Tax Reimbursements ($)(1) | Company Contributions to 401(k) Plan ($) | Company Contributions to Employee Stock Purchase Plan ($) | Severance Payments/ Accruals ($) | Total ($) |
| Clarence L. Werner | | 2,250 | (2) | | — |
| | | — |
| | | — |
| | | — |
| | | 2,250 | |
| Gary L. Werner | | 23,529 | (3) | | 15,665 |
| | | — |
| | | — |
| | | — |
| | | 39,194 | |
| Derek J. Leathers | | 18,650 | (4) | | 8,793 |
| | | 1,661 |
| | | 3,247 |
| | | — |
| | | 32,351 | |
| John J. Steele | | 9,972 | (5) | | 5,197 |
| | | 1,661 |
| | | 2,436 |
| | | — |
| | | 19,266 | |
| James A. Mullen | | 13,050 | (6) | | — |
| | | 1,661 |
| | | 1,621 |
| | | — |
| | | 16,332 | |
| Gregory L. Werner | | 16,748 | (7) | | 10,480 |
| | | — |
| | | — |
| | | 4,020,942 |
| (8) | | 4,048,170 | |
| |
| (1) | The amounts reported in this column are the tax gross-ups for Company vehicle use. |
| (2) | Perquisites and personal benefits include $2,250 for personal medical care membership program. |
| (3) | Perquisites and personal benefits include $17,107 for use of one Company vehicle; $4,172 for legal and income tax preparation services; and $2,250 for personal medical care membership program. |
| (4) | Perquisites and personal benefits include $12,649 for use of one Company vehicle; $3,751 for Company-paid country club membership; and $2,250 for personal medical care membership program. |
| (5) | Perquisites and personal benefits include $7,722 for use of one Company vehicle and $2,250 for personal medical care membership program. |
| (6) | Perquisites and personal benefits include $10,800 for Company car allowance and $2,250 for personal medical care membership program. |
| (7) | Perquisites and personal benefits include $11,444 for use of one Company vehicle and $5,304 for legal and income tax preparation services. |
| (8) | Pursuant to his Severance Agreement and Release, the amount reported in this column includes (i) a cash severance benefit of $4,000,000, payable in ten semi-annual installments of $400,000 each on January 1 and July 1 of each year, with the first payment on January 1, 2016 and the last payment on July 1, 2020, and (ii) payment of COBRA premiums for continuation of health benefits for a period of 18 months totaling an estimated $20,942. |
Our contributions on behalf of the Named Executive Officers to the 401(k) Planplan and Employee Stock Purchase Plan, as well as the years-of-service awards,employee stock purchase plan are made on the same terms as provided to all of our eligible employees in the United States. In addition to the above-mentioned compensation, the Named Executive Officers may also participatedparticipate in voluntary health and welfare benefit programs that are available for all eligible U.S. employees.
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GRANTS OF PLAN-BASED AWARDS FOR 20152020
The following Grants of Plan-Based Awards for 2015 table sets forth information regarding performance stock, restricted stockEquity and stock optionnon-equity incentive plan awards granted to Named Executive Officers during 2020 included the following:
•Non-equity incentive plan: cash annual incentive compensation awarded under the performance-based AIP, with performance metrics for operating income, revenues, operating ratio and individual performance for fiscal 2020. The actual AIP payouts earned for 2020 are disclosed in the Summary Compensation Table and were paid in February 2021.
•Equity incentive plan: awards of performance stock under our Equity Plan, with an earnings per diluted share performance metric for the two-year period from January 1, 2020 to December 31, 2021. No shares are earned for performance below the threshold level.
•Stock awards: restricted stock awards subject to time-based vesting.
The following table sets forth information regarding equity and non-equity incentive plan awards granted to Named Executive Officers during 2015.2020. Columns required by the SEC regulations are omitted where there is no amount to report or such column is inapplicablenot applicable for all of the Named Executive Officers. The stock awards reported in the following table are also disclosed in the Summary Compensation Table and Outstanding Equity Awards at December 31, 20152020 tables and therefore do not constitute additional compensation not otherwise reported in this Proxy Statement.
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| GRANTS OF PLAN-BASED AWARDS FOR 2020 |
| | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | All Other Stock Awards: Number of Shares of Stock (#) | Grant Date Fair Value of Stock Awards ($)(1) |
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) |
Clarence L. Werner(2) | | 90,625 | 362,500 | 725,000 | | | | | | |
| 2/13/20 | | | | | 7,471 | 14,942 | 29,884 | | 562,500 |
| 2/13/20 | | | | | | | | 14,804 | 562,500 |
| Derek J. Leathers | | 200,000 | 800,000 | 1,600,000 | | | | | | |
| 2/13/20 | | | | | 18,594 | 37,188 | 74,376 | | 1,400,000 |
| 2/13/20 | | | | | | | | 36,844 | 1,400,000 |
| H. Marty Nordlund | | 65,625 | 262,500 | 525,000 | | | | | | |
| 2/13/20 | | | | | 2,989 | 5,977 | 11,954 | | 225,000 |
| 2/13/20 | | | | | | | | 5,921 | 225,000 |
| John J. Steele | | 47,250 | 189,000 | 378,000 | | | | | | |
| 2/13/20 | | | | | 2,657 | 5,313 | 10,626 | | 200,000 |
| 2/13/20 | | | | | | | | 5,263 | 200,000 |
| Jim S. Schelble | | 52,500 | 210,000 | 420,000 | | | | | | |
| 2/13/20 | | | | | 2,657 | 5,313 | 10,626 | | 200,000 |
| 2/13/20 | | | | | | | | 5,263 | 200,000 |
| James L. Johnson | | 54,000 | 216,000 | 432,000 | | | | | | |
| 2/13/20 | | | | | 2,657 | 5,313 | 10,626 | | 200,000 |
| 2/13/20 | | | | | | | | 5,263 | 200,000 |
| |
| (1) | The grant date fair value per share of the performance stock ($37.65) and the restricted stock ($38.00) 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 awards are not entitled to receive dividends prior to vesting. The present value of estimated future dividends was calculated based on a $0.09 quarterly dividend amount per share and a risk-free interest rate of 1.6%. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 8 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2020. |
| (2) | Mr. Werner’s 2020 AIP cash award payout was prorated for his May 31, 2020 retirement date. He forfeited 100% of his 2020 stock awards upon his retirement. |
|
| | | | | | | | | | | | | | | | | | |
| GRANTS OF PLAN-BASED AWARDS FOR 2015 |
| | | Estimated future payouts under equity incentive plan awards(1) | Grant Date Fair Value of Stock and Option Awards ($)(2) |
| Name | Grant Date | Threshold (#) | Target (#) | Maximum (#) |
Clarence L. Werner(3) | | | — |
| | | — |
| | | — |
| | | — |
| |
| Gary L. Werner | 02/10/2015 | | 40,500 |
| | | 55,500 |
| | | 70,500 |
| | | 1,597,745 |
| |
| Derek J. Leathers | 02/10/2015 | | 32,500 |
| | | 47,500 |
| | | 62,500 |
| | | 1,367,440 |
| |
| John J. Steele | 02/10/2015 | | 6,500 |
| | | 9,500 |
| | | 12,500 |
| | | 273,488 |
| |
| James A. Mullen | 02/10/2015 | | 6,500 |
| | | 9,500 |
| | | 12,500 |
| | | 273,488 |
| |
| Gregory L. Werner | 02/10/2015 | | 32,500 |
| | | 47,500 |
| | | 62,500 |
| | | 1,367,440 |
| |
| | |
| (1) | The earnings per diluted share performance objectives were as follows: Threshold - $1.10, Target - $1.55 and Maximum - $2.00. There were also two additional levels of attainment possible between the Threshold and the Target and between the Target and the Maximum. Earnings per diluted share below $1.10 would have resulted in the earning of zero shares. The grant does not allow for proration of shares between attainment levels. |
| (2) | The fair value of the performance 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 1.6% risk-free interest rate. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 7 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2015. |
| (3) | Clarence L. Werner did not receive any plan-based awards in 2015. |
The performance stock is earned based upon the level of attainment by the Company of specified earnings per diluted share performance objectives for the fiscal year ended December 31, 2015, as established by the Compensation Committee. The number of shares that could ultimately be earned ranged from 0 percent to 132 percent of the target number stated in each executive's award agreement based on the level of attainment of the performance objectives. On February 10, 2016, the Compensation Committee certified that the Company's earnings per diluted share for 2015 of $1.71 resulted in the performance stock being earned at a level above the target level. The performance stock earned will vest, subject to continued employment, in five annual increments of 20% each beginning February 10, 2016 (one year after the grant date). The awards will become fully vested on February 10, 2020.
OUTSTANDING EQUITY AWARDS AT 20152020 YEAR-END
The tablestable that follow presentfollows presents information regarding all outstanding equity awards held by each of the Named Executive Officers as of December 31, 2015. The2020. There were no outstanding stock option, restrictedoptions held by the Named Executive Officers. Restricted stock and performance stock awards disclosed in these tables were granted under our long-term incentive program.are contingent upon the recipient’s continued employment with the Company through each vesting date. Awards reported in these tables with grant dates before 20132018 are not disclosed in the Summary Compensation Table and therefore constitute additional compensation not otherwise reported in this Proxy Statement; performance stock awards with grant dates in 2014 through 2015 are also disclosed in the Summary Compensation Table.Statement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2020 |
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
Clarence L. Werner(2) | | | — | | | | — | | | | — | | | | — | | |
| Derek J. Leathers | 2/8/17 | | 6,016 | | (3) | | 235,948 | | | | | | | | |
| 2/7/18 | | 14,952 | | (4) | | 586,417 | | | | | | | | |
| 2/7/18 | | 45,020 | | (5) | | 1,765,684 | | | | | | | | |
| 2/11/19 | | 25,530 | | (6) | | 1,001,287 | | | | | | | | |
| 2/11/19 | | | | | | | | 30,032 | | (7) | | 1,177,855 | | |
| 2/13/20 | | 36,844 | | (8) | | 1,445,022 | | | | | | | | |
| 2/13/20 | | | | | | | | 18,594 | | (9) | | 729,257 | | |
| H. Marty Nordlund | 2/8/17 | | 2,314 | | (3) | | 90,755 | | | | | | | | |
| 2/7/18 | | 3,655 | | (4) | | 143,349 | | | | | | | | |
| 2/7/18 | | 11,004 | | (5) | | 431,577 | | | | | | | | |
| 2/11/19 | | 6,241 | | (6) | | 244,772 | | | | | | | | |
| 2/11/19 | | | | | | | | 7,341 | | (7) | | 287,914 | | |
| 2/13/20 | | 5,921 | | (8) | | 232,222 | | | | | | | | |
| 2/13/20 | | | | | | | | 2,989 | | (9) | | 117,229 | | |
| John J. Steele | 2/8/17 | | 1,157 | | (3) | | 45,378 | | | | | | | | |
| 2/7/18 | | 1,994 | | (4) | | 78,205 | | | | | | | | |
| 2/7/18 | | 6,003 | | (5) | | 235,438 | | | | | | | | |
| 2/11/19 | | 3,405 | | (6) | | 133,544 | | | | | | | | |
| 2/11/19 | | | | | | | | 4,004 | | (7) | | 157,037 | | |
| 2/13/20 | | 5,263 | | (8) | | 206,415 | | | | | | | | |
| 2/13/20 | | | | | | | | 2,657 | | (9) | | 104,208 | | |
| Jim S. Schelble | 2/8/17 | | 1,157 | | (3) | | 45,378 | | | | | | | | |
| 2/7/18 | | 1,994 | | (4) | | 78,205 | | | | | | | | |
| 2/7/18 | | 6,003 | | (5) | | 235,438 | | | | | | | | |
| 2/11/19 | | 3,405 | | (6) | | 133,544 | | | | | | | | |
| 2/11/19 | | | | | | | | 4,004 | | (7) | | 157,037 | | |
| 2/13/20 | | 5,263 | | (8) | | 206,415 | | | | | | | | |
| 2/13/20 | | | | | | | | 2,657 | | (9) | | 104,208 | | |
| James L. Johnson | 2/8/17 | | 1,157 | | (3) | | 45,378 | | | | | | | | |
| 2/7/18 | | 1,994 | | (4) | | 78,205 | | | | | | | | |
| 2/7/18 | | 6,003 | | (5) | | 235,438 | | | | | | | | |
| 2/11/19 | | 3,405 | | (6) | | 133,544 | | | | | | | | |
| 2/11/19 | | | | | | | | 4,004 | | (7) | | 157,037 | | |
| 2/13/20 | | 5,263 | | (8) | | 206,415 | | | | | | | | |
| 2/13/20 | | | | | | | | 2,657 | | (9) | | 104,208 | | |
Stock option, restricted stock and performance stock awards are all contingent upon the recipient’s continued employment with the Company through each vesting date. If the recipient’s employment with us is terminated, each portion of an award for which the vesting date has not occurred will be forfeited pursuant to our Equity Plan and the recipient’s award agreement.
|
| | | | | | | | | | | | | |
| OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2015 |
| Option Awards |
| Name | Grant Date | Number of Securities Underlying Unexercised Options: (#) Exercisable | Number of Securities Underlying Unexercised Options: (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($/Sh)(1) | Option Expiration Date |
| Clarence L. Werner | | | — |
| | — | — | | — |
| | — |
| Gary L. Werner | | | — |
| | — | — | | — |
| | — |
| Derek J. Leathers | 11/29/2007 | | 25,000 |
| | — | — | | 17.18 |
| | 11/30/2017 |
| John J. Steele | | | — |
| | — | — | | — |
| | — |
| James A. Mullen | | | — |
| | — | — | | — |
| | — |
| Gregory L. Werner | | | — |
| | — | — | | — |
| | — |
| |
| (1) | Pursuant to our Equity Plan, the exercise price is equal to the closing market price on the date of grant. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| (1) | Market value is calculated by multiplying the number of shares of stock that have not vested by the closing market price of our common stock ($39.22 per share) on December 31, 2020 (the last trading day of our fiscal year). |
| (2) | Mr. Werner retired during 2020, and he had no outstanding awards at the end of 2020. |
| (3) | The remaining shares of restricted stock vested on February 8, 2021. |
| (4) | One-half of the restricted stock vested on February 7, 2021, and the remaining shares vest on February 7, 2022. |
| (5) | The number of shares and market value for Performance Stock granted February 7, 2018 is reported at 150% of the target level of performance (pursuant to SEC rules) because the Company achieved a level of performance between 150% and 200% for the two-year performance period from January 1, 2018 to December 31, 2019, but absolute total shareholder return during the performance period was less than 30% which capped the award payout at 150%. The Compensation Committee certified achievement at 150% on January 25, 2021. The shares ultimately earned vested in one installment on February 7, 2021. |
| (6) | One-third of the restricted stock vested on February 11, 2021, and the remaining shares vest in two equal installments on February 11, 2022 and 2023. |
| (7) | The number of shares and market value for Performance Stock granted February 11, 2019 is reported at 87.8% of the target level of performance (pursuant to SEC rules) because the Company achieved that level of performance for the two-year performance period from January 1, 2019 to December 31, 2020 and the absolute total shareholder return during the performance period does not apply to awards where the level of performance is less than 150% of target. The final performance and payout have not been certified by the Compensation Committee. Any shares ultimately earned will vest in one installment on February 11, 2022. |
| (8) | Thirty-four percent of the restricted stock vested on February 13, 2021, and the remaining shares vest in two equal installments on February 13, 2022 and 2023. |
| (9) | The number of shares and market value for Performance Stock granted February 13, 2020 is reported at the threshold level of performance (pursuant to SEC rules) because the Company has not yet achieved the threshold level of performance for the two-year performance period from January 1, 2020 to December 31, 2021. Any shares ultimately earned will vest in one installment on February 13, 2023. |
35
|
| | | | | | | | | | | | | | | | | | |
| OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2015 |
| Stock Awards |
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
| Clarence L. Werner | | | — |
| | | — |
| | | — |
| | | — |
| |
Gary L. Werner(9) | 12/01/2009 | | 6,000 |
| (2) | | 140,340 |
| | | — |
| | | — |
| |
| 11/30/2010 | | 12,000 |
| (3) | | 280,680 |
| | | — |
| | | — |
| |
| 11/28/2011 | | 6,000 |
| (4) | | 140,340 |
| | | — |
| | | — |
| |
| 11/29/2012 | | 16,000 |
| (5) | | 374,240 |
| | | — |
| | | — |
| |
| 02/10/2014 | | 36,000 |
| (7) | | 842,040 |
| | | — |
| | | — |
| |
| 02/10/2015 | | 60,500 |
| (8) | | 1,415,095 |
| | | — |
| | | — |
| |
| Derek J. Leathers | 12/01/2009 | | 6,000 |
| (2) | | 140,340 |
| | | — |
| | | — |
| |
| 11/30/2010 | | 12,000 |
| (3) | | 280,680 |
| | | — |
| | | — |
| |
| 07/27/2012 | | 16,000 |
| (6) | | 374,240 |
| | | — |
| | | — |
| |
| 02/10/2014 | | 36,000 |
| (7) | | 842,040 |
| | | — |
| | | — |
| |
| 02/10/2015 | | 52,500 |
| (8) | | 1,227,975 |
| | | — |
| | | — |
| |
| John J. Steele | 12/01/2009 | | 2,000 |
| (2) | | 46,780 |
| | | — |
| | | — |
| |
| 11/30/2010 | | 2,000 |
| (3) | | 46,780 |
| | | — |
| | | — |
| |
| 11/28/2011 | | 1,200 |
| (4) | | 28,068 |
| | | — |
| | | — |
| |
| 11/29/2012 | | 3,200 |
| (5) | | 74,848 |
| | | — |
| | | — |
| |
| 02/10/2014 | | 7,200 |
| (7) | | 168,408 |
| | | — |
| | | — |
| |
| 02/10/2015 | | 10,500 |
| (8) | | 245,595 |
| | | — |
| | | — |
| |
| James A. Mullen | 12/01/2009 | | 2,000 |
| (2) | | 46,780 |
| | | — |
| | | — |
| |
| 11/30/2010 | | 4,000 |
| (3) | | 93,560 |
| | | — |
| | | — |
| |
| 11/28/2011 | | 1,400 |
| (4) | | 32,746 |
| | | — |
| | | — |
| |
| 11/29/2012 | | 3,600 |
| (5) | | 84,204 |
| | | — |
| | | — |
| |
| 02/10/2014 | | 7,200 |
| (7) | | 168,408 |
| | | — |
| | | — |
| |
| 02/10/2015 | | 10,500 |
| (8) | | 245,595 |
| | | — |
| | | — |
| |
Gregory L. Werner(10) | | | — |
| | | — |
| | | — |
| | | — |
| |
| |
| (1) | Market value is calculated by multiplying the number of shares of stock that have not vested by the closing market price of our common stock ($23.39 per share) on December 31, 2015 (the last trading day of our fiscal year). |
| (2) | Remaining restricted stock vests in one installment on December 1, 2016. |
| (3) | Remaining restricted stock vests in two equal installments on November 30, 2016 and 2017. |
| (4) | Remaining restricted stock vests in one installment on November 28, 2016. |
| (5) | Remaining restricted stock vests in two equal installments on November 29, 2016 and 2017. |
| (6) | Remaining restricted stock vests in two equal installments on July 27, 2016 and 2017. |
| (7) | Performance stock was earned based upon level of attainment of 2014 performance conditions and is subject to a service-based vesting schedule after attainment. One-fourth of the remaining performance stock vested on February 10, 2016, and the remaining shares vest in three equal installments on February 10, 2017, 2018 and 2019. |
| (8) | The number of shares and market value for performance stock granted February 10, 2015, is reported at a level above the target level, which is the level achieved for the year ended December 31, 2015 and certified by the Compensation Committee on February 10, 2016. Once earned, the shares vest annually in five equal installments, the first of which occurred on February 10, 2016 (one year from grant date), and the remaining shares vest in four equal installments on February 10, 2017, 2018, 2019 and 2020. |
| (9) | Gary L. Werner forfeited a substantial portion of the unvested equity awards presented above upon his retirement on February 12, 2016. Of the unvested shares presented in this table, he forfeited 100% of shares granted on 12/01/2009, 11/30/2010, 11/28/2011 and 11/29/2012; 75% of the shares granted on 02/10/2014; and 80% of the shares granted on 02/10/2015. |
| (10) | Gregory L. Werner resigned on August 27, 2015, and he held no outstanding awards at the end of 2015. |
OPTION EXERCISES AND STOCK VESTED FOR 20152020
The following Stock Option Exercises and Stock Vested for 2015 table provides information regarding (i) stock options that were exercised by our Named Executive Officers and (ii) shares of restricted and performance stock that vested during 2015. The value realized on exercise of stock options and the value realized on vesting of stock awards reflect the total pre-tax value realized by the Named Executive Officers. The value realized on exercise of stock options is calculated by subtracting the aggregate exercise price of the exercised options from the aggregate market value of the shares of common stock acquired on the exercise date. The number of shares and value realized on exercise of stock options includes shares sold to pay the exercise price and applicable withholding taxes. The value realized on vesting of stock awards is the aggregate market value of the shares of common stock on the date the shares became vested.2020. The number of shares and value realized on vesting of stock awards includes shares that were withheld at the time of vesting to satisfy tax withholding requirements. Columns related to stock option exercises required by SEC regulations are omitted because our Named Executive Officers did not exercise stock options in 2020. Our Named Executive Officers have no outstanding stock options as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| STOCK VESTED FOR 2020 |
| | | Stock Awards |
| Name | | | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
| Clarence L. Werner | | | | | | | | | 7,993 | | | | 308,148 | | |
| Derek J. Leathers | | | | | | | | | 80,839 | | | | 3,123,235 | | |
| H. Marty Nordlund | | | | | | | | | 26,914 | | | | 1,040,219 | | |
| John J. Steele | | | | | | | | | 14,684 | | | | 567,390 | | |
| Jim S. Schelble | | | | | | | | | 14,684 | | | | 567,390 | | |
| James L. Johnson | | | | | | | | | 14,684 | | | | 567,390 | | |
|
| | | | | | | | | | | | | | | | |
| STOCK OPTION EXERCISES AND STOCK VESTED FOR 2015 |
| | Option Awards | Stock Awards |
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
| Clarence L. Werner | | — |
| | | — |
| | | — |
| | | — |
| |
| Gary L. Werner | | — |
| | | — |
| | | 35,000 |
| | | 983,570 |
| |
| Derek J. Leathers | | — |
| | | — |
| | | 29,000 |
| | | 803,010 |
| |
| John J. Steele | | 15,000 |
| | | 207,969 |
| | | 7,600 |
| | | 213,162 |
| |
| James A. Mullen | | — |
| | | — |
| | | 9,000 |
| | | 251,370 |
| |
| Gregory L. Werner | | — |
| | | — |
| | | 9,000 |
| | | 264,330 |
| |
NONQUALIFIED DEFERRED COMPENSATION FOR 20152020
We establishedhave a nonqualified deferred compensation plan in 2005 for eligible key employees whose 401(k) Planplan contributions wereare 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.
Deferrals. Under the nonqualified deferred compensation plan, eligible employees are permitted to defer a portion of their base salary and cash annual incentive compensation on a pre-tax basis within maximum dollar limitations we establish each year that correspond to participants’ job titles (such as Senior Vice President or Vice President). The maximum deferral limit for each of the Named Executive Officers was $54,000 for the 2020 plan year and is $75,000 for the 2021 plan year.
Company Contributions.The nonqualified deferred compensation plan also permits us to make matching contributions to participant accounts. We did not make any such matches in 20152020 and have not done so since adopting the plan.
Deferrals.
Under the nonqualified deferred compensation plan, eligible employees are permitted to defer a portion of their base salary on a pre-tax basis. Beginning on January 1, 2010, participants were also permitted to defer amounts from annual cash bonuses. Such deferred amounts must be within the annual dollar limitations we establish. Through December 31, 2008, the annual dollar limitations were determined so that the combined sum of a highly compensated participant’s 401(k) Plan contributions and nonqualified deferred compensation plan contributions would approximate the maximum contribution amount available to non-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 2015 nonqualified deferred compensation plan year ranged from $9,000 to $54,000 and will remain unchanged for the 2016 plan year. The maximum deferral limit for each of the Named Executive Officers was $54,000 for the 2015 plan year and is $54,000 for the 2016 plan year.
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 or losses 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. 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” Withdrawals. At the time of making their deferral election for the year, aA participant elects under his salary deferral agreement whether the resulting deferred compensation will be distributed to him in annual installments or a lump sum.sum payment upon separation. Distributions are made after the executive officer’sparticipant’s retirement or termination from the Company. Participants who separate from service with the Company (as described in the plan)and will generally not receive distributions from the planbegin until 12 months after the separation date. Under certain circumstances, participants may also elect to receive scheduled (education account) 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 2015.2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NONQUALIFIED DEFERRED COMPENSATION FOR 2020 |
| Name | Executive Contributions in 2020 ($)(1) | Company Contributions in 2020 ($)(2) | Aggregate Earnings (Losses) in 2020 ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at End of 2020 ($)(4) |
| Clarence L. Werner | | — | | — | | — | | — | — |
| Derek J. Leathers | | 54,000 | | | — | | 170,990 | | | — | 1,086,768 |
| H. Marty Nordlund | | 54,000 | | | — | | 164,278 | | | — | 1,052,869 |
| John J. Steele | | 54,000 | | | — | | 199,992 | | | — | 1,370,398 |
| Jim S. Schelble | | 54,000 | | | — | | 113,735 | | | — | 1,114,322 |
| James L. Johnson | | 54,000 | | | — | | 87,356 | | | — | 686,926 |
| | | | | | | | | |
| (1) | The amounts disclosed in this column are reported as compensation and included within the amounts in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table. |
| (2) | The Company does not make matching contributions. |
| (3) | We do not provide above-market or preferential earnings on nonqualified deferred compensation plan balances; therefore, we did not report any portion of these amounts in the Summary Compensation Table pursuant to SEC rules. |
| (4) | Of these balances, the following executive contributions were reported in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table in our proxy statements for 2018 and 2019: Mr. Leathers, $107,952; Mr. Nordlund, $99,790; Mr. Steele, $108,004; and Mr. Schelble, $108,004. |
CEO PAY RATIO
For 2020, our last completed fiscal year, the annual total compensation of the median employee of our company (other than our CEO) was $54,166; and the annual total compensation of our CEO was $4,810,029. The ratio of the annual total compensation of our CEO to the median employee’s annual total compensation was 89 to 1 for 2020. We believe the ratio provided here is a reasonable estimate calculated in a manner consistent with SEC requirements.
Pursuant to SEC rules, we identified a new median employee for 2020. To identify the median employee, we conducted a full analysis of our U.S. employee population as of our December 31, 2020 determination date. We relied on the definition of employee provided by the applicable rule, and we excluded employees residing in Mexico, China and Canada from our calculation under the de minimis exemption. As of our December 31, 2020 determination date, the total number of U.S. and non-U.S. employees was 12,264, which was used in calculating our de minimis exemption. The number of non-U.S. employees, by jurisdiction, excluded under the de minimis exemption were: (i) Mexico 102, (ii) China 27, and (iii) Canada 21. To determine our median employee, we used total Medicare wages and tips as reported on the employees’ IRS Form W-2 for 2020. These amounts were then annualized to account for permanent employees that were employed for less than the full fiscal year. After identifying the median employee, we then calculated the annual total compensation of such employee for 2020 on the same basis as used for the CEO in the Summary Compensation Table.
PROPOSAL 2 — ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION
Section 14A of the Exchange Act requires us to seek non-binding, advisory stockholder approval, commonly referred to as a “say-on-pay” resolution, of our Named Executive Officers’ compensation for 2020 as disclosed in the Nonqualified DeferredExecutive Compensation for 2015 table below presentssection of this Proxy Statement. This advisory vote is not intended to address any specific item of compensation but rather the overall compensation of our Named Executive Officers and the principles, policies and practices described in this Proxy Statement. Accordingly, we are asking stockholders to vote on the following information relatedadvisory resolution at the 2021 Annual Meeting:
RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby APPROVED.
Through our executive compensation program, we strive to attract, motivate and retain a talented, entrepreneurial executive team that provides leadership and contributes to the achievement of our overall business and financial goals and long-term success, while remaining true to our nonqualified deferredmission, values and guiding corporate principles. We seek to accomplish these objectives in a manner that rewards performance and aligns with our stockholders’ long-term interests.
You should read the Compensation Discussion and Analysis section beginning on page 18 of this Proxy Statement, which describes our executive compensation planprogram, how our executive compensation process functions and how the program and its procedures are designed to accomplish our compensation objectives. We also urge you to review the executive compensation tables and narratives appearing on pages 29 through 34, which provide more detailed information on our Named Executive Officer participants:Officers’ compensation.
Our Board and Compensation Committee believe our executive compensation program, articulated in the Compensation Discussion and Analysis, achieves our compensation objectives, rewards performance and links our Named Executive ContributionsOfficers’ interests with the long-term interests of our stockholders. The Company believes our executive compensation program has been instrumental to our business and in 2015: Reflects voluntaryhelping us accomplish our objectives.
At the Company’s annual meeting held on May 12, 2020, more than 98% of the stockholder votes were cast in favor of our say-on-pay resolution to approve, on an advisory basis, the compensation of our Named Executive Officers. The Company and its Compensation Committee believe this affirms our stockholders’ support of the Company’s approach to executive deferralscompensation and executive compensation program objectives. We historically have held our say-on-pay vote every three years. At the Company’s annual meeting held on May 9, 2017, the stockholders voted on an advisory basis to conduct future advisory votes on executive compensation every year, as recommended by our Board of base salary and annual bonus. These deferrals areDirectors. The Board has determined that an advisory say-on-pay resolution will be included in the “Salary”Company’s proxy materials every year commencing in 2018 until the next frequency vote, which will be held in 2023. The frequency vote is an opportunity for stockholders to cast an advisory vote on the frequency of future say on pay votes, such as this Proposal 2.
This advisory resolution is non-binding on the Company, Board of Directors and “Bonus” columnsCompensation Committee. The Board and Compensation Committee, when appropriate, will review and consider the voting results as one factor when making future decisions and determinations regarding executive compensation and our executive compensation program.
RECOMMENDATION OF THE BOARD OF DIRECTORS — PROPOSAL 2
The Board of Directors unanimously recommends that stockholders vote FORthe approval of the Summary Compensation Tableadvisory resolution on executive compensation. The Designated Proxy 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 approval of the advisory resolution on executive compensation.
Company Contributions in 2015: No such contributions were made.
Aggregate Earnings (Losses) in 2015: 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 2015: No withdrawals or distributions were made.
Aggregate Balance as of December 31, 2015: Reflects the total market value of the Named Executive Officer’s nonqualified deferred compensation account, including such participant’s contributions and earnings to date.
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| | | | | | | | | | | | |
| NONQUALIFIED DEFERRED COMPENSATION FOR 2015 |
| Name | Executive Contributions in 2015 ($)(1) | Company Contributions in 2015 ($) | Aggregate Earnings (Losses) in 2015 ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at End of 2015 ($)(3) |
| Clarence L. Werner | | — |
| | — | | — |
| | — | — |
| Gary L. Werner | | 17,004 |
| | — | | (516 | ) | | — | 197,708 |
| Derek J. Leathers | | 53,976 |
| | — | | 466 |
| | — | 493,494 |
| John J. Steele | | 54,002 |
| | — | | (6,608 | ) | | — | 532,579 |
| James A. Mullen | | 14,040 |
| | — | | (304 | ) | | — | 230,019 |
| Gregory L. Werner | | 5,559 |
| | — | | 79 |
| | — | 151,205 |
| | | | | | | | | | |
| (1) | The amounts disclosed in this column are reported as compensation and included within the amounts in the “Salary” and “Bonus” columns of the Summary Compensation Table. |
| (2) | We do not provide above-market or preferential earnings on nonqualified deferred compensation plan balances; therefore, 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 the “Salary” and “Bonus” columns of the Summary Compensation Table in our proxy statements for 2013 and 2014: Gary L. Werner, $34,008; Mr. Leathers, $107,952; Mr. Steele, $108,004; and Mr. Mullen, $48,080; and Gregory L. Werner, $17,004. |
PROPOSAL 23 — RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FEES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of KPMG LLP (“KPMG”) is our independent registered public accounting firm. The table that follows sets forth the aggregate fees billed to us by KPMG for professional audit services rendered in connection with the audit of our annual financial statements and internal control over financial reporting for 20152020 and 2014.2019. KPMG did not provide any other services to us during those periods.
| | | | | | | | |
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FEES FOR 2020 AND 2019 |
| 2020 ($) | 2019 ($) |
| Audit Fees | 773,750 | 623,750 |
| Audit-Related Fees | — | — |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total | 773,750 | 623,750 |
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| | |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES FOR 2015 AND 2014 |
| | 2015 ($) | 2014 ($) |
| Audit Fees | 506,290 | 462,450 |
| Audit-Related Fees | — | — |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total | 506,290 | 462,450 |
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 20152020 and 2014,2019, (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. The 2020 audit fees also include fees totaling $110,000 for comfort letters and consents issued in relation to the Form S-3 registration statement for Mr. Werner’s sale of his Company common stock. Mr. Werner reimbursed the Company for the $110,000.
Audit-Related Fees. Audit-related fees 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 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 2015.2020.
The Audit Committee has approved KPMG to perform the review of our first quarter 2021 financial statements. Proposed audit fees for KPMG to serve as our independent registered public accounting firm for 2016.the remainder of 2021 will be presented to the Audit Committee for review and approval at the next quarterly meeting. Representatives of KPMG will be present at the 20162021 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.
AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PERFORMED
BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has a policy 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 20152020 and 20142019 table. When determining whether a service should receive 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 Chair the pre-approval authority to address any requests for pre-approval of services between Audit Committee meetings, and such Chair 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-approval and (ii) the fees for services performed to date.
We did not pay any fees categorized as Audit-Related Fees, Tax Fees or All Other Fees to KPMG during 2015 and 2014. Accordingly, theThe Audit Committee did not approve any fees during these periods2020 and 2019 that related to the waiver of pre-approval provisions or the de minimis exception set forth in applicable SEC rules.
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 U.S. Securities and Exchange Commission, 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 Drs. Bird and PeetzMs. Duren and Messrs. Gallagher, Holmes, Jung Sather and Steinbach.Timmerman. Mr. Jung is the Chair 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 financial reporting process of Werner Enterprises, Inc. (the “Company”). 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 and filed with the SEC; appointing the independent registered public accounting firm; reviewing services provided by the Company’s independent auditors and internal audit department; and evaluating the Company’s accounting policies and its system of established internal controls. In its oversight of the independent registered public accounting firm, the Audit Committee reviews the scope of the audit, audit fees, auditor independence matters and the extent to which the independent auditors are retained to perform non-audit services for the Company.
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 registered public accounting firm, KPMG LLP, is responsible for performing independent quarterly reviews and an independent annual audit of the financial statements and internal control over financial reporting and for expressing an opinion on the conformity of those statements with accounting principles generally accepted in the United States of America (“GAAP”) and an opinion on the effectiveness of the Company’s internal control over financial reporting.
In conjunction with the preparation of the Company’s 20152020 audited consolidated 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 audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for 20152020 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 (i) Rule 2-07applicable standards of SEC Regulation S-X (Communication with Audit Committees) and (ii) Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended (Auditing Standard No. 16, Communications with Audit Committees) 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.SEC.
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 Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the Audit 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 2015,2020, for filing with the SEC.
Patrick J. Jung, Chair
Kenneth M. Bird, Ed.D.
Dwaine J. Peetz, Jr., M.D.
DuaneDiane K. SatherDuren
Michael L. SteinbachGallagher
Jack A. Holmes
Gerald H. Timmerman
RECOMMENDATION OF THE BOARD OF DIRECTORS — PROPOSAL 23
We are asking stockholders to ratify the appointment of KPMG as our independent registered public accounting firm for 2016.2021. 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 good 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 2016,2021, 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 unanimously 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, 2016.2021. The Designated Proxy Holder 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.
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 oversee administration of our policies with respect to related person transactions and to review and approve all related person transactions submitted to the Governance Committee when such approval is required under the NASDAQ and SEC rules and regulations. The Company discloses related person transactions that are required to be disclosed under SEC rules in its applicable SEC filings.
For 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:
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(i) | The Company was or is to be a participant; |
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(ii) | The amount involved exceeds or is expected to exceed $120,000; and |
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(iii) | Any “related person” has an interest. |
(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;
•Any “immediate family member” of a director, director nominee, executive officer or beneficial owner of more than 5% of our 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; or
•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.
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RELATED PERSON TRANSACTIONS
Land Lease Agreement. The Company leases certain land from the Clarence L. Werner Revocable Trust (the “Trust”), a related person. C.L.CL Werner, Chairman and Chief Executive Officerof the Board of 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 C.L.CL 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-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 vendorsupplier 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.
The Lease Agreement’s initial ten-year term expired 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. The Company exercised its option to extend the term of the lease to May 31, 2017.2022. 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 $52,000$84,000 in 2015.2020. The terms of the Lease Agreement also permit C.L.CL Werner, in his capacity as landlord, to receive as rent use of the Lodge Premises and Farmland Premises for personal use.
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, at the termination of either 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 lease period, including the two five-year renewal periods. The Company has made leasehold improvements to the Lodge Premises since the inception of the lease agreement in 1994. The cost of these improvements was approximately $6.5$7.0 million, and the net book value (cost less accumulated depreciation) at December 31, 20152020 was approximately $2.7$2.4 million.
The revisions to the Lease Agreement removed the provisions relating to the Farmland Premises (including the option to purchase rights), 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 $71,000$32,000 for 2015.2020.
Family Members of Executive Officers and Directors. The Company employs family members of certain executive officers and directors. Such family members are employed on the same terms and conditions as non-related employees, and their total compensation is commensurate with that of their peers. In 2015,2020, the Company employed fourthree individuals who are considered a “related persons”person” under Item 404 of Regulation S-K of the SEC, and each individual’s total compensation exceeded $120,000. The aggregate total compensation for these four individuals in 2015 was $708,300. These amounts include all elements of compensation received by those individuals, including cash compensation, equity
awards, perquisites and other personal benefits and forms of compensation. The Company also employed six other related persons during 2015, none of whom received compensation in excess of $120,000.
Equipment Sales.
During 2015, the Company sold used tractors and trailers to WinRow Farms. LLC, for a total of $180,650. These sales were made at current market prices for used equipment. WinRow Farms, LLC, is owned by C.L. Werner's brother, Vern Werner.
Aircraft Charter Services and Private Aircraft Usage. During 2015,2020, the Company used aircraft charter services for Company business travel pursuant to a customary charter arrangement with an aircraft charter and management entity owned by the son-in-law of C.L.CL Werner. On certain occasions when Mr. Werner and/or other executives traveled on Company business, the aircraft used for such charters were private aircraft owned by C.L.CL Werner. The Company pays an hourly rate as well as certain charter-related additional expenses such as landing fees, crew expenses, catering and federal excise taxes. The Company paid a total of $331,386$238,013 to the aircraft charter entity in 20152020 for aircraft charters and the charter-related additional expenses and excise taxes, of which $245,500$201,000 represented charter fees for the private aircraft owned by Mr. Werner. The Company was reimbursed $114,139 by Mr. Werner for a portion of these costs in 2020.
OTHER BUSINESS
We do not knowGregory L. Werner Severance Agreement. Effective August 27, 2015, Gregory L. Werner resigned as our Chief Executive Officer. In connection with his resignation, Mr. Werner and the Company entered into a Severance Agreement and Release (the “Severance Agreement”) dated August 27, 2015, the terms of any business that will be presented for consideration at the 2016 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 solicitedwhich were approved by the Board willCompensation Committee. Under the Severance Agreement and subject to the terms and conditions set forth therein, the Company and Mr. Werner agreed to the following severance benefits: (i) a cash severance benefit of $4.0 million, payable in ten (10) semi-annual installments of $400,000 each on January 1 and July 1 of each year, with the first payment to be voted inmade on January 1, 2016 and the last payment to be made on July 1, 2020, and (ii) payment of Mr. Werner’s COBRA premiums for continuation of health benefits for a period of 18 months. In accordance with the best judgmentterms of Mr. Werner’s previously granted equity compensation award agreements and the person votingCompany’s Amended and Restated Equity Plan, all unvested equity awards were forfeited upon the proxies.effective date of his resignation. Mr. Werner retired from the Board effective March 24, 2020, and the final payment under the Severance Agreement was made on July 1, 2020.
STOCKHOLDER PROPOSALS
Only stockholders of record as of March 21, 2016,22, 2021, are entitled to bring business before the 20162021 Annual Meeting. All stockholder proposals must be in writing and include the following:
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(i) | A brief description of the business the stockholder desires to bring before the Annual Meeting; |
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(ii) | The reason for conducting such proposed business at the Annual Meeting; |
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(iii) | The name and address of the stockholder proposing such business; |
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(iv) | The number of shares of our common stock beneficially owned by such stockholder; and |
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(v) | Any material interest of the stockholder in such business. |
(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 number of shares of our common stock beneficially owned by such stockholder; and
(v)Any material interest of the stockholder in such business.
To be eligible for inclusion in our 20172022 Proxy Materials: Stockholder proposals intended to be presented at our 20172022 Annual Meeting of Stockholders must be in writing and be received by the Corporate Secretary at our executive offices on or before December 8, 2016.3, 2021. The inclusion of any such stockholder proposal in our 20172022 Proxy Materials will be considered untimely if received after December 8, 2016.3, 2021. Stockholders may submit nominations for directors to be elected at the 20172022 Annual Meeting of Stockholders, and such nominations must be contained in a written proposal and delivered to the Corporate Secretary at our executive offices by December 8, 2016.3, 2021. For a description of the process of submitting stockholder nominations for director, refer to the Director Nomination Process section under Corporate Governance in this Proxy Statement.
All written stockholder proposals (whether for the recommendation of director candidates or the proposal of other business) are subject to and must comply with the applicable rules and regulations under the Exchange Act, including Rule 14a-8. Rule 14a-8 provides requirements for the inclusion of stockholder proposals in company-sponsored proxy materials. The address for our Corporate Secretary and executive offices is provided in the Contacting the Corporate Secretary and Executive Offices section of this Proxy Statement.
Regarding proposals not to be included in our 20162021 Proxy Materials: Stockholders may present proposals for consideration at the 20162021 Annual Meeting of Stockholders that are not intended for inclusion in the 20162021 Proxy Materials. These proposals must be received in writing by the Corporate Secretary at our executive offices no later than April 20, 201621, 2021 for the 20162021 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.
ANNUAL MEETING AND VOTING INFORMATION
Annual Meeting Information. The 2021 Annual Meeting of Stockholders will be held at 10:00 a.m. local Central Daylight time on Tuesday, May 11, 2021, at the Embassy Suites Omaha-La Vista Hotel & Conference Center, and at any adjournment(s) thereof. The Embassy Suites Omaha-La Vista Hotel & Conference Center is located at 12520 Westport Parkway in La Vista, Nebraska, which is situated near U.S. Interstate 80 and the Giles Road exit (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 contact information provided in the Contacting the Corporate Secretary and Executive Offices section. At the meeting, members of our management team will discuss our results of operations and business plans. Members of our Board of Directors are also expected to be present.
Record Date. The record date for the Annual Meeting is March 22, 2021. On the record date, 67,918,148 shares of common stock ($0.01 par value) were outstanding. At the Annual Meeting, each stockholder will be entitled to one vote (in person or by proxy) per share that is owned of record at the close of business on March 22, 2021. Our stock transfer books will not be closed. On March 22, 2021, the closing market price of our common stock as reported on the NASDAQ Global Select MarketSM was $45.86 per share.
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, of a majority of all outstanding shares of common 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. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. “Broker non-votes” are shares held by a brokerage firm, bank or other nominee (collectively, a “broker”) that are represented by proxy at the Annual Meeting, but the broker has not received voting instructions from the beneficial owner of such shares and does not have discretionary voting power for certain matters.
Stockholders Eligible to Vote and Voting Methods. Only stockholders of record as of the close of business on the record date are entitled to receive notice of, attend and vote at the Annual Meeting. How you hold your shares determines the method by which you may vote your shares. Most of the Company’s stockholders hold their shares through a broker, bank or other nominee rather than in their own name. As summarized below, there are some distinctions between registered shares and those owned beneficially.
Registered Stockholders. If your shares are registered directly in your name with our transfer agent (Equiniti Trust Company), you are considered a “registered stockholder” and the stockholder of record with respect to those shares. If you are a registered stockholder, you may vote your shares by mail using the enclosed proxy and postage-paid return envelope and by following the instructions appearing on the proxy. As a registered stockholder, you may also vote your shares in person at the Annual Meeting by notifying and obtaining a ballot from the Corporate Secretary prior to the occurrence of any votes.
Beneficial Owners. If your shares are held in a brokerage account, bank or other nominee, you are considered a “beneficial owner” of shares, and you have the right to instruct your broker how to vote the shares held in your account. Your broker will inform 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 from your broker a legal proxy that gives you the right to vote the shares.
Regardless of how you hold your shares, your right to vote in person at the Annual Meeting is not affected by signing and returning the proxy by mail (as generally done by registered stockholders) or by submitting your proxy pursuant to your broker’s instructions (as done by beneficial owners, commonly by the Internet or telephone).
Voting Your Proxy and Designated Proxy Holders. When a proxy is executed and returned (and not revoked) prior to the Annual Meeting, the proxy will be voted according to the instructions you made when granting the proxy. Unless you specify otherwise or if no choice is indicated on your proxy, all shares of our common stock represented by the proxy will be voted:
(i)FOR the election of ALL nominees for director (Proposal 1);
(ii)FOR the approval of the advisory resolution on executive compensation (Proposal 2);
(iii)FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2021 (Proposal 3); and
(iv)In accordance with the best judgment of the named proxy on any other matters properly brought before the Annual Meeting or any adjournment thereof. See Other Matters in this Proxy Statement.
For purposes of the 2021 Annual Meeting, Clarence L. Werner and Derek J. Leathers will act as the appointed and authorized “Designated Proxy Holders.” Your executed proxy appoints each of the Designated Proxy Holders as your duly authorized attorney-in-fact and gives the applicable Designated Proxy Holder the power to represent and vote at the Annual Meeting all shares of our outstanding common stock that you are entitled to vote. The Designated Proxy Holders will vote your shares as instructed by you on your proxy. If you do not provide voting instructions on the proposals discussed in this Proxy Statement, or for any other matters properly presented at the Annual Meeting, your proxy also gives each of the Designated Proxy Holders the discretionary authority to vote your shares represented thereby as noted in this Proxy Statement and in accordance with his best judgment.
Revoking Your Proxy. Any stockholder who delivers an executed proxy has the right to revoke the proxy at any time prior to the call to vote at the Annual Meeting. You may revoke your proxy before the Annual Meeting by (i) delivering a written and executed notice of revocation of the proxy to the Corporate Secretary at our executive offices prior to the Annual Meeting, (ii) executing and delivering a new proxy with a later date before the Annual Meeting or (iii) 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.
Cumulative Voting in Director Elections. With respect to the election of directors, Company stockholders (or their proxy holder, if one is appointed) have cumulative voting rights under the laws of the State of Nebraska. This means that you (or your proxy holder) may: (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 your shares; or (iii) distribute an amount of votes calculated as described in section (ii) among as many director nominees as you desire. If you wish to vote cumulatively, you must vote in person or give your specific cumulative voting instructions to the selected 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 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.
Votes Required for Proposals and Voting Process. If you are a beneficial owner, certain exchange rules govern how brokers can vote your shares. If your broker does not receive voting instructions from you, the broker may generally vote your shares on certain routine matters but cannot vote your shares on the election of directors, corporate governance proposals and other non-routine matters; these broker non-votes will not be treated as votes cast at the Annual Meeting on non-routine matters. With respect to the proposals described in this Proxy Statement to be voted on at the 2021 Annual Meeting, the election of directors (“Proposal 1”) and approval of the advisory resolution on executive compensation (“Proposal 2”) constitute non-routine matters. The ratification of the appointment of our independent registered public accounting firm (“Proposal 3”) is considered a routine matter.
The following votes are required for the three proposals discussed in this Proxy Statement to be voted on at the Annual Meeting, assuming the presence of a quorum:
Proposal 1. Directors are elected when they receive a plurality of affirmative votes cast by holders of the outstanding shares of our common stock, present or represented by proxy, at the Annual Meeting and entitled to vote thereon. This means the five nominees receiving the highest number of votes at the Annual Meeting, after taking into account any cumulative voting, will be elected to the Board. Abstentions and broker non-votes will not impact the election of directors.
Proposal 2. The approval of the advisory resolution on executive compensation will be decided by the affirmative vote of a majority of the outstanding shares of our common stock, present or represented by proxy, at the Annual Meeting and entitled to vote thereon. Abstentions will be counted as votes cast and will have the same effect as a vote against the resolution. Broker non-votes will not be counted as votes cast and will have no effect on the outcome of such vote.
Proposal 3.The ratification of the appointment of KPMG LLP as our independent registered public accounting firm requires the affirmative vote of a majority of the outstanding shares of our common stock, present or represented by proxy, at the Annual Meeting and entitled to vote thereon. Abstentions will be counted as votes cast and will have the same effect as a vote against the matter. Broker non-votes will also be counted as votes cast; however, because brokers may vote on this routine matter, no broker non-votes are expected in connection with this Proposal 3.
Voting Results. Our Corporate Secretary has been appointed by the Board to serve as the inspector of election for the Annual Meeting. Proxies and ballots will be received and tabulated by the inspector of election. Preliminary voting results will be announced at the Annual Meeting, and the inspector of election will then calculate final voting results. We will disclose the Annual Meeting voting results on a Current Report on Form 8-K filed with the SEC in accordance with SEC rules.
Stockholder Privacy. As a matter of Company policy, we keep all proxies, ballots and voting tabulations that identify individual stockholders private and confidential. Such documents are available for examination only by the inspector of election and certain Company representatives who assist with processing proxies and tabulating the vote. Stockholder votes are not otherwise disclosed, except as may be necessary to meet legal requirements.
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 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 Materials to beneficial owners of our stock in accordance with customary practice. Your cooperation in promptly voting your shares and submitting your proxy will help to avoid additional expense in the event the Company retains an outside firm to solicit proxies.
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 proxy authorizes the Designated Proxy Holder to vote the shares represented thereby in his discretion and according to his best judgment.
Assuming the presence of a quorum, all other matters that properly come before the Annual Meeting will each require the affirmative vote of a majority of the outstanding shares of our common stock, present or represented by proxy, at the Annual Meeting and entitled to vote thereon.
STOCKHOLDERS SHARING THE SAME ADDRESS
We have adopted a procedure called “householding” pursuant to SEC rules and regulations. Under this procedure, we will deliver only one copy of this Proxy Statement and our 20152020 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 20152020 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 20152020 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 20152020 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
Our Corporate Secretary is James L. Johnson. The mailing address, 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
Telephone: (402) 895-6640
Toll-Free: (800) 228-2240
E-Mail: invrelations@werner.com
INTERNET WEBSITE AND AVAILABILITY OF MATERIALS
Our Internet website, as referred to in this Proxy Statement, is: http://www.werner.com, under the “Investors” link. This Proxy Statement, the Notice of Annual Meeting of Stockholders and 20152020 Annual Report (including our Annual Report on Form 10-K for 2015)2020) are available on our website. Our prior proxy statements, annual reports and SEC filings are also included on the website. You may obtain a copy of these materials, without charge, on our website or by contacting the Corporate Secretary.
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| | By Order of the Board of Directors, |
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| | James L. Johnson |
| Omaha, Nebraska | | Executive Vice President, Chief Accounting Officer |
April 7, 20162, 2021 | | & Corporate Secretary |
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 10, 2016.11, 2021. The undersigned stockholder hereby acts by proxy and appoints Clarence L. Werner and Derek J. Leathers to act as duly authorized attorney-in-factattorneys-in-fact and proxy (theproxies (collectively, the “Designated Proxy Holder”Holders”), with full power of substitution, to represent and vote, as the undersigned stockholder directs herein, all shares of common stock of Werner Enterprises, Inc., that such stockholder is entitled to vote as of March 21, 201622, 2021 at the Annual Meeting of Stockholders to be held on Tuesday, May 10, 201611, 2021 (including any adjournments or postponements thereof), and to vote all such shares on any other business that properly comes 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
1. PROPOSAL1 – 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 beside the box. (Board of Directors of Werner Enterprises, Inc. submits and recommends a vote “for all” for the first and “for” for the second of the following two proposals:recommendation: FOR ALL)
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| Nominees: | 1. | Scott C. Arves–Class III | 2. | Vikram Mansharamani, Ph.D.–Class III | 3. | Alexi A. Wellman–Class III |
| 4. | Carmen A. Tapio–Class I | 5. | Derek J. Leathers–Class II | | |
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1. | PROPOSAL1 – 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. (Board of Directors recommendation: FOR ALL)
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| For Allo | | Withhold Allo | | For All Excepto | |
Nominees:
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1. Kenneth M. Bird, Ed. D. – Class I
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2. Dwaine J. Peetz, Jr., M.D. – Class I
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2.To cumulate votes as to a particular nominee as explained in the Proxy Statement, check this box and then indicate the name(s) and the number of votes to be given to such nominee(s) on the line below. Please do not check this box unless you want to exercise cumulative voting. o |
| Cumulate | PROPOSAL 2 – To ratify the appointment of KPMG LLP as the independent registered public accounting firm of Werner Enterprises, Inc. for the year ending December 31, 2016.
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2. PROPOSAL 2 – To approve the advisory resolution on executive compensation. Check only one box. (Board of Directors recommendation: FOR)
3. PROPOSAL 3 – To ratify the appointment of KPMG LLP as the independent registered public accounting firm of Werner Enterprises, Inc. for the year ending December 31, 2021.Check only one box. (Board of Directors recommendation: FOR)
This Proxy, when properly executed, will be voted as directed by the undersigned stockholder. If no instruction is given with respect to a proposal, this Proxy will be voted in accordance with the recommendation of the Board of Directors, which is: “FOR ALL” for Proposal 1 (PROXY HOLDERS MAY CUMULATE VOTES) and "FOR" “FOR” for Proposal 2.Proposals 2 and 3.
Please date, sign and print your name.*
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| Signature | | Date | | Signature | | Date |
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| Printed Name | | | | Printed Name | | |
*When shares are held by joint tenants, both individuals should sign this Proxy. When signing as an attorney, executor, administrator, trustee or guardian, provide your full title. If the stockholder is a corporation or partnership, provide the full corporate or partnership name by the name of the authorized officer or person completing this Proxy.
Please mark, sign, date and promptly return this Proxy using the enclosed postage-paid return envelope.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 10, 2016:11, 2021: The Proxy Statement and 20152020 Annual Report of Werner Enterprises, Inc. are available, without charge, at http://www.werner.com under the “Investors” link or by contacting the Corporate Secretary by toll free telephone at (800) 228-2240 or by e-mail at invrelations@werner.com.
