UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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WERNER ENTERPRISES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Post Office Box 45308
Omaha, Nebraska 68145-0308
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 202114, 2024
Dear Stockholders:
Notice is hereby given that the 20212024 Annual Meeting of Stockholders of Werner Enterprises, Inc., a Nebraska corporation (the “Company”), will be held at the Embassy Suites Omaha-La Vista Hotel & Conference Center, 12520 Westport Parkway, La Vista, Nebraska, on Tuesday, May 11, 2021,14, 2024, at 10:00 a.m. Central Time for the following purposes:
1.To elect three Class III directors to each serve for a three-year term expiring at the 2024 Annual Meeting of Stockholders, one Class I director to serve for a one-year term expiring at the 20222025 Annual Meeting of Stockholders and onetwo Class II director toIII directors to each serve for a two-yearthree-year term expiring at the 20232027 Annual Meeting of Stockholders and until their respective successors are elected and qualified.Stockholders.
2.To approve an advisory resolution on executive compensation.
3.To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021.2024.
4.To transact such other business as may properly come before the meeting or any adjournment thereof.
Only stockholders of record (“registered stockholders”) with our transfer agent, Equiniti Trust Company, at the close of business on March 22, 2021,25, 2024, our record date, will be entitled to receive notice of and to vote at the 20212024 Annual Meeting or any adjournment thereof.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 11, 2021: ThisPlease see Important Notice Regarding the Availability of Annual Meeting of Stockholders presents only an overview of the more complete enclosed proxy materials comprised of the Company’s (i) 2021 Proxy Statement and (ii) 2020 Annual Report to Stockholders (containing our Annual Report on Form 10-K for 2020). Copies of the proxy materials are available, without charge,Materials on the Company’s website (http://www.werner.com under the “Investors” link). The enclosed proxy materials contain important information about the Company and 2021 Annual Meeting, and you are encouraged to review these documents before voting.next page.
Your vote is important. Whether or not you attend the meeting, please vote and submit your proxy as promptly as possible using one of the voting methods described in the Proxy Statement. If you hold your shares through a brokerage firm, bank or other nominee, follow the instructions you receive from them to vote your shares.
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| | By Order of the Board of Directors, |
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| | James L. JohnsonDiane M. Stewart-Ferro |
| Omaha, Nebraska | | Executive Vice President, Chief Accounting OfficerCorporate Secretary |
April 2, 20213, 2024 | | | & Corporate Secretary
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| IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 14, 2024 | |
| We are delivering proxy materials to registered stockholders for the 2024 Annual Meeting under the “Notice and Access” rules of the U.S. Securities and Exchange Commission. The rules permit us to furnish our “Proxy Materials” (the Notice of Annual Meeting, the Proxy Statement and proxy card for the meeting, our 2023 Annual Report to Stockholders containing our Annual Report on Form 10-K for the year ended December 31, 2023, and any amendments or additional soliciting materials) via a Notice of Internet Availability of Proxy Materials (“Availability Notice”), which instructs registered stockholders on how to access and review the Proxy Materials, free of charge, and submit proxies on the Internet, which we encourage them to do. This method of furnishing the Proxy Materials, versus mailing bulky printed copies and proxies to all registered stockholders, aligns with our environmental goals and reduces our printing and distribution expenses. A registered stockholder may request and receive printed Proxy Materials and a proxy card by following the instructions in the Availability Notice. We encourage you to access and review all the important information in the Proxy Materials prior to voting. YOUR VOTE IS IMPORTANT If you are a registered stockholder, follow the instructions in the Availability Notice to vote and submit your proxy as soon as possible, even if you plan to attend the meeting. If you hold your shares through brokerage firms, banks or other nominees, follow the voting instructions they send you. To help the environment and further our cost savings, please choose, if prompted, to receive email notices regarding the online availability of proxy materials.
PROXY MATERIALS ARE AVAILABLE AT WWW.PROXYVOTE.COM. FOLLOW THE INSTRUCTIONS YOU RECEIVE TO ACCESS PROXY MATERIALS AND VOTE. | |
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WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 202114, 2024
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PROXY STATEMENT SUMMARY AND BUSINESS OVERVIEW
We are sendingfurnishing you this Proxy Statement in connection with the solicitation of proxies by our Board of Directors (the “Board”) for the 20212024 Annual Meeting of Stockholders (the “Annual Meeting” or “2024 Annual Meeting”) of Werner Enterprises, Inc. The 2021 Annual Meeting will be held at the time and place and for the purposes set forth in the Notice of Annual Meeting of Stockholders to be held on May 14, 2024 located on the cover page of this Proxy Statement. We are mailing the Proxy Statement proxy(the “Meeting Notice”). Additional meeting information is set forth in Annual Meeting and our Annual Report to Stockholders for the year ended December 31, 2020 (the “2020 Annual Report”) onVoting Information.
On or about April 2, 2021.3, 2024, Broadridge Financial Solutions, Inc. (“Broadridge”), sent on our behalf the Notice of Internet Availability of Proxy Materials (“Availability Notice”) to “registered stockholders” at the close of business on the “record date” (each as defined below). The Availability Notice explains how to access our “Proxy Materials” (defined below) and how to vote proxies via the Internet, phone or mail. Registered stockholders will not receive printed copies unless they request them as instructed in the Availability Notice.
In this Proxy Statement, we also use the following terms and abbreviations:
•We refer to Werner Enterprises, Inc. as the “Company,” “Werner,” “we,” “our” or “us.”“us”
•Reference to the “SEC” means the U.S. Securities and Exchange Commission
•The 2021 Annual Meetingterm “record date” means March 25, 2024
•The term “registered stockholders” means stockholders of Stockholders is referred torecord with our transfer agent, Equiniti Trust Company (“Equiniti”), as of the “Annual Meeting” or “2021 Annual Meeting.”close of business on the record date
•References to “2020”“2023” and “for the year ended December 31, 2020”2023” mean the Company’s fiscal year for the period beginning January 1, 20202023 and ending December 31, 2020.2023
•References to the “2023 Form 10-K” mean our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 26, 2024
•References to the “2023 Annual Report” mean our Annual Report containing the 2023 Form 10-K
•References to “Proxy Materials” mean the Meeting Notice, this Proxy Statement, the proxy card, the 2023 Annual Report, and any amendments or additional solicitation materials
•The term “executive officers” means those executives listed in the Executive Officer Information section of this Proxy Statement.
•The term “Proxy Materials”References to “our website” means and consists of this Proxy Statement, the proxy relating to the 2021 Annual Meeting and the 2020 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
The Proxy Materials section of this Proxy Statement.
This Proxy Statement and our 2020 Annual Report are available on our website. In these Proxy Materials, wethrough www.proxyvote.com, the website of Broadridge Financial Services, Inc. The materials refer to certain reports and forms that we have filed with the U.S. Securities and Exchange Commission (the “SEC”). All of ourSEC. Our SEC filings, including the Proxy Materials, are available on our website under the Financial Information heading, as well as on the SEC website at www.sec.gov. You may also request copies of ourthe Proxy Materials as instructed in the Availability Notice. You may request copies of other SEC filings and Proxy Materials from our Corporate Secretary at the contact informationas provided in the Contacting the Corporate Secretary and Executive Offices section of this Proxy Statement..
2020 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 our associates, customers and the 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 2020 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
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•Operating income$227.4 million
| •Capital expenditures, net$266.2 million
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•Net income$169.1 million
| •Dividends paid$24.9 million
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•Earnings per diluted share$2.44
| •Stock repurchases$56.5 million
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•Operating ratio90.4%
| •Stockholders’ equity$1.2 billion
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20202023 Financial Highlights. The Company’s financial results in 2023 were impacted by a prolonged and challenging operating environment with revenues flat and operating income decreasing 45%. Earnings per diluted share decreased 53% due primarily to market dynamics including lower equipment gains, inflationary headwinds and rate pressure in One-Way. Despite these challenges, we generated record cash flow from operations of $474.4 million and ended the year with a net debt to earnings before interest, income taxes, depreciation, and amortization (EBITDA) ratio of 1.21 times.
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•Total revenues $3.3 billion | •Cash flow from operations$474.4 million |
•Operating income$176.4 million | •Capital expenditures, net $408.7 million |
•Net income attributable to Werner$112.4 million | •Dividends paid $34.2 million |
•Earnings per diluted share$1.76 | •Stockholders’ equity $1.5 billion |
•Operating ratio 94.6% | |
2023 Executive Compensation Program. Our executive compensation program has been instrumental to achieving our business objectives. Our total compensation mix allows us to retain qualified, innovative executive officers who possess the necessary experience and expertise to effectively lead and manage the Company, contribute to our long-standing success and create value for our stockholders. The overall design of our compensation 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 noTwo named executive officers received base salary increases in 20192023 with an average increase of 5% |
| •Executive officers voluntarily decreased their base salaries during second quarter of 2020 due to COVID-19
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| Cash Annual Incentive Compensation | •Short-term cash incentive with variable payout opportunities based on fourtwo Company performance metrics measured against pre-defined annual goals and an individual performance metric |
| •No changeTarget cash annual incentive payouts as a percentage of base salary increased from 115% in payout opportunities2022 to 120% in 2023 for 2020the Chief Executive Officer (“CEO”) and remained the same at 70% in 2023 for the other named executive officers |
| •No adjustment to performance metrics and target goals for 2020 established prior to the COVID-19 outbreak
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| Long-Term Incentive Compensation | •Long-term equity-based incentives split equally between restricted stock and performance stock (at target) with three-year vesting schedules |
| •No changeUpdated performance stock Total Shareholder Return (“TSR”) modifier to equity award designallow for 2020a 25% increase or decrease in shares earned for outperforming or underperforming peers, respectively, rather than serving as a payout cap as it had in previous years |
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 | •Tax gross-ups beginning in 2022 |
•Stock ownership guidelines | |
•Limited perquisites | |
Environmental Social and Governance (“ESG”). At Werner, we are proud ofESG concepts have long been woven into the strong foundation of driving greater sustainability and inclusion throughout the 65 yearsfabric of our organization. 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 tonshistory. The recent history of CO2 since 2007. Werner is proud of its highly-skilled and safety-conscious driver workforce, that includes 55% of drivers who are ethnically diverse and 21% of drivers who are military veterans. Werner’s talented Board of Directors has strong business experience, relevant leadership skills and increasing diversity among its membership. After the 2021 Annual Meeting, we expect eight of nine directors will be independent and four of nine directors will be gender or ethnically diverse.our formal ESG program includes:
In October 2020, we launched a codified approach to sustainability organization-wide and unveiled key ESG milestones. As an important part of the Social component of ESG, 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 our 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 uphold transparency, ethics and integrity in our governance practices with an emphasis on creating a more diverse Board with complementary skills that 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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Carbon Emissions | •55% carbon emissions reduction by 2035
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2021 •Earned SmartWay Excellence award from the EPA for the 4th consecutive yearReleased an inaugural corporate social responsibility (“CSR”) report |
•Testing electric truckRetained leaders in sustainability and will test hydrogen truck |
•Invested in autonomous trucking technology company TuSimplediversity, equity and inclusion
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Associate Resource Groups (“ARG”) | •Add 3 associate resource groups by end of 2021 |
•Formed an IDEAL (Inclusion Diversity, Equity, Accountability & Learning) Council to oversee ARG developmentfacilitate Associate Resource Groups (“ARGs”) that help drive associate engagement and encourage diverse voices and perspectives
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2022 •Added Veterans’ ARGLaunched WernerBlue, a sustainability initiative that, through the work of a task force including executive leadership, focuses on progress toward ESG strategies and priorities •Environmental Social and Governance Committee (“ESG Committee”) of the Board was established, having the responsibilities described in March 2021; Young Emerging Professionals ARG will launch in May 2021Environmental Social and Governance Committee |
Formal Diversity Leadership Position | •Establish formal diversity leadership position by end of first quarter 2021Updated our inaugural CSR report
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2023 •Appointed AVP - Diversity, InclusionPosted a detailed CSR report (“2023 Report”) on our website under the ESG heading showing: ▪our ESG goals and Learningthe progress toward each ▪that ESG is a main pillar of Werner DRIVESM (Durable, Results, Innovation, Values, ESG), a strategy that incorporates sustainability, capital allocation, an outcome-oriented approach to operations, a drive to innovate, and a culture that supports and values team members ▪multiple awards we have received related to ESG efforts (awards are also shown in first quarter 2021Item 1 of our 2023 Form 10-K)
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2024 •Continuing to establish and measure progress toward meaningful, reportable ESG metrics and goals and work closely with the ESG Committee of the Board in, among other efforts: ▪building on our strong foundation as an industry leader focused on reducing our environmental impact and carbon footprint ▪fostering and empowering an inclusive culture that upholds our core values ▪upholding transparency, ethics and integrity in our governance practices
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Highlights of 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.program include:
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Environmental •As shown in the 2023 Report, we are an award-winning EPA SmartWay Transportation Partner: ▪working to make our fleet more environmentally sustainable ▪investing in and testing alternative fuels and technology ▪including facilities in our carbon reduction efforts ▪executing a carbon reduction plan against an aggressive 2020 baseline (initial results of 16% in the 2023 Report)
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Social •Commitment to several core Company values furthers this responsibility: ▪Safety - We strive to invest in new technology to help keep our professional drivers and communities safe –In 2023, we achieved a 19-year low (for our third quarter) in our U.S. Department of Transportation preventable accident rate ▪Inclusion - We have 11 ARGs to foster an inclusive workplace aligned with our corporate goals and values –In 2023, we formalized our supplier diversity program ▪Community – We are dedicated to addressing important societal issues –We connect associates participating in our longstanding Blue Brigade with volunteer opportunities in their communities –We are a leader in an industry-wide effort to combat human trafficking; in 2023, we rolled out training to all office associates
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Governance •Our talented Board has strong business experience, relevant leadership skills and diversity among its membership, as shown in Director Information •Recent governance activity of the Board includes: ▪In 2023, we created a Lead Independent Director position and appointed a Lead Independent Director ▪In 2024, we separated the office of President from that of Chairman & Chief Executive Officer and appointed our Chief Legal Officer as President
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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 a 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. DirectorsSubject to the terms and conditions of our By-laws, directors hold office for a term of three years and until a successor is elected and qualified. Thequalified, and the terms of office for each class of current directors expire at the annual meetingAnnual Meeting of stockholdersStockholders in the following years: Class I, 2022;2025; Class II, 2023;2026; and Class III, 2021.2024.
DIRECTOR NOMINEES
You will be asked to elect threeone director in Class I to serve for a one-year term expiring at the 2025 Annual Meeting of Stockholders (“2025 Annual Meeting”) and two directors in Class III to each serve for a three-year term expiring
at the 2024 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 20222027 Annual Meeting of Stockholders and one Class II director to serve for a two-year term expiring at the 2023(“2027 Annual Meeting of Stockholders and until his or her respective successor is elected and qualified.Meeting”). The nominees for director at the 2021 Annual Meeting are:
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| NOMINEES OF THE BOARD OF DIRECTORS |
| Class | Term Ends | Name |
| Class I | If elected, new term will expire
at 2025 Annual Meeting | Michelle D. Greene (1) |
| Class III | If elected, new term would expire
at 2027 Annual Meeting | Scott C. Arves–Class III | Vikram Mansharamani, Ph.D.–Class III | Arves
Alexi A. Wellman–Class IIIWellman |
| Carmen A. Tapio–Class I | Derek J. Leathers–Class II |
(1) Appointed in November 2023 to fill a directorship vacancy created by the retirement of Dr. Kenneth M. Bird, Ed.D. |
Mr. Clarence L. Werner, Chairman
On February 27, 2024, former Class III director, Vikram Mansharamani, Ph.D. resigned from the Board.As a result, the number of directors decreased from nine to eight. As of the date of this Proxy Statement, the Board Mr. Patrick J. Junghas three Class I, three Class II, and Mr. Michael L. Gallagher, currenttwo Class III directors whose terms will expire at the 2021 Annual Meeting, will not stand for re-election to the Board, but they will continue to serve on the Board until their terms 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 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. directors.
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 other directors whose terms will continue after the 2021 Annual Meeting. Certain information provided to us by our directors and director nominees regarding their qualifications, skills and experience is also set forth in the Director Biographies and in the Director Skills and Qualifications matrix following the table.Diversity matrix. 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 |
Derek J. Leathers | Vice Chairman, President & Chief Executive Officer of Werner Enterprises, Inc. | 2023 | II |
Kenneth M. Bird, Ed.D. | President & Chief Executive Officer
of Avenue Scholars | 2022 | I |
Gerald 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 Executive Officer of North End Teleservices, LLC | 2022 | I |
| Scott C. Arves, Director & Nominee | Former Director, President & Chief Executive Officer
of Transport America, Inc. | N/A2024 | III |
Vikram Mansharamani, Ph.D.Diane K. Duren, Director | Harvard University LecturerFormer Executive Vice President and Corporate
Secretary of Union Pacific Corporation | N/A2026 | IIIII |
| Michelle D. Greene, Director & Nominee | Executive Vice President, Chief Information Officer,
Global Technology and Business Services
of Cardinal Health | 2024 | I |
| Jack A. Holmes, Director | Chairman of EmergeTMS;
Former President of UPS Freight | 2025 | I |
| Derek J. Leathers, Director | Chairman & Chief Executive Officer
of Werner Enterprises, Inc. | 2026 | II |
| Michelle D. Livingstone, Director | Former Vice President-Transportation
of The Home Depot | 2026 | II |
| Carmen A. Tapio, Director | Founder and Chief Executive Officer
of North End Teleservices, LLC | 2025 | I |
| Alexi A. Wellman, Director & Nominee | Chief FinancialExecutive Officer of Altaba, Inc. | N/A2024 | III |
Director 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. LEATHERSSCOTT C. ARVES, 51,67, was appointed by our Board of Directorselected as a Company director in May 2020 to fill a directorship vacancy and appointed Vice Chairman of the Board.2021. Mr. Leathers has been our President since 2011 and Chief Executive Officer since May 2016, and he currently servesArves retired from Transport America, Inc. 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 employed by Schneider National, a large truckload carrier, for eight years, during which time he was based out of Mexico City for several years and was one of the first foreign members of Mexico’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 Committee member of the Greater Omaha Chamber of Commerce, among others. Mr. Leathers brings to the Board a unique understanding of our business and operationsJanuary 2017 after serving as well as his significant and extensive knowledge of the transportation industry.
KENNETH M. BIRD, ED.D., 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 theDirector, President & Chief Executive Officer of Avenue Scholars,for ten years. Prior to that, he had a nonprofit entity that serves youth education in Omaha, Nebraska. Dr. Bird previously
27-year career with Schneider National, Inc., where he most recently served as SuperintendentPresident of Westside Community Schools in Omaha, Nebraskathe Transportation Sector from 1992 until May 2008,2000 to June 2006. In that capacity, he was responsible for all of Schneider’s trucking and he also held various administrative positions with Westside Community Schools since 1981. Heintermodal business, which was employed by the Nebraska Department of Education from 1974 to 1981 and as a special education teacher at Westside Community Schools from 1970 to 1974. Dr. Bird’s broad range of board experience is also considerable and extensive.$3 billion business employing approximately 20,000 people. He is active in local, state and national professional organizations ascurrently a member of various advisory councils, committeesthe Board of Advisors of CSM Companies and task forces. Dr. Bird serves aswas a director or trustee onof Commercial Vehicle Group from May 2005 to May 2019 and a numberdirector 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.
GERALD H. TIMMERMAN, 81, was appointed by our Board of Directors inTFI International from May 2016 to fill a vacant directorship position and was elected by the stockholders at the 2017 Annual Meeting.December 2018. 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. TimmermanArves brings to our Board substantial business experience financial acumenin the truckload industry and outsideprevious board experience that contributes to the Board’s collective qualifications, skillsexperience. Mr. Arves was appointed Chair of our Nominating and experience.Corporate Governance Committee effective May 2022 and Lead Independent Director effective February 2023.
DIANE K. DUREN, 61,64, was elected as a Company director of the Company in 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 committee and is Chair of its compensation committees.committee. Ms. Duren is a member of the board of directors of Savage Companies, a privately held transportation, logistics, materials handling, and industrial services company, and serves on its audit committee and is Chair of its compensation committee. 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 servesserved on the Boardboard of Children’s Hospital and Medical Center as Chair.where she was Chair from 2019 to 2021. In 2018, Ms. Duren joined Peter Kiewit Foundation as a Community Advisor and in 2019 became a trustee of the foundation. Ms. DurenTrustee. She also became a member ofjoined Creighton University’s Board of Trustees in 2019.2019 and currently serves as Vice Chair. 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. She also qualifies as an audit committee financial expert. 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. HOLMESMICHELLE D. GREENE, 61,54, was appointed by our Board in November 2023 to fill a vacant directorship position. Ms. Greene is Executive Vice President, Chief Information Officer, Global Technology and Business Services at Cardinal Health, a distributor of Directorspharmaceuticals, a global manufacturer and distributor of medical and laboratory products, and a provider of performance and data solutions for healthcare facilities. In her role as Chief Information Officer, Ms. Greene manages the teams charged with Digital and Commercial Technologies, Pharma and Medical segment information technology, Global Business Services and Information Security. In addition to her day-to-day responsibilities at Cardinal Health, Ms. Greene serves on the board for The Cardinal Health Foundation, actively sponsors the company’s STEM Initiative, co-sponsors BOLD, the Black and African American employee resource group and is an executive advisor for the Black and African American Equity Cabinet. In the community, Ms. Greene serves on numerous boards including Goodwill of Southeastern Wisconsin, Goodwill Manufacturing, Inc., GreenPath Financial Wellness and Detroit Public Television. She is also an active member of ITSMF (IT Senior Management Forum), Chief and Black Women on Boards. With her experience in business strategy, including technology solutions, and in information technology infrastructure and cybersecurity, Ms. Greene adds valuable acumen to our Board.
JACK A. HOLMES, 64, was appointed by our Board 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.Meeting of Stockholders. 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 Chairman and a director of EmergeTMS in Scottsdale, Arizona; formerly served as a director of Sharps Compliance, (SMED), on which he servesserved as Chairman of the Nominating and Corporate Governance Committee and the Compensation Committee; and isas a member of the board of directorsdirector 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.Board. Mr. Holmes was appointedserved as Chair of our Nominating and Corporate Governance Committee effectivefrom April 2020.2020 to April 2022.
CARMEN A. TAPIODEREK J. LEATHERS, 55,54, was appointed by our Board in May 2020 to fill a directorship vacancy and appointed Vice Chairman of Directorsthe Board. In May 2021, he was elected as a Company director by the stockholders and appointed Chairman of the Board. He served as our President from 2011 to January 2024 and has been our Chief Executive Officer since May 2016. Mr. Leathers has worked in the transportation and logistics industry for over 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 employed by Schneider National, a large truckload carrier, for eight years, during which time he was based out of Mexico City for several years and was one of the first foreign members of Mexico’s trucking association (CANACAR). Mr. Leathers is active in a number of local, state and national professional organizations and boards. He currently serves as the chair of the American Transportation Research Institute board of directors, is a founder and board member of PlaySmart, and is a board member and Executive Committee member of the Greater Omaha Chamber of Commerce. Mr. Leathers brings to the Board a unique understanding of our business and operations as well as his significant and extensive knowledge of the transportation industry.
MICHELLE D. LIVINGSTONE, 65, was appointed by our Board in May 2022 to fill a vacant directorship and was elected by the stockholders at the 2023 Annual Meeting of Stockholders. Ms. Livingstone served as Vice President - Transportation for The Home Depot (a multinational home improvement retail business) in Atlanta from 2007 to 2021. During this time, she was a founding member of the Supply Chain Leadership Team and served on the Environmental Council to drive sustainability efforts. From 2005 to 2007, Ms. Livingstone was Senior Vice President – Transportation for C&S Wholesale Grocers in Keene, New Hampshire and was Vice President –
Transportation for J.C. Penney of Plano, Texas from 2002 to 2005. Ms. Livingstone was Senior Director of Supply Chain and Transportation for Kraft Foods of North America, Inc. of Madison, Wisconsin from 1985 to 2002. Ms. Livingstone currently serves as a board member for Mastery Logistics Systems, Rainbow Village, The Transportation and Supply Chain Institute of the University of Denver, and Indiana University Kelley School of Business Transportation Executive Board. With her extensive leadership experience in the transportation industry, Ms. Livingstone adds thoughtful insight through industry expertise to our Board.
CARMEN A. TAPIO, 58, was appointed by our Board in November 2020 to fill a directorship vacancy. Ms. Tapiovacancy and was elected by the stockholders at the 2021 Annual Meeting of Stockholders. She is the Founder, Presidentfounder and CEOChief Executive Officer of North End Teleservices, LLC, in Omaha, Nebraska.Nebraska, which provides advanced contact center solutions. She has held this position since 2017 and previously served as President and COOChief Operating Officer 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. Since 2021, Ms. Tapio has served on the Board of Directors of the Federal Reserve Bank of Kansas City, Omaha Branch. Ms. Tapio is active in local community organizations and is currently onserves as the chair of the Greater Omaha Chamber of Commerce board of directors and executive committee, serving as the chair for both the Diversity and Inclusion Council and the CEO’s forits Commitment to Opportunity, Diversity and Equity Council. Ms. Tapio(“CODE”) and CEOs for CODE councils. She also served as council chair forof the Leadership, Diversity Equity and Inclusion Council for the state of Nebraska’s Blueprint Nebraska Task Force.strategy. In 2022, Ms. Tapio was named USA TODAY’s Women of the Year honoree from Nebraska. She 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. Ms. Tapio was appointed Chair of our Environmental Social and Governance Committee effective January 2022.
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 ideas 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 a wide variety of experiences which will bring a valuable perspective to our Board.
ALEXI A. WELLMAN, 50, is53, was elected as a nominee for election to the BoardCompany director in May 2021. Ms. Wellman has been the Chief Executive Officer of Altaba, Inc., a closed-end management investment company, since January 2022. From June 2017 until her current appointment, Ms. Wellman served as 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 18 years, 7 yearsseven of which she served as an audit partner. She was the audit engagement partner on the Company’s annual audit for the year ended December 31, 2010, prior to her departure in 2011. Ms. Wellman currently serves on the Board of Directorsboard and is anthe audit committee and compensation committee memberchair of TWC Tech Holdings II Corp. (TWCTU) and Nebula Caravel Acquisition Corp. (NEBCU), both True Wind Capital special purpose acquisition companies. She also serves on the Board of Directors of V2verify,ESS Inc. and MatMaCorp. Ms. Wellman has significant knowledge and experience in financial management, accounting processes and corporate governance. She brings substantial accounting and financial expertise, overall board experience and comprehension of our business operations and industry that contribute to the Board’s collective qualifications, skills and experience. Ms. Wellman also qualifies as an audit committee financial expert. Ms. Wellman was appointed Chair of our Audit Committee effective May 2021.
Director Skills and QualificationsDiversity.The Nominating and Corporate Governance Committee (“Governance Committee”) considers the particular experience, qualifications, and skills of each director and the relevance of such key competencies to the Company’s business and operations when determining whether an individual should serve as a Company director. The matrix that follows summarizes the skills and qualificationsdiversity of the continuing directors and director nominees, which the Governance Committee considered in its evaluation. The Company is continuing to refresh, diversify and add new capabilities to our Board, and as a result following the 2021 Annual Meeting, if elected, sevensix of the nineeight directors will have a tenure of less than five years.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DIRECTOR SKILLS AND DIVERSITY |
| Scott C. Arves | Diane K. Duren | Michelle D. Greene | Jack A. Holmes | Derek J. Leathers | Michelle D. Livingstone | Carmen A. Tapio | Alexi A. Wellman | % |
| Skills | | | | | | | | | |
| Strategy development and risk management | X | X | X | X | X | | X | X | 88% |
| CEO experience | X | | | X | X | | X | X | 63% |
| Cybersecurity experience | | | X | X | X | | X | X | 63% |
| Marketing and sales | X | X | | X | X | | X | | 63% |
| Public company officer or director | X | X | X | X | X | X | X | X | 100% |
| Government affairs, public policy, regulatory | | | | X | X | X | | | 38% |
| Industry | X | X | | X | X | X | | | 63% |
| Corporate governance | X | X | | X | | | | X | 50% |
| Financial | | X | | X | X | | X | X | 63% |
Demographics | | | | | | | | | |
| Race/Ethnicity: | | | | | | | | | |
| African American or Black | | | X | | | | X | | 25% |
| White | X | X | | X | X | X | | X | 75% |
| Gender: | | | | | | | | | |
| Female | | X | X | | | X | X | X | 63% |
| Male | X | | | X | X | | | | 38% |
Board Tenure | | | | | | | | | |
| Approximate Years | 3 | 7 | 0.5 | 6 | 4 | 2 | 3 | 3 | N/A |
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 A 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,Nasdaq rules, except for Mr. Werner and Mr. Leathers .Leathers. The Board has also determined that each member of the three Board committees satisfies the applicable independence requirements of NASDAQNasdaq and the SEC.
In making its independence determinations, our Board evaluated the following relationships and affirmatively determined that they did not materially affect the respective directors’ objectivity or independence:
•Ms. Livingstone is a member of the board of directors of Mastery Logistics Systems, Inc. (“MLSI”). We purchase MLSI’s cloud-based transportation management system solution. On January 24, 2023, we purchased a $25.0 million subordinated promissory note from MLSI and have invested in MLSI as described in notes 6, 7 and 9 to the Consolidated Financial Statements in our 2023 Form 10-K.Ms. Livingstone does not participate in board decisions at either MLSI or Werner regarding the MLSI-Werner relationship and is obligated to protect the Company’s confidential information.
•Ms. Tapio is the founder and Chief Executive Officer of North End Teleservices, LLC. The Company’s transactions with North End Teleservices, LLC are described in Transactions with Related Persons. The relationship between North End Teleservices, LLC and the Company is arms-length.
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 questionnaires completed by our 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’sGovernance Committee’s recommendations and after considering the information available to thesuch 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,designed to 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 appoints our Chairman and our Chief Executive Officer. CL Werner currently serves as our Chairman through the 2021 Annual Meeting, and Derek J. Leathers serves as our Vice Chairman, President and Chief Executive Officer. Each individual was appointed by our Boardis serving in both roles, subject to serve in his current position until he resigns, is removed,resignation, removal, or is unable inability to serve due to death or incapacity, pursuant to Section 2 of Article III of our By-Laws. As Chairman, Mr. Leathers is actively involved in determining agendas for and presides over Board meetings and serves as a liaison between our Board and management.
The positions of Chairman and CEO are held by two individuals instead of the same person. We believe our current leadership structure, with a non-independent director serving as both Chairman and CEO, is effective for us. This configuration demonstrates to our stockholders, employees and customers that our primary leadership roles are served by twoa qualified peopleperson who each havehas an extensive depth of knowledge about the Company’s business and industry and areis committed to our development and success. Although CL Werner
We also have a Lead Independent Director (Scott C. Arves) whose responsibilities include the following: (i) preside at Board meetings at which the Chairman and CEO is not anpresent, including executive sessions of the independent directors, (ii) ensure that independent directors have adequate opportunities to meet and discuss issues without management present and call executive sessions of the independent directors as needed, (iii) review information sent to the Board and provide advice with respect to the agenda, schedule and other materials sent for Board meetings, (iv) communicate with the Chairman and CEO regarding discussions held in executive sessions of the Board, (v) serve as a liaison between the Chairman and CEO and the independent directors, (vi) be available for consultation and communication with major stockholders as deemed appropriate by the Board, (vii) lead the Board in succession planning for the Chairman and CEO, as well as succession planning for the Lead Independent Director, (viii) retain outside advisors and consultants who report directly to the Board on Board-wide issues, and (ix) be available to assist with the interviews of all director candidates and make recommendations to the Governance Committee. The Lead Independent Director Charter further describes the position and responsibilities of the role and is no longeravailable under the Corporate Governance heading of our largest stockholder, as our founder he demonstrates a long-standing dedication to the Company.website.
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 CommitteeBoard meeting and may also be held when deemed appropriate by the independent directors. Our Audit Committee is currently comprised solely of five of our seven independent directors. Our independent directors do not formally select a lead independent director to preside over their executive sessions. Rather,Since his appointment as Lead Independent Director, Mr. Jung, Chair of the Audit Committee, presidesArves has presided over the executive sessions of the independent directors and he also actsacted as a liaison between the independent directors, management and the full Board. Further information regarding the 20202023 executive sessions is provided under the in Committees of the Board of Directors section.Directors.
We believe that by having each Board committee (including their respective Chairs) and 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 providesa Lead Independent Director, we have an effective and strong Board leadership structure for the Company. Our Board has the flexibility to continue or modify our leadership structure in the future, asas the Board deems 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 primaryassists the Board in fulfilling its oversight responsibilityresponsibilities by reviewing the Company’s financial statements and audits thereof, and any other financial reports the Company files with respect to risks relating tothe SEC; systems of internal controls overregarding financial reporting; and auditing, accounting and financial reporting processes generally. In consultation with the independent auditors and contingent liabilitiesthe Internal Audit Department, the Audit Committee reviews the adequacy of the Company’s internal control environment, risk management processes, and risks that may be materialprocedures designed to ensure compliance with laws and regulations. It oversees policies and procedures related to the Company. protection of Company proprietary and customer information and compliance with data privacy requirements and risk management related to cybersecurity. It reviews with the Company’s counsel any legal matter that could have a significant impact on the Company’s financial statements.
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.business. Our ESG Committee identifies and assesses ESG risks and presents its findings to the Board and management. 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, ESG Committee, and Nominating and Corporate Governance Committee didCommittee do not impact our Board leadership structure because our Board is comprised of a majority, and such Board committeescommittees 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.website under the Corporate Governance heading. 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, theThe Board of Directorshas 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)16 of the Securities Exchange Act of 1934 (the “Exchange Act”)). 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 2020.2023.
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. The Board has threefour standing committees: the Audit Committee, the Compensation Committee, the ESG Committee, and the Nominating and Corporate Governance Committee (the “Governance Committee”).Committee. The Governance Committee evaluates each committee’s composition and appoints committee members annually, subject to Board 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.
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 under 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. |
| | | | | | | | | | | | | | | | | | | | |
| BOARD COMMITTEE MEMBERSHIP AND 2023 MEETINGS HELD |
Name | Audit Committee | Compensation Committee | ESG Committee | Governance Committee | Board of Directors |
| Scott C. Arves | | | X | Chair | X |
| Diane K. Duren | X | Chair | | | X |
| Michelle D. Greene | X | | X | | X |
| Jack A. Holmes | | X | | X | X |
| Derek J. Leathers | | | | | X |
| Michelle D. Livingstone | | X | X | | X |
| Carmen A. Tapio | | | Chair | X | X |
| Alexi A. Wellman | Chair | X | | | X |
| Number of Meetings | 4 | 6 | 3 | 3 | 5 (1) |
| | | | | | |
| (1) | Four (4) executive sessions of the independent directors were held in 2023. |
ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS AND 2023 ANNUAL MEETING
During 2020,2023, each incumbent director 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). Under 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. Due to COVID-19 meeting restrictions during the early stagesEight of the pandemic, our nine directors then serving were unable to attendattended our Annual Meeting of Stockholders in May 2020.2023, and the single absence was due to illness. The number of meetings conducted in 20202023 by the Board and each Board committee are provided in the Board Committee Membership and 20202023 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, the primary purpose of which is to oversee ourassist the Board in fulfilling its oversight responsibilities by reviewing the Company’s financial statements and audits thereof, and any other financial reports the Company files with the SEC; systems of internal controls regarding financial reporting; and auditing, accounting and financial reporting policies and processes our internal control systems, and the services performed by our independent registered public accounting firm.generally. Such oversight is performed in accordance with applicable SEC rules and NASDAQ listing standards.Nasdaq rules. Please refer to the Report of the Audit Committee section for the 20202023 report. As more fully described in its charter,
available on our website under the Corporate Governance heading, the Audit Committee’s oversight 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;
•ConsultingReviewing with the auditors and management regarding the adequacy of the Company’s internal controls;control environment, risk management processes, and procedures designed to ensure compliance with laws and regulations;
•Reviewing our financial statements with management and the independent auditors prior to their 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.irregularities;
•Overseeing policies and procedures related to the protection of Company proprietary and customer information and compliance with data privacy requirements; and
•Overseeing risk management related to cybersecurity.
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 2020,2023, as Audit Committee Chair, Mr. JungMs. Wellman 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 standardsNasdaq rules, and (iii) has sufficient knowledge and sophistication in financial and auditing mattersabilities for Audit Committee service under the NASDAQNasdaq rules. The Board also designated Mr. JungMses. Duren and Wellman as anhaving financial sophistication under Nasdaq rules and as “audit committee financial expert” as definedexperts” under the SEC rules upon determining that Mr. Jung possesses the requisite qualifications and experience and determined that director nominee Ms. Wellman will also qualify as an “audit committee financial expert” following Mr. Jung’s retirement.rules.
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 President &and 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 stockholder-approved Werner Enterprises, Inc. 2023 Long-Term Incentive Plan (the “2023 LTIP”) and for oversight of awards under such plan and the “Prior Plan” as defined therein, which includes the Werner Enterprises, Inc. Amended and Restated Equity Plan (the “Equity Plan”).ratified by stockholders on May 14, 2013, and amended and restated on February 7, 2018 and February 23, 2021.
The Report of the Compensation Committee section contains the 20202023 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.charter available on our website under the Corporate Governance heading.
Compensation Committee Independence.Our Board of Directors has determined that all current Compensation Committee members satisfy the applicable SEC and NASDAQNasdaq 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 20202023 or on the date of this Proxy Statement. In 2020,2023, except for Ms. Tapio, who served on the Compensation Committee for a portion of 2023, no other 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 2020,2023, 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.
ENVIRONMENTAL SOCIAL AND GOVERNANCE COMMITTEE
The Company formed an ESG Committee effective January 1, 2022. The primary functions of the ESG Committee are to: (i) support and oversee Company policies, in conjunction with other Board committees, relating to environmental, social, corporate social responsibility, sustainability, and public policy matters relevant to the Company; and (ii) assist management in setting general strategy relating to ESG matters and provide oversight to the Company’s underlying ESG programs and policies. The ESG Committee makes policy, program and strategy recommendations to the Board concerning current and emerging ESG trends that may affect our business, operations, performance, or public image. Committee members also play an active role in the creation of our periodic Corporate Responsibility Report. A more complete description of the ESG Committee’s functions is provided in its charter available on our website under the Corporate Governance heading.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Our Governance Committee is comprised only of directors whom the Board has determined satisfy the applicable SEC and NASDAQNasdaq 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 in 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.Nasdaq rules. A more complete description of the Governance Committee’s functions is provided in its charter.charter available on our website under the Corporate Governance heading.
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 or the independent directors as a group. This process is described in our Stockholder Communications Procedure for Communicating with the Board of Directors, included onunder the Corporate Governance heading of our website. You may direct any matter intended for the Board 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.website under the Corporate Governance heading. 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.Contacting the Corporate Secretary and Executive Offices. 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.such 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 20202023 proxy statement was April 3, 2020.2023. Stockholder recommendations intended for consideration for the director elections at the 20212024 Annual Meeting needed to be submitted on or beforewere due by December 4, 2020.5, 2023.) Stockholder recommendations for director nominees for the 2025 Annual Meeting must be submitted no later than the close of business on December 3, 2021 for the 2022 Annual Meeting of Stockholders.4, 2024.
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 theunder SEC, NASDAQNasdaq or other applicable laws or regulations.rules. 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 contact information is provided in the Contacting the Corporate Secretary and Executive Offices section..
Further, in addition to satisfying the requirements above and in our charter documents, stockholders who intend to solicit proxies in support of director nominees other than the nominees proposed by our Board must provide notice that meets all the requirements set forth in Rule 14a-19 under the Exchange Act no later than March 17, 2025.
We reserve the right to reject, rule out of order, or take other appropriate action with respect to any director nomination or stockholder proposal that does not comply with our restated bylaws and other applicable requirements.
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 Committee 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 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. The Governance Committee values diversity in its candidates and considers it desirable if potential nominees complement 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 attributes, including gender, race and ethnic diversity.
The following table summarizes certain self-identified personal characteristics of our directors in accordance with Nasdaq Listing Rule 5605(f). Each term used in the table has the meaning given to it in the rule and related instructions.
| | | | | | | | | | | | | | |
| BOARD DIVERSITY MATRIX (AS OF April 3, 2024) |
| Total Number of Directors | 8 |
| | Female | Male | Non-Binary | Did Not
Disclose
Gender |
| Part I: Gender Identity |
| Directors | 5 | 3 | 0 | 0 |
| Part II: Demographic Background |
| African American or Black | 2 | 0 | 0 | 0 |
| Alaskan Native or Native American | 0 | 0 | 0 | 0 |
| Asian | 0 | 0 | 0 | 0 |
| Hispanic or Latinx | 0 | 0 | 0 | 0 |
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 |
| White | 3 | 3 | 0 | 0 |
| Two or More Races or Ethnicities | 0 | 0 | 0 | 0 |
| LGBTQ+ | 0 |
| Did Not Disclose Demographic Background | 0 |
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.Board.
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.
2023.Our current 20202023 annual compensation package for independent directors is comprised of the annual cash retainers and restricted stock awards provided in the Independent Director Annual Retainers and Fees table that follows. 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.
| | | | | |
| INDEPENDENT DIRECTOR ANNUAL RETAINERS AND FEES |
| Fee or Retainer | Amount and Frequency of Payment |
| Cash Retainer for Board Membership | $50,000
75,000
(paid in quarterly installments of $12,500$18,750 each) |
| Cash Retainer for the Lead Independent Director | $25,000
(paid in quarterly installments of $6,250 each) |
| Cash Retainer for the Audit Committee Chair | $15,000
(paid in quarterly installments of $3,750 each) |
| Cash Retainer for the Compensation Committee Chair | $10,000
(paid in quarterly installments of $2,500 each) |
Cash Retainer for the GovernanceESG Committee Chair | $10,000
(paid in quarterly installments of $2,500 each) |
| Cash Retainer for the Governance Committee Chair | $10,000
(paid in quarterly installments of $2,500 each) |
| Restricted Stock Award for Board Membership | $80,000
100,000
(three year vesting period from the date of grant) |
The Director Compensation for 20202023 table presents the compensation of each individual serving as an independent director during 20202023 for service on our Board and its committees. This table does not include those directors who are also Company employees or related parties because such directors are not considered independent directors and thus did not receive any compensation in 20202023 for their service on our Board. (CL Werner and Derek(Derek Leathers were directorsis a director and named executive officers,officer, and the compensation paid to each of themhim by the Company is discussed in the Executive Compensation section and provided in the Summary Compensation Table.) Our independent directors do not participate in any benefit, pension or nonqualified deferred compensation plan of the Company. For these reasons,Company or receive stock option or non-equity incentive compensation awards; thus, we have omitted those columns from the table.that would otherwise be required by SEC rules.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DIRECTOR COMPENSATION FOR 2020 |
| Name | Fees Earned or Paid in Cash ($)(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 $0.09 quarterly dividend amount per share and 1.0% and 0.2% risk-free interest rates, respectively. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 8 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2020. |
| (3) | The aggregate number of shares of unvested restricted stock outstanding at December 31, 2020 for each independent director is as follows: Dr. Bird 3,624; Ms. Duren 3,624; Mr. Gallagher 3,624; Mr. Holmes 3,491; Mr. Jung 3,624; Ms. Tapio 995; and Mr. Timmerman 3,624. No option awards were outstanding. |
| (4) | Dr. Peetz retired from the Board on November 10, 2020, upon which his unvested restricted stock awards became fully vested. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DIRECTOR COMPENSATION FOR 2023 |
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1)(2) | All Other Compensation ($) | Total ($) |
Scott C. Arves (3) | | 103,750 | | | 100,000 | | — | | 203,750 | |
Kenneth M. Bird, Ed.D. (4) | | 75,000 | | | 100,000 | | — | | 175,000 | |
| Diane K. Duren | | 85,000 | | | 100,000 | | — | | 185,000 | |
Michelle D. Greene (4) | | 9,375 | | | 50,000 | | — | | 59,375 | |
| Jack A. Holmes | | 75,000 | | | 100,000 | | — | | 175,000 | |
| Michelle D. Livingstone | | 75,000 | | | 100,000 | | — | | 175,000 | |
Vikram Mansharamani, Ph.D. (5) | | 75,000 | | | 100,000 | | — | | 175,000 | |
| Carmen A. Tapio | | 85,000 | | | 100,000 | | — | | 185,000 | |
| Alexi A. Wellman | | 90,000 | | | 100,000 | | — | | 190,000 | |
|
| (1) | On May 9, 2023, each of the independent directors then serving on the Board received an annual award of 2,274 shares of restricted stock with a grant date fair value of $43.97 per share. On November 6, 2023, Ms. Greene was awarded 1,384 shares of restricted stock, a prorated award in conjunction with her appointment to the Board, with a grant date fair value of $36.13 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 9, 2023 and November 6, 2023 grants were calculated based on a $0.14 quarterly dividend amount per share and 4.0% and 4.5% risk-free interest rates, respectively. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 11 of our Consolidated Financial Statements in the 2023 Form 10-K. |
| (2) | The aggregate number of shares of unvested restricted stock outstanding at December 31, 2023 for each independent director who served in 2023 is as follows: Mr. Arves 4,429; Ms. Duren 4,429; Ms. Greene 1,384; Mr. Holmes 4,429; Ms. Livingstone 3,865; Dr. Mansharamani 4,429; Ms. Tapio 4,429; and Ms. Wellman 4,429. No option awards were outstanding. |
| (3) | Mr. Arves was appointed Lead Independent Director effective February 2023. |
| (4) | Dr. Bird retired from the Board and Ms. Greene was appointed to the Board effective November 6, 2023. Upon Dr. Bird’s retirement, his unvested restricted stock awards became fully vested. |
| (5) | Dr. Mansharamani resigned from the Board effective February 27, 2024, upon which his unvested restricted stock awards became fully vested. |
During 2020,2023, restricted stock was granted to the independent directors then serving on the Board on May 12, 20209, 2023 and to Ms. TapioGreene on November 10, 2020.6, 2023. The grants of restricted stock to the independent directors were made in accordance with our Amended and Restated Equity Plan,2023 LTIP, 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, 20239, 2026 and November 10, 2023,6, 2026, 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 Plan2023 LTIP was included as an exhibit to our Current Report on Form 8-K filed with the SEC on May 9, 2023, and the Form of Restricted Stock Award Agreement were bothwas included as exhibitsan exhibit to our AnnualQuarterly Report on Form 10-K10-Q for the year ended December 31, 2020quarter ending June 30, 2023 filed with the SEC on February 24, 2021.August 8, 2023.) We did not grant any stock options, stock appreciation rights (“SARs”), or performance stockother forms of equity awards to our independent directors in 2020.2023.
Director Stock Ownership. In February 2020, formal stock ownership guidelines for all independent directors were adopted. Stock ownership includes common stock owned (directly or indirectly) and time-vested restricted stock. ThePrior to March 2022, the ownership guidelines requirerequired independent directors to own stock with a market value equal to or in excess of 3.0 times the current independent director annual cash retainer. In March 2022, the stock ownership guidelines were updated to require independent directors to own stock with a market value equal to or in excess of 5.0 times the current independent director annual cash retainer. Independent directors have threefive years from adoptionthe later of the date of this policy change or from their date of election to meet the ownership guidelines and are required to retain all restricted
stock granted as fees for Board membership until such time as they meet the ownership guidelines. All independent directors, except Ms. Tapio,Duren and Mr. Holmes already met the revised ownership guidelines as of December 31, 2020.2023. Mr. Arves and Mses. Greene, Livingstone, Tapio and Wellman have either served as a director for less than five years or will have five years from the date of this policy change to comply. The individual stock ownership of
each independent director is set forth in the table under the Stock Ownership of Directors, Executive Officers and Certain Beneficial Owners section of this Proxy Statement..
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 until he or she resigns, is removed, or is unable to serve due to death or 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 |
EXECUTIVE OFFICERS |
| Name | Position with the Company | Age |
| Derek J. Leathers | Vice Chairman President & Chief Executive Officer | 5154 |
H. Marty NordlundNathan J. Meisgeier | Senior President & Chief Legal Officer | 50 |
| Craig T. Callahan | Executive Vice President & Chief Commercial Officer | 50 |
| Eric J. Downing | Executive Vice President & Chief Operating Officer | 5951 |
John J. SteeleJames L. Johnson | Executive Vice President & Chief Accounting Officer | 60 |
| Daragh P. Mahon | Executive Vice President & Chief Information Officer | 55 |
| H. Marty Nordlund | Executive Vice President of Strategic Partnerships | 62 |
| Jim S. Schelble | Executive Vice President & Chief Administrative Officer | 63 |
| Christopher D. Wikoff | Executive Vice President, Treasurer & Chief Financial Officer | 63 |
Jim S. Schelble | Executive Vice President & Chief Administrative Officer | 60 |
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 | 5249 |
For information regarding the business experience of Derek J. Leathers, please refer to Director Information under.
NATHAN J. MEISGEIER joined the Proposal 1 – ElectionCompany in 2005 as Senior Counsel of Directors sectionLitigation. He held the titles of this Proxy Statement.
H. MARTY NORDLUND joined usAssociate Vice President and Associate General Counsel before being promoted to Vice President and General Counsel 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–Dedicated Fleet Services in 1998; (iv) Vice President–Specialized Services in 2001; (v) Senior Vice President–Specialized Services in 2003; (vi) Executive Vice President–Specialized Services in 2005; and (vii) Senior Executive Vice President—Specialized Services in 2006.2016. In May 2016, Mr. NordlundFebruary 2018, he was namedpromoted to his current position as Senior Executive Vice President and Chief OperatingLegal Officer. Before joiningIn January 2024, he began serving as President in addition to Chief Legal Officer. Outside of the Company, Mr. Nordlund held various management positions with Crete Carrier Corporation, a large privately held truckload carrier.
JOHN J. STEELE joinedMeisgeier is the Company in 1989 as Controller. During his time with us, he was appointed toChairman of the following positions: (i) Corporate Secretary in 1992; (ii) Vice President–Controller & Corporate Secretary in 1994; (iii) Vice President, Treasurer & Chief Financial Officer in 1996;American Trucking Associations’ Legal Reform Advisory Council 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 servessits on the board of directors of Morningside College.
JIM S. SCHELBLE joined usfor the American Trucking Associations Litigation Center, among other positions with the transportation industry. Mr. Meisgeier graduated from Harvard Law School in 1998 as Manager of New Business Development. During his tenure with us, Mr. Schelbleand was promoted toa litigator at 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–Sales in 2003; (v) Senior Vice President–Sales in 2004; (vi) Executive Vice President–Sales and Marketing in 2005; and (vii) Executive Vice President of Marketing and Driver Resources in 2015. In May 2016,
Mr. Schelble was named to his current position as Executive Vice President and 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. Mr. Schelble also serves on the state board and executive board of 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 2010. Mr. Johnson was employed by the independent public accountingKansas City law firm of Arthur Andersen & Co. as a certified public accountant from 1985 until his employment with us in 1991.Stinson, Mag and Fizzell for seven years before joining Werner.
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.
NATHANERIC J. MEISGEIERDOWNING has worked in multiple departments since joining the Company in 1998 as a fleet coordinator, including time in Operations, Marketing, Logistics and Dedicated. During his tenure with the Company, he has served in a variety of leadership roles and was promoted to the following positions: (i) Associate Vice President of Specialized Services in 2009; (ii) Vice President of Specialized Services in 2012; and (iii) Senior Vice President of Dedicated in 2016. Under his leadership as Senior Vice President of Dedicated, he was instrumental in fostering relationships and growing strategic customer accounts resulting in the Company’s 50% Dedicated fleet growth while nearly doubling Dedicated revenue. He was named to his current position as Executive Vice President and Chief
Operating Officer in January 2023. Mr. Downing serves on the Nebraska Trucking Association board of directors where he is also an executive committee member. Mr. Downing served in the United States Air Force from 1991 to 1998.
JAMES L. JOHNSON joined the Company in 20051991 as Senior CounselManager of Litigation. Since that time, Mr. MeisgeierFinancial Reporting. He has heldsince been appointed to the titlesfollowing positions with us: (i) Assistant Controller in 1992; (ii) Director of AssociateAccounting in 1994; (iii) Controller in 1996; (iv) Vice President and Associate General Counsel before being promoted toController in 2000; and (v) Senior Vice President and General CounselController in 2016.2005. In February 2018, Mr. Meisgeier2010, he was promoted to his current position of Executive Vice President and Chief LegalAccounting Officer. He also served as Corporate Secretary from 1996 to August 2023. Mr. Meisgeier practiced atJohnson was employed by the Kansas City lawindependent public accounting firm of Stinson, Mag and Fizzell for seven years before joining WernerArthur Andersen & Co. as a certified public accountant from 1985 until his employment with the Company in 2005.1991. He graduated from Nebraska Wesleyan University with a degree in Business Administration with an emphasis in accounting.
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., a cloud communications provider, 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.
H. MARTY NORDLUND joined the Company in 1994 as an account executive. He then received the following promotions with the Company: (i) Director of Dedicated Fleet Services in 1995; (ii) Senior Director of Dedicated Fleet Services in 1997; (iii) Vice President of Dedicated Fleet Services in 1998; (iv) Vice President of Specialized Services in 2001; (v) Senior Vice President of Specialized Services in 2003; (vi) Executive Vice President of Specialized Services in 2005; (vii) Senior Executive Vice President of Specialized Services in 2006; and (viii) Senior Executive Vice President and Chief Operating Officer in 2016. In January 2023, Mr. Nordlund became Executive Vice President of Strategic Partnerships. Prior to joining the Company, he held various management positions with Crete Carrier Corporation, a large privately held truckload carrier.
JIM S. SCHELBLE joined the Company in 1998 as Manager of New Business Development and has been appointed to the following positions throughout his tenure: (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 of Sales in 2003; (v) Senior Vice President of Sales in 2004; and (vi) Executive Vice President of Sales and Marketing in 2005. He was named to his current position of Executive Vice President and Chief Administrative Officer in May 2016 and currently has responsibility for Driver Recruiting, the Roadmaster School Network, and the Terminal Network. Prior to joining the Company, Mr. Schelble spent twelve years with Roadway Express, a less-than-truckload carrier, in various management positions within operations, sales, and marketing. In addition to his corporate responsibilities, Mr. Schelble serves on the state and executive board of Community Health Agencies Drive and also serves on the Board of Directors of the Professional Truck Drivers Institute. Mr. Schelble graduated from St. John’s University with a degree in business administration and then from Drake University with an MBA in business.
CHRISTOPHER D. WIKOFF joined the Company in April 2023 as Executive Vice President, Chief Financial Officer and Treasurer. He previously served as Executive Vice President and Treasurer of West Technology Group, formerly Intrado Corporation, a cloud-based, global technology company ("West") from 2016 to 2023. Prior to joining West, Mr. Wikoff served as Vice President, Finance and Treasurer at CommScope, a Fortune 1000 network infrastructure provider, from 2003 through 2015. Prior to his time at CommScope, Mr. Wikoff served in other corporate and divisional finance leadership roles, including with Avaya from 2000 to 2003.
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 22, 2021,25, 2024, with respect to the beneficial ownership of our common stock by: (i) each of our current directors, and director nominees; (ii) each of ournominees and Named Executive Officers; (iii)(ii) each person known to us to beneficially own more than 5% of the outstanding shares of our common stock; and (iv)(iii) all current executive officers, directors and director nominees as a group.
On March 22, 2021,25, 2024, we had 67,918,14863,412,833 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.
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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) |
| Scott C. Arves | | 3,614 | | | | 2,132 | | | | 5,746 | | | | * | |
| Diane K. Duren | | 16,108 | | | | 2,132 | | | | 18,240 | | | | * | |
| Michelle D. Greene | | — | | | | — | | | | — | | | | * | |
| Jack A. Holmes | | 6,741 | | | | 2,132 | | | | 8,873 | | | | * | |
| Michelle D. Livingstone | | 819 | | | | 1,568 | | | | 2,387 | | | | * | |
| Carmen A. Tapio | | 4,129 | | | | 2,132 | | | | 6,261 | | | | * | |
| Alexi A. Wellman | | 2,064 | | | | 2,132 | | | | 4,196 | | | | * | |
| Derek J. Leathers | | 365,666 | | | | — | | | | 365,666 | | | | * | |
| Christopher D. Wikoff | | — | | | | 4,601 | | | | 4,601 | | | | * | |
| Nathan J. Meisgeier | | 40,513 | | | | — | | | | 40,513 | | | | * | |
| Jim S. Schelble | | 65,672 | | | | — | | | | 65,672 | | | | * | |
| James L. Johnson | | 85,742 | | | | — | | | | 85,742 | | | | * | |
BlackRock, Inc. (3) | | 8,301,381 | | | | — | | | | 8,301,381 | | | | 13.1 | % | |
The Vanguard Group (4) | | 6,420,141 | | | | — | | | | 6,420,141 | | | | 10.1 | % | |
Macquarie Parties (5) | | 4,369,007 | | | | — | | | | 4,369,007 | | | | 6.9 | % | |
Victory Capital Management Inc. (6) | | 3,971,256 | | | | — | | | | 3,971,256 | | | | 6.3 | % | |
Dimensional Fund Advisors LP (7) | | 3,811,264 | | | | — | | | | 3,811,264 | | | | 6.0 | % | |
All current executive officers, directors and director nominees as a group (16 persons) (2) | | 729,871 | | | | 16,829 | | | | 746,700 | | | | 1.2 | % | |
*Indicates beneficial ownership of less than 1%. |
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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. |
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| (1) | This column represents restricted stock that will vest within 60 days after March 25, 2024. The shares are not outstanding and may not be voted at the Annual Meeting. |
| (2) | The percentages are based upon 63,412,833 shares, which equal our outstanding shares as of March 25, 2024. In accordance with SEC rules, for individuals who hold restricted stock that will vest within 60 days of March 25, 2024, the number of shares of common stock on which the percentage is based also includes the number of such shares. |
| (3) | Based on Schedule 13G/A as of December 31, 2023, as filed with the SEC by BlackRock, Inc. BlackRock, Inc. claims sole voting power of 8,164,526 shares and sole dispositive power of 8,301,381 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/A filing, the address of this stockholder is 50 Hudson Yards, New York, New York 10001. |
| (4) | Based on Schedule 13G/A as of December 29, 2023, 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 51,540 shares, sole dispositive power of 6,302,496 shares, and shared dispositive power of 117,645 shares. According to the Schedule 13G/A filing, the address of this stockholder is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. |
| (5) | Based on Schedule 13G/A as of December 31, 2023, as jointly filed with the SEC by Macquarie Group Limited, Macquarie Management Holdings Inc, and Macquarie Investment Management Business Trust (together, the “Macquarie Parties”): (i) Macquarie Group Limited does not claim sole voting power, shared voting power, sole dispositive power, or shared dispositive power with respect to any of these shares; and (ii) Macquarie Management Holdings Inc. and Macquarie Investment Management Business Trust each claim sole voting power and sole dispositive power of 4,369,007 shares, and each do not claim any shared voting power or shared dispositive power with respect to any of these shares. The principal business address of Macquarie Group Limited is 50 Martin Place Sydney, New South Wales, Australia. The principal business address of Macquarie Management Holdings Inc. and Macquarie Investment Management Business Trust is 610 Market Street, Philadelphia, Pennsylvania 19106. |
| (6) | Based on Schedule 13G/A as of December 31, 2023, as filed with the SEC by Victory Capital Management Inc. Victory Capital Management Inc. claims sole voting power of 3,944,910 shares and sole dispositive power of 3,971,256 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/A filing, the address of this stockholder is 4900 Tiedeman Rd. 4th Floor, Brooklyn, Ohio 44144. |
| (7) | Based on Schedule 13G/A as of December 29, 2023, as filed with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP claims sole voting power of 3,739,994 shares and sole dispositive power of 3,811,264 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/A filing, the address of this stockholder is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This section of the Proxy Statement identifies our Named Executive Officers (“NEOs”) 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, weWe also discuss and analyze our executive compensation program and the executive compensation amounts shown in such section.herein. 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. section. 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 directors who are independent directors, each of whom is independent pursuant tounder SEC rules and NASDAQ listing standards.Nasdaq rules.
Named Executive Officers. Our “Named Executive Officers” 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, 2020.2023, and one additional individual who served as the CFO during 2023. Our fivesix Named Executive Officers and the capacities in which they currently serve are identified in the table below.
| | | | | | | | |
20202023 NAMED EXECUTIVE OFFICERS |
| Name | Position with the Company |
| Derek J. Leathers | Vice Chairman President & Chief Executive Officer |
H. Marty NordlundChristopher D. Wikoff (1) | Senior Executive Vice President (“SEVP”) & Chief Operating Officer |
John J. Steele | Executive Vice President (“EVP”), Treasurer & Chief Financial Officer |
Nathan J. Meisgeier (2) | President & Chief Legal Officer |
| Jim S. Schelble | Executive Vice President (“EVP”) & Chief Administrative Officer |
| James L. Johnson | Executive Vice President (“EVP”) & Chief Accounting Officer |
John J. Steele (3) | Former Executive Vice President (“EVP”), Treasurer & Chief AccountingFinancial Officer & Corporate Secretary |
| | |
(1) | Mr. Wikoff began his employment with the Company on April 18, 2023. |
| (2) | Mr. Meisgeier was promoted to President on January 5, 2024. |
| (3) | Mr. Steele retired as an employee from the Company on June 30, 2023 and provided consulting services until December 31, 2023. |
In accordance with applicable SEC rules, Clarence L. Werner, our former Executive Chairman who retired from the Company on May 31, 2020, is also a Named Executive Officer. Except where expressly noted, references to “Named Executive Officers” in this Compensation Discussion and Analysis do not include 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 continually review the program to 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 table below summarizes and compares our key 20202023 and 20192022 financial results. Our 20202023 financial statements are included in our Annual Report onthe 2023 Form 10-K for 2020 filed with the SEC.10-K.
| 2020 AND 2019 FINANCIAL RESULTS | | 2020 (1) | 2019 (1) | Change (%) |
| 2023 AND 2022 FINANCIAL RESULTS | | 2023 AND 2022 FINANCIAL RESULTS |
| 2023 (1) | | | 2023 (1) | 2022 (1) | Change (%) |
| Total revenues | Total revenues | | $2,372,178 | | $2,463,701 | | -4 | % | |
| Net income | | $169,078 | | $166,944 | | 1 | % | |
| Operating income | |
| Operating income | |
| Operating income | |
| Earnings per diluted share | |
| Earnings per diluted share | |
| Earnings per diluted share | Earnings per diluted share | | $2.44 | | $2.38 | | 2 | % | |
Operating ratio(2) | Operating ratio(2) | | 90.4 | % | | 90.8 | % | | |
| Return on assets | | 8.0 | % | | 7.8 | % | | |
| Return on equity | | 14.7 | % | | 14.6 | % | | |
Operating ratio (2) | |
Operating ratio (2) | |
| Total shareholder return (1-year) | Total shareholder return (1-year) | | 9.0 | % | | 39.9 | % | | |
| Total shareholder return (1-year) | |
| Total shareholder return (1-year) | |
| Total shareholder return (3-year cumulative) | |
| Total shareholder return (3-year cumulative) | |
| Total shareholder return (3-year cumulative) | Total shareholder return (3-year cumulative) | | 17.7 % | | 56.2 | % | | |
| | (1) | (1) | Dollar amounts in thousands, except for per share amounts. |
| | (1) | |
| | (1) | | Dollar amounts in thousands, except for per share amounts. |
| (2) | (2) | Operating expenses expressed as a percentage of operating revenues. | (2) | Operating expenses expressed as a percentage of operating revenues. |
2020 wasThe Company’s financial results were impacted by a veryprolonged and challenging and disruptive year resulting from the COVID-19 pandemic. The Company reacted quicklyoperating environment. Revenues for 2023 were flat at $3.3 billion, while operating income decreased 45% to changing freight and work conditions and achieved record results. Revenues were down 4% but net income increased 1% and earnings$176.4 million. Earnings per diluted share decreased 53% driven largely by market dynamics including lower equipment gains, inflationary headwinds and rate pressure in One-Way. In 2023, our Dedicated business proved to be durable and resilient, growing full-year revenue net of fuel surcharges and revenue per truck. Our One-Way trucking business’ rate per mile decline was more favorable than industry benchmarks, and through operational improvements, we significantly increased 2%. The Company also generated $180 million of free cash flow during 2020. Wemileage production throughout the year. In addition, our Logistics division saw notable growth in both volume and revenue. While our results in 2023 were not up to our standards, we believe the Company is builtoperational improvements we made will result in profitable growth generation for years to thrive in any trucking or logistics cycle. Our core strengths and sustainable competitive advantages support our strong consistent performance.come. The Company’s cumulative total shareholder return (“TSR”)TSR for the three-year period ended December 31, 20202023 was 17.7%12.0% and for the one-year period ended December 31, 20202023 was 9.0%6.6%. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report onthe 2023 Form 10-K for 2020 filed with the SEC for more discussion of our 20202023 financial results.
After receiving no base salary increases in 2019, the Named Executive OfficersFor 2023, Messrs. Leathers and Schelble received base salary increases in 2020 but voluntarily took reductions in theirto better align with base salaries during second quarter of 2020 due to the unknown impact of the COVID-19 pandemic. reflected in competitive benchmarks. See Base Salary for more discussion of the 20202023 base salaries. The Compensation Committee did not adjustbased the performance metrics and target goals for 20202023 for the cash annual incentive program (“AIP”), which were established prior to on the COVID-19 pandemic.achievement of revenues (excluding fuel surcharge) and operating income goals and on individual performance. The 2020 AIP payouts for 2023 performance for the Named Executive Officers ranged from 130.5%71.2% to 151.1%74.7% of target. See Cash Annual Incentive Compensation for more discussion of the 20202023 AIP.
In February 2020,2023, the Compensation Committee awarded equity-based long-term incentives to the Named Executive Officers split equally between restricted stock and performance stock at increased award values from the prior yearcompared to recognize management’s high performance in 2019 relative to its peers in a difficult market2022 for Messrs. Leathers, Meisgeier and to further align with market practice.Johnson. The restricted stock vests evenly over a three-year period while the performance stock, if goals are achieved, 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 with a three-year relative TSR modifier). See Long-Term Incentive Compensation for more discussion of the equity incentive awards.
Consideration of Stockholder Say-on-Pay Vote. At the Company’s Annual Meeting of Stockholders held in May 2020,2023, the Board asked Company stockholders to indicate on an advisory and non-binding basis whether they approve the Company’s executive compensation (a “say-on-pay resolution”). This proposal was contained in the Company’s 20202023 proxy statement dated April 3, 2020,2023, in accordance with Section 14A of the Exchange Act.
More than 98% of the stockholderStockholder votes were cast 96% in favor of our say-on-pay resolution to approve, on an advisory basis, the compensation of our Named Executive Officers. The Company and itsthe Compensation Committee believe this affirms our stockholders’ support of the Company’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’ opinions expressed in such vote and consider the voting outcome in making executive compensation decisions.
20202023 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 Purpose Statement and guiding corporate principles. (Our Purpose Statement is included on our website.website under the About Werner heading.)
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 limitedLimit executive perquisites.
•No tax gross-ups.
Elements of Executive Compensation. The elements of our 20202023 executive compensation program are: (i) base salary, (ii) cash annual incentive compensation, (iii) long-term incentive compensation, and (iv) perquisites and benefits. The following discussion explains these elements and their primary purposes with respect to our 20202023 executive compensation program.
The table below summarizes our total compensation mix for 2020.2023. It excludes certain items that are reflected as “All Other Compensation” for 2023 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.
| 2020 PAY ELEMENTS | | Base Salary (1) | Annual Incentive Compensation (2) | Restricted Stock | Performance Stock (2) | Variable Compensation (3) |
| 2023 PAY ELEMENTS | | 2023 PAY ELEMENTS |
| Base Salary (1) | | | Base Salary (1) | Annual Incentive Compensation (2) | Restricted Stock | Performance Stock (2) | Variable Compensation (3) |
| CEO | CEO | 18% | 18% | 32% | 82% | CEO | 16% | 20% | 32% | 84% |
Other NEOs(4) | Other NEOs(4) | 36% | 22% | 21% | 64% | Other NEOs (4) | 39% | 27% | 17% | 61% |
| | (1) | |
| (1) | |
| (1) | | Annual base salary rate set by the Compensation Committee in February 2023. |
| | | | Cash and equity incentive compensation calculated at the target level of performance. |
(1)(3) | (1)(3) | Annual base salary rate set by the Compensation Committee in February 2020. | (1)(3) | Variable compensation includes annual incentive compensation, restricted stock, and performance stock. |
(2)(4) | (2)(4) | Cash and equity incentive compensation calculated at the target level of performance. | (2)(4) | This row includes information for NEOs employed for the full year of 2023. |
| (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. Base salaries are reviewed on an annual basis and at the time of promotion or other change in job function and responsibilities. A 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. 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.
industry group. The following 20202023 base salaries were approved by the Compensation Committee in February 2020 for the Named Executive Officers.
| | BASE SALARY | BASE SALARY | BASE SALARY |
| Name | Name | 2019 Base Salary ($) | 2020 Base Salary ($) | Change (%) | Name | 2022 Base Salary ($) | 2023 Base Salary ($) | Change (%) |
| Clarence L. Werner | 362,500 | | 362,500 | | — | % |
| Derek J. Leathers | Derek J. Leathers | 725,000 | | 800,000 | | 10 | % | Derek J. Leathers | 875,000 | 925,000 | 6% |
| H. Marty Nordlund | 375,000 | | 375,000 | | — | % |
| John J. Steele | 285,000 | | 315,000 | | 11 | % |
Christopher D. Wikoff (1) | | Christopher D. Wikoff (1) | N/A | 495,000 | N/A |
Nathan J. Meisgeier (1) | | Nathan J. Meisgeier (1) | N/A | 435,000 | N/A |
| Jim S. Schelble | Jim S. Schelble | 310,000 | | 350,000 | | 13 | % | Jim S. Schelble | 400,000 | 420,000 | 5% |
James L. Johnson(1) | N/A | 360,000 | | N/A |
| James L. Johnson | | James L. Johnson | 450,000 | —% |
John J. Steele (2) | | John J. Steele (2) | 340,000 | —% |
| | (1) | |
| (1) | |
| (1) | | Messrs. Wikoff and Meisgeier were not Named Executive Officers in 2022. |
(1)(2) | (1)(2) | Mr. Johnson was not a Named Executive Officer in 2019. | (1)(2) | Mr. Steele retired as an employee from the Company on June 30, 2023 and thereafter provided consulting services until December 31, 2023. The amount shown for 2023 reflects his 2023 base salary as if he had been employed throughout 2023. |
Cash Annual Incentive Compensation. The 20202023 AIP established target cash award amounts as a percentage of base salary which varies by executive position. For 2023, target cash annual incentive payouts as a percentage of base salary increased from 115% to 120% for the CEO and remained the same at 70% for the other Named Executive Officers. The 20202023 AIP considers fourthree performance metrics, with the financial metrics tied to pre-defined goals (25%(40% operating income; 25%30% revenues less fuel surcharge revenues (“FSC”); 25% operating ratio (“OR”), net FSC; and 25%30% individual performance). Individual performance for the executive officers included predefined areas of improvement or strategic milestones under the executive’s purview to be achieved during the year. The 20202023 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.
| | ANNUAL INCENTIVE PLAN PERFORMANCE RESULTS | ANNUAL INCENTIVE PLAN PERFORMANCE RESULTS | ANNUAL INCENTIVE PLAN PERFORMANCE RESULTS |
| AIP Measure | AIP Measure | Target (1) | Final Results (1) | Achieved (%) | Weight (%) | 2020 AIP Payout (% Target) | AIP Measure | Target (1) | Final Results (1) | Achieved (%) | Weight (%) | 2023 AIP Payout (% Target) |
Operating income(2) | Operating income(2) | $204.2 | $232.3 | 191.8% | 25% | 48.0% | Operating income (2) | $303.2 | $192.4 | —% | 40% | —% |
Revenues less FSC(3) | Revenues less FSC(3) | $2,273.9 | $2,213.6 | 80.1% | 25% | 20.0% | Revenues less FSC (3) | $3,250.0 | $2,951.1 | 54.0% | 30% | 16.2% |
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 | Individual performance | Varies by NEO | | 100.0% to 175.0% | 25% | 25.0% to 43.8% | Individual performance | Varies by NEO | | 183.3% to 195.0% | 30% | 55.0% to 58.5% |
| Total | Total | | 100% | 130.5% to 151.1% | Total | | | | 100% | 71.2% to 74.7% |
| | (1) | |
| (1) | |
| (1) | (1) | Dollar amounts in millions. | Dollar amounts in millions. |
| (2) | (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. | (2) | Final results include adjustment of $5.7 million of insurance and claims expense for interest accrued during 2023 on an adverse jury verdict rendered in 2018 and $10.3 million of amortization expense related to intangibles, which the Compensation Committee determined should be added back to the reported 2023 operating income for purposes of the 2023 AIP payouts. |
| (3) | (3) | Operating revenues less trucking fuel surcharge revenues. | (3) | Operating revenues less trucking fuel surcharge revenues. |
| (4) | Operating expenses less trucking fuel surcharge revenues expressed as a percentage of operating revenues less trucking fuel surcharge revenues, for the total Company. Total Company OR applies to Messrs. Werner, Leathers, Nordlund, Steele and Johnson. |
| (5) | Operating expenses less trucking fuel surcharge revenues expressed as a percentage of operating revenues less trucking fuel surcharge revenues, for the Truckload Transportation Services segment. Total Trucking OR applies to Mr. Schelble. |
The Compensation Committee believes the 20202023 AIP aligns pay for performance and the interest of management with stockholders. The table that follows shows the calculation of the AIP payouts achieved for the Named Executive Officers for 2020,2023, which are disclosed in the Summary Compensation Table. The 20202023 AIP payments occurred in February 2021.2024. Please refer to the Grants of Plan-Based Awards for 2020 section 2023 for additional information regarding the AIP.
| | CASH ANNUAL INCENTIVE COMPENSATION | CASH ANNUAL INCENTIVE COMPENSATION | |
| Name | Name | 2020 Base Salary ($) | 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 | | |
| Name | |
| Name | |
| Derek J. Leathers | 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 | | |
| Derek J. Leathers | |
| Derek J. Leathers | |
Christopher D. Wikoff (1) | |
Christopher D. Wikoff (1) | |
Christopher D. Wikoff (1) | |
| Nathan J. Meisgeier | |
| Nathan J. Meisgeier | |
| Nathan J. Meisgeier | |
| Jim S. Schelble | |
| Jim S. Schelble | |
| Jim S. Schelble | Jim S. Schelble | 350,000 | | 60.0 | % | 210,000 | | 151.1 | % | 317,310 | | |
| James L. Johnson | James L. Johnson | 360,000 | | 60.0 | % | 216,000 | | 147.1 | % | 317,736 | | |
| James L. Johnson | |
| James L. Johnson | |
John J. Steele (2) | |
John J. Steele (2) | |
John J. Steele (2) | |
| | (1) | |
| | (1) | |
| | (1) | |
(1)(2) | (1)(2) | Mr. Werner’s 2020 AIP payout was prorated for his May 31, 2020 retirement date. | |
(1)(2) | |
(1)(2) | |
20202023 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. 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.
Under our Equity Plan,2023 LTIP, the Compensation Committee may grant stock options, SARs, restricted or unrestricted stock, restricted stock units (“RSUs”), performance stock, and performance stockcash-based opportunities to our executive officers, non-employee directors and non-employee directors.consultants. The grant date is the same date as the meeting at which the Compensation Committee decides to grant equity awards, after giving consideration to the timing of such decisions to ensure that awards occur when neither the recipient nor the Compensation Committee members possess material nonpublic information. None of our restricted or performance stock awards give the recipient any voting or dividend rights until such stockaward vests, nor do they have any post-vesting sales restrictions.
In February 2020,2023, the Compensation Committee, in its sole discretion, awarded the Named Executive OfficersMessrs. Leathers, Meisgeier, Schelble, and Johnson restricted stock and performance stock for 2020.2023. The restricted stock will vestvests in three annual increments of 34%, 33% and 33% beginning February 13, 202123, 2024 (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 a cumulative earnings per diluted share performance objective for the two-year period from January 1, 20202023 to December 31, 2021,2024, as established by the Compensation Committee. The Compensation Committee works 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 target shares stated in each executive’s award agreement based on the level of attainment of the performance objective and subject to a TSR modifier wherebythat can increase or decrease the maximum payout will be capped at 150% of target if absolutevesting percentage by 25% based on the Company’s TSR duringfor the three-year period ending December 31, 2022 is less than 25%.2025, relative to the TSR of the following eight trucking peers for the same period: Covenant Logistics Group, Heartland Express, Hub Group, J.B. Hunt, Knight-Swift Transportation, Landstar System, Marten Transport, and Schneider National. Any performanceperformance stock earned will vest on February 10, 2026, generally subject to continued employment on February 13, 2023.as described in Arrangements and Potential Payments upon Termination or Change in Control. 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; and3,600,000; Messrs. Steele, SchelbleMeisgeier and Johnson–$400,000 each.each; and Mr. Schelble–$350,000. The target value granted to each of these Named Executive OfficerOfficers was split equally between restricted stock and performance stock. Mr. Werner forfeited 100%Steele did not receive any plan-based awards in 2023. In May 2023, the Compensation Committee awarded Mr. Wikoff restricted stock with a grant date fair value of $1,000,000 in connection with his 2020appointment as Chief Financial Officer. Mr. Wikoff’s restricted stock awards upon his retirement onwill vest in five annual increments of 20%
each beginning May 31, 2020.9, 2024 (one year after the grant date), subject to continued employment. The 20202023 grants of restricted stock and performance stock to the Named Executive Officers are disclosed in the Summary Compensation Table. Please refer to the Grants of Plan-Based Awards for 2020 section2023 for additional information regarding the equity awards.information.
2019 Performance Stock.2022 Long-Term Incentive Compensation. In February 2019,2022, the Compensation Committee, in its sole discretion, awarded the Named Executive Officers restricted stock and performance stock for 2019.2022. The 2019restricted stock vests in three annual increments of 34%, 33% and 33% beginning February 7, 2023 (one year after the grant date), subject to continued employment. The performance stock iswas eligible to be 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, 20192022 to December 31, 2020,2023, as established by the Compensation Committee. The number of shares that maycould ultimately be earned will range from 0% to
200% of the target shares stated in each executive’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, 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 2019 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 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 rangeranged from 0% to 200% of the target shares stated in each executive’s award agreement based on the level of attainment of the performance objective and subject to a TSR modifier whereby the maximum payout willwould be capped at 150% or 175% of target if absolutebased on the Company’s TSR duringfor the three-year period ending December 31, 2020 is less than 30%.2024, relative to the TSR of the following eight trucking peers for the same period: Covenant Logistics Group, Heartland Express, Hub Group, J.B. Hunt, Knight-Swift Transportation, Landstar System, Marten Transport, and Schneider National. Any performanceperformance stock earned will vest,would have vested on February 7, 2025, generally subject to continued employment on February 7, 2021.as explained in the section Arrangements and Potential Payments upon Termination or Change in Control. The Compensation Committee has determined that (i) insurance and claims expense of $3.9$5.7 million in 2019,2023 and $5.4 million in 2022, for interest accrued in 2019during those years related to an adverse jury verdict rendered in 2018 is anthat remains under appeal, (ii) amortization expense related to intangibles of $10.3 million in 2023 and $6.1 million in 2022, and (iii) net losses on investments of $1.3 million in 2023 and net gains on investments of $12.2 million in 2022 are unusual itemitems not reflective of 2019management performance andthat should be added back to pre-tax operating incomeadjusted for calculating 2019 dilutedin the calculation of the two-year cumulative earnings per diluted share for purposes of determining the achievement level of the 20182022 performance shares. Cumulative earnings per diluted share from January 1, 20182022 to December 31, 20192023, adjusted for the accrued interest, amortization expense and net unrealized losses and gains on investments, amounted to 190.5%$5.69 which is below threshold, resulting in a payout of 0% of target (no payout). This final performance and payout will be reported in the 2025 proxy statement.
2021 Performance Stock. In February 2021, the Compensation Committee awarded the Named Executive Officers restricted stock and performance stock for 2021. The 2021 performance stock was eligible to be 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, 2021 to December 31, 2022, as established by the Compensation Committee. The number of shares that could ultimately be earned ranged from 0% to 200% of the target goal. Absoluteshares stated in each executive’s award agreement based on the level of attainment of the performance objective and subject to a TSR modifier whereby the maximum payout would be capped at 150% or 175% of target based on the Company’s TSR for the three-year period ending December 31, 2023, relative to the TSR of the following nine trucking peers for the same period: Covenant Logistics Group, Heartland Express, Hub Group, J.B. Hunt, Knight-Swift Transportation, Landstar System, Marten Transport, Schneider National, and U.S. Xpress Enterprises. Performance stock earned would vest, subject to continued employment, on February 11, 2024. The Compensation Committee determined that (i) insurance and claims expense of $5.4 million in 2022 and $5.1 million in 2021, for interest accrued during those years related to an adverse jury verdict rendered in 2018 that remains under appeal, (ii) amortization expense related to intangibles of $6.1 million in 2022, and (iii) net gains on investments of $12.2 million in 2022 and $40.3 million in 2021 are unusual items not reflective of management performance period was below 30%, sothat should be adjusted for in the calculation of the two-year cumulative earnings per diluted share for purposes of determining the achievement level of the 2021 performance shares. Cumulative earnings per diluted share from January 1, 2021 to December 31, 2022, adjusted for the accrued interest, amortization expense related to intangibles and net unrealized gains on investments, amounted to $7.15 which exceeded the maximum performance goal of $6.88, resulting in a payout of 200% of target before considering the impact of the TSR modifier. The Company’s TSR for the three-year period ended December 31, 2023 was cappedbelow the 25th percentile of the nine trucking peers, capping the award payout at 150%. The performance shares vested on February 7, 2021 for the Named Executive Officers still employed11, 2024 and were paid out at a 150% achievement level.
Perquisites and Benefits. Our executive compensation program includes limited executive perquisites that we believe are reasonable and consistent with our overall compensation objectives. Our Compensation Committee periodically reviews the perquisites provided to executive officers. Tax gross-ups related to perquisites were eliminated in 2022. The perquisites offered under our 20202023 executive compensation program were as follows:
•Country Club Membership. In 2020,2023, 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 annual physical examination and unlimited direct access to a primary care physician. We believe the program allows our Named Executive Officers to devote more time to our business and promotes the health and wellness of these key employees.
•Personal Use of Corporate Aircraft. Mr. Leathers is eligible to use the Company’s aircraft for limited personal use. Personal use isfor 2023 was limited to 30 flight hours$100,000 per year and Mr. Leathers must fully reimbursebased on the Company for theCompany’s incremental cost of his use.the personal flights. 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 2020,2023, 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 20202023). These benefits are available to our Named Executive Officers on the same terms as provided to other 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 2020 section2023. In 2022, the Company discontinued its past practice of this Proxy Statement.providing tax gross-ups for personal use of Company vehicles.
Role of the CompensationCompensation Consultant. Frederic W. Cook & Co. (the “Consultant”) is an independent executive compensation consulting firm engaged by the Compensation Committee. The Compensation Committee has assessed the independence of the Consultant and determined that the Consultant’s work did not raise any conflicts of interest.
The Consultant assists the Committee in its evaluation of the compensation for our executives. The Compensation Committee engages 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 of the Company’s executives in comparison to our peer group, and (iii) review the Company’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, although it 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 2020,2023, 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 GroupsGroups and Benchmarking. The companies in the peer group 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 fromto add Daseke, Inc. to the 20192023 competitive peer group as shownand remove Yellow Corporation (formerly YRC Worldwide), which ceased operations in the table below.2023.
| | | | | | | | |
20202023 COMPETITIVE PEER GROUP |
| ArcBest | J.B. HuntHub Group | SaiaMarten Transport |
Covenant TransportationLogistics Group | Kansas City SouthernJ.B. Hunt | 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 |
| Daseke | Kansas City Southern | Saia |
| Forward Air | Knight-Swift Transportation | Schneider National |
| Heartland Express | Landstar System | U.S. Xpress Enterprises |
The Compensation Committee has not historically 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 DeterminationDetermination Process. The Compensation Committee makes all annual compensation decisions for our Named Executive Officers.
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 President & 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 programAIP and the grant of performance stock in prior years and to consider base salary levels, the cash annual incentive program and granting new equity or incentive compensation awards for the current year and setting performance objectives related to each. Our Chairman & CEO is not present during the Compensation Committee’s deliberation and determination of his own compensation.
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 ensurefacilitate 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).
•Annual cash incentive compensation represents a significant portion of our executive officers’ total cash compensation and is awarded under our Annual Incentive Program.AIP. The programAIP allows for the Compensation Committee to exercise some discretion through an individual performance metric,in addition to the financial
performance metrics. Annual incentive targets are thoroughly vetted by management and 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.our Clawback Policy described in Incentive-Based Compensation 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. Long-term incentive compensation is split between time-based restricted stock and performance stock. The time-based restricted stock vests ratably over three years. Performance stock achievement levels are capped at 200%, with a total shareholder returnTSR modifier, if achievement is over 150%, havehas a three-year cliff vesting, and areis subject to recoupment.our Clawback Policy described in Incentive-Based Compensation Recoupment.
•The vesting of stock awards granted under our Equity2023 LTIP and the Prior Plan may be prohibited if an executive officer is terminated for cause or under other circumstances as provided in the Equity Plan.therein.
•Our executives have significant stock ownership in the 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.
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 compensation programs 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 Compensation 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.
Hedging and PledgingPledging Policy. Named Executive Officers are subject to a policy on hedging and pledging of the Company’s common stock. 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 Named 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 Named Executive Officer certified to compliance with this policy in their annual questionnaire completed at the end of 2020.2023.
ExecutiveExecutive Stock Ownership. The 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 equalequal to or in excess of a specified multiple of the officer’s base salary. During 2020,2023, the executive ownership guidelines were as follows: Chief Executive Officer–6.07.0 times, Chief Operating Officer–President–3.5 times and Executive Vice President–2.5 times and Senior Vice President–1.53.5 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 executive 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 2021,2020 and Mr. Wikoff who joined the Company in April 2023.
Incentive-Based Compensation Committee approved adjustmentsRecoupment. The Company’s current Clawback Policy, effective as of December 1, 2023, was included as an exhibit to the ownership guidelinesCompany’s 2023 Form 10-K. It supplements prior clawback policies that apply to furtherawards in effect prior to such date. The Clawback Policy applies only to “Incentive-Based Compensation” that is “Received” by an “Executive Officer” (each as defined in the alignment of executiveClawback Policy) 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 awardsonly in the event that the Company is required to prepare an accounting restatement due to the executive officers paid within the twelve months following the year of a 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 Board of Directorsnoncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial
statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. The Incentive-Based Compensation Received by the Executive Officer during the three completed fiscal years immediately preceding the date that the Company is required to prepare such accounting restatement is subject to the Clawback Policy, provided that such compensation was Received after beginning service as an Executive Officer and that such person served as an Executive Officer at any time during the performance period applicable to the Incentive-Based Compensation in question. Subject to all other terms and conditions of the Clawback Policy, the amount of Incentive-Based Compensation subject to such policy is the amount Received by an Executive Officer that exceeds the amount that otherwise would have been Received had it been determined based on the restated amounts. Equity award agreements with our Executive Officers granted after the Clawback Policy effective date refer to such policy, and the 2023 LTIP provides that any awards granted thereunder are subject to any clawback or recoupment policy which the Company may applyadopt from time to current or former Company executive officers. The Company has not had any accounting restatements since becoming a publicly-traded company in 1986.time.
Tax Deductibility of Executive Compensation; Accounting Considerations. 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,The limitations under the Tax Cuts and Jobs Act of 2017, (i) the performance-based exception to Section 162(m) is eliminated and (ii)of the definition of covered employee is expandedInternal Revenue Code apply to include the Company’s CEO, CFO, and certain formerother named executive officers resulting in pay in excess(collectively, the covered persons), and anyone who was a covered person after December 31, 2016. The Company will be denied a deduction for any compensation exceeding $1,000,000 for such covered persons, regardless of $1 million in 2018 or later generally not being deductible forwhether the Company, subject to the transition rule for plans and agreements in place on November 2, 2017.compensation is performance-based compensation. 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) without 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. 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,SEC, nor shall this report be subject to Regulation 14A (other than as indicated) or to the liabilities set forth in Section 18 of the Securities Exchange Act of 1934.Act. 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 on2023 Form 10-K for 2020 of Werner Enterprises, Inc. (the “Company”) and this Proxy Statement, for the Annual Meeting of Stockholders to be held May 11, 2021, the Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section (required by Item 402(b) of the SEC’s Regulation S-K of the U.S. Securities and Exchange Commission)S-K) 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 on2023 Form 10-K for 2020.10-K.
Diane K. Duren, Chair
Patrick J. Jung
Kenneth M. Bird, Ed.D.
Jack A. Holmes
CarmenAlexi A. TapioWellman
Michelle D. Livingstone
EMPLOYMENT AND OTHER ARRANGEMENTS
EachExcept for Mr. Wikoff, each of our Named Executive Officers has been an employee of the Company for at least ten years. None of our Named Executive Officers has any type ofa written employment agreement with us.
Mr. Steele retired from the Company on June 30, 2023. On July 1, 2023, we entered into a Consulting Services Agreement with him under which he provided, through December 31, 2023, strategic advice and counsel related to the business issues and projects he was involved with prior to his retirement. We paid $75,000 per month for such services. The agreement was attached to a Current Report on Form 8-K filed with the SEC on July 7, 2023.
ARRANGEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Termination. None of our Named Executive Officers who were serving as executive officers at the end of 2020 has a severance agreement or severance benefit arrangement with us.
Change in Control. During 2020, none of our Named Executive Officers had a change in control agreement with us, and we did not 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 athe Werner Enterprises, Inc. Change in Control Severance Plan (the “CIC(“CIC Plan”) that, which was included as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 6, 2021. The CIC Plan covers the Named Executive Officers. The CIC PlanOfficers and applies only coversto 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. TheIn the event a Named Executive Officer is terminated without “cause” or voluntarily resigns for “good reason” (each as defined in the CIC Plan) within the protection period noted above, the CIC Plan provides for cash severance payments ranging from 1.5 to 2.02.5 times annual base salary plus target AIP bonus and provides for limited continuation of some benefits. The definitions ofCIC Plan provides that “change in control”, “good reason” and “cause” are similar to shall have the definitions of these termssame meaning as in the Equity Plan.2023 LTIP.
Potential Benefits Payable Under the Equity Plan.Our Equity2023 LTIP and Prior Plan permitspermit the vesting of outstanding equity awards upon certain termination or resignation actions following a change“change in control. The Equity Plan providescontrol” (as defined in the applicable plan). They provide that if a Named Executive Officer is terminated other than for “cause” or voluntarily resigns for “good reason” (each as defined in the applicable plan) 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”Our 2023 LTIP and “change in control” are defined in the current stockholder-approved version of the Equity Plan. Our EquityPrior Plan also providesprovide 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 number of shares shall become fully vested.vested and earned. Under award agreements, (i) vesting upon “disability” (as defined in the applicable plan) for performance stock awarded on or after February 7, 2022 and for time-vesting restricted stock awarded on or after May 9, 2023 is treated the same as vesting in the event of death, and (ii) performance stock awarded on or after February 7, 2022 to a grantee who thereafter retires remains eligible to vest with vesting to be based on actual achievement of goals at the end of the performance period and subject to the requirements, among others, that (x) as of the retirement date, the “rule of 70” is met (grantee is at least 55 years of age and the grantee’s age plus years of service with the Company equals at least 70) and (y) at least 12 months have elapsed since the grant date.
Except for the circumstances described above, none of our Named Executive Officers has or had a severance agreement or severance benefit arrangement with us.
Summary Table - Potential Payments Upon Termination or Change in Control. The following Potential Benefits Payable Undertable summarizes potential payments upon termination or change in control for the Equity Plan table shows the potential benefits payable to each Named Executive Officer dueOfficers who were still serving as executive officers as of December 31, 2023. Except as specifically indicated in the footnotes to the occurrence of eithertable below, we used the termination or resignation event describedfollowing assumptions in calculating the amounts included in the Equity Plan. The amounts oftable and discussed below:
•As required by SEC rules, we assume the potential benefits representtriggering event causing the estimated value of all unvested equity awards that would fully vest upon either event, assuming (i) such eventpayment occurred on December 31, 2020 (the29, 2023, the last business day of our last completed 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 periodyear, 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 $39.22 per share which was the NASDAQ closing market price of our common stock was $42.37, the Nasdaq closing market price on that date.
•We treat all amounts of base salary and annual cash incentive that were earned and accrued, including any 401k matching contributions, as of the same date.date of the triggering event as paid immediately prior to the triggering event.
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| POTENTIAL BENEFITS PAYABLE UNDER THE EQUITY PLAN |
| Name | Number of Unvested Shares Vesting | Potential Benefit ($)(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 $208,376 each for Messrs. Steele, Schelble and Johnson, for the 2020 performance stock for which the threshold level of performance had not yet been achieved as of December 31, 2020. |
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| POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
| Name | Event of Termination | Severance ($) (1) | Stock-Based Awards ($) (2) | Perquisites and Other Benefits ($) (3) | Total ($) |
| Derek J. Leathers | Termination without cause or resignation for good reason within 24 months following a change in control | 5,087,500 | | 7,042,275 | | 29,380 | | 12,159,155 | |
| Death | — | | 5,349,975 | | — | | 5,349,975 | |
Disability (4) | — | | — | | — | | — | |
Retirement (5) | — | | — | | — | | — | |
| Christopher D. Wikoff | Termination without cause or resignation for good reason within 24 months following a change in control | 1,262,250 | | 974,764 | | 17,450 | | 2,254,464 | |
| Death | — | | 974,764 | | — | | 974,764 | |
Disability (4) | — | | 974,764 | | — | | 974,764 | |
Retirement (5) | — | | — | | — | | — | |
| Nathan J. Meisgeier | Termination without cause or resignation for good reason within 24 months following a change in control | 1,479,000 | | 770,159 | | 23,504 | | 2,272,663 | |
| Death | — | | 582,121 | | — | | 582,121 | |
Disability (4) | — | | — | | — | | — | |
Retirement (5) | — | | — | | — | | — | |
| Jim S. Schelble | Termination without cause or resignation for good reason within 24 months following a change in control | 1,071,000 | | 723,595 | | 9,901 | | 1,804,496 | |
| Death | — | | 559,072 | | — | | 559,072 | |
Disability (4) | — | | — | | — | | — | |
Retirement (5) | — | | — | | — | | — | |
| James L. Johnson | Termination without cause or resignation for good reason within 24 months following a change in control | 1,147,500 | | 770,159 | | 29,718 | | 1,947,377 | |
| Death | — | | 582,121 | | — | | 582,121 | |
Disability (4) | — | | — | | — | | — | |
Retirement (5) | — | | — | | — | | — | |
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| (1) | Represents lump sum cash severance payments, in accordance with the CIC Plan, equal to each Named Executive Officer’s Tier Level Multiplier, ranging from 1.5 to 2.5, times the sum of each Named Executive Officer’s (i) 2023 base salary and (ii) 2023 target cash incentive. The amounts are to be paid within 60 days following the date of the triggering event. |
| (2) | In certain events, our 2023 LTIP and Prior Plan, or agreements thereunder, provide for accelerated vesting of all unvested restricted awards and of performance awards based on the level of goal achievement through the date of the event. Unless otherwise noted, the amounts represent the estimated fair value of all unvested equity awards as of December 29, 2023 using the $42.37 closing market price as of that date. Additional information regarding the estimated fair value of performance stock is as follows: (i) the 2023 performance stock was deemed to have been earned at the target level (in the event of termination without cause or resignation for good reason within 24 months following a change in control) or unearned (in the event of death, disability or retirement); (ii) no shares were deemed to be earned for the 2022 performance stock because the Company achieved below the threshold level of performance for the two-year performance period ended December 31, 2023; and (iii) the 2021 performance stock was deemed to have been earned at 150% (in the event of termination without cause or resignation for good reason within 24 months following a change in control or as a result of death) because the Company achieved a level of performance of 200% for the two-year performance period ended December 31, 2022, but the absolute TSR for the three-year period ended December 31, 2023 was below 25% capping the award payout at 150% of target. |
| (3) | Under the CIC Plan, this represents the estimated employer portion of premium costs for the continuation of medical, and dental coverage under COBRA for a period (in months) equal to each Named Executive Officer’s Tier Level Multiplier, ranging from 1.5 to 2.5, times 12 (“Coverage Period”). Premium cost reimbursements by the Company will continue through the Coverage Period unless the Named Executive Officer ceases to be eligible under COBRA or he becomes eligible for coverage under the health benefit plan of a subsequent employer. |
| (4) | In the event of disability, accelerated vesting of unvested restricted awards and performance awards is applicable for restricted stock awarded on or after May 9, 2023 and for performance stock awarded on or after February 7, 2022. |
| (5) | In the event of retirement, continued vesting of unvested performance awards is applicable for performance stock awarded on or after February 7, 2022. Messrs. Leathers, Wikoff and Meisgeier are not retirement eligible under the terms of the applicable performance award agreements. Messrs. Schelble and Johnson are retirement-eligible; although, as of December 29, 2023, they would not have held the 2023 performance awards for the 12 months required for vesting eligibility. No vesting is shown for their 2022 performance awards for the reason set forth in note (2), part (ii) above. |
Mr. Steele is not included in the foregoing table as he retired as an employee from the Company on June 30, 2023 and became ineligible for cash severance payments. As shown in the Outstanding Equity Awards at December 31, 2023 table, he had no outstanding awards at December 31, 2023 that remained eligible to vest.
SUMMARY COMPENSATION TABLE
The following table presents information about compensation earned during 2020, 20192023, 2022 and 20182021 by our Named Executive 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. Columns that would otherwise be required by SEC regulationsrules are omitted where such column is inapplicable for all of the Named Executive Officers.if inapplicable.
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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 |
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| (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 $400,000. |
| (3) | Cash awards reported in this column represent the actual amounts earned under the Company’s performance-based AIP for fiscal years 2020, 2019 and 2018 based upon achievement of pre-defined performance metrics, and were paid in February following the end of each fiscal year. Such awards are also disclosed in the Grants of Plan-Based Awards for 2020 table. |
| (4) | Refer to the All Other Compensation for 2020 table for a more detailed explanation of the compensation reported in this column.
|
| (5) | Mr. Werner retired as Executive Chairman of the Company on May 31, 2020. He continues to serve as Chairman of the Board through the end of his current term, which will end in May 2021 following the 2021 Annual Meeting. His salary represents all salary paid in 2020. Mr. Werner’s 2020 AIP cash award payout was prorated for his retirement date. Upon his retirement, Mr. Werner forfeited 100% of his 2020 stock awards, 100% of his 2019 and 2018 performance stock awards, 75% of his 2019 restricted stock award, and 50% of his 2018 restricted stock award, representing the unvested portions of such awards. |
| (6) | Mr. Johnson was not a Named Executive Officer in 2019 or 2018. |
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| SUMMARY COMPENSATION TABLE |
Name and Principal Position | Year | Salary (1) | Bonus ($) (2) | Stock Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | All Other Compensation ($) (5) | Total ($) |
Derek J. Leathers –
Chief Executive Officer | 2023 | 917,308 | | — | | 3,600,000 | | 812,520 | | 116,924 | | 5,446,752 | |
| 2022 | 838,462 | | — | | 3,200,000 | | 1,288,000 | | 133,736 | | 5,460,198 | |
| 2021 | 844,231 | | — | | 2,800,000 | | 1,574,200 | | 95,920 | | 5,314,351 | |
Christopher D. Wikoff – EVP, Treasurer & Chief Financial Officer (6) | 2023 | 329,366 | | 250,000 | | 1,000,000 | | 179,284 | | — | | 1,758,650 | |
Nathan J. Meisgeier – President & Chief Legal Officer (7) | 2023 | 421,923 | | — | | 400,000 | | 227,462 | | 11,324 | | 1,060,709 | |
Jim S. Schelble –
EVP & Chief Administrative Officer | 2023 | 416,923 | | — | | 350,000 | | 209,328 | | 34,451 | | 1,010,702 | |
| 2022 | 384,616 | | — | | 350,000 | | 341,600 | | 30,374 | | 1,106,590 | |
| 2021 | 394,231 | | — | | 300,000 | | 408,480 | | 33,104 | | 1,135,815 | |
James L. Johnson –
EVP & Chief Accounting Officer | 2023 | 450,000 | | — | | 400,000 | | 228,218 | | 11,324 | | 1,089,542 | |
| 2022 | 429,231 | | — | | 350,000 | | 390,285 | | 11,328 | | 1,180,844 | |
| 2021 | 413,077 | | — | | 300,000 | | 428,904 | | 12,261 | | 1,154,242 | |
John J. Steele – Former EVP, Treasurer & Chief Financial Officer (8) | 2023 | 192,865 | | — | | — | | — | | 455,727 | | 648,592 | |
| 2022 | 326,923 | | — | | 350,000 | | 256,632 | | 10,547 | | 944,102 | |
| 2021 | 337,116 | | — | | 300,000 | | 331,908 | | 10,089 | | 979,113 | |
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| (1) | Base salary for 2022 reflects 25 biweekly payments instead of 26. |
| (2) | Mr. Wikoff joined the Company on April 18, 2023 and received a cash sign on bonus. In the event Mr. Wikoff resigns his employment for any reason or the Company terminates his employment for cause, in each case, within one year following the payment date of the sign on bonus, he is obligated to repay the entire gross amount of the sign on bonus to the Company on the date of his termination. |
| (3) | The stock awards reported in this column and the associated valuation assumptions are also disclosed in the Grants of Plan-Based Awards for 2023 table. The stock awarded in 2023 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 target level of performance. The target value of the 2023 performance awards was as follows: Mr. Leathers $1,800,000, Messrs. Meisgeier and Johnson $200,000, and Mr. Schelble $175,000. If the highest level of performance is achieved, prior to any potential adjustment related to the TSR modifier, the value of the 2023 awards would be as follows: Mr. Leathers $3,600,000, Messrs. Meisgeier and Johnson $400,000, and Mr. Schelble $350,000. Messrs. Wikoff and Steele did not receive performance stock in 2023. |
| (4) | Cash awards reported in this column represent the actual amounts earned under the Company’s performance-based AIP for fiscal years 2023, 2022 and 2021 based upon achievement of pre-defined performance metrics, and were paid in February following the end of each fiscal year. Such awards are also disclosed in the Grants of Plan-Based Awards for 2023 table. |
| (5) | Refer to the All Other Compensation for 2023 table for a description of the compensation reported in this column. |
| (6) | Salary for Mr. Wikoff represents all salary paid to him during 2023. Mr. Wikoff’s 2023 AIP cash award payout was prorated based on his time in service at the Company in 2023. |
| (7) | Mr. Meisgeier was not a Named Executive Officer in 2022 and 2021. |
| (8) | Mr. Steele served as EVP, Treasurer & Chief Financial Officer until April 18, 2023, and retired as an employee from the Company on June 30, 2023. His salary represents all salary paid to him during 2023. Upon his retirement, Mr. Steele forfeited 100% of his 2021 performance stock award, 66% of his 2022 restricted stock award, and 33% of his 2021 restricted stock award, representing the unvested portions of such awards. In 2023, Mr. Steele did not receive awards of restricted stock, performance stock, or performance-based AIP. |
ALL OTHER COMPENSATION FOR 20202023
The table below shows the components of “all other compensation” provided in 20202023 to the Named Executive Officers, as reported in the preceding Summary Compensation Table.
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| ALL OTHER COMPENSATION FOR 2020 |
| Name | Perquisites & Other Personal Benefits ($) | 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) $511 for personal use of the corporate aircraft when his spouse accompanied him on a Company-related business trip. |
| (3) | Perquisites and other personal benefits for Messrs. Nordlund and Schelble include use of one Company vehicle, Company-paid country club membership and personal medical care membership program. Tax reimbursements for Messrs. Nordlund and Schelble represent tax gross-ups for Company vehicle use. |
| (4) | Perquisites and other personal benefits for Messrs. Steele and Johnson include personal medical care membership program. |
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| ALL OTHER COMPENSATION FOR 2023 |
| Name | Perquisites & Other Personal Benefits ($) | | Company Contributions to 401(k) Plan ($) | | Company Contributions to Employee Stock Purchase Plan ($) | | Post-Employment Payments | | Total ($) |
Derek J. Leathers (1) | | 108,800 | | | 5,000 | | | 3,124 | | | — | | | 116,924 | |
| Christopher D. Wikoff | | — | | | — | | | — | | | — | | | — | |
Nathan J. Meisgeier (2) | | 3,200 | | | 5,000 | | | 3,124 | | | — | | | 11,324 | |
Jim S. Schelble (3) | | 26,327 | | | 5,000 | | | 3,124 | | | — | | | 34,451 | |
James L. Johnson (2) | | 3,200 | | | 5,000 | | | 3,124 | | | — | | | 11,324 | |
John J. Steele (4) | | — | | | 5,000 | | | 727 | | | 450,000 | | | 455,727 | |
|
| (1) | Perquisites and other personal benefits for Mr. Leathers include $85,000 personal use of Company aircraft, use of one Company vehicle, Company-paid country club membership, and personal medical care membership program. |
| (2) | Perquisites and other personal benefits for Messrs. Meisgeier and Johnson include personal medical care membership program. |
| (3) | Perquisites and other personal benefits for Mr. Schelble include Company-paid country club membership, use of one Company vehicle, personal medical care membership program, and a years-of-service award. |
| (4) | Post-employment payments for Mr. Steele consist of payments for consulting services. Pursuant to a Consulting Services Agreement between the Company and Mr. Steele, dated July 1, 2023, the Company engaged Mr. Steele to provide consulting services after his retirement from July 1, 2023 through December 31, 2023. Under the Consulting Services Agreement, Mr. Steele provided strategic advice and counsel related to the business issues and projects he was involved with prior to his retirement and must also abide by non-competition and confidentiality requirements. The non-competition requirement covers a period from July 1, 2023 through December 31, 2024. |
Our contributions on behalf of the Named Executive Officers to the 401(k) plan and 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 participate in voluntary health and welfare benefit programs that are available for all eligible U.S. employees.
GRANTS OF PLAN-BASED AWARDS FOR 20202023
Equity and non-equity incentive plan awards granted to Named Executive Officers during 20202023 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 ratioless FSC, and individual performance for fiscal 2020.2023. The actual AIP payouts earned for 20202023 are disclosed in the Summary Compensation Table and were paid in February 20212024.
•Equity incentive plan: awards of performance stock under our Equitythe Prior Plan, with an earnings per diluted share performance metric for the two-year period from January 1, 20202023 to December 31, 2021.2024. No shares are earned for performance below the threshold level.
•Stock awards: awards of restricted stock under the Prior Plan for Messrs. Leathers, Meisgeier, Schelble, and Johnson and under our 2023 LTIP for Mr. Wikoff. Restricted stock awards are 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 2020.2023. Columns that would otherwise be required by the SEC regulationsrules are omitted where such column is not applicable for all of the Named Executive Officers.if inapplicable. The awards reported in the following table are also disclosed in the Summary Compensation Table and Outstanding Equity Awards at December 31, 20202023 tables and therefore do not constitute additional compensation not otherwise reported in this Proxy Statement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 $0.09 quarterly dividend amount per share and a risk-free interest rate of 1.6%. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 8 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2020. |
| (2) | Mr. Werner’s 2020 AIP cash award payout was prorated for his May 31, 2020 retirement date. He forfeited 100% of his 2020 stock awards upon his retirement. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GRANTS OF PLAN-BASED AWARDS FOR 2023 |
| | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | All Other Stock Awards: Number of Shares of Stock (#) | Grant Date Fair Value of Stock Awards ($) (1) |
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) |
| Derek J. Leathers | | 555,000 | | 1,110,000 | | 2,220,000 | | | | | | | |
| 2/10/23 | | | | | 9,985 | | 39,941 | | 89,867 | | | 1,800,000 | |
| 2/23/23 | | | | | | | | 39,141 | | 1,800,000 | |
| Christopher D. Wikoff | | 173,250 | | 346,500 | | 693,000 | | | | | | | |
| 5/9/23 | | | | | | | | 23,006 | | 1,000,000 | |
| Nathan J. Meisgeier | | 152,250 | | 304,500 | | 609,000 | | | | | | | |
| 2/10/23 | | | | | 1,110 | | 4,438 | | 9,986 | | | 200,000 | |
| 2/23/23 | | | | | | | | 4,349 | | 200,000 | |
| Jim S. Schelble | | 147,000 | | 294,000 | | 588,000 | | | | | | | |
| 2/10/23 | | | | | 971 | | 3,883 | | 8,737 | | | 175,000 | |
| 2/23/23 | | | | | | | | 3,805 | | 175,000 | |
| James L. Johnson | | 157,500 | | 315,000 | | 630,000 | | | | | | | |
| 2/10/23 | | | | | 1,110 | | 4,438 | | 9,986 | | | 200,000 | |
| 2/23/23 | | | | | | | | 4,349 | | 200,000 | |
John J. Steele (2) | | — | | — | | — | | | — | | — | | — | | — | | — | |
| |
| (1) | The grant date fair value per share of the performance stock and 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 awards are not entitled to receive dividends prior to vesting. The grant date fair values per share of the performance stock and the restricted stock were $45.07 and $45.99, respectively, for Messrs. Leathers, Meisgeier, Schelble, and Johnson. The grant date fair value per share of the restricted stock was $43.47 for Mr. Wikoff. The present values of estimated future dividends for the February 10, 2023, February 23, 2023, and May 9, 2023 grants were calculated based on $0.13, $0.13, and $0.14 quarterly dividend amounts per share, respectively, and risk-free interest rates of 4.0%, 4.1%, and 3.8%, respectively. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 11 of our Consolidated Financial Statements in the 2023 Form 10-K. |
| (2) | Mr. Steele did not receive any plan-based awards in 2023 due to his announced retirement. |
OUTSTANDING EQUITY AWARDS AT 20202023 YEAR-END
The table that follows presents information regarding all outstanding equity awards held by each of the Named Executive Officers as of December 31, 2020. There were no outstanding stock options held2023. Columns that would otherwise be required by the Named Executive Officers.SEC rules are omitted if inapplicable. Restricted stock and performance stock awards are generally contingent upon the recipient’s continued employment with the Company through each vesting date. See Arrangements and Potential Payments upon Termination or Change in Control for further information on award terms and conditions. Awards reported in these tables with grant dates before 20182021 are not disclosed in the Summary Compensation Table and therefore constitute additional compensation not otherwise reported in this Proxy Statement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2020 |
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(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 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023 |
| 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) |
| Derek J. Leathers | 2/11/21 | | 11,188 | | (2) | | 474,036 | | | | | | | | |
| 2/11/21 | | 51,303 | | (3) | | 2,173,708 | | | | | | | | |
| 2/7/22 | | 24,636 | | (4) | | 1,043,827 | | | | | | | | |
| 2/7/22 | | — | | (5) | | — | | | | | | | | |
| 2/10/23 | | | | | | | | 19,971 | | (6) | | 846,171 | | |
| 2/23/23 | | 39,141 | | (7) | | 1,658,404 | | | | | | | | |
| Christopher D. Wikoff | 5/9/23 | | 23,006 | | (8) | | 974,764 | | | | | | | | |
| Nathan J. Meisgeier | 2/11/21 | | 1,199 | | (2) | | 50,802 | | | | | | | | |
| 2/11/21 | | 5,496 | | (3) | | 232,866 | | | | | | | | |
| 2/7/22 | | 2,695 | | (4) | | 114,187 | | | | | | | | |
| 2/7/22 | | — | | (5) | | — | | | | | | | | |
| 2/10/23 | | | | | | | | 2,219 | | (6) | | 94,019 | | |
| 2/23/23 | | 4,349 | | (7) | | 184,267 | | | | | | | | |
| Jim S. Schelble | 2/11/21 | | 1,199 | | (2) | | 50,802 | | | | | | | | |
| 2/11/21 | | 5,496 | | (3) | | 232,866 | | | | | | | | |
| 2/7/22 | | 2,695 | | (4) | | 114,187 | | | | | | | | |
| 2/7/22 | | — | | (5) | | — | | | | | | | | |
| 2/10/23 | | | | | | | | 1,942 | | (6) | | 82,283 | | |
| 2/23/23 | | 3,805 | | (7) | | 161,218 | | | | | | | | |
| James L. Johnson | 2/11/21 | | 1,199 | | (2) | | 50,802 | | | | | | | | |
| 2/11/21 | | 5,496 | | (3) | | 232,866 | | | | | | | | |
| 2/7/22 | | 2,695 | | (4) | | 114,187 | | | | | | | | |
| 2/7/22 | | — | | (5) | | — | | | | | | | | |
| 2/10/23 | | | | | | | | 2,219 | | (6) | | 94,019 | | |
| 2/23/23 | | 4,349 | | (7) | | 184,267 | | | | | | | | |
John J. Steele (9) | 2/7/22 | | — | | (5) | | — | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| (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 ($39.2242.37 per share) on December 31, 202029, 2023 (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, 2021.11, 2024. |
(4) | One-half of the restricted stock vested on February 7, 2021, and the remaining shares vest on February 7, 2022. |
(5)(3) | The number of shares and market value for Performance Stockperformance stock granted February 7, 201811, 2021 is reported at 150% of the target level of performance (pursuant to SEC rules) because the Company achieved a level of performance between 150% andof 200% for the two-year performance period from January 1, 20182021 to December 31, 2019,2022, but absolute total shareholder return during the performanceTSR for the three-year period ended December 31, 2023 was less than 30% which cappedbelow the 25th percentile relative to a group of peer companies, capping the award payout at 150%. of target. The Compensation Committee certified achievement at 150% on January 25, 2021.26, 2024. The shares ultimately earned vested in one installment on February 7, 2021.11, 2024. |
(6)(4) | One-thirdOne-half of the restricted stock vested on February 11, 2021,7, 2024, and the remaining shares vest in two equal installments on February 11, 2022 and 2023.7, 2025. |
(7)(5) | The number ofNo shares were earned and market valueno shares will vest for Performance Stockperformance stock granted February 11, 2019 is reported at 87.8% of the target level of performance (pursuant to SEC rules)7, 2022 because the Company achieved thatbelow the threshold level of performance for the two-year performance period from January 1, 20192022 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)(6) | The number of shares and market value for Performance Stockperformance stock granted February 13, 202010, 2023 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, 20202023 to December 31, 2021.2024. Any shares ultimately earned will vest in one installment on February 13, 2023.10, 2026. |
| (7) | Thirty-four percent of the restricted stock vested on February 23, 2024, and the remaining shares vest in two equal installments on February 23, 2025 and 2026. |
| (8) | This award shall vest in five annual increments of 20% each beginning May 9, 2024, and become fully vested on May 9, 2028. |
| (9) | Upon his retirement, Mr. Steele forfeited 100% of his 2021 performance stock award, 66% of his 2022 restricted stock award, and 33% of his 2021 restricted stock award, representing the unvested portions of such awards. |
STOCK VESTED FOR 20202023
The following table provides information regarding shares of restricted and performance stock that vested during 2020.2023. 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 exercisesthat would otherwise be required by SEC regulationsrules are omitted because our Named Executive Officers did not exercise stock options in 2020.if inapplicable. Our Named Executive Officers havehad no outstanding stock options as of December 31, 2020.2023.
| STOCK VESTED FOR 2020 | | | | Stock Awards |
| STOCK VESTED FOR 2023 | |
| STOCK VESTED FOR 2023 | |
| STOCK VESTED FOR 2023 | |
| | | Stock Awards | | | | | Stock Awards |
| Name | Name | | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Name | | | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
| Clarence L. Werner | | | 7,993 | | | 308,148 | | |
| Derek J. Leathers | Derek J. Leathers | | | 80,839 | | | 3,123,235 | | |
| H. Marty Nordlund | | | 26,914 | | | 1,040,219 | | |
| John J. Steele | | | 14,684 | | | 567,390 | | |
| Christopher D. Wikoff | |
| Christopher D. Wikoff | |
| Christopher D. Wikoff | |
| Nathan J. Meisgeier | |
| Nathan J. Meisgeier | |
| Nathan J. Meisgeier | |
| Jim S. Schelble | |
| Jim S. Schelble | |
| Jim S. Schelble | Jim S. Schelble | | | 14,684 | | | 567,390 | | |
| James L. Johnson | James L. Johnson | | | 14,684 | | | 567,390 | | |
| James L. Johnson | |
| James L. Johnson | |
| John J. Steele | |
| John J. Steele | |
| John J. Steele | |
NONQUALIFIED DEFERRED COMPENSATION FOR 20202023
We have a nonqualified deferred compensation plan for eligible key employees whose 401(k) plan contributions are 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 Executive Vice President). The maximum deferral limit for each of the Named Executive Officers was $54,000$100,000 for the 20202023 and 2024 plan year and is $75,000 for the 2021 plan year.years.
Company Contributions. The nonqualified deferred compensation plan also permits us to make matching contributions to participant accounts. We did not make any such matches in 20202023 and have not done so since adopting the plan.
Earnings. Each participant in the nonqualified deferred compensation plan selects one or more investment funds available under the plan in which their contributed amounts are deemed to be invested. Deferred compensation accounts will then accrue earnings or losses based on the return of the selected investment funds. We do not pay preferential earnings or guarantee above-market earnings on any investments made under the plan.
Distributions and “In Service” Withdrawals. A participant elects under his salary deferral agreement whether the resulting deferred compensation will be distributed to him in annual installments or a lump sum payment upon separation. Distributions are made after the participant’s retirement or termination from the Company and will generally not begin until 12 months after the separation date. Under certain circumstances, participants may also elect to receive scheduled (education account) or hardship “in service” withdrawals while still employed with us. None of our Named Executive Officers received distributions or “in service” withdrawals during 2020.
| NONQUALIFIED DEFERRED COMPENSATION FOR 2020 | | NONQUALIFIED DEFERRED COMPENSATION FOR 2023 | | NONQUALIFIED DEFERRED COMPENSATION FOR 2023 |
| Name | Name | Executive Contributions in 2020 ($)(1) | Company Contributions in 2020 ($)(2) | Aggregate Earnings (Losses) in 2020 ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at End of 2020 ($)(4) | Name | Executive Contributions in 2023 ($) (1) | Company Contributions in 2023 ($) (2) | Aggregate Earnings (Losses) in 2023 ($) (3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at End of 2023 ($) (4) |
| Clarence L. Werner | | — | | — | | — | | — | — |
| Derek J. Leathers | 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 |
| Christopher D. Wikoff | |
| Nathan J. Meisgeier | |
| Jim S. Schelble | Jim S. Schelble | | 54,000 | | | — | | 113,735 | | | — | 1,114,322 |
| James L. Johnson | James L. Johnson | | 54,000 | | | — | | 87,356 | | | — | 686,926 |
| John J. Steele | |
| | (1) | |
| (1) | |
| (1) | |
| (1) | |
| (1) | |
| (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. |
| | | | | The Company does not make matching contributions. |
(1)(3) | (1)(3) | 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. | (1)(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. |
(2)(4) | (2)(4) | The Company does not make matching contributions. | (2)(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 2021 and 2022: Mr. Leathers, $143,000; Mr. Schelble, $174,996; Mr. Johnson, $175,000; and Mr. Steele, $174,980. |
(3)(5) | (3)(5) | 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)(5) | Includes a 2022 plan year deferral election of $35,000 related to Mr. Meisgeier’s 2022 cash annual incentive compensation, which was paid in February 2023. Mr. Meisgeier’s contributions for 2022 and 2023 were within the maximum deferral limits for each year. |
| (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 2020,2023, our last completed fiscal year, the annual total compensation of the median employee of our company (other than our CEO) was $54,166;$59,723; and the annual total compensation of our CEO was $4,810,029.$5,446,752. The ratio of the annual total compensation of our CEO to the median employee’s annual total compensation was 8991 to 1 for 2020. 2023.
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 2020.2023. To identify the median employee, we conducted a full analysis of our U.S. employee population as of our December 31, 20202023 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, 20202023 determination date, the total number of U.S. and non-U.S. employees was 12,264,13,819, 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 102,100 and (ii) China 27, and (iii) Canada 21.5. To determine our median employee, we used total Medicare wages and tips as reported on the employees’ IRS Form W-2 for 2020.2023. 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 20202023 on the same basis as used for the CEO in the Summary Compensation Table.Table.
PAY VERSUS PERFORMANCE
The following disclosure provides information regarding the “compensation actually paid” to our CEO and non-CEO NEOs versus Company performance. Additional information on how the Compensation Committee makes compensation decisions and aligns executive compensation with Company performance is included in Compensation Discussion and Analysis, beginning on page 23 of this Proxy Statement.
The following table presents information about our Named Executive Officers’ pay and Company performance for each of the Company’s four most recently completed fiscal years.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PAY VERSUS PERFORMANCE TABLE |
| | | | | Value of Initial Fixed $100 Investment Based On: | | |
| Year | Summary Compensation Table Total for CEO ($) (1) | Compensation Actually Paid to CEO ($) (1)(2) | Average Summary Compensation Table Total for Non-CEO NEOs ($) (3) | Average Compensation Actually Paid to Non-CEO NEOs ($) (2)(3) | Total Share- holder Return ($) | 2023 Peer Group Total Share- holder Return ($) (4) | 2022 Peer Group Total Share- holder Return ($) (4) | Net Income ($) (in 000’s) | Operating Income ($) (in 000’s) |
| 2023 | 5,446,752 | | 3,516,805 | | 1,113,639 | | 899,065 | | 122 | | 228 | | 228 | | 112,290 | | 176,416 | |
| 2022 | 5,460,198 | | 2,465,428 | | 1,094,807 | | 701,308 | | 115 | | 175 | | 175 | | 245,580 | | 323,076 | |
| 2021 | 5,314,351 | | 8,798,833 | | 1,133,218 | | 1,587,300 | | 134 | | 213 | | 212 | | 261,478 | | 309,146 | |
| 2020 | 4,810,029 | | 6,822,876 | | 1,102,850 | | 1,423,523 | | 109 | | 131 | | 131 | | 169,078 | | 227,438 | |
| | | | | | | | | |
| (1) | Represents compensation of Mr. Leathers for all periods presented. |
| (2) | SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid.” The Reconciliation of Compensation Actually Paid Adjustments table below details the applicable adjustments that were made to determine “compensation actually paid” (all amounts are averages for the non-CEO NEOs). |
| (3) | Compensation of Messrs. Schelble, Johnson, and Steele are included in the average compensation calculations for all periods presented. Messrs. Wikoff and Meisgeier are included in the average compensation calculations for 2023 and Mr. Nordlund is included in the average compensation calculations for 2022, 2021, and 2020. |
| (4) | In 2023, we selected a new Peer Group in order to more closely align with our benchmarking Peer Group. Our peer group includes companies similar to us in the transportation industry and has the following companies: ArcBest; Covenant Logistics Group; Daseke; Forward Air; Heartland Express; Hub Group; JB Hunt; Knight-Swift Transportation; Landstar System; Marten Transport; Old Dominion Freight Line; Saia; and Schneider National. We added Daseke to our 2023 peer group and removed US Xpress Enterprises, Inc. (acquired by Knight-Swift Transportation in 2023) and Yellow Corporation (ceased operations in 2023) from our 2023 and 2022 peer groups. |
The following table reconciles total compensation reported in the Summary Compensation Table to “compensation actually paid” for the CEO and non-CEO NEOs (averaged) over the last four years.
| | | | | | | | | | | | | | | | | | | | | | | |
| RECONCILIATION OF COMPENSATION ACTUALLY PAID ADJUSTMENTS |
| Year | Summary Compensation Table “Total” Column ($) | Subtract Summary Compensation Table “Stock Awards” Column ($) | Add Year End Fair Value of Unvested Equity Awards Granted in Year ($) | Add/ (Subtract) Year Over Year Change in Fair Value of Unvested Equity Awards Granted in Prior Years ($) | Add/ (Subtract) Year Over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in Year ($) | Subtract Fair Value of Prior Year Equity Awards that Failed to Meet Vesting Conditions in Year ($) | Compensation Actually Paid ($) |
| CEO |
| 2023 | 5,446,752 | | (3,600,000) | | 2,433,079 | | (1,562,871) | | 799,845 | | — | | 3,516,805 | |
| 2022 | 5,460,198 | | (3,200,000) | | 2,507,777 | | (2,102,923) | | (199,624) | | — | | 2,465,428 | |
| 2021 | 5,314,351 | | (2,800,000) | | 4,741,960 | | 1,288,523 | | 253,999 | | — | | 8,798,833 | |
| 2020 | 4,810,029 | | (2,800,000) | | 4,252,764 | | 302,174 | | 257,909 | | — | | 6,822,876 | |
| Non-CEO NEOs (Average) |
| 2023 | 1,113,639 | | (430,000) | | 343,301 | | (124,568) | | 84,891 | | (88,198) | | 899,065 | |
| 2022 | 1,094,807 | | (350,000) | | 274,289 | | (287,911) | | (29,877) | | — | | 701,308 | |
| 2021 | 1,133,218 | | (312,500) | | 529,187 | | 195,957 | | 41,438 | | — | | 1,587,300 | |
| 2020 | 1,102,850 | | (412,500) | | 626,539 | | 49,962 | | 56,672 | | — | | 1,423,523 | |
The following graphs illustrate the relationships between each of the financial performance measures included in the Pay Versus Performance Table above and the compensation actually paid to the CEO and, on average, to non-CEO NEOs over the Company’s four most recently completed fiscal years.
The following is a list of key financial performance measures used to link compensation actually paid to our Named Executive Officers for 2023 to company performance:
•Revenues, less fuel surcharge revenues
•Operating income
•Diluted earnings per share
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 20202023 as disclosed in the Executive Compensation section 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 advisory 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 mission, 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 1823 of this Proxy Statement, which describes our executive compensation program, 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 2936 through 34,41, which provide more detailed information on our Named Executive 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 Officers’ interests with the long-term interests of our stockholders. The Company believes our executive compensation program has been instrumental to our business and in helping us accomplish our objectives.
At the Company’s annual meetingAnnual Meeting of Stockholders held on May 12, 2020, more than 98% of the stockholder votes were cast9, 2023 (the “2023 Annual Meeting”), stockholders voted 96% 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 compensation 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, the2023 Annual Meeting, stockholders voted 93% in favor, on an advisory basis, to conductof a proposal that future advisory votes on executive compensation occur every year, as recommended by our Board. As a result, the Board of Directors. The Board has determined at its meeting on May 9, 2023 that an advisory say-on-pay resolution on executive compensation will be included in the Company’s proxy materials every year commencing in 20182024 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 2.2029.
This advisory resolution is non-binding on the Company, Board of Directors and Compensation 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 advisory resolution on executive compensation. TheA Designated Proxy HoldersHolder 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.
PROPOSAL 3 — 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 20202023 and 2019.2022 and audit-related fees for 2022. KPMG did not provide any other services to us during those periods.
| INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FEES FOR 2020 AND 2019 | | 2020 ($) | 2019 ($) |
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FEES | | INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FEES |
| 2023 ($) | | | 2023 ($) | 2022 ($) |
| Audit Fees | Audit Fees | 773,750 | 623,750 | Audit Fees | 1,014,600 | 924,871 |
| Audit-Related Fees | Audit-Related Fees | — | — | Audit-Related Fees | — | 70,000 |
| Tax Fees | Tax Fees | — | — | Tax Fees | — | — |
| All Other Fees | All Other Fees | — | — | All Other Fees | — | — |
| Total | Total | 773,750 | 623,750 | Total | 1,014,600 | 994,871 |
Audit Fees. Audit fees consist of fees for (i) the audit of our annual financial statements included in our 2023 Form 10-K and in our Annual ReportsReport on Form 10-K for 2020 and 2019,the year ended December 31, 2022, (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 thesethe services are compatible with maintaining the independence of KPMG.KPMG’s independence. KPMG did not provide any non-audit services for us in 2020.2023 or 2022.
The Audit Committee has approved KPMG to perform the review of our first quarter 20212024 financial statements. Proposed audit fees for KPMG to serve as our independent registered public accounting firm for the remainder of 20212024 will be presented to the Audit Committee for review and approval at the next quarterly meeting. Representatives of KPMG will be present at the 2021 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 accountantaccounting firm 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 2020 and 2019table. 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 accounting firm 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 committeeAudit 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.
The Audit Committee did not approve any fees during 20202023 and 20192022 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,SEC, nor shall this report be subject to Regulation 14A (other than as indicated) or to the liabilities set forth in Section 18 of the Securities Exchange Act of 1934.Act. 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 Ms. Wellman, who serves as Chair, and Mses. Duren and Messrs. Gallagher, Holmes, Jung and Timmerman. Mr. Jung is the Chair of the Audit Committee.Greene. All of the Audit Committee members are qualified independent directors under the audit committee structure and membership requirements of the NASDAQNasdaq 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 ofAudit Committee’s primary purpose is to assist the Audit Committee includeBoard in its oversight responsibilities by reviewing the Company’s financial information that will be presented to stockholdersstatements and filedaudits thereof, and any other financial reports the Company files with the SEC; appointingSEC, systems of internal controls regarding financial reporting, and auditing, accounting and financial reporting processes generally. It appoints and oversees 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 oversightwork of the independent registered public accounting firm, the Audit Committee reviewsreviewing the scope of the audit,audits, audit fees, auditor independence, matters and the extent to which the independent auditors are retained to perform non-audit services for the Company. It reviews major changes to the Company’s auditing and accounting principles and practices recommended by the independent auditors or management, the scope of internal audits, the performance of the internal audit department, and the adequacy of the internal control environment, risk management processes, and procedures designed to ensure compliance with laws and regulations. It reviews the Company’s Code of Conduct, oversees policies and procedures related to the protection of Company proprietary and customer information and compliance with data privacy requirements, and risk management related to cybersecurity.
The Audit Committee does not itself prepare financial statements, or perform audits, attest that financial statements are complete, accurate and its members are not auditorsin accordance with accounting principles generally accepted in the United States of America (“GAAP”), or certifiers of the Company’s financial statements.design or implement internal controls. 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’sKPMG, as the 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”)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 20202023 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 on2023 Form 10-K for 2020 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 applicable standards of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
The Audit Committee also received and reviewed the written disclosures and letter submitted to the committee by the Company’s independent auditors,from KPMG LLP. Such written disclosures and letter are required by applicable PCAOB requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’sKPMG’s communications with the Audit Committee concerning independence. The Audit Committeeindependence and discussed with KPMG LLP also discussed KPMG LLP’sits independence to serve as the Company’s independent auditors of the Company.auditors.
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 on2023 Form 10-K for 2020, for filing with the SEC.
Patrick J. Jung,Alexi A. Wellman, Chair
Diane K. Duren
Michael L. GallagherMichelle D. Greene
Jack A. Holmes
Gerald H. Timmerman
RECOMMENDATION OF THE BOARD OF DIRECTORS — PROPOSAL 3
We are asking stockholders to ratify the appointment of KPMG as our independent registered public accounting firm for 2021.2024. 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 2021,2024, 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 FORthe ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2021. The2024. A 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 standardsNasdaq 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 NASDAQNasdaq and SEC rules and regulations.rules. No director may participate in any discussion or approval of a related person transaction for which he or she, or his or her relative, is a related party. 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:
(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.
RELATED PERSON TRANSACTIONS
Land Lease Agreement. The Company leases certain land from the Clarence L. Werner Revocable Trust (the “Trust”), a related person. CL Werner, Chairman of the Board of Werner Enterprises, Inc., is the sole trustee of the Trust. On February 8, 2007,In November 2022, the Company entered into a revised LeaseMaster Services Agreement with North End Teleservices, LLC to provide supplemental staffing of internal service desk representatives to the Company through November 2023, and the contract was extended until a new contract could be negotiated to commence on February 21, 2024. The new agreement effective as of MayFebruary 21, 2002 (the “Lease Agreement”), and2024 has a License Agreement (the “License Agreement”) with 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, 2002three-year term with a 10-year leasetotal cost of approximately $1,107,000 over such term, commencing June 1, 2002 (the “2002 Lease Agreement”).
The Lease Agreement coversor $369,000 per year. Carmen Tapio, as our director, is a related person. She is North End Teleservices, LLC’s founder and Chief Executive Officer. Total 2023 costs under the lease of land comprisinginitial agreement were 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 supplier 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”)$369,000. 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 extendbelieves the term of the lease to May 31, 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 $84,000 in 2020. The terms of the Lease Agreement also permit CL Werner, in his capacity as landlord, to receive as rent use of the Lodge Premisesinitial agreement were, 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 $7.0 million, and the net book value (cost less accumulated depreciation) at December 31, 2020 was approximately $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 $32,000 for 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 2020, the Company employed three individuals who are considered a “related person” under Item 404 of Regulation S-K of the SEC, none of whom received compensation in excess of $120,000.
Aircraft Charter Services and Private Aircraft Usage. During 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 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 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 $238,013 to the aircraft charter entity in 2020 for aircraft charters and the charter-related additional expenses and excise taxes, of which $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.
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 subjectnew agreements are, no less favorable 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 eachthan those that could be obtained from unrelated third parties, 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 andan arm’s length basis. The Governance Committee, without Ms. Tapio’s participation, approved the Company’s Amended and Restated Equity Plan, all unvested equity awards were forfeited upon the 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.transactions with North End Teleservices, LLC.
STOCKHOLDER PROPOSALS
Only stockholders of record as of March 22, 2021,25, 2024, are entitled to bring business before the 20212024 Annual Meeting. All stockholder proposals must be in writing and include the following:
(i)A brief description of the business the stockholder desires to bring before the Annual Meeting;
(ii)The reason for conducting such proposed business at the Annual Meeting;
(iii)The name and address of the stockholder proposing such business;
(iv)The 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 20222025 Proxy Materials: Stockholder proposals intended to be presented at our 20222025 Annual Meeting of Stockholders must be in writing and be received by the Corporate Secretary at our executive offices on or before December 3, 2021.4, 2024. The inclusion of any such stockholder proposal in our 20222025 Proxy Materials will be considered untimely if received after December 3, 2021.4, 2024. Stockholders may submit nominations for directors to be elected at the 20222025 Annual Meeting of Stockholders, and such nominations must be contained in a written proposal and delivered to the Corporate Secretary at our executive offices byDecember 3, 2021.4, 2024. 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 officescontact information is provided in the Contacting the Corporate Secretary and Executive Offices section of this Proxy Statement..
Regarding proposals not to be included in our 2021 Proxy Materials: Stockholders may present proposals for consideration at the 20212024 Annual Meeting of Stockholders that are not intended for inclusion in the 2021 Proxy Materials. These proposals must be received in writing by the Corporate Secretary at our executive offices no later than April 21, 202124, 2024 for the 20212024 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 timeTime on Tuesday, May 11, 2021,14, 2024, 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. Only registered stockholders (defined below) and beneficial owners with legal proxies (as explained in Beneficial Owners below) are entitled to vote in person at the Annual Meeting. We reserve the right to limit attendees to registered stockholders and beneficial owners and to make available and enforce certain meeting rules of conduct.Should you require additional directions to attend the meeting and vote in person, you may contact our Corporate Secretary at the contact informationas 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, 2021.25, 2024. On the record date, 67,918,14863,412,833 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, 2021.25, 2024. Our stock transfer books will not be closed. On March 22, 2021,25, 2024, the closing market price of our common stock as reported on the NASDAQNasdaq Global Select MarketSM was $45.86$37.97 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,(each, 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 Most of the close of business on the record date are entitled to receive notice of, attend and vote at the Annual Meeting.Company’s stockholders hold their shares through a broker rather than in their own name. 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 (EquinitiEquiniti Trust Company),Company, you are considered a “registered stockholder” and the stockholder of record with respect to those shares. If you are a registered stockholder holding shares at the close of business on the record date, Broadridge must receive your proxy by 11:59 p.m. Eastern Time on May 13, 2024 (“Registered Deadline”), which you may vote your shares by mail using the enclosed proxy and postage-paid return envelope andsubmit by following the instructions appearing onin the proxy. AsAvailability Notice or returning a registered stockholder,proxy you receive in the mail. Even if you have already submitted a proxy, you may also vote your shares in person at the Annual Meeting by notifying and obtainingMeeting. To vote in person, obtain a ballot from the Corporate Secretary at the meeting and complete and return it prior to the occurrenceclosing of any votes.the polls.
Beneficial Owners. If you hold your shares are held inthrough a brokerage account, bank or other nominee,broker, you are considered a “beneficial owner” of shares, and you have the right to instruct yourthe broker how to vote the shares held in your account. YourThe broker will informshould provide you as to how your shareswith a voting instruction form, and it may be voted by
proxy, including whetherinclude Internet or telephonictelephone voting options are available.options. You must follow the instructions therein by the broker’s deadline (“Broker Deadline”). As a beneficial owner, of shares, you may not vote in person at the Annual Meeting unless you obtain from yourthe broker a legal proxy that gives you the right to votedo so. Please contact the shares.
Regardlessbroker for instructions on obtaining such a document and then present it along with proof of how you hold your shares, your rightbeneficial ownership (such as a brokerage account statement) prior to vote in personvoting by ballot 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).Meeting.
Voting Your Proxy and Designated Proxy Holders.Holder. When a proxy is executedproperly and returnedtimely submitted (and not timely and properly 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 20212024 (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 theand Nathan J. Meisgeier are each an appointed and authorized “Designated Proxy Holders.Holder.” Your executed proxy appoints each of the Designated Proxy Holders as your duly authorized attorney-in-fact and givesattorney-in-fact. If you properly submit a proxy, either of the applicable Designated Proxy HolderHolders has the power to represent and vote at the Annual Meeting all shares of our outstanding common stock that you are entitled to vote.vote represented in the proxy. The Designated Proxy HoldersHolder who votes your shares will vote your sharesdo so 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 HoldersHolder who votes your shares 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 If you wish to revoke theyour prior proxy ator voting instruction and replace it with a new one, re-cast your vote using any timeallowed method prior to the callRegistered Deadline (if you are a registered stockholder) or Broker Deadline (if you are a beneficial owner). If you wish to vote at the Annual Meeting. You may revoke your proxy beforevote without re-casting a new one, contact Broadridge (if you are a registered stockholder) or the Annual Meeting by (i) deliveringbroker (if you are a writtenbeneficial owner) and executed notice of revocation of the proxy to the Corporate Secretary at our executive officesfollow their instructions, which must be received 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 ofapplicable deadline. You may also revoke your proxy revocation and votingvote in person. Attendanceperson at the Annual Meeting in andprior to the closing of itself,the polls, but only if you are a registered holder or have a legal proxy from your broker. In either case, you may either re-cast your vote or submit a written revocation request to the Corporate Secretary. Mere attendance at the Annual Meeting does not automatically revoke your proxy. For all options, only your latest, unrevoked vote prior to the applicable deadline will not constitute a revocation of a proxy.be counted.
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 sectionclause (ii) among as many director nominees as you desire. If you wish to vote cumulatively, you must vote in person (as allowed) 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. YouIf you vote by mail or in person, you may withhold authority to vote for any nominee(s) by striking throughwriting the name(s)number(s) of such nominee(s) where provided on the accompanying proxy. If you vote by Internet or telephone, you may withhold authority by following instructions provided.
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 doesvoting instructions are not receive voting instructionsreceived 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-votesmatters. 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 the 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 fivethree 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 The Board has been appointed by the BoardMr. Johnson and two other Company employees to serve as thean inspector of election for the Annual Meeting.Meeting, each having individual authority to fulfill the duties of inspector. Proxies and ballots will be received and tabulated by thean inspector of election. Preliminary voting results will be announced at the Annual Meeting, and thean 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.within four business days after the Annual Meeting.
Stockholder Privacy. As a matter of Company policy, we keep all All proxies, ballots and voting tabulations that identify individual stockholders are kept private and confidential. Such documents are available for examination onlyconfidential by the inspector of electionour tabulator and certain Company representatives who assist with processing proxies and tabulating the vote. Stockholder votes arewill not otherwisebe 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 Broadridge, brokerage firms and other custodians and fiduciaries for all reasonable expenses incurred for forwarding Proxy Materials to beneficial owners of our stockstockholders 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 thea 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 rulesBroadridge and regulations. Under this procedure, we will deliverbrokers may participate in the practice of householding stockholder materials, such as proxy statements, annual reports, and information statements, which aligns with our environmental goals and reduces printing expenses. This means only one copy of thisthe Proxy Statement and our 2020 Annual ReportMaterials may have been sent to multiple stockholders who share the same mailing address (if they appear to be membersin your household. To obtain separate copies of the same family)Proxy Materials for each individual stockholder, contact our Corporate Secretary as provided in Contacting the Corporate Secretary and Executive Offices, unlessand 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 writtenthe materials without charge.
If you wish to commence or oral request,discontinue householding for your residence, you should (i) if you are a separate copyregistered stockholder, contact Broadridge either by calling toll-free at 1.866.540.7095 or by writing Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or (ii) if you are a beneficial owner holding through a broker, contact such entity.
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.Diane M. Stewart-Ferro. 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 2020 Annual Report (including our Annual Report on Form 10-K for 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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| INTERNET AVAILABILITY OF MATERIALS; VOTING | |
| We are sending an Important Notice Regarding Internet Availability of Proxy Materials (“Availability Notice”) to registered stockholders rather than mailing a full paper set of materials. The Availability Notice contains instructions on how to access our proxy materials for the Annual Meeting and vote. Please promptly go to www.proxyvote.com, read the Proxy Statement, and follow the simple instructions to vote, which include using the control number in the Availability Notice. The Availability Notice also contains instructions on how to obtain the printed Proxy Materials, free of charge. If you receive a proxy card by mail, you may vote by following the instructions on the card, including using the control number therein. If you hold shares through a broker, please promptly follow their voting instructions. We appreciate your prompt votes in advance even if you plan to attend the meeting. All investors and the public may go to our website, www.werner.com, under the Investors link, to view the Proxy Materials and other SEC filings. However, use www.proxyvote.com to submit your proxy to vote your shares.
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| | By Order of the Board of Directors, |
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| | James L. JohnsonDiane M. Stewart-Ferro |
| Omaha, Nebraska | | Executive Vice President, Chief Accounting OfficerCorporate Secretary |
April 2, 20213, 2024 | | | & Corporate Secretary
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLYTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. V34800-P08474 ! ! ! For All Withhold All For All Except For Against Abstain ! !! WERNER ENTERPRISES, INC. To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. WERNER ENTERPRISES, INC. ATTENTION: CORPORATE SECRETARY POST OFFICE BOX 45308 OMAHA, NE 68145-0308 01) Michelle D. Greene 02) Scott C. Arves 03) Alexi A. Wellman Nominees: 2. To approve an advisory resolution on executive compensation. 3. To ratify the appointment of KPMG LLP as the independent registered public accounting firm for the year ending December 31, 2024. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. NOTE: Designated Proxy Holder may vote shares subject to proxy on any other business that properly comes before the meeting or any adjournment thereof. 1. Election of Directors* The Board of Directors recommends you vote FOR ALL: The Board of Directors recommends you vote FOR the following proposals: ! *Alternatively, to cumulate votes as to a particular nominee as explained in the Proxy Statement, do NOT mark "For All," "Withhold All" or "For All Except" above, but check box to the right then indicate the name(s) and the number of votes to be given to such nominee(s) on the reverse side of this card and return it by mail. Please do not check box unless you want to exercise cumulative voting. ! !! VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by Werner Enterprises, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. We must receive your proxy card by 11:59 p.m. Eastern Time the day before the meeting. SCAN TO VIEW MATERIALS & VOTEw
Post Office Box 45308
Omaha, Nebraska 68145-0308
V34801-P08474 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 14, 2024: The Notice of Annual Meeting, Proxy Statement, and 2023 Annual Report are available at www.proxyvote.com. Continued and to be signed on reverse side WERNER ENTERPRISES, INC. PROXY This Proxy is solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders to be held Tuesday, May 11, 2021. 14, 2024 at 10:00 a.m. Central Time (Embassy-Suites Omaha-La Vista Hotel & Conference Center, La Vista, NE) The undersigned stockholder hereby acts by proxy and appoints Clarence L. Werner andeach of Derek J. Leathers and Nathan J. Meisgeier (each, a "Designated Proxy Holder"), to act as duly authorized attorneys-in-factattorney-in-fact and proxies (collectively, the “Designated Proxy Holders”),proxy, 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 22, 202125, 2024 at the Annual Meeting of Stockholders to be held on Tuesday, May 11, 202114, 2024 (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.
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 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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For All o
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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
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Cumulate | |
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 ALL” for Proposal 1, (PROXY HOLDERS MAY CUMULATE VOTES) and ““FOR” ” for Proposals 2 and 3.
Please date, sign and print your name.*
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| | | IF HELD JOINTLY:
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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 CUMULATE ____________________________________________________________________________________________ _______________________________________________________________________________________________________ (If you noted cumulative voting instructions above, please check the stockholder is a corporation or partnership, providecorresponding box on the full corporate or partnership name by the name of the authorized officer or person completing this Proxy.reverse side.)
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 11, 2021: The Proxy Statement and 2020 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.
