UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
WERNER ENTERPRISES, INC.
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(Name of Registrant as Specified In Its Charter)
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[LOGO OF WERNER ENTERPRISES, INC.]
Post Office Box 45308
Omaha, Nebraska 68145-0308
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 2011
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Dear Stockholders:
Notice is hereby given that the 2011 Annual Meeting of
Stockholders (the "2011 Annual Meeting") 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 10, 2011, at 10:00 a.m. local Central Daylight
time. This meeting will be held for the following purposes,
which are more fully described in the accompanying Proxy
Statement:
1. To elect three Class II directors to each serve for a
three-year term expiring at the 2014 Annual Meeting of
Stockholders and until their respective successors are
elected and qualified.
2. To approve an advisory resolution on executive
compensation.
3. To hold an advisory vote on the frequency of future
advisory votes on executive compensation.
4. To ratify the appointment of KPMG LLP as the Company's
independent registered public accounting firm for the
year ending December 31, 2011.
5. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March
21, 2011, will be entitled to receive notice of and to vote at
the 2011 Annual Meeting or any adjournment thereof.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 10, 2011: This
Notice of Annual Meeting of Stockholders is not a form for
voting and presents only an overview of the more complete
enclosed proxy materials comprised of the Company's (i) 2011
Proxy Statement (including a proxy for voting) relating to the
2011 Annual Meeting and (ii) Annual Report to Stockholders for
the year ended December 31, 2010 (containing our Annual Report
on Form 10-K for 2010 filed with the U.S. Securities and
Exchange Commission on March 1, 2011). Copies of the proxy
materials are available, without charge, on the Company's
website (http://www.werner.com under the "Investors" link) or
by contacting the Corporate Secretary by telephone at (800)
228-2240 or e-mail at invrelations@werner.com. The enclosed
proxy materials contain important information about the
Company and 2011 Annual Meeting, and you are encouraged to
review these documents before voting.
All stockholders are cordially invited and encouraged to
attend the 2011 Annual Meeting in person. However, regardless
of whether you attend the meeting, we request that you vote
and submit your proxy as promptly as possible in order to
ensure the presence of a quorum and that your shares will be
voted in accordance with your wishes. Voting instructions are
enclosed and provided in the Proxy Statement for your
convenience. If you attend the 2011 Annual Meeting, you may
either (i) vote by proxy beforehand and forego voting at the
Annual Meeting or (ii) revoke your proxy and cast your vote in
person. If you hold your shares through a brokerage firm,
bank or other nominee, follow the instructions you receive
from them to vote your shares.
By Order of the Board of Directors,
/s/ James L. Johnson
James L. Johnson
Omaha, Nebraska Executive Vice President, Chief
April 7, 2011 Accounting Officer and Corporate
Secretary
TABLE OF CONTENTS
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INTRODUCTION 1
Annual Meeting Information 2
Voting Information and Instructions 2
Record Date 2
Quorum 2
Stockholders Eligible to Vote 2
Stockholder Voting Methods 2
Voting Your Proxy and Designated Proxy Holders 3
Revoking Your Proxy 3
Cumulative Voting in Director Elections 3
Votes Required for Proposals and Voting Process 4
Voting Results 4
Stockholder Privacy 5
Expenses of Solicitation 5
Other Matters 5
PROPOSAL 1 - ELECTION OF DIRECTORS 5
Director Nominees 5
Current Director Information 6
Recommendation of the Board of Directors - Proposal 1 9
CORPORATE GOVERNANCE 9
Director Independence Determinations 9
Role and Leadership of the Board of Directors 9
Board Oversight of Risk Management 10
Corporate Governance Policies and Materials 10
Committees of the Board of Directors 11
Attendance at Board and Committee Meetings and Annual
Meeting 12
Audit Committee 12
Audit Committee Independence and Financial Expert 12
Compensation Committee 13
Compensation Committee Independence 13
Compensation Committee Interlocks and Insider
Participation 14
Nominating and Corporate Governance Committee 14
Stockholder Communications with the Board of Directors 14
Director Nomination Process 14
Stockholder Recommendations for Director Candidates 15
Desirable Skills and Traits for Director Candidates 15
Director Compensation and Benefits 16
Director Stock Ownership 17
Compensation of Directors for 2010 17
Report of the Audit Committee 18
EXECUTIVE OFFICERS 19
Current Executive Officer Information 19
Future Management Changes 21
BENEFICIAL OWNERSHIP OF COMMON STOCK 21
Stock Ownership of Directors, Executive Officers and
Certain Beneficial Owners 21
Section 16(a) Beneficial Ownership Reporting Compliance 23
PROPOSAL 2 - ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION 23
Recommendation of the Board of Directors - Proposal 2 25
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PROPOSAL 3 - ADVISORY VOTE ON THE FREQUENCY OF FUTURE
ADVISORY VOTES ON EXECUTIVE COMPENSATION 25
Recommendation of the Board of Directors - Proposal 3 26
EXECUTIVE COMPENSATION 26
Compensation Discussion and Analysis 26
Named Executive Officers 26
Executive Summary 27
2010 Executive Compensation Program and Objectives 28
Elements of Executive Compensation 29
Role of the Compensation Consultant 36
Role of Peer Groups and Benchmarking 36
Compensation Determination Process 37
Risk Management Related to Compensation 40
Other Executive Compensation Policies and
Considerations 41
Employment Arrangements 43
Arrangements and Potential Payments Upon Termination or
Change in Control 43
Termination 43
Change in Control 43
Potential Benefits Payable Under the Equity Plan 43
Report of the Compensation Committee 44
Summary Compensation Table 45
All Other Compensation for 2010 47
Grants of Plan-Based Awards for 2010 48
Outstanding Equity Awards at 2010 Year-End 48
Option Exercises for 2010 51
Nonqualified Deferred Compensation for 2010 52
Deferrals 52
Earnings 52
Distributions and "In Service" Withdrawals 52
PROPOSAL 4 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 53
Fees of the Independent Registered Public Accounting
Firm 53
Audit Fees 54
Audit-Related Fees 54
Tax Fees 54
Policy of Audit Committee Pre-Approval of Audit and
Non-Audit Services Performed by the Independent
Registered Public Accounting Firm 54
Recommendation of the Board of Directors - Proposal 4 55
TRANSACTIONS WITH RELATED PERSONS 55
Review and Approval of Related Person Transactions 55
Related Person Transactions 56
Land Lease Agreement 56
Family Members of Executive Officers and Directors 57
Independent Contractors 57
Personal Use of Corporate Aircraft 57
OTHER BUSINESS 57
STOCKHOLDER PROPOSALS 58
STOCKHOLDERS SHARING THE SAME ADDRESS 58
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES 59
INTERNET WEBSITE AND AVAILABILITY OF MATERIALS 59
ii
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2011
________________________
INTRODUCTION
We are sending you this Proxy Statement in connection with the
solicitation of proxies by our Board of Directors (the
"Board") for the 2011 Annual Meeting of Stockholders of Werner
Enterprises, Inc. The 2011 Annual Meeting will be held for
the purposes set forth in the Notice of Annual Meeting of
Stockholders on the cover page of this Proxy Statement. We
are mailing the Proxy Statement, proxy and our Annual Report
to Stockholders for the year ended December 31, 2010 (the
"2010 Annual Report") on or about April 7, 2011.
In this Proxy Statement, we also use the following terms and
abbreviations:
* We refer to Werner Enterprises, Inc. as the "Company,"
"we" or "us."
* The 2011 Annual Meeting of Stockholders is referred to
as the "Annual Meeting" or "2011 Annual Meeting."
* References to "2010" and "for the year ended December
31, 2010" mean the Company's fiscal year for the period
beginning January 1, 2010 and ending December 31, 2010.
* The term "executive officers" means those executives
listed in the Current Executive Officer Information
section beginning on page 19 of this Proxy Statement
and on our website.
* "Named Executive Officers" means the five executive
officers identified on page 26 of the Compensation
Discussion and Analysis section of this Proxy
Statement.
* "Proxy Materials" means this Proxy Statement, the proxy
relating to the 2011 Annual Meeting and the 2010 Annual
Report.
* We also refer to our "website," which means the
Internet website available at http://www.werner.com
under the "Investors" link, as provided in the Internet
Website and Availability of Materials section of this
Proxy Statement.
This Proxy Statement and our 2010 Annual Report are available
on our website. In these Proxy Materials, we refer to certain
reports and forms that we have filed with the U.S. Securities
and Exchange Commission (the "SEC"). All of our SEC filings
are available on our website. You may also request copies of
our SEC filings and Proxy Materials from the Corporate
Secretary at the contact information provided in the
Contacting the Corporate Secretary and Executive Offices
section of this Proxy Statement.
1
Annual Meeting Information
The 2011 Annual Meeting of Stockholders will be held at 10:00
a.m. local Central Daylight time on Tuesday, May 10, 2011, 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 just
off U.S. Interstate 80 and the Giles Road Exit 442 in La
Vista's Southport development. Should you require additional
directions to attend the meeting and vote in person, you may
contact our Corporate Secretary at the contact information set
forth in the Contacting the Corporate Secretary and Executive
Offices section on page 59. At the meeting, Clarence L.
("C.L.") Werner, Gregory ("Greg") L. Werner and Gary L. Werner
and other members of our management team will discuss our
results of operations and business plans. Members of our
Board of Directors will also be present to answer your
questions.
Voting Information and Instructions
Record Date. The record date for the Annual Meeting is March
21, 2011. On the record date, 72,767,735 shares of our issued
$0.01 par value common stock 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 21, 2011. Each share has one vote
on each matter. Our stock transfer books will not be closed.
On March 21, 2011, the closing market price of our common
stock as reported on the NASDAQ Global Select MarketSM was
$25.47 per share.
Quorum. For business to be conducted at the Annual Meeting, a
quorum must be present. The presence at the Annual Meeting,
either in person or by proxy, of a majority of all outstanding
shares of common stock entitled to vote at the Annual Meeting
will constitute a quorum for the transaction of business.
Both abstentions and broker non-votes are counted for the
purpose of determining whether a quorum is present for the
transaction of business. If a quorum is not present, the
Annual Meeting will be adjourned until a quorum is obtained.
("Broker non-votes" are shares held by a brokerage firm, bank
or other nominee (collectively, a "broker") that are
represented by proxy at the Annual Meeting, but the broker has
not received voting instructions from the beneficial owner of
such shares and does not have discretionary voting power for
certain matters.)
Stockholders Eligible to Vote. Only stockholders of record as
of the close of business on the record date are entitled to
notice of, attend and vote at the Annual Meeting. Shares that
may be voted at the Annual Meeting include shares that are
held by (i) "registered stockholders" and (ii) "beneficial
owners."
(i) If your shares are registered directly in your
name with our transfer agent (Wells Fargo Bank
Minnesota, N.A.), you are considered a
"registered stockholder" and the stockholder of
record with respect to those shares.
(ii) Most stockholders hold their shares through a
broker, rather than holding shares registered
directly in the stockholder's name. In that
case, you are considered a "beneficial owner" of
shares held in street name.
Stockholder Voting Methods. Your type of stock ownership
determines the method by which you may vote your shares.
Registered Stockholders. If you are a registered
stockholder, you may vote your shares by mail using the
enclosed proxy and postage-paid return envelope and by
following the instructions appearing on the proxy. As
a registered stockholder, you may also vote your shares
in person at the Annual Meeting by notifying and
obtaining a ballot from the Corporate Secretary prior
to the occurrence of any votes.
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Beneficial Owners. If you are a beneficial owner, you
have the right to instruct your broker how to vote the
shares held in your account. Your broker will inform
you as to how your shares may be voted by proxy,
including whether Internet or telephonic voting options
are available. As a beneficial owner of shares, you
may not vote in person at the Annual Meeting unless you
obtain from your broker a legal proxy that gives you
the right to vote the shares.
Regardless of your type of stock ownership, your right to vote
in person at the Annual Meeting is not affected by signing and
returning the proxy by mail (as generally done by registered
stockholders) or by submitting your proxy pursuant to your
broker's instructions (as done by beneficial owners, commonly
by the Internet or telephone).
Voting Your Proxy and Designated Proxy Holders. When a proxy
is executed and returned (and not revoked) prior to the Annual
Meeting, the proxy will be voted according to the instructions
you made when granting the proxy. Unless you specify
otherwise or if no choice is indicated on your proxy, all
shares of our common stock represented by the proxy will be
voted:
(i) FOR the election of ALL nominees for Class II
director (Proposal 1);
(ii) FOR the approval of the advisory resolution on
executive compensation (Proposal 2);
(iii) To conduct future advisory votes on executive
compensation EVERY THREE YEARS (as opposed to
every year or two years) (Proposal 3);
(iv) FOR the ratification of the appointment of KPMG
LLP as our independent registered public
accounting firm for 2011 (Proposal 4); and
(v) In accordance with the best judgment of the
named proxies on any other matters properly
brought before the Annual Meeting or any
adjournment thereof. See Other Matters in this
Proxy Statement.
For purposes of the 2011 Annual Meeting, C.L. Werner and Gary
Werner will act as the appointed and authorized "Designated
Proxy Holders." Your executed proxy appoints each of the
Designated Proxy Holders as your duly authorized attorney-in-
fact and gives the Designated Proxy Holders the power to
represent and vote at the Annual Meeting all shares of our
outstanding common stock that you are entitled to vote. The
Designated Proxy Holders will vote your shares as instructed
by you on your proxy. If you do not provide voting
instructions on the proposals discussed in this Proxy
Statement, or for any other matters properly presented at the
Annual Meeting, your proxy also gives the Designated Proxy
Holders the discretionary authority to vote your shares
represented thereby as noted in this Proxy Statement and in
accordance with their best judgment.
Revoking Your Proxy. Any stockholder who delivers an executed
proxy has the right to revoke the proxy at any time prior to
the call to vote at the Annual Meeting. You may revoke your
proxy before the Annual Meeting by (i) delivering a written
and executed notice of revocation of the proxy to the
Corporate Secretary at our executive offices prior to the
Annual Meeting or (ii) executing and delivering a subsequent
proxy (dated later than the previously submitted proxy) before
the Annual Meeting. Alternatively, you may revoke your proxy
by attending the Annual Meeting, informing the Corporate
Secretary of your proxy revocation and voting in person.
Attendance at the Annual Meeting, in and of itself, will not
constitute a revocation of a proxy.
Cumulative Voting in Director Elections. With respect to the
election of directors, Company stockholders (or their proxy
holder, if one is appointed) have cumulative voting rights
under the laws of the State of Nebraska. This means that you
(or your proxy holder) may: (i) vote your shares for as many
directors as are to be elected; (ii) cumulate your shares and
give one director nominee an amount of votes equal to the
total number of directors to be elected multiplied by the
total number of your shares; or (iii) distribute an amount of
3
votes calculated as described in section (ii) among as many
director nominees as you desire. If you wish to vote
cumulatively, you must vote in person or give your specific
cumulative voting instructions to the selected proxy, and your
instructions must indicate the number of votes represented by
your shares that are to be cast for one or more of the
director nominees. The solicitation of proxies on behalf of
the Board of Directors includes a solicitation for
discretionary authority to cumulate votes. You may withhold
authority to vote for any nominee(s) by striking through the
name(s) of such nominee(s) on the accompanying proxy.
Votes Required for Proposals and Voting Process. If you are a
beneficial owner, certain exchange rules govern how brokers
can vote your shares. If your broker does not receive voting
instructions from you, the broker may generally vote your
shares on routine matters but cannot vote your shares on the
election of directors and other non-routine matters; these
broker non-votes will not be treated as votes cast at the
Annual Meeting on non-routine matters. With respect to the
proposals described in this Proxy Statement to be voted on at
the 2011 Annual Meeting, the election of directors ("Proposal
1"), approval of the advisory resolution on executive
compensation ("Proposal 2") and advisory vote on the frequency
of future advisory votes on executive compensation ("Proposal
3") constitute non-routine matters. The ratification of the
appointment of our independent registered public accounting
firm ("Proposal 4") is considered a routine matter.
The following votes are required for the four 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 three
nominees receiving the highest number of votes at the
Annual Meeting, after taking into account any
cumulative voting, will be elected to the Board.
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. Regarding the advisory approval of the
frequency of future advisory votes on executive
compensation, the frequency option that receives the
most 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 will be
considered the option selected by the stockholders.
Abstentions will be counted as votes cast, and broker
non-votes will not be counted as votes cast. Neither
abstentions nor broker non-votes will have an effect on
the outcome of such vote.
Proposal 4. 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 4.
Voting Results. Our Corporate Secretary has been appointed by
the Board to serve as the inspector of election for the Annual
Meeting. Proxies and ballots will be received and tabulated
by the inspector of election. Preliminary voting results will
be announced at the Annual Meeting, and the inspector of
election will then calculate final voting results. We will
4
disclose the Annual Meeting voting results on a Current Report
on Form 8-K filed with the SEC in accordance with SEC rules.
Stockholder Privacy. As a matter of Company policy, we keep
all proxies, ballots and voting tabulations that identify
individual stockholders private and confidential. Such
documents are available for examination only by the inspector
of election and certain Company representatives who assist
with processing proxies and tabulating the vote. Stockholder
votes are not otherwise disclosed within the Company, to
members of our Board or to third parties, except as may be
necessary to meet legal requirements.
Expenses of Solicitation
We will bear all costs of this proxy solicitation, including
expenses for the preparation, printing, assembly and mailing
of materials. Some of our directors, officers and employees
may also solicit proxies in person or by the Internet,
telephone or other electronic communications, and they will
not receive any additional compensation for making such
solicitations. We will also reimburse brokerage firms and
other custodians and fiduciaries for all reasonable expenses
incurred for forwarding Proxy Materials to beneficial owners
of our stock in accordance with customary practice. Your
cooperation in promptly voting your shares and submitting your
proxy will help to avoid additional expense.
Other Matters
On the date of mailing this Proxy Statement, the Board of
Directors knows of no other matters to be brought before
stockholders at the Annual Meeting other than the matters
described in this Proxy Statement. If any other matters are
properly presented at the meeting, your signed proxy
authorizes the Designated Proxy Holders to vote the shares
represented thereby in their discretion and according to their
best judgment.
Assuming the presence of a quorum, all other matters that
properly come before the Annual Meeting will each require the
affirmative vote of a majority of the outstanding shares of
our common stock, present or represented by proxy, at the
Annual Meeting and entitled to vote thereon.
PROPOSAL 1 - ELECTION OF DIRECTORS
Our Articles of Incorporation provide that there shall be two
or three separate classes of directors. Each class must
consist of not less than two, nor more than five, directors,
and the classes should be nearly equal in number as possible.
Our By-Laws provide for eight directors, divided into three
classes (Class I, II and III), and each class should have the
same number of directors to the extent possible. Directors
hold office for a term of three years and until a successor is
elected and qualified. Each term expires at the third
succeeding annual meeting of stockholders after the respective
director's election. The terms of office for each class of
current directors expire at the annual meeting of stockholders
in the following years: Class I, 2013; Class II, 2011; and
Class III, 2012.
Director Nominees
You will be asked to elect three directors in Class II to each
serve for a three-year term expiring at the 2014 Annual
Meeting of Stockholders and until his respective successor is
elected and qualified. The three current Class II directors
whose terms will expire at the 2011 Annual Meeting are:
Gary L. Werner Gregory L. Werner Michael L. Steinbach
5
They have been nominated for re-election at the 2011 Annual
Meeting for terms expiring at the 2014 Annual Meeting of
Stockholders and until their respective successors are duly
elected and qualified. Their individual qualifications,
skills and experience are discussed in their respective
biographies in the following Current Director Information
section.
Each of the nominees designated in this Proxy Statement has
indicated his intention to serve as a director if elected, and
the Board does not know of any reason why any nominee will be
unavailable for election. In the event any nominee becomes
unwilling or unable to serve as a director, the shares
represented by your accompanying proxy will be voted for any
substitute nominee designated by the Board, unless 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.
Current Director Information
Identified in the table below are the current director
nominees and the directors whose terms will continue after the
2011 Annual Meeting, all of whom are current members of our
Board. Certain information provided to us by our directors
regarding their qualifications, skills and experience is also
set forth in the biographies following the table. Family
relationships between any directors and executive officers are
noted in the relevant biographies. None of the corporations
or other organizations referenced in the biographies is a
parent, subsidiary or affiliate of the Company.
Members of the Board of Directors
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Term
Name Principal Occupation Ends Class
---- -------------------- ---- -----
Clarence L. Werner Chairman of Werner Enterprises, Inc. 2012 III
Gary L. Werner Vice Chairman of Werner Enterprises, Inc. 2011 II
Gregory L. Werner President and Chief Executive Officer 2011 II
of Werner Enterprises, Inc.
Gerald H. Timmerman President of Timmerman & Sons Feeding Co., Inc. 2013 I
and Timmerman Feeding Corporation
Michael L. Steinbach Owner of Steinbach Farms & Equipment Sales 2011 II
and Steinbach Truck & Trailer
Kenneth M. Bird, Ed.D. President and Chief Executive Officer 2013 I
of the Avenue Scholars Foundation
Patrick J. Jung Chief Operating Officer of Surdell & Partners LLC 2012 III
Duane K. Sather Former President of Sather Trucking Corporation 2012 III
and Former Chairman of Sathers Inc.
CLARENCE L. WERNER, 73, operated Werner Enterprises as a sole
proprietorship from 1956 until the incorporation of Werner
Enterprises, Inc. in September 1982. He has been a Company
director since that time and also served as President until
1984. Since 1984, Mr. Werner has been our Chairman, and he
served as our Chief Executive Officer from 1984 until February
2007. As our founder, Mr. Werner has been actively involved
in the Company's business and operations since its inception
over 50 years ago. As a result of these professional
experiences, Mr. Werner brings to the Board a unique
understanding of our business and operations attributed to his
long-standing commitment to, management of and involvement
with the Company for more than 50 years, as well as his
6
significant and extensive knowledge of the transportation
industry. Mr. Werner is the father of brothers Gary Werner
and Greg Werner.
GARY L. WERNER, 53, has been a director of the Company since
its incorporation. Mr. Werner was General Manager of Werner
Enterprises, Inc. and its predecessor from 1980 to 1982. He
also served as Vice President from 1982 until 1984, when he
was named our President and Chief Operating Officer. Mr.
Werner was then named Vice Chairman in 1991 and has held such
position since that time. From 1993 to April 1997, Mr. Werner
also reassumed the duties of President. Mr. Werner also
serves on the advisory board of the Eppley Cancer Center of
the University of Nebraska Medical Center. Mr. Werner has a
depth of professional experience acquired during his long-term
service with the Company, and his extensive comprehension of
our business derived from such experience provides a valuable
perspective on the Company's operations and industry. Mr.
Werner is a son of C.L. Werner and a brother of Greg Werner.
GREGORY L. WERNER, 51, was elected as a director of the
Company in 1994. He served as our Treasurer from 1982 to 1986
and was Vice President from 1984 until March 1996. Mr. Werner
was promoted to Executive Vice President in March 1996 and
became President in April 1997. Mr. Werner has also directed
revenue equipment maintenance for Werner Enterprises, Inc. and
its predecessor since 1981. He became responsible for our
management information systems in 1993 and also assumed the
duties of Chief Operating Officer in 1999. Mr. Werner was
then named our Chief Executive Officer in February 2007. Mr.
Werner possesses significant knowledge and a thorough
understanding of our business operations and industry, which
is attributed to his long-term professional experience with
the Company. Because of his position as our President and
Chief Executive Officer, Mr. Werner also provides the Board
with an important insider perspective and management's point-
of-view about various aspects of our business operations and
strategies. Mr. Werner is a son of C.L. Werner and a brother
of Gary Werner.
GERALD H. TIMMERMAN, 71, was elected as a Company director in
1988. Since 1969, Mr. Timmerman has been and currently serves
as President of Timmerman & Sons Feeding Co., Inc. He has
also served as the President of Timmerman Feeding Corporation
since 1965. Timmerman & Sons Feeding Co., Inc. and Timmerman
Feeding Corporation, both of which are based in Springfield,
Nebraska, are cattle feeding, ranching and beef production
enterprises 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. He is currently a member of the board of
directors of McCarthy Group, LLC, a private equity investment
firm based in Omaha, Nebraska. Mr. Timmerman has also been a
partner of McCarthy Group, LLC for over 25 years, from which
he derived comprehensive and long-standing experience in
mergers and acquisitions and investment, financial, lending
and other business-related transactions. Mr. Timmerman is
also active in and serves on the board of directors of several
civic organizations. As a result of these and other
professional experiences, Mr. Timmerman brings to our Board
substantial business experience, financial acumen and outside
board experience that contributes to the Board's collective
qualifications, skills and experience.
MICHAEL L. STEINBACH, 56, was elected as a director of the
Company in 2002. He has been the sole owner of Steinbach
Farms & Equipment Sales since 1973. Steinbach Farms &
Equipment Sales buys and sells farmland and equipment and is
located in Valley, Nebraska. Mr. Steinbach has also been the
sole owner of Steinbach Truck & Trailer, a semi-tractor and
trailer dealership located in Valley, Nebraska, since 1997.
He also farms or custom farms approximately six thousand acres
of farmland. Mr. Steinbach possesses an extensive
understanding of the semi-tractor and trailer industry
acquired from his experience in the equipment sales business.
His depth of knowledge of our primary equipment (semi-tractors
and trailers) is a valuable resource to the Company as we
assess the age, productivity and other characteristics of our
tractor and trailer fleet. This knowledge, coupled with Mr.
Steinbach's related comprehension of the truckload
transportation industry and successful personal business
experience, contribute to our Board's collective
qualifications, skills and experience.
7
KENNETH M. BIRD, ED.D., 63, was appointed by our Board of
Directors in 2002 to fill a vacant director position and was
then elected by the stockholders in 2004. Dr. Bird is
currently the President and Chief Executive Officer of the
Avenue Scholars Foundation (previously known as the Bright
Futures Foundation, renamed in September 2010), a nonprofit
entity that serves youth education in Omaha, Nebraska. Dr.
Bird previously served as Superintendent of Westside Community
Schools in Omaha, Nebraska from 1992 until May 2008, and he
also held various administrative positions with Westside
Community Schools since 1981. Prior to 1981, he was employed
by the Nebraska Department of Education and as a special
education teacher at Westside Community School. Dr. Bird's
broad range of board experience is also considerable and
extensive. He is active in local, state and national
professional organizations as a member of various advisory
councils, committees and task forces. Dr. Bird serves as a
director or trustee on a number of civic boards, and he has
been the recipient of several professional, leadership and
community service awards. He possesses significant overall
board experience, administrative competence, executive and
financial experience and proven leadership skills that enhance
our Board's diversity and discussions. As a result of these
professional and other experiences, Dr. Bird brings to the
Board a broad perspective of our community and an appreciation
of corporate governance principles that contribute to the
collective qualifications, skills and experience of our Board
of Directors.
PATRICK J. JUNG, 63, was elected as a Company director in
2003. He currently serves as the Chief Operating Officer of
Surdell & Partners LLC, an advertising company in Omaha,
Nebraska. Prior to his position with Surdell & Partners LLC,
Mr. Jung was a practicing certified public accountant with
KPMG LLP for 30 years, 20 years of which he served as an audit
partner. He was also the audit engagement partner on the
Company's annual audit for the year ended December 31, 1999
prior to his retirement from KPMG LLP in 2000. Mr. Jung is a
member of the board of managers of Burlington Capital Group
LLC (which includes America First Tax Exempt Investors, L.P.,
a publicly traded company) and serves on its audit and
governance committees. Located in Omaha, Nebraska, Burlington
Capital Group LLC's business involves real estate, money
management and emerging markets. Mr. Jung is also a member of
the board of directors of Supertel Hospitality, Inc. and
serves as its audit committee chair and as a member of its
nominating committee. Supertel Hospitality, Inc.,
headquartered in Norfolk, Nebraska, is a publicly traded real
estate investment trust that owns and acquires limited-service
hotels in the United States. He also works with several civic
boards and organizations. Mr. Jung has significant knowledge
and experience in financial management, accounting processes
and corporate governance that is derived from his professional
and other experiences. He brings to our Board substantial
accounting and financial expertise and sophistication,
exceptional administrative proficiency, overall board
experience and comprehension of our business operations and
industry that contribute to the Board's collective
qualifications, skills and experience. Mr. Jung also
qualifies as an audit committee financial expert and serves as
Chair of our Audit Committee and Compensation Committee.
DUANE K. SATHER, 66, was elected as a Company director in
2006. Mr. Sather's extensive knowledge and experience in our
industry is partially accredited to his service as President
of Sather Trucking Corporation from 1972 to 1996. From 1988
to 1996, he also served as Chairman of Sathers Inc., a
wholesale candy manufacturer and distributor. Sather Trucking
Corporation and Sathers Inc. were sold to Favorite Brands
International, Inc. in 1996. Mr. Sather is an investor and
currently serves as a director of several privately held
companies that construct and operate ethanol plants in the
Midwest. During his tenure with Sather Trucking Corporation
and Sathers Inc., Mr. Sather gained a wide range of knowledge
about the trucking industry, including managing a large
workforce, overseeing a large business operation, marketing
and logistics. Mr. Sather brings to the Board his diverse
business and executive experience and comprehensive industry
knowledge. This invaluable industry insight contributes to
our Board's collective qualifications, skills and experience.
Future changes to the leadership of the Board are discussed
under the Future Management Changes section on page 21.
8
Recommendation of the Board of Directors - Proposal 1
The Board of Directors recommends that stockholders vote FOR
---
the election of each Class II director nominee. The
Designated Proxy Holders of proxies solicited by the Board in
this Proxy Statement will vote the proxies as directed on each
proxy, or if no instruction is made, for the election of all
Class II director nominees.
CORPORATE GOVERNANCE
Director Independence Determinations
The Board has affirmatively determined that all members of our
Board of Directors are independent pursuant to SEC rules and
the listing standards adopted by NASDAQ, except for C.L.
Werner, Gary Werner and Greg Werner. The Board has also
determined that each member of the three Board committees
satisfies the applicable independence requirements of NASDAQ
and the SEC.
With the assistance of our in-house corporate legal counsel,
our Nominating and Corporate Governance Committee reviewed the
(i) legal and regulatory standards for assessing Board and
Board committee independence, (ii) criteria for determining a
director's "audit committee financial expert," "non-employee
director" and "outside director" status and (iii) responses to
annual and biannual questionnaires completed by our directors.
After completing its review, the Nominating and Corporate
Governance Committee submitted its independence
recommendations to our Board. Our Board then made its
independence determinations based on the committee's
recommendations and after considering the information
available to the committee.
Role and Leadership of the Board of Directors
One of the primary roles of the Board of Directors is to
oversee our senior management in the competent and ethical
operation of our business and to ensure that our stockholders'
interests are being properly served. To achieve these
objectives, the Board establishes and maintains high standards
of responsibility and ethics that, when consistently applied
and followed, contribute to our business's overall success.
The Chairman presides over each Board meeting and is actively
involved in determining agendas for Board meetings and serving
as a liaison between our Board and management. The Board
elects our Chairman each year at its annual meeting.
Currently, C.L. Werner serves as our Chairman, and Greg Werner
serves as our President and Chief Executive Officer ("CEO").
Each individual was elected by our Board at its 2010 annual
meeting to serve in his current position for a one-year term
or until his respective successor is duly elected and
qualified, pursuant to Section 2 of Article III of our By-
Laws.
The positions of Chairman and CEO are held by two individuals
instead of the same person. Although C.L. Werner and Greg
Werner are not independent directors, we believe our current
leadership structure is effective for us. This configuration
demonstrates to our stockholders, employees and customers that
our primary leadership roles are served by two qualified
people who each have an extensive depth of knowledge about the
Company's business and industry, share a long-standing
dedication to and significant ownership interest in the
Company and are equally committed to our development and
success.
Our independent directors regularly meet in "executive
sessions," which are meetings conducted without the presence
of management. These executive sessions are typically
conducted after each quarterly Audit Committee meeting and may
also be held when deemed appropriate by the independent
directors. Our Audit Committee is comprised solely of all of
our independent directors, each of whom typically attends each
Audit Committee meeting, and this consistent and routine
9
meeting schedule consequently enables the independent
directors to conduct such executive sessions on a regular
basis. Our independent directors do not formally select a
lead independent director to preside over their executive
sessions. Rather, Mr. Jung, as Chair of the Audit Committee,
presides over the executive sessions of the independent
directors, and he also acts as a liaison between the
independent directors, management and the full Board. Further
information regarding the 2010 executive sessions is provided
under the Committees of the Board of Directors section.
We believe that separating the Chairman and CEO positions,
having the majority of our Board and each Board committee
comprised of independent directors (who meet regularly in
executive sessions) and having independent directors serve as
Chairs of our Board committees provides an effective and
strong leadership structure for the Company. Our Board has
the flexibility to continue or modify our leadership structure
in the future, as the Board deems appropriate or necessary.
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 other Board committees considers certain risks
within its respective area of responsibility. Our Audit
Committee has primary oversight responsibility with respect to
risks relating to internal controls over financial reporting
and contingent liabilities and risks that may be material to
the Company. As discussed in the Risk Management Related to
Compensation section, our Compensation Committee also
considers the Company's risks in determining whether our
executive compensation program encourages executive officers
to take unreasonable risks relating to our business. Our
Nominating and Corporate Governance Committee reviews risks
related to legal and regulatory compliance concerning various
corporate governance matters. The risk oversight roles of the
Board, Audit Committee, Compensation Committee and Nominating
and Corporate Governance Committee did not impact our
leadership structure because our Board is comprised of a
majority, and such committees consist entirely, of independent
directors.
Corporate Governance Policies and Materials
The members of our Board of Directors possess a variety of
experience, knowledge and judgment, and the diversity of these
skills complements our corporate governance structure. Our
corporate governance policies are designed to enable effective
and thorough decision-making and to allow proper and
comprehensive monitoring of the Company's performance and
compliance. These policies are also meant to provide our
Board with practical guidelines that are regularly reviewed
and can be appropriately revised and updated in response to
regulatory developments and evolving business and governance
practices. Our fundamental corporate governance principles
and practices are set forth in our Code of Corporate Conduct
and other policies, each of which is available on our website.
Pursuant to SEC rules, we will disclose amendments to or
10
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.
Committees of the Board of Directors
The Board of Directors conducts its business through (i)
meetings of the Board, (ii) actions taken by written consent
in lieu of meetings, (iii) actions of its committees and (iv)
discussions with management, the independent auditors and
other consultants retained from time to time. The Board has
three standing committees: the Audit Committee, the
Compensation Committee and the Nominating and Corporate
Governance Committee (the "Governance Committee"). The
Governance Committee evaluates each committee's composition
and appoints committee members annually. The Board then
approves committee members appointed by the Governance
Committee at the Board's first meeting held thereafter. The
Board may also make further changes to committee assignments
from time to time as the Board deems appropriate or as advised
by the Governance Committee. A majority of full committee
membership elects committee Chairs, unless elected by the full
Board. Committee members cannot be removed except by a
majority vote of independent directors in office at the time.
The responsibilities and duties of each committee are
discussed below.
Our Board delegates various responsibilities and authority to
the committees to foster the effective governance of the
Company. Each committee also meets periodically or when
appropriate and reports their respective activities and
actions to the full Board. The committees operate pursuant to
written charters (including any amendments thereto) approved
and adopted by the Board. The Audit Committee, Compensation
Committee and Governance Committee charters were not amended
in 2010 or in 2011 prior to the date of this Proxy Statement.
Each of the committee charters is available on our website.
The composition of each committee is as follows:
2010 Board Committee Membership and Meetings
-------------------------------------------------------------------------------------
Audit Compensation Governance Board of
Name Committee Committee Committee Directors
---- --------- ------------ ---------- ---------
Clarence L. Werner X
Gary L. Werner X
Gregory L. Werner X
Kenneth M. Bird, Ed.D. X X X
Patrick J. Jung Chair Chair X
Duane K. Sather X X X
Michael L. Steinbach X X X
Gerald H. Timmerman X X Chair X
-------------------------------------------------------------------------------------
Number of Meetings 4 2 1 5
-------------------------------------------------------------------------------------
Number of Executive Sessions 4 1 - 4
11
Attendance at Board and Committee Meetings and Annual Meeting
During 2010, each incumbent director attended and participated
in at least 75% of all meetings of the Board of Directors and
Board committees on which he served. We encourage directors
to attend annual meetings of stockholders, although we do not
have a formal policy regarding director attendance at these
meetings. All of our directors attended our Annual Meeting of
Stockholders in May 2010, and we anticipate that most, if not
all, of our directors will attend the 2011 Annual Meeting.
The number of meetings conducted in 2010 by the Board and each
Board committee are provided in the 2010 Board Committee
Membership and Meetings table on page 11.
Audit Committee
Our Board of Directors established a separately-designated
standing Audit Committee, in accordance with Section
3(a)(58)(A) of the Securities Exchange Act of 1934 (the
"Exchange Act"), to oversee our accounting and financial
reporting policies and processes (including our internal
control systems) and the quarterly review and annual audit of
our financial statements by our independent registered public
accounting firm. Such oversight is performed in accordance
with the applicable SEC rules and NASDAQ listing standards.
As more fully described in its charter, the Audit Committee's
responsibility for overseeing our accounting and financial
reporting processes includes but is not limited to:
* Discussing the annual audit and resulting letter of
comments with management;
* Consulting with the auditors and management regarding
the adequacy of internal controls;
* Reviewing our financial statements prior to their
release with management and the independent auditors;
* 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;
* Overseeing the work of our internal audit department
and independent auditors; and
* Assessing and maintaining procedures for the anonymous
submission of complaints concerning accounting and
auditing irregularities.
The Audit Committee meets in executive session with our
independent auditors and also in a separate executive session
with the head of our internal audit department. These
meetings are conducted without the presence of our management
and typically occur at each quarterly Audit Committee meeting.
In 2010, as Audit Committee Chair, Mr. Jung also participated
in four meetings with management and the independent auditors
for the purpose of reviewing the Company's financial results
prior to the issuance of 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 for Audit Committee
membership prescribed by Rule 10A-3(b)(1) and Section
10A(m)(3) of the Exchange Act; (ii) is independent under the
NASDAQ listing standards and (iii) has sufficient knowledge
and sophistication in financial and auditing matters under the
NASDAQ rules. The Board also designated Mr. Jung as an "audit
committee financial expert" as defined under the SEC rules
upon determining that Mr. Jung possessed the requisite
qualifications and experience.
We have provided the Report of the Audit Committee for 2010 in
this Proxy Statement on page 18.
12
Compensation Committee
The Compensation Committee is responsible for determining and
approving the compensation of our Chairman, Vice Chairman and
President and CEO. The Compensation Committee also approves
the compensation of all other executive officers after
considering the recommendations of our Chairman, Vice Chairman
and 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, cash bonuses and stock awards.
Our Compensation Committee is tasked with evaluating and
approving our overall executive compensation strategy and
elements to ensure such components align with our business
objectives, stockholder interests and responsible corporate
practices and culture. Additionally, the Compensation
Committee is responsible for recommending to the Board the
compensation policies for our independent directors and
overall Board members.
The Compensation Committee has responsibility for oversight of
and determining awards of equity compensation pursuant to the
Werner Enterprises, Inc. Equity Plan (the "Equity Plan"). Our
Equity Plan provides for grants of nonqualified stock options,
restricted stock and stock appreciation rights ("SARs") to
employees and non-employee directors. With respect to the
Equity Plan, the Compensation Committee has authority to
determine the terms of granted awards, including (i)
recipients; (ii) the number of shares subject to each award;
(iii) the dates on which awards are granted, exercisable and
become vested; (iv) whether or not awards may be exercised in
installments; (v) the type of award; (vi) the form of
consideration payable upon exercise of each award; and (vii)
any other terms of the awards consistent with the terms of the
Equity Plan. (The Equity Plan was included as Exhibit 99.1 to
our Current Report on Form 8-K filed with the SEC on May 14,
2007.)
As explained in more detail under Compensation Process and
Determination within the Compensation Discussion and Analysis
section, the Compensation Committee delegated to our President
and CEO certain authority that allows him to modify the base
salaries of executive officers within ranges established by
the Compensation Committee. The Compensation Committee
annually reviews and approves any such base salary changes at
its year-end meeting. The Compensation Committee also reviews
and determines the compensation of the Chairman, Vice Chairman
and President and CEO independent of each such officer's
participation or consultation. These tasks were performed by
the Compensation Committee in 2010.
During 2010, the Compensation Committee retained the firm of
Pay Governance LLC ("Pay Governance") as its compensation
consultant to assist with the continued development and
evaluation of compensation policies and with the Compensation
Committee's determinations of compensation awards. The
Compensation Committee engaged Pay Governance to provide
independent and unbiased external advice and expertise
regarding executive compensation and to provide a competitive
market pay analysis for our Named Executive Officers. This
analysis compared the base salary, annual cash bonus and long-
term incentive components of compensation to peer groups.
We have provided the Report of the Compensation Committee for
2010 in this Proxy Statement on page 44. For more information
about the Compensation Committee's activities and the
retention of Pay Governance in 2010, refer to the Compensation
Discussion and Analysis, Role of the Compensation Consultant
and Report of the Compensation Committee sections of this
Proxy Statement. The Compensation Committee's functions are
also described in its charter.
Compensation Committee Independence. Our Board of Directors
has determined that all current Compensation Committee members
satisfy the applicable SEC and NASDAQ independence
requirements. Each Compensation Committee member is also (i)
a "non-employee director" as defined by Rule 16b-3 under the
13
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 2010 or on the date
of this Proxy Statement. In 2010, no member of the
Compensation Committee had any relationships or transactions
with the Company that would require disclosure as a "related
person transaction" under the SEC rules and regulations and in
the Proxy Statement section entitled Transactions with Related
Persons. During 2010, none of our executive officers served
on the board of directors or compensation committee of any
other entity whose executive officer(s) served as a member of
our Board of Directors or Compensation Committee.
Nominating and Corporate Governance Committee
Our Governance Committee is comprised only of directors whom
the Board has determined satisfy the applicable SEC and NASDAQ
independence requirements. The Governance Committee is
responsible for the director nomination process. These duties
include assisting the Board in identifying, evaluating and
recruiting qualified potential candidates for election to the
Board. The Governance Committee recommends for the Board's
approval the director nominees for any election of directors.
This process is described further in the Director Nomination
Process section.
The Governance Committee is also responsible for various
corporate governance matters, including the development and
oversight of our corporate governance policies, compliance
practices and ethical standards of conduct for our directors,
officers and employees. The committee makes recommendations
to the Board regarding our corporate governance processes and
reviews our Code of Corporate Conduct. The Governance
Committee also monitors the effectiveness, and advises on the
composition, structure and size, of our Board and Board
committees. It also annually assists our Board with its
independence and expertise determinations. The Governance
Committee has oversight of the administration of our policies
regarding "related person transactions" (as discussed under
the Transactions with Related Persons section herein), and the
committee reviews and approves or disapproves any such
transactions when such approval is required by SEC and NASDAQ
rules and regulations. A more complete description of the
Governance Committee's functions is provided in its charter.
Stockholder Communications with the Board of Directors
The Board of Directors established a process by which
stockholders and other parties may communicate directly with
members of the Board and/or the independent directors as a
group. This process is described in our Stockholder
Communications Procedure for Communicating with the Board of
Directors, which is included on our website. You may direct
any matter intended for the Board and/or independent directors
by writing to the intended recipients in care of our Corporate
Secretary at our executive offices. Generally, the Corporate
Secretary will forward any received correspondence according
to the stockholder's instructions. The Corporate Secretary,
however, reserves the right not to forward any abusive,
threatening or otherwise inappropriate materials. All 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
described in our current Nominating and Corporate Governance
Committee Directorship Guidelines and Selection Policy (the
"Directorship Guidelines Policy") and Policy Regarding
14
Director Recommendations by Stockholders (the "Stockholder
Recommendation Policy"). Both policies are available free of
charge on our website. Stockholders may also request a copy
of these policies by contacting our Corporate Secretary at our
executive office address or telephone number provided in this
Proxy Statement. Each policy was approved by the Board of
Directors and is administered by the Governance Committee.
The Governance Committee evaluates the policies regularly and
may update and revise the policies from time to time, subject
to Board approval, when appropriate and as applicable legal or
listing standards change.
Stockholder Recommendations for Director Candidates. With
respect to director candidates identified by stockholders, the
Stockholder Recommendation Policy applies. In accordance with
the Stockholder Recommendation Policy, the Governance
Committee will consider candidates proposed by only "qualified
stockholders." A "qualified stockholder" is an individual
stockholder or group of stockholders that has beneficially
owned at least 2% of our issued and outstanding common stock
for at least one year (and will hold such percentage of stock
through the 2011 Annual Meeting). Such stock ownership is
determined as of the date the stockholder recommendation is
submitted. You must submit stockholder director candidate
recommendations in a written proposal, and each proposal must
include all information required and requested by the
Stockholder Recommendation Policy.
In order for a stockholder's candidate to be evaluated and
considered as a prospective nominee, you must submit your
recommendation to our Corporate Secretary not less than 120
days before the one-year anniversary of the release date of
the previous year's proxy statement. (For example, the
release date of the 2010 proxy statement was April 7, 2010.
Stockholder recommendations intended for consideration for the
director elections at the 2011 Annual Meeting had to be
submitted on or before December 8, 2010.) Stockholder
recommendations for director nominees must be submitted no
later than the close of business on December 9, 2011 for the
2012 Annual Meeting of Stockholders.
Stockholder recommendations for director candidates must be
accompanied by a description of each candidate's
qualifications in sufficient detail to permit the Governance
Committee to evaluate whether each candidate satisfies the
independence, financial literacy and experience requirements
of the SEC, NASDAQ or other applicable laws or regulations.
Director candidates proposed by stockholders in accordance
with the Stockholder Recommendation Policy are evaluated by
the Governance Committee in the same manner as any other
prospective candidate during the director nominee selection
process. We have not engaged and have not paid any fees to
any third party for assistance with the director nomination
process.
In addition to the requirements described above and in the
Stockholder Recommendation Policy, all written stockholder
proposals containing director candidate recommendations must
comply with Rule 14a-8 of the Exchange Act. Rule 14a-8 sets
forth the requirements for the inclusion of stockholder
proposals in company-sponsored proxy materials. Contact
information for our Corporate Secretary is provided in the
Contacting the Corporate Secretary and Executive Offices
section on page 59.
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.
15
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 us;
* 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. Our Governance
Committee does not have a formal policy with respect to
diversity; however, the Governance Committee considers it
desirable if potential nominees compliment and contribute to
the Board's overall diversity. In this respect, we broadly
construe diversity to mean an array of opinions, perspectives,
skills, personal and professional experiences and backgrounds
and other distinguished attributes. Diversity is not solely
limited to gender, race and ethnicity distinctions; rather,
our interpretation of diversity also includes one's ability to
positively contribute to the chemistry and collaborative
nature of our Board, as well as one's personal and
professional experiences, aptitude and expertise relevant to
our transportation and logistics services industry.
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.
Our 2010 annual compensation package for independent directors
is comprised of the annual cash retainers and cash meeting
fees provided in the Independent Director Retainers and Fees
table on page 17. This compensation package did not change
from 2009 to 2010. Additional annual retainers are paid to
the Chairs of the Audit Committee and Compensation Committee,
but directors do not receive any additional compensation for
serving as the Governance Committee Chair or member of any
other Board committee. We will also reimburse each
independent director at cost for all of their respective
reasonable out-of-pocket travel expenses incurred in
connection with their attendance at Board and Board committee
meetings and for other reasonable out-of-pocket expenses
directly related to their Board and Board committee service.
The Compensation Committee and Board believe the current
independent director retainer levels are appropriate to
attract and retain top independent and outside Board members.
16
Independent Director Retainers and Fees
----------------------------------------------------------------------------------------------
Fee or Retainer Amount Paid in 2010
--------------- -------------------
Annual Board Retainer for Board Membership $15,000
(paid in quarterly installments of $3,750 each)
Annual Retainer for the Audit Committee Chair $10,000
(paid in quarterly installments of $2,500 each)
Annual Retainer for the $5,000
Compensation Committee Chair (paid in quarterly installments of $1,250 each)
Board of Directors Meeting Fee $2,000
(paid for each Board meeting)
Board Committee Meeting Fee $2,000
(paid for each committee meeting not
held on the same day as a Board meeting)
Director Stock Ownership. We do not have formal stock
ownership requirements for independent directors. The
individual stock ownership of each independent director is set
forth in the table under Stock Ownership of Directors,
Executive Officers and Certain Beneficial Owners within the
Beneficial Ownership of Common Stock section of this Proxy
Statement.
Compensation of Directors for 2010. The compensation received
by each independent director varies because such compensation
is based on (i) the number of Board and committee meetings
held, (ii) the Board committees on which the independent
director serves and (iii) whether the individual is the Chair
of the Audit Committee or the Compensation Committee.
The Director Compensation for 2010 table on page 18 presents
the compensation earned by each individual serving as an
independent director during 2010 for service on our Board and
its committees. This table does not include those directors
who are also Company employees because such employee directors
are not considered independent directors and thus did not
receive any compensation in 2010 for their service on our
Board. (The compensation paid by the Company to our employee
directors is discussed in the Executive Compensation section
and provided in the Summary Compensation Table on page 46.)
In 2010, we did not grant any awards of stock options, SARs or
restricted stock to independent directors. Our independent
directors also do not participate in any benefit, pension or
nonqualified deferred compensation plan of the Company. For
these reasons, we have omitted those columns from the table.
17
Director Compensation for 2010
--------------------------------------------------------------------------------------
Fees Earned Non-Equity
or Paid Incentive Plan All Other
Name in Cash ($)(1) Compensation ($) Compensation ($) Total ($)
---- -------------- ---------------- ---------------- ---------
Kenneth M. Bird, Ed.D. 33,000 - - 33,000
Patrick J. Jung 48,000 - - 48,000
Duane K. Sather 29,000 - - 29,000
Michael L. Steinbach 29,000 - - 29,000
Gerald H. Timmerman 33,000 - - 33,000
-----------------
(1) The amounts in this column include fees and retainers
received for Board membership, Board committee
membership and for service as the Audit Committee Chair
and Compensation Committee Chair.
Report of the Audit Committee
The following report of the Audit Committee shall not be
deemed to be "soliciting material" or to otherwise be
considered "filed" with the U.S. Securities and Exchange
Commission, nor shall this report be subject to Regulation 14A
(other than as indicated) or to the liabilities set forth in
Section 18 of the Securities Exchange Act of 1934. This
report shall not be deemed to be incorporated by reference
into any prior or subsequent filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates it by
reference or treats it as soliciting material.
The Audit Committee of the Board of Directors is comprised of
Dr. Bird and Messrs. Jung, Sather, Steinbach and Timmerman.
Mr. Jung is the Chair of the Audit Committee. All of the
Audit Committee members are qualified independent directors
under the audit committee structure and membership
requirements of the NASDAQ and SEC rules and regulations. The
primary purpose of the Audit Committee is to assist the Board
of Directors in its general oversight of the financial
reporting process of Werner Enterprises, Inc. (the "Company").
The Audit Committee conducts its oversight activities by
exercising the certain responsibilities and powers set forth
in its written charter adopted by the Board. A copy of the
charter is available on the Company's website.
The general duties of the Audit Committee include reviewing
the Company's financial information that will be presented to
stockholders and filed with the SEC; appointing the
independent registered public accounting firm; reviewing
services provided by the Company's independent auditors and
internal audit department; and evaluating the Company's
accounting policies and its system of established internal
controls. In its oversight of the independent registered
public accounting firm, the Audit Committee reviews the scope
of the audit, audit fees, auditor independence matters and the
extent to which the independent auditors are retained to
perform non-audit services for the Company.
The Audit Committee does not prepare financial statements or
perform audits, and its members are not auditors or certifiers
of the Company's financial statements. Rather, the Company's
management is responsible for the preparation, consistency,
integrity and fair presentation of the Company's financial
statements, accounting and financial principles, internal
control and disclosure control systems and procedures designed
to ensure compliance with applicable accounting standards,
laws and regulations. The Company's independent registered
public accounting firm, KPMG LLP, is responsible for
performing independent quarterly reviews and an independent
18
annual audit of the financial statements and for expressing an
opinion on the conformity of those statements with accounting
principles generally accepted in the United States of America
("GAAP").
In conjunction with the preparation of the Company's 2010
audited financial statements, the Audit Committee met with
both management and the independent auditors of the Company to
review and discuss significant accounting issues and the
financial statements included in the Company's Annual Report
on Form 10-K for 2010 prior to the issuance of such financial
statements. Management advised the Audit Committee that such
financial statements were prepared in accordance with GAAP,
and the Audit Committee discussed such financial statements
with management and the independent auditors. The Audit
Committee's assessment included a discussion with the
Company's independent auditors regarding matters that are
required to be discussed pursuant to (i) Rule 2-07 of SEC
Regulation S-X (Communication with Audit Committees) and (ii)
Statement on Auditing Standards No. 61 (Communication with
Audit Committees), as amended (AICPA, Professional Standards,
Vol. I, AU section 380) and as adopted by the Public Company
Accounting Oversight Board in Rule 3200T, and as superseded by
Statement on Auditing Standards No. 114 (The Auditor's
Communication With Those Charged With Governance) adopted by
the Public Company Accounting Oversight Board.
The Audit Committee also received and reviewed the written
disclosures and letter submitted to the committee by the
Company's independent auditors, KPMG LLP. Such written
disclosures and letter are required by applicable requirements
of the Public Company Accounting Oversight Board regarding
KPMG LLP's communications with the Audit Committee concerning
independence. The Audit Committee and KPMG LLP also discussed
KPMG LLP's independence as the independent auditors of the
Company.
Based on the foregoing reviews and discussions, the Audit
Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's
Annual Report on Form 10-K for 2010, for filing with the SEC.
Patrick J. Jung, Chair
Kenneth M. Bird, Ed.D.
Duane K. Sather
Michael L. Steinbach
Gerald H. Timmerman
EXECUTIVE OFFICERS
Our By-Laws provide that each executive officer holds his or
her respective office for a term of one year or until his or
her successor becomes duly elected and qualified, except that
a term may be (i) longer than one year if such service is
specified in an employment contract or (ii) terminated sooner
than one year because of death, resignation or otherwise.
Pursuant to the By-Laws, our Board of Directors elects our
executive officers at the Board's annual organizational
meeting immediately following the annual meeting of
stockholders.
Current Executive Officer Information
The table on page 20 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.
19
Executive Officers
----------------------------------------------------------------------------------------------
Name Position with the Company Age
---- ------------------------- ---
Clarence L. Werner Chairman 73
Gary L. Werner Vice Chairman 53
Gregory L. Werner President and Chief Executive Officer 51
Derek J. Leathers Senior Executive Vice President and Chief Operating Officer; 41
President of Werner Global Logistics
H. Marty Nordlund Senior Executive Vice President-Specialized Services 49
Robert E. Synowicki, Jr. Executive Vice President-Driver Resources 52
John J. Steele Executive Vice President, Treasurer and Chief Financial Officer 53
Jim S. Schelble Executive Vice President-Sales and Marketing 50
James A. Mullen Executive Vice President and General Counsel 42
James L. Johnson Executive Vice President, Chief Accounting Officer 47
and Corporate Secretary
For information regarding the business experience of C.L.
Werner, Gary Werner and Greg Werner, please refer to Current
Director Information under the Proposal 1 - Election of
Directors section of this Proxy Statement.
DEREK J. LEATHERS joined the Company in 1999 as the Managing
Director-Mexico Division. During his tenure with us, he
received the following promotions: (i) Vice President-Mexico
Division in 2000; (ii) Vice President-International in 2001;
(iii) Senior Vice President-International in April 2003; (iv)
Senior Vice President-Van Division and International in July
2003; and (v) Executive Vice President-Van Division and
International in 2004. In 2006, Mr. Leathers was promoted to
his current position as Senior Executive Vice President and
was named President of Werner Global Logistics. He also
serves as our Chief Operating Officer, a position to which he
was appointed by the Board in May 2008. Prior to joining the
Company, Mr. Leathers was Vice President of Mexico Operations
for two years at Schneider National, a large truckload
carrier, and he held various other management positions during
his eight-year career at Schneider National.
H. MARTY NORDLUND joined us in 1994 as an account executive.
He then received the following promotions within the Company:
(i) Director of Dedicated Fleet Services in 1995; (ii) Senior
Director of Dedicated Fleet Services in 1997; (iii) Vice
President-Dedicated Fleet Services in 1998; (iv) Vice
President-Specialized Services in 2001; (v) Senior Vice
President-Specialized Services in 2003; and (vi) Executive
Vice President-Specialized Services in 2005. In 2006, Mr.
Nordlund was named to his current position as Senior Executive
Vice President-Specialized Services. Before joining the
Company, Mr. Nordlund held various management positions with
Crete Carrier Corporation, a large privately held truckload
carrier.
ROBERT E. SYNOWICKI, JR. joined the Company in 1987 as a tax
and finance manager. Since that time, he was appointed to the
following positions: (i) Treasurer in 1989; (ii) Vice
President, Treasurer and Chief Financial Officer in 1991;
(iii) Executive Vice President and Chief Financial Officer in
March 1996; and (iv) Executive Vice President and Chief
Operating Officer in November 1996. Mr. Synowicki was
appointed Executive Vice President and Chief Information
Officer in 1999, and he was named to his current position as
20
Executive Vice President-Driver Resources in December 2010.
Mr. Synowicki was employed by the independent public
accounting firm of Arthur Andersen & Co. as a certified public
accountant from 1983 until his employment with us in 1987.
Mr. Synowicki also serves on the board of directors of Blue
Cross and Blue Shield of Nebraska and other professional
organizations.
JOHN J. STEELE joined the Company in 1989 as Controller.
During his time with us, he was appointed to the following
positions: (i) Corporate Secretary in 1992; (ii) Vice
President-Controller and Corporate Secretary in 1994; (iii)
Vice President, Treasurer and Chief Financial Officer in 1996;
and (iv) Senior Vice President, Treasurer and Chief Financial
Officer in 2004. He was named to his current position as
Executive Vice President, Treasurer and Chief Financial
Officer in 2005. Mr. Steele was employed by the independent
public accounting firm of Arthur Andersen & Co. as a certified
public accountant from 1979 until his employment with the
Company in 1989.
JIM S. SCHELBLE joined us in 1998 as Manager of New Business
Development. During his tenure with us, Mr. Schelble was
promoted to the following positions: (i) Director of National
Accounts in 1999; (ii) Senior Director of Dedicated Services
in 2000; (iii) Associate Vice President of Corporate and
Dedicated Sales in 2002; (iv) Vice President-Sales in 2003;
and (v) Senior Vice President-Sales in 2004. In 2005, he was
named to his current position as our Executive Vice
President-Sales and Marketing. Prior to joining the Company,
Mr. Schelble spent twelve years with Roadway Express, a less-
than-truckload carrier, in a variety of management positions
within operations, sales, and marketing.
JAMES A. MULLEN joined us in 2006 as Vice President and
General Counsel of Litigation. In June 2010, he was promoted
to Executive Vice President and General Counsel. Before
becoming employed by the Company, Mr. Mullen was an attorney
with Fraser Stryker Law Firm in Omaha, Nebraska from 1993 to
1997. From 1997 until his employment with us, he was a
partner with Lefler and Mullen, and later Mullen and Mullen,
law firms in Omaha, Nebraska.
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 and Controller in 1996; (iv) Vice
President, Controller and Corporate Secretary in 2000; and (v)
Senior Vice President, Controller and Corporate Secretary in
2005. He was named to his current position as Executive Vice
President, Chief Accounting Officer and Corporate Secretary in
July 2010. Mr. Johnson was employed by the independent public
accounting firm of Arthur Andersen & Co. as a certified public
accountant from 1985 until his employment with us in 1991.
Future Management Changes. On February 18, 2011, the Board
approved several planned management changes that will become
effective following the 2011 Annual Meeting. As part of these
changes, C.L. Werner will be resigning as Chairman and
executive officer and will continue to be employed by us as
Chairman Emeritus. Gary Werner will become Chairman, and Greg
Werner will become Vice Chairman and retain his current
leadership position as CEO. C.L. Werner, Gary Werner and Greg
Werner will continue serving on the Board. Derek Leathers
will become President and continue to hold the position of
Chief Operating Officer.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Stock Ownership of Directors, Executive Officers and Certain
Beneficial Owners
The Beneficial Ownership table on page 22 sets forth certain
information as of March 21, 2011, with respect to the
beneficial ownership of our common stock by:
21
(i) Each of our directors and director nominees;
(ii) Each of our Named Executive Officers;
(iii) Each person known to us to beneficially own more
than 5% of the outstanding shares of our common
stock; and
(iv) All current executive officers, directors and
director nominees as a group.
On March 21, 2011, we had 72,767,735 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.
The footnotes to the Beneficial Ownership table are provided
on page 23.
Beneficial Ownership
------------------------------------------------------------------------------
Amount and Nature
of Beneficial Ownership
-----------------------
Percent of
Name of Shares Right to Total Shares
Beneficial Owner Owned Acquire(1) Shares Outstanding(2)
---------------- ------ ---------- ------ --------------
Clarence L. Werner(3) 23,033,518 100,000 23,133,518 31.7%
Gary L. Werner(4) 1,573,086 100,000 1,673,086 2.3%
Gregory L. Werner 3,302,961 100,000 3,402,961 4.7%
Derek J. Leathers 6,087 80,750 86,837 *
John J. Steele 7,338 50,500 57,838 *
Kenneth M. Bird, Ed.D. 500 - 500 *
Patrick J. Jung 2,000 - 2,000 *
Duane K. Sather 7,000 - 7,000 *
Michael L. Steinbach - - - -
Gerald H. Timmerman - - - -
All executive officers, 27,962,192 578,750 28,540,942 38.9%
directors and director
nominees as a group
(15 persons)(3) (4)
*Indicates beneficial ownership of less than 1%.
22
Beneficial Ownership - Continued
------------------------------------------------------------------------------
(1) This column represents shares of our common stock that a
respective individual may acquire upon exercising stock
options that are vested as of March 21, 2011 or that will
vest and become exercisable 60 days thereafter. The
shares underlying these options are not outstanding and
may not be voted at the 2011 Annual Meeting. This column
does not include any shares of restricted stock because
all such shares awarded by the Company will vest more
than 60 days after March 21, 2011.
(2) The percentages are based upon 72,767,735 shares, which
equal our outstanding shares as of March 21, 2011. In
accordance with SEC rules, for individuals who hold
options exercisable within 60 days of March 21, 2011, the
number of shares of common stock on which the percentage
is based also includes the number of shares underlying
such options.
(3) Clarence L. Werner has sole voting power with respect to
23,130,518 shares; sole dispositive power for 8,129,268
of these shares; shared voting power for 3,000 shares;
and shared dispositive power with respect to 15,004,250
shares.
(4) The shares shown for Gary L. Werner do not include: (i)
479,497 shares held by the Gary L. Werner Irrevocable
Inter Vivos QTIP Trust II (the sole trustee of this trust
is Union Bank and Trust Company, which has sole
investment and sole voting power over the shares held by
the trust); and (ii) 500,000 shares held by the Becky K.
Werner Revocable Trust (the sole trustee of this trust is
Becky K. Werner, Mr. Werner's wife, and she has sole
investment and sole voting power over the shares held by
the trust). Mr. Werner disclaims actual and beneficial
ownership of the shares held by the Gary L. Werner
Irrevocable Inter Vivos QTIP Trust II and the shares held
by the Becky K. Werner Revocable Trust.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who own more than 10% of
our registered class of equity securities (common stock), to
file with the SEC reports of beneficial ownership and changes
in such beneficial ownership. Executive officers, directors
and greater than 10% beneficial owners are required by SEC
rules to furnish us copies of all Section 16(a) forms they
file. We file Section 16(a) reports on behalf of our
executive officers and directors to report their initial and
subsequent changes in beneficial ownership of our common
stock.
Based solely upon our review of (i) the reports (including any
amendments thereto) we filed on behalf of our officers and
directors, (ii) copies of such forms furnished to us and (iii)
written representations from certain reporting persons that no
other reports were required for those persons, we believe that
all Section 16(a) filing requirements applicable to our
officers, directors and greater than 10% beneficial owners
were complied with during 2010.
PROPOSAL 2 - ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION
The federal Dodd-Frank Wall Street Reform and Consumer
Protection Act added Section 14A to the Exchange Act. Section
14A requires us to provide our stockholders with the
opportunity to vote to approve our Named Executive Officers'
compensation as disclosed in this Proxy Statement, in
accordance with the compensation disclosure rules of the SEC.
Such vote is conducted on a nonbinding and advisory basis.
We are required to ask our stockholders to approve an advisory
resolution on our executive compensation as reported in this
Proxy Statement. 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.
23
You should read the Compensation Discussion and Analysis
section beginning on page 26 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 45
through 53, which provide more detailed information on our
Named Executive Officers' compensation. Highlights of our
executive compensation program include the following:
* C.L. Werner has not received a salary increase since
2003. He also did not receive an annual cash bonus in
2009 or 2010 or stock award in 2008, 2009 or 2010.
* C.L. Werner, Gary Werner and Greg Werner collectively
own approximately 39% of the shares of the Company's
outstanding common stock, and except for C.L. Werner,
all of our Named Executive Officers were granted long-
term incentive compensation under our Equity Plan in
2010. We believe our Named Executive Officers' stock
ownership and such long-term incentive compensation
stock awards significantly link these Named Executive
Officers' interests with our stockholders' interests.
* Total 2010 annual compensation for our Named Executive
Officers increased 4% in the aggregate from 2009,
compared to a 40% increase in earnings per diluted
share, a 41% increase in net income and a 24% annual
total stockholder return for 2010.
* None of our Named Executive Officers has an employment
arrangement, severance agreement or change in control
agreement. We also do not provide any "golden
parachute" benefits to the Named Executive Officers.
* Each of our Named Executive Officers is employed at-
will and is expected to demonstrate exceptional
performance as a member of our executive team.
Our Board and Compensation Committee believe our executive
compensation program, articulated in the Compensation
Discussion and Analysis, effectively achieves our compensation
objectives, rewards performance and strongly links our Named
Executive Officers' interests with the long-term interests of
our stockholders. The Company believes our executive
compensation program has been instrumental in and contributed
to helping us achieve our recent strong financial performance
and long-term success.
In accordance with the recently adopted Section 14A of the
Exchange Act, and as a matter of good corporate governance, we
are asking stockholders to approve the following advisory
resolution at the 2011 Annual Meeting:
RESOLVED, that the stockholders of Werner
Enterprises, Inc. (the "Company") hereby approve, on
an advisory basis, the compensation of the Company's
Named Executive Officers, as disclosed pursuant to
the compensation disclosure rules of the U.S.
Securities and Exchange Commission, including the
Compensation Discussion and Analysis, compensation
tables and narrative discussion disclosed in the
Proxy Statement for the Company's 2011 Annual
Meeting of Stockholders.
This advisory resolution, commonly referred to as a "say-on-
pay" resolution, is nonbinding on the Company, Board of
Directors and Compensation Committee. Although the vote on
Proposal 2 is advisory and nonbinding, 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.
24
Recommendation of the Board of Directors - Proposal 2
The Board of Directors recommends that stockholders vote FOR
---
the approval of the advisory resolution on executive
compensation. The Designated Proxy Holders of proxies
solicited by the Board in this Proxy Statement will vote the
proxies as directed on each proxy, or if no instruction is
made, for the approval of the advisory resolution on executive
compensation.
PROPOSAL 3 - ADVISORY VOTE ON THE FREQUENCY OF
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
Proposal 2, as described above, asks the Company's
stockholders to approve a "say-on-pay" advisory resolution on
executive compensation. This Proposal 3 affords our
stockholders the opportunity to cast an advisory vote on how
often the Company should conduct say-on-pay advisory
resolution votes in the future. Under Proposal 3,
stockholders may vote to have the say-on-pay advisory
resolution vote every year, every two years or every three
years. Alternatively, stockholders may abstain from casting a
vote.
An advisory vote on executive compensation policies provides
us with direct feedback from our stockholders on our executive
compensation program. After considering the benefits and
consequences of each option for the frequency of future
say-on-pay advisory resolutions, we believe that a vote on a
say-on-pay advisory resolution should be conducted every three
years. Our executive compensation program is designed in large
part to create long-term stockholder value, attract and retain
a talented executive officer team and to more closely align
our executive officers' interests with those of our
stockholders. Our Compensation Committee concluded that
conducting the advisory vote on executive compensation once
every three years is sufficient and appropriate to assess
whether our executive compensation program objectives are
being achieved and driving stockholder value. If such votes
were conducted more often, however, we believe the potential
for frequent changes to our executive compensation program
could create uncertainty for our Named Executive Officers,
which could adversely affect our executive officer retention
and consequently our overall financial performance and
long-term stockholder value and interests. We also believe
that because our industry is impacted and driven by the U.S.
economy generally, holding such vote every three years enables
our stockholders to gain a more meaningful long-term
perspective and express their views on our executive
compensation program than would occur with more frequent
votes.
Stockholders should note, however, that because the vote on
the say-on-pay advisory resolution occurs well after the
beginning of the compensation year, and because the elements
of our executive compensation program are designed to operate
in an integrated and complementary manner, in some cases it
may not be feasible to change our executive compensation
program in consideration of any one year's vote on an advisory
resolution on executive compensation by the time the following
year's annual meeting of stockholders occurs. The
Compensation Committee, which administers our executive
compensation program, values our stockholders' opinions
expressed in these votes and will consider the outcome of such
votes in making its executive compensation decisions.
We believe that a vote on the advisory resolution on executive
compensation once every three years is consistent with our
corporate governance practice of seeking input and encouraging
dialogue from our stockholders on corporate governance
matters, as well as our executive compensation program
objectives and principles.
The advisory vote on the frequency of future advisory votes on
executive compensation is nonbinding on the Company, Board of
Directors and Compensation Committee. Stockholders are not
voting to approve or disapprove the Board's recommendation.
Rather, the vote is a solicitation of stockholder votes.
Stockholders will be able to specify one of four choices for
25
this Proposal 3 on the proxy: (i) every year, (ii) every two
years, (iii) every three years or (iv) abstain. Although the
vote on Proposal 3 is advisory and nonbinding, the Board and
Compensation Committee, when appropriate, will review and
consider the voting results when deciding how frequently to
conduct say-on-pay advisory resolution votes but will not be
bound by either its own recommendation or by the voting
outcome. Notwithstanding the Board's recommendation or the
outcome of the stockholder vote at the 2011 Annual Meeting,
our Board may subsequently decide to conduct future say-on-pay
advisory resolution votes more frequently and may vary its
practice based on various factors, such as discussions with
stockholders or upon the adoption of material changes to our
executive compensation program. This Proposal 3 is included
in the Proxy Statement pursuant to the recently adopted
Section 14A of the Exchange Act.
Recommendation of the Board of Directors - Proposal 3
The Board of Directors recommends that stockholders vote to
conduct future advisory votes on executive compensation
EVERY THREE YEARS. The Designated Proxy Holders of proxies
-----------------
solicited by the Board in this Proxy Statement will vote the
proxies as directed on each proxy, or if no instruction is
made, for future advisory votes on executive compensation to
occur every three years.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section of the Proxy Statement identifies our Named
Executive Officers and explains how our compensation policies
and practices are developed and operate with respect to such
Named Executive Officers. In the Compensation Discussion and
Analysis, we also discuss and analyze our executive
compensation program and the executive compensation amounts
shown in such section. This discussion should be read in
conjunction with the Summary Compensation Table (including the
related tabular and narrative disclosures) and the
Compensation Committee section under Corporate Governance in
this Proxy Statement. As indicated in that section, the
Compensation Committee of the Board of Directors is
responsible for establishing our executive compensation
policies and overseeing our executive compensation practices.
Our Compensation Committee is also comprised solely of
independent directors, each of whom is independent pursuant to
SEC rules and NASDAQ listing standards.
Named Executive Officers. Pursuant to the SEC rules, our
Named Executive Officers consist of the CEO, CFO and the three
most highly compensated executive officers (excluding the CEO
and CFO) who were executive officers as of December 31, 2010.
Our five Named Executive Officers are identified in the table
below.
2010 Named Executive Officers
-----------------------------------------------------------------------------------------
Name Position with the Company
---- -------------------------
1. Clarence L. Werner Chairman
2. Gary L. Werner Vice Chairman
3. Gregory L. Werner President and Chief Executive Officer
4. Derek J. Leathers Senior Executive Vice President and Chief Operating Officer;
President of Werner Global Logistics
5. John J. Steele Executive Vice President, Treasurer and Chief Financial Officer
26
Executive Summary. The Company and its Compensation Committee
believe our executive compensation program has been
instrumental to our business and in helping us accomplish our
objectives. We also regard the program as appropriate and
fair in view of our financial performance relative to our
competitive peer group and given the challenging economic and
transportation and logistics market conditions that continued
in 2010 from 2009. We believe these difficult circumstances
resulted in a more competitive market for executive talent
but, even during the recent challenging economic periods, our
total compensation mix allowed us to retain qualified,
innovative executive officers who possess the necessary
experience and expertise to manage the Company, provide
effective Company leadership in competitive markets,
contribute to our long-standing success and create value for
our stockholders. (The peer group is identified in the
Competitive Peer Group and Benchmarking section within the
Compensation Discussion and Analysis. Our 2010 financial
statements are included in our Annual Report on Form 10-K for
2010 filed with the SEC on March 1, 2011.)
In 2010, we achieved significantly improved financial results
compared to 2009. The Company believes our executive
compensation program for the Named Executive Officers was
conducive in helping us achieve a strong financial performance
in 2010 despite the ongoing challenges of the recovering U.S.
and global economies in which the results were accomplished.
The table below summarizes and compares our key 2010 and 2009
financial results.
2010 and 2009 Financial Results - Summary & Comparison
-------------------------------------------------------------------
2010 ($)(1) 2009 ($)(1) Change (%)
----------- ----------- ----------
Total Revenues 1,815,020 1,666,470 9%
Net Income 80,039 56,584 41%
Earnings Per Diluted Share 1.10 0.79 40%
Operating Ratio(2) 92.6% 94.2%
Return on Assets 6.6% 4.5%
Return on Equity 11.1% 7.5%
-----------------
(1) Dollar amounts in thousands, except for per share
amounts.
(2) Operating expenses expressed as a percentage of
operating revenues.
The Compensation Committee considered, among other factors,
our financial performance, total stockholder return, peer
group executive compensation and each executive's individual
performance in making its decisions on total compensation for
our Named Executive Officers. As shown in the Summary
Compensation Table on page 46, total 2010 annual compensation
for our Named Executive Officers increased 4% in the aggregate
from 2009, compared to a 40% increase in earnings per diluted
share and a 41% increase in net income. Our total stockholder
return for 2010 was 24%, compared to an average of 27% for our
competitive peer group. Our three-year average annual total
stockholder return was 21% (2008 to 2010), in comparison to a
three-year annual average of 13% for our competitive peer
group.
We strive to retain talented executive officers by
compensating them in a manner that rewards performance and
aligns such officers' interests with our stockholders' long-
term interests, and we believe our executive compensation
program helps to accomplish this objective. Our Named
Executive Officers operate as a team vested in the Company's
success, and we expect our Named Executive Officers to
contribute to our overall accomplishments and progress, rather
than focus solely on objectives exclusive to the individual
officer's area of responsibility. Our Compensation Committee
27
also rewards performance on a more consistent basis, during
both challenging and favorable economic periods, in an effort
to preclude large increases and decreases in executive
compensation levels and to retain talented and experienced
executive officers. In line with our executive compensation
program, compensation awarded in 2010 to our Named Executive
Officer team reflected the Company's improved financial
results and industry performance. With respect to Named
Executive Officer compensation, our Chairman's total direct
compensation (which includes base salary, cash bonuses and
long-term incentive compensation) was at the 26th percentile
when compared to the total direct compensation of the peer
group of executive chairmen. The average total direct
compensation of our other four Named Executive Officers fell
at the 67th percentile when compared to the compensation of
their peers at the companies in our competitive peer group,
while our revenues were at the 73rd percentile. Our
competitive peer group is provided on page 36, and our
executive chairman peer group is identified on page 37.
We also believe the total mix of compensation provided under
our executive compensation program is competitive and
attractive to our Named Executive Officers. The Compensation
Committee has not implemented or devised any company-wide
performance target or formulaic methodology on which it bases
its executive compensation determinations. Rather, we believe
the components of our executive compensation program are
directly connected to the principle that executive
compensation should be based on performance. The Company
believes our program reflects such principle and effectively
rewards performance in a simple and straightforward manner.
Our elements of compensation promote and retain stability
within our executive team and maintain value for our
stockholders, which contributes to our positive long-term
development and the overall success of the Company.
As discussed below, numerous factors are considered when
internal pay equity as to our executive officers is assessed.
Under our executive compensation program, the base salary and
performance-based elements of compensation motivate executive
officers to achieve our annual financial and operational goals
and drive business unit and individual performance. Our long-
term incentive compensation encourages executive officers to
remain employed with the Company, due partially to long-term
vesting periods and potential wealth accumulation, and
meaningfully aligns each Named Executive Officer's interests
and level of stock ownership with those of our stockholders.
In 2010, we awarded restricted stock under our Equity Plan to
four of our Named Executive Officers. Perquisites and
benefits also provide for the wellness of our executive
officer team. We believe that each element in our
compensation program, combined with the program objectives set
forth below, rewards extraordinary executive performance and
attracts and retains exemplary executive talent.
Upon hire, we typically indicate to each executive officer
that such individual is employed "at will," and such
employment does not customarily provide for any severance upon
termination. None of our Named Executive Officers has any
employment or severance agreement with the Company.
The Company's executive compensation program is discussed on
the following pages of this Proxy Statement, and we believe it
serves the Company well. We regard our program as
uncomplicated in design and believe it enables our
compensation decisions and practices, including those
discussed herein, to reflect and reinforce the Company's
values, culture and mission.
2010 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.
28
* Support our Mission Statement, Vision Statement and
guiding corporate principles. (Our Mission and Vision
Statements are included on our website at
http://www.werner.com under the "About Werner" tab.)
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.
* Ensure that highly capable and goal-oriented
executives remain motivated and committed to the
Company, even when downturns in the industry and
economy affect Company performance. This principle is
important with respect to encouraging our executives
to remain with the Company for long and productive
careers.
* Encourage our executive team to consider current and
long-term opportunities and 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.
* Provide limited executive perquisites.
Elements of Executive Compensation. The five elements of our
2010 executive compensation program are: (i) base salary,
(ii) performance-based compensation, (iii) long-term incentive
compensation, (iv) perquisites and (v) benefits. The
following discussion explains these elements and their primary
purposes with respect to our 2010 executive compensation
program.
Base Salary. Base salary is a fixed element of
compensation that we pay to each executive officer for
the performance of his primary duties and
responsibilities. Generally, each respective executive
officer's base salary is commensurate with such
person's responsibility, experience, tenure and job
performance. As discussed in this Executive
Compensation section, base salaries are reviewed on an
annual basis and at the time of promotion or other
change in job function and responsibilities. Base
salaries are not established on the basis of any
specific performance criteria, but 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. The base
salaries paid to each of our executive officers will
vary due to the application of these factors. Market
adjustments to executive base salaries may be made when
there is a significant change in an officer's position
or responsibilities or if competitive market data
indicates a significant deviation compared to market
29
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.
The Compensation Committee's determination of Named
Executive Officer compensation packages are primarily
made through the exercise of its particular judgment
and by applying the factors discussed above. The 2010
base salaries of our Named Executive Officers are
disclosed in the Summary Compensation Table. With the
exception of Mr. Leathers, base salary levels in 2010
were the same as those in 2009 because we believed the
2009 levels remained competitive and modifications were
not warranted to achieve our executive compensation
program objectives. The base salaries of our Named
Executive Officers for 2010 were determined by the
Compensation Committee following a thorough review of
each Named Executive Officer's overall compensation and
in light of each person's respective performance and
responsibilities, our financial results and
developments in the competitive transportation and
logistics services markets. C.L. Werner's base salary
was slightly above the median when compared to base
salaries in our executive chairman peer group. The
base salaries of our other four Named Executive
Officers averaged at the 75th percentile when compared
to the base salaries for similar positions with
companies in our competitive peer group. In May 2010,
the Compensation Committee approved a 14% increase to
Mr. Leathers' base salary to recognize his performance
and the additional responsibilities he assumed within
the past year. During its meeting in November 2010,
the Compensation Committee increased Mr. Steele's base
salary by 7% for 2011 in recognition of his individual
performance and to closer align his total direct
compensation with the median total direct compensation
of his peers at the companies within our competitive
peer group. The Compensation Committee reviewed Mr.
Steele's base salary as a percentage of total cash
compensation (base salary and annual cash bonus) and
determined that an increase to his base salary in lieu
of an increase to his annual cash bonus was more
appropriate. This would better align his components of
cash compensation to that of his peers. The
Compensation Committee did not make any other changes
to Named Executive Officer base salaries in 2010.
Performance-Based Compensation. Performance-based
compensation is typically awarded in the form of annual
cash bonuses. Our annual cash bonus program is a
discretionary program designed to encourage and reward
executives for performance during the fiscal year and
on a more short-term basis. However, our philosophy is
to also reward performance on a more consistent basis
during both challenging and favorable economic
conditions. This practice allows us to retain an
experienced executive team to lead our Company through
the challenges of unfavorable economic cycles and to
better position our Company for future success when
conditions improve. Thus, we believe the annual cash
bonus program also contributes to our long-term success
because it rewards and drives individual performance
and motivates executive officers to improve our overall
performance, while our practice of rewarding
performance more consistently encourages executive
officers to consider the long-term impact of current
decisions. Historically, annual cash bonus payments to
executive officers have been the same or higher than
the previous year's payment. This practice correlates
with our relatively consistent profitable financial
results after considering the economic and industry
conditions that affect our business.
Performance-based compensation is awarded by our
Compensation Committee. Performance-based compensation
is not calculated on the basis of any specific
performance criteria, but a number of factors are
considered when determining individual annual cash
bonus amounts. The Compensation Committee awards
performance-based compensation that it considers
appropriate based upon and after assessing: (i) the
financial and economic environment concerning the
30
Company; (ii) the respective officer's individual
performance and contribution toward achieving our
business objectives; (iii) the amount of the executive
officer's bonus payment awarded in the preceding year;
(iv) the President and CEO's recommendation to the
Compensation Committee; (v) performance-based
compensation data and total cash compensation data for
certain officer positions, including actual bonuses
paid in the marketplace by other transportation and
logistics services companies in our competitive peer
group; and (vi) our overall financial results
(including our revenues, net income, operating ratio,
total stockholder return and return on assets relative
to our competitive peer group). (In this Proxy
Statement, "operating ratio" means operating expenses
expressed as a percentage of operating revenues, and
"total stockholder return" refers to the percentage
increase in the value of stockholders' Company shares,
including changes in the stock price and re-investment
of dividends.) Final award amounts approved by the
Compensation Committee for each executive officer are
intended to be competitive for our market and
reflective of each respective executive officer's
performance and contribution to our financial and
business performance and success.
In November 2010, our Compensation Committee approved
and awarded annual cash bonuses to the Named Executive
Officers, excluding C.L. Werner, under our
discretionary annual cash bonus program. In 2010, C.L.
Werner requested that he not be awarded an annual cash
bonus, consistent with 2009. The annual cash bonuses
of Gary Werner and Greg Werner were reduced in 2009, at
their request, in connection with our Company-wide
cost-saving initiatives implemented during that year.
In 2010, the Compensation Committee awarded bonuses to
Gary Werner and Greg Werner at the same level as those
given to them in 2008. The Compensation Committee
awarded Mr. Leathers an 8% increase in his annual cash
bonus for his individual performance and his
contribution to the Company's overall performance in
2010. Mr. Steele was awarded an annual cash bonus at
the same level as his 2009 annual cash bonus in
conjunction with his 2011 base salary increase. Each
of our Named Executive Officers are members of our
leadership team that successfully helped us improve our
profitability during a challenging economic period.
The performance-based compensation for each of our four
Named Executive Officers, excluding C.L. Werner, is
below the 75th percentile for similarly positioned
executives of the companies in our competitive peer
group.
The Compensation Committee also compared total cash
compensation for our four Named Executive Officers,
excluding C.L. Werner, to that of our competitive peer
group when determining performance-based compensation
awards. The total cash compensation of these Named
Executive Officers averaged above the 75th percentile
for similar positions with the competitive peer group
companies.
In making its 2010 annual cash bonus decisions, the
Compensation Committee compared our financial
performance for the nine-month period ended September
30, 2010 to the performance of companies within our
competitive peer group. Compared to our competitive
peer group, our net income had one of the largest
percentage increases for the nine months ended
September 30, 2010 compared to the same period of 2009.
The Compensation Committee also determined that our
overall financial performance met with management's
expectations, particularly given the challenging but
improving business and economic climate. The annual
cash bonuses awarded to our Named Executive Officers in
2010 are disclosed in the Summary Compensation Table.
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
31
development. Accordingly, the Compensation Committee
granted long-term equity awards to our executive
officers in 2010.
Our Equity Plan permits a variety of equity awards
under our ongoing long-term incentive program. In
determining long-term incentive compensation, our
Compensation Committee evaluates which equity award
vehicles achieve the best balance between providing
appropriate long-term incentive compensation and
creating and maintaining long-term stockholder value.
The periodic vesting periods of long-term incentive
compensation directly align executive officer interests
and compensation with our stockholders' interests by
rewarding creation and preservation of long-term
stockholder value. The Compensation Committee also
believes this element of compensation provides equity
ownership opportunities for our executive officers.
Because we do not have a pension plan and some
executives' 401(k) Retirement Savings Plan
contributions are limited under federal income tax
rules (as discussed in the Benefits section on page
35), we believe our executive officers consider
potential wealth accumulation from equity gains when
planning for their retirement.
Stock option and restricted stock grants are made at
the discretion of the Compensation Committee and are
not necessarily made on an annual basis. In designing
long-term incentive awards and determining an overall
pool of stock to make available for grant, the
Compensation Committee considers the Board's duty to
our stockholders to limit equity dilution, whether such
awards will help to accomplish our executive
compensation program objectives, how our relative
financial performance compares against the marketplace
and the emphasis placed on equity in the total mix of
compensation. For purposes of allocating the overall
stock pool among executive officers, our Compensation
Committee also evaluates (i) the scope of each
executive's responsibilities, position and experience;
(ii) each executive officer's individual performance
and contribution to our overall performance and
financial results; (iii) the total mix of compensation
for each executive; (iv) our historical practice of
granting equity awards to executive officers; and (v)
the perceived retention value of the total compensation
package in light of the current labor and financial
markets. The Compensation Committee will weigh these
factors, in addition to long-term stockholder value and
interests, when making any executive stock award
determinations.
Stock options represent a right to purchase a certain
number of shares of our common stock at a particular
exercise price per share after designated vesting
periods occur. The exercise price is equal to the
NASDAQ Global Select MarketSM closing market price of
our common stock on the grant date. Stock option value
depends upon stock price appreciation. We believe this
factor motivates our executive officers to improve and
maintain Company performance because strong financial
results may potentially increase the value of any
unexercised stock options. Please refer to the Stock
Grant Practices section under Other Executive
Compensation Policies and Considerations on page 41 for
additional information regarding stock options.
An award of restricted stock entitles the recipient to
receive a specified number of shares of our common
stock, at no cost to the recipient, if the executive
officer remains employed with us when the restricted
stock vests. The value of the restricted stock is
equal to the NASDAQ Global Select MarketSM closing
market price on any given date after granting.
Consequently, the restricted stock value may increase
or decrease with changes in the stock price during the
period between granting and vesting and on the vesting
date and each subsequent day thereafter. We believe
that restricted stock awards directly link executive
officer interests with those of our stockholders
because restricted stock value is impacted by these
stock price changes, and the Compensation Committee
32
considers the granting of restricted stock awards to be
a means of increasing executive officer ownership in
Company stock. We also believe that despite the stock
price fluctuations, restricted stock will have value in
the long-term and can potentially deliver greater
share-for-share compensation value at grant than stock
options. By awarding restricted stock, we are able to
offer comparable grant date compensation value with
fewer shares, and we believe the use of restricted
stock accordingly results in less dilution of earnings
per share when compared to stock options.
Vesting of stock options and restricted stock is
subject to continued employment with us. This
condition helps ensure that a portion of an executive
officer's awards will vest after several years, which
is intended to retain the executive officer and cause
them to focus on our long-term business objectives.
When deciding upon the long-term incentive compensation
of our Named Executive Officers in November 2010, the
Compensation Committee considered the information
regarding competitive peer group long-term incentive
compensation that was included in the Pay Governance
executive compensation survey. The survey indicated
that during the past three years, our long-term
incentive compensation for the four Named Executive
Officers, excluding C.L. Werner, averaged between the
25th percentile and the median of our competitive peer
group. The Compensation Committee also assessed each
Named Executive Officer's respective contributions to
our performance for the nine-month period ended
September 30, 2010 and our performance during that time
compared to other companies within our competitive peer
group. The Compensation Committee also took into
account our overall financial performance given the
challenging but improving business and economic
climate, such as our improvement in total stockholder
return in 2009 (23% in 2009 compared to 15% in 2008)
and the three-year average total stockholder return for
2007 to 2009 of 11%. The three-year average total
stockholder return of 11% was at the 88th percentile of
our competitive peer group's three-year average total
stockholder return.
On November 30, 2010, the Compensation Committee, in
its sole discretion, awarded Gary Werner, Greg Werner
and Derek Leathers each 30,000 shares and John Steele
5,000 shares of restricted stock in accordance with our
Equity Plan. These shares were awarded to each Named
Executive Officer in acknowledgement of their
respective contributions to our overall success and
accomplishments during 2010. Pursuant to the
Restricted Stock Award Agreements with the restricted
stock recipients, the restricted stock is subject to
service-based vesting provisions. Beginning three
years after the grant date of each award, the
restricted stock will vest annually in five increments
of 20% each. The awards will then become fully vested
on November 30, 2017. The Named Executive Officer
recipients do not have any voting or dividend rights
with respect to such stock until it is fully vested,
and there are not any post-vesting sales restrictions
on the shares. (The Form of Restricted Stock Award
Agreement was included as Exhibit 10.1 to our Current
Report on Form 8-K filed with the SEC on December 4,
2009.) We did not grant any stock options or SARs to
our Named Executive Officers in 2010.
No long-term incentive compensation was granted to C.L.
Werner in 2010. The Compensation Committee recognizes
that C.L. Werner's level of stock ownership
significantly connects his interests with the interests
of our other stockholders, and from time to time, our
Compensation Committee considers compensation
arrangements and awards for C.L. Werner given his
continuing contributions and leadership to the Company.
Please refer to the Summary Compensation Table and
Grants of Plan-Based Awards for 2010 table for further
details concerning long-term incentive compensation
awarded to our Named Executive Officers.
33
Perquisites. Our executive compensation program includes
executive perquisites that we consider an important
element of our total executive reward packages and are
necessary for Named Executive Officers to carry out the
responsibilities of their positions. We believe our
Named Executive Officer perquisites and other benefits
are representative of and competitive with those
offered by companies with whom we compete for executive
talent, and offering these perquisites and benefits
helps us with attracting and retaining valued and
talented executive officers.
The aggregate incremental cost of perquisites and other
benefits 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 2010 section of this Proxy
Statement.
The perquisites offered under our 2010 executive
compensation program were as follows:
* Accounting, Legal and Tax Services. Our
Chairman, Vice Chairman and President and CEO
utilize accounting, legal and tax (income tax
preparation) services provided by us. The
Chairman fully reimburses us for such services.
We receive no such reimbursement from the Vice
Chairman and President and CEO. The
reimbursement amounts we receive from the
Chairman and the unreimbursed amounts included in
compensation for the Vice Chairman and President
and CEO are based on our estimate of the costs
incurred by the Company for our personnel to
provide these services.
* Country Club Membership. In 2010, we provided
Mr. Leathers with a country club membership. The
membership fees and other business-related and
reasonably incurred expenses were paid by us, and
we received full reimbursement from Mr. Leathers
for any personal expenses he incurred in
connection with the membership. We provide this
membership for our benefit, notwithstanding the
incidental personal benefit to Mr. Leathers.
* Personal Use of Corporate Aircraft and Property.
The Chairman, Vice Chairman and the President and
CEO are permitted personal use of our corporate
aircraft provided they reimburse the Company (we
do not provide non-reimbursed personal use to any
of these three executives). When the Chairman,
Vice Chairman or President and CEO uses our
corporate aircraft for personal business, such
Named Executive Officer reimburses us the higher
of our incremental cost or the taxable amount
calculated pursuant to the Internal Revenue
Service (the "IRS") regulations. Our executive
officers are also permitted limited personal use
of the corporate aircraft with the approval of
the Chairman, Vice Chairman or President and CEO,
and we provide transportation on the corporate
aircraft for immediate family members of
executive officers if such family members are
specifically invited to attend events for
appropriate Company-related business purposes.
In either case, we are not reimbursed for such
utilization of the aircraft by the executive
officer. C.L. Werner, Greg Werner and Derek
Leathers used the corporate aircraft for personal
benefit in 2010. The Chairman's reimbursements
for such use are discussed under Transactions
with Related Persons. Mr. Greg Werner reimbursed
the Company for the higher incremental cost of
his personal use in 2010. Mr. Leathers' personal
use of the corporate aircraft includes only those
occasions when his spouse accompanied him on
Company-related business trips at the request of
the Chairman, and the value of Mr. Leathers'
personal corporate aircraft use is not included
in the All Other Compensation for 2010 table on
page 47 as permitted by SEC rules because there
is no aggregate incremental cost to the Company
for providing the benefit. Our executive
officers are also allowed limited use of our
corporate condominiums and Valley Lodge for
personal purposes subject to the approval of the
Chairman, Vice Chairman or President and CEO. In
34
2010, Mr. Leathers used the corporate condominium
but none of our Named Executive Officers used the
Valley Lodge for personal benefit.
* Company Vehicle. We provide each Named Executive
Officer with one Company vehicle for business and
personal use, with the exception of the Chairman,
who was provided two Company vehicles for part of
2010. We are responsible for paying the
operating expenses of these vehicles, which
include costs such as fuel, repairs and
maintenance, insurance and licensing and
registration.
Benefits. As discussed above in Perquisites, we believe
our benefits are competitive and standard compared to
those offered by companies in our industry and
competitive peer group and are essential for retaining
exceptional executives. In 2010, we offered the
following benefits:
* Health and Welfare Benefits. Our Named Executive
Officers are eligible to participate in our full
range of health and welfare benefits, and are
covered under the same plans and terms, that are
provided to all of our full-time employees in the
United States. In 2010, we partially paid the
healthcare insurance premiums of Mr. Leathers.
These premiums are disclosed under All Other
Compensation for 2010.
* 401(k) Plan. Our Named Executive Officers are
eligible to participate in our 401(k) Retirement
Savings Plan (the "401(k) Plan"). This plan
allows participants to make pre-tax deferred
salary contributions through payroll deductions,
and the Company matches a certain portion of each
participant's contributions. Earnings on
participant and Company contributions grow tax-
deferred. 401(k) Plan matching contributions are
made to Named Executive Officers on the same
terms as provided to our eligible U.S. employees.
At his respective request, the Vice Chairman and
the President and CEO do not receive a matching
contribution from us for the 401(k) Plan. Our
Chairman does not participate in this plan.
401(k) Plan Company-made matching contributions
for our other Named Executive Officers are
detailed under All Other Compensation for 2010.
* Employee Stock Purchase Plan. The Named
Executive Officers may elect to participate in
our Employee Stock Purchase Plan. Generally
under this plan, a participant may acquire shares
of our common stock at market price through
payroll deduction, and the Company will match an
amount equal to a specified percentage of each
participant's contributions. Such matching
amounts are made to Named Executive Officers on
the same terms as provided to our eligible U.S.
employees. The All Other Compensation for 2010
section identifies matching amounts made for
Named Executive Officers who participate in this
plan.
* Executive Nonqualified Excess Plan. We offer
participation in the Executive Nonqualified
Excess Plan (the "nonqualified deferred
compensation plan") to key managerial employees
because their 401(k) Plan contributions are
limited under federal income tax rules applicable
to highly compensated employees. We believe
these executives should have other similar means
of saving for retirement on a tax-deferred basis.
Our nonqualified deferred compensation plan (as
described further under Nonqualified Deferred
Compensation for 2010) enables these highly
compensated employees, including our Named
Executive Officers, to contribute amounts (in
addition to their 401(k) Plan contributions) on a
tax-deferred basis, subject to annual dollar
limits we impose. The nonqualified deferred
compensation plan provisions allow us to make
matching contributions; however, to date, we have
elected not to make any such contribution. Our
nonqualified deferred compensation plan is
described further under Nonqualified Deferred
Compensation for 2010.
35
Role of the Compensation Consultant. In 2010, our
Compensation Committee directly retained and engaged Pay
Governance as its compensation consultant. Pay Governance is
an independent outside executive compensation consulting firm
that assists our Compensation Committee, as requested, in
fulfilling certain tasks and responsibilities prescribed in
its charter. Pay Governance reports and provides services
only to our Compensation Committee, although Pay Governance
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, Pay
Governance will not perform any services for us or our
management.
Our Compensation Committee typically seeks market analysis and
information from Pay Governance prior to reviewing and
deciding executive compensation for the upcoming year. This
information includes compensation trends and practices in our
industry, competitive peer companies, historical compensation
statistics and market survey data. Pay Governance also
provides general guidance on our executive compensation
program and awards, but the consultant does not determine or
recommend any amounts or forms of compensation for any of our
executive officers or directors.
In 2010, other than for work completed for the Compensation
Committee, Pay Governance did not provide any services to us,
our management or any of our affiliates.
Role of Peer Groups and Benchmarking. Each year, our
Compensation Committee reviews the general criteria and
recommendations for the addition or removal of companies in
our competitive peer group. The criteria includes but is not
limited to market capitalization, revenues, net income and
industry of operation. Upon applying these criteria, the
Compensation Committee selected our peer group, which is
comprised of 15 companies in the transportation and logistics
services industry with whom we compete for executive talent.
Although our Compensation Committee may modify the peer group
when appropriate, the Compensation Committee prefers to keep
the group substantially consistent from year to year to
produce more consistent and useful executive compensation
benchmarking.
When the Compensation Committee conducted its annual review of
our peer group in 2010, it determined the peer group should
include the same companies as in 2009 based on our peer group
criteria. Thus, our peer group did not change from 2009 to
2010. Our competitive peer group for 2010 is shown in the
table below.
2010 Competitive Peer Group
-------------------------------------------------------------------------------------------------------
Arkansas Best Heartland Express Marten Transport
Celadon Group Hub Group Old Dominion Freight Line
C.H. Robinson Worldwide, Inc. J.B. Hunt Transport Services Pacer International
Con-Way Knight Transportation Saia
Covenant Transportation Group, Inc. Landstar System Universal Truckload Services, Inc.
In 2010, our Compensation Committee applied the competitive
peer group criteria to the 15 peer group companies. Upon
doing so, we found that our revenues fell nearest to those
revenues in the top quartile of our competitive peer group; as
a result, we compare total direct compensation against the
75th percentile of this peer group.
36
In 2010, for the first time, the Compensation Committee
utilized another peer group, different from the competitive
peer group identified above, for evaluating the executive
Chairman position of C.L. Werner. This other peer group is
comprised of publicly traded companies that have a similar non-
CEO executive chairman position and annual revenues comparable
to those of the Company. Our executive chairman peer group is
shown in the table below.
2010 Executive Chairman Peer Group
-----------------------------------------------------------------------------------------------
Albemarle Corporation DreamWorks Animation SKG, Inc. Nu Skin Enterprises, Inc.
Alberto Culver Company J.B. Hunt Transport Services Old Dominion Freight Line
Autodesk, Inc. JoS. A. Bank Clothiers, Inc. Patterson Companies, Inc.
Benchmark Electronics, Inc. Mercury General Corporation PerkinElmer, Inc.
Bon-Ton Stores, Inc. Molson Coors Brewing Company Superior Energy Services, Inc.
Corinthian Colleges, Inc. Mueller Industries, Inc. Universal Forest Products, Inc.
Our Compensation Committee determined the executive Chairman's
total direct compensation should be compared to the median of
the executive chairman peer group because our revenues fell
between the 25th percentile and the median of the average
revenues of the companies included within the executive
chairman peer group.
The Compensation Committee refers to a competitive market
analysis and market data provided by Pay Governance when it
reviews and prepares executive compensation for the year. The
market analysis incorporates the market data and reflects
compensation levels and practices for executives holding
similar positions at companies within our peer groups, which
helps our Compensation Committee determine executive
compensation at competitive levels. In 2010, Pay Governance
prepared such an analysis for the Compensation Committee. The
Compensation Committee then compares three of our executive
compensation elements (base salary, performance-based
compensation and long-term incentive compensation) to amounts
paid for similar executive positions among those companies in
our peer groups. The Compensation Committee reviews
compensation practices and levels at peer companies during the
executive compensation decision-making process so that the
Compensation Committee can determine compensation levels in an
informed manner and at levels the Compensation Committee
believes are reasonably competitive.
The Compensation Committee does not attempt to set
compensation elements for each executive to meet specific
benchmarks based on peer group data. Instead, we consider
these comparisons as one factor in determining executive
compensation levels. Generally, the Compensation Committee
reviews total compensation levels annually and makes
adjustments when job responsibilities, individual performance
or market data warrants such modifications. Actual total
compensation can vary from year to year based on Company and
individual performance.
Compensation Determination Process. The Compensation
Committee makes all annual compensation decisions for our
Named Executive Officers. Additionally, the President and CEO
may also modify compensation for certain executives within the
Compensation Committee parameters described below.
When determining total compensation, we apply a consistent
approach for all Named Executive Officers. The structure and
levels of our executive compensation program are determined,
in large part, by considering all elements of compensation,
37
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. (Direct
compensation includes base salary, cash bonuses and long-term
incentive compensation.) 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 President and
CEO. Our Compensation Committee may also request executive
compensation guidance and advice from an independent outside
consultant (such as Pay Governance) when deciding compensation
for our Named Executive Officers. In addition to the factors
and information described above, our Compensation Committee
also considers and determines the compensation of our Named
Executive Officers as follows:
Compensation of All Named Executive Officers. Each year,
the Compensation Committee reviews each element of
executive compensation and how such elements relate to
the total direct compensation, executive position and
related responsibilities of each Named Executive
Officer. As part of this annual process, the
Compensation Committee also examines how such elements
are reflected in competitive executive compensation
market data when determining annual pay opportunities.
Generally, the amount of compensation realized or
potentially realizable does not directly impact the
level at which future pay opportunities are set, but
such amount is considered by the Compensation
Committee.
Compensation of Chairman, Vice Chairman and President and
CEO. Our Compensation Committee assesses the executive
compensation information compiled by the independent
outside consultant (Pay Governance) when developing
compensation packages for our Chairman, Vice Chairman
and President and CEO. Upon reviewing such
information, the Compensation Committee then meets in
executive session and determines a compensation package
for each of these particular officers based on how the
elements of executive compensation apply to the
individual and the related factors described above.
These factors generally include each individual's job
performance, responsibilities and the scope of their
position, compensation history, leadership and our
financial and operating performance and stockholder
return. In evaluating such factors, the Compensation
Committee does not apply specific performance criteria,
formulas or pre-determined targets to calculate
compensation. We believe this approach reinforces our
program objectives because compensation determinations
are based on and underscore overall Company performance
achieved by our executive officer team, led in large
part by the Chairman, Vice Chairman and President and
CEO. The President and CEO's compensation is best
reflected by the overall performance and achievements
of the Company, and the Compensation Committee believes
this practice is appropriate because the President and
CEO is responsible for the financial performance of the
entire Company. Our Chairman, Vice Chairman and
President and CEO are also eligible for all of the same
compensation programs, perquisites and benefits as our
other Named Executive Officers.
Our Chairman, Vice Chairman and President and CEO do
not participate in the Compensation Committee's
deliberations or decisions with regard to his own
respective compensation or the compensation of any
38
other such Named Executive Officer having the title of
Chairman, Vice Chairman or President and CEO.
Compensation of Other Named Executive Officers. At the
end of the year, the Compensation Committee reviews the
competitive market compensation data for our peer group
compiled by the independent outside consultant (Pay
Governance). Upon doing so, our Compensation Committee
establishes cash compensation "pay ranges" (inclusive
of base salary and annual cash bonus) according to job
title (such as Senior Executive Vice President and
Executive Vice President). As explained in the
Compensation Committee section within Corporate
Governance, the Compensation Committee delegated
certain authority to our President and CEO that permits
him to adjust the base salaries of the other Named
Executive Officers. The President and CEO does not
have authority to modify his own base salary or that of
the Chairman or Vice Chairman. After our Compensation
Committee defines the cash compensation pay ranges, the
President and CEO may then make changes to the other
Named Executive Officer base salaries during the
following year, provided such changes are within the
parameters of the pay ranges designated by the
Compensation Committee. Our Compensation Committee
reviews and approves these base salary changes at the
close of the year. Any proposed changes that do not
fall within the established pay ranges require the
approval of the Compensation Committee before any such
changes become effective. At the end of the year, the
President and CEO presents to our Compensation
Committee his year-end total cash compensation
recommendations for the other Named Executive Officers.
Our Compensation Committee then reviews and approves
such recommendations at its year-end meeting. (For
example, our Compensation Committee established cash
compensation pay ranges in November 2010 for fiscal
year 2011. The President and CEO has delegated
authority to modify base salaries throughout 2011
within these ranges. In November or December 2011, the
Compensation Committee will review the President and
CEO's total cash compensation recommendations for the
other Named Executive Officers, and such
recommendations will include these base salary
changes.) During 2010, our President and CEO did not
make any increases to the other Named Executive Officer
base salaries.
After conducting its review of our peer group's
compensation data, the Compensation Committee also
evaluates and approves the annual cash bonus and long-
term incentive compensation for the other Named
Executive Officers. In making such determinations, the
Compensation Committee considers the relevant factors
and compensation elements, including each Named
Executive Officer's position and related
responsibilities and overall individual and Company
performance and achievements. Our Compensation
Committee determines annual cash bonus and long-term
incentive compensation near the end of the fiscal year.
Our President and CEO participates in the Compensation
Committee's discussions regarding the compensation and
performance of the other Named Executive Officers. The
Compensation Committee values the President and CEO's
evaluation of the other executives because he has
direct knowledge of each person's performance and
contributions to the Company. The Compensation
Committee does not use any formulaic methods or refer
to any defined performance criteria or targets to set
the compensation of the other Named Executive Officers.
The President and CEO's recommendations are influenced
by factors that vary year-to-year, such as overall
Company financial and operating performance, individual
performance, stockholder return, compensation history
and executive officer retention. Our Compensation
Committee also contemplates such factors during the
compensation determination process. Prior to the
Compensation Committee's discussions, the President and
CEO may seek and consider input from the Chairman and
Vice Chairman. However, other than the President and
CEO, no other Named Executive Officer participates in
39
the executive compensation discussions and decisions of
the Compensation Committee.
Risk Management Related to Compensation. When reviewing and
implementing the executive compensation program, the Company
and our Compensation Committee formulate and adhere to certain
practices that ensure consistent leadership and decision-
making among our executive officers. The Compensation
Committee assesses whether our program and practices are
reasonably likely to have a material adverse effect on the
Company and concluded they do not. The Compensation Committee
does not believe our executive compensation program and
practices are designed to promote or encourage unreasonable
risk for the following reasons:
* Base salaries are fixed amounts determined on an
annual basis and are established after a broad range
of factors (rather than specific performance measures)
are considered.
* Performance-based compensation represents a
significant portion of our executive officers' total
cash compensation and is awarded under our
discretionary annual cash bonus program. The
discretionary nature of the program allows for
determinations of executive officer annual cash
bonuses to be based on several factors, as discussed
under Performance-Based Compensation in the Elements
of Executive Compensation section of this Proxy
Statement. While annual cash bonuses generally reward
short-term performance and achievements, this
compensation also contributes to our long-term success
by motivating executive officers to better our overall
results and business.
* We generally consider and apply the same performance
measures and other factors for our annual cash bonus
program for the Named Executive Officers, other
executive and non-executive officers, management and
non-executive employees.
* Long-term incentive compensation is important to
further aligning our executive officers' interests
with those of our stockholders, and it balances short-
and long-term decision-making by our executives. Most
of our stock awards have staggered or long-term
vesting schedules, and the financial opportunity is
realized through appreciation of our stock price over
several years.
* The vesting and exercising of stock awards granted
under our Equity Plan may be prohibited if an
executive officer is terminated for cause or under
other circumstances as provided in the Equity Plan.
* With respect to their stock ownership, our executive
officers could lose significant value if our stock
price was exposed to unreasonable risk.
* Our performance-based and long-term incentive
compensation are not formulaic but are determined on a
discretionary basis by the Compensation Committee.
Awards of these types of compensation are also not
assured each year.
When structuring overall compensation practices for our non-
executive employees, we consider whether our practices
incentivize unreasonable risk-taking behavior and could
consequently impact our risk management and oversight. We
also regard the mix of pay and the elements of our executive
compensation program (including the relative considered
factors) 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 Board 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.
40
Other Executive Compensation Policies and Considerations.
Stock Grant Practices. Under our Equity Plan, the
Compensation Committee may grant stock options, SARs
and restricted stock to our executive officers and non-
employee directors. We do not have an annual equity
program, and the Equity Plan does not require us to
grant equity awards on an annual or otherwise regular
basis. Therefore, our Compensation Committee does not
grant equity awards on any pre-determined grant date.
Instead, the Compensation Committee selects a grant
date after it decides to grant any equity awards. The
Compensation Committee also selects a grant date that
occurs when neither the recipient nor the Compensation
Committee possess material nonpublic information.
Pursuant to our Equity Plan, the purchase price of the
common stock under each stock option is equal to the
closing market price of our common stock on the date
the option is granted. We do not necessarily consider
the realized or unrealized value of prior stock option
awards when determining the target economic value of
new stock option awards because each grant is awarded
as an incentive to drive future stockholder return.
For stock options granted prior to the May 2007 Equity
Plan amendments, the purchase price of the common stock
under each option was equal to the closing market price
of our common stock on the day prior to the date of
grant. Restricted stock is awarded at no cost to the
recipient.
Our Compensation Committee also establishes the vesting
period for each grant. We have not granted any stock
options to Named Executive Officers since 2007. For
that reason, and to further explain the vesting periods
of stock options awarded under the Equity Plan, we have
provided the Stock Option Vesting Periods table below
regarding stock options granted in prior years for
which a portion of the option award remains
outstanding. All outstanding stock options granted to
our Named Executive Officers vest over a six-year
period based on the prescribed schedules and expire
after ten years.
Stock Option Vesting Periods
---------------------------------------------------------------
2007 Grant: 2001-2006 Grants:
Years from Grant Date Amount Vested Amount Vested
--------------------- ------------- -----------------
2 Years (24 Months) 15% 25%
3 Years (36 Months) 20% 20%
4 Years (48 Months) 20% 20%
5 Years (60 Months) 20% 20%
6 Years (72 Months) 25% 15%
The restricted stock granted in 2010 is subject to a
service-based periodic vesting schedule. Beginning
three years after the November 30, 2010 grant date, the
restricted stock will vest annually in five increments
of 20% each. These 2010 awards will become fully
vested on November 30, 2017 and have no post-vesting
sales restrictions. The restricted stock granted in
2009 is also subject to the same service-based periodic
vesting schedule as the 2010 awards, except that the
2009 awards will begin vesting three years after the
December 1, 2009 grant date and fully vest on December
1, 2016. However, the restricted stock granted in 2008
is not subject to periodic vesting periods; rather, the
restricted stock will vest five years after the grant
date of the award and has no post-vesting sales
41
restrictions. None of our restricted stock awards give
the recipient any voting or dividend rights until such
stock fully vests.
Our Equity Plan also permits the Compensation Committee
to grant SARs to our executive officers and non-
employee directors. No such awards were granted in
2010, nor have any SARs been granted at any other time.
Please refer to the preceding Long-Term Incentive
Compensation section for additional details regarding
stock option and restricted stock determinations. The
Summary Compensation Table and Grants of Plan-Based
Awards for 2010 table also provide information
regarding equity compensation awarded to our Named
Executive Officers.
Executive Stock Ownership. Although we do not have
formal stock ownership guidelines or requirements for
our executive officers, our executive officers as a
group beneficially own 39% of the outstanding shares of
our common stock. As discussed in this Proxy
Statement, our Equity Plan permits us to grant
nonqualified stock options, SARs and restricted stock
to executive officers. Our executive officers may also
increase their stock ownership by electing to
participate in our Employee Stock Purchase Plan, as
discussed under Benefits on page 35. Effective January
1, 2011, the maximum annual contribution level for all
employees increased from $10,000 to $20,000. This
increase enables executive officers and other employees
to purchase a larger number of Company shares through
the Employee Stock Purchase Plan and thereby increase
their stock ownership in the Company. The individual
stock ownership of our Named Executive Officers is
provided in the Beneficial Ownership table on page 22.
Tax Deductibility of Executive Compensation; Accounting
Considerations. The Compensation Committee reviews
estimated tax and accounting (pro forma expense)
projections and implications and how these factors
impact the material elements of our executive
compensation program. Generally, executive salaries
and performance-based compensation are accrued as
expense over the requisite service period related to
the particular compensation element (this period is
typically equal to the performance period of the
executive officer), and we realize a tax deduction upon
the payment of the compensation to the executive.
Section 162(m) of the Internal Revenue Code prevents us
from taking a tax deduction, in any one taxable year,
for non-performance-based compensation in excess of $1
million paid to the CEO and the next four highest
compensated executive officers. We collectively refer
to these executives as the "covered officers." Certain
compensation of the covered officers is specifically
exempt from the deduction limit to the extent that such
compensation does not exceed $1 million during any
fiscal year or is "performance-based" as defined in
Section 162(m). The Compensation Committee carefully
considers and monitors the effect of Section 162(m) on
our executive compensation program and will structure
executive compensation to preserve its tax
deductibility under Section 162(m) while maintaining
our ability to attract, motivate and retain high-
quality executive officers. The Compensation Committee
also believes there are circumstances where the
interests of the Company and our stockholders are best
served by maintaining flexibility in the manner
compensation is provided. In those events, the
Compensation Committee may, at its discretion, approve
payments of nondeductible compensation if the
Compensation Committee believes the circumstances
warrant such payments. All amounts paid to the covered
officers during 2010 qualified as deductible under
Section 162(m), except for $97,598 paid to Greg Werner.
Our aggregate cost of the lost tax deduction that
resulted from exceeding the Section 162(m)
deductibility limit in 2010 was approximately $40,000.
42
Employment Arrangements
Each of our Named Executive Officers and other executive
officers has been an employee of the Company for at least ten
years, and none has any type of written employment agreement
with us.
Arrangements and Potential Payments Upon Termination or Change
in Control
Termination. None of our Named Executive Officers for 2010
has a severance agreement or severance benefit arrangement
with us. We do not provide for incremental compensation or
special treatment for incentive compensation in the event of a
Named Executive Officer's voluntary termination (such as
resignation or retirement), termination for cause or
termination by death or disability.
Change in Control. None of our Named Executive Officers has a
change in control agreement with us, and we do not currently
provide for incremental compensation or special treatment for
incentive compensation related to a change in control. Under
the stockholder-approved Equity Plan, the Compensation
Committee and the Board have the authority and discretion to
take certain actions in the event of a change in control in
the Company, and determinations of such actions are generally
made with respect to all Named Executive Officers or on a
case-by-case basis. These actions include but are not limited
to adjusting outstanding option awards or accelerating the
vesting dates of outstanding awards.
Potential Benefits Payable Under the Equity Plan. As stated
above, we do not have any employment, severance or change in
control agreements with any of our Named Executive Officers.
Our Equity Plan, however, permits the vesting of outstanding
equity awards upon certain termination or resignation actions
following a change in control. The Equity Plan provides that
if a Named Executive Officer is terminated other than for
"cause" or voluntarily resigns for "good reason" within the
period beginning upon a change in control and ending on the
second anniversary of the change in control, then (i) all
outstanding stock options and SARs will become fully
exercisable and (ii) all conditions and restrictions (other
than those imposed by law) on outstanding restricted stock
will be deemed satisfied as of the executive officer's
employment termination date. "Cause," "good reason" and
"change in control" are defined in the current stockholder-
approved version of the Equity Plan.
The ensuing Potential Benefits Payable Under the Equity Plan
table shows the potential benefits payable to each Named
Executive Officer due to the occurrence of either the
termination or resignation event described in the Equity Plan.
The amounts of the potential benefits represent the estimated
value of all unvested equity awards that would fully vest upon
either event, assuming such event occurred on December 31,
2010 (the last day of our fiscal year) and a stock price of
$22.60 per share, which was the NASDAQ closing market price of
our common stock on the same date. These amounts are the same
for both events and are reflected in the "Potential Benefit"
column.
43
Potential Benefits Payable Under the Equity Plan
---------------------------------------------------------------------------------
Name Number of Unvested Shares Vesting Potential Benefit ($)(1)
---- --------------------------------- ------------------------
Clarence L. Werner - -
Gary L. Werner 60,000 (Restricted Stock) 1,356,000
Gregory L. Werner 60,000 (Restricted Stock) 1,356,000
Derek J. Leathers 19,250 (Stock Options) 2,139,835
90,000 (Restricted Stock)
John J. Steele 12,000 (Stock Options) 405,165
15,000 (Restricted Stock)
-----------------
(1) The actual exercise prices of the stock options (as
specified in each Named Executive Officer's
respective award agreements) vary from the $22.60
closing market price used to calculate the amounts in
this table. These actual exercise prices range from
a minimum of $16.68 per share to a maximum of $17.18
per share. Shares of restricted stock do not have an
exercise price, thus the potential benefit was
calculated using only the $22.60 closing market
price.
Report of the Compensation Committee
The following report of the Compensation Committee shall not
be deemed to be "soliciting material" or to otherwise be
considered "filed" with the U.S. Securities and Exchange
Commission, nor shall this report be subject to Regulation 14A
(other than as indicated) or to the liabilities set forth in
Section 18 of the Securities Exchange Act of 1934. This
report shall not be deemed to be incorporated by reference
into any prior or subsequent filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates it by
reference or treats it as soliciting material.
In conjunction with the preparation of the Annual Report on
Form 10-K for 2010 of Werner Enterprises, Inc. (the "Company")
and this Proxy Statement for the Annual Meeting of
Stockholders to be held May 10, 2011, the Compensation
Committee has reviewed and discussed with management the
foregoing Compensation Discussion and Analysis section
(required by Item 402(b) of Regulation S-K of the U.S.
Securities and Exchange Commission) of this Proxy Statement.
Based on such review and discussion, the Compensation
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis section be included in
this Proxy Statement and incorporated by reference into the
Company's Annual Report on Form 10-K for 2010.
Patrick J. Jung, Chair
Kenneth M. Bird, Ed.D.
Gerald H. Timmerman
44
Summary Compensation Table
The Summary Compensation Table provided on page 46 presents
all elements of compensation for our Named Executive Officers
for 2008, 2009 and 2010 as follows:
* Salary: Refers to Base Salary.
* Bonus: Refers to Performance-Based Compensation.
* Stock Awards: Refers to the aggregate grant date fair
value computed in accordance with Financial Accounting
Standards Board Accounting Standards Codification
Topic 718 (Compensation - Stock Compensation).
Pursuant to SEC rules, the amounts listed for 2008
have been restated to reflect the aggregate grant date
fair value of restricted stock awarded during 2008.
Previously for 2008, we disclosed the amounts recorded
as expense in our 2008 financial statements for stock
awards granted to our Named Executive Officers.
* All Other Compensation: Represents the aggregate
amount of:
(i) Perquisites and other personal benefits having
an aggregate value in excess of $10,000;
(ii) Matching Company contributions to the 401(k)
Plan;
(iii) Insurance premiums paid by the Company;
(iv) Tax reimbursements; and
(v) Matching Company contributions under the
Employee Stock Purchase Plan.
You should read the Summary Compensation Table in conjunction
with the Compensation Discussion and Analysis section and the
tables and narrative descriptions that follow. Executive
deferrals to our 401(k) Plan and nonqualified deferred
compensation plan are included in the appropriate column
(typically the "Salary and/or Bonus" columns) for which the
compensation was earned.
The "Non-Equity Incentive Plan Compensation" and "Option
Awards" columns are omitted from the Summary Compensation
Table because we did not make any of these awards in 2008,
2009 or 2010. We have also removed the "Nonqualified Deferred
Compensation Earnings" column from the Summary Compensation
Table because none of the earnings on the nonqualified
deferred compensation balances of our Named Executive Officers
were above-market or preferential earnings.
45
Summary Compensation Table
--------------------------------------------------------------------------------------------------------
Name and Stock All Other
Principal Position Year Salary Bonus($)(1) Awards($)(2) Compensation($)(3) Total ($)
------------------ ---- ------ ----------- ------------ ------------------ ---------
Clarence L. Werner - 2010 715,000 - - 29,949 744,949
Chairman 2009 715,000 - - 31,570 746,570
2008 715,000 350,000 - 31,570 1,096,570
Gary L. Werner - 2010 355,000 230,000 619,200 27,604 1,231,804
Vice Chairman 2009 368,654 205,000 543,000 23,459 1,140,113
2008 356,750 230,000 - 18,115 604,865
Gregory L. Werner - 2010 720,000 350,000 619,200 27,598 1,716,798
President and CEO 2009 749,442 300,000 543,000 22,302 1,614,744
2008 720,000 350,000 - 36,423 1,106,423
Derek J. Leathers - 2010 401,696 260,000 619,200 39,553 1,320,449
Senior Executive Vice 2009 380,849 240,000 543,000 27,193 1,191,042
President and COO; 2008 288,234 230,000 686,400 26,204 1,230,838
President of Werner
Global Logistics
John J. Steele - 2010 210,000 110,000 103,200 15,478 438,678
Executive Vice President, 2009 219,077 110,000 181,000 16,447 526,524
Treasurer and CFO 2008 210,000 100,000 - 17,065 327,065
-----------------
(1) Annual cash bonus awards are made under the annual cash
bonus program. Bonuses reported in this column were awarded
by the Compensation Committee on November 30, 2010; December
1, 2009; and December 2, 2008, respectively.
(2) The stock awards reported in this column are also disclosed
in the Grants of Plan-Based Awards for 2010 table on page 48
and Outstanding Equity Awards at December 31, 2010 tables on
pages 49 and 50.
(3) Refer to the All Other Compensation for 2010 table on page
47 for a more detailed explanation of the compensation
reported in this column.
46
All Other Compensation for 2010
The table below shows the components of "all other
compensation" provided in 2010 to the Named Executive
Officers, as reported in the preceding Summary Compensation
Table.
All Other Compensation for 2010
-----------------------------------------------------------------------------------------------------------------------
Company
Contributions
Perquisites Company to Employee Severance
& Other Tax Insurance Contrib- Stock Payments/
Personal Reimburse- Premiums utions to Purchase Accruals
Name Benefits ($) ments ($)(1) ($)(2) 401(k) Plan ($) Plan ($)(3) ($)(4) Total($)
---- ------------ ------------ --------- --------------- ------------- ---------- --------
Clarence L. Werner 19,298(5) 10,651 - - - - 29,949
Gary L. Werner 20,019(6) 7,585 - - - - 27,604
Gregory L. Werner 20,142(7) 7,456 - - - - 27,598
Derek J. Leathers 14,797(8) 16,791 2,375 4,220 1,370 - 39,553
John J. Steele 7,909(9) 4,163 - 2,036 1,370 - 15,478
-----------------
(1) The amounts reported in this column are the tax gross-ups for
Company vehicle use for C.L. Werner, Gary Werner, Greg Werner
and John Steele. The amount reported for Derek Leathers
represents tax gross-ups of $4,252 for Company vehicle use;
$488 for personal use of the corporate condominium; $11,888
for personal use of the corporate aircraft when his spouse
accompanied him on Company-related business trips; and $163
for a Company-paid commercial airline ticket.
(2) The amount reported in this column represents a partial
payment by the Company of Derek Leathers' healthcare insurance
premiums.
(3) There is a 15% Company match for employee contributions to the
Employee Stock Purchase Plan.
(4) In 2010 we did not, and do not currently, have any employment,
termination or change in control arrangements with any of the
Named Executive Officers.
(5) Perquisites and personal benefits include $19,298 for use of
two Company vehicles during part of the year and one Company
vehicle during the remainder of the year.
(6) Perquisites and personal benefits include $13,915 for use of
one Company vehicle and $6,104 for legal and income tax
preparation services.
(7) Perquisites and personal benefits include $13,691 for use of
one Company vehicle and $6,451 for income tax preparation
services.
(8) Perquisites and personal benefits include $8,065 for use of
one Company vehicle; $5,312 for Company-paid country club
membership; $1,065 for personal use of corporate condominium;
and $355 for one Company-paid commercial airline ticket for
Mr. Leathers' spouse.
(9) Perquisites and personal benefits include $7,909 for use of
one Company vehicle.
Our contributions on behalf of the Named Executive Officers to
the 401(k) Plan and Employee Stock Purchase Plan are made on
the same terms as provided to all of our eligible employees in
the United States. In addition to the above-mentioned
compensation, the Named Executive Officers also participated
in voluntary health and welfare benefit programs that are
available and comparable to such programs for all eligible
U.S. employees.
47
Grants of Plan-Based Awards for 2010
The following Grants of Plan-Based Awards for 2010 table sets
forth information regarding restricted stock and stock option
awards granted to Named Executive Officers under our Equity
Plan during 2010. Columns required by the SEC regulations are
omitted where there is no amount to report or such column is
inapplicable for all of the Named Executive Officers.
Grants of Plan-Based Awards for 2010
-----------------------------------------------------------------------------------
All Other Stock Awards: Grant Date
Number of Shares of Fair Value of Stock and
Name Grant Date Stock or Units (#)(1) Option Awards ($)(2)
---- ---------- ----------------------- -----------------------
Clarence L. Werner - - -
Gary L. Werner 11/30/2010 30,000 619,200
Gregory L. Werner 11/30/2010 30,000 619,200
Derek J. Leathers 11/30/2010 30,000 619,200
John J. Steele 11/30/2010 5,000 103,200
-----------------
(1) The stock awards reported in these columns are also
disclosed in the Summary Compensation Table and
Outstanding Equity Awards at December 31, 2010
tables and therefore do not constitute additional
compensation not otherwise reported in this Proxy
Statement.
(2) The fair value of the restricted stock is based upon
the market price of the underlying common stock on
the grant date, reduced by the present value of
estimated future dividends because the award is not
entitled to receive dividends prior to vesting. The
present value of estimated future dividends was
calculated based on a $0.05 quarterly dividend
amount per share and 2.1% risk-free interest rate.
Further discussion of the valuation and assumptions
regarding our stock awards is provided in Note 5 of
our Consolidated Financial Statements in our Annual
Report on Form 10-K for 2010.
Outstanding Equity Awards at 2010 Year-End
The tables on pages 49 and 50 present information regarding
all outstanding equity awards held by each of the Named
Executive Officers as of December 31, 2010. The stock option
and restricted stock awards disclosed in these tables were
granted under our long-term incentive program.
For the vesting dates of the unvested and unexercisable stock
options disclosed in the Outstanding Equity Awards at December
31, 2010 (Option Awards) table on page 49, please refer to the
Vesting Dates of Unvested and Unexercisable Stock Options at
December 31, 2010 table on page 51.
48
Outstanding Equity Awards at December 31, 2010
--------------------------------------------------------------------------------------------------
Option Awards(1)
----------------
Equity
Incentive
Plan
Awards:
Number of Number of Number of
Securities Securities Securities
Underlying Underlying Underlying Option
Unexercised Unexercised Unexercised Exercise Option
Options: Options: Unearned Price Expiration
Name (#) Exercisable (#) Unexercisable(2) Options (#) ($/Sh)(3) Date
---- --------------- -------------------- ----------- --------- ----------
Clarence L. Werner 100,000 - - 18.33 05/20/2014
Gary L. Werner 100,000 - - 18.33 05/20/2014
Gregory L. Werner 100,000 - - 18.33 05/20/2014
Derek J. Leathers 33,334(4) - - 9.77 09/29/2011
35,000 - - 18.33 05/20/2014
17,000 3,000 - 16.68 10/22/2015
8,750 16,250 - 17.18 11/30/2017
John J. Steele 12,500 - - 9.77 09/29/2011
20,000 - - 18.33 05/20/2014
12,750 2,250 - 16.68 10/22/2015
5,250 9,750 - 17.18 11/30/2017
-----------------
(1) We did not grant any stock options to our Named
Executive Officers in 2010, 2009 or 2008. The option
awards reported in this table were granted before 2008
and are not disclosed in the Summary Compensation Table
and therefore constitute additional compensation not
otherwise reported in this Proxy Statement.
(2) The vesting dates of unvested and unexercisable stock
options are reported in the Vesting Dates of Unvested
and Unexercisable Stock Options at December 31, 2010
table on page 51.
(3) Pursuant to our Equity Plan, the exercise price is equal
to the closing market price on the date of grant. For
earlier grants made prior to the May 2007 Equity Plan
amendments, the exercise price was equal to the closing
market price on the day before the grant date.
(4) In March 2011, Mr. Leathers exercised 13,334 stock
options that were vested and exercisable at December 31,
2010.
49
Outstanding Equity Awards at December 31, 2010
------------------------------------------------------------------------------------------------
Stock Awards(1)
---------------
Equity Incentive Equity Incentive
Plan Awards: Plan Awards:
Number of Market Value Number of Market or Payout
Shares or of Shares or Unearned Shares, Value of Unearned
Units of Stock Units of Stock Units or Other Shares, Units or
That Have That Have Rights That Have Other Rights That
Name Not Vested (#) Not Vested ($)(2) Not Vested (#) Have Not Vested ($)
---- -------------- ----------------- ---------------- -------------------
Clarence L. Werner - - - -
Gary L. Werner 30,000(3) 678,000 - -
30,000(4) 678,000 - -
Gregory L. Werner 30,000(3) 678,000 - -
30,000(4) 678,000 - -
Derek J. Leathers 30,000(3) 678,000 - -
30,000(4) 678,000 - -
30,000(5) 678,000 - -
John J. Steele 5,000(3) 113,000 - -
10,000(4) 226,000 - -
-----------------
(1) The stock awards reported in this table are also disclosed
in the Summary Compensation Table and therefore do not
constitute additional compensation not otherwise reported in
this Proxy Statement.
(2) Market value is calculated by multiplying the number of
restricted stock shares that have not vested by the closing
market price of our common stock ($22.60 per share) on
December 31, 2010 (the last trading day of our fiscal year).
(3) This restricted stock award will vest according to a
staggered vesting schedule. Beginning on November 30, 2013
(three years after the November 30, 2010 grant date), the
restricted stock will vest annually in five increments of
20% each. The award will then become fully vested on
November 30, 2017. The restricted stock award is contingent
upon the recipient's continued employment with the Company
through each vesting date. If the recipient's employment
with us is terminated, each portion of restricted stock for
which the vesting date has not occurred will be forfeited
pursuant to our Equity Plan and the recipient's Restricted
Stock Award Agreement.
(4) This restricted stock award will vest according to a
staggered vesting schedule. Beginning on December 1, 2012
(three years after the December 1, 2009 grant date), the
restricted stock will vest annually in five increments of
20% each. The award will then become fully vested on
December 1, 2016. The restricted stock award is contingent
upon the recipient's continued employment with the Company
through each vesting date. If the recipient's employment
with us is terminated, each portion of restricted stock for
which the vesting date has not occurred will be forfeited
pursuant to our Equity Plan and the recipient's Restricted
Stock Award Agreement.
(5) This restricted stock award is scheduled to vest in its
entirety on July 31, 2013 (the fifth anniversary of the July
31, 2008 grant date), provided Mr. Leathers continues to be
employed with the Company through the vesting date. If he
is not employed with us at such time, all shares of
restricted stock will be forfeited upon the end of Mr.
Leathers' employment with us.
50
Vesting Dates of Unvested and Unexercisable
Stock Options at December 31, 2010
---------------------------------------------------
Name Options Vesting Vesting Date
---- --------------- ------------
Clarence L. Werner - -
Gary L. Werner - -
Gregory L. Werner - -
Derek J. Leathers 3,000 10/21/2011
5,000 11/29/2011
5,000 11/29/2012
6,250 11/29/2013
John J. Steele 2,250 10/21/2011
3,000 11/29/2011
3,000 11/29/2012
3,750 11/29/2013
Option Exercises for 2010
The following Option Exercises for 2010 table provides
information regarding stock options that were exercised by our
Named Executive Officers during 2010. The "value realized on
exercise" reflects the total pre-tax value realized by the
Named Executive Officers. This value is calculated by
subtracting the aggregate exercise price of the exercised
options from the aggregate market value of the shares of
common stock acquired on the exercise date. No restricted
stock awards vested during 2010 for any Named Executive
Officers. For that reason, the columns regarding vested stock
awards have been omitted from the table.
Option Exercises for 2010
---------------------------------------------------------------
Option Awards
-------------
Number of Shares Value Realized
Name Acquired on Exercise (#) on Exercise ($)
---- ------------------------ ---------------
Clarence L. Werner - -
Gary L. Werner 275,000 3,591,022
Gregory L. Werner 366,668 4,778,364
Derek J. Leathers 13,334 200,785
John J. Steele - -
51
Nonqualified Deferred Compensation for 2010
We established a nonqualified deferred compensation plan in
2005 for eligible key employees whose 401(k) Plan
contributions were limited by IRS regulations affecting highly
compensated employees. This plan is subject to the
requirements of Section 409A of the Internal Revenue Code and
is administered in good faith compliance with Section 409A.
The nonqualified deferred compensation plan also permits us to
make matching contributions to participant accounts. We did
not make any such matches in 2010 and have not done so since
adopting the plan.
Deferrals. Under the nonqualified deferred compensation plan,
eligible employees are permitted to defer a portion of their
base salary on a pre-tax basis. Beginning on January 1, 2010,
participants were also permitted to defer amounts from
performance-based compensation. Such deferred amounts must be
within the annual dollar limitations we establish. Through
December 31, 2008, the annual dollar limitations were
determined so that the combined sum of a highly compensated
participant's 401(k) Plan contributions and nonqualified
deferred compensation plan contributions would approximate the
maximum contribution amount available to non-highly
compensated employees who participate in the 401(k) Plan.
Beginning January 1, 2009, certain participants were allowed
to defer combined amounts that exceed the maximum 401(k)
Internal Revenue Code deferral limits for non-highly
compensated employees. Prior to the enrollment period for the
next year, management establishes maximum deferral limits that
correspond to participants' job titles (such as Senior Vice
President or Vice President). The maximum deferral limits for
the 2010 nonqualified deferred compensation plan year ranged
from $8,500 to $50,000, and such limits for the 2011 plan year
range from $8,500 to $52,000. The maximum deferral limit for
each of the Named Executive Officers was $50,000 for the 2010
plan year and is $52,000 for the 2011 plan year.
Earnings. Each participant in the nonqualified deferred
compensation plan selects one or more investment funds
available under the plan in which their contributed amounts of
deferred compensation are deemed to be invested. Deferred
compensation accounts will then accrue earnings based on the
return of the selected investment funds. The participant may
change how their deferred compensation is allocated to the
investment funds at any time, subject to limitations imposed
by the plan. Changes generally become effective as of the
first trading day following the change. We do not pay
preferential earnings or guarantee above-market earnings on
any investments made under the plan. Any appreciation or
depreciation in a plan participant's account is due solely to
the participant's contributions and the underlying performance
of the investment funds selected by the participant.
Distributions and "In Service" Withdrawals. At the time of
making their deferral election for the year, a participant
elects under his salary deferral agreement whether the
resulting deferred compensation will be distributed to him in
annual installments or a lump sum. Distributions are made
after the executive officer's retirement or termination from
the Company. Beginning January 1, 2010, participants who
separate from service with the Company (as described in the
plan) will generally not receive distributions from the plan
until 12 months after the separation date (the previous
distribution waiting period prescribed by the plan was six
months). Under certain circumstances, participants may also
elect to receive scheduled or hardship "in service"
withdrawals while still employed with us. The specific
distribution options in this case depend upon the plan
provisions. None of our Named Executive Officers received
distributions or "in service" withdrawals during 2010.
The Nonqualified Deferred Compensation for 2010 table on page
53 presents the following information related to our
nonqualified deferred compensation plan and Named Executive
Officer participants:
* Executive Contributions in 2010: Reflects voluntary
executive deferrals of base salary. These deferrals
are included in the "Salary" column of the Summary
Compensation Table.
52
* Company Contributions in 2010: No such contributions
were made.
* Aggregate Earnings in 2010: Reflects the earnings
and/or losses on account balances. None of the
earnings are above-market or preferential earnings and
were therefore not included in the Summary
Compensation Table.
* Aggregate Withdrawals and Distributions in 2010: No
withdrawals or distributions were made.
* Aggregate Balance as of December 31, 2010: Reflects
the total market value of the Named Executive
Officer's nonqualified deferred compensation account,
including such participant's contributions and
earnings to date.
Nonqualified Deferred Compensation for 2010
-------------------------------------------------------------------------------------------------
Aggregate Aggregate Aggregate
Executive Company Earnings Withdrawals/ Balance
Contributions Contributions (Losses) Distrib- at End of
Name in 2010 ($)(1) in 2010 ($) in 2010 ($)(2) utions ($) 2010 ($)(3)
---- -------------- ------------- -------------- ------------ -----------
Clarence L. Werner - - - - -
Gary L. Werner 16,980 - 7,643 - 71,386
Gregory L. Werner 8,502 - 6,338 - 66,123
Derek J. Leathers 49,125 - 12,902 - 107,686
John J. Steele 49,092 - 14,354 - 119,172
-----------------
(1) The amounts disclosed in this column are reported as compensation
and included within the amounts in the "Salary" column of the
Summary Compensation Table on page 46.
(2) We do not provide above-market or preferential earnings on
nonqualified deferred compensation plan balances; therefore, we
did not report any portion of these amounts in the Summary
Compensation Table pursuant to SEC rules.
(3) Of these balances, the following executive contributions were
reported in the "Salary" column of the Summary Compensation Table
in our proxy statements for 2008 and 2009: C.L. Werner, not
applicable; Gary Werner, $24,847; Greg Werner, $17,001; Derek
Leathers, $24,050; and, John Steele, $24,870.
PROPOSAL 4 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees of the Independent Registered Public Accounting Firm
The firm of KPMG LLP ("KPMG") is our independent registered
public accounting firm. The table on page 54 sets forth the
aggregate fees billed to us by KPMG for professional audit
services rendered in connection with the audit of our annual
financial statements and internal control over financial
reporting for 2010 and 2009. KPMG did not provide any other
services to us during those periods.
53
Independent Registered Public
Accounting Firm Fees for 2010 and 2009
---------------------------------------
2010 ($) 2009 ($)
-------- --------
Audit Fees 402,360 402,360
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total 402,360 402,360
Audit Fees. Audit fees consist of fees for (i) the audit of
our annual financial statements included in our Annual Reports
on Form 10-K for 2010 and 2009, (ii) review of our financial
statements included in our Quarterly Reports on Form 10-Q
during such periods and (iii) the audit of our internal
control over financial reporting during such periods.
Audit-Related Fees. Audit-related fees consist of fees (i)
for assurance and related services that are reasonably related
to the performance of the audit or the review of our financial
statements and are not reported under Audit Fees and (ii) fees
related to audit and attest services not required by laws or
regulations and consultations concerning financial accounting
and reporting standards.
Tax Fees. Tax fees are defined as fees for professional
services for tax compliance, tax advice and tax planning.
These services may include assistance regarding federal, state
and international tax compliance, tax return preparation, tax
audits and customs and duties.
The Audit Committee has reviewed KPMG's provision of services
and believes that these services are compatible with
maintaining the independence of KPMG. KPMG did not provide
any non-audit services for us in 2010.
The Audit Committee has approved KPMG as our independent
registered public accounting firm for 2011. Representatives
of KPMG will be present at the 2011 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.
Policy of Audit Committee Pre-Approval of Audit and Non-Audit
Services Performed by the Independent Registered Public
Accounting Firm
The Audit Committee is responsible for pre-approving all audit
and non-audit services provided by independent registered
public accounting firms. Prior to the engagement of an
independent registered public accountant for the next year's
audit, our management will submit to the Audit Committee for
approval an itemized list of all audit and non-audit services
expected to be rendered during such year and the budgeted fees
for such services. The Audit Committee then pre-approves
these services according to the categories of service in the
Independent Registered Public Accounting Firm Fees for 2010
and 2009 table above. When determining whether a service
should receive pre-approval, the Audit Committee considers
whether such services are consistent with the SEC rules
regarding auditor independence. In the event circumstances
arise and it becomes necessary to engage the independent
registered public accountants for additional services not
contemplated in the original pre-approval, the Audit Committee
will approve such additional services prior to the
commencement of the engagement and provision of such services.
54
Pursuant to its charter, the Audit Committee may delegate to
its Chair the pre-approval authority to address any requests
for pre-approval of services between Audit Committee meetings,
and such Chair must report any such pre-approval decisions to
the committee at its next meeting. Our management and
independent registered public accounting firm periodically
report to the full Audit Committee (i) the extent of services
provided by such accounting firm in accordance with this pre-
approval and (ii) the fees for services performed to date.
We did not pay any fees categorized as Audit-Related Fees, Tax
Fees or All Other Fees to KPMG during 2010 and 2009.
Accordingly, the Audit Committee did not approve any fees
during these periods that related to the pre-approval
provisions or the de minimis exception set forth in applicable
SEC rules.
Recommendation of the Board of Directors - Proposal 4
We are asking stockholders to ratify the appointment of KPMG
as our independent registered public accounting firm for 2011.
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 2011,
select a different independent registered public accounting
firm or terminate KPMG if the Audit Committee determines that
such a change would be in our best interests and those of our
stockholders.
The Board of Directors recommends that stockholders vote FOR
the ratification of the appointment of KPMG LLP as our
independent registered public accounting firm for the year
ending December 31, 2011. The Designated Proxy Holders of
proxies solicited by the Board in this Proxy Statement will
vote the proxies as directed on each proxy, or if no
instruction is made, for the ratification of the appointment
of KPMG LLP.
TRANSACTIONS WITH RELATED PERSONS
Review and Approval of Related Person Transactions
Our Governance Committee charter requires the Governance
Committee (each member of which is independent under
applicable NASDAQ listing standards and SEC rules) to oversee
administration of our policies with respect to related person
transactions and to review and approve all related person
transactions submitted to the Governance Committee when such
approval is required under the NASDAQ and SEC rules and
regulations. All related person transactions that are
required to be disclosed under SEC rules are disclosed in our
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;
55
* 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; or
* 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.
* 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. C.L. Werner, Chairman of Werner Enterprises,
Inc., is the sole trustee of the Trust. On February 8, 2007,
the Company entered into a revised Lease Agreement, effective
as of May 21, 2002 (the "Lease Agreement"), and a License
Agreement (the "License Agreement") with C.L. Werner in his
capacity as trustee. The Lease Agreement and License
Agreement were approved by the disinterested members of the
Board of Directors at the Board's February 8, 2007 meeting.
The Lease Agreement was originally entered into between the
parties on May 21, 2002 with a 10-year lease term commencing
June 1, 2002 (the "2002 Lease Agreement").
The Lease Agreement covers the lease of land comprising
approximately 35 acres (referred to as the "Lodge Premises"),
with improvements consisting of lodging facilities and a
sporting clay range which the Company uses for business
meetings and customer and vendor promotion. The 2002 Lease
Agreement provided for a non-exclusive license to use for
hunting purposes a contiguous portion of farmland comprising
approximately 580 acres (referred to as the "Farmland
Premises"). These license rights were deleted from the Lease
Agreement and incorporated into the License Agreement.
The Lease Agreement's current ten-year term expires May 31,
2012. The Lease Agreement gives the Company the option to
extend such agreement for two additional five-year periods,
through 2017 and 2022, respectively. Under the Lease
Agreement, the Company also makes annual rental payments of
one Dollar ($1.00) per year, and the Company is responsible
for the real estate taxes and maintenance costs on the Lodge
Premises. These costs totaled approximately $63,000 in 2010.
The terms of the Lease Agreement also permit C.L. Werner, in
his capacity as landlord, to receive as rent use of the Lodge
Premises and Farmland Premises for personal use.
Under the Lease Agreement, at any time during the lease or any
extension thereof, the Company has the option to purchase the
Lodge Premises from the Trust at its current market value,
excluding the value of all leasehold improvements the Company
made. The Company also has a right of first refusal to
purchase the Lodge Premises, or any part thereof, if the Trust
receives an offer from an unrelated third party to purchase
the Lodge Premises. The Trust has the option at any time
during the lease to demand that the Company exercise its
option to purchase the Lodge Premises. If the Company does
not elect to purchase the Lodge Premises as demanded by the
Trust, then the Company's option to purchase at any time
during the lease is forfeited; however, the Company will
retain the right of first refusal with respect to a purchase
offer from an unrelated third party. If the Company
terminates the Lease Agreement prior to the expiration of the
initial ten-year term and elects not to purchase the Lodge
Premises from the Trust, then the Trust agrees to pay the
Company the cost of all leasehold improvements, less
accumulated depreciation calculated on a straight-line basis
over the term of the Lease Agreement (ten years). If, at the
termination of the initial ten-year term or any of the two
56
five-year renewal periods, the Company has not exercised its
option to purchase the Lodge Premises accordingly, the
leasehold improvements become the property of the Trust.
However, the Company currently intends to exercise its option
to purchase the Lodge Premises at its current market value
prior to the completion of the initial ten-year lease period
or any of the two five-year renewal periods. The Company has
made leasehold improvements to the Lodge Premises of
approximately $6.3 million since the inception of leasehold
arrangements commenced in 1994.
The revisions to the Lease Agreement removed the provisions
relating to the Farmland Premises (including the description
of option to purchase rights described above), as of the
effective date of the 2002 Lease Agreement, and the Company
and the Trust entered into the separate License Agreement
defining the Company's respective rights to the Farmland
Premises. Under the License Agreement, the Company and its
invitees are granted a non-exclusive right to hunt and fish on
the Farmland Premises, for a term of one year, which is
automatically renewable unless either party terminates not
less than 30 days prior to the end of the current annual term.
The Trust agrees to use its best efforts to maintain a
controlled shooting area permit on the Farmland Premises while
the License Agreement is effective and to maintain the land in
a manner to maximize hunting cover for game birds. In
consideration of the license to hunt and fish on the Farmland
Premises, the Company agrees to pay the Trust an amount equal
to the real property taxes and special assessments levied on
the land and the cost of all fertilizer and seed used to
maintain the hunting cover and crops located on the land.
Such costs were approximately $54,000 for 2010.
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
2010, the Company employed four individuals whose total
compensation exceeded $120,000 and who are considered "related
persons" under Item 404 of Regulation S-K of the SEC. The
aggregate total compensation for these four individuals in
2010 was $848,455, which includes all elements of compensation
received by those individuals, including cash compensation,
equity awards, perquisites and other personal benefits and
forms of compensation. The Company also employed three other
related persons during 2010, none of whom received
compensation in excess of $120,000.
Independent Contractors. During 2010 the Company paid
$442,772 to WinRow Farms, which is owned by C.L. Werner's
brother, Vern Werner. WinRow Farms leased tractors and
drivers to us as independent contractors. The contracts for
these tractors were terminated in 2010. During 2010, the
Company sold used revenue equipment to WinRow Farms at a total
of $15,400. The payments to WinRow Farms are based on the
same per-mile settlement scale that is applied to the
Company's other similar independent contractors. The Company
believes the revenue equipment sales prices are no less
favorable to the Company than those that could be obtained
from unrelated third parties, on an arm's length basis.
Personal Use of Corporate Aircraft. C.L. Werner utilized the
Company's corporate aircraft for non-business purposes during
2010. Mr. Werner reimbursed the Company $211,681 representing
the aggregate incremental cost associated with the personal
flights. This cost is higher than the imputed income
calculated for income tax purposes in accordance with IRS
rules. The incremental cost is computed using the average
hourly variable costs of operating the Company's aircraft,
which primarily consists of fuel and maintenance.
OTHER BUSINESS
We do not know of any business that will be presented for
consideration at the 2011 Annual Meeting of Stockholders other
than that described in this Proxy Statement. As to other
business (if any) that may properly be brought before the
57
meeting, we intend that proxies solicited by the Board will be
voted in accordance with the best judgment of the person
voting the proxies.
STOCKHOLDER PROPOSALS
Only stockholders of record as of March 21, 2011, are entitled
to bring business before the 2011 Annual Meeting. All
stockholder proposals must be in writing and include the
following:
(i) A brief description of the business the
stockholder desires to bring before the Annual
Meeting;
(ii) The reason for conducting such proposed business
at the Annual Meeting;
(iii) The name and address of the stockholder proposing
such business;
(iv) The class and number of shares of our common stock
beneficially owned by such stockholder; and
(v) Any material interest of the stockholder in such
business.
To be eligible for inclusion in our 2012 Proxy Materials:
Stockholder proposals intended to be presented at our 2012
Annual Meeting of Stockholders must be in writing and be
received by the Corporate Secretary at our executive offices
on or before December 9, 2011. The inclusion of any such
stockholder proposal in our 2012 Proxy Materials will be
considered untimely if received after December 9, 2011.
Stockholders may submit nominations for directors to be
elected at the 2012 Annual Meeting of Stockholders, and such
nominations must be contained in a written proposal and
delivered to the Corporate Secretary at our executive offices
by December 9, 2011. For a description of the process of
submitting stockholder nominations for director, refer to the
Director Nomination Process section under Corporate Governance
in this Proxy Statement.
All written stockholder proposals (whether for the
recommendation of director candidates or the proposal of other
business) are subject to and must comply with the applicable
rules and regulations under the Exchange Act, including Rule
14a-8. Rule 14a-8 provides requirements for the inclusion of
stockholder proposals in company-sponsored proxy materials.
The address for our Corporate Secretary and executive offices
is provided in the Contacting the Corporate Secretary and
Executive Offices section of this Proxy Statement.
Regarding proposals not to be included in our 2011 Proxy
Materials: Stockholders may present proposals for
consideration at the 2011 Annual Meeting of Stockholders that
are not intended for inclusion in the 2011 Proxy Materials.
These proposals must be received in writing by the Corporate
Secretary at our executive offices no later than April 20,
2011 for the 2011 Annual Meeting. Pursuant to our By-Laws,
stockholders may make other proposals at the Annual Meeting to
be discussed and considered; but unless the Corporate
Secretary receives the written proposal at least twenty days
before the Annual Meeting, such proposal will be considered
untimely and will not be acted upon. Instead, the proposal
will be laid over for action at the next stockholder meeting
held thirty days or more later.
STOCKHOLDERS SHARING THE SAME ADDRESS
We have adopted a procedure called "householding" pursuant to
SEC rules and regulations. Under this procedure, we will
deliver only one copy of this Proxy Statement and our 2010
Annual Report to multiple stockholders who share the same
mailing address (if they appear to be members of the same
family), unless we have received contrary instructions from an
affected stockholder. Stockholders who participate in
householding will continue to receive separate Proxies. This
procedure reduces our printing and mailing costs and fees.
58
We will promptly deliver, upon written or oral request, a
separate copy of this Proxy Statement and the 2010 Annual
Report to any stockholder at a shared address to which a
single copy of either of those documents was delivered. To
request a separate copy of this Proxy Statement and/or the
2010 Annual Report, stockholders may write or call our
Corporate Secretary at our executive offices. You will not be
charged for any requested copies. This Proxy Statement and
our 2010 Annual Report are also available on our website.
Householding of proxy materials occurs when you provide us or
your broker with a written householding consent. Stockholders
who would like to revoke their householding consent and
receive a separate copy of our subsequent proxy statements and
annual reports to stockholders should contact their broker (if
the shares are held in a brokerage account) or our Corporate
Secretary (if you hold registered shares). Stockholders who
share a mailing address and receive multiple copies of proxy
materials but would like to participate in householding and
receive a single copy of our proxy materials should contact
their broker or our Corporate Secretary.
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES
Our Corporate Secretary is James L. Johnson. The mailing
address, telephone numbers and e-mail address for our
Corporate Secretary and executive offices are:
Werner Enterprises, Inc.
Attention: Corporate Secretary
Post Office Box 45308
Omaha, Nebraska 68145-0308
Telephone: (402) 895-6640
Toll-Free: (800) 228-2240
E-Mail: invrelations@werner.com
INTERNET WEBSITE AND AVAILABILITY OF MATERIALS
Our Internet website, as referred to in this Proxy Statement,
is: http://www.werner.com, under the "Investors" link. This
Proxy Statement, the Notice of Annual Meeting of Stockholders
and 2010 Annual Report (including our Annual Report on Form
10-K for 2010) 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.
-----------------
By Order of the Board of Directors
/s/ James L. Johnson
James L. Johnson
Omaha, Nebraska Executive Vice President, Chief
April 7, 2011 Accounting Officer and Corporate
Secretary
59
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
-------------------
PROXY
-------------------
This Proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders to be held Tuesday, May 10, 2011. The undersigned
stockholder hereby acts by proxy and appoints each of Clarence L. Werner
and Gary L. Werner to act as duly authorized attorneys-in-fact and proxies
(collectively, the "Designated Proxy Holders"), with full power of
substitution, to represent and vote, as the undersigned stockholder
directs herein, all shares of common stock of Werner Enterprises, Inc.,
that such stockholder is entitled to vote as of March 21, 2011 at the
Annual Meeting of Stockholders to be held on Tuesday, May 10, 2011
(including any adjournments or postponements thereof), and to vote all
such shares on any other business that properly comes before such meeting.
The proposals to be voted on in this Proxy are not related to, and are not
conditioned upon, the approval of other matters. The Board of Directors
of Werner Enterprises, Inc. submits and recommends a vote "for" each of
the following proposals:
1. Proposal 1 - Election of Class II directors. Check only one box. To
withhold authority to vote for any individual nominee(s), check "For
All Except" and write the number(s) of the nominee(s) on the line
below the box.
For All Withhold All For All Except
Nominees: [ ] [ ] [ ]
1. Gary L. Werner
2. Gregory L. Werner
3. Michael L. Steinbach
-----------------
2. Proposal 2 - To approve the advisory resolution on executive
compensation. Check only one box.
For Against Abstain
[ ] [ ] [ ]
3. Proposal 3 - To hold an advisory vote on the frequency of future
advisory votes on executive compensation. Check only one box.
Every Year Every Two Years Every Three Years Abstain
[ ] [ ] [ ] [ ]
4. Proposal 4 - To ratify the appointment of KPMG LLP as the independent
registered public accounting firm of Werner Enterprises, Inc. for the
year ending December 31, 2011. Check only one box.
For Against Abstain
[ ] [ ] [ ]
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 "FOR ALL" for Proposal 1, "FOR"
Proposals 2 and 4 and "EVERY THREE YEARS" for Proposal 3.
Please date, sign and print your name.*
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If held jointly:
--------------- -------- --------------- --------
Signature Date Signature Date
--------------- ---------------
Printed Name Printed Name
*When shares are held by joint tenants, both individuals should sign this
Proxy. When signing as an attorney, executor, administrator, trustee or
guardian, provide your full title. If the stockholder is a corporation or
partnership, provide the full corporate or partnership name by the name of
the authorized officer or person completing this Proxy.
Please mark, sign, date and promptly return this Proxy using the enclosed
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postage-paid return envelope.
-----------------------------
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting To Be Held on May 10, 2011: The Proxy Statement and
2010 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.