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 ENTEPRISES, INC.]
Post Office Box 45308
Omaha, Nebraska 68145-0308
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 2012
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Dear Stockholders:
Notice is hereby given that the 2012 Annual Meeting of
Stockholders (the "2012 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 8, 2012, 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 III directors to each serve for a
three-year term and one Class I director to serve for a
one-year term and until their respective successors are
elected and qualified.
2. To ratify the appointment of KPMG LLP as the Company's
independent registered public accounting firm for the
year ending December 31, 2012.
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March
19, 2012, will be entitled to receive notice of and to vote at
the 2012 Annual Meeting or any adjournment thereof.
Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting To Be Held on May 8, 2012: 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) 2012
Proxy Statement (including a proxy for voting) relating to the
2012 Annual Meeting and (ii) Annual Report to Stockholders for
the year ended December 31, 2011 (containing our Annual Report
on Form 10-K for 2011 filed with the U.S. Securities and
Exchange Commission on February 27, 2012). 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 2012 Annual Meeting, and you are encouraged to
review these documents before voting.
All stockholders are cordially invited and encouraged to
attend the 2012 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 2012 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 5, 2012 Accounting Officer & Corporate
Secretary
TABLE OF CONTENTS
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INTRODUCTION 1
Annual Meeting Information 1
Voting Information and Instructions 2
Expenses of Solicitation 4
Other Matters 4
PROPOSAL 1 - ELECTION OF DIRECTORS 5
Director Nominees 5
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 Board Committee Meetings and
Annual Meeting 12
Audit Committee 12
Compensation Committee 13
Nominating and Corporate Governance Committee 14
Stockholder Communications with the Board of Directors 14
Director Nomination Process 15
Director Compensation and Benefits 16
EXECUTIVE OFFICERS 18
Executive Officer Information 18
BENEFICIAL OWNERSHIP OF COMMON STOCK 20
Stock Ownership of Directors, Executive Officers and
Certain Beneficial Owners 20
Section 16(a) Beneficial Ownership Reporting Compliance 22
EXECUTIVE COMPENSATION 22
Compensation Discussion and Analysis 22
Employment Arrangements 39
Arrangements and Potential Payments Upon Termination or
Change in Control 39
Report of the Compensation Committee 41
Summary Compensation Table 41
All Other Compensation for 2011 43
Grants of Plan-Based Awards for 2011 44
Outstanding Equity Awards at 2011 Year-End 44
Option Exercises for 2011 48
Nonqualified Deferred Compensation for 2011 48
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 50
Fees of the Independent Registered Public Accounting Firm 50
Policy of Audit Committee Pre-Approval of Audit and
Non-Audit Services Performed by the Independent
Registered Public Accounting Firm 51
Report of the Audit Committee 51
Recommendation of the Board of Directors - Proposal 2 53
TRANSACTIONS WITH RELATED PERSONS 53
Review and Approval of Related Person Transactions 53
Related Person Transactions 54
OTHER BUSINESS 55
STOCKHOLDER PROPOSALS 55
STOCKHOLDERS SHARING THE SAME ADDRESS 56
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES 57
INTERNET WEBSITE AND AVAILABILITY OF MATERIALS 57
i
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2012
________________________
INTRODUCTION
We are sending you this Proxy Statement in connection with the
solicitation of proxies by our Board of Directors (the
"Board") for the 2012 Annual Meeting of Stockholders of Werner
Enterprises, Inc. The 2012 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, 2011 (the
"2011 Annual Report") on or about April 5, 2012.
In this Proxy Statement, we also use the following terms and
abbreviations:
* We refer to Werner Enterprises, Inc. as the "Company,"
"we," "our" or "us."
* The 2012 Annual Meeting of Stockholders is referred to
as the "Annual Meeting" or "2012 Annual Meeting."
* References to "2011" and "for the year ended December
31, 2011" mean the Company's fiscal year for the
period beginning January 1, 2011 and ending December
31, 2011.
* The term "executive officers" means those executives
listed in the Executive Officer Information section
beginning on page 18 of this Proxy Statement and on
our website.
* "Named Executive Officers" means the five executive
officers identified on page 23 of the Compensation
Discussion and Analysis section of this Proxy
Statement.
* "Proxy Materials" means and consist of this Proxy
Statement, the proxy relating to the 2012 Annual
Meeting and the 2011 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 2011 Annual Report are available
on our website. In these Proxy Materials, we refer to certain
reports and forms that we have filed with the U.S. Securities
and Exchange Commission (the "SEC"). All of our SEC filings
are available on our website, as well as the SEC website at
www.sec.gov. You may also request copies of our SEC filings
and Proxy Materials from our Corporate Secretary at the
contact information provided in the Contacting the Corporate
Secretary and Executive Offices section of this Proxy
Statement.
Annual Meeting Information
The 2012 Annual Meeting of Stockholders will be held at 10:00
a.m. local Central Daylight time on Tuesday, May 8, 2012, at
the Embassy Suites Omaha-La Vista Hotel & Conference Center,
and at any adjournment(s) thereof. The Embassy Suites Omaha-
La Vista Hotel & Conference Center is located at 12520
Westport Parkway in La Vista, Nebraska, which is situated near
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U.S. Interstate 80 and the Giles Road exit (Exit 442) in La
Vista's Southport development. Should you require additional
directions to attend the meeting and vote in person, you may
contact our Corporate Secretary at the contact information
provided in the Contacting the Corporate Secretary and
Executive Offices section on page 57. At the meeting, members
of our management team will discuss our results of operations
and business plans. Members of our Board of Directors are
also expected to be present to answer your questions.
Voting Information and Instructions
Record Date. The record date for the Annual Meeting is March
19, 2012. On the record date, 72,857,376 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 19, 2012. Each share has one vote
on each matter. Our stock transfer books will not be closed.
On March 19, 2012, the closing market price of our common
stock as reported on the NASDAQ Global Select MarketSM was
$25.50 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.
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.
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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 director
(Proposal 1);
(ii) FOR the ratification of the appointment of KPMG
LLP as our independent registered public
accounting firm for 2012 (Proposal 2); and
(iii) In accordance with the best judgment of the
named proxies on any other matters properly
brought before the Annual Meeting or any
adjournment thereof. See Other Matters in this
Proxy Statement.
For purposes of the 2012 Annual Meeting, Clarence L. ("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
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
3
shares on certain routine matters but cannot vote your shares
on the election of directors, corporate governance proposals
and other non-routine matters; these broker non-votes will not
be treated as votes cast at the Annual Meeting on non-routine
matters. With respect to the proposals described in this
Proxy Statement to be voted on at the 2012 Annual Meeting, the
election of directors ("Proposal 1") constitutes a non-routine
matter. The ratification of the appointment of our
independent registered public accounting firm ("Proposal 2")
is considered a routine matter.
The following votes are required for the two proposals
discussed in this Proxy Statement to be voted on at the Annual
Meeting, assuming the presence of a quorum:
Proposal 1. Directors are elected when they receive a
plurality of affirmative votes cast by holders of the
outstanding shares of our common stock, present or
represented by proxy, at the Annual Meeting and
entitled to vote thereon. This means the four nominees
receiving the highest number of votes at the Annual
Meeting, after taking into account any cumulative
voting, will be elected to the Board. Abstentions and
broker non-votes will not impact the election of
directors.
Proposal 2. The ratification of the appointment of KPMG
LLP as our independent registered public accounting
firm requires the affirmative vote of a majority of the
outstanding shares of our common stock, present or
represented by proxy, at the Annual Meeting and
entitled to vote thereon. Abstentions will be counted
as votes cast and will have the same effect as a vote
against the matter. Broker non-votes will also be
counted as votes cast; however, because brokers may
vote on this routine matter, no broker non-votes are
expected in connection with this Proposal 2.
Voting Results. Our Corporate Secretary has been appointed by
the Board to serve as the inspector of election for the Annual
Meeting. Proxies and ballots will be received and tabulated
by the inspector of election. Preliminary voting results will
be announced at the Annual Meeting, and the inspector of
election will then calculate final voting results. We will
disclose the Annual Meeting voting results on a Current Report
on Form 8-K filed with the SEC in accordance with SEC rules.
Stockholder Privacy. As a matter of Company policy, we keep
all proxies, ballots and voting tabulations that identify
individual stockholders private and confidential. Such
documents are available for examination only by the inspector
of election and certain Company representatives who assist
with processing proxies and tabulating the vote. Stockholder
votes are not otherwise disclosed within the Company, to
members of our Board or to third parties, except as may be
necessary to meet legal requirements.
Expenses of Solicitation
We will bear all costs of this proxy solicitation, including
expenses for the preparation, printing, assembly and mailing
of materials. Some of our directors, officers and employees
may also solicit proxies in person or by the Internet,
telephone or other electronic communications, and they will
not receive any additional compensation for making such
solicitations. We will also reimburse brokerage firms and
other custodians and fiduciaries for all reasonable expenses
incurred for forwarding Proxy Materials to beneficial owners
of our stock in accordance with customary practice. Your
cooperation in promptly voting your shares and submitting your
proxy will help to avoid additional expense.
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
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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 the Board may be
divided into two or three separate classes of directors. Each
class must consist of not less than two, nor more than five,
directors, and the classes should be nearly equal in number as
possible. Our By-Laws provide for 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, 2014; and Class III, 2012.
Director Nominees
You will be asked to elect three directors in Class III to
each serve for a three-year term expiring at the 2015 Annual
Meeting of Stockholders and until his respective successor is
elected and qualified. The three current Class III directors
whose terms will expire at the 2012 Annual Meeting are:
Clarence L. Werner Patrick J. Jung Duane K. Sather
All three current Class III directors have been nominated for
re-election at the 2012 Annual Meeting for terms expiring at
the 2015 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified. In
addition, Dwaine J. Peetz, Jr., M.D., has been nominated as a
Class I director for election at the 2012 Annual Meeting for a
one-year term expiring at the 2013 Annual Meeting of
Stockholders and until his successor is elected and qualified.
On May 10, 2011, former independent director of the Company,
Mr. Gerald H. Timmerman, retired from our Board of Directors.
The Nominating and Corporate Governance Committee of the Board
subsequently recommended for the Board's approval Dr. Peetz as
a nominee to fill the directorship vacancy created by Mr.
Timmerman's departure. Our Board then appointed Dr. Peetz to
the vacant directorship position. Dr. Peetz was recommended
by Mr. C.L. Werner for consideration by the Nominating and
Corporate Governance Committee and the Board to fill this
vacancy. The individual qualifications, skills and experience
of the nominees for director are discussed in their respective
biographies in the following Director Information section.
Each of the nominees designated in this Proxy Statement has
indicated his 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.
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Director Information
Identified in the table below are the director nominees and
the directors whose terms will continue after the 2012 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 Emeritus of Werner Enterprises, Inc. 2012 III
Gary L. Werner Chairman of Werner Enterprises, Inc. 2014 II
Gregory L. Werner Vice Chairman & Chief Executive Officer 2014 II
of Werner Enterprises, Inc.
Kenneth M. Bird, Ed.D. President & Chief Executive Officer 2013 I
of the Avenue Scholars Foundation
Patrick J. Jung Chief Operating Officer of Surdell & Partners LLC 2012 III
Dwaine J. Peetz, Jr., Former Thoracic Surgeon; Former Clinical Assistant 2012 I
M.D.(1) Professor of Surgery at Creighton University School
of Medicine and University of Nebraska Medical
Center
Duane K. Sather Former President of Sather Trucking Corporation 2012 III
and Former Chairman of Sathers Inc.
Michael L. Steinbach Owner of Steinbach Farms & Equipment Sales 2014 II
and Steinbach Truck & Trailer
______________
(1) On May 10, 2011, former independent director of the
Company, Mr. Gerald H. Timmerman, retired from our Board
of Directors. The Nominating and Corporate Governance
Committee of the Board subsequently recommended for the
Board's approval Dr. Peetz as a nominee to fill the
directorship vacancy created by Mr. Timmerman's departure
and to thereby serve on the Audit, Compensation and
Nominating and Corporate Governance Committees of the
Board. Our Board then appointed Dr. Peetz to the vacant
directorship position and, in connection, to such three
Board committees.
CLARENCE L. WERNER, 74, 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 served as President until 1984.
He also served as our Chief Executive Officer from 1984 until
February 2007. Mr. Werner was our Chairman from 1984 until he
resigned as Chairman and was named to his present position as
Chairman Emeritus in May 2011. 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
6
well as his significant and extensive knowledge of the
transportation industry. Mr. Werner is the father of brothers
Gary Werner and Greg Werner.
GARY L. WERNER, 54, 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 & Chief Operating Officer. Mr. Werner
was then named Vice Chairman in 1991 and held such position
until being named Chairman in May 2011. He has served as our
Chairman 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, 52, was elected as a director of the
Company in 1994. He served as our Treasurer from 1982 to
1986, became Vice President in 1984, and was promoted to
Executive Vice President in 1996. Mr. Werner has also
directed revenue equipment maintenance for Werner Enterprises,
Inc. and its predecessor since 1981 and became responsible for
our management information systems in 1993. Mr. Werner served
as our President from April 1997 until May 2011 and as our
Chief Operating Officer from 1999 to 2007. Mr. Werner was
named our Chief Executive Officer in February 2007, a position
he continues to hold, and he became our current Vice Chairman
in May 2011. 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
Vice Chairman & 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.
KENNETH M. BIRD, ED.D., 64, was appointed by our Board of
Directors in 2002 to fill a vacant directorship position and
was subsequently elected by the stockholders. Dr. Bird is
currently the President & Chief Executive Officer of the
Avenue Scholars Foundation, a nonprofit entity that serves
youth education in Omaha, Nebraska. Dr. Bird previously
served as Superintendent of Westside Community Schools in
Omaha, Nebraska from 1992 until May 2008, and he also held
various administrative positions with Westside Community
Schools since 1981. Prior to 1981, 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, 64, was elected as a Company director in
2003. He 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
7
Group LLC's business involves real estate, money management
and emerging markets. He also works with several civic boards
and organizations. Mr. Jung previously served as a member of
the board of directors of Supertel Hospitality, Inc. from
April 2005 through January 2012. 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 both our Audit Committee and Compensation
Committee.
DWAINE J. PEETZ, JR., M.D., 61, was appointed by our Board of
Directors in May 2011 to fill a vacant directorship position.
Dr. Peetz is a thoracic surgeon from Omaha, Nebraska and
retired from practice in 2011. He was formerly the Assistant
Clinical Professor of Surgery at the Creighton University
School of Medicine and the Clinical Assistant Professor of
Surgery at the University of Nebraska Medical Center, both of
which are nationally recognized and accredited medical schools
located in Omaha, Nebraska. Dr. Peetz graduated from the
Creighton University School of Medicine, completed his
residency in thoracic surgery at the University of Michigan in
Ann Arbor, Michigan and became certified by the American Board
of Surgery in 1981 and American Board of Thoracic Surgery in
1983. During his distinguished career, Dr. Peetz acquired
comprehensive leadership, board and administrative experience.
He has been active in various professional organizations,
served as the chairman and a member of several affiliated
hospital committees and authored numerous medical publications
and abstracts. From 1991 to 1999, he was also the chairman of
the department of surgery for the Alegent Health Bergan Mercy
Medical Center in Omaha, Nebraska. Because of these
professional experiences, Dr. Peetz brings to the Board an
important and unique point of view regarding organizational
and operational management issues, business administration and
financial knowledge, public health and safety expertise and
valuable management insight. His sophisticated professional
perspective and overall administrative adeptness are
beneficial and contribute to the collective qualifications,
skills and experience of our Board of Directors.
DUANE K. SATHER, 67, was elected as a Company director in
2006. Mr. Sather's extensive knowledge and experience in our
industry is partially attributable to his service as President
of Sather Trucking Corporation from 1972 to 1996. From 1988
to 1996, he also served as Chairman of Sathers Inc., a
wholesale candy 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 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.
MICHAEL L. STEINBACH, 57, 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
8
experience, contribute to our Board's collective
qualifications, skills and experience.
Recommendation of the Board of Directors - Proposal 1
The Board of Directors recommends that stockholders vote FOR
---
the election of each 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 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, Gary Werner serves as our Chairman, and Greg Werner
serves as our Vice Chairman & Chief Executive Officer ("CEO").
Each individual was elected by our Board at its 2011 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 Gary 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
9
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
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, 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 2011 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 considers the
Company's risks in determining whether our executive
compensation program encourages executive officers to take
unreasonable risks relating to our business. Our Nominating
and Corporate Governance Committee reviews risks related to
legal and regulatory compliance concerning various corporate
governance matters. The risk oversight roles of the Board,
Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee did not impact our leadership
structure because our Board is comprised of a majority, and
such Board committees consist entirely, of independent
directors.
Corporate Governance Policies and Materials
The members of our Board of Directors possess a variety of
experience, knowledge and judgment, and the diversity of these
skills complements our corporate governance structure. Our
corporate governance policies are designed to enable effective
and thorough decision-making and to allow proper and
comprehensive monitoring of the Company's performance and
compliance. These policies are also meant to provide our
Board with practical guidelines that are regularly reviewed
and can be appropriately revised and updated in response to
regulatory developments and evolving business and governance
practices. Our fundamental corporate governance principles
10
and practices are set forth in our Code of Corporate Conduct
and other policies, each of which is available on our website.
Pursuant to SEC rules, we will disclose amendments to or
waivers from our Code of Corporate Conduct, as they relate to
our CEO, Chief Financial Officer ("CFO") and Chief Accounting
Officer ("CAO"), on our website or in a Current Report on Form
8-K filed with the SEC. To date, we have not granted any
waivers from our Code of Corporate Conduct to the CEO, CFO or
CAO.
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 each committee's members appointed by the Governance
Committee at the Board's first meeting held thereafter. The
Board may also make further changes to committee assignments
from time to time as the Board deems appropriate or as advised
by the Governance Committee. 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 2011 or in 2012 prior to the date of this Proxy Statement.
Each committee charter is available on our website.
The composition of each Board committee is as follows:
2011 Board Committee Membership
-------------------------------------------------------------------------------
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
Dwaine J. Peetz, Jr., M.D. X X X X
Duane K. Sather X Chair X
Michael L. Steinbach X X X
11
The numbers of Board and Board committee meetings and
executive sessions conducted in 2011 were:
2011 Board and Board Committee Meetings
-------------------------------------------------------------------------------
Audit Compensation Governance Board of
Committee Committee Committee Directors
--------- ------------ ---------- ---------
Number of Meetings 4 5 2 4
Number of Executive Sessions 4 1 - 4
Attendance at Board and Board Committee Meetings and Annual
Meeting
During 2011, each incumbent director attended and participated
in at least 75% or more of the aggregate of (i) the total
number of meetings of the Board of Directors (held during the
period for which he has been a director) and (ii) the total
number of meetings held by all Board committees on which he
served (during the periods that 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 2011, and we anticipate that
most, if not all, of our directors will attend the 2012 Annual
Meeting. The number of meetings conducted in 2011 by the
Board and each Board committee are provided in the 2011 Board
and Board Committee Meetings table above.
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 and fees;
* Overseeing the work of our internal audit department
and independent auditors; and
* Assessing and maintaining procedures for the anonymous
submission of complaints concerning accounting and
auditing irregularities.
The Audit Committee meets in executive session with our
independent auditors and also in a separate executive session
with the head of our internal audit department. These
meetings are conducted without the presence of our management
and typically occur at each quarterly Audit Committee meeting.
In 2011, 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 our quarterly earnings press
releases.
12
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 2011 in
this Proxy Statement on page 51.
Compensation Committee
The Compensation Committee is responsible for determining and
approving the compensation of our Chairman and our Vice
Chairman & CEO. The Compensation Committee also approves the
compensation of all other executive officers after considering
the recommendations of our Vice Chairman & CEO (who also seeks
and considers input from the Chairman Emeritus and the
Chairman). (Although we do not classify Chairman Emeritus as
an executive officer position, the Compensation Committee also
determines and approves the compensation for our current
Chairman Emeritus because of C.L. Werner's previous long-
standing service as an executive officer of the Company.)
Prior to making any such compensation determinations, the
committee performs an annual review of all compensation
elements for our executive officers and Chairman Emeritus,
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 Determination
Process within the Compensation Discussion and Analysis
section, the Compensation Committee delegated to our Vice
Chairman & CEO certain authority that allows him to modify the
base salaries of executive officers within ranges established
by the Compensation Committee. The Compensation Committee
annually reviews and approves any such base salary changes at
its year-end meeting. The Compensation Committee also reviews
and determines the compensation of the Chairman Emeritus,
Chairman and Vice Chairman & CEO independent of each such
officer's participation or consultation. These tasks were
performed by the Compensation Committee in 2011.
During 2011, 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
13
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
2011 in this Proxy Statement on page 41. For more information
about the Compensation Committee's activities and the
retention of Pay Governance in 2011, 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
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 2011 or on the date
of this Proxy Statement. In 2011, 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 2011, none of our executive officers served
on the board of directors or compensation committee of any
other entity whose executive officer(s) served as a member of
our Board of Directors or Compensation Committee.
Nominating and Corporate Governance Committee
Our Governance Committee is comprised only of directors whom
the Board has determined satisfy the applicable SEC and NASDAQ
independence requirements. The Governance Committee is
responsible for the director nomination process. These duties
include assisting the Board in identifying, evaluating and
recruiting qualified potential candidates for election to the
Board. The Governance Committee recommends for the Board's
approval the director nominees for any election of directors.
This process is described further in the Director Nomination
Process section.
The Governance Committee is also responsible for various
corporate governance matters, including the development and
oversight of our corporate governance policies, compliance
practices and ethical standards of conduct for our directors,
officers and employees. The committee makes recommendations
to the Board regarding our corporate governance processes and
reviews our Code of Corporate Conduct. The Governance
Committee also monitors the effectiveness, and advises on the
composition, structure and size, of our Board and Board
committees. It also annually assists our Board with its
independence and expertise determinations. The Governance
Committee has oversight of the administration of our policies
regarding "related person transactions" (as discussed under
the Transactions with Related Persons section herein), and the
committee reviews and approves or disapproves any such
transaction when such approval is required by SEC and NASDAQ
rules and regulations. A more complete description of the
Governance Committee's functions is provided in its charter.
Stockholder Communications with the Board of Directors
The Board of Directors established a process by which
stockholders and other parties may communicate directly with
members of the Board and/or the independent directors as a
group. This process is described in our Stockholder
Communications Procedure for Communicating with the Board of
Directors, which is included on our website. You may direct
any matter intended for the Board and/or independent directors
by writing to the intended recipients in care of our Corporate
14
Secretary at our executive offices. Generally, the Corporate
Secretary will forward any received correspondence according
to the stockholder's instructions. The Corporate Secretary,
however, reserves the right not to forward any abusive,
threatening or otherwise inappropriate materials. A majority
of our independent directors approved the process for
collecting stockholder communications received by our
Corporate Secretary on the Board's behalf.
Director Nomination Process
Generally, the Governance Committee considers director
candidates recommended by Board members, management and
stockholders. Nominees for the Board of Directors are then
selected by the Governance Committee according to the process
summarized below and described in our current Nominating and
Corporate Governance Committee Directorship Guidelines and
Selection Policy (the "Directorship Guidelines Policy") and
Policy Regarding Director Recommendations by Stockholders (the
"Stockholder Recommendation Policy"). Both policies are
available free of charge on our website. Stockholders may
also request a copy of these policies by contacting our
Corporate Secretary at our executive office address or
telephone number provided in this Proxy Statement. Each
policy was approved by the Board of Directors and is
administered by the Governance Committee. The Governance
Committee evaluates the policies regularly and may update and
revise the policies from time to time, subject to Board
approval, when appropriate and as applicable legal or listing
standards change.
Stockholder Recommendations for Director Candidates. With
respect to director candidates identified by stockholders, the
Stockholder Recommendation Policy applies. In accordance with
the Stockholder Recommendation Policy, the Governance
Committee will consider candidates proposed by only "qualified
stockholders." A "qualified stockholder" is an individual
stockholder or group of stockholders that has beneficially
owned at least 2% of our issued and outstanding common stock
for at least one year (and will hold such percentage of stock
through the date of the annual meeting, and if the recommended
candidate is elected, through his or her term of service).
Such stock ownership is determined as of the date the
stockholder recommendation is submitted. You must submit
stockholder director candidate recommendations in a written
proposal, and each proposal must include all information
required and requested by the Stockholder Recommendation
Policy.
In order for a stockholder's candidate to be evaluated and
considered as a prospective nominee, you must submit your
recommendation to our Corporate Secretary not less than 120
days before the one-year anniversary of the release date of
the previous year's proxy statement. (For example, the
release date of the 2011 proxy statement was April 7, 2011.
Stockholder recommendations intended for consideration for the
director elections at the 2012 Annual Meeting had to be
submitted on or before December 9, 2011.) Stockholder
recommendations for director nominees must be submitted no
later than the close of business on December 6, 2012 for the
2013 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
15
information for our Corporate Secretary is provided in the
Contacting the Corporate Secretary and Executive Offices
section on page 57.
Desirable Skills and Traits for Director Candidates.
Generally, candidates for director positions should possess
the following skills and traits:
* Relevant business and financial expertise and
experience, including an understanding of fundamental
financial statements;
* The highest character and integrity and a reputation
for working constructively with others;
* Sufficient time to devote to meetings and consultation
on Board matters; and
* Freedom from conflicts of interest that would
interfere with the candidate's performance as a
director.
The Governance Committee evaluates prospective nominees
against certain minimum standards and qualifications, as
identified in the Directorship Guidelines Policy, and the
committee will strive to recommend director nominees who
satisfy these standards and qualifications in large part. The
basic standards and qualifications set forth in the
Directorship Guidelines Policy include but are not limited to
those skills and traits listed above and as follows:
* Representation of our stockholders as a whole;
* Background that contributes to a Board comprised of
individuals with varied occupational experience and
perspective;
* Leadership experience and ability to exercise sound
business judgment;
* Accomplishments, credentials and recognition in their
respective field;
* Contributions to the Board's skills, competency and
qualifications through expertise in an area of
business significant to 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 and composition. In this
respect, we broadly construe diversity to mean an array of
opinions, perspectives, skills, personal and professional
experiences and backgrounds and other distinguished
attributes. Diversity is not solely limited 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.
16
Our 2011 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 below. This compensation package did not change from
2010 to 2011. 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.
Independent Director Retainers and Fees
-------------------------------------------------------------------------------------------
Fee or Retainer Amount Paid in 2011
--------------- -------------------
Annual Board Retainer for Board Membership $15,000
(paid in quarterly installments of $3,750 each)
Annual Retainer for the $10,000
Audit Committee Chair (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 2011. The compensation received
by each independent director varies because such compensation
is based on (i) the number of Board and Board committee
meetings held, (ii) the Board committees on which the
independent director serves and (iii) whether the individual
is the Chair of the Audit Committee or the Compensation
Committee.
The Director Compensation for 2011 table on page 18 presents
the compensation earned by each individual serving as an
independent director during 2011 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 2011 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 42 for
our Chairman and our Vice Chairman & CEO. The compensation
paid by the Company to our Chairman Emeritus is provided in
the Family Members of Executive Officers and Directors section
on page 55.) In 2011, 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
17
benefit, pension or nonqualified deferred compensation plan of
the Company. For these reasons, we have omitted those columns
from the table.
Director Compensation for 2011
-----------------------------------------------------------------------------------------------------
Non-Equity
Fees Earned or Incentive Plan All Other
Name Paid in Cash ($)(1) Compensation ($) Compensation ($) Total ($)
---- ------------------- ---------------- ---------------- ---------
Kenneth M. Bird, Ed.D. 33,000 - - 33,000
Patrick J. Jung 48,000 - - 48,000
Dwaine J. Peetz, Jr., M.D.(2) 17,500 - - 17,500
Duane K. Sather 29,000 - - 29,000
Michael L. Steinbach 29,000 - - 29,000
Gerald H. Timmerman(2) 15,500 - - 15,500
______________
(1) The amounts in this column include fees and retainers
received for Board membership, Board committee membership
and for service as the Audit Committee Chair and
Compensation Committee Chair.
(2) On May 10, 2011, Mr. Timmerman retired from our Board,
and Dr. Peetz was appointed to the directorship position
vacated by Mr. Timmerman. During 2011, each individual
received compensation only for those Board and Board
committee meetings held during his respective period of
service and received two quarterly installments of the
annual retainer for board membership.
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.
Executive Officer Information
The table on page 19 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.
18
Executive Officers
---------------------------------------------------------------------------------------------
Name Position with the Company Age
---- ------------------------- ---
Gary L. Werner Chairman 54
Gregory L. Werner Vice Chairman & Chief Executive Officer 52
Derek J. Leathers President & Chief Operating Officer 42
H. Marty Nordlund Senior Executive Vice President-Specialized Services 50
Robert E. Synowicki, Jr. Executive Vice President-Driver Resources 53
John J. Steele Executive Vice President, Treasurer & Chief Financial Officer 54
Jim S. Schelble Executive Vice President-Sales and Marketing 51
James A. Mullen Executive Vice President & General Counsel 43
James L. Johnson Executive Vice President, 48
Chief Accounting Officer & Corporate Secretary
For information regarding the business experience of Gary
Werner and Greg Werner, please refer to Director Information
under the Proposal 1 - Election of Directors section of this
Proxy Statement.
DEREK J. LEATHERS joined the Company in 1999 as the Managing
Director-Mexico Division. During his tenure with us, he has
served in the following positions: (i) Vice President-Mexico
Division in 2000; (ii) Vice President-International in 2001;
(iii) Senior Vice President-International in April 2003; (iv)
Senior Vice President-Van Division and International in July
2003; (v) Executive Vice President-Van Division and
International in 2004; and (vi) Senior Executive Vice
President and President of Werner Global Logistics in 2006.
The Board then appointed Mr. Leathers our Chief Operating
Officer in May 2008 and President in May 2011, and he
currently serves in both positions. Prior to joining the
Company, Mr. Leathers was Vice President of Mexico Operations
for two years at Schneider National, a large truckload
carrier, and he held various other management positions during
his eight-year career at Schneider National.
H. MARTY NORDLUND joined us in 1994 as an account executive.
He then received the following promotions within the Company:
(i) Director of Dedicated Fleet Services in 1995; (ii) Senior
Director of Dedicated Fleet Services in 1997; (iii) Vice
President-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 & Chief Financial Officer in 1991; (iii)
Executive Vice President & Chief Financial Officer in March
1996; and (iv) Executive Vice President & Chief Operating
Officer in November 1996. Mr. Synowicki was appointed
Executive Vice President & Chief Information Officer in 1999,
and he was named to his current position as 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
19
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 & Corporate Secretary in 1994; (iii) Vice
President, Treasurer & Chief Financial Officer in 1996; and
(iv) Senior Vice President, Treasurer & Chief Financial
Officer in 2004. He was named to his current position as
Executive Vice President, Treasurer & Chief Financial Officer
in 2005. Mr. Steele was employed by the independent public
accounting firm of Arthur Andersen & Co. as a certified public
accountant from 1979 until his employment with the Company in
1989.
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 & General
Counsel of Litigation. In June 2010, he was promoted to
Executive Vice President & General Counsel. Before becoming
employed by the Company, Mr. Mullen was an attorney with
Fraser Stryker Law Firm in Omaha, Nebraska from 1993 to 1997.
From 1997 until his employment with us, he was a partner with
Lefler and Mullen, and later Mullen and Mullen, law firms in
Omaha, Nebraska.
JAMES L. JOHNSON joined the Company in 1991 as Manager of
Financial Reporting. Since that time, Mr. Johnson was
appointed to the following positions with us: (i) Assistant
Controller in 1992; (ii) Director of Accounting in 1994; (iii)
Corporate Secretary & Controller in 1996; (iv) Vice President,
Controller & Corporate Secretary in 2000; and (v) Senior Vice
President, Controller & Corporate Secretary in 2005. He was
named to his current position as Executive Vice President,
Chief Accounting Officer & Corporate Secretary in July 2010.
Mr. Johnson was employed by the independent public accounting
firm of Arthur Andersen & Co. as a certified public accountant
from 1985 until his employment with us in 1991.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Stock Ownership of Directors, Executive Officers and Certain
Beneficial Owners
The Beneficial Ownership table on page 21 sets forth certain
information as of March 19, 2012, with respect to the
beneficial ownership of our common stock by:
(i) Each of our directors and director nominees;
(ii) Each of our Named Executive Officers;
(iii) Each person known to us to beneficially own more
than 5% of the outstanding shares of our common
stock; and
(iv) All current executive officers, directors and
director nominees as a group.
On March 19, 2012, we had 72,857,376 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
20
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 22.
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) 22,737,518 100,000 22,837,518 31.3%
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%
Kenneth M. Bird, Ed.D. 500 - 500 *
Patrick J. Jung 2,000 - 2,000 *
Dwaine J. Peetz, Jr., M.D. 15,000 - 15,000 *
Duane K. Sather 7,000 - 7,000 *
Michael L. Steinbach - - - *
Derek J. Leathers 7,118 68,750 75,868 *
John J. Steele 7,929 43,250 51,179 *
James A. Mullen 2,143 5,500 7,643 *
All executive officers, 27,685,530 583,250 28,268,780 38.5%
directors and director
nominees as a group
(15 persons)(3)(4)
*Indicates beneficial ownership of less than 1%.
21
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 19, 2012 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 2012 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 19, 2012.
(2) The percentages are based upon 72,857,376 shares, which
equal our outstanding shares as of March 19, 2012. In
accordance with SEC rules, for individuals who hold
options exercisable within 60 days of March 19, 2012, 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
22,834,518 shares; sole dispositive power for 7,833,268
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 2011.
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.
22
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 (other than the CEO
and CFO) who were serving as executive officers as of December
31, 2011. Our five Named Executive Officers are identified in
the table below.
2011 Named Executive Officers
--------------------------------------------------------------------------------------
Name Position with the Company
---- -------------------------
1. Gary L. Werner Chairman
2. Gregory L. Werner Vice Chairman & Chief Executive Officer
3. Derek J. Leathers President & Chief Operating Officer
4. John J. Steele Executive Vice President, Treasurer & Chief Financial Officer
5. James A. Mullen Executive Vice President & General Counsel
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 2011 from 2010. We believe this 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 Groups and Benchmarking
section within the Compensation Discussion and Analysis. Our
2011 financial statements are included in our Annual Report on
Form 10-K for 2011 filed with the SEC on February 27, 2012.)
In 2011, we achieved significantly improved financial results
compared to 2010. The Company believes our executive
compensation program for the Named Executive Officers was
conducive in helping us achieve a strong financial performance
in 2011, including net income in excess of $100 million for
the first time in our Company's history.
The table below summarizes and compares our key 2011 and 2010
financial results, and the footnotes to such table are
provided on page 24.
2011 and 2010 Financial Results - Summary & Comparison
------------------------------------------------------------------
2011(1) 2010(1) Change (%)
------- ------- ----------
Total Revenues $2,002,850 $1,815,020 10%
Net Income $102,757 $80,039 28%
Earnings Per Diluted Share $1.40 $1.10 28%
Operating Ratio(2) 91.3% 92.6%
Return on Assets 8.3% 6.6%
Return on Equity 14.5% 11.1%
23
2011 and 2010 Financial Results - Summary & Comparison - Continued
------------------------------------------------------------------
(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, each
executive's individual performance and peer group executive
compensation in relation to their financial results in making
its decisions on total compensation for our Named Executive
Officers. As shown in the Summary Compensation Table on page
42, total 2011 annual compensation for our Named Executive
Officers increased 11% in the aggregate from 2010, compared to
a 28% increase in net income and a 28% increase in earnings
per diluted share. Our total stockholder return for 2011 was
10%, compared to an average of negative 13% for our
competitive peer group. Our three-year average annual total
stockholder return was 19% (2009 to 2011), in comparison to a
three-year annual average of 12% 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
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 2011 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 20th 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 was at
the 65th percentile when compared to the compensation of their
peers at the companies in our competitive peer group, while
our net income was at the 82nd percentile. Our competitive
peer group is provided on page 33, and our executive chairman
peer group is explained on page 34.
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 contribute 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 2011, we awarded restricted stock under our Equity Plan to
our Named Executive Officers. Perquisites and benefits also
provide for the wellness of our executive officer team. We
24
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.
Consideration of Stockholder Say-on-Pay Votes. At the
Company's Annual Meeting held in May 2011, the Board asked
Company stockholders to indicate on an advisory and nonbinding
basis whether they approve the Company's executive
compensation (a "say-on-pay resolution") and how frequently
they prefer the Company to conduct such votes in the future.
These proposals were contained in the Company's 2011 proxy
statement dated April 7, 2011, in accordance with Section 14A
of the Exchange Act.
Voting results on our say-on-pay resolution overwhelmingly
approved the compensation of our named executive officers,
with more than 95% of the stockholder votes cast in favor of
our say-on-pay resolution. The Company and its Compensation
Committee believe this affirms our stockholders' support of
the Company's approach to executive compensation and executive
compensation program objectives. While such vote is advisory
and nonbinding, the Board and Compensation Committee value our
stockholders' opinions expressed in such vote and consider the
voting outcome in making executive compensation decisions.
Following such vote, the Compensation Committee accordingly
retained the Company's executive compensation program
structure in determining 2011 executive compensation, by
maintaining its emphasis on both more meaningful long-term
stockholder value and executive compensation elements that
attract and help to retain a talented executive officer team
whose interests align closely to those of our stockholders.
In addition, a majority of the stockholder votes cast on the
frequency of future advisory votes to approve executive
compensation were voted in favor of conducting such votes once
every three years. While such vote is advisory and
nonbinding, the Board resolved to hold an advisory, nonbinding
stockholder vote to approve executive compensation once every
three years, and the next such vote will be held at our 2014
Annual Meeting of Stockholders.
2011 Executive Compensation Program and Objectives. Our
executive compensation program is designed to achieve the
following primary objectives:
* Attract, motivate and retain talented high-quality
executives who contribute to the advancement of our
strategic, operational and financial goals and to our
long-term success in today's competitive markets and
industry.
* Reward our executive officers for their individual
performance, leadership and contribution to the
achievement of our overall business objectives.
* Support our Mission Statement, 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.)
25
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
2011 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 2011 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
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.
26
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 2011
base salaries of our Named Executive Officers are
disclosed in the Summary Compensation Table. On May
10, 2011, in connection with the appointment of C.L.
Werner to Chairman Emeritus and his continued
employment with the Company in such capacity, the
Compensation Committee approved a $355,000 decrease to
his base salary. C.L. Werner is no longer a named
executive officer as a result of these changes. Also
on May 10, 2011, the Compensation Committee approved a
$150,000 increase to Gary Werner's base salary, in
connection with his promotion to Chairman, and a
$100,000 increase to Mr. Leathers' base salary, in
connection with his promotion to President. The base
salaries of our Named Executive Officers for 2011 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. Gary
Werner's base salary was at the 33rd percentile when
compared to base salaries in our executive chairman
peer group. The base salaries of our other four Named
Executive Officers averaged at the 83rd percentile when
compared to the base salaries for similar positions
with companies in our competitive peer group. During
its meeting in November 2011, the Compensation
Committee increased Mr. Steele's base salary by $10,000
for 2012 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 did not make any other changes
to Named Executive Officer base salaries in 2011.
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
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 Vice Chairman & 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
27
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 2011, our Compensation Committee approved
and awarded annual cash bonuses to the Named Executive
Officers under our discretionary annual cash bonus
program. The annual cash bonuses of Gary Werner and
Mr. Leathers were increased by the Compensation
Committee by $70,000 and $60,000, respectively, in 2011
to reflect their increased responsibilities as a result
of their promotions in May 2011. Greg Werner's annual
cash bonus for 2011 remained unchanged from 2010. The
annual cash bonuses for Mr. Steele and Mr. Mullen for
2011 were increased by the Compensation Committee to
reward them for their individual performance and for
their contributions to the Company attaining record net
income in 2011. Each of our Named Executive Officers
is a member of our leadership team that successfully
helped us improve our profitability and achieve net
income in excess of $100 million in 2011 for the first
time in our Company's history. The performance-based
compensation for Gary Werner was at the 17th percentile
when compared to the executive chairman peer group.
The average of our other four Named Executive Officers,
excluding Gary Werner, is at the median for similarly
positioned executives of the companies in our
competitive peer group.
The Compensation Committee also compared total cash
compensation for all of our Named Executive Officers to
that of our executive chairman peer group and our
competitive peer group when determining performance-
based compensation awards. The total cash compensation
of Gary Werner was at the 16th percentile of the
executive chairman peer group and our other four Named
Executive Officers averaged at the 66th percentile for
similar positions with the competitive peer group
companies.
In making its 2011 annual cash bonus decisions, the
Compensation Committee compared our total stockholder
return for year-to-date 2011 (at the time of the
meeting in November 2011) to the performance of
companies within our competitive peer group. Compared
to our competitive peer group, our total stockholder
return was at the 90th percentile for the year-to-date
period. The Compensation Committee also determined
that our overall financial performance met with
management's expectations. The annual cash bonuses
awarded to our Named Executive Officers in 2011 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
development. Accordingly, the Compensation Committee
granted long-term equity awards to our executive
officers in 2011.
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.
28
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.
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 37 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
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.
29
In July 2011, the Compensation Committee granted 40,000
shares of restricted stock to Mr. Leathers. The first
20,000 shares of this restricted stock award vest 12
months after the grant date, and the remaining 20,000
shares vest 18 months after the grant date. Thus, the
grant will become fully vested on January 29, 2013.
The Compensation Committee awarded these restricted
shares to Mr. Leathers with a shortened vesting period
to increase his stock ownership in the Company, which
better aligns his interests with that of the
stockholders, and to recognize his individual
performance, leadership and contributions to the
success of the Company, as well as to recognize his
promotion to President.
When deciding upon the long-term incentive compensation
of our Named Executive Officers in November 2011, the
Compensation Committee considered the information
regarding competitive peer group long-term incentive
compensation that was included in the Pay Governance
executive compensation surveys. Gary Werner's average
long-term incentive compensation during the past three
years was at the 15th percentile when compared to the
executive chairman peer group. The average long-term
incentive compensation during the past three years for
the four Named Executive Officers, excluding Gary
Werner, was at the 54th percentile 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, 2011 and our performance during that time
compared to other companies within our competitive peer
group. The Compensation Committee also took into
account our 2011 year-to-date total stockholder return
of 10% which was at the 90th percentile when compared
to the total stockholder return of our competitive peer
group and our three-year (2008-2010) average total
stockholder return of 21%, which is at the 95th
percentile when compared to our competitive peer group.
On November 28, 2011, the Compensation Committee, in
its sole discretion, awarded Gary Werner and Greg
Werner each 30,000 shares, Mr. Steele 6,000 shares and
Mr. Mullen 7,000 shares of restricted stock in
accordance with our Equity Plan. (Mr. Leathers was not
awarded any restricted shares in November 2011 as a
result of his earlier grant in July 2011.) These
shares were awarded to each Named Executive Officer in
acknowledgement of their respective contributions to
our overall success and accomplishments during 2011.
Pursuant to the Restricted Stock Award Agreements with
the restricted stock recipients, the restricted stock
is subject to service-based vesting provisions.
Beginning one year after the grant date of each award,
the restricted stock will vest annually in five
increments of 20% each. The awards will then become
fully vested on November 28, 2016. After comparing the
vesting periods of our stock awards to those of our
competitive peer group, the Compensation Committee
established a shorter vesting period for the restricted
stock awarded in November 2011 than the awards in 2010
and 2009. Please refer to the Restricted Stock Vesting
Periods table on page 38 for a comparison of vesting
periods for the 2009, 2010 and 2011 awards. 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 2011.
Please refer to the Summary Compensation Table and
Grants of Plan-Based Awards for 2011 table for further
details concerning long-term incentive compensation
awarded to our Named Executive Officers.
30
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 (and any related tax gross-ups) provided to
the Named Executive Officers is shown in the "All Other
Compensation" column of the Summary Compensation Table
and detailed in the All Other Compensation for 2011
section of this Proxy Statement.
The perquisites offered under our 2011 executive
compensation program were as follows:
* Accounting, Legal and Tax Services. Our Chairman
and our Vice Chairman & CEO utilize accounting,
legal and tax (income tax preparation) services
provided by us, and we are not reimbursed for such
services. The unreimbursed amounts are included
in compensation for the Chairman and the Vice
Chairman & CEO and are based on our estimate of
the costs incurred by the Company for our
personnel to provide these services.
* Country Club Membership. In 2011, 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 and the Vice Chairman & CEO are
permitted personal use of our corporate aircraft
provided they reimburse the Company (we do not
provide non-reimbursed personal use to either of
these executives). When the Chairman or the Vice
Chairman & 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 or the Vice Chairman &
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, Mr. Leathers
and Mr. Steele used the corporate aircraft for
personal benefit in 2011. The reimbursements for
such use by C.L. Werner are discussed under
Transactions with Related Persons. Greg Werner
reimbursed the Company for the higher incremental
cost of his personal use in 2011. Mr. Leathers'
and Mr. Steele's personal use of the corporate
aircraft includes only those occasions when his
respective spouse accompanied him on Company-
related business trips at the request of the Vice
Chairman & CEO, and the value of Mr. Leathers'
and Mr. Steele's personal corporate aircraft use
is not included in the All Other Compensation for
2011 table on page 43 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 for personal purposes
subject to the approval of the Chairman or the
Vice Chairman & CEO. In 2011, Mr. Leathers used
the corporate condominium for personal benefit,
31
the value of which is included in the All Other
Compensation for 2011 table.
* Company Vehicle. We provide each Named Executive
Officer with one Company vehicle for business and
personal use. We are responsible for paying the
operating expenses of these vehicles, which
include costs such as fuel, repairs and
maintenance, insurance and licensing and
registration. Mr. Mullen does not use a Company-
provided vehicle.
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 2011, 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 2011, we partially paid the
healthcare insurance premiums of Mr. Leathers.
These premiums are disclosed under All Other
Compensation for 2011.
* 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 Chairman and the Vice
Chairman & CEO do not receive a matching
contribution from us for the 401(k) Plan. 401(k)
Plan Company-made matching contributions for our
other Named Executive Officers are detailed under
All Other Compensation for 2011.
* 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 2011 section identifies matching
amounts made for Named Executive Officers who
participate in this plan.
* Executive Nonqualified Excess Plan. We offer
participation in the Executive Nonqualified Excess
Plan (the "nonqualified deferred compensation
plan") to key managerial employees because their
401(k) Plan contributions are limited under
federal income tax rules applicable to highly
compensated employees. We believe these
executives should have other similar means of
saving for retirement on a tax-deferred basis.
Our nonqualified deferred compensation plan
enables these highly compensated employees,
including our Named Executive Officers, to
contribute 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 2011.
Role of the Compensation Consultant. In 2011, our
Compensation Committee directly retained and engaged Pay
Governance as its compensation consultant. Pay Governance is
an independent outside executive compensation consulting firm
32
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 2011, 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.
Competitive 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 include but are 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 16 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 2011, it added Swift Transportation Company
to the peer group, because it competes directly with us in the
truckload transportation industry and data on the company is
now available as Swift Transportation Company became publicly
traded in December 2010. The remainder of the peer group did
not change from 2010 to 2011. Our competitive peer group for
2011 is shown in the table below.
2011 Competitive Peer Group
-------------------------------------------------------------------------------------------
Arkansas Best Hub Group Old Dominion Freight Line
Celadon Group J.B. Hunt Transport Services Pacer International
C.H. Robinson Worldwide, Inc. Knight Transportation Saia
Con-Way Landstar System Swift Transportation Company
Covenant Transportation Marten Transport Universal Truckload
Group, Inc. Services, Inc.
Heartland Express
In 2011, our Compensation Committee applied the competitive
peer group criteria to the 16 peer group companies. Upon
doing so, we found that our net income, market capitalization
and revenues were at the 82nd percentile, 75th percentile and
66th percentile, respectively, compared to our competitive
peer group; as a result, we compare each element of
compensation and total direct compensation against the 75th
percentile of this peer group.
33
In 2011, the Compensation Committee utilized a second peer
group (executive chairman peer group), different from the
competitive peer group identified above, for evaluating the
executive Chairman position of Gary Werner. This second peer
group is comprised of publicly traded companies in the S&P
MidCap 400r index that have a similar non-CEO executive
chairman position.
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 were at
the 48th percentile of the 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 2011, 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 also compares
total annual cash and total direct compensation to that paid
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 Vice Chairman &
CEO may also modify compensation for certain executives within
the Compensation Committee parameters described below.
When determining total compensation, we apply a consistent
approach for all Named Executive Officers. The structure and
levels of our executive compensation program are determined,
in large part, by considering all elements of compensation,
rather than only a few components in isolation. Our
Compensation Committee evaluates each element individually and
also takes into account the position and current total direct
compensation of the individual being considered. (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 Vice Chairman
& 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
34
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. The
Compensation Committee meets annually (near the end of
the year) to review the compensation of our 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 and Vice Chairman & CEO. Our
Compensation Committee assesses the executive
compensation information compiled by the independent
outside consultant (Pay Governance) when developing
compensation packages for our Chairman and our Vice
Chairman & 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 and the Vice Chairman & CEO. The
Vice Chairman & 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 Vice Chairman & CEO
is responsible for the financial performance of the
entire Company. Our Chairman and our Vice Chairman &
CEO are also eligible for all of the same compensation
programs, perquisites and benefits as our other Named
Executive Officers.
Our Chairman and our Vice Chairman & CEO do not
participate in the Compensation Committee's
deliberations or decisions with regard to his own
respective compensation or the compensation of any
other such Named Executive Officer having the title of
Chairman or of Vice Chairman & CEO.
Compensation of Other Named Executive Officers. The
Compensation Committee reviews the competitive market
compensation data for our peer group compiled by the
independent outside consultant (Pay Governance) each
year. 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 Vice Chairman & CEO that
permits him to adjust the base salaries of the other
Named Executive Officers. The Vice Chairman & CEO does
not have authority to modify his own base salary or
that of the Chairman. After our Compensation Committee
defines the cash compensation pay ranges, the Vice
Chairman & CEO may then make changes to the other Named
Executive Officer base salaries during the following
35
year, provided such changes are within the parameters
of the pay ranges designated by the Compensation
Committee. Any proposed changes that do not fall
within the established pay ranges require the approval
of the Compensation Committee before any such changes
become effective. At the Compensation Committee's
annual compensation review meeting, the Vice Chairman &
CEO presents to our Compensation Committee his year-end
total cash compensation recommendations for the other
Named Executive Officers, and such recommendations
include any base salary changes made by the Vice
Chairman & CEO during the year. Our Compensation
Committee then reviews and approves such
recommendations. (For example, our Compensation
Committee established cash compensation pay ranges in
November 2011 for fiscal year 2012. The Vice Chairman
& CEO has delegated authority to modify base salaries
throughout 2012 within these ranges. In November or
December 2012, the Compensation Committee will review
the Vice Chairman & CEO's total cash compensation
recommendations for the other Named Executive Officers,
and such recommendations will include these base salary
changes.) During 2011, our Vice Chairman & 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 Vice Chairman & CEO participates in the
Compensation Committee's discussions regarding the
compensation and performance of the other Named
Executive Officers. The Compensation Committee values
the Vice Chairman & 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 Vice Chairman & 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 Vice Chairman & CEO may
seek and consider input from the Chairman Emeritus and
Chairman. However, other than the Vice Chairman & CEO,
no other Named Executive Officer participates in 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
36
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.
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,
although the Compensation Committee has granted equity
awards the last three years at its regular year-end
meeting. The grant date is generally the same date as
the meeting at which the Compensation Committee decides
to grant equity awards. The Compensation Committee
also considers the timing of such decisions to ensure
that awards occur when neither the recipient nor the
Compensation Committee possess material nonpublic
information.
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
37
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. All
outstanding stock options granted to our Named
Executive Officers vest over a six-year period and
expire after ten years. The only stock option awards
that have not fully vested are those awarded to Messrs.
Leathers, Steele and Mullen in 2007. Of the initial
2007 grant, 20% will vest on November 29, 2012 and 25%
will vest on November 29, 2013, at which time the 2007
grant will become fully vested.
The restricted stock granted by the Compensation
Committee is generally subject to a service-based
periodic vesting schedule. The service-based vesting
schedules for the 2009 to 2011 restricted stock awards
are provided in the Restricted Stock Vesting Periods
table below. 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. None of our restricted stock awards
give the recipient any voting or dividend rights until
such stock fully vests, nor do they have any post-
vesting sales restrictions.
Restricted Stock Vesting Periods
------------------------------------------------------------
2009-2010 July November
Grants: 2011 Grant: 2011 Grant:
Amounts Amount Amount
Years from Grant Date Vested Vested Vested
--------------------- --------- ----------- -----------
1 Year (12 Months) - 50% 20%
18 Months - 50% -
2 Years (24 Months) - - 20%
3 Years (36 Months) 20% - 20%
4 Years (48 Months) 20% - 20%
5 Years (60 Months) 20% - 20%
6 Years (72 Months) 20% - -
7 Years (84 Months) 20% - -
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
2011, 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 2011 table also provide information
regarding equity compensation awarded to our Named
Executive Officers.
38
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 over 7% 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 32. Effective January
1, 2011, the maximum annual contribution level for all
employees increased from $10,000 to $20,000. This
increase enables all 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 21.
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 2011 qualified as deductible under
Section 162(m), except for $96,406 paid to Greg Werner.
Our aggregate cost of the lost tax deduction that
resulted from exceeding the Section 162(m)
deductibility limit in 2011 was approximately $40,000.
Employment Arrangements
Each of our Named Executive Officers and other executive
officers has been an employee of the Company for at least ten
years, with the exception of Mr. Mullen, who joined the
Company in 2006. None of our Named Executive Officers has any
type of written employment agreement with us.
Arrangements and Potential Payments Upon Termination or Change
in Control
Termination. None of our Named Executive Officers for 2011
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
39
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 may be
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,
2011 (the last day of our fiscal year) and a stock price of
$24.10 per share, which was the NASDAQ closing market price of
our common stock on the same date. These amounts are the same
for both events and are reflected in the "Potential Benefit"
column.
Potential Benefits Payable Under the Equity Plan
---------------------------------------------------------------------------------
Name Number of Unvested Shares Vesting Potential Benefit ($)(1)
---- --------------------------------- ------------------------
Gary L. Werner 90,000 (Restricted Stock) 2,169,000
Gregory L. Werner 90,000 (Restricted Stock) 2,169,000
Derek J. Leathers 11,250 (Stock Options) 3,210,850
130,000 (Restricted Stock)
John J. Steele 6,750 (Stock Options) 552,810
21,000 (Restricted Stock)
James A. Mullen 4,500 (Stock Options) 681,840
27,000 (Restricted Stock)
______________
(1) The actual exercise price of the stock options (as
specified in each Named Executive Officer's respective
award agreements) is $17.18 per share and varies from
the $24.10 closing market price used to calculate the
amounts in this table. Shares of restricted stock do
not have an exercise price, thus the potential benefit
was calculated using only the $24.10 closing market
price.
40
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 2011 of Werner Enterprises, Inc. (the "Company")
and this Proxy Statement for the Annual Meeting of
Stockholders to be held May 8, 2012, 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 2011.
Patrick J. Jung, Chair
Kenneth M. Bird, Ed.D.
Dwaine J. Peetz, Jr., M.D.
Summary Compensation Table
The Summary Compensation Table provided on page 42 presents
all elements of compensation for our Named Executive Officers
for 2009, 2010 and 2011 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).
* All Other Compensation: Represents the aggregate
amount of:
(i) Perquisites and other personal benefits having
an aggregate value in excess of $10,000;
(ii) Matching Company contributions to the 401(k)
Plan;
(iii) Insurance premiums paid by the Company;
(iv) Tax reimbursements; and
(v) Matching Company contributions under the
Employee Stock Purchase Plan.
You should read the Summary Compensation Table in conjunction
with the Compensation Discussion and Analysis section and the
tables and narrative descriptions that follow. Executive
deferrals to our 401(k) Plan and nonqualified deferred
compensation plan are included in the appropriate column
(typically the "Salary and/or Bonus" columns) for which the
compensation was earned.
The "Non-Equity Incentive Plan Compensation" and "Option
Awards" columns are omitted from the Summary Compensation
Table because we did not make any of these awards in 2009,
2010 or 2011. We have also removed the "Nonqualified Deferred
Compensation Earnings" column from the Summary Compensation
41
Table because none of the earnings on the nonqualified
deferred compensation balances of our Named Executive Officers
were above-market or preferential earnings.
Summary Compensation Table
-----------------------------------------------------------------------------------------------------------
Name and Stock All Other
Principal Position Year Salary Bonus ($)(1) Awards ($)(2) Compensation ($)(3) Total ($)
------------------ ---- ------ ------------ ------------- ------------------- ---------
Gary L. Werner - 2011 453,077 300,000 650,700 26,158 1,429,935
Chairman 2010 355,000 230,000 619,200 27,604 1,231,804
2009 368,654 205,000 543,000 23,459 1,140,113
Gregory L. Werner - 2011 720,000 350,000 650,700 26,406 1,747,106
Vice Chairman & CEO 2010 720,000 350,000 619,200 27,598 1,716,798
2009 749,442 300,000 543,000 22,302 1,614,744
Derek J. Leathers - 2011 484,388 320,000 932,000 37,461 1,773,849
President & COO 2010 401,696 260,000 619,200 39,553 1,320,449
2009 380,849 240,000 543,000 27,193 1,191,042
John J. Steele - 2011 225,000 130,000 130,140 17,681 502,821
Executive Vice President, 2010 210,000 110,000 103,200 15,478 438,678
Treasurer & CFO 2009 219,077 110,000 181,000 16,447 526,524
James A. Mullen - 2011 342,665 125,000 151,830 5,487 624,982
Executive Vice President
and General Counsel(4)
______________
(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 28,
2011; November 30, 2010; and December 1, 2009,
respectively.
(2) The stock awards reported in this column are also
disclosed in the Grants of Plan-Based Awards for 2011
table on page 44 and Outstanding Equity Awards at
December 31, 2011 tables on pages 45 and 46.
(3) Refer to the All Other Compensation for 2011 table on
page 43 for a more detailed explanation of the
compensation reported in this column.
(4) Mr. Mullen was not a Named Executive Officer in 2010 or
2009.
42
All Other Compensation for 2011
The table below shows the components of "all other
compensation" provided in 2011 to the Named Executive
Officers, as reported in the preceding Summary Compensation
Table.
All Other Compensation for 2011
-------------------------------------------------------------------------------------------------------------------
Company
Contributions
Perquisites Company to Employee Severance
& Other Tax Insurance Contributions Stock Payments/
Personal Reimburse- Premiums to 401(k) Purchase Accruals
Name Benefits ($) ments ($)(1) ($)(2) Plan ($) Plan ($) ($)(3) Total ($)
---- ------------ ------------ --------- ------------- ------------- --------- ---------
Gary L. Werner 18,402(4) 7,756 - - - - 26,158
Gregory L. Werner 18,650(5) 7,756 - - - - 26,406
Derek J. Leathers 18,710(6) 9,119 2,565 4,272 2,795 - 37,461
John J. Steele 7,721(7) 4,578 - 3,768 1,614 - 17,681
James A. Mullen - - - 3,873 1,614 - 5,487
______________
(1) The amounts reported in this column are the tax gross-
ups for Company vehicle use for Gary Werner and Greg
Werner. The amount reported for Mr. Leathers
represents tax gross-ups of $5,979 for Company vehicle
use; $631 for personal use of the corporate
condominium; and $2,509 for personal use of the
corporate aircraft when his spouse accompanied him on
Company-related business trips. The amount reported
for Mr. Steele represents tax gross-ups of $4,057 for
Company vehicle use and $521 for personal use of the
corporate aircraft when his spouse accompanied him on a
Company-related business trip.
(2) The amount reported in this column represents a partial
payment by the Company of Mr. Leathers' healthcare
insurance premiums.
(3) In 2011 we did not, and do not currently, have any
employment, termination or change in control
arrangements with any of the Named Executive Officers.
(4) Perquisites and personal benefits include $14,215 for
use of one Company vehicle and $4,187 for legal and
income tax preparation services.
(5) Perquisites and personal benefits include $14,215 for
use of one Company vehicle and $4,435 for legal and
income tax preparation services.
(6) Perquisites and personal benefits include $11,096 for
use of one Company vehicle; $6,239 for Company-paid
country club membership; and $1,375 for personal use of
corporate condominium.
(7) Perquisites and personal benefits include $7,721 for
use of one Company vehicle.
Our contributions on behalf of the Named Executive Officers to
the 401(k) Plan and Employee Stock Purchase Plan are made on
the same terms as provided to all of our eligible employees in
the United States. In addition to the above-mentioned
compensation, the Named Executive Officers also participated
in voluntary health and welfare benefit programs that are
available and comparable to such programs for all eligible
U.S. employees.
43
Grants of Plan-Based Awards for 2011
The following Grants of Plan-Based Awards for 2011 table sets
forth information regarding restricted stock and stock option
awards granted to Named Executive Officers under our Equity
Plan during 2011. Columns required by the SEC regulations are
omitted where there is no amount to report or such column is
inapplicable for all of the Named Executive Officers.
Grants of Plan-Based Awards for 2011
----------------------------------------------------------------------------------
All Other Stock Awards: Grant Date
Number of Shares of Fair Value of Stock and
Name Grant Date Stock or Units (#)(1) Option Awards ($)(2)
---- ---------- ----------------------- -----------------------
Gary L. Werner 11/28/2011 30,000 650,700
Gregory L. Werner 11/28/2011 30,000 650,700
Derek J. Leathers 07/29/2011 40,000 932,000
John J. Steele 11/28/2011 6,000 130,140
James A. Mullen 11/28/2011 7,000 151,830
______________
(1) The stock awards reported in these columns are also
disclosed in the Summary Compensation Table and
Outstanding Equity Awards at December 31, 2011 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 for the July 29, 2011 grant
was calculated based on a $0.05 quarterly dividend
amount per share and 0.4% risk-free interest rate. The
present value of estimated future dividends for the
November 28, 2011 grant was calculated based on a $0.05
quarterly dividend amount per share and 1.2% risk-free
interest rate. Further discussion of the valuation and
assumptions regarding our stock awards is provided in
Note 6 of our Consolidated Financial Statements in our
Annual Report on Form 10-K for 2011.
Outstanding Equity Awards at 2011 Year-End
The tables on pages 45 and 46 present information regarding
all outstanding equity awards held by each of the Named
Executive Officers as of December 31, 2011. The stock option
and restricted stock awards disclosed in these tables were
granted under our long-term incentive program.
For the vesting dates of the unvested restricted stock awards
disclosed in the Outstanding Equity Awards at December 31,
2011 (Stock Awards) table on page 46, please refer to the
Vesting Dates of Unvested Stock Awards at December 31, 2011
table on page 47. Both stock option and restricted stock
awards are contingent upon the recipient's continued
employment with the Company through each vesting date. If the
recipient's employment with us is terminated, each portion of
an award for which the vesting date has not occurred will be
forfeited pursuant to our Equity Plan and the recipient's
award agreement.
44
Outstanding Equity Awards at December 31, 2011
----------------------------------------------------------------------------------------------
Option Awards(1)
----------------
Equity
Incentive
Plan
Awards:
Number of Number of Number of
Securities Securities Securities
Underlying Underlying Underlying Option
Unexercised Unexercised Unexercised Exercise Option
Options: Options: Unearned Price Expiration
Name (#) Exercisable (#) Unexercisable Options (#) ($/Sh)(2) Date
---- --------------- ----------------- ----------- --------- ----------
Gary L. Werner 100,000 - - 18.33 05/20/2014
Gregory L. Werner 100,000 - - 18.33 05/20/2014
Derek J. Leathers 35,000 - - 18.33 05/20/2014
20,000 - - 16.68 10/22/2015
13,750 11,250(3) - 17.18 11/30/2017
John J. Steele 20,000 - - 18.33 05/20/2014
15,000 - - 16.68 10/22/2015
8,250 6,750(3) - 17.18 11/30/2017
James A. Mullen 5,500 4,500(3) - 17.18 11/30/2017
______________
(1) We did not grant any stock options to our Named
Executive Officers in 2011, 2010 or 2009. 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) 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.
(3) This stock option award vests according to a staggered
vesting schedule. Of the initial grant, 20% will vest
on November 29, 2012 and 25% will vest on November 29,
2013, at which time the grant will be fully vested.
45
Outstanding Equity Awards at December 31, 2011
--------------------------------------------------------------------------------------------------
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 (#)(2) Not Vested ($)(3) Not Vested (#) Have Not Vested ($)
---- ----------------- ----------------- ---------------- -------------------
Gary L. Werner 30,000 723,000 - -
30,000 723,000 - -
30,000 723,000 - -
Gregory L. Werner 30,000 723,000 - -
30,000 723,000 - -
30,000 723,000 - -
Derek J. Leathers 30,000(1) 723,000 - -
30,000 723,000 - -
30,000 723,000 - -
40,000 964,000 - -
John J. Steele 10,000 241,000 - -
5,000 120,500 - -
6,000 144,600 - -
James A. Mullen 10,000 241,000 - -
10,000 241,000 - -
7,000 168,700 - -
______________
(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, except for
30,000 shares that were granted to Mr. Leathers in 2008
and therefore constitute additional compensation not
otherwise reported in the Proxy Statement.
(2) The vesting dates of unvested restricted stock awards
are reported in the Vesting Dates of Unvested Stock
Awards at December 31, 2011 table on page 47.
(3) 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 ($24.10 per
share) on December 31, 2011 (the last trading day of
our fiscal year).
46
Vesting Dates of Unvested Stock Awards at December 31, 2011
--------------------------------------------------------------------------------
Stock Awards Vesting (#)
------------------------
Gary L. Gregory L. Derek J. John J. James A.
Vesting Date Grant Date Werner Werner Leathers Steele Mullen
------------ ---------- ------- ---------- -------- ------- --------
07/29/2012 07/29/2011 - - 20,000 - -
11/28/2012 11/28/2011 6,000 6,000 - 1,200 1,400
12/01/2012 12/01/2009 6,000 6,000 6,000 2,000 2,000
01/29/2013 07/29/2011 - - 20,000 - -
07/31/2013 07/31/2008 - - 30,000 - -
11/28/2013 11/28/2011 6,000 6,000 - 1,200 1,400
11/30/2013 11/30/2010 6,000 6,000 6,000 1,000 2,000
12/01/2013 12/01/2009 6,000 6,000 6,000 2,000 2,000
11/28/2014 11/28/2011 6,000 6,000 - 1,200 1,400
11/30/2014 11/30/2010 6,000 6,000 6,000 1,000 2,000
12/01/2014 12/01/2009 6,000 6,000 6,000 2,000 2,000
11/28/2015 11/28/2011 6,000 6,000 - 1,200 1,400
11/30/2015 11/30/2010 6,000 6,000 6,000 1,000 2,000
12/01/2015 12/01/2009 6,000 6,000 6,000 2,000 2,000
11/28/2016 11/28/2011 6,000 6,000 - 1,200 1,400
11/30/2016 11/30/2010 6,000 6,000 6,000 1,000 2,000
12/01/2016 12/01/2009 6,000 6,000 6,000 2,000 2,000
11/30/2017 11/30/2010 6,000 6,000 6,000 1,000 2,000
47
Option Exercises for 2011
The following Stock Option Exercises for 2011 table provides
information regarding stock options that were exercised by our
Named Executive Officers during 2011. 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 2011 for any Named Executive
Officers. For that reason, the columns regarding vested stock
awards have been omitted from the table.
Stock Option Exercises for 2011
--------------------------------------------------------------
Number of Shares Value Realized
Name Acquired on Exercise (#) on Exercise ($)
---- ------------------------ ---------------
Gary L. Werner - -
Gregory L. Werner - -
Derek J. Leathers 33,334 506,142
John J. Steele 12,500 205,069
James A. Mullen - -
Nonqualified Deferred Compensation for 2011
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 2011 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 2011 nonqualified deferred compensation plan year ranged
from $8,500 to $52,000, such limits for the 2012 plan year
range from $9,000 to $54,000. The maximum deferral limit for
each of the Named Executive Officers was $52,000 for the 2011
plan year and is $54,000 for the 2012 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
48
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. 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. 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 2011.
The Nonqualified Deferred Compensation for 2011 table below
(footnotes to such table are provided on page 50) presents the
following information related to our nonqualified deferred
compensation plan and Named Executive Officer participants:
* Executive Contributions in 2011: Reflects voluntary
executive deferrals of base salary and performance-
based compensation (annual bonus). These deferrals are
included in the "Salary" and "Bonus" columns of the
Summary Compensation Table.
* Company Contributions in 2011: No such contributions
were made.
* Aggregate Earnings in 2011: 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 2011: No
withdrawals or distributions were made.
* Aggregate Balance as of December 31, 2011: 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 2011
------------------------------------------------------------------------------------------------
Aggregate Aggregate Aggregate
Executive Company Earnings Withdrawals/ Balance
Contributions Contributions (Losses) Distrib- at End of
Name in 2011 ($)(1) in 2011 ($) in 2011 ($)(2) utions ($) 2011 ($)(3)
---- -------------- ------------- -------------- ------------ -----------
Gary L. Werner 17,004 - (3,064) - 85,326
Gregory L. Werner 8,502 - 2,562 - 77,187
Derek J. Leathers 52,000 - (5,005) - 154,181
John J. Steele 52,000 - 96 - 171,269
James A. Mullen 24,040 - (3,406) - 86,170
49
Nonqualified Deferred Compensation for 2011 - Continued
-------------------------------------------------------------
(1) The amounts disclosed in this column are reported as
compensation and included within the amounts in the
"Salary" and "Bonus" columns of the Summary Compensation
Table on page 42.
(2) We do not provide above-market or preferential earnings
on nonqualified deferred compensation plan balances;
therefore, we did not report any portion of these
amounts in the Summary Compensation Table pursuant to
SEC rules.
(3) Of these balances, the following executive contributions
were reported in the "Salary" and "Bonus" columns of the
Summary Compensation Table in our proxy statements for
2009 and 2010: Gary Werner, $34,004; Greg Werner,
$17,331; Mr. Leathers, $66,875; Mr. Steele, $67,000; and
Mr. Mullen, not applicable.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees of the Independent Registered Public Accounting Firm
The firm of KPMG LLP ("KPMG") is our independent registered
public accounting firm. The table below sets forth the
aggregate fees billed to us by KPMG for professional audit
services rendered in connection with the audit of our annual
financial statements and internal control over financial
reporting for 2011 and 2010. KPMG did not provide any other
services to us during those periods.
Independent Registered Public
Accounting Firm Fees for 2011 and 2010
----------------------------------------
2011 ($) 2010 ($)
-------- --------
Audit Fees 414,500 402,360
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total 414,500 402,360
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 2011 and 2010, (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.
50
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 2011.
The Audit Committee has approved KPMG as our independent
registered public accounting firm for 2012. Representatives
of KPMG will be present at the 2012 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 2011
and 2010 table on page 50. When determining whether a service
should receive pre-approval, the Audit Committee considers
whether such services are consistent with the SEC rules
regarding auditor independence. In the event circumstances
arise and it becomes necessary to engage the independent
registered public accountants for additional services not
contemplated in the original pre-approval, the Audit Committee
will approve such additional services prior to the
commencement of the engagement and provision of such services.
Pursuant to its charter, the Audit Committee may delegate to
its Chair the pre-approval authority to address any requests
for pre-approval of services between Audit Committee meetings,
and such Chair must report any such pre-approval decisions to
the committee at its next meeting. Our management and
independent registered public accounting firm periodically
report to the full Audit Committee (i) the extent of services
provided by such accounting firm in accordance with this pre-
approval and (ii) the fees for services performed to date.
We did not pay any fees categorized as Audit-Related Fees, Tax
Fees or All Other Fees to KPMG during 2011 and 2010.
Accordingly, the Audit Committee did not approve any fees
during these periods that related to the waiver of pre-
approval provisions or the de minimis exception set forth in
applicable SEC rules.
Report of the Audit Committee
The following report of the Audit Committee shall not be
deemed to be "soliciting material" or to otherwise be
considered "filed" with the U.S. Securities and Exchange
Commission, nor shall this report be subject to Regulation 14A
(other than as indicated) or to the liabilities set forth in
Section 18 of the Securities Exchange Act of 1934. This
report shall not be deemed to be incorporated by reference
into any prior or subsequent filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates it by
reference or treats it as soliciting material.
The Audit Committee of the Board of Directors is comprised of
Drs. Bird and Peetz and Messrs. Jung, Sather and Steinbach.
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
51
in its written charter adopted by the Board. A copy of the
charter is available on the Company's website.
The general duties of the Audit Committee include reviewing
the Company's financial information that will be presented to
stockholders and filed with the SEC; appointing the
independent registered public accounting firm; reviewing
services provided by the Company's independent auditors and
internal audit department; and evaluating the Company's
accounting policies and its system of established internal
controls. In its oversight of the independent registered
public accounting firm, the Audit Committee reviews the scope
of the audit, audit fees, auditor independence matters and the
extent to which the independent auditors are retained to
perform non-audit services for the Company.
The Audit Committee does not prepare financial statements or
perform audits, and its members are not auditors or certifiers
of the Company's financial statements. Rather, the Company's
management is responsible for the preparation, consistency,
integrity and fair presentation of the Company's financial
statements, accounting and financial principles, internal
control and disclosure control systems and procedures designed
to ensure compliance with applicable accounting standards,
laws and regulations. The Company's independent registered
public accounting firm, KPMG LLP, is responsible for
performing independent quarterly reviews and an independent
annual audit of the financial statements and internal control
over financial reporting and for expressing an opinion on the
conformity of those statements with accounting principles
generally accepted in the United States of America ("GAAP")
and an opinion on the effectiveness of the Company's internal
control over financial reporting.
In conjunction with the preparation of the Company's 2011
audited consolidated financial statements, the Audit Committee
met with both management and the independent auditors of the
Company to review and discuss significant accounting issues
and the audited consolidated financial statements included in
the Company's Annual Report on Form 10-K for 2011 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 2011, for filing with the SEC.
Patrick J. Jung, Chair
Kenneth M. Bird, Ed.D.
Dwaine J. Peetz, Jr., M.D.
Duane K. Sather
Michael L. Steinbach
52
Recommendation of the Board of Directors - Proposal 2
We are asking stockholders to ratify the appointment of KPMG
as our independent registered public accounting firm for 2012.
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 2012,
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, 2012. 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;
* An executive officer of the Company;
* A security holder who is known to be the beneficial
owner of more than 5% of our common stock;
* Any "immediate family member" of a director, director
nominee, executive officer or beneficial owner of more
than 5% of our common stock. "Immediate family
members" include spouse, children, parents, siblings,
in-laws, stepparents and stepchildren and any other
person sharing the related person's household; or
53
* 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 Emeritus 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. The Company exercised
its option to extend the term of the lease to May 31, 2017.
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 $90,000 in 2011. 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, at the termination
of the initial ten-year term or any of the two five-year
renewal periods, the Company has not exercised its option to
purchase the Lodge Premises accordingly, the leasehold
improvements become the property of the Trust. However, the
Company currently intends to exercise its option to purchase
the Lodge Premises at its current market value prior to the
completion of the lease period, including the two five-year
renewal periods. The Company has made leasehold improvements
to the Lodge Premises since the inception of leasehold
arrangements commenced in 1994. The cost of these
improvements was approximately $6.3 million, and the net book
value (cost less accumulated depreciation) at December 31,
2011 was approximately $3.5 million.
The revisions to the Lease Agreement removed the provisions
relating to the Farmland Premises (including the option to
purchase rights), as of the effective date of the 2002 Lease
Agreement, and the Company and the Trust entered into the
separate License Agreement defining the Company's respective
rights to the Farmland Premises. Under the License Agreement,
54
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 $42,000 for 2011.
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
2011, the Company employed six individuals who are considered
"related persons" under Item 404 of Regulation S-K of the SEC,
and each individual's total compensation exceeded $120,000.
The aggregate total compensation for these six individuals in
2011 was $1,557,244, which includes C.L. Werner's aggregate
total compensation of $500,304 for 2011. These amounts
include all elements of compensation received by those
individuals, including cash compensation, equity awards,
perquisites and other personal benefits and forms of
compensation. The Company also employed three other related
persons during 2011, none of whom received compensation in
excess of $120,000.
Personal Use of Corporate Aircraft. C.L. Werner utilized the
Company's corporate aircraft for non-business purposes during
2011. Mr. Werner reimbursed the Company $132,160 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 2012 Annual Meeting of Stockholders other
than that described in this Proxy Statement. As to other
business (if any) that may properly be brought before the
meeting, we intend that proxies solicited by the Board will be
voted in accordance with the best judgment of the person
voting the proxies.
STOCKHOLDER PROPOSALS
Only stockholders of record as of March 19, 2012, are entitled
to bring business before the 2012 Annual Meeting. All
stockholder proposals must be in writing and include the
following:
(i) A brief description of the business the
stockholder desires to bring before the Annual
Meeting;
(ii) The reason for conducting such proposed business
at the Annual Meeting;
(iii) The name and address of the stockholder proposing
such business;
(iv) The number of shares of our common stock
beneficially owned by such stockholder; and
(v) Any material interest of the stockholder in such
business.
To be eligible for inclusion in our 2013 Proxy Materials:
Stockholder proposals intended to be presented at our 2013
Annual Meeting of Stockholders must be in writing and be
received by the Corporate Secretary at our executive offices
55
on or before December 6, 2012. The inclusion of any such
stockholder proposal in our 2013 Proxy Materials will be
considered untimely if received after December 6, 2012.
Stockholders may submit nominations for directors to be
elected at the 2013 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 6, 2012. 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 2012 Proxy
Materials: Stockholders may present proposals for
consideration at the 2012 Annual Meeting of Stockholders that
are not intended for inclusion in the 2012 Proxy Materials.
These proposals must be received in writing by the Corporate
Secretary at our executive offices no later than April 18,
2012 for the 2012 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.
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 2011
Annual Report to multiple stockholders who share the same
mailing address (if they appear to be members of the same
family), unless we have received contrary instructions from an
affected stockholder. Stockholders who participate in
householding will continue to receive separate Proxies. This
procedure reduces our printing and mailing costs and fees.
We will promptly deliver, upon written or oral request, a
separate copy of this Proxy Statement and the 2011 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
2011 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 2011 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.
56
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 2011 Annual Report (including our Annual Report on Form
10-K for 2011) 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 5, 2012 Accounting Officer & Corporate
Secretary
57
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 8, 2012. 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 19, 2012 at the
Annual Meeting of Stockholders to be held on Tuesday, May 8, 2012
(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 all" for
the first and "for" for the second of the following two proposals:
1. Proposal 1 - Election of directors. Check only one box. To withhold
authority to vote for any individual nominee(s), check "For All
Except" and write the number(s) of the nominee(s) on the line below
the box. (Board of Directors recommendation: FOR ALL)
For All Withhold All For All Except
Nominees: [ ] [ ] [ ]
1. Clarence L. Werner - Class III
2. Patrick J. Jung - Class III
3. Duane K. Sather - Class III
4. Dwaine J. Peetz, Jr., M.D. - Class I
--------------------
2. Proposal 2 - To ratify the appointment of KPMG LLP as the independent
registered public accounting firm of Werner Enterprises, Inc. for the
year ending December 31, 2012. Check only one box. (Board of
Directors recommendation: FOR)
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 in accordance with the recommendation
of the Board of Directors, which is: "FOR ALL" for Proposal 1 and "FOR"
Proposal 2.
Please date, sign and print your name.*
--------------------------------------
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
-------------------------------------------------------------------------
postage-paid return envelope.
-----------------------------
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting To Be Held on May 8, 2012: The Proxy Statement and
2011 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.