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
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
WERNER ENTERPRISES, INC.
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(Name of Registrant as Specified In Its Charter)
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[LOGO OF WERNER ENTERPRISES, INC.]
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2004
________________________
Dear Stockholders:
It is a pleasure to invite you to the 2004 Annual Meeting of
Stockholders of Werner Enterprises, Inc. (the "Company") to be held at the
Embassy Suites, 555 South 10 Street, Omaha, Nebraska, on Tuesday, May 11,
2004, at 10:00 a.m. The Embassy Suites is located just a few blocks south
and east of the downtown Omaha business area. The meeting will be held for
the following purposes:
1. To elect directors to serve until the end of their term or until
their successors are elected and qualified.
2. To amend the Company's Stock Option Plan to increase the number
of shares that may be optioned or sold under the Plan from
14,583,334 to 20,000,000.
3. To amend the Company's Stock Option Plan to increase the maximum
aggregate number of shares that may be granted to any one person
from 1,562,500 to 2,562,500.
4. To consider a stockholder proposal regarding board inclusiveness,
if presented at the meeting.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on March 22, 2004, will
be entitled to vote at the meeting or any adjournment thereof.
At the meeting, Clarence L. Werner and members of the Company's
management team will discuss the Company's results of operations and business
plans. Members of the Board of Directors and the Company's management will
be present to answer your questions.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 2003, is enclosed.
As stockholders, we encourage you to attend the meeting in person.
Whether or not you plan to attend the meeting, we ask you to sign, date, and
mail the enclosed proxy as promptly as possible in order to make sure that
your shares will be voted in accordance with your wishes at the meeting in
the event that you are unable to attend. A self-addressed, postage-paid
return envelope is enclosed for your convenience. If you attend the meeting,
you may vote by proxy or you may revoke your proxy and cast your vote in
person.
By Order of the Board of Directors
/s/ James L. Johnson
James L. Johnson
Vice President, Controller
and Corporate Secretary
Omaha, Nebraska
April 7, 2004
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2004
________________________
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") for the Annual Meeting of
Stockholders of Werner Enterprises, Inc. (the "Company") to be held on
Tuesday, May 11, 2004, at 10:00 a.m. local time, at the Embassy Suites, 555
South 10 Street, Omaha, Nebraska, and at any adjournments thereof. The
meeting will be held for the purposes set forth in the notice of such meeting
on the cover page hereof. The Proxy Statement, Form of Proxy, and Annual
Report to Stockholders on Form 10-K are being mailed by the Company on or
about April 7, 2004.
A Form of Proxy for use at the Annual Meeting of Stockholders is
enclosed together with a self-addressed, postage-paid return envelope. Any
stockholder who executes and delivers a proxy has the right to revoke it at
any time prior to its use at the Annual Meeting. Revocation of a proxy may
be effected by filing a written statement with the Secretary of the Company
revoking the proxy, by executing and delivering to the Company a subsequent
proxy before the meeting, or by voting in person at the meeting. A proxy,
when executed and not revoked, will be voted in accordance with the
authorization contained therein. Unless a stockholder specifies otherwise on
the Form of Proxy, all shares represented will be voted FOR the election of
all nominees for director, FOR the two amendments to the Company's Stock
Option Plan, and AGAINST the stockholder proposal.
The cost of soliciting proxies, including the preparation, assembly and
mailing of material, will be paid by the Company. Directors, officers, and
regular employees of the Company may solicit proxies by telephone, electronic
communications, or personal contact, for which they will not receive any
additional compensation in respect of such solicitations. The Company will
also reimburse brokerage firms and others for all reasonable expenses for
forwarding proxy material to beneficial owners of the Company's stock.
As a matter of policy, proxies, ballots, and voting tabulations that
identify individual stockholders are kept private by the Company. Such
documents are available for examination only by certain representatives
associated with processing proxy cards and tabulating the vote. The vote of
any stockholder is not disclosed, except as may be necessary to meet legal
requirements.
OUTSTANDING STOCK AND VOTING RIGHTS
On March 22, 2004, the Company had 79,269,963 shares of its $.01 par
value Common Stock outstanding. At the meeting, each stockholder will be
entitled to one vote, in person or by proxy, for each share of stock owned of
record at the close of business on March 22, 2004. The stock transfer books
of the Company will not be closed.
With respect to the election of directors, stockholders of the Company,
or their proxy if one is appointed, have cumulative voting rights under the
laws of the State of Nebraska. That is, stockholders, or their proxy, may
vote their shares for as many directors as are to be elected, or may cumulate
such shares and give one nominee as many votes as the number of directors to
be elected multiplied by the number of their shares, or may distribute votes
on the same principle among as many nominees as they may desire. If a
stockholder desires to vote cumulatively, he or she must vote in person or
give his or her specific cumulative voting instructions to the designated
proxy that the number of votes represented by his or her shares are to be
cast for one or more designated nominees. A stockholder may also withhold
authority to vote for any nominee (or nominees) by striking through the name
(or names) of such nominees on the accompanying Form of Proxy. Directors
shall be elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting at which a quorum is present.
A properly executed proxy marked "ABSTAIN" with respect to any such
matter will not be voted, although it will be counted for purposes of
determining whether there is a quorum. Accordingly, an abstention will have
the effect of a negative vote. If an executed proxy is returned by a broker
holding shares in street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered present at the meeting for purposes of
determining a quorum, but will not be considered to be represented at the
meeting for purposes of calculating the vote with respect to such matter.
On the date of mailing this Proxy Statement, the Board of Directors has
no knowledge of any other matter which will come before the Annual Meeting
other than the matters described herein. However, if any such matter is
properly presented at the meeting, the proxy solicited hereby confers
discretionary authority to the proxies to vote in their sole discretion with
respect to such matters, as well as other matters incident to the conduct of
the meeting.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors has established a process by which stockholders
and other parties who wish to communicate directly with the Lead Outside
Director or with the independent directors as a group may do so by writing to
Lead Outside Director, c/o Corporate Secretary at the address indicated on
the first page of this Proxy Statement. A majority of the Company's
independent directors has approved the process for collecting and organizing
stockholder communications received by the Company's Corporate Secretary on
the Board's behalf.
ELECTION OF DIRECTORS AND
INFORMATION REGARDING DIRECTORS
The Articles of Incorporation of the Company provide that there shall be
up to three separate classes of directors, each consisting of not less than
three directors, and as nearly equal in number as possible. The Bylaws of
the Company divide the Board of Directors into three classes each consisting
of three directors. The term of office of the directors in the first class
expires at the 2004 Annual Meeting of Stockholders. Directors hold office
for a term of three years. The term of office of the directors in the second
and third classes will expire at the 2005 and 2006 Annual Meetings of
Stockholders, respectively. Curtis G. Werner, Gerald H. Timmerman, and
Kenneth M. Bird, class I directors whose terms will expire at the 2004 Annual
Meeting, have been nominated for election at the meeting for terms expiring
at the 2007 Annual Meeting and until their successors are duly elected and
qualified.
Information concerning the names, ages, terms, positions with the
Company, and/or business experience of each nominee named above and of the
other persons whose terms as directors will continue after the 2004 Annual
Meeting is set forth on the following pages. Messrs. Timmerman, Doll,
Steinbach, Bird, and Jung are independent directors as defined in the
National Association of Securities Dealers ("NASD") Rule 4200.
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Term
Name Position with Company or Principal Occupation Ends
---- --------------------------------------------- ----
Clarence L. Werner Chairman of the Board and Chief Executive Officer (3) 2006
Gary L. Werner Vice Chairman 2005
Curtis G. Werner Vice Chairman-Corporate Development 2004
Gregory L. Werner President and Chief Operating Officer 2005
Gerald H. Timmerman President of Timmerman & Sons Feeding Co., Inc. (1)(2)(3)(4) 2004
Jeffrey G. Doll President and Chief Executive Officer of Doll Distributing,
Inc. (1)(2)(3)(4) 2006
Michael L. Steinbach Owner of Steinbach Farms and Equipment Sales and Steinbach
Truck and Trailer (1)(2)(3)(4) 2005
Kenneth M. Bird Superintendent-Westside Community Schools (1)(2)(3)(4) 2004
Patrick J. Jung Executive Vice President of Meridian, Inc. (1)(2)(3)(4) 2006
__________
(1) Serves on audit committee.
(2) Serves on option committee.
(3) Serves on executive compensation committee.
(4) Serves on nominating committee.
Clarence L. Werner, 66, operated Werner Enterprises as a sole
proprietorship from 1956 until its incorporation in September 1982. He has
been a director of the Company since its incorporation and served as
President until 1984. Since 1984, he has been Chairman of the Board and
Chief Executive Officer of the Company.
Gary L. Werner, 46, has been a director of the Company since its
incorporation. Mr. Werner was General Manager of the Company and its
predecessor from 1980 to 1982. He served as Vice President from 1982 until
1984, when he was named President and Chief Operating Officer of the Company.
Mr. Werner was named Vice Chairman in 1991. From 1993 to April 1997, Mr.
Werner also reassumed the duties of President.
Curtis G. Werner, 39, was elected a director of the Company in 1991. He
began employment with the Company in 1985 and was promoted to Director of
Safety in 1986. He was promoted to Vice President - Safety in 1987. Mr.
Werner was promoted to Vice President in 1990, Executive Vice President in
1993, Executive Vice President and Chief Operating Officer in 1994, and Vice
Chairman - Corporate Development in 1996. On July 23, 2003, the Company
announced that Mr. Werner would be resigning as an officer of the Company to
pursue other business interests but would remain on the Board of Directors.
Mr. Werner is transitioning his duties to others in the organization.
Gregory L. Werner, 44, was elected a director of the Company in 1994.
He was a Vice President of the Company from 1984 to March 1996 and was
Treasurer from 1982 until 1986. He was promoted to Executive Vice President
in March 1996 and became President in April 1997. Mr. Werner has directed
revenue equipment maintenance for the Company and its predecessor since 1981.
He assumed responsibility for the Company's Management Information Systems in
1993, and also assumed the duties of Chief Operating Officer in 1999.
Gerald H. Timmerman, 64, was elected a director of the Company in 1988.
Mr. Timmerman has been President since 1970 of Timmerman & Sons Feeding Co.,
Inc., Springfield, Nebraska, which is a cattle feeding and ranching
partnership with operations in three midwestern states.
Jeffrey G. Doll, 49, was elected a director of the Company in 1997 and
appointed Lead Outside Director in August 2002. He has been President and
Chief Executive Officer of Doll Distributing, Inc., a beer wholesaler located
in Council Bluffs, Iowa, since 1980.
Michael L. Steinbach, 49, was elected a director of the Company in 2002.
He has been the sole owner of Steinbach Farms and Equipment Sales, which buys
and sells farm land and equipment and is located in Valley, Nebraska, since
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1980. Mr. Steinbach has also been the sole owner of Steinbach Truck and
Trailer, a semi-tractor and trailer dealership located in Valley, Nebraska,
since 1997. Mr. Steinbach also farms or custom farms approximately six
thousand acres of farmland.
Kenneth M. Bird, 56, was appointed by the Board of Directors in 2002 to
fill a vacant director position. He has been Superintendent of the Westside
Community Schools in Omaha, Nebraska since 1992 and has held various
administrative positions in the District since 1981. Dr. Bird was the
Nebraska Superintendent of the Year in 1998 and has been recognized for his
technology leadership and vision. Dr. Bird is very active in professional
organizations on the local, state, and national levels, and also serves on a
number of community and civic boards.
Patrick J. Jung, 56, was elected a director of the Company in 2003. He
has been an Executive Vice President with Meridian, Inc., an advertising
agency, since 2001. Prior to his position with Meridian, Inc., Mr. Jung was
a practicing certified public accountant with KPMG LLP for thirty years. Mr.
Jung was 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 also currently serves on the Board of Directors of America First
Real Estate Investment Partners, L.P.
Gary L. Werner, Curtis G. Werner, and Gregory L. Werner are sons of
Clarence L. Werner.
In the event that any nominee becomes unavailable for election for any
reason, the shares represented by the accompanying form of proxy will be
voted for any substitute nominees designated by the Board, unless the proxy
withholds authority to vote for all nominees. The Board of Directors knows
of no reason why any of the persons nominated to be directors might be unable
to serve if elected, and each nominee has expressed an intention to serve if
elected. 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH NOMINEE TO THE BOARD OF DIRECTORS. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR
DIRECTOR UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
Board of Directors and Committees
The Board of Directors conducts its business through meetings of the
Board, actions taken by written consent in lieu of meetings, and by the
actions of its Committees. The Company has established audit, option,
executive compensation, and nominating committees.
The Audit Committee discusses the annual audit and resulting letter of
comments to management, consults with the auditors and management regarding
the adequacy of internal controls, reviews the Company's financial statements
with management and the outside auditors prior to their issuance, appoints
the independent auditors for the next year, reviews and approves all audit
and non-audit services pursuant to Section 10A of the Securities Exchange Act
of 1934, and manages the Company's internal audit department. The Audit
Committee periodically meets in executive session with the independent
auditors and with the head of the internal audit department, in each case
without the presence of management. All current Audit Committee members are
"independent" as defined in the applicable listing standards of the NASD.
The Board of Directors has determined that each Audit Committee member has
sufficient knowledge in financial and auditing matters to serve on the
Committee and has designated Mr. Jung as an audit committee financial expert
as defined by the Securities and Exchange Commission ("SEC").
The Option Committee administers the Company's Stock Option Plan. It
has the authority to determine the recipients of options and stock
appreciation rights, the number of shares subject to such options and the
corresponding stock appreciation rights, the date on which these options and
stock appreciation rights are to be granted and are exercisable, whether or
4
not such options and stock appreciation rights may be exercisable in
installments, and any other terms of the options and stock appreciation
rights consistent with the terms of the plan.
The Executive Compensation committee reviews and makes recommendations
to the Board of Directors with respect to the compensation of executives.
The Nominating Committee, which was formed in 2004, assists the Board in
identifying, evaluating, and recruiting qualified candidates for election to
the Board and recommends for the Board's approval the director nominees for
any election of directors. All current Nominating Committee members are
"independent" as defined in the applicable listing standards of the NASD.
The Nominating Committee charter is posted on the Company's website,
www.werner.com. The Board considers candidates for Board membership
suggested by its members, as well as management and stockholders. The
Company has not engaged and has not paid any fees to a third party to assist
in the nomination process. Stockholders who wish to recommend a prospective
nominee for the Board should notify the Company's Corporate Secretary in
writing, pursuant to the provisions of the Company's bylaws relating to
stockholder nominations as described in the "Stockholder Proposals" section.
The Board evaluates prospective nominees against certain minimum standards
and qualifications, including business experience, skills, talents, and the
prospective nominee's ability to contribute to the success of the Company.
The Board also considers other relevant factors, including the balance of
management and independent directors, the need for Audit Committee expertise,
and relevant industry experience. A prospective candidate nominated by a
stockholder is evaluated by the Nominating Committee in the same manner as
any other prospective candidate, based upon submission by the nominating
stockholder of required background information and qualifications concerning
the nominee. The required background information and qualifications
requirements can be obtained by writing to the Corporate Secretary at the
Company's general corporate address.
The Board of Directors held four (4) meetings and acted three (3) times
by unanimous written consent during the year ended December 31, 2003. There
were three (3) meetings of the audit committee (including one (1) executive
session with the independent auditors without the presence of management),
one (1) meeting of the executive compensation committee, and no meetings of
the option committee during that period. All directors participated in 75%
or more of the aggregate of the total number of Board of Directors meetings
and the total number of meetings held by committees on which they served.
Although the Company does not have a formal policy regarding director
attendance at annual meetings, all directors attended the Company's annual
meeting of stockholders in May 2003.
Directors who are not full-time employees of the Company receive a fee
of $2,000 for each meeting of the Board of Directors and for each committee
meeting if not held on a day on which a meeting of the Board of Directors is
held. Directors are also reimbursed for travel expenses incurred to attend
meetings of the Board of Directors and committee meetings.
5
Executive Officers
The following table sets forth the executive officers of the Company and
the capacities in which they serve.
Name Age Capacities In Which They Serve
---- --- ------------------------------
Clarence L. Werner 66 Chairman of the Board and Chief Executive Officer
Gary L. Werner 46 Vice Chairman
Curtis G. Werner 39 Vice Chairman-Corporate Development
Gregory L. Werner 44 President and Chief Operating Officer
Daniel H. Cushman 49 Senior Executive Vice President, Chief Marketing
and Operational Officer
Robert E. Synowicki, Jr. 45 Executive Vice President and Chief Information Officer
Richard S. Reiser 57 Executive Vice President and General Counsel
H. Marty Nordlund 42 Senior Vice President-Specialized Services
Derek J. Leathers 34 Senior Vice President-Van Division
Duane D. Henn 66 Vice President-Safety
Larry P. Williams 58 Vice President-Value Added Services
John J. Steele 46 Vice President, Treasurer and Chief Financial Officer
Dwayne O. Haug 55 Vice President-Maintenance
R. Lee Easton 45 Vice President-Management Information Systems
Guy M. Welton 39 Vice President-Operations
James L. Johnson 40 Vice President, Controller and Corporate Secretary
John W. Frey 50 Vice President-Safety Operations and Compliance
Jim S. Schelble 43 Vice President-Sales
See "ELECTION OF DIRECTORS AND INFORMATION REGARDING DIRECTORS" for
information regarding the business experience of Clarence L. Werner, Gary L.
Werner, Curtis G. Werner, and Gregory L. Werner.
Daniel H. Cushman joined the Company in 1997 as Director of National
Accounts. He was promoted to Vice President - Sales, Van Division, in April
1999, Senior Vice President - Van Division in December 1999, Senior Vice
President - Marketing and Operations in 2001, Executive Vice President and
Chief Marketing Officer in 2002, and Senior Executive Vice President, Chief
Marketing and Operational Officer in January 2004. Mr. Cushman was President
of Triple Crown Services in Fort Wayne, Indiana for four years prior to
joining the Company and held various other management positions at Triple
Crown Services starting in 1988. From 1978 to 1988 Mr. Cushman was employed
by Roadway Express in Akron, Ohio.
Robert E. Synowicki, Jr. joined the Company in 1987 as a tax and finance
manager. He was appointed Treasurer in 1989, became Vice President,
Treasurer and Chief Financial Officer in 1991, Executive Vice President and
Chief Financial Officer in March 1996, Executive Vice President and Chief
Operating Officer in November 1996, and Executive Vice President and Chief
Information Officer in 1999. Mr. Synowicki is a certified public accountant
and was employed by the firm of Arthur Andersen & Co., independent public
accountants, from 1983 until his employment with the Company in 1987. Mr.
Synowicki also serves on the Board of Directors of Blue Cross and Blue Shield
of Nebraska.
Richard S. Reiser joined the Company as Vice President and General
Counsel in 1993, and was promoted to Executive Vice President and General
Counsel in 1996. Mr. Reiser was a partner in the Omaha office of the law
firm of Nelson and Harding from 1975 to 1984. From 1984 until his employment
with the Company, he was engaged in the private practice of law as a
principal and director of Gross & Welch, a professional corporation, Omaha,
Nebraska.
H. Marty Nordlund joined the Company in 1994 as an account executive.
He was promoted to Director of Dedicated Fleet Services in 1995, Senior
Director of Dedicated Fleet Services in 1997, Vice President - Dedicated
Fleet Services in 1998, Vice President - Specialized Services in 2001, and
was named Senior Vice President - Specialized Services in 2003. Prior to
6
joining the Company, Mr. Nordlund held various management positions with
Crete Carrier Corporation.
Derek J. Leathers joined the Company in 1999 as Managing Director -
Mexico Division. He was promoted to Vice President - Mexico Division in
2000, Vice President - International Division in 2001, Senior Vice
President - International in April 2003, and was named Senior Vice
President - Van Division in July 2003. Mr. Leathers was Vice President of
Mexico Operations for two years at Schneider National, a large truckload
carrier, prior to joining the Company and held various other management
positions during his eight-year career at Schneider National.
Duane D. Henn joined the Company in 1985 as a Driver Recruiter. He was
named National Director of Driver Recruiting in 1986. In 1988 he was
promoted to Director of Safety, and in 1994 was named Vice President -
Safety. Prior to joining the Company, Mr. Henn spent 20 years in State and
County Law Enforcement and six years in the Court System.
Larry P. Williams joined the Company in 1988 as an Account Executive.
In 1991, he was promoted to Director of Regional Fleets. He was named Vice
President - Logistics in 1994 and Vice President - Value Added Services in
2001. Prior to joining the Company, Mr. Williams held various management
positions with United Parcel Service and Federated Department Stores.
John J. Steele joined the Company in 1989 as Controller. He was elected
Corporate Secretary in 1992, Vice President - Controller and Corporate
Secretary in 1994, and Vice President, Treasurer and Chief Financial Officer
in 1996. Mr. Steele is a certified public accountant and was employed by the
firm of Arthur Andersen & Co., independent public accountants, from 1979
until his employment with the Company in 1989.
Dwayne O. Haug joined the Company in 1990 as Director of Maintenance.
He was promoted to Vice President - GraGar, Inc. (a wholly owned subsidiary
of the Company) in 1994, and Vice President - Maintenance in 1997. Mr. Haug
was President of Silvey Refrigerated Carriers, Inc. in Council Bluffs, Iowa
from 1988 until his employment with the Company. He held various management
positions with Ellsworth Freight Lines, Inc. in Eagle Grove, Iowa from 1972
to 1987.
R. Lee Easton joined the Company in 1990 as a Programmer/Analyst. He
was promoted to Management Information Systems (MIS) Project Manager in 1991,
Manager of Systems Design and Development in 1993, Director of MIS in 1996,
Senior Director of MIS in 1997, and was named Vice President - MIS in 1998.
Prior to joining the Company, Mr. Easton was a programmer with Procter
Hospital in Peoria, Illinois, and a consultant with Cap Gemini America.
Guy M. Welton joined the Company in 1987 as one of the Company's first
management trainees. He held multiple positions within Operations and
Marketing before being appointed to Manager of Quality in 1992. He was then
promoted to Director of Quality in 1994, Director of Operations in 1995,
Senior Director of Operations in 1997, and Vice President - Operations in
1999.
James L. Johnson joined the Company in 1991 as Manager of Financial
Reporting. He was promoted to Assistant Controller in 1992, Director of
Accounting in 1994, Corporate Secretary and Controller in 1996, and was named
Vice President, Controller and Corporate Secretary in 2000. Mr. Johnson is a
certified public accountant and was employed by the firm of Arthur Andersen &
Co., independent public accountants, from 1985 until his employment with the
Company in 1991.
John W. Frey joined the Company in 1995 as a Driver Recruiter. He was
promoted to Recruiting Analyst in 1997, Recruiting Manager in 1998, Assistant
Director of Driver Development in 1998, Director of Student Driver
Development in 2001, and was named Vice President - Safety Operations and
Compliance in 2003. Prior to joining the Company, Mr. Frey had over 23 years
of service in the U.S. Marine Corps.
7
Jim S. Schelble joined the Company in 1998 as Manager of New Business
Development. He was promoted to Director of National Accounts in 1999,
Senior Director of Dedicated Services in 2000, Associate Vice President of
Corporate and Dedicated Sales in 2002, and named Vice President - Sales in
2003. Prior to joining the Company, Mr. Schelble spent twelve years with
Roadway Express in a variety of management positions within operations,
sales, and marketing.
Under the Company's bylaws, each executive officer holds office for a
term of one year or until his successor is elected and qualified. The
executive officers of the Company are elected by the Board of Directors at
its Annual Meeting immediately following the Annual Meeting of Stockholders.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
initial reports of ownership and changes in ownership with the SEC. Officers,
directors and greater than ten-percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that, during the year
ended December 31, 2003, all filing requirements applicable to its officers,
directors, and greater than ten-percent beneficial owners were complied with.
SECURITY OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS
The authorized Common Stock of the Company consists of 200,000,000
shares, $.01 par value.
The following table sets forth certain information as of March 22, 2004,
with respect to the beneficial ownership of the Company's Common Stock by
each director and each nominee for director of the Company, by each executive
officer of the Company named in the Summary Compensation Table herein, by
each person known to the Company to be the beneficial owner of more than 5%
of the outstanding Common Stock, and by all executive officers, directors,
and director nominees as a group. On March 22, 2004, the Company had
79,269,963 shares of Common Stock outstanding.
Beneficial Ownership
--------------------------
Name of Beneficial Owner Shares Percent (1)
------------------------ ---------- -----------
Clarence L. Werner (2) 22,943,997 28.8%
Gary L. Werner (3) 2,773,417 3.5%
Curtis G. Werner (4) 2,176,426 2.7%
Gregory L. Werner (5) 3,684,828 4.6%
Daniel H. Cushman (6) 51,981 *
Gerald H. Timmerman 13,666 *
Jeffrey G. Doll - *
Michael L. Steinbach - *
Kenneth M. Bird - *
Patrick J. Jung - *
FMR Corp. (7) 5,622,739 7.1%
All executive officers, directors and
director nominees as a group
(23 persons) (8) 32,077,115 39.6%
___________
* Indicates less than 1%.
8
(1) The percentages are based upon 79,269,963 shares, which equal the
outstanding shares of the Company as of March 22, 2004. For beneficial
owners who hold options exercisable within 60 days of March 22, 2004,
the number of shares of Common Stock on which the percentage is based
also includes the number of shares underlying such options.
(2) Includes options to purchase 525,000 shares which are exercisable as of
March 22, 2004, or which become exercisable 60 days thereafter.
(3) Includes options to purchase 235,834 shares which are exercisable as of
March 22, 2004, or which become exercisable 60 days thereafter.
(4) Includes options to purchase 68,750 shares which are exercisable as of
March 22, 2004, or which become exercisable 60 days thereafter.
(5) Includes options to purchase 407,501 shares which are exercisable as of
March 22, 2004, or which become exercisable 60 days thereafter.
(6) Options to purchase 51,981 shares which are exercisable as of March 22,
2004, or which become exercisable 60 days thereafter.
(7) Based on Schedule 13G as of December 31, 2003, as filed with the
Securities and Exchange Commission by FMR Corp., 82 Devonshire Street,
Boston, Massachusetts 02109. FMR Corp. claims sole voting power with
respect to 592,411 shares, sole dispositive power with respect to
5,622,379 shares, and no shared voting or dispositive power with respect
to any of these shares.
(8) Includes options to purchase 1,702,342 shares which are exercisable as
of March 22, 2004, or which become exercisable 60 days thereafter.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The table on the following page summarizes the compensation paid by the
Company and its subsidiaries to the Company's Chief Executive Officer and to
the Company's four most highly compensated executive officers other than the
Chief Executive Officer who were serving as executive officers at December
31, 2003, for services rendered in all capacities to the Company and its
subsidiaries during the three fiscal years ended December 31, 2003.
9
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
---------------------------------- ------------
Other Securities
Annual Underlying All Other
Compensation Options/ Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(1) SAR's(#) ($)(2)
--------------------------- ---- --------- -------- ------------ ---------- ------------
Clarence L. Werner 2003 636,668 300,000 46,000 - -
Chairman and 2002 575,004 300,000 101,985 - -
Chief Executive Officer 2001 575,004 250,000 46,000 600,000 -
Gary L. Werner 2003 318,808 160,000 - - -
Vice Chairman 2002 301,250 110,000 - - -
2001 300,000 100,000 - 220,000 -
Curtis G. Werner 2003 323,077 100,000 - - -
Vice Chairman- 2002 300,000 100,000 83,254 - -
Corporate Development 2001 300,000 92,000 - 220,000 -
Gregory L. Werner 2003 408,462 200,000 - - -
President and 2002 344,712 150,000 - - -
Chief Operating Officer 2001 330,000 127,000 - 293,333 -
Daniel H. Cushman 2003 290,677 150,000 - - 2,212
Senior Executive Vice 2002 267,909 100,000 - - 2,550
President, Chief 2001 238,205 75,000 - 53,333 951
Marketing and Operational
Officer
------------
(1) Other annual compensation for Mr. Clarence L. Werner during 2003, 2002,
and 2001 consists of $40,000 for the value of professional services
received and $6,000, $42,349, and $6,000, respectively, for personal
use of a Company vehicle and Company aircraft. Other annual
compensation for 2002 also includes amounts reimbursed for payment of
income taxes of $19,636.
Other annual compensation for Mr. Curtis G. Werner during 2002 consists
of $6,600 for the value of professional services received, $42,204 for
personal use of a Company vehicle and Company aircraft, and $34,450
reimbursed for payment of income taxes.
(2) All other compensation for 2003 reflects the Company's contribution to
the individual 401(k) retirement savings plan of $2,212 of Mr. Daniel H.
Cushman.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options/SAR's At Options/SAR's At
Acquired December 31, 2003 December 31, 2003(1)
On Value -------------------------- --------------------------
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
---- -------- --------- ----------- ------------- ----------- -------------
Clarence L. Werner - - 525,000 975,000 5,792,456 10,318,369
Gary L. Werner - - 235,834 380,834 2,649,975 4,066,677
Curtis G. Werner 161,250 1,752,521 68,750 403,334 667,982 4,319,201
Gregory L. Werner 51,667 480,973 432,501 505,836 4,685,445 5,398,649
Daniel H. Cushman 45,417 411,829 51,981 106,254 569,869 1,149,916
------------
(1) Based on the $19.49 closing price per share of the Company's Common
Stock on December 31, 2003.
10
BOARD EXECUTIVE COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Executive Compensation Committee of the Board of Directors has
furnished the following report on executive compensation:
The Executive Compensation Committee annually reviews and approves the
compensation for the Chairman and Chief Executive Officer ("CEO") of the
Company. In turn, the Chairman and CEO reviews and recommends the
compensation for the Vice Chairman, Vice Chairman - Corporate Development,
and the President and Chief Operating Officer. Compensation for other
executive officers is reviewed and recommended by the Chairman and CEO, Vice
Chairman, Vice Chairman - Corporate Development, and the President and Chief
Operating Officer. The Executive Compensation Committee reviews the total
compensation for the executive officers of the Company, including the
Chairman and CEO.
As with all employees, compensation for the Company's executive
officers, including Clarence L. Werner, Chairman and CEO, is based on
individual performance and the Company's financial performance. The
Company's financial performance is the result of the coordinated efforts of
all employees, including executive officers, through teamwork focused on
meeting the expectations of customers and stockholders. The Company strives
to compensate its executive officers, including the Chairman and CEO, based
upon the following key factors: (1) salary levels of executives employed by
competitors in the trucking industry and other regional and national
companies, (2) experience and pay history with the Company, (3) retention of
key executives of the Company, (4) relationship of individual and Company
financial performance to compensation increases.
Base salaries and the annual bonus are determined based on the above
factors. The annual bonus plan allows executive officers to earn additional
compensation depending on individual and Company financial performance.
Company financial performance is evaluated by reviewing such factors as the
Company's operating ratio, earnings per share, revenue growth, and size and
performance relative to competitors in the trucking industry. Individual
performance is evaluated by reviewing the individual's contribution to these
financial performance goals as well as a review of quantitative and
qualitative factors. Stock options are used as a long-term compensation
incentive and are intended to retain and motivate executives and management
personnel for the purpose of improving the Company's financial performance,
which should, in turn, improve the Company's stock performance. Stock
options are granted periodically to executives and management based on the
individuals' performance and potential contribution. Stock options are
granted with exercise prices equal to the prevailing market price of the
Company's stock on the date of the grant. Therefore, options only have value
if the market price of the Company's stock increases after the grant date.
The Committee compared the total compensation package for Mr. Clarence
L. Werner and the other top four Werner executives to the total compensation
packages of many of the Company's publicly-traded competitors in the
truckload industry, as disclosed on each company's most recently available
proxy statement. Comparisons were made on the basis of total compensation
per tractor operated, total compensation as a percentage of net income, and
similar factors. Both the total compensation of the Company's CEO and the
average total compensation of the Company's other executives disclosed in the
summary compensation table were in the middle of the range of compensation
paid by many of the Company's publicly-traded competitors in the truckload
industry, based on total compensation per tractor operated and as a
percentage of net income.
11
The Executive Compensation Committee has determined it is unlikely that
the Company would pay any amounts in the year ended December 2004 that would
result in a loss of Federal income tax deduction under Section 162(m) of the
Internal Revenue Code of 1986, as amended, and accordingly, has not
recommended that any special actions be taken or that any plans or programs
be revised at this time.
Clarence L. Werner, Committee Chairman
Gerald H. Timmerman
Jeffrey G. Doll
Michael L. Steinbach
Kenneth M. Bird
Patrick J. Jung
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee of the Board of Directors is
comprised of Messrs. Clarence L. Werner, Timmerman, Doll, Steinbach, Bird,
and Jung.
Mr. Clarence L. Werner serves as Chairman of the Executive Compensation
Committee and is also the Chairman and Chief Executive Officer of the
Company. Disclosure of transactions between Mr. Clarence L. Werner and the
Company required by Item 404 of Regulation S-K can be found under the caption
"Certain Transactions".
REPORT OF THE AUDIT COMMITTEE
The following report is not deemed to be "soliciting material" or to be
"filed" with the SEC or subject to the liabilities of Section 18 of the 1934
Act, and the report shall not be deemed to be incorporated by reference into
any prior or subsequent filing by the Company under the Securities Act of
1933 or the Securities Exchange Act of 1934.
The Audit Committee of the Board of Directors is comprised of Messrs.
Jung, Doll, Timmerman, Steinbach, and Bird. Mr. Jung is chairman of the
Audit Committee. All of the committee members qualify as independent members
of the Audit Committee under the National Association of Securities Dealers'
listing standards. The primary purpose of the Audit Committee is to assist
the Board of Directors in its general oversight of the Company's financial
reporting process. The Audit Committee conducted its oversight activities
for the Company in accordance with the duties and responsibilities outlined
in the Audit Committee charter. The charter was revised during 2003 to
comply with the requirements of the Sarbanes-Oxley Act. The original charter
as well as the revisions to the charter were approved by the Board of
Directors. The complete text of the revised charter is attached to this
Proxy Statement as an Appendix.
The Company's management is responsible for the preparation,
consistency, integrity, and fair presentation of the financial statements,
accounting and financial reporting principles, systems of internal and
disclosure controls, and procedures designed to ensure compliance with
accounting standards, applicable laws, and regulations. The Company's
independent auditors, KPMG LLP, are responsible for performing an independent
audit of the financial statements and expressing an opinion on the conformity
of those financial statements with accounting principles generally accepted
in the United States of America.
In conjunction with the preparation of the Company's 2003 audited
financial statements, the Audit Committee met with both management and the
Company's outside auditors to review and discuss the financial statements
prior to their issuance and to discuss significant accounting issues.
Management advised the Committee that the financial statements were prepared
12
in accordance with accounting principles generally accepted in the United
States of America, and the Committee discussed the statements with both
management and the outside auditors. The Committee's review included
discussion with the outside auditors of matters required to be discussed
pursuant to Statement on Auditing Standards No. 61 (Communication With Audit
Committees).
With respect to the Company's outside auditors, the Committee, among
other things, discussed with KPMG LLP matters relating to its independence,
including written disclosures made to the Committee as required by the
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees).
Based on the foregoing review and discussions, the Committee has
recommended to the Board of Directors that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2003, for filing with the Securities and Exchange
Commission.
Patrick J. Jung, Committee Chairman
Jeffrey G. Doll
Gerald H. Timmerman
Michael L. Steinbach
Kenneth M. Bird
13
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH APPEARS HERE]
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
Werner Enterprises, Inc. (WERN) $100 $ 79.9 $ 97.4 $140.0 $166.1 $188.8
Standard & Poor's 500 $100 $121.1 $110.3 $ 97.3 $ 75.8 $ 97.5
Nasdaq Trucking Group (SIC Code 42) $100 $ 94.0 $103.7 $143.1 $163.3 $211.2
Assuming the investment of $100 on December 31, 1998, and reinvestment
of all dividends, the graph above compares the cumulative total stockholder
return on the Company's Common Stock for the last five fiscal years with the
cumulative total return of the Standard & Poor's 500 Market Index and an
index of other companies that are in the trucking industry (Nasdaq Trucking
Group - Standard Industrial Classification ("SIC") Code 42) over the same
period. The Company's stock price was $19.49 as of December 31, 2003. This
was used for purposes of calculating the total return on the Company's Common
Stock for the year ended December 31, 2003.
PROPOSALS REGARDING AMENDMENTS TO STOCK OPTION PLAN
The stockholders of the Company approved the Werner Enterprises, Inc.
Stock Option Plan (the "Plan") on June 9, 1987, at their annual meeting. The
Plan authorizes the grant of nonqualified stock options and stock
appreciation rights in order to help attract and retain key employees by
providing them with participatory rights in the future success and growth of
the Company. The Board of Directors has unanimously approved and recommended
that the stockholders consider and approve increasing the maximum number of
shares that may be optioned or sold under the Plan and the aggregate number
of shares that may be granted to any one person.
Section 3 of the Plan currently provides that the maximum number of
shares of common stock that may be optioned or sold under the Plan, taking
into consideration previous stock splits, is 14,583,334 shares. The Board of
Directors has approved increasing the maximum number of shares that may be
optioned or sold under the Plan by 5,416,666. If the Plan amendment is
approved by the stockholders, the maximum number of shares that may be
optioned or sold under the Plan will be increased to 20,000,000.
14
Section 4 of the Plan currently provides that the maximum aggregate
number of options that may be granted to any one person, taking into
consideration previous stock splits, is 1,562,500 options. The Board of
Directors has approved increasing the maximum aggregate number of options
that may be granted to any one person under the Plan by 1,000,000. If the
Plan amendment is approved by the stockholders, the maximum aggregate number
of options that may be granted to any one person under the Plan will be
increased to 2,562,500.
In the opinion of the Board of Directors, the operation of the Plan will
continue to be consistent with the underlying purposes of the Plan after the
implementation of the Plan Amendments. If a quorum exists at the Annual
Meeting, the Plan Amendments shall be approved if the votes cast favoring the
Plan Amendments exceed the votes cast opposing the Plan Amendments.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THESE PROPOSALS. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE PROPOSALS UNLESS
STOCKHOLDERS SPECIFY A CONTRARY VOTE.
STOCKHOLDER PROPOSAL REGARDING BOARD INCLUSIVENESS
The Company has been informed that a stockholder intends to introduce
the following resolution at the Annual Meeting. Upon receiving an oral or
written request, the Company will furnish the name, address, and share
ownership of the stockholder submitting the proposal. The Company takes no
responsibility for the content of this proposal.
BOARD INCLUSIVENESS
WHEREAS:
In response to the recent corporate scandals, the U.S. Congress
(Sarbannes-Oxley Act) (sic), the stock exchanges and the SEC each have taken
actions to enhance the independence, accountability and responsiveness of
corporate boards, including requiring greater board and committee
independence. We believe that in order to achieve such independence it is
necessary for corporations to abandon the cozy clubbiness that has all too
often characterized boards in the past.
As companies seek new board members to meet the new independence
standards, there is a unique opportunity to enhance diversity on the board.
A number of corporations have included their commitment to board diversity
(by sex and race) in the Charter for their nominating committee (a charter
now being required for NYSE and NASDAQ listed companies). We believe that
the judgments and perspectives that woman (sic) and members of minority
groups bring to board deliberations improve the quality of board decision
making, are likely to reduce the clubbiness of the board, and will enhance
business performance by enabling a company to respond more effectively to the
needs of customers worldwide.
We note that fewer that (sic) twenty percent of companies in the S&P 500
have all white male boards and that many have several women and/or minorities
on their board. We believe that many publicly-held corporations have
benefited from the perspectives brought by their many well-qualified board
members who are women or minority group members. Thus, Sun Oil's former CEO,
Robert Campbell, stated: stated (sic) (Wall Street Journal, 8/12/96): "Often
what a woman or minority person can bring to the board is some perspective a
company has not had before---adding some modern-day reality to the
deliberation process. Those perspectives are of great value, and often
missing from an excluded gathering. They can also be inspirational to the
company's diverse workforce."
Increasingly, institutional investors have supported the call for
greater board diversity. For example, the 2003 corporate governance
guidelines of America's largest institutional investor (TIAA-CREF) calls
(sic) for "diversity of directors by experience, sex, age, and race."
15
WHEREAS
Werner Enterprises currently has a distinguished board of nine persons,
all of whom are white males;
We believe that our Board should take every reasonable step to ensure
that women and persons from minority racial groups are in the pool from which
Board nominees are chosen; therefore be it
RESOLVED that the shareholders request the Board:
1. In connection with its search for suitable Board candidates to
ensure that women and persons from minority racial groups are among
those it considers for nomination to the Board.
2. To publicly commit itself to a policy of board inclusiveness,
including steps to be taken and a timeline for implementing that policy.
3. To report to shareholders, at reasonable expense, by September
2004:
a. On its efforts to encourage diversified representation on the
board
b. Whether, in the nominating committee's charter or its
procedures, diversity is included as a criterion in selecting the
total membership of the Board.
SUPPORTING STATEMENT
We urge the Board to enlarge its search for qualified members by casting
a wider net.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL FOR
THE FOLLOWING REASONS:
Your Board of Directors recommends a vote against the Stockholder
Proposal for the following reasons: A similar resolution was submitted by
this proponent and voted on at the 2003 Annual Meeting, at which 40,465,149
votes were cast against its adoption, representing more than 70% of the total
votes cast for and against the proposal. The Company offers equal employment
opportunity to all persons without regard to race, color, religion, sex,
national origin, age, disability, or veteran status in accordance with
applicable laws. The Company's Board also recognizes that qualified Board
members with diverse backgrounds and perspectives can enhance Company
performance. However, the Board believes the primary criteria in selecting
an individual for Board membership should be that individual's
qualifications, experience, skills, talents and the individual's ability to
contribute to the success of the Company (and thereby contribute to the
enhancement of stockholder value), without regard to the individual's gender,
race, color or other status. The Board has considered in the past, and will
continue to consider in the future, highly qualified candidates for Board
membership, as determined by their individual qualifications, abilities and
talents, including relevant industry experience.
The stockholder proposal would require the Board of Directors to take
every reasonable step to ensure that women and persons from minority racial
groups are in the pool from which Board nominees are chosen. The Board
believes that the Company and its stockholders are best served by a focus on
the overall qualifications of Board members rather than narrow goals
regarding gender, race, color or any other category. Furthermore, the Board
wishes to avoid any implication that it has not previously considered the
most qualified individuals without regard to the individual's gender, race,
color or other status. If the Board adopted the resolution contained in the
proposal, the Board believes that its ability to select the most qualified
candidates for Board membership could be limited. As such, the Board believes
the proposal is not in the best interests of the Company and its stockholders
and recommends that you vote AGAINST the proposal.
The affirmative vote of a majority of the votes cast on this matter by
holders of shares present or represented at the meeting and entitled to vote
thereon is required to approve this stockholder proposal.
16
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE
PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
CERTAIN TRANSACTIONS
The Company leases certain land from the Clarence L. Werner Revocable
Trust (the "Trust"), a related party. Clarence L. Werner, Chairman of the
Board and Chief Executive Officer, is the sole trustee of the Trust. The
land and related improvements consist of lodging facilities and a sporting
clay range and are used by the Company for business meetings and customer
promotion.
During 2001, the Company and the Trust entered into a new 10-year lease
with the term of the lease beginning June 1, 2002. The new lease provides
for termination of the original lease which began in 1994. The new lease
provides the Company with the option to extend the lease for two additional
5-year periods following the initial term. The Company will make annual rent
payments of one dollar ($1) to the Trust for use of the property. At any
time during the term of the lease or any extensions thereof, the Company has
the option to purchase the land from the Trust at its current market value,
excluding the value of all leasehold improvements made by the Company. The
Company also has right of first refusal to purchase the land or any part
thereof if the Trust has an offer from an unrelated third party to purchase
the land. The Trust has the option at any time during the lease to demand
that the Company exercise its option to purchase the land at its current
market value. If the Company elects not to purchase the land as demanded by
the Trust, then the Company's option to purchase the land at any time during
the lease is forfeited; however, the Company will still have right of first
refusal related to a purchase offer from an unrelated third party. If the
Company terminates the lease prior to the expiration of its 10 year term and
elects not to purchase the land from the Trust, then the Trust agrees to pay
the Company the cost of all leasehold improvements, less accumulated
depreciation calculated on a straight-line basis over the term of the lease
(10 years). The Company has made leasehold improvements to the land of
approximately $6.1 million since inception of the original lease in 1994.
On April 17, 2000, the Company entered into an agreement with WRG
Development, L.L.C. to sell 2.746 acres of land near the Company's Dallas,
TX, terminal to WRG Development, L.L.C. or its nominee (WRG Dallas, L.L.C.)
for $361,330. The closing date for the 2.746 acres was January 10, 2001.
The agreement also includes an option for WRG Dallas, L.L.C. to purchase an
additional .783 acres for a price of $119,376. The Clarence L. Werner
Revocable Trust (the "Trust"), a related party, owns a one-third interest in
WRG Development, L.L.C. and WRG Dallas, L.L.C. Clarence L. Werner, Chairman
of the Board and Chief Executive Officer, is the sole trustee of the Trust.
In a separate agreement with WRG Dallas, L.L.C. on September 27, 2000, the
Company committed to rent a guaranteed number of rooms in the lodging
facility to be constructed and operated on the land purchased from the
Company. In April 2002 the Company and WRG Dallas, L.L.C. signed an addendum
to this agreement. The terms of the addendum provide that the Company will
pay for an average of 40 rooms per day per week at fixed rates depending on
room size and amenities. The contract provides for an annual 10% increase in
the number of rooms guaranteed by the Company and a 3% annual increase in the
fixed room rates. The agreement became effective September 16, 2001 and has
a five-year term. WRG Dallas, L.L.C. billed the Company $731,831 for rooms
rented during the year ended December 31, 2003. The Company believes that
these transactions are on terms no less favorable to the Company than those
that could be obtained from unrelated third parties, on an arm's length
basis.
Chairman and Chief Executive Officer Clarence L. Werner's brother, Vern
Werner, is employed by the Company as Manager of Owner-Operator Conversions
and received total pay of $83,751 during 2003. Clarence L. Werner's brother,
Jim Werner, is employed by the Company as Fleet Manager and received total
pay of $70,021 during 2003. Scott Robertson, son-in-law of Clarence L.
Werner, is employed by the Company as Director - Aviation and received total
pay of $154,640 during 2003.
17
During 2003, the Company paid $5,888,380 to Pegasus Enterprises, LLC
which is owned by Clarence L. Werner's brother, Vern Werner, and sister-in-
law. Pegasus Enterprises, LLC leases tractors and drivers to the Company as
owner-operators. At December 31, 2003, the Company had notes receivable from
Pegasus Enterprises, LLC of $1,030,000 related to the sale of 46 used trucks.
The payments to Pegasus Enterprises, LLC are based on the same per-mile
settlement scale as the Company's other owner-operator contractors. The
terms of the note agreements and the tractor sales prices are no less
favorable to the Company than those that could be obtained from unrelated
third parties, on an arm's length basis.
During 2003, the Company's Audit Committee and the Board of Directors
approved the purchase of approximately 2.6 acres of land in Omaha, Nebraska
for $500,000 from Blue One Limited Partnership. Mr. Clarence L. Werner,
Chairman of the Board and Chief Executive Officer, is the general partner of
the partnership. A market valuation was performed on the property prior to
the purchase, and a higher purchase offer was received by Mr. Werner from an
unrelated third party. The property is adjacent to the Company's current
disaster recovery site and was purchased for use as additional parking in the
event of a disaster and for possible future expansion of the disaster
recovery site.
PUBLIC ACCOUNTANTS
The firm of KPMG LLP is the independent public accountants of the
Company. The following table presents fees for professional audit services
rendered by KPMG LLP for the audit of the Company's annual financial
statements for the years ended December 31, 2003 and 2002, and fees for other
services rendered by KPMG LLP during those periods. Certain amounts for 2002
have been reclassified to conform to the 2003 presentation.
2003 2002
-------- --------
Audit Fees $ 82,671 $ 77,722
Audit-Related Fees 123,168 18,881
Tax Fees 0 9,041
All Other Fees 8,500 0
-------- --------
Total $214,339 $105,644
======== ========
Audit fees relate to services rendered for the audit of the Company's
annual financial statements and review of financial statements included in
the Company's Form 10-Q. Audit-related fees include fees for SEC
registration statement services, benefit plan audits, actuarial services
related to the valuation of insurance and claims accruals, and assessment and
procedures documentation of risk management controls in connection with the
implementation of Section 404 of the Sarbanes-Oxley Act of 2002. Tax fees
include fees for tax compliance, tax advice and tax planning. All other fees
include fees for a compliance review of the Company's 401(k) retirement
savings plan.
The Audit Committee has reviewed the services provided related to the
other fees billed by KPMG LLP and believes that these services are compatible
with maintaining KPMG LLP's independence with regard to the audit of the
Company's financial statements. It is anticipated that the Audit Committee,
at its next scheduled meeting, will approve KPMG LLP as independent public
accountants for the Company for the year ending December 31, 2004.
Representatives of KPMG LLP will be present at the Annual Meeting of
Stockholders, will have an opportunity to make a statement if they so desire,
and will be available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2005 Annual
Meeting of Stockholders must be received by the Secretary of the Company on
or before December 8, 2004, to be eligible for inclusion in the Company's
18
2005 proxy materials. The inclusion of any such proposal in such proxy
material shall be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934, as amended.
Stockholder proposals submitted for presentation at the 2004 Annual
Meeting must be received by the Secretary of the Company at its headquarters
in Omaha, Nebraska no later than April 21, 2004. Such proposals must set
forth (i) a brief description of the business desired to be brought before
the Annual Meeting and the reason for conducting such business at the Annual
Meeting, (ii) the name and address of the stockholder proposing such
business, (iii) the class and number of shares of the Company's Common Stock
beneficially owned by such stockholder and (iv) any material interest of such
stockholder in such business. Nominations for directors may be submitted by
stockholders by delivery of such nominations in writing to the Secretary of
the Company by April 30, 2004. Only stockholders of record as of March 22,
2004, are entitled to bring business before the Annual Meeting or make
nominations for directors.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
The SEC has adopted rules that permit companies and intermediaries such
as brokers to satisfy delivery requirements for proxy statements with respect
to two or more stockholders sharing the same address by delivering a single
proxy statement addressed to those stockholders. This process, which is
commonly referred to as "householding," potentially provides extra
convenience for stockholders and cost savings for companies. The Company and
some brokers household proxy materials, delivering a single proxy statement
to multiple stockholders sharing an address unless contrary instructions have
been received from one or more of the stockholders. The Company undertakes
to deliver promptly upon written or oral request a separate copy of the
annual report or proxy statement, as applicable, to a stockholder at a shared
address to which a single copy of the documents was delivered. A stockholder
who wishes to receive a separate copy of a proxy statement or annual report,
or one who is receiving multiple copies and wishes to receive only one,
should notify the broker if the shares are held in a brokerage account or
notify the Company if the stockholder holds registered shares. Stockholders
can notify the Company by sending a written request to Werner Enterprises,
Inc., Corporate Secretary, P.O. Box 45308, Omaha, NE 68145 or by calling
(402) 895-6640.
OTHER BUSINESS
Management of the Company knows of no business that will be presented
for consideration at the Annual Meeting of Stockholders other than that
described in the Proxy Statement. As to other business, if any, that may
properly be brought before the meeting, it is intended that proxies solicited
by the Board will be voted in accordance with the best judgment of the person
voting the proxies.
Stockholders are urged to complete, date, sign, and return the proxy
enclosed in the envelope provided. Prompt response will greatly facilitate
arrangements for the meeting, and your cooperation will be appreciated.
By Order of the Board of Directors
/s/ James L. Johnson
James L. Johnson
Vice President, Controller
and Corporate Secretary
19
APPENDIX
WERNER ENTERPRISES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER
I. PURPOSE
The primary function of the Audit Committee ("the Committee") is to
assist the Board of Directors ("the Board") in fulfilling its oversight
responsibilities by reviewing: the financial reports and other financial
information provided by the Corporation to any governmental body or the
public; the Corporation's systems of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board have
established; and the Corporation's auditing, accounting, and financial
reporting processes generally. Consistent with this function, the Committee
should encourage continuous improvement of, and should foster adherence to,
the Corporation's policies, procedures and practices at all levels. The
Committee does not itself prepare financial statements or perform audits, and
its members are not auditors or certifiers of the Corporation's financial
statements. The Committee's duties and responsibilities are more
specifically enumerated in Section V. of this Charter.
II. COMPOSITION
The Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall satisfy the independence,
financial literacy and experience requirements of Section 10A of the
Securities Exchange Act of 1934, the National Association of Securities
Dealers, Inc. ("NASD") and any other applicable regulatory requirements. At
least one member of the Committee shall be a "financial expert" as that term
is defined by the SEC.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least two times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication,
the Committee should meet at least annually with management, internal audit,
and the independent auditors in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be
discussed privately.
IV. RESOURCES
The Committee shall have the authority to retain and compensate such
outside counsel, experts and other advisors as it determines appropriate to
assist in the full performance of its functions. The Committee shall also
have the authority to conduct or authorize investigations into any matters
within its scope of responsibilities and shall have the authority to retain
and compensate outside advisors to assist it in the conduct of any
investigation.
The Committee may request any officer or employee of the Corporation or
the Corporation's outside counsel or independent auditors to attend a meeting
of the Committee or to meet with any members of, or consultants to, the
Committee.
The Committee shall determine the extent of funding necessary for
payment of compensation to the independent auditors for purpose of rendering
or issuing the annual audit report and to any independent legal, accounting
and other consultants retained to advise the Committee.
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V. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
General
1. Provide an open avenue of communication among the independent
auditors, financial and senior management, and the Board of Directors.
2. Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
3. Review and update this Charter periodically as conditions
dictate.
Independent Auditors
4. Be directly responsible for the appointment, compensation and
oversight of the work of the independent auditors (including resolution
of disagreements between management and the independent auditors
regarding financial reporting) for the purpose of preparing its audit
report or related work.
5. Have the sole authority to review in advance, and grant any
appropriate pre-approvals of (i) all auditing services to be provided by
the independent auditors, and (ii) all non-audit services to be provided
by the independent auditors as permitted by Section 10A of the
Securities Exchange Act of 1934 or other applicable regulations, and
(iii) in connection therewith to approve all fees and other terms of
engagement. The Committee shall also review and approve all disclosures
required to be included in Securities and Exchange Commission periodic
reports filed with respect to non-audit services.
6. Review the performance of the independent auditors and discharge
the independent auditors when circumstances warrant.
7. On an annual basis, review and discuss with the independent
auditors all relationships the independent auditors have with the
Corporation in order to evaluate the independent auditors' continued
independence.
8. At least annually, review and discuss with the independent
auditors the internal quality control procedures of the independent
auditors' firm.
9. Confirm that the lead audit partner, or the lead audit partner
responsible for reviewing the audit for the Company's independent
auditors, is rotated at least once every five years.
10. Review all reports required to be submitted by the independent
auditors to the Committee under Section 10A of the Securities Exchange
Act of 1934, NASD, or other applicable regulatory requirement.
Financial Reporting
11. Review the organization's annual financial statements and any
reports or other financial information submitted to any governmental
body, or the public, including any certification, report, opinion, or
review rendered by the independent auditors.
12. Consider, in consultation with the independent auditor, the audit
scope and plan of the independent auditor.
13. In consultation with the independent auditors, review the
integrity of the organization's financial reporting processes.
14. Provide that management and the independent auditor discuss with
the Committee their qualitative judgments about the appropriateness, not
just the acceptability, of accounting principles and financial
disclosure practices used or proposed to be adopted by the Corporation
and, particularly, about the degree of aggressiveness or conservatism of
its accounting principles and underlying estimates.
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15. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent auditors or management.
16. Review with management and the independent auditors any
significant judgments made in management's preparation of the financial
statements and the view of each as to the appropriateness of such
judgments.
17. Following completion of the annual audit, review with management
and the independent auditors any significant difficulties encountered
during the course of the audit, including any restrictions on the scope
of the work or access to required information.
18. Review with the independent auditors and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. (This review
should be conducted at an appropriate time subsequent to implementation
of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
19. Establish, review and update periodically a Code of Conduct and
ensure that management has established a system to enforce this Code.
20. Review management's monitoring of the Corporation's compliance
with the organization's Code of Conduct, and ensure that management has
the proper review system in place to ensure that Corporation's financial
statements, reports and other financial information disseminated to
governmental organizations and the public satisfy legal requirements.
21. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
22. Review, with the organization's counsel, any legal matter that
could have a significant impact on the organization's financial
statements.
Internal Audit
23. Review, based upon the recommendation of the independent auditors
and the head of the Internal Audit Department, the scope and plan of the
work to be performed by the Internal Audit Department.
24. Review and approve the appointment and replacement of the head of
the Internal Audit Department, and review on an annual basis the
performance of the Internal Audit Department.
25. In consultation with the independent auditors and the Internal
Audit Department, (a) review the adequacy of the Corporation's internal
control structure and system, and the procedures designed to insure
compliance with laws and regulations, and (b) discuss the
responsibilities, budget, and staffing needs of the Internal Audit
Department.
Other
26. Establish procedures for the (i) receipt, retention and treatment
of complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters, and (ii) confidential,
anonymous submission by employees of the Corporation of concerns
regarding questionable accounting or auditing matters. (Said procedures
are attached to this Charter as Attachment "A").
27. Review and approve all related-party transactions.
28. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
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ATTACHMENT A
------------
Policy for Submission of Complaints to the Audit Committee
----------------------------------------------------------
The Audit Committee has established the following procedures for: (i)
the receipt, retention, and treatment of complaints received by the Company
regarding accounting, internal accounting controls, or auditing matters; and
(ii) the confidential, anonymous submission by Company employees of concerns
regarding questionable accounting or auditing matters.
1. All Company employees will be informed via the intranet, employee
handbooks and postings that complaints regarding questionable accounting
or auditing matters may be made anonymously and confidentially by
submitting the complaint by mail to Mr. Patrick J. Jung, Audit Committee
Chairman at P.O. Box 34043, Omaha, NE 68134-0043. Any such complaint
should identify the practices that are alleged to constitute an improper
accounting, internal auditing control or auditing practice, providing as
much detail as possible. If an employee would like to discuss any
matter with the Audit Committee, the employee should indicate this in
the submission and include a telephone number or email address at which
he or she might be contacted if the Audit Committee deems it
appropriate. The Audit Committee will take reasonable steps to protect
the confidentiality and anonymity of employees submitting such
complaints.
2. Any Director, officer or employee of the Company who receives a
complaint from any person regarding accounting, internal accounting
controls or auditing matters of the Company must immediately report such
complaint to the Company's General Counsel who shall report such
complaint to the Chairman of the Audit Committee upon becoming advised
of such complaint.
3. Upon receiving a complaint, the Audit Committee Chairman shall
initially review the complaint to determine if the complaint relates to
accounting or auditing controls or matters. If the complaint does not
relate to accounting or auditing controls or matters, the Audit
Committee Chairman shall forward the complaint to the Company's General
Counsel for handling.
4. Upon receiving a complaint relating to accounting or auditing
controls or matters, the Audit Committee Chairman shall confer with the
other members of the Audit Committee. The Audit Committee is required
to address only those complaints or concerns relating to accounting,
internal accounting controls and/or auditing matters. The Audit
Committee shall conduct or coordinate a timely and impartial
investigation of such complaints. As necessary, the Audit Committee
may utilize directors, officers and employees of the Company, as well
as independent investigators, to assist with the investigation.
5. Upon completing an investigation of an accounting or auditing
complaint, the Audit Committee shall report to the Board of Directors no
later than its next regularly scheduled meeting with respect to the
complaint and any recommended corrective actions. The Company may
discipline those employees who played a role in the improper conduct as
well as those who should have and failed to detect the conduct.
6. The Company shall not retaliate nor take any adverse action against
any person for raising a concern or making a complaint under this Policy
if that person, in doing so, acts in good faith and reasonably believes
the complaint or concern to be true.
7. The Audit Committee shall retain documentation of auditing or
accounting complaints received and investigations relating thereto for a
period of no less than 5 (five) years.
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WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
_______________________
FORM OF PROXY
_______________________
This Proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held May 11, 2004. The undersigned
hereby appoints Clarence L. Werner and Gary L. Werner, and each of them, as
proxy, with full power of substitution in each of them and hereby authorizes
them to represent and vote, as designated below, all the shares of Common
Stock of Werner Enterprises, Inc., held of record by the undersigned as of
March 22, 2004, at the Annual Meeting of Stockholders to be held on May 11,
2004, and any adjournments thereof.
1. Election of Directors.
(Check only one box below. To withhold authority for any
individual nominee, strike through the name of the nominee.)
[ ] To vote for the nominees listed below:
Curtis G. Werner
Gerald H. Timmerman
Kenneth M. Bird
or
[ ] To withhold authority to vote for all nominees listed above.
2. To amend the Company's Stock Option Plan to increase the number of
shares that may be optioned or sold under the Plan from 14,583,334 to
20,000,000.
(Check only one box below.)
[ ] For [ ] Against [ ] Abstain
3. To amend the Company's Stock Option Plan to increase the maximum
aggregate number of shares that may be granted to any one person from
1,562,500 to 2,562,500.
(Check only one box below.)
[ ] For [ ] Against [ ] Abstain
4. Stockholder Proposal - Board Inclusiveness.
(Check only one box below.)
[ ] For [ ] Against [ ] Abstain
5. In their discretion, the proxy is authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed
hereon by the undersigned stockholder. If no direction is made, this Proxy
will be voted FOR the election of all nominees for director, FOR the two
amendments to the Company's Stock Option Plan, and AGAINST the stockholder
proposal. Please sign exactly as your name appears. When shares are held by
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give your full title. If signing
as a corporation, please sign the full corporate name by the President or
another authorized officer. If a partnership, please sign in the partnership
name by an authorized person.
_______________________ _________ _____________________________ _________
Signature Date Signature if held jointly Date
Please mark, sign, date, and promptly return this form of proxy using the
enclosed self-addressed, postage-paid return envelope.