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:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by rule
14a-6(e)(2))
[ ] 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 8, 2007
________________________
Dear Stockholders:
It is a pleasure to invite you to the 2007 Annual Meeting of
Stockholders of Werner Enterprises, Inc. (the "Company") to be held at the
Omaha Marriott, 10220 Regency Circle, Omaha, Nebraska, on Tuesday, May 8,
2007, at 10:00 a.m. local time. The Omaha Marriott is located near the
intersection of Interstate 680 and West Dodge Road. The meeting will be held
for the following purposes:
1. To elect two Class I directors to serve for a three-year term
and until their successors are elected and qualified.
2. To adopt an amended and restated Equity Plan.
3. To approve the amendment to Article III of the Articles of
Incorporation with regard to the purpose of the corporation.
4. To approve the amendment to Article VIII of the Articles of
Incorporation with regard to the provisions for
indemnification.
5. To approve the amendment to Article VIII, Section A of the
Articles of Incorporation with regard to limitations on the
liability of directors.
6. 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 19, 2007, will
be entitled to vote at the meeting or any adjournment thereof.
At the meeting, Clarence L. Werner, Gregory L. Werner, and Gary L.
Werner and other 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, 2006 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, or vote your shares by telephone or via the
Internet, 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, as well as instructions for alternative means
of voting. 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
Senior Vice President, Controller
and Corporate Secretary
Omaha, Nebraska
April 4, 2007
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2007
________________________
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. ("Werner" or the "Company") to be
held on Tuesday, May 8, 2007, at 10:00 a.m. local time, at the Omaha
Marriott, 10220 Regency Circle, Omaha, Nebraska, and at any adjournments
thereof. The meeting will be held for the purposes set forth in the Notice
of Annual Meeting of Stockholders on the cover page hereof. The Proxy
Statement, Form of Proxy, and Annual Report to Stockholders are being mailed
by the Company on or about April 4, 2007.
A Form of Proxy for use at the Annual Meeting of Stockholders is
enclosed together with a self-addressed, postage-paid return envelope.
Alternatively, most stockholders may vote by telephone or via the Internet
instead of returning the enclosed form. Stockholders should refer to the
voting form or other voting instructions included with the proxy materials
for information on the voting methods available.
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 adoption of the Company's amended and restated
Equity Plan, FOR approval of the amendment to Article III of the Articles of
Incorporation (the "Articles"), FOR approval of the amendment to Article VIII
of the Articles, and FOR approval of the amendment to Article VIII, Section A
of the Articles.
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 19, 2007, the Company had 73,900,461 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 19, 2007. 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. This means that 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. The solicitation of
proxies on behalf of the Board of Directors includes a solicitation for
discretionary authority to cumulate votes. A stockholder may 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.
1
A majority of all outstanding shares of common stock entitled to vote at
the annual meeting must be present or represented by proxy in order to
satisfy the quorum requirement for the transaction of business at the annual
meeting. Both abstentions and broker non-votes are counted for the purpose
of determining a quorum. "Broker non-votes" are shares present by proxy at
the Annual Meeting and held by brokers or nominees as to which instructions
to vote have not been received from the beneficial owners and the broker or
nominee does not have discretionary authority as to certain shares to vote on
one or more matters. If a quorum should not be present, the annual meeting
may be adjourned from time to time until a quorum is obtained.
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 independent
directors as a group may do so by writing to Independent Directors 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.
DIRECTOR NOMINATION PROCESS
The Nominating Committee considers candidates for Board membership
suggested by Board members, as well as management and stockholders. In
accordance with the "Policy Regarding Director Recommendations by
Stockholders", it will consider candidates recommended by one or more
stockholders that have individually or as a group owned beneficially at least
two percent of the Company's issued and outstanding stock for at least one
year. Stockholder recommendations must be submitted in writing with the
required proof of compliance with stock ownership requirements, background
information, and qualifications of the candidate to the Corporate Secretary
not less than 120 days prior to the first anniversary of the date of the
proxy statement relating to the Company's previous annual meeting (by
December 5, 2007 for the 2008 Annual Meeting of Stockholders) in order for
the candidate to be evaluated and considered as a prospective nominee.
Generally, candidates for director positions should possess:
* 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
performance as a director.
The Nominating Committee evaluates prospective nominees against certain
minimum standards and qualifications, as listed in the "Nominating Committee
Directorship Guidelines and Selection Policy". These include, but are not
limited to, business experience, skills, talents, and the prospective
nominee's ability to contribute to the success of the Company. The
Nominating Committee 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 in accordance with the "Policy Regarding Director
Recommendations by Stockholders" is evaluated by the Nominating Committee in
the same manner as any other prospective candidate. The Company has not
engaged and has not paid any fees to a third party to assist in the
nomination process.
The full text of the Company's "Policy Regarding Director
Recommendations by Stockholders", including a list of information required to
be submitted with the nomination by the recommending stockholder, and
"Nominating Committee Directorship Guidelines and Selection Policy" may be
found on the Company's website, www.werner.com. Stockholders may also
request a copy of either policy by writing to the Corporate Secretary at the
address indicated on the first page of this Proxy Statement.
ELECTION OF DIRECTORS AND INFORMATION REGARDING DIRECTORS
The Articles of Incorporation of the Company provide that there shall be
two or three separate classes of directors, each consisting of not less than
two, nor more than five, directors, and as nearly equal in number as
possible. The Bylaws of the Company provide for eight directors, divided
into three classes. The term of office of the directors in the first class
expires at the 2007 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 2008 and 2009 Annual Meetings of
Stockholders, respectively. Gerald H. Timmerman and Kenneth M. Bird, current
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class I directors whose terms will expire at the 2007 Annual Meeting, have
been nominated for election at the meeting for terms expiring at the 2010
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 2007 Annual
Meeting is set forth on the following pages. The Board has determined that
Messrs. Timmerman, Steinbach, Bird, Jung, and Sather are each independent
pursuant to Nasdaq listing standards.
Name Position with Company or Principal Occupation Term Ends
---- --------------------------------------------- ---------
Clarence L. Werner Chairman of the Board 2009
Gary L. Werner Vice Chairman 2008
Gregory L. Werner President and Chief Executive Officer 2008
Gerald H. Timmerman President of Timmerman & Sons Feeding Co., Inc. (1)(2)(3) 2007
Michael L. Steinbach Owner of Steinbach Farms and Equipment Sales and
Steinbach Truck and Trailer (1)(3) 2008
Kenneth M. Bird Superintendent - Westside Community Schools (1)(2)(3) 2007
Patrick J. Jung Chief Operating Officer of Surdell&Partners LLC (1)(2)(3) 2009
Duane K. Sather Former Chairman of Sather Companies (1)(3) 2009
__________
(1) Serves on Audit Committee.
(2) Serves on Compensation Committee.
(3) Serves on Nominating Committee.
Clarence L. Werner, 69, 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 he
served as Chief Executive Officer of the Company from 1984 until February 8,
2007.
Gary L. Werner, 49, 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.
Gregory L. Werner, 47, 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. He was
named Chief Executive Officer of the Company on February 8, 2007.
Gerald H. Timmerman, 67, 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.
Michael L. Steinbach, 52, 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
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, 59, was appointed by the Board of Directors in 2002 to
fill a vacant director position and was elected by the stockholders in 2004.
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, 59, was elected a director of the Company in 2003. He
is currently serving as the Chief Operating Officer of Surdell&Partners LLC,
an Omaha, Nebraska advertising company. Prior to his position with
Surdell&Partners LLC, 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 currently serves on the board of
directors of the Burlington Capital Group LLC, including America First Tax
Exempt Investors L.P., and serves on its audit and governance committees. He
3
also serves on the board of directors of Supertel Hospitality, Inc. and
serves as its audit committee chairman and as a member of its nominating
committee.
Duane K. Sather, 62, is an investor and serves as a director of several
privately-held companies that construct and operate ethanol plants. From
1972 to 1996, Mr. Sather was President of Sather Trucking Company, and from
1988 to 1996, Mr. Sather was Chairman of Sather Companies. In 1996, the
Sather Companies were sold to Favorite Brands International.
Gary L. 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 or the nominee who becomes
unavailable. 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.
Assuming the presence of a quorum, directors shall be elected by a
plurality of the votes cast by the stockholders of the outstanding shares of
the Common Stock of the Company present in person or represented by proxy at
the 2007 Annual Meeting of Stockholders and entitled to vote thereon. This
means that the two nominees receiving the highest number of votes at the
annual meeting, after taking into account any cumulative voting, will be
elected to the Board. Shares not voted for any nominee, whether by
specifically withholding authority to vote on a proxy card or otherwise, will
have no impact on the election of directors except to the extent the failure
to vote for a nominee results in another individual receiving a larger
proportion of the total votes.
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 Board has established Audit, Compensation,
and Nominating Committees. Currently, Messrs. Timmerman, Bird, and Jung serve
as members of the Audit, Compensation, and Nominating Committees, and Messrs.
Sather and Steinbach are members of the Audit and Nominating Committees. The
Option Committee was dissolved on November 7, 2006, and the authority and
power of this committee was transferred and delegated to the Compensation
Committee.
Audit Committee
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, discusses
with management the process used to support the Chief Executive Officer and
Chief Financial Officer certifications that accompany the Company's periodic
filings, appoints the independent auditors for the next year, reviews and
approves all audit and non-audit services, manages the Company's internal
audit department, and reviews and maintains procedures for the anonymous
submission of complaints concerning accounting and auditing irregularities.
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 each independent pursuant to Nasdaq listing standards. 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 under
the rules of the Securities and Exchange Commission ("SEC"). The Audit
Committee charter, which has been approved by the Board of Directors, is
posted on the Company's website, www.werner.com. This information is not
deemed to be "soliciting material" or to be "filed" with the SEC or subject
to the liabilities of Section 18 of the Securities Exchange Act of 1934, and
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 except to the extent the Company specifically
requests that such information be incorporated by reference or treated as
soliciting material.
4
Compensation Committee
The Compensation Committee is responsible for determining and approving
the compensation of the Chairman, the Vice Chairman, and the President and
Chief Executive Officer. The Compensation Committee is also responsible for
approving the compensation of all other executive officers after considering
the recommendations of the Chairman, the Vice Chairman, and the President and
Chief Executive Officer. On November 7, 2006, the Compensation Committee
became responsible for administering the Company's Stock Option Plan, and the
authority of the Option Committee was transferred and delegated to the
Compensation Committee. 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 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. All current
Compensation Committee members are "non-employee directors" as defined by
Rule 16b-3 under the Securities Exchange Act of 1934, are "outside directors"
as defined in Section 162(m) of the Internal Revenue Code of 1986 ("the
Code"), as amended, and are each independent pursuant to Nasdaq listing
standards. The Compensation Committee charter is posted on the Company's
website, www.werner.com.
As explained in more detail under "Compensation Process" within the
Compensation Discussion and Analysis, the Compensation Committee has
delegated authority to the President and CEO which allows him to make changes
to the base salaries of executive officers within ranges established by the
Compensation Committee. Any such base salary changes are summarized,
reviewed, and approved by the Compensation Committee at the close of the
year.
During 2006, the Compensation Committee retained the firm of Towers
Perrin as its compensation consultant to assist in the continued development
and evaluation of compensation policies and the Compensation Committee's
determinations of compensation awards. The role of Towers Perrin is to
provide independent, third-party advice and expertise in executive
compensation issues. The Compensation Committee engaged Towers Perrin to
provide a competitive market pay analysis for the Company's executive
officers, comparing the base salary, annual bonus, and long-term incentive
components of compensation to both a competitive peer group and the general
industry.
Nominating Committee
The Nominating Committee 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 each independent pursuant to
Nasdaq listing standards. The Nominating Committee charter is posted on the
Company's website, www.werner.com.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is comprised of
Messrs. Timmerman, Bird, and Jung. None of the members of the Compensation
Committee during 2006 or as of the date of this proxy statement is or has
been an officer or employee of the Company. There were no transactions
between any member of the Compensation Committee and the Company that
occurred during 2006 which would require disclosure under Item 404 of
Regulation S-K. During 2006, no executive officer of the Company served as a
director or member of the compensation committee of any other entity, one of
whose executive officers served as a director or member of the Compensation
Committee of the Company.
Meeting Attendance
The Board of Directors held five meetings (in addition, two executive
sessions of the independent directors were held without the presence of
management) and acted once by unanimous written consent during the year ended
December 31, 2006. There were six meetings of the Audit Committee (including
four executive sessions with the independent auditors and four executive
sessions with the senior manager of internal audit, all without the presence
of management), three meetings of the Compensation Committee and one action
by unanimous written consent, one meeting of the Option Committee, and one
meeting of the Nominating 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, and the average attendance was 96%. The Company
encourages directors to attend annual meetings, although it does not have a
formal policy regarding director attendance at these meetings. Seven of the
eight then-current directors attended the Company's Annual Meeting of
Stockholders in May 2006, and the Company anticipates that most, if not all,
of its directors will attend the 2007 Annual Meeting of Stockholders.
5
DIRECTOR COMPENSATION AND BENEFITS
Directors who are not employees of the Company receive an annual
compensation package that is designed to attract, motivate and retain highly-
qualified independent professionals to represent the Company's stockholders.
The Company's 2006 compensation package for non-employee directors is
comprised of an annual cash retainer and cash meeting fees. Specifically:
* Annual board retainer: $10,000, paid in quarterly installments, for
board membership
* Board meeting fee: $2,000 paid for each meeting
* Audit Committee Chairman annual retainer: $10,000, paid in quarterly
installments
* Committee meeting fee: $2,000 paid for each meeting (if meeting is
not held on the same day as the board meeting)
In addition, the non-employee directors also receive reimbursement at
cost for all travel expenses incurred in attending board and Committee
meetings.
Director Stock Ownership
The Company does not have formal stock ownership requirements for
directors.
2006 Compensation
Cash compensation varies by non-employee director based on the number of
Committee meetings held, the Committees on which the non-employee director
serves, and whether the individual is the Chairman of the Audit Committee.
In 2006, all of the incumbent directors attended at least 75% of the total
number of meetings of the Board and of all Board Committees of which the
directors were members and expected to attend.
Change in
Pension Value
& Nonqualified
Fees Earned Non-Equity Deferred
or Paid Stock Option Incentive Plan Compensation All Other
Name in Cash($) Awards($) Awards($) Compensation($) Earnings ($) Compensation($) Total($)
-------------------------------------------------------------------------------------------------------------------
Gerald H. Timmerman 34,000 - - - - - 34,000
Michael L. Steinbach 32,000 - - - - - 32,000
Kenneth M. Bird 34,000 - - - - - 34,000
Patrick J. Jung 44,000 - - - - - 44,000
Duane K. Sather 23,500 - - - - - 23,500
Jeffrey G. Doll (1) 11,000 - - - - - 11,000
(1) Mr. Doll resigned from the Company's Board of Directors effective May 9,
2006.
Directors who are also employees of the Company receive no additional
compensation for service as a Director.
6
EXECUTIVE OFFICERS
The following table sets forth the executive officers of the Company and
the capacities in which they currently serve.
Name Age Capacities In Which They Serve
---- --- ------------------------------
Clarence L. Werner 69 Chairman of the Board (1)
Gary L. Werner 49 Vice Chairman
Gregory L. Werner 47 President and Chief Executive Officer (1)
Daniel H. Cushman 52 Senior Executive Vice President and Chief Marketing Officer
Derek J. Leathers 37 Senior Executive Vice President - Value Added Services and International
H. Marty Nordlund 45 Senior Executive Vice President - Specialized Services
Robert E. Synowicki, Jr. 48 Executive Vice President and Chief Information Officer
Richard S. Reiser 60 Executive Vice President and General Counsel
John J. Steele 49 Executive Vice President, Treasurer and Chief Financial Officer
Jim S. Schelble 46 Executive Vice President - Sales and Marketing
(1) On February 8, 2007, Mr. Clarence L. Werner resigned as the Chief
Executive Officer, and the Board named Gregory L. Werner the Chief Executive
Officer.
See "ELECTION OF DIRECTORS AND INFORMATION REGARDING DIRECTORS" for
information regarding the business experience of Clarence L. Werner, Gary L.
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 and
Chief Marketing Officer in 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.
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, Senior Vice President - Van Division and
International in July 2003, Executive Vice President - Van Division and
International in 2004, and was named Senior Executive Vice President - Value
Added Services and International in 2006. 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.
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, Senior
Vice President - Specialized Services in 2003, Executive Vice President -
Specialized Services in August 2005, and was named Senior Executive Vice
President - Specialized Services in 2006. Prior to joining the Company, Mr.
Nordlund held various management positions with Crete Carrier Corporation.
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 December 1999. Mr. Synowicki was employed by the firm
of Arthur Andersen & Co., independent public accountants, as a certified
public accountant 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.
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, Vice President, Treasurer and Chief Financial Officer in
1996, Senior Vice President, Treasurer and Chief Financial Officer in 2004,
and was named Executive Vice President, Treasurer and Chief Financial Officer
7
in August 2005. Mr. Steele was employed by the firm of Arthur Andersen &
Co., independent public accountants, as a certified public accountant from
1979 until his employment with the Company in 1989.
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, Vice President - Sales in 2003, Senior
Vice President - Sales in 2004 and was named Executive Vice President - Sales
and Marketing in August 2005. 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 and amendments
thereto received by it and 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, 2006, all filing requirements
applicable to its officers, directors, and greater than ten percent
beneficial owners were complied with in a timely manner, except that the
initial Form 3 for Duane K. Sather was filed 10 business days after the due
date.
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL
STOCKHOLDERS
The table below sets forth certain information as of March 19, 2007,
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 named
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 19, 2007, the Company
had 73,900,461 shares of Common Stock outstanding. Except as otherwise
indicated in the footnotes to the following table, the Company believes that
the beneficial owners of the Common Stock listed below have sole voting power
and investment power with respect to such shares, subject to applicable laws.
Unless otherwise noted, the business address of each beneficial owner set
forth below is 14507 Frontier Road, Omaha, Nebraska 68138.
Beneficial Ownership
----------------------------------------------
Name of Shares Right to
Beneficial Owner Owned Acquire (1) Total Percent (2)
---------------- ------ ----------- ----- -----------
Clarence L. Werner (3) 22,327,985 1,137,500 23,465,485 31.3%
Gary L. Werner (4) 1,558,086 460,418 2,018,504 2.7%
Gregory L. Werner 3,276,694 688,336 3,965,030 5.3%
Daniel H. Cushman 704 173,234 173,938 *
John J. Steele 2,896 67,709 70,605 *
Gerald H. Timmerman 13,666 - 13,666 *
Michael L. Steinbach - - - *
Kenneth M. Bird 500 - 500 *
Patrick J. Jung 2,000 - 2,000 *
Duane K. Sather 7,000 - 7,000 *
Lord, Abbett & Co. LLC (5) 4,985,316 - 4,985,316 6.7%
Dimensional Fund Advisors LP (6) 4,830,396 - 4,830,396 6.5%
All executive officers, directors
and director nominees as a group
(15 persons) (3)(4) 27,201,696 2,737,700 29,939,396 39.1%
___________
* Indicates less than 1%.
(1) Number of shares underlying stock options which are exercisable as of
March 19, 2007, or which become exercisable 60 days thereafter.
8
(2) The percentages are based upon 73,900,461 shares, which equal the
outstanding shares of the Company as of March 19, 2007. For beneficial
owners who hold options exercisable within 60 days of March 19, 2007,
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 these
23,465,485 shares, sole dispositive power with respect to 8,464,235
shares, and shared dispositive power with respect to 15,001,250 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 which is Union Bank and Trust Company who has sole
investment and 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 which is Becky K. Werner (Mr. Werner's wife) who has sole
investment and voting power over the shares held by the trust. Mr.
Werner disclaims actual and beneficial ownership of the shares held by
the Gary L. Werner Irrevocable Inter Vivos QTIP Trust II and the shares
held by the Becky K. Werner Revocable Trust.
(5) Based on Schedule 13G as of December 29, 2006, as filed with the
Securities and Exchange Commission by Lord, Abbett & Co. LLC, 90 Hudson
Street, Jersey City, New Jersey 07302. Lord, Abbett & Co. LLC claims
sole voting power with respect to 4,733,216 shares, sole dispositive
power with respect to 4,985,316 shares, and no shared voting or
dispositive power with respect to any of these shares.
(6) Based on Schedule 13G as of December 31, 2006, as filed with the
Securities and Exchange Commission by Dimensional Fund Advisors LP, 1299
Ocean Avenue, Santa Monica, California 90401. Dimensional Fund Advisors
LP claims sole voting power and sole dispositive power with respect to
these 4,830,396 shares and no shared voting or dispositive power with
respect to any of these shares.
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee of the Board of Directors is responsible for
establishing executive compensation policies and overseeing executive
compensation practices at Werner. The Compensation Committee is comprised
solely of non-employee directors, each of whom is independent pursuant to
Nasdaq listing standards.
Executive Compensation Philosophy
Werner's executive compensation program objectives are to attract,
motivate and retain high-quality executives by providing total compensation
that is competitive with the various labor markets and industries in which
the Company competes for talent. The executive pay program is designed to
reward the Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO")
and the next three most highly compensated executive officers who were
executive officers at December 31, 2006 (collectively, the "named executive
officers") for both Company performance and the executive's individual
performance and contribution to the Company's overall business objectives.
The Compensation Committee carries out the executive compensation
philosophy of Werner through the following compensation principles:
* Provide total compensation that is competitive with the various
labor markets and industries in which the Company competes for talent
such that it will attract, motivate and retain a highly capable and
performance-focused executive team.
* Link executive rewards to the financial performance of the Company as
well as the executive's individual performance and contribution to
the Company's overall business objectives.
Elements of Compensation
Individual elements of Werner's total compensation are determined after
consideration of an executive's total direct compensation (base salary,
actual bonus and actual long-term incentive awards).
The primary elements of the Company's 2006 executive compensation
package include: base salary, annual cash bonus opportunity, stock options,
employee stock purchase plan, perquisites, health and welfare benefit
programs, 401(k), and non-qualified deferred compensation plan.
9
Base Salary
Werner's base salary is a fixed element of compensation that is paid to
each named executive officer for the performance of his primary job duties
and responsibilities. Base salaries at Werner are reviewed annually. Market
adjustments to named executive officer base salaries are generally made when
there is a significant change in position responsibilities or if competitive
market data indicates a significant deviation compared to market salary
practices.
The actual salaries paid to each of Werner's named executive officers
will vary based on the performance of the individual and the business unit(s)
or function(s) under his or her leadership, the Company's performance, and
economic and business conditions affecting Werner at the time of the review.
Annual Cash Bonus
Werner's annual cash bonus program is a discretionary program designed
to reward executives after consideration of Werner's overall financial
results considering economic and business conditions affecting the Company,
the executive's performance and contribution to the Company's overall
business objectives and the prior year's bonus payment. The annual cash
bonus program provides motivation for executives to improve the Company's
annual financial results, which leads to long-term success. Historically,
executive payments have been the same or higher than the previous year's
payment which correlates with Werner's consistent profitable growth record,
after considering economic and business conditions affecting the Company.
Actual cash bonus awards are at the sole discretion of the Compensation
Committee. The Compensation Committee considers the CEO's recommendation,
competitive total cash compensation data by position, and actual bonuses paid
in the marketplace at other peer transportation and logistics companies (such
as those companies in the Werner executive compensation peer group listed
under "Compensation Process"). The Compensation Committee also reviews the
Company's revenues, net income, operating ratio, number of tractors, stock
price, and return on assets relative to other peer transportation companies
when making its decision.
Final award amounts approved by the Compensation Committee for each
executive are intended to deliver market competitive total cash compensation
reflective of the executive's individual performance and contribution within
the overall context of Company financial results and business objectives.
Long-Term Incentive Compensation
Werner's long-term incentive program is designed to reward for share
price appreciation through executive stock options and provides an incentive
for long-term retention of executives. Grants are made at the discretion of
the Compensation Committee and are not necessarily made on an annual basis.
In determining an overall pool of stock options to make available for grant,
the Compensation Committee considers both dilution and relative financial
performance of Werner compared against the marketplace. The Compensation
Committee considers each executive's responsibilities, individual
performance, and contribution to the Company's performance for purposes of
allocating the overall pool among executives.
Werner has historically chosen a stock option long-term incentive
program because the Company believes that stock options link the interests of
Werner's named executive officers with Company stockholders. The Board has
proposed amendments to its stock option plan, subject to stockholder
approval, which would allow the Company to award restricted stock to its
executives. The Company believes the use of restricted stock would have a
less dilutive effect as compared to stock options, and would also directly
link executive interests with that of the stockholders as restricted stock
units are impacted by both increases and decreases in stock price. The
Company expects to use a combination of stock options and restricted stock
awards in its ongoing long-term incentive program. The vesting periods for
the long-term incentive program directly align compensation for named
executive officers with the interests of stockholders of the Company by
rewarding creation and preservation of long-term stockholder value.
In 2006, Werner did not make any stock option grants to the named
executive officers.
Perquisites
Werner believes perquisites are both an important element of competitive
total rewards and are necessary for the named executive officers to carry out
the responsibilities of their positions.
Position-specific perquisites are as follows: the Vice Chairman and the
President and CEO utilize Company-provided income tax preparation services.
The Chairman also utilizes Company income tax, accounting, and legal services
for which he reimburses the Company. The Senior Executive Vice President and
10
Chief Marketing Officer is provided with a Company-paid country club
membership.
Werner did not provide unreimbursed personal use of Company aircraft to
the Chairman, the Vice Chairman, and the President and CEO. When any of
these three executives use Werner aircraft for personal business, the
executive reimburses the Company at the higher of the incremental cost to the
Company or the Internal Revenue Service ("IRS") taxable income amount. In
2006, Werner provided the Senior Executive Vice President and Chief Marketing
Officer with nominal use of the Werner aircraft for personal business for
himself and two other individuals. For SEC disclosure purposes, there was no
incremental cost to the Company related to his use of the plane in 2006;
however, "All Other Compensation" in the Summary Compensation Table includes
the tax gross-up for the IRS value of the personal use.
All of the named executive officers of Werner are provided with a
Company car for business and personal use, with the exception of the Chairman
and the President and CEO who each have the use of two Company cars.
Benefits
The named executive officers participate in the full range of health and
welfare benefits and are covered by the same plans on the same terms as
provided to all full-time U.S. employees, with the exception of the Senior
Executive Vice President and Chief Marketing Officer who receives an
additional subsidy of his healthcare premiums (see All Other Compensation
Table for details).
Werner targets its overall benefits to be competitive with its peer
group. Included in these benefits are the company contributions to the
401(k) Plan and company match on the Employee Stock Purchase Plan, which are
on the same terms as provided to all full-time U.S. employees (see All Other
Compensation Table for details). At the executives' request, the Vice
Chairman and the President and CEO do not receive a matching contribution for
the 401(k) Plan. The non-qualified deferred compensation plan (as described
further under "Non-qualified Deferred Compensation Plan for the Year Ended
December 31, 2006") allows key employees whose 401(k) plan contributions are
limited due to IRS regulations affecting highly compensated employees to
contribute additional amounts on a tax-deferred basis, subject to annual
dollar limits imposed by the Company. The nonqualified deferred compensation
plan provisions allow the Company to make a matching contribution, however,
to date, the Company has elected not to make a matching contribution.
Compensation Process
Each year, the Compensation Committee reviews the competitiveness of
total direct compensation as well as the competitiveness of each individual
compensation element for Werner's named executive officers. As part of this
annual process, the Compensation Committee reviews and considers executive
market data (base salary, total cash, long-term incentives and total direct
compensation) along with the individual responsibilities of each executive
when setting annual pay opportunities.
At the end of the year, after reviewing the competitive compensation
data, the Compensation Committee sets established total direct compensation
"pay ranges" by job title (i.e., Senior Executive Vice President, Executive
Vice President, Senior Vice President, and Vice President) within which the
CEO may make base salary changes during the following year. Any proposed
changes that do not fall within the approved ranges require approval of the
Compensation Committee. These base salary changes are summarized, reviewed
and approved by the Compensation Committee at the close of the year. For
example, the Compensation Committee sets base salary pay ranges in November
2006 for fiscal year 2007. The CEO has delegated authority to make base
salary changes throughout 2007 within these ranges. In November 2007, the
Compensation Committee will review year-end total cash compensation
recommendations by the CEO for the named executive officers, including these
base salary changes.
Werner reviews its executive total compensation levels (base salary,
bonus and long-term incentives) in relation to both a competitive peer group
of 17 transportation and logistics companies and companies of comparable size
to Werner in the broader general industry. The competitive market pay
analysis is prepared by the Compensation Committee's Consultant.
Werner's revenues align most closely with the revenues of the top
quartile of the competitive peer group; therefore, Werner compares total
compensation against the 75th percentile of the peer group. The general
industry data, on the other hand, is regressed or size-adjusted to Werner's
annual revenues. Therefore, Werner compares total compensation at the median
of the general industry group.
Werner's competitive peer group is made up of companies with which the
Company competes for executive talent in the transportation and logistics
industry. The companies are: Arkansas Best, Celadon Group, Hub Group, Pacer
International, Expeditors International of Washington, Con-Way, Covenant
11
Transport, Heartland Express, J.B. Hunt Transport Services, Knight
Transportation, Landstar System, Old Dominion Freight Line, Saia, Swift
Transportation, U.S. Xpress Enterprises, Marten Transport, and USA Truck.
The Compensation Committee does not attempt to set each compensation
element for each executive based on the peer group and general industry data
but instead uses these comparisons as one factor in determining compensation
levels. Generally, the Compensation Committee reviews total compensation
levels annually and makes adjustments when job responsibilities, individual
performance or market data warrants. Actual total compensation can vary from
year to year based on Company, operating unit and individual performance.
When setting total compensation, the Company applies a consistent
approach for all named executive officers. The Compensation Committee also
exercises appropriate business judgment in how it applies these standard
approaches to the facts and circumstances associated with each executive.
Generally, the amount of compensation realized or potentially realizable
does not directly impact the level at which future pay opportunities are set.
Recommendations on the pay packages for the Chairman, the Vice Chairman,
and the President and CEO are made by the Compensation Committee's Consultant
and their pay is set by the Compensation Committee during executive session
based on the Compensation Committee's assessment of the individual's
responsibility and performance and the financial and operating performance of
Werner. On February 8, 2007, Mr. Clarence L. Werner resigned as the Chief
Executive Officer and continues to serve as Chairman, and the Board named Mr.
Gregory L. Werner the Chief Executive Officer. In connection with the
promotion and additional responsibilities, the Compensation Committee
increased the base salary of Mr. Gregory L. Werner effective February 9,
2007, as disclosed in a Current Report on Form 8-K filed February 9, 2007.
The CEO of Werner is eligible for all of the same programs as the other
named executive officers. The CEO's actual compensation is reflective of
overall Company performance and the achievement of the CEO goals and
objectives, as determined by the Compensation Committee.
Stock Grant Practices
Werner grants stock options on an ad hoc basis at the discretion of the
Compensation Committee. The Compensation Committee follows a set practice
whereby the Compensation Committee selects a grant date, and the option grant
price is based on the closing price of Werner common stock on the day prior
to the date of grant in accordance with the provisions of the current stock
option plan. The Board has proposed amendments to the plan, one of which
will specify that the grant price is established as the closing price on the
date of grant.
When choosing the grant date, the Compensation Committee watches the
longer term trends in Werner's stock price and selects grant dates that will
provide an incentive for management to increase Werner's stock price back to
higher levels.
The Compensation Committee also establishes the vesting period for each
grant. Stock options granted to Werner's named executive officers since 1999
vest over six years based on the following schedule and expire after ten
years:
Years from Grant Date Amount Vested
--------------------- -------------
2 years 25%
3 years 20%
4 years 20%
5 years 20%
6 years 15%
Executive Stock Ownership
Werner does not have formal executive stock ownership guidelines.
12
Tax and Accounting Considerations
The Committee reviews projections of the estimated accounting (pro forma
expense) and tax impact of all material elements of the executive
compensation program. Generally, an accounting expense is accrued over the
requisite service period of the particular pay element (generally equal to
the performance period) and the Company realizes a tax deduction upon the
payment to/realization by the executive.
Section 162(m) of the Code, generally provides that publicly held
corporations may not deduct in any one taxable year certain compensation in
excess of $1 million paid to the Chief Executive Officer and the next four
most highly compensated executive officers. The Committee will use, where
practical, compensation policies and programs that preserve the tax
deductibility of compensation; however, the Committee, at its sole
discretion, may approve payment of nondeductible compensation from time to
time if it deems circumstances warrant it.
In fiscal 2006, the Chairman received compensation in excess of $1
million. Consequently, a portion of Mr. C.L. Werner's compensation was not
treated as a deductible income tax expense for 2006. Section 162(m) did not
limit Werner's ability to take a tax deduction for compensation paid to any
other executive officer.
Employment Arrangements
None of the Company's named executive officers have written employment
agreements with the Company.
Termination Arrangements
None of the Company's named executive officers have severance agreements
with the Company.
Werner does not provide for incremental compensation or special
treatment for incentive compensation in the event of a voluntary termination,
termination for cause, or termination by death or disability.
Change-in-Control Arrangements
None of the Company's named executive officers have change in control
agreements with the Company, and Werner does not currently provide for
incremental compensation or special treatment for incentive compensation
related to a change in control. The Board has proposed amendments to its
stock option plan, subject to stockholder approval, which would add change in
control provisions to the stock option plan.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table presented below represents all elements
of compensation awards to the Company's named executive officers for fiscal
year 2006, including:
* Base salary
* Bonus: Awards made under the annual cash plan
* All other compensation represents the sum of the values of:
* Perquisites and Other Personal Benefits
* Matching Company contributions to 401(k) plan
* Insurance Premiums paid by the Company
* Tax Reimbursements
* Matching Company contributions under the Employee Stock Purchase
Plan
Base salaries and annual cash plan awards have been determined in
accordance with the procedures presented in the Compensation Discussion and
Analysis. Executive deferrals to the Company's 401(k) plan and non-qualified
deferred compensation plan are included in the appropriate column (i.e.,
Salary and/or Bonus) for which the compensation was earned.
13
Change in
Pension Value
and Non-Qualified
Non-Equity Deferred
Stock Option Incentive Plan Compensation All Other
Name and Salary Bonus Awards Awards Compensation Earnings Compensation
Principal Position Year ($) ($)(1) ($)(2) ($)(2) ($)(2) ($)(3) ($)(4) Total($)
-------------------------------------------------------------------------------------------------------------------------------
Clarence L. Werner 2006 715,000 350,000 - - - - 32,621 1,097,621
Chairman (5)
Gregory L. Werner 2006 420,000 350,000 - - - - 37,093 807,093
President and
Chief Executive Officer (5)
Gary L. Werner 2006 355,000 230,000 - - - - 17,260 602,260
Vice Chairman
Daniel H. Cushman 2006 310,270 245,000 - - - - 26,863 582,133
Senior Executive Vice
President and Chief
Marketing Officer
John J. Steele 2006 210,000 80,000 - - - - 14,507 304,507
Executive Vice President,
Treasurer and Chief
Financial Officer
Footnotes:
(1) Annual awards made under the annual cash plan.
(2) No stock, stock option, or non-equity incentive plan awards were made in
2006.
(3) None of the earnings on non-qualified deferred compensation balances are
above-market or preferential earnings.
(4) See "All Other Compensation" table below for detailed breakdown of all
other compensation.
(5) On February 8, 2007, Mr. Clarence L. Werner resigned as the Chief
Executive Officer, and the Board named Gregory L. Werner the Chief
Executive Officer.
ALL OTHER COMPENSATION FOR THE YEAR ENDED DECEMBER 31, 2006
The table below presents "all other compensation" provided in fiscal
year 2006 to the named executive officers. All other compensation, as
defined by the SEC, is comprised of the following:
Registrant Registrant
Payments/ Contributions to Contributions to
Perquisites & Accruals on Defined Insurance Tax Employee Stock
Other Personal Termination Contribution Premiums Reimbursements Purchase
Name Benefits ($) Plans ($) Plans ($)(6) ($)(7) ($)(8) Plan ($)(9)
------------------------------------------------------------------------------------------------------------------
Clarence L. Werner (1) 20,801 - - - 11,820 -
Gregory L. Werner (2) 25,301 - - - 11,792 -
Gary L. Werner (3) 12,666 - - - 4,594 -
Daniel H. Cushman (4) 14,139 - 2,019 1,992 8,018 695
John J. Steele (5) 8,471 - 1,655 - 3,686 695
Footnotes:
(1) Perquisites and personal benefits include $20,801 for use of two company
cars.
(2) Perquisites and personal benefits include $20,801 for use of two company
cars and $4,500 for income tax preparation services.
(3) Perquisites and personal benefits include $10,166 for use of company car
and $2,500 for income tax preparation services.
(4) Perquisites and personal benefits include $8,471 for use of company car
and $5,668 for Company-paid country-club membership.
(5) Perquisites and personal benefits include $8,471 for use of company car.
(6) Registrant contributions to company 401(k) plan.
(7) Insurance premium of $1,992 represents an additional subsidy of Mr.
Cushman's healthcare premiums.
(8) Tax gross-ups for company car use for Messrs. C.L. Werner, Gregory L.
Werner, Gary L. Werner, and John J. Steele. Tax gross-up of $4,484 for
company car use and $3,534 for the IRS value of personal use of the
company aircraft for Mr. Cushman.
(9) 15% company match for employee contributions to the Employee Stock
Purchase Plan.
The Company's contribution to the 401(k) Plan and Employee Stock
Purchase Plan on behalf of the named executive officers are on the same terms
as provided to all full-time U.S. employees. In addition to the above
compensation, the five named executive officers also participated in
voluntary health and welfare benefit programs which are generally available
and comparable to those provided to all full-time U.S. employees.
14
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2006
The table below presents the details of all outstanding awards held by
the five named executive officers as of December 31, 2006. There are no
outstanding stock awards for any executives (columns in tables have been
excluded).
Option Awards
---------------------------------------------------------------------------------------------
Equity Incentive
Plan Awards:
Number of Number of Number of
Securities Securities Securities
Underlying Underlying Underlying
Unexercised Unexercised Unexercised
Options Options Unearned Option Exercise Option Expiration
Name (#) Exercisable (#) Unexercisable Options (#) Price ($) Date
-----------------------------------------------------------------------------------------------------------------
Clarence L. Werner 475,000 - - 7.73 12-Jul-10
637,500 112,500 - 9.77 29-Sep-11
25,000 75,000 - 18.33 20-May-14
Gregory L. Werner 26,667 - - 9.66 09-Dec-07
25,001 - - 7.35 21-Dec-09
300,001 - - 7.73 12-Jul-10
311,667 55,001 - 9.77 29-Sep-11
25,000 75,000 - 18.33 20-May-14
Gary L. Werner 201,668 - - 7.73 12-Jul-10
233,750 41,250 - 9.77 29-Sep-11
25,000 75,000 - 18.33 20-May-14
Daniel H. Cushman 1,564 - - 9.66 09-Dec-07
8,750 - - 9.26 09-Apr-09
2,917 - - 8.96 14-Apr-09
22,918 - - 7.35 21-Dec-09
55,418 - - 7.61 20-Sep-10
56,667 10,001 - 9.77 29-Sep-11
25,000 75,000 - 18.33 20-May-14
- 35,000 - 16.68 22-Oct-15
John J. Steele 18,750 - - 9.66 09-Dec-07
33,334 - - 7.35 21-Dec-09
10,625 1,875 - 9.77 29-Sep-11
5,000 15,000 - 18.33 20-May-14
- 15,000 - 16.68 22-Oct-15
OPTION EXERCISES FOR THE YEAR ENDED DECEMBER 31, 2006
The table below presents the stock options exercised during 2006 by the
five named executive officers. The value realized on exercise reflects the
total pre-tax value realized by officers (stock price at exercise minus the
option's grant/exercise price). There are no outstanding stock awards for
any executives.
Option Awards
---------------------------------------------
Number of Shares Value Realized on
Name Acquired on Exercise (#) Exercise ($)
------------------------------------------------------------------
Clarence L. Werner 100,000 1,328,520
Gregory L. Werner 100,000 1,273,295
Gary L. Werner 50,000 697,475
Daniel H. Cushman - -
John J. Steele - -
15
NON-QUALIFIED DEFERRED COMPENSATION PLAN FOR THE YEAR ENDED DECEMBER 31, 2006
The Company offers a deferred compensation plan that was established in
2005 for eligible key employees whose 401(k) plan contributions are limited
due to IRS regulations affecting highly compensated employees. Key terms of
the plan:
* Eligible employees can defer compensation (base salary) on a pre-
tax basis within annual dollar limits established by the Company.
The current annual limit is established such that a participant's
combined deferrals in both the non-qualified deferred compensation
plan and the 401(k) plan approximate the maximum annual deferral
amount available to non-highly compensated employees in the 401(k)
plan.
* Accounts accrue earnings based on the return of one or more
investment funds made available in the non-qualified deferred
compensation plan; the participant elects the investment funds in
which his or her deferred compensation account shall be deemed to be
invested.
* Payouts are made after retirement or termination of employment from
the Company either as annual installments or as a lump sum as elected
in each participant's salary deferral agreement. Participants may
also make elections for in-service payouts under certain
circumstances.
* The plan document allows the Company to make a matching
contribution to the participants' accounts, but, to date, the Company
has chosen not to make matching contributions.
The table below presents the following information related to the
Company's Deferred Compensation Plan.
* Executive contributions during 2006: reflects voluntary executive
deferrals of base salary. These deferrals are included in the Salary
column of the Summary Compensation Table.
* Company contributions during 2006: none
* Aggregate earnings during 2006: reflects the earnings (losses) on
account balances. None of the earnings are above-market or
preferential earnings and, thus, are not listed in the Summary
Compensation Table.
* Aggregate withdrawals/distributions: none
* Aggregate balance as of December 31, 2006: total market value of
the deferred compensation account, including executive contributions
and any earnings to date
Executive Registrant Aggregate Aggregate
Contributions in Contributions in Aggregate Earnings Withdrawals/ Balance at
Name 2006 ($) 2006 ($) in 2006 ($) Distributions ($) End of 2006 ($)
-------------------------------------------------------------------------------------------------------------------
Clarence L. Werner - - - - -
Gregory L. Werner 10,000 - 2,217 - 21,356
Gary L. Werner 10,000 - 1,074 - 11,074
Daniel H. Cushman 10,000 - 1,980 - 21,226
John J. Steele 10,000 - 2,196 - 21,367
COMPENSATION COMMITTEE REPORT
The following report is not deemed to be "soliciting material" or to be
"filed" with the SEC or subject to Regulation 14A, other than as provided
below, or to the liabilities of Section 18 of the Securities Exchange Act of
1934, 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 except to the extent the Company
specifically requests that such information be incorporated by reference or
treated as soliciting material.
In conjunction with the preparation of the Company's Annual Report on
Form 10-K for the year ended December 31, 2006 and this Proxy Statement for
the Annual Meeting of Stockholders to be held May 8, 2007, the Compensation
Committee has reviewed and discussed with management the accompanying
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-
K and found on pages 9-13.
Based on the foregoing review and discussions, the Compensation
Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement on Schedule 14A
and incorporated by reference into the Annual Report on Form 10-K for the
year ended December 31, 2006.
Patrick J. Jung, Committee Chairman
Gerald H. Timmerman
Kenneth M. Bird
16
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 Regulation 14A, other than as provided
below, or to the liabilities of Section 18 of the Securities Exchange Act of
1934, 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 except to the extent the Company
specifically requests that such information be incorporated by reference or
treated as soliciting material.
The Audit Committee of the Board of Directors is comprised of Messrs.
Jung, Timmerman, Steinbach, Bird, and Sather. 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 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 2006 audited
financial statements, the Audit Committee met with both management and the
Company's outside auditors to review and discuss the financial statements
included in the Company's Annual Report on Form 10-K prior to their issuance
and to discuss significant accounting issues. Management advised the Audit
Committee that the financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, and
the Audit Committee discussed the statements with both management and the
outside auditors. The Audit 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), as amended,
as adopted by the Public Company Accounting Oversight Board.
With respect to the Company's outside auditors, the Audit Committee,
among other things, discussed with KPMG LLP matters relating to its
independence, including written disclosures made to the Audit Committee as
required by the Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees).
Based on the foregoing review and discussions, the Audit 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, 2006, for filing with the Securities and Exchange
Commission.
Patrick J. Jung, Committee Chairman
Gerald H. Timmerman
Michael L. Steinbach
Kenneth M. Bird
Duane K. Sather
17
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG LLP is the independent registered public accounting
firm 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 and internal control over financial reporting for the
years ended December 31, 2006 and 2005, and fees for other services rendered
by KPMG LLP during those periods.
2006 2005
---- ----
Audit Fees $434,379 $398,668
Audit-Related Fees 7,000 6,500
Tax Fees 0 0
All Other Fees 0 0
-------- --------
Total $441,379 $405,168
======== ========
Audit fees relate to services rendered for the audit of the Company's
annual financial statements and internal control over financial reporting and
for the review of financial statements included in the Company's Quarterly
Reports on Form 10-Q filed with the SEC. Audit-related fees include fees for
benefit plan audits. Tax fees are defined as fees for tax compliance, tax
advice and tax planning.
The Audit Committee has reviewed the services provided related to the
audit-related 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 the
independent registered public accounting firm for the Company for the year
ending December 31, 2007. 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.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent public accountants. Prior to engagement
of the independent public accountants for the next year's audit, management
will submit to the Audit Committee for approval a list of all audit and non-
audit services expected to be rendered during that year and the budgeted fees
for those services. The Audit Committee pre-approves these services by
category of service (audit, audit-related, tax and other) prior to
commencement of the engagement. If circumstances arise where it becomes
necessary to engage the independent public accountants for additional
services not contemplated in the original pre-approval, the Audit Committee
will approve those additional services prior to commencement of the
engagement. The Audit Committee may delegate pre-approval authority to the
Chair of the Audit Committee, provided that the Chair reports any such pre-
approval decisions to the Audit Committee at its next scheduled meeting. The
independent public accountants and management periodically report to the full
Audit Committee regarding the extent of services provided by the independent
public accountants in accordance with this pre-approval, and the fees for the
services performed to date. None of the fees paid to the independent public
accountants during 2006 and 2005 under the categories Audit-Related, Tax and
All Other fees described above were approved by the Audit Committee after
services were rendered pursuant to the de minimus exception established by
the SEC.
PROPOSAL TO ADOPT AMENDED AND RESTATED EQUITY PLAN
The Company believes that equity compensation aligns the interests of
management and employees with the interests of its stockholders. The Company
currently provides for the grant of stock options and stock appreciation
rights under the Werner Enterprises, Inc. Stock Option Plan. This stock
option plan was initially adopted by stockholders on June 9, 1987 at the
annual meeting. Since then, the plan was amended and restated in 1988, 1994,
2000 and 2004. The current aggregate number of shares that may be granted
pursuant to the exercise of stock options and stock appreciation rights under
the plan is 20,000,000 shares. As of December 31, 2006, 8,890,551 shares
remained available for issuance under this stock option plan. Stock options
for a total of 5,000 shares were granted to employees in 2006, and none have
been granted to date in 2007.
The Board has approved and adopted an amended and restated option plan
and renamed the amended plan the "Werner Enterprises, Inc. Equity Plan" (the
"Equity Plan"), pursuant to which it will, if the plan is approved by the
stockholders, be able to grant shares of restricted stock and grant awards of
stock options and stock appreciation rights to non-employee directors. The
amended and restated Equity Plan is being proposed for stockholder approval
so that the Company can continue to grant equity compensation to employees
18
and non-employee directors under the terms of the amended plan. If the
proposed plan amendments are not approved by stockholders, the current plan
will continue in its current form. A copy of the amended and restated Equity
Plan is attached as Appendix A to this Proxy statement.
The following general description of material features of the Equity
Plan is qualified in its entirety by reference to the provisions of the
amended and restated Equity Plan set forth in Appendix A.
Changes From Current Option Plan
Generally, with the exceptions noted immediately below, the Equity Plan
contains the same features, terms and conditions as the current version of
the plan. The material changes made to the Equity Plan are as follows:
* The Equity Plan will permit grants of restricted stock. All shares
of restricted stock must, at a minimum, be restricted for at least
one year from the date the restricted stock award is granted.
* The Equity Plan will permit non-employee directors to be eligible
to receive awards under the Plan. Accordingly, non-employee
directors will be eligible to receive grants of stock options,
restricted stock and stock appreciation rights (SARs).
* The Company modified the definition of "Committee" such that, for
awards granted to certain officers, the Committee will be composed
of at least two independent directors who qualify as "outside
directors" as defined in Section 162(m) of the Code and
"non-employee directors" as defined by SEC Rule 16b-3 and, such
that a separate Committee composed of two or more directors (who
need not be independent) or a senior executive officer can be
delegated the authority to grant certain awards under the Equity
Plan, provided that any such delegation is within limits
specifically prescribed by the Board.
* The Company modified the definition of "Fair Market Value", which
is used in establishing the exercise price of a stock option or
SAR, to be the closing trading price on the date of grant of an
option or SAR. The prior definition was the closing price on the
day prior to the date of grant of an option or SAR.
* The Company added certain features to the Equity Plan such that if
a participant's employment is constructively or actually terminated
within a two-year period following a "Change in Control", that
participant's awards under the Equity Plan will become fully
exercisable, in the case of stock options or SARs, or fully vested,
in the case of restricted stock. The Equity Plan also provides
more flexibility with dealing with outstanding awards following a
Change in Control or in connection with certain corporate events
which do not constitute a Change in Control. Under the Equity
Plan, a Change in Control will generally occur if 50% or more of
the common stock becomes owned by a person other than a member of
the Werner family, there is a non-approved, majority change in the
composition of the board of directors, the Company undergoes a
merger or consolidation in which the majority of the stockholder
ownership changes, the stockholders approve a plan of liquidation
or dissolution, or there is a sale of all or substantially all of
the Company's assets.
* If approved by the Committee or its delegate, awards granted under
the Equity Plan may be transferred to certain family members,
grantor trusts and certain other persons if such transfer is other
than for consideration.
* The Company expanded its ability under the Equity Plan to allow
payment of the stock option exercise price through cashless
exercise procedures, so-called "stock-for-stock" exercise
procedures or any other method permissible under current law for
exercising stock options.
General
The Equity Plan provides for grants of nonqualified stock options,
restricted stock and stock appreciation rights. The objectives of the Plan
are to advance the Company's interests and the interests of its stockholders
by attracting, motivating and retaining those individuals whose skill and
initiative enhance the Company's continued success, growth and profitability.
19
Eligibility and Limits on Awards
Any employee is currently eligible to receive awards under the Equity
Plan. If the proposed amendments to the Equity Plan are approved by the
stockholders, non-employee directors will be able to receive awards under the
Plan as well. No determination has been made as to which of the Company's
employees or non-employee directors will receive grants under the Equity
Plan, and, therefore the benefits to be allocated to any individual or to any
group of employees are not presently determinable. Since all members of the
board of directors would be eligible to receive grants under the Equity Plan,
each member of the Board has a personal interest in the approval of the
Equity Plan.
The Equity Plan places limits on the maximum amount of awards that may
be granted to any person during the duration of the Equity Plan. Under the
Equity Plan, no person may receive awards of stock options, stock
appreciation rights or restricted stock, that cover in the aggregate more
than 2,562,500 shares during the Equity Plan's duration.
Administration
The Equity Plan is administered by the Board of Directors or the
Compensation Committee. The Board or Compensation Committee will select the
employees and non-employee directors to whom awards will be granted and will
set the terms of such awards. As amended, the Equity Plan provides that
Board or Compensation Committee may delegate its authority under the plan to
a select group of directors (which may include officers of the Company) or to
a senior executive officer, subject to guidelines prescribed by the Board or
Compensation Committee, but only with respect to employees who are not
subject to Section 16 of the Exchange Act or Section 162(m) of the Internal
Revenue Code.
Shares Reserved for Awards
The Plan provides for up to 20,000,000 shares of common stock to be used
for awards. At December 31, 2006, 8,890,551 shares were available for
granting additional options, which represents approximately 12% of the shares
outstanding as of March 19, 2007. The shares may be treasury, or authorized
but unissued, shares of common stock and to the extent any award under the
Equity Plan terminates, expires or is forfeited, the shares subject to such
award will again be available for distribution under the Equity Plan. If a
stock option award is exercised, any shares used for full or partial payment
of the purchase price of shares with respect to which option is exercised and
any shares retained by the Company for tax withholding will again be
available for distribution under the Equity Plan. If a stock appreciation
right award is exercised, only the number of shares issued, if any, will be
considered delivered for the purpose of determining availability of shares
for delivery under the Equity Plan.
The number of shares authorized for awards is subject to adjustment for
changes in capitalization, reorganizations, mergers, stock splits, and other
corporate transactions as the Board or the Compensation Committee determines
to require an equitable adjustment. The Equity Plan will remain in effect
until all the shares available have been used to pay awards, subject to the
right of the Board to amend or terminate the Equity Plan at any time.
General Terms of Awards
The Board or the Compensation Committee will select the participants and
set the term of each award, which may not be more than ten years. The Board
or the Compensation Committee has the power to determine the terms of the
awards granted, including the number of shares subject to each award, the
form of consideration payable upon exercise, and all other matters. The
exercise price of an option and the grant price of a stock appreciation right
must be at least the fair market value of a share as of the grant date.
The Board or the Compensation Committee will also set the vesting
conditions of the award, except that vesting will be accelerated if, within
two years after a change of control, the Company (or its successor)
terminates the participant's employment other than for "cause" or the
participant terminates employment for a "good reason" (as the terms "cause"
and "good reason" are defined in the Equity Plan).
Awards granted under the Equity Plan are not generally transferable by
the participant except in the event of the participant's death as required by
law or if authorized by the Committee or its delegate, as provided in an
award agreement. Other terms and conditions of each award will be set forth
in award agreements, which can be amended by the Board or the Committee.
The number and type of awards that will be granted under the Equity Plan
presently is not determinable as the Board or Compensation Committee will
make these determinations in the future in its sole discretion.
20
Restricted Stock
Shares of Restricted Stock may be awarded under the Equity Plan. The
restricted stock will vest and become transferable upon the satisfaction of
conditions set forth in the respective restricted stock award agreement.
Restricted stock awards may be forfeited if, for example, the participant's
employment terminates before the award vests.
Stock Options
The Equity Plan will permit the granting to eligible participants of
nonqualified stock options, which do not qualify for any special tax
treatment under the Internal Revenue Code. The exercise price for any stock
option will not be less than the fair market value of a Common Share on the
date of grant. No stock option may be exercised more than ten years after
its date of grant.
Stock Appreciation Rights
Stock Appreciation Rights ("SARs") may be granted in combination with
underlying stock options. SARs entitle the holder upon exercise to receive
an amount in shares equal in value to the excess of the fair market value of
the shares covered by such right over the grant price. The grant price for
SARs will not be less than the fair market value of a common share on the
SARs' date of grant. The payment upon a SAR exercise shall be solely in
whole shares of equivalent value. Fractional shares will be rounded down to
the nearest whole share with no cash consideration paid.
Change in Control Provisions
The Equity Plan provides that, if, within the two-year period beginning
on the date of a Change in Control (as defined in the Equity Plan), an
employee resigns for "good reason" or is terminated by the Company other than
for "cause", (as the terms "good reason" and "cause" are defined in the
Equity Plan), then all stock options and SARs will become fully vested and
immediately exercisable, and the restrictions applicable to outstanding
shares of restricted stock will lapse. The Board or Committee may also make
certain adjustments and substitutions in connection with a Change in Control
or similar transactions or events as described in Section 13 of the Equity
Plan.
Federal Income Tax Consequences
Based on current provisions of the Internal Revenue Code and the
existing regulations thereunder, the anticipated U.S. federal income tax
consequences of grants under the Equity Plan are as described below. The
following discussion is not intended to be a complete discussion of
applicable law and is based on the U.S. federal income tax laws as in effect
on the date hereof. State tax consequences may in some cases differ from
those described below.
Stock Options
A participant receiving a nonqualified stock option does not recognize
taxable income on the date of grant of the nonqualified option, provided that
the nonqualified option does not have a readily ascertainable fair market
value at the time it is granted. In general, the participant must recognize
ordinary income at the time of exercise of the nonqualified option in the
amount of the difference between the fair market value of the shares on the
date of exercise and the option price. The ordinary income recognized will
constitute compensation for which tax withholding generally will be required.
The amount of ordinary income recognized by a participant will be deductible
by the Company in the year that the participant recognizes the income if the
Company complies with the applicable withholding requirements.
Shares acquired upon the exercise of a nonqualified stock option will
have a tax basis equal to their fair market value on the exercise date or
other relevant date on which ordinary income is recognized, and the holding
period for the shares generally will begin on the date of exercise or such
other relevant date. Upon subsequent disposition of the shares, the
participant will recognize long-term capital gain or loss if the participant
has held the shares for more than one year prior to disposition, or short-
term capital gain or loss if the participant has held the shares for one year
or less.
If a participant pays the exercise price, in whole or in part, with
previously acquired shares, the participant will recognize ordinary income in
the amount by which the fair market value of the shares received exceeds the
exercise price. The participant will not recognize gain or loss upon
delivering the previously acquired shares to the Company. Shares received by
a participant, equal in number to the previously acquired shares exchanged
therefor, will have the same basis and holding period for long-term capital
gain purposes as the previously acquired shares. Shares received by a
participant in excess of the number of such previously acquired shares will
21
have a basis equal to the fair market value of the additional shares as of
the date ordinary income is recognized. The holding period for the
additional shares will commence as of the date of exercise or such other
relevant date.
Restricted Stock
The recognition of income from an award of restricted stock for federal
income tax purposes depends on the restrictions imposed on the shares.
Generally, taxation will be deferred until the first taxable year the shares
are no longer subject to substantial risk of forfeiture. At the time the
restrictions lapse, the grantee will recognize ordinary income equal to the
then fair market value of the shares. Generally, the Company will be entitled
to deduct the fair market value of the shares transferred to the grantee as a
business expense in the year the grantee includes the compensation in income.
Stock Appreciation Rights
To the extent that the requirements of the Internal Revenue Code are
met, there are no immediate tax consequences to a grantee when a SAR is
granted. When a grantee exercises the right to the appreciation in fair
market value of shares represented by a SAR, payments made in shares are
normally includable in the grantee's gross income for regular income tax
purposes. The Company will be entitled to deduct the same amount as a
business expense in the same year. The includable amount and corresponding
deduction each equal the fair market value of the shares payable on the date
of exercise.
Deductibility of Awards
Section 162(m) of the Internal Revenue Code places a $1 million annual
limit on the compensation deductible by the Company or a majority owned
subsidiary paid to certain of its executives. The limit, however, does not
apply to "qualified performance-based compensation." The Company believes
that awards of stock options, SARs, and restricted stock qualify for the
performance-based compensation exception to the deductibility limit.
Amendment and Termination
The Board may amend the Equity Plan at any time, provided that no such
amendment will be made without stockholder approval if such approval is
required under applicable law, regulation, or stock exchange rule, or if such
amendment would: (i) decrease the grant or exercise price of any stock option
or SAR to less than fair market value on the date of grant (except as
discussed above under "Shares Reserved for Awards"), (ii) increase the number
of shares that may be distributed under the Equity Plan or adversely affect
in any material way any Award previously granted under the Plan, without the
written consent of the participant of such Award.
Equity Compensation Plan Information
The following table summarizes, as of December 31, 2006, information
about compensation plans under which equity securities of the Company are
authorized for issuance:
Number of Securities
Remaining Available for
Future Issuance under
Number of Securities to Weighted-Average Equity Compensation
be Issued upon Exercise Exercise Price of Plans (Excluding
of Outstanding Options, Outstanding Options, Securities Reflected in
Warrants and Rights Warrants and Rights Column (a))
Plan Category (a) (b) (c)
------------- ----------------------- -------------------- -----------------------
Equity compensation
plans approved by
security holders 4,565,004 $11.03 8,890,551
The Company does not have any equity compensation plans that were not
approved by security holders.
Voting Procedures
Assuming the presence of a quorum, to be adopted, the proposal to amend
and restate the Equity Plan requires the affirmative vote of the stockholders
representing a majority of the outstanding shares of the Common Stock of the
Company present in person or represented by proxy at the 2007 Annual Meeting
of Stockholders. If an executed proxy is returned and the stockholder has
22
abstained from voting on this proposal, the shares represented by such proxy
will be considered present at the meeting for purposes of determining a
quorum and for purposes of calculating the vote, but will not be considered
to have been voted in favor of the proposal. Accordingly, an abstention from
voting on this proposal will have the same effect as a vote against the
proposal. 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 this proposal, 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 this proposal. This means that such
broker non-vote would reduce the number of affirmative votes that are
necessary to approve the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE PROPOSAL TO APPROVE THE AMENDED AND RESTATED EQUITY PLAN. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE EQUITY PLAN UNLESS
STOCKHOLDERS SPECIFY A CONTRARY VOTE.
PROPOSAL REGARDING AMENDMENT TO ARTICLE III OF THE ARTICLES OF INCORPORATION
On February 8, 2007, the Board of Directors authorized a resolution
approving, and recommending that the stockholders consider and approve, an
amendment to Article III of the Company's Articles of Incorporation with
regard to the Company's purpose and conduct of business. The Board
recommends that the current Article III with regard to the Company's purpose
and conduct of business be amended and restated in its entirety. The
Company's current Article III lists numerous specific purposes for which the
corporation is organized (including detailed descriptions of the common
carrier business), which are overly complex and lacking in clarity. The
general effect of the amendment will be to simplify and clarify the purpose
of the corporation and the business activities in which the Company may
engage by providing that the Company may conduct any and all lawful business
permitted by the Nebraska Business Corporation Act. The Board of Directors
believes that it is in the best interests of the Company and its stockholders
to adopt the proposed amendment.
Article III of the Articles, as amended, would read as set forth below:
"The purpose for which this corporation is organized is to
conduct any and all lawful business for which corporations may be
organized under the Nebraska Business Corporation Act".
Assuming the presence of a quorum, to be adopted, the proposed amendment
to Article III of the Articles of Incorporation requires the affirmative vote
of the stockholders representing a majority of the outstanding shares of the
Common Stock of the Company present in person or represented by proxy at the
2007 Annual Meeting of Stockholders. If an executed proxy is returned and
the stockholder has abstained from voting on this proposal, the shares
represented by such proxy will be considered present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote,
but will not be considered to have been voted in favor of the proposal.
Accordingly, an abstention from voting on this proposal will have the same
effect as a vote against the proposal. 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 this proposal,
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 this proposal.
This means that such broker non-vote would reduce the number of affirmative
votes that are necessary to approve this proposal.
If the proposed amendment to Article III of the Articles is approved by
the stockholders at the 2007 Annual Meeting of Stockholders, the amendment
will become effective upon the filing of a Certificate of Revised and Amended
Articles with the Secretary of State of the State of Nebraska, which is
expected to be accomplished as promptly as practicable after such approval is
obtained.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT TO ARTICLE III OF THE ARTICLES OF INCORPORATION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE PROPOSED AMENDMENT
UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
PROPOSALS REGARDING AMENDMENTS OF ARTICLES OF INCORPORATION REGARDING
INDEMNIFICATION AND LIMITATION OF LIABILITY
The proposed amendments to Article VIII described below regarding
expanded indemnification and limitation of liability of officers and
directors reflect a concern with (1) the extent of stockholder litigation in
recent years, (2) the increased difficulty and other complications relating
to obtaining adequate directors' and officers' liability insurance, and (3)
the increased vulnerability of directors and officers to potentially large
23
claims for monetary damages, which may discourage them from fully and freely
carrying out their duties, including responsible entrepreneurial risk-taking.
The Board of Directors believes that these provisions of the Articles of
Incorporation should be revised and updated to reflect developments in the
law so as to attract and retain qualified directors and officers and
encourage them to fully and freely fulfill their duties.
PROPOSAL REGARDING AMENDMENT TO ARTICLE VIII OF THE ARTICLES OF INCORPORATION
On February 8, 2007, the Board of Directors authorized a resolution
recommending that the stockholders consider and approve an amendment to
Article VIII of the Company's Articles with regard to the indemnification
provisions. The Board recommends that the current Article VIII which
provides for mandatory indemnification to Company directors, officers,
employees or other agents be amended. Indemnification is the practice by
which a corporation holds harmless from liability and pays the expenses of
directors and officers who are named as defendants or otherwise involved in
litigation relating to their activities on behalf of the corporation. The
Nebraska Business Corporation Act authorizes Nebraska corporations such as
the Company to indemnify directors and officers against liability and
expenses, subject to certain limitations prescribed by law.
The current form of indemnification protection found in Article VIII has
been in the Company's Articles of Incorporation since 1986. In 1995, the
Nebraska Business Corporation Act, including its provisions on
indemnification, was substantially amended. A primary purpose of the
proposed amendment is to update Article VIII to reflect current provisions of
the Nebraska Business Corporation Act.
There are two material revisions to the indemnification provisions in
the amended language of Article VIII: (i) the deletion of coverage of
employees or agents from the mandatory indemnification provisions of Article
VIII, and (ii) a revision of the limitations on indemnification of directors
and officers to be covered under Article VIII.
The indemnification language of Article VIII, both as currently stated
and as proposed to be amended, provides for mandatory indemnification of
covered persons. The Nebraska Business Corporation Act expressly authorizes
such provisions with respect to directors and officers of a corporation, but
is silent with respect to employees and agents. For this reason, the
reference to employees and agents in the mandatory indemnification provisions
of Article VIII has been deleted. The Company believes that the issue of
indemnification of employees and agents of the corporation is better left to
the Board of Directors of the corporation, which may address such
requirements in either the Company's Bylaws, or by separate Board resolutions
from time to time. Currently there are no mandatory indemnification
provisions in the Company's Bylaws or resolutions covering employees or
agents, and the impact of the amendment to Article VIII would be to delete
the requirement of mandatory indemnification by the Company with respect to
employees and agents who meet the appropriate standard. However, the
Company's Board of Directors could in its discretion provide such
indemnification protection to employees and agents to the extent permitted by
law.
The second material revision in the proposed Article VIII amendment
language is a change in the limitations on the right of directors and
officers to receive the protection of mandatory indemnification. The current
Article VIII requires that the covered person act in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, not
have any reasonable cause to believe his conduct was unlawful. The mandatory
indemnification standard in the proposed Article VIII provides coverage to
directors and officers for all liabilities and expenses, except for four
delineated categories. This expanded coverage for indemnification follows
the express language permitted to be included in the articles of
incorporation of Nebraska corporations under the Nebraska Business
Corporation Act, as amended in 1995. The exceptions to mandatory
indemnification provide protection to the Company against indemnification
which is not warranted consistent with the Nebraska Business Corporation Act.
The protection of mandatory indemnification would not be provided when the
covered person: (i) received a financial benefit to which he was not
entitled, (ii) intentionally inflicted harm on the Company or its
shareholders, (iii) intentionally violated criminal law, or (iv) in the case
of a current or former director, violated Section 21-2096 of the Nebraska
Revised Statute, which provides for personal liability for directors who
approve unlawful distributions (including dividends) from the corporation.
The Company believes that the proposed amendment to Article VIII's
indemnification provisions is consistent with current provision of the
Nebraska Business Corporation Act and provides more clarity with respect to
the coverage to be provided to directors and officers of the corporation.
Although there is currently no litigation pending, or, to the Company's
knowledge, threatened, that will trigger either the existing or the proposed
indemnification provision, incumbent directors may be deemed to have a direct
and personal interest in approval of the proposed amendment because of
possible litigation in the future. The Company maintains directors' and
officers' liability insurance, which may offset part of the cost involved in
any indemnification claim. To the extent obligations under the proposed
indemnity provisions exceed any proceeds of insurance (or if such coverage is
discontinued or not available), any indemnification payments made by the
24
Company could have an adverse effect upon its earnings and assets. The Board
of Directors believes that it is in the best interests of the Company and its
stockholders to adopt the proposed amendment.
Article VIII of the Articles, as amended, would read as set forth below:
"To the fullest extent permitted by law, the corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit
or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, whether formal or informal,
including, to the extent permitted by law, an action by or in the
right of the corporation, by reason of the fact that he is or was a
director or officer of the corporation, or is or was serving at the
request of the corporation as a director, officer, partner, member
of a limited liability company, trustee, employee, or agent of
another domestic or foreign corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan, or
other entity, against any obligation to pay any judgment,
settlement, penalty, or fine (including an excise tax assessed with
respect to an employee benefit plan) and expenses, actually and
reasonably incurred by him in connection with such action, suit, or
proceeding, except liability for (i) receipt of a financial benefit
to which he is not entitled, (ii) an intentional infliction of harm
on the corporation or its shareholders, (iii) in the case of a
current or former director, a violation of Nebraska Revised Statute
21-2096, or (iv) an intentional violation of criminal law.
To the extent permitted by law, the corporation shall have the
power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the
corporation against any liability asserted against him and incurred
by him in such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify
him against such liability.
The indemnity provided for by this Article VIII shall not be
deemed to be exclusive of any other rights to which those
indemnified may be otherwise entitled, nor shall the provisions of
this Article VIII be deemed to prohibit the corporation from
extending its indemnification to cover other persons or activities
to the extent permitted by law or pursuant to any provisions in the
By-Laws, by a resolution of the directors or shareholders, or a
contract."
Assuming the presence of a quorum, to be adopted, the proposed amendment
to Article VIII of the Articles of Incorporation requires the affirmative
vote of the stockholders representing a majority of the outstanding shares of
the Common Stock of the Company present in person or represented by proxy at
the 2007 Annual Meeting of Stockholders. If an executed proxy is returned
and the stockholder has abstained from voting on this proposal, the shares
represented by such proxy will be considered present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote,
but will not be considered to have been voted in favor of the proposal.
Accordingly, an abstention from voting on this proposal will have the same
effect as a vote against the proposal. 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 this proposal,
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 this proposal.
This means that such broker non-vote would reduce the number of affirmative
votes that are necessary to approve the proposal.
If the proposed amendment to Article VIII of the Articles is approved by
the stockholders at the 2007 Annual Meeting of Stockholders, the amendment
will become effective upon the filing of a Certificate of Revised and Amended
Articles with the Secretary of State of the State of Nebraska, which is
expected to be accomplished as promptly as practicable after such approval is
obtained.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT TO ARTICLE VIII OF THE ARTICLES OF INCORPORATION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE PROPOSED AMENDMENT
UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
25
PROPOSAL REGARDING AMENDMENT TO ARTICLE VIII, SECTION A OF THE ARTICLES OF
INCORPORATION
On February 8, 2007, the Board of Directors authorized a resolution
recommending that the stockholders consider and approve an amendment to
Article VIII, Section A of the Company's Articles with regard to limitations
on liability of directors. The Board recommends that the current Article
VIII, Section A with regard to limitations on the liability of directors be
amended and restated in its entirety. Article VIII, Section A of the current
Articles limits the personal liability of outside directors only and is
consistent with Nebraska law at the time the provision was amended into the
Articles of Incorporation in 1989. The current provision eliminates personal
liability of an outside director to the stockholders or the corporation for
monetary damages for any breach of fiduciary duty by such Director. The
Nebraska Business Corporation Act has been amended since that time to permit
greater limitation on liabilities of directors as proposed by the Amendment.
The proposed amendment would limit the liability of all directors to the
corporation or its stockholders for money damages for any action taken, or
any failure to take any action as a director, except for the four delineated
categories of liabilities set forth in Article VIII, Section A, as required
by the Nebraska Business Corporation Act. The amendment would only apply to
claims for money damages and would not prevent suits seeking injunctive
relief, nor would it in any way limit other types of claims against
directors, such as claims arising under federal or state securities laws. It
only applies to claims by the Company or its stockholders and not to claims
by other parties.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to adopt the proposed amendment.
Article VIII, Section A of the Articles, as amended, would read as set
forth below:
"A director of the corporation shall not be liable to the
corporation or its stockholders for money damages for any action
taken, or any failure to take any action, as a director, except
liability for: (i) The amount of a financial benefit received by a
director to which he or she is not entitled; (ii) An intentional
infliction of harm on the corporation or the stockholders; (iii) A
violation of Nebraska Revised Statutes 21-2096; or (iv) An
intentional violation of criminal law.
No amendment to or repeal of this Article shall apply to or
have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or
repeal. If the Nebraska Business Corporation Act is hereafter
amended to authorize the further elimination or limitation of
liability of directors, then the liability of directors shall be
eliminated or limited to the full extent authorized by the Nebraska
Business Corporation Act as so amended."
Assuming the presence of a quorum, to be adopted, the proposed amendment
to Article VIII, Section A of the Articles of Incorporation requires the
affirmative vote of the stockholders representing a majority of the
outstanding shares of the Common Stock of the Company present in person or
represented by proxy at the 2007 Annual Meeting of Stockholders. If an
executed proxy is returned and the stockholder has abstained from voting on
this proposal, the shares represented by such proxy will be considered
present at the meeting for purposes of determining a quorum and for purposes
of calculating the vote, but will not be considered to have been voted in
favor of the proposal. Accordingly, an abstention from voting on this
proposal will have the same effect as a vote against the proposal. 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 this proposal, 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 this proposal. This means that such broker non-vote would reduce
the number of affirmative votes that are necessary to approve the proposal.
If the proposed amendment to Article VIII, Section A of the Articles is
approved by the stockholders at the 2007 Annual Meeting of Stockholders, the
amendment will become effective upon the filing of a Certificate of Revised
and Amended Articles with the Secretary of State of the State of Nebraska,
which is expected to be accomplished as promptly as practicable after such
approval is obtained.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT TO ARTICLE VIII, SECTION A OF THE ARTICLES OF
INCORPORATION. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR
THE PROPOSED AMENDMENT UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
26
POLICIES AND PROCEDURES WITH RESPECT TO RELATED PARTY TRANSACTIONS
The Company's Audit Committee Charter requires that members of the Audit
Committee, each of whom is independent pursuant to Nasdaq listing standards,
review and approve all related party transactions for which such approval is
required under applicable law, including SEC and NASD rules. Current SEC
rules define a related party transaction to include any transaction,
arrangement or relationship in which the Company is a participant and in
which any of the following persons has or will have a direct or indirect
interest:
* an executive officer, director or director nominee of the Company;
* any person who is known to be the beneficial owner of more than 5% of
the Company's common stock;
* any person who is an immediate family member (as defined under Item
404 of Regulation S-K) of an executive officer, director or director
nominee or beneficial owner of more than 5% of the Company's common
stock; or
* any firm, corporation or other entity in which any of the foregoing
persons is employed or is a partner or principal or in a similar
position or in which such person, together with any other of the
foregoing persons, has a 10% or greater beneficial ownership
interest.
All related party transactions required to be disclosed under SEC rules
shall be disclosed in the Company's applicable filings with the SEC.
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, is the sole trustee of the Trust. On February 8, 2007, the Company
entered into a revised Lease Agreement, effective as of the 21st day of May
2002 (the "Lease Agreement"), and a License Agreement (the "License
Agreement") with Clarence L. Werner, Trustee of the Trust. 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 as of 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 are used by the Company
for business meetings and customer 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"), which license rights were deleted from the Lease
Agreement and separated into the License Agreement.
The Lease Agreement's current 10-year term expires May 31, 2012, and
provides the Company the option to extend the lease for two additional 5-year
periods, through 2017 and 2022, respectively. Under the Lease Agreement, the
Company makes annual rental payments of One Dollar ($1.00) per year, and is
responsible for the real estate taxes and maintenance costs on the Lodge
Premises, which totaled approximately $44,000 for 2006.
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 made by the Company. The Company also has a right of first
refusal to purchase the Lodge Premises, or any part thereof, if the Trust has
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 at its current market
value, excluding the value of all leasehold improvements made by the Company.
If the Company elects not 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 still have the right of first refusal
with respect to a purchase offer from an unrelated third party. If the
Company terminates the Lease Agreement prior to the expiration of the initial
10-year term and elects not to purchase the Lodge Premises from the Trust,
then the Trust agrees to pay the Company the cost of all leasehold
improvements, less accumulated depreciation calculated on a straight-line
basis over the term of the Lease Agreement (10 years). If at the termination
of the initial 10-year lease term, or any of the two 5-year renewal periods,
the Company has not exercised its option to purchase the Lodge Premises at
its current market value, the leasehold improvements become the property of
the Trust. However, it is the Company's current intention to exercise its
option to purchase the Lodge Premises at its current market value prior to
the completion of the initial 10-year lease period or any of the two 5-year
renewal periods. The Company has made leasehold improvements to the Lodge
Premises of approximately $6.1 million since the inception of leasehold
arrangements commencing in 1994.
27
The revisions to the Lease Agreement removed the provisions relating to
the Farmland Premises, as of the effective date of the 2002 Lease Agreement,
including the description of option to purchase rights described above, from
the agreement, and the Company and the Trust entered into the separate
License Agreement defining their respective rights with respect to the
Farmland Premises. Under the License Agreement, the Company and its
invitees are granted a non-exclusive right to hunt and fish on the Farmland
Premises, for a term of one year, which is automatically renewable unless
either party terminates not less than 30 days prior to the end of the current
annual term. The Trust agrees to use its best efforts to maintain a
Controlled Shooting Area Permit on the Farmland Premises while the License
Agreement is in effect, 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 $29,000 for
2006.
The Company in the following capacities employs family members of
certain executive officers. Clarence L. Werner's son-in-law, Scott Robertson,
is employed as Director-Aviation and Gary L. Werner's brother-in-law, Daniel
Matthew, is employed with Fleet Truck Sales. The Company compensated in
excess of $120,000 in total compensation to each of these individuals. The
total compensation in 2006 for Mr. Robertson was $154,320 and for Mr. Matthew
was $147,115.
During 2006, the Company paid $7,270,727 to Pegasus Enterprises, LLC
which is owned by Clarence L. Werner's brother, Vern Werner, and sister-in-
law and paid $161,197 to D-W Trucking, in which Vern Werner has a 50%
ownership interest. Pegasus Enterprises, LLC and D-W Trucking lease tractors
and drivers to the Company as owner-operators. At December 31, 2006, the
Company had notes receivable from Pegasus Enterprises, LLC of $1,380,649
related to the sale of 40 used trucks. The largest aggregate amount of
principal outstanding during 2006 was $1,560,790, the amount of principal
paid during 2006 was $606,126, and the amount of interest paid during 2006
was $147,686. The interest rate payable on this debt ranges from 12% to
12.75%. The payments to Pegasus Enterprises, LLC and D-W Trucking are based
on the same per-mile settlement scale as the Company's other similar owner-
operator contractors. The terms of the note agreements with and the tractor
sales prices, which totaled $788,500 during 2006, to Pegasus Enterprises, LLC
are no less favorable to the Company than those that could be obtained from
unrelated third parties, on an arm's length basis.
Clarence L. Werner utilized the Company's aircraft for non-business
purposes during 2006. Mr. Werner reimbursed the Company $198,265
representing the aggregate incremental cost associated with the personal
flights, which is higher than the imputed income calculated for income tax
purposes in accordance with Internal Revenue Service 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.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2008 Annual
Meeting of Stockholders must be received by the Secretary of the Company on
or before December 5, 2007, to be eligible for inclusion in the Company's
2008 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. Nominations for
directors to be elected at the 2008 Annual Meeting of Stockholders may be
submitted by stockholders by delivery of such nominations in writing to the
Secretary of the Company by December 5, 2007. For a description of the
process for submitting such nominations, see "Director Nomination Process" on
page 2 of this Proxy Statement.
Stockholder proposals submitted for presentation at the 2007 Annual
Meeting but not included in our proxy materials must be received by the
Secretary of the Company at its headquarters in Omaha, Nebraska no later than
April 18, 2007. 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. Only
stockholders of record as of March 19, 2007, are entitled to bring business
before the Annual Meeting.
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; provided, that stockholders
are not holding shares in nominee name. This process, which is commonly
referred to as "householding," potentially provides extra convenience for
stockholders and cost savings for companies. After receipt of written
consent, 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
28
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 provide written notification to
the broker if the shares are held in a brokerage account or 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 or vote their shares by telephone or via
the Internet. 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
Senior Vice President, Controller
and Corporate Secretary
29
APPENDIX A
WERNER ENTERPRISES, INC.
EQUITY PLAN
1. Background and History. Werner Enterprises, Inc. (the
-----------------------
"Company") initially adopted the Werner Enterprises, Inc. Stock
Option Plan in 1987, such plan being approved by the Company's
shareholders on June 9, 1987 at the Company's annual meeting.
The stock option plan was amended and restated in 1988, 1994,
2000, and most recently in 2004. If approved by the Company's
shareholders, the Company desires to again amend and restate the
option plan and, as the amendment and restatement will add
restricted stock to the types of awards eligible to be granted
under the plan, rename the plan as the Werner Enterprises, Inc.
Equity Plan (the "Plan") the terms of which are set forth herein.
2. Purpose. The purpose of the Plan is to advance the
--------
interests of the Company and its shareholders by attracting and
retaining those individuals whose skill and initiative enhance
the Company's continued success, growth and profitability. This
Plan authorizes the Company to grant nonqualified stock options,
stock appreciation rights and restricted stock (hereinafter
defined as "Awards") to employees and non-employee directors.
This Plan authorizes the grant of Awards in order to help attract
and retain key employees and non-employee directors, by further
aligning their financial interests with those of the Company's
shareholders and by providing them with participatory rights in
the future success and growth of the Company, without necessarily
requiring a financial outlay by these individuals to ensure their
participation in the Plan benefits.
3. Definitions. The following words shall have the
------------
following meaning:
(a) "Affiliate" of the Company means any Person
that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by, or is
under common Control with the Company.
(b) "Award" means a grant of an Option, one or
more Stock Appreciation Rights, or one of more shares
of Restricted Stock.
(c) "Award Agreement" means a written agreement or
instrument between the Company and a Participant
evidencing an Award.
(d) "Board" means the Board of Directors of the
Company.
(e) "Cause" means unless otherwise defined in a
Participant's employment agreement or change in control
severance agreement with the Company, in which case
such definition will apply, (i) the material
misappropriation of any of the Company's funds or
property; (ii) the conviction of, or the entering of a
guilty plea or plea of no contest with respect to, a
felony, or the equivalent thereof; (iii) commission of
an act of willful damage, willful misrepresentation,
willful dishonesty, or other willful conduct that can
reasonably be expected to have a material adverse
effect on the business, reputation, or financial
situation of the Company; or (iv) gross negligence or
willful misconduct in performance of a Participant's
duties; provided, however, "cause" shall not exist
A-1
under clause (iv), above, with respect to an act or
failure to act unless (A) the Participant has been
provided written notice describing in sufficient detail
the acts or failure to act giving rise to the Company's
assertion of such gross negligence or misconduct,
(B) been provided a reasonable period to remedy any
such occurrence and (C) failed to sufficiently remedy
the occurrence.
(f) "Change in Control" means the first to occur
of the following events:
(1) Any Person, other than a Member of the
Werner Family, is or becomes the Beneficial
Owner (within the meaning set forth in Rule
13d-3 under the 1934 Act), directly or
indirectly, of securities of the Company (not
including for this purpose any securities
acquired directly from the Company or its
Affiliates or held by an employee benefit
plan of the Company) representing 50% or
more of the combined voting power of the
Company's then outstanding securities,
excluding any Person who becomes such a
Beneficial Owner in connection with a
transaction described in clause (x) of
paragraph (3) of this definition; or
(2) The following individuals cease for any
reason to constitute a majority of the number
of directors then serving: individuals who,
on the Effective Date, constitute the Board
and any new director (other than a director
whose initial assumption of office is in
connection with an actual or threatened
election contest, including a consent
solicitation, relating to the election of
directors of the Company) whose appointment
or election by the Board or nomination for
election by the Company's shareholders was
approved by a vote of at least two-thirds of
the directors then still in office who either
were directors on the Effective Date or whose
appointment, election or nomination for
election was previously so approved or
recommended; or
(3) There is consummated a merger or
consolidation of the Company with any other
corporation, OTHER THAN (x) a merger or
consolidation which would result in the
voting securities of the Company outstanding
immediately prior to such merger or
consolidation continuing to represent (either
by remaining outstanding or by being
converted into voting securities of the
surviving entity or any parent thereof), in
combination with the ownership of any trustee
or other fiduciary holding securities under
an employee benefit plan of the Company, at
least 50% of the combined voting power of the
securities of the Company or such surviving
entity or any parent thereof outstanding
immediately after such merger or
consolidation, or (y) a merger or
consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly,
of securities of the Company (not including
for this purpose any securities acquired
directly from the Company or its Affiliates
other than in connection with the acquisition
by the Company or its Affiliates of a
A-2
business) representing 50% or more of the
combined voting power of the Company's then
outstanding securities; or
(4) The shareholders of the Company approve
a plan of complete liquidation or dissolution
of the Company or there is consummated an
agreement for the sale or disposition by the
Company of all or substantially all of the
Company's assets, other than a sale or
disposition by the Company of all or
substantially all of the Company's assets to
an entity, at least 50% of the combined
voting power of the voting securities of
which are owned by shareholders of the
Company in substantially the same proportions
as their ownership of the Company immediately
prior to such sale.
Notwithstanding the foregoing, a "Change in
Control" shall not be deemed to have occurred by
virtue of (i) the consummation of any transaction
or series of integrated transactions immediately
following which the record holders of the Common
Stock immediately prior to such transaction or
series of transactions continue to have
substantially the same proportionate ownership in
an entity which owns all or substantially all of
the Company's assets immediately following such
transaction or series of transactions or (ii) the
acquisition of shares of Common Stock by the
Company such that, by reducing the number of
outstanding shares of Common Stock, the
proportionate number of shares of Common Stock
Beneficially Owned by a Person was increased, and,
but for this sentenced resulted in a Change in
Control.
(g) "Code" means the Internal Revenue Code of
1986, as amended from time to time.
(h) "Company" means Werner Enterprises, Inc., a
Nebraska corporation.
(i) "Committee" means (A) the Board, or (B) one or
more committees of the Board to whom the Board has
delegated all or part of its authority under this Plan.
Initially, the Committee shall be the Compensation
Committee of the Board which is delegated all of the
Board's authority under this Plan as contemplated by
clause (B) in this definition.
(j) "Common Stock" or "Stock" means the common
stock of the Company, par value $.01 per share.
(k) "Control" means the possession, directly or
indirectly, of the power to direct or cause the
direction of the management and policies of a person,
whether through the ownership of voting securities, by
contract or otherwise.
(l) "Effective Date" means May 8, 2007, such date
being the date this amended and restated Plan was
approved by the Company's shareholders.
A-3
(m) "Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time.
(n) "Fair Market Value" means: (i) if the Stock is
traded on a national securities exchange, the closing
trading price of a share of Stock for composite
transactions, as published by The Wall Street Journal
for the date in question; or (ii) if the Stock is not
traded on a national securities exchange, the value of
the Stock determined in good faith by the Committee in
its sole discretion.
(o) "Good Reason" means, without a Participant's
written consent and unless otherwise defined in a
Participant's employment agreement or change in control
severance agreement with the Company (in which case
such definition will apply), any of the following:
(1) Any material and adverse reduction or
material and adverse diminution in a
Participant's position (including status,
offices, titles and reporting requirements),
authority, duties or responsibilities held,
exercised or assigned at any time during the
90-day period immediately preceding the
Change in Control;
(2) Any reduction in a Participant's annual
base salary as in effect immediately
preceding the Change in Control or as the
same may be increased from time to time; or
(3) A Participant being required by the
Company to be based at any office or location
that is more than 70 miles from the location
where the Participant was employed
immediately preceding the Change in Control.
Provided, however, notwithstanding the occurrence
of any of the events set forth above in this
definition, Good Reason shall not include for the
purpose of this definition (1) an isolated,
insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by
the Participant, or (2) any reduction in the
Participant's base annual salary or reduction in
benefits received by the Participant where such
reduction is in connection with a company-wide
reduction in salaries or benefits.
(p) "Member of the Werner Family" means (i)
Clarence L. Werner and any other person who shall be a
lineal descendant, naturally or by legal adoption, of
Clarence L. Werner (each such person being referred to
as a "Werner Descendant"), (ii) a spouse of a Werner
Descendant, and (iii) a trust, corporation, limited
liability company or partnership under the terms of
which the principal beneficiaries are Werner
Descendants or persons included in clause (i) or (ii).
For purposes of the foregoing, a person who is a spouse
of a Werner Descendant at the time of the death of such
Werner Descendant shall continue to be a Member of the
Werner Family following such death only so long as
there is living a Werner Descendant who is an issue
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(naturally or by legal adoption) from the marriage of
such person and such deceased Werner Descendant.
(q) "Option" means a right to purchase Common
Stock, granted pursuant to the Plan. All Options
granted under the Plan will be nonqualified stock
options and not "Incentive Stock Options" under Section
422 of the Code.
(r) "Option Price" means the purchase price for
Common Stock under an Option, as determined in Section
7 below.
(s) "Plan" means this Werner Enterprises, Inc.
Equity Plan, as amended from time to time.
(t) "Participant" means an employee or
non-employee director of the Company (or any of its
subsidiaries) to whom an Award is granted under the
Plan.
(u) "Person" shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act and
used in Sections 13(d) and 14(d) thereof, including
"group" as defined in Section 13(d) thereof.
(v) "Restricted Stock" means Stock granted under
Section 9 that is subject to those restrictions set
forth therein and the Award Agreement.
(w) "Rule 16b-3" means Rule 16b-3 promulgated
under the Exchange Act.
(x) "Stock Appreciation Right" or "SAR" means a
right to receive an amount equal to the appreciation in
a share of Stock from the grant date to the exercise
date and granted pursuant to Section 8 below.
4. Stock Subject to Plan; Award Limits.
------------------------------------
(a) Number of Shares. Subject to the provisions of
Section 12 of the Plan, the maximum number of shares of
Common Stock that may be issued under the Plan is
20,000,000 shares. Such shares may be treasury, or
authorized but unissued, shares of Common Stock of the
Company.
(b) Award Limitation. Subject to adjustment
pursuant to Section 12, Awards covering no more than
2,562,500 shares in the aggregate may be granted to one
person during the Plan's duration.
(c) Unused and Forfeited Stock. Any shares of
Common Stock that are subject to an Award under this
Plan that are not used because the terms and conditions
of the Award are not met, including any shares that are
subject to an Award that expires or is terminated for
any reason, any shares that are used for full or
partial payment of the purchase price of shares with
respect to which an Option is exercised and any shares
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retained by the Company pursuant to Section 17(b) shall
automatically become available for use under the Plan.
5. Administration.
---------------
(a) Composition. The Plan shall be administered by
the Committee. To the extent the Board considers it
desirable for transactions relating to Awards to be
eligible to qualify for an exemption under Rule 16b-3,
the Committee shall consist of two or more directors of
the Company, all of whom qualify as "non-employee
directors" within the meaning of Rule 16b-3. To the
extent the Board considers it desirable for
compensation delivered pursuant to Awards to be
eligible to qualify for an exemption from the limit on
tax deductibility of compensation under Section 162(m)
of the Code, the Committee shall consist of two or more
directors of the Company, all of whom shall qualify as
"outside directors" within the meaning of Code Section
162(m).
(b) Authority. Two members of the Committee shall
constitute a quorum for the transaction of business.
The Committee is granted the authority to determine the
recipients of Awards, the number of shares subject to
such Awards, if applicable, the date on which Awards
are granted, become exercisable or vested, and any
other terms of the Awards consistent with the terms of
this Plan. The interpretation and construction of any
provision of the Plan by the Committee shall be final,
unless otherwise determined by a majority of the entire
Board. No member of the Board or the Committee shall
be liable for any action or determination made by him
in good faith.
(c) Delegation. Notwithstanding the general
administrative powers discussed above, the Board may,
by resolution, expressly delegate to a special
committee consisting of two or more directors, who may
also be officers of the Company, or to a senior
executive officer of the Company, the authority, within
specified parameters, to (i) grant employees Awards
under the Plan, and (ii) determine the number of such
Awards to be received by any such participants;
provided, however, that if such delegation of duties
and responsibilities is to officers of the Company or
to directors who are not "non-employee directors"
(within the meaning of Rule 16b-3(b)(3) under the
Exchange Act) and "outside directors" (within the
meaning of Code Section 162(m)), such officers or
directors may not grant Awards to employees (a) who are
subject to Section 16(a) of the Exchange Act at the
time of grant, or (b) who, at the time of grant, are
anticipated to become during the term of the Award,
"covered employees" as defined in Code Section
162(m)(3). The acts of such delegate(s) shall be
within limits specifically prescribed by the Board,
will be treated hereunder as acts of the Board and such
delegate(s) shall report regularly to the Board and the
Compensation Committee of the Board regarding the
delegated duties and responsibilities and any Awards so
granted.
6. Eligibility. The Committee may grant Awards to any key
------------
employee (including an employee who is a director and/or an
officer of the Company and its subsidiaries) and any non-employee
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director. Awards may be granted by the Committee at any time and
may include or exclude new or previous Participants as the
Committee shall determine. Awards granted at different times
need not contain similar provisions.
7. Stock Options. The Committee may grant one or more
---------------
Options to a Participant. Each Option will be evidenced by a
written Award Agreement and entered into by the Company and the
Participant to whom the Option is granted, such Award Agreement
containing or being subject to the following terms and
conditions:
(a) Option Price. The purchase price of Common
Stock under each Option shall be not less than 100
percent of the Fair Market Value of the Common Stock on
the date the Option is granted. In addition, the Plan
allows, at the discretion of the Committee, the
surrender of an Option and its subsequent regrant. The
regranting of the Option may allow for lower-priced
shares (as then valued) to be granted or for a lesser
number of shares than originally intended to be issued.
However, as with the originally issued option shares,
the price to the Participant may not be less than the
Fair Market Value of the regranted optioned shares, as
determined at the time of regrant.
(b) Time and Method of Payment. The Option Price
shall be paid in full at the time an Option is
exercised under the Plan through a payment of cash or
cashier's check or, if permitted by the Committee, the
surrender or attestation of previously acquired Stock,
the payment through a broker in accordance with
procedures permitted by Regulation T of the Federal
Reserve Board, or any other method permitted under
applicable law. Exercise of an Option without
concurrent payment in full shall be invalid and of no
effect. Upon the exercise of an Option and the payment
of the full Option Price, the Participant shall be
entitled to the issuance of a stock certificate
evidencing his ownership of such Common Stock and, as
of that date, the Participant shall have all the rights
of a shareholder. No adjustment will be made for
dividends or other rights for which the record date is
prior to the date the Participant is entitled to the
issuance of a stock certificate.
(c) Number of Shares. Each Option shall state the
total number of shares of Common Stock to which it
pertains. The number of shares to which a Participant
is entitled under an Option shall be reduced by the
number of Stock Appreciation Rights (described in
Section 8 below) related to the Option that have been
previously exercised by the Participant.
(d) Option Period and Limitations on Exercise of
Options. The Committee may in its discretion provide
that an Option may become exercisable only after the
expiration of a period of time specified in the Option
Award Agreement. Except as provided in the Option
Award Agreement, Options shall not be exercisable until
the expiration of six months from the date the Option
is granted, and any Option may be exercised in whole or
in part. No Option may be exercised after the
expiration of ten years and one day from the date it is
granted. Unless otherwise noted in the Option Award
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Agreement, no Option may be exercised for a fractional
share of Common Stock.
(e) Limitations Upon Exercise of Options. If a
Participant exercises an Option, the SARs to which the
Option relates shall expire. Adjustment to the number
of shares in the Plan and the price per share pursuant
to Section 12 below shall also be made to any Options
held by each Participant.
(f) No Obligation To Exercise Option. The granting
of an Option shall impose no obligation upon the
Participant to exercise such Option.
8. Stock Appreciation Rights. The Committee may grant
---------------------------
Stock Appreciation Rights at the same time as Participants are
awarded Options under the Plan. Such Stock Appreciation Rights
shall be evidenced by a written Award Agreement and entered into
by the Company and the Participant to whom the SAR is granted,
such agreement containing or being subject to the following terms
and conditions:
(a) Grant. Each SAR shall relate to a specific
Option under the Plan and shall be awarded to a
Participant concurrently with the grant of such Option.
The number of SARs granted to a Participant may be
equal to the number of shares that the Participant is
entitled to receive pursuant to the related Option. The
number of SARs held by a Participant shall be the
number of SARs granted reduced by:
(1) the number of SARs exercised for Common
Stock or cash pursuant to the SARs Award
Agreement; or
(2) the number of shares of Common Stock
purchased by such Participant pursuant to the
related Option.
(b) Manner of Exercise. A Participant shall
exercise SARs by giving written notice of such exercise
to the Company. The date on which such written notice
is received by the Company shall be the exercise date
for the SARs.
(c) Appreciation Available. Each SAR shall entitle
a Participant to the excess of the Fair Market Value of
a share of Common Stock on the exercise date over the
Option Price of the related Option.
(d) Payment of Appreciation. The appreciation
available to a Participant from an exercise of one or
more SARs may, in the sole discretion of the Committee,
be paid to the Participant either in cash or Common
Stock. If paid in cash, the amount thereof shall be
the amount of appreciation available (see (c) above).
If paid in Common Stock, the number of shares that
shall be issued pursuant to the exercise of SARs shall
be determined by dividing the amount of appreciation by
the Fair Market Value of a share of Common Stock on the
exercise date of the SAR; provided, however, that no
fractional shares shall be issued upon the exercise of
SARs.
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(e) Limitations Upon Exercise of SARs. If a
Participant exercises a SAR for cash, the Option to
which the SARs relates shall expire. SARs may be
exercised only at such times and by such persons as may
exercise Options under the Plan. Adjustment to the
number of shares in the Plan and the price per share
pursuant to Section 12 below shall also be made to any
SARs held by each Participant.
(f) No Obligation To Exercise SARs. The granting
of one or more SARs shall impose no obligation upon the
Participant to exercise such SARs
9. Restricted Stock. The Committee may grant shares of
------------------
Restricted Stock in such amounts as the Committee shall determine
and subject to the terms and provisions of this Plan.
(a) Restrictions. A Participant's right to retain
shares of Restricted Stock shall be subject to such a
restriction that the Participant continue to perform as
an Employee or remain a non-employee director for a
restriction period specified by the Committee and not
less than one year nor more than ten years. The
Committee may also require that a Participant's right
to retain shares of Restricted Stock is subject to the
attainment of specified performance goals and
objectives. The Committee may, in its sole discretion,
require different periods of service or different
performance goals and objectives with respect to
(i) different Participants or (ii) separate, designated
portions of the shares that are Restricted Stock. Any
grant of Restricted Stock shall contain terms such that
the Award is either exempt from Code Section 409A or
complies with such Section.
(b) Privileges of a Shareholder, Transferability.
Unless otherwise provided in the Award Agreement, a
Participant shall not have voting, dividend,
liquidation and other rights with respect to shares of
Restricted Stock. If a Participant is granted in the
Award Agreement any voting, dividend, liquidation or
other rights on shares of Restricted Stock, such rights
(1) shall accrue to the benefit of a Participant only
with respect to shares of Restricted Stock held by, or
for the benefit of, the Participant on the record date
of any such dividend or voting date and (2) subject to
the terms of the Award Agreement, any dividends paid on
shares of Restricted Stock before such shares become
vested may be held in escrow by the Company and subject
to the same restrictions on transferability and
forfeitability as the underlying shares of Restricted
Stock. A Participant's right to sell, encumber or
otherwise transfer such Restricted Stock shall, in
addition to the restrictions otherwise provided for in
the Award Agreement, be subject to the limitations of
Section 9(b) hereof.
(c) Enforcement of Restrictions. The Committee
may, in its sole discretion, require one or more of the
following methods of enforcing the restrictions
referred to in Section 9(a) and (b):
(1) placing a legend on the Stock
certificates referring to restrictions;
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(2) requiring the Participant to keep the
Stock certificates, duly endorsed, in the
custody of the Company while the restrictions
remain in effect;
(3) requiring that the Stock certificates,
duly endorsed, be held in the custody of a
third party nominee selected by the Company
who will hold such shares of Restricted Stock
on behalf of the Participant while the
restrictions remain in effect; or
(4) inserting a provision into the
Restricted Stock Award Agreement prohibiting
assignment of such Award Agreement until the
terms and conditions or restrictions
contained therein have been satisfied or
released, as applicable.
10. Effect of Termination of Employment on Outstanding
-------------------------------------------------------
Awards. The Committee shall determine in each case whether a
-------
termination of employment (including a termination due to
disability) shall be considered voluntary or involuntary. In
addition, the Committee shall determine, subject to applicable
law, whether a leave of absence or similar circumstance shall
constitute a termination of employment and the date upon which a
termination resulting therefrom became effective. Any such
determination of the Committee shall be final and conclusive,
unless overruled by the entire Board at its next regular or
special meeting. The effect of a Participant's termination of
employment on outstanding Awards is as follows:
(a) Involuntary Termination for Cause. If a
Participant's employment with the Company or a
subsidiary thereof is involuntarily terminated by the
Company or such subsidiary for Cause, all of the
Options, SARs and shares of Restricted Stock held by
the Participant will immediately terminate and be
forfeited and his rights under the Award Agreement to
exercise the Options or SARs, or become vested in the
Restricted Shares, as the case may be, will immediately
terminate.
(b) Involuntary Termination by Company Other Than
for Cause or Voluntary Resignation-Effect on Options
and SARs. If the Company involuntarily terminates a
Participant's employment not for Cause or if a
Participant's employment with the Company or a
subsidiary of the Company is voluntarily terminated by
the Participant, the Participant may exercise his or
her Options or SARs that are otherwise exercisable
pursuant to this Plan on the date of such termination
for up to and including one hundred and eighty (180)
days after such termination of his or her employment,
but in no event shall any Option or SAR be exercisable
more than ten years and one day from the date it was
granted. The Committee has the right to cancel an
Option or SAR during such 180 day period if the
Participant engages in employment or activities
contrary, in the opinion of the Committee, to the best
interests of the Company.
(c) Voluntary Resignation-Effect on Restricted
Shares. If a Participant's employment with the Company
or a subsidiary of the Company is voluntarily
terminated by the Participant, all unvested Restricted
Shares then held by the Participant shall be forfeited
A-10
and returned to the Company effective as of the date of
the Participant's termination.
(d) Death.
(1) If a Participant dies while employed by
the Company, or within one hundred and eighty
(180) days after having retired or
voluntarily terminated his or her employment,
and at the time of death had unexercised
Options or SARs, the executors or
administrators, or legatees or heirs, of his
estate shall have the right to exercise such
Options and SARs within one year of the
Participant's death to the extent that such
deceased Participant was entitled to exercise
the Options and SARs on the date of his
death; provided, however, that in no event
shall the Options or SARs be exercisable more
than ten years and one day from the date they
were granted. As a condition to any such
exercise, the Committee may require any such
executor, administrator, legatee or heir
seeking to exercise such Options or SARs to
provide evidence satisfactory to the
Committee, in its sole discretion, of his or
her authority to exercise such Options or
SARs on behalf of the Participant's estate.
(2) If the Participant dies while holding
shares of Restricted Stock which have not
otherwise been forfeited, all service period
and other restrictions applicable to the
shares of Restricted Stock then held by him
or her shall lapse, and such shares shall
become fully vested and nonforfeitable.
11. Nonassignability.
-----------------
(a) General Rule. Except as provided below in
Section 11(b), no Award may be assigned, alienated,
pledged, hypothecated, attached or sold or otherwise
transferred or encumbered by a Participant except by
will or by the laws of descent and distribution, and
any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void
and unenforceable against the Company. If the
Participant attempts to alienate, assign, pledge,
hypothecate or otherwise dispose of Participant's
Award, the Board may terminate the Participant's Award
by notice to him or her and such Award will thereupon
become null and void.
(b) Permitted Transfers. Pursuant to conditions
and procedures established by the Committee from time
to time, the Committee may permit Awards to be
transferred to, exercised by and paid to certain
persons or entities related to a Participant, including
members of the Participant's immediate family,
charitable institutions, or trusts or other entities
whose beneficiaries or beneficial owners are members of
the Participant's immediate family and/or charitable
institutions (a "Permitted Transferee"). In the case
of initial Awards, at the request of the Participant,
the Committee may permit the naming of the related
person or entity as the Award recipient. Any permitted
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transfer shall be subject to the condition that the
Committee receive evidence satisfactory to it that the
transfer is being made for estate and/or tax planning
purposes on a gratuitous or donative basis and without
consideration (other than nominal consideration).
12. Adjustments in Authorized Shares.
---------------------------------
(a) If, without the receipt of consideration
therefore by the Company, the Company at any time
increases or decreases the number of its outstanding
shares of Common Stock or changes in any way the rights
and privileges of such shares such as, but not limited
to, the payment of a stock dividend or any other
distribution upon such Stock payable in Stock, or
through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization
involving the Stock, such that any adjustment is
necessary in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be
made available under the Plan then in relation to the
Stock that is affected by one or more of the above
events, the numbers, rights and privileges of (i) the
aggregate number of shares of Common Stock available
for Awards under the Plan, (ii) the aggregate number of
shares that may be subject to Awards granted to any one
person, (iii) the shares of Stock then included in each
outstanding Award granted hereunder and (iv) the Option
Price, if applicable, shall be increased, decreased or
changed in like manner as if they had been issued and
outstanding, fully paid and non assessable at the time
of such occurrence. The manner in which such
adjustments are made shall be determined by the Board
or Committee in its sole discretion provided such
adjustments are consistent with the provisions of
Section 12(b), below.
(b) General Adjustment Rules.
(1) If any adjustment or substitution
provided for in this Section 12 shall result
in the creation of a fractional share under
any Award, such fractional share shall be
rounded up to a whole share and no fractional
share shall be issued.
(2) In the case of any such substitution or
adjustment affecting an Option or a SAR such
substitution or adjustments shall be made in
a manner that is in accordance with the
substitution and assumption rules set forth
in Treasury Regulations 1.424-1 and the
applicable guidance relating to Code Section
409A.
13. Reorganization, Change in Control or Liquidation.
-------------------------------------------------
(a) Except as otherwise provided in an Award
Agreement or other agreement approved by the Committee
to which any Participant is a party, in the event that,
within the period commencing on a Change in Control and
ending on the second anniversary of the Change in
Control, and except as the Committee may expressly
provide otherwise, a Participant's employment with the
Company or one of its affiliates is terminated other
A-12
than for Cause, or the Participant voluntarily resigns
for Good Reason, then (i) all Options and SARs then
outstanding shall become fully exercisable, and (ii)
all restrictions (other than restrictions imposed by
law) and conditions on all Restricted Stock Awards then
outstanding shall be deemed satisfied as of the date of
the Participant's termination of employment.
(b) In addition to the foregoing, in the event the
Company undergoes a Change in Control or in the event
of a corporate merger or consolidation (other than a
merger or consolidation in which the Company is the
continuing corporation and that does not result in any
reclassification or change of outstanding shares of
Common Stock), major acquisition of property (or
stock), separation, reorganization or liquidation in
which the Company is a party and in which a Change in
Control does not occur, the Committee, or the board of
directors of any corporation assuming the obligations
of the Company, shall have the full power and
discretion to take any one or more of the following
actions:
(1) Without reducing the underlying economic
value of any Award, amend the procedures and
conditions for the exercise or settlement of
any outstanding Awards granted hereunder;
(2) Provide for the purchase by the Company
of any Award, upon the Participant's request,
for, with respect to an Option or SAR, an
amount of cash equal to the positive amount,
if any, that could have been attained upon
the exercise of such Award or realization of
the Participant's rights had such Award been
currently exercisable, or, in the case of
Restricted Stock, the Fair Market Value of
such shares of Stock;
(3) Provide that Options or SARs granted
hereunder must be exercised in connection
with the closing of such transactions, and
that if not so exercised such Options or SARs
will expire;
(4) Make such adjustment to any Award that
is outstanding as the Committee or Board
deems appropriate to reflect such Change in
Control or corporate event; or
(5) Cause any Award then outstanding to be
assumed, or new rights of equivalent economic
value substituted therefore, by the acquiring
or surviving corporation.
Any such determinations by the Committee may be made
generally with respect to all Participants, or may be
made on a case-by-case basis with respect to
particular Participants. Notwithstanding the
foregoing, any transaction undertaken for the purpose
of reincorporating the Company under the laws of
another jurisdiction, if such transaction does not
materially affect the beneficial ownership of the
Company's capital stock, such transaction shall not
constitute a merger, consolidation, major acquisition
of property for stock, separation, reorganization,
liquidation, or Change in Control.
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14. Termination and Amendment. The Board, by resolution,
---------------------------
may terminate the Plan with respect to any Awards that have not
been granted. The Board or Committee may at any time amend or
modify, the Plan; provided, however, that no amendment or
modification may become effective without approval of the
amendment or modification by the shareholders if shareholder
approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, to comply with the
requirements for listing on any exchange where the Stock is
listed, or if the Company, on the advice of counsel, determines
that shareholder approval is otherwise necessary or desirable.
Notwithstanding any other provision of the Plan to the contrary
(but subject to a Participant's employment being terminated for
Cause), no termination, amendment or modification of the Plan
shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the
Participant of such Award.
15. Agreement and Representation of Employees. As a
----------------------------------------------
condition to the receipt of any shares of Stock under the Plan,
the Company may require the person receiving such shares to
represent and warrant that the shares of Common Stock are being
acquired only for investment and without any present intention to
sell or distribute such shares, if, in the opinion of counsel for
the Company, such a representation is required under the
Securities Act of 1933 or any other applicable law, regulation or
rule of any governmental agency.
16. Reservation of Shares of Common Stock. The Company,
---------------------------------------
during the term of the Plan, will at all times reserve and keep
available the number of shares of Common Stock that shall be
sufficient to satisfy the requirements of this Plan. The
inability of the Company to obtain from any regulatory body
having jurisdiction the authority deemed necessary by legal
counsel for the Company for the lawful issuance and sale of its
Common Stock hereunder shall relieve the Company of any liability
in respect of the failure to issue or sell Common Stock as to
which the requisite authority has not been obtained.
17. Withholding.
------------
(a) Withholding Requirement. The Company's
obligations to deliver Shares upon the exercise of an
Option, or upon the vesting of any other Award, shall
be subject to the Participant's satisfaction of all
applicable federal, state and local income and other
tax withholding requirements.
(b) Withholding with Stock. The Committee may, in
its sole discretion, permit a Participant to pay all
minimum required amounts of tax withholding, or any
part thereof, by electing to transfer to the Company,
or to have the Company withhold from the shares of
Common Stock otherwise issuable to the Participant,
shares of Common Stock having a value not to exceed the
minimum amount required to be withheld under federal,
state or local law or such lesser amount as may be
elected by the Participant. The Committee may require
that any shares transferred to the Company have been
held or owned by the Participant for a minimum period
of time. All elections shall be subject to the
approval or disapproval of the Committee. The value of
shares of Stock to be withheld shall be based on the
Fair Market Value of the Stock on the date that the
amount of tax to be withheld is to be determined (the
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"Tax Date"), as determined by the Committee. Any such
elections by Participant to have Shares withheld for
this purpose will be subject to the following
restrictions:
(1) All elections must be made prior to the
Tax Date;
(2) All elections shall be irrevocable; and
(3) If the Participant is an officer or
director of the Company within the meaning of
Section 16 of the 1934 Act ("Section 16"),
the Participant must satisfy the requirements
of such Section 16 and any applicable rules
thereunder with respect to the use of Stock
to satisfy such tax withholding obligation.
18. Effective Date of Plan. The Plan was originally
---------------------------
effective as of June 9, 1987 and this most recent amendment and
restatement, if approved by the Company's shareholders, will be
effective May 8, 2007.
19. Code Section 409A. This Plan is intended to meet or to
------------------
be exempt from the requirements of Section 409A of the Code, and
shall be administered, construed and interpreted in a manner that
is in accordance with and in furtherance of such intent. Any
provision of this Plan that would cause an Award to fail to
satisfy Section 409A of the Code or, if applicable, an exemption
from the requirements of that Section, shall be amended (in a
manner that as closely as practicable achieves the original
intent of this Plan) to comply with Section 409A of the Code or
any such exemption on a timely basis, which may be made on a
retroactive basis, in accordance with regulations and other
guidance issued under Section 409A of the Code.
20. Termination Date of Plan. This Plan may be terminated
-------------------------
by the Board of Directors, in its sole discretion, and no Award
shall be granted pursuant to this Plan after such termination.
Termination of this Plan shall not affect any Award granted
during the term of this Plan.
A-15
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 8, 2007. 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 19,
2007, at the Annual Meeting of Stockholders to be held on May 8, 2007, 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:
Gerald H. Timmerman
Kenneth M. Bird
or
[ ] To withhold authority to vote for all nominees listed above.
2. To adopt an amended and restated Equity Plan.
(Check only one box below.)
[ ] For [ ] Against [ ] Abstain
3. To approve the amendment to Article III of the Articles of Incorporation
with regard to the purpose of the corporation.
(Check only one box below.)
[ ] For [ ] Against [ ] Abstain
4. To approve the amendment to Article VIII of the Articles of Incorporation
with regard to the provisions for indemnification.
(Check only one box below.)
[ ] For [ ] Against [ ] Abstain
5. To approve the amendment to Article VIII, Section A of the Articles of
Incorporation with regard to limitations on the liability of directors.
(Check only one box below.)
[ ] For [ ] Against [ ] Abstain
6. 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 adoption of the
Company's amended and restated Equity Plan, FOR approval of the amendment to
Article III of the Articles of Incorporation, FOR approval of the amendment to
Article VIII of the Articles of Incorporation, and FOR approval of the
amendment to Article VIII, Section A of the Articles of Incorporation. 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.