UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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WERNER ENTERPRISES, INC.
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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 13, 2008
___________________________
Dear Stockholders:
Notice is hereby given that the 2008 Annual Meeting of
Stockholders (the "2008 Annual Meeting") of Werner
Enterprises, Inc., a Nebraska corporation (the "Company"),
will be held at the Omaha Marriott, 10220 Regency Circle,
Omaha, Nebraska, on Tuesday, May 13, 2008, at 10:00 a.m. local
Central Daylight time. This meeting will be held for the
following purposes, which are more fully described in the
accompanying Proxy Statement:
1. To elect three Class II directors to each serve for a
three-year term expiring at the 2011 Annual Meeting of
Stockholders and until their respective successors are
elected and qualified.
2. To ratify the appointment of KPMG LLP as the Company's
independent registered public accounting firm for the
year ending December 31, 2008.
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March
24, 2008, will be entitled to receive notice of and to vote at
the 2008 Annual Meeting or any adjournment thereof.
Enclosed you will find the Proxy Statement (including a Proxy)
relating to the 2008 Annual Meeting and a copy of the
Company's Annual Report to Stockholders for the year ended
December 31, 2007 (the "2007 Annual Report"). The Proxy
Statement and 2007 Annual Report are also available on the
Company's website: www.werner.com under the "Investor
Information" tab.
All stockholders are cordially invited and encouraged to
attend the 2008 Annual Meeting in person. However, regardless
of whether you attend the meeting, we request that you vote
and submit your proxy as promptly as possible in order to
ensure the presence of a quorum and that your shares will be
voted in accordance with your wishes. Voting instructions are
enclosed and provided in the Proxy Statement for your
convenience. If you attend the 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
Omaha, Nebraska and Corporate Secretary
April 8, 2008
TABLE OF CONTENTS
_________________
INTRODUCTION 1
Annual Meeting Information 1
Voting Information and Instructions 2
Record Date 2
Methods of Voting 2
Revoking Your Proxy 2
Voting Your Proxy 2
Stockholder Privacy 2
Election of Directors and Cumulative Voting 2
Quorum 3
Expenses of Solicitation 3
Other Matters 3
PROPOSAL 1 - ELECTION OF DIRECTORS 3
Election and Voting Process 3
Director Nominees 4
Current Director Information 4
Recommendation of the Board of Directors 6
CORPORATE GOVERNANCE 6
Role of the Board of Directors 6
Corporate Governance Policies and Materials 6
Committees of the Board of Directors 6
Director Independence Determination 7
Audit Committee 7
Compensation Committee 8
Compensation Committee Interlocks and Insider
Participation 9
Nominating and Corporate Governance Committee 9
Attendance at Board and Committee Meetings, Annual Meeting 9
Stockholder Communications with the Board of Directors 10
Director Nomination Process 10
Director Compensation and Benefits 11
Director Stock Ownership 12
2007 Compensation of Directors 12
Report of the Audit Committee 13
EXECUTIVE OFFICERS 14
Current Executive Officer Information 14
BENEFICIAL OWNERSHIP OF COMMON STOCK 16
Section 16(a) Beneficial Ownership Reporting Compliance 16
Security Ownership of Directors, Executive Officers and
Certain Beneficial Owners 16
EXECUTIVE COMPENSATION 18
Compensation Discussion and Analysis 18
i
Named Executive Officers 19
Executive Compensation Program and Philosophy 19
Elements of Executive Compensation 19
Compensation Process and Determination 22
Competitive Peer Groups and Benchmarking 23
Other Policies and Considerations 24
Employment Arrangements 26
Arrangements and Potential Payments Upon Termination or
Change in Control 26
Termination 26
Change in Control 26
Potential Benefits Payable Under the Equity Plan 26
Report of the Compensation Committee 27
Summary Compensation Table 28
All Other Compensation for 2007 30
Grants of Plan-Based Awards for 2007 31
Outstanding Equity Awards at 2007 Year-End 31
Option Exercises for 2007 34
Nonqualified Deferred Compensation for 2007 34
Deferrals 34
Earnings 34
Distributions and In-Service Withdrawals 35
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 36
Independent Registered Public Accounting Firm Fees 36
Audit Fees 36
Audit-Related Fees 36
Tax Fees 36
Policy of Audit Committee Pre-Approval of Audit and Non-
Audit Services Performed by the Independent Registered
Public Accounting Firm 37
Recommendation of the Board of Directors 37
TRANSACTIONS WITH RELATED PERSONS 38
Review and Approval of Related Person Transactions 38
Related Person Transactions 38
Land Lease Agreement 38
Family Members of Executive Officers and Directors 39
Owner-Operators 40
Personal Use of Corporate Aircraft 40
OTHER BUSINESS 40
STOCKHOLDER PROPOSALS 40
STOCKHOLDERS SHARING THE SAME ADDRESS 41
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES;
WEBSITE 41
ii
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 2008
________________________
INTRODUCTION
We are sending you this Proxy Statement in connection with the
solicitation of proxies by our Board of Directors (the
"Board") for the 2008 Annual Meeting of Stockholders of Werner
Enterprises, Inc. The 2008 Annual Meeting will be held for
the purposes set forth in the Notice of Annual Meeting of
Stockholders on the cover page of this Proxy Statement. We
are mailing the Proxy Statement, Proxy and our Annual Report
to Stockholders for the year ended December 31, 2007 ("2007
Annual Report") on or about April 8, 2008.
In this Proxy Statement, we refer to Werner Enterprises, Inc.
as the "Company," "we" or "us," and to the 2008 Annual Meeting
of Stockholders as the "Annual Meeting" or "2008 Annual
Meeting." References to "2007" and "for the year ended
December 31, 2007" mean the Company's fiscal year for the
period beginning January 1, 2007 and ending December 31, 2007.
The term "executive officers" means most of our senior
executives, who are all listed in the "Current Executive
Officer Information" section on page 14 of this Proxy
Statement and on our website. References to "named executive
officers" mean the five executive officers identified in the
Summary Compensation Table and "Compensation Discussion and
Analysis" section of Executive Compensation in this Proxy
Statement. "Proxy materials" means the Proxy Statement, Proxy
and 2007 Annual Report. We also refer to our "website," which
means the Internet website available at www.werner.com under
the "Investor Information" tab, as provided in the "Contacting
the Corporate Secretary and Executive Offices; Website"
section of this Proxy Statement.
This Proxy Statement and our 2007 Annual Report are available
on our website. In these proxy materials, we refer to certain
reports and forms that we have filed with the Securities and
Exchange Commission ("SEC"). All of our SEC filings are
available on our website. You may also request copies of our
SEC filings and proxy materials from the Corporate Secretary
at the contact information provided in the "Contacting the
Corporate Secretary and Executive Offices; Website" section of
this Proxy Statement.
Annual Meeting Information
The 2008 Annual Meeting of Stockholders will be held at 10:00
a.m. local Central Daylight time on Tuesday, May 13, 2008, at
the Omaha Marriott, and at any adjournment(s) thereof. The
Omaha Marriott is located at 10220 Regency Circle in Omaha,
Nebraska, which is near the intersection of U.S. Interstate
680 and West Dodge Road. Should you require additional
directions to attend the meeting and vote in person, you may
contact our Corporate Secretary at the information set forth
in the "Contacting the Corporate Secretary and Executive
Offices; Website" section on page 41. At the meeting,
Clarence L. Werner, Gregory L. Werner and Gary L. Werner and
other members of our management team will discuss our results
of operations and business plans. Members of our Board of
Directors will also be present to answer your questions.
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Voting Information and Instructions
Record Date. The record date for the Annual Meeting is March
24, 2008. On the record date, 70,385,013 shares of our $0.01
par value Common Stock were outstanding. At the Annual
Meeting, each stockholder will be entitled to one vote (in
person or by proxy) per share that is owned of record at the
close of business on March 24, 2008. Each share has one vote
on each matter. Our stock transfer books will not be closed.
On March 24, 2008, the closing sale price of our Common Stock
as reported on the NASDAQ Global Select MarketSM was $19.66
per share.
Methods of Voting. You may vote your shares by mail using the
enclosed Proxy and self-addressed postage-paid return envelope
and by following the instructions appearing on the Proxy.
These instructions allow you to vote by completing, signing,
dating and returning the Proxy in the envelope.
Alternatively, you may vote by the Internet or telephone if
instructions for these other voting methods were enclosed with
your proxy materials. Signing and returning the Proxy by
mail, or submitting your Proxy by the Internet or telephone,
does not affect your right as a stockholder to vote in person
at the Annual Meeting.
Revoking Your Proxy. Any stockholder who delivers an executed
proxy has the right to revoke the proxy at any time prior to
its use at the Annual Meeting. You may revoke your proxy
before the Annual Meeting by: (i) delivering a written and
executed notice of revocation of the proxy to the Corporate
Secretary at our executive offices; (ii) executing a
subsequent proxy (dated later than the previously submitted
proxy) and delivering the subsequent proxy to our Corporate
Secretary; or (iii) attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting, in and of itself,
will not constitute a revocation of a proxy.
Voting Your Proxy. When a proxy is executed and returned (and
not revoked) prior to the Annual Meeting, the proxy will be
voted according to the instructions you made when granting the
proxy. Unless you specify otherwise or no choice is indicated
on the Proxy, all shares of our Common Stock represented by
the proxy will be voted:
(i) FOR the election of all nominees for
director ("Proposal 1");
(ii) FOR the ratification of the appointment of
KPMG LLP as our independent registered
public accounting firm for 2008 ("Proposal
2"); and
(iii) In accordance with the best judgment of the
named proxies on any other matters properly
brought before the Annual Meeting or any
adjournment thereof. See "Other Matters" in
this Proxy Statement.
Stockholder Privacy. As a matter of Company policy, we keep
all proxies, ballots and voting tabulations that identify
individual stockholders private. Such documents are available
for examination only by certain representatives associated
with processing proxies and tabulating the vote. Stockholder
votes are not disclosed, except as may be necessary to meet
legal requirements.
Election of Directors and Cumulative Voting. With respect to
the election of directors, Company stockholders (or their
proxy if one is appointed) have cumulative voting rights under
the laws of the State of Nebraska. This means that you (or
your proxy) may either (i) vote your shares for as many
directors as are to be elected; (ii) cumulate your shares and
give one director nominee an amount of votes equal to the
total number of directors to be elected multiplied by the
total number of their shares; or (iii) distribute an amount of
votes calculated as described in (ii) among as many director
nominees as you desire. If you desire to vote cumulatively,
you must vote in person or give your specific cumulative
voting instructions to the designated proxy, and your
instructions must indicate the number of votes represented by
your shares that are to be cast for one or more of the
director nominees. The solicitation of proxies on behalf of
the Board of Directors includes a solicitation for
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discretionary authority to cumulate votes. You may withhold
authority to vote for any nominee(s) by striking through the
name(s) of such nominee(s) on the accompanying Proxy.
Quorum. For business to be conducted at the Annual Meeting, a
quorum must be present. The presence at the Annual Meeting,
either in person or by proxy, of a majority of all outstanding
shares of Common Stock entitled to vote at the Annual Meeting
will constitute a quorum for the transaction of business.
Both abstentions and broker non-votes are counted for the
purpose of determining whether a quorum is present for the
transaction of business. ("Broker non-votes" are shares held
by a broker or nominee that are represented by proxy at the
Annual Meeting, but the beneficial owner of such shares has
not instructed the broker or nominee to vote on certain
matters and has not given the broker or nominee discretionary
voting power.) If a quorum is not present, the Annual Meeting
will be adjourned until a quorum is obtained.
Expenses of Solicitation
We will bear all costs of this proxy solicitation, including
expenses for the preparation, printing, assembly and mailing
of materials. Some of our directors, officers and regular
employees may also solicit proxies in person or by the
Internet, telephone or other electronic communications, and
they will not receive any additional compensation for making
such solicitations. We will also reimburse brokerage firms
and other custodians and fiduciaries for all reasonable
expenses incurred for forwarding proxy materials to beneficial
owners of our stock in accordance with customary practice.
Your cooperation in promptly voting your shares and submitting
your proxy will help to avoid additional expense.
Other Matters
On the date of mailing this Proxy Statement, the Board of
Directors knows of no other matters to be brought before
stockholders at the Annual Meeting other than the matters
described in this Proxy Statement. If any other matters are
properly presented at the meeting, your signed proxy gives the
persons named on the enclosed Proxy the discretionary
authority to vote the shares represented thereby in accordance
with their best judgment.
PROPOSAL 1 - ELECTION OF DIRECTORS
Our Articles of Incorporation provide that there shall be two
or three separate classes of directors. Each class must
consist of not less than two, nor more than five, directors,
and the classes should be nearly equal in number as possible.
Our By-Laws provide for eight directors, divided into three
classes (Class I, II and III), and each class should have the
same number of directors to the extent possible. Directors
hold office for a term of three years, and each term expires
at the third succeeding annual meeting of stockholders after
the respective director's election and until a successor is
elected and qualified. The terms of office for each class of
current directors expire at the annual meeting of stockholders
in the following years: Class I, 2010; Class II, 2008; and
Class III, 2009.
Election and Voting Process
Assuming the presence of a quorum, directors are elected when
they receive a plurality of affirmative votes cast by holders
of the outstanding shares of our Common Stock, present or
represented by proxy, at the Annual Meeting and entitled to
vote thereon. This means that the three nominees receiving
the highest number of votes at the Annual Meeting, after
taking into account any cumulative voting, will be elected to
the Board. Shares not voted for any nominee (whether by
specifically withholding authority to vote on a Proxy or
3
otherwise) will not impact the election of directors except to
the extent that such failure to vote for a nominee results in
another individual receiving a larger proportion of the total
votes.
Each of the nominees designated in this Proxy Statement has
indicated his intention to serve as a director if elected, and
the Board does not know of any reason why any nominee will be
unavailable for election. In the event any nominee becomes
unwilling or unable to serve as a director, the shares
represented by your accompanying Proxy will be voted for any
substitute nominee designated by the Board, unless your proxy
withholds authority to vote for the unavailable and/or
substitute nominee. There are no arrangements or
understandings between any of the nominees and any other
person pursuant to which any of the nominees was selected as a
nominee.
Director Nominees
You will be asked to elect three directors in Class II to each
serve for a three-year term expiring at the 2011 Annual
Meeting of Stockholders until his respective successor is
elected and qualified. Gary L. Werner, Gregory L. Werner and
Michael L. Steinbach are current Class II directors whose
terms will expire at the 2008 Annual Meeting. They have been
nominated for election at the 2008 Annual Meeting for terms
expiring at the 2011 Annual Meeting of Stockholders and until
their respective successors are duly elected and qualified.
Current Director Information
Set forth below is certain information provided to us by the
director nominees and the directors whose terms will continue
after the 2008 Annual Meeting, all of whom are current
directors.
Name Position with the Company or Principal Occupation Term Ends
---- ------------------------------------------------- ---------
Clarence L. Werner Chairman 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. 2010
Michael L. Steinbach Owner of Steinbach Farms & Equipment Sales and 2008
Steinbach Truck & Trailer
Kenneth M. Bird Superintendent of Westside Community Schools 2010
Patrick J. Jung Chief Operating Officer of Surdell & Partners LLC 2009
Duane K. Sather Former Chairman of Sather Companies 2009
CLARENCE L. WERNER, 70, operated Werner Enterprises as a sole
proprietorship from 1956 until the Company's incorporation in
September 1982. He has been a Company director since that
time and also served as President until 1984. Since 1984, Mr.
Werner has been Chairman of the Board, and he served as Chief
Executive Officer of the Company from 1984 until February 8,
2007. Mr. Werner is the father of Gary L. Werner and Gregory
L. Werner.
GARY L. WERNER, 50, 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 also served
as Vice President from 1982 until 1984, when he was named
President and Chief Operating Officer of the Company. Mr.
Werner was then named Vice Chairman in 1991. From 1993 to
4
April 1997, Mr. Werner also reassumed the duties of President.
Gary L. Werner is a son of Clarence L. Werner and a brother of
Gregory L. Werner.
GREGORY L. WERNER, 48, was elected as a director of the
Company in 1994. He served as a Vice President of the Company
from 1984 to March 1996 and was Treasurer from 1982 until
1986. Mr. Werner was promoted to Executive Vice President in
March 1996 and became President in April 1997. Mr. Werner has
also directed revenue equipment maintenance for 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. Mr.
Werner was named Chief Executive Officer of the Company on
February 8, 2007. Gregory L. Werner is a son of Clarence L.
Werner and a brother of Gary L. Werner.
GERALD H. TIMMERMAN, 68, was elected as a Company director in
1988. Since 1970, Mr. Timmerman has been President of
Timmerman & Sons Feeding Co., Inc. in Springfield, Nebraska.
Timmerman & Sons Feeding Co., Inc. is a cattle feeding and
ranching corporation with operations in several Midwestern
states.
MICHAEL L. STEINBACH, 53, was elected as a director of the
Company in 2002. He has been the sole owner of Steinbach
Farms & Equipment Sales since 1980. Steinbach Farms &
Equipment Sales buys and sells farmland and equipment and is
located in Valley, Nebraska. Mr. Steinbach has also been the
sole owner of Steinbach Truck & Trailer, a semi-tractor and
trailer dealership located in Valley, Nebraska, since 1997.
Mr. Steinbach also farms or custom farms approximately six
thousand acres of farmland.
KENNETH M. BIRD, 60, was appointed by the Board of Directors
in 2002 to fill a vacant director position and was then
elected by the stockholders in 2004. He has been
Superintendent of the Westside Community Schools in Omaha,
Nebraska since 1992 and also held various administrative
positions in the Westside School District since 1981. In
1998, Dr. Bird was the Nebraska Superintendent of the Year and
has been recognized for his technology leadership and vision.
He is also the President and Chief Executive Officer of
Building Bright Futures, a non-profit entity and initiative
that serves youth education in Omaha, Nebraska. Dr. Bird is
also active in local, state and national professional
organizations, and he serves on a number of community and
civic boards.
PATRICK J. JUNG, 60, was elected as a Company director in
2003. He currently serves as the Chief Operating Officer of
Surdell & Partners LLC, an advertising company in Omaha,
Nebraska. Prior to his position with Surdell & Partners LLC,
Mr. Jung was a practicing certified public accountant with
KPMG LLP for thirty years. Mr. Jung was also the audit
engagement partner on the Company's annual audit for the year
ended December 31, 1999 prior to his retirement from KPMG LLP
in 2000. Mr. Jung is currently a member of the board of
directors of Burlington Capital Group LLC (including America
First Tax Exempt Investors L.P.) and serves on its audit and
governance committees. He is also a member of the board of
directors of Supertel Hospitality, Inc. and serves as its
audit committee chair and as a member of its nominating
committee. Located in Omaha, Nebraska, Burlington Capital
Group LLC's business involves real estate, money management
and emerging markets. Supertel Hospitality, Inc.,
headquartered in Norfolk, Nebraska, is a real estate
investment trust that owns and acquires limited-service hotels
in the United States.
DUANE K. SATHER, 63, was elected as a Company director in
2006. He 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, Sather Companies were
sold to Favorite Brands International.
5
Recommendation of the Board of Directors
The Board of Directors recommends that stockholders vote FOR
---
the election of each director nominee. Holders of proxies
solicited by the Board in this Proxy Statement will vote the
proxies as directed on each Proxy, or if no instruction is
made, for the election of all director nominees.
CORPORATE GOVERNANCE
Role of the Board of Directors
One of the primary roles of the Board of Directors is to
oversee our senior management in the competent and ethical
operation of our business and to ensure that our stockholders'
interests are being properly served. To achieve these
objectives, the Board establishes and maintains high standards
of responsibility and ethics that, when consistently applied
and followed, contribute to our business's overall success.
Corporate Governance Policies and Materials
The members of our Board of Directors possess a variety of
experience, knowledge and judgment, and the diversity of these
skills complements our corporate governance structure. Our
corporate governance policies are designed to enable effective
and thorough decision-making and to allow proper and
comprehensive monitoring of the Company's performance and
compliance. Our fundamental corporate governance principles
and practices are set forth in our Code of Corporate Conduct
and other policies, each of which is available on our website.
Committees of the Board of Directors
The Board of Directors conducts its business through (i)
meetings of the Board, (ii) actions taken by written consent
in lieu of meetings, (iii) actions of its committees and (iv)
discussions with management, the independent auditors and
other consultants retained from time to time. The Board has
three standing committees: the Audit Committee, the
Compensation Committee and the Nominating and Corporate
Governance Committee ("Governance Committee"). The Board
elects committee members at the Board's annual organizational
meeting. A majority of full committee membership elects
committee chairs, unless elected by the full Board. Committee
members cannot be removed except by a majority vote of
independent directors in office at the time. The
responsibilities and duties of each committee are discussed
below.
The committees operate pursuant to written charters (including
any amendments thereto) approved and adopted by the Board.
These charters are available on our website. The Audit
Committee recently amended its charter to further reflect
applicable listing standards of the Nasdaq Stock Market, Inc.
("NASDAQ"), and the Board approved these amendments on
February 18, 2008. On August 14, 2007, the Board approved
amendments to the Audit Committee and Governance Committee
charters that transferred the authority to evaluate and
approve or disapprove any "related person transactions" (as
defined in the "Transactions with Related Persons" section of
this Proxy Statement) from the Audit Committee to the
Governance Committee. At that time, the Board also approved
additional amendments to the Governance Committee charter to
further define the Governance Committee's role in corporate
governance with respect to the development and oversight of
our practices and policies regarding corporate governance,
ethical issues and compliance matters.
6
The current composition of each committee is as follows:
Compensation Governance
Name Audit Committee Committee Committee (1)
---- --------------- ------------ -------------
Kenneth M. Bird X X
Patrick J. Jung X (Chair) X (Chair)
Duane K. Sather X X
Michael L. Steinbach X X
Gerald H. Timmerman X X X
____________________
(1) The Governance Committee does not have a Chair.
Director Independence Determination
The Board has determined that all members of the Board of
Directors are independent pursuant to the applicable NASDAQ
listing standards, except for Messrs. Clarence L. Werner, Gary
L. Werner and Gregory L. Werner. The Board has also
determined that each member of the three Board committees
satisfies the applicable independence requirements of NASDAQ,
the SEC and the Internal Revenue Service ("IRS").
Audit Committee
The following information in this section is not deemed to be
"soliciting material" or to otherwise be considered "filed"
with the SEC, nor shall this report be subject to Regulation
14A (other than as indicated) or to the liabilities set forth
in Section 18 of the Securities Exchange Act of 1934. This
information shall not be deemed to be incorporated by
reference into any prior or subsequent filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically
incorporates it by reference or treats it as soliciting
material.
Our Board of Directors established a separately-designated
standing Audit Committee to oversee our accounting and
financial reporting processes and our financial statement
audits, in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended ("Exchange Act").
As more fully described in its charter, the Audit Committee is
responsible for overseeing our accounting and financial
reporting processes, which includes but is not limited to:
* Discussing the annual audit and resulting letter of
comments with management;
* Consulting with the auditors and management regarding
the adequacy of internal controls;
* Reviewing our financial statements prior to their
release with management and the independent auditors;
* Evaluating with management the process used to support
the Chief Executive Officer and Chief Financial
Officer certifications that accompany our periodic SEC
filings;
* Appointing the independent auditors for the next
fiscal year;
* Reviewing and approving all audit and non-audit
services;
* Overseeing the work of our internal audit department;
and
* Assessing and maintaining procedures for the anonymous
submission of complaints concerning accounting and
auditing irregularities.
7
The Audit Committee periodically meets in executive session
with our independent auditors and also in a separate executive
session with the senior manager in charge of our internal
audit department. These meetings are conducted without the
presence of our management.
The Board of Directors has determined that each Audit
Committee member (i) meets the independence criteria for Audit
Committee membership prescribed by Rule 10A-3(b)(1) under the
Exchange Act and (ii) has sufficient knowledge and
sophistication in financial and auditing matters under the
NASDAQ rules. The Board has also designated Mr. Jung as an
"audit committee financial expert" as defined under the SEC
rules.
We have provided the Report of the Audit Committee for 2007 in
this Proxy Statement on page 13.
Compensation Committee
The Compensation Committee is responsible for determining and
approving the compensation of our Chairman, Vice Chairman and
President and Chief Executive Officer. The Compensation
Committee also approves the compensation of all other
executive officers after considering the recommendations of
our Chairman, Vice Chairman and President and Chief Executive
Officer. The Compensation Committee is also responsible for
recommending to the Board the compensation policies for
"outside directors" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code").
The Compensation Committee assumed responsibility in 2006 for
oversight of and determining awards of equity compensation
pursuant to our Equity Plan. Our Equity Plan provides for
grants of nonqualified stock options, restricted stock and
stock appreciation rights ("SARs") to employees and non-
employee directors. With respect to the Equity Plan, the
Compensation Committee has authority to determine the terms of
granted awards, including (i) recipients; (ii) the number of
shares subject to each award; (iii) the date on which awards
are granted, exercisable and become vested; (iv) whether or
not awards may be exercised in installments; (v) the type of
award; (vi) the form of consideration payable upon exercise of
each award; and (vii) any other terms of the awards consistent
with the terms of the Equity Plan.
As explained in more detail under "Compensation Process and
Determination" within the "Compensation Discussion and
Analysis" and "Executive Compensation" sections, the
Compensation Committee delegated to our President and Chief
Executive Officer certain authority that allows him to modify
the base salaries of executive officers within ranges
established by the Compensation Committee. The Compensation
Committee reviews and approves any such base salary changes at
its year-end meeting. This task was performed in 2007. The
Compensation Committee also determines the compensation of the
Chairman, Vice Chairman and President and Chief Executive
Officer independent of each such officer's participation or
consultation.
During 2007, the Compensation Committee continued to retain
the firm of Towers Perrin as its compensation consultant to
assist with the continued development and evaluation of
compensation policies and with the Compensation Committee's
determinations of compensation awards. The Compensation
Committee engaged Towers Perrin to provide independent and
unbiased third-party advice and expertise regarding executive
compensation and to provide a competitive market pay analysis
for our named executive officers. This analysis compared the
base salary, annual bonus and long-term incentive components
of compensation to both a competitive peer group and the
general industry.
During 2007, Towers Perrin also performed an outside director
pay analysis. This analysis compared cash compensation
(including retainers and meeting fees) and equity compensation
for outside directors to a competitive peer group. The
analysis also considered director participation on Board
committees and additional fees paid for chairing any such
committee.
8
The Board has determined that all current Compensation
Committee members are (i) "non-employee directors" as defined
by Rule 16b-3 under the Exchange Act and (ii) "outside
directors" as defined in Section 162(m) of the Internal
Revenue Code.
We have provided the Report of the Compensation Committee for
2007 in this Proxy Statement on page 27. For more information
about the Compensation Committee's activities, refer to the
"Compensation Discussion and Analysis" section and Report of
the Compensation Committee within "Executive Compensation"
under this Proxy Statement.
Compensation Committee Interlocks and Insider Participation.
No member of the Compensation Committee was an officer or
employee of the Company at any time during 2007 or on the date
of this Proxy Statement. During 2007, the Compensation
Committee was comprised of Kenneth M. Bird, Patrick J. Jung
and Gerald H. Timmerman, each of whom is an outside (non-
employee) director who satisfies the applicable SEC and NASDAQ
independence requirements. In 2007, no member of the
Compensation Committee had any relationship or transaction
with the Company that would require disclosure as a "related
person transaction" under Item 404 of SEC Regulation S-K and
in the Proxy Statement section entitled "Transactions with
Related Persons." During 2007, none of our executive officers
served on the board of directors or compensation committee of
any other entity whose executive officer(s) served as a member
of our Board of Directors or Compensation Committee.
Nominating and Corporate Governance Committee
The Governance Committee is responsible for the director
nomination process. These duties include assisting the Board
in identifying, evaluating and recruiting qualified candidates
for election to the Board. The Governance Committee also
recommends for the Board's approval the director nominees for
any election of directors. The Governance Committee is also
responsible for various corporate governance matters,
including the development and oversight of our corporate
governance and compliance policies and practices and ethical
standards of conduct for our directors, officers and
employees. The Governance Committee administers our policies
regarding "related person transactions" (as discussed in the
"Transactions with Related Persons" section herein) and
reviews and approves or disapproves any such transactions. A
more complete description of the Governance Committee's
functions is provided in its charter.
Attendance at Board and Committee Meetings, Annual
Meeting
During 2007, the following meetings were held:
Board of Directors:
* The Board held five meetings.
* Four executive sessions of the independent
directors were also held without the presence of
management.
* The Board acted twice by unanimous written consent.
Audit Committee:
* The Audit Committee held six meetings.
* Four executive sessions without the presence of
management were also conducted with the independent
auditors.
* Four executive sessions without the presence of
management were held with the senior manager of
internal audit.
* Mr. Jung participated in four meetings with
management and the independent auditors for the
purpose of reviewing financial results prior to the
issuance of earnings press releases.
* The Audit Committee did not act by unanimous
written consent.
9
Compensation Committee:
* The Compensation Committee held four meetings.
* The Compensation Committee did not act by unanimous
written consent.
Nominating and Corporate Governance Committee:
* The Governance Committee held one meeting.
* The Governance Committee did not act by unanimous
written consent.
During 2007, each incumbent director attended and participated
in at least 75% of all meetings of the Board of Directors and
Board committees on which he served. The average Board and
Board committee meeting attendance was 96%. We encourage
directors to attend annual meetings of stockholders, although
we do not have a formal policy regarding director attendance
at these meetings. Seven of the eight then-current directors
attended our Annual Meeting of Stockholders in May 2007, and
we anticipate that most, if not all, of our directors will
attend the 2008 Annual Meeting.
Stockholder Communications with the Board of Directors
The Board of Directors established a process by which
stockholders and other parties may communicate directly with
members of the Board and/or the independent directors as a
group. You may direct any matter intended for the Board
and/or independent directors by writing to the intended
recipients in care of our Corporate Secretary at our executive
offices. The Corporate Secretary reserves the right not to
forward any abusive, threatening or otherwise inappropriate
materials. A majority of our independent directors approved
the process for collecting and organizing stockholder
communications received by our Corporate Secretary on the
Board's behalf. Our Stockholder Communications Procedure for
Communicating with the Board of Directors is included on our
website.
Director Nomination Process
Our Nominating and Corporate Governance Committee Directorship
Guidelines and Selection Policy ("Directorship Guidelines
Policy") and Policy Regarding Director Recommendations by
Stockholders ("Stockholder Recommendation Policy") are
available on our website. Stockholders may also request a
copy of these policies by writing to our Corporate Secretary
at our executive office address provided in this Proxy
Statement. The purpose of these policies is to describe the
process by which nominees for the Board of Directors are
selected. Each policy was approved by the Board of Directors
and is administered by the Governance Committee.
Generally, the Governance Committee considers director
candidates suggested by Board members, management and
stockholders. With respect to stockholders, the Stockholder
Recommendation Policy applies. In accordance with the
Stockholder Recommendation Policy, the Governance Committee
will consider candidates recommended by stockholders that have
beneficially owned (individually or as a group) at least 2% of
our issued and outstanding stock entitled to vote on the
recommendation for at least one year, determined as of the
date the stockholder recommendation is submitted. You must
submit stockholder recommendations in writing, and each
recommendation must include all information required and
requested by the Stockholder Recommendation Policy.
In order for a stockholder's candidate to be evaluated and
considered as a prospective nominee, you must submit your
recommendation to our Corporate Secretary not less than 120
days before the one-year anniversary of the release date of
the previous year's proxy statement. (For example, the
release date of the 2007 proxy statement was April 4, 2007.
Stockholder recommendations intended for consideration for the
director elections at the 2008 Annual Meeting had to be
submitted on or before December 5, 2007.) Stockholder
10
recommendations for director nominees must be submitted no
later than December 8, 2008 for the 2009 Annual Meeting of
Stockholders.
Generally, candidates for director positions should possess
the following skills and traits:
* Relevant business and financial expertise and
experience, including an understanding of fundamental
financial statements;
* The highest character and integrity and a reputation
for working constructively with others;
* Sufficient time to devote to meetings and consultation
on Board matters; and
* Freedom from conflicts of interest that would
interfere with the candidate's performance as a
director.
The Governance Committee evaluates prospective nominees
against certain minimum standards and qualifications, as
identified in the Directorship Guidelines Policy. The
standards and qualifications set forth in the Directorship
Guidelines Policy include, but are not limited to, the
prospective nominee's business experience, skills, talents and
ability to contribute to our success. The Governance
Committee also considers other relevant factors, such as the
balance of management and independent directors, the need for
Audit Committee expertise and relevant industry experience.
Prospective director candidates nominated by stockholders in
accordance with the Stockholder Recommendation Policy are
evaluated by the Governance Committee in the same manner as
any other prospective candidate. We have not engaged and have
not paid any fees to any third party for assistance with the
director nomination process.
Director Compensation and Benefits
Only outside (non-employee) members of our Board of Directors
receive compensation for their service as one of our
directors. These outside directors receive an annual
compensation package that is designed to attract, motivate and
retain highly qualified independent professionals to represent
our stockholders. Directors who are employees of the Company
do not receive any compensation for their service on our Board
of Directors.
Our 2007 annual compensation package for non-employee
directors is comprised of an annual cash retainer and cash
meeting fees. On August 14, 2007, our Compensation Committee
and Board approved an increase to the annual outside director
retainer from $10,000 to $15,000 and established a $5,000
annual retainer for the Compensation Committee Chair. These
changes became effective for the fourth quarter of 2007. In
modifying these retainers, the Compensation Committee
evaluated the incentives and compensation offered to outside
directors by those companies in our competitive peer group and
industry and assessed whether an increase in such compensation
would help us attract and retain high-quality outside
directors (our competitive peer group is described under
"Competitive Peer Groups and Benchmarking" within the
"Compensation Discussion and Analysis" section in this Proxy
Statement). The Compensation Committee also considered
whether an increase in the outside directors' fixed
compensation would encourage effective Board service by
enhancing their independence from our non-independent
directors. These director retainer adjustments were disclosed
in Exhibit 10.1 to Form 10-Q filed with the SEC on October 31,
2007.
Each outside director also receives reimbursement at cost for
all of their respective reasonable out-of-pocket travel
expenses incurred in connection with their attendance at Board
and committee meetings. In 2007, Mr. Jung attended an audit
committee seminar, and the fee for this seminar and related
travel expenses were equally shared by the three companies
(including us) of which Mr. Jung is a director.
11
Specifically, the 2007 and current 2008 compensation package
includes the fees and retainers for outside directors that are
provided in the following Outside Director Retainers and Fees
table:
Outside Director Retainers and Fees
---------------------------------------------------------------------------------------------
Amount Paid - Amount Paid -
Fee or Retainer 1st, 2nd and 3rd Quarters of 2007 4th Quarter of 2007 and 2008
--------------- --------------------------------- ----------------------------
Annual Board Retainer $10,000 (paid in quarterly $15,000 (paid in quarterly
for Board Membership installments of $2,500) installments of $3,750)
Board Meeting Fee $2,000 (paid for $2,000 (paid for
each Board meeting) each Board meeting)
Board Committee Meeting Fee $2,000 (paid for each $2,000 (paid for each
Committee meeting Committee meeting
not held on the same day not held on the same day
as a Board meeting) as a Board meeting)
Annual Retainer for the $10,000 (paid in quarterly $10,000 (paid in quarterly
Audit Committee Chair (1) installments of $2,500) installments of $2,500)
Annual Retainer for the None $5,000 (paid in quarterly
Compensation Committee Chair (2) installments of $1,250)
Director Compensation
----------------------------------------------------------------------------------------
Fees Earned or Non-Equity
Paid in Cash Incentive Plan All Other
Name ($) (1) Compensation ($) Compensation ($) Total ($)
---- ------- ---------------- ---------------- ---------
Kenneth M. Bird 33,250 - - 33,250
Patrick J. Jung 44,500 - - 44,500
Duane K. Sather 31,250 - - 31,250
Michael L. Steinbach 31,250 - - 31,250
Gerald H. Timmerman 33,250 - - 33,250
____________________
(1) The amounts in this column include fees and retainers
received for Board membership, Board committee
membership and for service as the Audit Committee Chair
and Compensation Committee Chair.
Report of the Audit Committee
The following report of the Audit Committee shall not be
deemed to be "soliciting material" or to otherwise be
considered "filed" with the SEC, nor shall this report be
subject to Regulation 14A (other than as indicated) or to the
liabilities set forth in Section 18 of the Securities Exchange
Act of 1934. This report shall not be deemed to be
incorporated by reference into any prior or subsequent filing
under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent that the Company
specifically incorporates it by reference or treats it as
soliciting material.
The Audit Committee of the Board of Directors is comprised of
Messrs. Bird, Jung, Sather, Steinbach and Timmerman. Mr. Jung
is the Chair of the Audit Committee. All of the Audit
Committee members are qualified independent directors under
the audit committee structure and membership requirements of
the NASDAQ and SEC rules and regulations. The primary purpose
of the Audit Committee is to assist the Board of Directors in
its general oversight of the Company's financial reporting
process. The Audit Committee conducts its oversight
activities by exercising the certain responsibilities and
powers set forth in its written charter adopted by the Board.
A copy of the charter is available on the Company's website.
The general duties of the Audit Committee include reviewing
the Company's financial information that will be presented to
stockholders; appointing the independent auditors; reviewing
services provided by the Company's independent registered
public accounting firm and internal audit department;
evaluating the Company's accounting policies and its system of
established internal controls; and reviewing significant
financial transactions.
The Audit Committee does not prepare financial statements or
perform audits, and its members are not auditors or certifiers
of the Company's financial statements. Rather, the Company's
management is responsible for the preparation, consistency,
integrity and fair presentation of the Company's financial
statements, accounting and financial principles, internal
control and disclosure control systems and procedures designed
to ensure compliance with applicable accounting standards,
laws and regulations. The Company's independent auditors,
KPMG LLP, are responsible for performing an independent audit
of the financial statements and for expressing an opinion on
the conformity of those statements with accounting principles
generally accepted in the United States of America ("GAAP").
13
In conjunction with the preparation of the Company's 2007
audited financial statements, the Audit Committee met with
both management and the independent auditors of the Company to
review and discuss significant accounting issues and the
financial statements included in the Company's Annual Report
on Form 10-K for 2007 prior to the issuance of such financial
statements. Management advised the Audit Committee that such
financial statements were prepared in accordance with GAAP,
and the Audit Committee discussed such financial statements
with management and the independent auditors. The Audit
Committee's assessment included a discussion with the
Company's independent auditors regarding matters that are
required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as
amended and adopted by the Public Company Accounting Oversight
Board.
The Audit Committee also received and reviewed the written
disclosures and letter submitted to the committee by the
Company's independent auditors, KPMG LLP. Such written
disclosures and letter are required by the Independence
Standards Board No. 1 (Independent Discussions with Audit
Committees). The Audit Committee and KPMG LLP also discussed
KPMG LLP's independence as the independent auditors of the
Company.
Based on the foregoing reviews and discussions, the Audit
Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's
Annual Report on Form 10-K for 2007, for filing with the SEC.
Patrick J. Jung, Chair
Kenneth M. Bird
Duane K. Sather
Michael L. Steinbach
Gerald H. Timmerman
EXECUTIVE OFFICERS
Our By-Laws provide that each executive officer holds his or
her respective office for a term of one year or until his or
her successor becomes duly elected and qualified, except that
a term may be longer than one year if such service is
specified in an employment contract or terminated sooner than
one year because of death, resignation or otherwise. Pursuant
to the By-Laws, our Board of Directors elects our executive
officers at the Board's annual organizational meeting
immediately following the annual meeting of stockholders.
Current Executive Officer Information
The following table on page 15 identifies our current
executive officers and the capacities in which they now serve.
Also set forth below the table is certain information provided
to us by these executive officers regarding their acquired
business experience.
14
Name Position with the Company Age
---- ------------------------- ---
Clarence L. Werner Chairman 70
Gary L. Werner Vice Chairman 50
Gregory L. Werner President and Chief Executive Officer 48
Derek J. Leathers Senior Executive Vice President - Value Added Services & International 38
H. Marty Nordlund Senior Executive Vice President - Specialized Services 46
Robert E. Synowicki, Jr. Executive Vice President and Chief Information Officer 49
Richard S. Reiser Executive Vice President and General Counsel 61
John J. Steele Executive Vice President, Treasurer and Chief Financial Officer 50
Jim S. Schelble Executive Vice President - Sales and Marketing 47
For information regarding the business experience of Clarence
L. Werner, Gary L. Werner and Gregory L. Werner, please refer
to "Current Director Information" under the "Proposal 1 -
Election of Directors" section of this Proxy Statement.
DEREK J. LEATHERS joined the Company in 1999 as the Managing
Director - Mexico Division. During his tenure with the
Company, he received the following promotions: (i) Vice
President - Mexico Division in 2000; (ii) Vice President -
International in 2001; (iii) Senior Vice President -
International in April 2003; (iv) Senior Vice President - Van
Division and International in July 2003; and (v) Executive
Vice President - Van Division and International in 2004. In
2006, Mr. Leathers was promoted to his current position as
Senior Executive Vice President - Value Added Services and
International. Prior to joining the Company, Mr. Leathers was
Vice President of Mexico Operations for two years at Schneider
National, a large truckload carrier, and he held various other
management positions during his eight-year career at Schneider
National.
H. MARTY NORDLUND joined the Company in 1994 as an account
executive. He received the following promotions with the
Company: (i) Director of Dedicated Fleet Services in 1995;
(ii) Senior Director of Dedicated Fleet Services in 1997;
(iii) Vice President - Dedicated Fleet Services in 1998; (iv)
Vice President - Specialized Services in 2001; (v) Senior Vice
President - Specialized Services in 2003; and (vi) Executive
Vice President - Specialized Services in 2005. In 2006, Mr.
Nordlund was named to his current position as Senior Executive
Vice President - Specialized Services. Prior to joining the
Company, Mr. Nordlund held various management positions with
Crete Carrier Corporation, a large truckload carrier.
ROBERT E. SYNOWICKI, JR. joined the Company in 1987 as a tax
and finance manager. Since that time, he was appointed to the
following positions: (i) Treasurer in 1989; (ii) Vice
President, Treasurer and Chief Financial Officer in 1991;
(iii) Executive Vice President and Chief Financial Officer in
March 1996; and (iv) Executive Vice President and Chief
Operating Officer in November 1996. He was named to his
current position as Executive Vice President and Chief
Information Officer in 1999. Mr. Synowicki was employed by
the independent public accounting firm of Arthur Andersen &
Co. as a certified public accountant from 1983 until his
employment with 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. He 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
15
law as a principal and director of Gross & Welch, a
professional corporation, in Omaha, Nebraska.
JOHN J. STEELE joined the Company in 1989 as Controller.
During his time with the Company, he was appointed to the
following positions: (i) Corporate Secretary in 1992; (ii)
Vice President - Controller and Corporate Secretary in 1994;
(iii) Vice President, Treasurer and Chief Financial Officer in
1996; and (iv) Senior Vice President, Treasurer and Chief
Financial Officer in 2004. He was named to his current
position as Executive Vice President, Treasurer and Chief
Financial Officer in 2005. Mr. Steele was employed by the
independent public accounting firm of Arthur Andersen & Co. as
a certified public accountant from 1979 until his employment
with the Company in 1989.
JIM S. SCHELBLE joined the Company in 1998 as the Manager of
New Business Development. During his tenure with the Company,
Mr. Schelble was promoted to the following positions: (i)
Director of National Accounts in 1999; (ii) Senior Director of
Dedicated Services in 2000; (iii) Associate Vice President of
Corporate and Dedicated Sales in 2002; (iv) Vice President -
Sales in 2003; and (v) Senior Vice President - Sales in 2004.
In 2005, he was named to his current position as Executive
Vice President - Sales and Marketing. Prior to joining the
Company, Mr. Schelble spent twelve years with Roadway Express,
a less-than-truckload carrier, in a variety of management
positions within operations, sales, and marketing.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than 10% of our registered
class of equity securities, to file with the SEC reports of
beneficial ownership and changes in such beneficial ownership.
Officers, directors and greater than 10% stockholders are
required by SEC rules to furnish us copies of all Section
16(a) forms they file. We file Section 16(a) reports on
behalf of our officers and directors to report their initial
and subsequent changes in beneficial ownership of our Common
Stock.
Based solely upon our review of the reports we filed on behalf
of our officers and directors, copies of such forms furnished
to us and written representations from certain reporting
persons that no Forms 5 were required for those persons, we
believe that all Section 16(a) filing requirements applicable
to our officers, directors and greater than 10% beneficial
owners were complied with during 2007; except that one Form 4
was filed for Chris C. Neil, Vice President, on August 15,
2007 (three business days after the August 10, 2007 due date)
with respect to Mr. Neil's exercising of stock options
involving 2,293 shares of our Common Stock on August 8, 2007
and Mr. Neil's disposal of all such shares on the same date.
Security Ownership of Directors, Executive Officers and
Certain Beneficial Owners
The Beneficial Ownership table on page 17 sets forth certain
information as of March 24, 2008, with respect to the
beneficial ownership of our Common Stock by:
(i) each of our directors and director nominees;
(ii) each named executive officer listed in the Summary
Compensation Table under the "Executive
Compensation" section;
(iii) each person known to us to beneficially own more
than 5% of the outstanding shares of our Common
Stock; and
(iv) all current executive officers, directors and
director nominees as a group.
16
On March 24, 2008, we had 70,385,013 shares of Common Stock
outstanding. Except as otherwise indicated in the table, the
persons listed have sole voting power and sole investment
power with respect to such shares indicated as beneficially
owned by them. 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 Percent of Shares
Beneficial Owner Owned Acquire (1) Total Outstanding (2)
---------------- ----- ----------- ----- ---------------
Clarence L. Werner (3) 22,967,985 615,000 23,582,985 33.2%
Gary L. Werner (4) 1,558,086 541,668 2,099,754 3.0%
Gregory L. Werner 3,283,594 756,670 4,040,264 5.7%
Daniel H. Cushman (5) 1,017 - 1,017 *
Derek J. Leathers (5) 1,803 94,418 96,221 *
John J. Steele 5,376 62,584 67,960 *
Kenneth M. Bird 500 - 500 *
Patrick J. Jung 2,000 - 2,000 *
Duane K. Sather 7,000 - 7,000 *
Michael L. Steinbach - - - -
Gerald H. Timmerman 13,666 - 13,666 *
Wellington Management
Company, LLP (6) 9,384,382 - 9,384,382 13.3%
Dimensional Fund
Advisors LP (7) 5,760,765 - 5,760,765 8.2%
All executive officers,
directors and director
nominees as a group
(14 persons) (3)(4)(8) 27,851,179 2,208,010 30,059,189 41.4%
*Indicates beneficial ownership of less than 1%.
____________________
(1) Number of shares underlying stock options which are
exercisable as of March 24, 2008, or which become
exercisable 60 days thereafter.
(2) The percentages are based upon 70,385,013 shares,
which equals our outstanding shares as of March 24,
2008. For beneficial owners who hold options
exercisable within 60 days of March 24, 2008, the
number of shares of Common Stock on which the
percentage is based also includes the number of shares
underlying such options.
17
(3) Clarence L. Werner has sole voting power with respect
to these 23,582,985 shares, sole dispositive power for
8,581,735 of these 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 this trust is Union Bank and Trust Company,
which has sole investment and sole voting power over
the shares held by the trust); and (ii) 500,000 shares
held by the Becky K. Werner Revocable Trust (the sole
trustee of this trust is Becky K. Werner, Mr. Werner's
wife, and she has sole investment and sole voting
power over the shares held by the trust). Mr. Werner
disclaims actual and beneficial ownership of the
shares held by the Gary L. Werner Irrevocable Inter
Vivos QTIP Trust II and the shares held by the Becky
K. Werner Revocable Trust.
(5) Daniel H. Cushman's employment with the Company ended
on January 15, 2008. Prior to January 15, 2008, Mr.
Cushman was a named executive officer of the Company
and served as Senior Executive Vice President and
Chief Marketing Officer. Derek J. Leathers became a
named executive officer of the Company in 2008 upon
the end of Mr. Cushman's employment. Mr. Cushman's
business address is 3930 16th Avenue S.W., Post Office
Box 68, Cedar Rapids, Iowa 52406.
(6) Based on Schedule 13G (Amendment No. 1) as of December
31, 2007, as filed with the SEC by Wellington
Management Company, LLP, 75 State Street, Boston,
Massachusetts 02109. Wellington Management Company,
LLP claims no sole voting power or sole dispositive
power with respect to any of these shares, but does
claim shared voting power of 6,651,182 shares and
shared dispositive power with respect to 9,309,382
shares.
(7) Based on Schedule 13G (Amendment No. 1) as of December
31, 2007, as filed with the SEC 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 5,760,765 shares, but does not claim
any shared voting power or shared dispositive power
with respect to any of these shares.
(8) Daniel H. Cushman is excluded from this group because
he is not currently an executive officer, nor was he
such an officer as of March 24, 2008.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section of the Proxy Statement explains how our
compensation policies and practices are developed and operate
with respect to the named executive officers identified below
and in the Summary Compensation Table. In "Compensation
Discussion and Analysis," we also discuss and analyze our
executive compensation program and the executive compensation
amounts shown below. This discussion should be read in
conjunction with the Summary Compensation Table (including the
related tabular and narrative disclosures) and the
"Compensation Committee" section under "Corporate Governance"
in this Proxy Statement. As indicated in that section, the
Compensation Committee of the Board of Directors is
responsible for establishing our executive compensation
policies and overseeing our executive compensation practices.
Our Compensation Committee is also comprised solely of non-
employee directors, each of whom is independent pursuant to
NASDAQ listing standards.
18
Named Executive Officers. Pursuant to the SEC rules, our
named executive officers consist of the Chief Executive
Officer ("CEO"), Chief Financial Officer ("CFO") and the three
most highly compensated executive officers (excluding the CEO
and CFO) who were executive officers as of December 31, 2007.
The five named executive officers of the Company during 2007
were:
1. Clarence L. Werner (1) Chairman
2. Gary L. Werner Vice Chairman
3. Gregory L. Werner (1) President and Chief Executive Officer
4. Daniel H. Cushman (2) Senior Executive Vice President and Chief Marketing Officer
5. John J. Steele Executive Vice President, Treasurer and Chief Financial Officer
____________________
(1) On February 8, 2007, Clarence L. Werner resigned as
the CEO, and our Board of Directors appointed Gregory
L. Werner as the CEO.
(2) Daniel H. Cushman was a named executive officer
during 2007 and until his employment with the Company
ended in January 2008. During 2008, we have not made
any policies or specific decisions, nor have we taken
any steps, that affect Mr. Cushman's 2007
compensation or affect a fair understanding of such
compensation.
Executive Compensation Program and Philosophy. Our executive
compensation program is designed to achieve the following
primary objectives:
* Attract, motivate and retain high-quality executives
who contribute to the advancement of our strategic,
operational and financial goals.
* Reward our named executive officers for their
individual performance and their contribution to the
achievement of our overall business objectives.
* Support our Mission Statement, Vision Statement and
guiding corporate principles. (Our Mission and Vision
Statements are included on our website at
www.werner.com under "About Us.")
The Compensation Committee carries out our executive
compensation philosophy by applying the following principles:
* Provide compensation that is competitive with that
paid by companies in our same market and industry for
executive talent. Our Compensation Committee has the
authority to engage the services of a third-party
advisor to assist with determining how our executive
compensation program compares to those of other
companies.
* Reward performance by considering factors such as (i)
our financial performance and (ii) the executive's
individual performance and contribution to our overall
business goals.
* Ensure that highly capable and goal-oriented
executives remain motivated and committed to the
Company, even when downturns in the industry and
economy affect company performance. This principle is
important with respect to encouraging our executives
to remain with the Company for long and productive
careers.
* Encourage executive officers to become stockholders
and facilitate stock ownership in the Company by
offering equity-based compensation. We believe that
stock ownership aligns our executive officers'
interests with those of our stockholders and supports
strategic decision-making and actions that will serve
our long-term interests.
* Provide limited executive perquisites.
Elements of Executive Compensation. Our Compensation
Committee's determination of compensation levels for executive
officers differs depending upon the position and current total
direct compensation of the individual being considered.
19
(Direct compensation includes base salary, bonuses and long-
term incentive awards.) The Compensation Committee will then
evaluate the individual elements of our executive compensation
program: base salary, performance-based compensation, long-
term incentive compensation, perquisites and benefits. The
following discussion explains these elements and their primary
purposes of our 2007 executive compensation program.
Base Salary. Base salary is a fixed element of
compensation that we pay to each named executive
officer for the performance of his primary job duties
and responsibilities. We review base salaries on an
annual basis. Base salaries are not established on the
basis of any specific performance criteria, but a
number of factors are considered when determining
individual salary levels. These factors include but
are not limited to (i) the individual's performance;
(ii) the performance of the business unit(s) or
function(s) under his leadership; (iii) our overall
performance and achievements; and (iv) the economic and
business conditions affecting the Company at the time
of the review. The base salaries paid to each of our
named executive officers will vary due to the
application of these factors. Market adjustments to
named executive officer base salaries are generally
made when there is a significant change in an officer's
position or responsibilities or if competitive market
data indicates a significant deviation compared to
market salary practices; however, while we may be
guided by such events and data, we do not set
compensation levels at targeted or specific levels
relative to that of a particular peer, competitor or
industry group. The Compensation Committee's
determination of named executive officer compensation
packages are primarily made through the exercise of its
particular judgment. The base salaries of our named
executive officers are disclosed in the Summary
Compensation Table.
Performance-Based Compensation (Annual Cash Bonus).
Performance-based compensation is typically awarded in
the form of annual cash bonuses. Our annual cash bonus
program is a discretionary program designed to reward
executives, and performance-based compensation awards
are determined at the sole discretion of our
Compensation Committee. We believe the annual cash
bonus program rewards performance and motivates
executive officers to improve our overall performance,
which contributes to our long-term success.
Historically, annual cash bonus payments to executive
officers have been the same or higher than the previous
year's payment, and this practice correlates with our
consistent profitable growth record after considering
the economic and business conditions affecting us.
The Compensation Committee awards performance-based
compensation that it considers appropriate based upon
or after assessing: (i) the economic and business
conditions affecting the Company; (ii) the respective
officer's individual performance and contribution
toward achieving our business objectives; (iii) the
amount of the executive officer's bonus payment awarded
in the preceding year; (iv) the CEO's recommendation to
the Compensation Committee; (v) performance-based
compensation data for certain officer positions,
including actual bonuses paid in the marketplace at
other transportation and logistics services companies
in our peer group (such companies are listed under
"Competitive Peer Groups and Benchmarking" within the
"Compensation Discussion and Analysis" section in this
Proxy Statement); and (vi) our overall financial
results (including our revenues, net income, operating
ratio, profit margin, number of tractors, stock price
and return on assets) relative to other peer
transportation and logistics services companies. Final
award amounts approved by the Compensation Committee
for each executive officer are intended to be
competitive for our market and reflective of each
respective executive officer's performance and
contribution to our financial and business growth and
success.
20
In November 2007, our Compensation Committee approved
and awarded annual cash bonuses to the named executive
officers under our discretionary annual cash bonus
program. These bonuses were awarded at the same level
as those awarded in 2006. In making its decision, the
Compensation Committee determined that our performance
for the nine-month period ended September 30, 2007 was
equivalent to or exceeded the median revenues, net
income, operating ratio, profit margin, number of
tractors and stock price of our transportation and
logistics services peers. The Compensation Committee
also considered that our overall financial performance
met management's expectations, particularly given the
challenging business and economic climate. The annual
cash bonuses awarded in 2007 are disclosed in the
Summary Compensation Table.
Long-Term Incentive Compensation (Stock Options). Our
long-term incentive program is important to us because
it encourages long-term retention of executive officers
and enables us to recognize efforts put forth by these
officers that contributed to any stock price
appreciation. We have historically chosen a stock
option long-term incentive program because we believe
that stock options link executive officer interests
with those of our stockholders and provide meaningful
equity ownership opportunities for executive officers.
The periodic vesting periods of long-term incentive
compensation also directly align the interests and
compensation of named executive officers with our
stockholders' interests by rewarding creation and
preservation of long-term stockholder value.
Stock option 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 dilution and how our
relative financial performance compares against the
marketplace. The Compensation Committee also evaluates
each executive officer's responsibilities, individual
performance and contribution to our performance for
purposes of allocating the overall stock option pool
among executive officers.
In 2007, our stockholders approved amendments to our
Equity Plan that allowed us to award restricted stock
to our executive officers. We believe the use of
restricted stock would have a less dilutive effect on
earnings per share as compared to stock options, and
restricted stock would also directly link executive
officer interests with those of our stockholders
because restricted stock units are impacted by both
increases and decreases in stock price. Although we
have not granted any restricted stock awards, the 2007
amendments to our Equity Plan permit the Compensation
Committee to make future grants comprised of a
combination of stock options and restricted stock
awards in our ongoing long-term incentive program.
On November 29, 2007, we made stock option grants to
certain named executive officers. The options to
purchase our Common Stock were awarded by the
Compensation Committee pursuant to our Equity Plan.
The named executive officers who received stock options
were Daniel H. Cushman (25,000 shares) and John J.
Steele (15,000 shares). The Compensation Committee did
not grant any stock options to Messrs. Clarence L.
Werner, Gary L. Werner and Gregory L. Werner. Please
refer to the Summary Compensation Table and Grants of
Plan-Based Awards table for further details concerning
these awards.
Perquisites. Our executive compensation program includes
limited executive perquisites that we consider to be an
important element of our total executive reward
packages and are necessary for named executive officers
to carry out the responsibilities of their positions.
We believe our named executive officer perquisites and
other benefits are representative of and competitive
with those offered by companies with whom we compete
for executive talent, and offering these perquisites
and benefits helps us with attracting and retaining
valued executive talent. The aggregate incremental
21
cost of provided perquisites and other benefits to the
named executive officers is shown in the "All Other
Compensation" column of the Summary Compensation Table
and detailed in the "All Other Compensation for 2007"
section of the Proxy Statement.
The perquisites offered under our executive
compensation program are as follows:
* Income Tax Preparation Services. Our Vice
Chairman and President and CEO utilize income tax
preparation services provided by us. The
Chairman also utilizes our income tax, accounting
and legal services, and he reimburses us for such
services.
* Country Club Membership. In 2007, we provided
the Senior Executive Vice President and Chief
Marketing Officer with a country club membership.
The membership fees were paid by us.
* Personal Use of Corporate Aircraft. The
Chairman, Vice Chairman and the President and CEO
are permitted personal use of our corporate
aircraft provided they reimburse the Company. We
do not provide non-reimbursed personal use to any
of these three executives. When the Chairman,
Vice Chairman or President and CEO uses our
corporate aircraft for personal business, such
executive officer reimburses us the higher of our
incremental cost or the IRS taxable amount. Such
reimbursements made by the Chairman in 2007 are
discussed in "Transactions with Related Persons."
Senior management is also permitted limited
personal use of corporate aircraft with the
approval of the Chairman, Vice Chairman or
President and CEO. In 2007, we provided the
Senior Executive Vice President and Chief
Marketing Officer with use of our corporate
aircraft for one personal trip for himself and
other individuals.
* Company Vehicle. We provide each named executive
officer with one Company vehicle for business and
personal use, with the exception of the Chairman
and the President and CEO who are each provided
two Company vehicles.
Benefits. As discussed above in "Perquisites," we
believe our benefits are competitive compared to those
offered by companies in our industry and competitive
peer group and are essential for retaining exceptional
executives. Our named executive officers participate
in the full range of health and welfare benefits, and
are covered under the same plans and terms, that are
provided to all of our full-time employees in the
United States. In 2007, the Senior Executive Vice
President and Chief Marketing Officer received an
additional subsidy of his healthcare premiums. These
premiums are discussed under "All Other Compensation
for 2007." Our benefits also include Company
contributions to our 401(k) Plan and a Company match
made under our Employee Stock Purchase Plan, both of
which are made on the same terms as provided to our
full-time U.S. employees. These contributions and
matches are also detailed under "All Other Compensation
for 2007." At the named executive officers' request,
the Vice Chairman and the President and CEO do not
receive a matching contribution from us for the 401(k)
Plan. The Chairman does not participate in the 401(k)
Plan. The nonqualified deferred compensation plan (as
described further under "Nonqualified Deferred
Compensation for 2007") allows key employees whose
401(k) Plan contributions are limited by IRS
regulations affecting highly compensated employees to
contribute additional amounts on a tax-deferred basis,
subject to annual dollar limits we impose. The
nonqualified deferred compensation plan provisions
allow us to make matching contributions; however, to
date, we have elected not to make a matching
contribution.
Compensation Process and Determination. Annual executive
compensation decisions are made by our Compensation Committee.
When determining total compensation, we apply a consistent
approach for all named executive officers. The structure and
level of our executive compensation is determined, in large
part, by considering all elements of compensation, rather than
only a few components in isolation. Our Compensation
22
Committee also exercises appropriate business judgment in how
it applies these standard approaches to the facts and
circumstances involving each respective executive officer.
Compensation of Chairman, Vice Chairman and the President
and CEO. Our Compensation Committee consults an
independent third-party consultant to assist with
developing executive compensation packages for our
Chairman, Vice Chairman and President and CEO. Upon
assessing the executive compensation information
compiled by the consultant, our Compensation Committee
then meets in executive session and determines a
compensation package for these particular officers
based on each individual's job performance and
responsibilities, leadership, our financial and
operating performance and how the elements of executive
compensation apply to such individual. The CEO's
compensation is also reflective of our overall
performance and the achievement of the CEO's goals and
objectives for the Company. Our CEO is also eligible
for all of the same programs (such as health and
welfare benefits) as our other named executive
officers.
Each year, the Compensation Committee reviews each
element of executive compensation and how such elements
relate to the total direct compensation and executive
position and related responsibilities of each named
executive officer. As part of this annual process, the
Compensation Committee also examines how such elements
are reflected in competitive executive compensation
market data when determining annual pay opportunities.
Generally, the amount of compensation realized or
potentially realizable does not directly impact the
level at which future pay opportunities are set.
Compensation of Other Named Executive Officers. At the
end of the year, the Compensation Committee reviews the
competitive market compensation data for our peer
group. Upon doing so, our Compensation Committee
establishes base salary and annual cash bonus "pay
ranges" according to job title (such as Senior
Executive Vice President and Executive Vice President).
The CEO may then make changes to executive officer base
salaries during the following year, provided such
changes are within the parameters of the pay ranges
designated by the Compensation Committee. Any proposed
changes that do not fall within the established pay
ranges require approval of the Compensation Committee.
Our Compensation Committee reviews and approves these
base salary changes at the close of the year. (For
example, our Compensation Committee sets base salary
pay ranges in November 2007 for fiscal year 2008. The
CEO has delegated authority to modify base salaries
throughout 2008 within these ranges. In November 2008,
the Compensation Committee will review the CEO's year-
end total cash compensation recommendations for the
named executive officers, and such recommendations will
include these base salary changes.) After conducting
its review of our peer group's compensation data, the
Compensation Committee also evaluates and approves the
annual cash bonus and long-term incentive compensation
for each named executive officer. In making such
determinations, the Compensation Committee considers
relevant factors, including (i) each executive
officer's position and related responsibilities, (ii)
overall individual and Company performance and (iii)
achievement of corporate goals and objectives. Our
Compensation Committee determines annual cash bonus and
long-term incentive compensation near the end of the
fiscal year.
Competitive Peer Groups and Benchmarking. The Compensation
Committee refers to a competitive market analysis prepared by
Towers Perrin when it reviews and prepares executive
compensation packages for the year. In 2007, Towers Perrin
assisted our Compensation Committee with identifying the
Company's peer group, which consists of companies that
specifically provide transportation and logistics services.
The Compensation Committee then compares our elements of
executive compensation (base salary, annual bonus and long-
term incentives) to amounts paid for similar executive
positions among (i) those companies in our peer group and (ii)
23
a broader general industry group comprised of companies with
median revenues of $2 billion. The Compensation Committee
places more significance on our competitive peer group than
the general industry group.
Each year, our Compensation Committee also reviews the general
criteria and recommendations for the addition or removal of
companies in our competitive peer group. The criteria include
but are not limited to market capitalization, revenues and
revenue growth, earnings per share and total stockholder
return, net income and industry of operation. Upon applying
these criteria, the Compensation Committee was able to select
our peer group, which is comprised of 17 companies in the
transportation and logistics industry with whom we compete for
executive talent. Although the Compensation Committee may
make changes to the peer group when appropriate, the group
remained consistent and did not change from 2006 to 2007. In
2007, after applying these criteria, we found that our
revenues fell nearest to those revenues in the top quartile of
our competitive peer group; as a result, we compare total
executive compensation against the 75th percentile of this
peer group. The general industry data, on the other hand, is
regressed or size-adjusted according to our annual revenues.
Therefore, we compare total executive compensation at the
median of the general industry group.
Werner Enterprises, Inc.
2007 Competitive Peer Group
---------------------------
Arkansas Best Landstar System
Celadon Group Marten Transport
Con-Way Old Dominion Freight Line
Covenant Transport Pacer International
Expeditors International of Washington Saia
Heartland Express Swift Transportation
Hub Group USA Truck
J. B. Hunt Transport Services U.S. Xpress Enterprises
Knight Transportation
The Compensation Committee does not attempt to set
compensation elements for each executive to meet specific
benchmarks based on peer group and general industry data.
Instead, we consider these comparisons as one factor in
determining executive compensation levels. Generally, the
Compensation Committee reviews total compensation levels
annually and makes adjustments when job responsibilities,
individual performance or market data warrants such
modifications. Actual total compensation can vary from year
to year based on Company, operating unit and individual
performance.
Other Policies and Considerations.
Stock Grant Practices. Under our Equity Plan, the
Compensation Committee may grant stock options to our
executive officers and non-employee directors. We do
not have an annual equity program, and the Equity Plan
does not require us to grant equity awards on an annual
or otherwise regular basis. Therefore, our
Compensation Committee does not grant stock options on
any pre-determined grant date. Instead, the
Compensation Committee selects a grant date after it
decides to award stock options. The committee also
selects a grant date that occurs when neither the
recipient nor the Compensation Committee possess
material nonpublic information. When choosing the
grant date, our Compensation Committee also monitors
long-term trends in our stock price and attempts to
select grant dates that will provide incentives for
management to increase our stock value and increase the
24
stock price to higher levels. Pursuant to our Equity
Plan, the purchase price of the Common Stock under each
option is equal to the closing price of our Common
Stock on the date the option is granted. For stock
options granted prior to the May 8, 2007 Equity Plan
amendments discussed below, the purchase price of the
Common Stock under each option was equal to the closing
price of our Common Stock on the day prior to the date
of grant.
Our Compensation Committee also establishes the vesting
period for each grant. All stock options granted to
our named executive officers vest over a six-year
period based on the following schedules and expire
after ten years.
2007 Grant: 1999-2006 Grants:
Years from Grant Date Amount Vested Amount Vested
--------------------- ------------- -------------
2 Years (24 Months) 15% 25%
3 Years (36 Months) 20% 20%
4 Years (48 Months) 20% 20%
5 Years (60 Months) 20% 20%
6 Years (72 Months) 25% 15%
Our Equity Plan also permits the Compensation Committee
to grant awards comprised of SARs and restricted stock.
No such awards have been granted, in 2007 or at any
other time. On May 8, 2007, our stockholders approved
amendments to the Equity Plan, and the Equity Plan was
included as an exhibit to Form 8-K filed with the SEC
on May 14, 2007. Please refer to "Long-Term Incentive
Compensation (Stock Options)" under "Elements of
Executive Compensation" and "Compensation Discussion
and Analysis" for additional details regarding stock
option determinations.
Executive Stock Ownership. We do not have formal stock
ownership guidelines or requirements for our executive
officers. As discussed in this Proxy Statement, our
Equity Plan permits us to grant nonqualified stock
options, SARs and restricted stock to executive
officers. The Compensation Committee granted stock
options to two named executive officers on November 29,
2007: Daniel H. Cushman (25,000 shares) and John J.
Steele (15,000 shares). The individual stock ownership
of our named executive officers is provided in the
Beneficial Ownership table.
Tax Deductibility of Executive Compensation; Accounting
Considerations. The Compensation Committee reviews
estimated tax and accounting (pro forma expense)
projections and implications and how these factors
impact the material elements of our executive
compensation program. Generally, executive salaries
and performance-based compensation are accrued as
expense over the requisite service period related to
the particular compensation element (this period is
typically equal to the performance period of the
executive officer), and we realize a tax deduction upon
the payment of the compensation to the executive.
Section 162(m) of the Internal Revenue Code prevents us
from taking a tax deduction, in any one taxable year,
for non-performance-based compensation in excess of $1
million paid to the Chief Executive Officer and the
next four highest compensated executive officers (the
CEO and such officers collectively, the "covered
officers"). Certain compensation of the covered
officers is specifically exempt from the deduction
limit to the extent that such compensation does not
exceed $1 million during any fiscal year or is
"performance-based" as defined in Section 162(m). The
25
Compensation Committee carefully considers and monitors
the effect of Section 162(m) on our executive
compensation program and will structure compensation to
preserve its tax deductibility under Section 162(m)
while maintaining our ability to attract, motivate and
retain high-quality executive officers. The
Compensation Committee also believes there are
circumstances where the interests of the Company and
our stockholders are best served by maintaining
flexibility in the manner compensation is provided. In
those events, the Compensation Committee may, at its
discretion, approve payments of nondeductible
compensation if the Compensation Committee believes the
circumstances warrant such payments. All amounts paid
to the covered officers during 2007 qualified as
deductible under Section 162(m), except for $97,308
paid to Clarence L. Werner and $66,423 paid to Gregory
L. Werner.
Employment Arrangements
None of our named executive officers has any type of written
employment agreement with us.
Arrangements and Potential Payments Upon Termination or Change
in Control
Termination. None of our named executive officers has a
severance agreement with us. We do not provide for
incremental compensation or special treatment for incentive
compensation in the event of a named executive officer's
voluntary termination, termination for cause or termination by
death or disability. None of our named executive officers for
2007 currently has any such severance benefit arrangement,
except Daniel H. Cushman. We entered into a separation
agreement with Mr. Cushman upon the end of his employment with
the Company on January 15, 2008 (the "Employment End Date").
Pursuant to this separation agreement, Mr. Cushman (i) could
exercise his stock options that vested as of the Employment
End Date, as permitted by and in accordance with the Equity
Plan; (ii) would be paid for any vacation (as paid time off)
accrued prior to his Employment End Date, of which there was
none; and (iii) received dental and health insurance coverage
until January 31, 2008, which all of our employees receive
through the last day of the month in which their employment
ends. The separation agreement also provided that if Mr.
Cushman elected COBRA continued health coverage after January
31, 2008, we would subsidize such coverage until the earlier
of March 31, 2008 or Mr. Cushman's employment with another
company.
Change in Control. None of our named executive officers has a
change in control agreement with us, and we do not currently
provide for incremental compensation or special treatment for
incentive compensation related to a change in control. The
stockholder-approved Equity Plan amendments (approved in May
2007) included change in control provisions. Under the Equity
Plan, the Compensation Committee and the Board have the
authority and discretion to take certain actions in the event
of a change in control in the Company, and determinations of
such actions are generally made with respect to all named
executive officers or on a case-by-case basis. These actions
include, but are not limited to, adjusting outstanding option
awards or accelerating the vesting dates of outstanding
awards.
Potential Benefits Payable Under the Equity Plan. As stated
above, we do not have any severance or change in control
agreements with any of our named executive officers. Our
Equity Plan, however, permits the vesting of outstanding stock
options and restricted stock upon certain termination or
resignation actions following a change in control. The Equity
Plan provides that within the period beginning upon a change
in control and ending on the second anniversary of the change
in control, a named executive officer may be terminated other
than for "cause" or may voluntarily resign for "good reason."
Upon the occurrence of either event, (i) all outstanding stock
options and SARs will become fully exercisable and (ii) all
conditions and restrictions (other than those imposed by law)
on outstanding restricted stock will be deemed satisfied as of
the executive officer's employment termination date. "Cause,"
26
"good reason" and "change in control" are defined in the
Equity Plan, as approved and amended, included as an exhibit
to the Form 8-K filed with the SEC on May 14, 2007.
The table below shows the potential benefits payable to each
named executive officer due to the occurrence of either the
termination or resignation event described in the Equity Plan.
The amounts of the potential benefits represent the estimated
value of all unvested stock options that would fully vest upon
either event, assuming such event occurred on December 31,
2007 (the last day of our fiscal year) and a stock price of
$17.03, which was the NASDAQ closing market price of our
Common Stock on the same date. These amounts are the same for
both events and are reflected in the "Potential Benefit"
column.
Potential Benefits Payable Under the Equity Plan
------------------------------------------------------------------------------------
Name Number of Unvested Shares Vesting Potential Benefit ($) (1)
---- --------------------------------- -------------------------
Clarence L. Werner 55,000 -
Gary L. Werner 55,000 -
Gregory L. Werner 55,000 -
Daniel H. Cushman (2) 106,250 9,188
John J. Steele 37,250 3,938
____________________
(1) The actual exercise prices of the options (as specified
in each named executive officer's respective award
agreements) vary from the $17.03 closing market price
used to calculate the amounts in this table. These
actual exercise prices range from a minimum of $16.68
per share to a maximum of $18.33 per share. No
potential benefit was calculated for options where the
option exercise price exceeded the $17.03 closing
market price on December 31, 2007.
(2) Daniel H. Cushman's employment with the Company ended
on January 15, 2008. Consequently, these 106,250
unvested stock options were forfeited upon the end of
Mr. Cushman's employment.
Report of the Compensation Committee
The following report of the Compensation Committee shall not
be deemed to be "soliciting material" or to otherwise be
considered "filed" with the SEC, nor shall this report be
subject to Regulation 14A (other than as indicated) or to the
liabilities set forth in Section 18 of the Securities Exchange
Act of 1934. This report shall not be deemed to be
incorporated by reference into any prior or subsequent filing
under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent that the Company
specifically incorporates it by reference or treats it as
soliciting material.
In conjunction with the preparation of the Company's Annual
Report on Form 10-K for 2007 and this Proxy Statement for the
Annual Meeting of Stockholders to be held May 13, 2008, the
Compensation Committee has reviewed and discussed with
management the foregoing "Compensation Discussion and
Analysis" section required by Item 402(b) of Regulation S-K.
Based on such review and discussions, the Compensation
Committee recommended to the Board of Directors that the
"Compensation Discussion and Analysis" section be included in
this Proxy Statement and incorporated by reference into the
Annual Report on Form 10-K for 2007.
Patrick J. Jung, Committee Chair
Kenneth M. Bird
Gerald H. Timmerman
27
Summary Compensation Table
The Summary Compensation Table provided on page 29 presents
all elements of compensation for our named executive officers
for 2007 as follows:
* Salary: refers to Base Salary.
* Bonus: refers to Performance-Based Compensation
(Annual Cash Bonus).
* Option Awards: refers to amounts expensed in our
financial statements under SFAS No. 123 (Revised
2004), Share-Based Payment.
* All Other Compensation: represents the aggregate
amount of:
(i) Perquisites and other personal benefits;
(ii) Matching Company contributions to the 401(k)
Plan;
(iii) Insurance premiums paid by the Company;
(iv) Tax reimbursements; and
(v) Matching Company contributions under the
Employee Stock Purchase Plan.
You should read the Summary Compensation Table in conjunction
with the "Compensation Discussion and Analysis" section and
the tables and narrative descriptions that follow. Executive
deferrals to our 401(k) Plan and nonqualified deferred
compensation plan are included in the appropriate column
(typically the "Salary and/or Bonus" columns) for which the
compensation was earned. The "Stock Awards" and "Non-Equity
Incentive Plan Compensation" columns are omitted from the
Summary Compensation Table because no stock or non-equity
incentive plan awards were made in 2007.
28
Summary Compensation Table
-----------------------------------------------------------------------------------------------------
Change in
Pension
Value &
Nonqualified
Deferred All
Option Compensation Other
Name and Bonus Awards Earnings Compensation
Principal Position Year Salary ($) (1) ($) (6) ($) (2) ($) (3) Total ($)
------------------ ---- ------ ------- ------- ------- ------- ---------
Clarence L. Werner - 2007 715,000 350,000 174,815 - 32,308 1,272,123
Chairman (4) 2006 715,000 350,000 412,885 - 32,621 1,510,506
Gary L. Werner - 2007 355,000 230,000 131,624 - 18,115 734,739
Vice Chairman 2006 355,000 230,000 261,667 - 17,260 863,927
Gregory L. Werner - 2007 679,615 350,000 139,959 - 36,808 1,206,382
President and CEO (4) 2006 420,000 350,000 290,852 - 37,093 1,097,945
Daniel H. Cushman - 2007 310,770 245,000 173,535 - 43,896 773,201
Senior Executive 2006 310,270 245,000 258,286 - 26,863 840,419
Vice President and Chief
Marketing Officer (5)
John J. Steele - 2007 210,000 80,000 49,225 - 17,419 356,644
Executive 2006 210,000 80,000 64,651 - 14,507 369,158
Vice President,
Treasurer and CFO
____________________
(1) Annual cash bonus awards are made under the annual
cash bonus program. These bonuses were awarded by
the Compensation Committee on November 29, 2007.
(2) None of the earnings on nonqualified deferred
compensation balances are above-market or
preferential earnings.
(3) Refer to the All Other Compensation for 2007 table
below for a more detailed explanation of all other
compensation.
(4) On February 8, 2007, Mr. Clarence L. Werner resigned
as the CEO and our Board appointed Gregory L. Werner
as the CEO.
(5) Daniel H. Cushman's employment with the Company
ended on January 15, 2008. Prior to January 15,
2008, Mr. Cushman was a named executive officer of
the Company during 2007 and until his employment
ended in January 2008.
(6) On November 29, 2007, our Compensation Committee
granted Daniel H. Cushman a total of 25,000 options
and John J. Steele a total of 15,000 options. These
grants were made pursuant to our Equity Plan. Refer
to Note 5 of our Annual Report on Form 10-K for 2007
for the assumptions used in the valuation.
29
All Other Compensation for 2007
The table below shows the components of "all other
compensation" provided in 2007 to the named executive
officers.
All Other Compensation for 2007
------------------------------------------------------------------------------------------------------------------
Company
Contrib-
utions to
Company Employee
Perquisites Tax Contrib- Stock Severance
& Other Reimburse Insurance utions to Purchase Payments/
Personal -ments Premiums 401(k) Plan Accruals
Name Year Benefits ($) ($) (1) ($) (2) Plan ($) ($) (3) ($) (4) Total ($)
---- ---- ------------ ------- ------- -------- ------- ------- ---------
Clarence L. Werner (5) 2007 20,801 11,507 - - - - 32,308
Gary L. Werner (6) 2007 12,666 5,449 - - - - 18,115
Gregory L. Werner (7) 2007 25,301 11,507 - - - - 36,808
Daniel H. Cushman (8) 2007 28,893 8,245 2,112 3,837 809 - 43,896
John J. Steele (9) 2007 8,471 4,484 - 3,655 809 - 17,419
____________________
(1) Tax gross-ups for Company vehicle use for Messrs.
Clarence L. Werner, Gary L. Werner, Gregory L. Werner
and John J. Steele. Tax gross-ups of $4,484 for
Company vehicle use and $3,761 for the IRS value of
personal use of corporate aircraft for Mr. Cushman.
(2) Insurance premium of $2,112 represents an additional
subsidy of Daniel H. Cushman's healthcare premiums.
(3) There is a 15% Company match for employee
contributions to the Employee Stock Purchase Plan.
(4) In 2007 we did not, and do not currently, have any
change in control arrangements with any of the named
officers.
(5) Perquisites and personal benefits include $20,801 for
use of two Company vehicles.
(6) Perquisites and personal benefits include $10,166 for
use of one Company vehicle and $2,500 for income tax
preparation services.
(7) Perquisites and personal benefits include $20,801 for
use of two Company vehicles and $4,500 for income tax
preparation services.
(8) Perquisites and personal benefits include $8,471 for
use of one Company vehicle; $5,866 for Company-paid
country club membership; and $14,556 for personal use
of corporate aircraft.
(9) Perquisites and personal benefits include $8,471 for
use of one Company vehicle.
Our contributions on behalf of the named executive officers to
the 401(k) Plan and Employee Stock Purchase Plan are made on
the same terms as provided to all of our full-time employees
in the United States. In addition to the above-mentioned
compensation, the named executive officers also participated
in voluntary health and welfare benefit programs that are
available and comparable to such programs for all full-time
U.S. employees.
30
Grants of Plan-Based Awards for 2007
The following table sets forth information regarding stock
option awards granted to named executive officers under our
Equity Plan during 2007. Columns required by the SEC
regulations are omitted where there is no amount to report or
such column is inapplicable for all of the named executive
officers.
Grants of Plan-Based Awards for 2007
All Other
All Other Option Grant Date
Stock Awards: Awards: Fair Value
Number of Number of Exercise or of Stock
Shares of Securities Base Price and Option
Stock or Underlying of Option Awards
Name Grant Date Units (#) Options (#) ($/Sh) (1) ($) (2)
---- ---------- --------- ----------- ---------- -------
Clarence L. Werner - - - - -
Gary L. Werner - - - - -
Gregory L. Werner - - - - -
Daniel H. Cushman 11/29/2007 - 25,000 17.18 161,113
John J. Steele 11/29/2007 - 15,000 17.18 96,668
____________________
(1) The exercise price is equal to the closing market
price on the date of grant.
(2) Note 5 of our Annual Report on Form 10-K for 2007
includes the assumptions used in determining
valuations provided in this column.
Outstanding Equity Awards at 2007 Year-End
The table on page 32 presents information regarding all
outstanding equity awards held by each of the named executive
officers as of December 31, 2007. There are no outstanding
stock awards for any executives; therefore, the columns
pertaining to such stock awards are excluded from the table.
31
Outstanding Equity Awards at December 31, 2007
---------------------------------------------------------------------------------------------------
Option Awards
-------------
Equity
Incentive
Plan Awards:
Number of Number of Number of
Securities Securities Securities
Underlying Underlying Underlying Option
Unexercised Unexercised Unexercised Exercise Option
Options: Options: Unearned Price Expiration
Name (#) Exercisable (#) Unexercisable (1) Options (#) ($/Sh) Date
---- --------------- --------------------- ----------- ------ ----
Clarence L. Werner 550,000 - - 9.77 09/29/2011
45,000 55,000 - 18.33 05/20/2014
Gary L. Werner 201,668 - - 7.73 07/12/2010
275,000 - - 9.77 09/29/2011
45,000 55,000 - 18.33 05/20/2014
Gregory L. Werner 25,001 - - 7.35 12/21/2009
300,001 - - 7.73 07/12/2010
366,668 - - 9.77 09/29/2011
45,000 55,000 - 18.33 05/20/2014
Daniel H. Cushman 8,750 - - 9.26 04/09/2009
(2) 2,917 - - 8.96 04/14/2009
22,918 - - 7.35 12/21/2009
55,418 - - 7.61 09/20/2010
66,668 - - 9.77 09/29/2011
45,000 55,000 - 18.33 05/20/2014
8,750 26,250 - 16.68 10/22/2015
- 25,000 - 17.18 11/30/2017
John J. Steele 33,334 - - 7.35 12/21/2009
12,500 - - 9.77 09/29/2011
9,000 11,000 - 18.33 05/20/2014
3,750 11,250 - 16.68 10/22/2015
- 15,000 - 17.18 11/30/2017
____________________
(1) The vesting dates of unvested and unexercisable stock
options are reported in the Vesting Dates of Unvested
and Unexercisable Stock Options table on page 33.
(2) Following the end of his employment with the Company
in January 2008 and pursuant to his separation
agreement, Daniel H. Cushman exercised 210,421 vested
stock options and forfeited 106,250 unvested stock
options.
32
Vesting Dates of Unvested and
Unexercisable Stock Options as of December 31, 2007
----------------------------------------------------------------------
Shares Shares
Name Vesting Vesting Date Vesting Vesting Date
---- ------- ------------ ------- ------------
Clarence L. Werner 20,000 05/19/2008
20,000 05/19/2009
15,000 05/19/2010
Gary L. Werner 20,000 05/19/2008
20,000 05/19/2009
15,000 05/19/2010
Gregory L. Werner 20,000 05/19/2008
20,000 05/19/2009
15,000 05/19/2010
Daniel H. Cushman 20,000 05/19/2008 7,000 10/21/2010
(1) 7,000 10/21/2008 5,000 11/29/2010
20,000 05/19/2009 5,250 10/21/2011
7,000 10/21/2009 5,000 11/29/2011
3,750 11/29/2009 5,000 11/29/2012
15,000 05/19/2010 6,250 11/29/2013
John J. Steele 4,000 05/19/2008 3,000 10/21/2010
3,000 10/21/2008 3,000 11/29/2010
4,000 05/19/2009 2,250 10/21/2011
3,000 10/21/2009 3,000 11/29/2011
2,250 11/29/2009 3,000 11/29/2012
3,000 05/19/2010 3,750 11/29/2013
____________________
(1) Following the end of his employment with the Company
in January 2008 and pursuant to his separation
agreement, Daniel H. Cushman forfeited all of his
unvested stock options.
33
Option Exercises for 2007
The following table provides information regarding stock
options that were exercised by our named executive officers
during 2007. The "value realized on exercise" reflects the
total pre-tax value (stock price at exercise minus the
grant/exercise price of the option) realized by the officers.
There are no outstanding stock awards for any named executive
officers, so these columns have been omitted from the table.
Option Exercises for 2007
-----------------------------------------------------------------------
Option Awards
-------------
Number of Shares Value Realized
Name Acquired on Exercise (#) on Exercise ($)
---- ------------------------ ---------------
Clarence L. Werner (1) 675,000 7,016,845
Gary L. Werner - -
Gregory L. Werner (2) 26,667 221,923
Daniel H. Cushman 1,564 12,371
John J. Steele (3) 18,750 168,047
____________________
(1) The total number of shares acquired on exercise
and held by Mr. Clarence L. Werner is 675,000.
(2) The total number of shares acquired on exercise
and held by Mr. Gregory L. Werner is 6,900.
(3) The total number of shares acquired on exercise
and held by Mr. Steele is 2,150.
Nonqualified Deferred Compensation for 2007
We established a nonqualified deferred compensation plan in
2005 for eligible key employees whose 401(k) Plan
contributions were limited by IRS regulations affecting highly
compensated employees. This plan is subject to the
requirements of Section 409A of the Internal Revenue Code and
is administered in good faith compliance with Section 409A.
The nonqualified deferred compensation plan also permits us to
make matching contributions to participant accounts. We did
not make any such matches in 2007 and have not done so to
date.
Deferrals. Under the nonqualified deferred compensation plan,
eligible employees are permitted to defer a portion of their
base salary on a pre-tax basis. Such deferred amounts must be
within the annual dollar limitations we establish, and such
limitations in 2007 were $10,500. The annual dollar
limitations are determined so that the combined deferrals (in
both the 401(k) Plan and the nonqualified deferred
compensation plan) of a highly compensated participant will
approximate the maximum deferral amount available to non-
highly compensated employees who participate in the 401(k)
Plan.
Earnings. Each participant in the nonqualified deferred
compensation plan selects one or more investment funds
available under the plan in which their amounts of deferred
compensation are deemed to be invested. Deferred compensation
accounts will then accrue earnings based on the return of the
selected investment funds. The participant may change how
their deferred compensation is allocated to the investment
funds at any time, subject to limitations imposed by the plan.
Changes generally become effective as of the first trading day
following the change.
34
Distributions and In-Service Withdrawals. At the time of
making their deferral election for the year, a participant
elects under his salary deferral agreement whether the
resulting deferred compensation will be distributed to him in
annual installments or a lump sum. Distributions are made
after the executive officer's retirement or termination from
the Company. Under certain circumstances, participants may
also elect to receive scheduled or hardship "in service"
withdrawals while still employed with us. The specific
distribution options in this case depend upon the plan
provisions.
The nonqualified deferred compensation table below presents
the following information related to our nonqualified deferred
compensation plan and named executive officer participants:
* Executive Contributions in 2007: reflects voluntary
executive deferrals of base salary; these deferrals
are included in the "Salary" column of the Summary
Compensation Table.
* Company Contributions in 2007: no such contributions
were made.
* Aggregate Earnings in 2007: reflects the earnings
and/or losses on account balances; none of the
earnings are above-market or preferential earnings and
were therefore not included in the Summary
Compensation Table.
* Aggregate Withdrawals and Distributions in 2007: no
withdrawals or distributions were made.
* Aggregate Balance as of December 31, 2007: reflects
the total market value of the executive officer's
nonqualified deferred compensation account, including
such participant's contributions and earnings to date.
Nonqualified Deferred Compensation for 2007
--------------------------------------------------------------------------------------------------
Aggregate
Executive Registrant Aggregate Aggregate Balance
Contributions Contributions Earnings Withdrawals/ at End
Name in 2007 ($) in 2007 ($) in 2007 ($) Distributions ($) of 2007 ($)
---- ----------- ----------- ----------- ----------------- -----------
Clarence L. Werner - - - - -
Gary L. Werner 10,019 - 1,809 - 22,902
Gregory L. Werner 10,481 - 2,106 - 33,943
Daniel H. Cushman 10,000 - 2,189 - 33,415
John J. Steele 10,500 - 1,186 - 33,053
35
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Independent Registered Public Accounting Firm Fees
The firm of KPMG LLP ("KPMG") is our independent registered
public accounting firm. The following table sets forth the
aggregate fees billed to us by KPMG for professional audit
services rendered in connection with the audit of our annual
financial statements and internal control over financial
reporting for 2007 and 2006 and for other services provided to
us by KPMG during those periods.
Independent Registered Public
Accounting Firm Fees for 2007 and 2006
----------------------------------------
2007 ($) 2006 ($)
-------- --------
Audit Fees 443,949 434,379
Audit-Related Fees - 7,000
Tax Fees - -
All Other Fees - -
Total 443,949 441,379
Audit Fees. Audit fees consist of fees for (i) the audit of
our annual financial statements included in our Annual Reports
on Form 10-K for 2007 and 2006, (ii) review of our financial
statements included in our Quarterly Reports on Form 10-Q
during such periods and (iii) the audit of our internal
control over financial reporting during such periods.
Audit-Related Fees. Audit-related fees include fees incurred
in 2006 for the audit of our 401(k) Plan. This category of
fees may also consist of fees (i) for assurance and related
services that are reasonably related to the performance of the
audit or the review of our financial statements and are not
reported under "Audit Fees" and (ii) fees related to audit and
attest services not required by laws or regulations and
consultations concerning financial accounting and reporting
standards.
Tax Fees. Tax fees are defined as fees for professional
services for tax compliance, tax advice and tax planning.
These services may include assistance regarding federal, state
and international tax compliance, tax return preparation, tax
audits and customs and duties.
The Audit Committee has reviewed KPMG's provision of services
and believes that these services are compatible with
maintaining the independence of KPMG. KPMG did not provide
any non-audit services for us in 2007.
The Audit Committee has approved KPMG as our independent
registered public accounting firm for 2008. Representatives
of KPMG will be present at the 2008 Annual Meeting and will
have an opportunity, should they so desire, to make a
statement. The KPMG representatives will also be available to
respond to appropriate questions from stockholders.
36
Policy of Audit Committee Pre-Approval of Audit and Non-Audit
Services Performed by the Independent Registered Public
Accounting Firm
The Audit Committee is responsible for pre-approving all audit
and non-audit services provided by independent registered
public accounting firms. Prior to the engagement of an
independent registered public accountant for the next year's
audit, our management will submit to the Audit Committee for
approval an itemized list of all audit and non-audit services
expected to be rendered during such year and the budgeted fees
for such services. The Audit Committee then pre-approves
these services according to the categories of service in the
Independent Registered Public Accounting Firm Fees table
above. When determining whether a service should receive pre-
approval, the Audit Committee considers whether such services
are consistent with the SEC rules regarding auditor
independence. In the event circumstances arise and it becomes
necessary to engage the independent registered public
accountants for additional services not contemplated in the
original pre-approval, the Audit Committee will approve such
additional services prior to the commencement of the
engagement and provision of such services.
Pursuant to its charter, the Audit Committee may delegate to
its Chair the pre-approval authority to address any requests
for pre-approval services between Audit Committee meetings,
and the Chair must report any such pre-approval decisions to
the committee at its next meeting. Our management and
independent registered public accounting firm periodically
report to the full Audit Committee (i) the extent of services
provided by such accounting firm in accordance with this pre-
approval and (ii) the fees for services performed to date.
None of the fees categorized as Audit-Related Fees, Tax Fees
and All Other Fees we paid to KPMG during 2007 and 2006 were
approved by the Audit Committee pursuant to the waiver of pre-
approval provisions and the de minimis exception set forth in
applicable SEC rules.
Recommendation of the Board of Directors
We are asking stockholders to ratify the appointment of KPMG
as our independent registered public accounting firm for 2008.
Although this stockholder ratification is not required by our
By-Laws, Audit Committee charter or otherwise, the Board of
Directors is submitting the selection of KPMG to our
stockholders for ratification as a matter of corporate
governance.
In the event our stockholders do not ratify the appointment of
KPMG, then our Audit Committee and Board of Directors will
reconsider the appointment. Even if our stockholders ratify
the selection of KPMG, the Audit Committee will retain its
authority to, in its discretion and at any time during 2008,
select a different independent registered public accounting
firm or terminate KPMG if the Audit Committee determines that
such a change would be in our best interests and those of our
stockholders.
The Board of Directors recommends that stockholders vote FOR
---
the ratification of the appointment of KPMG LLP as our
independent registered public accounting firm for the year
ending December 31, 2008. Holders of proxies solicited by the
Board in this Proxy Statement will vote the proxies as
directed on each Proxy, or if no instruction is made, for the
ratification of the appointment of KPMG LLP.
37
TRANSACTIONS WITH RELATED PERSONS
Review and Approval of Related Person Transactions
Our Governance Committee charter requires the Governance
Committee (each member of which is independent under
applicable NASDAQ listing standards and SEC rules) to review
and approve all related person transactions when such approval
is required under the NASDAQ and SEC rules and regulations.
All related person transactions that are required to be
disclosed under SEC rules are disclosed in our applicable SEC
filings.
As defined by Item 404 of SEC Regulation S-K, a "related
person transaction" is any effected or proposed transaction,
arrangement or relationship in which:
(i) The Company was or is to be a participant;
(ii) The amount involved exceeds or is expected to
exceed $120,000; and
(iii) Any "related person" has an interest.
Under Item 404, "related person" generally means:
* A director or director nominee of the Company;
* An executive officer of the Company;
* A security holder who is known to be the beneficial
owner of more than 5% of our Common Stock; or
* Any "immediate family member" of a director, director
nominee, executive officer or beneficial owner of more
than 5% of our Common Stock. "Immediate family
members" include spouse, children, parents, siblings,
in-laws, stepparents and stepchildren and any other
person sharing the related person's household.
* Any firm, corporation or other entity in which any of
the foregoing persons (i) is employed by, a director
of or a partner or principal in such entity or (ii)
has a beneficial ownership interest of 10% or more.
Related Person Transactions
Land Lease Agreement. The Company leases certain land from
the Clarence L. Werner Revocable Trust (the "Trust"), a
related person. 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 May 21, 2002 (the "Lease Agreement"), and a License
Agreement (the "License Agreement") with Mr. Werner in his
capacity as trustee. The Lease Agreement and License
Agreement were approved by the disinterested members of the
Board of Directors at the Board's February 8, 2007 meeting.
The Lease Agreement was originally entered into between the
parties on May 21, 2002 with a 10-year lease term commencing
June 1, 2002 (the "2002 Lease Agreement").
The Lease Agreement covers the lease of land comprising
approximately 35 acres (referred to as the "Lodge Premises"),
with improvements consisting of lodging facilities and a
sporting clay range which the Company uses for business
meetings and customer promotion. The 2002 Lease Agreement
provided for a non-exclusive license to use for hunting
purposes a contiguous portion of farmland comprising
approximately 580 acres (referred to as the "Farmland
Premises"). These license rights were deleted from the Lease
Agreement and incorporated into the License Agreement.
38
The Lease Agreement's current ten-year term expires May 31,
2012. The Lease Agreement gives the Company the option to
extend such agreement for two additional five-year periods,
through 2017 and 2022, respectively. Under the Lease
Agreement, the Company also makes annual rental payments of
One Dollar ($1.00) per year, and the Company is responsible
for the real estate taxes and maintenance costs on the Lodge
Premises. These costs totaled approximately $46,000 in 2007.
Under the Lease Agreement, at any time during the lease or any
extension thereof, the Company has the option to purchase the
Lodge Premises from the Trust at its current market value,
excluding the value of all leasehold improvements the Company
made. The Company also has a right of first refusal to
purchase the Lodge Premises, or any part thereof, if the Trust
receives an offer from an unrelated third party to purchase
the Lodge Premises. The Trust has the option at any time
during the lease to demand that the Company exercise its
option to purchase the Lodge Premises. If the Company does
not elect to purchase the Lodge Premises as demanded by the
Trust, then the Company's option to purchase at any time
during the lease is forfeited; however, the Company will
retain the right of first refusal with respect to a purchase
offer from an unrelated third party. If the Company
terminates the Lease Agreement prior to the expiration of the
initial ten-year term and elects not to purchase the Lodge
Premises from the Trust, then the Trust agrees to pay the
Company the cost of all leasehold improvements, less
accumulated depreciation calculated on a straight-line basis
over the term of the Lease Agreement (ten years). If, at the
termination of the initial ten-year term or any of the two
five-year renewal periods, the Company has not exercised its
option to purchase the Lodge Premises accordingly, the
leasehold improvements become the property of the Trust.
However, the Company currently intends to exercise its option
to purchase the Lodge Premises at its current market value
prior to the completion of the initial ten-year lease period
or any of the two five-year renewal periods. The Company has
made leasehold improvements to the Lodge Premises of
approximately $6.1 million since the inception of leasehold
arrangements commenced in 1994.
The revisions to the Lease Agreement removed the provisions
relating to the Farmland Premises (including the description
of option to purchase rights described above), as of the
effective date of the 2002 Lease Agreement, and the Company
and the Trust entered into the separate License Agreement
defining the Company's respective rights to the Farmland
Premises. Under the License Agreement, the Company and its
invitees are granted a non-exclusive right to hunt and fish on
the Farmland Premises, for a term of one year, which is
automatically renewable unless either party terminates not
less than 30 days prior to the end of the current annual term.
The Trust agrees to use its best efforts to maintain a
controlled shooting area permit on the Farmland Premises while
the License Agreement is effective and to maintain the land in
a manner to maximize hunting cover for game birds. In
consideration of the license to hunt and fish on the Farmland
Premises, the Company agrees to pay the Trust an amount equal
to the real property taxes and special assessments levied on
the land and the cost of all fertilizer and seed used to
maintain the hunting cover and crops located on the land.
Such costs were approximately $31,000 for 2007.
Family Members of Executive Officers and Directors. The
Company employs the family members of certain executive
officers in the following capacities: (i) Scott Robertson is
employed as the Director-Aviation and is Clarence L. Werner's
son-in-law and the brother-in-law of Gary L. Werner and
Gregory L. Werner; (ii) Gary L. Werner's brother-in-law,
Daniel Matthew, is employed with the Company's Fleet Truck
Sales subsidiary. The total compensation in 2007 for Mr.
Robertson was $167,734 (this amount includes the use of one
Company vehicle) and for Mr. Matthew was $142,700. The
Company also employs four other family members (one of whom is
Vern Werner, mentioned in the "Owner-Operators" section below)
of certain named executive officers in various capacities, and
each of these other family members receives less than $120,000
in annual compensation.
39
Owner-Operators. During 2007, the Company paid $7,501,944 to
Pegasus Enterprises, LLC, which is owned by Clarence L.
Werner's brother, Vern Werner, and sister-in-law. During that
time, the Company also paid $424,614 to WinRow Farms, which is
owned by Vern Werner. Pegasus Enterprises, LLC and WinRow
Farms lease tractors and drivers to us as owner-operators.
During 2007, the Company sold tractors to Pegasus Enterprises,
LLC at a total of $622,160 and to WinRow Farms at a total of
$219,000. At December 31, 2007, the Company had notes
receivable from Pegasus Enterprises, LLC of $1,374,483 related
to the sale of 40 used trucks. The largest aggregate amount
of principal outstanding during 2007 was $1,487,882. The
amount of principal paid during 2007 was $546,708, and the
amount of interest paid during 2007 was $171,265. The
interest rate payable on this debt ranges from 12% to 12.75%.
The payments to Pegasus Enterprises, LLC and WinRow Farms are
based on the same per-mile settlement scale that is applied to
the Company's other similar owner-operator contractors. The
Company believes the terms of the note agreements and the
tractor sales prices are no less favorable to the Company than
those that could be obtained from unrelated third parties, on
an arm's length basis.
Personal Use of Corporate Aircraft. Clarence L. Werner
utilized the Company's corporate aircraft for non-business
purposes during 2007. Mr. Werner reimbursed the Company
$243,698 representing the aggregate incremental cost
associated with the personal flights. This cost is higher
than the imputed income calculated for income tax purposes in
accordance with IRS rules. The incremental cost is computed
using the average hourly variable costs of operating the
Company's aircraft, which primarily consists of fuel and
maintenance.
OTHER BUSINESS
We do not know of any business that will be presented for
consideration at the 2008 Annual Meeting of Stockholders other
than that described in this Proxy Statement. As to other
business (if any) that may properly be brought before the
meeting, we intend that proxies solicited by the Board will be
voted in accordance with the best judgment of the person
voting the proxies.
STOCKHOLDER PROPOSALS
Only stockholders of record as of March 24, 2008, are entitled
to bring business before the 2008 Annual Meeting. All
stockholder proposals must be in writing and include the
following:
(i) A brief description of the business the
stockholder desires to bring before the
Annual Meeting;
(ii) The reason for conducting such proposed
business at the Annual Meeting;
(iii) The name and address of the stockholder
proposing such business;
(iv) The class and number of shares of our Common
Stock beneficially owned by such
stockholder; and
(v) Any material interest of the stockholder in
such business.
To be eligible for inclusion in our 2009 proxy materials,
stockholder proposals intended to be presented at our 2009
Annual Meeting of Stockholders must be in writing and be
received by the Corporate Secretary at our executive offices
on or before December 8, 2008. The inclusion of any such
stockholder proposal in our 2009 proxy materials will be
subject to the applicable proxy rules and regulations under
the Exchange Act and will be considered untimely if received
after December 8, 2008. Stockholders may submit nominations
for directors to be elected at the 2009 Annual Meeting of
Stockholders, and such nominations must be written and
delivered to the Corporate Secretary at our executive offices
by December 8, 2008. Such nominations are also subject to the
rules and regulations prescribed by the Exchange Act. For a
description of the process of submitting stockholder
40
nominations for director, refer to the "Director Nomination
Process" section under "Corporate Governance" in this Proxy
Statement.
Stockholders may present proposals for consideration at the
2008 Annual Meeting of Stockholders that are not intended for
inclusion in the 2008 proxy materials. These proposals must
be received in writing by the Corporate Secretary at our
executive offices no later than April 23, 2008 for the 2008
Annual Meeting. Pursuant to our By-Laws, stockholders may
make other proposals at the Annual Meeting to be discussed and
considered; but unless the Corporate Secretary receives the
written proposal at least twenty days before the Annual
Meeting, such proposal will be considered untimely and will
not be acted upon. Instead, the proposal will be laid over
for action at the next stockholder meeting held thirty days or
more later.
STOCKHOLDERS SHARING THE SAME ADDRESS
We have adopted a procedure called "householding," which has
been approved by the SEC. Under this procedure, we will
deliver only one copy of this Proxy Statement and our 2007
Annual Report to multiple stockholders who share the same
mailing address (if they appear to be members of the same
family), unless we have received contrary instructions from an
affected stockholder. Stockholders who participate in
householding will continue to receive separate Proxies. This
procedure reduces our printing and mailing costs and fees.
We will promptly deliver, upon written or oral request, a
separate copy of this Proxy Statement and the 2007 Annual
Report to any stockholder at a shared address to which a
single copy of either of those documents was delivered. To
request a separate copy of this Proxy Statement and/or the
2007 Annual Report, stockholders may write or call our
Corporate Secretary at our executive offices. You will not be
charged for any requested copies. This Proxy Statement and
our 2007 Annual Report are also available on our website.
Householding of proxy materials occurs when you provide us or
your broker with a written householding consent. Stockholders
who would like to revoke their householding consent and
receive a separate copy of our subsequent proxy statements and
annual reports to stockholders should contact their broker (if
the shares are held in a brokerage account) or our Corporate
Secretary (if you hold registered shares). Stockholders who
share a mailing address and receive multiple copies of proxy
materials but would like to participate in householding and
receive a single copy of our proxy materials should contact
their broker or our Corporate Secretary.
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES;
WEBSITE
Our current Corporate Secretary is James L. Johnson. The
mailing address and telephone numbers for our Corporate
Secretary and executive offices are:
Werner Enterprises, Inc.
Attention: Corporate Secretary
Post Office Box 45308
Omaha, Nebraska 68145-0308
Phone: (402) 895-6640
Toll-Free: (800) 228-2240
E-Mail: invrelations@werner.com
41
Our website, as referred to in this Proxy Statement, is:
www.werner.com, under the "Investor Information" tab. As
indicated in the "Introduction" on page 1, the following
materials and information discussed in this Proxy Statement
are available on our website: our current and prior proxy
statements, annual reports and SEC filings. You may also
request a copy of these materials, without charge, on the
website or by contacting the Corporate Secretary.
____________________
By Order of the Board of Directors
/s/ James L. Johnson
James L. Johnson
Senior Vice President, Controller
and Corporate Secretary
Omaha, Nebraska
April 8, 2008
42
WERNER ENTERPRISES, INC.
Post Office Box 45308
Omaha, Nebraska 68145-0308
_______________________
PROXY
_______________________
This Proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held Tuesday, May 13, 2008. The
undersigned stockholder hereby appoints and authorizes Clarence L. Werner
and Gary L. Werner to act as proxies, each with full power of
substitution, to represent and vote (as the undersigned stockholder
directs in this Proxy) all shares of Common Stock of Werner Enterprises,
Inc., that such stockholder is entitled to vote (as of March 24, 2008) at
the Annual Meeting of Stockholders to be held on Tuesday, May 13, 2008
(including any adjournments or postponements thereof), and to vote all
such shares on such other business that may properly come before such
meeting.
The proposals to be voted on in this Proxy are not related to, and are
not conditioned upon, the approval of other matters. The Board of
Directors of Werner Enterprises, Inc. submits and recommends a vote "for"
each of the following proposals:
1. Proposal 1 - Election of Directors.
Check only one box. To withhold authority to vote for any
individual nominee(s), check "For All Except" and write the
number(s) of the nominee(s) on the line below the box.
For All Withhold All For All Except
Nominees: [ ] [ ] [ ]
1. Gary L. Werner
2. Gregory L. Werner
3. Michael L. Steinbach
______________
2. Proposal 2 - To ratify the appointment of KPMG LLP as the
independent registered accounting firm of Werner Enterprises, Inc.
for the year ending December 31, 2008.
Check only one box.
For Against Abstain
[ ] [ ] [ ]
This Proxy, when properly executed, will be voted as directed by the
undersigned stockholder. If no direction is given with respect to a
proposal, this Proxy will be voted "FOR" the proposal.
Please date, sign and print your name. When shares are held by joint
tenants, both individuals should sign this Proxy. When signing as an
attorney, executor, administrator, trustee or guardian, please give your
full title. If the stockholder is a corporation, please provide the full
corporate name by the name of the authorized officer completing this
Proxy. If the stockholder is a partnership, please provide the full
partnership name by the name of the authorized person completing this
Proxy.
____________________________________ _____________________________
Signature Date
____________________________________
Printed Name
If held jointly:
____________________________________ _____________________________
Signature Date
____________________________________
Printed Name
Please mark, sign, date and promptly return this Proxy using the enclosed
self-addressed postage-paid return envelope.