ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
Departure of Directors or Certain Officers
On February 9, 2022, Mr. Gerald H. Timmerman, Director, gave notice of his decision to retire from the Board of Directors of Werner Enterprises, Inc. (the "Company"), effective February 9, 2022. Mr. Timmerman's decision to retire does not relate to any disagreement with the Company on any matter relating to the Company's operations, policies or practices.
As a result, the size of the Board of Directors decreased from nine members to eight members on February 9, 2022. The Company's By-Laws require not less than seven nor more than nine directors.
Compensatory Arrangement of Certain Officers
On February 7, 2022, the Compensation Committee (the “Committee”) of the Board of Directors of Werner Enterprises, Inc. (the “Company”) approved the following compensation for each of the Company’s named executive officers.
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Named Executive Officer
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Base Salary
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RS (#)
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PS (#)
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Derek J. Leathers
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Chairman, President and Chief Executive Officer
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$
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875,000
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37,327
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37,746
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H. Marty Nordlund
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Senior Executive Vice President and Chief Operating Officer
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$
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410,000
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4,083
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4,128
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John J. Steele
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Executive Vice President, Treasurer and Chief Financial Officer
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$
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340,000
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4,083
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4,128
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Jim S. Schelble
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Executive Vice President and Chief Administrative Officer
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$
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400,000
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4,083
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4,128
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James L. Johnson
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Executive Vice President, Chief Accounting Officer and Corporate Secretary
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$
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450,000
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4,083
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4,128
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The base salaries are effective February 11, 2022.
The grants of Restricted Stock (“RS”) and Performance Stock (“PS”) to the named executive officers are subject to the terms and conditions of the Company’s Amended and Restated Equity Plan, as amended and restated on February 23, 2021 (the “Plan”). The RS vests in three installments of 34%, 33% and 33%, respectively, on each of the first three anniversaries from the grant date. The PS only vests if the Company meets specified performance objectives related to diluted earnings per share for the two-year period January 1, 2022 through December 31, 2023. All earned PS will cliff vest in one installment on the third anniversary from the grant date. PS amounts are presented at the target level of performance. Actual vesting ranges between 0% and 200% of the target, depending on actual performance, and has a total shareholder return (“TSR”) modifier that can cap the vesting at 150% or 175% based on the Company's TSR for the three-year period ending December 31, 2024, relative to the TSR of a peer group of companies for the same period.
The Committee also approved the parameters of the performance-based cash bonus program (Annual Incentive Plan or “AIP”) for the 2022 fiscal year, subject to the terms and conditions for Performance Awards in the Plan. The performance goals for the 2022 AIP relate to the Company’s (i) operating income, (ii) revenues, excluding fuel surcharge revenues and (iii) individual performance. Each named executive officer may earn a bonus ranging from 0% to 200% of their 2022 target bonus, based on the level of attainment of the performance goals. The target bonus amounts range from 60% to 115% of each named executive officer's 2022 annual base salary.
In addition to the cash and equity compensation described above, certain of the Company’s named executive officers may also receive the following other compensation and perquisites: matching contributions to the Company’s 401(k) retirement savings plan and employee stock purchase plan, personal use of a Company provided vehicle, country club membership, personal use of the Company's aircraft, and personal medical care membership program. The named executive officers are also eligible to participate in voluntary health and welfare benefit programs sponsored by the Company.
The foregoing descriptions are not complete descriptions of all the rights and obligations and are qualified in their entirety by reference to the Plan filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which is incorporated by reference herein, and the Form of Performance-Based Restricted Stock Award Agreement, effective February 7, 2022, filed as Exhibit 10.1 to this Current Report on Form 8-K.