Werner Enterprises Inc DEFA14A, filed Apr 2, 2021

Werner Enterprises Inc (WERN)

DEFA14A 2021-04-02

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						By Order of the Board of Directors,
						James L. Johnson
Omaha, Nebraska						Executive Vice President, Chief Accounting Officer
April 2, 2021						& Corporate Secretary


TABLE OF CONTENTS
PROXY STATEMENT SUMMARY AND BUSINESS OVERVIEW		1
PROPOSAL 1–ELECTION OF DIRECTORS		3
	DIRECTOR NOMINEES	3
	DIRECTOR INFORMATION	4
	RECOMMENDATION OF THE BOARD OF DIRECTORS–PROPOSAL 1	7
CORPORATE GOVERNANCE		7
	DIRECTOR INDEPENDENCE DETERMINATIONS	7
	ROLE AND LEADERSHIP OF THE BOARD OF DIRECTORS	7
	BOARD OVERSIGHT OF RISK MANAGEMENT	8
	CORPORATE GOVERNANCE POLICIES AND MATERIALS	8
	HEDGING AND PLEDGING POLICY	9
	COMMITTEES OF THE BOARD OF DIRECTORS	9
	ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS AND ANNUAL MEETING	10
	AUDIT COMMITTEE	10
	COMPENSATION COMMITTEE	10
	NOMINATING AND CORPORATE GOVERNANCE COMMITTEE	11
	STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS	11
	DIRECTOR NOMINATION PROCESS	12
	DIRECTOR COMPENSATION AND BENEFITS	13
EXECUTIVE OFFICERS		15
	EXECUTIVE OFFICER INFORMATION	15
BENEFICIAL OWNERSHIP OF COMMON STOCK		16
	STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS	16
EXECUTIVE COMPENSATION		18
	COMPENSATION DISCUSSION AND ANALYSIS	18
	REPORT OF THE COMPENSATION COMMITTEE	27
	EMPLOYMENT ARRANGEMENTS	27
	ARRANGEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL	27
	SUMMARY COMPENSATION TABLE	29
	ALL OTHER COMPENSATION FOR 2020	30
	GRANTS OF PLAN-BASED AWARDS FOR 2020	31
	OUTSTANDING EQUITY AWARDS AT 2020 YEAR-END	32
	STOCK VESTED FOR 2020	33
	NONQUALIFIED DEFERRED COMPENSATION FOR 2020	33
	CEO PAY RATIO	34
PROPOSAL 2–ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION		35
	RECOMMENDATION OF THE BOARD OF DIRECTORS–PROPOSAL 2	35
PROPOSAL 3–RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		36
	FEES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	36
	AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PERFORMED BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	36
	REPORT OF THE AUDIT COMMITTEE	37
	RECOMMENDATION OF THE BOARD OF DIRECTORS–PROPOSAL 3	38
TRANSACTIONS WITH RELATED PERSONS		38
	REVIEW AND APPROVAL OF RELATED PERSON TRANSACTIONS	38
	RELATED PERSON TRANSACTIONS	39
STOCKHOLDER PROPOSALS		40
ANNUAL M EETING AND VOTING INFORMATION		41
STOCKHOLDERS SHARING THE SAME ADDRESS		44
CONTACTING THE CORPORATE SECRETARY AND EXECUTIVE OFFICES		44
INTERNET WEBSITE AND AVAILABILITY OF MATERIALS		44


•Total revenues $2.4 billion			•Cash flow from operations $445.9 million
•Operating income $227.4 million			•Capital expenditures, net $266.2 million
•Net income $169.1 million			•Dividends paid $24.9 million
•Earnings per diluted share $2.44			•Stock repurchases $56.5 million
•Operating ratio 90.4%			•Stockholders’ equity $1.2 billion


Annual Base Salary			•Fixed element of annual compensation
			•Base salary increases in 2020 averaging less than 10% after no base salary increases in 2019
			•Executive officers voluntarily decreased their base salaries during second quarter of 2020 due to COVID-19
Cash Annual Incentive Compensation			•Short-term cash incentive with variable payout opportunities based on four performance metrics measured against pre-defined annual goals
			•No change in payout opportunities for 2020
			•No adjustment to performance metrics and target goals for 2020 established prior to the COVID-19 outbreak
Long-Term Incentive Compensation			•Long-term equity-based incentives split between restricted stock and performance stock with three-year vesting schedules
			•No change to equity award design for 2020


What we do			What we don’t do
•Pay for performance			•Employment agreements for executive officers
•Short-term and long-term incentive compensation			•Single-trigger severance arrangements
•Recoupment policy for performance-based cash and equity awards			•Dividends or dividend equivalents on unvested or unearned equity awards
•Annual say-on-pay vote			•Hedging and pledging of Werner securities
•Independent compensation consultant
•Stock ownership guidelines
•Limited perquisites


Carbon Emissions			•55% carbon emissions reduction by 2035
			•Earned SmartWay Excellence award from the EPA for the 4th consecutive year
			•Testing electric truck and will test hydrogen truck
			•Invested in autonomous trucking technology company TuSimple
Associate Resource Groups (“ARG”)			•Add 3 associate resource groups by end of 2021
			•Formed IDEAL (Inclusion, Diversity, Equity, Accountability & Learning) Council to oversee ARG development
			•Added Veterans’ ARG in March 2021; Young Emerging Professionals ARG will launch in May 2021
Formal Diversity Leadership Position			•Establish formal diversity leadership position by end of first quarter 2021
			•Appointed AVP - Diversity, Inclusion and Learning in first quarter 2021


Scott C. Arves–Class III	Vikram Mansharamani, Ph.D.–Class III	Alexi A. Wellman–Class III
Carmen A. Tapio–Class I	Derek J. Leathers–Class II


INDEPENDENT DIRECTOR ANNUAL RETAINERS AND FEES
Fee or Retainer			Amount and Frequency of Payment
Cash Retainer for Board Membership			$50,000 (paid in quarterly installments of $12,500 each)
Cash Retainer for the Audit Committee Chair			$15,000 (paid in quarterly installments of $3,750 each)
Cash Retainer for the Compensation Committee Chair			$10,000 (paid in quarterly installments of $2,500 each)
Cash Retainer for the Governance Committee Chair			$10,000 (paid in quarterly installments of $2,500 each)
Restricted Stock Award for Board Membership			$80,000 (three year vesting period from the date of grant)


DIRECTOR COMPENSATION FOR 2020
Name		Fees Earned or Paid in Cash ($)(1)		Stock Awards ($)(2)(3)		Non-Equity Incentive Plan Compensation ($)	All Other Compensation ($)	Total ($)
Kenneth M. Bird, Ed.D.			43,750		80,000	—	—		123,750
Diane K. Duren			52,500		80,000	—	—		132,500
Michael L. Gallagher			43,750		80,000	—	—		123,750
Jack A. Holmes			51,250		80,000	—	—		131,250
Patrick J. Jung			61,250		80,000	—	—		141,250
Dwaine J. Peetz, Jr., M.D.(4)			43,750		80,000	—	—		123,750
Carmen A. Tapio			4,688		40,000	—	—		44,688
Gerald H. Timmerman			43,750		80,000	—	—		123,750

(1)	The Board of Directors elected to voluntarily reduce their annual cash retainers for Board membership to support the Company’s initiatives to reduce costs in the third and fourth quarters of 2020, in light of the expected impact from the COVID-19 pandemic on the Company’s business and industry. All Board members elected reductions of 25% to their $12,500 quarterly installment payments for Board membership, which resulted in quarterly installment payments of $9,375 in the third and fourth quarters of 2020. The temporary percentage reductions in the annual cash retainers were effective from July 1, 2020 through December 31, 2020.
(2)	On May 12, 2020, each of the independent directors then serving on the Board received an annual award of 1,941 shares of restricted stock with a grant date fair value of $41.21 per share. On November 10, 2020, Ms. Tapio was awarded 995 shares of restricted stock, a prorated award in conjunction with her appointment to the Board, with a grant date fair value of $40.20 per share. The grant date fair value is based upon the market price of the underlying common stock on the grant date, reduced by the present value of estimated future dividends because the award is not entitled to receive dividends prior to vesting. The present values of estimated future dividends for the May 12, 2020 and November 10, 2020 grants were calculated based on a $0.09 quarterly dividend amount per share and 1.0% and 0.2% risk-free interest rates, respectively. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 8 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2020.
(3)	The aggregate number of shares of unvested restricted stock outstanding at December 31, 2020 for each independent director is as follows: Dr. Bird 3,624; Ms. Duren 3,624; Mr. Gallagher 3,624; Mr. Holmes 3,491; Mr. Jung 3,624; Ms. Tapio 995; and Mr. Timmerman 3,624. No option awards were outstanding.
(4)	Dr. Peetz retired from the Board on November 10, 2020, upon which his unvested restricted stock awards became fully vested.


EXECUTIVE OFFICERS
Name	Position with the Company	Age
Derek J. Leathers	Vice Chairman, President & Chief Executive Officer	51
H. Marty Nordlund	Senior Executive Vice President & Chief Operating Officer	59
John J. Steele	Executive Vice President, Treasurer & Chief Financial Officer	63
Jim S. Schelble	Executive Vice President & Chief Administrative Officer	60
James L. Johnson	Executive Vice President, Chief Accounting Officer & Corporate Secretary	57
Craig T. Callahan	Executive Vice President & Chief Commercial Officer	47
Nathan J. Meisgeier	Executive Vice President & Chief Legal Officer	47
Daragh P. Mahon	Executive Vice President & Chief Information Officer	52


BENEFICIAL OWNERSHIP
		Amount and Nature of Beneficial Ownership
Name of Beneficial Owner		Shares Owned		Right to Acquire (1)		Total Shares		Percent of Shares Outstanding (2)
Clarence L. Werner(3)(4)			3,137		—		3,137		*
Kenneth M. Bird, Ed.D.			9,620		1,738		11,358		*
Patrick J. Jung(4)			10,520		3,624		14,144		*
Gerald H. Timmerman			14,520		1,738		16,258		*
Diane K. Duren			10,520		1,738		12,258		*
Michael L. Gallagher(4)			2,648		3,624		6,272		*
Jack A. Holmes			1,286		1,263		2,549		*
Carmen A. Tapio			—		—		—		*
Scott C. Arves(4)			550		—		550		*
Vikram Mansharamani, Ph.D.(4)			—		—		—		*
Alexi A. Wellman(4)			—		—		—		*
Derek J. Leathers			224,956		—		224,956		*
H. Marty Nordlund			39,617		—		39,617		*
John J. Steele			61,963		—		61,963		*
Jim S. Schelble			46,565		—		46,565		*
James L. Johnson			66,343		—		66,343		*
BlackRock, Inc.(5)			7,875,625		—		7,875,625		11.6	%
The Vanguard Group(6)			5,952,107		—		5,952,107		8.8	%
Dimensional Fund Advisors LP(7)			3,900,308		—		3,900,308		5.7	%
Gregory L. Werner(8)			5,283,847		—		5,283,847		7.8	%
All current executive officers, directors and director nominees as a group (19 persons)(2) (3)			532,002		13,725		545,727		*
*Indicates beneficial ownership of less than 1%.
(1)	This column represents restricted stock that will vest within 60 days after March 22, 2021. The shares are not outstanding and may not be voted at the 2021 Annual Meeting.
(2)	The percentages are based upon 67,918,148 shares, which equal our outstanding shares as of March 22, 2021. In accordance with SEC rules, for individuals who hold restricted stock that will vest within 60 days of March 22, 2021, the number of shares of common stock on which the percentage is based also includes the number of such shares.
(3)	Mr. Clarence L. Werner has shared voting and dispositive power for 3,137 shares.
(4)	Mr. Clarence L. Werner, Mr. Jung and Mr. Gallagher will serve as Board members through the 2021 Annual Meeting but will not stand for re-election. Mr. Arves, Dr. Mansharamani and Ms. Wellman have been nominated for election at the 2021 Annual Meeting.
(5)	Based on Schedule 13G as of December 31, 2020, as filed with the SEC by BlackRock, Inc. BlackRock, Inc. claims sole voting power of 7,643,684 shares and sole dispositive power of 7,875,625 shares, and does not claim any shared voting power or shared dispositive power with respect to any of these shares. According to the Schedule 13G filing, the address of this stockholder is 55 East 52nd Street, New York, New York 10055.
(6)	Based on Schedule 13G as of December 31, 2020, as filed with the SEC by The Vanguard Group. The Vanguard Group does not claim sole voting power with respect to any shares and claims shared voting power of 132,824 shares, sole dispositive power of 5,768,092 shares, and shared dispositive power of 184,015 shares. According to the Schedule 13G filing, the address of this stockholder is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
(7)	Based on Schedule 13G as of December 31, 2020, as filed with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP claims sole voting power of 3,770,607 shares and sole dispositive power of 3,900,308 shares, and does not claim any shared voting power or shared dispositive power with respect to any of these shares. According to the Schedule 13G filing, the address of this stockholder is Building One, 6300 Bee Cave Road, Austin, Texas 78746.
(8)	Based on Schedule 13G as of December 31, 2020, as filed with the SEC by Gregory L. Werner. Mr. Werner claims sole voting power and sole dispositive power of 5,033,847 shares and claims shared voting power and shared dispositive power of 250,000 shares. According to the Schedule 13G filing, the address of this stockholder is 5604 South 118th Plaza, Omaha, Nebraska 68137.


2020 NAMED EXECUTIVE OFFICERS
Name			Position with the Company
Derek J. Leathers			Vice Chairman, President & Chief Executive Officer
H. Marty Nordlund			Senior Executive Vice President (“SEVP”) & Chief Operating Officer
John J. Steele			Executive Vice President (“EVP”), Treasurer & Chief Financial Officer
Jim S. Schelble			Executive Vice President (“EVP”) & Chief Administrative Officer
James L. Johnson			Executive Vice President (“EVP”), Chief Accounting Officer & Corporate Secretary


2020 AND 2019 FINANCIAL RESULTS
		2020 (1)			2019 (1)			Change (%)
Total revenues			$2,372,178			$2,463,701			-4	%
Net income			$169,078			$166,944			1	%
Earnings per diluted share			$2.44			$2.38			2	%
Operating ratio(2)			90.4	%		90.8	%
Return on assets			8.0	%		7.8	%
Return on equity			14.7	%		14.6	%
Total shareholder return (1-year)			9.0	%		39.9	%
Total shareholder return (3-year cumulative)			17.7 %			56.2	%

(1)	Dollar amounts in thousands, except for per share amounts.
(2)	Operating expenses expressed as a percentage of operating revenues.


ANNUAL INCENTIVE PLAN PERFORMANCE RESULTS
AIP Measure		Target (1)	Final Results (1)	Achieved (%)	Weight (%)	2020 AIP Payout (% Target)
Operating income(2)		$204.2	$232.3	191.8%	25%	48.0%
Revenues less FSC(3)		$2,273.9	$2,213.6	80.1%	25%	20.0%
Total Company OR, net FSC(2)(4)		91.0%	89.5%	149.9%	25%	37.5%
Total Trucking OR, net FSC(2)(5)		89.0%	86.5%	182.3%		45.6%
Individual performance		Varies by NEO		100.0% to 175.0%	25%	25.0% to 43.8%
Total					100%	130.5% to 151.1%
(1)	Dollar amounts in millions.
(2)	Final results include adjustment of $4.9 million of insurance and claims expense for interest accrued during 2020 on an adverse jury verdict rendered in 2018, which the Compensation Committee determined should be added back to the 2020 operating income and subtracted from the 2020 operating expenses used in the calculation of ORs for purposes of the 2020 AIP payouts.
(3)	Operating revenues less trucking fuel surcharge revenues.
(4)	Operating expenses less trucking fuel surcharge revenues expressed as a percentage of operating revenues less trucking fuel surcharge revenues, for the total Company. Total Company OR applies to Messrs. Werner, Leathers, Nordlund, Steele and Johnson.
(5)	Operating expenses less trucking fuel surcharge revenues expressed as a percentage of operating revenues less trucking fuel surcharge revenues, for the Truckload Transportation Services segment. Total Trucking OR applies to Mr. Schelble.


CASH ANNUAL INCENTIVE COMPENSATION
Name		2020 Base Salary ($)	Target Payout (% Salary)		Target AIP Payout ($)	AIP Payout (% Target)		2020 AIP Payout ($)
Clarence L. Werner(1)		362,500	100.0	%	362,500	130.5	%	197,110
Derek J. Leathers		800,000	100.0	%	800,000	149.2	%	1,193,600
H. Marty Nordlund		375,000	70.0	%	262,500	138.8	%	364,350
John J. Steele		315,000	60.0	%	189,000	143.0	%	270,270
Jim S. Schelble		350,000	60.0	%	210,000	151.1	%	317,310
James L. Johnson		360,000	60.0	%	216,000	147.1	%	317,736
(1)	Mr. Werner’s 2020 AIP payout was prorated for his May 31, 2020 retirement date.


2020 COMPETITIVE PEER GROUP
ArcBest	J.B. Hunt	Saia
Covenant Transportation Group	Kansas City Southern	Schneider National
Echo Global Logistics	Knight-Swift Transportation	U.S. Xpress Enterprises
Forward Air	Landstar System	YRC Worldwide
Heartland Express	Marten Transport
Hub Group	Old Dominion Freight Line


ALL OTHER COMPENSATION FOR 2020
Name		Perquisites & Other Personal Benefits ($)		Tax Reimbursements ($)		Company Contributions to 401(k) Plan ($)		Company Contributions to Employee Stock Purchase Plan ($)		Total ($)
Clarence L. Werner(1)			30,175		23,369		—		—		53,544
Derek J. Leathers(2)			22,232		12,874		5,000		3,246		43,352
H. Marty Nordlund(3)			24,257		11,984		5,000		3,246		44,487
John J. Steele(4)			2,700		—		5,000		2,435		10,135
Jim S. Schelble(3)			21,262		8,195		5,000		3,246		37,703
James L. Johnson(4)			2,700		—		5,000		3,246		10,946

(1)	Perquisites and other personal benefits for Mr. Werner include $27,475 for use of one Company vehicle and personal medical care membership program. Tax reimbursements for Mr. Werner represent tax gross-ups for Company vehicle use.
(2)	Perquisites and other personal benefits for Mr. Leathers include use of one Company vehicle, Company-paid country club membership and personal medical care membership program. Tax reimbursements for Mr. Leathers represent tax gross-ups of (i) $12,363 for Company vehicle use and (ii) $511 for personal use of the corporate aircraft when his spouse accompanied him on a Company-related business trip.
(3)	Perquisites and other personal benefits for Messrs. Nordlund and Schelble include use of one Company vehicle, Company-paid country club membership and personal medical care membership program. Tax reimbursements for Messrs. Nordlund and Schelble represent tax gross-ups for Company vehicle use.
(4)	Perquisites and other personal benefits for Messrs. Steele and Johnson include personal medical care membership program.


2020 PAY ELEMENTS
		Base Salary (1)	Annual Incentive Compensation (2)	Restricted Stock	Performance Stock (2)	Variable Compensation (3)
CEO		18%	18%	32%	32%	82%
Other NEOs(4)		36%	22%	21%	21%	64%

(1)	Annual base salary rate set by the Compensation Committee in February 2020.
(2)	Cash and equity incentive compensation calculated at the target level of performance.
(3)	Variable compensation includes annual incentive compensation, restricted stock, and performance stock.
(4)	Other NEOs does not include Mr. Werner, who retired as Executive Chairman on May 31, 2020.


BASE SALARY
Name		2019 Base Salary ($)	2020 Base Salary ($)	Change (%)
Clarence L. Werner		362,500	362,500	—	%
Derek J. Leathers		725,000	800,000	10	%
H. Marty Nordlund		375,000	375,000	—	%
John J. Steele		285,000	315,000	11	%
Jim S. Schelble		310,000	350,000	13	%
James L. Johnson(1)		N/A	360,000	N/A
(1)	Mr. Johnson was not a Named Executive Officer in 2019.


POTENTIAL BENEFITS PAYABLE UNDER THE EQUITY PLAN
Name		Number of Unvested Shares Vesting			Potential Benefit ($)(1)(2)
Derek J. Leathers			195,582	(Restricted/Performance Stock)		7,670,726
H. Marty Nordlund			42,453	(Restricted/Performance Stock)		1,665,007
John J. Steele			27,139	(Restricted/Performance Stock)		1,064,392
Jim S. Schelble			27,139	(Restricted/Performance Stock)		1,064,392
James L. Johnson			27,139	(Restricted/Performance Stock)		1,064,392

(1)	The potential benefit was calculated using the $39.22 closing market price on December 31, 2020. The potential benefit at December 31, 2020 includes $3,119,873 for Mr. Leathers, $754,514 for Mr. Nordlund, and $434,597 each for Messrs. Steele, Schelble and Johnson, for restricted and performance stock which became vested in February 2021.
(2)	In the event of a death, the potential benefit listed above would exclude $1,458,513 for Mr. Leathers, $234,418 for Mr. Nordlund, and $208,376 each for Messrs. Steele, Schelble and Johnson, for the 2020 performance stock for which the threshold level of performance had not yet been achieved as of December 31, 2020.


SUMMARY COMPENSATION TABLE
Name and Principal Position		Year	Salary (1)	Bonus ($)	Stock Awards ($)(2)	Non-Equity Incentive Plan Compensation ($)(3)	All Other Compensation ($)(4)	Total ($)
Clarence L. Werner – Former Executive Chairman(5)		2020	95,486	—	1,125,000	197,110	53,544	1,471,140
		2019	362,500	—	1,125,000	249,763	50,129	1,787,392
		2018	333,125	—	1,125,000	585,438	58,006	2,101,569
Derek J. Leathers – President & Chief Executive Officer		2020	773,077	—	2,800,000	1,193,600	43,352	4,810,029
		2019	725,000	—	2,250,000	499,525	47,488	3,522,013
		2018	722,116	—	2,250,000	1,170,875	40,459	4,183,450
H. Marty Nordlund – SEVP & Chief Operating Officer		2020	376,442	—	450,000	364,350	44,487	1,235,279
		2019	375,000	—	550,000	163,538	45,990	1,134,528
		2018	375,000	—	550,000	415,013	43,004	1,383,017
John J. Steele – EVP, Treasurer & Chief Financial Officer		2020	311,596	—	400,000	270,270	10,135	992,001
		2019	285,000	—	300,000	117,819	13,177	715,996
		2018	282,692	—	300,000	270,351	9,255	862,298
Jim S. Schelble – EVP & Chief Administrative Officer		2020	345,192	—	400,000	317,310	37,703	1,100,205
		2019	310,000	—	300,000	123,132	39,066	772,198
		2018	310,000	—	300,000	300,948	37,553	948,501
James L. Johnson – EVP, Chief Accounting Officer & Corporate Secretary(6)		2020	355,231	—	400,000	317,736	10,946	1,083,913



(1)	Base salary for 2020 reflects 27 biweekly payments instead of 26, as well as voluntary base salary reductions by the Named Executive Officers in light of the unknown impact from the COVID-19 pandemic. In April 2020, Mr. Werner reduced his annual base salary for the remainder of 2020 by $250,000. Mr. Leathers reduced his base salary for second quarter 2020 only by 25%. Messrs. Nordlund, Steele, Schelble, and Johnson reduced their respective base salaries for second quarter 2020 only by 15% each.
(2)	The stock awards reported in this column and the associated valuation assumptions are also disclosed in the Grants of Plan-Based Awards for 2020 table. The stock awarded in 2020 includes both restricted stock and performance stock. Reported amounts for restricted stock represent the grant date fair value and for performance stock represent the grant date fair value based on the probable outcome of the performance conditions (target level). The target value of the 2020 performance awards was as follows: Mr. Werner $562,500, Mr. Leathers $1,400,000, Mr. Nordlund $225,000 and Messrs. Steele, Schelble and Johnson $200,000. If the highest level of performance is achieved, the value of the 2020 awards would be as follows: Mr. Werner $1,125,000, Mr. Leathers $2,800,000, Mr. Nordlund $450,000 and Messrs. Steele, Schelble and Johnson $400,000.
(3)	Cash awards reported in this column represent the actual amounts earned under the Company’s performance-based AIP for fiscal years 2020, 2019 and 2018 based upon achievement of pre-defined performance metrics, and were paid in February following the end of each fiscal year. Such awards are also disclosed in the Grants of Plan-Based Awards for 2020 table.
(4)	Refer to the All Other Compensation for 2020 table for a more detailed explanation of the compensation reported in this column.
(5)	Mr. Werner retired as Executive Chairman of the Company on May 31, 2020. He continues to serve as Chairman of the Board through the end of his current term, which will end in May 2021 following the 2021 Annual Meeting. His salary represents all salary paid in 2020. Mr. Werner’s 2020 AIP cash award payout was prorated for his retirement date. Upon his retirement, Mr. Werner forfeited 100% of his 2020 stock awards, 100% of his 2019 and 2018 performance stock awards, 75% of his 2019 restricted stock award, and 50% of his 2018 restricted stock award, representing the unvested portions of such awards.
(6)	Mr. Johnson was not a Named Executive Officer in 2019 or 2018.


GRANTS OF PLAN-BASED AWARDS FOR 2020
			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards			Estimated Future Payouts Under Equity Incentive Plan Awards			All Other Stock Awards: Number of Shares of Stock (#)	Grant Date Fair Value of Stock Awards ($)(1)
Name		Grant Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)
Clarence L. Werner(2)			90,625	362,500	725,000
		2/13/20				7,471	14,942	29,884		562,500
		2/13/20							14,804	562,500
Derek J. Leathers			200,000	800,000	1,600,000
		2/13/20				18,594	37,188	74,376		1,400,000
		2/13/20							36,844	1,400,000
H. Marty Nordlund			65,625	262,500	525,000
		2/13/20				2,989	5,977	11,954		225,000
		2/13/20							5,921	225,000
John J. Steele			47,250	189,000	378,000
		2/13/20				2,657	5,313	10,626		200,000
		2/13/20							5,263	200,000
Jim S. Schelble			52,500	210,000	420,000
		2/13/20				2,657	5,313	10,626		200,000
		2/13/20							5,263	200,000
James L. Johnson			54,000	216,000	432,000
		2/13/20				2,657	5,313	10,626		200,000
		2/13/20							5,263	200,000

(1)	The grant date fair value per share of the performance stock ($37.65) and the restricted stock ($38.00) is based upon the market price of the underlying common stock on the grant date, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. The present value of estimated future dividends was calculated based on a $0.09 quarterly dividend amount per share and a risk-free interest rate of 1.6%. Further discussion of the valuation and assumptions regarding our stock awards is provided in Note 8 of our Consolidated Financial Statements in our Annual Report on Form 10-K for 2020.
(2)	Mr. Werner’s 2020 AIP cash award payout was prorated for his May 31, 2020 retirement date. He forfeited 100% of his 2020 stock awards upon his retirement.


OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2020
Name	Grant Date	Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)(1)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
Clarence L. Werner(2)			—			—		—			—
Derek J. Leathers	2/8/17		6,016	(3)		235,948
	2/7/18		14,952	(4)		586,417
	2/7/18		45,020	(5)		1,765,684
	2/11/19		25,530	(6)		1,001,287
	2/11/19							30,032	(7)		1,177,855
	2/13/20		36,844	(8)		1,445,022
	2/13/20							18,594	(9)		729,257
H. Marty Nordlund	2/8/17		2,314	(3)		90,755
	2/7/18		3,655	(4)		143,349
	2/7/18		11,004	(5)		431,577
	2/11/19		6,241	(6)		244,772
	2/11/19							7,341	(7)		287,914
	2/13/20		5,921	(8)		232,222
	2/13/20							2,989	(9)		117,229
John J. Steele	2/8/17		1,157	(3)		45,378
	2/7/18		1,994	(4)		78,205
	2/7/18		6,003	(5)		235,438
	2/11/19		3,405	(6)		133,544
	2/11/19							4,004	(7)		157,037
	2/13/20		5,263	(8)		206,415
	2/13/20							2,657	(9)		104,208
Jim S. Schelble	2/8/17		1,157	(3)		45,378
	2/7/18		1,994	(4)		78,205
	2/7/18		6,003	(5)		235,438
	2/11/19		3,405	(6)		133,544
	2/11/19							4,004	(7)		157,037
	2/13/20		5,263	(8)		206,415
	2/13/20							2,657	(9)		104,208
James L. Johnson	2/8/17		1,157	(3)		45,378
	2/7/18		1,994	(4)		78,205
	2/7/18		6,003	(5)		235,438
	2/11/19		3,405	(6)		133,544
	2/11/19							4,004	(7)		157,037
	2/13/20		5,263	(8)		206,415
	2/13/20							2,657	(9)		104,208



(1)			Market value is calculated by multiplying the number of shares of stock that have not vested by the closing market price of our common stock ($39.22 per share) on December 31, 2020 (the last trading day of our fiscal year).
(2)			Mr. Werner retired during 2020, and he had no outstanding awards at the end of 2020.
(3)			The remaining shares of restricted stock vested on February 8, 2021.
(4)			One-half of the restricted stock vested on February 7, 2021, and the remaining shares vest on February 7, 2022.
(5)			The number of shares and market value for Performance Stock granted February 7, 2018 is reported at 150% of the target level of performance (pursuant to SEC rules) because the Company achieved a level of performance between 150% and 200% for the two-year performance period from January 1, 2018 to December 31, 2019, but absolute total shareholder return during the performance period was less than 30% which capped the award payout at 150%. The Compensation Committee certified achievement at 150% on January 25, 2021. The shares ultimately earned vested in one installment on February 7, 2021.
(6)			One-third of the restricted stock vested on February 11, 2021, and the remaining shares vest in two equal installments on February 11, 2022 and 2023.
(7)			The number of shares and market value for Performance Stock granted February 11, 2019 is reported at 87.8% of the target level of performance (pursuant to SEC rules) because the Company achieved that level of performance for the two-year performance period from January 1, 2019 to December 31, 2020 and the absolute total shareholder return during the performance period does not apply to awards where the level of performance is less than 150% of target. The final performance and payout have not been certified by the Compensation Committee. Any shares ultimately earned will vest in one installment on February 11, 2022.
(8)			Thirty-four percent of the restricted stock vested on February 13, 2021, and the remaining shares vest in two equal installments on February 13, 2022 and 2023.
(9)			The number of shares and market value for Performance Stock granted February 13, 2020 is reported at the threshold level of performance (pursuant to SEC rules) because the Company has not yet achieved the threshold level of performance for the two-year performance period from January 1, 2020 to December 31, 2021. Any shares ultimately earned will vest in one installment on February 13, 2023.


STOCK VESTED FOR 2020
	Stock Awards
Name		Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
Clarence L. Werner				7,993	308,148
Derek J. Leathers				80,839	3,123,235
H. Marty Nordlund				26,914	1,040,219
John J. Steele				14,684	567,390
Jim S. Schelble				14,684	567,390
James L. Johnson				14,684	567,390


NONQUALIFIED DEFERRED COMPENSATION FOR 2020
Name		Executive Contributions in 2020 ($)(1)		Company Contributions in 2020 ($)(2)	Aggregate Earnings (Losses) in 2020 ($)(3)		Aggregate Withdrawals/ Distributions ($)	Aggregate Balance at End of 2020 ($)(4)
Clarence L. Werner			—	—		—	—	—
Derek J. Leathers			54,000	—		170,990	—	1,086,768
H. Marty Nordlund			54,000	—		164,278	—	1,052,869
John J. Steele			54,000	—		199,992	—	1,370,398
Jim S. Schelble			54,000	—		113,735	—	1,114,322
James L. Johnson			54,000	—		87,356	—	686,926

(1)	The amounts disclosed in this column are reported as compensation and included within the amounts in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table.
(2)	The Company does not make matching contributions.
(3)	We do not provide above-market or preferential earnings on nonqualified deferred compensation plan balances; therefore, we did not report any portion of these amounts in the Summary Compensation Table pursuant to SEC rules.
(4)	Of these balances, the following executive contributions were reported in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table in our proxy statements for 2018 and 2019: Mr. Leathers, $107,952; Mr. Nordlund, $99,790; Mr. Steele, $108,004; and Mr. Schelble, $108,004.


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES FOR 2020 AND 2019
	2020 ($)	2019 ($)
Audit Fees	773,750	623,750
Audit-Related Fees	—	—
Tax Fees	—	—
All Other Fees	—	—
Total	773,750	623,750


Nominees:	1.	Scott C. Arves–Class III	2.	Vikram Mansharamani, Ph.D.–Class III	3.	Alexi A. Wellman–Class III
	4.	Carmen A. Tapio–Class I	5.	Derek J. Leathers–Class II