10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[Mark	one]
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-14690

WERNER ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Nebraska			47-0648386
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
14507 Frontier Road
Post Office Box 45308
Omaha	,	Nebraska	68145-0308
(Address of principal executive offices)			(Zip Code)

(402) 895-6640

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	WERN	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large Accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of April 30, 2021, 67,918,148 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

WERNER ENTERPRISES, INC.

INDEX

		PAGE
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements:	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2021 and 2020	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and 2020	5
	Consolidated Condensed Balance Sheets as of March 31, 2021 and December 31, 2020	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	7
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020	8
	Notes to Consolidated Financial Statements (Unaudited) as of March 31, 2021	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II – OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	29

2

PART I

FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements:

This Quarterly Report on Form 10-Q contains historical information and forward-looking statements based on information currently available to our management. The forward-looking statements in this report, including those made in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of Part I, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These safe harbor provisions encourage reporting companies to provide prospective information to investors. Forward-looking statements can be identified by the use of certain words, such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project” and other similar terms and language. We believe the forward-looking statements are reasonable based on currently available information. However, forward-looking statements involve risks, uncertainties and assumptions, whether known or unknown, that could cause our actual results, business, financial condition and cash flows to differ materially from those anticipated in the forward-looking statements. A discussion of important factors relating to forward-looking statements is included in Item 1A (Risk Factors) of Part I of our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). Readers should not unduly rely on the forward-looking statements included in this Form 10-Q because such statements speak only to the date they were made. Unless otherwise required by applicable securities laws, we undertake no obligation or duty to update or revise any forward-looking statements contained herein to reflect subsequent events or circumstances or the occurrence of unanticipated events.

Item 1. Financial Statements.

The interim consolidated financial statements contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the financial condition, results of operations and cash flows for the periods presented. The interim consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and were also prepared without audit. The interim consolidated financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements; although in management’s opinion, the disclosures are adequate so that the information presented is not misleading.

Operating results for the three-month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. In the opinion of management, the information set forth in the accompanying consolidated condensed balance sheets is fairly stated in all material respects in relation to the consolidated balance sheets from which it has been derived.

These interim consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes contained in our 2020 Form 10-K.

3

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended March 31,
(In thousands, except per share amounts)	2021		2020
	(Unaudited)
Operating revenues	$	616,446	$	592,703
Operating expenses:
Salaries, wages and benefits	204,853		205,997
Fuel	50,838		48,771
Supplies and maintenance	46,147		45,721
Taxes and licenses	23,233		22,850
Insurance and claims	22,056		36,064
Depreciation	63,951		68,837
Rent and purchased transportation	146,493		126,442
Communications and utilities	3,022		3,808
Other	(6,618)		3,147
Total operating expenses	553,975		561,637
Operating income	62,471		31,066
Other expense (income):
Interest expense	838		1,591
Interest income	(297)		(626)
Other	42		45
Total other expense (income)	583		1,010
Income before income taxes	61,888		30,056
Income taxes	15,396		6,998
Net income	$	46,492	$	23,058
Earnings per share:
Basic	$	0.68	$	0.33
Diluted	$	0.68	$	0.33
Weighted-average common shares outstanding:
Basic	67,932		69,253
Diluted	68,223		69,609

See Notes to Consolidated Financial Statements (Unaudited).

4

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended March 31,
(In thousands)	2021		2020
	(Unaudited)
Net income	$	46,492	$	23,058
Other comprehensive income (loss):
Foreign currency translation adjustments	(1,568)		(9,893)
Change in fair value of interest rate swaps, net of tax	1,303		(5,597)
Other comprehensive income (loss)	(265)		(15,490)
Comprehensive income	$	46,227	$	7,568

See Notes to Consolidated Financial Statements (Unaudited).

5

WERNER ENTERPRISES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts)	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	83,130	$	29,334
Accounts receivable, trade, less allowance of $8,897 and $8,686, respectively	347,902		341,104
Other receivables	44,363		23,491
Inventories and supplies	11,919		12,062
Prepaid taxes, licenses and permits	12,876		17,231
Other current assets	32,719		33,694
Total current assets	532,909		456,916
Property and equipment	2,410,791		2,405,335
Less – accumulated depreciation	873,449		862,077
Property and equipment, net	1,537,342		1,543,258
Other non-current assets	159,275		156,502
Total assets	$	2,229,526	$	2,156,676
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	113,064	$	83,263
Current portion of long-term debt	—		25,000
Insurance and claims accruals	91,097		76,917
Accrued payroll	41,912		35,594
Accrued expenses	25,350		25,032
Income taxes payable	19,226		7,824
Other current liabilities	17,112		20,384
Total current liabilities	307,761		274,014
Long-term debt, net of current portion	175,000		175,000
Other long-term liabilities	41,485		43,114
Insurance and claims accruals, net of current portion	235,850		231,638
Deferred income taxes	241,700		237,870
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 80,533,536 shares
issued; 67,918,148 and 67,931,726 shares outstanding, respectively	805		805
Paid-in capital	114,588		116,039
Retained earnings	1,478,616		1,438,916
Accumulated other comprehensive loss	(23,098)		(22,833)
Treasury stock, at cost; 12,615,388 and 12,601,810 shares, respectively	(343,181)		(337,887)
Total stockholders’ equity	1,227,730		1,195,040
Total liabilities and stockholders’ equity	$	2,229,526	$	2,156,676

See Notes to Consolidated Financial Statements (Unaudited).

6

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
(In thousands)	2021		2020
	(Unaudited)
Cash flows from operating activities:
Net income	$	46,492	$	23,058
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	63,951		68,837
Deferred income taxes	3,487		(2,912)
Gain on disposal of property and equipment	(10,520)		(2,469)
Non-cash equity compensation	2,502		2,406
Insurance and claims accruals, net of current portion	4,212		5,973
Other	1,285		88
Changes in certain working capital items:
Accounts receivable, net	(6,798)		11,946
Other current assets	551		12,195
Accounts payable	18,481		354
Other current liabilities	12,224		13,900
Net cash provided by operating activities	135,867		133,376
Cash flows from investing activities:
Additions to property and equipment	(82,555)		(57,231)
Proceeds from sales of property and equipment	44,689		38,391
Investment in equity securities	(5,000)		—
Decrease in notes receivable	1,575		2,316
Net cash used in investing activities	(41,291)		(16,524)
Cash flows from financing activities:
Repayments of short-term debt	(25,000)		—
Repayments of long-term debt	—		(50,000)
Dividends on common stock	(6,114)		(6,232)
Repurchases of common stock	(5,507)		(8,798)
Tax withholding related to net share settlements of restricted stock awards	(3,740)		(3,930)
Net cash used in financing activities	(40,361)		(68,960)
Effect of exchange rate fluctuations on cash	(419)		(2,073)
Net increase (decrease) in cash, cash equivalents and restricted cash	53,796		45,819
Cash, cash equivalents and restricted cash, beginning of period	29,334		33,442
Cash, cash equivalents and restricted cash, end of period(1)	$	83,130	$	79,261
Supplemental disclosures of cash flow information:
Interest paid	$	878	$	1,811
Income taxes paid	536		611
Supplemental schedule of non-cash investing and financing activities:
Notes receivable issued upon sale of property and equipment	$	988	$	1,099
Change in fair value of interest rate swaps	1,303		(5,597)
Property and equipment acquired included in accounts payable	23,570		13,848
Property and equipment disposed included in other receivables	17		1,251
Dividends accrued but not yet paid at end of period	6,792		6,218
(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Consolidated Balance Sheets Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	83,130	$	72,237
Restricted cash included in other current assets	—		7,024
Total cash, cash equivalents and restricted cash	$	83,130	$	79,261

See Notes to Consolidated Financial Statements (Unaudited).

7

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)	Common Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Equity
	(Unaudited)
BALANCE, December 31, 2020	$	805	$	116,039	$	1,438,916	$	(22,833)	$	(337,887)	$	1,195,040
Comprehensive income	—		—		46,492		(265)		—		46,227
Purchases of 130,446 shares of common stock	—		—		—		—		(5,507)		(5,507)
Dividends on common stock ($0.10 per share)	—		—		(6,792)		—		—		(6,792)
Equity compensation activity, 116,868 shares	—		(3,953)		—		—		213		(3,740)
Non-cash equity compensation expense	—		2,502		—		—		—		2,502
BALANCE, March 31, 2021	$	805	$	114,588	$	1,478,616	$	(23,098)	$	(343,181)	$	1,227,730

BALANCE, December 31, 2019	$	805	$	112,649	$	1,294,608	$	(14,728)	$	(282,326)	$	1,111,008
Comprehensive income	—		—		23,058		(15,490)		—		7,568
Purchases of 282,992 shares of common stock	—		—		—		—		(8,798)		(8,798)
Dividends on common stock ($0.09 per share)	—		—		(6,218)		—		—		(6,218)
Equity compensation activity, 125,203 shares	—		(4,360)		—		—		430		(3,930)
Non-cash equity compensation expense	—		2,406		—		—		—		2,406
BALANCE, March 31, 2020	$	805	$	110,695	$	1,311,448	$	(30,218)	$	(290,694)	$	1,102,036

See Notes to Consolidated Financial Statements (Unaudited).

8

WERNER ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) Accounting Policies

New Accounting Pronouncements Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which reduces complexity in accounting for income taxes by removing certain exceptions to the general principles stated in Topic 740 and by clarifying and amending existing guidance to improve consistent application of and simplify other areas of Topic 740. The Company adopted ASU 2019-12 as of January 1, 2021. Upon adoption, this update had no effect on our financial position, results of operations and cash flows.

Accounting Standards Updates Not Yet Effective

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848)” which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The provisions of this update are effective for all entities as of March 12, 2020 through December 31, 2022 and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. We are evaluating the impact of the optional expedients in this update and their applicability to modifications of our existing credit facilities and hedging relationships that reference LIBOR.

(2) Revenue

Revenue Recognition

Revenues are recognized over time as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

The following table presents our revenues disaggregated by revenue source (in thousands):

	Three Months Ended March 31,
	2021		2020
Truckload Transportation Services	$	462,949	$	464,863
Werner Logistics	137,853		112,164
Inter-segment eliminations	(134)		(11)
Transportation services	600,668		577,016
Other revenues	15,778		15,687
Total revenues	$	616,446	$	592,703

The following table presents our revenues disaggregated by geographic areas in which we conduct business (in thousands). Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country. If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin.

	Three Months Ended March 31,
	2021		2020
United States	$	555,239	$	530,071
Mexico	38,756		43,421
Other	22,451		19,211
Total revenues	$	616,446	$	592,703

9

Contract Balances and Accounts Receivable

A receivable is an unconditional right to consideration and is recognized when shipments have been completed and the related performance obligation has been fully satisfied. At March 31, 2021 and December 31, 2020, the accounts receivable, trade, net, balance was $347.9 million and $341.1 million, respectively. Contract assets represent a conditional right to consideration in exchange for goods or services and are transferred to receivables when the rights become unconditional. At March 31, 2021 and December 31, 2020, the balance of contract assets was $8.9 million and $6.9 million, respectively. We have recognized contract assets within the other current assets financial statement caption on the balance sheet. These contract assets are considered current assets as they will be settled in less than 12 months.

Contract liabilities represent advance consideration received from customers and are recognized as revenues over time as the related performance obligation is satisfied. The balance of contract liabilities was $1.7 million as of March 31, 2021 and $1.5 million as of December 31, 2020. The amount of revenues recognized in the three months ended March 31, 2021 that was included in the December 31, 2020 contract liability balance was $1.5 million. We have recognized contract liabilities within the accounts payable and other current liabilities financial statement captions on the balance sheet. These contract liabilities are considered current liabilities as they will be settled in less than 12 months.

Performance Obligations

We have elected to apply the practical expedient in ASC Topic 606 to not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less. Remaining performance obligations represent the transaction price allocated to future reporting periods for freight shipments started but not completed at the reporting date that we expect to recognize as revenue in the period subsequent to the reporting date; transit times generally average approximately 3 days.

During the three months ended March 31, 2021 and March 31, 2020, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

(3) Leases

We have entered into operating leases primarily for real estate. The leases have terms which range from 1 year to 11 years, and some include options to renew. Renewal terms are included in the lease term when it is reasonably certain that we will exercise the option to renew.

Operating leases are included in other non-current assets, other current liabilities and other long-term liabilities on the consolidated condensed balance sheets. These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using our incremental borrowing rate because the rate implicit in each lease is not readily determinable. We have certain contracts for real estate that may contain lease and non-lease components which we have elected to treat as a single lease component. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense is reported in rent and purchased transportation on the consolidated statements of income.

10

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of March 31, 2021.

(In thousands)	March 31, 2021
Maturity of Lease Liabilities
2021 (remaining)	$	2,806
2022	2,934
2023	1,910
2024	1,507
2025	969
Thereafter	473
Total undiscounted operating lease payments	$	10,599
Less: Imputed interest	(633)
Present value of operating lease liabilities	$	9,966
Balance Sheet Classification
Right-of-use assets (recorded in other non-current assets)	$	9,506
Current lease liabilities (recorded in other current liabilities)	$	3,408
Long-term lease liabilities (recorded in other long-term liabilities)	6,558
Total operating lease liabilities	$	9,966
Other Information
Weighted-average remaining lease term for operating leases	3.70 years
Weighted-average discount rate for operating leases	3.30		%

Cash Flows

During the three months ended March 31, 2021 and March 31, 2020, right-of-use assets of $0.5 million and $0.9 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities. Cash paid for amounts included in the present value of operating lease liabilities was $0.9 million and $1.0 million for the three months ended March 31, 2021 and March 31, 2020, respectively, and is included in operating cash flows.

Operating Lease Expense

Operating lease expense was $3.6 million and $2.0 million for the three months ended March 31, 2021 and March 31, 2020, respectively. This expense included $1.0 million for the three months ended March 31, 2021 and March 31, 2020 for long-term operating leases, with the remainder for variable and short-term lease expense.

11

Lessor Operating Leases

We are the lessor of tractors and trailers under operating leases with initial terms of 2 to 10 years. We recognize revenue for such leases on a straight-line basis over the term of the lease. Revenues were $3.1 million and $3.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. The following table presents information about the maturities of these operating leases as of March 31, 2021.

(In thousands)	March 31, 2021
2021 (remaining)	$	7,206
2022	2,111
2023	—
2024	—
2025	—
Thereafter	—
Total	$	9,317

(4) Investments

Investment in Mastery Logistics Systems, Inc.

In 2020, we entered into a strategic partnership with Mastery Logistics Systems, Inc. (“MLSI”), a transportation technology development company. We are collaborating with MLSI to develop a cloud-based transportation management system using MLSI's SaaS technology which we have agreed to license. In 2020, we paid MLSI $5.0 million for shares of preferred stock of MLSI which represent approximately 5% ownership. This investment is being accounted for under ASC 321, Investments - Equity Securities and is recorded in other noncurrent assets on the consolidated balance sheet. As of March 31, 2021, no events have occurred that would indicate that the value of our investment in MLSI has changed.

Investment in TuSimple

On January 8, 2021, we made a $5.0 million equity investment in TuSimple, an autonomous trucking technology company. Our interest, which represents less than 1%, is being accounted for under ASC 321, Investments - Equity Securities and is recorded in other noncurrent assets on the consolidated balance sheet. As of March 31, 2021, no events have occurred that would indicate that the value of our investment in TuSimple has changed.

Subsequent Event

TuSimple completed its initial public offering in April 2021. Upon completion, our equity investment was converted to Class A common shares. We will record future changes in the value of our investment, based on the share price reported by Nasdaq, in other expense (income) on the consolidated statements of income.

(5) Credit Facilities

As of March 31, 2021, we had unsecured committed credit facilities with two banks. We had with Wells Fargo Bank, N.A. a $300.0 million credit facility which will expire on May 14, 2024. We also had a $200.0 million credit facility with BMO Harris Bank N.A., which will expire on May 14, 2024. Borrowings under these credit facilities bear variable interest based on the London Interbank Offered Rate (“LIBOR”).

As of March 31, 2021 and December 31, 2020, our outstanding debt totaled $175.0 million and $200.0 million, respectively. We had $25.0 million outstanding under the credit facilities at a variable interest rate of 0.78% as of March 31, 2021. We had (i) an additional $75.0 million outstanding under the Wells Fargo Bank, N.A. credit facility at a variable rate of 0.78% as of March 31, 2021, which is effectively fixed at 2.32% with an interest rate swap agreement through May 14, 2024 and (ii) an additional $75.0 million outstanding under the BMO Harris Bank N.A. credit facility at a variable rate of 0.81% as of March 31, 2021, which is effectively fixed at 2.36% with an interest rate swap agreement through May 14, 2024. The $500.0 million of borrowing capacity under our credit facilities at March 31, 2021, is further reduced by $50.9 million in stand-by letters of credit under which we are obligated. Each of the debt agreements includes, among other things, financial covenants requiring us (i) to exceed a minimum ratio of earnings before interest, income taxes, depreciation and amortization to interest expense and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility). At March 31, 2021, we were in compliance with these covenants.

12

At March 31, 2021, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2021	$	—
2022	—
2023	—
2024	175,000
2025	—
Total	$	175,000

The carrying amounts of our long-term debt approximate fair value due to the duration of the notes and the variable interest rates.

(6) Commitments and Contingencies

As of March 31, 2021, we have committed to property and equipment purchases of approximately $164.4 million.

We are involved in certain claims and pending litigation, including those described herein, arising in the ordinary course of business. The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements. Moreover, the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and related events unfold.

On May 17, 2018, in Harris County District Court in Houston, Texas, a jury rendered an adverse verdict against Werner Enterprises, Inc. (the “Company”) in a lawsuit arising from a December 30, 2014 accident between a Werner tractor-trailer and a passenger vehicle. On July 30, 2018, the court entered a final judgment against Werner for $92.0 million, including pre-judgment interest.

The Company has premium-based liability insurance to cover the potential outcome from this jury verdict. Under the Company’s insurance policies in effect on the date of this accident, the Company’s maximum liability for this accident is $10.0 million (plus pre-judgment and post-judgment interest) with premium-based coverage that exceeds the jury verdict amount. As a result of this jury verdict, the Company had recorded a liability of $24.9 million as of March 31, 2021, and $23.6 million as of December 31, 2020. Under the terms of the Company’s insurance policies, the Company is the primary obligor of the verdict, and as such, the Company has also recorded a $79.2 million receivable from its third-party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the consolidated balance sheets as of March 31, 2021 and December 31, 2020.

The Company is pursuing an appeal of this verdict. No assurances can be given regarding the outcome of any such appeal.

We have been involved in class action litigation in the U.S. District Court for the District of Nebraska, in which the plaintiffs allege that we owe drivers for unpaid wages under the Fair Labor Standards Act (“FLSA”) and the Nebraska Wage Payment and Collection Act and that we failed to pay minimum wage per hour for drivers in our Career Track Program, related to short break time and sleeper berth time. The period covered by this class action suit is August 2008 through March 2014. The case was tried to a jury in May 2017, resulting in a verdict of $0.8 million in plaintiffs’ favor on the short break matter and a verdict in our favor on the sleeper berth matter. As a result of various post-trial motions, the court awarded $0.5 million to the plaintiffs for attorney fees and costs. As of March 31, 2021, we had accrued for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter. Plaintiffs appealed the post-verdict amounts awarded by the trial court for fees, costs and liquidated damages, and the Company filed a cross appeal on the verdict that was in plaintiffs’ favor. The United States Court of Appeals for the Eighth Circuit denied Plaintiffs’ appeal and granted Werner’s appeal, vacating the judgment in favor of the plaintiffs. The appellate court sent the case back to the trial court for proceedings consistent with the appellate court’s opinion. On June 22, 2020, the trial court denied Plaintiffs’ request for a new trial and entered judgment in favor of the Company, dismissing the case with prejudice. On July 21, 2020, Plaintiffs’ counsel filed a notice of appeal of that dismissal.

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We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items. Based on the knowledge of the facts, management does not currently believe the outcome of these class actions is likely to have a material adverse effect on our financial position or results of operations. However, the final disposition of these matters and the impact of such final dispositions cannot be determined at this time.

(7) Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock awards. Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. There are no differences in the numerators of our computations of basic and diluted earnings per share for any periods presented.

The computation of basic and diluted earnings per share is shown below (in thousands, except per share amounts).

	Three Months Ended March 31,
	2021		2020
Net income	$	46,492	$	23,058
Weighted average common shares outstanding	67,932		69,253
Dilutive effect of stock-based awards	291		356
Shares used in computing diluted earnings per share	68,223		69,609
Basic earnings per share	$	0.68	$	0.33
Diluted earnings per share	$	0.68	$	0.33

(8) Equity Compensation

The Werner Enterprises, Inc. Amended and Restated Equity Plan (the “Equity Plan”), approved by the Company’s shareholders in 2013, provides for grants to employees and non-employee directors of the Company in the form of nonqualified stock options, restricted stock and units (“restricted awards”), performance awards, and stock appreciation rights. The Board of Directors or the Compensation Committee of our Board of Directors determines the terms of each award, including the type, recipients, number of shares subject to and vesting conditions of each award. No awards of stock appreciation rights have been issued under the Equity Plan to date, and no stock option awards are outstanding. The maximum number of shares of common stock that may be awarded under the Equity Plan is 20,000,000 shares. The maximum aggregate number of shares that may be awarded to any one person in any one calendar year under the Equity Plan is 500,000. As of March 31, 2021, there were 6,537,930 shares available for granting additional awards.

Equity compensation expense is included in salaries, wages and benefits within the Consolidated Statements of Income. As of March 31, 2021, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $16.1 million and is expected to be recognized over a weighted average period of 2.0 years. The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands): 

	Three Months Ended March 31,
	2021		2020
Restricted awards:
Pre-tax compensation expense	$	1,549	$	1,398
Tax benefit	395		356
Restricted stock expense, net of tax	$	1,154	$	1,042
Performance awards:
Pre-tax compensation expense	$	946	$	1,010
Tax benefit	241		258
Performance award expense, net of tax	$	705	$	752

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We do not have a formal policy for issuing shares upon vesting of restricted and performance awards. Such shares are generally issued from treasury stock. From time to time, we repurchase shares of our common stock, the timing and amount of which depends on market and other factors. Historically, the shares acquired from such repurchases have provided us with sufficient quantities of stock to issue for equity compensation. Based on current treasury stock levels, we do not expect to repurchase additional shares specifically for equity compensation during 2021.

Restricted Awards

Restricted stock entitles the holder to shares of common stock when the award vests. Restricted stock units entitle the holder to a combination of cash or stock equal to the value of common stock when the unit vests. The value of these shares may fluctuate according to market conditions and other factors. Restricted awards currently outstanding vest over periods ranging from 12 to 60 months from the grant date of the award. The restricted awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes restricted award activity for the three months ended March 31, 2021:

	Number of Restricted Awards (in thousands)	Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	367	$	35.78
Granted	114	41.30
Vested	(107)	34.96
Forfeited	(2)	35.53
Nonvested at end of period	372	37.70

We estimate the fair value of restricted awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate. Cash settled restricted stock units are recorded as a liability within the Consolidated Balance Sheets and are adjusted to fair value each reporting period.

The total fair value of previously granted restricted awards vested during the three-month periods ended March 31, 2021 and March 31, 2020 was $4.5 million and $2.9 million, respectively. We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations were recorded as treasury stock.

Performance Awards

Performance awards entitle the recipient to shares of common stock upon attainment of performance objectives as pre-established by the Compensation Committee. If the performance objectives are achieved, performance awards currently outstanding vest, subject to continued employment, 36 months after the grant date of the award. The performance awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes performance award activity for the three months ended March 31, 2021:

	Number of Performance Awards (in thousands)	Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	262	$	32.96
Granted	74	40.93
Vested	(100)	33.04
Forfeited	—	—
Nonvested at end of period	236	35.42

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The 2021 performance awards are earned based upon the level of attainment by the Company of specified performance objectives related to cumulative diluted earnings per share for the two-year period from January 1, 2021 to December 31, 2022. Shares earned based on cumulative diluted earnings per share may be capped based on the Company’s total shareholder return during the three-year period ended December 31, 2023, relative to the total shareholder return of a peer group of companies for the same period. The 2021 performance awards will vest in one installment on the third anniversary from the grant date. In January 2021, the Compensation Committee determined the 2018 fiscal year performance objectives were achieved at a level above the target level; the additional shares earned above the target level were included in 2020 shares granted.

We estimate the fair value of performance awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate.

The vesting date fair value of performance awards that vested during the three-month periods ended March 31, 2021 and March 31, 2020 was $4.1 million and $5.8 million, respectively. We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations were recorded as treasury stock.

(9) Segment Information

We have two reportable segments – Truckload Transportation Services (“TTS”) and Werner Logistics.

The TTS segment consists of two operating units, Dedicated and One-Way Truckload. These units are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting. Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers. One-Way Truckload is comprised of the following operating fleets: (i) the medium-to-long-haul van (“Van”) fleet transports a variety of consumer nondurable products and other commodities in truckload quantities over irregular routes using dry van trailers, including Mexico cross-border routes; (ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams; (iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States; and (iv) the Temperature Controlled fleet provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers. Revenues for the TTS segment include a small amount of non-trucking revenues which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where we utilize a third-party capacity provider.

The Werner Logistics segment generates the majority of our non-trucking revenues through three operating units that provide non-trucking services to our customers. These three Werner Logistics operating units are as follows: (i) Truckload Logistics, which uses contracted carriers to complete shipments for brokerage customers and freight management customers for which we offer a full range of single-source logistics management services and solutions; (ii) the intermodal (“Intermodal”) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation; and (iii) Werner Final Mile (“Final Mile”) offers home and business deliveries of large or heavy items using third-party agents with two associates operating a liftgate straight truck. In first quarter 2021, we completed the previously-announced sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group, and we realized a $1.0 million gain when the transaction closed on February 26, 2021. Werner Logistics will continue to provide North American truck brokerage, freight management, intermodal and final mile services.

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We generate other revenues from our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities. None of these operations meets the quantitative reporting thresholds. As a result, these operations are grouped in “Other” in the table below. “Corporate” includes revenues and expenses that are incidental to our activities and are not attributable to any of our operating segments, including gains and losses on sales of assets not attributable to our operating segments. We do not prepare separate balance sheets by segment and, as a result, assets are not separately identifiable by segment. Inter-segment eliminations in the table below represent transactions between reporting segments that are eliminated in consolidation. The following table summarizes our segment information (in thousands):

	Three Months Ended March 31,
	2021		2020
Revenues
Truckload Transportation Services	$	462,949	$	464,863
Werner Logistics	137,853		112,164
Other	15,399		15,068
Corporate	379		619
Subtotal	616,580		592,714
Inter-segment eliminations	(134)		(11)
Total	$	616,446	$	592,703
Operating Income
Truckload Transportation Services	$	57,628	$	29,089
Werner Logistics	4,574		1,085
Other	866		2,900
Corporate	(597)		(2,008)
Total	$	62,471	$	31,066

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) summarizes the financial statements from management’s perspective with respect to our financial condition, results of operations, liquidity and other factors that may affect actual results. The MD&A is organized in the following sections:

•Overview

•COVID-19

•Results of Operations

•Liquidity and Capital Resources

•Contractual Obligations and Commercial Commitments

•Regulations

•Critical Accounting Estimates

The MD&A should be read in conjunction with our 2020 Form 10-K.

Overview:

We have two reportable segments, Truckload Transportation Services (“TTS”) and Werner Logistics, and we operate in the truckload and logistics sectors of the transportation industry. In the truckload sector, we focus on transporting consumer nondurable products that generally ship more consistently throughout the year. In the logistics sector, besides managing transportation requirements for individual customers, we provide additional sources of truck capacity, alternative modes of transportation, a North American delivery network and systems analysis to optimize transportation needs. Our success depends on our ability to efficiently and effectively manage our resources in the delivery of truckload transportation and logistics services to our customers. Resource requirements vary with customer demand, which may be subject to seasonal or general economic conditions. Our ability to adapt to changes in customer transportation requirements is essential to efficiently deploy resources and make capital investments in tractors and trailers (with respect to our TTS segment) or obtain qualified third-party capacity at a reasonable price (with respect to our Werner Logistics segment). We may also be affected by our customers’ financial failures or loss of customer business.

Revenues for our TTS segment operating units (Dedicated and One-Way Truckload) are typically generated on a per-mile basis and also include revenues such as stop charges, loading and unloading charges, equipment detention charges and equipment repositioning charges. To mitigate our risk to fuel price increases, we recover from our customers additional fuel surcharge revenues that generally recoup a majority of the increased fuel costs; however, we cannot assure that current recovery levels will continue in future periods. Because fuel surcharge revenues fluctuate in response to changes in fuel costs, we identify them separately and exclude them from the statistical calculations to provide a more meaningful comparison between periods. The key statistics used to evaluate trucking revenues, net of fuel surcharge, are (i) average revenues per tractor per week, (ii) average percentage of empty miles (miles without trailer cargo), (iii) average trip length (in loaded miles) and (iv) average number of tractors in service. General economic conditions, seasonal trucking industry freight patterns and industry capacity are important factors that impact these statistics. Our TTS segment also generates a small amount of revenues categorized as non-trucking revenues, which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where the TTS segment utilizes a third-party capacity provider. We exclude such revenues from the statistical calculations.

Our most significant resource requirements are company drivers, independent contractors, tractors and trailers. Independent contractors supply their own tractors and drivers and are responsible for their operating expenses. Our financial results are affected by company driver and independent contractor availability and the markets for new and used revenue equipment. We are self-insured for a significant portion of bodily injury, property damage and cargo claims; workers’ compensation claims; and associate health claims (supplemented by premium-based insurance coverage above certain dollar levels). For that reason, our financial results may also be affected by driver safety, medical costs, weather, legal and regulatory environments and insurance coverage costs to protect against catastrophic losses.

The operating ratio is a common industry measure used to evaluate our profitability and that of our TTS segment operating fleets. The operating ratio consists of operating expenses expressed as a percentage of operating revenues. The most significant variable expenses that impact the TTS segment are driver salaries and benefits, fuel, fuel taxes (included in taxes and licenses expense), payments to independent contractors (included in rent and purchased transportation expense), supplies and maintenance and insurance and claims. As discussed further in the comparison of operating results for first quarter 2021 to first quarter 2020, several industry-wide issues have caused, and could continue to cause, costs to increase in future periods. These issues include shortages of drivers or independent contractors, changing fuel prices, compliance with new or proposed regulations and tightening of the commercial truck liability insurance market. Our main fixed costs include depreciation expense for tractors and trailers and equipment licensing fees (included in taxes and licenses expense). The TTS segment

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requires substantial cash expenditures for tractor and trailer purchases. We fund these purchases with net cash from operations and financing available under our existing credit facilities, as management deems necessary.

We provide non-trucking services primarily through the three operating units within our Werner Logistics segment (Truckload Logistics, Intermodal, and Final Mile). In first quarter 2021, we completed the previously-announced sale of the WGL freight forwarding services for international ocean and air shipments to Scan Global Logistics Group. WGL had annual revenues of $53 million in 2020, and we realized a $1.0 million gain from the sale in first quarter 2021. Unlike our TTS segment, the Werner Logistics segment is less asset-intensive and is instead dependent upon qualified associates, information systems and qualified third-party capacity providers. The largest expense item related to the Werner Logistics segment is the cost of purchased transportation we pay to third-party capacity providers. This expense item is recorded as rent and purchased transportation expense. Other operating expenses consist primarily of salaries, wages and benefits. We evaluate the Werner Logistics segment’s financial performance by reviewing the gross margin percentage (revenues less rent and purchased transportation expenses expressed as a percentage of revenues) and the operating income percentage. The gross margin percentage can be impacted by the rates charged to customers and the costs of securing third-party capacity. We have a mix of contracted long-term rates and variable rates for the cost of third-party capacity, and we cannot assure that our operating results will not be adversely impacted in the future if our ability to obtain qualified third-party capacity providers changes or the rates of such providers increase.

COVID-19:

The COVID-19 pandemic, declared March 11, 2020, has profoundly impacted the U.S. economy. During the pandemic, the transportation industry has been designated by the U.S. government as an essential industry for keeping the U.S. supply chain moving. We are working hard to stay healthy while safely delivering our customers’ freight on time. Our leadership team meets frequently to address issues related to customers, freight, drivers, safety, staffing, human resources, and costs and provides regular updates to all our associates. Throughout our offices and terminal network, we are closely following the safety guidelines set forth by the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO), including hygiene and social distancing. We made and intend to continue to make significant investments in personal protective products to keep our associates safe, and we are helping to get our associates access to the vaccine. Over half of our office associates continue working from home. We introduced Werner-specific associate relief plans to provide rapid and needed assistance to those Werner associates affected by the virus.

Over the past several years, we have repositioned Werner to increase our ability to execute through different macroeconomic environments. We believe our freight base, which is heavily weighted toward customers delivering essential products that are continually being restocked in today’s economy, is enabling us to more effectively manage through the difficult economic environment created by the pandemic.

Our results in first quarter 2021 reflect seasonally strong freight market conditions in a strengthening economy and tight driver market. Freight demand in our One-Way Truckload fleet was strong and gained momentum in first quarter, and Dedicated freight demand remained strong during the quarter. We believe we proactively managed and adapted our fleet and cost structure without compromising service.

While there remain significant uncertainties related to COVID-19 and its effect on the economy, we believe that demand for our services will continue to be strong during the remainder of 2021. We performed a customer industry and financial risk assessment on our 100 largest customers shortly after the pandemic declaration. While our financial risk has clearly increased since the pandemic began, we believe we have a relatively lower level of financial risk with the predominance of financially stronger companies in our customer base as well as a lower overall industry risk due to our focus on industries delivering essential products.

At the end of first quarter 2021, we believe we are well positioned with a strong balance sheet and sufficient liquidity. Our debt is low at $175 million, or a net debt ratio of 0.2 times earnings before interest, income taxes, depreciation and amortization for the last twelve months. We had available liquidity of $357 million, considering cash on hand and available credit facilities of $274 million. We also have sufficient cushion with our two debt covenants. We currently plan to continue paying our quarterly dividend, which we have paid quarterly since 1987. This cash outlay currently results in slightly less than $7 million per quarter. Net capital expenditures in 2021 currently are expected to be in the range of $275 million to $300 million.

We do not currently expect the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted in March 2020, to have a material impact on our consolidated financial statements. Under the CARES Act, we deferred payment of certain employer payroll taxes for 2020, with 50% due December 31, 2021 and 50% due December 31, 2022. We also expect to utilized a provision allowing accelerated income tax depreciation for certain assets, which did not impact our effective tax rate.

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There have been a number of regulatory actions and waivers related to the COVID-19 pandemic, in an effort to keep the supply chain moving. We do not currently expect these collective changes to have a material impact on our consolidated financial statements.

Results of Operations:

The following table sets forth the Consolidated Statements of Income in dollars and as a percentage of total operating revenues and the percentage increase or decrease in the dollar amounts of those items compared to the prior year. 

	Three Months Ended (3ME)  March 31,						Percentage Change in Dollar Amounts
	2021			2020			3ME
(Amounts in thousands)	$		%	$		%	%
Operating revenues	$	616,446	100.0	$	592,703	100.0	4.0
Operating expenses:
Salaries, wages and benefits	204,853		33.2	205,997		34.8	(0.6)
Fuel	50,838		8.2	48,771		8.2	4.2
Supplies and maintenance	46,147		7.5	45,721		7.7	0.9
Taxes and licenses	23,233		3.8	22,850		3.9	1.7
Insurance and claims	22,056		3.6	36,064		6.1	(38.8)
Depreciation	63,951		10.4	68,837		11.6	(7.1)
Rent and purchased transportation	146,493		23.8	126,442		21.3	15.9
Communications and utilities	3,022		0.5	3,808		0.7	(20.6)
Other	(6,618)		(1.1)	3,147		0.5	(310.3)
Total operating expenses	553,975		89.9	561,637		94.8	(1.4)
Operating income	62,471		10.1	31,066		5.2	101.1
Total other expense (income)	583		0.1	1,010		0.1	(42.3)
Income before income taxes	61,888		10.0	30,056		5.1	105.9
Income taxes	15,396		2.5	6,998		1.2	120.0
Net income	$	46,492	7.5	$	23,058	3.9	101.6

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The following tables set forth the operating revenues, operating expenses and operating income for the TTS segment and certain statistical data regarding our TTS segment operations, as well as statistical data for the One-Way Truckload and Dedicated operating units within TTS.

	Three Months Ended March 31,
	2021			2020
Truckload Transportation Services segment (amounts in thousands)	$		%	$		%
Trucking revenues, net of fuel surcharge	$	410,652		$	409,098
Trucking fuel surcharge revenues	47,459			51,041
Non-trucking and other operating revenues	4,838			4,724
Operating revenues	462,949		100.0	464,863		100.0
Operating expenses	405,321		87.6	435,774		93.7
Operating income	$	57,628	12.4	$	29,089	6.3

	Three Months Ended March 31,
Truckload Transportation Services segment	2021			2020			% Change
Average tractors in service	7,790			7,862			(0.9)	%
Average revenues per tractor per week (1)	$	4,055		$	4,003		1.3	%
Total tractors (at quarter end)
Company	7,360			7,350			0.1	%
Independent contractor	375			485			(22.7)	%
Total tractors	7,735			7,835			(1.3)	%
Total trailers (at quarter end)	22,710			21,910			3.7	%
One-Way Truckload
Trucking revenues, net of fuel surcharge (in 000’s)	$	156,839		$	177,849		(11.8)	%
Average tractors in service	2,856			3,271			(12.7)	%
Total tractors (at quarter end)	2,815			3,150			(10.6)	%
Average percentage of empty miles	11.35		%	11.83		%	(4.1)	%
Average revenues per tractor per week (1)	$	4,224		$	4,182		1.0	%
Average % change in revenues per total mile (1)	9.5		%	(3.7)		%
Average % change in total miles per tractor per week	(7.7)		%	5.1		%
Average completed trip length in miles (loaded)	853			863			(1.2)	%
Dedicated
Trucking revenues, net of fuel surcharge (in 000’s)	$	253,813		$	231,249		9.8	%
Average tractors in service	4,934			4,591			7.5	%
Total tractors (at quarter end)	4,920			4,685			5.0	%
Average revenues per tractor per week (1)	$	3,957		$	3,874		2.1	%

(1)Net of fuel surcharge revenues.

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The following tables set forth the Werner Logistics segment’s revenues, rent and purchased transportation expense, gross margin, other operating expenses (primarily salaries, wages and benefits expense) and operating income, as well as certain statistical data regarding the Werner Logistics segment.

	Three Months Ended March 31,
	2021			2020
Werner Logistics segment (amounts in thousands)	$		%	$		%
Operating revenues	$	137,853	100.0	$	112,164	100.0
Rent and purchased transportation expense	120,527		87.4	95,932		85.5
Gross margin	17,326		12.6	16,232		14.5
Other operating expenses	12,752		9.3	15,147		13.5
Operating income	$	4,574	3.3	$	1,085	1.0

	Three Months Ended March 31,
Werner Logistics segment	2021	2020	% Change
Average tractors in service	39	32	21.9	%
Total tractors (at quarter end)	39	30	30.0	%
Total trailers (at quarter end)	1,440	1,625	(11.4)	%

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Operating Revenues

Operating revenues increased 4.0% for the three months ended March 31, 2021, compared to the same period of the prior year. When comparing first quarter 2021 to first quarter 2020, TTS segment revenues decreased $1.9 million, or 0.4%, and Werner Logistics revenues increased $25.7 million, or 22.9%.

During first quarter 2021, freight demand in our One-Way Truckload fleet was seasonally strong. This trend has continued during second quarter to-date. In our Dedicated fleet, freight demand remained strong in first quarter 2021. Improving demand from a strengthening economy, combined with several factors that are limiting capacity, resulted in a very good first quarter freight market.

The abnormally severe winter weather events in February and March 2021 were disruptive to operations. As each event developed, we made safety the highest priority by working with our drivers to park their trucks until it was safe to resume operations. These actions lowered our miles per truck, and we experienced increased weather-related maintenance, driver pay and other costs. However, we were pleased that our safety-first focus resulted in a decline in our chargeable DOT reportable accident rate in first quarter 2021. The unusually cold mid-February weather and resulting power outages also temporarily closed certain of our driving schools and terminal locations.

Trucking revenues, net of fuel surcharge, increased 0.4% in first quarter 2021 compared to first quarter 2020 due to a 1.3% increase in average revenues per tractor per week, net of fuel surcharge, partially offset by a 0.9% decrease in the average number of tractors in service. The increase in average revenues per tractor was due primarily to improved pricing in both Dedicated and One-Way Truckload, offset by a decline in miles per truck caused by adverse winter weather, fewer driver teams, and an increased mix of Dedicated. We currently expect average revenues per total mile for the One-Way Truckload fleet for second quarter 2021 to increase in a range of 13% to 16% when compared to the same period in 2020, and we currently expect Dedicated average revenues per truck per week to increase in a range of 3% to 5% in 2021 compared to 2020.

The average number of tractors in service in the TTS segment decreased 0.9% to 7,790 in first quarter 2021 from 7,862 in first quarter 2020. We ended first quarter 2021 with 7,735 trucks in the TTS segment, a year-over-year decrease of 100 trucks compared to the end of first quarter 2020, and a sequential decrease of 95 trucks compared to the end of fourth quarter 2020. Within TTS, our Dedicated unit ended first quarter 2021 with 4,920 trucks (or 64% of our total TTS segment trucks) compared to 4,685 trucks (or 60%) a year ago. We currently expect modest truck growth in 2021 and expect our truck count at the end of 2021 to be in the range of 1% to 3% higher when compared to the fleet size at year-end 2020. We cannot predict whether future driver shortages, if any, will adversely affect our ability to maintain our fleet size. If such a driver shortage were to occur, it could result in a fleet size reduction, and our results of operations could be adversely affected.

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Trucking fuel surcharge revenues decreased 7.0% to $47.5 million in first quarter 2021 from $51.0 million in first quarter 2020 due to fewer miles in first quarter 2021, despite higher average diesel fuel prices. These revenues represent collections from customers for the increase in fuel and fuel-related expenses, including the fuel component of our independent contractor cost (recorded as rent and purchased transportation expense) and fuel taxes (recorded in taxes and licenses expense), when diesel fuel prices rise. Conversely, when fuel prices decrease, fuel surcharge revenues decrease. To lessen the effect of fluctuating fuel prices on our margins, we collect fuel surcharge revenues from our customers for the cost of diesel fuel and taxes in excess of specified base fuel price levels according to terms in our customer contracts. Fuel surcharge rates generally adjust weekly based on an independent U.S. Department of Energy fuel price survey which is released every Monday. Our fuel surcharge programs are designed to (i) recoup higher fuel costs from customers when fuel prices rise and (ii) provide customers with the benefit of lower fuel costs when fuel prices decline. These programs generally enable us to recover a majority, but not all, of the fuel price increases. The remaining portion is generally not recoverable because it results from empty and out-of-route miles (which are not billable to customers) and truck idle time. Fuel prices that change rapidly in short time periods also impact our recovery because the surcharge rate in most programs only changes once per week.

Werner Logistics revenues are generated by its three operating units, following the sale of its WGL freight forwarding services for international ocean and air shipments in first quarter 2021. Werner Logistics revenues exclude revenues for full truckload shipments transferred to the TTS segment, which are recorded as trucking revenues by the TTS segment. Werner Logistics also recorded revenue and brokered freight expense of $134 thousand in first quarter 2021 and $11 thousand in first quarter 2020 for Intermodal drayage movements performed by the TTS segment (also recorded as trucking revenue by the TTS segment), and these transactions between reporting segments are eliminated in consolidation. In first quarter 2021, Werner Logistics revenues increased $25.7 million, or 22.9%, primarily due to higher pricing in Truckload Logistics and Intermodal. Truckload Logistics revenues (63% of total Logistics revenues) increased by 20%. Truckload Logistics volume decreased 1% in first quarter 2021, and revenues per load increased 22%. Intermodal revenues (24% of Logistics revenues) increased 30% in first quarter 2021, due to volume growth of 23% and 6% higher revenues per load. The Werner Logistics gross margin dollars increased 6.7% to $17.3 million in first quarter 2021 from $16.2 million in first quarter 2020 on the higher revenues, despite a lower gross margin percentage. The Werner Logistics gross margin percentage in first quarter 2021 of 12.6% decreased from 14.5% in first quarter 2020 due to higher spot truckload and dray rates which significantly increased the cost of capacity for contractual brokerage shipments and intermodal shipments in first quarter 2021. The Werner Logistics operating margin in first quarter 2021 increased to 3.3% from 1.0% because of the increase in gross profit, lower operating expenses and the $1.0 million gain on the WGL sale.

Operating Expenses

Our operating ratio (operating expenses expressed as a percentage of operating revenues) was 89.9% for the three months ended March 31, 2021 and 94.8% for the three months ended March 31, 2020. Expense items that impacted the overall operating ratio are described on the following pages. The tables on pages 20 through 22 show the Consolidated Statements of Income in dollars and as a percentage of total operating revenues and the percentage increase or decrease in the dollar amounts of those items compared to the same quarter of the prior year, as well as the operating ratios, operating margins, and certain statistical information for our two reportable segments, TTS and Werner Logistics.

Salaries, wages and benefits decreased $1.1 million or 0.6% in first quarter 2021 compared to first quarter 2020 and decreased 1.6% as a percentage of operating revenues to 33.2%. The lower dollar amount of salaries, wages and benefits expense in the first quarter of 2021 was due primarily to approximately 12.0 million fewer company truck miles and improved workers’ compensation costs, partially offset by increased driver pay rates. In January 2021, we implemented driver pay increases of approximately $10 million annually in our One-Way Truckload fleet, and we are implementing pay increases as needed in Dedicated. As a result, driver pay per company driver mile increased nearly 7% in first quarter 2021. Non-driver salaries, wages and benefits in the non-trucking Werner Logistics segment decreased 10.6%.

We renewed our workers’ compensation insurance coverage on April 1, 2021. Our coverage levels are the same as the prior policy year. We continue to maintain a self-insurance retention of $2.0 million per claim. Our workers’ compensation insurance premiums for the policy year beginning April 2021 are $0.3 million higher than the premiums for the previous policy year.

The tight driver recruiting market further intensified in first quarter 2021, as the improving freight market caused increased competition for the finite number of experienced drivers that meet our hiring standards. Several ongoing market factors persisted including a declining number of, and increased competition for, driver training school graduates, particularly considering COVID-19 constraints, aging truck driver demographics and increased truck safety regulations. We continue to take significant actions to strengthen our driver recruiting and retention as we strive to be the truckload employer of choice, including raising driver pay, providing a modern truck and trailer fleet with the latest safety equipment and technology, investing in our driver training school network and offering a wide variety of driving positions including daily and weekly home time opportunities. These efforts continue to have positive results on our driver retention. We are unable to predict

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whether we will experience future driver shortages or maintain our current driver retention rates. If such a driver shortage were to occur and additional driver pay rate increases became necessary to attract and retain drivers, our results of operations would be negatively impacted to the extent that we could not obtain corresponding freight rate increases.

Fuel increased $2.1 million or 4.2% in first quarter 2021 compared to first quarter 2020 and remained flat as a percentage of operating revenues due to higher average diesel fuel prices, partially offset by approximately 12.0 million fewer company truck miles in first quarter 2021. Average diesel fuel prices were 23 cents per gallon higher in first quarter 2021 than in first quarter 2020 and were 47 cents per gallon higher than in fourth quarter 2020.

We continue to employ measures to improve our fuel mpg such as (i) limiting truck engine idle time, (ii) optimizing the speed, weight and specifications of our equipment and (iii) implementing mpg-enhancing equipment changes to our fleet including new trucks, more aerodynamic truck features, idle reduction systems, trailer tire inflation systems, trailer skirts and automated manual transmissions to reduce our fuel gallons purchased. However, fuel savings from mpg improvement is partially offset by higher depreciation expense and the additional cost of diesel exhaust fluid. Although our fuel management programs require significant capital investment and research and development, we intend to continue these and other environmentally conscious initiatives, including our active participation as an EPA SmartWay Transport Partner. The SmartWay Transport Partnership is a national voluntary program developed by the EPA and freight industry representatives to reduce greenhouse gases and air pollution and promote cleaner, more efficient ground freight transportation.

For April 2021, the average diesel fuel price per gallon was approximately $1.04 higher than the average diesel fuel price per gallon in April 2020 and approximately 96 cents higher than in second quarter 2020.

Shortages of fuel, increases in fuel prices and petroleum product rationing can have a materially adverse effect on our operations and profitability. We are unable to predict whether fuel price levels will increase or decrease in the future or the extent to which fuel surcharges will be collected from customers. As of March 31, 2021, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

Supplies and maintenance increased $0.4 million or 0.9% in first quarter 2021 compared to first quarter 2020 and decreased 0.2% as a percentage of operating revenues. The higher dollar amount of supplies and maintenance expense was due primarily to higher driver and placement driver-related costs such as driver lodging and advertising.

Insurance and claims decreased $14.0 million or 38.8% in first quarter 2021 compared to first quarter 2020 and decreased 2.5% as a percentage of operating revenues due primarily to lower expense for new large dollar claims, partially offset by higher liability insurance premiums of $2.0 million. In January 2020, one of our trucks was involved in a serious accident. We self-insure for the first $10.0 million of liability coverage for this policy period and have appropriate excess liability coverage with insurance carriers above that amount. As a result, we recorded $10.0 million of insurance and claims expense in first quarter 2020 for this accident. We also incurred insurance and claims expense of $1.3 million in first quarter 2021 and $1.2 million in first quarter 2020 for accrued interest related to a previously-disclosed adverse jury verdict rendered May 17, 2018, which we are appealing (see Note 6 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report). Interest is accrued at $0.4 million per month, until such time as the outcome of our appeal is finalized. The majority of our insurance and claims expense results from our claim experience and claim development under our self-insurance program; the remainder results from insurance premiums for claims in excess of our self-insured limits.

We renewed our liability insurance policies on August 1, 2020 and are now responsible for the first $10.0 million per claim on all claims with no annual aggregates. For the policy year that began August 1, 2019, we were responsible for the first $3.0 million per claim with an annual $6.0 million aggregate for claims between $3.0 million and $5.0 million and an additional $5.0 million deductible per claim for each claim between $5.0 million and $10.0 million. We maintain liability insurance coverage with insurance carriers in excess of the $10.0 million per claim. Our liability insurance premiums for the policy year that began August 1, 2020 are $7.8 million higher than premiums for the previous policy year.

Depreciation expense decreased $4.9 million or 7.1% in first quarter 2021 compared to first quarter 2020 and decreased 1.2% as a percentage of operating revenues. During first quarter 2020, we changed the estimated life of certain trucks to be sold in 2020 to more rapidly depreciate these truck to their estimated residual values due to the weak used truck market. These trucks continued to depreciate at the same higher rate per truck until all were sold in 2020. The effect of this change in accounting estimate increased first quarter 2020 depreciation expense by $5.0 million and had no effect on first quarter 2021.

The average age of our truck fleet remains low by industry standards and was 2.0 years as of March 31, 2021, and the average age of our trailers was 4.0 years. We are continuing to invest in new trucks and trailers and our terminals in 2021 to improve our driver experience, increase operational efficiency and more effectively manage our maintenance, safety and fuel costs. During the remainder of 2021, we expect the average age of our truck and trailer fleet to remain at or near current levels.

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Rent and purchased transportation expense increased $20.1 million or 15.9% in first quarter 2021 compared to first quarter 2020 and increased 2.5% as a percentage of operating revenues. Rent and purchased transportation expense consists mostly of payments to third-party capacity providers in the Werner Logistics segment and other non-trucking operations and payments to independent contractors in the TTS segment. The payments to third-party capacity providers generally vary depending on changes in the volume of services generated by the Werner Logistics segment. Werner Logistics rent and purchased transportation expense increased $24.6 million, and as a percentage of Werner Logistics revenues increased to 87.4% in first quarter 2021 from 85.5% in first quarter 2020, due primarily to higher spot truckload and dray rates which significantly increased the cost of capacity for contractual brokerage shipments and intermodal shipments in first quarter 2021.

Rent and purchased transportation expense for the TTS segment decreased $4.4 million in first quarter 2021 compared to first quarter 2020. Independent contractor miles decreased approximately 5.8 million miles in first quarter 2021 and as a percentage of total miles were 6.7% in first quarter 2021 compared to 8.9% in first quarter 2020. The lower expense resulting from fewer independent contractor miles was partially offset by an increase in the per-mile settlement rate for certain independent contractors in first quarter 2021 and higher average diesel fuel prices. Because independent contractors supply their own tractors and drivers and are responsible for their operating expenses, the decrease in independent contractor miles as a percentage of total miles shifted costs from the rent and purchased transportation category to other expense categories, including (i) salaries, wages and benefits, (ii) fuel, (iii) depreciation, (iv) supplies and maintenance and (v) taxes and licenses.

Challenging operating conditions continue to make independent contractor recruitment and retention difficult. Such conditions include inflationary cost increases that are the responsibility of independent contractors and a shortage of financing available to independent contractors for equipment purchases. Historically we have been able to add company tractors and recruit additional company drivers to offset any decrease in the number of independent contractors. If a shortage of independent contractors and company drivers occurs, further increases in per-mile settlement rates (for independent contractors) and driver pay rates (for company drivers) may become necessary to attract and retain these drivers. These rate increases could negatively affect our results of operations to the extent that we would not be able to obtain corresponding freight rate increases.

Other operating expenses decreased $9.8 million in first quarter 2021 compared to first quarter 2020 and decreased 1.6% as a percentage of operating revenues. Gains on sales of assets (primarily used trucks and trailers) are reflected as a reduction of other operating expenses and are reported net of sales-related expenses (which include costs to prepare the equipment for sale). Gains on sales of equipment were $10.5 million in first quarter 2021, compared to $2.5 million in first quarter 2020. We realized substantially higher average gains per truck and trailer due to improved pricing in the market for our used equipment. We sold significantly more trucks and more trailers in first quarter 2021 than in first quarter 2020. We also realized a $1.0 million gain from the sale of WGL in first quarter 2021.

Other Expense (Income)

Other expense (income) decreased $0.4 million in first quarter 2021 compared to first quarter 2020. Interest expense decreased $0.8 million in first quarter 2021 compared to first quarter 2020 due to lower average outstanding debt in the 2021 period. The lower interest expense was partially offset by lower interest income in first quarter 2021 compared to first quarter 2020.

Income Taxes

Our effective income tax rate (income taxes expressed as a percentage of income before income taxes) was 24.9% in first quarter 2021 compared to 23.3% in first quarter 2020. The higher income tax rate in first quarter 2021 was attributed primarily to a lower amount of favorable discrete income tax items in first quarter 2021.

Liquidity and Capital Resources:

During the three months ended March 31, 2021, we generated cash flow from operations of $135.9 million, a 1.9% or $2.5 million increase in cash flows compared to the same three-month period a year ago. The increase in net cash provided by operating activities resulted primarily from higher net income partially offset by higher gain on disposal of property and equipment, lower non-cash depreciation and decreased cash flows from working capital. We were able to make net capital expenditures, repay debt, pay dividends and repurchase company stock with the net cash provided by operating activities and existing cash balances.

Net cash used in investing activities increased to $41.3 million for the three-month period ended March 31, 2021 from $16.5 million for the three-month period ended March 31, 2020. Net property additions (primarily revenue equipment) were $37.9 million for the three-month period ended March 31, 2021, compared to $18.8 million during the same period of 2020. The increase was due primarily to delays in receiving new trucks and trailers from our manufacturers in the first three months of 2020. We currently estimate net capital expenditures (primarily revenue equipment) in 2021 to be in the range of $275 million

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to $300 million, compared to net capital expenditures in 2020 of $266.2 million. We intend to fund these net capital expenditures through cash flow from operations and financing available under our existing credit facilities, if necessary. As of March 31, 2021, we were committed to property and equipment purchases of approximately $164.4 million.

Net financing activities used $40.4 million during the three months ended March 31, 2021, and used $69.0 million during the same period in 2020. We repaid $25.0 million of debt during the three months ended March 31, 2021, reducing our outstanding debt at March 31, 2021 to $175.0 million, and repaid $50.0 million of debt during the three months ended March 31, 2020. We paid dividends of $6.1 million in the three-month period ended March 31, 2021 and $6.2 million in the three-month period ended March 31, 2020. We increased our quarterly dividend rate by $0.01 per share, or 11%, beginning with the quarterly dividend to be paid in May 2021. Financing activities for the three months ended March 31, 2021, also included common stock repurchases of 130,446 shares at a cost of $5.5 million. The Company has repurchased, and may continue to repurchase, shares of the Company’s common stock. The timing and amount of such purchases depend upon economic and stock market conditions and other factors. As of March 31, 2021, the Company had purchased 2,313,438 shares pursuant to our current Board of Directors repurchase authorization and had 2,686,562 shares remaining available for repurchase.

Management believes our financial position at March 31, 2021 is strong. As of March 31, 2021, we had $83.1 million of cash and cash equivalents and over $1.2 billion of stockholders’ equity. Cash is invested primarily in government portfolio money market funds. As of March 31, 2021, we had a total borrowing capacity of $500.0 million under our two credit facilities (see Note 5 in the Notes to Consolidated Financial Statements (Unaudited) under Item I of Part I of this Form 10-Q), of which we had borrowed $175.0 million. The remaining $325.0 million of credit available under the facilities at March 31, 2021 is reduced by the $50.9 million in stand-by letters of credit under which we are obligated. These stand-by letters of credit are primarily required as security for insurance policies. We believe our liquid assets, cash generated from operating activities, and borrowing capacity under our credit facilities will provide sufficient funds for our operating and capital needs for the foreseeable future.

Contractual Obligations and Commercial Commitments:

Item 7 of Part II of our 2020 Form 10-K includes our disclosure of contractual obligations and commercial commitments as of December 31, 2020. There were no material changes in the nature of these items during the three months ended March 31, 2021.

Regulations:

Item 1 of Part I of our 2020 Form 10-K includes a discussion of pending proposed regulations that may have an effect on our operations if they become adopted and effective as proposed. There have been no material changes in the status of the proposed regulations previously disclosed in the 2020 Form 10-K.

Critical Accounting Estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the (i) reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (ii) reported amounts of revenues and expenses during the reporting period. We evaluate these estimates on an ongoing basis as events and circumstances change, utilizing historical experience, consultation with experts and other methods considered reasonable in the particular circumstances. Actual results could differ from those estimates and may significantly impact our results of operations from period to period. It is also possible that materially different amounts would be reported if we used different estimates or assumptions.

Information regarding our Critical Accounting Estimates can be found in our 2020 Form 10-K. Estimates of accrued liabilities for insurance and claims for bodily injury, property damage and workers’ compensation is a critical accounting estimate that requires us to make significant judgments and estimates and affects our financial statements.

There have been no material changes to this critical accounting estimate from that discussed in our 2020 Form 10-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk from changes in commodity prices, foreign currency exchange rates and interest rates.

Commodity Price Risk

The price and availability of diesel fuel are subject to fluctuations attributed to changes in the level of global oil production, refining capacity, seasonality, weather and other market factors. Historically, we have recovered a majority, but not all, of fuel price increases from customers in the form of fuel surcharges. We implemented customer fuel surcharge programs with most of our customers to offset much of the higher fuel cost per gallon. However, we do not recover all of the fuel cost increase through these surcharge programs.

Foreign Currency Exchange Rate Risk

We conduct business in foreign countries, primarily in Mexico. To date, most foreign revenues are denominated in U.S. Dollars, and we receive payment for foreign freight services primarily in U.S. Dollars to reduce direct foreign currency risk. Assets and liabilities maintained by a foreign subsidiary company in the local currency are subject to foreign exchange gains or losses. Foreign currency translation gains and losses primarily relate to changes in the value of revenue equipment owned by a subsidiary in Mexico, whose functional currency is the Peso. Foreign currency translation losses were $1.6 million for first quarter 2021 and $9.9 million for first quarter 2020. These were recorded in accumulated other comprehensive loss within stockholders’ equity in the Consolidated Balance Sheets.

Interest Rate Risk

We manage interest rate exposure through a mix of variable rate debt and interest rate swap agreements. We had $150 million of debt outstanding at March 31, 2021, for which the interest rate is effectively fixed at 2.34% through May 2024 with two interest rate swap agreements to reduce our exposure to interest rate increases. We had $25 million of variable rate debt outstanding at March 31, 2021. Interest rates on the variable rate debt and our unused credit facilities are based on the LIBOR. Assuming this level of borrowing, a hypothetical one-percentage point increase in the LIBOR interest rate would increase our annual interest expense by approximately $250,000.

Due to uncertainty surrounding the suitability and sustainability of LIBOR, central banks and global regulators have called for financial market participants to prepare for the discontinuation of LIBOR. On March 5, 2021, ICE Benchmark Administration ratified its proposal on ceasing publication of one-week and two-month settings of the USD LIBOR benchmark at the end of December 2021, and ceasing publication of the remaining overnight and one-, three-, six- and 12-month USD LIBOR settings at the end of the June 2023. LIBOR is a widely-referenced benchmark rate, and our unsecured credit facilities are referenced to LIBOR. We are communicating with our banks regarding the eventual transition to a new benchmark rate.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Our disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level in enabling us to record, process, summarize and report information required to be included in our periodic filings with the SEC within the required time period and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that no changes in our internal control over financial reporting occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have confidence in our internal controls and procedures. Nevertheless, our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the internal controls or disclosure procedures and controls will prevent all errors or intentional fraud. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect that resource constraints exist, and the benefits of controls must be evaluated relative to their costs. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements and instances of fraud, if any, have been prevented or detected.

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PART II

OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On May 14, 2019, our Board of Directors approved and announced a new stock repurchase program under which the Company is authorized to repurchase up to 5,000,000 shares of its common stock. As of March 31, 2021, the Company had purchased 2,313,438 shares pursuant to this authorization and had 2,686,562 shares remaining available for repurchase. The Company may purchase shares from time to time depending on market, economic and other factors. The authorization will continue unless withdrawn by the Board of Directors.

The following table summarizes our stock repurchases during first quarter 2021 made pursuant to this authorization. The Company did not purchase any shares during first quarter 2021 other than pursuant to this authorization. All stock repurchases were made by the Company or on its behalf and not by any “affiliated purchaser,” as defined by Rule 10b-18 of the Exchange Act.

Issuer Purchases of Equity Securities

Period	Total Number of Shares (of Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1-31, 2021	—	$	—		2,817,008
February 1-28, 2021	130,446	$	42.22	130,446	2,686,562
March 1-31, 2021	—	$	—		2,686,562
Total	130,446	$	42.22	130,446	2,686,562

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Item 6. Exhibits.

Exhibit No.	Exhibit	Incorporated by Reference to:
3(i)	Restated Articles of Incorporation of Werner Enterprises, Inc.	Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007
3(ii)	Revised and Restated By-Laws of Werner Enterprises, Inc.	Exhibit 3.1 to the Company’s Current Report on Form 8-K dated August 14, 2018
10.1	Named Executive Officer Compensation	Item 5.02 of the Company’s Current Report on Form 8-K dated February 11, 2021
10.2	Werner Enterprises, Inc. Amended and Restated Equity Plan	Filed herewith
10.3	Werner Enterprises, Inc. Change in Control Severance Plan	Filed herewith
31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 (Section 302 of the Sarbanes-Oxley Act of 2002)	Filed herewith
31.2	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 (Section 302 of the Sarbanes-Oxley Act of 2002)	Filed herewith
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	Furnished herewith
101	The following unaudited financial information from Werner Enterprises’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language) includes: (i) Consolidated Statements of Income for the three months ended March 31, 2021 and March 31, 2020, (ii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and March 31, 2020, (iii) Consolidated Condensed Balance Sheets as of March 31, 2021 and December 31, 2020, (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and March 31, 2020, (v) Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and March 31, 2020, and (vi) the Notes to Consolidated Financial Statements (Unaudited) as of March 31, 2021.
104	The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (included as Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WERNER ENTERPRISES, INC.
Date: May 6, 2021	By:	/s/ John J. Steele
		John J. Steele
		Executive Vice President, Treasurer and Chief Financial Officer
Date: May 6, 2021	By:	/s/ James L. Johnson
		James L. Johnson
		Executive Vice President, Chief Accounting Officer and Corporate Secretary

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EX-10.2

Exhibit 10.2

WERNER ENTERPRISES, INC.

AMENDED AND RESTATED EQUITY PLAN

1. Background and History. Werner Enterprises, Inc. (the "Company") initially adopted the Werner Enterprises, Inc. Stock Option Plan in 1987, such plan being approved by the Company's shareholders on June 9, 1987 at the Company's annual meeting. The stock option plan was amended and restated in 1988, 1994, 2000, and 2004. The plan was last amended and restated in 2007, and renamed the Werner Enterprises, Inc. Equity Plan (the “Plan”). If approved by the Company's shareholders, the Company desires to again amend and restate the equity plan, the terms of which are set forth herein, to add restricted stock units to the types of awards eligible to be granted under the Plan and to list objective performance criteria intended to satisfy the criteria for “performance-based compensation” under Section 162(m) of the Internal Revenue Code.

2. Purpose. The purpose of the Plan is to advance the interests of the Company and its shareholders by attracting and retaining those individuals whose skill and initiative enhance the Company's continued success, growth and profitability. This Plan authorizes the Company to grant nonqualified stock options, stock appreciation rights, restricted stock, and restricted stock units (hereinafter defined as "Awards") to employees and non-employee directors. This Plan authorizes the grant of Awards in order to help attract and retain key employees and non-employee directors, by further aligning their financial interests with those of the Company's shareholders and by providing them with participatory rights in the future success and growth of the Company, without necessarily requiring a financial outlay by these individuals to ensure their participation in the Plan benefits.

3. Definitions. The following words shall have the following meaning:

(a) "Affiliate" of the Company means any Person that directly, or indirectly through one or

more intermediaries, Controls or is Controlled by, or is under common Control with the Company.

(b) "Award" means a grant of one or more Options, one or more Stock Appreciation Rights, one of more shares of Restricted Stock, or one or more Restricted Stock Units.

(c) "Award Agreement" means a written agreement or instrument between the Company and a Participant evidencing an Award.

(d) "Board" means the Board of Directors of the Company.

(e) "Cause" means unless otherwise defined in a Participant's employment agreement or change in control severance agreement with the Company, in which case such definition will apply, (i) the material misappropriation of any of the Company's funds or property; (ii) the conviction of, or the entering of a guilty plea or plea of no contest with respect to, a felony, or the equivalent thereof; (iii) commission of an act of willful damage, willful misrepresentation, willful dishonesty, or other willful conduct that can reasonably be expected to have a material adverse effect on the business, reputation, or financial situation of the Company; or (iv) gross negligence or willful misconduct in performance of a Participant's duties; provided, however, “cause” shall not exist under clause (iv), above, with respect to an act or failure to act unless (A) the Participant has been provided written notice describing in sufficient detail the acts or failure to act giving rise to the Company's assertion of such gross negligence or misconduct, (B) been provided a reasonable period to remedy any such occurrence and (C) failed to sufficiently remedy the occurrence.

(f) "Change in Control" means the first to occur of the following events:

(1) Any Person is or becomes the Beneficial Owner (within the meaning set forth in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company (not including for this purpose any securities acquired directly from the Company or its Affiliates or held by an employee benefit plan of the Company) representing 50% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of paragraph (3) of this definition; or

(2) The following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or

(3) There is consummated a merger or consolidation of the Company with any other corporation, OTHER THAN (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including for this purpose any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 50% or more of the combined voting power of the Company's then outstanding securities; or

(4) The shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, (A) a "Change in Control" shall not be deemed to have occurred by virtue of (i) the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the Company's assets immediately following such transaction or series of transactions or (ii) the acquisition of shares of Common Stock by the Company such that, by reducing the number of outstanding shares of Common Stock, the proportionate number of shares of Common Stock Beneficially Owned by a Person was increased, and, but for this sentenced

resulted in a Change in Control; and (B) unless otherwise provided in the applicable Award Agreement, to the extent necessary to comply with the applicable provisions of Section 409A of the Code, “Change in Control” shall conform to the definition of change in control under Section 409A of the Code, and the Treasury Department or Internal Revenue Service regulations or guidance issued thereunder.

(g) "Code" means the Internal Revenue Code of 1986, as amended from time to time.

(h) "Company" means Werner Enterprises, Inc., a Nebraska corporation.

(i) "Committee" means (A) the Board, or (B) one or more committees of the Board to whom the Board has delegated all or part of its authority under this Plan. Initially, the Committee shall be the Compensation Committee of the Board which is delegated all of the Board's authority under this Plan as contemplated by clause (B) in this definition.

(j) "Common Stock" or "Stock" means the common stock of the Company, par value $.01 per share.

(k) "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

(l) “Covered Employee(s)” means an employee who is a “Covered Employee” within the meaning of Section 162(m) of the Code.

(m) "Effective Date" means May 14, 2013, such date being the date this amended and restated Plan was approved by the Company's shareholders.

(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

(o) "Fair Market Value" means: (i) if the Stock is traded on a national securities exchange, the closing trading price of a share of Stock for composite transactions, as published by The Wall Street Journal for the date in question; or (ii) if the Stock is not traded on a national securities exchange, the value of the Stock determined in good faith by the Committee in its sole discretion.

(p) "Good Reason" means, without a Participant's written consent and unless otherwise defined in a Participant's employment agreement or change in control severance agreement with the Company (in which case such definition will apply), any of the following:

(1) Any material and adverse reduction or material and adverse diminution in a Participant's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities held, exercised or assigned at any time during the 90-day period immediately preceding the Change in Control;

(2) Any reduction in a Participant's annual base salary as in effect immediately preceding the Change in Control or as the same may be increased from time to time; or

(3) A Participant being required by the Company to be based at any office or location that is more than 70 miles from the location where the Participant was employed immediately preceding the Change in Control.

Provided, however, notwithstanding the occurrence of any of the events set forth above in this definition, Good Reason shall not include for the purpose of this definition (1) an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Participant, or (2) any reduction in the Participant's base annual salary or reduction in benefits received by the Participant where such reduction is in connection with a company-wide reduction in salaries or benefits.

(q) "Option" means a right to purchase Common Stock, granted pursuant to Section 7 of the Plan. All Options granted under the Plan will be nonqualified stock options and not "Incentive Stock Options" under Section 422 of the Code.

(r) "Option Price" means the purchase price for Common Stock under an Option, as determined in Section 7 below.

(s) “Performance Award” means any Award granted pursuant to Section 11 of the Plan.

(t) "Plan" means this Werner Enterprises, Inc. Amended and Restated Equity Plan, as amended from time to time.

(u) "Participant" means an employee or non-employee director of the Company (or any of its subsidiaries) to whom an Award is granted under the Plan.

(v) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof.

(w) “Performance Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received an Award, that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code. Performance Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of a joint venture, Subsidiary, business unit, division, department, business segment, region or function and/or that are related to the performance of the individual Participant. The Performance Objectives may be made relative to the performance of other companies or an index covering multiple companies. The Performance Objectives applicable to any Qualified Performance-Based Award will be based on specified levels of or growth in one or more of the following criteria: earnings per share; revenues; operating income; operating expense ratios; net income; return on stockholders’ equity; return on assets; return on invested capital; cost of capital; return on revenues; gross margin; net operating margin; market share; cash flow; total shareholder return; common stock price; market capitalization; price to earnings ratio; financial return ratios; accounts receivable days outstanding; or any variation or combination of the foregoing. Performance Objectives need not be the same in respect for all Participants and may be established separately for the Company as a whole or for its various groups, divisions, subsidiaries and affiliates. Each of the Performance Objectives must be established in writing by the Committee prior to the commencement of the services to which the Performance Objectives relate, but no later than ninety (90) days after the commencement of the service period to which they

relate, and while the outcome is substantially uncertain (i.e. before 25% of the Performance Period has elapsed).

In connection with the establishment of Performance Objectives, except as otherwise required under Section 162(m) of the Code, the Committee may exclude the impact on performance of charges for restructuring, acquisitions, divestitures, discontinued operations, extraordinary items, and other unusual or non-recurring items and the cumulative effects of changes in tax law or accounting principles, as such are defined by generally accepted accounting principles or the Securities and Exchange Commission and as identified in the Company’s audited financial statements, notes to such financial statements or management’s discussion and analysis in the Company’s annual report or other filings with the Securities and Exchange Commission; provided, that the Committee commits to make such adjustments consistently with the requirements of Section 162(m) of the Code.

(x) “Performance Period” means, in respect of an Award intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code, a period of time established within which the Performance Objectives relating to such Award is to be achieved.

(y) “Qualified Performance-Based Award” means any Award or portion of an Award that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code.

(z) "Restricted Stock" means Stock granted under Section 9 that is subject to those restrictions set forth therein and the Award Agreement.

(aa) “Restricted Stock Unit” or “RSU” means a right to receive a share of Stock or cash value equal to a share of Stock granted under Section 10 that is subject to those restrictions set forth therein and the Award Agreement.

(ab) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act.

(ac) "Stock Appreciation Right" or "SAR" means a right to receive an amount equal to the appreciation in a share of Stock from the grant date to the exercise date and granted pursuant to Section 8 below.

4. Stock Subject to Plan; Award Limits.

(a) Number of Shares. Subject to the provisions of Section 15 of the Plan, the maximum number of shares of Common Stock that may be issued under the Plan is 20,000,000 shares. Such shares may be treasury, or authorized but unissued, shares of Common Stock of the Company.

(b) Award Limitation. Subject to adjustment pursuant to Section 15, Awards covering no more than 500,000 shares in the aggregate may be granted to one person in any one calendar year during the Plan's duration.

(c) Unused and Forfeited Stock. Any shares of Common Stock that are subject to an Award under this Plan that are not used because the terms and conditions of the Award are not met, including any shares that are subject to an Award that expires or is terminated for any reason, any shares that relate to Awards that are settled in cash, any shares that are used for full or partial payment of the purchase price of shares with respect to which an Option is exercised and any

shares retained by the Company pursuant to Section 20(b) shall automatically become available for use under the Plan.

5. Administration.

(a) Composition. The Plan shall be administered by the Committee. To the extent the Board considers it desirable for transactions relating to Awards to be eligible to qualify for an exemption under Rule 16b-3, the Committee shall consist of two or more directors of the Company, all of whom qualify as "non-employee directors" within the meaning of Rule 16b-3. To the extent the Board considers it desirable for compensation delivered pursuant to Awards to be eligible to qualify for an exemption from the limit on tax deductibility of compensation under Section 162(m) of the Code, the Committee shall consist of two or more directors of the Company, all of whom shall qualify as "outside directors" within the meaning of Code Section 162(m).

(b) Authority. Two members of the Committee shall constitute a quorum for the transaction of business. The Committee is granted the authority to determine the recipients of Awards, the number of shares subject to such Awards, if applicable, the date on which Awards are granted, become exercisable or vested, and any other terms of the Awards consistent with the terms of this Plan. The interpretation and construction of any provision of the Plan by the Committee shall be final, unless otherwise determined by a majority of the entire Board. No member of the Board or the Committee shall be liable for any action or determination made by him in good faith.

(c) Delegation. Notwithstanding the general administrative powers discussed above, the Board may, by resolution, expressly delegate to a special committee consisting of two or more directors, who may also be officers of the Company, or to a senior executive officer of the Company, the authority, within specified parameters, to (i) grant employees Awards under the Plan, and (ii) determine the number of such Awards to be received by any such participants; provided, however, that if such delegation of duties and responsibilities is to officers of the Company or to directors who are not "non-employee directors" (within the meaning of Rule 16b-3 under the Exchange Act) and "outside directors" (within the meaning of Code Section 162(m)), such officers or directors may not grant, or otherwise administer, Awards to employees (a) who are subject to Section 16(a) of the Exchange Act at the time of grant, or (b) who, at the time of grant, are anticipated to become during the term of the Award, "covered employees" as defined in Code Section 162(m). The acts of such delegate(s) shall be within limits specifically prescribed by the Board, will be treated hereunder as acts of the Board and such delegate(s) shall report regularly to the Board and the Compensation Committee of the Board regarding the delegated duties and responsibilities and any Awards so granted.

6. Eligibility. The Committee may grant Awards to any key employee (including an employee who is a director and/or an officer of the Company and its subsidiaries) and any non-employee director. Awards may be granted by the Committee at any time and may include or exclude new or previous Participants as the Committee shall determine. Awards granted need not contain similar provisions.

7. Stock Options. The Committee may grant one or more Options to a Participant. Each Option will be evidenced by a written Award Agreement and entered into by the Company and the Participant to whom the Option is granted, such Award Agreement containing or being subject to the following terms and conditions:

(a) Option Price. The purchase price of Common Stock under each Option shall be not less than 100 percent of the Fair Market Value of the Common Stock on the date the Option is

granted. Except as permitted by the provisions of Section 15 hereof, the Committee shall not have the power to (i) amend the terms of previously granted Options to reduce the Option Price of such Options, or (ii) cancel such Options and grant substitute Options with a lower Option Price than the cancelled Options, in each case without the approval of the Company’s stockholders.

(b) Time and Method of Payment. The Option Price shall be paid in full at the time an Option is exercised under the Plan through a payment of cash or cashier's check or, if permitted by the Committee, (i) the surrender or attestation of previously acquired Stock, the payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (ii) withholding shares (net-exercise) otherwise deliverable to the Participant pursuant to the Option having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or (iii) any other method permitted under applicable law. Exercise of an Option without concurrent payment in full of the Option Price shall be invalid and of no effect. Upon the exercise of an Option and the payment of the full Option Price, the Participant shall be entitled to the issuance of a stock certificate evidencing his ownership of such Common Stock (or an appropriate book entry shall be made) and, as of that date, the Participant shall have all the rights of a shareholder. No adjustment will be made for ordinary dividends or other rights for which the record date is prior to the date the Participant is entitled to the issuance of such Common Stock.

(c) Number of Shares. Each Option shall state the total number of shares of Common Stock to which it pertains. The number of shares to which a Participant is entitled under an Option shall be reduced by the number of Stock Appreciation Rights (described in Section 8 below) related to the Option that have been previously exercised by the Participant.

(d) Option Period and Limitations on Exercise of Options. The Committee may in its discretion provide that an Option may become exercisable only after the expiration of a period of time specified in the Option Award Agreement. Except as provided in the Option Award Agreement, Options shall not be exercisable until the expiration of six months from the date the Option is granted, and any Option may be exercised in whole or in part. No Option may be exercised after the expiration of ten years and one day from the date it is granted; provided, that an Award Agreement may provide that the period of time over which an Option (or SAR) may be exercised shall be automatically extended if on the scheduled expiration of such Award, the Participant’s exercise of such Award would violate applicable securities law; provided further, that during the extended exercise period the Option or SAR may only be exercised to the extent such Award was exercisable in accordance with its terms immediately prior to such scheduled expiration date and such extended exercise period shall end not later than thirty (30) days after the exercise of such Option or SAR first would no longer violate such laws. Unless otherwise noted in the Option Award Agreement, no Option may be exercised for a fractional share of Common Stock.

(e) Limitations Upon Exercise of Options. If a Participant exercises an Option, the SARs to which the Option relates shall expire. Adjustment to the number of shares in the Plan and the price per share pursuant to Section 15 below shall also be made to any Options held by each Participant.

(f) No Obligation To Exercise Option. The granting of an Option shall impose no obligation upon the Participant to exercise such Option.

8. Stock Appreciation Rights. The Committee may grant one or more Stock Appreciation Rights at the same time as Participants are awarded Options under the Plan. Such Stock Appreciation Rights shall be evidenced by a written Award Agreement and entered into by the Company and the Participant to

whom the SAR is granted, such Award Agreement containing or being subject to the following terms and conditions:

(a) Grant. Each SAR shall relate to a specific Option under the Plan and shall be awarded to a Participant concurrently with the grant of such Option. The number of SARs granted to a Participant may be equal to the number of shares that the Participant is entitled to receive pursuant to the related Option. Except as permitted by the provisions of Section 15 hereof, the Committee shall not have the power to (i) amend the terms of previously granted SARs to reduce the grant price of such SARs, or (ii) cancel such SARs and grant substitute SARs with a lower grant price than the cancelled SARs, in each case without the approval of the Company’s stockholders. The number of SARs held by a Participant shall be the number of SARs granted reduced by:

(1) the number of SARs exercised for Common Stock or cash pursuant to the SARs Award Agreement; or

(2) the number of shares of Common Stock purchased by such Participant pursuant to the related Option.

(b) Manner of Exercise. A Participant shall exercise SARs by giving written notice of such exercise to the Company. The date on which such written notice is received by the Company shall be the exercise date for the SARs.

(c) Appreciation Available. Each SAR shall entitle a Participant to the excess of the Fair Market Value of a share of Common Stock on the exercise date over the Option Price of the related Option.

(d) Payment of Appreciation. The appreciation available to a Participant from an exercise of one or more SARs may, in the sole discretion of the Committee, be paid to the Participant either in cash or Common Stock. If paid in cash, the amount thereof shall be the amount of appreciation available (see (c) above). If paid in Common Stock, the number of shares that shall be issued pursuant to the exercise of SARs shall be determined by dividing the amount of appreciation by the Fair Market Value of a share of Common Stock on the exercise date of the SAR; provided, however, that no fractional shares shall be issued upon the exercise of SARs and any such fractional share shall be rounded up to a whole share.

(e) Limitations Upon Exercise of SARs. If a Participant exercises a SAR for cash, the Option to which the SARs relates shall expire. SARs may be exercised only at such times and by such persons as may exercise Options under the Plan. Adjustment to the number of shares in the Plan and the price per share pursuant to Section 15 below shall also be made to any SARs held by each Participant.

(f) No Obligation To Exercise SARs. The granting of one or more SARs shall impose no obligation upon the Participant to exercise such SARs

9. Restricted Stock. The Committee may grant one or more shares of Restricted Stock in such amounts as the Committee shall determine and subject to the terms and provisions of this Plan. Each Restricted Stock Award will be evidenced by a written Award Agreement and entered into by the Company and the Participant to whom the Restricted Stock is granted, such Award Agreement containing or being subject to the following terms and conditions:

(a) Restrictions. A Participant's right to retain shares of Restricted Stock shall be subject to such a restriction that the Participant continue to perform as an employee or remain a non-employee director for a restriction period specified by the Committee and not less than one year nor more than ten years. The Committee may also require that a Participant's right to retain shares of Restricted Stock is subject to the attainment of specified Performance Objectives pursuant to Section 11. The Committee may, in its sole discretion, require different periods of service or different Performance Objectives with respect to (i) different Participants or (ii) separate, designated portions of the shares that are Restricted Stock.

(b) Privileges of a Shareholder, Transferability. Unless otherwise provided in the Award Agreement, a Participant shall not have voting, dividend, liquidation and other rights with respect to shares of Restricted Stock. If a Participant is granted in the Award Agreement any voting, dividend, liquidation or other rights on shares of Restricted Stock, such rights (1) shall accrue to the benefit of a Participant only with respect to shares of Restricted Stock held by, or for the benefit of, the Participant on the record date of any such dividend or voting date and (2) subject to the terms of the Award Agreement, any dividends paid on shares of Restricted Stock before such shares become vested may be held in escrow by the Company and subject to the same restrictions on transferability and forfeitability as the underlying shares of Restricted Stock. A Participant's right to sell, encumber or otherwise transfer such Restricted Stock shall, in addition to the restrictions otherwise provided for in the Award Agreement, be subject to the limitations of Section 9(b) hereof.

(c) Enforcement of Restrictions. The Committee may, in its sole discretion, require one or more of the following methods of enforcing the restrictions referred to in Section 9(a) and (b):

(1) placing a legend on the Stock certificates referring to restrictions;

(2) requiring the Participant to keep the Stock certificates, duly endorsed, in the custody of the Company while the restrictions remain in effect;

(3) requiring that the Stock certificates, duly endorsed, be held in the custody of a third party nominee selected by the Company who will hold such shares of Restricted Stock on behalf of the Participant while the restrictions remain in effect; or

(4) issue the Stock in book entry in an account in the custody of a third party nominee selected by the Company who will hold such shares of Restricted Stock on behalf of the Participant while the restrictions remain in effect; or

(5) inserting a provision into the Restricted Stock Award Agreement prohibiting assignment of such Award Agreement until the terms and conditions or restrictions contained therein have been satisfied or released, as applicable.

10. Restricted Stock Unit. The Committee may grant one or more Restricted Stock Units in such amounts as the Committee shall determine and subject to the terms and provisions of this Plan. Each such grant of Restricted Stock Units will constitute the agreement by the Company to deliver shares of Common Stock or cash to the Participant in the future in consideration of the performance of services. Each Restricted Stock Unit Award will be evidenced by a written Award Agreement and entered into by the Company and the Participant to whom the Restricted Stock Unit is granted, such Award Agreement containing or being subject to the following terms and conditions:

(a) Restrictions. A Participant's right to retain shares of Common Stock or cash value underlying Restricted Stock Units shall be subject to such a restriction that the Participant continue to perform as an employee or remain a non-employee director for a restriction period specified by the Committee and not less than one year nor more than ten years. The Committee may also require that a Participant's right to retain Restricted Stock Units is subject to the attainment of specified Performance Objectives pursuant to Section 11. The Committee may, in its sole discretion, require different periods of service or different Performance Objectives with respect to (i) different Participants or (ii) separate, designated portions of the Restricted Stock Units. Any grant of Restricted Stock Units shall contain terms such that the Award is either exempt from Code Section 409A or complies with such Section.

(b) Privileges of a Shareholder, Transferability. A Participant shall not have voting, dividend, liquidation and other rights with respect to shares of Common Stock underlying such Restricted Stock Units during the restriction period referred to in Section 10(a). A Participant's right to sell, encumber or otherwise transfer such Restricted Stock Unit shall, in addition to the restrictions otherwise provided for in the Award Agreement, be subject to the limitations of Section 10(b) hereof.

(c) Payment. The payment available to a Participant from the vesting of one or more RSUs may, in the sole discretion of the Committee, be paid to the Participant either in cash or Common Stock. Settlement of RSUs shall occur at such times as set forth in the applicable Award Agreements. If paid in cash, the amount thereof shall be equal to the product of the number of units vesting and the Fair Market Value of a share of Common Stock on the vesting date of the RSU. If paid in Common Stock, the number of Restricted Stock Units vesting will be converted to Common Stock on a one-for-one basis on the vesting date of the RSU.

11. Performance Awards. The Committee shall have sole and complete authority to determine the Participants who shall receive a Performance Award, which shall consist of a right that is (i) denominated either in cash or in Common Stock (including but not limited to Restricted Stock and Restricted Stock Units), (ii) valued, as determined by the Committee, in accordance with the achievement of such Performance Objectives during such Performance Periods as the Committee shall establish, and (iii) payable at such time and in such form as the Committee shall determine. Each Performance Award will be evidenced by a written Award Agreement and entered into by the Company and the Participant to whom the Performance Award is granted, such Award Agreement containing or being subject to the following terms and conditions:

(a) Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the Performance Objectives to be achieved during any Performance Period, the length of any Performance Period, the amount of any Performance Award and the amount and kind of any payment or transfer to be made pursuant to any Performance Award, and may amend specific provisions of the Performance Award; provided, however, that such amendment may not adversely affect existing Performance Awards made within a Performance Period commencing prior to implementation of the amendment.

(b) Section 162(m). Notwithstanding anything in the Plan to the contrary, unless the Committee determines that a Performance Award to be granted to a Covered Employee should not qualify as “performance-based compensation” for purposes of Section 162(m) of the Code, Performance Awards granted to Covered Employees shall be subject to the terms and provisions of this Section 11(b). To the extent necessary to comply with Section 162(m), with respect to grants of Performance Awards, no later than 90 days following the commencement of each Performance Period (or such other time as may be required or permitted by Section 162(m) of the Code), the

Committee shall, in writing, (i) select the Performance Objectives applicable to the Performance Period, (ii) establish the targets and bonus amounts which may be earned for such Performance Period, and (iii) specify the relationship among the Performance Objectives, the targets thereunder and the amounts to be earned by each Covered Employee for such Performance Period. Prior to the payment or settlement of any Performance Award, the Committee shall certify in writing whether the applicable Performance Objectives have been achieved and the amounts, if any, payable to Covered Employees for such Performance Period. In determining the amount earned by a Covered Employee for a given Performance Period, subject to any applicable Award Agreement, the Committee shall have the right to reduce (but not increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant in its sole discretion to the assessment of individual or corporate performance for the Performance Period.

(c) Maximum Payments. With respect to Performance Awards under this Section 11 that are denominated in Common Stock, the aggregate number of shares of Common Stock (including but not limited to Restricted Stock and Restricted Stock Units) that may be granted to any Covered Employee in any year shall not exceed 500,000. With respect to Performance Awards under this Section 11 that are denominated in cash, the maximum amount payable to any Covered Employee for any year is $5,000,000.

(d) Unless otherwise expressly stated in the relevant Award Agreement, each Award granted to a Covered Employee under the Plan is intended to be “performance-based compensation” within the meaning of Section 162(m). Accordingly, unless otherwise determined by the Committee, if any provision of the Plan or any Award Agreement relating to such an Award does not comply or is inconsistent with Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee discretion to increase the amount of compensation otherwise payable to a Covered Employee in connection with any such Award upon the attainment of the Performance Objectives established by the Committee.

12. Recoupment. Any Performance Award granted pursuant to the Plan shall be subject to mandatory repayment by the Participant to the Company to the extent the Participant is, or in the future becomes, subject to (a) any Company “clawback” or recoupment policy that is adopted to comply with the requirements of any applicable law, rule or regulation, or (b) any law, rule or regulation which imposes mandatory recoupment under circumstances set forth in such law, rule or regulation.

13. Effect of Termination of Employment on Outstanding Awards. The Committee shall determine in each case whether a termination of employment (including a termination due to disability) shall be considered voluntary or involuntary. In addition, the Committee shall determine, subject to applicable law, whether a leave of absence or similar circumstance shall constitute a termination of employment and the date upon which a termination resulting therefrom became effective. Any such determination of the Committee shall be final and conclusive, unless overruled by the entire Board at its next regular or special meeting. Except as otherwise provided by the Committee, the effect of a Participant's termination of employment (including a non-employee director ceasing to be a member of the Board) on outstanding Awards is as follows:

(a) Employees.

(1) Involuntary Termination for Cause. If an employee’s employment with the Company or a subsidiary thereof is involuntarily terminated by the Company or such subsidiary for Cause, all of the Options, SARs, shares of Restricted Stock, and Restricted

Stock Units held by the employee will immediately terminate and be forfeited and his rights under the Award Agreement to exercise the Options or SARs, or become vested in the Restricted Shares or Restricted Stock Units, as the case may be, will immediately terminate.

(2) Involuntary Termination by Company Other Than for Cause or Voluntary Resignation—Effect on Options and SARs. If the Company involuntarily terminates an employee's employment not for Cause or if an employee's employment with the Company or a subsidiary of the Company is voluntarily terminated by the employee, the employee may exercise his or her Options or SARs that are otherwise exercisable pursuant to this Plan on the date of such termination for up to and including one hundred and eighty (180) days after such termination of his or her employment, but in no event shall any Option or SAR be exercisable more than ten years and one day from the date it was granted. The Committee has the right to cancel an Option or SAR without notice during such 180 day period if the employee engages in employment or activities contrary, in the opinion of the Committee, to the best interests of the Company.

(3) Voluntary Resignation—Effect on Shares of Restricted Stock and Restricted Stock Units. If an employee's employment with the Company or a subsidiary of the Company is voluntarily terminated by the employee, all unvested shares of Restricted Stock and Restricted Stock Units then held by the employee shall be forfeited and returned to the Company effective as of the date of the employee's termination.

(4) Death.

(i) If an employee dies while employed by the Company, or within one hundred and eighty (180) days after having retired or voluntarily terminated his or her employment, and at the time of death had unexercised Options or SARs, the executors or administrators, or legatees or heirs, of his estate shall have the right to exercise such Options and SARs within one year of the employee's death to the extent that such deceased employee was entitled to exercise the Options and SARs on the date of his death; provided, however, that in no event shall the Options or SARs be exercisable more than ten years and one day from the date they were granted. As a condition to any such exercise, the Committee may require any such executor, administrator, legatee or heir seeking to exercise such Options or SARs to provide evidence satisfactory to the Committee, in its sole discretion, of his or her authority to exercise such Options or SARs on behalf of the employee's estate.

(ii) If the employee dies while holding shares of Restricted Stock or Restricted Stock Units which have not otherwise been forfeited, all service period restrictions applicable to the shares of Restricted Stock or Restricted Stock Units then held by him or her shall lapse, and such shares shall become fully vested and nonforfeitable. For Qualified Performance-Based Awards, the established Performance Objectives will be evaluated for actual performance to date and all service period restrictions applicable to the shares of Restricted Stock or Restricted Stock Units then held by him or her shall lapse, and such shares shall become fully vested and nonforfeitable.

(b) Non-Employee Directors.

(1) Removal for Misconduct. If a non-employee director is removed from the Board for misconduct (as determined by the Company’s shareholders), all of the Options and SARs and all unvested shares of Restricted Stock and Restricted Stock Units held by the non-employee director will immediately terminate and be forfeited and his rights under the Award Agreement to exercise the Options or SARs, or become vested in the Restricted Stock or Restricted Stock Units, as the case may be, will immediately terminate.

(2) Ceasing to be a Member of the Board Other Than for Misconduct. If a non-employee director ceases to be a member of the Board for any reason other than removal for misconduct as described in the immediately preceding paragraph (including but not limited to voluntary resignation, retirement, not standing for re-election, not being elected for a future term by the Company’s shareholders, or death), on the date such non-employee director ceases to be a member of the Board, all of the Options and SARs held by the non-employee director shall immediately vest and become exercisable in full and all restrictions applicable to the shares of Restricted Stock or Restricted Stock Units then held by him or her shall lapse and such shares shall become fully vested and nonforfeitable. The non-employee director may exercise his or her Options or SARs for up to and including one hundred and eighty (180) days after such date that he or she ceases to be a member of the Board, but in no event shall any Option or SAR be exercisable more than ten years and one day from the date it was granted. The Committee has the right to cancel an Option or SAR without notice during such 180 day period if the non-employee director engages in activities contrary, in the opinion of the Committee, to the best interests of the Company. If a non-employee director dies within one hundred and eighty (180) days after ceasing to be a member of the Board and at the time of death had unexercised Options or SARs, the executors or administrators, or legatees or heirs, of his estate shall have the right to exercise such Options and SARs within one year of the non-employee director's death to the extent that such deceased non-employee director was entitled to exercise the Options and SARs on the date of his death; provided, however, that in no event shall the Options or SARs be exercisable more than ten years and one day from the date they were granted. As a condition to any such exercise, the Committee may require any such executor, administrator, legatee or heir seeking to exercise such Options or SARs to provide evidence satisfactory to the Committee, in its sole discretion, of his or her authority to exercise such Options or SARs on behalf of the non-employee director's estate.

14. Nonassignability.

(a) General Rule. Except as provided below in Section 14(b), no Award may be assigned, alienated, pledged, hypothecated, attached or sold or otherwise transferred or encumbered by a Participant except by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company. If the Participant attempts to alienate, assign, pledge, hypothecate or otherwise dispose of Participant's Award, the Board may terminate the Participant's Award by notice to him or her and such Award will thereupon become null and void.

(b) Permitted Transfers. Pursuant to conditions and procedures established by the Committee from time to time, the Committee may permit Awards to be transferred to, exercised by and paid to certain persons or entities related to a Participant, including members of the Participant's immediate family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant's immediate family and/or charitable institutions (a "Permitted Transferee"). In the case of new Awards, at the request of the Participant, the Committee may permit the naming of the related person or entity as the Award recipient. Any permitted transfer shall be subject to the condition that the Committee receive

evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes on a gratuitous or donative basis and without consideration (other than nominal consideration).

15. Adjustments in Authorized Shares.

(a) Without limiting the Committee’s discretion as provided in Section 15 hereof, in the event that the Committee determines that any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property, and other than a normal cash dividend), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company, or other similar corporate transaction or event affects the shares, then the Committee shall, in an equitable and proportionate manner as deemed appropriate by the Committee (and, as applicable, in such manner as is consistent with Sections 162(m), 422 and 409A of the Code and the regulations thereunder) either: (i) adjust any or all of (1) the aggregate number of shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted under the Plan; (2) the number of shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards under the Plan; (3) the grant or exercise price with respect to any Award under the Plan, and (4) the limits on the number of shares or Awards that may be granted to Participants under the Plan in any calendar year; (ii) provide for an equivalent award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect; or (iii) make provision for a cash payment to the holder of an outstanding Award. Any such adjustments to outstanding Awards shall be effected in a manner that precludes the material enlargement of rights and benefits under such Awards. If any adjustment or substitution provided for in this Section 15 shall result in the creation of a fractional share under any Award, such fractional share shall be rounded up to a whole share and no fractional share shall be issued.

16. Reorganization, Change in Control or Liquidation.

(a) Except as otherwise provided in an Award Agreement or other agreement approved by the Committee to which any Participant is a party, in the event that, within the period commencing on a Change in Control and ending on the second anniversary of the Change in Control, and except as the Committee may expressly provide otherwise prior to a Change in Control, a Participant's employment with the Company or one of its affiliates is terminated other than for Cause, or the Participant voluntarily resigns for Good Reason, then (i) all Options and SARs then outstanding shall become fully exercisable, and (ii) all restrictions (other than restrictions imposed by law), Performance Objectives and conditions on all Restricted Stock and Restricted Stock Unit Awards then outstanding shall be deemed satisfied as of the date of the Participant's termination of employment.

(b) In addition to the foregoing, in the event the Company undergoes a Change in Control or in the event of a corporate merger or consolidation (other than a merger or consolidation in which the Company is the continuing corporation and that does not result in any reclassification or change of outstanding shares of Common Stock), major acquisition of property (or stock), separation, reorganization or liquidation in which the Company is a party and in which a Change in Control does not occur, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall have the full power and discretion to take any one or more of the following actions:

(1) Without reducing the underlying economic value of any Award, amend the procedures and conditions for the exercise or settlement of any outstanding Awards granted hereunder;

(2) Provide for the purchase by the Company of any Award, upon the Participant's request, for, with respect to an Option or SAR, an amount of cash equal to the positive amount, if any, that could have been attained upon the exercise of such Award or realization of the Participant's rights had such Award been currently exercisable, or, in the case of Restricted Stock or Restricted Stock Unit, the Fair Market Value of such shares of Stock;

(3) Provide that Options or SARs granted hereunder must be exercised in connection with the closing of such transactions, and that if not so exercised such Options or SARs will expire;

(4) Make such adjustment to any Award that is outstanding as the Committee or Board deems appropriate to reflect such Change in Control or corporate event; or

(5) Cause any Award then outstanding to be assumed, or new rights of equivalent economic value substituted therefore, by the acquiring or surviving corporation;

(6) In accordance with Section 409A, to the extent applicable, provide that (i) any outstanding Performance Awards relating to Performance Periods ending prior to the Change in Control or other event which have been earned but not paid shall become immediately payable, (ii) all then-in-progress Performance Periods for Performance Awards that are outstanding shall end, and either (A) any or all Participants shall be deemed to have earned an award equal to the relevant target award opportunity for the Performance Period in question, or (B) at the Committee’s discretion, the Committee shall determine the extent to which Performance Objectives have been met with respect to each such Performance Award, if at all, or (iii) the Company shall cause to be paid to each Participant such partial or full Performance Awards, in cash, Common Stock or other property as determined by the Committee, within thirty (30) days of such Change in Control, based on the Change in Control consideration, which amount may be zero if applicable.

Any such determinations by the Committee may be made generally with respect to all Participants, or may be made on a case-by-case basis with respect to particular Participants, and shall in all events comply with any applicable requirements under Section 409A of the Code. Notwithstanding the foregoing, any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company's capital stock, such transaction shall not constitute a merger, consolidation, major acquisition of property for stock, separation, reorganization, liquidation, or Change in Control.

17. Termination and Amendment. The Board, by resolution, may terminate the Plan with respect to any Awards that have not been granted. The Board or Committee may, at any time, amend or modify the Plan; provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the shareholders if shareholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements, to comply with the requirements for listing on any exchange where the Stock is listed, or if the Company, on the advice of counsel, determines that shareholder approval is otherwise necessary or desirable. Notwithstanding any other provision of the Plan to the contrary (but subject to a Participant's employment being terminated for Cause), no

termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant of such Award.

18. Agreement and Representation of Employees. As a condition to the receipt of any shares of Stock under the Plan, the Company may require the person receiving such shares to represent and warrant that the shares of Common Stock are being acquired only for investment and without any present intention to sell or distribute such shares, if, in the opinion of counsel for the Company, such a representation is required under the Securities Act of 1933 or any other applicable law, regulation or rule of any governmental agency.

19. Reservation of Shares of Common Stock. The Company, during the term of the Plan, will at all times reserve and keep available the number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan. The inability of the Company to obtain from any regulatory body having jurisdiction the authority deemed necessary by legal counsel for the Company for the lawful issuance and sale of its Common Stock hereunder shall relieve the Company of any liability in respect of the failure to issue or sell Common Stock as to which the requisite authority has not been obtained.

20. Withholding.

(a) Withholding Requirement. The Company's obligations to deliver shares upon the exercise of an Option, or upon the vesting of any other Award, shall be subject to the Participant's satisfaction of all applicable federal, state and local income and other tax withholding requirements.

(b) Withholding with Stock. All required amounts of tax withholding due upon the vesting of Restricted Stock is required to be satisfied by the Company withholding from the shares of Common Stock otherwise issuable to the Participant. The value of the Stock withheld shall be the minimum amount required up to the maximum amount allowed to be withheld under federal, state or local law as elected by the Participant. All elections shall be subject to the approval or disapproval of the Committee. The value of shares of Stock to be withheld shall be based on the Fair Market Value of the Stock on the date that the amount of tax to be withheld is to be determined (the "Tax Date”), as determined by the Committee. Any such elections by Participant regarding the amount of shares to be withheld for this purpose will be subject to the following restrictions:

(1) All elections must be made prior to the Tax Date;

(2) All elections shall be irrevocable; and

(3) If the Participant is an officer or director of the Company within the meaning of Section 16 of the 1934 Act ("Section 16"), the Participant must satisfy the requirements of such Section 16 and any applicable rules thereunder with respect to the use of Stock to satisfy such tax withholding obligation.

21. Effective Date of Plan. The Plan was originally effective as of June 9, 1987 and this most recent amendment and restatement was effective February 23, 2021.

22. Code Section 409A. This Plan is intended to meet or to be exempt from the requirements of Section 409A of the Code, and shall be administered, construed and interpreted in a manner that is in accordance with and in furtherance of such intent. Any provision of this Plan that would cause an Award to fail to satisfy Section 409A of the Code or, if applicable, an exemption from the requirements of that

Section, shall be amended (in a manner that as closely as practicable achieves the original intent of this Plan) to comply with Section 409A of the Code or any such exemption on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.

23. Termination Date of Plan. This Plan shall terminate and expire on the tenth anniversary of the Effective Date unless terminated prior thereto by action of the Board of Directors. No Award shall be granted pursuant to this Plan after such termination. Termination of this Plan shall not affect any Award granted during the term of this Plan.

EX-10.3

Exhibit 10.3

WERNER ENTERPRISES, INC.

CHANGE IN CONTROL SEVERANCE PLAN

Effective February 23, 2021

TABLE OF CONTENTS

			Page
ARTICLE ONE INTRODUCTION			1
	1.01	Purpose of the Plan	1
	1.02	Plan Status	1
ARTICLE TWO DEFINITIONS			1
	2.01	Accounting Firm	1
	2.02	Earned Obligations	1
	2.03	Administrator	1
	2.04	Annual Incentive Plan	1
	2.05	Base Salary	1
	2.06	Board	1
	2.07	Cause	2
	2.08	Change in Control	2
	2.09	CIC Period	2
	2.10	CIC Qualifying Termination	2
	2.11	CODE	2
	2.12	Committee	2
	2.13	Company	2
	2.14	Director	2
	2.15	Disability	3
	2.16	Effective Date	3
	2.17	Employer	3
	2.18	ERISA	3
	2.19	Exchange Act	3
	2.20	Excise Tax	3
	2.21	Good Reason	3
	2.22	Notification Letter	4
	2.23	Notice of Termination	4
	2.24	Participant	4
	2.25	Payment	4
	2.26	Person	4
	2.27	Plan	4
	2.28	Release	4
	2.29	Release Consideration Period	4
	2.30	Release Revocation Period	4
	2.31	Restrictive Covenants	4
	2.32	Section 409A	5
	2.33	Separation from Service	5
	2.34	Severance Benefits	5
	2.35	Subsidiary	5

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	2.36	Target Bonus	5
	2.37	Tier Level Multiplier	5
ARTICLE THREE ELIGIBILITY AND PARTICIPATION			5
	3.01	Eligibility	5
	3.02	Exclusive Benefits	5
	3.03	Conditions	6
	3.04	Change in Participation	6
ARTICLE FOUR SEVERANCE BENEFITS			6
	4.01	Release Requirement	6
	4.02	CIC Qualifying Termination	6
	4.03	Section 409A	8
	4.04	Enforcement Costs	9
	4.05	Code Section 280G	9
	4.06	Recoupment or Recovery of Severance Benefits	11
ARTICLE FIVE AMENDMENT AND TERMINATION			11
ARTICLE SIX MISCELLANEOUS			11
	6.01	Participant Rights	11
	6.02	Administrator Authority	11
	6.03	Claims and Appeals Procedure	12
	6.04	Reliance on Tables and Reports	14
	6.05	Expenses; Attorney's Fees	14
	6.06	Successors	14
	6.07	Construction	15
	6.08	References to Other Plans and Programs	15
	6.09	Notices	15
	6.10	Service of Legal Process	15
	6.11	Plan Year	15
	6.12	No Duty to Mitigate	15
	6.13	Withholding of Taxes	15
	6.14	Governing Law	15
	6.15	Validity/Severability	15
	6.16	Miscellaneous	16
	6.17	Source of Payments	16
	6.18	Survival of Provisions	16
	Annex A - Initial Participants		17
	Annex B - Restrictive Covenants		18
	Annex C - Form of Release		21

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ARTICLE ONE
INTRODUCTION

1.01    Purpose of the Plan. Werner Enterprises, Inc. (the “Company”) considers it essential and in the best interests of its shareholders (i) to facilitate executives acting in the interest of shareholders in the event of an anticipated or actual change in control of the Company; (ii) to provide for the Company’s change in control severance arrangements under a consistent framework; and (iii) to protect the Company’s business interests and confidential information through post-termination covenants. Accordingly, pursuant to the terms of this Plan, effective February 23, 2021, the Company will provide Severance Benefits to an eligible executive in the event of a CIC Qualifying Termination (as defined below) of the eligible executive’s employment. No benefits will be provided pursuant to this Plan except upon the occurrence of a CIC Qualifying Termination. The meaning of capitalized terms used throughout the Plan is determined under Article Two, except as they are otherwise defined in the Plan.

1.02    Plan Status. The Plan is intended to be a top hat welfare benefit plan under ERISA for a select group of management or highly compensated executives, so that it is subject only to the administration and enforcement provisions of ERISA.

ARTICLE TWO

DEFINITIONS

Where the following words and phrases appear in this Plan with initial capital letters, they shall have the meaning set forth below, unless a different meaning is plainly required by the context.

2.01    “Accounting Firm” means a nationally recognized accounting firm, or actuarial, benefits or compensation consulting firm, in each case with experience in performing calculations regarding the applicability of Code Section 280G and of the tax imposed by Code Section 4999, as selected by the Company.

2.02    “Earned Obligations” means a lump sum payment of earned and unpaid Base Salary, any annual bonus award earned by Participant for a fiscal year of the Company that ended prior to Participant’s date of termination that has not yet been paid, earned and unused vacation or paid time off, and other earned benefits through the date of termination, paid on the same basis as paid upon any voluntary termination of employment.

2.03    “Administrator” means the Committee. The Committee may delegate its duties and authority as Administrator to officers and employees of the Company.

2.04    “Annual Incentive Plan” means, with respect to a Participant, the Company’s annual incentive plan in which the Participant may be eligible and participates at the time of the Participant’s CIC Qualifying Termination.

2.05    “Base Salary” means, with respect to a Participant, the Participant’s annual base salary in effect on the date of the Participant’s CIC Qualifying Termination (disregarding for this purpose any reduction giving rise to a termination for Good Reason).

2.06    “Board” means the Board of Directors of the Company.

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2.07    “Cause” means any of the following with respect to a Participant:

(a)    material misappropriation of any of the Company's funds or property;

(b)    conviction of, or the entering of a guilty plea or plea of no contest with respect to, a felony, or the equivalent thereof;

(c)    commission of an act of willful damage, willful misrepresentation, willful dishonesty, or other willful conduct that can reasonably be expected to have a material adverse effect on the business, reputation, or financial situation of the Company; provided, however, no act, or failure to act, on the part of Participant shall be considered to have been “willfully” performed or omitted, unless done, or omitted to be done, by him or her in bad faith and without reasonable belief that his or her action or omission was in, or not opposed to, the best interest of the Company; or

(d)    gross negligence or willful misconduct in performance of Participant's duties; provided, however, “cause” shall not exist under this clause (d) with respect to an act or failure to act unless the Participant has (1) been provided written notice describing in sufficient detail the acts or failure to act giving rise to the Company's assertion of such gross negligence or misconduct, (2) been provided a reasonable period to remedy any such occurrence, and (3) failed to sufficiently remedy the occurrence.

2.08    “Change in Control” shall have the meaning set for the Werner Enterprises, Inc. Amended and Restated Equity Plan, as amended from time to time (or any shareholder approved successor plan thereto). To the extent any provision of this Plan would cause a payment of an amount subject to Section 409A (and not otherwise exempt from Section 409A) to be made because of the occurrence of a Change in Control, then such payment shall not be made unless such Change in Control also constitutes a “change in ownership,” “change in effective control” or “change in ownership of a substantial portion of the Company’s assets” within the meaning of Code Section 409A; provided, that other Participant rights that are tied to a Change in Control, such as vesting, shall not be affected by this paragraph.

2.09    “CIC Period” means the period commencing on the first effective date of the Change in Control and ending on the second anniversary thereof.

2.10    “CIC Qualifying Termination” means, with respect to a Participant, the Participant’s Separation from Service within the CIC Period (a) initiated by the Employer without Cause, or (b) initiated by the Participant for Good Reason.

2.11    “Code” means the Internal Revenue Code of 1986, as amended and the proposed, temporary and final regulations promulgated thereunder. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

2.12    “Committee” means the Compensation Committee of the Board.

2.13    “Company” means Werner Enterprises, Inc., a Nebraska corporation, or its successor or assignee.

2.14    “Director” means a member of the Board.

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2.15    “Disability” shall mean, with respect to a Participant, the date on which the insurer or administrator under the Employer’s program of long-term disability insurance determines that the Participant is eligible to commence benefits under such insurance.

2.16    “Effective Date” means the date on which this Plan is effective, February 23, 2021.

2.17    “Employer” means the Company and each Subsidiary.

2.18    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

2.19    “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. Reference to any section or subsection of the Exchange Act includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

2.20    “Excise Tax” shall mean, collectively (a) the tax imposed by Code Section 4999 by reason of being “contingent on a change in ownership or control” of the Company, within the meaning of Code Section 280G, (b) any similar tax imposed by state or local law, and (c) any interest or penalties with respect to any tax described in clause (a) or (b).

2.21    “Good Reason” means the occurrence of any of the following events without the Participant’s consent:

(a)    Any material and adverse reduction or material and adverse diminution in a Participant's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities held, exercised or assigned at any time during the 90-day period immediately preceding the Change in Control;

(b)    Any reduction in a Participant's annual Base Salary (other than a general reduction in base salary that affects all similarly situated executives in substantially the same proportions) as in effect immediately preceding the Change in Control or as the same may be increased from time to time; or

(c)    A Participant being required by the Company to be based at any office or location that is more than seventy (70) miles from the location where the Participant was employed immediately preceding the Change in Control;

A Participant cannot terminate his or her employment for Good Reason unless he or she, within 90 days following the first occurrence of any of the events set forth in this Section 2.21, (i) delivers written notice to the Company of his or her intention to terminate his or her employment for Good Reason, which notice specifies in reasonable detail the circumstances claimed to give rise to Participant’s right to terminate employment for Good Reason, (ii) provides the Company with at least thirty (30) days to cure the circumstances and, (iii) if the Company is not successful in curing the circumstances, Participant terminates employment within thirty (30) days of the Company’s failure to cure such circumstances. If the Participant does not terminate his or her employment for Good Reason pursuant to this paragraph, then the Participant will be deemed to have waived his or her right to terminate for Good Reason with respect to such grounds.

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For the avoidance of doubt, notwithstanding the occurrence of any of the events set forth above in this definition, Good Reason shall not include for the purpose of this definition an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Participant.

2.22    “Notification Letter” means a letter notifying an executive of his or her eligibility for participation in the Plan that meets the requirements of the following sentence. An offer-of-employment or promotion letter or other letter from the Employer shall constitute a “Notification Letter” if it specifically communicates the executive’s eligibility in the Plan, requires the executive to sign and return the letter (i) to agree to the terms and conditions of the Plan; (ii) to agree to the Restrictive Covenants; and (iii) if there is any pre-existing right to severance benefits (or similar benefits) in connection with a Change in Control from the Employer, to waive all such benefits in favor of benefits under this Plan.

2.23    “Notice of Termination” means a written notice of termination of employment for Cause or Disability given by the Employer to a Participant in the manner specified in Section 6.10, which states the specific termination provision in the Plan relied upon for the termination, sets forth in reasonable detail the facts and circumstances claimed to provide the basis for termination under the provision so indicated, and specifies the Participant’s date of termination.

2.24    “Participant” means each individual who has become a Participant pursuant to Section 3.01, and who has not ceased to be a Participant under Section 3.04.

2.25    “Payment” means any payment or benefit in the nature of compensation (within the meaning of Code Section 280G(b)(2)) received or to be received by a Participant or for the benefit of a Participant, whether payable under the terms of this Plan or any other plan, arrangement or agreement with the Employer or an affiliate of the Employer.

2.26    “Person” means any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the Exchange Act.

2.27    “Plan” means this Werner Enterprises, Inc. Change in Control Severance Plan, as set forth herein and as it may be amended from time to time, or any successor plan, program or arrangement thereto.

2.28    “Release” means an agreement, which shall be substantially similar to the form of Release attached hereto as Exhibit A, in which the Participant releases claims in connection with a termination of the Participant’s employment with the Employer and re-affirms the Participant’s obligation to observe the terms of the Restrictive Covenants.

2.29    “Release Consideration Period” means the period of time specified by the Release, not to exceed forty-five (45) days, during which the affected Participant is permitted to consider whether or not to sign the Release.

2.30    “Release Revocation Period” means the period of time specified by the Release, not to exceed seven (7) days (or such longer period as may be required by applicable law), during which the Participant is permitted to revoke the signed Release.

2.31    “Restrictive Covenants” means, with respect to a Participant, the restrictive covenants set forth in Annex B attached hereto and made a part of this Plan.

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2.32    “Section 409A” means Section 409A of the Code and the Department of Treasury and Internal Revenue Service guidance thereunder.

2.33    “Separation from Service” means “separation from service” from the Employer and all Subsidiaries as described under Section 409A(a)(2)(A)(i). A Participant who is both an employee and a Director will not have a Separation from Service until he or she has a Separation from Service with respect to both his or her employment and his or her Board membership.

2.34    “Severance Benefits” means the severance pay and the other benefits payable to a Participant pursuant to Article Four of the Plan.

2.35    “Subsidiary” means any entity in which the Company, directly or indirectly, beneficially owns more than fifty percent (50%) of such entity’s equity interest by vote and value.

2.36    “Target Bonus” means, with respect to a Participant, the Participant’s target annual cash incentive under the Annual Incentive Plan for the performance period containing the date of the Participant’s CIC Qualifying Termination.

2.37    “Tier Level Multiplier” means the multiple of Base Salary and Target Bonus payable under Section 4.02 that is established by the Committee for a Participant. Participants shall be placed at a level of 1X, 1.5X or 2X by the Committee.

ARTICLE THREEELIGIBILITY AND PARTICIPATION

3.01    Eligibility. The Committee may select and deselect senior executives of the Company as Participants from time to time and designate the Participant’s Tier Level Multiplier. The Administrator will provide notice to each such executive of his or her selection for Plan participation by means of a Notification Letter in the manner provided by Sections 2.22 and 6.10. Each such executive will become a Participant on the date the executive signs and properly returns the Notification Letter. Annex A of the Plan sets forth the names of the executives who have been designated as Participants as of the effective date of the Plan. The Committee may amend Annex A to indicate the executives eligible to participate from time to time (or to reflect the removal of executives as Participants in a manner consistent with the terms of the Plan).

3.02    Exclusive Benefits. Any Severance Benefits payable to a Participant under this Plan will be paid solely in lieu of, and not in addition to, any severance benefits payable under any offer letter, severance arrangement or other program or agreement on account of the Participant’s termination of employment with the Employer under the circumstances covered by this Plan. A Participant’s acceptance of participation in this Plan pursuant to Section 3.01 above shall constitute a waiver by such Participant of all other rights to severance benefits (or any similar separation benefits) in connection with a Change in Control that the Participant may have or claim with respect to the Employer.

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3.03    Conditions. A Participant’s entitlement to any Severance Benefits under Article Four will be subject to the following:

(a)    the Participant executing and delivering to the Company the Notification Letter as described in Section 3.01;

(b)    the Participant experiencing a CIC Qualifying Termination; and

(c)    the Participant executing a Release as described in Section 4.01.

3.04    Change in Participation. An individual shall cease to be a Participant on the date on which the individual ceases to be an employee of the Employer other than by a CIC Qualifying Termination. Except as provided in this and the next sentence, the Committee may discontinue or reduce an individual’s status as a Participant; provided, however, that no such discontinuance or reduction shall become effective (i) during the one-year period following the date on which advance written notice of such discontinuance or reduction is provided to the affected Participant in the manner specified in Section 6.10, or (ii) during the CIC period. In the event that an individual incurs a CIC Qualifying Termination while still a Participant, such individual shall remain a Participant until all Severance Benefits required to be provided to the Participant under the terms of the Plan on account of such CIC Qualifying Termination have been paid or provided.

ARTICLE FOURSEVERANCE BENEFITS

4.01    Release Requirement. A Participant will be eligible for the Severance Benefits described in Section 4.02 below, subject to the Release requirement specified in this Section 4.01. Within seven (7) days following the date of the Participant’s Separation from Service which qualifies for benefits under the Plan, the Company shall provide the Participant with a Release Agreement in a manner and form acceptable to the Company. As a condition of receiving the Severance Benefits described in Section 4.02, the Participant must execute and deliver the Release to the Company within the Release Consideration Period, the Release Revocation Period must expire without revocation of the Release by the Participant, and the Participant must be in material compliance with the Restrictive Covenants set forth in this Plan. In the event the Participant materially breaches one or more of such Restrictive Covenants, the Participant will forfeit any such Severance Benefits that have not been paid or provided to the Participant and must repay to the Company the amount (or equivalent cash value) of any such Severance Benefits that have been paid to the Participant.

4.02    CIC Qualifying Termination. In the event that a Participant incurs a CIC Qualifying Termination, the Company shall pay or provide to the Participant the Earned Obligations and the following Severance Benefits, subject to the Release requirement specified in Section 4.01 above.

(a)    Severance Pay. The Company shall pay to the Participant an amount equal to the Participant’s Tier Level Multiplier times the sum of (i) the Participant’s Base Salary, and (ii) the Participant’s Target Bonus. This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.03(f) and subject to the requirements of Section 4.03(e)).

(b)    Pro-Rata Target Bonus for Year of Termination. The Company shall pay to the Participant a lump sum cash payment equal to the amount of the target annual cash incentive payment to which the Participant was entitled under the Annual Incentive Plan for the performance period that includes the Participant’s date of termination, multiplied by a fraction (i) the numerator

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of which equals the number of days in such performance period during which the Participant was employed by the Employer (rounded up to the next highest number of days in the case of a partial day of employment), and (ii) the denominator of which is the total number of days in such performance period. This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.03(f) and subject to the requirements of Section 4.03(e)).

(c)    Health Benefits Continuation. Subject to a Participant’s (i) timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), with respect to the Company’s group health plans in which such Participant participated immediately prior to Separation from Service, and (ii) continued payment by such Participant of applicable premiums for such health plan coverages at the applicable active employee premiums (disregarding, for this purpose, the Participant’s inability to pay premiums on a pre-tax basis), the Company shall provide reimbursement of the difference between the monthly COBRA premiums paid by the Participant for himself or herself and/or his or her eligible dependents and the monthly premiums paid by similarly situated active executives (the “Benefit Continuation”). The Benefit Continuation will continue until the earliest of (1) expiration of the Participant’s Coverage Period (as defined below), (2) Participant ceasing to be eligible under COBRA, and (3) Participant becoming eligible for coverage under the health benefit plan(s) of a subsequent employer. If the Company is unable to provide, or is unable to continue to provide, reimbursement of the Participant’s premiums for COBRA continuation coverage as contemplated hereunder due to restrictions imposed by law, the Company shall pay Participant a taxable lump sum cash payment equal to the number of months remaining in the Coverage Period multiplied by the applicable active employee premiums. For purposes of this section 4.02(c), “Coverage Period” means the number of months equal to the Participant’s Tier Level Multiplier times twelve (12). Notwithstanding the foregoing, if the Benefit Continuation provided by the Company under this Section 4.02(c) would violate the nondiscrimination rules applicable to non-grandfathered health plans, or would result in the imposition of penalties under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, and the related regulations and guidance promulgated thereunder (the “ACA”), the Company shall reform this Section 4.02(c) in a manner as is necessary to comply with such nondiscrimination rules and/or the ACA. Benefit Continuation reimbursement shall be paid to the Participant on the first (1st) day of the month immediately following the month in which the Participant timely remits his or her premium payment (except as provided in Section 4.03(f) and subject to the requirements of Section 4.03(e)).

(d)    Equity and Long-Term Incentives. Any equity or long-term compensation grant or award outstanding to the Participant shall be treated as specified by the terms of the applicable equity or long-term incentive compensation plan under which the grant or award was made and the applicable award agreement.

(e)    401(k) Match. To the extent not contributed on or before Separation from Service, the Company shall pay the Participant an amount equal to any matching contribution that would have been made to his or her 401(k) retirement plan account for the year of termination if such Participant had remained in the employ of the Company as of the applicable 401(k) match contribution date. This amount shall be paid to the Participant in a lump sum within sixty (60) days following the date of the Participant’s Separation from Service (except as provided in Section 4.03(f) and subject to the requirements of Section 4.03(e)).

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4.03    Section 409A.

(a)    To the extent necessary to ensure compliance with Section 409A, or an exemption thereunder, the provisions of this Section 4.03 shall govern in all cases over any contrary or conflicting provision in the Plan. It is the intent of the Company that this Plan comply with the requirements of Section 409A, or an exemption thereunder, with respect to any nonqualified deferred compensation subject to Section 409A. The Plan shall be interpreted and administered to maximize the exemptions from Section 409A and, to the extent the Plan provides for deferred compensation subject to Section 409A, to comply with Section 409A and to avoid the imposition of tax, interest and/or penalties upon any Participant under Section 409A.

(b)    The Company makes no representations that the payments and benefits provided under the Plan comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by a Participant (or any other individual claiming a benefit through the Participant) on account of non-compliance with Section 409A of the Code. However, following the occurrence of a Change in Control, the Company shall exercise its good faith best efforts to minimize any adverse impact to a Participant with respect to the Severance Benefits payable to the Participant under this Plan (for example, by preserving the availability of the Section 409A short-term deferral exemption with respect to such benefits to the extent possible and by avoiding any forfeiture of a Participant’s benefits or any other non-payment of benefits due under this Plan).

(c)    The right to a series of payments under the Plan will be treated as a right to a series of separate payments. Each separate payment that is made within two and one-half (2-½) months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt from Section 409A as a short-term deferral within the meaning of the final regulations under Section 409A. Each separate payment that is made later than two and one-half (2-½) months following the end of the year that contains the date of the Participant’s Separation from Service is intended to be exempt under the two-times exception of Treasury Reg. § 1.409A-1(b)(9)(iii), up to the limitation on the availability of that exception specified in the regulation and subject to the conditions on the applicability of that exemption. Then, each separate payment that is made after the two-times exception ceases to be available shall be subject to delay, as necessary, in accordance with Section 4.03(f) below.

(d)    It is intended that each lump sum payment made pursuant to Section 4.02(b), shall be exempt from Section 409A as a short-term deferral within the meaning of the final regulations under Section 409A.

(e)    To the extent necessary to comply with Section 409A, in no event may a Participant, directly or indirectly, designate the taxable year of payment. In particular, to the extent necessary to comply with Section 409A, because any payment to a Participant under this Plan is conditioned upon the Participant’s executing and not revoking a Release, if the designated payment period for such payment begins in one taxable year and ends in the next taxable year, the payment will be made in the later taxable year.

(f)    To the extent necessary to comply with Section 409A, references in this Plan to “termination of employment” or “terminates employment” (and similar references) shall have the same meaning as Separation from Service, and no payment subject to Section 409A that is payable upon a termination of employment shall be paid unless and until (and not later than applicable in

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compliance with Section 409A) the Participant incurs a Separation from Service. In addition, if the Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) at the time of his or her Separation from Service, any nonqualified deferred compensation subject to Section 409A that would otherwise have been payable on account of, and within the first six (6) months following, the Participant’s Separation from Service, and not by reason of another event under Section 409A(a)(2)(A), will become payable on the first business day after six (6) months following the date of the Participant’s Separation from Service or, if earlier, the date of the Participant’s death (the “Specified Employee Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date and interest on such amounts calculated based on the applicable federal rate published by the Internal Revenue Service for the month in which the Participant’s Separation from Service occurs shall be paid to the Participant in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

(g)    To the extent that any reimbursement by the Employer to a Participant of eligible expenses under this Plan constitutes a “deferral of compensation” within the meaning of Section 409A (a “Reimbursement”) (i) the Participant must request the Reimbursement (with substantiation of the expense incurred) no later than thirty (30) days following the date on which the Participant incurs the corresponding eligible expense; (ii) subject to any shorter time period provided in any expense reimbursement policy of the Employer or specifically provided otherwise in this Plan, the Employer shall make the Reimbursement to the Participant on or before the last day of the calendar year following the calendar year in which the Participant incurred the eligible expense; (iii) the Participant’s right to Reimbursement shall not be subject to liquidation or exchange for another benefit; and (iv) the amount eligible for Reimbursement in one calendar year shall not affect the amount eligible for Reimbursement in any other calendar year.

4.04    Enforcement Costs. Each party shall bear its own costs and expenses, including legal fees, that may be incurred in enforcing its respective rights under this Plan.

4.05    Code Section 280G.

(a)    A Participant shall bear all expense of, and be solely responsible for, any Excise Tax; provided, however, that any Payment that would constitute a “parachute payment” within the meaning of Code Section 280G shall be reduced to the extent necessary so that no portion thereof shall be subject to the Excise Tax but only if, by reason of such reduction, the net after-tax benefit received by the Participant shall exceed the net after-tax benefit that would be received by the Participant if no such reduction was made.

(b)    The “net after-tax benefit” shall mean (i) the Payments which the Participant receives or is then entitled to receive from the Employer that would constitute “parachute payments” within the meaning of Code Section 280G, less (ii) the amount of all federal, state and local income and employment taxes payable by the Participant with respect to the foregoing calculated at the highest marginal income tax rate for each year in which the foregoing shall be paid to the Participant (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of Excise Tax imposed with respect to the payments and benefits described in (b)(i) above.

(c)    All determinations under this Section 4.05 will be made by an Accounting Firm. The Accounting Firm shall be required, in part, to evaluate the extent to which payments are exempt

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from Section 280G as reasonable compensation for services rendered before or after the Change in Control. All fees and expenses of the Accounting Firm shall be paid solely by the Company. The Company will direct the Accounting Firm to submit any determination it makes under this Section 4.05 and detailed supporting calculations to both the Participant and the Company as soon as reasonably practicable following the Change in Control or the CIC Qualifying Termination, as applicable.

(d)    If the Accounting Firm determines that one or more reductions are required under this Section 4.05, such Payments shall be reduced in the order that would provide the Participant with the largest amount of after-tax proceeds (with such order determined by the Accounting Firm) to the extent necessary so that no portion thereof shall be subject to the Excise Tax, and the Company shall pay such reduced amount to the Participant. To the extent any order of reduction of Payments is required to be set forth herein, then such reduction shall be applied in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced next (if necessary, to zero), with amounts that are payable or deliverable last reduced first; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24 will be reduced next (if necessary, to zero), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24); (iv) payments due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24 will be reduced next (if necessary, to zero), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24); and (v) all other non-cash benefits will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)—(v) above will be made in the following manner: first, a pro rata reduction of cash payments and payments and benefits due in respect of any equity not subject to Section 409A, and second, a pro rata reduction of cash payments and payments and benefits due in respect of any equity subject to Section 409A as deferred compensation. In no event will the Participant have any discretion with respect to the ordering of any payment reductions.

(e)    As a result of the uncertainty in the application of Code Section 280G at the time that the Accounting Firm makes its determinations under this Section 4.05, it is possible that amounts will have been paid or distributed to the Participant that should not have been paid or distributed (collectively, the “overpayments”), or that additional amounts should be paid or distributed to the Participant (collectively, the “underpayments”). If the Accounting Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Employer or the Participant, which assertion the Accounting Firm believes has a high probability of success or is otherwise based on controlling precedent or substantial authority, that an overpayment has been made, the Participant must repay the overpayment to the Company, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Participant to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Participant is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999. If the Accounting Firm determines, based upon controlling precedent or substantial authority that an underpayment has occurred, the Accounting Firm will notify the Participant and the Company of that determination and the Company will promptly pay the amount of that underpayment to the Participant without interest.

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(f)    The parties will provide the Accounting Firm access to and copies of any books, records, and documents in their possession as reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determinations and calculations contemplated by this Section 4.05. For purposes of making the calculations required by this Section 4.05, the Accounting Firm may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999.

4.06    Recoupment or Recovery of Severance Benefits. Severance Benefits under the Plan shall be subject to any policy of recoupment of compensation adopted or amended from time to time by the Board or the Committee, including, without limitation, any policy they deem necessary or desirable to comply with the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (providing for recovery of erroneously awarded compensation), Section 304 of the Sarbanes-Oxley Act of 2002 (providing for forfeiture of certain bonuses and profits), and any implementing rules and regulations of the U.S. Securities and Exchange Commission and applicable listing standards of a national securities exchange adopted in accordance with either of these Acts which policy is incorporated into this Plan.

ARTICLE FIVEAMENDMENT AND TERMINATION

Subject to the next sentence, the Committee in all respects shall have the right at any time and from time to time, by instrument in writing, to amend, modify, alter, or terminate the Plan in whole or in part and the Committee shall notify Participants of any such amendment, modification, alteration or termination of the Plan. Notwithstanding the foregoing or anything in this Plan to the contrary, the Committee may not amend, modify, alter or terminate this Plan so as to adversely affect payments or benefits then payable, or which could become payable, to a Participant under the Plan, except to the minimum extent required to comply with any applicable law, either (i) during the one-year period following the date on which advance written notice of such amendment, modification, alteration or termination is provided to the affected Participants in the manner specified in Section 6.10, or (ii) during the CIC Period.

ARTICLE SIXMISCELLANEOUS

6.01    Participant Rights. Except to the extent required or provided for by mandatorily imposed law as in effect and applicable hereto from time to time, neither the establishment of the Plan, nor any modification thereof, nor the payment of any benefits, shall be construed as giving to any Participant or other person any legal or equitable right against the Employer, or any officer or employee thereof, or the Board or the Administrator, except as herein provided; nor shall any Participant have any legal right, title or interest in the assets of the Employer. This Plan shall not constitute a contract of employment nor afford any individual any right to be retained or continued in the employ of the Employer or in any way limit the right of the Employer to discharge any of its employees, with or without cause. Participants have no right to receive any payments or benefits that the Employer is prohibited by applicable law from making.

6.02    Administrator Authority.

(a)    The Administrator will administer the Plan and have the full authority necessary to accomplish that purpose, including, without limitation, the authority to:

(i) resolve all questions relating to the eligibility of Participants;

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(ii) determine the amount of benefits, if any, payable to Participants under the Plan and determine the time and manner in which such benefits are to be paid;

(iii) engage any administrative, legal, tax, actuarial, accounting, clerical, or other services it deems appropriate in administering the Plan;

(iv) construe and interpret the Plan, supply omissions from, correct deficiencies in and resolve inconsistencies or ambiguities in the language of the Plan, resolve inconsistencies or ambiguities between the provisions of this document, and adopt rules for the administration of the Plan which are not inconsistent with the terms of the Plan document;

(v) compile and maintain all records it determines to be necessary, appropriate or convenient in connection with the administration of the Plan; and

(vi) resolve all questions of fact relating to any matter for which it has administrative responsibility.

(b)    The Administrator shall perform all of the duties and may exercise all of the powers that the Administrator deems necessary or appropriate for the proper administration of the Plan, including, but not limited to, delegation of any of its duties to one or more authorized officers or employees of the Company. All references to the authority of the Administrator in this Plan shall be read to include the authority of any party to which the Administrator delegates such authority.

(c)    The decision of the Administrator on any disputes arising under the Plan, including, but not limited to, questions of construction, interpretation and administration shall be final, conclusive and binding on all persons having an interest in or under the Plan. Any determination made by the Administrator shall be given deference in the event the determination is subject to judicial review and shall be overturned by a court of law only if it is arbitrary and capricious.

(d)    Any failure by the Administrator to apply any provisions of this Plan to any particular situation shall not represent a waiver of the Administrator’s authority to apply such provisions thereafter.

6.03    Claims and Appeals Procedure.

(a)    With respect to any claim for benefits which are provided exclusively under this Plan, the claim and any related appeal shall be administered pursuant to subsections (b) through (i) below. With respect to any claim for benefits which, under the terms of the Plan, are provided under another employee benefit plan or program maintained by an Employer, the Administrator shall determine any claim and any related appeal regarding an individual’s eligibility under the Plan pursuant to subsections (b) through (i) below but the administration of any other claim and any related appeal with respect to such benefits (including the amount of such benefits) shall be subject to the claims and appeals procedure specified in such other employee benefit plan or program.

(b)    Initial Claim. A Participant, or his or her beneficiary, or a duly authorized representative of the Participant or a beneficiary (the “claimant”) may make a claim for benefits under the Plan by filing a written claim with the Administrator within sixty (60) days after the Participant’s CIC Qualifying Termination and completing the procedures the Administrator or its delegate requires. The procedures may include the completion of forms and the submission of

12

documents and additional information. Determinations of each such claim shall be made as described below; provided, however, that the claimant and the Administrator (or its delegate) may agree to extended periods of time for making determinations beyond those periods described below.

(c)    Initial Period for Review of the Claim. The Administrator or its delegate shall review all materials and shall decide whether to approve or deny the claim. If a claim is denied in whole or in part, written notice of denial shall be furnished by the Administrator or its delegate to the claimant within a reasonable period of time after the claim is filed, but not later than ninety (90) days after the Administrator or its delegate receives the claim. The notice shall set forth the specific reason(s) for the denial, reference to the specific Plan provisions on which the denial is based, a description of any additional material or information necessary for the claimant to perfect his or her claim and an explanation of why such material or information is necessary, and a description of the Plan’s review procedures, including applicable time limits, including a statement of the Participant’s right to bring a civil action under Section 502(a) of ERISA following a benefit claim denial on review.

(d)    Extension of the Initial Period for Review of the Claim. If the Administrator or its delegate determines that special circumstances require an extension of time for processing the claim, it shall give written notice to the claimant and the extension shall not exceed ninety (90) days. The notice shall be given before the expiration of the ninety (90) day period described in Section 6.03(c) above and shall indicate the special circumstances requiring the extension and the date by which the Administrator or its delegate expects to render a decision.

(e)    Appeal of Denial of Initial Claim. The claimant may request a review upon written application, may review pertinent documents and may submit issues or comments in writing. The claimant must request a review within a reasonable period of time prescribed by the Administrator or its delegate. In no event shall such period of time be less than sixty (60) days.

(f)    Initial Period for Review of the Appeal. The Administrator or its delegate shall conduct all reviews of denied claims and shall render its decision within a reasonable time, but not more than sixty (60) days of the receipt of the appeal by the Administrator or its delegate. The claimant shall be notified of the Administrator’s, or its delegate’s, decision in a notice, which shall set forth the specific reason(s) for the denial, reference to the specific Plan provisions on which the denial is based, a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claimant’s claim, and a statement of the Participant’s right to bring a civil action under Section 502(a) of ERISA.

(g)    Extension of the Initial Period for Review of the Appeal. If the Administrator or its delegate determines that special circumstances require an extension of time for reviewing the appeal, it shall give written notice to the claimant and the extension shall not exceed sixty (60) days. The notice shall be given before the expiration of the sixty (60) day period described in Section 6.03(f) above and shall indicate the special circumstances requiring the extension and the date by which the Administrator, or its delegate, expects to render its decision.

(h)    Form of Notice to Claimant. The Administrator will notify the claimant of its decision regarding an appeal of a denied claim in writing. The decision will be written in a manner calculated to be understood by the claimant.

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(i)    Exhaustion of Administrative Remedies. The exhaustion of these claims procedures is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes: (i) no claimant shall be permitted to commence any legal action to recover benefits or to enforce or clarify rights under the Plan under Section 502 of ERISA or under any other provision of law, whether statutory or otherwise, until these claims procedures have been exhausted in their entirety; and (ii) in any such legal action, all explicit and implicit determinations by the Administrator or its delegate (including but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law. If the Administrator or its delegate fails to follow these procedures consistent with the requirements of ERISA with respect to any claim, the claimant will be deemed to have exhausted all administrative remedies under the Plan.

6.04    Reliance on Tables and Reports. In administering the Plan, the Administrator or its delegate is entitled to the extent permitted by law to rely conclusively upon all tables, valuations, certificates, opinions and reports which are furnished by accountants, legal counsel or other experts employed or engaged by the Administrator or its delegate. The Administrator and its delegate will be fully protected in respect of any action taken or suffered by the Administrator or its delegate in good faith reliance upon all such tables, valuations, certificates, reports, opinions or other advice. The Administrator and its delegate is also entitled to rely upon any data or information furnished by the Employer or by a Participant as to any information pertinent to any calculation or determination to be made under the provisions of the Plan, and, as a condition to payment of any benefit under the Plan the Administrator or its delegate may request a Participant to furnish such information as it deems necessary or desirable in administering the Plan.

6.05    Expenses; Attorneys’ Fees. All Plan administration expenses shall be paid by the Company.

6.06    Successors.

(a)    This Plan shall bind any successor of or to the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under this Plan if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Company shall require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Failure of the Company to obtain the agreement provided for in the preceding sentence in connection with a Change in Control will constitute a material breach of the Plan by the Company, which will entitle the Participant to terminate employment for Good Reason and obtain the Severance Benefits provided in Section 4.02.

(b)    The Plan shall inure to the benefit of and be binding upon and enforceable by the Company and the Participants and their personal and legal representatives, executors, administrators, successors, assigns, heirs, distributees, devisees and legatees. If a Participant should die after incurring a CIC Qualifying Termination and prior to receiving all of the Severance Benefits, the Severance Benefits (or any remaining amounts) shall be paid to the beneficiary designated by the Participant in a beneficiary designation form for this Plan, and in the event no such form is provided or the Participant has not otherwise properly designated a beneficiary, the Severance Benefits shall be payable to the Participant’s estate, provided that in all cases the Participant’s beneficiary or the Personal Representative of the Participant’s estate signs a Release similar to the form to be signed by the Participant as a condition of payment of such Severance Benefits.

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(c)    Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge, anticipate or otherwise encumber, transfer, hypothecate or convey any amounts payable under the Plan prior to the date that such amounts are paid, except that, in the case of a Participant’s death, such amounts shall be paid to the Participant’s beneficiaries as described in Section 6.06(b).

6.07    Construction. In determining the meaning of the Plan, words imparting the masculine gender shall include the feminine and the singular shall include the plural, unless the context requires otherwise. Unless otherwise stated, references to Sections are references to Sections of this Plan. Whenever an example is provided or the text uses the term “including” followed by a specific item or items, or there is a passage having similar effect, such passages of the Plan shall be construed as if the phrase “without limitation” followed such example or term (or otherwise applied to such passage in a manner that avoids limits on its breadth of application).

6.08    References to Other Plans and Programs. Each reference in the Plan to any plan, policy or program, this Plan or any other document of the Employer or affiliate of the Employer shall include any amendments or successor provisions thereto without the necessity of amending the Plan for such changes.

6.09    Notices. Notices and all other communications contemplated by this Plan shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid or when sent by express U.S. mail or overnight delivery through a national delivery service (or an international delivery service in the case of an address outside the U.S.) with signature required. Notice to the Company, the Board or the Administrator shall be directed to the attention of the Secretary of the Company at the address of the Company’s headquarters, and notice to a Participant shall be directed to the Participant at the most recent address of the Participant’s personal residence on file with the Company.

6.10    Service of Legal Process. Service of legal process may be made upon the Administrator to the attention of the Secretary of the Company at the address of the Company’s headquarters.

6.11    Plan Year. The records of the Plan shall be maintained on the basis of the Company’s fiscal year, which is the calendar year.

6.12    No Duty to Mitigate. The Participant shall not be required to mitigate the amount of any payment provided pursuant to this Plan, nor shall the amount of any such payment be reduced by any compensation that the Participant receives from any other source, except as provided in this Plan.

6.13    Withholding of Taxes. The Employer may withhold from any amount payable or benefit provided under this Plan such Federal, state, local, foreign and other taxes as are required to be withheld pursuant to any applicable law or regulation.

6.14    Governing Law. Except to the extent that the Plan may be subject to the provisions of ERISA and/or the Code, the Plan will be construed and enforced according to the laws of the State of Nebraska, without giving effect to the conflict of laws principles thereof.

6.15    Validity/Severability. If any provision of this Plan or the application of any provision to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Plan and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid or unenforceable will be reformed to the extent (and only to the extent) necessary to make it enforceable or valid. To the extent any provisions held to be invalid or unenforceable cannot be reformed, such

15

provisions are to be stricken here from and the remainder of this Plan will be binding on the Parties and their successors and assigns as if such invalid or illegal provisions were never included in this Plan from the first instance.

6.16    Miscellaneous. Any party’s failure to enforce any provision(s) of the Plan following a breach by another party of, or compliance with, any condition or provision of this Plan to be performed by such other party shall not be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not expressly set forth in this Plan.

6.17    Source of Payments. All payments provided under this Plan, other than payments made pursuant to any Employer employee benefit plan which provides otherwise, shall be paid in cash from the general funds of the Company, and no special or separate fund shall be required to be established, and no other segregation of assets required to be made, to assure payment. To the extent that any person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of an unsecured creditor of the Company.

6.18    Survival of Provisions. Notwithstanding any other provision of this Plan, the rights and obligations of the Company and the Participants under Article Four, Section 6.03 and Sections 6.06 through 6.18 will survive any termination or expiration of this Plan or the termination of the Participant’s employment for any reason whatsoever.

The foregoing was adopted this 23rd day of February 2021.

WERNER ENTERPRISES, INC.

By /s/ James L. Johnson    

Name: James L. Johnson

Title: EVP, CAO and Corporate Secretary

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Annex A

Initial Participants as of February 23, 2021

Tier Level Multiplier - 2.0x	Tier Level Multiplier - 1.5x	Tier Level Multiplier - 1.0x
Derek Leathers	Marty Nordlund Jim Johnson Jim Schelble John Steele Craig Callahan Nathan Meisgeier Daragh Mahon	Eric Downing Matt Parry Chad Dittberner Lance Dixon Chris Neil Scott Reed

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Annex B

Change In Control Severance Plan—Restrictive Covenants

As a condition to participating in the Plan, the Participant hereby agrees to the following:

1.Participant shall not divulge to anyone, either during or at any time after employment, any information constituting a trade secret or other confidential information acquired by him or her concerning the Company, its Subsidiaries or affiliates (collectively, the “Company Group”), except in the performance of his or her duties hereunder, including but not limited to its revenues, business systems and processes to the extent such information (a) is not generally known by the public and (b) is treated as confidential information by the Company Group (“Confidential Information”). Participant acknowledges that any Confidential Information is of great value to the Company, and upon the termination of his or her employment, Participant shall redeliver to the Company Group all Confidential Information and other related data in his or her possession. Notwithstanding any other provision in the Plan to the contrary, Confidential Information does not include information that enters the public domain, other than through breach of Participant’s obligations to the Company Group.

2.Participant hereby agrees that during the Restrictive Period (as defined below) and during the Participant’s employment by the Company Group, he or she shall not, directly or indirectly, individually or as a sole proprietor, or as a stockholder, partner, officer, director, employee, agent, consultant, or independent contractor of a corporation, partnership, limited liability company or any other entity, solicit the sale of services from or place, accept or aid in the replacement of services of any customer, carrier, shipper or third party logistics company of the Company with whom Participant actually did business and had personal contact within the Restrictive Period, of the type of character provided by Company to such customer, carrier, shipper or third party logistics company during Participant’s employment. Notwithstanding the foregoing, nothing herein shall prevent Participant from passively owning stock in a publicly traded corporation whose activities compete with those of the Company Group, provided that such stock holdings are not greater than five percent (5%) of such corporation. “Restrictive Period” means the period commencing as of the date of participation in the Plan and ending on the date coincident with number of months equal to the Participant’s Tier Level Multiplier times twelve (12).

3.Participant shall not, during the Restrictive Period, directly or indirectly, take any action which constitutes an interference with or a disruption of any of the Company Group’s business activities including, without limitation, the solicitation of the Company Group’s customers, suppliers, vendors, lessors, lessees, licensors, or licensees, to terminate or diminish their relationship with the Company Group; provided that the restrictions described in this paragraph 3 shall apply during the Restrictive Period only with respect to persons who are as of the date of termination, or who have been during the final two (2) years prior thereto, customers, suppliers, vendors, lessors, lessees, licensors or licensees of the Company.

4.Participant shall not, during the Restrictive Period, directly or indirectly, hire, offer to hire, entice, solicit or in any other manner persuade or attempt to persuade any officer, employee or agent of the Company Group (but only those persons who had such status at any time while Participant was employed by the Company Group), to discontinue or alter his, her or its relationship with the Company Group. Nothing in the Plan shall prohibit Participant from

18

publishing or advertising any general solicitation for employment not targeted at any Company Group employee covered by this paragraph 4, and it shall not be a violation for Participant to hire or encourage any other person who responds to such general solicitation.

5.At no time during or after termination of employment shall Participant, directly or indirectly, disparage the Company Group or any of the Company Group’s past or present employees, directors, products or services; provided, however, nothing in the Plan shall restrict Participant (a) from giving truthful testimony or statements in connection with any judicial proceeding or other governmental investigation or proceeding or (b) from communicating in any way with any governmental entity regarding any incident that Participant in good faith believes constitutes a violation of law.

6.Upon the receipt of reasonable notice from the Company Group (including the Company’s outside counsel), Participant agrees that while employed by the Company Group and thereafter, Participant will respond and provide information with regard to matters of which Participant has knowledge as a result of Participant’s employment with the Company Group, and will provide reasonable assistance to the Company Group and its representatives in defense of any claims that may be made against the Company Group, and will provide reasonable assistance to the Company Group in the prosecution of any claims that may be made by the Company Group, to the extent that such claims may relate to matters related to Participant’s period of employment with the Company Group. Any request for such cooperation shall take into account Participant’s other personal and business commitments. Participant also agrees to promptly inform the Company Group (to the extent Participant is legally permitted to do so) if he or she is asked to assist in any investigation of the Company Group or their actions, regardless of whether a lawsuit or other proceeding has then been filed with respect to such investigation, and shall not do so unless legally required. If Participant is required to provide any services pursuant to this paragraph 6 following termination of employment, upon presentation of appropriate documentation, the Company shall promptly reimburse Participant for reasonable out-of-pocket expenses incurred in connection with the performance of such services and in accordance with the Company’s expense policy for similarly situated officers.

7.In the event of a breach of any of the covenants contained in these restrictive covenants, Participant shall promptly repay any amounts previously paid under Section 4 of the Plan upon demand by the Company. Without intending to limit the remedies available to the Company Group, Participant acknowledges that a breach of any of the covenants contained herein may result in material and irreparable injury to the Company Group, for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat the Company Group shall be entitled to a temporary restraining order and/or a preliminary or permanent injunction restraining Participant from engaging in activities prohibited by the foregoing covenants or such other relief as may be required specifically to enforce any such covenants. If for any reason it is held that the restrictions herein are not reasonable or that consideration therefor is inadequate, such restrictions shall be interpreted or modified to include as much of the duration and scope specified herein as will render such restrictions valid and enforceable.

8.In the event of any violation of the provisions of this Annex B, Participant acknowledges and agrees that the post-termination restrictions contained in this Annex B shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any

19

period of such violation.

9.Nothing herein shall be interpreted or applied to prohibit Participant from making any good faith report to any governmental agency or other governmental entity concerning any acts or omissions that he or she may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation. In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, Participant shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

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Annex C

Form of Release1

SEPARATION AND RELEASE AGREEMENT

1. Separation Date. I, [Insert Employee’s name],hereby acknowledge that my employment by Werner Enterprises, Inc. (together with its subsidiaries, the “Company”) ended as of [Insert Date] (the “Termination Date”).

2. Severance Benefits. In exchange for the Company’s receipt of this Separation and Release Agreement (the “Release”) signed by me, and provided I do not revoke this Release in the manner specified in Paragraph 12 herein within seven (7) days after signing it, the Company will provide to me the severance benefits described in the Werner Enterprises, Inc. Change in Control Severance Plan (the “Plan”) on the terms and conditions set forth therein (the “Severance Benefits”). I agree and acknowledge that the Severance Benefits constitute payments or benefits to which I would not be entitled if I did not sign or if I revoke this Release. The Company acknowledges that I am entitled to the Earned Obligations as defined in the Plan irrespective of whether I execute the Release. I understand that information will be provided to me about my right to continue health benefits through the Company pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

3. Release of Claims.

a. General Release. In consideration of the Severance Benefits, I, on behalf of myself, my heirs, assigns, legal representatives, successors in interest, and any person claiming through me or any of them, hereby completely release and forever discharge all Released Parties from any and all claims, demands or liabilities whatsoever, based on any act or omission occurring before my signing of this Release, arising out of my employment with any of the Released Parties or the ending of such employment. The matters released include any claim arising under Title VII of the Civil Rights Act of 1964; the Federal Civil Rights Act of 1991; the Fair Credit Reporting Act; the Civil Rights Acts of 1866, 1870, 1871, and 1991; Title II of the Genetic Information Nondiscrimination Act of 2008; the Worker Adjustment and Retraining Notification Act of 1988; the Occupational Safety and Health Act of 1970; the Vietnam Era Veterans Readjustment Assistance Act of 1974; the Americans with Disabilities Act of 1990; the Federal Family and Medical Leave Act of 1993; the Equal Pay Act; the Rehabilitation Act; the Employee Retirement Income Security Act of 1974; the Age Discrimination in Employment Act (“ADEA”); the Older Workers Benefit Protection Act (“OWBPA”); the Fair Labor Standards Act of 1936; the National Labor Relations Act of 1935; the Uniformed Services Reemployment Rights Act of 1994; the Georgia Equal Employment for Persons with Disabilities Code, O.C.G.A. §§ 34-6A-1 to 34-6A-6 (prohibiting discrimination on the account of disability); the [Insert any additional laws as appropriate at the Termination Date], all of the foregoing as amended; any other federal, state or local law, regulation or ordinance regulating employment discrimination, wages, hours and working conditions, or other worker protections; or any other federal, state or local statutory or common law where I was employed or resided

1NOTE: The Parties agree that the Company may revise the release in light of additional statutes or claims so that the Company receives the benefit of the fullest legally permissible release of claims and may also change the timing, if required, to obtain such release. This footnote and the other footnotes are part of the form of release and are to be removed only when the Company finalizes the letter agreement for execution. If the release is due after the executive’s death, the Company will revise and provide for a comparable release by his estate or beneficiaries.

21

pertaining to employment relations, my employment or the termination of my employment, including any action based on any alleged breach of contract, breach of the covenant of good faith and fair dealing, fraud, fraudulent inducement or any other tort; any violation of public policy or statutory or constitutional rights; any claim for unpaid salary (other than as due in the ordinary course in a final paycheck); severance pay, bonus or similar benefit; sick leave; pension or retirement; vacation pay (other than as due in the ordinary course in a final paycheck) or holiday pay; equity compensation; car allowance; life insurance, health or medical insurance, or any other fringe benefit; any claim for reimbursement of health or medical costs; and any claim for Disability.

For purposes of this Release, the term “Released Parties” means the Company, and each of its subsidiaries and affiliates, and all of the current and former employees, officers, directors, trustees, agents, representatives, shareholders, attorneys, accountants, partners, insurers, advisors, partnerships, joint venturers, successors and assigns, employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs) of any of them, in their individual and official capacities, and the respective heirs and personal representatives of any of them, and any other persons acting by, through, under, or in concert with, any of them.

b. Unknown Claims. I understand and agree that the claims released in Paragraph 3.a include not only claims presently known to me, but also all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities and causes of action of every kind and character that would otherwise come within the scope of the released claims as described in Paragraph 3.a. I understand that I may hereafter discover facts different from what I now believe to be true that, if known, could have materially affected my willingness to execute this Release, but I nevertheless waive and release any claims or rights based on different or additional facts.

c. Exclusions from Release.

1. Certain Exclusions. Notwithstanding the foregoing, the Release does not include and will not preclude: (i) rights or claims to vested benefits under any applicable retirement plans or to the Earned Obligations; (ii) rights under COBRA; (iii) any claims not waivable by applicable law (including, where applicable, workers’ compensation claims and unemployment claims) or arising after the date I sign this Release; and/or (iv) any actions to enforce this Release or to receive the Severance Benefits.

2. Indemnification. The Company agrees that I am not releasing any claims or rights I may have for indemnification under state or other law or the governing documents of the Company and any affiliated companies, or under any indemnification agreement with the Company or under any insurance policy providing directors’ and officers’ coverage for any lawsuit or claim relating to the period when I was a director, officer, employee or agent of the Company or any affiliated company; provided, however, that (i) the Company’s acknowledgement is not a concession, acknowledgment, or guaranty that I have any such rights to indemnification or coverage in a particular matter, and (ii) the Company retains any defenses it may have to such indemnification or coverage.

4. No Claims. Except as permitted herein, I agree that I will not file, nor encourage or knowingly permit another to file, any claim, charge, action, or complaint (collectively “Claim”) concerning any matter released herein. If I have previously filed any such Claim, I agree to take all steps necessary to cause it to be withdrawn without delay; provided, however, that nothing in this Release: (a) prevents me from filing a Claim with, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or a state fair employment practices agency (except that I acknowledge that I may not recover any monetary benefits in connection with any such Claim; and further provided that (i) I further waive any rights or claims to any payment, benefit, attorneys’ fees or

22

other remedial relief in connection with any such charge, investigation or proceeding; and (ii) I agree that if any such Claim is filed on my behalf, I shall take all reasonable steps necessary to refuse any damages or individualized relief in connection therewith), or (b) shall limit or restrict my right to (i) challenge the validity of this Release under the ADEA, or (ii) prosecute any ADEA claim if such claim arises after I sign this Release, and no such action on my part shall be deemed to violate this provision or any other provision of this Release.This Release does not prohibit or prevent me from engaging in activities that are not waivable and are protected by applicable federal or state laws. Further, nothing in this Release or other policies or contracts covering me prohibits me from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies, filing a complaint with government agencies, or participating in government agency investigations or proceedings, or from receiving an award for information provided to any government agency. I have been advised that I am not required to notify the Company of any such communications; provided, however, that nothing herein authorizes the disclosure of information I obtained through a communication that was subject to the attorney-client privilege.

5. Release Negotiations Confidential. I represent and agree that I will keep the details of negotiation with respect to this Release completely confidential, and that I will not disclose such information to anyone, except as follows: (a) to my immediate family and professional representatives (provided they are informed of this confidentiality provision); (b) to any governmental authority; and (c) in response to subpoena or other legal process, provided that before making such disclosure (other than in response to a subpoena or other process issued by a government agency), I shall give the Company as much prior notice thereof as practical (to the extent legally permissible) to enable the Company to seek, at its sole discretion, an appropriate order preventing such disclosure. I am not required to maintain the confidentiality of the negotiations to the extent the Company publicly discloses the details of such negotiations.

6. Continuing Obligations. Except as otherwise permitted by Paragraph 4 above or in the Restrictive Covenants (as defined in the Plan), I acknowledge and reaffirm my obligation to keep confidential and not to use or disclose any and all non-public information concerning the Company that I acquired during the course of my employment with the Company, including any non-public information concerning the Company’s business affairs, business prospects, and financial condition, provided that I may respond to subpoena or other legal process, provided that before making such disclosure (other than in response to a subpoena or other process issued by a government agency), I shall give the Company as much prior notice thereof as practical (to the extent legally permissible) to enable the Company to seek, at its sole discretion, an appropriate order preventing such disclosure. I further acknowledge and reaffirm my continuing obligations with respect to the Restrictive Covenants, all of which remain in full force and effect.

7. Return of Company Property. I confirm that I have returned to the Company in good working order all Company-owned keys, files, records (and copies thereof), equipment (including computer hardware, software and printers, wireless handheld devices, cellular phones, tablets, smartphones, etc.), Company identification, Company proprietary and confidential information, and any other Company-owned property in my possession or control; that I will have left intact with, or delivered intact to, the Company all electronic Company documents and internal and external websites including those that I developed or helped to develop during my employment; and that I have deleted, and/or destroyed any hard copies of, all electronic files relating to the Company that are in my possession or control, including any that are located on any of my personal computers or personal external or cloud storage. I further confirm that I have cancelled all accounts for my benefit, if any, in the Company’s name, including credit cards, telephone charge cards, cellular phone accounts, and computer accounts. Notwithstanding the

23

foregoing, I have been advised that I may retain my address book to the extent it contains only contact information and that the Company will reasonably cooperate with me to transfer my Company cell phone number to a personal device.

8. Entire Agreement. Except as referenced in Paragraph 6 above, this Release constitutes the entire agreement between the Company and me as to any matter referred to in this Release. This Release supersedes all other agreements between the Company and me, other than the general benefit plans under which I am a participant and any outstanding equity awards from the Company. In executing this Release, I am not relying upon any agreement, representation, written or oral statement, understanding, omission, or course of conduct that is not expressly set forth in this Release.

9. Governing Law. This Release shall be governed by and enforced in accordance with the laws of the State of Nebraska, without regard to its conflicts of law principles.

10. Successors and Assigns. This Release will bind and inure to the benefit of the successors, assigns, heirs and personal representatives of the Released Parties and me.

11. Review Period; Revocation. I acknowledge that prior to signing this Release, I have been advised to consult with an attorney of my choice to review the Release, and have taken such opportunity to the extent I wish to do so. I further acknowledge that the Company has given me at least [twenty-one (21)] days to decide whether I wish to execute this Release. I understand that I may revoke this Release at any time during the seven (7) days after I sign it (the “Revocation Period”), and that the Release shall not become effective until the end of that Revocation Period. I understand and agree that by executing, timely returning, and not revoking this Release, I am waiving any and all rights or claims I might have under the ADEA, as amended by the OWBPA,2 and that I have received consideration beyond that to which I was entitled without providing this Release. If I choose to revoke the Release, such revocation must be by means of a writing signed by me and delivered within the seven (7) day Revocation Period as follows: via facsimile, electronic mail, first class mail, or hand-delivery to the Vice President – Human Resources at Werner Enterprises, Inc., 14507 Frontier Road, Omaha, Nebraska 68138, Email: schristensen@werner.com, or by facsimile number to 402-894-xxxx. If I sign this Release and return the Release via electronic mail or facsimile, I agree that my electronic signature or facsimile signature will be valid and binding for all purposes.

12. Modification in Writing. No provision of this Release may be modified, amended or waived except by a writing signed by me and an authorized representative of the Company.

13. No Admission of Liability. This Release shall not at any time or for any purpose be deemed an admission of liability of any kind by any Released Party. This Release may not be used or introduced as evidence in any legal proceeding, except to enforce or challenge its terms.

14. Headings; Interpretation. The headings, titles and captions contained in this Release are inserted only for the convenience of the parties and for reference, and in no way define, limit, extend or describe the scope of this Release or the intent of any provision hereof. References in this Release to “include” or “including” should be read as though they said “without limitation” or equivalent forms.

15. Severability. If any provision of this Release shall, for any reason, be held by a court or other tribunal of competent jurisdiction to be invalid, void or unenforceable, in whole or in part, such adjudication shall in no way affect any other provisions of this Release or the validity or enforcement of

2NOTE: To be revised when necessary, and any other OWBPA provisions added

24

the remainder of this Release, and any provision thus affected shall itself be modified only to the extent necessary to bring the provision within the applicable requirements of the law.

16. Automatic Revocation. If the Company determines my cessation of employment is to be treated as for Cause (as defined in the Plan) either at or after the Termination Date (where permitted by the Plan) and the Company acts upon such determination in a manner materially adverse to me, this Release, if already executed, is automatically revoked retroactively, and neither party is obligated by it.

17. Timely Execution. To receive the Severance Benefits, I must sign this Release on or after my Separation Date, and return it to the Company within [twenty-one (21) days] after my Separation Date, as follows: via facsimile, electronic mail, first class mail, or hand delivery to the Vice President – Human Resources at Werner Enterprises, Inc., 14507 Frontier Road, Omaha, Nebraska 68138, Email: schristensen@werner.com, or by facsimile number 402-894-xxxx. If I return this Release via electronic mail or facsimile, I agree that my electronic signature or facsimile signature will be valid and binding for all purposes.

Signatures on Following Page

25

EMPLOYEE’S ACCEPTANCE OF RELEASE

I have read this Release and I understand all of its terms. I acknowledge and agree that this Release is executed voluntarily, without coercion, and with full knowledge of its significance. I acknowledge that I have been advised to consult with an attorney of my choice to review the Release, and have taken such opportunity to the extent I wish to do so. I further acknowledge that I have been given [twenty-one (21)] days during which to decide whether to execute this Release, and have used that time to the extent I wish to do so. I understand that my execution of this Release constitutes a full, unconditional general release of any and all known or unknown claims that I may have against any Released Party, despite the fact that I may become aware of claims in the future that I did not consider prior to signing this Release.

Date:
	[Insert Employee’s Name]

Accepted:
	Werner Enterprises, Inc.
	By:
	[Name]
	[Title]

26

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Derek J. Leathers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Werner Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2021

/s/ Derek J. Leathers

Derek J. Leathers

Vice Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

(SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, John J. Steele, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Werner Enterprises, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2021

/s/ John J. Steele

John J. Steele

Executive Vice President, Treasurer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Werner Enterprises, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2021 (the “Report”), filed with the Securities and Exchange Commission, I, Derek J. Leathers, Vice Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 6, 2021	/s/ Derek J. Leathers
	Derek J. Leathers
	Vice Chairman, President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Werner Enterprises, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2021 (the “Report”), filed with the Securities and Exchange Commission, I, John J. Steele, Executive Vice President, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 6, 2021	/s/ John J. Steele
	John J. Steele
	Executive Vice President, Treasurer and Chief Financial Officer

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Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2021	Apr. 30, 2021
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	0-14690
Entity Registrant Name	WERNER ENTERPRISES, INC.
Entity Central Index Key	0000793074
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Incorporation, State or Country Code	NE
Entity Tax Identification Number	47-0648386
Entity Address, Address Line One	14507 Frontier Road
Entity Address, Address Line Two	Post Office Box 45308
Entity Address, City or Town	Omaha
Entity Address, State or Province	NE
Entity Address, Postal Zip Code	68145-0308
City Area Code	402
Local Phone Number	895-6640
Title of 12(b) Security	Common Stock, $0.01 Par Value
Trading Symbol	WERN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		67,918,148

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Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Operating revenues	$ 616,446	$ 592,703
Operating expenses:
Salaries, wages and benefits	204,853	205,997
Fuel	50,838	48,771
Supplies and maintenance	46,147	45,721
Taxes and licenses	23,233	22,850
Insurance and claims	22,056	36,064
Depreciation	63,951	68,837
Rent and purchased transportation	146,493	126,442
Communications and utilities	3,022	3,808
Other	(6,618)	3,147
Total operating expenses	553,975	561,637
Operating income	62,471	31,066
Other expense (income):
Interest expense	838	1,591
Interest income	(297)	(626)
Other	42	45
Total other expense (income)	583	1,010
Income before income taxes	61,888	30,056
Income taxes	15,396	6,998
Net income	$ 46,492	$ 23,058
Earnings per share:
Basic	$ 0.68	$ 0.33
Diluted	$ 0.68	$ 0.33
Weighted-average common shares outstanding:
Basic	67,932	69,253
Diluted	68,223	69,609

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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Net income	$ 46,492	$ 23,058
Other comprehensive income (loss):
Foreign currency translation adjustments	(1,568)	(9,893)
Change in fair value of interest rate swaps, net of tax	1,303	(5,597)
Other comprehensive income (loss)	(265)	(15,490)
Comprehensive income	$ 46,227	$ 7,568

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Consolidated Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 83,130	$ 29,334
Accounts receivable, trade, less allowance of $8,897 and $8,686, respectively	347,902	341,104
Other receivables	44,363	23,491
Inventories and supplies	11,919	12,062
Prepaid taxes, licenses and permits	12,876	17,231
Other current assets	32,719	33,694
Total current assets	532,909	456,916
Property and equipment	2,410,791	2,405,335
Less – accumulated depreciation	873,449	862,077
Property and equipment, net	1,537,342	1,543,258
Other non-current assets	159,275	156,502
Total assets	2,229,526	2,156,676
Current liabilities:
Accounts payable	113,064	83,263
Current portion of long-term debt	0	25,000
Insurance and claims accruals	91,097	76,917
Accrued payroll	41,912	35,594
Accrued expenses	25,350	25,032
Income taxes payable	19,226	7,824
Other current liabilities	17,112	20,384
Total current liabilities	307,761	274,014
Long-term debt, net of current portion	175,000	175,000
Other long-term liabilities	41,485	43,114
Insurance and claims accruals, net of current portion	235,850	231,638
Deferred income taxes	241,700	237,870
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 67,918,148 and 67,931,726 shares outstanding, respectively	805	805
Paid-in capital	114,588	116,039
Retained earnings	1,478,616	1,438,916
Accumulated other comprehensive loss	(23,098)	(22,833)
Treasury stock, at cost; 12,615,388 and 12,601,810 shares, respectively	(343,181)	(337,887)
Total stockholders’ equity	1,227,730	1,195,040
Total liabilities and stockholders’ equity	$ 2,229,526	$ 2,156,676

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Consolidated Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Allowance for doubtful trade accounts receivable	$ 8,897	$ 8,686
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	80,533,536	80,533,536
Common stock, shares outstanding	67,918,148	67,931,726
Treasury stock, shares	12,615,388	12,601,810

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities:
Net income	$ 46,492	$ 23,058
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	63,951	68,837
Deferred income taxes	3,487	(2,912)
Gain on disposal of property and equipment	(10,520)	(2,469)
Non-cash equity compensation	2,502	2,406
Insurance and claims accruals, net of current portion	4,212	5,973
Other	1,285	88
Changes in certain working capital items:
Accounts receivable, net	(6,798)	11,946
Other current assets	551	12,195
Accounts payable	18,481	354
Other current liabilities	12,224	13,900
Net cash provided by operating activities	135,867	133,376
Cash flows from investing activities:
Additions to property and equipment	(82,555)	(57,231)
Proceeds from sales of property and equipment	44,689	38,391
Investment in equity securities	(5,000)	0
Decrease in notes receivable	1,575	2,316
Net cash used in investing activities	(41,291)	(16,524)
Cash flows from financing activities:
Repayments of short-term debt	(25,000)	0
Repayments of long-term debt	0	(50,000)
Dividends on common stock	(6,114)	(6,232)
Repurchases of common stock	(5,507)	(8,798)
Tax withholding related to net share settlements of restricted stock awards	(3,740)	(3,930)
Net cash used in financing activities	(40,361)	(68,960)
Effect of exchange rate fluctuations on cash	(419)	(2,073)
Net increase (decrease) in cash, cash equivalents and restricted cash	53,796	45,819
Cash, cash equivalents and restricted cash, beginning of period	29,334	33,442
Cash, cash equivalents and restricted cash, end of period	83,130	79,261
Supplemental disclosures of cash flow information:
Interest paid	878	1,811
Income taxes paid	536	611
Supplemental schedule of non-cash investing and financing activities:
Notes receivable issued upon sale of property and equipment	988	1,099
Change in fair value of interest rate swaps	1,303	(5,597)
Property and equipment acquired included in accounts payable	23,570	13,848
Property and equipment disposed included in other receivables	17	1,251
Dividends accrued but not yet paid at end of period	6,792	6,218
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	83,130	72,237
Restricted cash included in other current assets	0	7,024
Cash, cash equivalents and restricted cash, end of period	$ 83,130	$ 79,261

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Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock
BALANCE at Dec. 31, 2019	$ 1,111,008	$ 805	$ 112,649	$ 1,294,608	$ (14,728)	$ (282,326)
Comprehensive income	7,568	0	0	23,058	(15,490)	0
Purchases of common stock	(8,798)	0	0	0	0	(8,798)
Dividends on common stock	(6,218)	0	0	(6,218)	0	0
Equity compensation activity	(3,930)	0	(4,360)	0	0	430
Non-cash equity compensation expense	2,406	0	2,406	0	0	0
BALANCE at Mar. 31, 2020	1,102,036	805	110,695	1,311,448	(30,218)	(290,694)
BALANCE at Dec. 31, 2020	1,195,040	805	116,039	1,438,916	(22,833)	(337,887)
Comprehensive income	46,227	0	0	46,492	(265)	0
Purchases of common stock	(5,507)	0	0	0	0	(5,507)
Dividends on common stock	(6,792)	0	0	(6,792)	0	0
Equity compensation activity	(3,740)	0	(3,953)	0	0	213
Non-cash equity compensation expense	2,502	0	2,502	0	0	0
BALANCE at Mar. 31, 2021	$ 1,227,730	$ 805	$ 114,588	$ 1,478,616	$ (23,098)	$ (343,181)

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Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Stockholders' Equity [Abstract]
Purchase of common stock, shares	130,446	282,992
Dividends declared per share	$ 0.10	$ 0.09
Equity compensation activity, shares	116,868	125,203

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Accounting Policies

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Accounting Policies

Accounting Policies

New Accounting Pronouncements Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which reduces complexity in accounting for income taxes by removing certain exceptions to the general principles stated in Topic 740 and by clarifying and amending existing guidance to improve consistent application of and simplify other areas of Topic 740. The Company adopted ASU 2019-12 as of January 1, 2021. Upon adoption, this update had no effect on our financial position, results of operations and cash flows.

Accounting Standards Updates Not Yet Effective

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848)” which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The provisions of this update are effective for all entities as of March 12, 2020 through December 31, 2022 and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. We are evaluating the impact of the optional expedients in this update and their applicability to modifications of our existing credit facilities and hedging relationships that reference LIBOR.

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Revenue

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue

Revenue Recognition

Revenues are recognized over time as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

The following table presents our revenues disaggregated by revenue source (in thousands):

	Three Months Ended March 31,
	2021		2020
Truckload Transportation Services	$	462,949	$	464,863
Werner Logistics	137,853		112,164
Inter-segment eliminations	(134)		(11)
Transportation services	600,668		577,016
Other revenues	15,778		15,687
Total revenues	$	616,446	$	592,703

The following table presents our revenues disaggregated by geographic areas in which we conduct business (in thousands). Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country. If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin.

	Three Months Ended March 31,
	2021		2020
United States	$	555,239	$	530,071
Mexico	38,756		43,421
Other	22,451		19,211
Total revenues	$	616,446	$	592,703

Contract Balances and Accounts Receivable

A receivable is an unconditional right to consideration and is recognized when shipments have been completed and the related performance obligation has been fully satisfied. At March 31, 2021 and December 31, 2020, the accounts receivable, trade, net, balance was $347.9 million and $341.1 million, respectively. Contract assets represent a conditional right to consideration in exchange for goods or services and are transferred to receivables when the rights become unconditional. At March 31, 2021 and December 31, 2020, the balance of contract assets was $8.9 million and $6.9 million, respectively. We have recognized contract assets within the other current assets financial statement caption on the balance sheet. These contract assets are considered current assets as they will be settled in less than 12 months.

Contract liabilities represent advance consideration received from customers and are recognized as revenues over time as the related performance obligation is satisfied. The balance of contract liabilities was $1.7 million as of March 31, 2021 and $1.5 million as of December 31, 2020. The amount of revenues recognized in the three months ended March 31, 2021 that was included in the December 31, 2020 contract liability balance was $1.5 million. We have recognized contract liabilities within the accounts payable and other current liabilities financial statement captions on the balance sheet. These contract liabilities are considered current liabilities as they will be settled in less than 12 months.

Performance Obligations

We have elected to apply the practical expedient in ASC Topic 606 to not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less. Remaining performance obligations represent the transaction price allocated to future reporting periods for freight shipments started but not completed at the reporting date that we expect to recognize as revenue in the period subsequent to the reporting date; transit times generally average approximately 3 days.

During the three months ended March 31, 2021 and March 31, 2020, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

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Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

Leases

We have entered into operating leases primarily for real estate. The leases have terms which range from 1 year to 11 years, and some include options to renew. Renewal terms are included in the lease term when it is reasonably certain that we will exercise the option to renew.

Operating leases are included in other non-current assets, other current liabilities and other long-term liabilities on the consolidated condensed balance sheets. These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using our incremental borrowing rate because the rate implicit in each lease is not readily determinable. We have certain contracts for real estate that may contain lease and non-lease components which we have elected to treat as a single lease component. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense is reported in rent and purchased transportation on the consolidated statements of income.

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of March 31, 2021.

(In thousands)	March 31, 2021
Maturity of Lease Liabilities
2021 (remaining)	$	2,806
2022	2,934
2023	1,910
2024	1,507
2025	969
Thereafter	473
Total undiscounted operating lease payments	$	10,599
Less: Imputed interest	(633)
Present value of operating lease liabilities	$	9,966
Balance Sheet Classification
Right-of-use assets (recorded in other non-current assets)	$	9,506
Current lease liabilities (recorded in other current liabilities)	$	3,408
Long-term lease liabilities (recorded in other long-term liabilities)	6,558
Total operating lease liabilities	$	9,966
Other Information
Weighted-average remaining lease term for operating leases	3.70 years
Weighted-average discount rate for operating leases	3.30		%

Cash Flows

During the three months ended March 31, 2021 and March 31, 2020, right-of-use assets of $0.5 million and $0.9 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities. Cash paid for amounts included in the present value of operating lease liabilities was $0.9 million and $1.0 million for the three months ended March 31, 2021 and March 31, 2020, respectively, and is included in operating cash flows.

Operating Lease Expense

Operating lease expense was $3.6 million and $2.0 million for the three months ended March 31, 2021 and March 31, 2020, respectively. This expense included $1.0 million for the three months ended March 31, 2021 and March 31, 2020 for long-term operating leases, with the remainder for variable and short-term lease expense.

Lessor Operating Leases

We are the lessor of tractors and trailers under operating leases with initial terms of 2 to 10 years. We recognize revenue for such leases on a straight-line basis over the term of the lease. Revenues were $3.1 million and $3.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively. The following table presents information about the maturities of these operating leases as of March 31, 2021.

(In thousands)	March 31, 2021
2021 (remaining)	$	7,206
2022	2,111
2023	—
2024	—
2025	—
Thereafter	—
Total	$	9,317

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Investments

3 Months Ended

Mar. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investments

Investments

Investment in Mastery Logistics Systems, Inc.

In 2020, we entered into a strategic partnership with Mastery Logistics Systems, Inc. (“MLSI”), a transportation technology development company. We are collaborating with MLSI to develop a cloud-based transportation management system using MLSI's SaaS technology which we have agreed to license. In 2020, we paid MLSI $5.0 million for shares of preferred stock of MLSI which represent approximately 5% ownership. This investment is being accounted for under ASC 321, Investments - Equity Securities and is recorded in other noncurrent assets on the consolidated balance sheet. As of March 31, 2021, no events have occurred that would indicate that the value of our investment in MLSI has changed.

Investment in TuSimple

On January 8, 2021, we made a $5.0 million equity investment in TuSimple, an autonomous trucking technology company. Our interest, which represents less than 1%, is being accounted for under ASC 321, Investments - Equity Securities and is recorded in other noncurrent assets on the consolidated balance sheet. As of March 31, 2021, no events have occurred that would indicate that the value of our investment in TuSimple has changed.

Subsequent Event

TuSimple completed its initial public offering in April 2021. Upon completion, our equity investment was converted to Class A common shares. We will record future changes in the value of our investment, based on the share price reported by Nasdaq, in other expense (income) on the consolidated statements of income.

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Credit Facilities

3 Months Ended

Mar. 31, 2021

Line of Credit Facility [Abstract]

Credit Facilities

Credit Facilities

As of March 31, 2021, we had unsecured committed credit facilities with two banks. We had with Wells Fargo Bank, N.A. a $300.0 million credit facility which will expire on May 14, 2024. We also had a $200.0 million credit facility with BMO Harris Bank N.A., which will expire on May 14, 2024. Borrowings under these credit facilities bear variable interest based on the London Interbank Offered Rate (“LIBOR”).

As of March 31, 2021 and December 31, 2020, our outstanding debt totaled $175.0 million and $200.0 million, respectively. We had $25.0 million outstanding under the credit facilities at a variable interest rate of 0.78% as of March 31, 2021. We had (i) an additional $75.0 million outstanding under the Wells Fargo Bank, N.A. credit facility at a variable rate of 0.78% as of March 31, 2021, which is effectively fixed at 2.32% with an interest rate swap agreement through May 14, 2024 and (ii) an additional $75.0 million outstanding under the BMO Harris Bank N.A. credit facility at a variable rate of 0.81% as of March 31, 2021, which is effectively fixed at 2.36% with an interest rate swap agreement through May 14, 2024. The $500.0 million of borrowing capacity under our credit facilities at March 31, 2021, is further reduced by $50.9 million in stand-by letters of credit under which we are obligated. Each of the debt agreements includes, among other things, financial covenants requiring us (i) to exceed a minimum ratio of earnings before interest, income taxes, depreciation and amortization to interest expense and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility). At March 31, 2021, we were in compliance with these covenants.

At March 31, 2021, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2021	$	—
2022	—
2023	—
2024	175,000
2025	—
Total	$	175,000

The carrying amounts of our long-term debt approximate fair value due to the duration of the notes and the variable interest rates.

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Commitments And Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

As of March 31, 2021, we have committed to property and equipment purchases of approximately $164.4 million.

We are involved in certain claims and pending litigation, including those described herein, arising in the ordinary course of business. The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements. Moreover, the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and related events unfold.

On May 17, 2018, in Harris County District Court in Houston, Texas, a jury rendered an adverse verdict against Werner Enterprises, Inc. (the “Company”) in a lawsuit arising from a December 30, 2014 accident between a Werner tractor-trailer and a passenger vehicle. On July 30, 2018, the court entered a final judgment against Werner for $92.0 million, including pre-judgment interest.

The Company has premium-based liability insurance to cover the potential outcome from this jury verdict. Under the Company’s insurance policies in effect on the date of this accident, the Company’s maximum liability for this accident is $10.0 million (plus pre-judgment and post-judgment interest) with premium-based coverage that exceeds the jury verdict amount. As a result of this jury verdict, the Company had recorded a liability of $24.9 million as of March 31, 2021, and $23.6 million as of December 31, 2020. Under the terms of the Company’s insurance policies, the Company is the primary obligor of the verdict, and as such, the Company has also recorded a $79.2 million receivable from its third-party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the consolidated balance sheets as of March 31, 2021 and December 31, 2020.

The Company is pursuing an appeal of this verdict. No assurances can be given regarding the outcome of any such appeal.

We have been involved in class action litigation in the U.S. District Court for the District of Nebraska, in which the plaintiffs allege that we owe drivers for unpaid wages under the Fair Labor Standards Act (“FLSA”) and the Nebraska Wage Payment and Collection Act and that we failed to pay minimum wage per hour for drivers in our Career Track Program, related to short break time and sleeper berth time. The period covered by this class action suit is August 2008 through March 2014. The case was tried to a jury in May 2017, resulting in a verdict of $0.8 million in plaintiffs’ favor on the short break matter and a verdict in our favor on the sleeper berth matter. As a result of various post-trial motions, the court awarded $0.5 million to the plaintiffs for attorney fees and costs. As of March 31, 2021, we had accrued for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter. Plaintiffs appealed the post-verdict amounts awarded by the trial court for fees, costs and liquidated damages, and the Company filed a cross appeal on the verdict that was in plaintiffs’ favor. The United States Court of Appeals for the Eighth Circuit denied Plaintiffs’ appeal and granted Werner’s appeal, vacating the judgment in favor of the plaintiffs. The appellate court sent the case back to the trial court for proceedings consistent with the appellate court’s opinion. On June 22, 2020, the trial court denied Plaintiffs’ request for a new trial and entered judgment in favor of the Company, dismissing the case with prejudice. On July 21, 2020, Plaintiffs’ counsel filed a notice of appeal of that dismissal.

We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items. Based on the knowledge of the facts, management does not currently believe the outcome of these class actions is likely to have a material adverse effect on our financial position or results of operations. However, the final disposition of these matters and the impact of such final dispositions cannot be determined at this time.

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Earnings Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock awards. Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. There are no differences in the numerators of our computations of basic and diluted earnings per share for any periods presented.

The computation of basic and diluted earnings per share is shown below (in thousands, except per share amounts).

	Three Months Ended March 31,
	2021		2020
Net income	$	46,492	$	23,058
Weighted average common shares outstanding	67,932		69,253
Dilutive effect of stock-based awards	291		356
Shares used in computing diluted earnings per share	68,223		69,609
Basic earnings per share	$	0.68	$	0.33
Diluted earnings per share	$	0.68	$	0.33

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Equity Compensation

3 Months Ended

Mar. 31, 2021

Equity Compensation [Abstract]

Equity Compensation

Equity Compensation

The Werner Enterprises, Inc. Amended and Restated Equity Plan (the “Equity Plan”), approved by the Company’s shareholders in 2013, provides for grants to employees and non-employee directors of the Company in the form of nonqualified stock options, restricted stock and units (“restricted awards”), performance awards, and stock appreciation rights. The Board of Directors or the Compensation Committee of our Board of Directors determines the terms of each award, including the type, recipients, number of shares subject to and vesting conditions of each award. No awards of stock appreciation rights have been issued under the Equity Plan to date, and no stock option awards are outstanding. The maximum number of shares of common stock that may be awarded under the Equity Plan is 20,000,000 shares. The maximum aggregate number of shares that may be awarded to any one person in any one calendar year under the Equity Plan is 500,000. As of March 31, 2021, there were 6,537,930 shares available for granting additional awards.

Equity compensation expense is included in salaries, wages and benefits within the Consolidated Statements of Income. As of March 31, 2021, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $16.1 million and is expected to be recognized over a weighted average period of 2.0 years. The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands): 

	Three Months Ended March 31,
	2021		2020
Restricted awards:
Pre-tax compensation expense	$	1,549	$	1,398
Tax benefit	395		356
Restricted stock expense, net of tax	$	1,154	$	1,042
Performance awards:
Pre-tax compensation expense	$	946	$	1,010
Tax benefit	241		258
Performance award expense, net of tax	$	705	$	752

We do not have a formal policy for issuing shares upon vesting of restricted and performance awards. Such shares are generally issued from treasury stock. From time to time, we repurchase shares of our common stock, the timing and amount of which depends on market and other factors. Historically, the shares acquired from such repurchases have provided us with sufficient quantities of stock to issue for equity compensation. Based on current treasury stock levels, we do not expect to repurchase additional shares specifically for equity compensation during 2021.

Restricted Awards

Restricted stock entitles the holder to shares of common stock when the award vests. Restricted stock units entitle the holder to a combination of cash or stock equal to the value of common stock when the unit vests. The value of these shares may fluctuate according to market conditions and other factors. Restricted awards currently outstanding vest over periods ranging from 12 to 60 months from the grant date of the award. The restricted awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes restricted award activity for the three months ended March 31, 2021:

	Number of Restricted Awards (in thousands)	Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	367	$	35.78
Granted	114	41.30
Vested	(107)	34.96
Forfeited	(2)	35.53
Nonvested at end of period	372	37.70

We estimate the fair value of restricted awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate. Cash settled restricted stock units are recorded as a liability within the Consolidated Balance Sheets and are adjusted to fair value each reporting period.

The total fair value of previously granted restricted awards vested during the three-month periods ended March 31, 2021 and March 31, 2020 was $4.5 million and $2.9 million, respectively. We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations were recorded as treasury stock.

Performance Awards

Performance awards entitle the recipient to shares of common stock upon attainment of performance objectives as pre-established by the Compensation Committee. If the performance objectives are achieved, performance awards currently outstanding vest, subject to continued employment, 36 months after the grant date of the award. The performance awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes performance award activity for the three months ended March 31, 2021:

	Number of Performance Awards (in thousands)	Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	262	$	32.96
Granted	74	40.93
Vested	(100)	33.04
Forfeited	—	—
Nonvested at end of period	236	35.42

The 2021 performance awards are earned based upon the level of attainment by the Company of specified performance objectives related to cumulative diluted earnings per share for the two-year period from January 1, 2021 to December 31, 2022. Shares earned based on cumulative diluted earnings per share may be capped based on the Company’s total shareholder return during the three-year period ended December 31, 2023, relative to the total shareholder return of a peer group of companies for the same period. The 2021 performance awards will vest in one installment on the third anniversary from the grant date. In January 2021, the Compensation Committee determined the 2018 fiscal year performance objectives were achieved at a level above the target level; the additional shares earned above the target level were included in 2020 shares granted.

We estimate the fair value of performance awards based upon the market price of the underlying common stock on the date of grant, reduced by the present value of estimated future dividends because the awards are not entitled to receive dividends prior to vesting. Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate.

The vesting date fair value of performance awards that vested during the three-month periods ended March 31, 2021 and March 31, 2020 was $4.1 million and $5.8 million, respectively. We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes. The shares withheld to satisfy the tax withholding obligations were recorded as treasury stock.

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Segment Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information

We have two reportable segments – Truckload Transportation Services (“TTS”) and Werner Logistics.

The TTS segment consists of two operating units, Dedicated and One-Way Truckload. These units are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting. Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers. One-Way Truckload is comprised of the following operating fleets: (i) the medium-to-long-haul van (“Van”) fleet transports a variety of consumer nondurable products and other commodities in truckload quantities over irregular routes using dry van trailers, including Mexico cross-border routes; (ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams; (iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States; and (iv) the Temperature Controlled fleet provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers. Revenues for the TTS segment include a small amount of non-trucking revenues which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where we utilize a third-party capacity provider.

The Werner Logistics segment generates the majority of our non-trucking revenues through three operating units that provide non-trucking services to our customers. These three Werner Logistics operating units are as follows: (i) Truckload Logistics, which uses contracted carriers to complete shipments for brokerage customers and freight management customers for which we offer a full range of single-source logistics management services and solutions; (ii) the intermodal (“Intermodal”) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation; and (iii) Werner Final Mile (“Final Mile”) offers home and business deliveries of large or heavy items using third-party agents with two associates operating a liftgate straight truck. In first quarter 2021, we completed the previously-announced sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group, and we realized a $1.0 million gain when the transaction closed on February 26, 2021. Werner Logistics will continue to provide North American truck brokerage, freight management, intermodal and final mile services.

We generate other revenues from our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities. None of these operations meets the quantitative reporting thresholds. As a result, these operations are grouped in “Other” in the table below. “Corporate” includes revenues and expenses that are incidental to our activities and are not attributable to any of our operating segments, including gains and losses on sales of assets not attributable to our operating segments. We do not prepare separate balance sheets by segment and, as a result, assets are not separately identifiable by segment. Inter-segment eliminations in the table below represent transactions between reporting segments that are eliminated in consolidation. The following table summarizes our segment information (in thousands):

	Three Months Ended March 31,
	2021		2020
Revenues
Truckload Transportation Services	$	462,949	$	464,863
Werner Logistics	137,853		112,164
Other	15,399		15,068
Corporate	379		619
Subtotal	616,580		592,714
Inter-segment eliminations	(134)		(11)
Total	$	616,446	$	592,703
Operating Income
Truckload Transportation Services	$	57,628	$	29,089
Werner Logistics	4,574		1,085
Other	866		2,900
Corporate	(597)		(2,008)
Total	$	62,471	$	31,066

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Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

New Accounting Pronouncements Adopted

New Accounting Pronouncements Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which reduces complexity in accounting for income taxes by removing certain exceptions to the general principles stated in Topic 740 and by clarifying and amending existing guidance to improve consistent application of and simplify other areas of Topic 740. The Company adopted ASU 2019-12 as of January 1, 2021. Upon adoption, this update had no effect on our financial position, results of operations and cash flows.

Accounting Standards Updates Not Yet Effective

Accounting Standards Updates Not Yet Effective

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848)” which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The provisions of this update are effective for all entities as of March 12, 2020 through December 31, 2022 and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. We are evaluating the impact of the optional expedients in this update and their applicability to modifications of our existing credit facilities and hedging relationships that reference LIBOR.

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Revenue (Tables)

3 Months Ended

Mar. 31, 2021

Revenue Recognition [Abstract]

Disaggregation of revenue by revenue source

The following table presents our revenues disaggregated by revenue source (in thousands):

	Three Months Ended March 31,
	2021		2020
Truckload Transportation Services	$	462,949	$	464,863
Werner Logistics	137,853		112,164
Inter-segment eliminations	(134)		(11)
Transportation services	600,668		577,016
Other revenues	15,778		15,687
Total revenues	$	616,446	$	592,703

Revenue by geographical location

The following table presents our revenues disaggregated by geographic areas in which we conduct business (in thousands). Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country. If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin.

	Three Months Ended March 31,
	2021		2020
United States	$	555,239	$	530,071
Mexico	38,756		43,421
Other	22,451		19,211
Total revenues	$	616,446	$	592,703

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Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases, Operating [Abstract]

Schedule of Operating Lease Information

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of March 31, 2021.

(In thousands)	March 31, 2021
Maturity of Lease Liabilities
2021 (remaining)	$	2,806
2022	2,934
2023	1,910
2024	1,507
2025	969
Thereafter	473
Total undiscounted operating lease payments	$	10,599
Less: Imputed interest	(633)
Present value of operating lease liabilities	$	9,966
Balance Sheet Classification
Right-of-use assets (recorded in other non-current assets)	$	9,506
Current lease liabilities (recorded in other current liabilities)	$	3,408
Long-term lease liabilities (recorded in other long-term liabilities)	6,558
Total operating lease liabilities	$	9,966
Other Information
Weighted-average remaining lease term for operating leases	3.70 years
Weighted-average discount rate for operating leases	3.30		%

Schedule of Lessor Operating Lease Maturities

The following table presents information about the maturities of these operating leases as of March 31, 2021.

(In thousands)	March 31, 2021
2021 (remaining)	$	7,206
2022	2,111
2023	—
2024	—
2025	—
Thereafter	—
Total	$	9,317

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Credit Facilities (Tables)

3 Months Ended

Mar. 31, 2021

Line of Credit Facility [Line Items]

Schedule of Maturities of Long-term Debt

At March 31, 2021, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2021	$	—
2022	—
2023	—
2024	175,000
2025	—
Total	$	175,000

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of Basic And Diluted Earnings Per Share

The computation of basic and diluted earnings per share is shown below (in thousands, except per share amounts).

	Three Months Ended March 31,
	2021		2020
Net income	$	46,492	$	23,058
Weighted average common shares outstanding	67,932		69,253
Dilutive effect of stock-based awards	291		356
Shares used in computing diluted earnings per share	68,223		69,609
Basic earnings per share	$	0.68	$	0.33
Diluted earnings per share	$	0.68	$	0.33

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Equity Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Equity Compensation [Abstract]

Schedule of Equity Compensation Expense and Related Income Tax Benefit Recognized

The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands): 

	Three Months Ended March 31,
	2021		2020
Restricted awards:
Pre-tax compensation expense	$	1,549	$	1,398
Tax benefit	395		356
Restricted stock expense, net of tax	$	1,154	$	1,042
Performance awards:
Pre-tax compensation expense	$	946	$	1,010
Tax benefit	241		258
Performance award expense, net of tax	$	705	$	752

Schedule of Equity Compensation, Restricted Award Activity

The following table summarizes restricted award activity for the three months ended March 31, 2021:

	Number of Restricted Awards (in thousands)	Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	367	$	35.78
Granted	114	41.30
Vested	(107)	34.96
Forfeited	(2)	35.53
Nonvested at end of period	372	37.70

Schedule of Equity Compensation, Performance Award Activity

The following table summarizes performance award activity for the three months ended March 31, 2021:

	Number of Performance Awards (in thousands)	Weighted Average Grant Date Fair Value ($)
Nonvested at beginning of period	262	$	32.96
Granted	74	40.93
Vested	(100)	33.04
Forfeited	—	—
Nonvested at end of period	236	35.42

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Schedule of Segment Information

The following table summarizes our segment information (in thousands):

	Three Months Ended March 31,
	2021		2020
Revenues
Truckload Transportation Services	$	462,949	$	464,863
Werner Logistics	137,853		112,164
Other	15,399		15,068
Corporate	379		619
Subtotal	616,580		592,714
Inter-segment eliminations	(134)		(11)
Total	$	616,446	$	592,703
Operating Income
Truckload Transportation Services	$	57,628	$	29,089
Werner Logistics	4,574		1,085
Other	866		2,900
Corporate	(597)		(2,008)
Total	$	62,471	$	31,066

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Revenue (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Revenue from Contracts with Customer [Line Items]
Accounts receivable, net	$ 347,902	$ 341,104
Contract assets	8,900	6,900
Contract liabilities	1,700	$ 1,500
Revenue recognized from contract liability during the period	$ 1,500
Average transit time	3 days

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Revenue (Disaggregation of Revenue by Revenue Source) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of revenue
Revenues	$ 616,446	$ 592,703
Truckload Transportation Services
Disaggregation of revenue
Revenues	462,949	464,863
Werner Logistics
Disaggregation of revenue
Revenues	137,853	112,164
Inter-segment eliminations
Disaggregation of revenue
Revenues	(134)	(11)
Transportation Services
Disaggregation of revenue
Revenues	600,668	577,016
Other revenues
Disaggregation of revenue
Revenues	$ 15,778	$ 15,687

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Revenue (Disaggregation of Revenue by Geographical Areas) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of revenue
Revenues	$ 616,446	$ 592,703
United States
Disaggregation of revenue
Revenues	555,239	530,071
Mexico
Disaggregation of revenue
Revenues	38,756	43,421
Others
Disaggregation of revenue
Revenues	$ 22,451	$ 19,211

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Leases (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Lessee, Lease, Description [Line Items]
Right-of-use asset recognized as non-cash asset addition	$ 0.5	$ 0.9
Cash paid for amounts included in measurement of operating lease liability	0.9	1.0
Total operating lease expense	3.6	2.0
Operating lease expense	1.0	1.0
Operating lease revenues	$ 3.1	$ 3.3
Minimum
Lessee, Lease, Description [Line Items]
Operating leases remaining term, lessee	1 year
Operating leases remaining term, lessor	2 years
Maximum
Lessee, Lease, Description [Line Items]
Operating leases remaining term, lessee	11 years
Operating leases remaining term, lessor	10 years

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Leases (Schedule of Operating Lease Information) (Details) $ in Thousands	Mar. 31, 2021 USD ($) Rate
Lessee, Lease, Description [Line Items]
2021 (remaining)	$ 2,806
2022	2,934
2023	1,910
2024	1,507
2025	969
Thereafter	473
Total undiscounted operating lease payments	10,599
Less: Imputed interest	(633)
Present value of operating lease liabilities	9,966
Right-of-use assets (recorded in other non-current assets)	9,506
Current lease liabilities (recorded in other current liabilities)	3,408
Long-term lease liabilities (recorded in other long-term liabilities)	$ 6,558
Weighted-average remaining lease term for operating leases	3 years 8 months 12 days
Weighted-average discount rate for operating leases | Rate	3.30%

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Leases (Schedule of Lessor Operating Lease Maturities) (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract]
2021 (remaining)	$ 7,206
2022	2,111
2023	0
2024	0
2025	0
Thereafter	0
Total	$ 9,317

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Investments (Details) $ in Millions	Mar. 31, 2021 USD ($)
Mastery Logistics System, Inc.
Schedule of Equity Method Investments [Line Items]
Value of ownership interest in investment	$ 5.0
Ownership interest in investment	5.00%
TuSimple
Schedule of Equity Method Investments [Line Items]
Value of ownership interest in investment	$ 5.0

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Credit Facilities (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks	$ 500.0
Borrowings outstanding	175.0	$ 200.0
Stand-by letters of credit	50.9
Wells Fargo Bank, N.A. Mature May 14, 2024
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks	$ 300.0
Committed credit facilities maturity	May 14, 2024
Borrowings outstanding	$ 75.0
Interest rate swap facility, amount	$ 75.0
Line of credit facility, interest rate	0.78%
Interest rate swap facility, fixed interest	2.32%
Interest rate swap facility, maturity date	May 14, 2024
BMO Harris Bank N.A. Mature May 14, 2024
Line of Credit Facility [Line Items]
Total of committed credit facilities with banks	$ 200.0
Committed credit facilities maturity	May 14, 2024
Borrowings outstanding	$ 75.0
Interest rate swap facility, amount	$ 75.0
Line of credit facility, interest rate	0.81%
Interest rate swap facility, fixed interest	2.36%
Interest rate swap facility, maturity date	May 14, 2024
Additional Outstanding Debt Under Credit Facilities
Line of Credit Facility [Line Items]
Borrowings outstanding	$ 25.0
Line of credit facility, interest rate	0.78%

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Credit Facilities (Details) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Line of Credit Facility [Line Items]
2021	$ 0.0
2022	0.0
2023	0.0
2024	175.0
2025	0.0
Total	$ 175.0	$ 200.0

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Commitments And Contingencies (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2021	Dec. 31, 2020	Dec. 30, 2014
Loss Contingencies [Line Items]
Commitment for property and equipment purchases			$ 164.4
Loss contingency, damages awarded, value		$ 0.8
Loss contingency, damages awarded, attorney fees and costs		$ 0.5
May 17, 2018 Verdict [Member]
Loss Contingencies [Line Items]
Loss contingency, damages awarded, value	$ 92.0
Self insurance retained liability					$ 10.0
Loss contingency, estimate of possible loss			24.9	$ 23.6
Loss contingency, receivable, noncurrent			79.2	79.2
Loss contingency, accrual, noncurrent			$ 79.2	$ 79.2

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Earnings Per Share (Basic And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Net income	$ 46,492	$ 23,058
Weighted average common shares outstanding	67,932	69,253
Dilutive effect of stock-based awards	291	356
Shares used in computing diluted earnings per share	68,223	69,609
Basic earnings per share	$ 0.68	$ 0.33
Diluted earnings per share	$ 0.68	$ 0.33

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Equity Compensation (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Equity Compensation [Abstract]
Maximum shares of common stock	20,000,000
Maximum annual shares awarded to employee	500,000
Shares available for granting additional awards	6,537,930
Unrecognized compensation cost of non-vested equity compensation awards	$ 16.1
Unrecognized compensation cost of non-vested equity compensation awards expected to be recognized over a weighted average period (years)	2 years
Restricted Stock
Equity Compensation [Abstract]
Fair value of awards vested	$ 4.5	$ 2.9
Restricted Stock | Minimum
Equity Compensation [Abstract]
Vesting period (months)	12 months
Restricted Stock | Maximum
Equity Compensation [Abstract]
Vesting period (months)	60 months
Performance Shares
Equity Compensation [Abstract]
Vesting period (months)	36 months
Fair value of awards vested	$ 4.1	$ 5.8

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Equity Compensation (Equity Compensation Expense And Related Income Tax Benefit Recognized) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Restricted Stock
Equity Compensation [Abstract]
Pre-tax compensation expense	$ 1,549	$ 1,398
Tax benefit	395	356
Stock expense, net of tax	1,154	1,042
Performance Shares
Equity Compensation [Abstract]
Pre-tax compensation expense	946	1,010
Tax benefit	241	258
Stock expense, net of tax	$ 705	$ 752

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Equity Compensation (Schedule of Equity Compensation Restricted Stock Activity) (Details) - Restricted Stock shares in Thousands	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Equity Compensation [Abstract]
Number of shares nonvested at beginning of period | shares	367
Number of shares granted | shares	114
Number of shares vested | shares	(107)
Number of shares forfeited | shares	(2)
Number of shares nonvested at end of period | shares	372
Weighted average grant date fair value nonvested at beginning of period | $ / shares	$ 35.78
Weighted average grant date fair value shares granted | $ / shares	41.30
Weighted average grant date fair value shares vested | $ / shares	34.96
Weighted average grant date fair value shares forfeited | $ / shares	35.53
Weighted average grant date fair value nonvested at end of period | $ / shares	$ 37.70

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Equity Compensation (Schedule of Equity Compensation Performance Shares Activity) (Details) - Performance Shares shares in Thousands	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Equity Compensation [Abstract]
Number of shares nonvested at beginning of period | shares	262
Number of shares granted | shares	74
Number of shares vested | shares	(100)
Number of shares forfeited | shares	0
Number of shares nonvested at end of period | shares	236
Weighted average grant date fair value nonvested at beginning of period | $ / shares	$ 32.96
Weighted average grant date fair value shares granted | $ / shares	40.93
Weighted average grant date fair value shares vested | $ / shares	33.04
Weighted average grant date fair value shares forfeited | $ / shares	0
Weighted average grant date fair value nonvested at end of period | $ / shares	$ 35.42

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Segment Information (Narratives) (Details)	3 Months Ended
	Mar. 31, 2021 Segments
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Information (Summary Of Segment Information) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Segment Reporting Information [Line Items]
Revenues	$ 616,446	$ 592,703
Operating Income	62,471	31,066
Truckload Transportation Services
Segment Reporting Information [Line Items]
Revenues	462,949	464,863
Operating Income	57,628	29,089
Werner Logistics
Segment Reporting Information [Line Items]
Revenues	137,853	112,164
Operating Income	4,574	1,085
Other
Segment Reporting Information [Line Items]
Revenues	15,399	15,068
Operating Income	866	2,900
Corporate
Segment Reporting Information [Line Items]
Revenues	379	619
Operating Income	(597)	(2,008)
Subtotal
Segment Reporting Information [Line Items]
Revenues	616,580	592,714
Inter-segment eliminations
Segment Reporting Information [Line Items]
Revenues	$ (134)	$ (11)