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'Family business' taken to extreme

By BRUCE MEYERSON, Associated Press
Published May 30, 2006

Clarence Werner's unmistakable imprint can be seen all around Werner Enterprises Inc., as one might expect of any business named for its founder and chief executive.

His brother, Vern Werner, serves as "manager of owner-operator conversions" for the Omaha, Neb., freight company and owns two outside truck leasing businesses that were paid nearly $7-million by Werner Enterprises last year. Clint Werner, assistant director of the Omaha body shop, is a grandson to Clarence, nephew to vice chairman Gary Werner, and son of president Gregory Werner.

Scott Robertson, a son-in-law to Clarence, is aviation director. Brother-in-law Eric Downing and his wife, Julie, work as "director of specialized services" and "assistant director of corporate services," respectively. Gary Werner's brother-in-law, Daniel Matthew, works fleet truck sales. Seven family members of Werner's top executives were paid about $650,000 in compensation during 2005.

This corporate version of All In the Family, though notably extensive in the case of Werner Enterprises, is not rare. Public companies are required to reveal all kinds of details in proxy statements about how shareholder money is being spent. And not unlike children, corporate disclosures say the darndest things when it comes to mixing business and family. A search of proxies filed with the Securities and Exchange Commission in 2006 by the Standard & Poor's 500 shows at least 140 in which at least one of the words "son," "daughter," "brother" or "sister" appears, though some include companies where a relative holds stock controlled or owned jointly with an executive.

At Electronic Data Systems Corp., two sons of executive vice president Charles Feld reaped sizable financial rewards in 2005 from the Plano, Texas, provider of information technology services. Kenny Feld, described solely as "an employee," was paid $424,000 in cash during the year and received 10,000 restricted stock units.

The other son, Jon Feld, isn't an employee. He was CEO and 20 percent owner of Navigator Systems Inc., a company that EDS paid $3.8-million "to provide staff augmentation services related to EDS' development of a Business Intelligence team to support its corporate initiatives of corporate metrics, analytics and dashboards."

It wasn't until November that oversight of Navigator's work was removed from father Charles' purview, EDS said in its proxy statement. The filing said Navigator submitted the best proposal in a competitive bid conducted by the company's purchasing organization.

The familial ties are so extensive at some companies that the disclosures should come with visual aids to help investors follow along at home.

Werner Enterprises has entered into numerous real estate deals with CEO Werner. About $6.1-million has been spent on improvements to land leased from the Clarence L. Werner Revocable Trust, where there's lodging and a shooting range for "business meetings and customer promotion."

The Werner proxy details a highly complicated series of transactions involving a motel near the company's Dallas terminal. The CEO recently transferred to the company one-third ownership in the motel, which sits on land sold by the company to the CEO. Such arrangements needn't equate with poor performance - shares of Werner have doubled over five years and EDS has risen 40 percent in two years after losing nearly three-quarters of its value during 2002 - but even a strong showing doesn't excuse what might be seen as a sense of entitlement with a company's resources.

Bruce Meyerson is a national business columnist for the Associated Press. Write to him at bmeyerson@ap.org.

[Last modified May 30, 2006, 05:58:23]