In a rare instance of internal board of directors disagreements jumping into public view, a director at Werner Enterprises has resigned, citing in part the truckload carrier’s “unquestioned dedication to ESG [environmental, social and governance] considerations as a primary strategy.”
Vikram Mansharamani’s resignation came before he faced the likelihood of not being be reelected to a second three-year term.
In a letter dated Feb. 27 and revealed publicly in a Werner (NASDAQ: WERN) Securities and Exchange Commission filing Friday, Mansharamani said he was resigning because “ongoing material disagreements with the board over policies and practices lead me to conclude I am no longer able to effectively serve as a director.”
In the brief letter, Mansharamani said the disagreements “center on repeated related party transactions, the unquestioned dedication to ESG considerations as a primary strategy, and the refusal to adequately consider differing perspectives.”
The letter provided no specifics on the nature of the “repeated related party transactions.”
Companies often adopt policies aimed at improving their performance against ESG goals and are sometimes rated on their ESG principles by agencies such as S&P Global and Moody’s.
The Mansharamani letter said the resignation was effective immediately. His term was up this year, and he would have needed to stand for reelection at the company’s annual meeting May 14. He was first elected to a three-year term in 2021.
According to Werner’s proxy statement from last year, Mansharamani was a lecturer at Harvard University for five years, 2017-2022. He taught at Yale University on finance and business ethics during the same period. Mansharamani was also described as “an author, and his ideas and writings have appeared in Fortune, Forbes, the New York Times, and many other publications.”
He has a Ph.D. and two master’s degrees from MIT. His undergraduate degree is from Yale.
According to the 2023 proxy statement, Mansharamani was paid $62,500 in cash for his service as a director in 2022 and received stock awards valued at $100,000.
The resignation letter does not make reference to what Werner, in a filing with the SEC disclosing Mansharamani’s status, said was reluctance on the part of Werner’s directors to give Mansharamani a second term.
Werner’s 8-K filing said Mansharamani had told a nominating committee meeting on Feb. 19 that he was interested in a second term on the board of directors.
But two days later, according to Werner, the carrier’s chairman and CEO, Derek Leathers, told Mansharamani that he “did not have the support of the nominating committee and that the nominating committee would not be recommending him … for reelection.”
According to Werner, the disagreement over “social responsibility and related corporate governance” had been discussed with the board.
“While the Company disagrees with Dr. Mansharamani’s statements, it carefully considers its policies and related practices and takes his report of ongoing material disagreements with the Board of Directors seriously,” Werner’s 8-K statement said. “The Company is proud of its commitment to stewardship, community engagement, and effective corporate governance.”
It also said that it was making an 8-K filing to give Mansharamani “the opportunity to respond as to whether he agrees with the statements made in this Form 8K and if not, the respects in which he does not agree.”
There is a long list of events that the SEC says require the filing of an 8-K. Some of the definitions turn on whether an event can be considered “material.”
But one of the occurrences that the SEC says should trigger an 8-K filing is the “departure of directors or certain officers.”
Werner has published a corporate responsibility report annually since 2020. In the latest report, released in November, the company lays out an ESG scorecard of ongoing and completed goals.
It includes such developments as “build a waste and energy scorecard that measures progress around waste reduction and electricity use” under Environmental, “launch a formalized supplier diversity program” under Social and “appoint a lead independent director” under Governance.
That last goal was completed in February 2023 with the appointment of Scott Arves as lead independent director. Arves is a retired former director, president and CEO of Transport America, a truckload carrier that ultimately became part of TFI (NASDAQ: TFII).
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