LANDSTAR SYSTEM INC

The Company maintains performance-based compensation programs that are designed to encourage the Company’s Named Executives to achieve various financial goals linked to operating objectives both for the Company’s upcoming fiscal year as well as for the longer term performance of the enterprise. The Company’s performance-based compensation programs include the Company’s annual ICP and stock-based awards program, each of which are further described below.

Annual Incentive Compensation Program (“ICP”)

The Company’s objective with respect to its annual ICP is to encourage the Company’s Named Executives to achieve various strategic and financial goals linked to operating objectives for the Company’s upcoming fiscal year. These annual goals are developed as part of the Company’s budgeting process and in general are aligned with the Company’s long-term strategic and financial objectives. For the 2025 fiscal year, the strategic goals incentive portion of the ICP represented 30% of each Named Executive’s bonus opportunity and the Diluted Earnings Per Share (“DEPS”) incentive portion of the ICP represented 70% of each Named Executive’s bonus opportunity under the ICP:

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Each Named Executive has a “Participant’s Percentage Participation” or “PPP” under the ICP. The PPP multiplied by the Named Executive’s base salary is the“one-time” bonus payable to that Named Executive. The PPPs for the Named Executives in 2025 were as follows: Mr. Lonegro, 100%, Mr. Todd, 60%, Mr. Kneller, 60%, Mr. Coro, 60% and Mr. Miller, 60%, as illustrated below as a percentage of each Named Executive’s annual base salary.

Strategic Goals Incentive Portion of the ICP

The strategic goals incentive portion of the ICP was a new feature of the ICP in 2025. The Compensation Committee approved the establishment of Landstar’s 2025 Strategic Goals focused on growth, managing risk and enhancing support based on the Company’s “Five Points of the Star” framework and is intended to include a comprehensive set of discrete strategic goals and objectives for the Named Executives to execute upon during the applicable fiscal year. This framework was established following Mr. Lonegro’s appointment as CEO, with each point of the star weighted as follows for purposes of determining funding under this portion of the ICP:

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Financial Goals Incentive Portion of the ICP

For each annual fiscal period, the Compensation Committee reviews and approves, among other financial goals, the budgeted amount of diluted earnings per share, or “DEPS”. In establishing the budgeted amount of DEPS for 2025, the Company considered 2024 operating results, historical operating trends and forecasted 2025 U.S. economic factors such as industrial production, estimated freight demand and capacity availability. Once the annual budgeted goal is approved by the Compensation Committee, the ICP is designed to incent management to meet and, when possible, to exceed budgeted DEPS. An executive’s incentive compensation payment continues to increase as actual results for the fiscal year exceed budgeted amounts. As further described below, actual payments under the ICP are calculated based upon how much actual results exceed budgeted DEPS, using a predetermined formula, up to the maximum annual payment per eligible participant subject to the discretion of the Compensation Committee. For the 2025 fiscal year, the maximum annual ICP payment amount for Mr. Lonegro was $3 million, while the maximum annual ICP payment amount for each other Named Executive was $2.5 million.

With respect to the 2025 fiscal year, each of the Named Executives had a “threshold” under the ICP based on a specific budgeted DEPS amount approved in connection with the Company’s annual operating budget. The Compensation Committee believed it was appropriate to establish the “threshold” under the ICP based on DEPS because (1) each of the Named Executives were in positions of broad responsibility over various components that affect the Company’s DEPS amount, (2) the Compensation Committee believes that DEPS is an important financial measure reflecting the performance of the Company’s overall strategic direction and considers this metric in connection with its evaluation of the performance of the Named Executives, (3) the Compensation Committee believes it is appropriate to compensate the Named Executives upon achievement of Company-wide, rather than function-specific budgeted targets in order to focus executive management on Company-wide strategic and financial performance goals, (4) the Compensation Committee, at its discretion, has the ability to adjust calculated bonus amounts in the event of extraordinary or unusual items impacting DEPS and (5) the Company’s performance-based equity programs use a number of other financial measures, including operating income, pre-tax income per diluted share and total shareholder return (“TSR”), to determine executive compensation under those programs, as further described below under “Stock-based Awards”.

The “threshold” amount of DEPS under the ICP refers to the amount of DEPS that would be required to give effect to a“one-time DEPS bonus payment.” Budgeted DEPS does not include the aggregate amount of a“one-time DEPS bonus payment.” Therefore, each Named Executive would have received no DEPS bonus payment if the Company’s actual DEPS amount for the fiscal year was less than budgeted DEPS before giving effect to the funding of aone-time DEPS bonus payment. Each Named Executive would have received aone-time DEPS bonus payment if the Company’s actual DEPS amount for the fiscal year equaled budgeted DEPS after giving effect to suchone-time DEPS bonus payment. The amount of theone-time DEPS bonus payment under the financial goals incentive portion of the ICP would be calculated by multiplying each such executive’s base salary by such executive’s PPP, multiplied by 70%.

For 2025, if the Company’s actual DEPS for the fiscal year were greater than the “threshold” amount of DEPS, the“one-time DEPS bonus payment” would then be multiplied by a “multiplier” determined based on the amount by which actual DEPS exceeded threshold DEPS up to a multiplier of 3.0 for each executive. For every three percentage points by which actual DEPS exceeds threshold DEPS, the applicable multiplier increases by 1. For example, if actual DEPS equaled threshold DEPS, the applicable multiplier would be 1.0, if actual DEPS exceeded threshold DEPS by three percent, the applicable multiplier would be 2.0, and if actual DEPS exceeded threshold DEPS by six percent, the applicable multiplier would be 3.0, with linear interpolation used for values of DEPS between threshold and target. For purposes of this Compensation, Discussion and Analysis and the “Grants of Plan-Based Awards” table below, we refer to the amount of DEPS required to achieve a multiplier of 3.0 as the “target” amount of DEPS.

In the event actual DEPS exceeded target DEPS, a bonus pool would accrue as if the multiplier continued to increase above 3.0 for each participant under the ICP, but at half the rate as the accrual of the multiplier between threshold and target (i.e., every six percentage points in increase of DEPS would lead to an additional full point of the multiplier). The bonus pool amount would be calculated by multiplying each executive’sone-time DEPS bonus payout (calculated as described above) by such “additional multiplier”. In other words, once each executive achieved a multiplier of 3.0, if actual DEPS exceeded target DEPS by an additional 6 percent, the bonus amount would be calculated based on an additional multiplier of 1.0, for a total multiplier of 4.0, and if actual DEPS exceeded target DEPS by an additional 12 percent, the bonus amount would be calculated based on an additional multiplier of 2.0, for a total multiplier of 5.0. These calculations of individual amounts for each Named Executive may be adjusted upwards or downwards at the discretion of the Compensation Committee, subject to the $3 million maximum for the CEO and the $2.5 million maximum for the other Named Executives.

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Relationship of DEPS Performance and ICP Multiplier Under the ICP

For example, in a hypothetical year, (i) if threshold DEPS was $5.00, the amount of DEPS required to achieve an ICP multiplier of 3.0 (target DEPS) would be 6% greater than $5.00, or $5.30, and (ii) based on target DEPS of $5.30, the amount of DEPS required to achieve an ICP multiplier of 4.0 would be 6% greater than $5.30, or $5.62. Following from that hypothetical under the financial goals incentive portion of the ICP, if actual DEPS in such year was:

In the event the ICP multiplier exceeded 1.0, a Named Executive’s bonus payment under the strategic goals incentive portion of the ICP would be adjusted in the same manner and based on the same performance multiplier as additional bonus amounts payable under the financial goals incentive portion of the ICP, subject to the Compensation Committee’s evaluation of performance against the strategic goals.

Stock-based Awards

Under the Company’s Employee Equity Plan, stock-based awards may be granted to the Company’s Named Executives and certain other key employees. The Compensation Committee determines the type and number of stock-based awards to be granted to a Named Executive based on such Named Executive’s job responsibilities, the individual performance evaluation of such Named Executive and overall Company performance. Stock-based awards are typically granted to Named Executives once a year.

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The Compensation Committee believes that restricted stock, restricted stock units (the “RSUs”) and other forms of stock-based awards that may be granted under the Employee Equity Plan are effective methods that may be used as part of the Company’s long-term compensation program. Over each of the past five years, the Compensation Committee approved to Named Executives on an annual basis the grant of performance related stock awards in the form of RSUs (the “Performance-Based Regular RSU Awards”) and time-based restricted stock awards (the “Regular Restricted Stock Awards”). During the past five years, the Compensation Committee has also approvednon-recurring grants of restricted stock (the “Special Restricted Stock Awards”) primarily as a retention tool in connection with the hiring or promotion of certain specific individuals. No Special Restricted Stock Awards were granted to a Named Executive in 2025.

Performance-Based Regular RSU Awards

For the Performance-Based Regular RSU Awards, each RSU represents the contractual right to receive up to two shares of Common Stock (subject to adjustment as provided in the Employee Equity Plan) when the award becomes vested. Vesting occurs within a five-year period beginning on the third anniversary of the grant date, with the number of Performance-Based Regular RSU Awards that vest each year following such anniversary determined by (a) multiplying the number of RSUs credited to the Named Executive as of the applicable vesting date by (b) the Performance Multiple derived from the chart below, and (c) subtracting therefrom the number of RSUs that have previously vested; provided that, in no event, may the aggregate number of RSUs that become vested exceed 200% of the RSUs credited to the Named Executive under the applicable grant.

For purposes of the Performance-Based Regular RSU Awards, the determination of the Performance Multiple is based on the achievement of the applicable Performance Hurdle. The Performance Hurdle means the average of the percentage change (positive or negative) in operating income andpre-tax income per diluted share, in each case from continuing operations, from the most recently completed fiscal year as compared to the results from continuing operations for the base year, and is as set forth in the chart below, with linear interpolation between Performance Hurdles:

Pre-tax income per diluted share rather than anafter-tax financial earnings metric is used as part of the Performance Hurdle because it is a financial metric that will not be impacted by changes to applicable tax rates, and, in particular, any future changes to the federal corporate tax rate, during the performance period of the applicable RSU. With respect to the 2021 Performance-Based Regular RSU Awards only, the Compensation Committee adjusted the Performance Hurdle to reflect the add back ofnon-cash impairment charges of approximately $2.6 million recorded in the Company’s 2020 fiscal year related to certain assets, primarily customer contract and related customer relationship intangible assets, held by the Company’s Mexican subsidiaries.

No dividends are paid on the Performance-Based Regular RSU Awards and Performance-Based Regular RSU Awards have no voting rights. However, dividend equivalents are credited to the Named Executive with respect to the Performance-Based Regular RSU Awards each time that a dividend is paid on the Company’s Common Stock. The aggregate amount of such dividend equivalents so credited in respect of each such dividend are equal to the dividend paid on a share of Common Stock multiplied by, respectively, the number of outstanding 2021, 2022, 2023, 2024 and 2025 Performance-Based Regular RSU Awards credited to the Named Executive on the dividend record date. The dividend equivalents are converted into additional 2021, 2022, 2023, 2024 and 2025 Performance-Based Regular RSU Awards credited to the Named Executive on the dividend payment date based upon the fair market value of a share of Common Stock on such date.

The Compensation Committee has designed the manner in which Performance-Based Regular RSU Awards are deemed to be earned to reflect the level of performance that the Compensation Committee expects to be achieved, with an increasing percentage of the Performance-Based Regular RSU Awards earned based on an increasing level of positive average change in operating income andpre-tax income per diluted share during the five year performance period. Accordingly, no portion of the award is earned if there is no positive change based on the applicable calculation, 100% of the number of units credited is earned if the “target” level of positive increase is achieved, and a maximum of 200% of the number of units credited is earned if the “maximum” level of positive increase is achieved, with interpolation between these levels of

Landstar System, Inc. 2026 Proxy Statement 43 performance. The Compensation Committee believes the use of a “target” and “maximum” sets expectations associated with these awards both internally to employee recipients as well as to stockholders and other third parties to help them understand the derivation of the value attributed by the Company to these awards at the time of grant. The Compensation Committee further believes that the manner in which these awards are deemed to be earned emphasizes to employee recipients and investors that the expectation at the time of grant is that the employee recipients would need to perform at a high level in order for the Company’s performance to reach the targeted level of operating income andpre-tax income per diluted share for the employees to earn the “target” number of units during the term of the award, and, moreover, that superior performance by the Company is required for the employee recipients to earn the “maximum” performance-based award. With respect to each of these Performance-Based Regular RSU Awards, the number of RSUs that vest is determined on the third, fourth and fifth anniversary from the date of grant. The Compensation Committee believes a vesting schedule of no less than three, and up to five, years in duration from the date of grant is consistent with the long-term performance goals these awards are intended to reward.

The Compensation Committee has established post-vesting holding period requirements with respect to shares of Common Stock received upon vesting of Performance-Based Regular RSU Awards. Each Named Executive is subject to aone-year post-vesting holding requirement with respect to the shares received upon settlement of Performance-Based Regular RSU Awards, net of any applicable withholding obligations in connection with such settlement.

The Performance-Based Regular RSU Awards are intended to be annual, recurring grants, subject to the discretion of the Compensation Committee, that the Compensation Committee believes will be the principal long-term performance-based compensation vehicle through which the Named Executives will be granted additional equity in the Company, along with, to a lesser extent, grants of restricted stock. The Compensation Committee believes that growth in operating income andpre-tax income per diluted share are key financial measures reflecting the long-term growth of the enterprise. The Compensation Committee also believes that the Company would have to achieve superior financial performance in order for a Named Executive to vest at the maximum level with respect to a Regular RSU Award granted in 2025. For example, in order for a Named Executive to vest at the maximum level with respect to a Regular RSU Award granted in 2025, the Company would need to achieve in 2027, 2028 or 2029, an average of a 100% increase in operating income andpre-tax earnings per diluted share compared to those achieved in fiscal year 2024.

The Company believes that the granting of stock-based awards in the form of RSUs and restricted stock is designed to encourage the creation of long-term stockholder value as the number of RSUs that vest is dependent upon growth in the Company’s operating income andpre-tax income per diluted share and their value varies directly with the Company’s stock price and the benefit realized from restricted stock varies directly with the Company’s stock price. Further, the Compensation Committee believes that the Company’s use of stock-based awards is key as a retention tool, as the continued employment of the Named Executives is an important factor relating to the Company’s strategic execution and growth.

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