Annual Meeting: May 14, 2020

Total 2019 compensation for XPO Logistics CEO Bradley Jacobs of $7,885,337, included a stock award of $7,007,415.

The International Brotherhood of Teamsters believes that shareholders should vote against this compensation package based on three primary issues, outlined in a letter sent to shareholders and filed at the SEC and discussed below.

“Mega-equity grants have become routine: For the third time in four years, CEO Jacobs received a long-term award worth at least $20 million, with the latest award appearing to stem in part from concerns over the attainability of the prior year’s award. Critically, the headline pay number in the proxy statement may obscure the value of these grants.

“Prior awards have netted huge executive windfalls: Without XPO’s abrupt shift to repurchasing shares, CEO Jacobs would have foregone more than $21 million cash under the final tranche of his 2016 Performance Share Units (PSU). In all, over the course of four years, the grant has netted CEO Jacobs over $60 million in cash payouts. Critically, despite touted improvements, recent awards continue to blur the lines between rewarding operational earnings growth and lucrative payouts for financially engineered results.

“Flawed pay philosophy: With Jacobs holding more than $1.2 billion in XPO equity, and having realized substantial gains in his personal wealth since investing in the company in 2011, it is entirely unclear what retention or incentive problem the company is solving for when it pays CEO Jacobs more than double the median of his industry peers.”

The Teamsters are not the only ones to raise concerns. On May 4, the company submitted an additional proxy filing countering points made by shareholder advisory firm Glass Lewis. In their analysis. Glass Lewis noted, “…all-or-nothing goals are less aligned with shareholder interests and amplify the risks in the goal-setting process as compared with sliding scale payout schedules.” This indeed appears to align well with the Teamsters thoroughly researched concern that massive buybacks made the difference in whether goals were reached for vesting. “However, based on our analysis of XPO’s SEC filings, it appears that the 2019 tranche, carrying a $6.39 adjusted cash flow per share target, would not have vested without the tailwind from a multibillion dollar repurchase program, launched in late 2018.”