XPO Logistics
Meeting Date: May 11
XPO Logistics Chairman and CEO Brad Jacobs received a reported total compensation of $21,812,660 in 2020, an increase of more than 177% from the previous year. Several pay decisions in 2020 are the focus of a vote no campaign by the International Brotherhood of Teamsters, who are also calling on shareholders to vote against compensation committee members: Michael Jesselson, Jason Papastavrou, and Marlene Colucci.
In their letter filed at the SEC, the Teamsters state that XPO “has continued to use large ad hoc awards, over and above the objections of investors, that are simply outsized for a company of this size.” This statement is in reference to the cash-based long-term-incentive (LTI) award granted to Jacobs in 2020 that may be worth up to $80 million, the “fourth massive LTI CEO Jacobs has received in the past five years.” The letter continues:
“Worse, the award fully accelerates upon a change in control (seemingly in the absence of a qualifying termination of his employment), carries an abbreviated vesting schedule that could see half the award paid out in cash just 18 months after granting, and appears to have less-than-robust performance hurdles.”
In addition, Jacobs received an annual bonus ($3.3 million) in 2020 paid out at 165% of target that was only possible after lowering the minimum threshold for the bonus pool mid-year, following a corporate trend of modifying compensation plans in response to the COVID-19 pandemic. Together, these awards make Jacobs’ 2020 pay “more than 2.7 times the median of the company’s own selected peer group.”
The Teamsters acknowledge that XPO has provided “extensive disclosure and strong stock performance” but contend that “XPO’s compensation is difficult to rationalize” given the simultaneous oversized LTI award and modified bonus to the CEO at a time when the company is splitting. U.K.-based advisory firm Pirc also recommended shareholders vote against the pay package, describing how the company has claimed furlough support from U.K. taxpayers and arguing that it “is expected for companies relying on taxpayer support during the pandemic to make appropriate reductions in executive remuneration.” Given that 2019 was “the third time in four years Say-on-Pay received more than 30% opposition” at XPO, it is likely that shareholders will continue to voice their opposition this year.