DEF 14A of XPO, Inc.

Filed Apr 2, 2024 · FY20230001104659-24-042499

Open on EDGAR

SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES
SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES
SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES
| | Brad Jacobs | Jason Aiken | Bella Allaire | J. Wes Frye | Mario Harik | Michael Jesselson | Allison Landry | Irene Moshouris | Johnny C. Taylor, Jr. | | CORE COMPETENCIES THAT CONTRIBUTE TO SERVICE ON XPO’S BOARD | | | | | | | | | | | BUSINESS OPERATIONS experience provides a practical understanding of developing, implementing and assessing our operating plan and business strategy. | | | | | | | | | | | CORPORATE GOVERNANCE experience bolsters Board and management accountability, transparency and a focus on stockholder interests. | | | | | | | | | | | ENVIRONMENTAL SUSTAINABILITY AND CORPORATE RESPONSIBILITY experience enables our Board’s oversight to guide our long-term value creation for stockholders in sustainable ways. | | | | | | | | | | | EFFECTIVE CAPITAL ALLOCATION experience is crucial to our Board’s evaluation of our financial statements and capital structure. | | | | | | | | | | | CRITICAL ANALYSIS OF CORPORATE FINANCIAL STATEMENTS AND CAPITAL STRUCTURES experience assists our Board in overseeing our financial reporting and internal controls. | | | | | | | | | | | HUMAN RESOURCES MANAGEMENT experience enables our Board to further our goals of making XPO an inclusive workplace and aligning human resources objectives with our strategic and operational priorities. | | | | | | | | | | | MULTINATIONAL CORPORATE MANAGEMENT experience informs the Board’s strategic thinking, given the global nature of our business. | | | | | | | | | | | RISK MANAGEMENT experience is critical to our Board’s role in overseeing the risks facing our company, including mitigation measures. | | | | | | | | | | | TALENT MANAGEMENT AND ENGAGEMENT experience helps our company attract, motivate and retain top candidates for leadership roles and innovation teams. | | | | | | | | | | | SKILLS CENTRAL TO XPO’S STRATEGY | | | | | | | | | | | CUSTOMER SERVICE experience brings important perspectives to our Board, given the critical role of customer retention in our business model. | | | | | | | | | | | SALES AND MARKETING experience enables our Board to assist with our growth strategy, including the development of new services and customer sectors. | | | | | | | | | | | M&A, INTEGRATION AND OPTIMIZATION experience helps our company identify the optimal strategic opportunities for profitable growth and realize synergies. | | | | | | | | | | | TRANSPORTATION AND LOGISTICS INDUSTRY experience is important in understanding our competitive environment and market positioning. | | | | | | | | | | | TECHNOLOGY AND INFORMATION SYSTEMS experience provides valuable insights and best practices relevant to enhancing customer outcomes, internal efficiencies and cybersecurity. | | | | | | | | | |
DIRECTORS
DIRECTORS Our Board of Directors currently consists of nine members. The term of each of our directors will expire at the Annual Meeting. Our Board has nominated all of the current directors to stand for election at the Annual Meeting, as set forth in Proposal 1 on page 72 of this Proxy Statement. Below is information regarding our nine director nominees, including the experience, qualifications, attributes and skills that led our Board to conclude each nominee should serve as a director.
DIRECTORS
| Brad Jacobs Age: 67 | Director since 2011 Executive Chairman since 2022 | | Mr. Jacobs has served as executive chairman of our Board of Directors since November 1, 2022 and previously held the titles of chairman and chief executive officer from September 2, 2011 to October 31, 2022. Mr. Jacobs has served as non-executive chairman of the board of directors of GXO Logistics, Inc. (NYSE: GXO) since August 2, 2021 and RXO, Inc. (NYSE: RXO) since November 1, 2022. Additionally, he is the managing member of Jacobs Private Equity, LLC and Jacobs Private Equity II, LLC. Prior to XPO, Mr. Jacobs led two public companies: United Rentals, Inc. (NYSE: URI), which he founded in 1997, and United Waste Systems, Inc., which he founded in 1989. Mr. Jacobs served as chairman and chief executive officer of United Rentals for its first six years, and as executive chairman for an additional four years. He served eight years as chairman and chief executive officer of United Waste Systems. | | | Board Committees: None | | | Other Public Company Boards: GXO Logistics, Inc. (NYSE: GXO); RXO, Inc. (NYSE: RXO) | | | Mr. Jacobs’ Skills and Experience Aligned with XPO’s Strategy: ▪ In-depth knowledge of the company’s business resulting from his years of service with the company as its founder and chief executive officer provides the Board with invaluable insights and perspectives on the company’s operations and long-term strategic planning and priorities; ▪ Leadership experience as chief executive officer of several public companies, and as a thought leader on building and leading successful businesses, equips Mr. Jacobs to foster productive Board engagement and decision-making in his role as executive chairman; and ▪ Extensive past and current experience as chairman of the board of several public companies equips Mr. Jacobs to effectively lead the Board in its oversight of management, long-term strategic decision-making, risk management and creation of long-term stockholder value. | |
DIRECTORS
| Jason Aiken Age: 51 | Independent Director since 2021 | | Mr. Aiken has served as a director of the company since August 2, 2021. He has served as executive vice president, technologies of General Dynamics Corporation since January 2023; previously, he held the joint role of executive vice president, technologies, and chief financial officer from January 2023 to February 2024, and senior vice president and chief financial officer from January 2014 to January 2023. Earlier, Mr. Aiken was the senior vice president and chief financial officer of General Dynamics subsidiary Gulfstream Aerospace Corporation, and held positions with General Dynamics, including controller, vice president of accounting and director of consolidation accounting. Prior to joining General Dynamics, Mr. Aiken was an audit manager with Arthur Andersen LLP in Washington, D.C., where he provided audit and consulting services for defense contractors. He holds an MBA degree from the Kellogg School of Management at Northwestern University, and a bachelor’s degree in business administration and accounting from Washington and Lee University. | | | Board Committees: ▪ Chair of the Audit Committee | | | Other Public Company Boards: None | | | Mr. Aiken’s Skills and Experience Aligned with XPO’s Strategy: ▪ Significant financial and accounting expertise through his service as chief financial officer and other senior finance positions with a Fortune 100 company gives Mr. Aiken the deep knowledge of financial strategy and risk management needed to serve on XPO’s Board and lead the Audit Committee as committee chair; and ▪ Senior operational, transactional and strategic experience that has been and continues to be essential for XPO in its continued efforts to drive stockholder value creation. | |
DIRECTORS
| Bella Allaire Age: 70 | Independent Director since 2022 | | Ms. Allaire has served as a director of the company since November 1, 2022. She has served as executive vice president of technology and operations of Raymond James Financial, Inc. (NYSE: RJF) since June 2011. Previously, she was managing director and chief information officer of UBS Wealth Management, Americas, and held a variety of technology roles at Prudential Securities, including executive vice president and chief information officer. Ms. Allaire holds a bachelor’s degree from Lviv University in Ukraine. | | | Board Committees: ▪ Member of the Nominating, Corporate Governance and Sustainability Committee | | | Other Public Company Boards: None | | | Ms. Allaire’s Skills and Experience Aligned with XPO’s Strategy: ▪ Deep technical knowledge through her executive roles overseeing technological transformation and operations provide the company with important expertise in operational excellence and technological innovation; and ▪ Significant experience in cybersecurity, enterprise risk management and talent management provide valuable perspectives relevant to XPO’s technology and service ecosystems. | |
DIRECTORS
| J. Wes Frye Age: 76 | Independent Director since 2023 | | Mr. Frye has served as a director of the company since March 8, 2023. He served as senior vice president and chief financial officer for the last 18 years of his 30-year tenure with Old Dominion Freight Line, Inc. (NYSE: ODFL) from 1985 until his retirement in 2015. Mr. Frye holds an MBA degree in finance from the University of North Carolina at Charlotte, and a bachelor’s degree in business administration from Appalachian State University. | | | Board Committees: ▪ Member of the Operational Excellence Committee | | | Other Public Company Boards: None | | | Mr. Frye’s Skills and Experience Aligned with XPO’s Strategy: ▪ Direct LTL operational experience through 30 years with Old Dominion Freight Line brings important industry expertise to the Board as XPO executes its growth plan as a pure-play LTL business in North America; and ▪ Extensive finance and accounting knowledge gained through his role as an operationally-oriented chief financial officer at Old Dominion Freight Line gives Mr. Frye an understanding of financial undertakings and risks associated with XPO’s business and the industry. | |
DIRECTORS
| Mario Harik Age: 43 | Director since 2022 | | Mr. Harik has served as a director and chief executive officer of the company since November 1, 2022. Previously, he served as president of the company’s North America Less-Than-Truckload business unit from October 2021 to October 2022. Additionally, Mr. Harik held the role of XPO’s chief information officer from November 2011 to October 2022 and chief customer officer from February 2021 to January 2022. Prior to XPO, he was chief information officer and senior vice president of research and development with Oakleaf Waste Management, chief technology officer with Tallan, Inc., and co-founder and chief architect of web and voice applications with G3 Analyst. He holds a master’s degree in engineering, information technology from Massachusetts Institute of Technology, and a degree in engineering, computer and communications from the American University of Beirut in Lebanon. | | | Board Committees: ▪ Chair of the Operational Excellence Committee | | | Other Public Company Boards: None | | | Mr. Harik’s Skills and Experience Aligned with XPO’s Strategy: ▪ In-depth leadership of the North American LTL unit brings a deep understanding of XPO-specific business opportunities to the Board, including strategic and operational execution and avenues for growth within the LTL industry at large; and ▪ Extensive technical knowledge gained by Mr. Harik through his leadership of XPO’s global innovation strategy and proprietary technology development is directly relevant to the freight transportation sector and highly valuable to the Board. | |
DIRECTORS
| Michael Jesselson Age: 72 | Independent Director since 2011 | | Mr. Jesselson has served as a director of the company since September 2, 2011, and served as lead independent director from March 2016 to October 31, 2022. He has been president and chief executive officer of Jesselson Capital Corporation since 1994. Mr. Jesselson served as a director of Ascendant Digital Acquisition Corp. III from November 2021 to February 2023, and as a director of Ascendant Digital Acquisition Corp. I from July 2020 to July 2021. He was a director of American Eagle Outfitters, Inc. (NYSE: AEO) from November 1997 to May 2017, including a tenure as lead independent director. Earlier, he worked at Philipp Brothers, a division of Engelhard Industries, from 1972 to 1981, then at Salomon Brothers Inc., in the financial trading sector. He is a director of C-III Capital Partners LLC, Clarity Capital and other private companies, as well as numerous philanthropic organizations. Mr. Jesselson also serves as the chairman of Bar Ilan University in Israel. He attended New York University School of Engineering. | | | Board Committees: ▪ Member of the Audit Committee | | | Other Public Company Boards: None. | | | Mr. Jesselson’s Skills and Experience Aligned with XPO’s Strategy: ▪ Significant experience with public company governance through prior service on the board of directors of American Eagle Outfitters, including as its lead independent director, contributes to the effective, independent oversight of XPO’s Board and thoughtful approach to governance practices; and ▪ Mr. Jesselson’s extensive investment expertise is important to XPO’s business model as the company continues to invest in growth to generate value for its stockholders. | |
DIRECTORS
| Allison Landry Age: 45 | Independent Director since 2021 Vice Chair since 2022 | | Allison Landry has served as a director of the company since August 2, 2021 and as vice chair since November 1, 2022. From September 2005 to July 2021, she was a senior transportation research analyst with Credit Suisse, covering the trucking, railroad, airfreight and logistics industries. Previously, Ms. Landry served as a financial analyst and senior accountant with OneBeacon Insurance Company (now Intact Insurance Specialty Solutions). She holds an MBA degree from Boston University’s Questrom School of Business, and a bachelor’s degree in psychology from College of the Holy Cross. | | | Board Committees: ▪ Chair of the Nominating, Corporate Governance and Sustainability Committee ▪ Member of the Compensation and Human Capital Committee ▪ Member of the Operational Excellence Committee | | | Other Public Company Boards: None | | | Ms. Landry’s Skills and Experience Aligned with XPO’s Strategy: ▪ More than 15 years of experience in the transportation sector, equity markets, research and analysis give Ms. Landry an invaluable investor perspective and understanding of stockholder value creation as chair of the Board’s Nominating, Corporate Governance and Sustainability Committee; and ▪ Significant experience in investments, financial analysis and valuation enables Ms. Landry to help guide XPO in identifying optimal strategic opportunities for profitable growth. | |
DIRECTORS
| Irene Moshouris Age: 63 | Independent Director since 2022 | | Ms. Moshouris has served as a director of the company since November 1, 2022. She served as senior vice president-treasurer of United Rentals, Inc. (NYSE: URI) from April 2011 to June 2023, and previously held the position of vice president and treasurer from August 2006 to April 2011. Prior to United Rentals, Ms. Moshouris was vice president and deputy treasurer with Avon Products, Inc., corporate tax manager with GTE Corporation, tax director, pharmaceutical group with Sterling Winthrop Inc. and tax manager with Arthur Andersen & Co. She has also served as a director of Summit Materials, Inc. (NYSE: SUM) since January 2024. She holds a master of law in taxation from New York University School of Law, a juris doctorate degree from Brooklyn Law School and a bachelor’s degree from Queens College. | | | Board Committees: ▪ Member of the Audit Committee ▪ Member of the Compensation and Human Capital Committee ▪ Member of the Nominating, Corporate Governance and Sustainability Committee | | | Other Public Company Boards: Summit Materials, Inc. (NYSE: SUM) | | | Ms. Moshouris’ Skills and Experience Aligned with XPO’s Strategy: ▪ Financial leadership experience gained through her role as senior vice president and treasurer of United Rentals, as well as numerous treasury and tax management positions with global corporations, provides Ms. Moshouris with strong oversight skills necessary for a member of the Audit Committee; and ▪ International business experience, including roles in international treasury and global finance in Europe and Latin America, contributes to the Board’s oversight of strategy, given the global nature of XPO’s business. | |
DIRECTORS
| Johnny C. Taylor, Jr. Age: 55 | Independent Director since 2021 Lead Independent Director since 2022 | | Mr. Taylor has served as a director of the company since August 2, 2021 and as lead independent director since November 1, 2022. He has served as president and chief executive officer of the Society of Human Resources Management (SHRM) since December 2017. Previously, Mr. Taylor served as president and chief executive officer of the Thurgood Marshall College Fund from May 2010 to December 2017. He has served as a member of the board of directors of Guild Education since February 2021 and of iCIMS, Inc. since March 2021. He has served as a trustee of the University of Miami since June 2017, as a corporate member of Jobs for America’s Graduates since January 2018, and as a member of the National Board of Governors of the American Red Cross since June 2018. He has served as chairman of the President’s Advisory Board on Historically Black Colleges and Universities and on the White House American Workforce Policy Advisory Board since February 2018. Mr. Taylor holds a juris doctorate degree and a master’s degree from Drake University, and a bachelor’s degree from the University of Miami. | | | Board Committees: ▪ Chair of the Compensation and Human Capital Committee | | | Other Public Company Boards: None | | | Mr. Taylor’s Skills and Experience Aligned with XPO’s Strategy: ▪ More than 25 years of experience in senior human resources, legal and business roles across a variety of industries and organizations contributes to the Board’s oversight of business operations, while incorporating crucial legal and human capital considerations; and ▪ Expertise in human capital strategy and management, collective bargaining and labor relations, executive compensation, diversity and inclusion, workplace culture and leadership training comprise a critical skill set for the Board, given XPO’s continued focus on human capital oversight and DE&I efforts. | |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The following table sets forth information concerning the compensation of each person who served as a non-employee director of our company during 2023.
2023 Director Compensation Table(1)
2023 Director Compensation Table(1)
2023 Director Compensation Table(1)
| Name | Fees Earned in Cash(2) | Stock Awards(3) | Total | | Jason Aiken(4) | $105,000 | $190,000 | $295,000 | | Bella Allaire(5) | 80,000 | 190,000 | 270,000 | | J Wes Frye(6) | 75,333 | 155,644 | 230,977 | | Michael Jesselson(7) | 80,000 | 190,000 | 270,000 | | Allison Landry(8) | 135,000 | 190,000 | 325,000 | | Irene Moshouris(9) | 80,000 | 190,000 | 270,000 | | Johnny C. Taylor, Jr.(10) | 125,000 | 190,000 | 315,000 |
2023 Director Compensation Table(1)
(1) Compensation information for Mr. Jacobs and Mr. Harik, who are NEOs of our company, is disclosed in this Proxy Statement under the heading Executive Compensation — Compensation Tables. Mr. Jacobs and Mr. Harik did not receive additional compensation for their service as a director. (2) The amounts reflected in this column represent the fees earned by each director for his or her Board service during 2023. Because the fees are paid in arrears and fourth quarter payments are received during the following calendar year, fees earned more accurately represent the compensation received by our directors. (3) The amounts reflected in this column represent an annual grant amount made in 2023 as discussed in more detail below. Each director serving on January 3, 2023 was granted an award of 5,480 restricted stock units (“RSUs”), corresponding to the value of $190,000. Mr. Frye joined the company’s board on March 8, 2023 and received a prorated award of 4,447 RSUs worth $155,644 on March 15, 2023. These awards vested on January 2, 2024. (4) As of December 31, 2023, Mr. Aiken held 9,520 RSUs. As of the Record Date, Mr. Aiken directly owns 6,400 shares of our common stock and 4,040 RSUs that are or will become vested within 60 days of the Record Date, as disclosed in this Proxy Statement under the heading Security Ownership of Certain Beneficial Owners and Management. (5) As of December 31, 2023, Ms. Allaire held 5,480 RSUs. As of the Record Date, Ms. Allaire directly owns 6,382 shares of our common stock as disclosed in this Proxy Statement under the heading Security Ownership of Certain Beneficial Owners and Management. (6) As of December 31, 2023, Mr. Frye held 4,447 RSUs. As of the Record Date, Mr. Frye directly and indirectly owns 7,447 shares of our common stock as disclosed in this Proxy Statement under the heading Security Ownership of Certain Beneficial Owners and Management. (7) As of December 31, 2023, Mr. Jesselson held 21,368 RSUs. As of the Record Date, Mr. Jesselson directly and indirectly owns a total of 295,509 shares of our common stock and 15,888 RSUs that are or will become vested within 60 days of the Record Date, as disclosed in this Proxy Statement under the heading Security Ownership of Certain Beneficial Owners and Management. (8) As of December 31, 2023, Ms. Landry held 5,480 RSUs. As of the Record Date, Ms. Landry directly owns a total of 8,840 shares of our common stock as disclosed in this Proxy Statement under the heading Security Ownership of Certain Beneficial Owners and Management. (9) As of December 31, 2023, Ms. Moshouris held 5,480 RSUs. As of the Record Date, Ms. Moshouris directly owns 6,382 shares of our common stock as disclosed in this Proxy Statement under the heading Security Ownership of Certain Beneficial Owners and Management. (10) As of December 31, 2023, Mr. Taylor held 9,520 RSUs. As of the Record Date, Mr. Taylor directly owns a total of 6,400 shares of our common stock and 4,040 RSUs that are or will become vested within 60 days of the Record Date, as disclosed in this Proxy Statement under the heading Security Ownership of Certain Beneficial Owners and Management. The compensation of our directors is subject to approval by our Board of Directors, which is based, in part, on the recommendation of the Compensation and Human Capital Committee. Directors who are employees of our company do not receive additional compensation for service as members of either our Board or its committees. For service during calendar year 2023, our non-employee directors received an annual cash retainer of $80,000, payable quarterly in arrears, and time-based restricted stock units (“Time-Based RSUs”) worth $190,000. The annual grant of such Time-Based RSUs was made on the first business day of 2023 (the “RSU Grant Date”) and the number of units was determined by dividing $190,000 by the average of the closing prices of the company’s common stock on the 10 trading days immediately preceding the RSU Grant Date. The grant vested on the first business day of 2024. The vice chair of the Board received an additional $25,000 annual cash retainer, payable quarterly in arrears. The lead independent director received an additional $25,000 annual cash retainer, payable quarterly in arrears. The chairs of the Audit Committee, Compensation and Human Capital Committee, and Nominating, Corporate Governance and Sustainability Committee received an additional cash retainer of $25,000, $20,000 and $20,000, respectively, payable quarterly in arrears. The non-employee members of the Operating Excellence Committee each received an annual $20,000 cash retainer, payable quarterly in arrears, prorated from July 1, 2023. No other fees are paid to our directors for their attendance at or participation in meetings of our Board or its committees. We reimburse our directors for expenses incurred in the performance of their duties, including reimbursement for air travel and hotel expenses. In 2016, our Board adopted a stock ownership policy establishing guidelines for stock retention requirements that apply to our non-employee directors and executive officers. Non-employee directors are subject to stock ownership guidelines of six times the annual cash retainer. To determine compliance with these guidelines, generally, common shares held directly or indirectly, vested RSUs subject to deferred delivery of stock, and unvested RSUs subject solely to time-based vesting count toward meeting the stock ownership guidelines. Stock options and equity-based awards subject to performance-based vesting conditions do not count toward
2023 Director Compensation Table(1)
meeting stock ownership guidelines until they have been exercised or the performance conditions are met, as applicable. Until the guidelines are met, 70% of shares received upon settlement of equity-based awards are required to be retained by the director. A revised policy was adopted by the Board in June 2023, extending the period by when a newly-appointed director is required to reach the required ownership level from three years to five years from the date of his or her appointment. As of the Record Date, all members of our Board were in compliance with the policy.
2022 Stockholder Engagement and Responsiveness
2022 Stockholder Engagement and Responsiveness Following the 2022 Annual Meeting, in October of 2022 the Committee engaged in substantive discussions with stockholders representing 44% of shares outstanding, regarding compensation, environmental, social and governance topics. Committee members considered the feedback gathered in these sessions as they designed the 2023 compensation program. Stockholders communicated a desire for a formulaic approach to the annual short-term incentive structure, and that the plan be based on key operational metric(s) that drive tangible financial returns. Stockholders also communicated a desire for the Committee to establish a practice of granting equity awards through an annual long-term incentive award program, and that equity awards include multi-year performance and vesting periods. The 2023 compensation program design, which the Committee decided to proactively disclose in last year’s proxy statement, is fully responsive to this feedback as shown below:
2022 Stockholder Engagement and Responsiveness
| ELEMENT | HIGHLIGHTS OF 2023 COMPENSATION DESIGN | | | | BASE SALARY | Fixed cash compensation corresponds to experience and job scope, and is aligned with market levels | | | | SHORT-TERM INCENTIVE | EC, CEO, CFO and CLO | COO1 | | | | 100% based on performance against the company’s annual adjusted EBITDA target – Adjusted EBITDA is a mainstay financial performance metric in each of XPO’s reportable segments | Profit-sharing cash incentive program with 0.56% participation factor of LTL adjusted operating income – Adjusted operating income incentivizes improving profitability | | | LONG-TERM INCENTIVES | Performance-Based Restricted Stock Units (PSUs) based on three-year performance period – 40% LTL Adjusted EBITDA growth – 20% LTL Adjusted operating ratio Improvement – 40% Relative TSR vs. S&P Transportation Select Index PSU key features include: – Cliff vesting contingent upon performance hurdles – Post-vesting sales restriction of one year – TSR portion earned at target if TSR is in the 60th percentile Restricted Stock Units (RSUs) that vest annually over three years | Long-Term Incentive Components | | | | | EC and CEO: 80% PSU 20% RSU | CFO and COO: 65% PSU 35% RSU | | | | | CLO: 50% PSU 50% RSU |
2022 Stockholder Engagement and Responsiveness
| What We Heard from Stockholders | Actions Taken in Response | | ■ Preference for a short-term incentive program that is purely formulaic ■ Preference for short-term performance incentives to be based on operational metric(s) | ■ 2023 plan includes a fully formulaic short-term incentive structure ■ 2023 short-term incentive is based on operational metrics (Adjusted EBITDA or LTL adjusted operating income) | | ■ Preference for an established practice of granting equity awards on an annual basis | ■ Committee commits to granting annual equity awards to XPO’s NEOs on a go-forward basis, outside of new hire or promotion grants, and absent truly extraordinary circumstances | | ■ Preference for long-term incentives to be primarily performance-based ■ Preference for long-term incentive awards to include multi-year performance and vesting periods | ■ 2023 plan includes a long-term incentive structure with at least 50% PSUs; executive chairman and CEO’s long-term incentive structure is 80% PSUs ■ Set three-year performance periods ■ Designed RSUs to vest annually over three years |
Components of NEO Compensation
Components of NEO Compensation The compensation design for our NEOs has three components: annual base salary, short-term cash incentive and long-term incentive: ■ Annual base salary is a fixed form of competitive pay and corresponds to an executive’s experience and job scope. ■ Short-term cash incentive is a performance-based, at-risk component that offers competitive incentive pay designed to motivate and recognize performance in a given year. ■ Long-term incentive is an at-risk component that offers a combination of performance-based and time-based restricted share units and is designed to motivate sustained performance over time. It is granted in equity to reinforce long-term stockholder value creation. The long-term incentive component also strives to increase the retention of top talent over time.
Target Pay Levels for Current NEOs
Target Pay Levels for Current NEOs In setting total target pay levels for our NEOs, the Committee considers several factors, including competitive market compensation, company and individual performance, scope and scale of responsibility, unique skills, tenure, internal equity and stockholder feedback. The Committee reviews the competitiveness of the total target pay level against the established peer group, as well as against published market compensation survey data (see Peer Group and Market Analysis on page 45). The following table provides a synopsis of the Committee’s determinations of 2023 annual target compensation components for the current NEOs included in this Proxy Statement:
Target Pay Levels for Current NEOs
| NEO | Base Salary | Target STI | Total Target Cash Compensation | Target PSUs | Target RSUs | Total Target Direct Compensation | | Brad Jacobs | $600,000 | $900,000 | $1,500,000 | $4,000,000 | $1,000,000 | $6,500,000 | | Executive Chairman | | | | (80% of LTI) | (20% of LTI) | | | Mario Harik | $850,000 | $1,700,00 | $2,550,000 | $6,000,000 | $1,500,000 | $10,050,00 | | Chief Executive Officer | | | | (80% of LTI) | (20% of LTI) | | | Kyle Wismans | $550,000 | $550,000 | $1,100,000 | $845,000 | $455,000 | $2,400,000 | | Chief Financial Officer | | | | (65% of LTI) | (35% of LTI) | | | Dave Bates | $750,000 | $3,420,00 | $4,170,000 | $975,000 | $525,000 | $5,670,000 | | Chief Operating Officer | | | | (65% of LTI) | (35% of LTI) | | | Wendy Cassity | $575,000 | $575,000 | $1,150,000 | $500,000 | $500,000 | $2,150,000 | | Chief Legal Officer and Corporate Secretary | | | | (50% of LTI) | (50% of LTI) | |
Target Pay Levels for Current NEOs
Note: There were no increases to the 2023 Total Target Direct Compensation for Messrs. Jacobs or Harik including base salary, STI target or LTI target which is a combination of PSUs and RSUs.
Annual Short-Term Incentive Awards
Annual Short-Term Incentive Awards The company’s annual short-term incentive (“STI”) awards are designed to reward individuals for performance against pre-established metrics set by the Committee at the beginning of the fiscal year. Each NEO (except the COO) is assigned an annual short-term incentive target, which is a percentage of base salary, based on the NEO’s level of responsibility, scope of role and impact, and relevant executive compensation benchmarking data. Actual annual short-term incentive payouts are based on results achieved against the pre-established performance metrics determined by the Committee and can range from 0% to 200% of target. Short-term incentive payouts are made in cash. For fiscal year 2023, achievement of the annual short-term incentive for our NEOs (excluding the COO) was measured using XPO’s adjusted EBITDA target. Adjusted EBITDA was selected because it is a key metric in our financial performance and demonstrates how well we are able to operate in serving our customers. Adjusted EBITDA focuses on the financial outcome of operating decisions by eliminating the impact of non-operating items, such as income tax provision, interest expense, and depreciation and amortization expense. Because it reflects the operating profitability of our business, it can be compared with other companies by our leaders, current and potential investors, and others with an interest in XPO. It is important to assess adjusted EBITDA performance on both a short-term and long-term basis, which is aligned with stockholder expectations. While a version of adjusted EBITDA is utilized in both the annual short-term incentive and long-term plan, adjusted EBITDA in the long-term plan measures LTL adjusted EBITDA growth, thereby ensuring that short-term adjusted EBITDA performance is aligned with long-term growth objectives. This performance metric aligns with our company’s strategic objectives of driving profitable growth, deploying capital for superior returns over time, and increasing the value of XPO’s common stock for our stockholders. The short-term incentive plan is formulaic; no management modifier is included.
NEO STI Payouts excluding COO
NEO STI Payouts excluding COO Following the spin-off of RXO, performance targets needed to be recalibrated to reflect XPO’s current size and performance objectives, as well as the current economic environment. In terms of actual 2023 performance for the short-term incentive component of the executive compensation program, XPO’s annual adjusted EBITDA(*) of $996 million exceeded the 2023 target by approximately 8.7%. Based on the linear payout curve below, this yielded an STI payout of 143.45%.
NEO STI Payouts excluding COO
The table below shows the 2023 short-term incentive actual payout amounts. A summary of our COO’s short-term incentive payout appears below the table:
NEO STI Payouts excluding COO
| NEO | Base Salary | Target STI | | Payout Achievement | Final Payout | | | | % | $ | | | | Brad Jacobs | $600,000 | 150% | $900,000 | 143.45% | $1,291,050 | | Mario Harik | $850,000 | 200% | $1,700,000 | 143.45% | $2,438,650 | | Kyle Wismans(1) | $550,000 | 100% | $550,000 | 143.45% | $788,975 | | Wendy Cassity | $575,000 | 100% | $575,000 | 143.45% | $824,838 |
NEO STI Payouts excluding COO
(1) The 2023 STI for Mr. Wismans was prorated to include his prior roles during the year. Approximately 60% of his payout ($479,870) resulted from performance prior to becoming CFO, the remaining 40% ($309,105) related to his CFO role and the updated compensation terms outlined in his offer letter. * See Annex A for reconciliations of non-GAAP financial measures.
COO STI Payouts
COO STI Payouts In order to secure Mr. Bates’ commitment to join XPO from a top-tier competitor, the Committee designed a short-term incentive program based on the program provided to him by his previous employer. Under XPO’s program, Mr. Bates receives 0.56% of the company’s North American LTL adjusting operating Income on a quarterly basis. This plan is formulaic — no management modifier is included — and is based on a key financial metric specifically chosen because it is fully aligned with Mr. Bates’ responsibilities as COO; that is, to deliver best-in-class customer service, improve network efficiency, and increase yield performance. North American LTL adjusting operating Income is also a key comparative measure against industry peers, and improvements to the metric are expected to correlate to increased stockholder value. The design of this plan was proactively disclosed in our engagement sessions with stockholders. Stockholders recognized the uniqueness of the design versus the other NEOs, and the Committee received positive feedback on the plan, given that this incentive structure was needed to recruit and secure a best-in-class COO with unparalleled industry experience and, as designed, the Committee believes that achievement under the plan is directly linked to a key driver of stockholder value. The company’s 2023 North American LTL adjusted operating income* was $589 million, which resulted in a prorated short-term incentive cash payout for Mr. Bates of $2,468,431 based on his start date in 2023. This payout is directly reflective of Mr. Bates’ leadership throughout the year to improve cost efficiency through operational discipline, including increases in labor productivity and linehaul insourcing from third parties. Mr. Bates led initiatives that improved every major component of customer service quality and drove record levels of customer satisfaction in 2023; these initiatives included enhanced training programs related to loading procedures, which helped to deliver a record low damage claims ratio performance. Additionally, he equipped field operations with improved service tools that have reduced damages by more than 20% at the facilities where they have been implemented thus far, and his industry knowledge was integral to successfully executing XPO’s strategic acquisition of 28 service centers in late 2023. See Annex A for reconciliations of non-GAAP financial measures.
Long-Term Incentive Awards
Long-Term Incentive Awards The company’s long-term incentive (“LTI”) awards are designed to reward individuals for performance against pre-established longer-term targets set by the Committee at the beginning of each three-year performance period in alignment with the company’s long-term strategic plan. The key objective of the plan is to encourage performance that drives stockholder value over the long term. The LTI component of the program is equity-based and tied to ambitious targets for key operational and financial metrics. In responsiveness to stockholder feedback, the 2023 executive compensation plan: (i) establishes a practice for the Committee to approve long-term equity awards annually; and (ii) designs the 2023 long-term incentive award to be heavily weighted toward performance share units, with extended vesting periods.
2023 Annual LTI Award Design
2023 Annual LTI Award Design
2023 Annual LTI Award Design
| Pay Element | Performance Measures / Details | Weight | Metric Rationale | | Performance Restricted Stock Units (PSUs)(1) | LTL adjusted EBITDA growth over three-year performance period | 40% | Adjusted EBITDA growth is a critical operating performance measure that reflects the profitability of the LTL business. | | | LTL adjusted operating ratio improvement over three-year performance period | 20% | LTL adjusted operating ratio measures the cost-efficiency and profitability of our network operations, and informs disciplined investments in long-term growth. | | | Relative total shareholder return (TSR) performance vs. S&P Transportation Select Index, measured over a three-year performance period | 40% | TSR targets incentivize a strong focus on XPO’s growth in market position versus core competitors, while directly aligning executive compensation with stockholder value creation. Measurement over a three-year performance period ensures that the company is delivering increasing stockholder value over time relative to its peers. | | Restricted Stock Units (RSUs) | Ratable vesting annually over three years | | Three-year structure supports retention and helps build stock ownership, ensuring strong alignment with stockholder interest. |
2023 Annual LTI Award Design
(1) The PSU three-year cliff vesting is contingent upon the following performance target hurdles: (i) LTL Adjusted EBITDA Growth of at least 8 percent (40% of award); (ii) LTL Adjusted Operating Ratio Improvement of at least 300 basis points (20% of award); and (iii) company TSR ranking at the completion of the Performance Period relative to each company in the S&P Transportation Select Industry Index TSR (in the order of lowest to highest TSR) at a minimum of the 60th percentile (40% of award), continued XPO employment through the vesting date, and there is a post-vesting sales restriction of one year.
2023 Annual LTI Award Design
| 2023 NEO LTI Target Mixes | | | EC and CEO: 80% PSU 20% RSU | CFO and COO: 65% PSU 35% RSU | | | CLO: 50% PSU 50% RSU |
2023 NEO Annual LTI Awards Granted
2023 NEO Annual LTI Awards Granted The Committee approved the annual LTI awards for each of our NEOs in 2023. The table below shows the economic value of the approved targets for annual long-term equity grants for each NEO, excluding promotion or new hire awards:
2023 NEO Annual LTI Awards Granted
| NEO | PSUs | RSUs | Total | | Brad Jacobs | $4,000,000 | $1,000,000 | $5,000,000 | | Mario Harik | $6,000,000 | $1,500,000 | $7,500,000 | | Kyle Wismans(1) | — | $325,000 | $325,000 | | Dave Bates | $975,000 | $525,000 | $1,500,000 | | Wendy Cassity | $500,000 | $500,000 | $1,000,000 | | Carl Anderson | $1,137,500 | $612,500 | $1,750,000 |
2023 NEO Annual LTI Awards Granted
(1) 2023 annual LTI awards were granted prior to Mr. Wismans’ promotion to CFO.
Kyle Wismans
Kyle Wismans In connection with his promotion to chief financial officer in August 2023, to recognize his additional responsibilities and role in company performance: ■ Mr. Wismans was granted a long-term equity award of $500,000: • 50% in PSUs with a four-year cliff-vest, and achievement tied to TSR outperformance relative to the S&P Transportation Select Industry Index over a four-year period; and • 50% in time-based RSUs with a four-year cliff-vest. In connection with his promotion to senior vice president of revenue management and finance in February 2023 (prior to his promotion to CFO), to recognize his additional responsibilities and role in company performance: ■ Mr. Wismans was granted a long-term equity award of $750,000: • 60% in time-based RSUs with a three-year ratable vesting schedule on the anniversary of the grant date; and • 40% in PSUs with a three-year cliff-vest, and achievement tied to LTL adjusted EBITDA growth, LTL adjusted operating ratio improvement and TSR outperformance relative to the S&P Transportation Select Industry Index over a three-year period. Mr. Wismans will forfeit the unvested RSU and PSU portions of these awards if his employment is terminated for a reason other than death or an involuntary termination without cause. Regarding the RSUs, if Mr. Wismans is terminated without cause prior to the vesting date, a prorated portion of the RSUs will vest; if he dies, 100% of the RSUs will vest. Regarding the PSUs, if Mr. Wismans is terminated without cause prior to the vesting date, a prorated number of the target PSUs will vest; if he dies, 100% of the target PSUs will vest. In the event of a Change of Control, Mr. Wismans will continue to vest in these RSUs and PSUs, subject to acceleration on certain termination events.
Dave Bates
Dave Bates In connection with his hiring as chief operating officer in April 2023: ■ Mr. Bates was granted a new hire sign-on cash award of $1.725 million, which included a payment in lieu of the short-term incentive bonus that he was forced to forfeit upon joining XPO from his previous employer; and ■ Mr. Bates was granted a new hire sign-on long-term equity award grant date value of $7.15 million, which was less than the economic equivalent of the compensation he forfeited from his previous employer: • 63% in PSUs with five-year cliff-vest, and achievement tied to TSR outperformance relative to the S&P Transportation Select Industry Index over a five-year period; and • 37% in time-based RSUs with a two-year ratable vesting schedule on the anniversary of the grant date. Mr. Bates will forfeit the unvested portion of his new hire equity awards in the event his employment is terminated for a reason other than death or an involuntary termination without cause. Regarding the RSUs, if Mr. Bates is terminated without cause prior to the vesting date, a prorated portion of the RSUs will vest; if he dies, 100% of the RSUs will rest. Regarding the PSUs, if Mr. Bates is terminated without cause prior to the vesting date, a prorated number of the target PSUs will vest; if he dies, 100% of the target PSUs will vest. In the event of a Change of Control, Mr. Bates will continue to vest in these RSUs and PSUs, subject to acceleration on certain termination events. He must repay 100% of the cash bonus in the event he voluntarily terminates before 24 months of continuous employment.
Wendy Cassity
Wendy Cassity In connection with her hiring as chief legal officer in March 2023: ■ Ms. Cassity was granted a new hire sign-on cash award of $570,000; and ■ Ms. Cassity was granted a new hire sign-on long-term equity award with a grant date value of $370,000, which was less than the economic equivalent of the compensation she forfeited from her previous employer: • 100% time-based RSUs with a three-year ratable vesting schedule on the anniversary of the grant date. • Ms. Cassity will forfeit the unvested portion of her new hire equity award in the event her employment is terminated for cause or she resigns. If Ms. Cassity is terminated for any reason other than cause or voluntary termination, a prorated portion of her RSUs will vest; if she dies, 100% of her RSUs will vest. She must repay 100% of the cash sign-on award in the event she voluntarily terminates before 12 months of continuous employment, and repay 50% of the cash sign-on award if she leaves after 12 months but before 24 months of continuous employment.
Modification of the Outstanding 2020 Performance-based Cash LTI Award
Modification of the Outstanding 2020 Performance-based Cash LTI Award As previously disclosed in our 2023 proxy statement, the Committee converted the final tranche (2023) of Mr. Jacobs’ and Mr. Harik’s outstanding 2020 Performance-based Cash LTI Awards into performance-based equity awards in February 2023. The conversion
Modification of the Outstanding 2020 Performance-based Cash LTI Award
aligns with the approach the Committee took for the conversion of the previous (2022) tranche of the 2020 Performance-based Cash LTI Awards based on stockholder feedback, and aligns with our philosophy of designing compensation that motivates our leaders to drive long-term stockholder value. From a reporting perspective, the 2023 tranche modifications impact the 2023 Summary Compensation Table. The Summary Compensation Table includes the values of these older, previously-reported awards as though they are new incremental awards related to the 2023 performance year. In addition to modifying the awards to convert them from cash-based to equity-based, the Committee also took action to align the performance metrics for the 2023 tranche with XPO’s strategic priorities following the RXO spin-off. Given the feedback received from stockholders indicating a preference for relative total shareholder return (“rTSR”) as a metric in long-term compensation structures, the Committee removed the two metrics related to adjusted cash flow per share and replaced them with the singular metric of rTSR versus the S&P Transportation Select Industry Index. The rTSR is measured over the two-year performance period of November 1, 2022 to December 31, 2024. The legacy cash-based award also included metrics related to performance against an ESG scorecard, and, as further described below, the ESG Scorecard was modified to better reflect XPO priorities following the RXO spin-off. With these amendments, the revised 2023 ESG Scorecard contains 38 specific, measurable goals. To address stockholder requests for greater disclosure of the scorecard targets and achievements, details of the deliverables and achievements are presented in the table “ESG Scorecard – 2023 Deliverables and Achievements” in Annex B. Based on the performance period of January 1, 2023 to December 31, 2023, 33 of the 38 ESG Scorecard initiatives were achieved, resulting in an overall score of 86.8 / 100 points. Per the associated payout table shown below, this achievement results in a 150% payout, which represents 25% of the long-term performance-based equity replacement award. The Committee has certified the performance of the 2023 ESG scorecard at 150% of target. The rTSR portion of the award, which is 75% of the award, will not be finalized until the end of the performance period on December 31, 2024, at which time the total award value will be calculated and certified. The target award amounts, and the combined vesting/sales restriction schedules, did not change by modifying the 2023 tranche of the original awards. The Committee approved the following structure for the final (2023) tranche of the converted 2020 Performance-based Cash LTI Award:
Modification of the Outstanding 2020 Performance-based Cash LTI Award
| Weighting | Performance Metrics | Performance Measurement Period | Payout Scale (straight-line interpolation between values for relative TSR) | | | 75% | Relative TSR: XPO vs. S&P Transportation Select Index | November 1, 2022 (RXO spin-off date) through December 31, 2024(1) | Percentile vs. Index | % PSU Earned | | | | | < 40th | 0% | | | | | 40th | 25% | | | | | 50th | 65% | | | | | 60th | 100% | | | | | 75th | 200% | | 25% | Performance vs. ESG Scorecard Targets | 2023 deliverables stated in the ESG scorecard, modified to reflect remaining XPO business operations post-RXO spin-off | Scorecard Grade (Scale of 1-100) | % PSU Earned | | | | | < 80 points | 0% | | | | | ≥ 80 points and < 85 points | 100% | | | | | ≥ 85 points and < 90 points | 150% | | | | | ≥ 90 points | 200% | | Additional Key Features | | | | | | ■ Vesting schedule: Cliff-vest on February 9, 2025, contingent upon achieving the performance hurdles and continued employment through the vesting date. ■ Post-vest sales restriction: Lock-up on the sale or transfer of shares post-vesting until January 15, 2026; vesting plus sales lock-up aligns with the total vesting period of the 2023 original tranche of the 2020 Cash LTI. | | | | |
Modification of the Outstanding 2020 Performance-based Cash LTI Award
Start of 30-day trading average represents the period from November 1, 2022 to December 13, 2022.
STRONG COMPENSATION POLICIES AND PRACTICES
| WHAT WE DO | WHAT WE DON’T DO | | Significant emphasis on variable, at-risk compensation. XPO’s compensation program is heavily weighted toward variable compensation through short-term incentives and long-term incentives. This allows the Committee to closely align total compensation values with company performance on an annual and long-term basis. | No exceptional perquisites. Our NEOs have no relocation benefits, supplemental pension or retirement savings or financial planning services beyond what is provided broadly to all XPO employees. | | Substantial portion of compensation linked to creation of stockholder value. Performance-based awards are, and have been, subject to meaningful stock price and/or earnings-related performance goals measured over service-based vesting periods. In addition, the Committee regularly reviews the full portfolio of XPO stockholdings for each NEO to ensure there is a sufficient amount of compensation at risk if objectives are not met, further aligning compensation with stockholder returns and value creation. | No pledging or hedging of company stock. Under our insider trading policy, our company’s directors and executive officers, including the NEOs, are prohibited from pledging or holding company securities in a margin account. In addition, they are prohibited from engaging in hedging transactions, such as prepaid variable forwards, equity swaps, collars and exchange funds or any other transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of company equity securities. | | Stock ownership policies. The Board has established meaningful stock ownership guidelines and stock retention requirements that encourage a strong ownership mindset among our NEOs. Our ownership guidelines specify 6x annual base salary for our CEO and 3x annual base salary for our other NEOs. | No guaranteed annual salary increases. Salary increases are not guaranteed annually and are instead determined based on review of our peer group, market survey data, an executive’s experience, tenure, Company and individual performance, scope and scale of responsibility, unique skills, internal equity, and stockholder feedback. | | Clawback policy. Our NEOs are subject to clawback restrictions with respect to incentive compensation. | No stock option repricing or discounted exercise price. XPO’s equity incentive plan does not permit either stock option repricing without stockholder approval or stock option awards with an exercise price below fair market value. | | Restrictive covenants. Our NEOs are subject to comprehensive non-competition and other restrictive covenants. | No golden parachute excise tax gross-ups. XPO does not provide golden parachute excise tax gross-ups. | | Engage with stockholders. Our Board values stockholder feedback and carefully considers investor perspectives in its decision-making processes for governance, compensation, and sustainability practices. | No consultant conflicts. The Committee retains an independent compensation consultant who performs services only for the Committee, as described in more detail below under the heading Role of the Committee’s Independent Compensation Consultant. |
Role of the Committee’s Independent Compensation Consultant
Role of the Committee’s Independent Compensation Consultant The Committee directly retained Exequity as its independent advisor for 2023. Among other things, the Committee’s independent advisor consults on compensation and governance matters, monitors trends and evolving market practices in executive compensation, and provides general advice and support to the Committee and the Committee’s chair. Exequity’s support for the Committee in 2023 included reviewing LTI award grant proposals and LTI modifications for NEOs, providing guidance on the evolution of considerations following the RXO spin-off, providing guidance with the design of the annual STI program and reviewing the content of this CD&A. Exequity did not provide any other services to the company.
Role of the Committee’s Independent Compensation Consultant
The Committee considered the independence of Exequity in light of applicable SEC rules and NYSE listing standards. After taking into account the absence of any relationships with management and members of the Committee, as well as Exequity’s internal policies and other information provided to the Committee, the Committee determined that no conflicts of interest existed that would prevent Exequity from serving as an independent compensation consultant to the Committee.
Peer Group and Market Analysis
Peer Group and Market Analysis XPO competes for the best talent within the transportation industry and across industries within the broader economic landscape. In order to attract and retain high-performing talent, the Committee references prevailing pay rates when establishing target compensation opportunities. To do this, the Committee reviews executive pay levels and practices across the peer group established for this purpose by the Committee, as well as market survey data. The peer group serves as the principal reference group for evaluating our NEOs’ compensation. Survey data derived from a range of business sectors serves as a secondary reference to ensure reasonableness, with a focus on companies with revenues between $5 billion and $10 billion in annual revenue, which is comparable to XPO’s revenue. The Committee prefers to evaluate a range of information regarding market pay practices, as: (i) XPO has a longstanding history of sourcing executives from a diversity of industries outside of the transportation and logistics sectors; and (ii) the number of pure-play public transportation carriers of a size similar to XPO is extremely limited; therefore, the ultimate peer group is a mix of companies that extend beyond the actual business profile of XPO to adjacent industries. At the start of 2023, a detailed review of the peer group was conducted to reflect XPO’s go-forward size and operating characteristics, given its transformation in North America. The review focused on industry, labor market competitors, revenue, market capitalization and organizational similarity to determine relevance. Based on this evaluation, and with input and consultation from Exequity, the Committee established a new peer group consisting of 19 companies, with revenues ranging from 0.4x to 3.0x XPO’s revenues, with XPO’s 2022 revenue of $7.7 billion ranking at the 44th percentile. This resulted in the removal of two companies from the prior peer group — United Parcel Service, Inc. and FedEx Corporation — due to their revenue size, given that our company had become a standalone LTL provider in North America, and the addition of 10 new peers. All of the companies in the new 2023 peer group were determined to be comparable to XPO in terms of industry, revenue, market capitalization and labor market:
Peer Group and Market Analysis
| 2023 Peer Group(1) | | | | ArcBest Corporation | Hub Group, Inc. | Old Dominion Freight Line, Inc. | | Avis Budget Group, Inc. | J.B. Hunt Transport Services, Inc. | Ryder System, Inc. | | C.H. Robinson Worldwide, Inc. | Knight-Swift Transportation Holdings, Inc. | Schneider National, Inc. | | CSX Corporation | Landstar System, Inc. | TFI International Inc. | | Expeditors Int’l of Washington, Inc. | Matson, Inc. | Union Pacific Corporation | | Hertz Global Holdings, Inc. | Norfolk Southern Corporation | Werner Enterprises, Inc. |
Peer Group and Market Analysis
(1) Due to its bankruptcy, Yellow Corporation was removed from the peer group in mid-2023 on a go-forward basis. The peer group and survey data review conducted at the start of 2023 was used to evaluate target pay levels for fiscal year 2023. In addition to reviewing peer group and survey market data, the Committee considers other internal and external factors in setting compensation for executives. These factors include, among others, an executive’s experience, tenure, retention and succession plan considerations, and company performance.
Guidelines
Guidelines Stock ownership guidelines are expressed as a multiple of each NEO’s annual base salary: ■ CEO: 6x annual base salary ■ Other NEOs: 3x annual base salary Compliance with our stock ownership guidelines is generally determined using the aggregate count of shares of common stock held directly or indirectly by the NEO, plus unvested restricted stock units subject solely to time-based vesting. Stock options, whether vested or unvested, and equity-based awards subject to performance-based vesting conditions, are not counted toward meeting stock ownership guidelines until they have settled or been exercised, as applicable.
Guidelines
Until the stock ownership guidelines are met, an executive is required to retain 70% of the net shares (after tax withholding) received upon settlement of equity-based awards. A newly appointed executive is required to reach his or her stock ownership guideline no later than five years from the date of appointment. As of the Record Date, all NEOs were in compliance with our stock ownership guidelines. In addition to our stock ownership guidelines, certain awards of our executive chairman and CEO were amended during 2023 to include one-year holding periods after vesting, as described above, and certain other LTI awards of our NEOs require one-year holding periods after vesting.
Annual STI Compensation
Annual STI Compensation Beyond the mandated clawback provisions under the SEC rules and NYSE listing standards, the employment agreements for Mr. Jacobs and Mr. Harik provide that if the NEO has engaged in fraud or other willful misconduct that contributes materially to any financial restatement or material loss to the company or any of its affiliates, the company may: (i) require repayment by the NEO of any cash STI or annual STI previously paid, net of any taxes paid by the NEO on such STI; (ii) cancel any earned but unpaid cash STI or annual STI; and/or (iii) adjust the NEO’s future compensation in order to recover an appropriate amount with respect to the restated financial results or the material loss.
Long-Term Incentive Compensation
Long-Term Incentive Compensation Beyond the mandated clawback provisions under the SEC rules and NYSE listing standards, the employment agreements for Mr. Jacobs and Mr. Harik include a clawback provision under which the NEO may be required, upon certain triggering events, to repay all or a portion of LTI compensation that was previously paid (including proceeds from previously exercised and vested equity-based awards) and to forfeit unvested equity-based awards during the term of the employment agreements. In cases where a cure is possible, the NEO will first be provided with a specified cure period. These clawback provisions are generally triggered if any of the following conditions apply. If the NEO: ■ Is terminated for cause, as defined in the employment agreement; ■ Has engaged in fraud or other willful misconduct that contributes materially to any significant financial restatement or material loss to our company or any of our affiliates; and/or ■ Breaches the restrictive covenants that are applicable under the employment agreement. The time period for the company to take action under this clawback provision is up to six months from the date of termination for cause and, for all other specified conditions, at any time up to six months after learning of the conduct, but in no event more than two years after the NEO engages in such conduct. The LTI agreements for NEOs provide that if they breach any restrictive covenant contained in any arrangements with the company or engage in fraud or willful misconduct that contributes materially to any financial restatement or material loss to the company or any of its subsidiaries, the company may require the NEO to repay any long-term incentive compensation that was previously paid (including proceeds from vested equity-based awards) and to forfeit unvested equity-based awards. In cases where a cure is possible, the NEO will first be provided with a specified cure period. The Severance Agreements for our NEOs provide that they will be subject to any legally mandated policy relating to the recovery of compensation, to the extent that the company is required to implement such policy pursuant to applicable law. In 2023, the NYSE adopted new listing standards addressing policy requirements for the mandatory recovery of executive incentive-based compensation by issuers with securities listed on the exchange. Our Board believes that it is in the best interests of the company and its stockholders to maintain a culture that emphasizes accountability. The Clawback Policy provides for the recovery of certain incentive compensation in the event of an accounting restatement as described below, and is designed to comply with Section 10D of the Exchange Act, Rule 10D-1 promulgated under the Exchange Act and Section 303A.14 of the New York Stock Exchange Listed Company Manual. The Clawback Policy provides that the company shall promptly recoup any erroneously awarded compensation received by any covered executive in the event of an accounting restatement. The accounting restatements covered include any restatement of the Company’s financial statements due to material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to such
Long-Term Incentive Compensation
financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected. The amount of erroneously awarded compensation subject to recovery under the Clawback Policy is the amount of incentive-based compensation received during the three-year period preceding the date of the accounting restatement exceeds the amount that would have been received had it been determined based on the restated amounts. To the extent that the rules adopted by the NYSE or the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act are broader than the clawback provisions contained in our NEO agreements, and to the extent that the company is required to implement any additional clawback provisions pursuant to applicable law, each NEO will be subject to additional clawback provisions pursuant to such rules as described under the heading Employment Agreements with NEOs—Clawbacks.
Equity Granting Policy
Equity Granting Policy All equity awards to NEOs are approved by the Committee with a grant date determined at the time of approval. We do not time the grant of equity awards in coordination with the release of material non-public information.
Employment Agreements
Employment Agreements We have entered into multi-year employment agreements with certain of our NEOs to promote long-term retention, while allowing the Committee to exercise discretion in designing incentive compensation programs. The material compensation-related terms of these agreements are described under the heading Employment Agreements with NEOs and the tables that follow the CD&A. Mr. Jacobs and Mr. Harik each entered into employment agreements in connection with their transition to their new roles in August and September 2022, respectively; these agreements became effective upon the RXO spin-off on November 1, 2022. Mr. Wismans entered into an offer letter agreement, a Confidential Information Protection Agreement, and a Change of Control and Severance Agreement in connection with his promotion to CFO, effective August 11, 2023. Mr. Bates entered into an offer letter agreement, a Confidential Information Protection Agreement, and a Change of Control and Severance Agreement in connection with his hiring as COO, effective April 21, 2023. Ms. Cassity entered into an offer letter agreement, a Confidential Information Protection Agreement, and a Change of Control and Severance Agreement in connection with her hiring as CLO, effective March 13, 2023. Mr. Anderson entered into an offer letter agreement, a Confidential Information Protection Agreement, and a Change of Control and Severance Agreement in connection with his hiring as CFO, effective November 8, 2022. The above mentioned agreements for our NEOs (collectively, the “NEO Agreements”) outline the terms and conditions of employment with XPO, including all restrictive covenants that benefit the company, with provisions such as non-competition and non-solicitation of customers and employees, as well as the target compensation opportunity designated by the Committee for base salary, annual STIs, annual LTIs, and other separation benefits that the executives would qualify for under specified circumstances. The material terms of these agreements are described under the heading Employment Agreements with NEOs. There are no multi-year compensation guarantees established in the NEO Agreements. The Committee may adjust compensation levels from year to year based on its annual assessments of performance and market benchmarks. For 2023, the Committee determined that no changes to base salary or target variable compensation levels were warranted, given the recent assessments of competitive pay levels conducted in late 2022, and were updated and assessed again in early 2023.
Summary Compensation Table
Summary Compensation Table The table below sets forth information concerning the total compensation awarded to, earned by or paid to our NEOs for the year ended December 31, 2023. We compensate our NEOs pursuant to the terms of their respective employment agreements. The information reported in the table below reflects the terms of such agreements. More information about our NEOs’ employment agreements is provided under the heading Employment Agreements with NEOs. Note: The Stock Awards column in the table below includes the impacts of modifications to previously-granted cash and stock awards in 2023 and 2022. Refer to the “Supplemental Summary Compensation Table” below for a representation of the compensation paid to our NEOs for fiscal years 2023 and 2022, excluding the modifications of awards granted in prior years.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Awards(2)(3) ($) | Non-Equity Incentive Plan Compensation(4) ($) | All Other Compensation(5) ($) | Total ($) | | Brad Jacobs(6) Executive Chairman | 2023 | 600,000 | — | 14,125,046 | 1,291,050 | 14,880 | 16,030,976 | | | 2022 | 929,561 | — | 34,600,992(7) | 11,446,524 | 13,880 | 46,990,957 | | | 2021 | 1,000,000 | — | — | 20,625,000 | 418,280 | 22,043,280 | | Mario Harik(8) Chief Executive Officer | 2023 | 850,000 | — | 9,084,498 | 2,438,650 | 14,463 | 12,387,611 | | | 2022 | 557,857 | — | 7,381,069(7) | 1,075,334 | 13,463 | 9,027,723 | | | 2021 | 500,000 | 100,000 | — | 4,914,063 | 12,863 | 5,526,925 | | Kyle Wismans(9) Chief Financial Officer | 2023 | 440,913 | 795,000 | 1,679,932 | 788,975 | 14,102 | 3,718,922 | | David Bates(10) Chief Operating Officer | 2023 | 522,116 | 1,725,000 | 11,485,130 | 2,468,431 | 1,120 | 16,201,797 | | Wendy Cassity(11) Chief Legal Officer | 2023 | 464,423 | 570,000 | 1,324,127 | 824,838 | 1,210 | 3,184,598 | | Carl Anderson(12) Former Chief Financial Officer | 2023 | 384,616 | — | 1,645,481 | — | 22,633 | 2,052,730 | | | 2022 | 93,750 | — | 1,091,845(13) | 129,452 | 263 | 1,315,310 |
Supplemental Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Awards(2)(3) ($) | Non-Equity Incentive Plan Compensation(4) ($) | All Other Compensation(5) ($) | Total ($) | | Brad Jacobs(6) Executive Chairman | 2023 | 600,000 | — | 4,632,433 | 1,291,050 | 14,880 | 6,538,363 | | | 2022 | 929,561 | — | —(7) | 11,446,524 | 13,880 | 12,389,965 | | | 2021 | 1,000,000 | — | — | 20,625,000 | 418,280 | 22,043,280 | | Mario Harik(8) Chief Executive Officer | 2023 | 850,000 | — | 6,948,658 | 2,438,650 | 14,463 | 10,251,771 | | | 2022 | 557,857 | — | —(7) | 1,075,334 | 13,463 | 1,646,654 | | | 2021 | 500,000 | 100,000 | — | 4,914,063 | 12,863 | 5,526,925 | | Kyle Wismans(9) Chief Financial Officer | 2023 | 440,913 | 795,000 | 1,679,932 | 788,975 | 14,102 | 3,718,922 | | David Bates(10) Chief Operating Officer | 2023 | 522,116 | 1,725,000 | 11,485,130 | 2,468,431 | 1,120 | 16,201,797 | | Wendy Cassity(11) Chief Legal Officer | 2023 | 464,423 | 570,000 | 1,324,127 | 824,838 | 1,210 | 3,184,598 | | Carl Anderson(12) Former Chief Financial Officer | 2023 | 384,616 | — | 1,645,481 | — | 22,633 | 2,052,730 | | | 2022 | 93,750 | — | 1,091,845(13) | 129,452 | 263 | 1,315,310 |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth additional details regarding grants of equity plan-based awards for our NEOs in 2023.
Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(3) | | Name | Grant Date | Grant Type | Threshold (#)(1) | Target (#) | Maximum (#)(2) | | | | Brad Jacobs | 2/9/2023 | PSU | 49,551 | 264,271 | 528,542 | — | 9,492,613 | | | 3/6/2023 | PSU | 44,126 | 110,314 | 220,628 | — | 3,632,418 | | | 3/6/2023 | RSU | — | — | — | 27,579 | 1,000,015 | | Mario Harik | 2/9/2023 | PSU | 11,149 | 59,461 | 118,922 | — | 2,135,840 | | | 3/6/2023 | PSU | 66,189 | 165,472 | 330,944 | — | 5,448,654 | | | 3/6/2023 | RSU | — | — | — | 41,368 | 1,500,004 | | Kyle Wismans | 2/15/2023 | RSU | — | — | — | 11,917 | 449,986 | | | 3/6/2023 | PSU | 3,310 | 8,274 | 16,548 | — | 272,452 | | | 3/6/2023 | RSU | — | — | — | 8,963 | 324,998 | | | 8/15/2023 | PSU | 1,727 | 3,454 | 6,908 | — | 382,461 | | | 8/15/2023 | RSU | — | — | — | 3,454 | 250,035 | | Dave Bates | 4/21/2023 | PSU | 8,860 | 22,149 | 44,298 | — | 885,469 | | | 4/21/2023 | PSU | 51,113 | 102,226 | 204,452 | — | 7,424,674 | | | 4/21/2023 | RSU | — | — | — | 11,926 | 524,983 | | | 4/21/2023 | RSU | — | — | — | 60,200 | 2,650,004 | | Wendy Cassity | 3/15/2023 | PSU | 6,063 | 15,156 | 30,312 | — | 454,115 | | | 3/15/2023 | RSU | — | — | — | 11,216 | 370,016 | | | 3/15/2023 | RSU | — | — | — | 15,156 | 499,996 | | Carl Anderson(4) | 3/6/2023 | PSU | 12,549 | 31,371 | 62,742 | — | 1,032,977 | | | 3/6/2023 | RSU | — | — | — | 16,892 | 612,504 |
Grants of Plan-Based Awards
(1) Amounts in this column reflect the number of potential shares earned for threshold performance for each performance metric of each award. Please note that some performance metrics do not provide a threshold opportunity. The payout opportunity for threshold performance can be 0, 25% or 50% depending upon the terms and conditions for each performance metric for each award. (2) The maximum level that may be paid is 200% of target. (3) Amounts in this column reflect the grant date fair value of awards calculated in accordance with FASB ASC Topic 718, using the valuation methodology set forth in Note 15, Stock-Based Compensation in our Consolidated Financial Statements of our 2023 Form 10-K. (4) Mr. Anderson’s employment with the company terminated on August 11, 2023 and all outstanding stock awards were forfeited. Additional information relevant to the awards shown in the above table, including a discussion of the applicable performance criteria and the actual payouts under such awards, is included below under the heading Outstanding Equity Awards at Fiscal Year-End.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth the outstanding equity awards held by our NEOs as of December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#)(1)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Brad Jacobs | 1,301,176(5) | 113,790,006(5) | 617,034(6) | 54,046,008(6) | | Mario Harik | 313,620(7) | 27,469,976(7) | 765,878(8) | 67,083,254(8) | | Kyle Wismans | 27,762(9) | 2,431,674(9) | 23,456(10) | 2,054,511(10) | | David Bates | 72,126(11) | 6,317,516(11) | 248,750(12) | 21,788,013(12) | | Wendy Cassity | 26,372(13) | 2,309,923(13) | 30,312(14) | 2,655,028(14) | | Carl Anderson | —(15) | —(15) | —(15) | —(15) |
Outstanding Equity Awards at Fiscal Year-End
Note: Vesting of all outstanding equity awards is subject to continued employment by the NEO on the applicable vesting date, subject to certain exceptions in connection with a qualifying termination of employment. See the “Potential Payments Upon Termination or Change of Control” table below for more details. (1) In order to preserve the value of the awards held by employees continuing with XPO following each of the GXO and RXO spin-offs, as applicable, including our NEOs, the number of outstanding shares underlying outstanding awards were adjusted using the ratios and methodologies outlined in each employee matters agreement, as applicable. The GXO ratio was based on the closing price per share of XPO common stock on July 30, 2021, compared to the closing price per share of XPO common stock on August 2, 2021. The RXO ratio was based on either: (i) the closing price per share of XPO common stock on October 31, 2022, compared to the closing price per share of XPO common stock on November 1, 2022; or (ii) a distribution ratio of one share of RXO common stock for every share of XPO common stock. The modification of these awards in connection with either spin-off did not result in incremental compensation cost. (2) In accordance with the RXO spin-off distribution ratio, certain outstanding RSUs on November 1, 2022, received additional time-based RSUs covering shares of stock of RXO. The outstanding RXO RSUs are as follows: Mr. Jacobs received 1,174,495 RXO RSUs valued at $27,318,754; Mr. Harik received 221,923 RXO RSUs valued at $5,161,929 and 28,031 PSUs that have been certified at 52% and converted to time-based RSUs through the remainder of the vesting period valued at $652,001; and Mr. Wismans received 3,428 RXO RSUs valued at $79,735 calculated using $23.26, the closing price of RXO common stock on the NYSE on December 29, 2023, the last trading day of our fiscal year 2023. The value of these RXO RSUs is not reflected in the table above. (3) The values reflected in this column were calculated using $87.59, the closing price of a company share on the NYSE on December 29, 2023, the last trading day of our fiscal year 2023. (4) In accordance with the RXO spin-off distribution ratio, certain outstanding PSUs on November 1, 2022 received additional PSUs covering shares of stock of RXO. The outstanding RXO PSUs are as follows: Mr. Harik received 28,031 RXO PSUs valued at $652,001 using $23.26, the closing price of RXO common stock on the NYSE on December 29, 2023, the last trading day of our fiscal year 2023. These PSUs have been certified at 52% and have converted to time-based RSUs for the remainder of the vesting period. The value of these RXO RSUs is not reflected in the table above. (5) Consists of 1,174,495 RSUs that vest on December 31, 2024 and are restricted from sale until December 31, 2025, 99,102 PSUs which vest February 9, 2025 that resulted from the performance certification at 150% and will be counted as time-based RSUs through the remainder of the vesting period and 27,579 RSUs that vest in equal installments on March 15, 2024, March 15, 2025 and March 15, 2026. (6) Consists of 198,203 target PSUs that vest on February 9, 2025, and 110,314 target PSUs that vest on March 6, 2026, subject to achievement of the Performance Criteria defined below. PSUs are reflected at the maximum level. The 99,102 PSUs that resulted from the performance certification at 150% are converted to time-based RSUs through the remainder of the vesting period on February 9, 2025. a. PSUs noted as vesting on December 31, 2024, subject to achievement of threshold opportunity at 25% payout for the company’s Total Shareholder Return Percentile Position vs. Index Companies in the S&P Transportation Select Industry Index for performance at the 40th percentile performance, and the maximum level that may be paid is 200% of target. The target award can be earned based on attainment of the company’s Total Shareholder Return Percentile Position vs. Index Companies in the S&P Transportation Select Industry Index for performance at the 60th percentile performance for the period November 1, 2022 through December 31, 2024 (75% of award), or achievement against goals related to ESG as outlined in our comprehensive scorecard (25% of award). The threshold is the same as the target for the company’s ESG Metrics Scorecard Grade. The award is earned based on a sliding scale with a minimum payout of 0% and a maximum payout of 200%. For a description of the 2023 performance criteria and results, see Executive Compensation Outcomes for 2023 — Long-Term Incentive Awards — Summary of ESG Scorecard Deliverables and Achievement Certification. b. PSUs noted as vesting on March 6, 2026, subject to achievement of certain performance criteria. PSUs are shown at the maximum level, with achievement of target performance goals as follows: (i) LTL adjusted EBITDA growth of at least 8% (40% of award); (ii) LTL adjusted operating ratio Improvement of at least 300 basis points (20% of award); and (iii) our company’s TSR ranking at the completion of the Performance Period relative to each company in the S&P Transportation Select Industry Index TSR a (in the order of lowest to highest TSR) at a minimum of the 60th percentile (40% of award). Consists of 28,031 PSUs that resulted from the performance certification at 52% and converted to time-based RSUs through the remainder of the vesting period, 22,298 PSUs vesting on February 9, 2025 that resulted from the performance certification at 150% and counted as time-based RSUs through the remainder of the vesting period, 221,923 RSUs that vest on December 31, 2024 and are restricted from sale until December 31, 2025, and 41,368 RSUs that vest in equal installments on March 15, 2024, March 15, 2025 and March 15, 2026.
Outstanding Equity Awards at Fiscal Year-End
Consists of 44,596 target PSUs that vest on February 9, 2025, 165,472 target PSUs that are eligible to vest on March 6, 2026, and 172,871 target PSUs that are eligible to vest on August 5, 2026, subject to the TSR Performance Goal with a relative TSR Multiplier, both as defined below. 28,031 PSUs resulted from the performance certification at 52% and converted to time-based RSUs through the remainder of the vesting period and the 14,865 PSUs that resulted from the performance certification at 150% are converted to time-based RSUs through the remainder of the vesting period. The PSUs that vest on August 5, 2026 are restricted from sale until one year after the settlement date, except in death or change of control termination. The PSUs are reflected at the maximum level. There is no threshold level of payment for below target performance, and the maximum level that may be paid is 200%. The target award can be earned based on individual or aggregate attainment of the performance goals as further detailed below. The award is earned based on a sliding scale with a minimum payout of 0% and a maximum payout of 200% of target. a. PSUs noted as vesting on December 31, 2024, subject to achievement of certain performance goals. See footnote 6a. above for additional terms of these PSUs. b. PSUs noted as vesting on March 6, 2026, subject to achievement of certain performance goals. See footnote 6b. above for additional terms of these PSUs. c. PSUs noted as vesting on August 5, 2026, subject to achievement of a relative TSR goal with a relative TSR multiplier; cannot be earned until after the four-year performance period ending August 5, 2026. The goals underlying these PSUs are: (i) company TSR ranking at the completion of the Performance Period relative to each company in the S&P Midcap 400 Index TSR (in the order of lowest to highest TSR) at a minimum of the 67th percentile (the “TSR Performance Goal”); and (ii) a multiplier of company TSR over the Performance Period that exceeds the aggregate weighted TSR of certain pre-selected transportation peers over the Performance Period by a minimum of 200 basis points (the “TSR Multiplier”). (9) Consists of 2,176 RSUs that vest in substantially equal installments on March 10, 2024 and March 10, 2025; 1,252 RSUs that vest in equal installments on November 14, 2024 and November 14, 2025; 11,917 RSUs that vest in substantially equal installments on February 15, 2024, February 15, 2025 and February 15, 2026; 8,963 RSUs that vest in substantially equal installments on March 15, 2024, March 15, 2025 and March 15, 2026; and 3,454 RSUs that vest on August 15, 2027. (10) Consists of 8,274 target PSUs that vest on March 6, 2026, and 3,454 target PSUs that vest on August 15, 2027, subject to achievement of certain performance goals. PSUs are reflected at the maximum level. a. PSUs noted as vesting on March 6, 2026, subject to achievement of certain performance goals. See footnote 6b. above for additional terms of these PSUs. b. PSUs noted as vesting on August 15, 2027, subject to achievement of the TSR performance goals as follows: achievement of threshold opportunity at 50% payout for the company’s Total Shareholder Return Percentile Position vs. Index Companies in the S&P Transportation Select Industry Index for performance at the 40th percentile performance; the maximum level that may be paid is 200% of target for performance at the 75th percentile or greater. The target award can be earned based on attainment of the company’s Total Shareholder Return Percentile Position vs. Index Companies in the S&P Transportation Select Industry Index for performance at the 55th percentile performance for the period August 15, 2023 through August 15, 2027 (100% of award). PSUs are reflected at the maximum level that may be paid, which is 200% of target. The award is earned based on a sliding scale with a minimum payout of 0% and a maximum payout of 200%. (11) Consists of 11,926 RSUs that vest in equal installments on March 15, 2024, March 15, 2025 and March 15, 2026, and 60,200 RSUs that vest in equal installments on April 21, 2024 and April 21, 2025. (12) Consists of 22,149 target PSUs that vest on March 6, 2026 and 102,226 target PSUs which vest on April 21, 2028, subject to achievement of certain performance goals. PSUs are reflected at the maximum level. a. PSUs noted as vesting on March 6, 2026, subject to achievement of certain performance goals. See footnote 6b. above for additional terms of these PSUs. b. PSUs noted as vesting on April 21, 2028, subject to achievement of the TSR performance goals as follows: achievement of threshold opportunity at 50% payout for the company’s Total Shareholder Return Percentile Position vs. Index Companies in the S&P Transportation Select Industry Index for performance at the 40th percentile performance; the maximum level that may be paid is 200% of target for performance at the 75th percentile or greater. The target award can be earned based on attainment of the company’s Total Shareholder Return Percentile Position vs. Index Companies in the S&P Transportation Select Industry Index for performance at the 55th percentile performance for the period April 21, 2023, through April 21, 2028 (100% of award). PSUs are reflected at the maximum level that they may be paid. (13) Consists of 26,372 RSUs that vest in equal installments on March 15, 2024, March 15, 2025 and March 15, 2026. (14) Consists of 15,156 target PSUs that vest on March 6, 2026, subject to achievement of certain performance goals. PSUs are reflected at the maximum level. See footnote 6b. above for additional terms of these PSUs. (15) Mr. Anderson’s employment with the company terminated on August 11, 2023, and all outstanding stock awards were forfeited.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table sets forth the options exercised and stock vested for our NEOs during 2023.
Option Exercises and Stock Vested
| | Stock Awards(1) | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Brad Jacobs | 43,125 | 3,777,319 | | Mario Harik | 19,406 | 1,699,772 | | Kyle Wismans | 21,729 | 1,329,961 | | Dave Bates | — | — | | Wendy Cassity | — | — | | Carl Anderson | — | — |
Option Exercises and Stock Vested
(1) In accordance with the RXO spin-off distribution ratio, certain outstanding LTI awards on November 1, 2022, received corresponding LTI awards covering shares of stock of RXO, Inc. These RXO LTI awards vested as follows: Mr. Jacobs vested in 43,125 RXO PSUs valued at $1,003,088; Mr. Harik vested in 19,406 RXO PSUs valued at $451,384; and Mr. Wismans vested in 7,600 RXO RSUs valued at $149,546 and 14,129 RXO PSUs valued at $320,304. The values reflected were calculated by multiplying the number of RXO shares that vested in 2023 by the closing price of one share of RXO common stock on the NYSE on each applicable vesting date. The values of these RXO awards are not reflected in the table above. The values reflected in this column were calculated by multiplying the number of shares that vested in 2023 by the closing price of one share of XPO common stock on the NYSE on each applicable vesting date.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control The following table sets forth the amounts of compensation that would be due to Messrs. Jacob and Harik pursuant to their respective employment agreements and equity award agreements (or in the cases of Messrs. Wismans, Bates and Anderson and Ms. Cassity, pursuant to their Change of Control and Severance Agreement and equity award agreements), as applicable, upon the termination events as summarized below, as if each such event had occurred on December 31, 2023. The amounts shown below are estimates of the payments that each NEO would receive in certain instances. The actual amounts payable will only be determined upon the actual occurrence of any such event. For Mr. Anderson, the following table sets forth the amount of compensation that was due in connection with his actual separation of employment.
Potential Payments Upon Termination or Change of Control
| | Brad Jacobs ($) | Mario Harik ($) | Kyle Wismans ($) | Dave Bates ($) | Wendy Cassity ($) | Carl Anderson(1) ($) | | Termination without Cause: | | | | | | | | Continuation of cash compensation(2)(3)(4)(5) | 4,500,000 | 3,400,000 | 1,650,000 | 5,775,000 | 1,725,000 | — | | Acceleration of equity-based awards(6)(7) | 140,993,010(9) | 27,716,279 | 881,944 | 4,641,219 | 968,045 | — | | Continuation of medical / dental benefits(8) | 19,788 | 27,573 | 10,942 | 12,186 | 11,759 | — | | Total | 145,512,798 | 31,143,852 | 2,542,886 | 10,428,405 | 2,704,804 | | | Voluntary Termination with Good Reason: | | | | | | | | Continuation of cash compensation(2)(5) | 4,500,000 | — | — | — | — | — | | Acceleration of equity-based awards(6)(7) | 140,993,010 | — | — | — | — | — | | Continuation of medical / dental benefits(8) | 19,788 | — | — | — | — | — | | Total | 145,512,798 | — | — | — | — | — | | Termination for Cause or Voluntary Termination without Good Reason: | | | | | | | | Continuation of cash compensation | — | — | — | — | — | — | | Acceleration of equity-based awards | — | — | — | — | — | — | | Continuation of medical/dental benefits | — | — | — | — | — | — | | Accrued Paid Time Off (PTO) Payment | — | — | — | — | — | 21,581 | | Total | — | — | — | — | — | 21,581 | | Disability: | | | | | | | | Continuation of cash compensation | — | — | — | — | — | — | | Acceleration of equity-based awards(7) | 117,787,353 | 21,391,317 | 520,985 | 2,106,715 | 614,356 | — | | Continuation of medical / dental benefits | — | — | — | — | — | — | | Total | 117,787,353 | 21,391,317 | 520,985 | 2,106,715 | 614,356 | — | | Death: | | | | | | | | Continuation of cash compensation | — | — | — | — | — | — | | Acceleration of equity-based awards(6)(7)(8) | 140,993,010 | 61,011,603 | 3,458,929 | 17,211,523 | 3,637,438 | — | | Continuation of medical / dental benefits | — | — | — | — | — | — | | Total | 140,993,010 | 61,011,603 | 3,458,929 | 17,211,523 | 3,637,438 | — | | Change of Control and No Termination: | | | | | | | | Continuation of cash compensation | — | — | — | — | — | — | | Acceleration of equity-based awards | — | — | — | — | — | — | | Continuation of medical / dental benefits | — | — | — | — | — | — | | Total | — | — | — | — | — | — | | Change of Control and Termination without Cause or for Good Reason: | | | | | | | | Continuation of cash compensation(2)(3)(4)(5) | 5,400,000 | 9,324,500 | 2,750,000 | 11,760,000 | 2,875,000 | — | | Acceleration of equity-based awards(6)(7) | 140,993,010 | 61,011,603 | 3,458,929 | 17,211,523 | 3,637,438 | — | | Continuation of medical / dental benefits(8) | 39,576 | 55,146 | 43,769 | 48,743 | 47,038 | — | | Total | 146,432,586 | 70,391,249 | 6,252,698 | 29,020,266 | 6,559,476 | — |
Potential Payments Upon Termination or Change of Control
(1) Mr. Anderson’s employment with the company terminated on August 11, 2023 as a result of his voluntary resignation, and all outstanding stock awards were forfeited. Amount shown includes payment for accrued paid time off. (2) Amounts shown do not include any payments for accrued and unpaid salary, bonuses or paid time off. In the event of a termination by the company without cause, continuation of cash compensation payable to each of Messrs. Harik, Wismans and Bates and Ms. Cassity will be reduced, dollar for dollar, by other income earned by such NEO in accordance with the terms of their employment agreement. The calculations of continuation of cash compensation pay for each use the applicable NEO’s base salary and target bonus amounts effective as of December 31, 2023. (3) In the event of a termination for any reason, the company has the right to extend the period during which each of Messrs. Harik, Wismans and Bates and Ms. Cassity is bound by the non-competition covenant in their employment agreement for up to 12 additional months for Mr. Harik and Ms. Cassity, and up to 18 additional months for Messrs. Wismans and Bates. This would extend the non-compete period from three years to four years following termination for Mr. Harik, from 18 months to three years following termination for Messrs. Wismans and Bates, and from 12 month to 24 months for Ms. Cassity. During the period the non-compete is extended, the applicable NEO would be entitled to receive cash compensation consisting of a portion of his or her monthly base salary as in effect on the date employment is terminated, reduced dollar for dollar by any other income earned at the time by the NEO. Fully extending the non-compete period would increase the amounts shown as continuation of cash compensation by up to $850,000 for Mr. Harik, $825,000 for Mr. Wismans, $1,125,000 for Mr. Bates and $575,000 for Ms. Cassity. (4) The values reflected in this row for Mr. Jacobs consist of non-compete payments in accordance with the terms of his employment agreement, including upon termination due to mutual agreement by our company and Mr. Jacobs. In the event of a termination for any reason, our company has the right to extend the period during which Mr. Jacobs is bound by the non-competition covenant in his employment agreement for up to 12 additional months. This would extend the non-compete period from three years to four years following termination. During the period the non-compete is extended, Mr. Jacobs would be entitled to receive cash compensation consisting of a portion of his monthly base salary and 1/12th of his target bonus as in effect on the date employment is terminated, reduced dollar for dollar by any other income earned at the time by Mr. Jacobs. Fully extending the non-compete period would increase the amount shown as continuation of cash compensation by up to $1,500,000 for Mr. Jacobs. In order to preserve the value of the awards held by employees continuing with XPO following each of the GXO and RXO spin-offs, as applicable, including our NEOs, the number
Potential Payments Upon Termination or Change of Control
of outstanding shares underlying outstanding awards were adjusted using the ratios and methodologies outlined in each Employee Matters Agreement, as applicable. The GXO ratio was based on the closing price per share of XPO common stock on July 30, 2021 compared to the closing price per share of XPO common stock on August 2, 2021. The RXO ratio was based on either: (i) the closing price per share of XPO common stock on October 31, 2022 compared to the closing price per share of XPO common stock on November 1, 2022; or (ii) a distribution ratio of one share of RXO common stock for every share of XPO common stock. The modification of these awards in connection with either spin-off did not result in incremental compensation cost. The values reflected in this row for Messrs. Jacobs, Harik, Wismans and Bates and Ms. Cassity, as applicable, were calculated using $87.59, the closing price of a company share on the NYSE on December 29, 2023, the last trading day of our fiscal year 2023. The amounts shown for PSUs have been estimated assuming that the applicable performance goals are met at target levels; provided, that, the February 9, 2023 PSUs granted to Messrs. Jacobs and Harik, the amounts shown include the vested portion at the certified amount of 150% of the 2023 ESG performance target goal that would be payable on certain termination events. As of December 31, 2023, none of the NEOs had any unvested stock options. Values applicable to all NEOs include standard pro-rata vesting upon certain terminations pursuant to the applicable award agreement. (7) In accordance with the RXO spin-off distribution ratio, certain outstanding RSU and PSU award counts increased on November 1, 2022, the spin-off date, to cover shares of stock of RXO, Inc. These time-based RXO RSUs and PSUs would accelerate upon termination as follows: for Mr. Jacobs, 1,174,495 RXO RSUs valued at $27,318,754; for Mr. Harik (except in the case of a termination without cause or a voluntary termination for good reason not in connection with a Change of Control) 221,923 RXO RSUs valued at $5,161,929 and 28,031 RXO PSUs valued at $652,001; for Mr. Wismans 2,176 RXO RSUs valued at $50,614 and 1,252 RXO RSUs valued at $29,125, calculated using $23.26, the closing price of RXO common stock on the NYSE on December 29, 2023 the last trading day of our fiscal year 2023. In the event of a termination without cause for Mr. Harik, these outstanding RXO RSUs and PSUs would accelerate as follows: 119,519 RXO RSUs valued at $2,780,012 and 28,031 RXO PSUs valued at $652,001 calculated using $23.26, the closing price of RXO common stock on the NYSE on December 29, 2023, the last trading day of our fiscal year 2023. The value of these RXO RSUs and PSUs are not reflected in the table above. The amounts shown for Mr. Jacobs’ and Mr. Harik’s PSUs have been estimated assuming that the applicable performance goals are met at target levels. (8) The amounts of continued medical and dental benefits shown in the table (i) have been calculated based upon our current actual costs of providing the benefits through COBRA and (ii) have not been discounted for the time value of money. In the event of a termination without cause, continued medical and dental benefits would cease for Mr. Jacobs when he receives medical or dental coverage, as applicable, in connection with other employment, for Mr. Harik when he commences employment with a new employer, for Messrs. Wismans and Bates and Ms. Cassity when they become eligible for any medical and dental benefits through a new employer. (9) The values reflected in this column for Mr. Jacobs include acceleration of equity-based awards upon termination without cause and termination due to mutual agreement between the company and Mr. Jacobs. For more information regarding the payments and benefits to which our NEOs are entitled upon certain termination events or upon a Change of Control, see the discussion in this Proxy Statement under the heading Employment Agreements with NEOs.
CEO PAY RATIO DISCLOSURE
CEO PAY RATIO DISCLOSURE As required by Item 402(u) of the SEC’s Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our CEO to that of our median employee. The pay ratio and annual total compensation amount disclosed in this section are reasonable estimates that have been calculated using methodologies and assumptions permitted by SEC rules.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and the company’s financial performance. For further information on the company’s executive compensation, see the CD&A beginning on page 30.
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
Required Tabular Disclosure of Compensation Actually Paid Versus Performance The following table discloses information on compensation actually paid (“CAP”) to our principal executive officers (“PEOs”) and (on average) to our other NEOs (“non-PEO NEOs”) during the specified years alongside the company’s TSR and net income metrics, as well as a company-selected measure of adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”). The company selected adjusted EBITDA as the most important measure to use in linking PEO and NEO compensation actually paid to company performance for 2023, as adjusted EBITDA represents a 40% weighting in the March 6, 2023 PSU awards, as well as a 100% weighting in the 2023 annual incentive plan for our Executive Chairman, CEO, CFO and CLO.
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
| Fiscal Year(1) | Summary Compensation Table Total for PEO 1(2) ($) | Compensation Actually Paid to PEO 1(3) ($) | Summary Compensation Table Total for PEO 2(2) ($) | Compensation Actually Paid to PEO 2(3) ($) | Average Summary Compensation Table Total for non-PEO NEOs ($) | Average Compensation Actually Paid to non-PEO NEOs ($) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($ in millions) | Company- Selected Measure: Adjusted EBITDA ($ in millions)(5) | | | | | | | | | Total Shareholder Return ($) | Peer Group(4) Total Shareholder Return ($) | | | | (a) | (b) | (c) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | — | — | 12,387,611 | 75,024,676 | 8,237,805 | 34,380,024 | 305.90 | 136.32 | 189 | 996 | | 2022 | 46,990,957 | 66,874,224 | 9,027,723 | 19,687,049 | 1,310,474 | 3,184,179 | 116.26 | 108.44 | 666 | 997 | | 2021 | 22,043,280 | 22,043,280 | — | — | 3,990,800 | 3,600,679 | 164.27 | 150.64 | 341 | 812 | | 2020 | 21,812,660 | 25,043,462 | — | — | 4,638,287 | 4,255,500 | 149.56 | 112.07 | 117 | 609 |
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
(1) Brad Jacobs is PEO 1 for fiscal years 2022, 2021, and 2020. Mario Harik is PEO 2 for fiscal years 2023 and 2022.The non-PEO NEOs reflect the following individuals in each year: 2023: Brad Jacobs, Kyle Wismans, Dave Bates and Wendy Cassity; 2022: Ravi Tulsyan and Carl Anderson; 2021: Mario Harik, Ravi Tulsyan, Troy Cooper, and David Wyshner; 2020: Mario Harik, Troy Cooper, David Wyshner, Kurt Rogers, and Sarah Glickman. (2) 2022 data reflects the total compensation of our executive chairman and former CEO, Mr. Jacobs, who served as our PEO (“PEO 1”) from January 1, 2022 until November 1, 2022, and the total compensation of our CEO and former president, North American LTL and CIO, Mr. Harik, who is serving as our PEO (“PEO 2”), effective November 1, 2022, and is therefore included in this table as an additional PEO in accordance with SEC rules. Amounts shown are as calculated in the Summary Compensation Table for each of the years shown (and for Mr. Harik, solely reflect compensation for the years of his service as our CEO). (3) The dollar amounts shown in these columns reflect compensation actually paid (“CAP”) to Mr. Jacobs and Mr. Harik, calculated in accordance with SEC rules. As required, the dollar amounts include (among other items) unpaid amounts of equity compensation that may be realizable in future periods, and as such, the dollar amounts shown do not fully represent the actual final amount of compensation earned or actually paid to either individual during the applicable years. The adjustments made to each officer’s total compensation for each year to determine CAP are shown in the tables below. For Mr. Jacobs, information is only included with respect to 2020, 2021 and 2022. For Mr. Harik, information is only included with respect to 2022 and 2023. (4) Our peer group is represented by the S&P Transportation Select Industry Index, which replaced the Dow Jones Transportation Average Index. Going forward, our performance comparison will use the S&P Transportation Select Industry Index. We believe that the S&P Transportation Select Industry Index is a more appropriate index, as our outstanding performance-based restricted stock units (“PSUs”) generally measure our performance compared to this index, of which we are a component. The peer group Total Shareholder Return shown in the table above reflects data for the S&P Transportation Select Industry Index for 2023, 2022, 2021 and 2020. The peer group Total Shareholder return for the Dow Jones Transportation Average Index for 2023, 2022, 2021 and 2020 was $154.31, $127.96, $155.22 and $116.52, respectively. (5) Our company-selected measure is adjusted EBITDA, which we define as income from continuing operations before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, goodwill impairment charges, litigation matters, transaction and integration costs, restructuring costs and other adjustments. Adjusted EBITDA is a non-GAAP financial measure. See Annex A for reconciliations of non-GAAP measures.
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
| | PEO 1 | | | | | Prior FYE Current FYE Fiscal Year | 12/31/2019 12/31/2020 2020 ($) | 12/31/2020 12/31/2021 2021 ($) | 12/31/2021 12/31/2022 2022(a) ($) | 12/31/2022 12/31/2023 2023 ($) | | Summary Compensation Table Total | 21,812,660 | 22,043,280 | 46,990,957 | — | | - Grant Date Fair Value of Modified Awards Disclosed in Fiscal Year (FASB ASC 718) | — | — | (54,298,870) | — | | + Previously Reported Grant Date Fair Value of Modified Awards | — | — | 19,697,878 | — | | - Grant Date Fair Value of Modified Awards over Previously Reported Grant Date Fair Value of Modified Awards | — | — | (34,600,992) | — | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | — | — | 54,484,259 | — | | + Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | — | — | — | — | | + Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | — | — | — | — |
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
| | PEO 1 | | | | | Prior FYE Current FYE Fiscal Year | 12/31/2019 12/31/2020 2020 ($) | 12/31/2020 12/31/2021 2021 ($) | 12/31/2021 12/31/2022 2022(a) ($) | 12/31/2022 12/31/2023 2023 ($) | | + Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years for Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | 3,230,802 | — | — | — | | - Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | — | — | — | | Compensation Actually Paid | 25,043,462 | 22,043,280 | 66,874,224 | — |
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
(a) For a description of the modifications and valuations of awards held by PEO 1, see footnote 7 of the Summary Compensation Table above.
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
| | PEO 2 | | | | | Prior FYE Current FYE Fiscal Year | 12/31/2019 12/31/2020 2020 ($) | 12/31/2020 12/31/2021 2021 ($) | 12/31/2021 12/31/2022 2022(a) ($) | 12/31/2022 12/31/2023 2023 ($) | | Summary Compensation Table Total | — | — | 9,027,723 | 12,387,611 | | - Grant Date Fair Value of Modified Awards Disclosed in Fiscal Year (FASB ASC 718) | — | — | (10,259,872) | — | | + Previously Reported Grant Date Fair Value of Modified Awards | — | — | 2,878,803 | — | | - Grant Date Fair Value of Modified Awards over Previously Reported Grant Date Fair Value of Modified Awards | — | — | (7,381,069) | — | | - Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | — | — | | (9,084,498) | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | — | — | 18,040,395 | 38,029,239 | | + Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | — | — | — | 32,520,954 | | + Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | — | — | — | — | | + Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year | — | — | — | 1,171,370 | | - Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | — | — | — | | Compensation Actually Paid | — | — | 19,687,049 | 75,024,676 |
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
(a) For a description of the modifications and valuations of awards held by PEO 2, see footnote 7 of the Summary Compensation Table above.
Required Tabular Disclosure of Compensation Actually Paid Versus Performance
| | Non-PEO NEOs | | | | | Prior FYE Current FYE Fiscal Year | 12/31/2019 12/31/2020 2020 ($) | 12/31/2020 12/31/2021 2021 ($) | 12/31/2021 12/31/2022 2022 ($) | 12/31/2022 12/31/2023 2023 ($) | | Summary Compensation Table Total | 4,638,287 | 3,990,800 | 1,310,474 | 8,237,805 | | - Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (1,317,067) | (521,238) | (545,923) | (6,051,943) | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | 627,445 | 1,199,280 | 4,175,040 | 18,841,448 | | + Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | 124,838 | — | — | 12,883,805 | | + Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | 61,561 | — | 184,257 | — | | + Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year | 180,900 | 9,732 | (86,372) | 661,143 | | - Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | (60,464) | (1,077,895) | (1,853,297) | (192,234) | | Compensation Actually Paid | 4,255,500 | 3,600,679 | 3,184,179 | 34,380,024 |
Required Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2023 to Company Performance
Required Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2023 to Company Performance As required, the disclosure below specifies the most important measures used by the company to link compensation actually paid to our PEO and NEOs for 2023 to company performance. For further information regarding these performance metrics and their function in our executive compensation program, see the CD&A beginning on page 30.
Required Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2023 to Company Performance
| 2023 Most Important Measures (Unranked) | | | ■ Adjusted EBITDA | ■ Relative TSR | | ■ Adjusted Operating Ratio LTL | ■ ESG Scorecard | | ■ Adjusted Cash Flow Per Share | ■ Relative Adjusted Cash Flow Per Share |
Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures
Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures The following graphs further illustrate the relationship between the pay and performance figures that are included in the pay versus performance tabular disclosure above. In addition, the first graph below further illustrates the relationship between company TSR and that of the S&P Transportation Select Index and the Dow Jones Transportation Average Index. As noted above, “compensation actually paid” for purposes of the tabular disclosure and the following graphs were calculated in accordance with SEC rules and do not fully represent the actual final amount of compensation earned by or actually paid to our PEOs and other NEOs during the applicable years.
Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures
| 58 | © 2024 XPO, Inc. |
Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures
(1) Adjusted EBITDA is a non-GAAP financial measure. See Annex A for reconciliations of non-GAAP measures.
Proposal 1: Election of Directors
Proposal 1: Election of Directors Our Board of Directors has nominated for election each of the following persons to serve until the 2025 Annual Meeting of Stockholders or until their successors are duly elected and qualified: Brad Jacobs Jason Aiken Bella Allaire J. Wes Frye Mario Harik Michael Jesselson Allison Landry Irene Moshouris Johnny C. Taylor, Jr. All nine of the nominees listed above were elected as directors by our stockholders at our 2023 Annual Meeting of Stockholders. In the event that any of these nominees is unable or declines to serve as a director at the time of the Annual Meeting, the proxies voting for his or her election will be voted for any nominee who shall be designated by the Board of Directors to fill the vacancy. As of the date of this Proxy Statement, we are not aware that any of the nominees is unable or will decline to serve as a director if elected.

DEF 14A of XPO, Inc.

SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES

SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES

SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTORS

DIRECTOR COMPENSATION

2023 Director Compensation Table(1)

2023 Director Compensation Table(1)

2023 Director Compensation Table(1)

2023 Director Compensation Table(1)

2023 Director Compensation Table(1)

2022 Stockholder Engagement and Responsiveness

2022 Stockholder Engagement and Responsiveness

2022 Stockholder Engagement and Responsiveness

Components of NEO Compensation

Target Pay Levels for Current NEOs

Target Pay Levels for Current NEOs

Target Pay Levels for Current NEOs

Annual Short-Term Incentive Awards

NEO STI Payouts excluding COO

NEO STI Payouts excluding COO

NEO STI Payouts excluding COO

NEO STI Payouts excluding COO

NEO STI Payouts excluding COO

COO STI Payouts

COO STI Payouts

Long-Term Incentive Awards

2023 Annual LTI Award Design

2023 Annual LTI Award Design

2023 Annual LTI Award Design

2023 Annual LTI Award Design

2023 NEO Annual LTI Awards Granted

2023 NEO Annual LTI Awards Granted

2023 NEO Annual LTI Awards Granted

Kyle Wismans

Dave Bates

Wendy Cassity

Modification of the Outstanding 2020 Performance-based Cash LTI Award

Modification of the Outstanding 2020 Performance-based Cash LTI Award

Modification of the Outstanding 2020 Performance-based Cash LTI Award

Modification of the Outstanding 2020 Performance-based Cash LTI Award

Modification of the Outstanding 2020 Performance-based Cash LTI Award

Modification of the Outstanding 2020 Performance-based Cash LTI Award

STRONG COMPENSATION POLICIES AND PRACTICES

Role of the Committee’s Independent Compensation Consultant

Role of the Committee’s Independent Compensation Consultant

Role of the Committee’s Independent Compensation Consultant

Peer Group and Market Analysis

Peer Group and Market Analysis

Peer Group and Market Analysis

Guidelines

Guidelines

Annual STI Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Equity Granting Policy

Employment Agreements

Summary Compensation Table

Summary Compensation Table

Supplemental Summary Compensation Table

Grants of Plan-Based Awards

Grants of Plan-Based Awards

Grants of Plan-Based Awards

Grants of Plan-Based Awards

Outstanding Equity Awards at Fiscal Year-End