DEF 14A of Arcbest Corp /TX/
Filed Mar 15, 2024 · FY20230001308179-24-000158
Director Nominees
Director Nominees
Director Nominees
| | | | | | | Committees | | | | Name | Occupation | Age | Director Since | Independent | Other Public Directorships | Audit | Compensation | Nominating/Corporate Governance | | Salvatore A. Abbate | Chief Executive Officer for Veritiv Corporation | 55 | Jan. 2023 | | | | | | | Eduardo F. Conrado | President for Ascension | 57 | Nov. 2016 | | 1 | | | | | Fredrik J. Eliasson | Former Executive Vice President and Chief Financial Officer for Change Healthcare Inc. | 53 | Dec. 2019 | | 1 | | | | | Michael P. Hogan | Chief Development and Growth Officer for Earned | 64 | Oct. 2016 | | | | | | | Kathleen D. McElligott | Former Executive Vice President, Chief Information Officer and Chief Technology Officer for McKesson Corporation | 68 | Jul. 2015 | | | | | | | Judy R. McReynolds Chair | President and Chief Executive Officer for ArcBest | 61 | Jan. 2010 | | 1 | | | | | Dr. Craig E. Philip | Professor, Vanderbilt University | 70 | Aug. 2011 | | | | | | | Steven L. Spinner Lead Independent Director | Operating Partner for MidOcean Partners | 64 | Jul. 2011 | | | | | | | Janice E. Stipp | Former Senior Vice President, Chief Financial Officer and Treasurer for Rogers Corporation | 64 | Oct. 2012 | | 2 | | | |
Director Nominees
| | Member | | Chair | | Audit Committee Financial Expert |
Director Nominees
Our nine nominees represent a diverse range of skills:
2023 Performance
2023 Performance In 2023, the economy was a top challenge for many shippers who depended on ArcBest’s expertise as an integrated logistics powerhouse to help them navigate market disruptions, rapidly changing market conditions and increased supply chain complexity. With 15,000 employees utilizing their industry knowledge while offering a breadth of solutions, ArcBest truly lived out its mission to connect and positively impact the world by efficiently solving logistics challenges. Our team continues to respond nimbly to evolving market dynamics in real time, pivoting quickly to profitably serve our customers. We successfully completed our 100th year in business, and we are positioned to be successful for the next century as we continue to transform through innovation, investment, and an intense focus on quality.
2023 Performance
| | $172.6M OPERATING INCOME FROM CONTINUING OPERATIONS | | $5.77 DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS |
Compensation Highlights
Compensation Highlights Our executive compensation program strikes a balance between fixed and variable elements. As shown below, 79% of compensation for our CEO, and 64% of compensation (on average) for our other Named Executive Officers, was at risk in 2023.
Key Compensation Governance Policies
Key Compensation Governance Policies The Compensation Committee continually reviews the Company’s executive compensation program to ensure our practices promote stockholders’ best interests. Some of our key policies are summarized below.
Key Compensation Governance Policies
| What We Do: | | | | We tie pay to performance. The majority of executive pay is at risk. | | | Half (50%) of the long-term incentive value granted to Named Executive Officers is contingent on the Company’s performance over a 3-year period. | | | We use three-year ratable vesting for our restricted stock units to encourage retention and a long-term perspective. | | | Named Executive Officers and Directors are subject to significant stock ownership requirements. | | | We have caps on both the annual incentive and long-term incentive payouts. | | | We have a robust clawback policy that goes beyond the minimum requirements under the Nasdaq listing standards. | | | We conduct annual risk assessments of our compensation plans. | | | We have an independent Compensation Committee. | | | The Compensation Committee has an independent compensation consultant. | | | We benchmark our compensation practices to peers with which we compete for talent. |
Key Compensation Governance Policies
| What We Don’t Do: | | | | NO tax gross-up payments for any amounts considered excess parachute payments. | | | NO single-trigger payments upon a change in control. | | | NO excessive perquisites. | | | NO hedging or pledging of Company stock. | | | NO employment agreements with our Named Executive Officers. | | | NO re-pricing of stock options without stockholder approval. | | | NO guaranteed bonuses. |
Stockholder Engagement
Stockholder Engagement Feedback from our stockholders is very important to us. The Company engages with stockholders through various means, including in-person meetings, investor conferences, one-on-one calls and our Annual Meeting. The objectives of our stockholder engagement program are to discuss our strategic priorities, corporate governance and executive compensation practices, among other topics; strengthen our relationships with our investors; address any concerns raised in prior engagements; ensure we meet evolving investor expectations; and convey our approach to maximizing stockholder value. The information and viewpoints gathered in our discussions with stockholders are critical to informing our priorities and strategies. In 2023, we also engaged in stockholder outreach efforts specifically in response to the results of the 2023 election of directors, reaching out to holders representing over 65% of our outstanding shares to discuss our corporate governance policies and practices. Of those stockholders we contacted, stockholders representing over 40% of our outstanding shares scheduled appointments to meet with our management team. For additional information regarding our stockholder engagement activities, including feedback received from stockholders in relation to, and actions taken in response to, the outcome of the 2023 annual meeting, see “Prior Director Election Results & Responsiveness to Stockholder Engagement.”
PROPOSAL I. ELECTION OF DIRECTORS
PROPOSAL I. ELECTION OF DIRECTORS The Board recommends a vote “FOR” each of the nominees. All of the nominees are currently serving as directors of the Company and were elected at the 2023 Annual Meeting of Stockholders. If elected, each nominee will serve until ArcBest’s Annual Meeting of Stockholders in 2025 or until their respective successors are duly elected and qualified or until the individual’s earlier death, resignation or removal from office. Each nominee has indicated a willingness to serve as a member of the Board, if elected. If, for any reason, a nominee becomes unable to serve or will not serve, either the number of the Company’s directors will be reduced or the Board will designate a substitute nominee. The Company’s bylaws provide that, in an uncontested election, directors are elected by a majority of the votes cast by stockholders, in person or by proxy, at a meeting at which a quorum is present. This means that the number of shares voted “for” a director nominee’s election must exceed the number of shares voted “against” it. In an uncontested election, a nominee who does not receive a majority of votes cast will not be elected, and the Company’s bylaws require that any incumbent director who does not receive the affirmative vote of a majority of the votes cast must promptly tender a resignation to the Board. The Nominating/Corporate Governance Committee will consider any resignation tendered under this policy and recommend to the Board whether to accept or reject it, and the Board will act on such resignation, taking into account such recommendation, within 90 days following the certification of the election results. The director who tenders his or her resignation under this policy will not vote with respect to recommending of the Nominating/Corporate Governance Committee or the decision of the Board with respect to the resignation. The Nominating/Corporate Governance Committee in making its recommendation, and the Board in making its decision, may consider any information it deems appropriate, including any reasons given by stockholders for their votes against a director, the qualifications of the director, and the director’s contributions to the Board and the Company. The Board will promptly disclose its decision to accept or reject the resignation and, if rejected, the reasons for doing so. If a director’s resignation is not accepted by the Board, then such director will continue to serve. If a director’s resignation is accepted by the Board, then the Board, in its sole discretion, may fill any remaining vacancy or decrease the size of the Board. Unless otherwise instructed, your proxy will be voted for the election of each of the nominees.
Director Nominees
Director Nominees A biography of each Director nominee, current as of February 26, 2024, appears below. There are no family relationships among any of the nominees and executive officers of the Company or its subsidiaries.
Director Nominees
| SALVATORE A. ABBATE | | | | Age 55 Director since: Jan. 2023 INDEPENDENT Committees: ■ Compensation ■ Nominating/ Corporate Governance | Key Skills and Experience: ■ Senior Leadership: CEO and member of the Board of Directors of Veritiv, a leading business-to-business specialty distribution solutions company. Remained as CEO after the company’s sale to Clayton, Dubilier & Rice (“CDR”). Provided key leadership throughout the company’s efforts to focus on growth-oriented initiatives, operational efficiency and best-in-class technology implementation. Under Mr. Abbate’s leadership of Veritiv, the company stock rose from under $13.00 per share in October of 2020, to $170 per share on December 1, 2023, when its acquisition by CDR closed. Prior to this role, Mr. Abbate held senior leadership roles in corporate strategy, sales and marketing at Andersen Windows & Doors. ■ Value Creation and M&A: As CEO, led the execution of Veritiv’s $2.6 billion sale to CDR in 2022 at a significant premium. Prior to the company’s sale, Mr. Abbate executed several additional transformation transactions at Veritiv, including the divestitures of Veritiv’s logistics solutions and Canadian businesses that funded the company’s share repurchase program, debt repayment and growth initiatives. Adjusted EBITDA has more than tripled during Mr. Abbate’s tenure as CEO. ■ Logistics: At Veritiv, leads the largest business-to-business packaging distribution business in North America with approximately $7 billion in annual sales, 95 North American distribution centers (over 110 worldwide) and a truck fleet of approximately 600. ■ Corporate Strategy, Sales and Marketing: As SVP and Chief Sales and Marketing Officer at Andersen Windows & Doors, Mr. Abbate oversaw the implementation of multiple marketing campaigns and initiatives, leading to increased customer penetration to become one of the largest window and door manufacturers in North America. Prior to this role, Mr. Abbate led Global Sales and Marketing for the Performance Film Division at Solutia, overseeing over $290 million in net sales across multiple geographic regions in 2011. | | | | Career Highlights: ■ Veritiv Corporation ■ Chief Executive Officer (2020 – Present) ■ Chief Operating Officer (2020 – 2020) ■ Senior Vice President & Chief Commercial Officer (2018 – 2019) ■ Andersen Windows & Doors ■ Senior Vice President & Chief Sales & Marketing Officer (2013 – 2018) ■ Senior Vice President, Sales & Marketing (2011 – 2013) ■ Solutia Inc. ■ Vice President (Global Sales and Marketing of the Performance Films Division) (2009 – 2011) | | | | Board Experience: ■ Veritiv (Private) (2020 – present) | Education: ■ B.S. (Industrial Engineering), Georgia Institute of Technology; M.B.A., Northwestern University |
Director Nominees
| EDUARDO F. CONRADO | | | | Age 57 Director since: Nov. 2016 INDEPENDENT Committees: ■ Compensation ■ Nominating/ Corporate Governance (Chair) | Key Skills and Experience: ■ Senior Leadership: Currently serves as President at Ascension, one of the largest private healthcare systems in the United States operating more than 2,600 health care sites and 140 hospitals. Prior to this role, Mr. Conrado served in various senior management positions at Motorola Solutions across the company’s corporate and international businesses in a range of consumer and commercial segments. ■ Corporate Strategy: Brings over 25 years of strategy implementation and execution across the healthcare and technology sector. At Ascension, Mr. Conrado led critical tactical initiatives aligning the company’s portfolio and investments to better serve its patients. At Motorola, Mr. Conrado oversaw the company’s growth strategy and drove innovation across the company’s products, services and software divisions. ■ Value Creation and M&A: While at Motorola, Mr. Conrado oversaw the acquisition strategy of multiple companies, providing significant growth to Motorola’s managed and support services. | | | | Career Highlights: ■ Ascension ■ President (2023 – Present) ■ Executive Vice President, Chief Strategy & Innovation Officer (2019 – 2023) ■ Executive VP & Chief Digital Officer (2018 – 2019) ■ Motorola Solutions ■ Executive Vice President, Chief Innovation Officer & Chief Strategy Officer (2015 – 2018) ■ Senior Vice President & Chief Innovation Officer (2014 – 2015) ■ Senior Vice President (Marketing & IT) (2013 – 2014) ■ Senior Vice President & Chief Marketing Officer (2010 – 2013) ■ Senior Vice President & Chief Marketing Officer (Enterprise Mobility Solutions, Home and Network Business and Broadband Mobility Solutions Businesses) (2009 – 2010) | | | | Board Experience: ■ Southwest Airlines (NYSE: LUV, 2023 – Present) | Education: ■ B.S. (Industrial Engineering), Texas Tech University; M.B.A., ESADE; M.I.M., Thunderbird School of Global Management |
Director Nominees
| FREDRIK J. ELIASSON | | | | Age 53 Director since: Dec. 2019 INDEPENDENT Committees: ■ Audit | Key Skills and Experience: ■ Senior Leadership: Served as EVP and CFO of Change Healthcare, a leading provider of revenue and payment cycle management for the U.S. healthcare system. Oversaw over $2 trillion in annual claims and led the company during its initial public offering and sale to OptumInsight. Prior to this role, Mr. Eliasson served in multiple senior management roles, including both EVP CFO and EVP Sales & Marketing, at CSX Corporation, one of the largest rail-based freight transportation and logistics companies in the United States. ■ Value Creation and M&A: Led Change Healthcare during its IPO in 2019 and eventual $13 billion sale to OptumInsight in January 2021. As a member of senior management at CSX, Mr. Eliasson helped transform the company’s business focus, drove revenue and earnings growth and increased shareholder value substantially, with CSX’s value more than doubling during his tenure. Mr. Eliasson is a designated financial expert. ■ Capital Markets: CFO of Change Healthcare during its IPO in 2019. Played an integral role in the organization of financial, corporate governance, risk and investor relation materials, among others. | | | | Career Highlights: ■ Change Healthcare ■ Executive Vice President & Chief Financial Officer (2018 – 2022) ■ CSX Corporation ■ Executive Vice President & Chief Sales & Marketing Officer (2015 – 2017) ■ Executive Vice President & Chief Financial Officer (2012 – 2015) ■ Vice President - Sales & Marketing (Chemicals and Fertilizer) (2011 – 2012) ■ Vice President (Emerging Markets,) (2009 – 2011) | | | | Board Experience: ■ Gates Industrial Corporation (NYSE: GTES, 2022 – Present) ■ Envision Healthcare (Private) (2023 – Present) ■ Copeland (Private) (2023 - Present) | Education: ■ B.A., Virginia Commonwealth University; M.S., Virginia Commonwealth University |
Director Nominees
| MICHAEL P. HOGAN | | | Age 64 Director since: Oct. 2016 INDEPENDENT Committees: ■ Compensation ■ Nominating/ Corporate Governance | Key Skills and Experience: ■ Senior Leadership: Mr. Hogan is part of the founding team at Earned Wealth, the first financial advisory firm created specifically to serve physicians, where he has served as Chief Strategy Officer, Chief Growth Officer, and Head of Corporate Development. Prior to this role, Mr. Hogan served as President of Tax-Smart Innovation at Blucora and as EVP, Strategic Business & Brand Development for GameStop Corporation. ■ Corporate Strategy: At Earned, Mr. Hogan has transformed the company into a leading provider of wealth services and tax planning, reaching clients in 24 states. At GameStop, he oversaw the company’s successful diversification and transformation, including over 40 acquisitions producing $1B+ businesses in Retail Technology, Digital Gaming, and Licensed Products. At Blucora, he created the “Tax-Smart Investing” business unit, which has delivered $300M+ in client tax savings. | | | Career Highlights: ■ Earned (previously Forme Financial) ■ Chief Development & Growth Officer (2022 – Present) ■ Blucora ■ President (Tax-Smart Innovation) (2018 – 2020) ■ GameStop Corporation ■ Executive Vice President (2012 – 2018) ■ Senior Vice President & Chief Marketing Officer (2008 – 2012) ■ Strategic Frameworking ■ Principal (2002 – 2007) ■ Dean Foods Company ■ Senior Vice President & Chief Marketing Officer (1998 – 2001) ■ Frito-Lay ■ Vice President (International Marketing) (1985 – 1998) | | | Education: ■ B.S. (Economics), Northern Illinois University; M.B.A. (Finance and Marketing), Northwestern University |
Director Nominees
| KATHLEEN D. MCELLIGOTT | | | | Age 68 Director since: Jul. 2015 INDEPENDENT Committees: ■ Compensation (Chair) ■ Nominating/ Corporate Governance | Key Skills and Experience: ■ Senior Leadership: Served as EVP, Chief Information Officer and Chief Technology Officer for McKesson Corporation before retiring in February 2020. Oversaw critical and transformational strategic initiatives in technology, supply chain and commercialization services in North America and Europe. Prior to this role, Ms. McElligott served in numerous senior leadership roles at Emerson Electric and GE Aircraft Engines. ■ Value Creation and M&A: During her tenure at McKesson, Emerson Electric and GE, Ms. McElligott engaged in multiple acquisition processes from due diligence through integration, yielding improved growth and operational efficiency. Additionally, Ms. McElligott served as a director during Forescout’s $1.9 billion sale to Advent, achieving an approximately 30% share price premium and positioning the company for continued innovation and delivery of cybersecurity products and solutions. ■ Logistics: Brings over 30 years of experience in technology, logistics and supply chain management through senior leadership roles at McKesson, Emerson Electric and GE Aircraft Engines. At McKesson, Ms. McElligott oversaw the technology for a network of 30 distribution centers servicing retail national accounts, independent retail pharmacies and institutional healthcare providers with critical pharmaceutical drugs and healthcare-related products. ■ Technology and Cybersecurity: Ms. McElligott brings significant experience in technology and cybersecurity across multiple senior roles at McKesson, Emerson Electric and GE Aircraft Engines. As CIO and CTO of McKesson, Ms. McElligott oversaw all technology initiatives and provided support and guidance for the development of the company’s healthcare technology products and application development processes. During her tenure as CIO of Emerson, Ms. McElligott managed the company’s information technology strategy, operations, governance and information security for its global operations, including hardware, software and services, as well as its telecommunications and data center infrastructure. | | | | Career Highlights: ■ McKesson Corporation ■ Executive Vice President, Chief Information Officer & Chief Technology Officer (2015 – 2020) ■ Emerson Electric Company ■ Vice President & Chief Information Officer (2010 – 2015) ■ Vice President, Industrial Automation Business (2003 – 2010) ■ Vice President, Power Transmission (2000 – 2003) ■ GE Aerospace (formerly GE Aircraft Engines) ■ Chief Information Officer, Supply Chain (1997 – 2000) | | | | Board Experience: ■ Forescout Technologies (NASDAQ: FSCT, 2019 – 2020) | Education: ■ B.A. (Computer Science), Kent State University; M.B.A., Xavier University |
Director Nominees
| JUDY R. MCREYNOLDS | | | | Age 61 Director since: Jan. 2010 Chairman of the Board since: 2016 Committees: ■ None | Key Skills and Experience: ■ Senior Leadership: Serves as Chairman, President and CEO of ArcBest, overseeing significant growth and value creation across all verticals. Ms. McReynolds joined ArcBest in 1997 and has served as SVP, CFO and Treasurer; VP — Controller; and Director of Corporate Accounting. Ms. McReynolds has been the driving force behind diversifying ArcBest into a logistics powerhouse with a full suite of logistics solutions that meet customers’ supply chain needs. Individually, Ms. McReynolds has been recognized for numerous awards in leadership and business, including Forbes 50 Over 50 and Women Inc. Most Influential Corporate Board Directors. ■ Value Creation and M&A: Guides ArcBest M&A strategy, leading the company during its $235 million acquisition of MoLo Solutions, adding scale to its full truckload solution and enabling the achievement of $5 billion in revenue in 2022, a significant milestone. Optimized the business through the approximately $100 million sale of FleetNet America to Cox Automotive Mobility Solutions in 2023. In 2012, Ms. McReynolds oversaw ArcBest’s $180 million acquisition of what is now called Panther Premium Logistics, bolstering the company’s end-to-end logistics solutions. ■ Finance and Accounting: A Certified Public Accountant, Ms. McReynolds brings over 30 years of public and private finance experience in senior roles at ArcBest (including CFO), P.A.M. Transportation Services and Ernst and Young. ■ Logistics: Ms. McReynolds guides ArcBest with over 30 years of experience in the transportation and logistics industry, including 28 years with the company. Under her leadership, ArcBest has evolved into a multibillion-dollar integrated logistics company — leading the way with cutting-edge technology and customized solutions that help keep the global supply chain moving. | | | | Career Highlights: ■ ArcBest Corporation ■ Chairman (2016 – Present) ■ President & Chief Executive Officer (2010 – Present) ■ Senior Vice President, Chief Financial Officer, Principal Accounting Officer & Treasurer (2006 – 2010) ■ Vice President & Controller (2000 – 2006) ■ Controller (1998 – 1999) ■ Director (Corporate Accounting) (1997 – 1998) ■ P.A.M. Transportation Services ■ Director (Financial Reporting and Taxation) (1995 – 1997) ■ Ernst & Young ■ Senior Manager (1990 – 1995) | | | | Board Experience: ■ OGE Energy Group (NYSE: OGE, 2011 – Present) ■ First Bank Corp (Private)(2011 – Present) ■ First National Bank of Fort Smith (Private)(2011 – Present) ■ American Trucking Association (Private) (2010 – 2022; 2024 – Present) ■ American Transportation Research Institute (2010 – 2022) | Education: ■ B.B.A. (Accounting), University of Oklahoma | | | Select Awards ■ Women Business Collaborative’s Women CEOs in America list (2023) ■ Women’s Foundation of Arkansas Top 100 Women of Impact (2023) ■ Arkansas Business Hall of Fame Class of 2023 ■ Arkansas’ 250 Most Influential Leaders (2022, 2020, 2019 and 2018) ■ Arkansas Business Executive of the Year (2022) ■ Forbes 50 Over 50 (October 2022) ■ Gartner CEO Talent Champion (October 2022) ■ Comparably Best CEOs for Women and Best CEO (2021, 2022 and 2023) ■ Global Trade Magazine Top Ten Women in Logistics (July 2020 and July 2021) ■ Women Inc. Most Influential Corporate Board Directors (December 2019) ■ Recognized “Female Executives Advancing in Trucking Industry” by Transport Topics (June 2019) ■ Women in Trucking Association Distinguished Woman in Logistics (April 2019) ■ The CEO Connection Top 25 Most Influential Women in the Mid-Market (2018, 2017, 2016, 2015) | |
Director Nominees
| DR. CRAIG E. PHILIP | | | | Age 70 Director since: Aug. 2011 INDEPENDENT Committees: ■ Audit | Key Skills and Experience: ■ Senior Leadership: Former CEO of Ingram Barge, a leading provider of domestic marine transportation services. During his 30-year career with Ingram, starting as VP Strategic Planning, he led an aggressive acquisition program that transformed Ingram Barge into the third largest for-hire river carrier in the United States. Dr. Philip began his career at Consolidated Rail Corporation and later joined Southern Pacific Railroad where he was VP of the Intermodal Division as it became one of the first to deploy doublestack container railcars and the first purpose-built intermodal terminal for such railcars adjacent to the ports of LA/Long Beach. ■ Logistics: Brings over 40 years of logistics experience in intermodal operations, maritime shipping and railroad marketing. Dr. Philip is currently the Director of the Vanderbilt Center for Transportation and Operational Resiliency (VECTOR), a research institute with a focus on the integration of transportation infrastructure systems with funding from both public and private sponsors. Recognizing his contributions to Information Technology and Management Innovation, Dr. Philip was elected to the National Academy of Engineering in 2014. ■ Risk Management: One of Dr. Philip’s key research areas at VECTOR is the application of risk management tools to transportation systems, carrier safety management, and transport policy and regulation. At Ingram Barge, he oversaw and championed the company’s “Zero Harm” safety initiatives, and as chair of the industry’s main trade association, led efforts with federal regulators to modernize the required safety inspection and regulatory oversight regimes. | | | | Career Highlights: ■ Vanderbilt University ■ Research Professor & Director of Vanderbilt Center for Transportation and Operational Resiliency (2015 – Present) ■ Ingram Barge Company (Division of Ingram Industries) ■ Chief Executive Officer (1999 – 2014) ■ President (1994 – 1999) ■ Southern Pacific Railroad Company ■ Vice President (Intermodal Division) (1987 – 1991) | | | | Board Experience: ■ Marine Board of the Transportation Research Board (Private, 2016 - present, Chairman since 2022) ■ Multiple National and Regional Advocacy, Social Service and Academic Non-Profits | Education: ■ B.S.E (Civil Engineering), Princeton University; M.S.E and Ph.D. (Civil Engineering), Massachusetts Institute of Technology | | STEVEN L. SPINNER | | | | Age 64 Director since: Jul. 2011 INDEPENDENT Lead Independent Director since: 2022 Committees: ■ Audit | Key Skills and Experience: ■ Senior Leadership: Former President, CEO and Chairman of United Natural Foods (UNFI), North America’s premier grocery wholesaler. Mr. Spinner retired in 2021, and his contributions over 12 years catalyzed UNFI to new heights, increasing annual sales from $3 billion to over $26 billion. Prior to this role, Mr. Spinner served as President and CEO of Premier Food Group, overseeing significant strategy and scaling initiatives. ■ Value Creation and M&A: Oversaw over $3 billion worth of transactions during his tenure at UNFI, including the company’s transformative $2.8 billion acquisition of Supervalu. The acquisition of Supervalu accelerated UNFI’s “build out the store” strategy, diversified its customer base, enhanced cross-selling opportunities, expanded market reach and scale and led to significant cost savings and accelerated growth. ■ Logistics: Brings over 25 years of logistics experience in the wholesale distribution business through numerous executive management positions. At UNFI, Mr. Spinner oversaw the company’s national network of multi-tiered logistics distribution centers. In 2021, the company offered nearly 300,000 products across all grocery verticals and operated over 57 distribution centers and warehouses representing approximately 30 million square feet of warehouse space. Mr. Spinner’s transformative growth efforts and logistical innovations made UNFI the premier North American coast-to-coast wholesale distributor with customers in all fifty states as well as all ten provinces in Canada. | | | | Career Highlights: ■ MidOcean Partners ■ Operating Partner (2021 – Present) ■ Boxcar Partners ■ General Partner (2021 – Present) ■ United Natural Foods, Inc. ■ President, CEO and Chairman (2008 – 2021) ■ Performance Food Group ■ President & CEO (2006 – 2008) ■ President & COO (2005 – 2006) ■ Senior Vice President & Division Chief Executive, Broadline (2002 – 2005) | | | | Board Experience: ■ United Natural Foods (NYSE: UNFI, 2008 – 2021) ■ Performance Food Group (NYSE: PFGC, 2006 – 2008) | Education: ■ B.A., Albright College |
Director Nominees
| JANICE E. STIPP | | | | Age 64 Director since: Oct. 2012 INDEPENDENT Committees: ■ Audit (Chair) | Key Skills and Experience: ■ Senior Leadership: Former SVP, CFO & Treasurer of Rogers Corporation, a developer, manufacturer and seller of high-performance and high reliability engineered materials and components to over 5,000 customers worldwide. Ms. Stipp’s leadership played a pivotal role in accelerating organic and inorganic sales, gross margins and operating income. Prior to this role, Ms. Stipp served as EVP, CFO and Treasurer at Tecumseh Products Company, a publicly traded global leader in the refrigeration and air conditioning industry. Additional experience includes work in the manufacturing, technology and automotive industries with publicly traded, global corporations and private equity firms. ■ Value Creation and M&A: Brings significant transaction and integration experience in both public and private companies. Oversaw the acquisitions of DeWall Industries, Diversified Silicone Products and Grinswold during her tenure at Rogers resulting in more than $800 million in sales. ■ Finance and Accounting: Brings over 36 years of financial and accounting experience including as CFO of both public and private companies and as Certified Public Accountant. Ms. Stipp is a designated financial expert. | | | | Career Highlights: ■ Rogers Corporation ■ Senior Vice President, Chief Financial Officer & Treasurer (2017 – 2018) ■ Vice President, Chief Financial Officer, Chief Accounting Officer & Treasurer (2015 – 2017) ■ Tecumseh Products Company ■ Executive Vice President, Chief Financial Officer, Secretary & Treasurer (2011 – 2015) ■ Revstone Industries ■ Chief Financial Officer (2011 – 2011) ■ Acument Global Technologies ■ Chief Financial Officer (2007 – 2011) ■ GDX Automotive ■ Executive Vice President & Chief Financial Officer (2005 – 2007) | | | | Board Experience: ■ Diploma PLC (LSE: DPLM, 2024 – Present) ■ Rotork (LSE: ROR, 2020 – Present) ■ Sappi Limited (JSE: SAP, 2019 – 2022) ■ Commercial Vehicle Group (NASDAQ: CVGI, 2019 – 2021) ■ NN, Inc. (NASDAQ: NNBR, 2019 – 2019) ■ Ply Gem Holdings (NYSE: PGEM, 2014 – 2018) | Education: ■ B.A. (Accounting), Michigan State University; M.B.A, Wayne State University |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The Nominating/Corporate Governance Committee is responsible for reviewing and awarding compensation to the non-employee Directors and has retained Meridian Compensation Partners, LLC, an independent compensation consultant, to assist in fulfilling that responsibility. The Nominating/Corporate Governance Committee sets the levels and forms of non-employee Director compensation based on its experience, review of the compensation paid to directors of comparable publicly traded companies, and Meridian’s advice. We offer a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board.
2023 Director Compensation Table
2023 Director Compensation Table The table below summarizes the compensation paid by the Company to non-employee Directors for the year ended December 31, 2023.
2023 Director Compensation Table
| Name(1) | Fees Earned or Paid in Cash | Stock Awards(2,3) | All Other Compensation | Total | | Salvatore A. Abbate | $85,000 | $122,290 | $- | $207,290 | | Eduardo F. Conrado(4) | 100,000 | 122,290 | - | 222,290 | | Fredrik J. Eliasson | 85,000 | 122,290 | - | 207,290 | | Michael P. Hogan | 85,000 | 122,290 | - | 207,290 | | Kathleen D. McElligott(4) | 105,000 | 122,290 | - | 227,290 | | Craig E. Philip | 85,000 | 122,290 | - | 207,290 | | Steven L. Spinner(5) | 115,000 | 122,290 | - | 237,290 | | Janice E. Stipp(4) | 110,000 | 122,290 | - | 232,290 |
2023 Director Compensation Table
| (1) Judy R. McReynolds, the Chairman, President and Chief Executive Officer of the Company, is not included in this table since she is an employee of the Company and thus received no compensation for her service as a Director. The compensation received by Ms. McReynolds as an officer of the Company is shown in the Summary Compensation Table on page 52. | | (2) Reflects the aggregate grant date fair value of RSU awards made during 2023, computed using the grant date fair value ($87.35 per share), in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) determined without regard to estimated forfeitures and adjusted for present value of dividends (to reflect that dividend equivalents are not paid with respect to unvested RSU awards). All non-employee Directors received an award of 1,400 RSUs under the Ownership Incentive Plan on May 5, 2023 (computed using a stated annual value of $125,000 and the grant date closing stock price of $87.82 per share, rounded to the nearest hundred shares). No dividends or dividend equivalents are paid to non-employee Directors on RSUs, except for RSUs that vest but are deferred by the Director under the terms of the plan. See Note M to the consolidated financial statements in the Company’s 2023 Annual Report for additional detail on share-based compensation. | | (3) As of December 31, 2023, each non-employee Director had the following aggregate number of RSUs outstanding, although only the value of the 2023 RSU award is provided in the Stock Awards column above. |
2023 Director Compensation Table
| Name | Vested but Subject to Transfer Restrictions(i) | Unvested | Total RSUs Outstanding | | Salvatore A. Abbate | - | 1,400 | 1,400 | | Eduardo F. Conrado | 19,500 | 1,400 | 20,900 | | Fredrik J. Eliasson | 1,300 | 1,400 | 2,700 | | Michael P. Hogan | 3,800 | 1,400 | 5,200 | | Kathleen D. McElligott | 2,900 | 1,400 | 4,300 | | Craig E. Philip | - | 1,400 | 1,400 | | Steven L. Spinner | - | 1,400 | 1,400 | | Janice E. Stipp | - | 1,400 | 1,400 |
2023 Director Compensation Table
| (i) The balance in the Vested but Subject to Transfer Restrictions column includes shares deferred under the terms of the equity plan. | | (4) Committee Chairpersons during 2023: Ms. Stipp, Audit Committee and Qualified Legal Compliance Committee; Ms. McElligott, Compensation Committee; and Mr. Conrado, Nominating/Corporate Governance Committee. | | (5) Lead Independent Director during 2023: Mr. Spinner. |
2024 Director Compensation Changes
2024 Director Compensation Changes In October 2023, Meridian conducted a review of director compensation, including compensation paid to directors of the Company’s executive compensation peer group as well as compensation paid to directors of similarly sized general industry companies. Following the review, the Nominating/Corporate Governance Committee increased the member annual retainer for 2024 from $85,000 to $95,000 and the target equity grant value from $125,000 to $145,000. The increases were made to align the Company’s director compensation with the 50th percentile of our peer group and similarly sized general industry companies. For more information about our peer group, see “Peer Group” on page 40.
Company Performance
| ■ | We generated the second-highest annual revenue in our history. | | ■ | We created long-term value for our shareholders, returning over $100 million through dividends and buybacks, and achieving a 72% total shareholder return and a $120.21 year-end stock price. | | ■ | We improved our Asset Based operating ratio in the second half of the year through strategic cost-reduction initiatives and providing transportation solutions for our customers amid market disruption. | | ■ | We aligned our business with our growth strategy by divesting FleetNet America for $100 million. | | ■ | We grew our Asset Light shipment volume and improved our productivity metrics. | | ■ | We received recognition from Fast Company and TIME for the Vaux Freight Movement System™ as one of the year’s best inventions. |
Overview of our Compensation Program
| | Compensation Element | How Paid | Features | For More Information | | FIXED | Base salary | Cash | Reviewed annually and reflects executive’s experience, the scope and complexity of the executive’s position, current objectives and responsibilities, internal equity, the executive’s performance, retention needs, and market factors | Page 41 | | AT RISK (variable) | Annual incentive (AIP) | Cash | Based on annual goals for Adjusted Operating Income and Adjusted ROCE, weighted equally | Page 42 | | AT RISK (variable) | Long-term incentive | Cash (C-LTIP) (50% of target) | Based on three-year goals for Adjusted ROCE and relative TSR, weighted equally | Page 44 | | | | Time-vested RSUs (50% of target) | Vest pro-rata over three years following grant date | Page 45 |
Key Compensation Governance Policies
| What We Do: | | | | We tie pay to performance. The majority of executive pay is at risk. | | | Half (50%) of the long-term incentive value granted to Named Executive Officers is contingent on the Company’s performance over a 3-year period. | | | We use three-year ratable vesting for our restricted stock units to encourage retention and a long-term perspective. | | | Named Executive Officers and Directors are subject to significant stock ownership requirements. | | | We have caps on both the annual incentive and long-term incentive payouts. | | | We have a robust clawback policy that goes beyond the minimum requirements under the Nasdaq listing standards. | | | We conduct annual risk assessments of our compensation plans. | | | We have an independent Compensation Committee. | | | The Compensation Committee has an independent compensation consultant. | | | We benchmark our compensation practices to peers with which we compete for talent. |
Alignment of Cash Incentive Payouts with Operating Income
Alignment of Cash Incentive Payouts with Operating Income Our executive compensation program aims to achieve a strong relationship between pay and Company performance. In establishing compensation for our Named Executive Officers, the Compensation Committee reviews the historical trend of the average annual incentive payout and long-term incentive payout in a given year, as compared to the Company’s operating income. The following charts illustrate the respective trends of average annual incentive payouts and long-term incentive payouts to Named Executive Officers as compared to operating income over a ten-year period. Correlating cash incentive payments to improvements in operating income reinforces the Company’s emphasis on profitable growth and return on capital employed. For more information regarding pay for performance, see our “Pay Versus Performance” table on page 66, which we are providing 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.
Role of the Compensation Committee
Role of the Compensation Committee The Compensation Committee is responsible for overseeing and approving compensation levels and incentive plans for the Named Executive Officers. The Compensation Committee has determined and reviewed the value and forms of compensation for Named Executive Officers and other officers based on Committee members’ knowledge and experience, competitive market compensation information, periodic review and analysis from an independent compensation consultant, and management recommendations. The Committee approves salary levels, incentive plan performance metrics, performance goals, payout opportunities, equity award levels and terms, and the peer group used for market benchmarking. The Committee also evaluates the need for, and the provisions of, severance arrangements for the Named Executive Officers, reviews risks associated with compensation plans, and administers the Company’s clawback policy.
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant The Compensation Committee directly engages Meridian Compensation Partners, LLC (“Meridian”) as its independent executive compensation consultant. Meridian provided ongoing consulting assistance to the Compensation Committee throughout the year on areas such as compensation design, proxy disclosure, market trends, corporate governance practices, technical considerations and other matters. In particular, Meridian assisted the Committee by evaluating the Company’s compensation programs and award levels, participating in Committee meetings when requested, and reviewing Committee materials. Other than executive and director compensation consulting to the Board, the Compensation Committee and the Nominating/Corporate Governance Committee, Meridian does not provide any other services to the Company. The Compensation Committee has the final authority to hire and terminate the independent compensation consultant and evaluates the consultant periodically. The Chair of the Compensation Committee approves the fees paid to the consultant. The Compensation Committee has assessed the independence of Meridian under SEC rules and concluded that Meridian’s work for the Board, the Compensation Committee and the Nominating/Corporate Governance Committee does not raise any conflict of interest. The Company has retained Mercer LLC (“Mercer”) to provide additional consulting services at the request of management and to assist with management’s recommendations for selecting our peer group and executive compensation. Mercer primarily assists management with market analysis and proxy disclosure review. The Company has assessed the independence of Mercer under SEC rules and concluded that Mercer’s work for management does not raise any conflict of interest. At the Company’s request, Mercer conducted a compensation review for Named Executive Officers in July 2022. This study helped inform compensation decisions for 2023.
Peer Group
Peer Group The Committee compares the Company’s compensation levels with the compensation of executives at similar entities in our industry to determine whether our compensation is competitive. The peer group is also used to gauge the Company’s performance for relative TSR in the C-LTIP. The peer group includes the companies with which we compete in the transportation and logistics industry and for executive talent. Each year, with input from Meridian, the Committee reviews our current peer group using criteria such as market capitalization and revenues. Management also makes recommendations for our peer group. Our 2023 peer group for market comparison is the same peer group used in 2022 (as disclosed in the 2023 proxy statement), except that, in accordance with the terms of the C-LTIP plan, two companies were removed for 2023. In July 2023, following the acquisition of US Xpress Enterprises, Inc. (USX) by Knight-Swift Transportation Holdings, Inc. (also a peer group company), the Committee removed USX from the C-LTIP awards for the 2021-2023, 2022-2024 and 2023-2025 performance periods. In addition, in October 2023, as a result of its Chapter 11 bankruptcy and subsequent delisting from Nasdaq, the Committee removed Yellow Corporation from the C-LTIP awards for the 2021-2023, 2022-2024 and 2023-2025 performance periods. Our peer group for 2023 is listed in the table below:
Peer Group
| Company Name | Revenue in 2023 ($ millions) | | ArcBest Corporation | 4,427 | | Covenant Logistics Group, Inc. | 1,104 | | Forward Air Corporation | 1,371 | | Hub Group, Inc. | 4,203 | | J.B. Hunt Transport Services, Inc. | 12,830 | | Knight-Swift Transportation Holdings, Inc. | 7,142 | | Landstar System, Inc. | 5,303 | | Old Dominion Freight Line, Inc. | 5,866 | | Saia, Inc. | 2,881 | | Schneider National, Inc. | 5,499 | | TFI International Inc. | 7,521 | | Werner Enterprises, Inc. | 3,283 |
Peer Group and Industry Comparisons
Peer Group and Industry Comparisons Target total compensation and each pay component are designed to approximate the 50th percentile of the peer group, with actual pay outcomes that vary based on company performance. Although the Committee considers these market benchmarks, compensation for a given executive may further vary from market based on the executive’s experience, the scope and complexity of the executive’s position, the executive’s current objectives and responsibilities, internal equity, the executive’s performance, and retention needs. In setting performance goals for the incentive plans, the Committee references the historical long-term ROCE of the S&P 500 companies. We believe inclusion of Adjusted ROCE as an incentive metric is an important factor in our performance and keeps our leadership focused on efficient capital deployment for both the short-term and the long-term, which increases the value of the Company to its stockholders. We believe the S&P 500 is an appropriate performance benchmark because it is a broad-based group of U.S. companies in leading industries and reflects the risk and return characteristics of the broader market on an ongoing basis. While the S&P 500 primarily includes companies that are larger than the Company, the performance of these companies reflects stable, well-managed organizations. The Committee believes that performance at or above the level of the S&P 500 companies is acceptable performance and worthy of performance-based incentive payments. In addition, for long-term incentives, the Company uses TSR relative to our industry peer group to more directly align the long-term cash incentive plan with shareholder value creation.
Annual Cash Incentive Compensation
Annual Cash Incentive Compensation
PERFORMANCE METRICS
PERFORMANCE METRICS The annual cash incentive for 2023 was based on the Company’s Adjusted Operating Income and Adjusted ROCE. As in prior years, the two performance metrics were equally weighted. Adjusted Operating income represents operating income as reported in the Company’s consolidated financial statements, adjusted (if applicable to the covered period) to (i) add back (a) certain annual or long-term incentive compensation expenses, including AIP and C-LTIP, and (b) direct third-party acquisition expenses, and (ii) exclude (a) all revenue and expenses for businesses acquired during the measurement period, (b) any expenses resulting directly from reorganization and restructuring that are publicly disclosed, (c) any increases or decreases from certain extraordinary, unusual or non-recurring item as approved by the Compensation Committee, (d) any increases or decreases resulting from changes in accounting principles, (e) any losses from a discontinued operation, (f) any goodwill, other intangible asset, and lease-related impairment charges, and (g) any settlement and termination expenses (including withdrawal liabilities) relating to pension plans. The use of Adjusted Operating Income reinforces the Company’s emphasis on profitable growth. Adjusted ROCE represents net income divided by average adjusted debt plus average equity for the measurement period, with net income, debt and equity adjusted (if applicable to the covered period) to (i) add back (a) certain after-tax annual or long-term incentive compensation expenses, including expenses related to the AIP and C-LTIP, and (b) after-tax direct third-party acquisition expenses, interest expense, and amortization of intangibles, and (ii) exclude (a) all revenue, expenses, and taxes from, and debt attributable to, businesses acquired during the measurement period, (b) any decreases in net income resulting directly from reorganization and restructuring expenses that are publicly disclosed, (c) any increases or decreases to ROCE resulting from any extraordinary, unusual or non-recurring items as approved by the Compensation Committee, (d) any increases or decreases in net income resulting from changes in accounting principles, (e) any losses from a discontinued operation, (f) the effect of changes in federal income tax law or regulations affecting reported results during the measurement period, (g) any goodwill, other intangible asset, and lease-related impairment charges, (h) any after-tax income from cash and short-term investments attributable to any reduction in average debt, and (i) any after-tax settlement and termination expenses (including withdrawal liabilities) relating to pension plans. As discussed earlier, the Committee and management believe that Adjusted ROCE keeps participants focused on the profitable use of Company resources, which increases the value of the Company to its stockholders. We use a historical average ROCE of the S&P 500, typically over a period of at least ten years, so the performance target does not reflect short-term market volatility.
TARGET AWARDS
TARGET AWARDS Each Named Executive Officer’s target annual incentive opportunity is expressed as a percentage of base salary earned during the plan year. The following table shows the incentive targets for 2023. The annual incentive opportunities (as a percentage of base salary) for the Messrs. Anderson, Newcity and Cobb were unchanged from 2022, but the opportunities for Ms. McReynolds and Mr. Runser were increased from 100% to 110% and 70% to 75%, respectively, to generally reflect the 50th percentile of the peer group. Mr. Beasley’s annual incentive opportunity was increased from 40% to 65% in connection with his appointment as CFO in May 2023.
TARGET AWARDS
| (1) The maximum total payout potential is 250% of the target incentive, assuming Company performance is at or above the maximum goal levels for Adjusted Operating Income and Adjusted ROCE. | | (2) Mr. Beasley became CFO in May 2023. His annual target incentive (as a percentage of base salary) reported in this table reflects only the target resulting from his mid-year role change. However, his actual target opportunity and payout amount, as reported in the “Performance Results” section below and the “Summary Compensation Table”, were calculated based on 40% of base salary earned for the period of January 1 through May 13, 2023, and 65% of base salary earned for the period of May 14 through December 31, 2023. | | (3) Mr. Cobb retired from the Company in October 2023. He remained eligible for the annual incentive opportunity under the terms of the AIP because he was a participant in the plan for more than ninety days during the plan year. |
PERFORMANCE GOALS
PERFORMANCE GOALS The following tables show the goals and associated payouts for the two performance metrics utilized for the 2023 annual incentive.
PERFORMANCE GOALS
| * The payout earned for performance at levels between those indicated is calculated using straight-line interpolation, except that no payout is earned for performance below the Threshold performance levels. |
PERFORMANCE RESULTS
PERFORMANCE RESULTS Actual Adjusted Operating Income achieved for 2023 as measured under the annual cash incentive plan was $275.5 million, falling below the target performance amount, resulting in a payout of 25.5% for the Adjusted Operating Income portion of the annual incentive. Adjusted ROCE for the year was 20.1%, exceeding the maximum performance amount, resulting in a payout of 300% for the Adjusted ROCE portion of the annual incentive. Combining the two payouts, weighted 50% each, produced a total payout of 162.75% of the target incentive opportunity. Actual payouts for 2023 performance are shown below:
PERFORMANCE RESULTS
| | 2023 Target Annual Incentive Opportunity | 2023 Actual Annual Incentive Plan Payout | | Judy R. McReynolds | $990,000 | $1,611,225 | | J. Matthew Beasley(1) | 229,877 | 374,125 | | Seth K. Runser | 356,250 | 579,797 | | Dennis L. Anderson II | 279,696 | 455,205 | | Michael E. Newcity | 280,808 | 457,014 | | David R. Cobb(2) | 381,615 | 493,460 |
PERFORMANCE RESULTS
| (1) Mr. Beasley’s 2023 target opportunity reflects the sum of his AIP opportunities before and after he became CFO based on his annual target incentive (as a percentage of base salary) and base salary in effect during such periods. | | (2) In light of his retirement in October 2023, Mr. Cobb received a pro-rated portion of his annual incentive payout. |
Long-Term Incentive Compensation
Long-Term Incentive Compensation
TARGET AWARDS
TARGET AWARDS Our long-term compensation target incentive opportunity consists of two components: (i) a three-year cash incentive opportunity (“2023-2025 C-LTIP”), and (ii) a time-vested RSU award. The following table shows the targets for long-term incentive compensation opportunities awarded in 2023 for the 2023-2025 C-LTIP and the 2023 RSU award.
TARGET AWARDS
| | Total Long-Term Compensation Target Incentive Opportunity (Fixed Dollar Amount) | 2023-2025 C-LTIP Target Value | 2023 RSU Grant Value | | Judy R. McReynolds | $2,500,000 | $1,250,000 | $1,250,000 | | J. Matthew Beasley(1) | 390,000 | 90,000 | 300,000 | | Seth K. Runser | 650,000 | 325,000 | 325,000 | | Dennis L. Anderson II | 550,000 | 275,000 | 275,000 | | Michael E. Newcity | 540,000 | 270,000 | 270,000 | | David R. Cobb(2) | 400,000 | 400,000 | - |
TARGET AWARDS
| (1) Mr. Beasley’s 2023-2025 C-LTIP target value award reflects the value awarded for Mr. Beasley’s role prior to his becoming CFO in May 2023. | | (2) Because Mr. Cobb retired in October 2023, he did not complete at least twelve months of the performance period and, therefore, is not eligible to receive a payout under the 2023-2025 C-LTIP. He did not receive a 2023 RSU award. |
CASH LONG-TERM INCENTIVE COMPENSATION
CASH LONG-TERM INCENTIVE COMPENSATION The Committee has awarded cash long-term incentive opportunities since 2006. We have observed that these awards, which are exclusively performance-based, appropriately reward management and drive performance with respect to the Company’s key financial metrics. The three-year performance cycle encourages a long-term perspective, while the payout being driven by relative TSR and three-year average Adjusted ROCE incentivizes sustainable value creation relative to our peers along with profitability and capital efficiency. Using cash-based awards also mitigates the dilutive effect of solely offering long-term equity compensation. In February 2023, the Committee granted a three-year cash incentive award for the performance period from January 1, 2023 through December 31, 2025, using the same two metrics we have used in recent years: three-year average Adjusted ROCE and relative TSR, each weighted 50%. Relative TSR rewards participants when the Company outperforms our peer group and directly aligns executives’ interests with shareholder value creation relative to our peers. The payout for the relative TSR component is based on the percentile rank of the Compounded Annual Growth Rate (“CAGR”) of our TSR relative to our peer group over the three-year measurement period. For these purposes, we calculate TSR as the annualized rate of return reflecting price appreciation between the beginning 60-day average share price (ending December 31 of the year immediately prior to the beginning of the measurement period) and the ending 60-day average share price (ending December 31 of the final year of the measurement period), adjusted for dividends paid and the compounding effect of reinvested dividends and any stock dividend on, dividend of or stock split or stock combination of, or any like change in, stock of the same class, for any change in the capital structure of the Company or a peer group company, or to exclude any peer group company that is no longer publicly traded. CAGR converts the total return into a value that indicates what the return was on an annual basis for the three-year period. For information on the performance peer group for the relative TSR component of the 2023-2025 cash long-term incentive plan, refer to page 40. Adjusted ROCE for the three-year performance period measures the efficient use of corporate assets to create profitable growth and aligns executives’ interest with our profitability and appropriate employment of capital. As previously discussed, the Committee and management believe that Adjusted ROCE keeps participants focused on the profitable use of Company resources, which increases the value of the Company to its stockholders. For the Adjusted ROCE component, the three-year average goal is based on historical averages for S&P 500 companies over longer periods of time, as discussed on page 42. For purposes of the 2023-2025 C-LTIP, Adjusted ROCE is defined substantially the same as Adjusted ROCE for the AIP, except that (i) after-tax annual incentive compensation expenses are not added back, and (ii) certain additional adjustments are made to reflect the multi-year performance period. The tables below show the goals and associated payout potential for the two performance metrics utilized for the 2023-2025 C-LTIP. Payments for the 2023-2025 C-LTIP, if any, will be made in early 2026. The maximum total payout potential is 250% of the target incentive, assuming Company performance is at or above the maximum goal levels for relative TSR and Adjusted ROCE.
CASH LONG-TERM INCENTIVE COMPENSATION
| Relative TSR | Payout Earned for Relative TSR (% of target earned)* | Adjusted ROCE % Achieved | Payout Earned for Adjusted ROCE (% of target earned)* | | <25th percentile | 0% | <9% | 0% | | 25th percentile (threshold) | 25% | 9% (threshold) | 50% | | 50th percentile | 100% | 14% | 100% | | ≥75th percentile | 200% | ≥19% | 300% |
CASH LONG-TERM INCENTIVE COMPENSATION
| * The payout earned for performance at levels between those indicated is calculated using straight-line interpolation, except there is no payout for performance below the threshold level. |
LONG-TERM EQUITY INCENTIVE COMPENSATION
LONG-TERM EQUITY INCENTIVE COMPENSATION The Company grants RSU awards to help align the executives’ interests with those of our stockholders. In 2023, Named Executive Officers were granted time-vested RSUs as shown in the table below.
LONG-TERM EQUITY INCENTIVE COMPENSATION
| Named Executive Officer | RSU Target Grant Value | RSUs Granted in 2023(1) | | Judy R. McReynolds | $1,250,000 | 14,200 | | J. Matthew Beasley | 300,000 | 3,400 | | Seth K. Runser | 325,000 | 3,700 | | Dennis L. Anderson II | 275,000 | 3,100 | | Michael E. Newcity | 270,000 | 3,100 | | David R. Cobb(2) | - | - |
LONG-TERM EQUITY INCENTIVE COMPENSATION
| (1) The number of RSUs granted is based on the target award value established by the Committee divided by the closing stock price of the Company’s Common Stock on the date of grant and rounded to the nearest 100 units. | | (2) Mr. Cobb did not receive a grant under the 2023 RSU award in light of his previously announced plan for early retirement in October 2023. |
LONG-TERM EQUITY INCENTIVE COMPENSATION
The Committee believes the award of RSUs with time-based vesting makes it easier for the Named Executive Officers to accumulate an equity interest in the Company and comply with our Stock Ownership Policy and also helps to retain key talent. RSUs granted in 2023 are subject to three-year ratable vesting, with one-third of the awards vesting on each of the first, second and third anniversaries of the grant date. Stock will be issued in settlement of the RSUs on the vesting dates, or earlier if the Named Executive Officer experiences a qualifying termination of employment. No dividends or dividend equivalents are paid to Named Executive Officers on RSUs. See “Outstanding Equity Awards at 2023 Fiscal Year-End” for additional information regarding these awards.
C-LTIP Awards for the 2021-2023 Performance Period
C-LTIP Awards for the 2021-2023 Performance Period The performance period for the 2021-2023 C-LTIP ended on December 31, 2023. The Company’s actual TSR percentile rank was 100th and three-year average Adjusted ROCE was 28.56%, both above the maximum performance levels, resulting in an aggregate payout of 250% of the target incentive opportunity, as reflected in the table below. The individual incentive targets were expressed as a fixed dollar value based, in large part, on the respective officers’ positions within the Company. The original performance payout targets for the 2021-2023 awards can be found in our proxy statement for our 2022 Annual Meeting of Stockholders.
C-LTIP Awards for the 2021-2023 Performance Period
| | 2021-2023 Target C-LTIP Opportunity | 2021-2023 Actual C-LTIP Payout | | Judy R. McReynolds | $1,000,000 | $2,500,000 | | J. Matthew Beasley(1) | N/A | N/A | | Seth K. Runser(2) | 250,000 | 625,000 | | Dennis L. Anderson II | 275,000 | 687,500 | | Michael E. Newcity | 270,000 | 675,000 | | David R. Cobb | 400,000 | 916,667 |
C-LTIP Awards for the 2021-2023 Performance Period
| (1) Mr. Beasley joined the Company in 2022, and did not receive an award under the 2021-2023 C-LTIP. | | (2) Mr. Runser was ABF Freight Chief Operating Officer at the time of the 2021-2023 C-LTIP award, and his target incentive opportunity was based on his position at that time. |
Compensation Risk Assessment
| ■ | a combination of short- and long-term compensation; | | ■ | a combination of equity- and cash-based compensation; | | ■ | multiple performance metrics; | | ■ | relative performance metrics; | | ■ | robust financial control policies and audit practices; | | ■ | caps for potential amounts earned under annual and long-term incentive plans; | | ■ | a robust clawback policy that goes beyond the minimum requirements under the Nasdaq listing standards; | | ■ | a prohibition against hedging transactions or pledging of shares; | | ■ | multi-year vesting periods for equity awards; | | ■ | stock ownership requirements for executive officers; | | ■ | retention of an independent compensation consultant to advise the Compensation Committee; | | ■ | approval of performance criteria and performance results by the Compensation Committee, which consists of only independent Directors; and | | ■ | review of peer groups by an independent compensation consultant and the Compensation Committee. |
Compensation Program Changes for 2024
| ■ | Revised the performance metric weighting utilized in our AIP to 60% Adjusted Operating Income and 40% Adjusted ROCE (from equal weighting in 2023) and harmonized the maximum payout percentages for each performance metric to 250% (from 200% and 300%, respectively); | | ■ | Revised the long-term incentive compensation weighting to 60% performance-based C-LTIP and 40% time-vested RSUs (from equal weighting in 2023); and | | ■ | Revised the performance metric weighting utilized in our C-LTIP to 60% three-year average Adjusted ROCE and 40% Relative TSR (from equal weighting in 2023) and harmonized the maximum payout percentages for each performance metric to 250% (from 300% and 200%, respectively). |
Equity Award Practices
Equity Award Practices The Company’s policy for granting equity awards states:
Equity Award Practices
| ■ | the Compensation Committee is responsible for granting equity-based compensation for employees; | | ■ | the Compensation Committee establishes a fixed dollar value for each grant recipient; | | ■ | the award dates for each grant are five business days following the Company’s applicable quarterly earnings release, unless a different date is approved by the Board; | | ■ | the number of shares/units awarded will be based on the fixed dollar value established by the Compensation Committee divided by the closing price of the Company’s Common Stock on the specified award date and rounded to the nearest 100 shares, unless otherwise approved by the Board; and | | ■ | any award that does not conform to these policy requirements must be approved by the Board. |
ANTI-HEDGING AND PLEDGING POLICIES
ANTI-HEDGING AND PLEDGING POLICIES All Company officers, including Named Executive Officers, and certain other employees, as well as non-employee Directors, are subject to the Insider Trading Policy, which prohibits certain transactions in the Company’s securities, including the purchase or sale of puts, calls, options or other derivative securities based on the Company’s securities. The Insider Trading Policy also prohibits monetization transactions, such as forward sale contracts (in which a stockholder continues to own the underlying security without having all the risks or rewards of ownership, executes a short-sale of Company securities, or “sells against the box”—failing to deliver sold securities), as well as any other hedging or pledging transaction involving the Company’s securities. This policy does not include ArcBest stock options exercised in accordance with the terms of the Company’s equity plan. The Company does not have any outstanding stock option awards.
Post-Employment Supplemental Medical Policy (“Executive Medical Policy”)
Post-Employment Supplemental Medical Policy (“Executive Medical Policy”) Certain corporate officers and certain other subsidiary officers, including certain of the Named Executive Officers, and their eligible dependents have lifetime health coverage under the Company’s Executive Medical Policy following their termination of employment after age 55 with 10 years of service. The health coverage is provided through a fully insured third party-provided health plan. Eligible retired officers from age 55 to 60 pay a premium to the Company, equivalent to the then-current COBRA rate applicable to qualifying former employees. From age 60 to 65, a retired officer is required to reimburse the Company an amount equivalent to $250 per individual covered per month, up to a maximum of $500 per month. For retired officers age 65 and over, reduced premiums are charged by the Company for continued retiree coverage. New participants have not been added to the plan since 2017. All of our current Named Executive Officers (other than Mr. Beasley) are eligible participants. The Executive Medical Policy provides that coverage will be forfeited if the officer becomes an employee, consultant or director of, or has an ownership interest in, any competitor of the Company.
Employment Agreements and Change in Control Provisions
Employment Agreements and Change in Control Provisions None of our Named Executive Officers is party to an employment agreement with the Company. However, the Named Executive Officers do participate in the Amended and Restated 2012 Change in Control Plan (the “2012 Change in Control Plan”) for certain senior officers of the Company. The Board amended the plan in October 2022 to, among other things, clarify the treatment of outstanding equity awards upon a change in control. The Committee believes this plan serves the best interests of our stockholders since it is designed to help retain executives during uncertain times leading up to and immediately following a change in control. By providing fair compensation in the event of termination following a change in control, the plan is designed to allow the executives to reasonably evaluate potential actions without concern over how it may impact them financially. The benefits under the 2012 Change in Control Plan are intended to provide the officer participants with a reasonable severance package that is based on the value the officers have created and is realized by the Company’s stockholders in the event of a change in control. The Company does not gross up for taxes a Named Executive Officer may owe on change in control benefits, including any excise taxes under Internal Revenue Code (“IRC”) Section 4999. Under the terms of the 2012 Change in Control Plan, a best-net calculation will be performed to determine whether change in control benefits due to the Named Executive Officers should be reduced (so no excise tax will be imposed) or should be paid in full (with any resulting excise taxes to be paid in full by the Named Executive Officer). See “Potential Payments upon Termination or Change in Control” for additional information regarding the provisions of the 2012 Change in Control Plan.
Deductibility of Executive Compensation
Deductibility of Executive Compensation Section 162(m) of the IRC limits the tax deductibility of annual compensation paid to certain executives to $1 million. As a result, the Company will not receive a federal income tax deduction for any compensation paid to its Named Executive Officers in excess of $1 million except to the extent awards, if any, are “grandfathered” under applicable exceptions. The Committee believes that stockholder interests are best served by not restricting its flexibility in structuring compensation programs, even if those programs result in non-deductible compensation expenses. IRC Section 280G applies to payments made to executives of a company in connection with a change in control and prohibits the deduction of any “excess parachute payment.” Benefits payable under the 2012 Change in Control Plan, as well as accelerated vesting of equity awards and annual and long-term cash incentives, could result in “excess parachute payments” that are not deductible by the Company. For more information regarding amounts payable and benefits available upon the occurrence of certain changes in control, see “Executive Compensation — Potential Payments upon Termination or Change in Control.”
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation The Company designs and operates its nonqualified deferred compensation arrangements in a manner that is intended to be exempt or compliant with Section 409A of the IRC and the final regulations issued thereunder.
Summary Compensation Table
Summary Compensation Table The following table sets forth compensation paid for the years indicated for our 2023 Named Executive Officers.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | | Judy R. McReynolds ArcBest Chairman, President and CEO | 2023 | $900,000 | $1,227,732 | $4,111,225 | $9,464 | $66,687 | $6,315,108 | | | 2022 | 848,720 | 1,230,566 | 4,271,800 | 16,127 | 63,680 | 6,430,893 | | | 2021 | 824,000 | 990,774 | 4,132,412 | 10,485 | 48,618 | 6,006,289 | | J. Matthew Beasley ArcBest CFO | 2023 | 395,926 | 293,964 | 374,125 | - | 23,100 | 1,087,115 | | | - | - | - | - | - | - | - | | | - | - | - | - | - | - | - | | Seth K. Runser ABF Freight President | 2023 | 475,000 | 319,902 | 1,204,797 | - | 28,060 | 2,027,759 | | | 2022 | 437,750 | 321,358 | 1,191,062 | - | 29,648 | 1,979,818 | | | - | - | - | - | - | - | - | | Dennis L. Anderson II ArcBest Chief Strategy Officer | 2023 | 430,301 | 268,026 | 1,142,705 | - | 28,218 | 1,869,250 | | | 2022 | 413,751 | 266,492 | 1,197,345 | - | 29,763 | 1,907,351 | | | 2021 | 401,700 | 269,421 | 1,228,424 | - | 29,074 | 1,928,619 | | Michael E. Newcity ArcBest Chief Innovation Officer, and ArcBest Technologies President | 2023 | 432,012 | 268,026 | 1,132,014 | - | 23,280 | 1,855,332 | | | 2022 | 415,396 | 266,492 | 1,337,518 | - | 24,580 | 2,043,986 | | | 2021 | 403,297 | 269,421 | 1,317,286 | - | 23,380 | 2,013,384 | | David R. Cobb Former ArcBest CFO | 2023 | 404,268 | - | 1,410,126 | - | 34,040 | 1,848,434 | | | 2022 | 489,250 | 391,900 | 1,729,844 | - | 24,580 | 2,635,574 | | | 2021 | 475,000 | 399,786 | 1,719,079 | - | 23,380 | 2,617,245 |
Summary Compensation Table
| (1) The amounts reflect the aggregate grant date fair value of RSU awards granted to the Named Executive Officers on May 5, 2023, under the Ownership Incentive Plan, computed in accordance with FASB ASC Topic 718, determined without regard to estimated forfeitures and adjusted for present value of dividends (to reflect that dividend equivalents are not paid with respect to RSU awards). The actual value realized by the officer as a result of these awards will vary based on a number of factors, including the Company’s performance, stock price fluctuations and applicable vesting. No dividends or dividend equivalents are paid to Named Executive Officers on RSUs. See Note M to the consolidated financial statements in the Company’s 2023 Annual Report for additional detail regarding share-based compensation. | | (2) Reflects cash compensation earned during 2023 from the annual incentive plan (“2023 AIP”), and cash compensation earned from the 2021-2023 cash long-term incentive plan (“2021-2023 C-LTIP”), each of which were paid in February 2024, as shown in the table below. AIP and C-LTIP awards earned are generally paid as soon as administratively practicable following the date the awards are calculated and approved, but no later than 75 days after the end of the measurement period to which the performance goals relate. See the “2023 Grants of Plan-Based Awards” table and the CD&A for additional information on the 2023 AIP and the 2021-2023 C-LTIP. |
Summary Compensation Table
| | McReynolds | Beasley | Runser | Anderson | Newcity | Cobb | | 2023 AIP | $1,611,225 | $374,125 | $579,797 | $455,205 | $457,014 | $493,460 | | 2021-2023 C-LTIP | 2,500,000 | - | 625,000 | 687,500 | 675,000 | 916,667 | | Total | $4,111,225 | $374,125 | $1,204,797 | $1,142,705 | $1,132,014 | $1,410,126 |
Summary Compensation Table
| (3) Reflects the increase in actuarial present value during 2023 of each Named Executive Officer’s accumulated benefit under the Company’s legacy SBP and DSAs. The values reported are determined using the same assumptions as used by the Company for financial reporting purposes for the Company’s SBP and DSAs, except the payment date is assumed to be age 60 for the SBP rather than age 65. See “2023 Pension Benefits” for additional information on these plans. The 2023 change in actuarial present value by plan is as follows: |
Summary Compensation Table
| | McReynolds | Beasley | Runser | Anderson | Newcity | Cobb | | Supplemental Benefit Plan | $- | $- | $- | $- | $- | $- | | Deferred Salary Agreement | 9,464 | - | - | - | - | - | | Total Increase | $9,464 | $- | $- | $- | $- | $- |
Summary Compensation Table
Earnings with respect to outstanding vested RSUs are not above market and are not included in this column. See “2023 Non-Qualified Deferred Compensation” for additional information on outstanding vested RSUs.
Summary Compensation Table
| (4) All Other Compensation for 2023 consists of the following: |
Summary Compensation Table
| | McReynolds | Beasley | Runser | Anderson | Newcity | Cobb | | 401(k) Company Match | $9,900 | $9,900 | $9,900 | $9,900 | $9,900 | $9,900 | | DC Contribution | 13,200 | 13,200 | 13,200 | 13,200 | 13,200 | 13,200 | | 24-Hour Accidental Death Premiums(i) | 180 | - | - | 180 | 180 | 180 | | Perquisites(ii) | 33,461 | - | - | - | - | - | | Gross-Ups(iii) | 9,946 | - | 4,960 | 4,938 | - | - | | Retirement Gift(iv) | - | - | - | - | - | 10,760 | | Total Increase | $66,687 | $23,100 | $28,060 | $28,218 | $23,280 | $34,040 |
Summary Compensation Table
| (i) | The 24-hour accidental death benefit was closed to new participants before Messrs. Beasley and Runser were promoted to eligible roles; therefore, they do not receive this benefit. | | (ii) | Perquisites values for Ms. McReynolds include expenses for spousal travel to Company or industry events and any related Company lost tax deduction resulting from the spouse accompanying the Named Executive Officer on a Company airplane. Ms. McReynolds’ perquisite value also includes limited personal use of Company aircraft. No other Named Executive Officer received perquisites in excess of $10,000 during 2023, and therefore no value is reported. | | (iii) | Tax gross-ups for Ms. McReynolds and Messrs. Runser and Anderson are for gifts related to the Company’s annual President’s Club event, conference fees and expenses for a spouse accompanying the officer, and spousal travel on a Company airplane to a Company or industry event. | | (iv) | The retirement gift for Mr. Cobb consisted of a retirement award upon his retirement in October 2023, and a legacy gift made by the Company in his name to a local charity in honor of his years of service to the Company. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table provides information related to non-equity and equity-based awards made to the Named Executive Officers for 2023.
2023 Grants of Plan-Based Awards
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2,3) | | | All Other Stock Awards | | | Name | Award Type(1) | Approval Date(2,3,4) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(4) | | Judy R. McReynolds | AIP | 2/20/2023 | 2/20/2023 | $371,250 | $990,000 | $2,475,000 | | | | | C-LTIP | 2/20/2023 | 2/20/2023 | 468,750 | 1,250,000 | 3,125,000 | | | | | RSU | 4/19/2023 | 5/5/2023 | | | | 14,200 | $1,227,732 | | J. Matthew Beasley | AIP | 2/20/2023 | 2/20/2023 | 86,204 | 229,877 | 574,693 | | | | | C-LTIP | 2/20/2023 | 2/20/2023 | 33,750 | 90,000 | 225,000 | | | | | RSU | 4/19/2023 | 5/5/2023 | | | | 3,400 | 293,964 | | Seth K. Runser | AIP | 2/20/2023 | 2/20/2023 | 133,594 | 356,250 | 890,625 | | | | | C-LTIP | 2/20/2023 | 2/20/2023 | 121,875 | 325,000 | 812,500 | | | | | RSU | 4/19/2023 | 5/5/2023 | | | | 3,700 | 319,902 | | Dennis L. Anderson II | AIP | 2/20/2023 | 2/20/2023 | 104,886 | 279,696 | 699,239 | | | | | C-LTIP | 2/20/2023 | 2/20/2023 | 103,125 | 275,000 | 687,500 | | | | | RSU | 4/19/2023 | 5/5/2023 | | | | 3,100 | 268,026 | | Michael E. Newcity | AIP | 2/20/2023 | 2/20/2023 | 105,303 | 280,808 | 702,019 | | | | | C-LTIP | 2/20/2023 | 2/20/2023 | 101,250 | 270,000 | 675,000 | | | | | RSU | 4/19/2023 | 5/5/2023 | | | | 3,100 | 268,026 | | David R. Cobb(5) | AIP | 2/20/2023 | 2/20/2023 | 143,106 | 381,615 | 954,038 | | | | | C-LTIP | 2/20/2023 | 2/20/2023 | 150,000 | 400,000 | 1,000,000 | | |
2023 Grants of Plan-Based Awards
| (1) Award Types: AIP = annual incentive compensation under the ArcBest Corporation Executive Incentive Compensation Plan RSU = restricted stock units granted under the Ownership Incentive Plan C-LTIP = three-year cash long-term incentive compensation plan (2023-2025 performance period) | | (2) The performance criteria for the 2023 AIP award were approved by the Committee on February 20, 2023. Amounts shown in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column with respect to the 2023 AIP award represent the threshold, target and maximum payment levels of the 2023 AIP. The target amount reflected is calculated based on base salary earned in 2023, provided that Mr. Beasely’s target amount is the sum of his 2023 AIP opportunities before and after he became CFO based on his annual target incentive (as a percentage of base salary) and base salary in effect during such periods. Awards under the annual incentive plan are described in greater detail in “Compensation Discussion & Analysis — Components of Compensation — Annual Cash Incentive Compensation.” The actual amount of the AIP award paid for 2023 performance with respect to each Named Executive Officer is set forth in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” | | (3) The performance criteria for the 2023-2025 C-LTIP award were approved by the Committee on February 20, 2023. Amounts shown in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column represent the threshold, target and maximum payment levels with respect to C-LTIP awards granted in 2023. Awards under the cash long-term incentive compensation plan are described in greater detail in “Compensation Discussion & Analysis — Components of Compensation — Long-Term Incentive Compensation.” | | (4) The RSU award was approved by the Committee on April 19, 2023. As provided in the equity award policy, the grant date for the award was five business days following the first quarter’s earnings release. Value shown reflects the grant date fair value ($86.46 per share) of RSU awards made under the Ownership Incentive Plan on May 5, 2023, computed in accordance with FASB ASC Topic 718, determined without regard to forfeitures and adjusted for present value of dividends (which are not payable with respect to RSUs granted to Named Executive Officers). The 2023 RSUs are subject to three-year ratable vesting, with one-third of the awards vesting on each of the first, second and third anniversaries of the grant date, subject to early vesting if the participant experiences a qualifying termination from employment with the Company. The 2023 RSUs are described in greater detail in “Compensation Discussion & Analysis — Components of Compensation — Long-Term Incentive Compensation.” | | (5) Mr. Cobb was granted incentive opportunities under the 2023 AIP and 2023-2025 C-LTIP; however, because Mr. Cobb retired in October 2023, he did not complete at least twelve months of the performance period and, therefore, is not eligible to receive a payout under the 2023-2025 C-LTIP. He was eligible to receive and did receive a prorated payout under the AIP because he completed at least ninety (90) days of the performance period. |
Outstanding Equity Awards at 2023 Year-End
Outstanding Equity Awards at 2023 Year-End The following table provides information related to any equity-based awards outstanding for the Named Executive Officers, as of December 31, 2023:
Outstanding Equity Awards at 2023 Year-End
| Stock Awards | | | | | Name | Grant Date | Number of Shares or Units of Stock that Have Not Vested (#)(1) | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | | Judy R. McReynolds | 05/12/2020(3) | 3,525 | $423,740 | | | 05/11/2021(4) | 1,267 | 152,306 | | | 05/06/2022(5) | 10,467 | 1,258,238 | | | 05/05/2023(6) | 14,200 | 1,706,982 | | J. Matthew Beasley | 05/06/2022(5) | 734 | $88,234 | | | 05/05/2023(6) | 3,400 | 408,714 | | Seth K. Runser | 05/12/2020(3) | 8,400 | $1,009,764 | | | 05/11/2021(4) | 3,700 | 444,777 | | | 05/06/2022(5) | 2,734 | 328,654 | | | 05/05/2023(6) | 3,700 | 444,777 | | Dennis L. Anderson II | 05/12/2020(3) | 13,500 | $1,622,835 | | | 05/11/2021(4) | 3,100 | 372,651 | | | 05/06/2022(5) | 2,267 | 272,516 | | | 05/05/2023(6) | 3,100 | 372,651 | | Michael E. Newcity | 05/12/2020(3) | 13,300 | $1,598,793 | | | 05/11/2021(4) | 3,100 | 372,651 | | | 05/06/2022(5) | 2,267 | 272,516 | | | 05/05/2023(6) | 3,100 | 372,651 | | David R. Cobb(7) | - | - | $- |
Outstanding Equity Awards at 2023 Year-End
| (1) Ms. McReynolds has attained early retirement eligibility in accordance with the terms of the RSU awards granted prior to 2022, resulting in pro rata vesting of such awards in an amount equal to (i) 1/48 of the RSU award each month for the award in 2020 (with full vesting on May 12, 2024), and (ii) 1/36 of the total number of shares each month for the award granted in 2021 (with full vesting on May 11, 2024). | | (2) Reflects the value of unvested RSUs as of December 31, 2023, awarded under the ArcBest Corporation Ownership Incentive Plan, as amended and restated, based on the closing market price of the Common Stock of $120.21 on December 29, 2023 (the last trading day of the year). | | (3) These RSU awards fully vest on May 12, 2024, the fourth anniversary of their grant date. | | (4) These RSU awards fully vest on May 11, 2024, the third anniversary of their grant date. | | (5) These RSU awards vest in three equal installments. The first installment vested and settled on May 6, 2023, and the remaining two installments will fully vest on May 6, 2024, and May 6, 2025, respectively. | | (6) These RSU awards vest in three equal installments on May 5, 2024, May 5, 2025, and May 5, 2026. | | (7) Mr. Cobb retired from the Company effective October 17, 2023, and accordingly, his RSUs that were not already vested at that time as a result of his early retirement eligibility were forfeited. See “2023 Option Exercises and Stock Vested” for information on the RSUs that vested in 2023. |
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested The following table provides information related to RSUs that vested during 2023 for the Named Executive Officers. None of our Named Executive Officers held stock option awards during 2023.
2023 Option Exercises and Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#)(1,2) | Value Realized on Vesting ($)(3) | | Judy R. McReynolds | 21,867 | $2,068,275 | | J. Matthew Beasley | 366 | 32,142 | | Seth K. Runser | 4,166 | 362,722 | | Dennis L. Anderson II | 8,233 | 715,070 | | Michael E. Newcity | 10,033 | 871,130 | | David R. Cobb | 7,185 | 660,074 |
2023 Option Exercises and Stock Vested
| (1) The 2019 RSU awards fully vested and settled on May 9, 2023. One-third of the 2022 RSU awards vested and settled on May 6, 2023. All of the shares issued for the 2019 RSU award at final vesting, and the pro-rata shares issued for the 2022 RSU award, are free of vesting and ownership restrictions. All shares owned by executive officers are subject to company-imposed restrictions that limit trading during periods when officers have material nonpublic information as well as the Company’s policy related to minimum stock ownership for executive officers, as discussed in the CD&A. | | (2) RSUs held by Ms. McReynolds and Mr. Cobb granted prior to 2022 were subject to monthly pro rata vesting in 2023 because Ms. McReynolds and Mr. Cobb had attained early retirement eligibility under the terms of the RSU awards. Awards that vest on a pro rata basis due to attainment of early retirement eligibility are not settled until the earlier of the original vesting date (four years from the grant date for awards in 2019 and 2020, and three years from the grant date for awards in 2021) or the date of a qualifying termination of employment. As such, while the value of all pro rata vesting in 2023 is reflected in the Option Exercises and Stock Vested table above and detailed in the table below, (i) Ms. McReynolds has not yet received the shares that vested in 2023 based on qualification for early retirement under awards that did not fully vest in 2023, and (ii) Mr. Cobb has not yet received the shares that vested in 2023, due to the six-month delay required for key employees pursuant to Section 409A of the IRC. Any remaining unvested shares under Mr. Cobb’s outstanding RSU awards were forfeited upon his early retirement. The table below includes RSU awards granted prior to 2022 that were subject to monthly pro rata vesting in 2023 due to early retirement eligibility, as well as the first tranche of Ms. McReynolds’ and Mr. Cobb’s 2022 RSUs that vested in 2023: |
2023 Option Exercises and Stock Vested
| | McReynolds Vested in 2023 | Cobb Vested in 2023 | | 2019 RSU Award | 2,259 | 908 | | 2020 RSU Award | 10,575 | 3,333 | | 2021 RSU Award | 3,800 | 1,278 | | 2022 RSU Award (first tranche of three year ratable vesting) | 5,233 | 1,666 | | Total vesting in 2023 | 21,867 | 7,185 |
2023 Option Exercises and Stock Vested
| (3) Value realized on RSU vesting is equal to the closing market price of the Common Stock on the date of vesting multiplied by the number of shares that vest on that date. |
2023 Pension Benefits
2023 Pension Benefits The following table illustrates the present value of the accumulated benefit as of December 31, 2023, under the SBP and DSA for the Named Executive Officers.
2023 Pension Benefits
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(3) | Payments During Last Fiscal Year ($) | | Judy R. McReynolds(1) | Supplemental Benefit Plan (SBP) | 10.7 | $424,470 | - | | | Deferred Salary Agreement (DSA) | 10.7 | 167,203 | - | | J. Matthew Beasley(2) | | - | - | - | | Seth K. Runser(2) | | - | - | - | | Dennis L. Anderson II(2) | | - | - | - | | Michael E. Newcity(2) | | - | - | - | | David R. Cobb(2) | | - | - | - |
2023 Pension Benefits
| (1) Ms. McReynolds elected to cease participation in the SBP and DSA, and the benefits were frozen effective January 31, 2008. Number of Years of Credited Service for the SBP and DSA was frozen based on her service as of the January 31, 2008 freeze date. | | (2) Messrs. Beasley, Runser, Anderson and Newcity were promoted to eligible roles, and Mr. Cobb was hired, after the SBP and DSA were closed to new entrants. As such, Messrs. Beasley, Runser, Anderson, Newcity and Cobb, are not eligible to participate in the SBP or DSA. | | (3) The actuarial present value of the accumulated benefits disclosed above is determined using the same assumptions as used by the Company for financial reporting purposes except the payment date is assumed to be age 60 for the SBP rather than age 65. Such assumptions are discussed in Note K to the Company’s consolidated financial statements in the 2023 Annual Report. The earliest date a benefit can be paid with no benefit reduction under the SBP is age 60. The payment date is assumed to be age 65 for the DSA, which is the earliest date a benefit can be paid with no benefit reduction. |
Supplemental Benefit Plan (frozen)
Supplemental Benefit Plan (frozen) The SBP supplements benefits under the Company’s legacy non-contractual defined benefit pension plan (“Pension Plan”), which was terminated effective December 31, 2017, and fully liquidated as of December 31, 2019. The SBP was designed to replace benefit reductions (i) from various IRC limits and (ii) from reductions in the rate of benefit accruals from the Company’s 1985 pension formula. The SBP takes into account all eligible earnings under the Pension Plan without regard to IRC limitations. Participation in the SBP was generally limited to officers of the Company or ABF Freight, including certain Named Executive Officers. No new participants were permitted in the SBP after December 2005, and caps have been placed on the maximum benefits payable. Benefit accruals in the SBP were frozen for all remaining participants effective December 31, 2009. Benefits under the SBP were calculated as an annuity and then converted to a lump sum. The Pension Plan benefit was then subtracted from the resulting lump sum to determine the SBP benefit. The annuity formula for the ArcBest Supplemental Benefit Plan is: 1.0% x $400 x years of service + 2.0% x (FAP–$400) x years of service Early retirement eligible participants (age 55 with 10 years of service) are subject to a benefit reduction of 6% per year for each year he or she retires prior to age 60. Upon termination of employment, benefits are paid in a lump sum as soon as administratively feasible. Certain benefits must be delayed for six months for key employees as required by Section 409A of the IRC. Benefits are paid from the general assets of the Company.
Deferred Salary Agreements (frozen)
Deferred Salary Agreements (frozen) The Company has unfunded, noncontributory DSAs with certain of their officers, including certain Named Executive Officers. No DSA has been entered into since December 2005, and the Company does not intend to enter into these agreements in the future. For the existing DSAs, upon normal retirement (age 65), death or disability as defined in “Potential Payments upon Termination or Change in Control,” the DSA benefit is equal to 35% of the participant’s final monthly base salary paid monthly for 120 months. Upon termination of employment prior to age 65, the monthly benefit is equal to the participant’s years of service (with a maximum of 25 years) times 3% times 35% of the participant’s final monthly base salary. Benefit payments commence in the month following termination, except to the extent a portion of the benefit must be delayed for six months for key employees as required by Section 409A of the IRC. DSA benefits are paid from the general assets of the Company. The DSAs provide that in the event of a change in control of the Company, as defined in “Potential Payments upon Termination or Change in Control,” followed by the officer’s termination within 36 months for pre-2005 deferred salary accruals or within 24 months for post-2004 deferred salary accruals, all benefits become 100% vested. The DSA benefit will be paid as a lump sum within fifteen days, with the 120 monthly installments discounted at 6.22% as provided in the DSA, except where payment must be delayed for six months for key employees as required by Section 409A of the IRC. DSA benefits will be reduced to the extent required to avoid being classified as excess parachute payments under Section 280G of the IRC. Other than during a 36-month period following a change in control of the Company for benefits accrued and vested prior to 2005 or during a 24-month period following a change in control of the Company for benefits accrued and vested after 2004, any unpaid DSA benefit is subject to forfeiture if the participant is discharged for wrongful conduct injurious to the Company, or if, following the date of termination, the participant discloses confidential information relating to the Company to unauthorized persons or becomes employed or renders services to a competitor of the Company.
2023 Non-Qualified Deferred Compensation
2023 Non-Qualified Deferred Compensation The following table shows the Named Executive Officers’ deferred compensation activity during 2023 with respect to outstanding vested RSUs. The vesting and settlement terms applicable to RSUs are described previously in “Compensation Discussion & Analysis — Components of Compensation — Long-Term Incentive Compensation,” footnote (4) to the “2023 Grants of Plan-Based Awards Table” section and in footnote (1) to the “Outstanding Equity Awards at 2023 Year-End” table.
2023 Non-Qualified Deferred Compensation
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($)(3) | Aggregate Balance at Last Fiscal Year End ($)(4,5) | | Judy R. McReynolds | $1,406,556 | $- | $2,453,714 | $195,855 | $5,879,231 | | J. Matthew Beasley | - | - | - | - | - | | Seth K. Runser | - | - | - | - | - | | Dennis L. Anderson II | - | - | - | - | - | | Michael E. Newcity | - | - | - | - | - | | David R. Cobb | 432,458 | - | 894,682 | 78,724 | 2,143,705 |
2023 Non-Qualified Deferred Compensation
| (1) The executive contribution amount represents the value realized on vesting of all RSUs that vested during 2023 due to early retirement eligibility, as previously reported in the “2023 Option Exercises and Stock Vested” table. | | (2) The earnings amount represents an estimate of annual earnings (or losses) with respect to vested but unsettled RSUs and is based on the difference in closing market price of the Common Stock of $70.04 as of December 30, 2022 (the last trading day of the year), and $120.21 as of December 29, 2023 (the last trading day of the year), multiplied by the number of vested RSUs as of December 31, 2023, described in footnote (4) below. | | (3) The value in the Aggregate Withdrawals/Distributions column represents the value of the 2019 RSU awards that fully vested and were settled on May 9, 2023. The value for the 2019 RSU awards is based on the closing market price of Common Stock of $86.70 on the settlement date, and includes 2,259 RSUs for Ms. McReynolds and 908 RSUs for Mr. Cobb. | | (4) Includes the value associated with 48,908 vested but unsettled RSUs for Ms. McReynolds, and 17,833 vested but unsettled RSUs for Mr. Cobb. The issuance of Mr. Cobb’s vested shares due to early retirement is delayed for six months pursuant to Section 409A of the IRC. The value is based on the closing market price of the Common Stock of $120.21 on December 29, 2023 (the last trading day of the year). RSUs that vested during 2023 are reported in the “2023 Option Exercises and Stock Vested” table. | | (5) The aggregate grant date fair value with respect to RSUs in prior years (2020-2021), including those previously reported in the “Summary Compensation Table,” are set forth in the table below. To the extent those previously-awarded RSUs have become vested but remain unsettled under the 2020 and 2021 awards, the value associated with those RSUs as of December 31, 2023 (calculated as described in footnote (4) above) is reported in the “Aggregate Balance at Last Fiscal Year End” column above. The 2022 and 2023 RSU awards are subject to three-year ratable vesting, and there are no vested but unsettled RSUs as a result of early retirement eligibility. |
2023 Non-Qualified Deferred Compensation
| | McReynolds | Cobb | | 2020 RSU Grant Date Fair Value | 806,238 | 304,960 | | 2021 RSU Grant Date Fair Value | 990,774 | 399,786 | | Total | $1,797,012 | $704,746 |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control The Company does not have any employment contracts or severance arrangements with any Named Executive Officer that provide for payments in connection with a termination of employment or a change in control, other than the applicable termination provisions contained within the various arrangements discussed elsewhere in this Proxy Statement. The termination and change in control provisions existing as of December 31, 2023, are described below and quantified in the table on page 63. All payments are assumed to be made in accordance with the six-month delay for key employees as required by Section 409A of the IRC, where applicable.
Potential Payments upon Termination
Potential Payments upon Termination When a Named Executive Officer’s employment with the Company terminates, the officer is entitled to receive compensation and other benefits earned during the term of his or her employment (subject to the clawback policy), including the following:
Potential Payments upon Termination
| ■ | Accrued vacation; | | ■ | Amounts earned but not yet paid under the annual incentive plan (“AIP”) and cash long-term incentive compensation plan (“C-LTIP”) (see the “Summary Compensation Table” section for amounts earned in 2023); | | ■ | DSA benefit earned as of the DSA freeze date, paid monthly over 120 months (see the “2023 Pension Benefits” table for present value as of December 31, 2023, and more information regarding DSAs); and | | ■ | SBP benefit earned as of the SBP freeze date, distributed as a lump sum (see “2023 Pension Benefits” table for values). |
Potential Payments upon Termination
Except in the case of early retirement, normal retirement, death or disability, as further described below, participants in (i) the AIP generally must be employed on the payment date in order to receive payment of their earned AIP awards and (ii) the C-LTIP must remain employed through the end of the measurement period in order to receive payment of any earned C-LTIP award, in each case unless the Committee, in its discretion, decides that a prorated award should be paid. Payment of a prorated incentive, if any, is made at the end of the measurement period and based upon actual performance results.
Potential Payments upon Early Retirement
Potential Payments upon Early Retirement In the event a Named Executive Officer terminates and is eligible for early retirement, the officer will be entitled to the following, in addition to the items identified in “Potential Payments upon Termination.” Early retirement is generally defined as termination of employment after reaching at least age 55 with 10 years of service, but before age 65.
Potential Payments upon Early Retirement
| ■ | Vesting and settlement of a pro rata number of RSUs granted prior to 2022 based on the number of whole months elapsed since the award date if there has elapsed a minimum of 12 months since the award date (see “2023 Non-Qualified Deferred Compensation” table for values related to our early retirement-eligible Named Executive Officers); remaining unvested RSUs are forfeited, including unvested RSUs under the 2022 and 2023 awards, which are not subject to pro-rata vesting due to early retirement eligibility; |
Potential Payments upon Early Retirement
| ■ | For eligible officers, executive medical coverage, with the retired officer responsible for paying a monthly premium amount equal to the then-current COBRA rate until age 60. All retirees are responsible for paying a premium equivalent to $250 per individual covered, up to a maximum of $500, from age 60 to 65, and a reduced monthly premium after age 65; and |
Potential Payments upon Early Retirement
| ■ | A pro rata benefit under the C-LTIP and under the AIP based on actual performance results for the full performance period, if he or she has completed a minimum of (a) 12 months of the measurement period under the C-LTIP, and (b) 90 days of the measurement period under the AIP, respectively. Any pro rata payment earned will not be paid until the end of the measurement period for the plan. |
Potential Payments upon Normal Retirement, Death or Disability
Potential Payments upon Normal Retirement, Death or Disability In the event of a Named Executive Officer’s termination due to his or her normal retirement, death or disability, the officer will be entitled to the following, in addition to the items identified in “Potential Payments upon Termination.” Under the Company’s plans, normal retirement is generally defined as termination of employment on or after attaining age 65, and disability is generally determined to have occurred if the participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12 months.
Potential Payments upon Normal Retirement, Death or Disability
| ■ | Full vesting and settlement of all RSUs; |
Potential Payments upon Normal Retirement, Death or Disability
| ■ | For eligible officers, executive medical coverage, with the retired officer (or his or her eligible dependents) responsible for paying a reduced monthly premium after age 65; and |
Potential Payments upon Normal Retirement, Death or Disability
| ■ | A pro rata benefit under the C-LTIP and under the AIP based on actual performance results for the full performance period, if he or she has completed a minimum of (a) 12 months of the measurement period under the C-LTIP, and (b) 90 days of the measurement period under the AIP, respectively. Any pro rata payment earned will not be paid until the end of the measurement period for the plan. |
Potential Payments upon Termination After a Change in Control
Potential Payments upon Termination After a Change in Control Subject to the terms of the Amended and Restated 2012 Change in Control Plan, as amended (the “Change in Control Plan”), in the event of a change in control of the Company, if termination of a Named Executive Officer occurs within 24 months of the change in control for “good reason” or without “cause” (as such terms are defined in the Change in Control Plan), the Named Executive Officer will be entitled to the following, in addition to the items identified in “Potential Payments upon Termination”:
Potential Payments upon Termination After a Change in Control
| ■ | RSUs become fully vested as of the termination date and will be distributed as soon as administratively possible; |
Potential Payments upon Termination After a Change in Control
| ■ | For annual awards that have not yet reached the end of the measurement period, a prorated benefit under the AIP based on the number of whole months completed during the applicable measurement period through the termination date; |
Potential Payments upon Termination After a Change in Control
| ■ | For C-LTIP awards that have not yet reached the end of the measurement period, a prorated benefit under the plan based on the number of whole months completed during the applicable measurement period through the termination date; amounts payable pursuant to such awards are computed and paid in the normal course of business and pursuant to the terms of the applicable plan after the end of the measurement period; |
Potential Payments upon Termination After a Change in Control
| ■ | Under the DSA, if termination of the Named Executive Officer occurs within 36 months of the change in control for benefits accrued and vested prior to 2005 and within 24 months of the change in control for benefits accrued and vested after 2004, the officer becomes 100% vested in the DSA benefit and the benefit is distributed as a lump sum; |
Potential Payments upon Termination After a Change in Control
| ■ | A lump sum cash payment equal to 24 months of the then-current COBRA rate to elect continuation of coverage under the medical and dental plans of the Company for the coverage in effect for the officer immediately prior to the date of termination (“Medical Premiums”); and |
Potential Payments upon Termination After a Change in Control
| ■ | A lump sum cash payment equal to either (A) with respect to Ms. McReynolds, two times her base salary in effect on the date of termination plus two times her average annual cash incentive earned during the three years prior to the year in which the date of termination occurs, or (B) for the other Named Executive Officers, one times the executive’s base salary in effect on the date of termination plus one times his average annual cash incentive earned during the three years prior to the year in which the date of termination occurs (“Cash Severance”). |
Potential Payments upon Termination After a Change in Control
“Change in Control” under the Company’s plans is generally defined as the earliest date on which any of the following events shall occur:
Potential Payments upon Termination After a Change in Control
| (i) | The acquisition by any individual, entity or group (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (i) the then outstanding shares of the Company’s Common Stock or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions will not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction that constitutes a Merger of Equals as defined in subsection (iii) below. | | (ii) | In any 12-month period, the individuals who, as of the beginning of the 12-month period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the effective date of the applicable agreement whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors. | | (iii) | Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries (each, a “Business Combination”), in each case, unless such Business Combination constitutes a Merger of Equals. A Business Combination will constitute a “Merger of Equals” if, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners, respectively, of the outstanding shares of the Company’s Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Resulting Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding shares of the Company’s Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Resulting Corporation and its affiliates or any employee benefit plan (or related trust) of the Resulting Corporation and its affiliates) beneficially owns, directly or indirectly, 35% or more of, respectively, the then-outstanding shares of Common Stock of the Resulting Corporation or the combined voting power of the then-outstanding voting securities of the Resulting Corporation except to the extent that such ownership existed with respect to the Company prior to the Business Combination, and (C) at least a majority of the |
Potential Payments upon Termination After a Change in Control
members of the board of directors of the Resulting Corporation (the “Resulting Board”) were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination.
Potential Payments upon Termination After a Change in Control
| (iv) The sale or other disposition of all or substantially all of the assets of the Company to any Person, other than a transfer to (A) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company or (B) any corporation pursuant to a transaction that constitutes a Merger of Equals as defined in subsection (iii) above. | | (v) A complete liquidation or dissolution of the Company. |
Potential Payments upon Termination After a Change in Control
“Good Reason” under the Company’s arrangements is generally defined as (i) any material and adverse diminution in the Named Executive Officer’s title, duties or responsibilities; (ii) a reduction in the Named Executive Officer’s base salary or employee benefits (including reducing the Named Executive Officer’s level of participation or target bonus award opportunity in the Company’s incentive compensation plans); or (iii) a relocation of the Named Executive Officer’s principal place of employment by more than 50 miles without the prior consent of the Named Executive Officer. “Cause” under the Company’s arrangements is generally defined as the Named Executive Officer’s (i) gross misconduct or fraud in the performance of a Named Executive Officer’s duties to the Company or any subsidiary; (ii) conviction or guilty plea or plea of nolo contendere with respect to any felony or act of moral turpitude; (iii) engaging in any material act of theft or material misappropriation of Company property; or (iv) breach of the Company’s Code of Conduct as such code may be revised from time to time. The Change in Control Plan provides that, unless outstanding equity awards are substituted, assumed, or continued by the successor to the Company with awards that have an equivalent (or greater) intrinsic value compared to the outstanding awards, such awards will become fully vested, settled and paid upon the occurrence of a change in control (with any outstanding performance-based awards being vested, settled and paid at a partial or full level based on the actual attainment of performance goals or, if not determinable, on a pro rata basis based on the assumed attainment of the target performance goals). If the equity awards are replaced by the successor company and the Named Executive Officer is terminated within 24 months of the change in control, he or she shall become vested as of the termination date in any unvested equity awards. If amounts payable to a Named Executive Officer under the Change in Control Plan (or pursuant to any other arrangement or agreement with the Company) exceed the amount allowed under section 280G of the IRC and would be subject to the excise tax imposed by section 4999 of the IRC, then, prior to the making of any payments to a Named Executive Officer, the Change in Control Plan provides that a best-net calculation will be made comparing (i) the before income tax net benefit to the Named Executive Officer of the payments after payment of the excise tax to (ii) the before income tax net benefit to the Named Executive Officer if the payments are reduced to the extent necessary to avoid being subject to the excise tax (the “Best Net Calculation”). If the amount calculated under (i) is less than the amount calculated under (ii) in the preceding sentence, then the payments will be reduced to the extent necessary to avoid being subject to the excise tax.
Quantification of Potential Payments upon Termination or Change in Control
Quantification of Potential Payments upon Termination or Change in Control The following table reflects compensation potentially payable to each Named Executive Officer under various employment termination and other scenarios based on the arrangements existing as of December 31, 2023. The amounts shown in the following table assume that a change in control occurred and/or each Named Executive Officer terminated employment with the Company effective December 31, 2023, and estimate the value that could be realized by each Named Executive Officer as a result of each specified triggering event; however, the amounts shown below do not take into account any Best Net Calculation and resulting reduction that may occur pursuant to the provisions of the Change in Control Plan. None of the Named Executive Officers are eligible for normal retirement; therefore, no data is shown for that scenario. Ms. McReynolds is eligible for early retirement. Mr. Cobb retired from the Company in October 2023, and therefore was not a participant under the Change in Control Plan as of December 31, 2023. The table below reflects the amounts actually paid to Mr. Cobb in connection with his retirement. None of the other Named Executive Officers are eligible for early retirement. See “2023 Pension Benefits” for benefits payable under the SBP and DSA. Benefits payable with respect to previously vested RSUs are quantified in the “2023 Non-Qualified Deferred Compensation” table.
Quantification of Potential Payments upon Termination or Change in Control
| Name | Benefit | General Termination ($) | Early Retirement ($) | Death ($) | Disability ($) | Termination Without Cause or Resignation for Good Reason After Change in Control ($) | | Judy R. McReynolds | RSUs(1) | N/A | - | 3,541,266 | 3,541,266 | 3,541,266 | | | Executive Medical(2) | N/A | 453,535 | 250,483 | 453,535 | - | | | Accrued Vacation(3) | N/A | 86,539 | 86,539 | 86,539 | 86,539 | | | DSA(4) | N/A | - | - | - | 442,576 | | | C-LTIP(5) | N/A | 5,379,167 | 5,379,167 | 5,379,167 | 4,936,591 | | | Annual Incentive Plan(6) | N/A | 1,611,225 | 1,611,225 | 1,611,225 | 1,611,225 | | | Cash Severance(7) | N/A | - | - | - | 5,662,017 | | | Medical Premiums(8) | N/A | - | - | - | 36,936 | | | Total(9) | N/A | $7,530,466 | $10,868,680 | $11,071,732 | $16,317,150 | | J. Matthew Beasley | RSUs(1) | - | N/A | 496,948 | 496,948 | 496,948 | | | Executive Medical(2) | N/A | N/A | N/A | N/A | N/A | | | Accrued Vacation(3) | 25,962 | N/A | 25,962 | 25,962 | 25,962 | | | C-LTIP(5) | - | N/A | 207,300 | 207,300 | 207,300 | | | Annual Incentive Plan(6) | 374,125 | N/A | 374,125 | 374,125 | 374,125 | | | Cash Severance(7) | - | N/A | - | - | 783,014 | | | Medical Premiums(8) | - | N/A | - | - | 20,544 | | | Total(9) | $400,087 | N/A | $1,104,335 | $1,104,335 | $1,907,893 | | Seth K. Runser | RSUs(1) | - | N/A | 2,227,972 | 2,227,972 | 2,227,972 | | | Executive Medical(2) | - | N/A | 298,072 | 563,456 | - | | | Accrued Vacation(3) | 45,673 | N/A | 45,673 | 45,673 | 45,673 | | | C-LTIP(5) | 625,000 | N/A | 1,373,583 | 1,373,583 | 1,373,583 | | | Annual Incentive Plan(6) | 579,797 | N/A | 579,797 | 579,797 | 579,797 | | | Cash Severance(7) | - | N/A | - | - | 1,134,504 | | | Medical Premiums(8) | - | N/A | - | - | 49,488 | | | Total(9) | $1,250,470 | N/A | $4,525,097 | $4,790,481 | $5,411,017 | | Dennis L. Anderson II | RSUs(1) | - | N/A | 2,640,653 | 2,640,653 | 2,640,653 | | | Executive Medical(2) | - | N/A | 300,457 | 566,088 | - | | | Accrued Vacation(3) | 41,375 | N/A | 41,375 | 41,375 | 41,375 | | | C-LTIP(5) | 687,500 | N/A | 1,320,917 | 1,320,917 | 1,320,917 | | | Annual Incentive Plan(6) | 455,205 | N/A | 455,205 | 455,205 | 455,205 | | | Cash Severance(7) | - | N/A | - | - | 1,023,739 | | | Medical Premiums(8) | - | N/A | - | - | 49,488 | | | Total(9) | $1,184,080 | N/A | $4,758,607 | $5,024,238 | $5,531,377 |
Quantification of Potential Payments upon Termination or Change in Control
| Name | Benefit | General Termination ($) | Early Retirement ($) | Death ($) | Disability ($) | Termination Without Cause or Resignation for Good Reason After Change in Control ($) | | Michael E. Newcity | RSUs(1) | - | N/A | 2,616,611 | 2,616,611 | 2,616,611 | | | Executive Medical(2) | - | N/A | 272,026 | 517,466 | - | | | Accrued Vacation(3) | 41,540 | N/A | 41,540 | 41,540 | 41,540 | | | C-LTIP(5) | 675,000 | N/A | 1,296,900 | 1,296,900 | 1,296,900 | | | Annual Incentive Plan(6) | 457,014 | N/A | 457,014 | 457,014 | 457,014 | | | Cash Severance(7) | - | N/A | - | - | 1,027,809 | | | Medical Premiums(8) | - | N/A | - | - | 49,488 | | | Total(9) | $1,173,554 | N/A | $4,684,091 | $4,929,531 | $5,489,362 | | David R. Cobb(10) | RSUs(1) | N/A | - | N/A | N/A | N/A | | | Executive Medical(2) | N/A | 498,486 | N/A | N/A | N/A | | | Accrued Vacation(3) | N/A | - | N/A | N/A | N/A | | | C-LTIP(5) | N/A | 1,444,467 | N/A | N/A | N/A | | | Annual Incentive Plan(6) | N/A | 493,460 | N/A | N/A | N/A | | | Cash Severance(7) | N/A | - | N/A | N/A | N/A | | | Medical Premiums(8) | N/A | - | N/A | N/A | N/A | | | Total(9) | $N/A | 2,436,413 | $N/A | $N/A | $N/A |
Quantification of Potential Payments upon Termination or Change in Control
| (1) The RSU value is calculated using a per-share price of $120.21, which is the closing market price of the Common Stock on December 29, 2023 (the last trading day of the year), multiplied by the number of the Named Executive Officer’s RSUs vesting as a result of the applicable triggering event. Benefits payable with respect to previously vested outstanding RSUs are quantified in the “2023 Non-Qualified Deferred Compensation” table. | | (2) The executive medical value is based on the accumulated benefit obligation for the Named Executive Officer as of December 31, 2023, using the same assumptions as used by the Company for financial reporting purposes except that the values above are based on the Named Executive Officer’s actual age at December 31, 2023, for the applicable triggering events. The values shown for executive medical coverage in the event of the Named Executive Officer’s death reflect the value of health coverage for the Named Executive Officer’s surviving spouse. Mr. Beasley is not eligible for Executive Medical benefits because the plan was closed to new participants in 2017, before Mr. Beasley joined the Company. | | (3) The accrued vacation value is based on the Named Executive Officer’s actual earned weeks of vacation and base salary rate as of December 31, 2023. Mr. Cobb had no remaining vacation balance at the time of his retirement and, therefore, did not receive a payout of accrued vacation. | | (4) The DSA value is equal to the accelerated benefit value as a result of the applicable triggering event. This value is based on the difference in the present value of the 120 monthly payments assuming the applicable triggering event occurred on December 31, 2023, less the present value of the actual DSA benefit accrued as of December 31, 2023. An interest rate of 6.22% was used to value the lump-sum payment upon a change in control as provided under the terms of the DSA. See “2023 Pension Benefits” for the present value of currently vested DSA benefits. | | (5) The C-LTIP value is the sum of the full amount paid under the 2021-2023 cash long-term incentive compensation plan since all such amounts were earned as of December 31, 2023, plus the pro rata benefit accrued under the 2022-2024 and 2023-2025 cash long-term incentive compensation plans, calculated based on performance as of December 31, 2023. Amounts shown in the “General Termination” column represent amounts fully earned but unpaid as of December 31, 2023. For C-LTIP participants with a frozen DSA, the C-LTIP change in control value is equal to the C-LTIP change in control value in excess of the DSA change in control value, if any. Ms. McReynolds is the only Named Executive Officer with a frozen DSA. | | (6) The AIP is equal to the annual incentive amount paid to each Named Executive Officer for 2023 since all such amounts were earned as of December 31, 2023 (reported in the “Summary Compensation Table”). | | (7) The cash severance payment value is a lump sum cash payment equal to (A) with respect to Ms. McReynolds, two times her base salary in effect on the date of termination plus two times her average annual cash incentive earned during the three years prior to the year in which the date of termination occurs, or (B) for the remaining Named Executive Officers, one times the executive’s base salary in effect on the date of termination plus one times his average annual cash incentive earned during the three years prior to the year in which the date of termination occurs, as provided under the terms of the Change in Control Plan. See “Potential Payments upon Termination after a Change in Control” for additional information. | | (8) The medical premium is a lump sum payment equal to 24 months of the COBRA premium in effect as of December 31, 2023, to elect continuation of coverage under the medical and dental plans of the Company for the coverage in effect for the officer and his or her eligible dependents immediately prior to the date of termination. See “Potential Payments upon Termination after a Change in Control” for additional information. | | (9) Totals represent aggregate amounts reflected in the table payable upon each termination or change in control event as indicated above. These totals do not include benefits that are currently vested and payable under the DSA or SBP (each reported in “2023 Pension Benefits”) or with respect to previously vested outstanding RSU awards (reported in the “2023 Non-Qualified Deferred Compensation” table), except to the extent a change in control or other triggering event creates an additional benefit above what was reported in either table. | | (10) Mr. Cobb retired from the Company in October 2023. He was eligible for early retirement, and the amounts reported in the “Early Retirement” column reflect the amounts actually paid to Mr. Cobb in connection with this retirement. |
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the ratio of the annual total compensation of our median employee to the annual total compensation of Ms. McReynolds, our CEO. That ratio is a reasonable estimate calculated in a manner consistent with SEC rules and the methodology described below. For 2023, our last completed fiscal year:
CEO Pay Ratio
| ■ | The total annual compensation of our median employee was $76,771.22. |
CEO Pay Ratio
| ■ | The total annual compensation of Ms. McReynolds, as reported in the Summary Compensation Table in this Proxy Statement, was $6,315,108.72. |
CEO Pay Ratio
| ■ | Based on this information, for 2023 the ratio of the total annual compensation of Ms. McReynolds to the median employee total annual compensation was 82.26 to 1. |
CEO Pay Ratio
Per SEC rules, the Company is permitted to use the same median employee for up to three years, unless there has been a change in the Company’s employee population or compensation arrangements that the Company reasonably believes would result in a significant change in the disclosure. Because there were no material changes to our employee population or compensation programs that we believe would significantly impact the pay ratio disclosure, we used the same median employee as used for 2022. We calculated 2023 compensation for the median employee using the same methodology used to calculate Ms. McReynolds’ total annual compensation as reflected in the Summary Compensation Table in this Proxy Statement. With respect to the total annual compensation of Ms. McReynolds, we used the amount reported in the “Total” column for 2023 of the Summary Compensation Table of this Proxy Statement. For a description of the methodology used to identify our median employee for fiscal year 2022, please refer to the CEO Pay Ratio section within our 2023 Proxy Statement filed with the SEC on March 17, 2023. SEC rules for identifying the median employee and calculating the pay ratio allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported above may not be comparable to the pay ratio reported by other companies, as other companies may have utilized different methodologies and have different employment and compensation practices.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following table sets forth the pay versus performance disclosures required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K for the years indicated. Ms. McReynolds served as Principal Executive Officer (“PEO”) in each year. The names of the non-PEO Named Executive Officers (the “Non-PEO NEOs”) included for purposes of calculating the average amounts in each covered year are as follows: (i) for 2023, J. Matthew Beasley, Seth K. Runser, Dennis L. Anderson II, Michael E. Newcity and David R. Cobb; (ii) for 2022, David R. Cobb, Michael E. Newcity, Seth K. Runser, Daniel E. Loe and Dennis L. Anderson II; (iii) for 2021, David R. Cobb, Michael E. Newcity, James A. Ingram and Dennis L. Anderson II; and (iv) for 2020, Timothy D. Thorne, David R. Cobb, Michael E. Newcity and James A. Ingram. The dollar amounts for Compensation Actually Paid (“CAP”) do not reflect the actual amount of compensation earned by or paid to the Named Executive Officers during the covered year. Please refer to the Compensation Discussion & Analysis section in this Proxy Statement and in our previous proxy statements for information about how the Compensation Committee has assessed the Company’s performance and Named Executive Officer compensation in a given year.
PAY VERSUS PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | Return on Capital Employed (Adjusted ROCE) | | | Year (a) | Summary Compensation Table Total for PEO (b) | Compensation Actually Paid to PEO(1) (c) | Average Summary Compensation Table Total for Non-PEO NEOs (d) | Average Compensation Actually Paid to Non-PEO NEOs(1) (e) | Total Shareholder Return(2) (f) | Peer Group Total Shareholder Return(3) (g) | Net Income (millions)(4) (h) | 1 Year(5) (i) | Average 3 Year(5) (j) | | 2023 | 6,315,108 | 10,548,681 | 1,737,578 | 2,508,269 | 447.38 | 235.83 | 195.43 | 20.1% | 28.6% | | 2022 | 6,430,893 | 384,908 | 2,097,211 | 342,776 | 259.47 | 180.19 | 298.21 | 39.9% | 26.7% | | 2021 | 6,006,289 | 16,582,019 | 2,131,000 | 5,779,949 | 441.63 | 216.63 | 213.52 | 34.8% | 19.4% | | 2020 | 4,174,608 | 6,594,027 | 1,648,558 | 2,599,276 | 156.55 | 130.88 | 71.10 | 15.4% | 11.7% |
PAY VERSUS PERFORMANCE
| (1) Reflects the CAP for the PEO and the average CAP for the Non-PEO NEOs for the covered years, as computed in accordance with Item 402(v) of Regulation S-K. The following adjustments were made to the Summary Compensation Table total compensation to determine the CAP: |
PAY VERSUS PERFORMANCE
| Year | Reported Summary Compensation Table Total(i) A | Reported Value of Equity Awards(ii) B | Equity Award Adjustments(iii) C | Reported Change in the Actuarial Present Value of Pension Benefits(iv) D | Pension Benefit Adjustments(v) E | Compensation Actually Paid A-B+C-D+E | | Company’s PEO | | | | | | | | 2023 | 6,315,108 | 1,227,732 | 5,470,769 | 9,464 | - | 10,548,681 | | Average of Non-PEO NEOs | | | | | | | | 2023 | 1,737,578 | 229,984 | 1,000,675 | - | - | 2,508,269 |
PAY VERSUS PERFORMANCE
| (i) | Reflects the amounts (or the average amounts for the Non-PEO NEOs) reported in the “Total” column of the Summary Compensation Table for the covered year. | | (ii) | Reflects the grant date fair value of equity awards granted to the PEO (or the average amounts with regard to the Non-PEO NEOs) as reported in the “Stock Awards” column in the Summary Compensation Table for the covered year. | | (iii) | The equity award adjustments for the covered year include the addition (or subtraction, as applicable) as set forth in the table below. The fair values of equity awards were calculated using closing stock price as of the applicable valuation dates and are not adjusted for present value of dividends (which are not payable with respect to RSUs granted to Named Executive Officers). |
PAY VERSUS PERFORMANCE
| Year | Year End Fair Value of Equity Awards Granted During the Fiscal Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair value of forfeited awards at end of prior year | Total Equity Award Adjustments | | Company’s PEO | | | | | | | 2023 | 1,706,982 | 3,219,258 | 544,529 | - | 5,470,769 | | Average of Non-PEO NEOs | | | | | | | 2023 | 319,759 | 532,825 | 233,554 | (85,463) | 1,000,675 |
PAY VERSUS PERFORMANCE
| (iv) Reflects the amounts reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table for the covered years. | | (v) These amounts reflect the actuarially determined service cost for services rendered during the applicable year. The Company’s legacy non-contractual defined benefit pension plan was terminated effective December 31, 2017, and fully liquidated as of December 31, 2019. Therefore, no services costs were incurred in any of the covered years. |
PAY VERSUS PERFORMANCE
| (2) Total Shareholder Return (TSR) is calculated assuming $100 was invested on December 31, 2019, with reinvestment of dividends. All calculations have been prepared by Zacks Investment Research, Inc. |
PAY VERSUS PERFORMANCE
| (3) The 2023 peer group includes the following companies: Covenant Logistics Group, Inc., Forward Air Corporation, Hub Group, Inc., J.B. Hunt Transport Services, Inc., Knight-Swift Transportation Holdings, Inc., Landstar System, Inc., Old Dominion Freight Line, Inc., Saia, Inc., Schneider National, Inc., TFI International Inc., and Werner Enterprises, Inc. Our 2023 peer group is identical to our 2022 peer group, except that, for 2023, U.S. Xpress Enterprises, Inc. was removed due to its acquisition by Knight-Swift Transportation Holdings, Inc., and Yellow Corporation was removed due to its Chapter 11 bankruptcy filing and subsequent delisting from Nasdaq. The following table sets forth the TSR for the 2022 peer group for each of the four years reported: |
PAY VERSUS PERFORMANCE
| Year | 2022 Peer Group Total Shareholder Return | | 2023 | 235.23 | | 2022 | 179.25 | | 2021 | 216.77 | | 2020 | 130.97 |
PAY VERSUS PERFORMANCE
| (4) Net income as reported in the Company’s audited financial statements for each covered year, which includes, for the applicable years, income from discontinued operations. | | (5) Reflects the one-year and three-year average Adjusted ROCE of the Company as approved by the Compensation Committee for purposes of the Company’s annual cash incentive compensation plan and long-term cash incentive compensation plan for each covered year. The Company has determined that one-year Adjusted ROCE as used in its annual cash incentive compensation plan is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link CAP to the Named Executive Officers, for the most recently completed fiscal year, to Company performance. Because the Company uses three-year average Adjusted ROCE in its long-term cash incentive program as discussed in greater detail in “Compensation Discussion & Analysis — Components of Compensation — Long-Term Incentive Compensation,” the Company is providing, on a supplemental basis, its three-year average Adjusted ROCE for each covered year. For more information, see the section below titled “Financial Performance Measures.” |