• ITVI.USA
    15,746.290
    48.010
    0.3%
  • OTRI.USA
    23.890
    0.480
    2.1%
  • OTVI.USA
    15,748.000
    48.490
    0.3%
  • TLT.USA
    2.810
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    3.640
    0.250
    7.4%
  • TSTOPVRPM.CHIATL
    2.680
    -0.160
    -5.6%
  • TSTOPVRPM.DALLAX
    1.450
    -0.060
    -4%
  • TSTOPVRPM.LAXDAL
    3.300
    0.010
    0.3%
  • TSTOPVRPM.PHLCHI
    2.020
    0.040
    2%
  • TSTOPVRPM.LAXSEA
    4.030
    0.130
    3.3%
  • WAIT.USA
    132.000
    7.000
    5.6%
  • ITVI.USA
    15,746.290
    48.010
    0.3%
  • OTRI.USA
    23.890
    0.480
    2.1%
  • OTVI.USA
    15,748.000
    48.490
    0.3%
  • TLT.USA
    2.810
    0.010
    0.4%
  • TSTOPVRPM.ATLPHL
    3.640
    0.250
    7.4%
  • TSTOPVRPM.CHIATL
    2.680
    -0.160
    -5.6%
  • TSTOPVRPM.DALLAX
    1.450
    -0.060
    -4%
  • TSTOPVRPM.LAXDAL
    3.300
    0.010
    0.3%
  • TSTOPVRPM.PHLCHI
    2.020
    0.040
    2%
  • TSTOPVRPM.LAXSEA
    4.030
    0.130
    3.3%
  • WAIT.USA
    132.000
    7.000
    5.6%
FinanceLess than TruckloadLogisticsTop Stories

XPO shareholders reject company bid on CEO’s compensation

Nonbinding proposal to reward Jacobs with up to $80 million over six years goes down to defeat

XPO Logistics Inc. (NYSE:XPO) shareholders on Tuesday voted down the company’s nonbinding proposal that would have granted $80 million in long-term compensation for Chairman and CEO Brad Jacobs, an amount that critics, notably organized labor, said was excessive.

XPO is not legally obligated to abide by the outcome. In a statement Tuesday, an XPO spokesman said that the “board will continue to take shareholder feedback into consideration as it evaluates the company’s compensation program in the future.” The statement added that it is committed to “maintaining a pay-for-performance culture based on achieving ambitious goals and delivering shareholder value.”

The Teamsters union, which has fought against XPO’s executive compensation levels for years as part of a long-running battle to organize its drivers and warehouse workers, mentioned the shareholder vote in its statement but said nothing more about it. XPO employs 210 Teamsters members at six U.S. LTL locations, five of which are negotiating with the company for their first-ever contracts. No unionized XPO employee currently works under a contract. About 35,000 XPO employees are legally eligible to join a union, according to company data.

Under the “Say on Pay” provisions of the Dodd-Frank Act of 2010, a company puts forth a mandatory, nonbinding shareholder resolution which asks investors to approve compensation packages for the company’s “named executive officers”: The CEO, CFO and the top three other most highly compensated officers. According to Teamsters General Secretary-Treasurer Ken Hall, more than 30% of XPO shareholders have rejected the company’s compensation proposals in three of the past four years.

In an April letter to XPO shareholders, Hall said the current proposal would have awarded Jacobs, who is also the company’s founder, the equivalent of $80 million in long-term incentives. In addition, an abbreviated vesting schedule could mean that Jacobs could receive half of the award in two separate tranches just 18 months after it is granted, Hall wrote. 

Jacobs has received tens of millions of dollars in various forms of compensation for a number of years. The magnitude of his compensation is amplified by the fact that, should the spinoff of XPO’s logistics business take effect as planned during the second half of 2021, Jacobs will be heading a much smaller company, Hall said. Jacobs will run XPO’s transportation business that will remain once the logistics business is spun off. 

XPO said that its shareholder proxy statement ties Jacobs’ proposed compensation to the company meeting very ambitious performance metrics. XPO must achieve 120% of internal and peer-to-peer cash flow and 40 environmental, social and governance (ESG) targets for four consecutive years starting in 2020, according to the proxy. Jacobs’ award fully vests over a six-year period effective in 2020, the proxy said.

Supporters of the compensation proposal contend that XPO is very much a pay-for-performance company and generously rewards top executives for hitting very ambitious targets. As such, it does not follow narrow compensation parameters that might be favored by groups like the Teamsters, according to the company’s advocates.

The value of XPO’s shares has risen 1,554% during the past 10 years, a period that roughly parallels the company’s life span. The Teamsters, who are XPO shareholders through various pension funds, acknowledge that the shares have performed well under Jacobs’ leadership. Hall noted in his letter, however, that Jacobs’ roughly 18% equity stake has risen from $135 million to more than $2.4 billion over that 10-year period. That level of wealth accumulation effectively diminishes the need to shower Jacobs with tens of millions of dollars of additional shareholder equity to incent him to perform, Hall said.

XPO shares closed down a small fraction at $148.11 a share in a generally down day for U.S. equities. 

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.

13 Comments

  1. Executive’s always take the credit that they don’t deserve. It’s the actual employees that should be getting better pay and compensation since they are the ones that actually work. Those fools in the so called upper management don’t do crap but sit around all day. That dude should actually get down on the docks and into the cab of those slow trucks that almost never leave the middle or left lane.

    1. Really?? He founded the company. Did they do that?? Could they do that??

      Clearly not. If they could’ve, they would’ve. This is America; not Cuba or the Soviet Union.

      1. Thanks Dave. It’s my money and I want it now !!!
        The workers get nothing !!! Your right I founded the company not the them. This is America . To hell with the workers they get the scraps

        1. Hey Mr Jacob, I’m an Xpo proud Miami teamster, let me tell you that we down here in Miami Florida work very hard to put food in ours tables for our families, that is very disappointing and disrespectful of you to say those words , all we want is our contract and we can go on working hard to support our families, you always will have your millions we only want our contract , TEAMSTERS ALL THE WAY !!! GOD BLESS YOU!!! 🙏

      2. Yes, we live in America. And this is a public company.
        That means that THE SHAREHOLDERS OWN THE COMPANY, NOT HIM!
        The shareholders can choose to fire his ass. He only owns as much of the company as he owns stock .

        You should know this, but you don’t. Because you have no appreciation for the law; you see the law as a bat which-with to beat down your opponents. Shameless.

  2. No employee should make over 100 times what the lowest employee over 20 years of age with 2 years with the company anywhere in the world. I see too many lower income workers living in homeless shelters and old vans in Ontario Canada. These people are often foreign people who got hurt including truck drivers for O T A and A T A members with division in Ontario Canada. One company out of Cambridge has a very bad name. X P O name for treatment of truck drivers is very bad.

  3. I have been on leave with cancer treatment which I will be retiring May 14 I got sick 2017 an I even had a hard time using some of my money out of my 401 management sucks terminal manager regional manager HR every time I ask a question they could not give me an answer that company have a Lotta problems they do not want to pay for what you pay for insurance benefits short term and long term disability it’s all about putting money in his pocket I even wrote letters never got a response back from anybody that show you the Company do not care

    1. That’s because the entire company is a shame . The management structure in the company is totally dysfunctional. It a shame and a house of cards with only one objective and that is to enrich Brad Jacobs . The company is a operational disaster. Management would like investors to believe its due to Covid but it runs much deeper than that .
      Good luck with your treatment and get a lawyer. It’s the only language they understand.

    2. Your argument has nothing to do with Jacobs compensation. XPO has nothing to do with your 401k money. You sound like a person that wants everybody to take care of you. I agree local management sucks,it has for years, it did under Conway and in most instances it still does under XPO. I have no love for Jacobs but he’s taken a company that was down to $35 a share and it’s worth now $148 a share. I’m just pissed that I didn’t buy it at $35. I was at Conway and XPO for 34 years and if you can’t make money there it’s on you. You’re not trying. They got a lot of problems but getting paid ain’t one of them.

  4. I see no problem with $80M over the next several years. I believe the organization is seriously undervalued and I’m glad they have new plans to split the company under an umbrella. This should bring their value higher. Nothing wrong with $80M unless they can name someone who could do it better with results.

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