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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

XPO LOGISTICS, INC.
(Name of Registrant as Specified In Its Charter)

 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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GRAPHIC

XPO LOGISTICS, INC.
Five American Lane
Greenwich, Connecticut 06831


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 14, 2020

To the Stockholders of XPO Logistics, Inc.:

Notice is hereby given that the 2020 Annual Meeting of Stockholders (the "Annual Meeting") of XPO Logistics, Inc. ("XPO" or the "company") will be held on Thursday, May 14, 2020 at 10:00 a.m. Eastern Daylight Time as a virtual meeting via webcast due to the public health concerns related to the COVID-19 pandemic. You can access the meeting at www.meetingcenter.io/229070589 with password XPO2020. You will also be required to have a control number to access the Annual Meeting. Please follow the instructions on pages 7-8 of the Proxy Statement.

The Annual Meeting shall be held for the following purposes, as more fully described in the Company's Proxy Statement accompanying this notice (the "Proxy Statement"):

To elect eight (8) members of our Board of Directors for a term to expire at the 2021 annual meeting of stockholders or until their successors are duly elected and qualified;

To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020;

To approve an amendment to the XPO Logistics, Inc. 2016 Omnibus Incentive Compensation Plan to increase the number of available shares thereunder by 1,150,000 to a total of 6,550,000;

To conduct an advisory vote to approve the executive compensation of our named executive officers ("NEOs") as disclosed in the Proxy Statement;

To consider and act upon a stockholder proposal regarding the integration of environmental, social, and governance ("ESG") metrics into executive compensation, if properly presented at the Annual Meeting;

To consider and act upon a stockholder proposal regarding the requirement that the chairman of the board be an independent director, if properly presented at the Annual Meeting;

To consider and act upon a stockholder proposal regarding ways to strengthen the prevention of workplace sexual harassment and align senior executive compensation incentives, if properly presented at the Annual Meeting;

To consider and act upon a stockholder proposal regarding the acceleration of executive equity awards in the case of a change in control of the Company, if properly presented at the Annual Meeting; and

To consider and transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

Only stockholders of record of our common stock, par value $0.001 per share, and our Series A Convertible Perpetual Preferred Stock, par value $0.001 per share, as of the close of business on April 9, 2020 are entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement of the Annual Meeting.

 

©2020 XPO Logistics, Inc.


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On or about April 21, 2020, we will mail a Notice of Internet Availability of Proxy Materials to our stockholders of record as of the record date. The notice contains instructions on how you can obtain internet access to our Proxy Statement and our Annual Report, which includes our Annual Report on Form 10-K for the 2019 fiscal year. The notice also contains instructions on how you can request a paper copy of the proxy materials, including a form of proxy.

Your vote is important. Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented. We ask that you vote your shares as soon as possible.

By Order of the Board of Directors,    

GRAPHIC

 

 

Bradley S. Jacobs
Chairman and Chief Executive Officer

 

 

Greenwich, Connecticut
April 21, 2020

 

 

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to Be Held on May 14, 2020:

The Proxy Statement and our Annual Report on Form 10-K for the Year Ended December 31, 2019 are available at www.edocumentview.com/XPO

 

©2020 XPO Logistics, Inc.


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TABLE OF CONTENTS    

 

 


PROXY STATEMENT SUMMARY

 

1

QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING

 

7

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

 

13

An Overview of Our Mission and How Our Board Composition is Aligned with Our Strategy

 
13

Directors

  14

Summary of Qualifications and Experience of Director Nominees

  19

Role of the Board and Board Leadership Structure

  20

Board Risk Oversight

  20

Committees of the Board and Committee Membership

  21

Director Compensation

  23

Compensation Committee Interlocks and Insider Participation

  24

Corporate Governance Guidelines and Code of Business Ethics

  24

Director Independence

  25

Director Selection Process

  25

Human Resource Management

  26

Board Oversight of Sustainability Matters

  27

Stockholder Communication with the Board

  27

Stockholder Proposals for Next Year's Annual Meeting

  27

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

28

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

29

EXECUTIVE COMPENSATION

 

32

Compensation Discussion and Analysis

 
32

Compensation Committee Report

  53

Compensation Tables

  54

Employment Agreements with NEOs

  59

Equity Compensation Plan Information

  62

AUDIT-RELATED MATTERS

 

63

Report of the Audit Committee

 
63

Policy Regarding Pre-Approval of Services Provided by the Outside Auditors

  64

Services Provided by the Outside Auditors

  64

PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING

 

65

Proposal 1: Election of Directors

 
65

Proposal 2: Ratification of the Appointment of KPMG LLP as our Independent Registered Public Accounting Firm for Fiscal Year 2020

  66

Proposal 3: Approval of an Amendment to the XPO Logistics, Inc. 2016 Omnibus Incentive Compensation Plan to Increase the Number of Available Shares

  67

Proposal 4: Advisory Vote to Approve Executive Compensation

  75

Proposal 5: Stockholder Proposal Regarding Integration of ESG Metrics Into Executive Compensation

  76

Proposal 6: Stockholder Proposal Regarding the Requirement that the Chairman of the Board be an Independent Director

  78

Proposal 7: Stockholder Proposal Regarding Ways to Strengthen the Prevention of Workplace Sexual Harassment and Align Senior Executive Compensation Incentives

  80

Proposal 8: Stockholder Proposal Regarding Acceleration of Executive Equity Awards in the Case of a Change in Control

  83

Other Matters

  85

ADDITIONAL INFORMATION

 

86

ANNEX A - RECONCILIATION OF NON-GAAP MEASURES

 

87

ANNEX B - AMENDMENT TO THE XPO LOGISTICS, INC. 2016 OMNIBUS INCENTIVE COMPENSATION PLAN

 

91

ANNEX C - XPO LOGISTICS, INC. 2016 OMNIBUS INCENTIVE COMPENSATION PLAN

 

92

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to Be Held on May 14, 2020:

 

 

This Proxy Statement and our Annual Report on Form 10-K for the Year Ended December 31, 2019
are available at www.edocumentview.com/XPO.

 

 

 

©2020 XPO Logistics, Inc.


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PROXY STATEMENT SUMMARY    

This Proxy Statement sets forth information relating to the solicitation of proxies by the Board of Directors ("Board of Directors" or "Board") of XPO Logistics, Inc. in connection with our 2020 Annual Meeting of Stockholders. This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

2020 ANNUAL MEETING OF STOCKHOLDERS

We intend to mail our Notice of Internet Availability of Proxy Materials ("Notice") on or about April 21, 2020, to our stockholders of record as of the close of business on April 9, 2020 (the "Record Date").

Date and Time
  Place
  Record Date
GRAPHIC   Thursday, May 14, 2020
at 10:00 a.m. Eastern Daylight Time
  GRAPHIC   Virtual Meeting Site:
www.meetingcenter.io/229070589
  GRAPHIC   You can vote if you were a
stockholder of record as of the
close of business on April 9, 2020

Admission: You will not be able to attend the Annual Meeting in person this year. You can access the Annual Meeting at www.meetingcenter.jo/229070589 with password XPO2020. You will need to provide the control number on your notice or proxy card in order to access the Annual Meeting. If the shares of common stock you hold are in an account at a broker, dealer, commercial bank, trust company or other nominee (i.e., in "street name"), you must register in advance to participate in the Annual Meeting, vote electronically and submit questions during the live webcast of the meeting. To register, you must obtain a legal proxy from the bank, broker or other nominee that holds your shares giving you the right to vote the shares. Requests for registration should be directed to our transfer agent, Computershare Trust Company, N.A. ("Computershare"), by email at legalproxy@computershare.com no later than 5:00 p.m. Eastern Time, on Friday, May 11, 2020. You will receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to www.meetingcenter.io/229070589 and enter your control number and the meeting password, XPO2020.

VOTING MATTERS AND BOARD RECOMMENDATIONS

The Board is not aware of any matter that will be presented for a vote at the 2020 Annual Meeting of Stockholders other than those shown below.

 
   
  Board Vote
Recommendation

   
  Page Reference
(for more detail)


PROPOSAL 1: Election of Directors
To elect eight (8) members of our Board of Directors for a term to expire at the 2021 annual meeting of stockholders or until their successors are duly elected and qualified.


 


 

GRAPHIC FOR
each Director
Nominee



 


 

13-27, 65

PROPOSAL 2: Ratification of the Appointment of our Independent Public Accounting Firm
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020.

 

 

 

GRAPHIC FOR

 

 

 

64, 66
                  

PROPOSAL 3: Approval of an Amendment to the Company's Incentive Compensation Plan
To approve an amendment to the XPO Logistics, Inc. 2016 Omnibus Incentive Compensation Plan to increase the number of available shares thereunder by 1,150,000 to a total of 6,550,000.


 


 

GRAPHIC FOR

 


 

67-74, 91-107


     

PROPOSAL 4: Advisory Vote to Approve Executive Compensation
To conduct an advisory vote to approve the executive compensation of our named executive officers ("NEOs") as disclosed in this Proxy Statement.

 

 

 

GRAPHIC FOR

 

 

 

75
                  

PROPOSAL 5: Stockholder proposal regarding integration of ESG metrics into executive compensation
To consider how to integrate environmental, social, and governance metrics into executive compensation.


 


 

GRAPHIC AGAINST

 


 

76-77


     

PROPOSAL 6: Stockholder Proposal Regarding the Requirement that the Chairman of the Board be an Independent Director
To adopt a requirement that the chairman of the Board be an independent director.

 

 

 

GRAPHIC AGAINST

 

 

 

78-79
                  

    

    

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PROPOSAL 7: Stockholder Proposal Regarding Ways to Strengthen the Prevention of Workplace Sexual Harassment and Align Senior Executive Compensation Incentives
To adopt measures to strengthen the company's prevention of workplace sexual harassment and align senior executive compensation incentives.


 


 

GRAPHIC AGAINST

 


 

80-82


     

PROPOSAL 8: Stockholder Proposal Regarding Acceleration of Executive Equity Awards in the Case of a Change in Control
To adopt a policy that, in the event of a change in control, there shall be no acceleration of vesting of any equity award granted to any senior executive officer.

 

 

 

GRAPHIC AGAINST

 

 

 

83-84

GOVERNANCE HIGHLIGHTS

Board and Committee
Independence

 
Eight of our nine current directors are independent.
  The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee consist entirely of independent directors.
Independent Board Oversight
and Leadership Roles
  In 2016, our Board added a robust lead independent director position to its leadership structure to complement the roles of our independent committees and independent committee chairmen in providing effective Board oversight. In 2019, our Board added the position of an independent vice chairman to its leadership structure to provide support on key governance matters and shareholder engagement to our chairman, lead independent director and the Board. These independent structures work in conjunction with the dual roles served by our chairman and chief executive officer. The Board believes the Board and company's leadership structure functions well for our company and is in the best interests of our stockholders based on the company's current strategy and ownership structure.
     
Board Refreshment   Our Board is committed to creating an effective mix of useful expertise and fresh perspectives among its members, including through the thoughtful refreshment of the Board when appropriate. In 2015, the Board initiated a process to seek out highly qualified director candidates who bring relevant experience to the Board and reflect our company's growing scale and diversity. This has resulted in the addition of five new directors, one in 2015, one in 2016, one in 2017 and two in 2019.
Committee Rotations   As part of its annual review of Board committee composition and committee chairmen assignments, in May 2018, and again in March 2019, the Board reconstituted its committees in order to enhance the effective functioning of the committees and bring fresh perspectives to committee processes.
     
 
Annual Director Elections   All directors are elected annually for one-year terms or until their successors are elected and qualified.
Majority Voting for Director Elections   Our bylaws provide for a majority voting standard in uncontested elections, and further require that a director who fails to receive a majority vote must tender his or her resignation to the Board.
     
Board Evaluations   Our Board regularly reviews committee and director performance and practices through an annual process of self-evaluation.
Risk Oversight and
Financial Reporting
  Our Board seeks to provide robust oversight of current and potential risks facing our company through regular deliberations and participation in management meetings. Our Audit Committee supports strong financial reporting oversight through regular meetings with management and dialogue with our auditors.
     
 
Active Participation   Our Board held 17 meetings during 2019 and each person currently serving as a director attended at least 88% of the meetings of our Board and any Board committee on which he or she served.

    

    

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©2020 XPO Logistics, Inc.


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2020 BOARD OF DIRECTORS NOMINEES

Our Board aims to create a team of directors with diverse experiences and perspectives to provide our complex, global company with thoughtful and engaged board oversight. When selecting new directors, our Board considers, among other things, the nominee's breadth of experience, financial expertise, integrity, ability to make independent analytical inquiries, understanding of our company's business environment, experience in areas relevant to our company's businesses and willingness to devote adequate time to Board duties, all in the context of the needs of the Board at that point in time and with the objective of ensuring a diversity of backgrounds, experience and viewpoints among Board members. Our Board also endeavors to actively seek out highly qualified women and individuals from underrepresented minorities to include in the pool from which Board nominees are chosen and has engaged in a purposeful process of regular refreshment as demonstrated by the following key metrics:


GRAPHIC

 

GRAPHIC

 

GRAPHIC

The following table provides summary information about each director nominee. Each director is elected annually by a majority of the votes cast.

 
   
   
   
   
  Committee
Memberships

Name

  Director
Since

  Age

  Occupation

  Independent

  AC

  CC

  NCGC

  AcqC

Bradley S. Jacobs

  2011   63   Chairman and Chief Executive Officer, XPO Logistics, Inc.          

Gena L. Ashe

 

2016

 

58

 

General Counsel and Corporate Secretary, Anterix Inc.

 

Y

 

         

                                 

Marlene M. Colucci

  2019   57   Executive Director of The Business Council   Y        

AnnaMaria DeSalva

 

2017

 

51

 

Vice Chairman, XPO Logistics, Inc.;
Global Chairman and Chief Executive Officer, Hill+Knowlton Strategies

 

Y

         

C

   
                                 

Michael G. Jesselson

  2011   68   Lead Independent Director, XPO Logistics, Inc.;
President and Chief Executive Officer, Jesselson Capital Corporation

 
Y        

Adrian P. Kingshott

 

2011

 

60

 

Chief Executive Officer, AdSon, LLC; Managing Director, Spotlight Advisors, LLC

 

Y

             

C

                                 

Jason D. Papastavrou*

  2011   57   Founder and Chief Investment Officer, ARIS Capital Management, LLC   Y     C    

Oren G. Shaffer*

 

2011

 

77

 

Former Vice Chairman and Chief Financial Officer,
Qwest Communications International, Inc.

 

Y

 

C

           

AC = Audit Committee
CC = Compensation Committee

 

NCGC = Nominating and Corporate
                Governance Committee
AcqC =  Acquisition Committee

 

C = Committee Chairman
= Committee Member
* =  Audit Committee Financial Expert

    

    

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The following table provides a summary of the qualifications and experience of our director nominees.

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2019 PERFORMANCE HIGHLIGHTS

XPO realized numerous financial achievements in 2019 under the skilled leadership of our NEOs:

LOGO

*
See Annex A for reconciliation of this non-GAAP measure.

    

    

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SUSTAINABILITY EFFORTS

We are pleased to have published our 2019 Sustainability Report highlighting our initiatives in the following areas:

LOGO

2019 COMPENSATION HIGHLIGHTS

Our compensation programs for NEOs align with our company's pay-for-performance culture by linking executive compensation to long-term stockholder value. The Compensation Committee's commitment to a pay-for-performance philosophy ensures that this alignment is reflected in our NEO compensation programs. Under Mr. Jacobs' strong leadership, for its first eight fiscal years combined (2012-2019), the company increased stockholder value by $7.2 billion, as represented by the change in XPO's market capitalization from December 31, 2011 through December 31, 2019. Mr. Jacobs' average annual realized pay from 2012 to 2019 was $9.9 million per year. Cumulatively, this equates to 1.1% of the total value created for stockholders during the eight-year period.

Realized Pay Demonstrates Actual Value of Compensation Earned by Our NEOs

Realized pay represents the compensation actually received by our executives in a given year and is calculated as the sum of: (i) salary paid; (ii) bonus(es) related to the performance year; and (iii) the value of long-term incentive compensation that vested in the year, calculated based on the closing stock price on the date the award vested. The realized pay measure, utilized consistently, allows our stockholders to assess whether the actual value of the compensation received by our CEO and other executive officers is rightsized relative to stockholders' return on investment in the company over time. In 2019, total realized pay was 92% performance-based for our CEO, Mr. Jacobs, and 77% and 76% performance-based for Mr. Cooper and Mr. Harik, respectively.

Performance Awards Align Interests of NEOs with Stockholders

The alignment of management's objectives with stockholders' interests is of critical importance, and the Compensation Committee holds our executives accountable for achieving rigorous annual and multi-year growth targets. The underlying premise is that an abundance of organic and inorganic opportunities exist to create incremental value for stockholders. The Compensation Committee believes that optimal compensation incentives motivate executives to balance short-term and long-term initiatives for competitive differentiation, market share gains, and revenue and margin expansion.

In determining the framework for performance-based awards, the Compensation Committee typically selects high-growth stretch goals for key indicators that extend beyond annual targets, and that vest on a long-term basis once the goals are entirely achieved. The awards typically reflect the inherent hurdles in achieving aspirational goals over a long period of time and align executive interests with the interests of our stockholders.

    

    

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All Equity Awards are Performance-Based for Mr. Jacobs, Mr. Cooper and Mr. Harik

Outstanding equity awards for Mr. Jacobs, Mr. Cooper and Mr. Harik are 100% performance-based as summarized below:

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Key features of our outstanding equity awards for Mr. Jacobs, Mr. Cooper and Mr. Harik are outlined below:

 
   
   
   

 

 

GRAPHIC

 

Staggered cliff vesting reduces risk and maintains focus on long-term value creation.

 

 

 

 

GRAPHIC

 

There is no threshold level for below-target performance (no payout if targets are not fully met).

 

 

 

 

GRAPHIC

 

Targets emphasize high-growth and high returns, incentivizing NEOs to capitalize on a mix of addressable opportunities.

 

 

 

 

GRAPHIC

 

Recent awards are balanced with two performance measures, including a relative market-based measure for the 2019-2024 PSU award (granted in June 2019).

 

 

 

 

GRAPHIC

 

Performance awards are subject to clawback restrictions.

 

 

As executive officers at XPO, Mr. Jacobs, Mr. Cooper and Mr. Harik have not sold any shares from vested equity and have not exercised any stock options. In addition, all vested awards are subject to lock-up restrictions prohibiting the sale of shares or exercise of options until September 2, 2020.

Responsive to Stockholder Feedback

We believe that strong corporate governance should include year-round engagement with stockholders, including constructive dialogue on our executive compensation program. Feedback received from stockholders in 2019, related to executive compensation matters, was shared with the Committee and incorporated into its decision-making process:

 
   
   
   

 

GRAPHIC

  Increased disclosure about the Committee's decision-making process, including:

Inclusion of the new proxy section "Execution of XPO Company Strategy—Effect on Timing of Grants of Equity Awards";

Detailed discussion of outstanding performance stock units (PSUs);

Detailed discussion of performance metrics underpinning outstanding PSUs; and

Supplemental materials filed with this proxy.

   
    GRAPHIC   Revised PSU award construct for the 2019-2024 PSU (granted in June 2019), including the addition of a relative market-based measure.    

    

    

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QUESTIONS AND ANSWERS
ABOUT OUR ANNUAL MEETING
   

This Proxy Statement sets forth information relating to the solicitation of proxies by the Board of Directors (our "Board of Directors" or our "Board") of XPO Logistics, Inc. ("XPO" or our "company") in connection with our 2020 Annual Meeting of Stockholders (the "Annual Meeting") or any adjournment or postponement thereof. This Proxy Statement (the "Proxy Statement") is being furnished by our Board of Directors for use at the Annual Meeting to be held on May 14, 2020 at 10:00 a.m. Eastern Daylight Time as a virtual meeting via webcast due to the public health concerns related to the COVID-19 pandemic. You can access the meeting at www.meetingcenter.io/2290705989 with password XPO2020. You will also be required to have a control number to access the Annual Meeting. Please follow the instructions below.

We intend to mail our Notice of Internet Availability of Proxy Materials ("Notice") on or about April 21, 2020, to our stockholders of record as of the close of business on April 9, 2020 (the "Record Date").

The following answers address some questions you may have regarding our Annual Meeting. These questions and answers may not include all of the information that may be important to you as a stockholder of our company. Please refer to the more detailed information contained elsewhere in this proxy statement.

What items of business will be voted on at the Annual Meeting?

We expect that the business put forth for a vote at the Annual Meeting will be as follows:

To elect eight (8) members of our Board of Directors for a term to expire at the 2021 annual meeting of stockholders or until their successors are duly elected and qualified (Proposal 1);

To ratify the appointment of KPMG LLP ("KPMG") as our independent registered public accounting firm for fiscal year 2020 (Proposal 2);

To approve an amendment to the XPO Logistics, Inc. 2016 Omnibus Incentive Compensation Plan to increase the number of available shares thereunder by 1,150,000 to a total of 6,550,000 (Proposal 3);

To conduct an advisory vote to approve the executive compensation of our named executive officers ("NEOs") as disclosed in this Proxy Statement (Proposal 4);

To consider and act upon a stockholder proposal regarding the integration of environmental, social, and governance ("ESG") metrics into executive compensation, if properly presented at the Annual Meeting (Proposal 5);

To consider and act upon a stockholder proposal regarding the appointment of an independent chairman of the board, if properly presented at the Annual Meeting (Proposal 6);

To consider and act upon a stockholder proposal regarding ways to strengthen the prevention of workplace sexual harassment and align senior executive compensation incentives, if properly presented at the Annual Meeting (Proposal 7);

To consider and act upon a stockholder proposal regarding the acceleration of executive equity awards in the case of a change in control of the Company, if properly presented at the Annual Meeting (Proposal 8); and

To consider and transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

Senior management of XPO and representatives of our outside auditor, KPMG, will be available to respond to appropriate questions.

Who can attend and vote at the Annual Meeting?

You are entitled to receive notice of and to attend and vote at the Annual Meeting, or any adjournment or postponement thereof, if, as of the close of business on April 9, 2020, the Record Date, you were a holder of record of our common stock or Series A Convertible Perpetual Preferred Stock (the "Series A Preferred Stock").

You will not be able to attend the Annual Meeting in person this year. You can access the Annual Meeting at www.meetingcenter.io/229070589 with password XPO2020. You will also be required to have a control number to access the Annual Meeting. Please follow the instructions below. You will need to provide the control number on your notice or proxy card in order to access the Annual Meeting. If the shares of common stock you hold are in an account at a broker, dealer, commercial bank, trust company or other nominee (i.e., in "street name"), you must register in advance to participate in the

    

    

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Annual Meeting, vote electronically and submit questions during the live webcast of the meeting. To register, you must obtain a legal proxy from the bank, broker or other nominee that holds your shares giving you the right to vote the shares. Requests for registration should be directed to Computershare by email at legalproxy@computershare.com no later than 5:00 p.m. Eastern Time, on Friday, May 11, 2020. You will receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to www.meetingcenter.io/229070589 and enter your control number and the meeting password, XPO2020.

Can I ask Questions During the Annual Meeting?

Stockholders (or their proxy holders) may submit questions for the Annual Meeting's question and answer session in advance by logging in to the meeting site at www.meetingcenter.io/229070589 with password XPO2020. You will need the control number on your Notice, proxy card or confirmation email from Computershare in order to submit a question. Click on the "message" icon at the top of the screen and submit your question. Please provide your name, address (city and state) and organization, and, if applicable, the specific proposal to which your question relates. Advance questions can be submitted beginning at 9:00 a.m., Eastern Daylight Time, on May 4, 2020. Questions may also be submitted during the Annual Meeting through the meeting website. We will answer as many questions during the meeting as time will allow and will group questions together where appropriate.

How many shares of XPO common stock or Series A Preferred Stock must be present to conduct business at the Annual Meeting?

As of the Record Date, there were 91,105,728 shares of common stock issued and outstanding, each of which is entitled to one vote on each matter to come before the Annual Meeting. In addition, each share of Series A Preferred Stock is entitled to vote together with our common stock on each matter to come before the Annual Meeting as if the shares of Series A Preferred Stock were converted into shares of common stock as of the Record Date, meaning that each share of Series A Preferred Stock is entitled to approximately 143 votes on each matter to come before the Annual Meeting. As of the Record Date, there were 71,110 shares of Series A Preferred Stock issued and outstanding, representing 10,158,171 votes. As a result, a total of 101,264,299 votes are eligible to be cast at the Annual Meeting based on the number of outstanding shares of our common stock and Series A Preferred Stock, voting together as a single class.

A quorum is necessary to hold a valid meeting of stockholders. Pursuant to the company's bylaws, the presence, in person or by proxy, of the holders of a majority of the shares issued and outstanding is necessary for each of the proposals to be presented at the Annual Meeting. Accordingly, the holders of shares of our common stock or Series A Preferred Stock outstanding on the Record Date representing 50,632,151 votes must be present at the Annual Meeting. If you vote by internet, telephone or proxy card, the shares you vote will be counted towards the quorum for the Annual Meeting. Abstentions and broker non-votes are counted as present for the purpose of determining a quorum.

What are my voting choices?

With respect to the election of directors, you may vote "FOR" or "AGAINST" each of the director nominees, or you may "ABSTAIN" from voting for one or more of such nominees. With respect to the other proposals to be considered at the Annual Meeting, you may vote "FOR" or "AGAINST" or you may "ABSTAIN" from voting on any proposal. If you sign your proxy without giving specific instructions, your shares will be voted in accordance with the recommendations of our Board of Directors with respect to the specific proposals described in this Proxy Statement and at the discretion of the proxy holders on any other matters that properly come before the Annual Meeting.

What vote is required to approve the proposals being considered at the Annual Meeting?

Proposal 1: Election of eight (8) directors. The election of each of the eight (8) director nominees named in this Proxy Statement requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" a nominee must exceed the number of shares voted "against" such nominee) by holders of shares of our common stock (including those that would be issued if all of our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present. If any incumbent director standing for re-election receives a greater number of votes "against" his or her election than votes "for" such election, our bylaws require that such person must promptly tender his or her resignation to our Board of Directors. You may not accumulate your votes for the election of directors.


Brokers may not use discretionary authority to vote shares of our common stock on the election of directors if they have not received specific instructions from their clients. If you are a beneficial owner of shares of our common stock, in order for your vote to be counted in the election of directors, you will need to communicate your voting decisions to your bank, broker or other nominee before the date of the Annual Meeting in accordance with their specific instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation and will have no effect on the election of director nominees.

    

    

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Proposal 2: Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020. Ratification of the appointment of KPMG as our independent registered public accounting firm for the year ending December 31, 2020 requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present. Abstentions are not considered votes cast for purposes of tabulation and will have no effect on the ratification of KPMG. We do not expect any broker non-votes, as brokers have discretionary authority to vote on this proposal.

Proposal 3: Approval of an amendment to the company's 2016 Omnibus Incentive Compensation Plan to increase the number of available shares. The approval of an amendment to the company's 2016 Omnibus Incentive Compensation Plan requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present.


Brokers may not use discretionary authority to vote shares of our common stock on this proposal if they have not received specific instructions from their clients. If you are a beneficial owner of shares of our common stock, in order for your vote to be counted for or against the amendment to the company's 2016 Omnibus Incentive Compensation Plan, you will need to communicate your voting decision to your bank, broker or other nominee before the date of the Annual Meeting in accordance with their specific instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation and will have no effect on the vote on this proposal.

Proposal 4: Advisory vote to approve executive compensation. Advisory approval of the resolution on executive compensation of our NEOs as disclosed in this Proxy Statement requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present. This resolution, commonly referred to as a "say-on-pay" resolution, is non-binding on our Board of Directors. Although non-binding, our Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.


Brokers may not use discretionary authority to vote shares of our common stock on the advisory vote to approve executive compensation if they have not received specific instructions from their clients. If you are a beneficial owner of shares of our common stock, in order for your vote to be counted in the advisory vote to approve executive compensation, you will need to communicate your voting decisions to your bank, broker or other nominee before the date of the Annual Meeting in accordance with their specific instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation and will have no effect on the advisory vote to approve executive compensation.

Proposal 5: Stockholder proposal regarding integration of ESG metrics into executive compensation. Approval of a requirement that the company examine and report to stockholders how it plans to integrate ESG metrics into performance measures of named executive officers requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present.


Brokers may not use discretionary authority to vote shares of our common stock on this stockholder proposal if they have not received specific instructions from their clients. If you are a beneficial owner of shares of our common stock, for your vote to be counted for or against the stockholder proposal, you will need to communicate your voting decision to your bank, broker or other nominee before the date of the Annual Meeting in accordance with their specific instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation and will have no effect on the vote on this stockholder proposal.

Proposal 6: Stockholder proposal regarding the requirement that the chairman of the board be an independent director. Approval of a policy requiring that the chairman of the board of directors be appointed from among independent directors requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present.


Brokers may not use discretionary authority to vote shares of our common stock on this stockholder proposal if they have not received specific instructions from their clients. If you are a beneficial owner of shares of our common stock, for your vote to be counted for or against the stockholder proposal, you will need to communicate your voting decision to your bank, broker or other nominee before the date of the Annual Meeting in accordance with their specific instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation and will have no effect on the vote on this stockholder proposal.

    

    

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Proposal 7: Stockholder proposal regarding ways to strengthen the prevention of workplace sexual harassment and align senior executive compensation incentives. Approval of a policy requiring the company to adopt measures to strengthen prevention of workplace sexual harassment and align senior executive compensation incentives requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present.


Brokers may not use discretionary authority to vote shares of our common stock on this stockholder proposal if they have not received specific instructions from their clients. If you are a beneficial owner of shares of our common stock, for your vote to be counted for or against the stockholder proposal, you will need to communicate your voting decision to your bank, broker or other nominee before the date of the Annual Meeting in accordance with their specific instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation and will have no effect on the vote on this stockholder proposal.

Proposal 8: Stockholder proposal regarding acceleration of executive equity awards in the case of a change in control. Approval of a policy requiring that in the event of a change in control there shall be no acceleration of vesting of senior executive officers' equity awards requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present.


Brokers may not use discretionary authority to vote shares of our common stock on this stockholder proposal if they have not received specific instructions from their clients. If you are a beneficial owner of shares of our common stock, for your vote to be counted for or against the stockholder proposal, you will need to communicate your voting decision to your bank, broker or other nominee before the date of the Annual Meeting in accordance with their specific instructions. Abstentions and broker non-votes are not considered votes cast for purposes of tabulation and will have no effect on the vote on this stockholder proposal.

In general, other business properly brought before the Annual Meeting requires the affirmative vote of a majority of the votes cast (meaning the number of shares voted "for" such proposal must exceed the number of shares voted "against" such proposal) by holders of shares of our common stock (including those that would be issued if all our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) at the Annual Meeting at which a quorum is present.

How does the Board of Directors recommend that I vote?

Our Board of Directors, after careful consideration, recommends that our stockholders vote "FOR" the election of each director nominee named in this proxy statement, "FOR" ratification of KPMG as our independent registered public accounting firm for fiscal year 2020, "FOR" approval of an amendment to the company's incentive compensation plan, "FOR" advisory approval of the resolution to approve executive compensation, "AGAINST" the approval of the stockholder proposal regarding integration of ESG metrics into executive compensation, if such proposal is properly presented at the meeting; "AGAINST" the approval of the stockholder proposal regarding the requirement that the chairman of the board be an independent director, if such proposal is properly presented at the meeting; "AGAINST" the approval of the stockholder proposal regarding ways to strengthen the prevention of workplace sexual harassment and align senior executive compensation incentives, if such proposal is properly presented at the meeting; and "AGAINST" the approval of the stockholder proposal regarding acceleration of executive equity awards in the case of a change in control, if such proposal is properly presented at the meeting.

What do I need to do now?

We urge you to read this Proxy Statement carefully, then vote via internet or by telephone by following the instructions on the Notice or proxy card, or mail your completed, dated and signed proxy card in the enclosed return envelope as soon as possible so that your shares of our common stock can be voted at the Annual Meeting of stockholders.

How do I cast my vote?

Registered Stockholders. If you are a registered stockholder (i.e., you hold your shares in your own name through our transfer agent, Computershare Trust Company, N.A., and not through a broker, bank or other nominee that holds shares for your account in "street name"), you may vote by proxy via internet or by telephone by following the instructions provided on the Notice or proxy card, or mail your completed, dated and signed proxy card in the enclosed return envelope. Proxies submitted via internet or by telephone must be received by 1:00 a.m. Eastern Daylight Time on May 14, 2020. Please see the Notice or proxy card provided to you for instructions on how to submit your proxy via internet or by telephone. Stockholders of record who attend the Annual Meeting may vote directly at the Annual Meeting by following the instructions provided during the Annual Meeting.

    

    

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Beneficial Owners. If you are a beneficial owner of shares (i.e., your shares are held in the name of a brokerage firm, bank or a trustee), you may vote by proxy by following the instructions provided in the Notice, voting instruction form or other materials provided to you by the brokerage firm, bank or other nominee that holds your shares. To vote directly at the Annual Meeting, you must obtain a legal proxy from the brokerage firm, bank or other nominee that holds your shares. Follow the instructions above to obtain a control number and the instructions provided for during the Annual Meeting.

What is the deadline to vote?

If you hold shares as the stockholder of record, your vote by proxy must be received before the polls close at the Annual Meeting. As indicated on the Notice or proxy card provided to you, proxies submitted via internet or by telephone must be received by 1:00 a.m. Eastern Daylight Time on May 14, 2020.

If you are the beneficial owner of shares of our common stock, please follow the voting instructions provided by your broker, trustee or other nominee.

What happens if I do not respond, or if I respond and fail to indicate my voting preference, or if I abstain from voting?

If you fail to vote via internet or by telephone as indicated on your Notice or proxy card, or sign, date and return your proxy card, your shares will not be counted towards establishing a quorum for the Annual Meeting, which requires holders representing a majority of the outstanding shares of our common stock (including those that would be issued if all of our outstanding Series A Preferred Stock had converted into shares of our common stock as of the Record Date) to be present in person or by proxy.

Failure to vote, assuming the presence of a quorum, will have no effect on the tabulation of the votes on the proposals. If you are a stockholder of record and you properly sign, date and return your proxy card, but do not indicate your voting preference, we will count your proxy as a vote "FOR" the election of the eight nominees for director named in "Proposal 1—Election of Directors," "FOR" ratification of KPMG as our independent registered public accounting firm for fiscal year 2020, "FOR" approval of an amendment to the company's incentive compensation plan, "FOR" advisory approval of the resolution to approve executive compensation, "AGAINST" the approval of the stockholder proposal regarding integration of ESG metrics into executive compensation, if such proposal is properly presented at the meeting, "AGAINST" the approval of the stockholder proposal regarding the requirement that the chairman of the board be an independent director, if such proposal is properly presented at the meeting, "AGAINST" the approval of the stockholder proposal regarding ways to strengthen the prevention of workplace sexual harassment and align senior executive compensation incentives, if such proposal is properly presented at the meeting, and "AGAINST" the approval of the stockholder proposal regarding acceleration of executive equity awards in the case of a change in control, if such proposal is properly presented at the meeting.

If my shares are held in "street name" by my broker, dealer, commercial bank, trust company or other nominee, will such broker or other nominee vote my shares for me?

You should instruct your broker or other nominee on how to vote your shares of our common stock using the instructions provided by such broker or other nominee. Absent specific voting instructions, brokers or other nominees who hold shares of our common stock in "street name" for customers are prevented by the rules set forth in the Listed Company Manual (the "NYSE Rules") of the New York Stock Exchange (the "NYSE") from exercising voting discretion with respect to non-routine or contested matters. We expect that when the NYSE evaluates the proposals to be voted on at the Annual Meeting to determine whether each proposal is a routine or non-routine matter, only "Proposal 2—Ratification of the Appointment of KPMG LLP as Our Independent Registered Public Accounting Firm for Fiscal Year 2020" will be determined to be routine. Shares not voted by a broker or other nominee, because such broker or other nominee does not have instructions or cannot exercise discretionary voting power with respect to one or more proposals, are referred to as "broker non-votes." It is important that you instruct your broker or other nominee on how to vote your shares of our common stock held in "street name" in accordance with the voting instructions provided by such broker or other nominee.

What if I want to change my vote?

Yes. Whether you attend the Annual Meeting or not, you may revoke a proxy at any time before your proxy is voted at the Annual Meeting. You may do so by properly delivering a later-dated proxy either via internet, by telephone, by mail, or by attending the Annual Meeting in person and voting. Please note, however, your attendance at the Annual Meeting will not automatically revoke any prior proxy, unless you vote again at the Annual Meeting or specifically request in writing that your prior proxy be revoked. You also may revoke your proxy by delivering a notice of revocation to our company (Attention: Secretary, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831) prior to the vote at the Annual Meeting. If you hold your shares through a broker, dealer, commercial bank, trust company or other nominee, you should follow the instructions of such broker or other nominee regarding revocation of proxies.

    

    

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How will the persons named as proxies vote?

If you are a registered stockholder (i.e., you hold your shares of our common stock in your own name through our transfer agent, Computershare Trust Company, N.A., and not through a broker, bank or other nominee that holds shares for your account in "street name") and you complete and submit a proxy, the persons named as proxies will follow your instructions. If you submit a proxy but do not provide instructions, or if your instructions are unclear, the persons named as proxies will vote as recommended by our Board of Directors or, if no recommendation is given, by using their own discretion.

Where can I find the results of the voting?

We intend to announce preliminary voting results at the Annual Meeting and will publish final results on a Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission ("SEC") within four (4) business days after the Annual Meeting. The Current Report on Form 8-K will also be available on the internet at our website, www.xpo.com.

Why did I receive a Notice regarding the internet availability of proxy materials instead of a full set of printed proxy materials?

We are making our proxy materials available to our stockholders on the internet by mailing the Notice to our stockholders instead of mailing a full set of proxy materials. The Notice contains instructions on how you may access an electronic copy of our proxy materials. The Notice also contains instructions on how you may request a paper copy of the proxy materials, including a form of proxy. We believe this process allows us to provide you with the information you need in a timely manner, while conserving natural resources and lowering the costs of printing and distributing our proxy materials.

Who will pay for the cost of soliciting proxies?

The company will pay for the cost of soliciting proxies. We have engaged Innisfree M&A Incorporated to assist us in soliciting proxies in connection with the Annual Meeting and have agreed to pay them approximately $15,000 plus their expenses for providing such services. Our directors, officers and other employees, without additional compensation, may solicit proxies personally, in writing, by telephone, by e-mail or otherwise. As is customary, we will reimburse brokerage firms, fiduciaries, voting trustees and other nominees for forwarding our proxy materials to each beneficial owner of shares of our common stock or Series A Preferred Stock held of record by them.

What is "householding" and how does it affect me?

In accordance with notices to many stockholders who hold their shares through a bank, broker or other holder of record (a "street-name stockholder") and share a single address, only one copy of our proxy materials is being delivered to that address unless contrary instructions from any stockholder at that address are received. This practice, known as "householding," is intended to reduce our printing and postage costs. However, any such street-name stockholders residing at the same address who wish to receive a separate copy of our proxy materials may request a copy by contacting their bank, broker or other holder of record, or by sending a written request to: Investor Relations, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831, or by contacting Investor Relations by telephone at 1-855-976-6951. The voting instruction form sent to a street-name stockholder should provide information on how to request: (1) householding of future company materials, or (2) separate materials if only one set of documents is being sent to a household.

Can I obtain an electronic copy of the Company's proxy materials?

Yes, this Proxy Statement and our 2019 Annual Report are available on the internet at www.edocumentview.com/XPO.

    

    

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BOARD OF DIRECTORS AND    
CORPORATE GOVERNANCE       

AN OVERVIEW OF OUR MISSION AND HOW OUR BOARD COMPOSITION IS ALIGNED WITH OUR STRATEGY

Our mission is to be the leading provider of cutting-edge supply chain solutions to the most successful companies in the world, and to do this by using our highly integrated network of people, technology and physical assets to help our customers manage their goods most efficiently throughout their supply chains. We run our business on a global basis, with over 50,000 customers served by approximately 100,000 employees and 1,504 locations in 30 countries, including the United States, France, the United Kingdom and Spain. Our transportation segment offers customers an unmatched network of multiple modes, flexible capacity and route density that transports freight quickly and cost effectively from origin to destination. Through our logistics segment, we provide a range of differentiated and data-intensive services, including highly engineered and customized solutions, value-added warehousing and distribution, omnichannel fulfillment, cold chain distribution, reverse logistics, surge management and other inventory management solutions.

Our blueprint for transforming transportation and logistics is rooted in innovation and revolves around our people. We care deeply about keeping our employees and customers happy, and we view safety, sustainability, strong governance and a purpose-driven culture as essential components of value creation. In addition, our company is a leading proponent of technology, with a global team of technologists and data scientists who concentrate their efforts in four areas of innovation: (1) automation and intelligent machines, (2) visibility and customer service, (3) the digital freight marketplace and (4) dynamic data science. Our success depends on our people.

Our Board of Directors consists of a highly skilled group of leaders who share our values and reflect our culture. Many of our directors have served as executive officers or served on boards of major companies and have an extensive understanding of the principles of corporate governance. In addition, our directors have a strong owner orientation—approximately 18.9% of the voting power of our capital stock on a fully-diluted basis is held by our directors or by entities or persons related to our directors (as of the Record Date). As described on page 19, our Board as a whole has broad expertise with the following skill sets that are relevant to our company, business, industry and strategy:

Business operations;

Corporate governance;

Customer service;

Environmental sustainability and corporate responsibility;

Effective capital allocation;

Critical analysis of corporate financial statements and capital structures;

Human resource management;

Multinational corporate management;

Sales and marketing;

Mergers and acquisitions, integration and optimization;

The transportation and logistics industry;

Risk management;

Talent management and engagement; and

Technology and information systems.

    

    

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DIRECTORS

Our Board of Directors currently consists of nine (9) members as set forth in the table below. The current term of each of our directors will expire at the Annual Meeting. Our Board has nominated eight of the current directors to stand for election at the Annual Meeting, as set forth in Proposal 1 on page 65 of this Proxy Statement.

Name
  Occupation
Bradley S. Jacobs   Chairman and Chief Executive Officer, XPO Logistics, Inc.
Gena L. Ashe   General Counsel and Corporate Secretary, Anterix Inc.
Marlene M. Colucci   Executive Director, The Business Council
AnnaMaria DeSalva   Vice Chairman, XPO Logistics, Inc.; Global Chairman and Chief Executive Officer, Hill+Knowlton Strategies
Michael G. Jesselson   Lead Independent Director, XPO Logistics, Inc.; President and Chief Executive Officer, Jesselson Capital Corporation
Aris Kekedjian   Advisor to global companies on finance and M&A strategies
Adrian P. Kingshott   Chief Executive Officer, AdSon, LLC; Managing Director, Spotlight Advisors, LLC
Jason D. Papastavrou   Founder and Chief Investment Officer, ARIS Capital Management, LLC
Oren G. Shaffer   Former Vice Chairman and Chief Financial Officer, Qwest Communications International, Inc.

Under the terms of an Investment Agreement, dated June 13, 2011 (the "Investment Agreement"), by and among Jacobs Private Equity, LLC ("JPE"), the other investors party thereto (collectively with JPE, the "Investors"), and our company, JPE has the right to designate certain percentages of the nominees for our Board of Directors so long as JPE owns securities (including preferred stock convertible into, or warrants exercisable for, securities) representing specified percentages of the total voting power of our capital stock on a fully-diluted basis. JPE does not currently own securities representing the required voting power to qualify for the right to designate nominees for our Board of Directors. The foregoing rights of JPE under the Investment Agreement are in addition to, and not in limitation of, JPE's voting rights as a holder of capital stock of our company. JPE is controlled by Bradley S. Jacobs, our chairman and chief executive officer. The Investment Agreement and the terms contemplated therein were approved by our stockholders at a special meeting on September 1, 2011.

None of the foregoing will prevent our Board of Directors from acting in accordance with its fiduciary duties or applicable law or stock exchange requirements or from acting in good faith in accordance with our governing documents, while giving due consideration to the intent of the Investment Agreement.

Set forth below is information regarding each of our director nominees, including the experience, qualifications, attributes or skills that led our Board of Directors to conclude that such person should serve as a director.

Bradley S. Jacobs   Chairman and Director since 2011

Age:  63

 

 

Mr. Jacobs has served as our chief executive officer and chairman of our Board of Directors since September 2, 2011. Mr. Jacobs is also the managing member of JPE, which is our largest stockholder (on a fully-diluted basis). Prior to XPO, he led two public companies: United Rentals, Inc. (NYSE: URI), which he founded in 1997, and United Waste Systems, Inc., which he founded in 1989. Mr. Jacobs served as chairman and chief executive officer of United Rentals for that company's first six years, and as its executive chairman for an additional four years. He served eight years as chairman and chief executive officer of United Waste Systems.

Board Committees:  None
Other Public Company Boards:  None
     
Mr. Jacobs brings to the Board:

In-depth knowledge of the company's business resulting from his years of service with the company as its chief executive officer;

Leadership experience as the company's chairman and chief executive officer, and a successful track record of leading companies that execute strategies similar to ours; and

Extensive past experience as the chairman of the board of directors of several public companies.

    

    

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Gena L. Ashe   Director since 2016

Age:  58

 

 

Ms. Ashe has served as a director of the company since March 21, 2016. Ms. Ashe has served as the general counsel and corporate secretary of Anterix Inc. since July 2019. Previously, Ms. Ashe was the president and chief executive officer of GLA Legal Advisory Group, LLC since February 2018. She was senior vice president, chief legal officer and corporate secretary of Adtalem Global Education Inc. (NYSE: ATGE) from May 2017 to February 2018, and executive vice president, chief legal officer, and corporate secretary of BrightView Landscapes, LLC (formerly The Brickman Group, Ltd. LLC) from December 2012 to June 2016. Also, Ms. Ashe has served as vice-chairman of the Supervisory Board of XPO Logistics Europe S.A., our majority-owned subsidiary, since February 2017. Ms. Ashe holds a juris doctorate degree from Georgetown University Law Center, where she serves on the Georgetown Law Advisory Board, a master's degree in electrical engineering from Georgia Institute of Technology and a bachelor's degree in mathematics from Spelman College, where she sits on the Board of Trustees. She has completed the executive development program at the Wharton School of the University of Pennsylvania and holds a certificate in international management from Oxford University in England.
     
Board Committees:

Member of Audit Committee

Member of Acquisition Committee


Other Public Company Boards:  None
     
Ms. Ashe brings to the Board:

More than two decades of valuable legal experience with public and private companies, which enables her to provide guidance to the Board and company management on legal matters, compliance and risk assessment and corporate governance best practices; and

An in-depth understanding of the dynamics of three of our most important customer verticals: e-commerce, technology and food and beverage.

Marlene M. Colucci   Director since 2019

Age:  57

 

 

Ms. Colucci has served as a director of the company since February 7, 2019. She has served as the executive director of The Business Council in Washington, D.C. since July 2013. Previously, she was executive vice president of public policy for the American Hotel & Lodging Association from September 2005 to June 2013, where she provided guidance on regulatory matters. From September 2003 to June 2005, she served in the White House as special assistant to President George W. Bush in the Office of Domestic Policy. In this role, she developed labor, transportation and postal reform policies and advised the president and his staff on related matters. Earlier, Ms. Colucci served as deputy assistant secretary with the U.S. Department of Labor's Office of Congressional and Intergovernmental Affairs. Her law career includes more than 12 years with the firm of Akin Gump Strauss Hauer & Feld LLP, where she served as senior counsel. She holds a juris doctorate degree from the Georgetown University Law Center.
     
Board Committees:

Member of Compensation Committee

Member of Acquisition Committee


Other Public Company Boards:  None
     
Ms. Colucci brings to the Board:

Significant experience with public policy development, including labor and transportation policy, from over two decades of relevant government and private sector experience; and

Meaningful perspectives on matters of corporate governance and business operations from her tenure leading the premier association of chief executive officers of the world's most important business enterprises.

    

    

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AnnaMaria DeSalva   Director since 2017

Age:  51

 

Vice Chairman since 2019

Ms. DeSalva has served as a director of the company since September 19, 2017, and vice chairman of the Board since February 7, 2019. She has served as global chairman and chief executive officer of Hill+Knowlton Strategies since June 2019. Prior to that, Ms. DeSalva served as chief communications officer of E.I. du Pont de Nemours & Co. (DuPont) from March 2014 to January 2018, then as senior advisor to the CEO of DowDuPont. Previously, she served as vice president of corporate affairs for biopharmaceutical innovation at Pfizer; was an advisor to the U.S. Food and Drug Administration; and led the global healthcare practice of Hill & Knowlton. For Bristol-Myers Squibb, she led global public affairs for the oncology business and served as the director of the Bristol-Myers Squibb Foundation. Ms. DeSalva serves on the board of governors of Argonne National Laboratory of the U.S. Department of Energy and is a member of its compensation and nominating committees; as well as the boards of directors of the non-profit Project Sunshine and the William & Mary Alumni Association. She is a graduate of The College of William & Mary in Williamsburg, Virginia; and has completed the Harvard School of Public Health's executive education program in risk communication, and the Advanced Health Leadership Program jointly offered by the University of California at Berkeley and Pompeu University in Barcelona, Spain.
     
Board Committees:

Chairman of Nominating and Corporate Governance Committee


Other Public Company Boards:  None
     
Ms. DeSalva brings to the Board:

Global perspective as the chief executive officer of a multinational organization serving clients across almost every sector of the world economy; and

Significant experience in corporate affairs, regulatory affairs and corporate social responsibility, having previously served in senior leadership roles at several public companies.

Michael G. Jesselson   Director since 2011

Age:  68

 

Lead Independent Director since 2016

Mr. Jesselson has served as director of the company since September 2, 2011, and as lead independent director since March 20, 2016. He has been president and chief executive officer of Jesselson Capital Corporation since 1994. Mr. Jesselson served as a director of American Eagle Outfitters, Inc. (NYSE: AEO) from November 1997 to May 2017, most recently as its lead independent director. Prior to that, he worked at Philipp Brothers, a division of Engelhard Industries from 1972 to 1981, then at Salomon Brothers Inc. in the financial trading sector. He is a director of C-III Capital Partners LLC, Clarity Capital and other private companies, as well as numerous philanthropic organizations. Mr. Jesselson also serves as the chairman of Bar Ilan University in Israel. He attended New York University School of Engineering.
     
Board Committees:

Member of Audit Committee

Member of Compensation Committee

Member of Nominating and Corporate Governance Committee


Other Public Company Boards:  None
     
Mr. Jesselson brings to the Board:

Significant experience with public company corporate governance issues through prior service on the board of directors of American Eagle Outfitters, including as its lead independent director; and

Extensive investment expertise.

    

    

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Adrian P. Kingshott   Director since 2011

Age:  60

 

 

Mr. Kingshott has served as a director of the company since September 2, 2011. He has served as the chief executive officer of AdSon, LLC since October 2005, managing director of Spotlight Advisors, LLC since September 2015 and a member of the board of directors of Centre Lane Investment Corp. since May 2011. Mr. Kingshott was a senior advisor to Headwaters Merchant Bank from 2013 until June 2018. Previously, with Goldman Sachs, he was co-head of the firm's Global Leveraged Finance business and held other positions over a 17-year tenure. More recently, Mr. Kingshott was a managing director and portfolio manager at Amaranth Advisors, LLC. He is an adjunct professor of Global Capital Markets and Investments at Fordham University's Gabelli School of Business. He holds a master's degree in business administration from Harvard Business School and a master of jurisprudence degree from Oxford University.
     
Board Committees:

Chairman of Acquisition Committee


Other Public Company Boards:  None
     
Mr. Kingshott brings to the Board:

More than 25 years of experience in the investment banking and investment management industries; and

Expertise with respect to corporate governance, acquisition transactions, debt and equity financing and corporate financial management issues.

Jason D. Papastavrou, Ph.D.   Director since 2011

Age:  57

 

 

Dr. Papastavrou has served as a director of the company since September 2, 2011. He founded ARIS Capital Management, LLC in 2004 and serves as its chief investment officer. Previously, Dr. Papastavrou was the founder and managing director of the Fund of Hedge Funds Strategies Group of Banc of America Capital Management (BACAP), president of BACAP Alternative Advisors, and a senior portfolio manager with Deutsche Asset Management. He was a tenured professor at Purdue University School of Industrial Engineering and holds a doctorate in electrical engineering and computer science from the Massachusetts Institute of Technology. Dr. Papastavrou serves on the board of directors of United Rentals, Inc. (NYSE: URI).
     
Board Committees:

Chairman of Compensation Committee

Member of Audit Committee

Member of Nominating and Corporate Governance Committee


Other Public Company Boards:  United Rentals, Inc. (since 2005)
     
Dr. Papastavrou brings to the Board:

Financial expertise related to his qualifications as an "audit committee financial expert" under SEC regulations; and

Extensive experience with finance and risk-related matters, from holding senior positions at investment management firms.

    

    

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Oren G. Shaffer   Director since 2011

Age:  77

 

 

Mr. Shaffer has served as a director of the company since September 2, 2011. From 2002 to 2007, Mr. Shaffer was vice chairman and chief financial officer of Qwest Communications International, Inc. (now CenturyLink, Inc.). Previously, Mr. Shaffer was president and chief operating officer of Sorrento Networks, Inc., executive vice president and chief financial officer of Ameritech Corporation, and held senior executive positions with The Goodyear Tire & Rubber Company, where he also served on the board of directors. Additionally, Mr. Shaffer served as a director on the board of Terex Corporation from 2007 until May 2019. He holds a master's degree in management from the Sloan School of Management, Massachusetts Institute of Technology, and a degree in finance and business administration from the University of California, Berkeley.
     
Board Committees:

Chairman of Audit Committee


Other Public Company Boards:  Terex Corporation (since 2007)
     
Mr. Shaffer brings to the Board:

Senior financial, operational and strategic experience with various large companies;

Corporate governance expertise from serving as director of various public companies; and

Financial expertise related to his qualifications as an "audit committee financial expert" under SEC regulations.

    

    

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SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES

GRAPHIC

    

    

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ROLE OF THE BOARD AND BOARD LEADERSHIP STRUCTURE

Our business and affairs are managed under the direction of our Board of Directors, which is our company's ultimate decision-making body, except with respect to those matters reserved to our stockholders. Our Board's primary responsibility is to seek to maximize long-term stockholder value. Our Board establishes our overall corporate policies, selects and evaluates our senior management team, which is charged with the conduct of our business, monitors the performance of our company and management, and provides advice and counsel to management. In fulfilling the Board's responsibilities, our directors have full access to our management, internal and external auditors and outside advisors.

Furthermore, our Board of Directors is committed to independent Board oversight. Our current Board leadership structure includes an executive chairman as well as a lead independent director and an independent vice chairman. The positions of chairman of the Board and chief executive officer are both currently held by Mr. Jacobs. Our Board believes that this combination of roles is appropriate because the structure enables decisive leadership and ensures clear accountability in the context of strong Board practices and a Board culture that facilitates independent oversight. On January 15, 2020, Mr. Jacobs underscored the company's commitment to maximize shareholder value when XPO announced that the Board had authorized a review of strategic alternatives, including the possible sale or spin-off of one or more of XPO's business units. The strategic alternatives review demonstrates the agility with which our executive chairman can focus on creating value for shareholders, while remaining intensely committed to the satisfaction of our customers and employees. However, on March 20, 2020, in light of market conditions resulting from the impact of the COVID-19 pandemic, XPO terminated the strategic review process. Our Board believes the dual roles function well for our company based on our current strategy, governance and ownership structure.

To assist our Board to further strengthen its independent decision-making, our Board of Directors has approved a set of Corporate Governance Guidelines (the "Guidelines"), which provide that the independent directors may appoint a lead independent director who presides over executive sessions of the independent directors, and who shall serve a term of at least one year. On March 20, 2016, the independent directors appointed Mr. Jesselson to serve as lead independent director. The position of lead independent director has been structured to serve as an effective balance to the dual roles served by Mr. Jacobs. The lead independent director presides at all meetings of the Board of Directors at which the chairman is not present and presides at all executive sessions of the independent directors. The Guidelines require that the independent directors meet at least once a year without members of management present, and the lead independent director is empowered to call additional meetings of the independent directors as necessary. In practice, in 2019, our independent directors met in executive sessions much more frequently. The lead independent director also serves as a liaison between the chairman and the independent directors. Together with the chairman, the lead independent director develops and approves Board meeting agendas, meeting schedules and meeting materials to be distributed to our Board of Directors in order to assure sufficient time for informed discussion of issues. The lead independent director is also available to meet with significant stockholders as appropriate and required.

In addition, on February 7, 2019, the Board established an independent vice chairman position as part of its ongoing commitment to strong corporate governance. The position of vice chairman is defined as an independent director with authorities and duties that include, among others: (i) presiding at meetings of the Board where the chairman and lead independent director are not present; (ii) assisting the chairman, when appropriate, in carrying out his or her duties; (iii) assisting the lead independent director, when appropriate, in carrying out his or her duties; and (iv) such other duties, responsibilities and assistance as the Board or the chairman may determine. Ms. DeSalva was appointed to serve as vice chairman on February 7, 2019, to provide support on key governance matters and stockholder engagement to the chairman, lead independent director and the Board.

Further information regarding the positions of lead independent director and vice chairman is set forth in the Guidelines. The Guidelines are available on the company's corporate website at www.xpo.com under the Investors tab.

Our Board of Directors held 17 meetings during 2019. In 2019, each person currently serving as a director attended at least 88% of the meetings of our Board of Directors and any Board committee on which he or she served. In addition, our Board of Directors acted three times during 2019 via unanimous written consent.

Our directors are expected to attend the annual meeting. Any director who is unable to attend the annual meeting is expected to notify the chairman of the Board in advance of the annual meeting. Seven of our then eight directors serving and standing for re-election attended the 2019 annual meeting of stockholders. Marlene M. Colucci, who was appointed to the Board on February 7, 2019, notified the chairman of the Board in advance that she was unable to attend the 2019 annual meeting due to a prior business commitment.

BOARD RISK OVERSIGHT

Our Board of Directors provides overall risk oversight, with a focus on the most significant risks facing our company. In addition, the Board is responsible for ensuring that appropriate crisis management and business continuity plans are in place. The management of risks to our business, and the execution of contingency plans, are primarily the responsibility of our senior management team.

    

    

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Our Board and senior management team regularly discuss the company's business strategy, operations, policies, controls, prospects, and current and potential risks. These discussions include approaches for assessing, monitoring, mitigating and controlling risk exposure. The Board has delegated responsibility for the oversight of specific risks special committees as follows:

Audit Committee. The Audit Committee oversees the policies that govern the process by which our exposure to risk is assessed and managed by management. In that role, the Audit Committee discusses with our management major financial risk exposures and the steps that management has taken to monitor and control these exposures. The Audit Committee also is responsible for reviewing risks arising from related party transactions involving our company and for overseeing our company-wide Code of Business Ethics and overall compliance with legal and regulatory requirements.

Compensation Committee. The Compensation Committee monitors the risks associated with our compensation philosophy and programs to ensure that the company has a compensation structure that strikes an appropriate balance in motivating our senior executives to deliver long-term results for the company's stockholders, while simultaneously holding our senior leadership team accountable.

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee oversees risks related to our governance structure and processes.

Acquisition Committee. The Acquisition Committee oversees risks related to the execution of our acquisition strategy.

To navigate the evolving COVID-19 pandemic, we have assembled a cross-disciplinary crisis management team that includes all of our executive officers. This team oversees the management of COVID-19 risks to the health and safety of our employees, which is paramount, and to our business operations and financial condition. Board members receive frequent updates from the crisis management team at formal Board meetings and through informal direct participation in crisis management team meetings. Among other topics, these updates cover such matters as the measures we are taking to address the risk of transmission of COVID-19 among our employees and the wider communities in which we operate as well as communications with our employees, customers and other stakeholders to share information on our response to the pandemic.

In addition, the Board periodically holds special sessions to evaluate topical trends identified as significant risks or items of strategic interest, such as human resources management, information technology and cyber security. The Board is committed to ensuring that our company has the resources and infrastructure necessary to appropriately address all significant risks.

COMMITTEES OF THE BOARD AND COMMITTEE MEMBERSHIP

Our Board of Directors has established four separately designated standing committees to assist the Board in discharging its responsibilities: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, and the Acquisition Committee. Our Board of Directors may eliminate or create additional committees as it deems appropriate. Each of our Board committees have written charters that comply with applicable SEC rules and the NYSE Listed Company Manual. These charters are available at www.xpo.com. You may obtain a printed copy of any of these charters, without charge, by sending a request to: Secretary, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

The Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are composed entirely of independent directors within all applicable standards (as further discussed below). Our Board of Directors' general policy is to review and approve committee assignments annually. The Nominating and Corporate Governance Committee is responsible, after consultation with our chairman of the Board and consideration of appropriate member qualifications, to recommend to our Board of Directors all committee assignments, including designations of the chairmen. Each committee is authorized to retain, in each committee's sole authority, its own outside counsel and other advisors at the company's expense as it desires. Also, each committee may form and delegate authority to subcommittees when appropriate.

The following table sets forth the membership of each of our Board committees as of the Record Date. Mr. Jacobs and Mr. Aris Kekedjian do not serve on any Board committees.

Name

Audit Committee Compensation Committee Nominating and Corporate Governance Committee Acquisition Committee

Gena L. Ashe

Marlene M. Colucci

   

AnnaMaria DeSalva

C

Michael G. Jesselson

 

Adrian P. Kingshott

C

Jason D. Papastavrou*

C

Oren G. Shaffer*

C

C = Committee chairman

= Committee member

  * = Audit Committee Financial Expert

    

    

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A brief summary of the committees' responsibilities follows:

Audit Committee. Our Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to assist our Board of Directors in fulfilling its responsibilities in a number of areas, including, without limitation, oversight of: (i) our accounting and financial reporting processes, including our systems of internal controls and disclosure controls, (ii) the integrity of our financial statements, (iii) our compliance with legal and regulatory requirements, (iv) the qualifications and independence of our independent registered public accounting firm, (v) the performance of our independent registered public accounting firm and internal audit function and (vi) related party transactions. Each member of the Audit Committee satisfies all applicable independence standards, has not participated in the preparation of our financial statements at any time during the past three years, and is able to read and understand fundamental financial statements. From January 1, 2019 to March 13, 2019, the Audit Committee was comprised of the following three directors: Mr. Shaffer (chairman), Mr. Kingshott and Dr. Papastavrou. On March 13, 2019, Mr. Kingshott stepped down as a member of the Audit Committee and Ms. Ashe and Mr. Jesselson were appointed as members of the Audit Committee. The Audit Committee met eight times during 2019. Our Board of Directors has determined that Mr. Shaffer and Dr. Papastavrou each qualify as an "audit committee financial expert" as defined under Item 407(d)(5) of Regulation S-K under the Exchange Act.

Compensation Committee. The primary responsibilities of the Compensation Committee are, among other things: (i) to oversee the administration of our compensation programs, (ii) to review and approve the compensation of our executive management, (iii) to review company contributions to qualified and non-qualified plans, (iv) to prepare any report on executive compensation required by SEC rules and regulations, and (v) retain independent compensation consultants and oversee the work of such consultants. The Compensation Committee met eight times during 2019 and, in addition, acted once via unanimous written consent to deliberate on a range of matters relating to compensation, including:

Certification of goal attainment for performance-based stock unit awards (PSUs)

Director and executive compensation benchmarking, compared to market levels of pay

Trends in executive pay practices and relevant developments within the regulatory landscape

Executive compensation decision frameworks and strategies for cash and long-term incentive compensation

Thresholds, targets and/or maximum values related to cash compensation

Risk assessment of incentive compensation plans

Employee engagement survey outcomes and action plans

NEO performance evaluations with respect to financial and non-financial goals and expectations

Approval of compensation decisions for directors and executive officers, including changes in cash incentives and equity awards for relevant executives

Evaluation of share utilization (i.e., burn rate and dilution) in our employee equity plan

Compliance with executive stock ownership guidelines

Material changes in benefit plans across the company

Cash bonus accruals for employees in XPO's annual incentive plan, based on financial performance of each business

Participation in XPO's employee stock purchase program

Review and certification of compensation advisor independence

Inclusion of the compensation, discussion and analysis disclosure in the company's annual proxy statement

From January 1, 2019 to March 13, 2019, the Compensation Committee was comprised of the following three directors: Mr. Kingshott (chairman), Mr. Jesselson and Dr. Papastavrou. On March 13, 2019, Ms. Colucci was appointed as a member of the Compensation Committee. On April 17, 2020, Mr. Kingshott stepped down from the Compensation Committee and Dr. Papastavrou was appointed the chairman of the committee.

Nominating and Corporate Governance Committee. The primary responsibilities of the Nominating and Corporate Governance Committee are, among other things: (i) to identify individuals qualified to become Board members and recommend that our Board of Directors select such individuals to be presented for stockholder consideration at the annual meeting or to be appointed by the Board of Directors to fill a vacancy, (ii) to make recommendations to our Board of Directors concerning committee appointments, (iii) to develop, recommend to our Board of Directors and annually review the Guidelines and oversee corporate governance matters, and (iv) to oversee an annual evaluation of our Board of Directors and committees. During 2019, the Nominating and Corporate Governance Committee was comprised of the following three directors: Ms. DeSalva (chairman), Mr. Jesselson and Dr. Papastavrou. The Nominating and Corporate Governance Committee met three times during 2019.

    

    

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Acquisition Committee. The Acquisition Committee is responsible for reviewing and approving acquisition, divestiture and related transactions proposed by our management in which the total consideration to be paid or received by us, for any particular transaction, does not exceed the limits that may be established by our Board of Directors from time to time. From January 1, 2019 to March 13, 2019, the Acquisition Committee was comprised of the following three directors: Dr. Papastavrou (chairman), Ms. Ashe and Mr. Kingshott. On March 13, 2019, Ms. Colucci was appointed as a member of the Acquisition Committee. On April 17, 2020, Dr. Papastavrou stepped down from the Acquisition Committee and Mr. Kingshott was appointed the chairman of the committee. The Acquisition Committee did not meet during 2019.

DIRECTOR COMPENSATION

The following table sets forth information concerning the compensation of each person who served as a non-employee director of our company during 2019.

2019 Director Compensation Table(1)

Name
Fees Earned or
Paid in Cash(2) ($)

Stock Awards(3)
($)

Option Awards
($)

Total
($)

Gena L. Ashe(4)

$ 75,000 $ 187,305 $ 262,305

Marlene Colucci(5)



$

67,292


$

157,350


$

224,642

AnnaMaria DeSalva(6)



$

112,431




$

187,305







$

299,736

Michael G. Jesselson(7)



$

100,000


$

187,305


$

287,305

Aris Kekedjian(8)



$

17,292




$

40,493







$

57,785

Adrian P. Kingshott(9)



$

90,000


$

187,305


$

277,305

Jason D. Papastavrou(10)



$

90,000




$

187,305







$

277,305

Oren G. Shaffer(11)



$

100,000


$

187,305


$

287,305
(1)
Compensation information for Mr. Jacobs, who is a NEO of our company, is disclosed in this Proxy Statement under the heading "Executive Compensation—Compensation Tables." Mr. Jacobs did not receive additional compensation for his service as a director.

(2)
The amounts reflected in this column represent the fees earned by the directors for their service during 2019. Because the fees are paid in arrears and fourth quarter payments are received during the following calendar year, fees earned more accurately represent the compensation received by our directors.

(3)
The amounts reflected in this column represent the grant date fair value of the awards made in 2019, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification 718 "Compensation—Stock Compensation" ("ASC 718"). For further discussion of the assumptions used in the calculation of the grant date fair value, please see "Notes to Consolidated Financial Statements—Note 15. Stock-Based Compensation" of our company's Annual Report on Form 10-K for the year ended December 31, 2019. The values reported in this column represent 3,249 restricted stock units ("RSUs") granted to each of the directors serving on January 2, 2019. Ms. Colucci, who became a director on February 7, 2019, received a prorated award of 2,637 RSUs on such date, and Mr. Kekedjian, who became a director on October 10, 2019, received a prorated award of 570 RSUs on such date. All of these awards vested on January 2, 2020. Each director serving on January 2, 2020 received an award of 2,392 RSUs on such date for service as a director in 2020; these awards shall vest on January 4, 2021 and are not reflected in the table above.

(4)
As of December 31, 2019, Ms. Ashe held 12,006 RSUs. Does not include €59,000 of fees paid to Ms. Ashe for her service as vice-chairman of the Supervisory Board of XPO Logistics S.A., our majority-owned subsidiary.

(5)
Ms. Colucci became a director on February 7, 2019 and received a prorated cash payment of $11,042 for her service during the first quarter of 2019. As of December 31, 2019, Ms. Colucci held 2,637 RSUs. As of the Record Date, Ms. Colucci beneficially owns a total of 2,637 shares of our common stock as disclosed in this proxy statement under the heading "Security Ownership of Certain Beneficial Owners and Management."

(6)
Ms. DeSalva was appointed vice chairman of the board on February 7, 2019 and received a prorated cash payment of $3,681 for such service during the first quarter of 2019. As of December 31, 2019, Ms. DeSalva held 3,249 RSUs. As of the Record Date, Ms. DeSalva beneficially owns a total of 2,881 shares of our common stock as disclosed in this proxy statement under the heading "Security Ownership of Certain Beneficial Owners and Management."

(7)
As of December 31, 2019, Mr. Jesselson held 24,000 stock options and 9,290 RSUs. As of the Record Date, Mr. Jesselson beneficially owns a total of 351,013 shares of our common stock as disclosed in this proxy statement under the heading "Security Ownership of Certain Beneficial Owners and Management."

(8)
Mr. Kekedjian became a director on October 10, 2019 and received a prorated cash payment of $17,292 for his service during the fourth quarter of 2019. As of December 31, 2019, Mr. Kekedjian held 570 RSUs. As of the Record Date, Mr. Kekedjian beneficially owns a total of 570 shares of our common stock as disclosed in this proxy statement under the heading "Security Ownership of Certain Beneficial Owners and Management."

(9)
As of December 31, 2019, Mr. Kingshott held 24,000 stock options and 20,048 RSUs. As of the Record Date, Mr. Kingshott beneficially owns a total of 137,262 shares of our common stock as disclosed in this proxy statement under the heading "Security Ownership of Certain Beneficial Owners and Management."

(10)
As of December 31, 2019, Dr. Papastavrou held 24,000 stock options and 22,548 RSUs. As of the Record Date, Dr. Papastavrou beneficially owns a total of 246,137 shares of our common stock as disclosed in this proxy statement under the heading "Security Ownership of Certain Beneficial Owners and Management."

(11)
As of December 31, 2019, Mr. Shaffer held 24,000 stock options and 25,048 RSUs. As of the Record Date, Mr. Shaffer beneficially owns a total of 70,048 shares of our common stock as disclosed in this proxy statement under the heading "Security Ownership of Certain Beneficial Owners and Management."

    

    

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The compensation of our directors is subject to the approval of our Board of Directors, which is based, in part, on the review and recommendation of the Compensation Committee. Directors who are employees of our company do not receive additional compensation for service as members of either our Board of Directors or its committees.

For service during calendar years 2017, 2018 and 2019, our non-employee directors received an annual cash retainer of $75,000, payable quarterly in arrears, and time-based RSUs ("Time-Based RSUs") worth $175,000. The annual grant of such Time-Based RSUs was made on the first business day of each year (the "RSU Grant Date") and the number of such units was determined by dividing $175,000 by the average of the closing prices of the company's common stock on the ten trading days immediately preceding the RSU Grant Date. The grant vested on the first anniversary of the RSU Grant Date. The lead independent director also received an additional $25,000 annual cash retainer, payable quarterly in arrears. Under the non-employee director annual compensation program, the chairmen of our Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Acquisition Committee each received an additional cash retainer of $25,000, $15,000, $15,000 and $15,000, respectively, payable quarterly in arrears. On February 7, 2019, the company's Board of Directors established the position of vice chairman of the Board, who received a prorated portion of an additional $25,000 annual cash retainer, payable quarterly in arrears.

On December 11, 2019, the Board of Directors, acting upon the recommendation of the Compensation Committee and in consultation with its independent compensation consultant, Semler Brossy Consulting Group, LLC ("Semler Brossy"), approved and adopted a revised non-employee director annual compensation program for the calendar year 2020 and subsequent years. Effective January 1, 2020, our non-employee directors receive an annual cash retainer of $80,000, payable quarterly in arrears, and time-based RSUs ("Time-Based RSUs") worth $190,000. The annual grant of such Time-Based RSUs is made on the first business day of each year (the "RSU Grant Date") and the number of such units is determined by dividing $190,000 by the average of the closing prices of the company's common stock on the ten trading days immediately preceding the RSU Grant Date. The grant vests on the first business day of the following calendar year. The vice chairman of the Board receives an additional $25,000 annual cash retainer, payable quarterly in arrears. The lead independent director also receives an additional $25,000 annual cash retainer, payable quarterly in arrears. The chairmen of our Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Acquisition Committee each receive an additional cash retainer of $25,000, $20,000, $20,000 and $15,000, respectively, payable quarterly in arrears.

No other fees are paid to our directors for their attendance at or participation in meetings of our Board or its committees. We also reimburse our directors for expenses incurred in the performance of their duties, including reimbursement for air travel and hotel expenses.

In 2016, our Board adopted a stock ownership policy establishing guidelines and stock retention requirements that apply to our non-employee directors and executive officers. Non-employee directors are subject to a stock ownership guideline of six (6) times the annual cash retainer. To determine compliance with these guidelines, generally, common shares held directly or indirectly, and unvested restricted stock units subject solely to time-based vesting, count towards meeting the stock ownership guidelines. Stock options, whether vested or unvested, and equity-based awards subject to performance-based vesting conditions, are not counted towards meeting the stock ownership guidelines until they have settled or been exercised, as applicable. Until the guidelines are met, 70% of shares received upon settlement of equity-based awards are required to be retained by the director. Under the policy, a newly-appointed director is required to reach the required ownership level no later than three years from the date of his or her appointment. As of the Record Date, five of our non-employee directors were in compliance with our stock ownership policy. Ms. DeSalva, who joined the board in 2018, and Ms. Colucci, who joined the board in 2019, are expected to reach the ownership level by the third anniversary of their respective appointment dates.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

From January 1, 2019 to March 13, 2019, the Compensation Committee was comprised of the following three directors: Mr. Kingshott (chairman), Mr. Jesselson and Dr. Papastavrou. On March 13, 2019, Ms. Colucci was appointed as a member of the Compensation Committee. On April 17, 2020, Mr. Kingshott stepped down and Dr. Papastavrou replaced him as chairman of the Compensation Committee. None of the members of our Compensation Committee has been an officer or employee of our company. During 2019, there were no material transactions between the company and the members of the Compensation Committee, and none of our executive officers served as a member of the compensation committee, or the board of directors, of any entity that has one or more executive officers serving on our Compensation Committee or on our Board of Directors.

CORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS ETHICS

Our Board of Directors is committed to sound corporate governance principles and practices. Our Board adopted the Guidelines on January 16, 2012, and most recently adopted amendments to the Guidelines on February 7, 2019, to establish the position of vice chairman. The vice chairman of the Board provides support on key governance matters and stockholder engagement to the chairman, lead independent director and the Board.

The Guidelines serve as a framework within which our Board of Directors conducts its operations. Among other things, the Guidelines include criteria for determining the qualifications and independence of the members of our Board, requirements for the standing committees of our Board, responsibilities for members of our Board, and an annual evaluation of the

    

    

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effectiveness of our Board and its committees. The Nominating and Corporate Governance Committee is responsible for reviewing the Guidelines annually, or more frequently as appropriate, and recommending to our Board appropriate changes in light of applicable laws and regulations, the governance standards identified by leading governance authorities, and our company's evolving needs.

We have a Code of Business Ethics that applies to our directors and executive officers. This code is designed to deter wrongdoing, to promote the honest and ethical conduct of all employees and to promote compliance with applicable governmental laws, rules and regulations, as well as to provide clear channels for reporting concerns. The Code of Business Ethics constitutes a "code of ethics" as defined in Item 406(b) of Regulation S-K. We intend to satisfy the disclosure requirements under applicable SEC rules relating to amendments to the Code of Business Ethics or waivers from any provision thereof applicable to our principal executive officer, our principal financial officer and principal accounting officer by posting such information on our website pursuant to SEC rules.

The Guidelines and our Code of Business Ethics are available on our website at www.xpo.com. In addition, you may obtain a printed copy of these documents, without charge, by sending a request to: Secretary, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

DIRECTOR INDEPENDENCE

Under the Guidelines, our Board of Directors is responsible for making independence determinations annually with the assistance of the Nominating and Corporate Governance Committee. Such independence determinations are made by reference to the independence standard under the Guidelines and the definition of "independent director" under Section 303A.02 of the NYSE Listed Company Manual. Our Board of Directors has affirmatively determined that each person who served as a director during any part of 2019, except Mr. Jacobs, our chairman of the Board and chief executive officer, satisfies the independence standards under the Guidelines and the NYSE Listed Company Manual.

In addition to the independence standards provided in the Guidelines, our Board of Directors has determined that each director who serves on our Audit Committee satisfies standards established by the SEC providing that, in order to qualify as "independent" for the purposes of membership on that committee, members of audit committees may not: (1) accept directly or indirectly any consulting, advisory or other compensatory fee from our company other than their director compensation, or (2) be an affiliated person of our company or any of its subsidiaries. Our Board of Directors has also determined that each member of the Compensation Committee satisfies the NYSE standards for independence of Compensation Committee members, which became effective on July 1, 2013. Additionally, our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee satisfies the NYSE standards for independence. In making the independence determinations for each director, our Board of Directors and the Nominating and Corporate Governance Committee analyzed certain relationships of the directors that were not required to be disclosed pursuant to Item 404(a) of Regulation S-K. For Ms. Colucci, those relationships included ordinary course commercial transactions between our company and the entity for which Ms. Colucci serves as an executive. For Dr. Papastavrou, those relationships included ordinary course commercial transactions between our company and an entity for which Dr. Papastavrou is a director.

DIRECTOR SELECTION PROCESS

The Nominating and Corporate Governance Committee is responsible for recommending to our Board of Directors all nominees for election to the Board, including nominees for re-election to the Board, in each case, after consultation with the chairman of the Board and in accordance with our company's contractual obligations. Pursuant to the Investment Agreement, JPE has had and may in the future have the contractual right based on its securities ownership, as described above under "Directors," to designate for nomination by our Board of Directors a certain percentage of the members of our Board of Directors. Subject to the foregoing, in considering new nominees for election to our Board, the Nominating and Corporate Governance Committee considers, among other things, breadth of experience, financial expertise, wisdom, integrity, an ability to make independent analytical inquiries, an understanding of our company's business environment, knowledge and experience in such areas as technology and marketing, and other disciplines relevant to our company's businesses, the nominee's ownership interest in our company, and a willingness and ability to devote adequate time to Board duties, all in the context of the needs of the Board at that point in time and with the objective of ensuring diversity in the background, experience, and viewpoints of Board members. When searching for new directors, our Board endeavors to actively seek out highly qualified women and individuals from underrepresented minorities to include in the pool from which Board nominees are chosen. Our Board aims to create a team of directors with diverse experiences and perspectives to provide our complex, global company with thoughtful and engaged board oversight. The Nominating and Corporate Governance Committee assesses the effectiveness of its diversity efforts through periodic evaluations of the Board's composition.

Subject to the contractual rights granted to JPE pursuant to the Investment Agreement, the Nominating and Corporate Governance Committee may identify potential nominees for election to our Board of Directors from a variety of sources, including recommendations from current directors or management, recommendations from our stockholders or any other source the committee deems appropriate, including engaging a third party consulting firm to assist in identifying independent director nominees.

    

    

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Our Board of Directors will consider nominees submitted by our stockholders, subject to the same factors that are brought to bear when it considers nominees referred by other sources. Our stockholders can nominate candidates for election as directors by following the procedures set forth in our bylaws, which are summarized below. We did not receive any director nominees from our stockholders for the 2020 Annual Meeting.

Our bylaws require that a stockholder who wishes to nominate an individual for election as a director at our annual meeting must give us advance written notice. The notice must be delivered to or mailed and received by the secretary of our company not less than 90 days, and not more than 180 days, prior to the earlier of the date of the annual meeting and the first anniversary of the preceding year's annual meeting. As more specifically provided in our bylaws, any nomination must include: (i) the nominator's name and address and the number of shares of each class of our capital stock that the nominator owns, (ii) the name and address of any person with whom the nominator is acting in concert and the number of shares of each class of our capital stock that any such person owns, (iii) the information with respect to each such proposed director nominee that would be required to be provided in a proxy statement prepared in accordance with applicable SEC rules, and (iv) the consent of the proposed candidate to serve as a member of our Board.

Any stockholder who wishes to nominate a potential director candidate must follow the specific requirements set forth in our bylaws, a copy of which may be obtained by sending a request to: Secretary, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

HUMAN RESOURCE MANAGEMENT

Our culture at XPO is about being safe, respectful, entrepreneurial, innovative and inclusive. In response to the evolving COVID-19 pandemic situation, XPO management, in coordination with and under the oversight of our Board of Directors, has moved quickly to deploy comprehensive operating protocols that prioritize employee safety while meeting the company's responsibilities as a designated provider of essential infrastructure services. Among the numerous protocols put in place:

XPO employees worldwide are working remotely if able to do so. For employees who need to work on site, the company follows the guidance of the World Health Organization (WHO), the US Centers for Disease Control (CDC) and its own health and safety protocols.

XPO has added Pandemic Paid Sick Leave to its US and Canadian benefits packages, giving affected full-time employees up to two work weeks (80 hours) of additional sick leave in addition to standard annual paid time off.

XPO continues to cover the cost of COVID-19 testing and provide access to free tele-medicine through a virtual clinic with a 24/7 nurse hotline for medical concerns, for all medical plan participants. These free services complement the company's other US healthcare benefits.

Employees globally are guaranteed up to three days of 100% pay continuation if a facility is closed temporarily for deep cleaning. These paid days are in addition to XPO's Pandemic Paid Sick Leave and standard paid time off. Third-party specialists in COVID-19 deep cleaning ensure that each site is disinfected.

The company automatically grants workplace accommodations for pregnant employees under the terms of its progressive Pregnancy Care Policy and continues to make alternate work arrangements for employees when medically advisable.

XPO has made free counseling sessions available to all US employees and their dependents during the crisis through its Employee Assistance Program (EAP). EAP formerly required that an employee be enrolled in an XPO healthcare plan to receive this mental health service.

XPO has introduced online programs in seven languages to help employees manage change during the pandemic. These include video sessions on health and safety, stress management and working remotely, as well as information on special policies in effect.

Social distancing guidelines are in effect in all XPO workplaces. Where possible, sites have erected barriers between workstations and use demarcations on floors to limit contact between employees. Visitors are restricted from accessing XPO offices and field locations.

Employees must affirm their health status before beginning a shift, stay home if they are ill and be tested if they believe they have been exposed to COVID-19.

Site management, senior team members and human resources staff participate in meetings prior to the start of each shift to emphasize social distancing and the importance of leaving work immediately if feeling sick. These policies are reinforced by signs posted throughout the facilities.

XPO's drivers and transportation contractors perform no-contact deliveries whenever possible, using digital image verification as proof of delivery and managing capacity on the company's digital freight platform.

XPO has arranged for additional cleaning measures inside its workplaces and provides personal protective equipment (PPE) and sanitization supplies to employees, with procurement measures in place to monitor inventory levels.

    

    

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XPO has created a dedicated COVID-19 portal where employees can access safety information, company policies, preventative measures and benefits information online.

XPO management and the Board of Directors are committed to maintaining XPO's superior work environment. Our efforts in human resource management focus on enhancing the robust training of our workforce, improving management capabilities and harmonizing best practices across our global operations. Our management team and Board of Directors work together in a transparent manner, allowing for open communication, including with respect to human resource-related matters. Our directors have access to all information about our human resource management operations and plans, and our chief human resources officer is invited to attend and speak at the meetings of our Board of Directors when appropriate. Our directors also have opportunities to attend and participate in executive leadership meetings with our mid-level and senior-level operating executives. We aim to integrate our human resources functions with our operational objectives.

BOARD OVERSIGHT OF SUSTAINABILITY MATTERS

Our approach to sustainability—and all areas of our business—is one of purpose-driven progress rooted in innovation. We work to promote environmental, social and organizational sustainability through the decisions we make and our interactions with colleagues, customers, suppliers and other stakeholders.

We believe that sustainability is essential to our company's long-term viability. It is good business and the right thing to do. It fosters equitable workplaces for our employees, both now and in the future. It is also important to many of our stakeholders who want to do business with partners who participate in the transition to a low-carbon economy.

We are pleased to have published our 2019 Sustainability Report detailing our objectives and progress in the areas of environmental sustainability, social initiatives and governance performance. Our 2019 Sustainability Report is available at www.xpo.com.

Sustainability features prominently in the deliberations among our directors and informs their overall approach to risk oversight at the Company. In addition, members of the Board have reviewed the contents of our 2019 Sustainability Report and have provided feedback to the Company.

STOCKHOLDER COMMUNICATION WITH THE BOARD

Stockholders and parties interested in communicating with our Board of Directors, any Board committee, any individual director, including our lead independent director, or any group of directors (such as our independent directors) should send written correspondence to: Board of Directors c/o Secretary, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831. Please note that we will not forward communications to the Board that qualify as spam, junk mail, mass mailings, resumes or other forms of job inquiries, surveys, business solicitations or advertisements.

STOCKHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING

Stockholder proposals intended to be presented at our 2021 annual meeting of stockholders must be received by our Secretary no later than December 21, 2020, to be considered for inclusion in our proxy materials, pursuant to Rule 14a-8 under the Exchange Act.

As more specifically provided for in our bylaws, no business may be brought before an annual meeting of our stockholders unless it is specified in the notice of the annual meeting or is otherwise brought before the annual meeting by or at the direction of our Board of Directors or by a stockholder entitled to vote and who has delivered proper notice to us not less than 90 days, and not more than 180 days, prior to the earlier of the date of the annual meeting and the first anniversary of the preceding year's annual meeting. Accordingly, assuming that our 2021 annual meeting of stockholders is held on or after May 14, 2021, for example, any stockholder proposal to be considered at the 2021 annual meeting, including nominations of persons for election to our Board of Directors, must be properly submitted to us not earlier than November 15, 2020, nor later than February 13, 2021.

Detailed information for submitting stockholder proposals or nominations of director candidates will be provided upon written request to: Secretary, XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

    

    

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CERTAIN RELATIONSHIPS AND
RELATED PARTY TRANSACTIONS
   

Under its written charter, the Audit Committee of our Board of Directors is responsible for reviewing and approving or ratifying any transaction between our company and a related person (as defined in Item 404 of Regulation S-K) that is required to be disclosed under the rules and regulations of the SEC. Our management is responsible for bringing any such transaction to the attention of the Audit Committee. In approving or rejecting any such transaction, the Audit Committee considers the relevant facts and circumstances, including the material terms of the transaction, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director's independence.

Since January 1, 2019, we have not been a participant in any transaction or series of similar transactions in which the amount exceeded or will exceed $120,000 and in which any current director, executive officer, holder of more than 5% of our capital stock, or any member of the immediate family of the foregoing, had or will have a material interest, except for the transactions previously disclosed in this Proxy Statement.

    

    

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information concerning the beneficial ownership of our voting securities as of the Record Date by: (i) each person who is known by us, based solely on a review of public filings, to be the beneficial owner of more than 5% of any class of our outstanding voting securities, (ii) each director, (iii) each NEO, and (iv) all executive officers and directors as a group. None of the foregoing persons beneficially owned any shares of equity securities of our subsidiaries as of the Record Date.

Under applicable SEC rules, a person is deemed to be the "beneficial owner" of a voting security if such person has (or shares) either investment power or voting power over such security or has (or shares) the right to acquire such security within 60 days by any of a number of means, including upon the exercise of options or warrants or the conversion of convertible securities. A beneficial owner's percentage ownership is determined by assuming that options, warrants and convertible securities that are held by the beneficial owner, but not those held by any other person, and which are exercisable or convertible within 60 days, have been exercised or converted. Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all voting securities shown as being owned by them. Unless otherwise indicated, the address of each beneficial owner in the table below is care of XPO Logistics, Inc., Five American Lane, Greenwich, Connecticut 06831.

Name of Beneficial Owner
  Shares of
Common Stock
Beneficially Owned

  Percentage of
Common Stock
Outstanding(1)

  Shares of Series A
Preferred Stock
Beneficially Owned(2)

  Percentage of
Series A Preferred
Stock Outstanding

 
Beneficial Ownership of 5% or more:                  
Jacobs Private Equity, LLC     19,285,714  (3)   17.5  %   67,500     94.9  %
Orbis Investment Management Limited(4)
Orbis House, 25 Front Street
Hamilton Bermuda HM11


 
18,735,423   20.6  %    
BlackRock, Inc.(5)
55 East 52nd street
New York, NY 10055
    9,245,119     10.1  %        
The Spruce House Partnership LLC(6)
435 Hudson Street, 8th Floor,
New York, NY 10014


 
9,090,601   10.0  %    
The Vanguard Group(7)
100 Vanguard Blvd.,
Malvern, PA 19355
    8,536,007     9.4  %        
Directors:                  
Gena L. Ashe     12,006  (8)   *          
Marlene M. Colucci   2,637   *      
AnnaMaria DeSalva     6,130  (9)   *          
Michael G. Jesselson   351,013  (10) *   725  (11) 1.0  %
Aris Kekedjian     570     *          
Adrian P. Kingshott   137,262  (12) *   300   *  
Jason D. Papastavrou     246,137  (13)   *     650  (14)   *  
Oren G. Shaffer   70,048  (15) *      
NEOs:                          
Bradley S. Jacobs+   19,799,601  (16) 17.9  % 67,500   94.9  %
Troy A. Cooper     178,396  (17)   *          
Sarah J.S. Glickman   4,793  (18) *      
Mario A. Harik     220,163  (19)   *          
David B. Wyshner   1  (20) *      
Current Directors and
Executive Officers as a Group: (13 People)
    21,028,758  (21)   18.9  %   69,175     97.3  %
*
Less than 1%

+
Director and Executive Officer

    

    

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(1)
For purposes of this column, the number of shares of the class outstanding reflects the sum of: (i) 91,105,728 shares of our common stock that were outstanding as of the Record Date, (ii) the number of shares of our common stock into which the outstanding shares of our preferred stock held by the relevant person, if any, were convertible on the Record Date, (iii) the number of shares of our common stock, if any, which the relevant person could acquire on exercise of options or warrants within 60 days of the Record Date, and (iv) the number of RSUs, if any, held by the relevant person that are or will become vested within 60 days of the Record Date.

(2)
Each share of our Series A Preferred Stock that was outstanding on the Record Date has an initial liquidation preference of $1,000 per share and is convertible into approximately 143 shares of our common stock at an effective conversion price of $7.00 per share of our common stock. Our Series A Preferred Stock votes together as a single class with our common stock on an as-converted basis, except with respect to certain matters that impact the rights of holders of our Series A Preferred Stock, in which case our Series A Preferred Stock votes separately as a single class. As of the Record Date, there were 71,110 shares of preferred stock outstanding.

(3)
Consists of 9,642,857 shares of our common stock issuable upon conversion of 67,500 shares of our Series A Preferred Stock, and 9,642,857 shares of our common stock issuable upon the exercise of 9,642,857 warrants at an exercise price of $7.00 per share of common stock. Mr. Jacobs has indirect beneficial ownership of the shares of our common stock and our Series A Preferred Stock beneficially owned by JPE as a result of being its managing member. In addition, Mr. Jacobs beneficially owns 263,887 shares of our common stock held directly following the vesting of equity incentive awards and 250,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date. See footnote(16) below.

(4)
Based on Amendment No. 7 to the Schedule 13G filed on February 18, 2020 by Orbis Investment Management Limited ("OIML"), Orbis Investment Management (U.S.), L.P. ("OIMUS") and Allan Gray Australia Pty Ltd ("AGAPL"), which reported that, as of December 31, 2019, OIML beneficially owned 18,570,951 shares of our common stock, OIMUS beneficially owned 156,137 shares of our common stock, and AGAPL beneficially owned 8,335 shares of our common stock. The group has sole voting and sole dispositive power over such shares of our common stock.

(5)
Based on Amendment No. 1 to the Schedule 13G filed on February 4, 2020 by BlackRock, Inc., which reported that, as of December 31, 2019, BlackRock, Inc. beneficially owned 9,245,119 shares of our common stock, with sole voting power over 8,623,015 shares of our common stock and sole dispositive power over 9,245,119 shares of our common stock.

(6)
Based on Form 4 filed on April 1, 2020 by The Spruce House Partnership LLC, (the "Aggregator"), its sole members being The Spruce House Partnership (AI) LP (f/k/a The Spruce House Partnership LP) and The Spruce House Partnership (QP) LP (collectively, the "Funds)", each a private investment fund managed by Spruce House Investment Management LLC (the "Investment Manager"). The reported shares of our common stock may be deemed to be beneficially owned by the Investment Manager, the general partner of the Funds, Spruce House Capital LLC (the "General Partner"), and by Zachary Sternberg and Benjamin Stein, managing members of the Investment Manager and the General Partner (the "Managing Members"). Each of the Funds, the Investment Manager, the General Partner and the Managing Members disclaim beneficial ownership of our common stock held by the Aggregator, except to the extent of his or its pecuniary interest therein. The Aggregator, the Funds, the Investment Manager, the General Partner and the Managing Members (collectively, the "Reporting Persons") affirmatively disclaim being a "group" for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(7)
Based on Amendment No. 5 to the Schedule 13G filed on February 12, 2020 by The Vanguard Group, which reported that, as of December 31, 2019, The Vanguard Group beneficially owned 8,536,007 shares of our common stock with sole voting power over 73,037 shares of our common stock, shared voting power over 28,243 shares of our common stock, sole dispositive power over 8,442,640 shares of our common stock and shared dispositive power over 93,367 shares of our common stock.

(8)
Consists of 12,006 RSUs that are or will become vested within 60 days of the Record Date.

(9)
Includes 3,249 RSUs that are or will become vested within 60 days of the Record Date.

(10)
Includes: (i) 15,000 shares of our common stock held in an individual retirement account of Michael G. Jesselson, (ii) 10,000 shares of our common stock owned by Mr. Jesselson's spouse, (iii) 12,000 shares of our common stock beneficially owned by the SJJ Irrevocable Trust, of which Mr. Jesselson is a trustee, (iv) 12,000 shares of our common stock beneficially owned by the RAJ Irrevocable Trust, of which Mr. Jesselson is a trustee, (v) 12,000 shares of our common stock beneficially owned by the JJJ Irrevocable Trust, of which Mr. Jesselson is a trustee, (vi) 10,000 shares of our common stock beneficially owned by Michael G. Jesselson and Linda Jesselson, Trustees UID 6/30/93 FBO Maya Ariel Ruth Jesselson, (vii) 103,570 shares of our common stock issuable upon conversion of 725 shares of our Series A Preferred Stock, which shares of our Series A Preferred Stock are beneficially owned by the Michael G. Jesselson 12/18/80 Trust and the Michael G. Jesselson 4/8/71 Trust, of which trusts Mr. Jesselson is the beneficiary, (viii) 103,572 shares of our common stock issuable upon the exercise of 103,572 warrants at an exercise price of $7.00 per share of our common stock, which warrants are beneficially owned by the Michael G. Jesselson 12/18/80 Trust and the Michael G. Jesselson 4/8/71 Trust, of which trusts Mr. Jesselson is the beneficiary, (ix) 21,322 shares of our common stock issuable upon the exercise of 21,322 warrants at an exercise price of $7.00 per share of our common stock, which warrants are beneficially owned by Michael G. Jesselson and Linda Jesselson, Trustees UID 6/30/93 FBO Maya Ariel Ruth Jesselson, (x) 24,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date, and (xi) 6,041 RSUs that are or will become vested within 60 days of the Record Date.

(11)
See clause (vii) of footnote(10).

(12)
Includes: (i) 42,857 shares of our common stock issuable upon conversion of 300 shares of our Series A Preferred Stock, (ii) 42,857 shares of our common stock issuable upon the exercise of 42,857 warrants at an exercise price of $7.00 per share of our common stock, (iii) 24,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable on within 60 days of the Record Date, and (iv) 20,048 RSUs that are or will become vested within 60 days of the Record Date.

(13)
Includes: (i) 92,857 shares of our common stock issuable upon conversion of 650 shares of our Series A Preferred Stock, which shares of Series A Preferred Stock are beneficially owned by Springer Wealth Management LLC, of which Dr. Papastavrou is the owner of 100% of the equity securities, (ii) 92,857 shares of our common stock issuable upon the exercise of 92,857 warrants at an exercise price of $7.00 per share of our common stock, which warrants are beneficially owned by Springer Wealth Management LLC, of which Dr. Papastavrou is the owner of 100% of the equity securities, (iii) 24,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date, and (iv) 19,299 RSUs that are or will become vested within 60 days of the Record Date.

(14)
See clause (i) of footnote(13).

(15)
Includes: (i) 8,500 shares of our common stock issuable upon the exercise of 8,500 warrants at an exercise price of $7.00 per share of common stock, (ii) 24,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date, and (iii) 25,048 RSUs that are or will become vested within 60 days of the Record Date.

    

    

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(16)
Mr. Jacobs has indirect beneficial ownership of the shares of our common stock and our Series A Preferred Stock beneficially owned by JPE as a result of being its managing member. See footnote(3). Also includes 263,887 shares of our common stock held directly by Mr. Jacobs following the vesting of equity incentive awards and 250,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date.

(17)
Includes: (i) 10,000 shares of our common stock issuable upon the exercise of 10,000 warrants at an exercise price of $7.00 per share of common stock, and (ii) 25,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date.

(18)
Includes 2,842 RSUs that are or will become vested within 60 days of the Record Date.

(19)
Includes 135,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date.

(20)
Mr. Wyshner became the Chief Financial Officer of the company on March 2, 2020.

(21)
Includes: (i) 9,882,142 shares of our common stock issuable upon conversion of 69,175 shares of our preferred stock, (ii) 9,921,965 shares of our common stock issuable upon the exercise of 9,921,965 warrants at an exercise price of $7.00 per share of our common stock, (iii) 506,000 shares of our common stock issuable upon the exercise of options that are or will become exercisable within 60 days of the Record Date, and (iv) 88,533 RSUs that are or will become vested within 60 days of the Record Date.

    

    

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EXECUTIVE COMPENSATION  

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes XPO's executive compensation program for 2019. The Compensation Committee of our Board of Directors (the "Committee") oversees our executive compensation program and practices. In this section, we explain how and why the Committee made its 2019 compensation decisions for the following named executive officers ("NEOs"):

NEO
2019 ROLE
Bradley S. Jacobs   Chairman and Chief Executive Officer
Troy A. Cooper   President
Mario A. Harik   Chief Information Officer
Sarah J.S. Glickman   Acting Chief Financial Officer
(served as Acting Chief Financial Officer until March 2, 2020)
Kenneth R. Wagers III   Chief Operating Officer and Interim President,
Less-Than-Truckload — North America (served until March 11, 2019)

2019 COMPANY PERFORMANCE HIGHLIGHTS

Overview

In 2019, our NEOs navigated the company through a weaker backdrop for our industry, driving a 24% increase in GAAP diluted earnings per share from the prior year. This gain reflects a significant increase in operating income from $704 million in 2018, to $821 million in 2019, and accretion from approximately $1.9 billion of disciplined share repurchases.

Additional highlights for full-year 2019 include:

$4.03 of adjusted diluted EPS*, an increase of 26% over 2018;

$1.67 billion of adjusted EBITDA*, a company record;

$791 million of net cash provided by operating activities;

$628 million of free cash flow*;

$377 million in cash and over $700 million of availability under our asset-based lending ("ABL") facility;

Headcount of approximately 100,000 employees globally; and

An absolute five-year total stockholder return ("TSR") of 95% as of December 31, 2019, well above the corresponding TSRs of the S&P 400 MidCap (54%) and Dow Jones Transportation Average (28%).

Despite an industrial recession in the US, declining growth in Europe and our largest customer substantially downsizing its business portfolio with us starting in the first quarter of 2019, XPO's TSR for 2019 was 40%, reflecting our NEOs' exemplary leadership in the face of significant challenges. This capped a decade in which XPO was the 7th best-performing stock among Fortune 500 companies.

Our NEOs have complementary strengths specific to XPO's growth strategy and competitive positioning. Our company is a leading global provider of supply chain services with an integrated network of people, technology and physical assets. We have three main drivers of value creation: critical scale, including leading positions in key service lines; impactful technology, particularly as it relates to improving revenue and margins; and deep expertise that delivers benefits for our customers.

In August 2019, our NEOs led the successful launch of 10 company-specific profit improvement initiatives that, in aggregate, represent a total pool of $700 million to $1 billion of potential profit growth opportunity by 2022. The single most important driver of these initiatives is our technology. Our technology investment in 2019 was approximately $550 million, among the highest in the industry. We have the ability to deploy our proprietary technology across service lines within our business segments, and in some cases across segments, to realize widespread efficiencies in our operations. XPO Connect™, our digital freight marketplace, has automated shipper-carrier interactions across transportation modes, including our brokerage, intermodal, last mile and managed transportation services. WMx, our cutting-edge logistics platform, integrates advanced automation on the cloud, while our XPO Smart™ productivity tools have applications in both transportation and logistics.

Importantly, our NEOs and our Board are deeply committed to our culture, which emphasizes safety, innovation, inclusiveness, an entrepreneurial spirit and respect for our planet and for each other. In 2019, the first full year of our enhanced Pregnancy Care Policy, over 600 of our employees received 1,135 accommodations, including more than 34,000 hours of prenatal paid leave. In addition, over 1,200 US employees took advantage of our paid family bonding policy, and 1,555 member-practitioner interactions were arranged through the no-cost supplemental health services we introduced. These supplemental services are delivered via a virtual clinic and provider network that covers over 20 different specialties in healthcare and family planning.

   

*
See Annex A for reconciliation of this non-GAAP measure

    

    

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Due in large part to the leadership of our NEOs, XPO is in a strong position to explore every opportunity to maximize stockholder value. Our NEOs are managing the business efficiently and profitably, with a steadfast focus on results for XPO stakeholders. This is a major reason why nearly 70% of Fortune 100 companies used XPO for supply chain solutions in 2019.

Focus on Profit Growth and Prudent Capital Allocation

In 2019, the company delivered 26% year-over-year growth in adjusted diluted earnings per share* and 7% growth in adjusted EBITDA*. Free cash flow* generation performed in line with our 2019 financial plan, and exceeded the midpoint of our 2019 guidance range by $3 million. The company also executed a stock repurchase program from December 14, 2018 through December 31, 2019 that was accretive to adjusted EPS by $0.37 for 2019. Key financial data are summarized below (dollars in millions, except per-share data).

GRAPHIC

*  See Annex A for reconciliation of this non-GAAP measure

Delivering Significant Total Stockholder Return (TSR)

The primary focus of our company's leadership team is to deliver meaningful value to our stockholders and other stakeholders through the execution of our strategy. Our steadfast commitment to long-term value creation, operational excellence and disciplined capital allocation have resulted in consistent outperformance of our total stockholder return relative to comparative indices, as illustrated below.

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Note: TSR calculations reflect the relevant trading price of XPO common stock and that of the relevant indices as of the last trading day of calendar years 2019, 2018, 2017, 2016, 2015 and 2014, as supplied by Research Data Group. The graph above is not the annual performance graph required by Item 201(e) of Regulation S-K; the required graph can be found in Part II,

    

    

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Item 5 of our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 10, 2020.

Our Commitment to Stockholder Value Creation and Alignment with Pay-for-Performance

On September 2, 2011, Bradley Jacobs began leading XPO as chief executive officer. Under Mr. Jacobs' strong leadership, for its first eight fiscal years combined (2012-2019), the company increased stockholder value by $7.2 billion, as represented by the change in XPO's equity market capitalization from December 31, 2011 through December 31, 2019. Mr. Jacobs' average annual realized pay from 2012 to 2019 was $9.9 million per year. Cumulatively, this equates to 1.1% of the total value created for stockholders during the eight-year period.

Realized pay represents the compensation actually received by our executives in a given year and is calculated as the sum of: (i) salary paid; (ii) bonus(es) related to the performance year; and (iii) the value of long-term incentive compensation that vested in the year, calculated based on the closing stock price on the date(s) the award(s) vested. No stock options were exercised during the period of 2012 to 2019; if stock options had been exercised, these amounts would have been included in realized pay calculations. The realized pay measure, utilized consistently, allows our stockholders to assess whether the actual value of the compensation received by our CEO and other executive officers is rightsized relative to stockholders' return on investment in the company over time.

The Committee's pay-for-performance philosophy has always focused on rewarding our executives for performance that creates substantial, long-term value for our stockholders. In determining the framework for performance-based awards, the Committee typically selects high-growth stretch goals for key operational indicators that extend beyond annual targets, and that vest on a long-term basis once the goals are entirely achieved. Our executives are not rewarded with a multiple of shares for exceeding targets, nor do they receive a threshold amount if they underdeliver. They also do not receive any portion of the award for meeting only some but not all goals required to earn the award. Instead, the amount of the award is typically representative of the hurdles inherent in achieving aspirational goals over a long period of time, and provides motivation for our executives to align their interests with the interests of our stockholders.

Over time, our financial and operational results have demonstrated the merits of this philosophy for our stakeholders. From 2012 to 2019, our leadership has consistently delivered on operational goals and strategic initiatives, resulting in growth of over $400 million of net income and close to $1.7 billion of adjusted EBITDA*. Moreover, our leadership has maintained a flexible and highly liquid balance sheet. We generated free cash flow* in excess of $600 million in each of 2018 and 2019. We ended 2019 with $377 million in cash and over $700 million of availability under our ABL facility. We have no significant debt maturities until 2022. Additionally, headcount has grown from approximately 200 employees as of December 31, 2011 to approximately 100,000 employees as of December 31, 2019, reflecting the significant surge of employment opportunities at XPO.

In further alignment with our stockholders, beneficial ownership as of the Record Date for Mr. Jacobs was 17.9%. In addition, as executive officers at XPO, Mr. Jacobs, Mr. Cooper and Mr. Harik have not sold any shares from vested equity and have not exercised any stock options. Furthermore, all vested awards for Mr. Jacobs, Mr. Cooper and Mr. Harik are subject to lock-up restrictions prohibiting the sale of shares or exercise of options until September 2, 2020.

* See Annex A for reconciliation of this non-GAAP measure

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Note: Market capitalization calculations reflect the relevant trading price of XPO common stock as of the last trading day of the calendar years 2011 and 2019, as sourced from Bloomberg.

    

    

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2019 KEY EXECUTIVE COMPENSATION ACTIONS

The Committee met eight times during 2019 to discuss executive compensation and other items pursuant to its charter. In addition to the regular responsibilities of the Committee, all members of the Board were invited to attend internal quarterly operating review meetings with business unit management that included in-depth reviews of the company's financial results, as well as discussions about operational execution, sales, customer service, technology initiatives, process innovation, human capital management, safety, the market landscape and business growth trajectories. These meetings also included a review of key performance indicators tracking the company's achievement of financial and non-financial objectives for each business line. Multiple Committee members attended these three-day review sessions throughout the year in order to remain well informed of the company's financial and operational performance.

The Committee authorized several executive compensation actions in 2019, and in the early part of 2020, based upon: (i) evaluation of the company's progress towards the business unit operational and financial goals for each quarter and the full-year 2019; (ii) assessment of the company's long-term organic and inorganic growth outlook and stockholder value creation opportunities; (iii) review of competitive rates of pay for executives; and (iv) the Committee's specified responsibilities, pursuant to its charter. In summary, the highlights of the key decisions made by the Committee in 2019 and 2020 to date are as follows:

 
 
 
 
 
  February 2019  

Certified the attainment of the $5.38 adjusted cash flow per share goal relating to the third tranche of the February 2016 award of phantom stock (i.e.,  cash-settled) for Mr. Jacobs, Mr. Cooper and Mr. Harik. While the performance goal was meaningfully exceeded, this third tranche paid out at target as there is no additional upside for exceeding the target.

 
  June 2019  

Awarded performance stock units (PSUs) that can be earned only upon achievement of adjusted EPS and relative TSR goals that cliff vest over a performance period of six years, with intentionally challenging growth targets that are attainable with particularly strong performance. The award is earned by achieving two targets by year-end 2024: (i) exceeding the S&P Transportation Select Industry Index by 34% (CAGR of 500 bps), and (ii) achieving adjusted earnings per share of $9.08 (CAGR of 19% relative to 2018 adjusted EPS).

As with all prior PSUs, the June 2019 award:

o

Uses a "hit or miss" construct that keeps executives focused on the company's comprehensive strategy for value creation: both performance goals must be achieved for the PSUs to be earned; if either one or both goals are not attained by December 31, 2024, the entire award (100% of PSUs) is forfeited; and

o

Has no threshold level of payment for below-target performance and no additional upside for exceeding the targets.

Increased annual base salary amounts for Mr. Jacobs, Mr. Cooper and Mr. Harik, and raised bonus target percentages for Mr. Jacobs, Mr. Cooper, Mr. Harik and Ms. Glickman, to align their cash compensation with competitive levels in the market for companies of similar revenue scale. Prior to the 2019 increases, Mr. Jacobs, Mr. Cooper and Mr. Harik had not received annual salary or target bonus increases since the inception of their employment agreements in February 2016.

 
  February 2020  

Certified the attainment of the $6.39 adjusted cash flow per share goal relating to the fourth and final tranche of the February 2016 award of phantom stock for Mr. Jacobs, Mr. Cooper and Mr. Harik. While the performance goal was meaningfully exceeded, this fourth tranche paid out at target as there is no additional upside for exceeding the target.

 
  March 2020  

Determined that no short-term cash incentive ("STI") would be paid to any of the NEOs for performance year 2019 in light of the Committee's evaluation of the total reward amounts already granted or earned for the year, which included consideration of:

o

The PSU awards previously granted in June 2019;

o

The meaningful amount realized from the final tranche of the February 2016 award of phantom stock that settled in February 2020 (for Mr. Jacobs, Mr. Cooper and Mr. Harik);

o

The additional income generated (relative to the prior year) from an increase in base salary, effective June 2019, for Mr. Jacobs, Mr. Cooper and Mr. Harik; and

o

The below-target average bonus payout for XPO corporate employees, due to the miss on adjusted EBITDA versus the mid-year revised guidance and financial plan. While our NEOs are part of the overall corporate employee bonus pool with respect to STI payouts, the Committee felt that with the factors above taken into account, no additional short-term payout consideration was warranted for our top executives.

 

Taken together, these actions demonstrate the Committee's focus on rewarding our executives for delivering long-term performance that creates substantial appreciation in value for our stockholders. Moreover, 100% of long-term incentive compensation for Mr. Jacobs, Mr. Cooper and Mr. Harik over the past two years has been awarded in the form of PSUs with high-growth stretch goals, and all equity-based compensation for Mr. Jacobs, Mr. Cooper and Mr. Harik is restricted from sale

    

    

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until September 2, 2020. This alignment of management's objectives with our stockholders' interests is critically important. The Committee believes that forward-looking compensation incentives are instrumental in motivating executives to balance short-term and long-term initiatives for competitive differentiation, market share gains, and revenue and margin expansion.

NEO Transitions

The company completed three executive officer transitions in 2019 and early 2020:

Kenneth Wagers' employment was terminated effective March 11, 2019 and the chief operating officer role was eliminated, as discussed in detail in last year's proxy statement.

David Wyshner was hired as chief financial officer on March 2, 2020, from Wyndham Hotels & Resorts, Inc.

Sarah Glickman stepped down from her position as acting chief financial officer on March 2, 2020, to assume the role of senior vice president, corporate finance and transformation.

Result of Stockholder Advisory Vote and Stockholder Outreach

We believe that strong corporate governance should include year-round engagement with stockholders, and we recognize the value of engaging in constructive dialogue with stockholders on business strategy, corporate governance, our executive compensation program, sustainability reporting initiatives and other critical matters. This allows us to better understand stockholders' views and interests, solicit their feedback and share our perspective on these important subjects.

In addition to our formal outreach related to the stockholder advisory vote on compensation, our investor relations team and chief strategy officer engage extensively with our stockholders throughout the year; often together with our CEO. This engagement includes regular dialogue immediately following our quarterly earnings calls, participation at investor conferences and other channels of communication.

With respect to executive compensation and governance, the stockholder advisory vote we conduct on an annual basis places a significant emphasis on garnering feedback from our key stockholders. While the vote is not binding on the company, its Board or the Committee, we believe that it is important for our stockholders to express their opinions by voting on our executive compensation structure and planned actions each year, which are disclosed in our proxy statement.

At the 2019 annual meeting, 67.1% of the votes cast on our advisory vote on executive compensation were in favor of our NEO compensation program. We were disappointed by the percentage of negative votes, even though the advisory vote obtained majority support. The Committee's goal is to continue to make responsive changes to our executive compensation programs and proxy disclosures on executive pay, while maintaining the emphasis on performance-based compensation opportunities that align with high growth and returns.

During our last set of engagement sessions in 2019, we proactively reached out to institutional investors representing approximately 20% of our common stock, ultimately engaging in dialogue with stockholders representing 15% of our common stock. Our Board's vice chairman was present for the majority of these conversations.

    

    

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The table below provides an overview of the key feedback received from our stockholders relevant to our executive compensation program, as well as the actions we took in response. Feedback received from stockholders is shared with the Committee and serves as input in its decision-making process.

 
   
   
Feedback
  Committee Actions

Stockholders appreciated the increased disclosure provided on the Committee's compensation decision-making process and choice of metrics, and our general engagement and responsiveness to stockholder feedback in the past year.

     

Over the past several years, we have enhanced our CD&A disclosure to explain, in further detail, the Committee's decision-making process for performance award constructs and performance metrics. For 2020, we have continued to include incremental disclosures focused specifically on explaining the Committee's rationale with respect to the timing of each of our recent equity award grants for NEOs.

Stockholders inquired about the performance goals and metrics considered for both long-term and short-term incentive compensation, with a focus on the ambitious high-growth goals underlying the August 2018 PSU award.

     

The Committee created a revised PSU award construct in June 2019 in response to stockholder commentary that the August 2018 PSU award goal might not be attainable (and, therefore, not meaningful to executives) based on existing market conditions. This followed an ongoing industrial recession in the US and declining growth in Europe during 2019, as well as the loss of a substantial part of the business of our largest customer.

The new June 2019 PSU award was predicated on the latest company financial plans, which reflected continued weakness in our markets and the decision of our largest customer to downsize its business portfolio with XPO starting in the first quarter of 2019.

Stockholders suggested introducing a relative performance measure.

     

The June 2019 PSU award includes a relative market-based measure in the underlying performance goals. A detailed discussion of the June 2019 grant can be found under the heading "June 2019 High-Growth Incentive Award: Cliff 2019-2024 PSUs."

Stockholders requested greater clarity on the timing and cadence of grants of long-term awards, which are more periodic and irregular in comparison to conventional practices for public companies.

     

A new section entitled "Execution of XPO Company Strategy — Effect on Timing of Grants of Equity Awards", added below, details the Committee's perspective that incentive compensation reviews and grants of equity-based compensation should be considered at critical inflection points in the execution of the company's strategy and performance, rather than on a regular, pre-defined basis.

In addition to executive compensation, our discussions with stockholders covered XPO's business strategy, capital allocation priorities — such as our share repurchase program initiated in late 2018 — and the Board's role in overseeing the execution of company strategy. We also discussed governance topics, including our Board structure and, specifically, the Board's rationale for creating the lead independent director and vice chairman roles. Stockholders appreciated the Board's focus on diversity and discussed our proactive policy of Board refreshment. Finally, sustainability was another area of focus, with stockholders expressing appreciation for the release of XPO's inaugural Sustainability Report, highlighting its comprehensive overview of XPO's safety culture and agility in evolving benefits programs and workplace policies to meet employees' needs and sharing suggestions for its further development in future.

    

    

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Execution of XPO Company Strategy — Effect on Timing of Grants of Equity Awards

The timing of grants of equity awards to our executive officers is not determined annually or on a predefined basis. Rather, the Committee considers such grants at critical inflection points in the execution of the company's strategy; this affords the Committee year-to-year flexibility in motivating our NEOs to achieve strategic priorities, as summarized below.

LOGO

    

    

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OUR COMPENSATION PHILOSOPHY AND EXECUTIVE COMPENSATION PROGRAM OBJECTIVES

XPO's executive compensation philosophy is founded on the following core objectives:

Attract high-impact, results-oriented executives in a competitive job market, who will contribute to XPO's goal of maximizing stockholder value.

Maintain executive focus on the company's top priorities of profitable growth, innovation, operational excellence, customer satisfaction and employee safety and engagement.

Ensure that each executive receives total compensation that encourages his or her long-term retention in a competitive job market.

Reward exceptional levels of performance with commensurate levels of compensation.

Align the interests of our executives with those of our stockholders by emphasizing high growth and high returns in our long-term, performance-based incentives.

OUR EXECUTIVE COMPENSATION GOVERNANCE FRAMEWORK

The company has adopted a compensation governance framework that includes the components described below, each of which the Committee believes reinforces the company's executive compensation philosophy and objectives.

WHAT WE DO
  WHAT WE DON'T DO
LOGO  Significant emphasis on variable compensation. Our executive compensation program is heavily weighted toward variable compensation, including long-term incentives that are primarily performance-based, and annual short-term cash incentives. This allows the Committee to closely align total compensation values with both company and individual performance on an annual and long-term basis.   LOGO  No exceptional perquisites. Our NEOs have no guaranteed bonuses, relocation benefits or supplemental pension or retirement savings beyond what is provided broadly to all XPO employees. In addition, our NEOs have no perquisites such as personal use of company aircraft, executive health services, club memberships, stipends or financial planning services.
LOGO  Substantial portion of compensation subject to creation of stockholder value. Performance-based awards are, and have been, subject to meaningful stock price and/or earnings-related performance goals measured over service-based vesting periods. All outstanding equity awards for Mr. Jacobs, Mr. Cooper and Mr. Harik are performance-based. The Committee also continually reviews the full portfolio of XPO stockholdings for each NEO to ensure there is a sufficient amount of compensation at risk and aligned with stockholder returns and value creation, while sustaining the NEO's focus on the company's strategic objectives.   LOGO  No pledging or hedging of company stock. Under our insider trading policy, our company's directors and executive officers, including the NEOs, are prohibited from pledging or holding company securities in a margin account without preclearance. In addition, such persons are prohibited from engaging in hedging transactions without preclearance, such as prepaid variable forwards, equity swaps, collars and exchange funds or any other transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of company equity securities.
LOGO  Stock ownership policies. The Board has adopted stock ownership guidelines and stock retention requirements that encourage the strong ownership mindset that exists among our executives.   LOGO  No guaranteed annual salary increases or bonuses. Salary increases are not guaranteed annually and are benchmarked against market data. We do not guarantee bonus payouts.
LOGO  Lock-up restrictions on equity awards. Lock-up restrictions generally prohibit the sale, for a specified period of time, of any shares of our common stock delivered pursuant to equity awards granted to NEOs by our company.   LOGO  No stock option repricing or discounted exercise price. Our company's equity incentive plan does not permit either stock option repricing without stockholder approval or stock option awards with an exercise price below fair market value.
LOGO  Clawback policy. Our NEOs are subject to clawback restrictions with respect to long-term and annual short-term incentive compensation.   LOGO  No golden parachute excise tax gross-ups. XPO does not provide golden parachute excise tax gross-ups.
LOGO  Restrictive covenants. Our NEOs are subject to comprehensive non-competition and other restrictive covenants.   LOGO  No consultant conflicts. The Committee retains an independent compensation consultant who performs services only for the Committee, as described in more detail below under the heading "Role of the Committee's Independent Compensation Consultant."

    

    

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Stock Ownership Policies

We believe that executive equity ownership in the company mitigates a number of risks, including risks related to executive retention and undue risk-taking.

Equity-based awards granted to our NEOs are generally subject to lock-up restrictions, as described in more detail below under the heading "Lock-up Restrictions on Equity Awards." We believe that the combination of executive stock ownership policies and lock-up restrictions is a highly effective way to create meaningful and enduring stock ownership levels.

Guidelines

Stock ownership guidelines are expressed as a multiple of each NEO's annual base salary:

CEO: 6x annual base salary

Other NEOs: 3x annual base salary

Compliance with our stock ownership guidelines is generally determined using the aggregate count of shares of common stock held directly or indirectly by the NEO, plus unvested restricted stock units ("RSUs") subject solely to time-based vesting. Stock options, whether vested or unvested, and equity-based awards subject to performance-based vesting conditions, are not counted toward meeting the stock ownership guidelines until they have settled or been exercised, as applicable.

Until the stock ownership guidelines are met, an executive is required to retain 70% of the net shares (after tax withholding) received upon settlement of equity-based awards. A newly appointed executive is required to reach his or her stock ownership guideline no later than three years from the date of appointment.

As of the Record Date, Mr. Jacobs, Mr. Cooper and Mr. Harik were in compliance with our stock ownership guidelines and, in particular, Mr. Jacobs exceeded the guidelines by a significant degree: his ownership as a multiple of salary was equal to 1,037. Ownership as a multiple of salary for Mr. Cooper and Mr. Harik as of the Record Date was 13 and 10, respectively. During her service as acting chief financial officer, Ms. Glickman was required to meet the guidelines no later than August 2021, three years from her appointment as acting chief financial officer. Since Ms. Glickman's transition to the role of senior vice president, corporate finance and transformation on March 2, 2020, she is no longer required to meet the guidelines.

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Lock-up Restrictions on Equity Awards

As of the Record Date, Mr. Jacobs, Mr. Cooper and Mr. Harik collectively hold approximately 465,000 shares of common stock issued as a result of the vesting of restricted stock awards, subject to lock-up restrictions through September 2, 2020.

Mr. Jacobs, Mr. Cooper and Mr. Harik also collectively hold 410,000 fully vested stock options. Shares to be issued upon the exercise of such options are also subject to lock-up restrictions through September 2, 2020.

The lock-up restrictions for Mr. Jacobs have been in place since 2011, and for Mr. Cooper and Mr. Harik since 2014. As executive officers at XPO, Mr. Jacobs, Mr. Cooper and Mr. Harik have not sold shares from vested equity and have not exercised stock options.

Shares to be issued to Ms. Glickman upon the vesting of her August 2018 PSU award, granted in recognition of her taking on the acting chief financial officer role, are subject to a lock-up of 90 days following vesting.

    

    

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Clawback Policy

Our NEOs are subject to clawback restrictions with respect to long-term and annual short-term incentive compensation. The Committee is focused on mitigating risk associated with the company's compensation program for NEOs and believes that clawback provisions are an important tool to achieve this.

Long-term incentive compensation

The NEO employment agreements include a clawback provision under which the NEO may be required, upon certain triggering events, to repay all or a portion of long-term incentive compensation that was previously paid (including proceeds from previously-exercised and vested equity-based awards) and to forfeit unvested equity-based awards during the term of the employment agreements. These clawback provisions are generally triggered if any of the following conditions apply — the NEO:

Has engaged in fraud or other willful misconduct that contributes materially to any significant financial restatements or material loss to our company or any of our affiliates;

Is terminated for cause, as defined in the employment agreement; or

Breaches the restrictive covenants that are applicable under the employment agreement.

Annual short-term incentive compensation

In addition, if a NEO has engaged in fraud or other willful misconduct that contributes materially to any financial restatements or material loss to the company or any of its affiliates, the company may require repayment by the NEO of any cash bonus or annual bonus previously paid (net of any taxes paid by the NEO on such bonus), and/or may cancel any earned but unpaid cash bonus or annual bonus, and/or adjust the NEO's future compensation in order to recover an appropriate amount with respect to the restated financial results or the material loss.

Additional provision

To the extent that the rules adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act are broader than the clawback provisions contained in our NEO employment agreements, and to the extent the company is required to implement a clawback policy pursuant to applicable law, the NEOs will each be subject to additional clawback provisions pursuant to such rules as described under the heading "Employment Agreements with NEOs–Clawbacks."

Compensation Structure

The general arrangement for NEO compensation at our company includes: (i) fixed base salaries; and (ii) variable incentive compensation consisting of annual cash incentives and equity awards that emphasize pay-for-performance and, in the case of equity-based awards, achievement of long-term performance goals.

The Committee chooses to weight the pay mix of our NEO compensation heavily toward variable incentive compensation, delivered primarily in the form of long-term equity awards. The Committee believes that this variability provides greater latitude in contemplating all relevant circumstances when making total reward determinations for each NEO, including: the Committee's assessment of individual responsibilities and contributions to corporate performance, the company's trend on total stockholder return, overall company success in achieving strategic goals, the company's position relative to market levels of pay, and the amount of realized and realizable pay in each NEO's compensation profile.

Role of the Committee

The Committee is responsible for approving our compensation practices and overseeing our executive compensation program in a manner consistent with our compensation philosophy. The Committee is tasked with: (i) reviewing the annual and long-term performance goals for our NEOs; (ii) approving awards under incentive compensation and equity-based plans; and (iii) approving all other compensation and benefits for our NEOs. The Committee acts independently but works closely with the full Board and executive management in making many of its decisions. To assist it in discharging its responsibilities, the Committee has retained the services of an independent compensation consultant, Semler Brossy, as discussed below.

Role of Management

Executive management provides input to the Committee, including with respect to the Committee's evaluation of executive compensation practices. In particular, our chief executive officer, Mr. Jacobs, provides recommendations for proposed compensation actions with respect to our executive team, but not with respect to his own compensation. The Committee carefully and independently reviews the recommendations of management without members of management present and consults its independent advisor, Semler Brossy, before making final determinations. We believe this process ensures that our executive compensation program effectively aligns with XPO's compensation philosophy and stockholder interests.

    

    

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Role of the Committee's Independent Compensation Consultant

The Committee directly retained Semler Brossy as its independent advisor for compensation and governance matters during 2019. Semler Brossy supported the Committee with respect to NEO compensation by: (i) reviewing 2019 compensation packages and long-term incentive awards for NEOs and other senior officers; (ii) providing analysis and guidance regarding the CEO's pay level re