XPO, Inc DEFR14A, filed Apr 20, 2023

XPO, Inc. (XPO)

DEFR14A 2023-04-20

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	PROXY STATEMENT SUMMARY			1
	BOARD OF DIRECTORS AND CORPORATE GOVERNANCE			12
	An Overview of Our Mission and How Our Board Composition is Aligned with Our Strategy			12
	Directors			12
	Role of the Board			17
	Board Leadership Structure			17
	Board Risk Oversight			17
	Director Orientation and Continuing Education			18
	Committees of the Board and Committee Membership			18
	Director Compensation			20
	Compensation Committee Interlocks and Insider Participation			21
	Corporate Governance Guidelines and Code of Business Ethics			21
	Director Independence			22
	Director Selection Process			22
	Board Oversight of Human Resource Management			23
	Board Oversight of Sustainability Matters			24
	Board Oversight of Information Technology and Cybersecurity Risk Management			24
	Stockholder Communication with the Board			24
	Stockholder Proposals for Next Year’s Annual Meeting			25
	CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			26
	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			27
	EXECUTIVE COMPENSATION			29
	Compensation Discussion and Analysis			30
	Compensation Committee Report			56
	Compensation Tables			57
	Employment Agreements with NEOs			67
	Equity Compensation Plan Information			70
	DELINQUENT SECTION 16(a) REPORTS			71
	AUDIT-RELATED MATTERS			72
	Audit Committee Report			72
	Policy Regarding Pre-Approval of Services Provided by the Outside Auditors			73
	Services Provided by the Outside Auditors			73
	QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING			74
	PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING			78
	Proposal 1: Election of Directors			78
	Proposal 2: Ratification of the Appointment of KPMG LLP as Our Independent Registered Public Accounting Firm for Fiscal Year 2023			79
	Proposal 3: Advisory Vote to Approve Executive Compensation			80
	Other Matters			80
	ADDITIONAL INFORMATION			81
	ANNEX A — RECONCILIATION OF NON-GAAP MEASURES AND FORWARD-LOOKING STATEMENTS			82
	ANNEX B — ESG SCORECARD — 2022 DELIVERABLES AND ACHIEVEMENTS			89

	Board Vote Recommendation	Page Reference (for more detail)
PROPOSAL 1: Election of Directors To elect nine (9) members of our Board of Directors for a term to expire at the 2024 Annual Meeting of Stockholders or until their successors are duly elected and qualified.	FOR each Director Nominee	12-25, 78
PROPOSAL 2: Ratification of the Appointment of our Independent Public Accounting Firm To ratify the appointment of KPMG LLP as the company’s independent registered public accounting firm for fiscal year 2023.	FOR	72-73, 79
PROPOSAL 3: Advisory Vote to Approve Executive Compensation To conduct an advisory vote to approve the executive compensation of the company’s named executive officers (“NEOs”) as disclosed in this Proxy Statement.	FOR	80

	Board and Committee Independence			Seven of our nine directors are independent. The Audit Committee, the Compensation Committee and the Nominating, Corporate Governance and Sustainability Committee each consist entirely of independent directors.
	Separation of Chairman and CEO Roles			Effective November 1, 2022, upon the completion of the RXO spin-off, Mr. Jacobs, our founder who had been our chairman and CEO since 2011, became our executive chairman, and Mr. Harik became our CEO. Our Board determined that splitting the chairman and CEO roles would be in the best interests of the company and our stockholders in order to facilitate a smooth CEO transition.
	Independent Board Oversight and Leadership Roles			We are committed to independent Board oversight. Alongside our executive chairman, our Board leadership structure includes a lead independent director and an independent vice chair. Our lead independent director is responsible for, among other duties, coordinating with the chairman with respect to meeting agendas, and calling and chairing sessions of the independent directors. Our vice chair is responsible for assisting the lead independent director in carrying out his duties and acting on his behalf when he is not present. The Board believes its leadership structure, as well as the leadership structure of the company, function cohesively and serve the best interests of our stockholders.
	Board Refreshment			Our Board is committed to ensuring that its composition includes a range of expertise aligned with the company’s business, as well as fresh perspectives on strategy. One of the ways the Board acts on this commitment is through the thoughtful refreshment of directors when appropriate. Upon the RXO spin-off, the composition of the Board changed to align more closely to the company’s business and strategy. Three directors stepped down from the Board, five directors including Mr. Jacobs remained on the board, and three new directors including Mr. Harik, our CEO, joined the Board. In March 2023, the Board appointed an additional new director. Each new director brings valuable experience and perspectives to the Board.
	Committee Rotations			As part of its annual review of committee assignments, the Board reconstitutes its committees and their chairs as needed to support the evolving needs of the company. Most recently, the company’s committees were reconstituted in November 2022 upon the completion of the RXO spin-off.
	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 reviews committee and director performance 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 by engaging in regular deliberations and participating in management meetings. Our Audit Committee contributes to strong financial reporting oversight through regular meetings with management and dialogue with our auditors.
	Active Board Participation			Our Board held ten meetings during 2022. Each person currently serving as a director, except Mr. Wes Frye who was elected a director on March 8, 2023, attended at least 90% of the meetings of the Board and any committee(s) on which he or she served during the time he or she served on the Board or committee(s).
	Direct Oversight of Sustainability			The Nominating, Corporate Governance and Sustainability Committee is tasked in its charter with supporting the Board in its oversight of the company’s purpose-driven sustainability strategies and external disclosures; this includes engaging with management on material ESG matters and stakeholder perspectives.
	Political Activity Disclosure and Oversight			In December 2022, the company adopted a Political Activity Policy that gives the Nominating, Corporate Governance and Sustainability Committee final approval over all political contributions by the company. The Policy also includes a commitment to publicly disclosing any political contributions by the company via a dedicated webpage that is easily accessible on the company’s website.
	Established Operational Excellence Committee			In April 2023, the company established the Operational Excellence Committee to review the company’s strategies and objectives with respect to operational excellence, including continuous improvement of quality and service, operational efficiency, cost control, occupational safety, environmental compliance, and technological innovation. The Committee also will review, with management, reports and key performance indicators relating to progress and trends in company operational excellence and achievement against the company’s strategies and objectives.

		WHAT WE HEARD FROM STOCKHOLDERS				RESPONSIVE ACTIONS
		Modifications to Outstanding Awards
		Equity Mix
		■ Stockholders generally expressed a preference for the outstanding 2020 Cash Long-Term Incentive (“LTI”) performance-based awards to incorporate an equity component, as opposed to being entirely cash-based.				■ Converted 100% of the target value of Mr. Jacobs and Mr. Harik’s final 2023 tranche of the 2020 Cash LTI performance-based awards into performance-based equity.
		Metrics
		■ Some stockholders expressed a preference to remove the adjusted cash flow per share metric in the 2020 Cash LTI performance-based awards and, in choosing new operational or financial metrics for go-forward performance-based stock unit (“PSU”) awards, to exclude gains from sales of real estate in calculating the selected measures. ■ Most stockholders continued to support the inclusion of relative metrics, such as relative total shareholder return (“TSR”), in LTI award structures.				■ Eliminated the adjusted cash flow per share metric from the final 2023 tranche of the 2020 Cash LTI performance-based awards and replaced it with a relative TSR metric to further align executive compensation with stockholder interests. ■ Operational and financial metrics used in our PSU award constructs exclude the impact of gains from real estate sales.
		Change-in-Control Provision
		■ Stockholders inquired about the Compensation Committee’s stance on moving away from a single-trigger change-in-control provision in the previously granted awards, and indicated a preference for double-trigger provisions.				■ Eliminated single-trigger change-in-control provisions from outstanding performance-based awards held by NEOs, including those converted following the RXO spin-off; double-trigger provisions have now been applied to all outstanding awards.
		Go-Forward Compensation Program Structure
		Formulaic Structure
		■ Stockholders expressed a preference for short-term incentive (“STI”) and LTI program structures to be less discretionary, more predictable and more formulaic.				■ Committed to a STI award that is purely formulaic • 2023 Annual Incentive for executive chairman, CEO and CFO based on adjusted EBITDA, with the application of a linear bonus payout curve from 50% threshold for performance at 90% of target to 200% at maximum for 120% of target ■ Adopted a formulaic LTI program with multiyear vesting periods, to be granted annually; this further reinforces a reliable, predictable incentive structure and aligns pay with performance • For executive chairman and CEO 80% of the award opportunity in the form of performance-based RSUs and 20% as time-based RSUs • For CFO 65% of the award opportunity in the form of performance-based RSUs and 35% as time-based RSUs
		CEO Promotion
		■ Stockholders overall asked for XPO to continue its robust disclosure of the CEO compensation package and sought to understand the structure of the Promotion PSU award granted to Mr. Harik in connection with his transition to the CEO position after the RXO spin-off.				■ As described further in this CD&A, Mr. Harik received a promotion award at his assumption to the CEO role to recognize his contributions to date and provide a competitive compensation package commensurate with the role. The Promotion PSU award is based entirely on achieving challenging relative TSR goals over a four-year cliff period, with target paying out if XPO’s performance is at the 67th percentile relative to the S&P Midcap 400, and payout of 150% of target if performance is at the 83rd percentile ranking, with a chance to qualify for a modifier (up to a cap of 200% total payout) if XPO’s TSR further outperforms select transportation peers.
		CD&A Disclosure
		■ Stockholders requested more clear disclosure of the Compensation Committee’s considerations with respect to how it structured LTIs awarded to top executives, the reasoning behind the metrics chosen, and the level of pay granted.				■ The CD&A discloses the Compensation Committee’s considerations around changes made to executive awards, which included reevaluating the pay program’s structure in the context of stockholder feedback, and its relevance for the current company after two successive spin-offs.

		WHAT WE HEARD FROM STOCKHOLDERS				RESPONSIVE ACTIONS
		■ Stockholders requested more clarity around the Compensation Committee’s use of a 25% modifier in the STI formula and the use of an ESG Scorecard.				■ The CD&A includes a thorough description of the Compensation Committee’s go-forward approach to executive compensation, including the removal of discretionary components of the STI program and a new construct for the annual LTI awards. ■ The Compensation Committee expanded its disclosure of the initiatives embedded in the ESG scorecard by providing a view of all 43 deliverables relevant to the determination of 2022 performance achievement within the 2020 Cash LTI program, as well as the adjustments to the scorecard deemed necessary by the Compensation Committee in connection with the RXO spin-off for the final 2023 tranche of the award (now a part of a replacement PSU structure, remaining at a weighting of 25%). See Annex B entitled “ESG Scorecard — 2022 Deliverables and Achievements”.


				August 2021: ✓ XPO spun off its contract logistics business into a new publicly-traded company, GXO, positioning XPO as a more-focused transportation leader ✓ As a part of the GXO spin-off, four directors departed, and four directors were added to align our Board’s composition with XPO’s post-spin-off strategy ■ New directors included Jason Aiken, Mary Kissel, Allison Landry and Johnny C. Taylor Jr. ✓ Board committees were reconstituted upon the completion of the spin-off and as part of the Board’s annual review of Committee assignments, which included naming an entirely new Compensation Committee consisting of all newly elected directors ■ Johnny C. Taylor Jr. named new Compensation Committee chair
				March 2022: ✓ XPO divested its intermodal operation May 2022: ✓ Conducted extensive stockholder engagement with select participation from Compensation Committee members — AnnaMaria DeSalva, Allison Landry and Johnny C. Taylor Jr. — engaging with stockholders representing 55% of shares outstanding ■ Engagements focused on discussing compensation changes the Board approved and understanding stockholder feedback on the program. Engagements also included a discussion on stockholder proposals and other environmental, social and corporate governance (“ESG”) matters ✓ Held 2022 Annual Meeting


				August 2022: ✓ Announced Mario Harik as CEO to succeed Brad Jacobs once the spin-off of RXO was completed ✓ Appointed Brad Jacobs to serve as executive chairman October 2022: ✓ As a part of the planned RXO spin-off, announced three directors would depart and three directors would be added to the Board effective upon completion of the spin-off, in order to continue to align our Board’s composition with XPO’s post-spin-off strategy ■ New directors included Bella Allaire, Mario Harik and Irene Moshouris ✓ Announced strategic LTL growth plan at XPO’s Investor Day, including plan to achieve 11-13% adjusted EBITDA CAGR for six-year period 2021-2027 ✓ Initiated multi-month stockholder engagement with select participation from Compensation Committee members — Allison Landry and Johnny C. Taylor Jr. — culminating in engagement with stockholders representing 44% of shares outstanding ■ Engagements focused on understanding stockholder concerns that drove the say-on-pay vote, as well as seeking feedback related to anticipated compensation adjustments as a result of the RXO spin-off ✓ Named Carl Anderson as Chief Financial Officer (“CFO”), effective November 2022 November 2022: ✓ Completed the spin-off of RXO, our tech-enabled brokered transportation services business unit, positioning XPO as the leading pure-play LTL transportation provider in North America ✓ Refreshed Board leadership ■ Appointed Johnny C. Taylor, Jr. to serve as lead independent director ■ Appointed Allison Landry to serve as Vice Chair and Chair of the Nominating, Governance and Sustainability Committee ✓ Added Irene Moshouris to the Compensation Committee, Nominating, Corporate Governance and Sustainability Committee, and Audit Committee ✓ Added Bella Allaire to the Nominating, Corporate Governance and Sustainability Committee
				January 2023: ✓ Named Carolyn Roach as Chief Human Resources Officer, Ali Faghri as Chief Strategy Officer and Michael Abrahams as Chief Communications Officer ✓ Initiated sustainability roadmap efforts to assess and align on ESG priorities for stand-alone XPO, alongside independent ESG consultant March 2023: ✓ Named Wendy Cassity as Chief Legal Officer ✓ Appointed Wes Frye to XPO’s Board, adding direct LTL operational experience to the Board April 2023: ✓ Created new Operational Excellence Committee of the Board, focused on overseeing the company’s operational strategy and progress ■ Appointed CEO Mario Harik as Chair and Wes Frye and Allison Landry as members

WHAT WE DO			WHAT WE DON’T DO
Significant emphasis on variable compensation. Our compensation program is heavily weighted toward variable compensation, including LTIs that are majority performance-based, and annual short-term cash incentives that are formulaically determined based on adjusted EBITDA. This allows the Committee to closely align total compensation values with company performance on an annual and long-term basis.			No exceptional perquisites. Our NEOs have no relocation benefits or supplemental pension or retirement savings beyond what is provided broadly to all XPO employees. In addition, our NEOs have no personal use of executive health services, club memberships, stipends or financial planning services.
Substantial portion of compensation linked to creation of stockholder value. Performance-based awards are, and have been, subject to meaningful stock price and/or earnings-related performance goals measured over service-based vesting periods. While performance-based awards have an important role in sustaining the NEOs’ focus on the company’s strategic objectives, the Committee also regularly reviews the full portfolio of XPO stockholdings for each NEO to ensure there is a sufficient amount of compensation at risk if the objectives are not met, further aligning compensation with stockholder returns and value creation, while sustaining the NEOs’ focus on the company’s strategic objectives.			No pledging or hedging of company stock. Under our insider trading policy, our company’s directors and executive officers, including the NEOs, are prohibited from pledging or holding company securities in a margin account. In addition, they are prohibited from engaging in hedging transactions, such as prepaid variable forwards, equity swaps, collars and exchange funds or any other transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of company equity securities.
Stock ownership policies. The Board has established stock ownership guidelines and stock retention requirements that encourage a strong ownership mindset among our NEOs. Our ownership guidelines reflect 6x annual base salary for our CEO and 3x annual base salary for our other NEOs. In addition, certain awards of our executive chairman and CEO were amended during 2022 to include one-year holding periods after vesting, as described above.			No guaranteed annual salary increases. Salary increases are not guaranteed annually and are benchmarked against market values.
Clawback policy. Our NEOs are subject to clawback restrictions with respect to incentive compensation.			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.
Restrictive covenants. Our NEOs are subject to comprehensive non-competition and other restrictive covenants.			No golden parachute excise tax gross-ups. XPO does not provide golden parachute excise tax gross-ups.
Engage with stockholders. Our Board values stockholder feedback and carefully considers investor perspectives for incorporation into its decision-making processes for governance, compensation and sustainability practices.			No consultant conflicts. The Committee retains an independent compensation consultant who performs services only for the Committee, as described in more detail below under the heading Role of the Committee’s Independent Compensation Consultant.

	Brad Jacobs Age: 66			Director since 2011 Executive Chairman since 2022
	Mr. Jacobs has served as executive chairman of our Board of Directors since November 1, 2022 and previously held the titles of chairman and chief executive officer from September 2, 2011 to October 31, 2022. Mr. Jacobs has served as non-executive chairman of the board of directors of GXO Logistics, Inc. (NYSE: GXO) since August 2, 2021 and RXO, Inc. (NYSE: RXO) since November 1, 2022. Additionally, he is the managing member of Jacobs Private Equity, LLC. Prior to XPO, Mr. Jacobs led two public companies: United Rentals, Inc. (NYSE: URI), which he founded in 1997, and United Waste Systems, Inc., which he founded in 1989. Mr. Jacobs served as chairman and chief executive officer of United Rentals for 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: GXO Logistics, Inc. (NYSE: GXO); RXO, Inc. (NYSE: RXO)
	Mr. Jacobs’s Skills and Experience Aligned with XPO’s Strategy: ▪ In-depth knowledge of the company’s business resulting from his years of service with the company as its chief executive officer provides the Board with invaluable insight and critical perspective in overseeing XPO’s long-term strategic priorities; ▪ Leadership experience as the company’s chairman and chief executive officer of several public companies lends Mr. Jacobs the ability to facilitate productive decision-making and advice during the company’s transformation in his role as executive chairman; and ▪ Extensive past and current experience as the chairman of boards of directors of several public companies gives Mr. Jacobs experience in providing valuable operational insights and strategic and long-term planning capabilities.

		Jason Aiken Age: 50			Independent Director since 2021
		Mr. Aiken has served as a director of the company since August 2, 2021. He has served as executive vice president, technologies and chief financial officer of General Dynamics Corporation since January 2023 and previously held the title of senior vice president and chief financial officer from January 2014 to January 2023. Prior to that, Mr. Aiken was the senior vice president and chief financial officer of General Dynamics subsidiary Gulfstream Aerospace Corporation, and held earlier positions with General Dynamics, including controller, vice president of accounting and director of consolidation accounting. Prior to joining General Dynamics, Mr. Aiken was an audit manager with Arthur Andersen LLP in Washington, D.C., where he provided audit and consulting services for defense contractors. He holds a masters in business administration degree from the Kellogg School of Management at Northwestern University, and a bachelor’s degree in business administration and accounting from Washington and Lee University.
		Board Committees: ▪ Chair of the Audit Committee
		Other Public Company Boards: None
		Mr. Aiken’s Skills and Experience Aligned with XPO’s Strategy: ▪ Significant financial and accounting expertise through his service as chief financial officer and other senior finance positions with a Fortune 100 company gives Mr. Aiken deep knowledge of financial strategy and risk management needed to serve on XPO’s Board and lead the Audit Committee as committee chair; and ▪ Senior operational, transactional and strategic experience that has been and continues to be essential for XPO in its strategic spin-offs and continued efforts to drive stockholder value creation.

	Bella Allaire Age: 69						Independent Director since 2022
	Ms. Allaire has served as a director of the company since November 1, 2022. She has served as executive vice president of technology and operations of Raymond James Financial, Inc. since June 2011. Previously she was managing director and chief information officer of UBS Wealth Management, Americas, and held a variety of technology roles at Prudential Securities, including executive vice president and chief information officer. Ms. Allaire holds a bachelor’s degree from Lviv University in Ukraine.
	Board Committees: ▪ Member of the Nominating, Corporate Governance and Sustainability Committee
	Other Public Company Boards: None
	Ms. Allaire’s Skills and Experience Aligned with XPO’s Strategy: ▪ Deep technical knowledge through her executive roles overseeing technological transformation and operations provide the company with important expertise in operational excellence and technological innovation; and ▪ Significant experience in cybersecurity and enterprise risk management, and talent management.

		Wes Frye Age: 75						Independent Director since 2023
		Mr. Frye has served as a director of the company since March 8, 2023. He served as senior vice president and chief financial officer for the last 18 years of his 30-year tenure at Old Dominion Freight Line, Inc. (NYSE: ODFL) from 1985 until his retirement in 2015. Mr. Frye holds an MBA degree in finance from the University of North Carolina at Charlotte, and a bachelor’s degree in business administration from Appalachian State University.
		Board Committees: ▪ Member of the Operational Excellence Committee
		Other Public Company Boards: None
		Mr. Frye’s Skills and Experience Aligned with XPO’s Strategy: ▪ Mr. Frye’s direct LTL operational experience through 30-year tenure at Old Dominion Freight Line adds important industry expertise to the Board as the company continues in its next chapter as a pure-play LTL business; and ▪ Extensive finance and accounting knowledge gained through role as an operationally oriented chief financial officer at Old Dominion Freight Line gives Mr. Frye an understanding of financial undertakings and risks associated with XPO’s business and the industry.

	Mario Harik Age: 42						Director since 2022
	Mr. Harik has served as a director and as chief executive officer of the company since November 1, 2022. Previously, Mr. Harik served as president of the company’s North America Less-Than-Truckload business unit from October 2021 to October 2022. He was also XPO’s chief information officer from November 2011 to October 2022 and chief customer officer from February 2021 to October 2022. Prior to XPO, Mr. Harik held positions as chief information officer and senior vice president of research and development with Oakleaf Waste Management, chief technology officer with Tallan, Inc., and co-founder and chief architect of web and voice applications with G3 Analyst. He holds a master’s degree in engineering, information technology from Massachusetts Institute of Technology, and a degree in engineering, computer and communications from the American University of Beirut in Lebanon.
	Board Committees: ▪ Chair of the Operational Excellence Committee
	Other Public Company Boards: None
	Mr. Harik’s Skills and Experience Aligned with XPO’s Strategy: ▪ Extensive leadership and company-specific experience as chief information officer, chief customer officer and president, North American LTL at XPO lends him a deep understanding of the business and the industry-best technology platform. Mr. Harik has helped build a platform to connect shippers and carriers more efficiently and build XPO into one of the largest North American trucking and logistics companies; and ▪ Mr. Harik’s experience leading XPO’s global technology strategy, organization and proprietary technology development demonstrates the value of his technical knowledge for XPO’s Board.

		Michael Jesselson Age: 71						Independent Director since 2011
		Mr. Jesselson has served as a director of the company since September 2, 2011 and served as lead independent director from March 2016 to October 31, 2022. He has been president and chief executive officer of Jesselson Capital Corporation since 1994. Mr. Jesselson served as a director of Ascendant Digital Acquisition Corp. III from November 2021 to February 2023 and as a director of Ascendant Digital Acquisition Corp. I from July 2020 to July 2021. He was a director of American Eagle Outfitters, Inc. (NYSE: AEO) from November 1997 to May 2017, most recently as its lead independent director. Earlier, he worked at Philipp Brothers, a division of Engelhard Industries from 1972 to 1981, then at Salomon Brothers Inc., in the financial trading sector. He is a director of C-III Capital Partners LLC, Clarity Capital and other private companies, as well as numerous philanthropic organizations. Mr. Jesselson also serves as the chairman of Bar Ilan University in Israel. He attended New York University School of Engineering.
		Board Committees: ▪ Member of the Audit Committee
		Other Public Company Boards: None.
		Mr. Jesselson’s Skills and Experience Aligned with XPO’s Strategy: ▪ Significant experience with public company governance through prior service on the board of directors of American Eagle Outfitters, including as its lead independent director, contributes to the effective, independent oversight of XPO’s Board and thoughtful approach to governance practices; and ▪ Mr. Jesselson’s extensive investment expertise is important to XPO’s business model as the company continues to invest in growth and provide value for its stockholders.

	Allison Landry Age: 44						Independent Director since 2021 Vice Chair since 2022
	Allison Landry has served as a director of the company since August 2, 2021 and as vice chair since November 1, 2022. From September 2005 to July 2021, she was a senior transportation research analyst with Credit Suisse, covering the trucking, railroad, airfreight and logistics industries. Previously, Ms. Landry served as a financial analyst and senior accountant with OneBeacon Insurance Company (now Intact Insurance Specialty Solutions). She holds a master’s degree in business administration from Boston University’s Questrom School of Business, and a bachelor’s degree in psychology from College of the Holy Cross.
	Board Committees: ▪ Chair of the Nominating, Corporate Governance and Sustainability Committee ▪ Member of the Compensation Committee ▪ Member of the Operational Excellence Committee
	Other Public Company Boards: None
	Ms. Landry’s Skills and Experience Aligned with XPO’s Strategy: ▪ More than 15 years experience in the transportation sector, equity markets, research and analysis gives Ms. Landry invaluable investor perspective and understanding of stockholder value creation for XPO as the Chair of the Nominating, Corporate Governance and Sustainability Committee; and ▪ Significant experience in investments, financial analysis and valuation allows Ms. Landry to help XPO in continuously identifying and evaluating best strategic opportunities for profitable growth.

		Irene Moshouris Age: 62						Independent Director since 2022
		Ms. Moshouris has served as a director of the company since November 1, 2022. She has served as senior vice president-treasurer of United Rentals, Inc. (NYSE: URI) since April 2011 and previously held the position of vice president-treasurer from August 2006 to April 2011. Prior to that, Ms. Moshouris was vice president and deputy treasurer with Avon Products, Inc., corporate tax manager with GTE Corporation, tax director-pharmaceutical group with Sterling Winthrop Inc. and tax manager with Arthur Andersen & Co. She holds a master of laws in taxation from New York University School of Law, juris doctorate from Brooklyn Law School and bachelor’s degree from Queens College.
		Board Committees: ▪ Member of the Audit Committee, the Compensation Committee and the Nominating, Corporate Governance and Sustainability Committee
		Other Public Company Boards: None
		Ms. Moshouris’ Skills and Experience Aligned with XPO’s Strategy: ▪ Financial leadership experience gained through her role as senior vice president and treasurer of United Rentals, as well as numerous treasury and tax management positions with global corporations, provides Ms. Moshouris with strong oversight skills necessary for a member of the audit committee; and ▪ International business experience, including international treasury role and director of global finance for Avon in Europe and Latin America, contributes to Board’s oversight of strategy given the global nature of XPO’s business.

	Johnny C. Taylor, Jr. Age: 54						Independent Director since 2021 Lead Independent Director since 2022
	Mr. Taylor has served as a director of the company since August 2, 2021 and lead independent director from November 1, 2022. He has served as president and chief executive officer of the Society of Human Resources Management (SHRM) since December 2017. Previously, Mr. Taylor served as president and chief executive officer of the Thurgood Marshall College Fund from May 2010 to December 2017. He has served as a member of the board of directors of Guild Education since February 2021 and of iCIMS, Inc. since March 2021. He has served as a trustee of the University of Miami since June 2017, as a corporate member of Jobs for America’s Graduates since January 2018, and as a member of the National Board of Governors of the American Red Cross since June 2018. He’s served as chairman of the President’s Advisory Board on Historically Black Colleges and Universities and on the White House American Workforce Policy Advisory Board since February 2018. Mr. Taylor holds a juris doctorate degree and a master’s degree from Drake University, and a bachelor’s degree from the University of Miami.
	Board Committees: ▪ Chair of the Compensation Committee
	Other Public Company Boards: None
	Mr. Taylor’s Skills and Experience Aligned with XPO’s Strategy: ▪ Mr. Taylor’s more than 25 years experience in senior human resources, legal, and business roles across a variety of industries and organizations lends to the Board’s oversight of business operations while incorporating crucial legal and human capital considerations; and ▪ His expertise in human capital strategy and management, diversity and inclusion, workplace culture, and leadership training provides a critical skill set for XPO’s Board given the company’s continued focus on human capital oversight and DE&I efforts.

Name	Fees Earned in Cash(2)			Stock Awards(3)			Total
Jason Aiken(4)		$	105,000		$	190,000		$	295,000
Bella Allaire(5)			13,261			31,753			45,014
AnnaMaria DeSalva(6)			104,280			158,247			262,527
Michael Jesselson(7)			100,856			190,000			290,856
Adrian Kingshott(8)			66,739			158,247			224,986
Mary Kissel(9)			66,739			158,247			224,986
Allison Landry(10)			87,459			190,000			277,459
Irene Moshouris(11)			13,261			31,753			45,014
Johnny C. Taylor, Jr.(12)			104,144			190,000			294,144

Name of Beneficial Owner	Shares of Common Stock Beneficially Owned		Percentage of Common Stock Outstanding(1)
Beneficial Ownership of 5% or more:
MFN Partners, LP(2)		12,675,369		11.0%
BlackRock, Inc.(3)		11,244,910		9.7%
The Vanguard Group(4)		10,751,543		9.3%
Orbis Investment Management Limited(5)		9,992,273		8.6%
Directors:
Jason Aiken		4,960(6)		*
Bella Allaire		902		*
Wes Frye		1,500		*
Michael Jesselson		305,917(7)		*
Allison Landry		4,960		*
Irene Moshouris		902		*
Johnny C. Taylor, Jr.		4,960(8)		*
NEOs:
Brad Jacobs+		1,688,117(9)		1.5%
Mario Harik+		123,548		*
Carl D. Anderson II(10)		—		—
Ravi Tulsyan(11)		20,025		*
Current Directors and Executive Officers as a Group: (10 People)		2,135,766(12)		1.8%

	NEO			2022 ROLES
	Brad Jacobs			Chief Executive Officer from January 1, 2022 through October 31, 2022; Executive Chairman commencing November 1, 2022
	Mario Harik			Chief Information Officer, Chief Customer Officer, and President, North American LTL through October 31, 2022; Chief Executive Officer commencing November 1, 2022
	Carl Anderson			Chief Financial Officer commencing November 8, 2022
	Ravi Tulsyan			Chief Financial Officer from January 1, 2022 through November 7, 2022


	2023 COMPENSATION PROGRAM (discussed on page 36)				■ Following the completion of the GXO and RXO spin-offs over the course of two years and with the announcement of Mr. Harik as XPO’s new CEO as well as other management hires, the newly reconstituted Committee redesigned the compensation program for 2023 in order to be responsive to stockholder feedback and align with the new business priorities. ■ For 2023, and with the intention to maintain this structure going forward, contingent upon stockholder feedback, the Committee: • Established a formulaic STI award for executives ▪ 2023 Annual Incentive for executive chairman, CEO and CFO based on adjusted EBITDA • Communicated intention to grant long-term incentive awards on an annual basis ▪ For executive chairman and CEO structured LTI to consist of 80% performance-based RSUs and 20% as time-based RSUs ▪ For CFO structured LTI to consist of 65% performance-based RSUs and 35% as time-based RSUs
	2022 COMPENSATION PROGRAM (discussed on page 42)				■ The Committee made a number of changes to compensation awards in 2022, reflecting modifications of prior awards from cash to equity and granting of awards in connection with the promotion of Mr. Harik to CEO. These include but not are not limited to: • Replacement LTL PSUs in place of the 2022 cash tranche of the 2020 LTI award equity for 50% of Mr. Jacobs’ award and 100% of Mr. Harik’s which required completion of the RXO spin-off no later than December 31, 2022 and achievement of targets across two metrics. • Regular LTL PSUs with a three-year vesting period and metrics aligned with path to LTL long-term targets. • A relative TSR PSU granted to Mr. Harik and Mr. Anderson in connection with their appointments as CEO and CFO and based on rigorous relative TSR target to incentivize a strong focus on XPO’s growth in market position versus core competitors. • A new hire RSU award for Mr. Harik in connection with his appointment as CEO.


	OUTSTANDING 2020 LTI AWARDS (discussed on page 48)				■ In February 2023, the Committee re-evaluated the structure of the remaining 2023 tranche of the 2020 LTI awards for both Mr. Jacobs and Mr. Harik. Based on stockholder feedback and the impact of the RXO spin-off on the company’s profile, the Committee decided to effectively cancel the original version of the award, denominated in cash, and replace it with new performance-based shares, with metrics that were realigned with post-spin-off strategic priorities. ■ The target amounts and combined vesting/sales restriction schedules were preserved in the issuance of the replacement awards, however, the weighting of the two metrics were changed so that relative TSR of XPO vs. the S&P Transportation Select Index represents 75% of the award and the ESG scorecard represents 25%. The ESG scorecard was recalibrated to better align with our current business. The new performance measurement period begins on November 1, 2022 and ends on December 31, 2024.
	OUTSTANDING 2018 & 2019 LTI AWARDS (discussed on page 50)				■ Prior to the RXO spin-off, Mr. Jacobs and Mr. Harik held two unvested performance-based stock awards. These PSUs included two separate performance hurdles within each award structure to achieve target payout, with a ‘hit-or-miss’ payout structure. The Committee evaluated market practice for how to properly handle the modification requirements for these awards and found that 72% of companies converted some or all of their outstanding executive PSUs into time-based RSUs vesting on their original schedules in conjunction with a spin-off. ■ Taking into account the extraordinary value creation created by Mr. Jacobs and Mr. Harik over the length of the PSU award, the difficulty in making a fair adjustment methodology following two successive spin-offs and the prevailing market practice, the Committee decided to convert the combined target shares in these two outstanding awards to a single time-based RSU award for each of Mr. Jacobs and Mr. Harik, effective as of the RXO spin-off date. ■ Taking into account stockholder feedback on how to address outstanding awards, the Committee extended the vesting schedule of the 2018 award by two years to December 31, 2024, aligning with the original vesting schedule of the 2019 award and also applied a post-vesting sales restriction on the entire pool of shares across both awards, which expires on December 31, 2025.

		WHAT WE HEARD FROM STOCKHOLDERS				RESPONSIVE ACTIONS
						within the 2020 Cash LTI program, as well as the adjustments to the scorecard deemed necessary by the Committee in connection with the RXO spin-off for the final 2023 tranche of the award (now a part of a replacement PSU structure, remaining at a weighting of 25%). See Annex B entitled “ESG Scorecard — 2022 Deliverables and Achievements”.

		ANNUAL CASH COMPENSATION			ANNUAL LTI COMPENSATION
NEO	Base Salary	Target Bonus (% of Base Salary)	Target Bonus ($ Value)	Total Target Annual Cash Compensation	Target PSUs	Target RSUs	Total Target Annual Direct Compensation
Brad Jacobs	$600,000	150%	$900,000	$1,500,000	$4,000,000	$1,000,000	$6,500,000
Executive Chairman					(80% of LTI)	(20% of LTI)
Mario Harik	$850,000	200%	$1,700,000	$2,550,000	$6,000,000	$1,500,000	$10,050,000
Chief Executive Officer					(80% of LTI)	(20% of LTI)
Carl Anderson	$625,000	100%	$625,000	$1,250,000	$1,137,500	$612,500	$3,000,000
Chief Financial Officer					(65% of LTI)	(35% of LTI)

		1				Previous stockholder feedback centered on LTI structural design
		2				Evaluation of peer group incentive pay designs and practices, provided by the Committee’s independent advisor
		3				The Committee’s longstanding tradition of maintaining ambitious targets for relevant company metrics and a higher proportion of LTI allocated to PSUs
		4				XPO’s strategic priorities post-spin-off, with specific focus on aligning to the company’s five-year outlook for the LTL business, as conveyed to investors in October 2022
		5				Alignment with stockholders’ interests

		PEERS
		C.H. Robinson Worldwide, Inc.
		CSX Corporation
		Expeditors International of Washington, Inc.
		FedEx Corporation
		J.B. Hunt Transport Services, Inc.
		Knight-Swift Transportation
		Norfolk Southern Corporation
		Ryder System, Inc.
		Union Pacific Corporation
		United Parcel Service, Inc.
		Yellow Corporation(1)

		ADDITIONAL PEERS
		ArcBest Corporation
		Avis Budget Group, Inc.
		Hertz Global Holdings, Inc.
		Hub Group, Inc.
		Landstar System, Inc.
		Matson, Inc.
		Old Dominion Freight Line, Inc.
		Schneider National, Inc.
		TFI International Inc.
		Werner Enterprises, Inc.

Name				STI Target											STI Target
Name	Salary			% of Salary		$ Amount			Target Cash Compensation			Salary			% of Salary		$ Amount			Target Cash Compensation
Brad Jacobs*		$	1,000,000		200%		$	2,000,000		$	3,000,000		$	600,000		200%		$	1,200,000		$	1,800,000
Mario Harik		$	500,000		125%		$	625,000		$	1,125,000		$	850,000		200%		$	1,700,000		$	2,550,000
Ravi Tulsyan		$	500,000		100%		$	500,000		$	1,000,000		$	500,000		100%		$	500,000		$	1,000,000
Carl Anderson			—		—			—			—		$	625,000		100%		$	625,000		$	1,250,000

Name	Salary			STI Target %				Payout Curve Achievement		STI Based on EBITDA Achievement			% Modifier Applied to EBITDA Funded Bonus	Bonus Adjusted following Committee Assessment	2022 Salary + Final Bonus Payout
Brad Jacobs*		$	929,561		200%	$	1,859,121		140%		$	2,602,769	Committee did not exercise the plan modifier available in 2022, yielding a purely formulaic outcome; plan modifier removed for 2023			$	3,532,329
Mario Harik		$	557,857		138%	$	768,096		140%		$	1,075,334				$	1,633,192
Carl Anderson		$	93,750		100%	$	93,750		140%		$	131,250				$	225,000

Weighting	Performance Metrics	2022 Target	2022 Actual(1)	Payout %	Payout Scale (2022 Tranche)
50%	XPO Absolute Adjusted Cash Flow Per Share	$5.35	$6.19	178%	Achievement Level	% Earned
					< $5.35	0%
					$5.35	100%
					$5.89	150%
					≥ $6.42	200%
25%	Relative Cumulative Growth in Adjusted Cash Flow Per Share vs. 2020 (Compared to 15- Peer Comparator Group)	55th Percentile Rank	Ranked 3rd out of 16 (~85th percentile)	200%	XPO Percentile Rank	% Earned
					< 55th	0%
					55th	100%
					65th	150%
					≥ 75th	200%
25%	ESG Scorecard (43 initiatives for 2022, each equally weighted at 2.3 points)	80 – 85 points out of 100	Final Score of 86.2 (Details provided in Annex B)	150%	Scorecard Grade (Scale of 1-100)	% Earned
					< 80 points	0%
					≥ 80 points and < 85 points	100%
					≥ 85 points and < 90 points	150%
					≥ 90 points	200%
Blended Payout %: Approximately 177%

Weighting	Performance Metrics	Payout Scale (2023 Tranche)
50%	XPO Absolute Adjusted Cash Flow Per Share	Achievement Level	% Earned (straight-line interpolation between values)
		< $5.95	0%
		$5.95	100%
		$6.55	150%
		≥ $7.14	200%
25%	Relative Cumulative Growth in Adjusted Cash Flow Per Share vs. 2020 (compared to Peer Group)	XPO Percentile Rank	% Earned (straight-line interpolation between values)
		< 55th	0%
		55th	100%
		65th	150%
		≥ 75th	200%
25%	ESG Scorecard (39 initiatives for 2023, each equally weighted at 2.6 points)	Scorecard Grade (Scale of 1-100)	% Earned
		< 80 points	0%
		≥ 80 points and < 85 points	100%
		≥ 85 points and < 90 points	150%
		≥ 90 points	200%

Name and Principal Position	Year		Salary ($)			Bonus(1) ($)			Stock Awards(2)(3) ($)			Non-Equity Incentive Plan Compensation(4) ($)			All Other Compensation(5) ($)			Total ($)
Brad Jacobs(6) Executive Chairman		2022		$	929,561			—		$	34,600,992(7)		$	11,446,524		$	13,880		$	46,990,957
		2021		$	1,000,000			—			—		$	20,625,000		$	418,280		$	22,043,280
		2020		$	1,000,000		$	3,300,000			—		$	17,500,000		$	12,660		$	21,812,660
Mario Harik(8) Chief Executive Officer		2022		$	557,857			—		$	7,381,069(7)		$	1,075,334		$	13,463		$	9,027,723
		2021		$	500,000		$	100,000			—		$	4,914,063		$	12,863		$	5,526,925
		2020		$	500,000		$	1,031,250			—		$	3,937,500		$	12,660		$	5,481,410
Carl Anderson(9) Chief Financial Officer		2022		$	93,750			—		$	1,091,845(10)		$	129,452		$	263		$	1,315,310
Ravi Tulsyan(11) Former Chief Financial Officer		2022		$	498,626			—			—		$	93,550		$	13,463		$	605,639
Ravi Tulsyan(11) Former Chief Financial Officer		2021		$	431,539		$	100,000		$	2,084,951		$	874,800		$	12,545		$	3,503,834

Name	Matching Contributions to 401(k) Plan(1) ($)			Company- Paid Life Insurance Premiums(2) ($)			Total ($)
Brad Jacobs		$	12,200		$	1,680		$	13,880
Mario Harik		$	12,200		$	1,263		$	13,463
Carl Anderson(3)			—			—			—
Ravi Tulsyan		$	12,200		$	1,263		$	13,463

			Estimated Future Payouts Under Equity Incentive Plan Awards(1)						All Other Stock Awards: Number of Shares of Stock or Units (#)(1)		Grant Date Fair Value of Stock Awards ($)(3)
Name	Grant Date	Grant Type	Threshold (#)		Target (#)(2)		Maximum (#)				Grant Date Fair Value of Stock Awards ($)(3)
Brad Jacobs	3/7/2022	PSU		—		82,932		165,864		—			—
Brad Jacobs	11/1/2022	RSU		—		—		—		1,174,495		$	34,600,992
Mario Harik	3/7/2022	PSU		—		37,320		74,640		—			—
	3/7/2022	PSU		—		53,906		107,812		—			—
	8/5/2022	PSU		—		172,871		345,742		—			—
	11/1/2022	RSU		—		—		—		221,923		$	7,381,069
Carl Anderson(4)	11/8/2022	RSU		—		—		—		14,112		$	499,988
Carl Anderson(4)	11/8/2022	PSU		—		14,112		28,224		—		$	591,857
Ravi Tulsyan	3/7/2022	PSU		—		49,759		99,518		—			—
Ravi Tulsyan	3/7/2022	PSU		—		82,932		82,932		—			—

	Stock Awards
Name	Number of Shares or Units of Stock That Have Not Vested (#)(1)(2)		Market Value of Shares or Units of Stock That Have Not Vested ($)(3)			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1)(4)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3)
Brad Jacobs		1,174,495 (5)		$	39,098,939(5)		82,932 (6)		$	2,760,806(6)
Mario Harik		221,923 (7)		$	7,387,817 (7)		264,097(8)		$	8,791,789(8)
Carl Anderson		14,112(9)		$	469,788 (9)		14,112(10)		$	469,788(10)
Ravi Tulsyan		23,296(11)		$	775,524(11)		153,161 (12)		$	5,098,738(12)