The Teamsters union wants to see executive pay reform at XPO Logistics [NYSE: XPO] after it was disclosed that Chairman and CEO Brad Jacobs is in line for a payout of up to $80 million at the same time the company has furloughed workers during the pandemic.

In a letter to shareholders filed with the Securities and Exchange Commission (SEC) ahead of Tuesday’s shareholder meeting, the Teamsters assert there is “something incongruous” about XPO granting a significant long-term incentive to Jacobs after three previous “pay revolts” by XPO shareholders over the past four years.

“Now, the company has granted CEO Bradley Jacobs an incentive award of up to $80 million, despite estimations that the company received more than £100 million [$141 million] from the U.K. government in pandemic relief” based on an analysis of public claims by the U.K. government, the Teamsters stated. At the same time, the union asserted, furloughed XPO workers in the U.K. received only 80% of their wages.

“If XPO’s mistreatment of its workforce and its concerning response to the COVID-19 pandemic are not enough for shareholders, then investors should look at the company’s continued use of large ad hoc awards that are simply outsized for this company. Now is the time to vote for serious reforms at XPO after years of the company dumping money into one man’s pockets,” said Teamsters General Secretary-Treasurer Ken Hall.

In addition to urging shareholders to vote against approving Jacobs’ compensation package, the union is recommending voting to oppose the reelection of three board members — “owing to the persistency of XPO’s pay problems” — as well as asking shareholders to vote on whether XPO’s chairman should be required to be an independent director, which the company recommends voting against.

Dodd-Frank reforms enacted in 2010 require public companies to give stockholders an opportunity to vote to approve — on a nonbinding advisory basis — compensation for named executive officers (NEOs), which are known as “say on pay” resolutions.

In responding to the Teamsters’ latest say on pay recommendations for XPO shareholders, an XPO spokesman pointed to a recent SEC proxy filing that included details on the company’s executive compensation. “We believe that our compensation programs appropriately reward executive performance and align the interests of our NEOs and key employees with the long-term interests of our stockholders, while also enabling us to attract and retain talented executives,” XPO stated.

The filing stated that XPO made changes to the executive compensation program over the past year in response to stockholder feedback.

“Stockholders have expressed concern that awards based on all-or-nothing goals have the potential to incentivize risk-taking. In response, the 2020 [long-term cash incentive] award has a sliding scale payout, as well as three separately weighted metrics,” according to XPO. The company also stated that, based on feedback, it began basing awards metrics relative to peers, and incorporating environmental, social, governance (ESG) metrics into executive pay.

Related articles:

Teamsters see pro-labor proposal leveling playing field at XPO
Jacobs to exit most of XPO the way he entered — unconventionally
XPO to split transport, logistics businesses

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