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 (Amendment No.     )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

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

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GXO 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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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

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GXO LOGISTICS, INC.
Two American Lane
Greenwich, Connecticut 06831

To Our Stockholders

We’re pleased to present GXO’s first annual proxy statement.

In the short time since we completed our spin-off from XPO last summer, GXO has distinguished itself as the world’s leading pure-play contract logistics provider. Our record performance reflects our ability to grow by providing our customers with outsourced logistics capabilities unmatched in our industry.

Our teams around the globe worked tirelessly during a challenging period to deliver a successful peak season for our customers last year. At the same time, we continued to win significant new contracts at an accelerated pace. Looking forward, the combination of our expertise, global scale and cutting-edge technology will only strengthen our position and create more value.

The Board values input from our stockholders, and we cordially invite you to attend our 2022 Annual Meeting, which will be held on Tuesday, May 24, 2022, at 10:00 a.m. Eastern Time. The meeting will be conducted exclusively as a live webcast.

During the meeting, we’ll provide updates on the company and our commitment to building long-term value. Also, stockholders will vote on a number of important matters. Please take the time to carefully read each of the proposals described in the Proxy Statement and follow the voting instructions to ensure your shares are represented at the meeting.

Thank you for your support of GXO!

April 25, 2022

Brad Jacobs
Chairman of the Board
GXO Logistics, Inc.

 

 

GXO LOGISTICS, INC.
Two American Lane
Greenwich, Connecticut 06831

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 24, 2022

To the Stockholders of GXO Logistics, Inc.:

Notice is hereby given that the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of GXO Logistics, Inc. (“GXO” or the “company”) will be held on Tuesday, May 24, 2022, at 10:00 a.m. Eastern Time. The meeting will be conducted exclusively as a live webcast. You can access the meeting at meetnow.global/MDLSNW2 with your control number.

The Annual Meeting shall be held for the purposes summarized below, and more fully described in the Proxy Statement accompanying this notice:

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To elect two (2) members of our Board of Directors as Class I directors for a term to expire at the 2025 Annual Meeting of Stockholders or until their successors are duly elected and qualified;

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To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2022;

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

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To consider an advisory vote on the frequency of future advisory votes to approve executive compensation; and

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To consider and transact other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

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Only stockholders of record of our common stock, par value $0.01 per share, as of the close of business on April 8, 2022, are entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement of the Annual Meeting. A complete list of these stockholders will be available on the bottom panel of your screen during the meeting after entering your control number.

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,

Brad Jacobs
Chairman of the Board

Greenwich, Connecticut
April 25, 2022

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to Be Held on May 24, 2022:

The Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2021, are available at www.envisionreports.com/gxo.

 

This Proxy Statement sets forth information relating to the solicitation of proxies by the Board of Directors (the “Board of Directors” or “Board”) of GXO Logistics, Inc. in connection with our 2022 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.

2022 ANNUAL MEETING OF STOCKHOLDERS

This Proxy Statement and form of proxy are first being mailed on or about April 25, 2022, to our stockholders of record as of the close of business on April 8, 2022 (the “Record Date”).

Admission: You will not be able to attend the Annual Meeting in person this year. You can access the Annual Meeting at meetnow.global/MDLSNW2. You will need to provide the control number on your 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 in advance, 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 May 19, 2022. You will receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to meetnow.global/MDLSNW2 and enter your control number.

VOTING MATTERS AND BOARD RECOMMENDATIONS

The Board is not aware of any matter that will be presented for a vote at the 2022 Annual Meeting of Stockholders other than those shown below.

 

GOVERNANCE HIGHLIGHTS

 

2022 BOARD OF DIRECTORS NOMINEES

Our Board aims to create a diverse and highly skilled team of directors who provide our global company with thoughtful 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 business environment, skills in areas relevant to our growth drivers 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, expertise and viewpoints. Our Board also endeavors to include highly qualified women and individuals from underrepresented minority groups in the candidate pool. The composition of our Board at year-end 2021 was:

The following table provides summary information about each director nominee. Our Board is currently classified with members of each class serving staggered three-year terms. We currently have two directors in Class I, three directors in Class II and three directors in Class III. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. By 2025, all of our directors will stand for election each year for one-year terms, and our board will therefore no longer be divided into three classes.

 

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

 

2021 PERFORMANCE HIGHLIGHTS

In 2021, GXO became an independent public company trading on the New York Stock Exchange, following the spin-off from XPO Logistics, Inc. Under the skilled leadership of our NEOs, in 2021 we reported:

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See Annex A for reconciliations of non-GAAP measures

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SUSTAINABILITY EFFORTS

We promote sustainability in our operations and corporate infrastructure as we participate in the transition to a low-carbon economy. We are collaborating with customers, such as French Luxury Group Kering, to create action plans that reduce emissions related to their supply chains through technology-enabled route optimization, load consolidation, sustainable packing and recycling, process automation and more.

 

We expect shortly to publish our inaugural ESG Report highlighting our initiatives in the following areas:

2021 COMPENSATION HIGHLIGHTS

The Compensation Committee’s pay-for-performance philosophy is focused on rewarding our executives for performance that creates substantial, long-term value for our stockholders. As a result, long-term incentive compensation is tied to ambitious goals for key operational indicators that incentivize our executives to drive long-term stockholder value creation. Over time, we expect our financial and operational results to demonstrate the merits of this philosophy for our stockholders.

Further details about executive compensation decisions are described in the “Executive Compensation Elements and Outcomes for 2021” section of the Compensation Discussion and Analysis.

 

QUESTIONS AND ANSWERS

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 GXO Logistics, Inc. (“GXO” or our “company”) in connection with our 2022 Annual Meeting of Stockholders (the “Annual Meeting”) or any adjournment or postponement thereof. This Proxy Statement is being furnished by our Board for use at the Annual Meeting to be held on May 24, 2022, at 10:00 a.m. Eastern Time as a live webcast. You can access the meeting at meetnow.global/MDLSNW2 with your control number.

This Proxy Statement and form of proxy are first being mailed on or about April 25, 2022, to our stockholders of record as of the close of business on April 8, 2022 (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:

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To elect two (2) members of our Board of Directors as Class I directors for a term to expire at the 2025 Annual Meeting of Stockholders or until their successors are duly elected and qualified (Proposal 1);

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To ratify the appointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for fiscal year 2022 (Proposal 2);

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To conduct an advisory vote to approve the executive compensation of our named executive officers (“NEOs”) as disclosed in this Proxy Statement (Proposal 3);

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To consider an advisory vote on the frequency of future advisory votes to approve executive compensation (Proposal 4); and

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To consider and transact other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

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Senior management of GXO 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, attend and vote at the Annual Meeting, or any adjournment or postponement thereof, if, as of the close of business on April 8, 2022, the Record Date, you were a holder of record of our common stock.

We have designed the virtual Annual Meeting to provide substantially the same opportunities to participate as stockholders would have at an in-person meeting. Our virtual Annual Meeting will be conducted on the internet via live webcast. You can access the Annual Meeting at meetnow.global/MDLSNW2. You will be required to provide the control number on your proxy card 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, by email at legalproxy@computershare.com no later than 5:00 p.m. Eastern Time on Thursday, May 19, 2022. You will receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to meetnow.global/MDLSNW2 and enter your control number.

Can I ask questions during the Annual Meeting?

The virtual Annual Meeting format allows stockholders to communicate with GXO during the Annual Meeting so they can ask questions of GXO’s management and Board of Directors, as appropriate. Stockholders (or their proxy holders) may submit questions for the Annual Meeting’s question and answer session in advance by logging on to the meeting site at meetnow.global/MDLSNW2. You will need the control number on your proxy card or confirmation email from Computershare in order to submit a question. Click on the “Q&A” icon in the top right corner of the screen and submit your question. You may provide your name, address (city and state) and organization, and, if applicable, the specific proposal to which your question relates. Questions can be submitted in advance of the Annual Meeting and 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. We reserve the right to exclude questions regarding topics that are not pertinent to meeting matters or company business or are inappropriate.

 

What if I have trouble accessing the Annual Meeting virtually?

The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Note: Internet Explorer is not a supported browser. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. For further assistance should you need it prior to or during the meeting you may call 1-888-724-2416.

How many shares of GXO common stock must be present to conduct business at the Annual Meeting?

As of the Record Date, there were 114,840,449 shares of common stock issued and outstanding, with each share entitled to one vote on each matter to come before the Annual Meeting.

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, holders of shares of our common stock outstanding on the Record Date representing 57,420,225 votes must be present at the Annual Meeting. If you vote by internet, telephone or proxy card, the shares you vote will be counted toward 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, except the frequency vote on executive compensation, you may vote “FOR” or “AGAINST” or you may “ABSTAIN” from voting on any proposal. With respect to the advisory vote on the frequency of future advisory votes to approve executive compensation, you may vote for one of four choices for the proposal on the proxy card or voting instruction: “ONE YEAR,” “TWO YEARS,” “THREE YEARS” or “ABSTAIN.” 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?

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Proposal 1: Election of two (2) directors. The election of each of the two (2) 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 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.

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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 2022. Ratification of the appointment of KPMG as our independent registered public accounting firm for the year ending December 31, 2022, requires the affirmative vote of a majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Because the proposed ratification of KPMG requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote on the matter, abstentions will have the effect of a vote against this proposal. We do not expect any broker non-votes, as brokers have discretionary authority to vote on this proposal.

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Proposal 3: 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 shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. This resolution, commonly referred to as a “say-on-pay” resolution, is not binding on our Board of Directors. Although the resolution is non-binding, our Board and the Compensation Committee will consider the voting results when making decisions regarding our executive compensation program.

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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. Because the advisory vote to approve executive compensation requires the affirmative vote of a

 

majority of the shares present in person or represented by proxy and entitled to vote on the matter, abstentions will have the effect of a vote against this proposal. Broker non-votes will have no effect on the advisory vote to approve executive compensation.

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Proposal 4: Advisory vote on frequency of future advisory votes to approve executive compensation. Advisory determination of the preference of the frequency of future advisory votes to approve executive compensation will be based on one of four choices for this proposal as indicated on the proxy card or voting instruction: “one year,” “two years,” “three years” or “abstain.” The affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders. For the frequency of future advisory votes to approve executive compensation, if none of the three alternatives receives a majority vote of the shares present in person or represented by proxy at the meeting and entitled to vote, then the alternative receiving a plurality of the votes cast by the holders of shares present in person or represented by proxy at the meeting and entitled to vote on the proposal will be deemed the preferred alternative of our stockholders. However, the vote is not binding on our Board of Directors and the Compensation Committee. Although the vote is non-binding, our Board of Directors and the Compensation Committee will carefully review the voting results. Notwithstanding our Board’s recommendation and the outcome of the stockholder vote, our Board may, in the future, decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

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Brokers may not use discretionary authority to vote shares on the advisory vote on frequency of future advisory votes to approve executive compensation if they have not received specific instructions from their clients. If you are a beneficial owner of shares, for your vote to be counted in the advisory vote on frequency of future advisory votes 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. Because the advisory vote on the frequency of future advisory votes to approve executive compensation requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote on the matter, abstentions will have the effect of a vote against this proposal. Broker non-votes will have no effect on the advisory vote on the frequency of future advisory votes to approve executive compensation.

In general, other business properly brought before the Annual Meeting at which a quorum is present requires the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter.

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” the ratification of KPMG as our independent registered public accounting firm for fiscal year 2022, “FOR” the advisory approval of the resolution to approve executive compensation and for the option of every “ONE YEAR” as the preferred frequency for future advisory votes to approve executive compensation.

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 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.

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, 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 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 Time on May 24, 2022. Please see the 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.

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 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 provided above to obtain a control number and the voting instructions provided 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 proxy card provided to you, proxies submitted prior to the Annual Meeting via internet or by telephone must be received by 1:00 a.m. Eastern Time on May 24, 2022.

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 proxy card, or fail to properly sign, date and return your proxy card, your shares will not be counted toward establishing a quorum for the Annual Meeting, which requires holders representing a majority of the outstanding shares of our common stock 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 two nominees for director named in “Proposal 1—Election of Directors,” “FOR” the ratification of KPMG as our independent registered public accounting firm for fiscal year 2022, “FOR” the advisory approval of the resolution to approve executive compensation and for a frequency of every “ONE YEAR” as the preferred frequency for future advisory votes to approve executive compensation.

If my shares are held in “street name” by my broker, dealer, commercial bank, trust company or other nominee, will my 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 they provide to you. 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 (i.e., they must receive specific voting instructions from a stockholder in order to vote that stockholder’s shares on non-routine or contested matters). Shares not voted by a broker or other nominee because they did not receive specific voting instructions from the stockholder on one or more proposals are referred to as “broker non-votes.”

We expect that when the NYSE determines whether each of the four proposals to be voted on at our Annual Meeting 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 2022” will be determined to be routine. 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” by following the instructions provided to you by your broker or other nominee.

What if I want to change my vote?

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 virtually and voting. Please note, however, that 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, GXO Logistics, Inc., Two 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 your broker or other nominee regarding revocation of proxies.

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, 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 voting 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 (the “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, https://investors.gxo.com/.

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 $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 email 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 held as of the Record Date through them.

What is “householding” and how does it affect me?

In cases where multiple company stockholders share the same address, and the shares are held through a bank, broker or other holder of record (“street-name stockholders”), only one copy of our proxy materials will be delivered to that address unless a

 

stockholder at that address requests otherwise. 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, GXO Logistics, Inc., Two American Lane, Greenwich, Connecticut 06831 or by contacting Investor Relations by email at InvestorRelations@GXO.com. The voting instruction form sent to a street-name stockholder should provide information on how to request a separate copy of future materials for each company stockholder at that address, if that is your preference. Similarly, if you currently receive separate copies of our proxy materials but wish to participate in householding, please contact us through the method described above.

Can I obtain an electronic copy of the company’s proxy materials?

Yes, this Proxy Statement and our 2021 Annual Report are available on the internet at https://investors.gxo.com/.

 

BOARD OF DIRECTORS AND

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

We are the largest pure-play contract logistics provider in the world and a foremost innovator in an industry propelled by strong secular tailwinds. Our mission is to provide our customers with high-value-add warehousing and distribution, order fulfillment, ecommerce, reverse logistics and other supply chain services differentiated by our ability to deliver technology-enabled, customized solutions at scale. As of December 31, 2021, we operated in approximately 900 facilities worldwide, totaling 195 million square feet of space that we operate primarily on behalf of large corporations that have outsourced their warehousing, distribution and other related activities to us.

Our revenue is diversified among hundreds of customers, including many multinational corporations, across numerous verticals. Our customers rely on us to move their goods with high efficiency through their supply chains—from the moment inbound goods arrive at our logistics sites, through fulfillment and distribution and the management of returned products. Our customer base includes many blue-chip leaders in sectors that demonstrate high growth and/or durable demand, with significant growth potential through customer outsourcing of logistics services.

Our strategy is to help our customers manage their supply chains for optimal efficiency, using our network of people, technology and other physical assets. We deliver value to customers in the form of technological innovations, process efficiencies, cost efficiencies and reliable outcomes. Our services are both highly responsive to customer goals, such as increasing visibility in the supply chain, decreasing fulfillment times and mitigating environmental impacts and being proactive in identifying potential improvements.

Our strategy addresses growth and optimization by focusing on consumer-related sectors that demonstrate enduring demand over time and where we already have a deep presence. We expect to attract new customers and expand the services we provide to existing customers through new projects, thus earning more of their external and internal logistics spend. We intend to integrate best practices to drive productivity, with a focus on automation and other levers of profitable growth.

To aid in executing our strategy, we have instilled a culture that focuses on delivering mutually beneficial results for our customers and our company with the highest legal and ethical standards and clear policies and practices to support compliance throughout our organization. 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.

Our Board of Directors comprises a highly skilled group of leaders who share our values and reflect our culture. Many of our directors have served as executive officers or board members of major companies and have an extensive understanding of the principles of corporate governance. In addition, our directors have a strong owner orientation—as of the Record Date, approximately 10.9% of the voting power of our capital stock was held by our directors or by entities or persons related to our directors. As described on page 17, our Board as a whole has extensive expertise in the following skill sets, all of which are relevant to our company, business, industry and strategy:

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Business operations;

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Corporate governance;

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Customer service;

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Environmental sustainability and corporate responsibility;

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Effective capital allocation;

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Critical analysis of corporate financial statements and capital structures;

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Human resource management;

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Multinational corporate management;

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Sales and marketing;

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Mergers and acquisitions, integration and optimization;

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The logistics industry;

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Risk management;

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Talent management and engagement; and

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Technology and information systems.

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DIRECTORS

Our Board of Directors currently consists of eight (8) members as set forth in the table below. Our amended and restated certificate of incorporation provides for a classified board of directors, with members of each class serving staggered three-year terms. We have two directors in Class I, three directors in Class II and three directors in Class III. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. By 2025, all of our directors will stand for election each year for one-year terms, and our board will therefore no longer be divided into three classes. The terms of directors in Classes I, II and III end at the annual meetings in 2022, 2023 and 2024, as indicated below.

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

 

 

 

 

SUMMARY OF QUALIFICATIONS AND EXPERIENCE OF DIRECTORS AND DIRECTOR NOMINEES

 

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 a non-executive chairman as well as a vice chair and a lead independent director. The position of chairman of the Board is currently held by Mr. Jacobs.

To further strengthen its independent decision-making, our Board has approved a set of Corporate Governance Guidelines (the “Guidelines”), which provide for an independent vice chair position as part of its ongoing commitment to strong corporate governance. The position of vice chair is defined as an independent director with authorities and duties that include: (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 duties; and (iii) such other duties, responsibilities and assistance as the Board or the chairman may determine. The vice chair is also available to meet with significant stockholders as required. Ms. Colucci was appointed to serve as vice chair on August 2, 2021.

In addition, the Board has provided 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. The position of lead independent director has been structured to serve as an effective balance to the chairman and to include, among other duties: (i) presiding at all meetings of the Board of Directors at which the chairman is not present; (ii) presiding at all executive sessions of the independent directors, which must take place at least once a year without members of management present; and (iii) calling additional meetings of the independent directors as necessary. The lead independent director also serves as a liaison between the chairman and the independent directors. On August 2, 2021, the independent directors appointed Mr. Shaffer to serve as lead independent director.

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

Our Board of Directors held two meetings during 2021 following its initial appointment on August 2, 2021. Each person currently serving as a director attended 100% of the Board meetings, as well as the meetings of any committee(s) on which he or she served. In addition, during 2021, our Board of Directors acted 10 times via unanimous written consent.

Our directors are expected to attend our annual meetings. Any director who is unable to attend is expected to notify the chairman of the Board in advance of the meeting date. GXO did not hold an Annual Meeting of Stockholders in 2021.

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 responsibilities of our senior management team.

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 to standing committees as follows:

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

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

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Nominating, Corporate Governance and Sustainability Committee. The Nominating, Corporate Governance and Sustainability Committee oversees risks related to our governance structure and processes, as well as risks associated with the company’s corporate sustainability practices and reporting.

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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 three separately designated standing committees to assist the Board in discharging its responsibilities: the Audit Committee, the Compensation Committee and the Nominating, Corporate Governance and Sustainability Committee. Each of these committees has a written charter that complies with applicable SEC rules and with the NYSE Listed Company Manual. These charters are available at www.gxo.com. You may obtain a printed copy of any of these charters, without charge, by sending a request to: Secretary, GXO Logistics, Inc., Two American Lane, Greenwich, Connecticut 06831.

The Audit Committee, the Compensation Committee and the Nominating, Corporate Governance and Sustainability Committee are each composed entirely of independent directors within all applicable standards, as discussed below. Our Board’s general policy is to review and approve committee assignments annually. After consulting with our Board chairman and considering member qualifications, the Nominating, Corporate Governance and Sustainability Committee is responsible for recommending to our Board all committee assignments, including the roles of committee chair. Each committee is authorized to retain, in its 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. Our Board may eliminate or create additional committees as it deems appropriate. All directors are invited to attend committee meetings even if they are not a member of the committee.

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

A brief summary of the committees’ responsibilities follows:

Audit Committee. Our Audit Committee was 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. During 2021, the Audit Committee comprised the following three directors: Mr. Shaffer (chair), Ms. Ashe and Ms. Chatfield. During 2021, the Audit Committee met four times. Our Board has determined that Mr. Shaffer qualifies 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) to retain independent compensation consultants and oversee the work of such consultants. During 2021, the Compensation Committee comprised the following three directors: Dr. Papastavrou (chair), Ms. Colucci and Ms. Gross. During 2021, the Compensation Committee met three times and, in addition, acted five times via unanimous written consent.

Nominating, Corporate Governance and Sustainability Committee. The primary responsibilities of the Nominating, Corporate Governance and Sustainability Committee are, among other things: (i) to identify individuals qualified to become Board members and recommend that our Board select such individuals to be presented for stockholder consideration at the annual meeting or to be appointed by the Board to fill a vacancy, (ii) to make recommendations to the Board concerning committee appointments, (iii) to develop, recommend to the Board and annually review the Guidelines and oversee corporate governance matters, (iv) to support the Board in its oversight of our company’s purpose-driven sustainability strategies, performance and external disclosures, including ESG matters and related stakeholder engagement, and (v) to oversee an annual evaluation of our Board and its committees. During 2021, the Nominating, Corporate Governance and Sustainability Committee comprised the following three directors: Ms. Gross (chair), Ms. Colucci and Dr. Papastavrou. The Nominating, Corporate Governance and Sustainability Committee met one time during 2021.

 

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 2021.

2021 Director Compensation Table(1)

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(1)

Compensation information for Malcolm Wilson and Karlis Kirsis is disclosed in this Proxy Statement under the heading “Executive Compensation—Compensation Tables.” Messrs. Wilson and Kirsis did not receive additional compensation for their service as a director. Mr. Kirsis served as a director from February 16, 2021, until his resignation, which was effective immediately prior to the spin-off on August 2, 2021.

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(2)

The amounts reflected in this column represent the fees earned by the directors for their service during 2021. 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.

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(3)

The amounts reflected in this column represent the grant date fair value of the awards made in 2021, 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 16. Stock-Based Compensation” of our company’s Annual Report on Form 10-K for the year ended December 31, 2021. Each director serving on January 3, 2022, received an award of 2,120 RSUs on such date for service as a director in 2022. These awards vest on January 3, 2023, and are not reflected in the table above.

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(4)

As of December 31, 2021, Mr. Jacobs held 1,073 RSUs. As of the Record Date, Mr. Jacobs beneficially owned a total of 12,304,190 shares of our common stock as disclosed in this Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management.” As of the date of this proxy statement, Mr. Jacobs beneficially owns a total of 6,856,690 shares of common stock.

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(5)

As of December 31, 2021, Ms. Colucci held 8,787 RSUs. As of the Record Date, Ms. Colucci beneficially owned a total of 11,424 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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(6)

As of December 31, 2021, Mr. Shaffer held 63,867 RSUs. As of the Record Date, Mr. Shaffer beneficially owned a total of 95,003 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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(7)

As of December 31, 2021, Ms. Ashe held 35,188 RSUs. As of the Record Date, Ms. Ashe beneficially owned a total of 31,661 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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(8)

As of December 31, 2021, Ms. Chatfield held 1,073 RSUs. As of the Record Date, Ms. Chatfield beneficially owned a total of 1,073 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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(9)

As of December 31, 2021, Ms. Gross held 1,073 RSUs. As of the Record Date, Ms. Gross beneficially owned a total of 1,612 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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(10)

As of December 31, 2021, Dr. Papastavrou held 51,225 RSUs. As of the Record Date, Dr. Papastavrou beneficially owned a total of 231,433 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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(11)

In connection with the spin-off, all outstanding equity awards with respect to XPO common stock held by the directors were equitably adjusted and converted into equity awards with respect to GXO common stock, with such equitable adjustments determined based on (i) the closing price of a share of XPO common stock on the close of trading on July 30, 2021 and (ii) the closing price of a share of GXO common stock on August 2, 2021.

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The compensation of our directors is subject to approval by our Board, which is based, in part, on the 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 year 2021, our non-employee directors received 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 was made on the first business day of 2022 (the “RSU Grant Date”) and the number of units was determined by dividing $190,000 by the average of the closing prices of the company’s common stock on the 10 trading days immediately preceding the RSU Grant Date. The vice chair of the Board received an additional $25,000 annual cash retainer, payable quarterly in arrears. The lead independent director also received an additional $25,000 annual cash retainer, payable quarterly in arrears. The chairs of our Audit Committee, our Compensation Committee and our Nominating, Corporate Governance and Sustainability Committee each received an additional cash retainer of $25,000, $20,000 and $20,000, 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 reimburse our directors for expenses incurred in the performance of their duties, including reimbursement for air travel and hotel expenses.

In 2022, 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 toward meeting the stock ownership guidelines. Stock options, whether vested or unvested, and equity-based awards subject to performance-based vesting conditions are not counted toward meeting 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 five years from the date of his or her appointment. As of the Record Date, all of our non-employee directors were in compliance with our stock ownership policy.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In 2021 the Compensation Committee comprised the following three directors: Dr. Papastavrou (chair), Ms. Colucci, and Ms. Gross. None of the members of our Compensation Committee has been an officer or employee of our company. During 2021, there were no material transactions between the company and the members of the Compensation Committee, other than described in the “Certain Relationships and Related Party Transactions” section on page 25, and none of our executive officers served on any compensation committee or 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 Corporate Governance Guidelines on August 2, 2021.

The Guidelines serve as a framework within which our Board 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 requirements to conduct an annual evaluation of the effectiveness of our Board and its committees. The Nominating, Corporate Governance and Sustainability Committee is responsible for reviewing the Guidelines annually, or more frequently as appropriate, and recommending appropriate changes to our Board 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 (the “Code”) that applies to our directors and executive officers. This Code is designed to deter wrongdoing, promote the honest and ethical conduct of all employees and promote compliance with applicable governmental laws, rules and regulations, as well as provide clear channels for reporting concerns. The Code 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 or waivers of any provision of the Code as applicable to our principal executive officer, our principal financial officer and our principal accounting officer by posting such disclosures on our website pursuant to SEC rules.

The Guidelines and our Code of Business Ethics are available on our website at www.gxo.com. In addition, you may obtain a printed copy of these documents, without charge, by sending a request to: Secretary, GXO Logistics, Inc., Two 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, Corporate Governance and Sustainability 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 has affirmatively determined that each person who served as a director during any part of 2021, except for Mr. Jacobs and Mr. Wilson, our chairman of the Board and our chief executive officer, respectively, 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 has determined that each director who serves on our Audit Committee satisfies standards for independence of Audit Committee members established by the SEC: that is, the director may not (i) accept directly or indirectly any consulting, advisory or other compensatory fee from our company other than his or her director compensation or (ii) be an affiliated person of our company or any of its subsidiaries. Our Board 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 has determined that each member of the Nominating, Corporate Governance and Sustainability Committee satisfies the NYSE standards for independence. In making the independence determinations for each director, our Board and the Nominating, Corporate Governance and Sustainability 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. Gross, those relationships included ordinary course commercial transactions between our company and the entity for which Ms. Gross serves as an executive.

DIRECTOR SELECTION PROCESS

The Nominating, Corporate Governance and Sustainability 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. Subject to the foregoing, in considering

 

new nominees for election to our Board, the Nominating, Corporate Governance and Sustainability Committee considers, among other things, broad experience; financial expertise; wisdom; integrity; an ability to make independent analytical inquiries; an understanding of our company’s business environment; relevant knowledge and experience in such areas as technology, 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 highly qualified women and individuals from underrepresented minorities to include in the candidate pool. Our Board aims to create a team of diverse and highly skilled directors who provide our global company with thoughtful board oversight. The Nominating, Corporate Governance and Sustainability Committee assesses the effectiveness of its diversity efforts through periodic evaluations of the Board’s composition.

The Nominating, Corporate Governance and Sustainability Committee may identify potential nominees for election to our Board from a variety of sources, including recommendations from current directors or management and 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 candidates.

Our Board 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 2022 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 120 days, prior to 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, GXO Logistics, Inc., Two American Lane, Greenwich, Connecticut 06831.

BOARD OVERSIGHT OF HUMAN RESOURCE MANAGEMENT

Our success relies in large part on our robust governance structure and Code of Business Ethics, our corporate citizenship and engaged employees who embrace our values. As a customer-centric company with a strong service culture, we constantly work to maintain and improve our position as an employer of choice. This requires an unwavering commitment to workplace inclusion and safety as well as competitive total compensation that meets the needs of our employees and their families.

Our management team and Board work together in a transparent manner, allowing for open communication, including with respect to human resources-related matters. Our directors have access to information about our human resources operations and plans, our chief human resources officer is invited to speak regularly at meetings of our Board, our Compensation Committee reviews broad-based employee compensation and benefits information and warehouse employees are invited to meet directly with the Board. Our directors also have opportunities to attend and participate in quarterly operating review meetings with business unit management and conduct visits of operational sites.

Under the leadership of our Board in 2021, we made significant investments in the safety, well-being and satisfaction of our employees in numerous areas, including: diversity, inclusion and belonging; health and safety; talent development and engagement; and expansive total rewards.

Diversity, Inclusion and Belonging

We take pride in having an inclusive workplace that encourages a diversity of backgrounds and perspectives and mandates fair treatment for all individuals. These attributes of our culture make us a stronger organization and a better partner to all GXO stakeholders. We welcome employees of every gender identity, sexual orientation, race, ethnicity, national origin, religion, life experience, veteran status and disability. In November 2021, we appointed a Vice President of Diversity, Inclusion and Belonging and we have launched a Sustainability Steering Committee and Diversity and Inclusion Steering Committee in Europe and the Americas whose strategies will include support and contributions for our environmental, social and governance commitments and ongoing annual community engagement events.

Health and Safety

Our employees’ safety is always our foremost priority, and we have numerous protocols in place to ensure a safe workplace environment. We aim to maintain an Occupational Safety and Health Administration recordable incident rate that is less than half the published rate for the General Warehousing and Storage sector, based on the “Industry Injury and Illness Data” of the U.S. Bureau of Labor Statistics.

 

We deployed a comprehensive array of protective measures and technology to maintain a safe workplace environment in response to the COVID-19 pandemic. We have taken many risk-mitigating actions to protect our employees, including offering 100% paid pandemic sick leave for eligible employees, procuring personal protective equipment for employees in all of our workplaces and providing expanded access to mental health counseling services for employees and their dependents.

Talent Development and Engagement

Our employees are critically important to our ability to provide best-in-class service. We ask our employees for feedback through engagement surveys, roundtables and town halls and we use periodic engagement surveys to gauge our progress and assess satisfaction. In this way, our employees help drive the continuous improvement of our business. We seek to identify top talent in all aspects of the recruitment process and we emphasize training and development.

We tailor our recruitment efforts by geography and job function using an array of channels to ensure a diverse candidate pool. Our talent development infrastructure provides resources to employees who aspire to grow throughout their career, such as tailored skills development, training and mentoring. In addition, we maintain a robust pipeline of future operations leaders by using structured sponsorships and additional learning techniques to develop internal candidates who demonstrate high potential in supervisory roles into site leader positions. Our programs also serve to retain top talent by defining personalized development paths and attract new talent by differentiating GXO as an employer of choice.

Expansive Total Rewards

We offer a competitive compensation package to help attract and retain outstanding talent. We offer competitive wages and a comprehensive suite of benefits to all employees to maintain our positioning as an employer of choice in the talent marketplace. A number of the benefits we offer were introduced in response to employee feedback—in the U.S., examples include our pregnancy care policy, family bonding policy, tuition reimbursement program for continuing education and benefits such as diabetes management, supplemental insurance and short-term loans. In Europe, the benefits offered vary by country and are tailored to the needs of the local markets. Examples include comprehensive healthcare and risk insurance, employee assistance programs covering mental, physical and financial well-being, pension plans, profit sharing and local and global bonuses structured to offer competitive pay in each country.

Our 2021 Form 10-K provides, and our inaugural ESG Report will provide, additional details of our global progress in these key areas.

BOARD OVERSIGHT OF ESG MATTERS

Our approach to ESG is one of purpose-driven progress rooted in innovation. We work to promote environmental sustainability, social initiatives and good governance through the decisions we make and our interactions with colleagues, customers, suppliers and other stakeholders. ESG features prominently in deliberations among our directors and informs their overall approach to risk oversight.

We believe that ESG is essential to our company’s long-term viability. It fosters an inclusive workplace for our employees. In addition, ESG matters are important to many of our stakeholders who want to do business with partners that share their goals: for example, the transition to a low-carbon economy.

In November 2021, we launched a Sustainability Steering Committee that includes cross-functional leaders from throughout the organization.

We expect shortly to publish our inaugural ESG Report detailing our progress in the areas of environmental sustainability, social initiatives and governance performance. Our inaugural ESG Report will be available at https://www.gxo.com/esg/. Members of our Board reviewed the contents of the ESG Report and provided feedback to the company. In addition, our Nominating, Corporate Governance and Sustainability Committee met with our Chief Compliance and ESG Officer to review and approve the ESG Report prior to publication.

BOARD OVERSIGHT OF INFORMATION TECHNOLOGY AND CYBERSECURITY RISK MANAGEMENT

Our Board maintains direct oversight over information technology and cybersecurity risk. The Board both receives and provides feedback on regular updates from management regarding information technology and cybersecurity governance processes, policies and business continuity plans, the status of projects to strengthen internal cybersecurity and the results of security breach simulations. The Board also discusses relevant incidents in the industry and the emerging threat landscape.

We have a robust IT security team, managed by our chief information security officer. This team continuously reviews relevant legislative, regulatory and technical developments and enhances our information security capabilities in order to protect against potential threats. We are continually improving our detection and recovery processes and have rolled out an IT security training program that all employees are required to complete at regular intervals. We also obtained an information security risk insurance policy.

 

STOCKHOLDER COMMUNICATION WITH THE BOARD

Stockholders and other 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, GXO Logistics, Inc., Two 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 2023 Annual Meeting of Stockholders must be received by our Secretary no later than December 26, 2022, in order 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 120 days, prior to the earlier of the date of the annual meeting and the first anniversary of the preceding year’s annual meeting. For example, assuming that our 2023 Annual Meeting is held on or after May 24, 2023, any stockholder proposal to be considered at the 2023 Annual Meeting, including nominations of persons for election to our Board, must be properly submitted to us not earlier than January 24, 2023, nor later than February 23, 2023.

Additionally, to comply with the SEC’s universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees at the 2023 Annual Meeting must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 25, 2023.

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

 

CERTAIN RELATIONSHIPS AND

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.

AGREEMENTS WITH XPO

Prior to the spin-off, XPO was our sole shareholder and, therefore, is deemed a “related party” even though XPO ceased to hold any shares of GXO common stock upon completion of the spin-off. As a result, we are required to disclose the following agreements that were approved and entered into between GXO and XPO prior to the spin-off while GXO was a wholly owned subsidiary of XPO. In connection with the spin-off, GXO entered into a separation agreement with XPO to effect the separation and to provide a framework for GXO’s relationship with XPO after the separation and entered into certain other agreements, including a transition services agreement, a tax matters agreement, an employee matters agreement and an intellectual property license agreement.

Additional information about the terms of these agreements can be found in GXO’s information statement, dated July 23, 2021, which was included as Exhibit 99.1 to GXO’s Current Report on Form 8-K filed on July 26, 2021, under the section titled “Certain Relationships and Related Party Transactions.” The foregoing summaries of the terms of the material agreements GXO entered into with XPO in connection with the spin-off do not purport to be complete and are qualified in their entirety by reference to the full text of the agreements, filed as exhibits to GXO’s Current Report on Form 8-K filed on August 2, 2021.

Separation Agreement

The separation agreement governs the rights and obligations of the parties regarding the distribution following the completion of the spin-off. On August 2, 2021, XPO distributed to its stockholders that held XPO common stock as July 23, 2021, the record date for the distribution, all of the issued and outstanding shares of GXO common stock on a pro rata basis. No fractional shares were issued.

Also, the separation agreement identified the assets transferred, the liabilities assumed and the contracts transferred to each of GXO and XPO as part of the separation of XPO into two independent companies. In particular, the separation agreement provides that, among other things, subject to the terms and conditions contained therein:

■

certain assets related to the GXO businesses, which we refer to as the “GXO Assets,” are now retained by or have been transferred to GXO or one of its subsidiaries, including:

​

■

equity interests in certain GXO subsidiaries that hold assets of the GXO businesses;

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■

the GXO brands, certain other trade names and trademarks and certain other intellectual property (including patents, know-how and trade secrets), software, information and technology allocated to GXO pursuant to the separation agreement;

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■

facilities owned or leased by GXO;

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■

certain contracts exclusively related to the GXO businesses;

​

■

with respect to certain contracts primarily but not exclusively related to the GXO businesses, those portions of such contracts to the extent related to the GXO businesses;

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■

other assets and rights expressly allocated to GXO pursuant to the terms of the separation agreement or certain other agreements entered into in connection with the separation;

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■

cash in an amount equal to $100 million (after giving effect to the cash true-up adjustments set forth in the separation agreement);

​

■

permits that primarily relate to the GXO businesses; and

​

■

other assets that are included in GXO’s pro forma balance sheet;

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■

certain liabilities related to the GXO businesses or the GXO Assets, which we refer to as the “GXO Liabilities,” are now retained by or have been transferred to GXO; and

​

 

■

all of the assets (including cash and cash equivalents) and liabilities (including whether accrued, contingent or otherwise) other than the GXO Assets and the GXO Liabilities have been retained by or transferred to XPO.

​

Transition Services Agreement

In connection with the spin-off, GXO and XPO entered into a transition services agreement pursuant to which GXO and XPO and their respective affiliates are to provide each other, on an interim, transitional basis, various services, such as treasury administration, employee benefits administration, information technology services, regulatory services, general administrative services and other support services. The agreed-upon charges for such services are generally intended to allow the servicing party to charge a price comprising out-of-pocket costs and expenses and a predetermined profit in the form of a mark-up of such out-of-pocket expenses.

The services commenced on the distribution date and terminate no later than 12 months following the distribution date. The receiving party may terminate any services by giving prior written notice to the provider of such services and paying any applicable wind-down charges.

Tax Matters Agreement

In connection with the spin-off, GXO and XPO entered into a tax matters agreement that governs the parties’ respective rights, responsibilities and obligations with respect to taxes (including responsibility for taxes, entitlement to refunds, allocation of tax attributes, preparation of tax returns, control of tax contests and other tax matters). Pursuant to the tax matters agreement:

■

XPO generally is responsible for all U.S. federal income taxes imposed on the XPO consolidated tax return group and state and foreign income, franchise, capital gains, withholding and similar taxes imposed on a consolidated, combined or unitary tax return group (or similar tax group under non-U.S. law) that includes XPO or one of its subsidiaries with respect to taxable periods (or portions thereof) that end on or prior to the distribution date.

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■

Special rules allocate tax liabilities in the event either (i) the distribution, together with certain related transactions, fails to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code or (ii) any internal separation transaction that is intended to qualify as a transaction that is generally tax-free fails to so qualify.

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■

Each of XPO and GXO would be responsible for a specified portion of any taxes (and any related costs and other damages) arising as a result of the failure of the distribution and certain related transactions to qualify as a transaction that is generally tax-free (including as a result of Section 355(e) of the Code) or a failure of any internal separation transaction that is intended to qualify as a transaction that is generally tax-free to so qualify, in each case, to the extent such amounts did not result from a disqualifying action by, or acquisition of equity securities of, XPO or GXO.

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■

Certain restrictions are imposed on GXO and its subsidiaries during the two-year period following the distribution that are intended to prevent the distribution, together with certain related transactions, from failing to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code.

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Employee Matters Agreement

In connection with the spin-off, GXO and XPO entered into an employee matters agreement to allocate liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters. The employee matters agreement governs certain compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company.

Intellectual Property License Agreement

In connection with the spin-off, GXO and XPO entered into an intellectual property license agreement to facilitate and provide for an orderly transition in connection with the transaction. Under the intellectual property license agreement, each of GXO and XPO is the owner of a copy of the XPO Smart Software for use in its business. The intellectual property license agreement also provides GXO a non-exclusive license to certain XPO software platforms for use in the operation of the GXO businesses, and XPO will retain a non-exclusive license to certain GXO software platforms for use in the operation of XPO’s retained businesses. Further, the intellectual property license agreement also provides the parties with reciprocal, non-exclusive licenses under certain intellectual property rights transferred to GXO and certain intellectual property rights retained by XPO in order to provide the parties freedom to operate their respective businesses.

 

DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Securities Exchange Act of 1934 requires that GXO’s directors, executive officers and persons who beneficially own 10% or more of GXO’s common stock file with the SEC initial reports of ownership and reports of changes in ownership of our stock and our other equity securities. To GXO’s knowledge, based solely on a review of the copies of such reports furnished to GXO and written representations that no other reports were required, during the year ended December 31, 2021, all such filing requirements applicable to GXO’s directors, executive officers and greater than 10% beneficial owners were complied with except for Ms. Chatfield, who filed one late report regarding her initial statement of beneficial ownership due to a delay in generating her SEC filing codes.

 

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 solely by the beneficial owner 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 GXO Logistics, Inc., Two American Lane, Greenwich, Connecticut 06831.

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*

Less than 1%

​

+

Director and Executive Officer

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(1)

For purposes of this column, the number of shares of common stock outstanding for each person reflects the sum of: (i) 114,840,449 shares of our common stock that were outstanding as of the Record Date, (ii) the number of RSUs held, if any, that are or will become vested within 60 days of the Record Date and (iii) the number of shares of common stock underlying stock options that are or will become vested within 60 days of the Record Date.

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(2)

Brad Jacobs has indirect beneficial ownership of the shares of GXO common stock beneficially owned by JPE, as a result of being its managing member. In addition, Mr. Jacobs directly owns 388,489 shares of GXO common stock. See footnote (6) below.

​

 

(3)

Based on the Schedule 13G filed on February 14, 2022, by Orbis Investment Management Limited (“OIML”), Orbis Investment Management (U.S.), L.P. (“OIMUS”) and Allan Gray Australia Pty Limited (“AGAPL”), which reported that, as of February 14, 2022, OIML beneficially owned 9,488,796 shares of GXO common stock, OIMUS beneficially owned 67,676 shares of GXO common stock, and AGAPL beneficially owned 3,651 shares of GXO common stock. The group has sole voting and sole dispositive power over such shares of GXO common stock.

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(4)

Based on the Schedule 13G filed on February 4, 2022, by BlackRock, Inc., which reported that, as of February 4, 2022, BlackRock, Inc. beneficially owned 10,141,054 shares of our common stock, with sole voting power over 9,644,505 shares of GXO common stock and sole dispositive power over 10,141,054 shares of GXO common stock.

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(5)

Based on the Schedule 13G filed on February 10, 2022, by The Vanguard Group, which reported that, as of February 9, 2022, The Vanguard Group beneficially owned 10,254,938 shares of GXO common stock with shared voting power over 72,791 shares of GXO common stock and sole dispositive power over 10,041,211 shares of GXO common stock and shared dispositive power over 213,727 shares of GXO common stock.

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(6)

Mr. Jacobs has indirect beneficial ownership of 11,915,701 shares of GXO common stock beneficially owned by JPE as a result of being its managing member. Also includes 388,489 shares of GXO common stock held directly by Mr. Jacobs. As of the date of this proxy statement, Mr. Jacobs has indirect beneficial ownership of 6,468,201 shares of GXO common stock owned by JPE and direct beneficial ownership of 388,489 shares of GXO common stock.

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(7)

Includes 8,787 vested RSUs that are subject to a deferral election.

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(8)

Includes 63,867 vested RSUs that are subject to a deferral election.

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(9)

Includes 31,661 vested RSUs that are subject to a deferral election.

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(10)

Includes 180,208 shares of GXO common stock beneficially owned by Springer Wealth Management LLC, of which Dr. Papastavrou is the owner of 100% of the equity securities. Includes 51,225 vested RSUs that are subject to a deferral election.

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(11)

Includes 26,388 unvested Options that will vest on June 7, 2022.

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(12)

Includes 21,989 unvested Options that will vest on May 17, 2022.

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(13)

As of the date of this proxy statement, Mr. Kirsis beneficially owns a total of 20,533 shares of common stock.

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(14)

Includes 4,398 unvested Options that will vest on June 7, 2022. As of the date of this proxy statement, Ms. Hammond beneficially owns a total of 10,712 shares of common stock.

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(15)

Includes 155,540 RSUs and 52,775 shares of common stock underlying stock options that are or will become vested within 60 days of the Record Date.

​

 

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes GXO’s executive compensation program for 2021. The Compensation Committee of our Board of Directors (the “Committee”) oversees our executive compensation program and practices. In this section, we explain the Committee’s 2021 compensation decisions for the following NEOs.

SPECIAL NOTE REGARDING THE SPIN-OFF

Prior to the completion of the spin-off on August 2, 2021, we were a wholly owned subsidiary of XPO Logistics, Inc. (“XPO”). This proxy statement discloses the compensation of our principal executive officer, principal financial officer and three next highest compensated executive officers, based on compensation for the year ended December 31, 2021 (collectively, the “NEOs”). Information presented for periods prior to the spin-off reflects the historical compensation philosophy, strategy and program designed by XPO and approved by the compensation committee of XPO’s board of directors (the “XPO Committee”), as well as the consideration of such factors as the XPO Committee or management of XPO determined were appropriate for an organization of XPO’s size and complexity.

Upon the spin-off, outstanding awards held by GXO employees, including the NEOs, were converted in accordance with the Employee Matters Agreement between GXO and XPO. The purpose of the conversion methodology used was to maintain the aggregate intrinsic value of the award immediately after the spin-off when compared to the aggregate intrinsic value immediately prior to the spin-off. Such adjusted awards are otherwise subject to the same terms and conditions that applied to the original XPO award immediately prior to the spin-off.

2021 COMPANY PERFORMANCE HIGHLIGHTS

Overview

2021 was a momentous year for GXO. Since becoming a standalone company on August 2, 2021, GXO, under the leadership of our NEOs, demonstrated its ability to deliver on its promise to make outsourced logistics a gamechanger for customers while establishing GXO as an industry leader. In 2021, GXO posted record results: record revenue, record adjusted EBITDA and record EPS.

Highlights of our full-year 2021 performance include:

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$7.9 billion of revenue;

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$153 million of net income attributable to common shareholders;

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$1.32 of diluted EPS, and $2.09 of adjusted diluted EPS*;

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■

$611 million of adjusted EBITDA*;

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$455 million of cash flow from operations;

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■

$216 million of free cash flow*; and

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■

$333 million of cash and cash equivalents, and $800 million of available borrowing capacity, as of December 31, 2021.

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*

See Annex A for reconciliations of non-GAAP measures.

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The tailwinds of ecommerce, automation and outsourcing continue unabated, and we see even more opportunities for significant growth. Our sales pipeline reached an all-time high of $2.5 billion, and we won contracts with an aggregate lifetime value of approximately $5 billion, giving us a strong foundation for growth in 2022.

Businesses are facing enormous and, in some cases, extremely complex challenges: for example, rising consumer expectations, rapidly evolving technology and multiplying risks to their supply chains. Our expertise as well as our winning combination of industry-leading technology, global scale and world-class talent help them meet these challenges and continue to set GXO apart.

 

We lead the industry in tech implementation, digitization and robotics, and in 2021 we dedicated half of our total capital expenditures to growing this lead. We are constantly testing new technology to make our operations more productive and efficient and to make the workplace safer and more engaging for our team members. Our leadership earned GXO a FreightTech 100 award, which spotlights the most innovative companies in our industry.

Our footprint and scale—approximately 200 million square feet of warehouse space across more than 900 locations and a team that numbers over 100,000 strong worldwide—make us one of only a handful of global players that can satisfy the logistics requirements of the world’s largest multinational companies. Our ability to support these customers at the highest level is a major competitive advantage and a key growth opportunity for GXO.

We also distinguish ourselves with exceptional service. In 2021, we delivered a successful peak for our customers, navigating an elongated end-of-year holiday period and sourcing talent exceptionally well. Our service and results helped us win contract extensions and earn new business from existing customers. Over the course of the year, we were able to expand our operations with 80 percent of our top 20 customers. Revenue from these customers grew organically by approximately 22 percent, demonstrating the success of our “land-and-expand” strategy.

In 2021, we delivered on this promise with a year of firsts and records. And we are well-positioned to seize the enormous opportunity ahead of us.

OUR COMPENSATION PHILOSOPHY AND EXECUTIVE COMPENSATION PROGRAM OBJECTIVES

GXO’s executive compensation philosophy is founded on the following core objectives:

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Attract high-impact, results-oriented executives who will contribute to GXO’s goal of maximizing stockholder value.

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Ensure that each executive receives total compensation that encourages his or her long-term retention through business and individual performance assessments, coupled with market benchmarking.

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

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Set ambitious targets that incentivize our executives to drive long-term stockholder value creation without unnecessary risk.

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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.

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Incorporate stockholder feedback into the Committee’s decision-making process.

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STOCKHOLDER OUTREACH AND ENGAGEMENT

We believe that regular stockholder engagement is key to strong corporate governance and we recognize the value of engaging in constructive dialogue with stockholders on numerous topics, including business strategy, governance, executive compensation, corporate sustainability reporting and other important matters. We strive to continually improve in these areas and we value the opportunity to hold ongoing engagement discussions with stockholders throughout the year. Our investor relations team engages regularly with both existing and prospective stockholders. Feedback from these sessions is shared with executive management and reflected in our strategic priorities. In addition, following the publication of the company’s inaugural Annual Report and ESG Report, we expect to engage more substantively with stockholders on governance, executive compensation and sustainability topics.

 

COMPENSATION GOVERNANCE HIGHLIGHTS

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.

THE COMMITTEE’S COMPENSATION DECISION-MAKING PROCESS

The Committee met three times and took five actions by unanimous written consent following the spin-off to discuss executive compensation and other items pursuant to its charter. In addition to the regular responsibilities of the Committee, members of the Board were invited to attend internal quarterly operating review meetings with executive management. These meetings included in-depth reviews of the company’s financial results, as well as discussions about COVID-19, supply chain disruptions, operational execution, sales, customer service, technology initiatives, process innovation, human capital management, safety, the market landscape and business growth trajectories. The meetings also included a review of key performance indicators that track the company’s achievement of financial and non-financial objectives. Multiple Committee members attended these sessions in order to remain well-informed of the company’s financial and operational performance.

The Committee believes in a balanced approach between evaluating individual and company performance results against formulaic programs to ensure maximum alignment with stockholder interests. The decision-making process incorporates an element of discretion, allowing the Committee to utilize a balanced, multi-dimensional approach to NEO compensation that includes a review of performance against goals.

 

NEO Compensation-Setting Process

The Committee considers several key factors in determining executive compensation.

GXO Peer Group

Prior to the spin-off, XPO used a group of 13 companies, including the companies set forth below in the column titled Initial 2021 Peer Group (the “Initial 2021 Peer Group”), to help set spin-off compensation. Following the spin-off, the GXO Compensation Committee, along with its advisors, developed a new peer group consisting of 19 companies, including the companies set forth below in the column titled Modified 2022 Peer Group (the “Modified 2022 Peer Group”). This Modified 2022 Peer Group was used to establish 2022 compensation.

 

The Modified 2022 Peer Group of 19 companies included the Initial 2021 Peer Group modified by subtracting one company and adding seven companies. Based on the current status of Echo Global Logistics, Inc., as described below, the current Modified 2022 Peer Group consists of 18 companies.

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*

Numbers represented in thousands.

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(1)

Deleted.

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(2)

Added.

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(3)

Echo Global Logistics, Inc. is no longer a listed company as it filed a Form 15-12b on December 7, 2021, regarding the certification and notice of termination of registration.

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Pay Elements

Our executive compensation program consists of three primary elements: base salary, annual short-term incentive awards and long-term incentive awards. These elements are described in more detail below.

 

EXECUTIVE COMPENSATION ELEMENTS AND OUTCOMES FOR 2021

Annual Base Salary

Annual base salary provides a fixed incentive that corresponds to an executive’s experience and job scope. The Committee reviews base salaries annually to align with current market levels. Prior to the spin-off, XPO’s Compensation Committee reviewed market and initial peer data to determine the base salaries for our NEOs for the duration of 2021. The 2021 annual base salaries are set forth in the table below.

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(1)

Base salaries for non-U.S. executive officers were determined in USD and converted and paid in British Pounds Sterling.

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Annual Short-Term Incentive

Our short-term incentive program is designed to reward annual performance that supports strategy and results. Each NEO is eligible for a target short-term incentive (“STI”) amount. Prior to the spin-off, XPO’s Compensation Committee reviewed market and initial peer data to determine the STI target opportunity for our NEOs. The table below reflects the 2021 annual short-term incentive opportunity of each NEO.

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(1)

Based on new hire salary proration. Ms. Fogarty joined GXO in September 2021.

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Gating Threshold to Establish Eligibility for Short-Term Incentive Payout

For the 2021 performance year, the Committee determined that the company’s target performance must equal or exceed 90% of the performance measures in order for each NEO to become eligible for a short-term incentive award, assuming they remained employed on the payment date.

Maximum Amount of Bonus

The evaluation of short-term incentive payouts is based on a review of key performance measures that are of preeminent importance to the company and our stockholders. Based on the Committee’s 2021 decision-making framework, cash bonuses are subject to a payout range of 0% to a cap of 200% of target, with straight-line interpolation results for all values in between.

Financial Results Relative to Publicly Disclosed Targets for 2021

As part of the company’s forecasting process for the second half of 2021, senior executives established goals for three key performance indicators, which were reviewed with the Committee: adjusted EBITDA, revenue and free cash flow, as shown below. These metrics were selected as key indicators that are important to the company and our stockholders and are a reflection of strong company performance and aligned with the prevalent short-term incentive practices of our peers. Performance based on a balanced scorecard of these three weighted metrics as set forth below was considered by the Committee when determining the 2021 annual incentive amounts for our NEOs.

■

50%—Adjusted EBITDA;

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■

30%—Revenue; and

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■

20%—Free Cash Flow, as adjusted to exclude certain items.

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*

See Annex A for reconciliations of non-GAAP measures.

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**

Represents achievements for the second half of 2021 used to determine the final payout results. The Actual Achievements include a one-time incremental spin-related adjustment to adjusted EBITDA.

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***

Represents Financial Results for the second half of 2021.

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As a global provider of logistics solutions, our business can be impacted to varying degrees by factors beyond our control. The rapid escalation of COVID-19 into a pandemic in 2020 and 2021 affected and may continue to affect economic activity broadly and customer sectors served by our industry. Despite these challenges, our performance surpassed that of many of our core industry competitors based on multiple operational and financial measures, and we exceeded our adjusted EBITDA, revenue and free cash flow targets for 2021.

2021 Short-Term Incentive (STI) Payout

In consideration of the above factors, Mr. Wilson, Mr. Oran, Mr. Kirsis, Ms. Hammond and Ms. Fogarty received a short-term incentive payout of 149% of target for the second half of 2021, in line with the average payout for bonus-eligible employees in the corporate function.

Below is a summary of our NEOs’ total annual STI compensation at target with respect to 2021 final outcomes.

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(1)

The Total Actual STI amount does not include the special one-time cash bonuses referenced below. Those amounts are captured in the Bonus column of the Summary Compensation Table.

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(2)

The final Bonus Funding Percentage is reflective of the full-year annual performance results, including the first half performance results for Mr. Wilson, Mr. Kirsis and Ms. Hammond, who were covered under a prior XPO AIP plan for that period.

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(3)

Based on new hire bonus proration. Ms. Fogarty joined GXO in September 2021.

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In addition to the annual STI, the Board approved special one-time cash bonuses (spin-off bonuses) to recognize the contributions that led to the Company’s successful spin-off from XPO Logistics, Inc. on August 2, 2021. A few key successes of note:

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The significant outreach efforts that resulted in a strong, initial company valuation.

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Completion of the spin-off, meeting the accelerated timeline, while maintaining a strong second half of 2021 financial performance along with strong stock price appreciation.

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Recruit exceptional talent to fill key leadership roles and position GXO for future success.

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