Days before XPO Logistics Inc. plans to hold its annual shareholder meeting on May 15, the International Brotherhood of Teamsters is urging that the company’s board chairman be an independent director and that the chairman and CEO positions be split in two.
Currently, Bradley Jacobs serves as both the company’s chairman and CEO.
The Teamsters and Jacobs have clashed before, and a union official told Transport Topics that workers and investors have lost confidence in Jacobs. The Greenwich, Conn., company’s stock plunged 38% last year and it lost $600 million in business when its largest customer — believed to be Amazon — withdrew two-thirds of its business with XPO.
“That’s a body blow, no question about it,” Jacobs commented about the lost business in a Feb. 15 conference call with investment analysts.
It’s not a panacea, but having all of the power concentrated in one individual is not the way of assuring investors it is a stable business going forward.
Teamsters Senior Government Analyst Michael Pryce-Jones
No one from Amazon or XPO would confirm these reports, but transportation and logistics industry experts said the type of business and volume affected could only have come from Amazon.
“The story of XPO is a changing one, from one that the markets had loved to one that the market is concerned about, and it has credibility concerns,” said Teamsters Senior Government Analyst Michael Pryce-Jones. “It’s a challenging moment for the company, and the best way to safeguard the company is to have an independent chairman. It’s not a panacea, but having all of the power concentrated in one individual is not the way of assuring investors it is a stable business going forward.”
The IBT is making its request through a formal non-binding shareholder resolution that it wants investors to consider at the upcoming meeting.
In a statement, the company defended its CEO and the composition of its board. “The company’s Board composition is highly independent,” XPO said in a Statement in Opposition, its official response to the Teamsters’ demand. “Seven of XPO’s eight directors are independent, three of whom have been added to the Board since 2016. To encourage open discussion without management’s influence, XPO’s Corporate Governance Guidelines require that non-management directors meet one or more times annually without the presence of management.”
The statement continued, “To further facilitate independent oversight, the Corporate Governance Guidelines provide for Board members’ unfettered access to senior XPO officers and outside advisors, and also require directors to exercise appropriate diligence in making decisions and in overseeing management of the company … based on the best interests of the company and its stockholders and without regard to any personal interest.”
Two shareholder advisory firms have announced they will support the union’s proposal to separate the two positions and have an independent director serve as chair.
Glass Lewis & Co. and Institutional Shareholder Services filed papers in late April urging shareholders to back the Teamsters’ resolution.
Both Glass Lewis and ISS said they support the idea that a chairman who is independent of management is preferable to having the same person lead the board and the executive team.
“We view an independent chair as better able to oversee the executives of the company and set a pro-shareholder agenda without the inherent conflicts that a CEO or other executive insiders face,” Glass Lewis wrote. Giving one individual executive and board leadership “concentrates too much responsibility in a single person and inhibits independent board oversight of executives on behalf of shareholders.”
ISS said “conflicts of interest may arise” when one person holds both positions, and said, “effective board oversight may be enhanced by independent leadership.”
Transport Topics Senior Writer Daniel P. Bearth contributed to this story.